Introduction about shell Royal dutch shell plc commonly known as Shell, one of the world’s largest oil & gas multinationalcompanies. It is an Anglo-Dutch company with headquarters in the Netherlands with its registered office in London, United Kingdom. It is the fifth-largest company in the world (and the second-largest energy company). It is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading. It also has major renewable energy activities, including in biofuels, hydrogen, solar and wind power.
Shell has operations in over 90 countries, produces around 3.1 million barrels of oil equivalent per day and has 44,000 service stations worldwide. Shell Oil Company, its subsidiary in the United States, is one of its largest businesses.
Shell provides 2.5% of the world’s oil and 3% of its natural gas. Oil and gas are non-renewable resources, but remain essential for powering the world’s needs and their demand is continuously increasing. Shell sells enough petrol and diesel a day to fuel 16 million vehicles and enough liquefied natural gas to provide electricity for 34 million homes around the world.
However, energy use is increasing due to a growing world population and higher standards of living. This means more demand not only for oil and gas but also for other energy sources. Shell is therefore faced with an enormous challenge – to help meet the needs of the present and future generations, while creating as little negative impact as possible to the environment. Organisation
Shell is currently organised into four major business groupings:
* Upstream International - manages the Upstream business outside the Americas. It searches for and recovers crude oil and natural gas, liquefies and transports gas, and operates the upstream and midstream infrastructure necessary to deliver oil and gas to the market. Its activities are organised primarily within geographic units, although there are some activities that are managed across the business or provided through support units.
* Upstream Americas - manages the Upstream business in North and South America. It searches for and recovers crude oil and natural gas, transports gas and operates the upstream and midstream infrastructure necessary to deliver oil and gas to market. Upstream Americas also extracts bitumen from oil sands that is converted into synthetic crude oil. It comprises operations organized into business-wide managed activities and supporting activities.
* Downstream - manages Shell's manufacturing, distribution and marketing activities for oil products and chemicals. Manufacturing and supply includes refinery, supply and shipping of crude oil. * Projects & technology - manages the delivery of Shell's major projects and drives the research and innovation to create technology solutions. It provides technical services and technology capability covering both Upstream and Downstream activities. It is also responsible for providing functional leadership across Shell in the areas of health, safety and environment, and contracting and procurement.
* Gas and electricity * Industrial use * Domestic use
* Refined oil productsFuels * Lubricants * Bitumen * Lubricants * Liquefied petroleum gas
* Chemical Products used for * Plastics * Coatings * Detergents
Stakeholders A person, group, or organization that has direct or indirect stake in an organization because it can affect or be affected by the organization's actions, objectives, and policies. Key stakeholders in a business organization include creditors, customers, directors, employees, government (and its agencies), owners(shareholders), suppliers, unions, and the community from which the business draws its resources.
Examples of a company's stakeholders
Stakeholders| Examples of interests| Government| taxation, VAT, legislation, low unemployment, truthful reporting.| Employees| rates of pay, job security, compensation, respect, truthful communication.| Customers| value, quality, customer care, ethical products.| Suppliers| providers of products and services used in the end product for the customer, equitable business opportunities.| Creditors| credit score, new contracts, liquidity.|
Community| jobs, involvement, environmental protection, shares, truthful communication.| Trade Unions| quality, Staff protection, jobs.| Owner(s)| have interest of the success of his/her business.|
There are two categories of shell stakeholders. 1. Internal stakeholders. Internal stakeholders are those who are ‘members’ of the business organization. Internal stakeholders are seen by the wider community as reflecting Shell and how it works.
2. External stakeholder. External stakeholders are people who are impacted by business’s work as clients/constituents, community partners, and others. External stakeholders are not part of the business but have a keen interest in what it does and influence Shell’s decision-making.
Internal stakeholders of shell
* Shareholders Shareholders play a crucial part in the life of the business. They provide a sizeable part of the capital required to set up and run the business.They take a reward from a share of the profits in the form of a dividend. This varies according to how many shares they own. The shareholders choose a Board of Directors to represent them and provide a direction to the company. This is set out in a long-term plan which is called a strategy. The directors are responsible for the implementation of the strategy. Each year the directors must produce a report for shareholders. This report is presented each year at an Annual General Meeting of shareholders.
