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AN EVALUATION OF MANAGEMENTS COMMITMENT TO

SOCIAL RESPONSIBILITY, AND ENVIROMENTAL


SUSTAINABILITY AND CRISIS MANAGEMENT: Case of
ROYAL DUTCH SHELL NIGERIA.

INTRODUCTION
The aim of this report is to examine management capability in the areas of
corporate social responsibility, social change and environmental issues, using
SHELL NIGERIA PLC as case study. A brief introduction into these concepts will be
offered and an analysis of previous management efforts within the last decade of
the organisations operations will also be examined. Furthermore, the
management competence towards social responsibility, social change and
environmental sustainability will be examined by pitting their present proficiency
in these areas against possible future contextual environments. In no way, will
there be an attempt to provide a business report or a market analysis on SHELL
NIGERIA in an attempt to successfully achieve the initially declared objective.
However, it is crucial to begin with the description of the key concepts under
examination and providing a brief background into the SHELL NIGERIA business.

SHELL-BP: Company Profile


The Royal Dutch/Shell Group founded Shell DArcy (Shell Nigeria or "the
company") in 1936, the first Shell company in Nigeria. The company gained its
licence to operate in Nigeria 2 years later with its first successful drill recorded at
Oloibiri, Bayelsa State in 1956. The organisation subsequently changed its name
to Shell-BP Petroleum Company of Nigeria (or SPDC), with its first successful
overseas shipment made in 1958. The company however didnt commission its
first terminal (Bonny Terminal located within the Niger Delta region) till a year
after the nations independence in 1961. It is of worthy relevance to note that
the Nigerian government remain Shells biggest shareholder with an equity share
of 80%, with Shell Nigeria owning the remainig 20% (Shell, 2012).
According to the Organisation of Petroleum Exporting Nations (OPEC, 2012); the
value of the Nigerian Petroleum exports is currently valued at $ 61.8 billion, with
proven crude oil reserves of 37.2 billion barrells, a production capacity of 2
million (b/d) and a refinery capacity of a merger 445,000 (b/d). This places
Nigeria as one of the 10 th oil-rich nation in the world. Since its arrival into the
Nigerian oil scene 76 years ago, the company has established over 90 fields,
1000 producing wells, 10 gas plants and two export terminals (Bonny and
Forcados) and a network of flowline pipelines that extend over 6,000km
(Burger.A, 2011). Shell currently supplies the Nigerian governement with about
70% of its gas needs
Depite these astoninghing developments, the company has been castigated by
Nigerians largely on the effects of its onshore oil exploration and refinement
activivities. The criticisms levelled against the company include enviromental
degredation/devastation, disregard for human rights and unfair distribution of
gained economic reward. The Niger Delta, (which is Shell Nigerias main base of
operations) is made up of fertile wetlands which holds approximately 30million

inhabitants whose main source of livelihood is farmign and fishing, in a region


considered to be one of Africas most densley populated locations (Kate, 2010).

