The Strategies of Shell Corporation - Case Study Example

Business Shell Corporation is the largest oil company in the world with of about 2.147 billion. Shell Corporation is the biggest oil refinery corporation specialized in oil and natural gas products, gasoline and petrochemical manufacturing (Hollander 2004, p. 44). The nature of business demands innovative solutions and new technologies to reduce environmental pollution caused by oil and gas refinery (Lomborg, 2001, p. 65). In this case, the government, the corporation stakeholders and consumers play a dominant role in strategies and approaches aimed to reduce pollution and introduce environmentally friendly technologies. In the US, the law makes available a repertory of ecological policy instruments of broad coverage and applicability, strong enough to support an integrated planning process comprising the federal government, the federal entities, municipalities, and society itself. This includes the ecological organization of regions and human settlements, the mandatory evaluation of environmental impacts of important projects, ecological planning regulations, steps for the protection of natural areas, research and education, inspection, and mechanisms for social participation. Ecological Balance and Environmental Protection became effective as an integrated legislative response to the environmental problems of the country. The law establishes a broad system of mutual assistance among the federal government, federal entities, and municipalities, decentralizing resources and responsibilities under a coordinated and cooperative framework (Lomborg 2001, p. 23). The authority should have a right to regulate mobile sources and emissions from businesses and services, parking lot inspections, vehicle traffic management, control over transportation systems and public roads, emission regulations for public transportation, and authority over urban development and land use. The federal regulatory agency has reserved to itself control over industrial sources, determination of technical regulations, and operation of atmospheric monitoring systems 9Bengtsson and Saito 2003, p. 52). The proposed environmental policy is based on environmentally friendly technology and new approaches to refinery. It is proposed to change highly polluting fuels for clean burning ones. The stakeholders and policy markers should start a fuel oil substitution for natural gas in power generating plants and the ten most highly polluting industries. They should also substituting liquefied petroleum gas for leaded gasoline. The second step is to install new systems for combustion and emissions control in vehicles, in manufacturing and in service industries. It is known fact that annual automobile inspections are now required and are performed in public service stations as well as in private workshops (Hollander 2004, p. 53). Policy makers anticipate strengthening this requirement and shortening the period for inspections to every six months. Industries are now subject to constant inspections and will be required to install scrubbers and particle control systems. Policy markers should start mandatory inspection and control of diesel vehicles. Policy markers have begun the renovation of urban bus fleets, the installation of new engines, and an adequate diesel motor maintenance program to reduce pollution and expand public transportation services. Policy markers will begin a program for retrofitting three-way catalytic converters in public service vehicles (Hollander 2004, p. 11). On the national level, the third proposed step is to rationalize and restructure transportation activities. Policy markers should consider the following actions: mechanisms to restrict circulation of all private vehicles one day a week during the winter; establishment of a corresponding system of incentives and penalties through higher prices for fuel and parking; removal from circulation of all vehicles found polluting excessively; prohibition of parking lots in specific zones as a disincentive and means of alleviating traffic congestion and increasing average speed; incentives for shared use of vehicles; restrictions to traffic in specific areas and at specific times; regulation and encouragement of institutional transportation; reconfiguration and freeing of roadways and lanes for the exclusive use of buses; establishment of continuous working hours in public sector offices to reduce the volume of trips per person; and an increase in traffic police for adequate enforcement of these actions (Lomborg 2001, p. 23). These environmental policies were selected because they have already undergone experimentation in other countries, have been widely applied, and their effectiveness has been proven. They imply the use of technologies that are commercially available, and the energy they require is available at a reasonable cost. They require adjustment in urban lifestyles and in institutional activities that can be accomplished in a short period, and they have a significant reduction effect on total emissions and on one or more of the major pollutants (Hollander 2004). By relying on the traditional mechanisms employed by the state to encourage compliance by the private sector and interest groups, the government avoids difficult political confrontations and costly expenditures that would be necessary to strictly enforce regulations and punish violators. This approach rests on the plans under way for conversion and decentralization of industrial activities that will require decades to take full effect. In