You are on page 1of 17

Shell in Nigeria:

Corporate Social Responsibility and


the Ogoni Crisis

Grazielle A. Mallari
Bernadette Raiza C. Peneyra
Michelle G. Reyes

0 | Page
TABLE OF CONTENTS

Content Page

I. Background of the Case 2


A. Rationale 2
B. Company Profile 3

II. Case Narrative 7


A. Statement of the Problem 7
B. Objectives of the Case 7

III. Case Analysis 7


A. The Organization: Organizational Behaviour Perspective 7
B. Ethical Issues: Business Ethics Perspective 8
C. Decision Criteria and Weights 10
D. Alternative Courses of Action (ACAs) 11
E. Evaluation of ACAs 17
F. Best Solution 17
G. Implementation Steps 18

IV. References 19

I. Background of the Case

A. Rationale

The discovery of Nigeria’s commercial quantities to produce oil in 1956 have transformed the country’s
economy, bringing its foreign exchange earnings by 90 percent and federal revenue by 80 percent, with a
huge reserve of natural gas that has yet to be exploited. However, despite being the largest oil producer in

1 | Page
Africa and the eight largest in the world, Nigeria still failed to be one of the most prosperous states on the
African continent as the windfall income from oil only benefited a small minority while increasing the
rate of impoverished.

Since Nigeria is under a military government, corruption exacerbated as large commissions and
percentage cuts goes to the hands of the soldiers and politicians, making power and money concentrated
to the few and worsening poverty. As the government benefited from the oil production, serious damage
to the environment and the livelihood of the people living in the oil-producing communities were often
disregarded.

Given a situation where government intervention was minimal, the leaders of the Ogoni ethnic group,
headed by Ken Saro-Wiwa, a well-known Nigerian author, established the Movement for the Survival of
the Ogoni People (MOSOP) to address their grievances on the oil production on a national and
international stage, which, in turn, sparked a violent response from the Nigerian military government.

According to MOSOP, environment in Ogoniland had been completely devastated by three decades of
reckless oil exploitation of ecological warfare by Shell. Although Chevron Nigeria Ltd is also operating in
Ogoniland, but on a smaller scale, Shell Petroleum Development Company (SPDC) production in the said
area was roughly 28,000 barrels a day, which is approximately 3 percent of its overall production.

With the pressure of MOSOP, together with Saro-Wiwa’s use of media to put a spotlight on the issue,
Shell ceased its production and facilities from Ogoniland in 1993. However, this organization’s political
opposition lead to a military crackdown in Ogoniland wherein Saro-Wiwa and the other leaders of
MOSOP have been detained several times.

In 1994, when four Ogoni leaders were brutally murdered by a mob of youth, Saro-Wiwa and other Ogoni
activists were arrested in changes of murder and incitement to murder, despite lack of evidence, as these
murdered leaders were regarded by some as the government collaborators.

On November 10, 1995, Ken Saro-Wiwa together with eight other Ogoni activists was executed by a
special tribunal appointed by the military government despite blatantly violation of international
standards of due process. Shell was then blamed both locally and internationally by executing the core of
the organization’s leadership. The oil company denied all the accusations but later on admitted that they
made direct payments to the Nigerian security forces in 1993.

As Shell face intensifying pressure to boycott its products in Europe and United States, and upon realizing
that the issue has been affecting their image with regards to human rights concerns, they resumed their
funding for the development projects of Ogoniland, such as hospital restoration and training for the Ogoni
youths.

In May 1999, Shell has been engaged in meeting and consulting Ogoni groups and organization to build
trust and have an understanding on their issues but has no plans on resuming the oil production in Ogoni
in the short term. However, despite the company’s effort, MOSOP remained opposed to the reopening of
their production in Ogoniland.

2 | Page
B. Company Profile

Shell Petroleum Development Company (SPDC) is the first and the largest petroleum company in Nigeria
for more than 50 years. It produces 39 percent of the country’s oil wherein operations on onshore and
shallow water oil and gas production were concentrated in the Niger Delta.

