CULTURE COMMUNICATION AND GLOBALIZATION
NAME………………………………SHAMSIDEEN A OLASANYA
CPR NO…………………………….2405724629
SEMESTER………………………..8TH
SUPERVISOR…………………….ANDREW FISH
DATE OF SUBMISSION…………30 MAY 2008
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TABLE OF CONTENT
INTRODUCTION.......................................................................................................1
METHOD....................................................................................................................4
THEORY................................................................................................................. ....5
STAKEHOLDERS THEORY……………………………………………………..10
NORMATIVE STAKEHOLDER…………………………………………………10
DERIVATIVE STAKEHOLDER…………………………………………………11
WHAT IS ETHICS………………………………………………………………..15
BUSINESS ETHICS………………………………………………………………16
CORPORATE SOCIAL RESPONSIBILITY…………………………………….17
ANALYSIS……………………………………………………………………….20
CONCLUSION…………………………………………………………………..25
BIBLIOGRAPHY
APPENDIX
INTRODUCTION
There seems to be no end to the lingering crisis between Shell and its host communities.
The conflict is still on with increase in violence. A local newspaper in Nigeria, Sunday
Tribune1 recently reported the violent attack on Shell as follows:
´´Suspected militant group at the weekend attacked Diebu Creek Flow
station of the Shell Petroleum Development Company in Peremabiri, in
1
Sunday Tribune May 4 2008
2
Southern Ijaw local government area of the state. During the attack
which lasted for several hours, at least three oil wells were reportedly
blown up, resulting in the oil spill which is now posing danger to the
health of the people in the area. …………. ``
The above newspaper report vividly shows the kind of relationship that existed between
Shell and the local community. The local community is one among other various
stakeholders that Shell deals with in the Niger Delta area in Nigeria. This was where
crude oil was discovered in commercial quantities. Shell petroleum Development
Company of Nigeria played a major role in the exploration of the oil.
Nigeria is populated with over 140 million people, the largest population in Africa, and it
is geographically located in the west coast of Africa. The 7 million people of the Niger
delta area, which consist of 20 different ethnic groups with agriculture and fisheries as
their main economic activities, became the centre of attention in the wake of Shell crisis.
The teeming population of the Niger Delta people made them to be an important and
prominent stakeholder even though we have various other stakeholders which will be
highlighted later on in the project.
The Majority of Niger Delta people are poor. In the 80s some of their leaders became
politically involved in pursuing the interest of the community, this political agitation
culminated in the establishment of MOSOP (Movement for the Survival of the Ogoni
People). They intended to use the political platform to gain greater political control and
greater share of the oil revenue. Their demands came as a reaction to deprivation, severe
degradation of the environment due to the oil exploration in their territory and the fact
that oil revenues that accrued had been diverted or misappropriated by government. Ken
Saro Wiwa, a writer, environmental activist, leader of the radical MOSOP, demanded
compensation for environmental damages and lost oil revenues from both the Nigerian
Government and the oil companies. The then military government in Nigeria was
uncomfortable with the radical agitation of MOSOP as their campaign got the attention of
both the local and international media. In spite of widespread international protest, the
nine foremost leaders of MOSOP, including Ken Saro Wiwa who were accused of
unsubstantiated criminal offenses were executed. Shell became the target of international
outrage; they were accused of complicity in the high handedness and brutality of the
3
government and for not identifying with the cause of the Niger Delta people.
Newton2sheds more light on the infamous role played by Shell in supporting the then
military dictator:
……´´The shooting started later that year, when police escorting a shell
subcontractor fired on a group of Ogoni protesting the laying of pipe
across farmland without notice or compensation. After that, Shell
withdrew from Ogoni, citing danger to its workers and to the citizens of
Ogoni. Through the summer and fall of 1993, armed gangs from the
Rivers state internal security, led by one Major (later Colonel) Paul
Okuntimo, continued murderous attacks on Ogoni villages. It was not
lost on the Ogoni that the boats used by several of the marauding gangs
were owned by Shell, and that a Shell helicopter hung in the sky during
the September attacks. The terrorist attacks, characterized by random
killings, rape, pillage, and burning, continued into 1994… ``
The crisis in the Niger Delta put Shell in a difficult situation with the people, as
organization versus stakeholder relations became sour. What really happened is what this
project intend to examine. Did shell recognize the local community as a stakeholder? Did
Shell attend to the needs of the local community? In today’s modern corporate business,
