Oil on Troubled Waters

Oil on Troubled Waters:

Can Shell Make Good in Nigeria?

Blog by Wayne Visser

Anyone who works in sustainable business or CSR will probably have cut their teeth on the classic (some would say infamous) case study of ‘Shell in Nigeria’. What makes it such a compelling case is that it has yet to reach any final resolution. Ever since Shell was tarred with the brush of bad publicity surrounding the execution in 1995 of environmental activist Ken Saro-Wiwa by the Nigerian government, it has struggled to regain its social license to operate.

My first direct encounter with Shell in Nigeria came a few years after the incident, when I was running KPMG’s sustainability practice in South Africa. In fact, KPMG’s sustainability practice in the Netherlands had worked closely with Shell to pioneer its triple bottom line reporting approach, and the KPMG Norway practice was working with Shell in Nigeria on sustainability reporting and environmental management.

Two things stick in my mind from that time. One was being rather puzzled by the failure of Shell Nigeria’s HSE (health, safety and environment) reports to mention the Saro-Wiwa fiasco, which was still very much at the forefront of protests and boycotts against Shell, both in the country and abroad. If ever there was an elephant in the room!

The second recollection was a trip to Nigeria by one of my team members to do an audit on Shell’s ISO 14001 system. When she returned, I was aghast to learn that, at one point, the Shell vehicle had been surrounded by an angry mob threatening violence, after which the team travelled to Shell sites by helicopter and with an armed guard.

I have subsequently visited Nigeria five times and had a chance to speak to many of those working on corporate responsibility in the country, including a number of Shell’s national sustainability managers. As a result, I am more convinced than ever that the case holds vital lessons for other companies in how to be more accountable in the 21st century.

Lesson 1: Perception is reality

Whether Shell was actually in any way complicit in Saro-Wiwa’s execution did not make any difference. The fact that they made a plea to the Nigerian government for clemency did nothing to change the public perception – shaped largely by activist NGOs like Greenpeace and organisations like The Body Shop – that Shell must be guilty of serious human rights and environmental abuses.

Lesson 2: If you lie with dogs, you wake up with fleas

One of the reasons that Shell was targeted was that it was (and continues to be) ‘in bed’ with the government, which today is a majority shareholder in the company. 95% of Shell’s revenue after costs goes to the Nigerian government. Rightly or wrongly, stakeholders believe that, given these close ties, Shell is little more than a puppet of a corrupt government.

Lesson 3: Beware the resource curse

Despite Nigeria’s vast natural wealth, the majority of its people remain poor. Shell paid $42 billion in revenues to the Nigerian government between 2008 and 2012. A further $5.2 billion was paid in royalties and taxes in 2012. Due to the greed and corruption of its politicians, very little of this money is spent on human development. Poor governance and transparency makes the economic and social contribution of companies as effective as moving around the deck chairs on the Titanic.

Lesson 4: Penalties for losing a social license to operate are high

Shell estimates that, of the 26,000 barrels of oil spilled in 2012, 95% was the result of sabotage and oil theft. Besides these serious economic and environmental impacts, the safety and security of Shell staff are also compromised. In 2012, two contractors were killed in an armed attack while assessing the remediation of an oil-spill site, and in 2010, 26 employees and contractors were kidnapped (down from 51 in 2009).

Lesson 5: Environmental damage is costly

Shell is installing equipment that will reduce gas flaring from its facilities at a cost of $2 billion, in addition to the $3 billion already spent to reduce flaring. In order to lessen its operational spills, Shell constructed a $1.1 billion replacement pipeline. At the beginning of 2012, there 316 sites in need of remediation from spills (they had cleaned nearly 80% by the end of the year).

Lesson 6: Trust begins with transparency

Shell actively promotes and participates in the Extractive Industries Transparency Initiaitve in Nigeria, in which all payments to government are publicly disclosed. Besides this, Shell as created a public website which tracks the company’s response to, and investigation and clean-up of, every spill from its facilities, whether operational or the result of sabotage.