Defining the concepts


Popular belief holds that success in business is largely measured by financial
returns, large dividend pay-outs, and incredible liquidity standings. Despite the
fact that the fundamental rationale for the existence of business is to make
profit, there has been an increased consciousness on the use of non-financial
measures in determinig business performance. Corporate social responsibility is
one of these measures, which has grown in relevance both academically and
business world in recent times (Barnerjee, 2007).
Several authors in business and academmics have attempted defining CSR as a
concept, with little/no consencus given to any particular definition. Authors such
as Silberhorn & Warren (2007), suggests that defining CSR could be subjective on
an organisational or national level. The UKs Department for Business innovation
and Skill (2012) define CSR as attempts by companies to address the social,
economic and environmental impact of their operations and also help meet
sustainable development goals.
Perhaps one of the most comprehensive
definitions of CSR which is believed to capture the essence of the concept was
suggested by
As highlighted by (Silberhorn & Warren, 2007), the relevance of CSR due to
certain internal and external factors, and it evolves due to constant changes in
soceital trends. He further sugested that organisations could either practise
proactive or reactive CSR, with most companies practising more of the latter
than the former.
CSR is now a well-known expression for what, in the past, has been a collection
of different and yet related terms: corporate philanthropy, corporate citizenship,
business ethics, stakeholding, community involvement, corporate responsibility,
socially responsible investment, sustainability, triple-bottom line, corporate
accountability and corporate social performance (Silberhorn & Warren, 2007).
There are organisations such as the ISO 26000 from the
International
Organisation for Standardisation, that cover voluntary guidance o social
responsibility (BIS, 2012).
According to Cromb (2008), CSR goes by several names such as stakeholder
management and business in soceity. He further suggest that social
responsibility by orgnaisations should be a neccesity rather than a voluntary
practice, which should be enforced. This view is sahred by some of the worlds
top executives as reported by Ioannou and Serafeim (2010) from a UN Global
impact study containing 766 participants (CEOs from all over the world), which
revealead that 93% of the participants believed that sustainability was an
important or very important factor for their oranisation, while 81% of them
believed that they had fully integrated sustainability issues into their business
strategy and operations.

Porter & Kramer (2006) suggest that comapanies are not responsible for all the
world problems. However, by identifying the issues they are best suited to
handle, they can also gain competitive advantage.
On enviromental isssues and Sustainability,
Over the past decade the genral public, businesses and the govenement have
realised the need to embrace the concept of sustianability develeopment, which
as become one of the catch phrases in the discussion of enviromental issues
(Angell and Klassen, 1999).
According to the UN Global compact (2012) website, there are several key
environmental challenges plaguing the earth and its inhabitants and it is the role
of business to address these issues based on certain activities such as research,
self-regulation, education, co-operation. Amongst the key environmental issues
mentioned include;

Damage to the ecosystem and loss of biodiversity.


Atmospheric pollution and the consequence of climate change.
Aquatic eco-system degradation.
Land degradation.
The impact of chemical use and their disposal.
Depletions of non-renewable natural resources.

Catastrophe Management
In understanding the concept that is Crisis or catastrophe management, one
should first understand what a crisis is. Darling (1994) identified a crisis as a
time of instability in which a decisivie change is looming with either with the
high possibility yielding undeserieable outcome(s) or a distincly positiive or a
higly desireable outcome(s). He futher suggests that crisis management is
identified, it undergoes at least three of four stages which include; (i)The
Prelimenary Crisis (identification stage), (ii) the Acute Crisis, (iii) Chronic Crisis
and the Crisis Resolution stages. However, authors such as Parsons (1996),
suggests that crisis can be identified based on varying time constraints, and as
such crsis could either be identified as either as Immediate, emergent or
sustained.
In every business, a form of crisis is inevitable (whether existing in full force or
having just passed through), and this has taught organisations (regardless of
market reach, industry or size) that they occur unexpectedly (Heller & Darling,
2012). This has been likened to a black swan, being a very improbable
occurrence, with massive impact and after the fact, requires an explanation
(Taleb, 2007). Crisis management entails managing an such situations that
threaten to affect the existence of the business.
SHELL NIGERIA & CORPORATE SOCIAL RESPONSIBILITY
In Nigeria, we are committed to social responsibility. It is
embedded in the way we carry out our day-to-day business. We
work with local organisations around our operations to be aware

