Shell in Nigeria: CSR and the Ogoni Crisis

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Source: http://www.logodesignlove.com/shell-logo-design-evolution

One of the Corporate Social Responsibility (CSR) cases  that we have discussed during our Leadership, Ethics and CSR class at the DLSU MBA is the case of the Shell in Nigeria: CSR and the Ogoni Crisis.

My personal definition of corporate social responsibility is sharing the  fruits of  your labor, initially within your own organization and sphere of influence and  then to the other people in your community.

A more sophisticated definition of CSR is shared by the Financial Times wherein it defines corporate social responsibility  as a business approach that drive change towards sustainable development through the delivery of economic, social and environmental  advantage and benefits for all stakeholders

This case is very interesting for me personally as one of my current top clients  is  Shell Philippines Exploration BV (SPEX). According to its website (www. shell.com.ph), Shell is an integrated energy company that aims to meet the world's growing demand for energy in ways that are economically, environmentally and socially responsible. SPEX draws its expertise from an extensive global experience in deep water oil and gas exploration and production.

This case is about the CSR  case of the Shell Petroleum Development Company of Nigeria Limited  (SPDC). According to the website of the  SPDC (www.shell.com.ng), SPDC is the pioneer and leader of the petroleum industry in Nigeria. It has the largest accreage in the country from which it produces some 39 percent of the nation's oil. The company's operations are concentrated in the Niger Delta and adjoining shallow offshore areas where it operates in an oil mining lease area of around 31,000 square kilometers.

In this case, there were environment and human rights issues. On environment  issues: there were reported contamination of drinking water,  gas flaring, oil spills and deforestation. On human rights issues: there were reports of  employee harassment, human detention, complicit in the violation of due process, and extra judicial  executions. Thus, how should Shell redeem  its good corporate  image
based on the the above mentioned issues it was involved in?

SPDC'S Nigerian content development workers inspecting natural gas flow.
Photo credit: www.shell.com.ng

Facts of the case:

The Oil Industry in Nigeria

 Nigeria is the biggest oil producer in Africa and  ranks no. eight in the world. Commercial quantities of oil was first found in Nigeria in 1956. Since then, its crude oil output has been  two million barrels of crude oil a day. This has provided 80 percent of federal reserves and 90 percent of forex for the government since 1970's.However, under a military rule, politics became an exercise in organized corruption especially around the oil industry itself  where large commissions and percentage cuts in oil contracts resulted in politicians and military officers to amass unexplained wealth  while the greater number of the population fell deeper below the poverty threshold level.

The Ogoni Crisis in Nigeria

On November  10, 1995 - Ken Saro-Wiwa, a world renowned  Nigerian author and spokesperson for the  Movement for the Survival of the Ogoni Peple (MOSOP) was   hanged in Port Harcourt, in  Nigeria, together with eight other Ogoni militants who lead the  protests against the oil industry. The " Ogoni Nine" had been tried and sentenced to death by  a special court  appointed by the military junta  whose procedures were not in accordance to  the  international standards of fair treatment through the normal judicial system.

The Saro-Wiwa case brought into the global  headlines a debate over the role played by the oil transnationals  in Nigeria that had already been raging for so many years.  Even before the executions, the oil industry had been criticized for its alleged support for successive military juntas
 that had scrapped plans of transition to civilian rule and stopped protest actions against the oil industry.

Shell in particular, the biggest oil producer in Nigeria had been the target of attacks  by the MOSOP, in a strategic campaign that successfully shut  down  Shell's production in Ogoniland in 1993. In turn Shell was blamed both nationally and  internationally as the military junta first brutally stopped
protests by MOSOP and finally tried and  sentenced to death the group's  main leaders.

Following the  death by hanging of the Ogoni Nine, on  December 15,1995, SPDC publicly declared that the  Nigerian Liquefied Natural Gas  (LNG) project construction, of which Shell is a 25.6 percent shareholder, had been approved and signed - a diplomatic coup for the Nigerian government. 

The following were the corporate strategic moves  executed by Shell  in the succeeding years  in Nigeria, in facing the challenge on demands   that it takes its business to the next level of CSR and
beyond maximizing profits and redeem its good corporate image in both  national and international level:

Shell in Nigeria

1977 March

• Royal Dutch/Shell Group espoused a  new Statement of General Business Principles which identified  five "areas of responsibility," to shareholders, to employees, to customers,  to external providers and to society.
• In the above mentioned document, Shell has included for the first time, a general commitment to human rights principles  and standards to  achieve sustainable development.
• The firm has  published the first yearly  report on the operations of SPDC looking at problems of environmental standards and human rights. Included also is the  initial group wide report on  safety, health  and the environment. 
• Shell  integrated in the company management procedures,  its commitment and support for fundamental human rights by  making it mandatory for the directors of the Shell group of companies  to submit annual reports  to Shell headquarters advising that they have complied with  the requirements of the Statement of General Business Principles.
• A " Management Primer"  on human rights issues was also prepared by Shell for distribution throughout the group

1998

• Shell  officially published its initial  social responsibility report. It "describes how we, the people, companies and businesses that make up the Royal Dutch/Shell Group are striving to live up to our responsibilities - financial,  social and  environmental." 
• The firm  also conducted the first of the many series of  workshops to discuss issues regarding the   environment and development  in line with  its Nigerian operations with local representatives and other interested parties in attendance.

1999

• May 1999,  Shell stated that it had engaged in "meetings and consultations, with a range of Ogoni groups and organizations" with the end view of   building "trust and understanding as a basis for addressing substantive issues of development and environmental management."
• In its 1999 report, "People, Planet and Profits: An Act of Commitment," Shell described the " Sustainable Development Management Framework" it had developed  and indicated that the organization  was developing a set of key performance indicators" on these  issues to enable stakeholders to compare the relative performance of companies in terms of environmental, financial and social indicators.

By the end of the  year 1999,   Shell brought out its Sustainability Report and stated that it was not complicit to any of the human rights abuses being a good citizen to the host country ever since it has started doing business in Nigeria.

Shell has also  made a lot of efforts to improve community relations with the local oil producing areas  of the Niger Delta by way of increasing  development spending and professionalizing the management and staff of all its  developmental  projects in the region.

Through  all of the above mentioned initiatives, Shell went on to become a  sectoral leader in the oil and gas industry, with regard to the development of  policies that pertains to  corporate social responsibility.