Lesson 7: Communities expect more than promises

Shell uses a Global Memorandum of Understanding (GMoU) model (introduced in 2006) to formalise its community contributions. Communities identify their own needs, decide how to spend the funding provided by SPDC and its joint-venture partners, and directly implement projects. By the end of 2011, Shell had signed and implemented agreements with 290 communities, of which 30% are around their operations in the Delta. In 2011, 596 projects and $79 million was channelled through the GMoUs.

Lesson 8: Reward innovation and best practice

In 2012, Shell received recognition in Nigeria’s Social Enterprise Reporting Awards (SERA), run by Trucontact, for its $27 million Kobo Fund, which enables small Niger Delta contractors to access loans needed to finance the supply of goods/services to Shell. The company is also providing $6 million for the UN-led Global Alliance for Clean Cooking Stoves, which aims to supply 100 million homes by 2020.

Lesson 9: Go beyond philanthropy

Despite spending over £31 million on community projects in 2012, Shell’s commitment to sustainability in Nigeria is demonstrably focused on reducing the negative environmental and health impacts of their core business operations, while increasing of the positive economic and social benefits.

Lesson 10: Support better policy

In recent years, the Nigerian government has moved to legislate CSR, including a requirement to spend no less than 3.5% of gross annual profits per year on CSR. Shell would do well to oppose policy developments like this, which only serve to embed a philanthropic mode and act like a tax. Far better would be to encourage better legislation (and more importantly, better enforcement) on critical issues like labour rights, environmental management and anti-corruption.

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[button size=”small” color=”blue” style=”download” new_window=”false” link=”http://www.waynevisser.com/wp-content/uploads/2013/08/blog_csrwire8_wvisser.pdf”]Pdf[/button] Oil on Troubled Waters: Can Shell Make Good in Nigeria?  (blog)

Related websites

[button size=”small” color=”blue” style=”tick” new_window=”false” link=”http://www.waynevisser.com/books/the-quest-for-sustainable-business”]Link[/button] The Quest for Sustainable Business (book)

[button size=”small” color=”blue” style=”tick” new_window=”false” link=”http://www.csrinternational.org”]Link[/button] CSR International (website)

Cite this blog

Visser, W. (2013) Oil on Troubled Waters: Can Shell Make Good in Nigeria? Wayne Visser Blog Briefing, 7 August 2013.

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Ties that Bind: Experiments in Community Business

Ties that Bind: Experiments in Community Business

Blog by Wayne Visser

After graduating in business studies from Cape Town, in 1992 I started a 4-month management traineeship programme with the Royal Bank of Canada in Kingston, Ontario. During this time, I came across the inspiring research of Professor Greg McLeod from Cape Breton University, written up in his Community Business Series booklets (and later, in From Mondragon To America – Experiments In Community Economic Development). Having worked in community development for over 30 years, McLeod was concerned about rootless capital – the trend of companies funded by absentee investors with no stake in the communities in which the business operates.

This is when I first learned of the amazing experiment in community business that had being going on for decades in Mondragon, a small town in the mountainous region of north-eastern Spain. Here, based on the teachings and initiatives of a Roman Catholic priest, a business comprising one electric stove manufacturer with five employees established was in 1955. Today, the Mondragon corporation is a complex of co-operatives with €36 billion ($46 billion) in assets and €13 billion ($17 billion) in sales, employing 80,000 people – all of which actively pursue a philosophy of local community development based on the values of co-operation, participation, social responsibility and innovation. With companies operating across four divisions (finance, industry, distribution and knowledge), Mondragon is today the foremost Basque business group and the seventh largest in Spain. For those who are interested to know more, there is a great series of blogs about Mondragon by co-founder and former CEO of Seventh Generation, Jeffrey Hollender.

