Social Performances of Shell Company - Research Paper Example

 Introduction Royal Dutch/Shell Group of Companies is one of the largest global groups of energy and petrochemicals companies with around 101,000 employees in more than 90 countries and territories1. Shell is expanding rapidly to other countries and they are almost monopolized the global energy market with their huge financial capabilities and resources. Most of the Shell companies are operating independently in each of the countries by the people who know the needs of the community and the environment well. They have the authority and autonomy to make all normal business decisions2. One of the major success factors of Shell Company is their respect to the community in which they operate. Unlike many other corporate giants, Shell is keen in spending a portion of their profit for the wellbeing of the society or community in which they operate. Moreover they are giving more emphasize to the environment protection. Social performance is accepted as the core of their business strategy for sustainable development. The term social performance measures how well an institution has translated its social goals into practice. It is measured through the principles, the actions and the corrective measures implemented3. This paper briefly analyses the social performances of Shell Company with respect to their global performances. Social Performance of Shell Company Most of the big companies declare their corporate social responsibility and these declarations often lie on paper alone. On the other hand, Shell is not like that. They don’t have much belief in public declarations and they don’t like the publicity for their actions. They normally done things with least publicity compared to other big companies. Shell company has reportedly paid approximately $36 billion in taxes and royalties from 2005-2008 to the Nigerian government which can be used to promote development, reduce poverty and support economic growth4. It is a well known fact that Nigeria is a poor country which is struggling to find enough resources to eradicate poverty. 36 billion dollar is definitely a huge amount for them compared to the overall economic strength of Nigeria is concerned. Most of the other companies will try to avoid huge royalty and tax amounts using their political influences whereas Shell never adopted any malpractices and they were than happy in contributing such a big amount to Nigeria as part of their corporate social responsibility or social performance. Shell has developed a broad model of social performance with the main areas being philanthropy, social investment, strategic social investment and social impact management. While the former two are familiar as techniques the latter two are seen as the real value creators for the business. All can contribute to good social performance if there is a clear grasp of business and stakeholder requirements. This requires great attention to stakeholder dialogue and integration with the business. Managing social performance in its totality is critical to business success5. Earlier most of the companies gave least importance to their corporate social responsibilities. They thought they thought they were extending services to the community by giving employment to the local people. So they thought that the society should help them out rather than expecting any other favors from them. They kept a blind eye towards the fact that they were exploiting the natural resources of a region while they were operating in a region which may create problems to the region in the long run. For example, When Coca Cola started their operation in Plachimada, Kerala (India), the locals thought that their village might be immensely developed because of the possible contributions Coca Cola might extend towards the infrastructure development. They started to extract millions of clean water and consequently the water levels began to drop from 150 to 500 feet. According to the locals Coca Cola was extracting 1.5 million liters a day6. Later because of agitations from the locals Coke forced to close down their operations there. The above incident clearly shows the importance of social performances in the sustainable growth of a company and Shell realized it very well. Shell is committed to: Pursue the goal of no harm to people; Protect the environment; Use material and energy efficiently to provide our products and services; Respect our neighbors and contribute to the societies in which we operate; Develop energy resources, products and services consistent with these aims; Publicly report on our performance; Play a leading role in promoting best practice in our industries; and Promote a culture in which all Shell employees share this commitment7. Ethics and morality are strongly disappearing from all the segments of human life and the business sector is one among the worst affected ones. Increased competition forces the corporate world to keep a blind eye towards matters other than profit making. Shell on the other hand, believe in doing business in a socially acceptable and respectable manner. They always give more attention towards the local laws of the community in which they operate, give more attention to support fundamental human rights in line with the legitimate role of business, and to give proper regard to health, safety, security and the environment8. So far we have discussed the positive aspects of Shells’ social performances. But we should remember that even Shell is not free from controversies with respect to the violation of Corporate Social Responsibility. Shell is in the firing line over its activities in the Niger delta, where relations with the community have been tense since the deaths of poet activist Ken Saro-Wiwa and eight others who protested about oil activities in the region9 Oil extraction and processing is a major cause of environment problems because of the liberation of toxic gases at the processing oils. Extreme care is essential at the time of extraction and refining of the oil to avoid the liberation of toxic gases like carbon dioxide, methane etc to the environment. The deaths of poet activist Ken Saro-Wiwa and eight others who protested about oil activities in Nigeria have put Shell under tight defense. Many people in Nigeria believe that the invisible hands which were responsible for the killing of these people was belong to Shell. People in Nigeria started to shot slogans against Shell even though they are paying a huge amount of money to the Nigerian government as part of royalty and taxes. Apart from the killing of Ken Saro Wiwa and eight other activists in Nigeria, Shell was also being hounded by Greenpeace over the decision to sink the Brent Spar oil platform and they temporarily lost the confidence of investors and the public10. Sinking of oil platform may cause severe damages to the environment. Shell was never expected or supposed to engage in such terrible activities because of their proclaimed commitments to the environment. But they did so and the investors and the public lost their faith in Shell. They started to visualize Shell as just another company which cheat the public in the name of corporate social responsibility. Shell forced to do lot of hard work to regain their lost image and the confidence of the public and the investors. Conclusions Shell is one of the rarest companies in the world which give respect to the needs of the community in which they operates. Even though there were some controversies with respect to some of the actions of Shell, in most of the cases, Shell showed ample commitments towards the community in which they operate. Shell believes in the progress of the community along with the progress of the company. They know the progress of the community and the company should complement each other. Shell has shown the corporate world that for sustainable development, the role of corporate social responsibility is immense. Bibliography 1. About Shell, Accessed on 14 April 2010 from http://www.shell.com/home/content/aboutshell/ 2. Coca Cola, 2007, Accessed on 14 April 2010 from http://sgu05hc.wordpress.com/coca-cola/ 3. HSSE and Social performance – commitment and policy Accessed on 14 April 2010 from http://www.shell.com/home/content/environment_society/integrated_approach/our_commitments_and_standards/hse_com_policy/health_safety_env_com_standard_25042007.html 4. Jones Murray, Fossgard-Moser Titus, and de Wit Monique, 2004, Social Performance: A Business Imperative for Success, Accessed on 14 April 2010 from http://www.onepetro.org/mslib/servlet/onepetropreview?id=00086793&soc=SPE 5. Macalister Terry, 2004, Social responsibility is just a PR tool for businesses, says report, guardian.co.uk, Accessed on 14 April 2010 from http://www.guardian.co.uk/business/2004/jan/21/voluntarysector.society 6. Nehring Lee, 2002, Business Case for Social Performance: The Shell Approach Accessed on 14 April 2010 from http://www.mining.ca/www/media_lib/MAC_Documents/Speeches/English/lee.pdf, p. 2 7. Shell general business principles, Accessed on 14 April 2010 from http://www-static.shell.com/static/aboutshell/downloads/who_we_are/sgbps/sgbp_english.pdf, p.6 8. Social performance, Accessed on 14 April 2010 from http://www.shell.com/home/content/environment_society/society/nigeria/social_performance/ 9. The evolution of CSR, Accessed on 14 April 2010 from http://www.corporatewatch.org.uk/?lid=2682 10. What is Social Performance, Accessed on 14 April 2010 from http://www.cerise-microfinance.org/publication/pdf/prog_spi2/15-11h15-Argidius-Kverhagen-definition.pdf, p.1 Read More