Company Posting: Addressing the issue of Child Labour
E-MAIL TO UN GLOBAL COMPACT TEAM – gloabalcompact@un.org
Royal Dutch/Shell Group of Companies
Jan. 9, 2000
Prepared by:
Xiaowei Liu
External Relations & Policy Development Adviser
Shell International Ltd.
E-mail: xiaowei.x.liu@si.shell.com
Tel: 44 20 7934 3225
Shell believes that the UN initiative to encourage a global network of values and principles
agreed by all the Compact partners is an exciting opportunity. It stimulates co-operation,
communication and engagement between business, policy makers, civil society organisations
and other leading thinkers and actors in the global arena. And it provides a valuable forum for
building a shared understanding of how important issues can be addressed realistically and
responsibly.
The issues covered by the Compact are challenging. In many cases there are more dilemmas
than simple global solutions. Shell certainly does not claim to have definitive answers. We
are increasing our efforts to gain a deeper understanding of the issues, and to ensure that core
values are applied effectively throughout our operations in more than 135 countries and a
multitude of different cultures.
When the Global Compact was launched, Sir Mark Moody-Stuart, Chairman of the Royal
Dutch/Shell Group stressed that in Shell, we believe that a responsible business must justify
its legitimacy in the eyes of societies and opinion leaders, and regulate itself effectively and
openly. That is why, for almost 25 years, Shell companies have operated on the basis of the
Shell General Business Principles (SGBP).
Over the years this statement of core values has been regularly reviewed, and when necessary,
revised, to reflect changing circumstances. The most recent revision, in 1997, was based on
extensive consultation, both inside Shell and with external publics.
The SGBP are in line with the UN Global Compact, the Global Sullivan Principles and the
recently revised OECD Guidelines for Multinational Enterprises. They are based on three
fundamental values of honesty, integrity and respect for people, and they underpin all aspects
of corporate behaviour.
They recognise that the Group has five areas of responsibility: to shareholders, to customers,
to employees, to those with whom they do business and to society. They include
commitments to support sustainable development and fundamental human rights.
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Principles One and Two of the Global Compact are being addressed by the Group in
accordance with its own principles governing responsibilities to employees and to society and
its support for fundamental human rights.
In order to help staff understand the issues and dilemmas, which may arise when applying the
Business Principles in their daily working lives, the Group publishes "primers". One of these
is an introductory guide to human rights; another deals with the complex problem of child
labour. Both primers were written with the help of independent experts. They are available to
the public and can be downloaded from the Shell website (www.shell.com/primers).
In addition, a special human rights site was launched on Shell's internal computer network on
10 December 1998, the 50th anniversary of the United Nations Universal Declaration of
Human Rights.
For this first posting, we focus specifically on our efforts with regard to Principle 5 of the
Global Compact, "the effective abolition of child labour".
The Shell primer "Business and Child Labour" examines the nature and causes of child
labour, the major legal instruments that address the issue and how child labour affects and is
affected by international businesses. It provides guidance to Shell managers, including
practical examples of the measures that Shell companies are taking to address the issue.
Some key points are:

The term ‘child labour’ refers to a type and intensity of work that hampers children’s
access to education, harms their health and development and deprives them of their
childhood or their self-respect.

The causes of child labour are complex, but are linked to poverty, the absence of basic
education and the persistence of certain social structures and attitudes. Child labour is
especially prevalent in the informal manufacturing sector and in domestic activities. The
ILO has estimated that there are some 250 million children in paid work, with many more
in unpaid activities and that Asia accounts for more than 60% of the world's child
workforce. However, the problem affects all regions and is growing in certain areas such
as Eastern Europe.

National legislation is the first point of regulation for child labour but it is also the subject
of various international conventions, notably ILO 138 (The Minimum Age Convention),
ILO 182 on the worst forms of child labour and the UN Convention on the Rights of the
Child (especially Article 32).

The effects of globalisation on working children can be both positive and negative.
Foreign direct investment can create jobs and increase export earnings, helping to reduce
the poverty associated with child labour. But increasing competition for foreign direct
investment can result in greater pressure to reduce production costs, leading to the use of
children as a cheap, compliant workforce.

