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Shell Failed Community Engagement in Niger-Delta Region and
Implications for CSR Practices: Towards Global Best Practices
for Sustainable Stakeholders’ Involvement
Dr. Adewole Adeyeye Daniel Olukayode Adekeye*
General and Entrepreneurial Studies, Ondo State University of Science and Technology,
P.M.B. 353, Okitipupa, Nigeria
Abstract
The study examines the experience of Shell Petroleum Development Corporation (SPDC) in Corporate Social
Responsibility (CSR) practices. The study observes that the experience of SPDC is one of deep frustrations
occasioned by inappropriate and ineffective stakeholders’ engagement. The study also observes that aside from
making host community encounter repeated deprivations, the SPDC in the Niger Delta fails to adequately
involve stakeholders in its CSR agenda in ways that are acceptable. All these raised the challenge of designing
best CSR practices for stakeholders’ engagements to address communities that perennially suffer the negative
impacts of business activities. The study concludes by attempting a template for global best practices for
sustainable stakeholder engagement with hostile host communities in CSR practices in order to achieve
sustainable business practices.
Keywords: CSR, Niger-Delta, Relationship Management, SPDC, Sustainability
DOI: 10.7176/IAGS/93-03
Publication date: January 31st 2022
1. Introduction
Many literatures have consistently upheld the imperatives of Corporate Social Responsibility (CSR) practices as
major enabler to sustainable business activities. In the present dispensation, businessmen can only abandon CSR
agenda to their own peril. There should be symbiotic relationships between a business entity and its network of
stakeholders. Research reports concur that the essential principle which guides Corporate Social Responsibility
(CSR) practices is predicated on business commitment to sprawling relationship with relevant stakeholders
particularly consumers, employees and host communities (Jose Milton, et al. 2010); (Andrea 2010). This
relationship must be cultivated and effectively managed in order to engender sustainable activities. Feghi and
Nasar (2012) affirm in their study that in management practices, Corporate Social Responsibility (CSR) has
become a widely accepted approach to effective operations. In their reports on the “Role of Business in Society:
An agenda for action” at Harvard University CSR and international business leaders forum, Fitz and Cormack
(2006) clearly emphasized the critical role of social responsibility for successful business expeditions. There are
many literatures on key features of CSR agenda, its inherent advantages and also the dangers of not
implementing CSR practices.
However, there are not too many management literatures on global best CSR practices or standard model
for organizations in order to maximize inherent benefits of corporate social responsibility practices. Besides,
there is also lack of in-depth information as to which approach is best suited for corporate social responsibilities
in terms of proper engagement of stakeholders. It is also very difficult to get materials on CSR approach for
dealing with perennially hostile host communities. The frustrating experience of Shell Petroleum Development
Corporation (SPDC) in the Niger Delta region of Nigeria has thrown up two major challenges along this line.
The first is the need for critical re-appraisal of CSR approaches in general. The need for CSR appraisal against
the backdrops of what approach is best suited in a given business circumstances. The second challenge is the
prospect of global best Corporate Social Responsibility (CSR) practices for categories of business organizations
as it concerns dealing with incessantly restive host communities.
The Shell Petroleum Development Company (SPDC) experience in Niger-Delta region of Nigeria has been
described as a classical case study on how not to engage stakeholders in Corporate Social Responsibility
practices particularly in relation to host communities. The reason for this is that Shell suffers untoward
frustrations; she was driven to a point where she engaged in various pull-out threats from the Niger Delta region
of Nigeria. She also experienced various directives on deadlines and orders from Nigerian government over what
she needed to do. Presumably an indication that Shell, it seems, does not know or does not seem to know what
she needs to do or she abdicated her responsibilities. Some explanations have been given for the unpalatable
encounter experienced by Shell in the Niger Delta region. These include the use of wrong CSR approach; over
reliance by Shell on in house Corporate Social Responsibility (CSR) principle which remains essentially
irrelevant to the Niger Delta region; and out rightly poor method of engaging stakeholders particularly as it
concerns restive host communities.