of their concerns and to ensure that the benefits of Shell's


resources feed through to local communities and businesses.
(Shell, 2012)
The above excertpt from Shell Nigerias corporate website indicates the
organisations commitment in communicties where it operates. This is echoed by
the comment made by SPDCs MD Mutiu Sunmonu who stated that We have a
strong focus on community development(Burger, 2011).
Shell Nigeria have continually forged to build rapport with the indigenes of
communities where they operate. This is evident from the effort the company
continually invests in four major areaas as indicated;
I.
Business Development
II.
Education
III.
Health
IV.
GMoUs
Shell Nigerias business development efforts within host communities has largely
been aimed at improving the quality of living for youths (as professionals or
entrepreneurs), and asssiting small businesses by providing finance facilities for
these establishments (Shell, 2012).
The micro-credit and business development programme was started in 1998 to help empower
communities and enable entrepreneurs take advantage of the economic opportunities in their locality.
This goal is being pursued through three broad categories of service: community-based enterprises,
micro-credit schemes and youth business development programmes.
Implementation is by using the group (cooperative) model and the revolving loan approach. The
programme is facilitated by local NGOs and mentor beneficiaries. Micro Finance Banks have been
introduced for improved monitoring and repayment.
The micro-credit programme has helped more than 30,000 people establish or expand businesses. In
2009, 27 new micro-credit schemes enabled 2,700 women and young people to set up smallscale
businesses. These loans typically help small business owners like local market women to buy more
goods.
The scheme has received external commendation, with the Delta State Government adopting the model
in the implementation of their micro-credit programme.

The Olomoro story


Olomoro community was given N1.6 micro credit seed fund in 2004, from which some 200 people
benefitted. The beneficiaries embarked on several income generating projects and successfully repaid
the loans. The same seed fund (plus interest) was re-cycled to other groups thereby increasing the total
number of beneficiaries.
The seed fund has been re-disbursed about 6 7 times among the women in Olomoro community,
increasing the total sum to about N3.8m in 2009. The Olomoro example demonstrates accountability
and community ownership of the micro credit scheme.

Live Wire
LiveWIRE a Shell global community initiative was launched in Nigeria in 2003 to encourage
young people to see starting a business as a desirable and viable career option. The
programme exposes undergraduates and postsecondary school leavers to basic business
principles and start up funds for business establishment. The programme has trained 3408
young people since 2003, of which 908 have received awards .

The LiveWIRE programme is another way we support entrepreneurs. It gives young people the skills
they need to start a business. In Nigeria, this programme has trained more than 3,000 young people
since 2003. With the support of the Delta State government, they had established more than 519
businesses by the end of 2009. In addition, the regional LiveWIRE programme helped 39 young
entrepreneurs set up, expand or manage their businesses in 2009.
Agriculture is one of the main sources of income for Nigerians. SPDC is partnering with USAID Nigeria
and the International Institute of Tropical Agriculture in an $11.3 million project ($2.25 million Shell
share) over five years to develop cassava farming. In 2009, more than 3,400 farmers received training
under this programme. It has also provided technical and business skills training for 11,000 farmers and
has created 3,600 full-time and 9,000 part-time jobs.
By the end of 2010, 3000 candidates were trained of which 588 received business start up awards. As at
February 2012, a total of 3408 young people had been trained, of which 908 received awards.
LiveWire Nigeria produced two recipients of the Central Bank of Nigeria's "Young
Entrepreneur of the Year" Award.

Objectives

To encourage and support youth development specifically to help young people


Become interested in setting up businesses and working for themselves.
To provide foundation (attitude re-orientation) and business training for youths aged between
18 and 30 years.
To facilitate viable business choices, preparation of business plans and business start ups by
youths.
To create employment opportunities from the establishment of businesses.
To identify and link beneficiaries with mentors

Programme Content

Value and Organize Yourself Workshop (VOY); Focus Attitudinal reorientation for youths
Bright Ideas Workshop; Focus Exploration / development of viable business ideas
Become a Successful Owner Manager (BSOM); Focus Development of enterprise management
skills in youths.
Business Start Up Awards; Focus financial support for business start-ups
Mentoring and Business Counselling support.
Resource Centres where business information are displayed free of charge

