ESADE Knowledge report
Esther Hennchen, PhD candidate and researcher at the ESADE Institute for Social Innovation, travelled to Nigeria last year to undertake field research for her PhD thesis on the role and responsibilities of multinational companies. Some of the findings of her research have recently been published as a paper entitled, "The role of oil mayors in supporting sustainable peace and development in Nigeria: The case of Royal Dutch Shell" 1. This study highlights how the oil company, Shell, has manifestly failed to manage the way it operates, despite its own claims to having extremely high self-imposed standards of social responsibility; as result the company has fuelled grievances and conflict between communities. "There's a paradox in Nigeria. Shell's CSR efforts are counterproductive because, on the one hand, they build hospitals and schools, but, on the other, they are not doing enough to counteract the negative impact their core business has on the environment", Hennchen commented.
In Nigeria, faced by a vacuum of governance and in order to maintain its social licence to operate, Shell (or rather, its subsidiary in Nigeria: Shell Petroleum Development Company or SPDC) has introduced a number of development programmes in communities through the Shell Foundation, and supports national programmes in a range of areas such as health, education and community-building. Yet, despite Shell's attempts to proactively implement a CSR agenda, the company remains a regular target for social activists, as well as for litigation on issues of malpractice.
While Shell claims to have significantly reduced its oil spills, and attributes the majority of recent oil spills to sabotage, almost all the social organisations interviewed by Hennchen criticise Shell's corroded infrastructure and its failure to clean up the oil spills that have occurred. Furthermore, recent claims by such organisations have been supported by a scientific investigation undertaken by the United Nations Environmental Program (UNEP), and the issue of a legal sanction against Shell. The UNEP report criticised SPDC's inadequate oilfield infrastructure and inability to clean up oil spills, which failed to meet not only local regulations and requirements, but also SPDC's own procedures, as well as international best practices. Then in 2011, in the first legal case of its kind, a legal claim was brought against Shell in the UK for two massive oil leaks in 2008 and 2009, which were the result of a technical failure. In addition to this, the company has also faced parliamentary hearings in Holland over its operations in the Niger Delta, which caused the worst oil spill of the decade as a result of a leak at the Bonga offshore platform.
The environmental NGO, Friends of the Earth, estimates that the amount of oil spilled by Shell in Nigeria over the past 50 years is about five times that of the BP oil spill in the Gulf of Mexico. According to a United Nations report released in 2011, it could take 25 to 30 years to clean up the pollution that has accumulated over 50 years of oil operations in the Niger Delta. "The damage done by Shell's poor extraction practices is chronic and cumulative for the environment and society, to the extent that inhabitants in the region are not only put at risk, but the livelihoods of many people living in contaminated areas are destroyed", explained Hennchen. While she was in Nigeria her research revealed cases of people who had contracted diseases because of gas flaring, oil spills and contaminated water. In addition, the ESADE researcher stated, "there is a very real causal connection between lost livelihoods due to oil spills from company negligence, the rise in illegal bunkering and refining as an economic response of some locals born into desperation."
Hennchen's research concludes that five decades of oil extraction in the country have resulted in hindered social development, poverty, corruption, environmental degradation, ethnic and gang violence, kidnappings and other aspects of social disorder. According to the study's conclusions, "important changes must be made if long-lasting peace is to be achieved". Some of the necessary changes -such as training and employment programmes, major infrastructure projects and endeavours to rehabilitate the environment- will require long-term commitments. Furthermore, "oil companies have to radically rethink what they consider to be corporate social responsibility, and more effectively approach their dual role as an economic and political actor in such a complex and conflict-prone setting," concluded Hennchen.
This research is part of Hennchen's broader PhD research project, which examines the political role of Multinational Corporations, like Shell, in Nigeria. The research published to date, depicts the challenges a company faces when failing to manage the political and social dimensions of its role. The case study reveals how Shell essentially stepped into a governance vacuum and then started to fulfil a social and economic role, undertaking what may be regarded as traditional government activities. They have not only had an impact on the rights of individuals, but this has been underpinned by a commitment to self-regulation, in order to protect their own 'social license to operate in the region'. This significant step into the political sphere has cast a shadow of ambiguity over the company's role for Shell employees, their customers and, above all, those who live in the Nigerian communities where the company operates.