ROYAL DUTCH/SHELL IN

NIGERIA
CORPORATE SOCIAL RESPONSIBILITY
Professor Déborah Philippe
HEC Lausanne
Fall 2010
CHRISTIAN KAUFMANN
BACKGROUND [1/2]
Different Actors within this conflict
 Nigeria & Nigerian Government
 Despite its plentiful resources and oil wealth, poverty is widespread in Nigeria (high
unemployment & crime rates) with growing population
 Nigerian State is heavily dependent on oil sales accounting for 80% of government
revenues and 90% of foreign exchange
 Military rule for more than 30 years with corrupt system ( negligent sovereign &
unreliable business partner)

 Royal Dutch Shell

 Operating in Nigeria (Niger Delta) since 1958 as SPDC
 Joint venture between SPDC, BP and the Nigerian Government (NNPC) since 1973.
(NNPC increased stake in venture over the years)
 By the mid-1990’s SPDC controlled about 60% of Nigeria’s oil reserves and generated
about $235 million in profits for the year 1994.
 Unpopular in Nigeria
 Shell employees and equipment are constant
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targets of attacks
BACKGROUND [2/2]
 Ogoni People
 Tribe in the Niger Delta which depend on the natural resources of the Delta to survive
(farming & fishing)
 Affected negatively by the oil activities in their region
 Virtually no compensation from government or oil companies for their deteriorating life
style

 Ken Saro-Wiwa & MOSOP

 Nigerian author & environmentalist which headed the Movement for the Survival of the
Ogoni People (MOSOP)
 Strong spokesperson against the Nigerian Gov. and SPDC
 Focused on creating international awareness for their cause
 MOSOP wrote the Ogoni Bill of Rights
 Demand political autonomy & compensation
 Focused on creating international awareness for their cause
 Represented a growing problem for Shell & Nigerian Government
 Arrested in 1994 with other 8 activists and sentenced to death by a military court for inciting
murder.
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1. Why is Shell the subject of criticism
and controversy? [1/3]

 Degradation of the Niger Delta environment by processes

of oil spills and natural gas flaring (“ecological
disaster?”)
 Decades of regular oil spills both on land and offshore
 Disposal of waste into waterways
 Natural gas flaring
 Devastation of acid rain to the land and people
 Other environmental issues include: deforestation and loss of
biodiversity, water contamination and air pollution from
refineries and chemical facilities.
 Inadequate cleanup solutions to help solve the above issues
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1. Why is Shell the subject of criticism
and controversy? [2/3]

 Poverty & Underdevelopment

 Nigerian population and especially the Niger Delta citizens live in poverty
while SPDC are making millions in profits
 Due to environmental damage access to food and clean water become more
limited
 Violation of human rights
 Delta population severely under compensated by Shell and the Nigerian
government for their oil activities

 Close Ties to Dictatorship

 Joint venture with NNPC
 Need for protection from attacks
 Request for increase in security and provide monetary and logistical support to
the Nigerian police

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1. Why is Shell the subject of criticism
and controversy? [3/3]

 Easier target for criticism

 Multinational company can be more easily held accountable
than a military dictatorship
 Ken Saro-Wiwa used this in his favor to attract international
attention for the cause of the Ogoni people

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 2. What do you think of Shell’s stated business
principle of non involvement in political
matters?

 Common Practice
 Shell’s non-involvement principle is a common practice among
MNEs1
 Poses Risk for MNEs to interfere in local matters
 Undermine local sovereignty

 SPDCs close link to Dictatorship cast doubt on neutrality

 Joint Venture & Security alliance

 Need for active engagement in cases regarding human rights abuse

 Acknowledge share of responsibility (even by omission)
 Disinvest in extreme cases

1
Peng, Mike W. 'Global Strategy' 2nd Edition 2006 South-western 7
3. What, if anything, should Shell have done
differently during its time in Nigeria? [1/2]

 Superior operating standards

 Oil production represents a high risk for communities in the
Delta region & absentee government puts further
responsibility on SPDC
 Increased standards of good practice to avoid oil spills
 Adequate clean up procedures for contaminated land and
water
 Increased assessment of environmental and social
consequences from operations
 Third party involvement to ensure reliability

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3. What, if anything, should Shell have done
differently during its time in Nigeria? [2/2]

 More proactive engagement with the communities in the Niger Delta

region
 Rather than rely on military oppression to assure security
 Legitimize themselves through development projects and community investment
 Since local government is not reliable to implement policies &
compensation to ensure basic rights for their population
➔ Plan & act independently (with help of NGOs) to ensure better implementation
of environmental & social policies to the people directly affected by their
operations

 More proactive engagement concerning the unfair trial of Ken Saro-

Wiwa & other 8 activists
 Threat to disinvest would have lowered risk of accusation of collusion
between Abucha and Shell

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4. What would you recommend for the future
to Shell’s board of directors? [1/2]

 Transform the relationship between civil society and their

company from adversary to ally
 Become more transparent
 Ensure robust, independent and coordinated oversight of their oil
activities including the impact on human rights
 Develop a relationship of trust among the Delta inhabitants
 Opening lines of communication between the company and the
community
 Allowing citizens to play a small role in the decision-making process
can go a long way in rekindling a tarnished relationship
 Work together with communities & development agencies to
identify priority projects and implement them
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4. What would you recommend for the
future to Shell’s board of directors? [2/2]

 Formulate clear guidelines for disinvesting

 If violence or human rights abuse escalate in Nigeria
 SPDC should be prepared to make difficult decision

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