organizations are becoming alive to their business ethics and CSR and this is practically
demonstrated in giving due preference to their stakeholders. The three prominent
concepts that will be use in this project are Stakeholders, Business Ethics and CSR; they
are interrelated and working in tandem of one another. Without stakeholders,
organizations can not apply business ethics and CSR and stakeholders’ interest is not
guaranteed without Business ethics and CSR.
In broad sense stakeholders have a stake in what a company does. Usually they include
diverse groups such as Ngos, social and environmental activist, the press, employees,
government, the host community, customers, professional and trade associations and host
of others. With the above newspaper report it is clear that Shell has some problems to sort
2
Newton (2005) pg 192
4
out with its stakeholders especially the local communities. Thus one can conveniently ask
the research question:
How far has Shell discharged business ethics to the local communities in Nigeria?
METHOD
This is an aspect of the project where I intend to describe the use of my theory to explain
the problem formulation. In my research topic the major operational words all through
the project are Stakeholders, Ethics and Corporate social responsibilities which i intend to
discuss in their theoretical basis. Attempt will be made to show case, to what extent did
Shell made use of its Ethics and Corporate social responsibilities in relation to the
Stakeholder. In addition, theories would also be use to identify other stakeholders and its
classification. In the course of examining various concepts various theories and school of
taught in their diverse form will be examined to give a balance view. Essentially the
project would rely heavily on academic materials to tackle the questions raised and this
will lead to my conclusion. The event and happenings of the project is situated in Nigeria,
so distance and time constrain will not permit the use of extensive data collection. In that
sense academic material such as text books, journals, newspaper report etc would be the
major reference points.
THEORY:
The concepts that will run through the project are stakeholders and stakeholder theory. It
will be examined why stakeholders matter, the importance and influence of stakeholders,
participation of stakeholders in decision making, how managers should prioritize their
stakeholders and other related issues. Lastly I will endeavor to address the issue of ethics
and CSR in relation to SHELL and its immediate community.
STAKEHOLDER
The term stakeholder evokes different meaning to different scholars and managers. In
time past, the word was associated with who held a stake or stakes in a bet. In one of his
speeches, Tony Blair, former British prime minister, referred to the UK as a stakeholder
society where the citizen has an interest or stake. The word stake refers to an interest or
5
share in any undertaking, but equally it can also mean a claim or assertion that an
individual or group has in the other party. With this insight one can define a stakeholder
as:
Any person, group, or organization who can affect or is affected by the
organizations action. Traditionally, a company’s stakeholders include
investors, employees, customers, suppliers, and local communities.3
One can discern from above definition that it is a two way affair where the activities of
the organization can affect the ``outside world`` and that of the external affects the
internal affairs of the organization. So in this case one can graphically see the Image of
Shell and that of the local community fit into this description. More often (especially in
the case study of Shell in Nigeria) Stakeholders take actions to reward or punish a firm’s
actions or in actions as the case may be in an attempt to commend or condemn that
behavior when the organizations business activities run contrary or below required
standard of stakeholders. One good turn deserves another, says an adage, and this could
have informed Phillips4 definition of stakeholder which states:
Stakeholders are those groups from whom the organization has voluntarily accepted
benefits. By doing so, the organization has incurred obligations of fairness to attend to the
well being of these stakeholders……..This will typically include groups such as
financiers, employees, customers, suppliers, and local communities.
Accepting benefits may be in the form of shares invested in the organization, utilization
of human capital, financial patronage of clients and customers, utilization of natural
resources such as oil, diamond, gold, silver, coal, copper, bauxite, limestone, iron,
uranium, cotton, animals, fruits etc. In this connection one can see that Organizations
depends on their Stakeholders for their growth and survival. In the light of this Shell
corporate and legitimate business in the Niger Delta is oil exploration and by implication
it is a derived benefit from the natural resources of the host community.
TYPES OF STAKEHOLDER
From the definition above one can see that local communities are Stakeholder. Apart
from the local community which is in focus in this project, other stakeholders can be:
3
4
Wood et al (2006) pg 11
Phillips (2003) pg158
6