With more than 6,000 kilometres of pipelines and flowlines, 87 flowstations, 8 gas plants and more than
1,000 producing wells, the company has around 5,000 employees wherein 95 percent of which are
Nigerians. Furthermore, since the company’s operations were mainly in the Niger Delta, 66 percent of
their Nigerian staff is from this area as well. The remaining percentage of employees is sourced indirectly
from its suppliers.

SPDC's Mission
The mission of SPDC is to be the operator of first choice in Nigeria through its commitment to strong
economic performance and to every aspect of sustainable development.

SPDC and its Joint Venture Partners


SPDC is the operator of a Joint Venture Agreement involving the Nigerian National Petroleum
Corporation (NNPC), which holds 55%, Shell 30%, Total Exploration and Production Nigeria Limited
(TEPNG)10% and Nigerian Agip Oil Company limited (NAOC) 5%.

How it began
SPDC was originally known as Shell D'Arcy and later as Shell-BP which was jointly financed by the
Royal Dutch/Shell Group of Companies and the British Petroleum (BP) Group on an equal basis. The
Company discovered the first commercial oil field in the country at Oloibiri Bayelsa State, in 1956 and
through a sustained exploration effort had since discovered more oil fields that have firmly established
Nigeria as one of the world's major crude oil producers with significant gas potential.

SPDC today
Together with its Joint Venture Partners, SPDC is capable of producing some 1 million barrels of oil per
day on an average. Through its community investment programme, SPDC is demonstrating its
commitment to improving the quality of life for all those who live and work in the Niger Delta.

SPDC's Values
The values of SPDC of honesty, integrity and respect for people form the basis of the Shell General
Business Principles.

Business activities in Nigeria


▪ Shell Nigeria Exploration and Production Company (SNEPCO) operates the Bonga field,
Nigeria’s first deepwater oil discovery. The Bonga facility has the capacity to produce more than
200,000 barrels per day of oil and 150 MM standard cubic feet of gas per day.

3 | Page
▪ Shell Nigeria Gas (SNG) is the only international oil and gas company to set up a gas distribution
company in Nigeria to supply industry customers.
▪ Nigeria LNG (NLNG) is a joint venture incorporated in 1989 to produce LNG and natural gas
liquids for export. It was Nigeria’s first LNG project. Shell holds a 25.6% share, together with
NNPC (49%), Total (15%) and ENI (10.4%).

Shell In Nigeria by numbers


▪ The SPDC JV’s assets include around 50 producing oil fields, a network of approximately 5,000
kilometers of oil and gas pipelines and flowlines, five gas plants and two major oil export
terminals (Bonny and Forcados)
▪ Bonga was Nigeria’s first oil and gas project in water depths over 1,000 metres. It increased
Nigeria’s oil capacity by 10% when it began producing in 2005 and has production capacity of
200,000 barrels of oil per day and 150 million standard cubic feet of gas per day
▪ The NLNG plant at Bonny Island has six processing units (trains) with total processing capacity
of 22 million tonnes a year of LNG and up to 5 million tonnes of natural gas liquids (LPG and
condensate). NLNG accounts for approximately 7% of the world’s total LNG supply

The History of Shell in Nigeria


▪ In 1936, The Royal Dutch/Shell Group founded Shell D'Arcy, the first Shell company in
Nigeria.4

First Steps
▪ 1936 - The Royal Dutch/Shell Group founded Shell D'Arcy, the first Shell company in Nigeria.
▪ November 1938 - Shell D'Arcy was granted Exploration licence to prospect for oil throughout
Nigeria
▪ January 1956 - First successful well drilled at Oloibiri by Shell D'Arcy
▪ April 1956 - Changed name to Shell-BP Petroleum Development Company of Nigeria Limited

First Oil
▪ February 1958 – The first shipment of oil from Nigeria
▪ April 1961 - Shell's Bonny Terminal was commissioned
▪ September 1971 - Shell's Forcados Terminal was commissioned

Agreements
▪ April 1973 - First participation agreement; Fed. Govt. acquires 35% shares in the Oil Companies
▪ April 1974 - Second Participation Agreement; Federal Government increases equity to 55%
▪ July 1979 - Third Participation Agreement (through NNPC) increases equity to 60%
▪ August 1979 - Fourth Participation Agreement; BP's share holding nationalised; NNPC = 80%,
Shell = 20%

