Business Ethic and Corporate Social Responsibility - Essay Example

? Business Ethic and Corporate Social Responsibility Introduction Royal Dutch Shell PLC is a multinational corporation (MNC) which operates in the oil industry. The company believes that success in business depends on its ability to meet a wide range of social and environmental challenges (Shell 2010). In order to do so Shell must indicate how it can operate safely and be able to manage the effects that its activities can have on the communities in which it operates as well as the society in general (Shell 2010). Oil is a major contributor to greenhouse gases which results in climate change. The company is on a drive to become more socially responsible by not only reducing its carbon footprints but by improving the safety of its work environment and is employees. In so doing it seeks to reduce the number of accidents and fatalities as well as the number of oil spills, blowouts and flarings at its operations globally. Shell has faced a lot of criticisms from the communities in which it operates and non-governmental organizations (NGO’s) that are concerned about the companies safety practices, the environment and human rights. The company is currently working with communities, its partners and NGO’s in order to deal with potential impacts and also to share the benefits that derive from operations and projects. Shell’s Display of its Corporate Social Responsibility (CSR) According to the company’s CEO Vosser (2010, qtd. in Shell 2010), strong principles as well as the development of trust are fundamental to shells approach and the respect for human rights is deeply entrenched in the company’s General Business Principles which it proudly boasts as having being developed since 1976. Vosser (2010, qtd in Shell 2010) also reveals that the company has adopted transparency as a way of dealing with some of its problems at its operations in Nigeria which has been plagued by operational spills, spills arising from sabotage and spills arising from the theft of fuel. This allows it to keep track of spills in order to determine the main cause. With respect to safety, the company has signed up with the UN Global Compact LEAD which seeks to reinforce commitment by businesses to the principles of Global Compact. Shell has been a member of this group since 2000. The company’s safety measures has been heightened as a result of the BP Deepwater Horizon incident in the Gulf of Mexico which dominated the news all over the world in 2010 and the oil spill that resulted. Shell believes that it has the necessary skills and technical expertise to avert such a situation in its operations based on its stringent operating standards which it applies globally. This is a demonstration of its ability to operate in a socially responsible manner despite the diversity of challenges the company faces. Shell’s goal is zero fatality and zero accidents (Shell 2010). In terms of safety in its deepwater operations the company ensures that the persons employed in this area of its operations are properly trained and are competent to handle the requirements of the job. Shell’s focus on the environment lies in some key areas, including CO2, flaring, spills, and the company’s use of water. The company has invested in technology that will lead to more energy efficient refineries and chemical plants. To this end the company has developed carbon capture and storage technology to effectively reduce carbon emissions. The company is working assiduously to reduce gas flarings in Nigeria; one of its locations in which it seeks to tackle environmental problems head on. In order to assist in the improvement of standards and practices that may lead to environmental sustainability the company is working with some leading environmental organisations in the quest to adhere to proper environmental management of the energy sector. In addition to providing jobs and training for its employees, Shell also shares the benefits of its operations with the communities in which it operates by providing contracts for goods and services and by investing in community programmes. The company hires and buys in the areas where it operates in order to support the development of the countries in which it operates. This is demonstrated by the fact that 90% of Shell’s employees are nationals of the countries in which it operates (Shell 2010). Shell (2010) reports that the company spent approximately $13bn on goods and services in countries with lower incomes where it operated. Tuodolo (2009) has indicated that neither the issues nor the corporation has changed in relation to its activities in some of the countries where it operates. What has really changed Shell’s public relations strategies (Tuodolo 2009). According to Trynas (2005, qtd. in Tuodolo 2009) the oil and gas sector is one of the business sectors that makes a strong claim for CSR and business ethics as it relates to human rights, employee and stakeholder rights, the protection of the environment, transparency and business principles and codes of practice. While pointing to the major achievements of Shell in contributing to the economic growth and the elevation of the standards of living in the countries in which it operates there are many drawbacks to its operations. Tuodolo (2009) indicates that there have been various campaigns against Shell’s operations in relation to ethical issues such as health, safety, corruption, climate change and the company’s abuse of human rights. In that regard Tuodolo (2009) states that cordial relationships between MNC’s and the society is rather a means of projecting a particular image of the business rather than to the society. There have been various protests in relation to its operations and the effects on the environment. These protest came about as a result of the Rossport gas pipeline which affected people in Ireland, Scotland and Sweden; the West Africa gas pipeline project and the right is the community in Chad and Cameroun; workers’ rights in Turkey; the disposal of Brent Spar oil rig in the North Sea; gas flaring in Nigeria; and Ogoni and environmental issues in the Delta area of Nigeria. According to Tuodolo (2009), Shell and other oil companies have collaborated with various NGO’s in order to deal with various issues affecting their relationship with the society. The Smithsonian Institute has worked with Shell in relation to the impact of its operations on diversity while The Environmental Council has worked with the company to deal with the issue of the disposal of the Brent Spar. Shell has also been making various contributions to the prevention of HIV/AIDS and makes annual contributions to various charities (Tuodolo 2009). According to Tuodolo (2009), Shell’s corporate relations machinery seems to cover it ‘bad deeds’. Hidden among the benefits gained by Nigeria there has been a number of negative effects which have cost Nigeria tremendously and in some cases have outweighed the positive effects. Tuodolo (2009) points to the great damage to the environment in the form of oil spills, pollution resulting from the discharge of drilling and production waste and gas flares (Tuodolo 2009). This has resulted in the destruction of farmlands and fish ponds. Tuodolo further indicates that this has also caused the destruction of sea animals and plants some of which has also been forced to migrate to other areas. This has resulted in a reduction is agricultural production which has negatively impacted the livelihood of the farming community. To this end fishermen have had to endanger their lives in order to survive by treading into deep waters to fish. Tuodolo (2009) also reported major conflicts resulting from the distribution or lack thereof of scarce resources and the proliferation of criminality and lawlessness by the issuing of guns and ammunitions to fight protestors against Shell. This has lead to the erosion of values of the Nigerian people. Conclusion Shell and the oil sector in general have contributed tremendously to the development of the countries in which they have operated or are operating. The production of oil is an carbon emission intensive operation and so Shell has to look for new ways to reduce its negative impact on the society. The companies contribution to the negative effects of climate change cannot be discounted neither can the benefits that the society has gained from its operations. However, taking one step forward and two step backwards can never be of benefit to any society. References Royal Dutch Shell PLC (2010) Sustainability Report. Retrieved from: http://sustainabilityreport.shell.com/2010/servicepages/downloads/files/all_shell_sr10.pdf Tuodolo, F. (2009). Corporate Social Responsibility: Between Civil Society and the Oil Industry in the Developing World. Retrieved from: http://www.acme-journal.org/vol8/Tuodolo09.pdf : Read More