Current employees

Potential employees

Shareholders

Customers past, present and future

Suppliers

Government

Pressure groups and watchdog bodies

Media

Investors and potential investors

Competitors

Local communities

Opinion leaders

Industry bodies and trade groups

Trade unions

The general public

Consumers

Lobbyists

Special interest groups

Competitors

Professionals

Shareholders and investors

Non-Governmental Organizations (NGOs)
THE CLASSIFICATION OF STAKEHOLDERS
Many authors have used different paradigms to classify the stakeholder. Croft (2003)5
simplifies it by dividing stakeholders into two broad groups:
Key or primary stakeholders: those who are directly affected by, or who
expect to benefit from, an organizations actions or decisions.
5
Croft (2003) p 39
7
Secondary stakeholders: those with some intermediary role, for example
local and central government, NGOs and, in some cases,
competitors………
Primary stakeholders need to participate regularly for the survival of the business. They
include employees, customers, shareholders, investors, suppliers and local communities.
The secondary stakeholders do not participate directly in the business transaction of the
organization. They are not directly relevant to the core economic interest of the
organization. They include the media, trade associations, and other interest group. The
essential difference between the two stakeholders types is that the former have more
stakes, rights, control, influence, and financial commitment to the organization than the
latter, whose non transactional dealings with the organizations makes them appear to be
less important primary stakeholders. The pressures and priorities that organizations face
are different when it comes to handling these two stakeholders. The above classification
is a mere theoretical statement. This is so because in practice, a prevailing issue or
situation can dramatically bring an otherwise obscure stakeholder to the limelight. For
example the press, who had hitherto occupied the secondary classification, may receive
greater attention from the organization because of negative and damaging press reports.
Issues or problems that organizations contend with are sometimes unforeseen and totally
unplanned for, like the Muhammad cartoon crisis as it affected Arla Dairy food. This put
the Danish dairy giant in the difficult situation of handling contrasting expectations from
its Stakeholders. This is to say that stakeholders´ influence and status is not static rather it
is flexible and can change at any point in time.
WHY DO STAKEHOLDERS MATTER?
Increasingly many organizations have come to acknowledge the influence of their
stakeholders such that stakeholders now affect their strategic decision making process.
They can affect the economic and social performance of organizations. They are the
regulators of global business conduct. Therefore it is pertinent for organizations to
successfully collaborate with stakeholders in order to achieve economic and social
leverage. Competitors are always on the prowl to take advantage of their fellow
competitors’ errors. So an organization must always be mindful of its business dealings
and carry along its various stakeholders. Indeed competitors in a way are stakeholders in
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their own right. If competition were removed an organization would take things for
granted, there would not be motivation to excel, no innovation and no dynamism. Mutual
respect further underscores why stakeholders matter in today’s corporate management,
but before that an organization must be able to identify and mount a scale of preference
for its stakeholders and understand clearly the expectations of both sides. With the
identification of the stakeholders then the relationship must be based on trust, mutual
respect, openness and dialogue. For all intents and purposes what this leads to is a good
reputation management between the organization and the stakeholders, for any
organization that communicates effectively with its stakeholders and takes their needs
and interest with utmost seriousness will not only have a good and solid platform to build
an impeccable reputation, but will also find a good support in its stakeholder in time of
trouble, and in a crisis of confidence.
STAKEHOLDER THEORY
There are many perspectives to the concept of stakeholder which has become the focal
point of many debates among scholars but one clear thing about these theories is that they
connect morals and values round the managing organization.
Normative and Derivative stakeholders are the two main categories i will use to illustrate
on Shell as the organization in question and the local community as the stakeholder in
focus.
NORMATIVE STAKEHOLDER
Normative Stakeholder according to Phillips6
are those to whom the organization has a direct moral obligation to
attend to their well-being…………Typically normative stakeholders are
those most frequently cited in stakeholder discussions such as financiers,
employees, customers, suppliers, and local communities
In this context one can see that the theory is predicated on the morals, values and ethics.
So this theory is much useful and applicable to the problem of ethical standard Shell is
facing in the Niger Delta. Shell’s direct obligation is to attend to the well being of its
local community as it is benefiting immensely from the natural resources (oil) of the
6
Phillips (2003) pg28
9
native community. Because this school of thought is hinged on morality one is further
incline to extend this school of thought to other group of people who have been on the
adverse end of exploitation. A good example involved IKEA, the Swedish international
giant in furniture and household utensils. IKEA narrowly escaped a negative reputation
when they responded positively and promptly to reports by NGOS protesting against the
exploitation of child workers in factories linked to IKEA in India, Pakistan and the
