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-In which way did this issue evolve into a crisis for Shell?

1. Societal expectations: Ogoni environmental activists and Delta tribal Chiefs had documented the environmental degradation from oil company activity.

2. Political developments: Their accounts were taken up in the African media and media around the world.

3. Legislative actions: Advertisements calling on Shell to ‘clean up its mess’ were signed and financially supported by more than 7000 people worldwide.

4. Regulation: a Dutch court of appeal ruled in favour of a case brought by four Nigerian farmers along with environmental activists against Shell. Shell’s Nigerian subsidiary was held responsible for four pipeline leaks and declared that the parent company had violated its duty of care. The company in turn was ordered to pay damages to the farmers and to install leak detection equipment in its pipelines.

I think Shell responded to the broader issue by buffering and advocacy. Shell only responded when they really had to, because the issue was getting big in the media. And the response was mostly ignoring the problem, because Shell was more focussed on getting the ‘victim role’ in this situation. Shell could have better responded by thought leadership and really trying to find a solution for the issue.

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Case study 10.1 Shell in Nigeria - Nicholas May

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Question 1:

The issue-life cycle of Shell’s practice in Nigeria

Latent: First of all, it is crucial for organizations to detect an issue as it emerges, and the problem they ignored was that they had oil spills, gas was affecting the Onogiri communities, polluting their water and damaging their farmland. However, Shell did not face much external pressure because there was not much environmental regulation anyway, and the company did not consider this situation an issue that could affect the company in any way.

Active: At this stage, the problem is gaining attention from activists and the media. We can see it due to the heated debates with groups such as the Movement for the Survival of the Ogoni People, Greenpeace, the Sierra Club, and Amnesty International. Shell responded to this stage, calling it sabotage and saying that the environmental issues were not completely their fault.

Intense: The intense stage starts when the issue becomes highly visible and impossible to ignore. The execution of the Ogoni People, for instance, or the death of Saro-Wiwa, an internationally acclaimed journalist, played a crucial part, as well as the persistent attention of the media. In this scenario, Shell responded to the execution of the activist as a devastating situation but again played the victim when accused of being guilty of this concern.

Crisis: The crisis has developed by ignoring the voice of the affected communities, maybe they did not think the issue would have escalated in the way it did. There are many consequences they face in their crisis, for instance, the economic repercussions, since Shell had to pay 10 billion dollars to clean up oil spills and compensate communities in the Niger Delta. Shell still fails to respect the environmental needs of the local communities, and they have constantly repeated this malpractice since again in 2008, there were two major oil spills in Bodo, a town in Onigoland in the Niger Delta, and in the year 2013, a tire broke out near one aging pipe. Therefore, another outcome of this crisis is the bad reputation the company would hold in the long term because, despite the legal actions that have been taken, the protest, or the media attention, they don’t seem to want to redeem themselves.

Question 2:

Issue-specific response strategies

At first, the company responded using the buffering method. They didn’t do any retrospective work since they tried to minimize their responsibilities when they claimed they were being sabotaged, for instance, and their goal was to decrease the attention to their actions. However, this sort of tactic could work in the short term but not for too long if the issue is left unattended.

A certain form of bridging was used by Shell in 1995 when nine Ogonis were executed, including the activist Saro-Wiwa. Because they tried to empathize with the situation, however, they kept defending themselves and their actions. Advocacy was the response strategy they used the most since they actively tried to defend their operations, for instance, when they tried to defend their behavior when they mentioned the 1995 World Bank study that said  ‘oil pollution ... only of moderate priority’ in comparison to other poverty-related factors that contributed to environmental deterioration. They kept denying their bad impact on the community and were the whole time trying to excuse themselves instead of working together with the people affected by their negligence, so there was no leadership strategy from them.

Shell acted in a very defensive way instead of recognising their problem from the beginning. They should have taken responsibility since they realised their issue could evolve into a deeper crisis if left unattended. Shell should have communicated with the affected party and worked their way towards more sustainable practices instead of relying on buffering and advocacy.

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Shell is a massive global group of energy and petrochemical companies, employing up to 103,000 people and with operations in more than 70 countries. They used progressive technologies and they took an inventive approach as they seek to help the world to build a sustainable future.