Of course, not all community businesses are large. A much smaller-scale venture that interested me at the time was New Findhorn Directions (NFD), established in 1979 as an umbrella body for businesses operating from the Findhorn Foundation eco-community in Scotland. As it happened, I visited the community after my traineeship in Canada, and again in 1996 when I began my Masters in Human Ecology in Ediburgh. The businesses in place at that time included the Wood Studio, Bay Area Graphics, Findhorn Bay Apothecary, Weatherwise Solar and Alternative Data. They also had a pioneering eco-housing project (which included houses made from whisky barrels). What united these diverse companies were that they were all trying to demonstrate a broader community philosophy of ‘spiritual management’ and ‘work as love in action’.

What can we learn about corporate responsibility from these somewhat eccentric experiments in community business? The first point to note is that these businesses exist within a different (some might say counter-mainstream) micro-culture. The common objective in places such as Findhorn in Scotland and Mondragon in Spain is community and environmental improvement, including through enterprise. They are not hungry for short-term profits; rather, they are pursuing long-term sustainable development strategies. The desire is to be autonomous and self-sustaining and, most of all, to promote local self-development rooted in history and tradition. These two examples serve to illustrate that success stories in alternative ways of doing business do exist. The details of exactly how they are different, however, still need more thorough exploration …

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[button size=”small” color=”blue” style=”download” new_window=”false” link=”http://www.waynevisser.com/wp-content/uploads/2013/07/blog_csrwire4_wvisser.pdf”]Pdf[/button] Ties that Bind: Experiments in Community Business (blog)

Related websites

[button size=”small” color=”blue” style=”tick” new_window=”false” link=”http://www.waynevisser.com/books/the-quest-for-sustainable-business”]Link[/button] The Quest for Sustainable Business (book)

[button size=”small” color=”blue” style=”tick” new_window=”false” link=”http://www.csrinternational.org”]Link[/button] CSR International (website)

Cite this blog

Visser, W. (2013) Ties that Bind: Experiments in Community Business, Wayne Visser Blog Series, 10 July 2013.

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Lessons from Africa’s Wild Frontiers

Lessons from Africa’s Wild Frontiers

Blog by Wayne Visser

Birthplace of blood diamonds

We start our journey around the world in Africa, in the country known today as Zimbabwe. This is the place where I was born and spent my childhood years. At that time, however, the country was still called Rhodesia – so named after the colonialist Cecil Rhodes in the late 1800s. Rhodes, an English-born explorer turned entrepreneur and business magnate, is the focus of my first story – a lesson in the abuse of corporate power.

In 1871, Rhodes joined the diamond rush and headed to Kimberley in South Africa. By 1889, he had formed an effective monopoly through a strategic partnership with the London-based Diamond Syndicate, which agreed to control the world supply of diamonds – around 90% at one point – and thereby maintain high prices. In the same year, Rhodes established the British South Africa Company, which was empowered under royal charter to trade with African tribal leaders, as well as to form banks; to own, manage, grant or distribute land; and to raise a police force.

In return, the company agreed to develop the territory it controlled, to respect existing African laws, to allow free trade within its territory and to respect all religions. Four years later, however, the very same company had recruited its own army and invaded tribal king Lobengula’s territory in what became known at the 1893 Matabele War. The troops and white settlers occupied the town and Bulawayo was declared a settlement under the rule of the British South Africa Company. Rhodes ordered that a new town be built on the ruins of Lobengula’s royal place.

For me, the lesson to learn from Rhodes and his British South Africa Company is clear: when companies have too much power—either political power or economic power – they will tend to abuse that power to enrich themselves. The fusion of private economic interest with public political sanction is the ultimate toxic recipe for corporate irresponsibility. We see it in all the classic cases of business crimes against society and the environment, whether it is through the regressive political lobbying of the oil industry in the United States (going all the way back to Rockefeller’s Standard Oil company), or the majority ownership of Shell by Nigeria’s former military dictatorship government.