Philippines. IKEA, in collaboration with UNICEF, tackled the problem. This sense of
duty and excellent corporate social responsibility displayed by IKEA could be said to be
the abiding spirit and principle of normative stakeholder theory. Discerning mind would
agree in a way that normative stakeholder theory draws its strength from moral points of
view and promotes human right, as ethics values and morals all bothers on human right.
Human right is a universally declared right by the UN in 1948 irrespective of color,
background, race, religion, nationality etc, therefore every human being can lay
legitimate claims to this basic human right within the context where its ideals is
disregarded.
This universal value may have serve as a source of inspiration to the Ogoni people in the
Niger Delta who formed MOSOP to fight for their right. MOSOP otherwise known as
Movement for the Survival of Ogoni People led by Novelist, Poet, Playwright and
Environmental Rights Activist Kenule Beeson Saro-Wiwa used this platform to demand
for justice and for a change. The dehumanization of both the people and the environment
which is against the universal human right declaration is what MOSOP want Shell to
stop. MOSOSP gained international attention making the movement to be the rallying
point of Ogoni people. In the light of this MOSOP, a product of the oppressed Niger
Delta people, now a pressure group could be said to be am important stakeholder in
negotiating for the emancipation of the Niger Delta people. DERIVATIVE
STAKEHOLDER
On the other hand Phillips7 also gave the definition of derivative Stakeholder:
….. are those groups or individuals who can either harm or benefit the
organization, but whom the organization has no direct moral obligation
as stakeholders. This latter group might include such groups as
7
Ibid pg 29
10
competitors, activist, and the media. The organization is not managed
for the benefit of derivative stakeholders, but to the extent that they may
influence the organization or its normative stakeholders, managers are
obliged to account for them in their decision making.
Philips obviously marked the difference between normative and derivative stakeholders.
Normative stakeholders because of its moral content makes it comes before derivative
stakeholder. In other words derivative stakeholder has no direct moral obligation unlike
normative stakeholders’, therefore competitors mentioned as example of derivative
stakeholder derives its energy as the name suggest from the business activities of its rival
organization. Thus one can say that other major oil companies in the Niger Delta area
who are also engaged in oil exploration along side Shell are derivative stakeholders. They
are Chevron, Exxon Mobil, Agip, Total, Elf, and Texaco. These are similar oil
companies’ competiting with Shell whose business activities can be detrimental to Shell
on one hand and who can also reap or make economic, political and corporate fortunes
out of the management blunders of Shell.
Still on derivative Stakeholder, the media, too, can harm the interest of the organization
with their persistence and consistent media coverage of the business activities of the
organization. In this case, Shell unimpressive corporate social responsibility and non
conformity to ethical standard in its business operation attracts serious media attention
from Nigerian and global press. Shell has no moral obligation to the press, but needs to
render their account of stewardship through press briefing to reach the people. Managers
should dedicate reasonable time and effort to the press. In this connection the press
becomes a stakeholder to be considered when organizations are making decisions
because they are capable of influencing the normative stakeholders. Little wonder why
the intense focus on Shell by the press in the wake of the crisis with the local
communities got international and local attention.
In short it is obvious that no organization can succeed or survive without having a cordial
and mutual relationship with its stakeholders´. And this good ``rapport`` can only happen
if there is conformity to business ethical standard. Any thing short of that will make the
stakeholder to be reluctant to transact business with the organization that cheats, ruins the
environment and fail to build trust. This will lead to examining the issue of Ethics in
11
business in relation to the stakeholders. The approach of organizations to their
stakeholders reflects their ethical standards therefore organizations that give much
attention to this moral code of conduct will be sensitive to the stakeholders.
ETHICS
OVERVIEW
Sometimes stakeholder management by organizations may be influenced by social or
ethical values and not by economic or financial motivation. Organizations are responsible
for many business decisions and their corporate decisions are accountable to different
classes of stakeholders. Some of these decisions are based on legal standards, market
conditions, political situations, community and ethical standard. In this world of
globalization organizations are expected to abide by the basic principles that govern the
conduct of their business wherever they operate. Advances in technology have brought
organizations into contact with countries, cultures and local communities which have
raised new ethical issues. An organization can no longer hide its misdeeds because
globalization has intensified the debate among diverse stakeholders and interest groups
on issues such as child labor, genetically modified food, privacy on the internet, copy
right, human cloning, and of course degraded environment. These principles should be
based on the core values drawn from global business citizenship. In simple terms ethics
advocate substantial transparency on the part of corporate organization in taking
decisions that have significant impact on the environment. For example, a pharmaceutical
company must ensure the good quality of its product; an automobile company must