The image of Shell is that they are a customer-focused organization, serving more than 1.000.000 industrial and commercial customers.

They also have around 33.000.000 customers daily at more than 47,000 Shell-branded retail service stations.

Though Shell is not a company without controversies. In 1936 the royal Dutch/Shell founded a company called “Shell D’Arcy” which after obtaining licenses started digging for oil in Nigeria. Although only in 1956 the first oil shipments were sent abroad(https://www.shell.com.ng/about-us/shell-nigeria-history.html). In 1995, after years of obtaining oil in Nigeria, their impact on the local people became more evident. During these years multiple oil spillages, death of fields due to acid, rising health issues and damage to the local ecosystem appeared, though the company still remained quiet.  Multiple critics and residents organized a peaceful protest against Shell organized by Movement of the Survival of the Ogoni people (MOSOP) led by Ken Saro-Wiwa. The Ogoni people claimed that multinational oil companies, especially Shell, with help from the Nigerian government, have destroyed their land and polluted their rivers, while giving very little, if any, real benefits in return. This protest led to the closure of the operations in the Niger Delta. Unfortunately, this movement did not go unnoticed by the Authoritarian local government. The government has been engaged in a systematic crackdown on Ogoni people and other communities. After the protest the local government executed 10 Ogonis including the leader.(https://www.hrw.org/reports/1995/Nigeria.htm). Although at first this issue was only locally known, after aforementioned events it was quickly picked up by the media. Shell responded to the controversy and expressed their condolences to Ken Saro - Wiwa, but they also tried to minimize political issues and all the ecological damages they had done in Nigeria, playing the role of a victim, shifting the blame. This statement did land well with the public; it remained under fire from the people and influential magazines like “The Guardian”, who were calling for clean up efforts, accountability and change. Shell responded to the claims by complete denial, resuming their ignorance to the wider problem. This did not contain all the controversies and they found themselves in a real crisis. Multiple spillage accidents and ongoing lawsuits only fueled the crisis, therefore, the people never forgot the incidents as it got media coverage. Their public image has been ruined and has not recovered for years.

Shell has gotten a lot of its activities based in Nigeria, particularly in the Niger Delta. They have been accused of environmental degradation, human rights violations, and there have been major problems between the Nigerian government and the company.

Here is an overview of how Shell has responded:

1. Legal Battles and Settlements: The Shell company has been involved in multiple legal battles over their operations in Nigeria. For example, the company agreed to pay $15.5 million in 2009 to settle a lawsuit in the United States, which of course accused the company of being complicit in human rights abuses, including the execution of Nigerian activist Ken Saro-Wiwa in1995. The company continued to deny wrongdoing, but did state that the settlement was a gesture of ''goodwill'' to contribute to reconciliation.

2. Corporate Responsibility Efforts:Shell has often been accused of environmental damage to which they have pointed to the effort they say they have made in maintaining their pipeline, and addressing their oil spills. The company claims that their oil spills were caused by oil theft and sabotage, not negligence. Shell also claims they have invested in cleanup work, although critics have claimed it has been slow and inadequate.

Source:

Shell pays out $15.5m over Saro-Wiwa killing | Nigeria | The Guardian

Ultimately, their business strategy is advocacy.

Indeed, Shell wants to influence public opinion, mitigate legal and reputational risks, influence policy and regulation, build alliances with stakeholders, manage investor relations and market perception, and much more.

Our opinion:

Our opinion is that Shell should have started clean up efforts and the advocacy for protection of human rights at the very start. By this way they could protect their image instead of just making it worse. Although it would have costed a lot, the long term benefits would have been worth it. They are playing the victim card too much as the people see right through the PR. This means that individuals around the globe understand that the company is ignorant of past issues and are not planning on changing their ways in the future. Therefore, the reputation of Shell is forever ruined, which is caused by their own actions.

To improve their reputation they should communicate clearly and take measures to strengthen their environmental and human rights stance. Shell should show its change through actions so that the media and people will believe that Shell has changed since all the controversies.

Gustė Misiūnaitė, Jasmijn Hengst