Professional Documents
Culture Documents
XXX
Blackwell
Malden,
Business
BASR
©
0045-3609
2007 Center
USA
and
Publishing
Society
for Business
Inc
Review
Ethics at Bentley College
C
orporate social responsibility (CSR) research studies what
is demanded of business by society, and to what extent
society’s demands should and can be fulfilled in practice, by
the firm. At the firm level, the CSR debate is associated with pro-
cesses for formulating and implementing CSR policies as well as
with mechanisms for stakeholder consultation.1 The latter, it can be
argued, has opened a new space for external involvement in the
firm’s CSR policy planning and strategic implementation processes.
Although most firms already have CSR policies in place and have
stepped up investment in their implementation, the role of stake-
holders involved in CSR processes within the organization is
generally not well explored. Particularly, the CSR/stakeholder
literature has not paid much attention to “what,” “how” and “under
what conditions” stakeholders may influence the firm’s CSR
processes in the international context. Moreover, the increasingly
larger proportion of business in industrial countries that are
involved in developing countries either directly (through direct
Alexis Rwabizambuga is with the Centre for the Study of Human Rights, London School of
Economics and Political Science. E-mail: a.rwabizambuga@lse.ac.uk.
© 2007 Center for Business Ethics at Bentley College. Published by Blackwell Publishing,
350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.
408 BUSINESS AND SOCIETY REVIEW
The intense debate over the impact of MNCs and FDI in developing
countries has been the subject of a vast literature and highlights a
large number of conflicting arguments among those who favor the
role of MNCs as channels for FDI to developing countries9 and
critics.10 What is clear, however, is that the growing involvement of
MNCs in the development process of developing countries will have
significant environmental and social consequences. According to
critics, these are likely to be negative. The reasons advanced are
varied and have often been addressed in the general literature on
globalization.11 Such authors argue that the process of globaliza-
tion, perceived as a process that involves the interpretation of the
universal and the particular, may generate conflicts between long-
standing local forces and new globalizing forces. These elements in
conflict have been described as consisting of the globalized world of
the modern rationality of global capitalist production on the one
hand and the world of locally rooted cultures, and informal and
410 BUSINESS AND SOCIETY REVIEW
RESEARCH FINDINGS
reputation, which has been tainted by the 1990s incidents, and securing
a license to operate, by abating societal hostility to the company
and its operations in Nigeria. These two main objectives have shaped
the implementation of Shell’s CSR policies in Nigeria, and determined
stakeholder engagement processes and mechanisms at all levels.
First, reputation building was reported to be very important
following decades of bad publicity that the company’s Nigeria
operations received. The Nigerian oil sector is known for its volatility
and low levels of security and violence. As depicted in Figure 1, oil
conflicts, conflict of territorial boundaries and resource control,
and political–military conflicts abound in the oil-producing regions
of southern Nigeria. Inevitably, Shell Nigeria has become part of
this context, which has had considerable impacts on its operations
as demonstrated by frequent disruptions of oil production activities
and their repercussions on global oil prices, and local political
stability. These conflicts started off as a conflict between local com-
munities and the federal government over the lack of oil revenues
flowing back from the federal government via the regional government
and through the local government. In the absence of federal
government officials to whom grievances could be expressed, oil
companies became proxy targets as the best way to obtain govern-
ment response to community grievances, given the vital nature of
oil production for Nigeria. Given that, under the existing operating
agreement between the government and the multinational oil
companies, security in the operating regions is the responsibility of
the state, the latter has often responded to community protests
heavy handedly rather than seeking dialog and peaceful conflict
resolution. The succession of dictatorial military regimes did little
to appease these conflicts, but consolidated its violent dissidence
repression tactics over the years. These practices culminated in the
execution of Ken Saro Wiwa, the notorious leader of the environ-
mental justice movement of Ogoni people from the Delta region
of Nigeria in 1996. Given the historically close collaboration that
has existed between the Nigerian State and Shell, the latter was
increasingly perceived as an accomplice of government violent
tactics. As such, an attack on Shell was regarded as an attack on
the Nigerian government. Shell is accused of having been supportive
of repressive tactics directed toward protesting communities, and
was at some point linked with the import of arms on behalf of
government security forces.
ALEXIS RWABIZAMBUGA 417
Roads and bridges 7.5 11.8 33.6 5.2 23.3 4.1 85.5
Education and schools 8 9.2 7.1 8.1 12.6 8 53
Electrification 0.4 0.5 1 7.2 6.7 4.8 20.6
Other infrastructure 7.2 11.1 0.5 13.3 5 2.9 40
Agriculture 2.8 1.7 1.9 3.8 4.8 2.3 17.3
Business dev. and – 2.7 0.5 2.9 4 1.9 12
micro-credit
Health care 5.7 5.8 5.9 4.9 3.9 2.6 28.8
Capacity, IEC and 6.8 1 1.2 2.2 3.8 2.5 17.5
new ventures
Water schemes 4.2 8.2 8.5 4.4 2.8 1.7 29.8
Total 42.6 52 60.2 52 66.9 30.8 304.5
they may often only represent the interests of the CLO and his
network. Implementing projects on community level is entrusted to
community development committees (CDCs), established before the
presence of the oil companies. Oil companies decided to distribute
project funds through the CDC, since it was a “traditional” struc-
ture already in place to serve communities. However, communities
denounce some of the weaknesses in this system.