* Suppliers Suppliers are also internal stakeholders who are Shell’s partners in the chain of production - for example in bringing petrol from the oil well to the petrol pump. Shell has a number of core values that are central to everything it does. Shell’s reputation depends on making sure that its business actions reflect these core values. Shell works with contractors and other partners in the supply chain who also demonstrate these values. If they do not, Shell will not use them. Supplier’s needs are,
* Want continuation of business. * Must reflect Shell values. Shell supplier principles In accordance with Shell General Business Principles and Group Code of Conduct, they seek to work with contractors and suppliers who contribute to sustainable development and are economically, environmentally and socially responsible. They will develop and strengthen relationships with contractors and suppliers who are committed tothe principles set out below or to similar standardsthrough their own activities and the management of their own suppliers and sub-contractors. Contractors and suppliers should provide workers with a dedicated whistle-blowing mechanism where grievances related to below topics can be logged confidentially. * Employees
Needs of the employees are, * Want secure employment, good benefits, safe conditions.
* Give high standards of service to maintain industry leadership Another important internal stakeholder group are employees. Shell employs over 100,000 people worldwide. These include senior international managers specializing in finance, marketing, sales, oil and gas exploration and other aspects of the business. Other employees include geologists, market researchers, site engineers, oil platform workers, office administrators, business analysts and many more. As stakeholders, employees are influenced by Shell but also affect how Shell operates. T
he employees’ standard of work and commitment to health and safety and excellence is vital in order to keep Shell as a leader in the energy field. Mistakes can be costly in terms of reputation and the livelihood of other employees. A priority at Shell is to respect people. It seeks to provide its staff with good and safe working conditions, and competitive terms of employment. This has a positive influence on employees as it keeps them safe and motivated. External Stakeholders of Shell
* Customers (business and individual) Customers buy the goods or services produced by firms. They may be individuals or other businesses.Firms must understand and meet the needs of their customers, otherwise they will fail to make a profit or, indeed, survive. One of Shell’s major objectives is:
‘To win and maintain customers by developing and providing products and services which offer value in terms of price, quality, safety and environmental impact, which are supported by technological, environmental and commercial expertise.’ Achieving this objective is challenging. Customers want value for money which involves providing the highest quality fuels atcompetitive prices. Research drives this process.
* Safety and environmental impact are key ingredients of the research and development process. Increasingly customers, concerned about pollution and environmental damage, require cleaner, more efficient fuels such as biofuel. * There is global interest in liquid biofuels for transport as people travel more. Biofuels also offer the potential to slow the rate of growth in the world’s CO2 emissions.
Shell responds to present changes in customer views and seeks to anticipate future customer expectations. It aims to help customers use less energy and emit less CO2. * Shell products include fuels and lubricants for all forms of transport such as, cars, ships, aeroplanes and trains. Shell has a set of global environmental standards/expectations for all of its companies. * Local communities
Local communities means, the communities living close to oil refineries have raised concerns over their safety. Shell seeks to overcome these fears by earning the trust of people by taking all the necessary safety measures. This includes operating the plant safely and making people aware of plans and emergency procedures.
Shell, in its commitment to improve the wellbeing of local communities, has created local partnerships. For an example, Shell has provided health facilities and supported the development of local schools and universities. Shell’s oil and gas operations aim to create economic and social development while minimizing negative impacts. It seeks to invest in lasting benefits for the community.
Their needs are,
* Want high levels of safety in their location * Benefit from Shell’s local partnerships, e.g. health/ education facilities or the creation of jobs
* Interest Groups
These are decision makers and opinion formers. People and organisations inpositions of influence make decisions and form opinions that canaffect Shell. These include academics, government, media, nongovernmentalorganisations (NGOs) business leaders and thefinancial community. They interact with Shell in different ways:
* Governments – Shell has operations in many countries across all regions of the globe. To gain approval to operate in these countries it has shown the host governments that it is operating in the right way. This includes creating jobs, paying taxes and providing important energy supplies. Shell is also working with governments to promote the need for more effective regulation on CO2 emissions.