comply with global standards for producing cars with less emission, airline operators
must adhere strictly to the maintenance rules of aircraft, Accounting firms must base their
financial report on legal regulations, media houses must conform to the basic truth in
their news reporting and of course oil companies must be mindful of their environment in
their explorative business. Finally as seen above the local community must not be left
out. That is why in the wake of Shell crisis globalization made it possible to let us see
what is happening to the local communities of the Niger Delta area in Nigeria
WHY THE NEED FOR BUSINESS OR CORPORATE ETHICS
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Essentially organizations that incorporate good business ethics into their business
activities often make good profits because the consumers are likely to reward such
organizations by continued patronage or by purchasing their product. The reverse is also
obvious for organizations that fall short of ethical standards. It is in this light that an
organization behaving ethically and responsibly is investing in a profitable venture. To
concretize this claim that practicing good ethics leads to profits, Mitchell8 gave a study
report on it:
A two-year study by The Performance Group, a consortium of seven
international Companies Volvo, Unilever, Monsanto, Imperial Chemical
Industries, Deutsche Bank, Electrolux and Gerling concluded that
improving environmental compliance and developing environmentally
friendly products can enhance company earnings per share, increase
profitability and also be important in wining contracts or investment
approval in emerging markets.
WHAT IS ETHICS
Different approach to the meaning of ethics abounds among business professionals and
sociologist such that coming to agreement on what is the right meaning or definition is
subjective and problematic.
The argument has been discussed by various scholars. For example some say there is
always a right thing to do, base on accepted principles, while others posited that the right
thing is based on a combination of specific situations, national cultures and personal
morals. With this broad knowledge of ethics it is apt to now examine business ethics but
before that a brief definition of ethics to capture the whole essence of its diverse elements
will be appropriate. In doing that Mitchell9 definition will be relevant here where he
explains that ethics involves:
8
Mitchell (2003) p8
9 Ibid pg 15
10
Rossouw (2006) p9
13
Moral principles and values of an individual or company in personal
and business relationships. The word is derived
from the Greek word for character, and describes an attitude having to
do with moral obligations and responsibilities.
Cultural influences and attitudes usually have a great impact on ethics
BUSINESS ETHICS
Business ethics are based on broad principles of integrity and fairness that tend to focus
on shareholder and stakeholder issues such as product quality, customer satisfaction,
employee wages and benefits as well as local community and environmental
responsibilities issues that a company can actually influence.10
In this theory, business ethics can be viewed as a social contract between the organization
and the stakeholder. In this case the local communities and environmental responsibilities
are my focus. This seems to be the centre point of the crisis between Shell and the local
communities. It is pertinent to ask at what point business ethics failed to work between
both parties. Organizations are expected to integrate core values such as honesty, trust,
respect, and fairness into their policies, practices and decision making. Organizations that
practice these virtues would have a good and strong reputation in the eyes of the
stakeholder, especially the local community in this case. And in time of crisis or when the
organization commits ethical error, the stakeholders` trust and loyalty will be guaranteed,
with reasonable understanding and sympathy. Then there is also less chance of
vulnerability to press attack, to criticism of NGOS, to intense pressures by activist, to
boycotts, and to violent physical attack from the immediate community. But when
organizations failed in their ethical duties to their stakeholder, their integrity would be
seriously put to question and would be very difficult to rebuild. If one is to go by the
current crisis in the Niger Delta of Nigeria one can easily infer where Shell and its local
community fall in this scheme of things as regard mutual understanding of corporate
ethical standard. The role and purpose which organizations play within the society while
having their business dealing are important. This is otherwise known as Corporate Social
Responsibility (CSR).
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CORPORATE SOCIAL RESPONSILITY (CSR)
Organizations draw their legitimacy to operate from the community and in turn must
render account for their social and environmental impact. Many corporate organizations
are very much aware of CSR because of the positive feedback involved, such as giving
the organizations a good reputation and economic gains. The use of corporate social
responsibility and corporate citizenship interchangeably points to a basic fact that both
synonymous concepts recognize their responsibilities in terms of social and
environmental concerns and not only economic achievement. Organizations that engage
in CSR have a high chance of integrating social and environmental issues into their
business operations. The theory of Shalhoub11serves my purpose in explaining the
concept of CSR:
Corporate social responsibility means that a corporation should be held
accountable for any of its actions that affect people, their communities,
and their environment. It implies that negative business impacts on people
and society should be acknowledged and corrected if at all possible
This shed more light on how organizations should conduct their business in a given