First, communities report that company processes that affect them
lack transparency. Second, while the company’s oil operations span
the entire regions across community lands, the dialogue with com-
munities takes place on a community-by-community basis, with
“oil-affected” communities only, rather than on collective negotia-
tion and dialogue with broader groups concerned. Third, company–
community interaction generally takes place at the company
headquarters, either at the invitation of the company, or in
response to a visit by a community delegation. Although company
officials reported that the objective of community dialogue is to
assess the needs and requirements of local communities, community
members gave a different impression of how companies approach
dialog. The prevailing sentiment among oil-affected communities is
that company officials engage in community meetings only to gain a
sense of the mood in the community and to identify groups in the
community that may pose a threat to the company or to company
assets. This might be explained by the fact that the company is
weary of the fact that villagers made their grievances known via
sabotage of company assets and the kidnap of company staff.
The findings also show that the company was keen to exploit the
weaknesses of the local institutional and regulatory environment to
ensure smooth running of its operations. For instance, during
processes of public consultation, such as the EIA, the processes
frequently denied sufficient time for feedback on reports from com-
munities concerned. While time is a major parameter in the field
development plan, and time saving can have major cost-saving
implications, time loss can often lead to big losses in exploration
and production operations. Since the government is also partly to
the business, it has not demonstrated much concern to protecting
community interests in this regard. The findings show that con-
sultations with local stakeholders involve bargaining process where
Shell engages with communities on a case-by-case basis. With the com-
munities denied the option to pull resources in a collective bargaining
426 BUSINESS AND SOCIETY REVIEW
CONCLUDING REMARKS
The article started by pointing out that there may be some explanatory
gaps with regard to what constitute the key driving forces of CSR
strategies of firms operating in international context. The strong
institutions argument was found unable to explain what drives
these policies in weak institutional environment. The article examined
the role of stakeholders in the Nigerian oil sector, and proposed to
examine how they interacted with Shell’s CSR program in Nigeria. It
examined how participating stakeholders gain legitimate access to
the stakeholder status and what means they find and deploy to
influence Shell Nigeria’s CSR processes in relation to their respec-
tive objectives. To this end, the article first proceeded by elaborating
an initial framework for understanding the role of these stakeholders
based on the existing ties and collaborative arrangements with Shell.
Generally, the findings highlight the complexity of Shell’s CSR
implementation processes in Nigeria. The various CSR programs
were mainly managed under external relations or productions and
operations departments. The findings show that Shell’s CSR program
is underpinned by a business rationale, and that there must be a
business case to justify investments channeled through to CSR
programs either as a case for reputation building, or a case for
risk mitigation. The underlying perception of CSR issues seems to
mediate between the scope and substance of Shell’s investment.
For instance, a public relations issue is likely to receive more
attention and resources assigned to it if it is perceived as a risk,
or an opportunity. Tribal communities that are large are likely to
receive abundant CSR investments from the company, to the detri-
ment of smaller ones. In addition, it was established that generally,
pressures from a global institutional environment have increased
public scrutiny of Shell’s operations in Nigeria. Shell’s operations
constitute a somehow integrated supply chain, and it might be
easier to link the whole Shell group to its business units in develop-
ing countries. However, this limelight is limited in scope, as if does
not necessarily reach and/or understand the dynamics of business
ALEXIS RWABIZAMBUGA 427
operations at the site level where Shell’s CSR practices take place
amidst complex relationship with fence line communities.
With regard to the various categories of stakeholders, the
findings reveal that stakeholders that engaged with Shell’s CSR
processes from within and were able to have some impact on the
processes and their outcomes are those with trusted backgrounds.
These may be previous employees or consulting firms with
members previously employed by Shell. These include other stake-
holders from trusted organizations and who joined Shell’s CSR
teams in various capacities. They were able to bring specialized
knowledge and had leverage on major policy decisions.
Stakeholders that have an independent sponsorship were highly
respected by the company. They consist of global non-governmental
organizations such as Amnesty International, Human Rights Watch,
Greenpeace, and development agencies from developed countries.
They collaborate with the company at a policy level and at the level
of strategic implementation. This group is motivated by the fact
that CSR features among their main areas of activity. This includes
several research and/or advocacy oriented development and
environmental NGOs. They operate from their own resources and
interact with the firm from the outside in. As mentioned earlier, the
accession to the partner status is based on the stature and
influence of the respective stakeholders in partnership with Shell,
and they derive their influence from their own resourcefulness,
capabilities and independence, not to mention the perceived significance
of their respective constituencies in and outside Nigeria.
The stakeholder group categorized as influential observers is an
independent actor with varied interests in the firm’s CSR agenda.
Members of the media, academia, and regulatory institutions,
political agents mostly feature in this group. These stakeholders are
driven by the interest of their respective profession, and operate
from the outside in, akin to know the internal workings of the
organization. They are handled delicately by the company, but
generally appear not to interact with the firms CSR processes.
Stakeholder described as influential claimants have direct interests
in the firm’s CSR programs, and mostly consist of local community
organizations and other organizations that champion the cause
of local communities. They act from outside in and draw their
influence from their ability to mobilize public opinion in support of
their own causes. In anticipation of the reputation as well as
428 BUSINESS AND SOCIETY REVIEW
NOTES