Company responses must be clearly thought through, taking into account the views of
many stakeholders. Experience has shown that without sensitivity and broad
engagement, even well meaning responses can actually have a detrimental effect on
children. A broader response to child labour can be achieved through specific social
investment activities.
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Child labour might not seem an obvious area of concern for a global energy enterprise like
Shell. But it is a problem, which is affecting all regions of the world today. Our Business
Principles - and the values they represent - mean that Shell companies must not exploit
children in any of their activities, either directly or indirectly through joint ventures,
contractors or suppliers. This is monitored, and we can report the following:

In every Shell company, employees are above the local legal age of employment. The
youngest company employee, who is 15 years old, works part time in Europe.

Shell companies in 101 countries have a specific policy to prevent the use of child labour
in any of their operations. In 112 countries, they operate a procedure to prevent the use of
child labour.

The number of Shell companies that screen contractors increased from 51 in 1998 to 63 in
1999, and those screening suppliers from 28 to 41 in the same timeframe. Such
screening includes, for instance, anti-child labour clauses in contracts and notification
sent to all suppliers that they should observe ILO 138. In some countries, site visits and
audits have been conducted to ensure compliance.
Although we would not claim that these measures provide a complete assurance, we believe
they are raising awareness of the problem and giving a clear indication to Shell companies
and those they work with that the use of child labour is unacceptable.
To take one specific case, Shell Brasil has been awarded the title of "Child Friendly
Company" for its pioneering work in discouraging the use of child labour in the production of
sugar cane alcohol, which it is legally obliged to sell on its forecourts and include in its
gasoline.
The award was made by a local NGO called ABRINQ, supported by UNICEF. This
recognition followed the participation of Shell Brasil in a broader debate with NGOs, local
government and distillers to find ways to help families whose children work in the sugar cane
fields and other rural industries. The legal minimum working age in Brazil is 14 years.
State governments, distillers and other producers (including producers of sisal, oranges and
coal) have been working with the affected families to set up funds that can be used to educate
the children who would otherwise go to work to support their families.
Shell Brazil has introduced a clause in its contracts with distillers forbidding the use of child
labour and asking them to respect the Business Principles. So far, the company has not
needed to enforce the clause because suppliers share these concerns.
The Shell view is that the best way to promote responsible global citizenship is to live it. We
see a commitment to fundamental human rights, and a focus on issues such as child labour, as
part of the "best practice" to which Shell companies aspire. But ensuring best practice, and
facing up to dilemmas posed by issues like these, is an on-going challenge. It would also be
idealistic to assume that performance will automatically match aspirations unless there is
effective internal and external monitoring.
That is why the Shell General Business Principles are published, and compliance with them is
subject to internal checking mechanisms. But it is not enough simply to achieve internal
satisfaction about the way the business is being conducted. The outside world must also be
satisfied. An important step towards external verification has been the annual publication,
since 1998, of The Shell Report.
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These reports give detailed evidence of how Shell companies are living up to the SGBP. The
Shell Report 2000 examines progress related to support for human rights, including the issue
of child labour. The content of the Report can be found online throughout the Shell website
www.shell.com. The Shell Reports provide a basis for dialogue, discussion - and criticism - of
performance. At the same time, work is underway to develop management systems, which
will produce increasingly verifiable measures of performance.
The commitment to support fundamental human rights and the focus on the issue of child
labour illustrate our belief in what the Global Compact and those associated with it are trying
to achieve in these areas.
The issues are complex, and the approaches outlined here are steps along the path to a shared
goal, not an end in themselves. We know there is more to be done and that others will have
questions or different answers. Dialogue and debate on how best to address these issues is
important in achieving the aims of the Global Compact. That is why are happy to take this
opportunity of sharing our efforts to put core values at the centre of corporate practices.
For information please contact:
Xiaowei Liu
External Relations & Policy Development Adviser
Shell International Ltd.
E-mail: xiaowei.x.liu@si.shell.com
Tel: 44 20 7934 3225
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