Shell’s dirty secret–missing leadership integrity?

Suspended right in the centre of an oil-devastated landscape, surmounted on a pool of escaped oil, hovers Shell’s bemused CEO.

All around lies evidence of black pollution. He can hardly escape the conclusion Shell has probably not been a force for good in this area—for decades.

The CEO walks gingerly across the trashed blackened swamp — without getting his shoes dirty, or his neatly tailored business suit grubby.

Next, he directly encounters people living nearby in shacks in truly awful conditions. They tell him to his face they’ve lived with chronic oil pollution most of their lives. Up close he can see for himself what a dreadful place this really is.

van Buerdon2
If Mr Van Beurdon used VR to really see the pollution

The more the CEO experiences the reality of the environment, the more he cannot escape understanding in a most visceral way how his company has handled its impact on local conditions. Piping in fresh water and promising to clean up the area has made little or no impact.

There are always ethical dilemmas to be faced in business and sometimes these can be hard to get to grips with. The above is how Virtual Reality (VR) technology soon might bring to life issues which a CEO would never otherwise personally experience on the spot.

Without VR we have to assume that Mr Ben van Beurden is fully aware of what is happening in the Niger Delta.

This man is an impressive CEO and his 30 year rise to the top of Shell has been smooth, if not completely predictable. He appears a civilised person with whom you could have a sensible conversation about Shell and its practices.

Yet the reality is Beurden’s company has been doing some terrible things in Nigeria and getting away with it. His company was apparently about to try and do the same in the Artic—though hopefully without being plagued by sabotage, oil theft. But then crude’s prices fell through the floor and the economics of drilling in the snow turned sour.

The controversial decision to approve Arctic drilling was a personal Calvary for Mr Van Beurden:

Shell and arctic2

Despite the “soul searching”, this CEO somehow managed to reconcile his conscience with what conveniently seemed good for his company.

That the long-term outcome would not have been good, either for the company or the planet does not seem to have featured strongly in his decision making.  Yet the evidence is that companies which act in an ethical and sustainable way tend to do better financially in the long run than those that don’t.

In the unlikely event you have an opportunity to talk with the pleasant Mr van Buerdon, no doubt he would tell you Shell has a clear position on the devastation in Nigeria. For example, while the company admits it’s responsible for cleaning oil spilled from its network, it does not feel obliged to pay compensation because of criminal interference from sabotage, oil theft or local wars.

It seems a fair argument. After all, a car manufacturer may accept liability for the safety of its products yet can hardly be accountable if people sabotage its vehicles by, say slashing the tyres, or blowing up the machine. Nor does it have to pay for road accidents over which it has no direct control.

Such reasoning does not hold up when applied to the terrible consequences of oil drilling in the Niger Delta. The World Wildlife fund for example has said the amount of oil spilled there has been the equivalent of the largest oil tanker spill happening every year for half a century. That would surely imply a breath-taking amount of sabotage or oil theft.

The conclusion must be Shell has failed to sufficiently invest in protecting or repairing it’s infrastructure. The result is the Niger Delta is one of the most polluted places on earth.

Whether Shell is really liable for sorting out the unholy mess that has arisen is yet to be tested in court, which is where the issue is now now headed. The lead solicitor behind the case ranged against Shell has declared:

“It is scandalous that four years after the UN Environmental Programme report, Shell is yet to clean up its oil in either Ogale or Billie.”
[1]

Meanwhile, the conscience wrestling CEO continues to head up a company whose ethics and record of sustainability remain at serious odds with the long established PR image of Shell as a benevolent company working for the benefit of  both shareholders and society.

In a speech last year, he announced a commitment to reduce operating costs. These fell in the first half of 2015 by more than $4 billion, or around 10% over the full year. Such a fall might partly explain why the company’s record in Nigeria has yet to see a sufficient investment to rectify the present devastation. Had this actually occurred the costs might have risen, not fallen 10%.

According to Amnesty International Shell has completely neglected to look after its oil pipelines and the company has known for years they were old and faulty. Hence presumably falling operating costs.

 “It’s outrageous that Shell has continued to blame the vast majority of its spills on saboteurs while knowing full well how bad a state its pipelines were in”
Amnesty spokesperson.

According to the the evidence says Amnesty International

“the company stands completely discredited.”

So how ethical is Shell’s CEO? Having wrestled with his conscience about the Arctic will he start doing the same regarding the devastation in the Niger Delta? It is one of the unsatisfactory aspects of our corporate systems that Van Beurden can comfortably sit astride this global giant and present a degree of gravitas and an air of personal integrity without any real challenge to his own integrity and ethical standards.

Yet ethical leaders have to take responsibility of what happens under their watch, even when technically it may have occurred long before they took office. It seems hard to accuse such an apparently pleasant man as lacking integrity or ethical standards. Yet how otherwise are we to judge how his company operates under his rule?

He is either part of the solution or perhaps just part of the problem.

 

  1. Shell faces new British court case over oil pollution in Niger Delta, Guardian 3rd March 2016

 

 

 

 

 

 

 

 

 

 

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