response to increasingly grave environmental deterioration, the US government appears to have retreated into more of a hortatory and less of an enforcement role with regard to pollution (Lomborg 2001, p. 37). For Shell Corporation, "actual priorities" can be seen as aspects of environmental policymaking that are intrinsic to the nature of the political system. Rather than relying on sanctions and making the initial investments in costly abatement programs, the government opted for an approach to abatement that stresses moral suasion, planning, bargaining, education, data collection, and incentives (Hollander 2004). The activities of environmental interest groups are dealt with in the classic petitionary pattern of supplication and persuasion that often characterizes legitimate interest articulation. Moreover, the success of any decentralization strategy will require that new areas of industrial growth be under the same environmental restrictions to prevent pollution problems from merely being transferred elsewhere (Kinder 2007). Although he agreed that various elements must be distinguished, he counseled that the whole picture cannot be ignored. Rich stressed that the role of the multilateral agencies in influencing policy must be considered, which means analyzing how economic resources are targeted in various countries and what happens to the environment (Hollander 2004, p. 76). The basic premise behind debt-for-nature swaps is that the urgent need for debt relief also presents a unique opportunity to leverage additional domestic investments in those countries for desperately needed environmental and social investments. If one accepts that basic principle then the conclusion is almost inexorable that the environmental plan and the accompanying World Bank adjustment conditions should, across the board and systematically, have provisions, incentives, and inducements to insure that a significant part of the debt relief granted to developing countries through the Brady Plan go toward these desperately needed, long-term environmental and social investments (McKee 2003, p. 73). The policy will be evaluated in terms of its impact on the environment and improve environmental conditions around the Shell’s manufacturing and refinery facilities. On the other hand, in its current form the environmental policies followed by Shell also poses a risk, indeed a threat: if environment and natural resources concerns are not taken into account in the plan and in adjustment conditions of the multilateral banks, then the net effect may be to increase the pressures on developing countries to unsustainably overexploit their resources (McKee 2003, p. 77). That is really the issue at hand. In the appropriations legislation for foreign operations that must be passed every year, there has been report language and bill language that has addressed these issues. It is useful to separate nature and development in our objectives, argued one participant. It is said that the poor will always be with us, yet the same cannot be said of the environment. The real value in distinguishing between debt-for-nature swaps and structural adjustment lending is that the debt-for-nature swap can buy time until a longer-term solution to the environmental crisis is found. The speaker did not see the two programs in conflict but felt that they should be separated (Stavins and Haty 2005, p. 109). Also, the evaluation of program’s effectiveness will involve economic and political analysis. This analysis will be based on the creation of the import-substitution model. Those alliances are already being challenged in search for a new model of economic development capable of overcoming the external financial constraints and excessive dependence on foreign capital and technology that ended unprecedented growth. The journey to a new and less environmentally damaging pattern of development has barely begun. Tragically, this search comes at a time of economic travail—public sector spending is being slashed, wages cannot keep up with triple-digit inflation, and businesses are being driven into bankruptcy. The larger challenge the United States and Shell Corporation must face is that these kinds of efforts will ultimately be inadequate to the task that other countries must undertake (McKee 2003, p. 45). That task is no less than a fundamental restructuring of the prevailing development model and an acceptance by a majority of stakeholders of the political changes required to support such a restructuring. The models heritage of overcentralized production, protected and polluting industries, and distortions between the rural and urban sectors will be the central concerns of economic and environmental actions in the coming decades. Bibliography Bengtsson, T. Saito, O. 2003, Population and Economy: From Hunger to Modern Economic Growth. Oxford University Press. Hollander, J., M. 2004, The Real Environmental Crisis: Why Poverty, Not Affluence, Is the Environments Number One Enemy. University of California Press. Lomborg, B. 2001, The Skeptical Environmentalist, Cambridge: Cambridge University Press. Kinder, C. 2007, The Population Explosion: Causes and Consequences. Referenced 20 June 2009 from http://yale.edu/ynhti/curriculum/units/1998/7/98.07.02.x.html McKee, J. K. 2003, Sparing Nature: The Conflict Between Human Population Growth and Earths Biodiverstiy. Rutgers University Press. Stavins, R., Haty, B. 2005, Environmental Protection and the Social Responsibility of Firms Perspectives from Law, Economics, and Business. Resources for the Future. Read More