Empowering Niger Delta Youths


At Shell, we recognise that the youths of the Niger Delta are the promise of tomorrow. They
represent the collective dreams of a stable and prosperous society where commerce and
industry thrive, and people develop their fullest potentials in peace and security.
Reducing unemployment among the young is a top priority for Shell Companies in Nigeria. The oil
industry is key to the Nigerian economy and the disruption of it by those who are disaffected is a matter
of great concern. The young are Nigerias greatest hope for the future and it is essential that they have
real job opportunities through vocational training and job creation programmes. Managed in partnership
with local NGOs, this scheme continues to offer training to young people in skills sets including welding,
sewing, auto mechanics, electrical work, computer technology, hairdressing, building, baking, soap
making, plumbing and fitting.
A key aspect of our youth development scheme is enabling the youths to gain useful skills with which
they can gainfully be self-employed. In 2000, SPDC commenced a comprehensive youth empowerment
scheme targeted at youths in Rivers, Bayelsa, Delta, Imo, Abia, Akwa Ibom and Edo states. The
programme comprises four main components:

Youth Training & Enterprise Programme (YTEP)


Work Force Training (WFT)


Youth Apprenticeship Training and Enterprise Scheme (YATES)

Non Violence and Conflict Management Training


Training can help young people acquire the skills they need in life. During 2009, the SPDC-operated joint
venture spent more than $2.3 million ($710,000 Shell share) to train 306 youths in a range of skills
including welding, pipefitting and carpentry, enterprise and leadership development, and conflict
management.

17/01/2011
The Shell Petroleum Development Company of Nigeria Limited (SPDC) has inaugurated the
second edition of its Niger Delta Postgraduate Scholarship Scheme in a continuing effort to
develop indigenous manpower for the oil and gas industry
he courses are Petroleum Engineering, Petroleum Geoscience, Petroleum Geophysics, Engineering
Geology, Exploration Geophysics, Oilfield Corrosion Engineering, Chemical Process Engineering,
Mechanical Engineering and Civil Engineering.
Potential beneficiaries must possess a Bachelors degree in the relevant field of study at the Upper
Second Class Level and have confirmed admission for any of the specified courses. The scholarship will
cover tuition fees, one return flight from Nigeria to the United Kingdom and a contribution towards living
expenses.
As in the pilot edition last year, 10 students from Rivers, Delta and Bayelsa states will be sponsored to
three British institutions - Imperial College, London, University College, London and University of Leeds
for one-year Masters programmes.
SPDCs General Manager Nigerian Content Development, Simbi Wabote said: We are expecting the first
batch of beneficiaries to finish later this year, and feedback from the universities has been very positive.
We look forward to their returning home and contributing to the development of the oil and gas industry
and their communities.
The SPDC Joint Venture commenced scholarship awards in the 1960s for programmes in Nigerian and
foreign institutions. At any one time, SPDC scholarships support more than 17,000 secondary school and
university students. In addition, SPDC runs the Shell Intensive Training programme (SITP) for graduate
employees.
Support for education is just one aspect of SPDCs social investments in the Niger Delta, and these range
from small business development, agriculture and education to training, health care, micro credit and
capacity building.

Godson Njoku
A. Mukydodo - I agree that youth development is critical to the development
of Nigeria's economy. Shell supports various activities which involve youth
development under our GMoU umbrella. We specifically have a
programme called LIVEWIRE geared towards supporting young people in
the Niger Delta.
Hi Raf, St Iyke here. As you may be aware, over 90% of SPDC staff are
Nigerians and Shell is the only IOC in Nigeria with Nigerians as MDs (in
SPDC, SNEPCO, SNG ). This is really great progress. More work is still
underway to ensure that positions that can be filled by Nigerians are so
filled. Having said that, Nigerian SPDC staff are on postings all over the
world to ensure that Nigerian staff continue have cross-posting
opportunities to obtain breadth and international exposure and to make
that possible we will continue to exchange Nigerian personnel with
expatriates in some positions in Nigeria. There is also the need to utilise