Changes
▪ December 1979 - Company name changed to Shell Petroleum Development Company of Nigeria
(SPDC)

4 | Page
▪ August 1984 - Agreement consolidating NNPC/Shell Joint Venture
▪ January 1986 - Signing of Memorandum of Understanding (MOU)
▪ June 1989 - Fifth Participation Agreement; (NNPC = 60%, Shell = 30%, Elf = 5%, Agip = 5%)
▪ July 1991 - Signing of Memorandum of Understanding & Joint Venture Operating Agreement

New Frontiers
▪ April 1993 - Production Sharing Contracts signed - SNEPCO
▪ July 1993 - Sixth Participation Agreement; (NNPC = 55%, Shell = 30%, Elf = 10%, Agip = 5%)
▪ April 1995 - SNEPCO starts drilling first Exploration well at Bonga (Nigeria's first deepwater oil
field)
▪ November 1995 - NLNG Final Investment Decision taken
▪ March 1998 - Shell Nigeria Gas Company established
▪ December 2002 - Commencement of production from EA field

One Million Barrel Mark


▪ October 2003 - Achievement of 1 million + barrels of oil per day production from SPDC
operations.

A New Face of SPDC


▪ January 2004 - THE NEW SPDC - A restructuring exercise; Nigerians placed in top positions of
Management.
▪ January 2005 - New SPDC launched, Basil Omiyi appointed first Nigerian MD.
▪ September 2005 - Basil Omiyi became Country Chair, Nigeria; oversees all Shell Companies in
Nigeria as well as Shell interests.
▪ November 2005 - SNEPCO began oil and Gas production at Bonga

Challenges and Rebirth


▪ February 2006 – SPDC suspended operations in western Niger Delta due to increasing militant
attacks. Production at EA was also suspended due to security concerns.
▪ June 2006 –The Shell Companies in Nigeria committed to Nigeria Content Development - to
maximise the participation of Nigerian businesses in all operations, thereby contributing to the
development of Nigeria's industrial capabilities and competences, and supporting the nation's
economy.
▪ January 2008 – Mutiu Sunmonu was appointed as the Managing Director of SPDC.
▪ March 2008 - Nigeria’s first 4D seismic acquisition in deepwater oil and gas operations was
achieved at SNEPCo-operated Bonga field, 120km southwest of the Niger Delta.

Harnessing Nigeria's Gas Resources


▪ October 2008 – The 240MMscf/d OKOLOMA Gas Plant started supply of the base load gas
requirement of (190MMscf/d) gas to the Afam VI Power Plant

Forays into Power


▪ July 2009 - The Afam VI Combined Cycle Power Plant commenced the supply of 442MW of
power, providing additional stability to the National Power Grid.

5 | Page
▪ July 2010 - The Gbaran Ubie integrated oil and gas project in Bayelsa state produced first gas.

II. Case Narrative

A. Statement of the Problem

How can Shell maintain its business operation in Nigeria and promote sustainable development?

B. Objectives of the Case

1. Identify the environmental, development and human rights consequences of oil operations in
Nigeria
2. Maintain the company’s operation in Niger Delta
3. Promote sustainable development
4. Establish a sound recommendation on Shell’s best course of action

III. Case Analysis

A. The Shell’s Perspective

Nigeria’s Oil Dependent Economy


Nigeria is the largest oil producer in Africa and the eighth largest in the world. Since 1970s, oil has
provided an approximately 90 percent if foreign exchange earnings, and 80 percent of federal
revenue. Nigeria also has huge reserves of natural gas yet to be fully exploited.

SPDC and its joint venture partners have five major fields in Ogoniland dating from 1960s and
1970s , each with its own flowstation (where gas is separated and flared from the oil collected from
different individual wells and the oil pumped on to terminals for export). In 1993, the total
production potential from SPDC’s Ogoni fields was roughly 28,000 barrels a day, which is
approximately 3 percent of SPDC’s overall production.

Oil Workers
Full-time employees in the oil industry are paid high wages for skilled work. However, they are few
well-paid individuals surrounded by a mass of unemployed or underemployed. In addition, most oil
workers do not come from the oil producing community.