communities. Accepting responsibilities for wrong deeds and making effort to correct the
damages is a good signal on the part of the organization that wills to conform to ethical
standards and good CSR. In essence a food company whose expired product flooded the
market should be more than ready to withdraw the product from the market. An airline
that cancelled its flight with short or no notice should endeavor to compensate its
customers for the inconveniences. A car manufacturing company who contravene its
corporate citizenship law must improve standards in its core values of safety, quality, and
environment. Equally, oil companies that spill oil in the course of their exploration
should be ready and willing to compensate the local community who suffer the pollution
and change practices. The media is full of reports of organizations that have fallen short
of the above demand. More often these organizations suffer heavy loss to their corporate
reputation and economic
11
Shalhoub (1999) P5- 7 + 24-29
15
fortunes. Organizations must be able to maintain the middle course such that they should
be able to reconcile their profit motive with fulfilling their social responsibilities. In
doing this the organization must maintain its integrity, stick to its values and have
positive relations with the stakeholders which the local community is part of. The culture
of compliance to basic laws and regulations with respect to health, safety, and human
right are what is expected from these companies. This is relevant in the case of Shell and
the local community. The obvious non promotion of social welfare in the Niger Delta
community became the centre point of crisis between the host community and the visiting
oil business organizations. In addition to the organizational responsibilities already
mentioned, the above theoretical framework also includes the environment as a factor to
be rendered account to. However it must be clear that these rights cannot possibly be
derive from social contract, for non humans can not engage the organization in verbal
negotiations and dialogue. The environment cannot be considered to be stakeholder
because there is already human being acting as proxies on its behalf. It is logical and safe
to buttress the argument in one part with the fact that it is only humans being that can be
the stakeholder of an organization because they are capable of verbal/vocal expressions
which can literarily galvanized or transform them into the status of stakeholder. And the
other fact is anthropocentric regarding human being as the central reality of the universe
in experience and value. However what is compelling for managers to do is morally
appealing, for they are expected to conserve the natural environment and preserve biodiversity. In essence taking care of the environment is paramount and this has been
adequately taken up by human being the vocal inhabitant of environment.
ANALYSIS
This segment will attempt to use the theory to make insightful exposition on how Shell as
a corporate entity has performed so far in its practice of ethical standard vis a vis the local
community.
SHELL AND THE LOCAL COMMUNINITY AS A STAKEHOLDER
In stakeholders theory we can see that the local community was one of the stakeholders.
Shell had been transacting its oil explorative business in Niger Delta community in
Nigeria. The Niger Delta in Nigeria is the region where there is a large deposit of crude
16
oil in commercial quantity. The local community played host to Shell. In the course of
doing so certain ethical standard were violated by Shell such that the livelihood of the
people were affected. This is an infringement on the rights of the local community as a
stakeholder to Shell. Did Shell made amends for this non compliance to standard? One
could deduce that this could be the genesis of the crisis in the Niger Delta, as a result of
disdainful treatment of the local community by Shell or could it be excessive demands of
the local people. A close look of the whole crisis shows Shell as not being proactive in
managing its Public relation. The accusation against Shell principally is that its
operations have negative effect on the people which could have been avoided, if a more
responsible approach has been taken. It would not have degenerated to an uncontrollable
level such that the media and other Interest group like Green peace sensationalized it.
Despite the ``hide and seek`` attitude put up by Shell in Nigeria, it succumbed to the
clamor of all the various stakeholder combined including the local communities. The
hard lesson for Shell in this case is that Stakeholders with power are stakeholders with
influence, whose ideas, feelings and needs should never be underestimated but rather
should be a topmost concern and priority. The theory of Normative Stakeholder further
emphasizes this by stating that organizations have a direct obligation to attend to the well
being of local communities.
SHELL AND ITS ETHICAL RESPONSIBILITIES TO THE COMMUNITY
Integrity and fair play should be paramount in the core value of organizations when they
are dealing with stakeholders. Essentially it is a moral question where organizations are
expected to return positive gestures. In this case Shell came in as a guest to explore the
natural resources therefore the onus lies naturally, ethically, morally and fairly on the
beneficiary (Shell) to show some sense of gratitude. This sense of gratitude is what we
translate into business ethics. But when the host community begins to suffer one can say
that oil exploration is now oil exploitation. Then the principle of fairness is not obeyed
as environmental regulations are disregarded. Oil spills, natural gas flaring, deforestation,
and river dredging have all caused severe degradation of the environment. Soil, water and
marine pollution have compromised the relationship between the people and their land,
and destroyed the traditional modes of livelihood of the native population. Shell lack of