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It is the position of this study that while it may not be possible to have hard and fast principle for Corporate
Social responsibility (CSR) practice in general, we agree that stakeholders' engagement, particularly dealing with
restive host communities falls within the realm of relationship management which follows certain broad
management principle. In this context, relationship management should be clinical, procedural and follow certain
principle (Jones & Bartlett 2009; Luu. Trong, et al 2014; Robert 2015). It is inconceivable why Shell should fail
in this activity. While the study does not concern itself with why adoption of in-house CSR principles by Shell
since there is no approach that is sacrosanct, the focus of the study therefore is predicated on why Shell has not
effectively work in order to engender support of its critical host communities and stakeholders towards effective
Corporate Social Responsibility practices. The study attempts global best practices for relationship management
that should have been deployed to help in CSR practices in this context.
2. Petroleum Exploration, Shell Petroleum Development Company (SPDC), Its Host Communities and the
CSR Challenge in the Niger-Delta Region
Shell Petroleum Development Company (SPDC) is a member of the Shell Group worldwide. The company is the
operator of Nigerian Joint Venture Oil business through the Nigerian National Petroleum Corporation (NNPC).
The company fully became involved after discovery of first commercial oil field in Oloibiri in the late 50’s and
since then, its activities in petroleum business have expanded greatly. Shell Petroleum Development Company
(SPDC) participates actively in massive exploration, production and distribution of different range of petroleum
products. It operates in an oil mining lease area of about 31,000 square kilometers in the Niger-Delta region of
Nigeria. From its base in the Niger Delta, the company runs a network of approximately 6000 oil pipelines and
flow lines, 87 flow stations, about 1000 producing wells in addition to 8 gas plants.
The Niger-Delta region is an epitome of oil wealth. It holds at least 20 billion barrel of oil reserves, while
the Shell led-petroleum activities pumps about 2 million barrels of oil daily from the region. Most activities of
Shell Petroleum Development Company (SPDC) are concentrated in the Niger-Delta region. The region
represents the core area where exhaustive production and exploratory activities take place. Activities of Shell
Petroleum Development Company (SPDC) in the Niger-Delta region according to (Chinua & Chinedu 2001;
Mbidoka 2004) include extractions , drilling, earth-moving activities, deep-sea explorations, opening of roads,
bush clearing, deployment of heavy equipment, digging of borrow pits, massive construction works which
include petroleum terminals. Shell constructed large terminals, including Forcados and Bonny terminals. Some
of the terminals are capable of storing 13 million barrels of crude oil. There are pipeline network that criss-cross
parts of the region for easy crude oil transportation. Shell is also involved in deep water drilling across the
adjoining sea and water in the Niger-Delta region.
The Niger-Delta today inhabits about 31 million people of more than 40 ethnic groups with about 250
dialects (Adekeye 2014:71). The region is inhabited by Nigerian minority groups such as Itsekiris, Urhobos,
Ijaws, Ilajes, Ogonis, Kalabaris’, Efiks, Ikweres. Various reports have identified ways by which Shell
operational activities impact negatively on its host communities (Bosen 2002; CNN 2004; Ndubuisi & Asia
2007). First, there is serious implication for human displacements. As Shell Petroleum Development Company
(SPDC) expands its exploration activities to capture new oil opportunities, it embarks on human displacements
with tragic interferences and disruptions of human settlement equilibrium. Farmlands, houses and other
settlements were made to be supplanted by erected oil facilities. This is one of the major causes of sporadic
clashes between Niger-Delta oil producing host communities and Shell led oil companies. Second, Shell
Petroleum Development Company (SPDC) often leaves in its trails, massive oil spills across land and sea in the
Niger-Delta region. Oil-related chemicals spill on available surfaces across the lands and water in Shell
operating areas. When this happens, the spillage kills plants and harm animals. In addition, water is polluted and
the earth is de-fertilized for good planting. Third, oil companies flared about 1.7 billion standard cubic meters of
gas. The negative effects of gas flaring are unimaginable. The recurring gas flares close to Niger-Delta host
communities precipitate air pollution. (Ndubuisi & Asia 2007; Aniefiok & Udo 2013). It contributes to global
warming. It also leads to many destructive air hazards. Fourth, Shell exploratory activities also pose serious
health implications to its host communities in the Niger-Delta region. Apart from the fact that host communities
are made to contend with polluted water and other related health risks; there is strong challenge of hydro-carbon
contamination that over-hangs every inhabitant in Niger-Delta region. Finally, Shell Petroleum Development
Company (SPDC) activities promote and exacerbate poverty in the Niger-Delta region. Encroachments on
farmlands and water ways due to oil spillage and massive water pollution have denied Niger Delta host
communities major sources of livelihood. Oil spills make farm lands unfit for cultivation, available plants are
easily exterminated while fishes are poisoned to death. By implications, Shell Petroleum Development Company
(SPDC) exploratory activities have engendered and perpetuated personal and community poverty across Niger-
Delta Region of Nigeria. Against the backdrop of these problems with host communities in the Niger Delta
region, there is fundamental challenge of instituting responsive Corporate Social Responsibility (CSR) practices
if the business of Shell is to be sustained in Niger-Delta region.
