Corporate Social Responsibility - Case Study Example

Corporate Social Responsibility Abstract This report deals with the evaluation and analysis of the impacts of the CSR activities of a multinational oil company, Shell Company. Since, the operations of the oil and gas industry are known to inflict major harms on the environment and communities; therefore, the role of Corporate Social Responsibility becomes more profound in this sector. The analysis of the Corporate Social Responsibility activities of Shell Company shows that the company has been facing major criticisms due to the harmful effects of its operations on the bird species in the drilling areas, the release of pollutants and the exploitation of natural resources in the underdeveloped areas. It has been found out that the company should immediately take initiatives to engage in more innovative and benefit reaping CSR activities so as to improve its socially responsible image and ensure its long term sustainability. Contents Abstract 1 Contents 1 Introduction  3 Analysis 4 Recommendations 5 Conclusion  6 References 7 Introduction  Shell Oil Company is the American subsidiary of the multinational oil major company, Royal Dutch Shell. The Royal Dutch Shell is an oil company of Anglo Dutch origin and is one of the largest oil corporations in the world. The head office of Shell Oil Company is in Houston, Texas. The company along with its share in the equity companies and the consolidated companies is one of the leading oil and natural gas producing businesses in the United States of America. The company is also engaged in the business of natural gas marketing, petrochemical manufacturing and gasoline marketing. The main products sold by the company include fuels, oils and oil card services. The company also deals in the production, exploration and refining of natural oil and petroleum products. This report deals with the analysis of the Corporate Social Responsibility (CSR) activity of Shell Oil Company by identifying whether the operations of the company has affected any of its stakeholders in a harmful manner. For this purpose, the corporate social responsibility initiatives taken up by Shell Company and the main motives of the corporation for adopting these CSR practices are discussed. The outcomes of the CSR activities are evaluated as per the effects of the different internal and external stakeholder groups and a discussion is made on how these activities have shaped up the image and reputation of the company among the global stakeholder groups. The report is concluded by providing suitable recommendations as to how the chosen company can improve the brand reputation by engaging in more innovative CSR initiatives. Analysis The role of the Corporate Social Responsibility activities of a company has become more prominent in the current global business environment in which competiveness and sustainability have become key concerns of a business for ensuring survival and success. Also, the increasing number of ethically and environmentally conscious consumer groups has also influenced the need for the development of suitable CSR practices within a business (Voien, 2000, p.200). This is especially true for a company operating in the oil and gas industry because, the functions of the oil and gas companies have already been highly criticized for the extreme derogatory effects that their operations have on the external communities, environment, natural habitats and the overall ecological system of the planet (Edelman, 2001, p.90). The activities of Shell Company have always faced high levels of criticism due to the harmful effects that they inflict in the environment (Carroll, 2008, pp.60-68). The company has been facing legal consequences for environmental violation from the year 1999 when the first lawsuit was filed against Shell Company by the United States Environment Protection Agency (EPA). This lawsuit was filed because the Agency identified major violations of the company regarding the Clean Air Act at a prominent petroleum terminal in Bridgeport, Connecticut. The activities of the company in this terminal was said to have led to the creation of 56 tons of volatile organic compound emissions which were severe air pollutants (Saether and Aguilera, 2008, p.40). Again in 2008, the Puget Sound Refinery of Shell was fined with an amount of USD 291,000 for its infringement to the Clean Air Act continuously from the year 2006 to 2010. The company was listed as a major high priority violator of the Clean Air Act in the year 2008. As per a report by the Environment Texas and the Sierra Club in 2008, Shell Company was one of the lowest ranking companies in terms of the measures related to the management of air quality and many of its activities led to the violation of the permissible emission limits as set by the EPA in the US (McLaren, 2008, p.102). In 2008, Shell Company started taking major steps in its Corporate Social Responsibility domain as a measure to receive the tarnished environmentally responsible image of the enterprise. The company collaborated with Philips with the aim of reducing the negative impacts of its oil extraction activities on the migratory bird species encountered in the drilling operations conducted in the North Sea (Royal Dutch Shell Plc., 2013, p.10). Currently, Shell Company has taken up major initiatives to improve its environmental and social image. The company has identified that the profitability and sustainability of the business depends on its abilities to forecast and respond to the seismic shifts within the energy industry (Mehra and Shay, 2008, p.16). Therefore, it has employed a group of forecasting managers who are known as scenario planners to release scenarios on how the globe might experience new types of climate changes in the future eyras and the strategies by which these climate changes can be dealt with. These were predicted on the basis of the “Three hard truths” as termed by the scenario planners of Shell which were, the rises in the global energy demand levels, the dangerous impacts of the climate changes and the supply of conventional energy being limited by these constraints (Shell Global, 2015, p.1). Recommendations The company should start taking major initiatives in the way of establish an environmentally compliant and responsible image on the minds of the global stakeholder groups (Bhattacharya, Sen and Korschun, 2011, pp. 56-60). Since, the environmental issues related to the company have always acted as major threats for the reputation and the sustainability of the business, therefore, Shell should focus on developing environmentally compliant mechanisms in its oil producing, refining and extracting facilities. Tackling the global environmental challenges should be the major objective of the business in the future years so as to negate the harmful impacts of the controversies on the brand image. Partnering with various environmental groups and national and international nonprofit organizations can be a major move of the company in this respect. Developing a sustainable lean and green supply chain is also an immediate requirement for the business (More and Webley, 2003, p.55). Conclusion  There are various ethical and environmental issues associated with the operations of Shell Company. This can act as major threat to the existence and profitability of the company in the future if these issues are not immediately addressed. Since, the company is major oil marketer in the world; therefore, it has sufficient resources and capabilities that it can invest towards giving back to the society which also makes the expectations of the global stakeholders very high. As such, the development of suitable CSR initiatives would act as a way of creating a satisfied stakeholder group and also lead to the long term sustainability and profitability for the business. References Bhattacharya, C. B., Sen, S. & Korschun, D. (2011). Leveraging Corporate Social Responsibility: The Stakeholder Route to Business and Social Value. Cambridge: Cambridge University Press. Carroll, A. B. (2000). The Four Faces of Corporate Citizenship. Dushkin: McGraw-Hill. Edelman, R. (2001). The Relationship among NGOs, Government, Media and Corporate Sector. New York: Presentation at Edelman PR Worldwide Executive Panel Discussion on NGOs and Global Corporate Citizenship. McLaren, D. (2008). Corporate Engagement by ‘Socially Responsible’ Investors: a practical paradigm for stakeholder governance? London: Ashridge. Mehra, A. & Shay, K. (2008). Shell, Corporate Social Responsibility and Respect for the Law. Retrieved from http://www.forbes.com/sites/csr/2012/10/03/shell-corporate-social-responsibility-and-respect-for-the-law/. More, E. & Webley, S. (2003). Do Business Ethics Pay? London: Institute of Business Ethics. Royal Dutch Shell Plc. (2013). Sustainability Report 2013. (Retrieved from http://reports.shell.com/sustainability-report/2013/servicepages/downloads/files/entire_shell_sr13.pdf. Saether, K. T. & Aguilera, R. V. (2008). Corporate Social Responsibility in a Comparative Perspective. Oxford: Oxford University Press. Shell Global. (2015). Environment and society. Retrieved from http://www.shell.com/global/environment-society.html. Voien, S. (2000). Corporate Social Responsibility – a guide to better business practices. San Francisco: Business for Social Responsibility Education Fund. Read More