transparency with the local community makes its dealing and activities unfair in the
17
perception of the people. Little wonder then that the relationship between Shell and the
host community became hostile. If Shell had adhered to the principle of fairness and
expectation of the community it would have enjoyed more cooperation and greater
legitimacy in carrying out its business. Violence is now the order of the day, which has
caused serious crisis in the community. This news coverage brings much nearer the
reality on ground. Here is a report of Nigerian Sunday Tribune12
Sabotage of our facilities is at disaster level – Shell
Following recent incessant attacks on its production facilities and
widespread theft of its crude oil and condensate, especially in the volatile
Niger Delta region, the Shell Petroleum Development Company (SPDC) has
described the situation as precarious and “an impending disaster in the oil
industry”.
Consequently, the multi-national oil giant, which said it is losing a total of
about 30,000 barrels of crude oil daily to theft in its areas of operation in
Nigeria, has cried out to security agencies, individuals, oil producing
communities and other stakeholders in the oil business to tighten their
security noose around oil facilities in the country to curtail oil pipeline
vandalisation and bunkering.
Making the appeal in an interactive session with newsmen in Port Harcourt
on Friday, the asset manager (East) of SPDC, Mr. Akin Ogunkoya, bemoaned
the current high rate of oil spillage in its areas of operation, which he said
has often resulted in the destruction of human lives, vegetation and aquatic
life………….
The crisis in the Niger delta, remain unresolved, it escalated as far back as 1999, when
the famous environmentalist and writer Ken Saro Wiwa and his kinsmen were executed
by the then military junta. Invariably this further put Shell business operation in a
difficult situation as the communities see Shell as a symbol against which to express their
anger.
12
Nigerian Sunday Tribune May 11 2008
18
The lingering crisis in the Niger Delta is also connected to political manipulations of the
Government. Shell is a multinational organization that can not take up the whole task of
public governance; it is the government that ought to provide essential public utilities to
the people. More than seventy five percent of Nigeria’s crude oil production which takes
over fifty percent of national revenue comes from the Niger Delta area of Nigeria. But the
matter is like killing the goose that lay the egg as there is little infrastructure to confirm
the wealth of that community. A lot of money has accrued from the oil revenue but
government has little to show for this because what stands between the people and
development is corruption. With this picture one can see that the local community has to
contend with Shell as an organization, and with the government.
Shell can not be totally culpable in the violation of the peoples’ rights, even though at
some point Shell made itself a willing tool in the hands of the government because of
profit motif at the expense of the local community. This was done by collaborating with
the then military junta. It is the government that failed to respond positively to the
demands of the people. This explains why Shell has managed to survive the onslaught of
the local community, despite the pressure, and violent attacks. It is an indication that the
matter extends beyond the problem of Shell. To further complicate the matter, many
militant groups who started initially with demands for their rights from the government
changed in their motives and objectives such that many militant groups saw their guerilla
action as a means of extorting money from Shell and other oil companies. They often
resort to killing, kidnapping and violent attack on oil installation of these companies as a
crude means of getting attention and pecuniary gains.
SHELL REVIEW OF ITS CORPORATE POLICY
Below is the response of Shell to the crisis of reputation which it suffered for its disregard
of ethical obligations to its stakeholders especially the community. This action point was
sourced from http://www.cceia.org/resources/publications/case_studies/20/index.html
Following the international focus on its Nigerian holdings in 1995 shell
review its position on issues of human rights and sustainable
development, including an extensive internal and external consultation
on the content of the group’s Statement of General Business Principles.
19
In March 1997 the group adopted a new Statement of General Business
Principles, which recognized five “areas of responsibility,” to
shareholders, to customers, to employees, to those with whom they do
business, and to society.
See details in Appendix I
CONCLUSION
My research findings in this project are based on the theoretical framework of the
problem formulations. The issue under focus is an ongoing event with its attendant
flexibility to sway to the trend of the moment. The research topic: SHELL CSR IN THE
PERCEPTION OF NIGER DELTA PEOPLE OF NIGERIA, with the problem
formulation: HOW FAR HAS SHELL DISCHARGED BUSINESS ETHICS TO THE
LOCAL COMMUNITIES IN NIGERIA has provided an analysis leading to the
following suggestions:
In the future Shell should do better by acknowledging its core stakeholders. From the
conflict shell had with its stakeholders one can say that there is no hiding place for Shell
or any other organization to ignore its legitimate stakeholders because it is a recipe for
inevitable clash of interest.
In ethical principle any organization that makes use of the
natural resources of the host
community has implicitly entered into a social contract with the community, and the
implementation of this mutual understanding requires some level of morality and fair
play. Shell could not boast of impressive performance in the stakeholder perception of its
business especially the local community who expected more ethically responsible