Man versus wild

My second story from Zimbabwe is about how greed and exploitation is decimating wildlife on the planet. I have a childhood memory of visiting Hwange National Park (then called Wankie), which is

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[button size=”small” color=”blue” style=”download” new_window=”false” link=”http://www.waynevisser.com/wp-content/uploads/2013/07/blog_csrwire2_wvisser.pdf”]Pdf[/button] Lessons from Africa’s Wild Frontiers (blog)

Related websites

[button size=”small” color=”blue” style=”tick” new_window=”false” link=”http://www.waynevisser.com/books/the-quest-for-sustainable-business”]Link[/button] The Quest for Sustainable Business (book)

[button size=”small” color=”blue” style=”tick” new_window=”false” link=”http://www.csrinternational.org”]Link[/button] CSR International (website)

Cite this blog

Visser, W. (2013) Lessons from Africa’s Wild Frontiers, Wayne Visser Blog Series, 26 June 2013.

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The Life Story of a Global Movement

The Life Story of a Global Movement

Blog by Wayne Visser

This new blog series for CSRwire is based on my book, The Quest for Sustainable Business. The book, in turn, follows a journey – around the world and through time; a journey of discovery and ideas. In the blog posts that follow, I will give you some glimpses into the search that has taken me to over 65 countries in the past 20 years. The path begins in Africa and winds its way through Asia, North America, Europe, Australasia and Latin America.

Along the way, I will share what I have learned in my encounters with mega-corporations and small farmers; and in conversations with CEOs and social entrepreneurs. I draw on facts and figures about world trends, and interviews with thought leaders and activists. This is a tale that consciously weaves the personal and the professional, mixing anecdotes and case studies. It looks outwards and reflects inwards, and is both autobiography and the life story of a global movement.

My inspiration for the book came when I decided, in 2010, to leave the security of the University of Cambridge – where I had been developing a Master’s in Sustainability Leadership – and set out on a ‘Corporate Social Responsibility (CSR) quest world tour’, which took me to 20 countries on five continents, travelling continuously for nine months. It was one of those great ironies of my life that I had to leave one of the world’s premier educational institutions in order to advance my learning.

Suffice to say I had an itch and I needed to scratch it. I wanted to reconnect with what was happening on the ground in countries around the world; and I was excited by the prospect of making new friends, seeing new lands, soaking up diverse cultures and discovering fresh case studies. More than anything, I needed to rekindle the passion that had started me on this career in sustainable business 20 years before.

My intention was always to capture my insights along the journey and share them with a wider sustainable business audience. One of the ways I did this was to conduct nearly 100 video interviews, all of which are shared on the CSR International channel on YouTube, and referred to throughout the text of the book.

The other way was to keep a diary and to write a book about my travel experiences—the book which forms the basis for this blog series. However, when I started to write, I repeatedly found myself referring to earlier parts of my career. Gradually, I began to wonder if there was a bigger story to be told. After all, my journey began in the lead-up to the Rio Earth Summit in 1992, and here we were, 20 years later, preparing for Rio+20.

In the interim, I had been fortunate to work, study, teach and research in the field of sustainable business, tracking its path as it emerged from a fringe concern to a mainstream movement and a global profession. There were stories to tell that ranged from hippie-like adventures in eco-villages and community enterprises to hard-nosed consulting assignments for big global brands. I had worked as a strategy analyst for Cap Gemini and set up and ran KPMG’s Sustainability Services in South Africa.

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[button size=”small” color=”blue” style=”download” new_window=”false” link=”http://www.waynevisser.com/wp-content/uploads/2013/07/blog_csrwire1_wvisser.pdf”]Pdf[/button] The Life Story of a Global Movement (blog)

Related websites

[button size=”small” color=”blue” style=”tick” new_window=”false” link=”http://www.waynevisser.com/books/the-quest-for-sustainable-business”]Link[/button] The Quest for Sustainable Business (book)

[button size=”small” color=”blue” style=”tick” new_window=”false” link=”http://www.csrinternational.org”]Link[/button] CSR International (website)

Cite this blog

Visser, W. (2013) The Life Story of a Global Movement, Wayne Visser Blog Series, 19 June 2013.

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