* The business community – Shell supplies to and buys from hundreds of other businesses. * Other oil companies – Shell works in partnership on projects with many other oil companies. These include both competitors such as BP and Exxon, and partners such as government owned oil companies in the countries in which it operates. Partnership activities have included building new oil or gas supply lines and new refineries. * NGO - NGOs are important bodies that influence decision-making. For example, Shell was considering drilling in 2008 for gas in British Columbia’s Sacred Headwaters (the source of three important rivers).
These rivers provided a source of wild salmon and other natural resources. A number of organizations were set up to protect the Headwaters including ‘Friends of Wild Salmon’. Shell listened to their concerns and postponed further drilling work. * The media – it is essential for competitive companies like Shell to continue to operate in ways that receive positive press coverage from newspapers, television and magazines. This reinforces its position in the market and can help to attract new customers through a positive reputation.
* Pressure groups
A pressure group is a group of people with specific aims andinterests which tries to influence major decision makers likebusinesses and governments and raise public awareness aboutissues.Shell talks regularly with major pressure groups such as Greenpeace about key issues such as how best to dispose of old oil rigs to minimize damage to the environment. Human Rights issues
Shell is dedicated to protecting human rights and helping communities. The search for oil and gas can take energy companies to places with poor human rights records. It treats each case separately using decision-making methods set out by the Danish Institute for Human Rights. If Shell chooses not to operate in these areas, this opens the door for less principled competitors to exploit workers in these countries. If it stays then it can be seen to be part of the problem. Shell will only operate in countries where it is able to follow its business principles. These principles set out what Shell stands for and define its behaviour and are published on its website.
Resolving stakeholder conflict
Shell believes that it will continue to exist and grow if it can balance the needs of stakeholder groups. Shell employs three criteria in making such decisions. It assesses whether:
1. The economic impact of the activity is likely to yield a good return for shareholders 2. The social impact will be suitable for employees and communities 3. The long-term effect of its activity will harm the environment. To avoid conflict, Shell sets minimum levels that must be met for all three areas before making a major decision or investment in any one. For example, when planning new activity on land that was previously used for other purposes such as timber, or agriculture, Shell looks to see if the longer term social or environmental impacts do not outweigh the financial return on that activity.
Triple Bottom Line
The triple bottom line (abbreviated as TBL or 3BL, and also known as people, planet, profit or the three pillars) captures an expanded spectrum of values and criteria for measuring organizational (and societal) success: economic, ecological, and social.
We can identify the shell’s triple bottom line as following…….
Corporate Social Responsibility Corporate social responsibility (CSR) is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere who may also be considered as stakeholders.
Shell subscribes to the principle of sustainable development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs. Being part of communityshell subscribes to the same principle of sustainable development.
Their practices are aligned with the systematic approach adopted by Royal Dutch Shell plc in their own efforts to implement good health, safety and environmental management practices. Their actions are governed by the need to make business decisions that give credence to their sense of economic, social and environmental responsibilities and by which their stakeholders and society can hold them accountable.
As they journey towards achieving their aspirations, the methods by which they bring their sustainable development practices into play will be integral to their success. Their current stance is reflected in the following practices:
• Shellprovidestheir customers with solutions and a variety of energy products, materials and services, which meet their requirements economically and does not cause harm to the environment. Shell work to convince them that their activities and their support for shell,do not lead to unsustainable social differences but create wealth,which benefits society as a whole. Shell also works to convince them that there is a clear path for the future development of their industry, which will benefit the next generation.
• Shell build and maintain a culture of learning and innovation in which employees can fulfill their potential and meet the most challenging of targets – while having fun at the same time! It is a culture where they encourage their leaders to inspire others through personal example, and where the values of honesty, integrity, respect for people, trust, openness, teamwork and professionalism, can prosper.