high calibre expertise possessed by non-Nigerians in SPDC. This also


applies to expert Nigerians contributing extensively on their own merit in
many specialist roles abroad.
Mutiu Sunmonu
A. Dear Saha, we have a strong focus on community development. Over the
past ten years we have scaled up our community development budget
from $50m in 1999 to $250m in 2009. In the past we were heavily
involved in the provision of infrastructure in the communities. we were
building roads, schools, clinics and providing portable water. Though these
are typical areas for government intervention, we stepped into the gap to
help in improving the standard of living of local communities. we are now
involving more and more development partners to help in addressing
community needs. Specific community development programs include our
micro credit scheme, health scheme - we have about 27 clinics in the
delta. we are a major supporter of education of young children with over
17000 children on shell scholarship at any point in time.
(Shell LiveWire Abia Imo Story, 2012)
Shell & Corporate Social Responsibility in Nigeria
SPDCs community development focus has shifted in recent years, he continued. In the past we were
heavily involved in the provision of infrastructure in the communities. We were building roads, schools,
clinics and providing portable water. Though these are typical areas for government intervention, we
stepped into the gap to help in improving the standard of living of local communities.
We are now involving more and more development partners to help in addressing community needs.
Specific community development programs include our micro credit scheme and health scheme. We
have about 27 clinics in the delta. we are a major supporter of education of young children, with over
17,000 children on Shell scholarship at any point in time.
- As of year-end 2010, Shell companies in Nigeria had trained some 1,900 service providers in
general contracting, developed eight local dredging companies, awarded 10 UK scholarships and
trained more than 3,000 people in entrepreneurship, scaffolding, project management, welding,
catering, and other vocations.
- In 2010 SPDC and SNEPCo provided more than $22.85 million of a total $71 million to local
community projects.
We are encouraging the community to own and drive development themselves while we provide
financial assistance to them and technical assistance through development NGOs. We have
established operating procedures and guidelines to help make the process accountable and
transparent. We still carry out major infrastructure in partnership with government, and other local and
international partners, social development specialist Gloria Udoh added.
Nevertheless, as one dialogue participant said, although Shell has widely circulated publications and
policies regarding your developmental activities in the host communities, the perception in such
communities about your CSR approach remains unsavory.
A lot of work has been done in the last couple of years to enhance alignment and learning across the
various countries that we operate, Udoh responded. In 2010, a new global social investment
strategy was approved by Shell and the process of embedding this is ongoing. The perception in our
host communities are monitored annually through an independent reputation tracker, and we glad to
report that the 2010 results showed improvements.

In 2006, SPDC introduced a new means of involving communities directly in their own development.
The Global Memorandum of Understanding program (GMoU) entails communities proposing
development projects and SPDC, on behalf of its JV partners, providing secure funding for five years.
SPDC also provides community project leaders with access to development experts and NGOs that
can assist them realize their aims.
Twenty-four GMoUs had been been established as year-end 2010, with over 400 projects completed
by clusters with the SPDC joint venture investing $65 million in them. Six of the clusters have gone
on to become registered community development foundations. (Burger.A; 2011)