Government’s Share of Oil Revenue


The “derivation principle” in the federal budget, under which a share of the revenue generated from
oil had been paid to the states where the oil was produced, was reduced to insignificant levels, and
only partially restored in 1999.

Movement for the Survival of Ogoni People (MOSOP)


MOSOP is a coalition of pre-existing Ogoni organizations, such as Federation of Ogoni Women’s
Associations, the Conference of Ogoni Traditional Rulers, and the National Union of Ogoni Students,

6 | Page
was the first really successful effort to organize people in oil-producing areas specifically to highlight
their grievances in relation to oil production on a national and international stage. Some of the issues
it highlighted were the environmental devastation and human rights violations of Shell.

Shell Ceased Production


Shell withdrew its staff from Ogoniland in January 1993 and ceased production at its facilities there
in mid-1993, citing intimidation and attacks on its staff.

Nigerian Liquefied Natural Gas (LNG) Project


In December 15, 1995, SPDC announced that the construction contract for the project, of which Shell
is a 25.6 percent shareholder, had been signed.

Boycott Campaign
Due to environment and human rights issues, Shell faced pressure from campaigns to boycott its
products in Europe and United States. In order to force the military to step down, there were calls for
the adoption of an international embargo on Nigerian oil. This move also threatened the operation of
the company in Nigeria.

The concept that companies have responsibilities to the community at large other than to make money
has gained increasing currency. However, international law is only just beginning to address the
behavior of non-state actors such as transnationals. Consumers, activists, and concerned shareholders
have begun to put pressure on the major transnationals to pay more than lip service to ideas of good
corporate citizenship, calling for international regulation of corporate activities.

B. Business Ethics Perspective

Universal Declaration of Human Rights


Shell International published its first social responsibility report, Profits and Principles-Does There
Have to Be a Choice?” It describes how people, companies and businesses that make up Shell, are
striving to live up their responsibilities more specifically in financial, social and environmental.

In 1999, Shell reported “People, Planet & Profits: An Act of Commitment,” that covers issues on
surrounding sustainable development.

Human Rights Abuse to Corporate Social Responsibility


The Saro-Wiwa case brought into the international headlines a debate over the role played by the oil
multinationals in Nigeria that had already been raging for several years. Shell in particular was
blamed both locally and internationally as the government first brutally suppressed protests by
MOSOP, and finally tried and executed the core of the organization’s leadership.

Poor environmental standards

Since the company’s ultimate goal is to maximize its profit, often the production’s environmental
impact were neglected. The adverse effects of oil exploration such as oil spills, gas flaring, poor

7 | Page
water quality, pollution, disruption and degradation of farmlands and fishing ports, have caused
severe damage to the livelihood of those living in the oil producing communities.

Inadequate compensation for damages

Compensation for the devastating effects of the oil production was usually undervalued due to the
absence of arbiter to determine the real value of the damage. Also, the poor reinforcement and
regulation to the environmental laws and human rights have allowed the company to violate such.

Human Rights Violation

After the violation of international standard for due process in the execution of the Ogoni Nine,
human rights violation further worsened when the three environmental activists have been forced to
sign the “invitation” to resume Shell’s operation in the Ogoniland. Also, though Ogoni detainees were
only allegedly beaten by the Shell police, the company later on admitted that they made payments for
the security forces.

Government Alliance and Bribery


As it seems to be a common practice for the oil companies in Nigeria, Shell admitted that they had
payments with the Nigerian security forces. Also, given that Nigeria’s oil sector contributes to 40
percent of the country’s GDP, clearly, the government is benefitting from the oil production than the
Ogoni community. Perhaps the primary reason why the government is more biased to the oil
companies than its people.

C. Decision Criteria and Weights


The Decision Criteria and Weights table below aims to showcase the basis of choosing the best option
with regards the nature of the case. This sets as guide encompassing acceptable organizational
behaviour and business ethics in the Philippine setting. Each criterion is designated with equivalent
weight to quantify its importance. All criteria sum up to 100% in weight.