Environmental and Social Impact
* All Shell companies have a systematic approach to HSE management to ensure legal compliance and continuous performance improvement. Shell publicizes environmental targets (including energy intensity for the chemical industry, CO2 emissions, safety incidents), and its staff are measured against these in their annual performance review process. * Shell’s Impact Assessmentwebpage guides the evaluation of the company’s social impact.
This used to ensure that systematic assessments are included in decision making and design of new investments and plans. Shell’s social policies are reviewed regularly. Shell also publicizes social performance targets against which staffs are appraised.
* Shell meets all good practice principles for environmental and social impact evaluation including engaging external stakeholders in the evaluation of activities which have impacted them, being open and transparent about evaluation results, using those results to inform future decision making, and evaluation of both goals and policies.
* Overall responsibility for social and environmental evaluations lies with Shell’s Social Responsibility Committee which oversees how the company is handling existing social issues and environmental impacts at projects and operations. Environmental impact evaluation training is delivered by the Health, Safety & Environment (HSE) department, and a listing of competencies for all staff shows what training they have received.
Creating corporate shared value The concept of shared value can be defined as policies &operating practices that enhance the competitiveness of a company while simultaneously Advancing the economics & social conditions in the communities in which it operates. In other words, The link between competitive advantage and Corporate social responsibility.
Companies can create shared value opportunities in three ways: • Reconceiving products and markets- Companies can meet social needs while better serving existing markets, accessing new ones, or lowering costs through innovation. • Redefining productivity in the value chain - Companies can improve the quality, quantity, cost, and reliability of inputs and distribution while they simultaneously act as a steward for essential natural resources and drive economic and social development.
• Enabling local cluster development - Companies do not operate in isolation from their surroundings. To compete and thrive, for example, they need reliable local suppliers, a functioning infrastructure of roads and telecommunications, access to talent, and an effective and predictable legal system. * Reconceiving products & markets
* It is addresses the question, Is our product good for customers? * Through the ties between its Group companies and research labs, Shell is striving to develop new energies and environmentally friendly products. The company aims to be an “energy solution provider” that supplies sustainable energy. * With respect to environment friendly, they help to reduce negative impacts by producing cleaner products: more cleaner-burning natural gas, better biofuels, and fuels that help customers improve their fuel efficiency and reduce emissions.
* By being aware of changes in customer values and regulatory requirements shell can develop products and services that meet their customers’ needs for clean, convenient and affordable energy before their competitors. * They consider environmental and social factors in their investment decisions and when planning major new projects. For example to include the expected future costs of emitting CO2. They perform an environmental, health and social impact assessment before starting any major work and they carry out subsequent reviews.
* Redefining Value chain activities * It is addresses the question, How shell do the primary & supportive activities environment friendly. Project & technological development For more than 85 years shell has been one of the leader in technology research. Most recently their research has been focused on meeting a number of topical challenges, such as: * Reducing emissions and the risks.
* Developing market led solutions to improve the rural and urban environments. * Developing solutions to meet specific customer needs.
Projects & Technology manages the delivery of Shell’s major projects and drives its research and technology development programme. Projects & Technology provides technical services and technology capability to the Upstream and Downstream businesses. It oversees safety and environmental performance and manages contracting and procurement across the company.
Human resource development To increase the productivity of the employees, shell provides higher wage & training and shell mostly concentrates on safety of the employees. Training – Since Shell recognizes that people are behind their success, Shell is committed to provide the training.Because Shell believes that employees need to fully optimize their skills and potential in order to excel in business. Therefore, Shell offers a huge range of training and development activities.
Safety - Shell has great efforts in ensuring safety of employees. Not only the employees but shell also considers other things. Following safety procedures have been laid down by Shell. * Personal and process safety
* Strengthening their safety culture * Road Safety * Safety in Shell * Safety podcast Sales and Marketing Shell responsible for strengthening their corporate reputation, building brand awareness and supporting their strategic business goals. In particular, they produce imaginative sales and marketing plans without affecting the environment & society negatively and implement them on a national, regional or global basis. When they perform their marketing activities, they focuses on safety of environment & society such as, reduce environmental pollution, waste elimination through the well-defined waste management.