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3. Shell CSR Activities in Niger-Delta Region and Failure to Properly Engage Host Communities
Available evidences point to the fact that Shell Petroleum Development Company (SPDC) is guided by two
principles in its corporate social responsibility (CRS) activities. The first principle is the Shell General Business
Principles (SGBP). The kernel of Shell General Business Principles (SGBP) upholds commitment to the
following established principles in all activities worldwide including the Niger Delta region:
• Emphasis on compliance
• Growing concern about security Post - 9/11
• Emphasis on social performance and with communities.
• Shell enterprise first values and behaviors
• Development of sustainable principles
• Clarity on treatment of facilitation payments
The other aspect of Shell Petroleum Development Company (SPDC) corporate social responsibility agenda
is Issue Management Initiatives. The issue management initiative is aimed at dealing with specific corporate
social responsibility (CSR) situation as they unfold.
Shell Petroleum Development Company claims to fully engage its host community by working with local
organisations and ensure that benefits of its resources are fed to communities and businesses. A critical appraisal
of Shell Petroleum Development Company (SPDC) corporate social responsibility (CSR) activities clearly
indicates that it lacked the depth and seriousness to tackle the critical challenge which confronts host
communities as a result of Shell exploratory activities.
Shell corporate social responsibility (CSR) activities lacked the finesse to pro-actively appreciate the critical
nature of the problems they perpetrated on their host communities. It also did not seem to gather enough muscle
to address the challenge created for the host communities head on. Instead, Shell seems to focus only on
trivialities emanating from her established corporate principles which they could not properly align with
development exigencies in the Niger Delta region and the problems it poses for her sustainability. Little wonder
why the high sounding Shell General Business Principles (SPDC) did not bring about substantial physical and
environmental remediation to host communities in the Niger-Delta. Also, the issue management strategy is rather
unstructured in conception. It is sporadic both in designs and applications. Hence, most of the various projects
embarked upon by Shell failed to placate host communities because the project did not engender their genuine
involvement. If the results of devastating effects of oil activities is anything to go by, according to (Watts, 2005)
there is no way Shell could have successfully captured the needs of stakeholders unless the host communities in
Niger Delta region are practically involved both in CSR project conception and applications. The resultant
dissatisfaction by host communities eventually led to intense restlessness.
In strict CSR stakeholders’ involvement sense, there is no reason why Shell Petroleum Development
Company should not have adopted Niger-Delta Region as Shell Corporate Region. This can be achieved by
developing cordial relationship through stakeholder involvement in Shell activities. It also entails sensitivity,
prompt and quick response to all shades of interest, from the onset in a manner that distinguishes every
stakeholder particularly host communities as part and parcel of Shell corporate family. After all, the Niger-Delta
region is the heartland of Shell mainstream activities. Unfortunately, Shell was only acting the brief of archaic
Milton Friedman approach to corporate social responsibility which focuses on maximizing shareholders profit at
the expense of other stakeholders. This approach is no longer fashionable in the present circumstance. Corporate
stakeholders in the present era are very much aware of their rights and interests. Corporate organizations must
acknowledge stakeholders interests and also carry them along for sustainable business practices.
4. The Imperatives of Stakeholders’ Involvement for Sustainable CSR Practices
A key feature of effective and sustainable CSR is the need to make stakeholders’ interests paramount in
corporate management (Clark & Bahson 2012; Bahaudin 2013). Stakeholders’ interests should be seen as
paramount from the very day of business conception. Therefore to deliver sustainable CSR initiative, it means
that every stakeholder’s interest must be incorporated and accommodated through getting them involved
(Shillington 2008). This entails voluntary integration of social, education, environmental, and other related
concerns of stakeholders into the thinking and activities of business operations. Stakeholders’ interest must be
integrated into each phase of business activities (Fox 2007; Porter & Kranner 2011). This is the heart of effective
and sustainable CSR initiative.