Decision Criteria Definition Weights Rationale


Adherence to the This criterion serves to 25% The Royal Dutch/Shell group of
Statement of General integrate economic, companies adopted a new
Business Principles environmental and social Statement of General Business
considerations into the Principles, which recognized five
company business areas of responsibility, to
decision-making shareholders, to customers, to
employees, to those with whom
they do business, and to society.

8 | Page
Sustainability The chosen solution should 25% With five major fields in
promote the long-term Ogoniland with oil production of
operation of the company 28,000 barrels per day or
as well as the welfare of approximately 3% of SPDC's
the community. overall production, the company
should ensure the maintenance of
its business operations in Niger
Delta. Moreover, it may want to
tap the huge natural gas in the
country that has yet to be
exploited.
Contribution to Positive Consumers view the 25% Good reputation affects consumer
Public Image company as ethical one and preference. Thus, Shell should
it has a concern not only on strive to build good public
its own economic reputation by resolving and
development, but also to avoiding social and
the welfare of the people environmental issues. This can
and the environment. reduce the threat such as the
boycott it faced in Europe and the
US.
Relationship with the Company should promote 25% The oil economy of Nigeria is
Government good relationship with the very important to the country, but
governing body of Nigeria the people of Nigeria still suffer
from a corrupt government.
Despite the revenues being
brought in from oil exports, the
Nigerian government still holds a
large unemployment rate and a
high poverty rate.

D. Alternative Courses of Action (ACAs)


1. Permanently cease all the business operations of Shell that caused exploitation of
natural resources and devastation of environment in Ogoniland.

The environment in Ogoniland has been damaged by oil production, though the extent of the
damage as subject to dispute and no independent, scientific, and comprehensive study has been
carried out. Ken Saro-Wiwa maintained that the environment in Ogoniland had been completely
devastated by three decades of reckless oil exploitation or ecological warfare by Shell.

● Integration of Ethics Concept

Movement for the Survival of Ogoni People

The Movement for the Survival of the Ogoni People, also known as MOSOP, is a mass ‐based

9 | Page
social movement organization of the indigenous Ogoni people. MOSOP is the organization that
represents Ogoniland in campaigning for social, economic and environmental justice in Nigeria

● Integration of Business Concept

Human Rights to Environmental Damages

Shell has been accused of human rights violations against the Ogoni people, and accused of
complicity in the 1994 arrests, and 1995 executions by hanging, of nine Ogoni men. The nine
men were part of the Movement for the Survival of the Ogoni People (MOSOP), and non-
violently campaigned against environmental degradation caused by oil operations, and for greater
Ogoni autonomy.

Markkula Framework

Utilitarian Under utilitarian, this option will be favorable to Nigeria in order


to recover all the environmental damages that destroy thousands
of people in the country caused by oil production of Shell.

Rights & Duties Niger Delta is one of the most oil-polluted places in the world.
This is because companies like Shell are failing to prevent or clean
up spills after occurrence. It is the responsibility of Shell do
necessary solution to clean up its environmental damages brought
in the country.

Justice & Fairness This ACA promotes the campaign of environmental justice for
Ogoni people on the challenges of accessing justice to argue for
the need of a legally binding mechanism to hold company
accountable for their human rights violations.

Virtue Beyond the issue of clean up and remediation are far more
important issues of human rights violations and crimes. In this
action, Shell oil company provides justice in all damages they
brought to Nigeria.

Care This ACA shows that the company has as greater responsibility
towards the people of Nigeria.

2. Provide job opportunities to Nigerian community by employing them to Shell


Company.

Shell companies in Nigeria employ thousands direct employees and contractors (90% Nigerian).
Many of the projects of the companies help create thousands more jobs. Many of these programs
are in partnership with government and other development agencies in Nigeria.

10 | Page
● Integration of Ethics Concept

Firm’s Responsibility to the Society

Shell Oil Company should involve more development partners to help in addressing community
needs. Gloria Udoh, social development specialist of Shell stated that “We are encouraging the
community to own and drive development themselves while we provide financial assistance to
them and technical assistance through development NGOs. We have established operating
procedures and guidelines to help make the process accountable and transparent. We still carry
out major infrastructure in partnership with government, and other local and international
partners”.