SHELLS ENVIROMENTALSUSTAINABILITY ISSUES

Environmental Pollution & Degradation & Remediation


Shell has been harshly criticized for the effects its exploration and production have had, and continue
to have, in a region of tremendous biodiversity and critical natural habitat, an ecosystem that
continues to provide the basic necessities of life for millions in the Delta region.
Seventy-five percent of oil spill incidents have been caused by third-party interference: sabotage and
oil theft, however; a large majority are the result of oil theft and piracy, according to Shell. The bulk of
the spills in the Delta are due to criminal acts, MD Sunmonu said.
However we are committed to cleaning up the spill related to our facilities regardless of the cause.
The quality of clean up is very high, and it is in accordance with very strict government regulations
and Shell standards, which are comparable to other places in Europe and America. We have always
achieved our goal of restoring impacted sites to their natural state in the fastest possible way and by
so doing we are able to minimize impact on local livelihoods.
When an incident occurs, First we recover as much oil as possible then residual oil is cleaned up,
regional communication manager for West Africa Jonathan Barnden explained. This is followed by
remediation of the site where needed, and finally this is signed off by the regulatory authorities. I dont
think I can get into the technicalities of remediation processes here, but SPDC uses recognized
methods which are suitable for the tropical climate in which it operates.
SPDC intends to publish its monitoring data for the public to see, added CX Upstream Internationals
Nick Wood. It shows compliance with international standards most of the time. (Buger, 2011)
Eliminating Natural Gas flaring
Most of the oil deposits in the Niger Delta are capped by large volumes of natural gas, termed
associated gas in the industry. Much lighter than petroleum, it was, and to varying degrees remains
common industry practice to burn off, or flare, this gas into the atmosphere in order to get to the
underlying oil. When Shell first started producing oil in Nigeria in the 1950s, there was no market for
natural gas. Its estimated that some 95% of Nigerian natural gas was burned off during this period.
Times have changed. Not only are local and regional markets for natural gas, billions of dollars are
being invested in developing liquefied natural gas (LNG) facilities and an international market.
In addition, there is now an economic impetus and incentive to capture natural gas associated with oil
reserves, as well as government and internationally accepted regulations aimed at improving air
quality and mitigating climate change. These, along with lawsuits, add to the economic cost of
continuing the practice.

Shell Nigeria is committed to eliminating natural gas flaring, according to panel members. In 2000,
SPDC launched an initiative to accomplish this by 2008. Delayed at various times by lack of funding
from its government-owned majority partner, NNPC, and civil unrest in the Delta, to date, SPDC has
reduced flaring more than 50%, said Alice Ajeh, international relations manager for Shell Nigeria.
SPDC is also using computer modeling to analyze and better understand the impact of flaring. This
specifically covers possible impacts farther from the flaring itself, CVX Upstreams Wood added.
Despite delays due to security, safety and other factors in the Niger Delta, between 2000 and 2009 a
lot of work was done which covered 60% of SPDC production potential, Ajeh continued. However,
with improved security in 2010, many of the delayed projects have resumed.
When completed, the program will cover 90% of SPDC production potential at an estimated cost of
some $6 billion (Buger, 2011).
Environmental Conservation
Shell has also become active in environmental conservation in the Delta. In recognition of the
importance of the Niger Deltas rich biodiversity, SPDC in 2006 joined with the government, forest
communities and NGOs to develop Biodiversity Action Plans (BAPs) for two forest reserves: GeleGele and Urhonigbe in Nigerias Edo State.
These are International Union for Conservation of Nature (IUCN) designated category I-IV protected
areas, Ajeh explained.
In 2007, SPDC and NGO partners contributed to the passing of a biodiversity law by the Edo State
government, one of the first such laws by a state government, she added.(Burger, 2011)

Previous M&S efforts (past 7years)


a

Study the past performance of the company through the last decade in the
areas of your choice. You should use a wide variety of sources, validating
each source for quality.
Critique the managements performance, synthesise the critiques and draw
conclusions about the style of management.

Future scenarios and implications


a. Using the steps of scenario planning, build a picture of the world in which the
company must operate in the 2018 2020 time frame, in each of the three
areas you have chosen. (Not for the marketplace). understanding of the
drivers of change and the imperatives on them
b. Assess the requirements of management in the scenario that you have
developed.

Looking towards the future


c. Compare the requirements that you have developed against the competence
that you have analysed and draw a conclusion.

Carroll, A. (1991) The Pyramid of Corporate Social Responsibility: Toward the Moral
Management of Organisational Stakeholders Business Horizons July-August.

Carroll, A.B. (1999), "Corporate social responsibility", Business and Society, Vol. 38 No.3, pp.268-95.
Taleb, N. (2007), The Black Swan, Random House, New York; NY.

Shell LiveWire Nigeria Abia Imos Story, 2012, online video, Shell Nigeria, accessed 17 June 2012,
<http://www.youtube.com/watch?v=cMUJ4cHTZSI>.