All operational improvement should be used as examples of sustainability and corporate social responsibility by shell. Major activities included in sales & marketing are, * Monitoring market developments and briefing colleagues for strategic planning cycles. * Maximizing sales revenue by driving product availability, promotional effectiveness, merchandising activity and pricing. * Developing value propositions for customer segments and building excellent customer relationships.
Supply & Distribution Safe and efficient logistics are critical to the sustainability of the chemical industry. Its performance in relation to responsible product transport and handling, care for the environment and compliance with regulations have potential to impact its image, reputation and license to operate.
Distributors serve an important Solvents market where typically customers, hence volumes, are smaller and the broad product portfolio adds to supply chain complexity. Shell has worked with selected distributors to streamline and improve the operational effectiveness of this route to market, employing a standardised business model, e-commerce tools and simplified logistics based on product collections.
According to the shell’s principle, Vehicles and drivers arriving at the Shell plants for product collection have to satisfy minimum HSSE (Health, Safety, Security and Environment) criteria or could be turned away. Shell’s main policy regarding to the distribution is, they look at both the suitability of the vehicle and the drivers that understanding the product and safe loading and unloading procedures without any negative impacts on society. * Enabling local cluster development
A Company may have a relationship with the community within which they are operate & the supporting companies. A company may help to regional economic growth. Cluster includes not only the business but institutions such as standards organizations and trade association. Community Development One of the shell’s main principle & major function is Community Development. Their object according to the community development is, “Wherever we operate we are part of a community. Our energy projects and facilities bring jobs and other benefits”It means, they work with communities to help develop local economies and improve how they operate.
Being part of a community – It means, sharing a range of benefits with those around the business. They include local jobs and training, contracts for goods and services, and the investments that make in community programmes.
They hire and buy locally to support development in countries where they work. (In 2010, more than 90% of Shell staff worldwide were nationals. they recruit and train local staff in countries where they operate. In some cases, governments require them to do this. But in most cases it is Shell’s voluntary policy)
They also work in partnerships with local and national governments to help build skills that meet development needs. Through the Shell LiveWIREprogramme that is active in 21 countries shell support young entrepreneurs in setting up businesses& provide them an opportunities to work in shell companies.
Shell aim to be good neighbors by continuously improving the ways in which they contribute directly or indirectly to the general well-being of the communities within which they work. Shell manages the social impacts of their business activities carefully and work with others to enhance the benefits to local communities and to mitigate any negative impacts from their activities. In addition, Shell takes a constructive interest in societal matters, directly or indirectly related to their business.
Regional economic growth Shell is supporting economic development by providing energy while addressing the social concerns at their operations.
* Fuelling development Their biggest contribution to society is providing the energy the world needs for economic growth and development. Shell companies provide about 2% of the world’s oil and 3% of its natural gas. They selling transport fuel to around 10 million customers a day and enough liquefied natural gas to provide electricity for 34 million homes. * Royalties and taxes
They make a major contribution to government finances: managed well the money can fund services such as schools and hospitals and diversify the economy. Managed poorly, the money can stimulate corruption, social inequality and conflict. * Buying and hiring locally
Shell has a global tendering and contract management process and they actively promote the use of local suppliers and contractors. They train local companies to help them meet their standards so they can compete for contracts. * Social investment
Shell have been involved in social investment programmes for many years and are working to make them more effective at delivering real benefits for the countries and communities where they operate. they support projects that are relevant to their business, such as mathematics and science education initiatives and environmental sustainability.
Conclusions Contributing to sustainable development Corporate Social Responsibility (CSR) or commonly known as Social Performance (SP) in Shell Group is the term they use to describe how they manage the impact of their business on the communities and societies in which they operate. As part of the Shell Group guidelines, Company has developed and executed its SP Plan, which aims to increase social performance levels in a structured manner. Shell Company and its stakeholders stand to gain from proactive engagement on clearly drawn-up issues.