● Integration of Business Concept

Business Public Image

Exploring for and producing oil and gas is a risky business. The benefits of fuel and power, and
the jobs and incomes it provides are substantial. They also come with costs, ones that aren’t
necessarily seen or felt immediately or even during one person’s lifetime. They are. economic in
nature, but are more completely viewed and appreciated in terms of costs to human and
environmental health and safety, and their sustainability.

Markkula Framework

Utilitarian This ACA discussed that both Shell Oil Company and the
Nigerian community are mutually benefiting in oil and gas
production, revenue and profit of the company.

Rights & Duties Shell companies in Nigeria play a key role in lifting people
from poverty through their contribution to society. It is the
duty of the company to increase the role of Nigeria’s economy
and society.

Justice & Fairness The shell company should establish just and fair treatment
with Nigerian people by providing them the needs of the
society.

Virtue This action shows that the company provides fairness in order
to give back to the society and regain the company’s public
reputation.

Care This ACA shows that the company has as greater


responsibility towards the people of Nigeria.

11 | Page
3. Establish an independent body that will investigate the alleged environmental and human rights
violations allegedly committed by Shell.

During Ogoni crisis, Ken Saro-Wiwa, a well-known Nigerian author and spokesperson for the
Movement for the survival of the Ogoni People (MOSOP) highlighted that the environment in
Ogoniland was completely devastated by the operations of Shell. In addition, the group accused the
company of collusions with Nigerian military who enforced ruthless military operations that were
needed for oil production to resume in the region. Although Shell initially denied the said allegations,
investigating these matters by establishing an independent body can contribute in improving the its
relationship between the ethnic group.

● Integration of Ethics Concept

Firm’s Responsibility to the Society

Companies should consider the impact of their business operations to the primary stakeholders,
stakeholders and wider society. They should “take actions that protect and improve the welfare of the
society as a whole along with their self-interest” (Davis and Blomstrom).

In this case, the company apparently committed environmental devastation and human rights
violations. Thus, Shell must promote social accountability by establishing an independent body that
will investigate these matters. If proven guilty, it must provide just compensation for damages that its
operations had caused to the Ogoniland and its community.

● Integration of Business Concept

Corporate Reputation

Good reputation can affect consumer preference. This was evident when due to its issues, Shell faced
mounting pressure from campaigns to boycott its products in Europe and the US. Thus, it will be
necessary for the company to conduct an investigation of the issues and provide compensation Ogoni
people.

Markkula Framework

This ACA will promote the common good. The Ogoni people can
utilize the monetary compensation that will be paid by Shell to
Utilitarian improve their standard of living. In turn, the company will have an
opportunity to repair its tarnished image and maintain its market
share in Europe and the US.

Rights & Duties The company will promote the right of Ogoni people to
compensation for the physical and moral damages caused by its

12 | Page
operations.

This action may be viewed as providing justice to the MOSOP


Justice & Fairness activists who risked and offered their lives to fight for their equality
and right to live in safe environment.

By providing just compensation, the company will espouse the virtue


Virtue
of “accountability” to the people of Ogoniland.

Through this action, the company will show care to the Ogoniland
Care
and its community.

4. Strengthen commitment to company’s thrust of 3Ps or triple bottomline and its relations with
the Nigerian government.

Despite of the adoption of the new Statement of General Business Principle, the overall relations
between Shell and the oil-producing communities of the Niger Delta had worsened by the end of
1999. In fact in January 2000, the MOSOP remained opposed to reopening of Shell production in
Ogoniland. Although much of this deterioration could be attributed to the government’s failure to
respond to the demands of the peoples in delta, the continuing problems also illustrate the difficulty of
putting the fine words of the Statement of General Business Principle in practice.

With this, it is important for Shell to strengthen its commitment to human rights principles or
sustainable development. Moreover, the company can leverage its bargaining power – as Nigerian
economy was heavily dependent on oil industry – to influence government to comply with human
rights and environmental policies.

● Integration of Ethics Concept

Firm’s Responsibility to the Society

As indicated earlier, companies should “take actions that protect and improve the welfare of the
society as a whole along with their self-interest” (Davis and Blomstrom). Thus, it is morally right to
address not only the impact of past and current issues faced by the company, but also integrate
environmental and social considerations into its business decision-making to prevent future.

