Royal Dutch Shell

Shell hopes report will appease critics

PUBLISHED : Wednesday, 22 April, 1998, 12:00am
UPDATED : Wednesday, 22 April, 1998, 12:00am

Royal Dutch/Shell, one of the world's biggest oil and gas groups, yesterday unveiled its first social responsibility report in a bid to answer intense criticism of its 'insensitive' approach to the environment.

In what is thought to be the first of its kind anywhere in the world, the report Profits and Principles - Does There have to be a Choice? said it aimed to weigh the performance of the group against its statement of general business principles, which set out ethical guidelines for its 105,000 employees.

It revealed 23 Shell staff had been caught and sacked for soliciting or accepting bribes, and it had cancelled 95 contracts because the contractors they were planning to employ did not meet its statement of general principles.

The group rule is clear - 'any bribery and you're out', the report said.

The 56-page report, to be produced annually, said Shell was committed to spending US$500 million over five years on developing a renewable energy business, and that by the end of next year all Shell companies would have systems to check performance on health, safety and the environment.

The company said it wanted to open permanent channels for feedback, and wanted suggestions from the public and pressure groups on how it could deal with dilemmas it faced such as 'bribery, double standards, and balancing profit for shareholders against spending on community projects'.

Shell chairman of the committee of managing directors, Cor Herkstroter, said the pioneering report was much more than just 'sober facts and figures'.

'It involves the passions and feelings of the people who make the group what it is,' he said.

The group has faced a barrage of criticism from pressure groups all over the world, who have accused it of putting profits over environmental and social welfare. It has been attacked for its policies in Nigeria, where demonstrators have sabotaged its installations in the volatile and heavily populated Niger Delta, where Shell pumps out more than 800,000 barrels per day of oil.

It has also been caught up in controversies in Britain, where it lost government backing to dump its Brent Spar North Sea platform at sea, and was forced to dispose it off the coast of Norway at a cost of GBP33 million (about HK$428.65 million) .

Shell said it was now working much more closely with non-governmental organisations such as Greenpeace.

One institutional investor said the new ethical approach adopted by Shell had to be commended, although all investors would be caught in their own dilemma of worrying about whether such a strategy could have an impact on profits.

'In theory there is a link between better social and environmental policies and improved profits, but it has yet to be proven,' he said.

'What is almost certain to happen is profits could be hit by these policies in the very short-term.'