gestures from Shell. In view of this i suggest Shell should improve on this in order to
enable the local community and Nigeria to develop good and positive socio political cum
economic harmonization with Shell.
Prompt positive response on the part of Shell may avert avoidable crisis that can cause
negative corporate image. Proactive CSR is what Shell should have embraced because
this kind of CSR is relatively more effective than reactive CSR. Shell, using pro active
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CSR, would use the opportunity to earn commendations and accolade from the public and
from local interest if it responded to the demands of the stakeholders and doing more for
the people. As the name suggest pre emptive positive initiatives would have made Shell
stand out as a unique oil organization rather than boxing itself into a corner of always
being on the defensive and using Machiavellian tactics. Adopting this kind of CSR may
not be a bad idea.
Government should be more humane and sincere to her citizens by spreading the wealth
accrued from this region. This hopefully will ultimately reduce the tension in that region
and considerably reduce the pressure on Shell. The socio economic life of the people
needs to be improved. Shell needs to pressurize the Nigerian government to provide basic
amenities to the people in order to reduce the pressure on Shell.
The activities and coordination of the local communities need to be reorganized such that
true and dedicated leaders will emerge to lead the people. It is obvious that the
community lacks direction. I hope this leadership crisis will be solved so that the
collective will/interest of the people will be taken care of in the nearest future.
BIBLIOGRAPHY
Croft, Susan. (2003): Managing Corporate Reputation: The New Currency
London, GBR: Thorogood
Donna J. Wood et al (2006): Global Business citizenship
M.E Sharpe, Inc. Armonk, New York
Karake Shalhoub, Zeinab A. (1999): Organizational Downsizing, Discrimination &
Corporate Social Responsibility.
Greenwood Publishing Group, Incorporated
Lisa H. Newton (2005): Business Ethics and the Natural Environment
21
Mitchell, Charles. (2003): A Short Course in International Business Ethics.
Novato, CA, USA: World Trade Press
Robert Phillips (2003): Stakeholder Theory and Organizational Ethics
Berrett-Koehler Publishers,Inc San Francisco
Rossouw, G. J. (Deon). (2006): Global Perspectives on Ethics of Corporate Governance.
Gordonsville, VA, USA: Palgrave Macmillan
National Newspaper in Nigeria
Nigerian Sunday Tribune May 4 2008
Nigerian Sunday Tribune May 11 2008
E links
http://www.cceia.org/resources/publications/case_studies/20/index.html
APPENDIX I
SHELL REVIEW OF ITS CORPORATE POLICY
Below is the response of Shell to the crisis of reputation which it suffered for its disregard
of ethical obligations its stakeholder especially the community. This action point was
sourced from http://www.cceia.org/resources/publications/case_studies/20/index.html
Following the international focus on its Nigerian holdings in 1995 shell review its
position on issues of human rights and sustainable development, including an extensive
internal and external consultation on the content of the group’s Statement of General
Business Principles. In March 1997 the group adopted a new Statement of General
Business Principles, which recognized five “areas of responsibility,” to shareholders, to
customers, to employees, to those with whom they do business, and to society.
As regards their responsibilities to society, Shell companies are now committed “to
conduct business as responsible corporate members of society, to observe the laws of the
22
countries in which they operate, to express support for fundamental human rights in line
with the legitimate role of business and to give proper regard to health, safety and the
environment consistent with their commitment to contribute to sustainable development.”
This was the first time that the group had included a general commitment to human rights
principles or sustainable development in such a document. At the 1997 shareholders
meetings of the Dutch and British parent companies of the Royal Dutch/Shell group, the
company published the first annual report on the operations of SPDC looking at issues of
environmental standards and human rights, and the first group-wide report on health,
safety, and the environment. The group’s management also said that it agreed in principle
with a policy of external verification of environmental information but rejected this
approach for the time being. At the same time Shell took steps to integrate its
commitment to “express support for fundamental human rights” into its internal
management procedures, requiring directors of Shell group companies to make annual
statements to Shell headquarters indicating that they have complied with the requirements
of the Statement of General Business Principles, in the same way that they have to make
statements of compliance with financial and other standards. Shell also produced a
“management primer” on human rights issues for distribution throughout the group.
At its 1998 annual shareholders meeting, Shell International published its first social
responsibility report, “Profits and Principles—Does There Have to Be a Choice?” It
“describes how we, the people, companies and businesses that make up the Royal
Dutch/Shell Group, are striving to live up to our responsibilities—financial, social and
environmental.” The report examined the company’s performance under its new business
principles, and considered the case of Nigeria, repeating many of its previous statements.
“Shell’s approach” to the “issues and dilemmas” surrounding human rights was stated as
follows: We support the Universal Declaration of Human Rights, and have made specific
reference to it in our Business Principles. This is what we have done to ensure we act in
the best possible way when confronted with human rights issues.
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