Course Code: MGN 645

Course Title: BUSINESS ETHICS AND CSR

Course Instructor:

Prof Megha Mehta

Academic Task No.:

Date of Allotment:

1-9-15

Academic Task Title: case based assignment

Date of submission: 30-09-15

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A-27
Students Reg. no: 11404408
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as specified at the time of assigning the task by the instructor)

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I declare that this Assignment is my individual work. I have not copied it from any other students work
or from any other source except where due acknowledgement is made explicitly in the text, nor has any
part been written for me by any other person.
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INTRODUCTION
Crane and Mitten (2010) business ethics are studies of activities and situation and decisions of
businesses in which a business wrongs and rights are properly addressed
Shell global oil and Gas Company was founded in 1886 by Marcus Samuel in England with
headquarters in Netherlands. The company is today regarded as one of the biggest oil Company.
In 1907 Shell merged with Royal Dutch Petroleum Company in other to increase its market
share, the merger significantly transformed the company to what it is today. Shell global became
the major supplier of petroleum during and after the World War 2. Shell has about 25,000
petroleum and gas station in the United States alone and several others in other nations of the
world. Shell is also one of the world most profitable companies with revenue of $451.2 billion
and income of $16.5 billion (shell.com)
This report will carry out a responsible business practice of shell oil and to ascertain if this
responsible practice conforms to the responsible corporate ethics and behaviour.

ETHICAL ISSUES FACED BY THE COMPANY

OPERATIONS
Shell Company is considered as one of the top most providers of efficient and cleaner burning
fuel in the world, in other words for shell to uphold its position in the market and also for them to
compete shell adopts a differentiation strategy. This strategy has a chief effect on its operational
activities, the project-delivery capabilities and technology.
In order to create a more effective and efficient return to shareholders, other strategies include
investing in low cost and quality energy to customers.
More profitable production and lower exploration cost helped recompense for the sharp fall in
the price of oil and also raised the profit significantly, in just 3 months the profit increased from
$3.6billion to $5.8billion, approximately 31%.
Bp plc, Total and Chevron are the top competitors of shell. Shell do not responsibly adapt to
competition and legislation laws by government and often chose bribery as its way out, this can
have a undesirable impact on shell as their reputation and profit will drastically reduce as bribery
and corruption reduces the rate of competition in a market, a recent business ethics survey
conducted by shell shows that 75% of shells retailers who participated believe that shells
management was very corrupt, greedy, incompetent and unethical.
In 2004 shell admitted to have provided untrue information and also admitted to have been
involved in corruption practices in which shell bribed officials to hasten the importation of oil
drilling machinery to Brazil, Angola and Nigeria.

Shell has often been practicing a double standard by operating with advance and cleaner facilities
in developed countries and traditional and unhygienic facilities in developing countries like
Nigeria in which shell releases about 19 tons of sulphur dioxide in poor communities like Ogoni
and Bodo on a daily basis, in countries like Denmark the sulphur dioxide released by shell is
extremely lower than the released sulphur dioxide in Nigeria. Shell often refuses to accept full
responsibility for the re-occurring spillage and blames it on their machineries; this shows how
unethical shell is.
A lot of people have been campaigning for shell to stop practicing double standards, the
campaign have achieved some level of successes as it made shell amended some its policies after
the campaign, yet shell still continue to abuse these developing communities and environment,
communities like Ogoni particularly Bodo that its core occupation is fishing and farming and has
been negatively affected by shells continuous oil spillage, and pollution which has led to
environmental and ecological degradation in most of the oil producing communities in Nigeria.
MNCs like shell have to be responsible in their operations and not irresponsible to the
environment in which they operate in, shells immoral behaviour disrupts the human rights act;
shell corrupted witnesses to swear against Ken Saro Wawa, and had him and other prominent
Ogoni men executed and also caused the demise of over 750 people in Ogoni land. This
merciless act was perfectly executed with the full corporation of both Shell and the Nigerian
government, Shell delivered ammunition to the ruthless Nigerian security forces also witnesses
and provided false information against the people of Ogoni, a community which has generated
shell billions of dollars.
Almost all of shells processes have always been inadequate and disastrous to the communities
they operate in.

HUMAN RESOURCE MANAGEMENT

Shell staffs more than 92,000 in over 70 countries of the world, workers are required to
undertake an online valuation and if found appropriate an interview would then be arranged
before they are been presented the job, this process takes less than a month shell provides
employment openings to the local environment in which it functions in, they train and develop
local suppliers and contractors. These relates with Friedmans theory which states that
businesses shouldnt just be all about profit making, but also ought to be socially and
environmentally conscience by providing employments opportunities to its communities by not
been discriminatory
Shells workers are goal getters; this is why shell denotes them as key to the efficient and
effective delivery of the companys strategy.
Shell invests a lot of money in the training and development of its workers in other to bring out
the best in them and also to uphold its competitive advantage as the finest provider of cleaner