Through a strategic and sustained SP Plan we aim to. • Contribute to the development of communities within which we operate. • Maintain and sustain the environment for the present and future generations. • Treat employees with dignity and respect. * National Day celebration with pre-school children. • Unity Walk with PD residents. • Refinery visit by various NGOs, Government bodies and students. • Community dialogues with NGOs, neighbors and Government authorities. • District-level English public speaking competition. • District-level English debating competition. • District-level English drama competition. • District-level English choral speaking competition. • Health day with local residents. • Beach cleaning campaign with students and National Service trainees. • Career guidance talk to secondary students with a NGO.
As an important part of society, all businesseshave a role to play in protecting and supporting biodiversity. As an active contributing member of society, Shell takes this responsibility very seriously.
Shell recognise that their operations have consequences that, if unaddressed, can result in the loss of biodiversity and can cost us their time, money and reputation. A failure to protect biodiversity could jeopardise theirlicence to operate, while a strong reputation built on the effective management of biodiversity will be a competitive advantage.
There is a clear business case for addressing biodiversity within Shell. their approach is set out in a Group Biodiversity Standard. The Shell Group Biodiversity Standard dictates that: • They conduct environment assessments, including the potential impact on biodiversity, prior to all new activities and the significant modification of existing activities; • They bring focused attention to the management of activities in internationally recognised hotspots, including the identification of key stakeholders and early consultation with them. In meeting the above standards, they will: • Work with others to maintain ecosystems; • Respect the basic concept of protected areas; • Seek partnerships to enable the Group to make a positive contribution towards the conservation of global diversity. In all that they do, they will balance theireconomic ambitions with a clear commitment to corporate responsibility. Health, Safety, Security and the Environment
Shell companies have a systematic approach to health, safety, security and environmental management in order to achieve continuous performance management. Shell companies manage these matters as critical business activities, set standards and targets for improvement, and measure, appraise and report performance externally. They continually look for ways to reduce the environmental impact of their operations, products and services. Balancing Stakeholder needs
Balancing the needs of the stakeholder is very essential issue for any type of business. But it is very difficult to balance the needs of stakeholders. In order to best achieve this balance shell recognizes five areas of responsibility to: shareholders, customers, employees, suppliers, society.
Shell’s values Shell employees share a set of core values – honesty, integrity and respect for people. They also firmly believe in the fundamental importance of trust, openness, teamwork and professionalism, and pride in what they do. Sustainable development
As part of the Business Principles, they commit to contribute to sustainable development. This requires balancing short- and long-term interests, integrating economic, environmental and social considerations into business decision making. Responsibilities
Shell companies recognise five areas of responsibility. It is the duty of management continuously to assess the priorities and discharge these inseparable responsibilities on the basis of that assessment. To Shareholder
To protect shareholders’ investment, and provide a long-term return competitive with those of other leading companies in the industry. To customers To win and maintain customers by developing and providing products and services which offer value in terms of price, quality, safety and environmental impact, which are supported by the requisite technological, environmental and commercial expertise.
To employees Respect the human rights of our employees and to provide them with good and safe working conditions, and competitive terms and conditions of employment. Promote the development and best use of the talents of their employees. createan inclusive work environment where every employee has an equal opportunity to develop his or her skills and talents. Encourage the involvement of employees in the planning and direction of their work&Provide them with channels to report concerns. Shellrecognise that commercial success depends on the full commitment of all employees. To Suppliers
Seek mutually beneficial relationships with contractors, suppliers and in joint ventures and to promote the application of these Shell General Business Principles or equivalent principles in such relationships. The ability to promote these principles effectively will be an important factor in the decision to enter into or remain in such relationships. To society
Conduct business as reasonable corporate members of society &comply with applicable laws and regulations &support fundamental human rights in line with the legitimate role of business, and to give proper regard to health, safety, security and the environment.
References www.shell.com Code_of_conduct_shell