● Integration of Business Concept

Sustainable Development

One of the issues that companies are facing today is to embrace sustainable development. According
to The World Bank, it has three pillars – economic growth, environmental stewardship, and social
inclusion. It is necessary for Shell to ensure that its economic activity produces inclusive growth and
efficiently utilizes resources to deliver short-term and long-term benefits for people, planet and profit.

13 | Page
Markkula Framework
This ACA will promote the greatest good to the greatest number. This
can help reducing the poverty among Ogoni people and preserve
their environment. On the other hand, this action will enable the
Utilitarian
company to maintain its operations in the land. Moreover, it can
address the boycott threats to the company due to its environmental
and human rights issues.

By strengthening its Statement of General Business Principles, the


company will promote the rights of Ogoni people to health and safety
Rights & Duties
as it will aim to reduce the impact of its operations to the
environment.

This action will allow the Nigerian community to have a share on the
Justice & Fairness
money generated from oil extraction.

The company will espouse the virtues of “justice, fairness and


Virtue responsibility” that can positively affect the reputation of Shell and
minimize threats to its

Through this action, the company will be an enormous expression of


Care care not only to the company and the Nigerian community, but also
to its future generations.

E. Evaluation of ACAs

14 | Page
F. Best Solution
As the execution of the Ogoni Nine further highlighted the anomalies between the government and
Shell, also increasing the threat to the oil company’s operation due to product boycott and reputation
damage, Shell had its change of heart and decided to face its commitment to the human rights.
Therefore, the company had adopted a new Statement of General Business Principles in March 1997.
However, such effort to the Ogoniland seems to be insufficient as the company’s relations with its oil-
producing communities, Niger Delta as a whole, had worsened.

Given such hostile situation, the question arises as to how Shell can maintain its business operation
not only in Ogoniland, but on the whole Niger Delta and maintain its market share, particularly in
Europe and the US.

With the use of the decision criteria stated above, the best solution for Shell is to strengthen its
commitment to the triple bottom line (i.e. Economic, Social, and Environmental) and to improve its
relations with the government in terms of providing equality to its people. Aside from strengthening
its Statement of General Business Principles, Shell, which was considered to have influence to the
oil-dependent government, can engage in talks with the latter and closely coordinate reduce the
environmental and social impact of Shell operations not only in Ogoniland, but to the whole Nigerian
community.

G. Implementation Steps

In order to increase the probability of being successful in addressing issues faced by Shell, close
coordination between the company and the government is needed. Shell must be able to strengthen its
commitment to the triple bottom line while leverage its position as one of the major drivers of Nigerian
economy to influence its government to promote environmental protection and human rights. This will be
done through the following:

Strengthen Commitment to Company’s Statement of General Business Principles

● Top management’s directive on ensuring that company’s Statement of General Business


Principles (profit, people and planet) is adhered and applied on its every business decisions
● Attend to the highest environmental standards and continuously look for ways to lessen the
adverse effects of the oil production.
● Continue the company’s CSR on its long-term investment of training the youth and provide
scholarship for a sustainable and qualitative education, which may, in turn, be favourable to the
company.
● Sponsor a health care program and support health facilities for the whole Nigerian community to
exemplify the company’s utmost care to its society.
● Provide opportunities to the young aspiring entrepreneurs to start and grow business by offering
financial assistance and training.

Strengthen Relations with the Government


● Shell should initiate talks with the government with regards to the following:
○ Continuous dialogue with the people living in the oil-producing communities to identify

15 | Page
and address their social and environmental concerns.
○ Establish a properly functioning court system that will determine the value of damage
caused by oil companies and provide due process for landholders whose property we
expropriated for oil production
○ Strict monitoring of environmental laws

IV. References

http://www.shell.com.ng/about-us/what-we-do/spdc.html
http://www.shell.com.ng/about-us/who-we-are.html
http://www.worldbank.org/en/topic/sustainabledevelopment/overview#1
Shell in Nigeria: The Social Responsibility and the Ogoni Crisis

16 | Page

You might also like