burning fuel. Shell is stared as one of the greatest company when it comes to gratifying
performance; employees who do well are remunerated through cash and discounts in sporting
facilities, dental and medical care depending on their geographical location.
However Shell do not fully obey to the drugs law act, in 2013 shell was blamed of selling alkyl
nitrites in one its south Yorkshire garage, alkyl nitrites are very damaging to the body and can
cause demise if swallowed, a local of Yorkshire told of her aversion and how appealed she was to
see alkyl nitrites been sold next to childrens sweet shelve in shell garage, this can have a
harmful impact on kids as they will grow with the opinion that it was just regular for them to buy
and ingest alkyl nitrites. Shell spokesman disproved the allegation, stating that his company does
not permit the sale of alkyl nitrites in any of its garage and is very keen to making sure that alkyl
nitrites are removed from any of its garage if any is found.
Shell in 2007 noted more loss of staff than any other multimillion dollar oil company in the
world, with death rate twice higher than BP, 28 contractors and two employees of shell were
killed.
The demise of these contractors and employees would have been prevented if shell had taken its
risk assessment very seriously
Furthermore shell workers are mostly sufferers of their lack of examination of faulty gears, in
2008 shell asked to pay $109,600 for not adequately training its employees in one of its largest
refinery Anacortes on how to properly tackle emergencies.

MARKETING
Calling to mind some of the covered unethical shell processes identified previously, it is also
observed in its marketing segment of operation where unfair or wrong marketing steps have been
assumed by shell to better its brand image
Toymaker Company Lego was enforced not to renew its contract worth 68 million with shell;
Greenpeace an environmental pressure group blamed shell of using the toymaker brands to build
brand trustworthiness with the next generation. Lego spokesman we do not like the way used
by Greenpeace to report the issue, as this may have produced some difference with our
stakeholders about the way we operate. We want to firmly say that with the way things seems to
be we are promising you all that as soon as our present contract ends with shell we are not going
to renew it anymore
Greenpeace considers the toymaker company Lego should strictly and sensibly choose their
partners to avoid them associating with bad companies such as shell. Greenpeace environmental
pressure group uploaded a video on YouTube against shell which they titled everything is not
awesome the video was viewed by about six million people.

The Advertising Standard Authority has disapproved shells advert saying it is misleading, in the
advert shell claimed that the companies $10 billion oil sand project in Canada is a sustainable
energy. Shell oil sand project consumes more energy than the companies oil exploration
activities; it also increases the amount of carbon dioxide emissions in the environment.
According to a recent report, the oil sand project emits more emissions than the normal
emissions released when producing the ordinary oil.
Defra,2008 best practice guidance on environmental claims stated that green claims should not
be vogue, for example by trying to give a good impression about general concern for the
environment, claims should often stop the use of terms such as sustainable green nonpolluting and so on
Dutch shell admitted that their sustainable development is geared towards fostering ways of
meeting the ever-growing demand for energy in the present generation, without compromising it
with their corporate needs.

FINANCE
Shell claims to obey the Accounting Standards Boards regulations, which states that
organisations must be transparent and provide a financial statement that is free from error and is
complete and that gives a true picture of the business financial position and assets statement
reports are published on the companys website. Shells financial statement does not actually
reflect the true financial position and assets of the business.
BBC, 2004, shell overstated its oil and natural gas reserve with a whopping $250 million barrels
in Norway, after it notice that about 3.9 billion had evaporated, the overstatement of shells oil
and natural reserve has drastically reduce investors confidence and trust in the company, the
trust of investors of shell is said to be low at present shells overstatement of its reserve transpired
for a long period of time. SEC, 2004 shell overstated its oil and natural gas with about $4.47
billion and also overstated its standardized measure cash flow with not less than $6.6 billion.
Shell also misstated its RRR (Resource Replacement Ratios) if shell had not overstated its oil
and natural reserve its resource, replacement and ratios would have been accurate.
Shell avoiding paying tax to government despite been one on the most profitable oil industry in
the world shows how irresponsible and unethical their businesses are: shell moved most of its
operations from the united kingdom to low tax zones like Switzerland by moving its ownership,
shell also shifted its trademarks to Netherlands all these they did in other for the British tax
authorities not to have a grip of their operations. Shell needs to practice responsible ethics by
publishing the amount of tax it pays to governments in which it operates in, transparency in
business is a driven force to success and shell has to conform fully to the ethical business
practice.

RECOMMENDATIONS
For shell to halt its brand name from dropping it must be very transparent and follows fully by
the financial reporting council standards and in also stop the company from paying huge amount
of money for violating the standards of reporting as this lead to shell paying $250 million to both
the united kingdom and united states securities and exchange commission, this money shell had
to pay would have been better used by the company in sourcing for more sources of energy and
training and development of employees.
Shell should morally work with the Nigerian and foreign government to extend ways of
eliminating the undesirable impact of shells operations activities which has significantly caused
environmental harms in local communities like ogoni in Niger- Delta Nigeria, as shells
excessive release of Co2 to this exposed community has done more harm than good, excessive
Co2 release can immensely cause global warning.
Shell should abstain from paying and using Nigerian security agencies to arrest, torture, as this
lead to the murder of protesters in some Niger-delta regions of Nigeria, shell must respect the
human right act. A federal court in the United States says it has documents which show how
shell collaborated with the Nigerian military which led to the illegal killing of demonstrators in
the Niger-Delta region. The Right Approach states that individuals must be treated with dignity
and their choices must be respected and individuals must be an object of manipulation.