Getting stakeholders involved for sustainable CSR practice should be a one step program. It should be a
corporate activity that lasts through-out her entire life span. Sustainable and effective stakeholders’ involvements
through CSR initiatives are not piecemeal. They are not sporadic or discretionary as it has been the case with
Shell. And it also goes beyond issues management. While issues management merely scratches the surface,
stakeholders’ involvement focuses on joint initiative to deal with problems in a sustainable way. It is an
approach in which both parties (company and the concerned stakeholders) are made to jointly diagnose
stakeholders’ problems, provide acceptable solutions and collectively work to actualize solutions..
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5. A Model of Stakeholders’ CSR Engagement for Sustainable Business Practices
To achieve sustainability through stakeholders’ involvement, companies must internalize concerns for
stakeholders’ interest into operational methods. Stakeholders’ involvement for sustainable CSR practice is a life-
long corporate affair. It is a process that should be built and internalized by corporate organizations into
operational procedures. This can be achieved through the following stepladder.
Step 1: Appraisals of Corporate Critical Stakeholders
Every corporate organization has network of stakeholders. These stakeholders are individuals, groups,
institutions and other related parties who are affected one way or the other by activities of corporate
organizations. These stakeholders have certain expectations from corporate organizations. It is the responsibility
of corporate organization to successfully identify and manage such expectations. An important step in the life of
success-driven organizations is to properly identify and understand the peculiarities of its network of
stakeholders’. The stakeholders of an average corporate organization and their traditional expectations are as
follows:
Workers:-
- Payment of fair wages
- Provision of safe working environment
- Opportunities for workers representation
- Ethics and fairness in the workplace
- Equal and available opportunities for training & capacity building
- Improved workplace environment and performance of employees
- Adequate opportunities for promotion
- Cordial management/employee relationship
- Right to be treated fairly
Competitors:-
- Fair competition
- Use of defensive instead of destructive competitive strategy
- Promotion of fair and favorable business climate
- Best market practices initiatives
- Avoidance of Price war
- Level playing field
- Free entry and exit
Consumers:-
- Quality services at reasonable prices
- Product responsibility
- Avoid unethical practices
- Adequate consumer information on products
- Lack of product misrepresentation
- Consumer protection
- Respect for consumer’s right of choice
- No activities that undermine consumer
Shareholders:-
- Disseminate timely information on business state of affairs
- Safe treatment of all categories of shareholders’ investment
- Wealth Protection.
- Corporate governance
- Fair treatment of all categories of shareholders.
- Ensure adequate returns on capital invested.
Environment:-
- Resource conservation.
- Maintenance of human natural ecosystem.
- Address climate change
- Prevention of harmful discharge of industrial wastes.
- Minimization of air, land and water pollution.
- Keeping the environment safe and clean.
Government:-
- Payments of relevant taxes/levies.
- Supports government activities especially those of legitimate government.
- Undertakes research and development to promote growth in society.
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- Contributes towards broad government development program.
- Provides basic needs of the society.
- Sponsors events and other complimentary development activities.
Host Communities:-
- Embark on community impact assessment programs
- Confront societal challenges
- Contribute towards better life of the community
- Assists in providing economic, social and physical infrastructures.
- Mitigate negative effects of company activities on the community.
- Community investments
- Provide welfare schemes for the community
- Participate in Community Development Association (CDA) program
International Business Environment:-
- Support for the emerging global business order.
- Comply with global business rules, statutes and standards.
- Demonstrate CSR global best practices
The above summary of stakeholders’ expectations is not exhaustive. It is therefore the duty of Corporate
Social Responsibility (CSR) managers to gauge expectations from time to time. Managers should also never
make the mistake of believing that one stakeholder is more important than the other. This will amount to a big
error. Instead, the expectations of each stakeholder must be understood against the backdrop of their individual
uniqueness.
Step 2: Open a CSR deal with network of stakeholders.
After identifying all the critical corporate stakeholders and their corresponding expectations, corporate managers
should strike appropriate deal with stakeholders. Avenue should be created for regular rapport between the
company and its stakeholders. In other words, there is preponderance of a formal arrangement where regular
meetings are held. The aim is to discuss issues of mutual interests. It is important for companies to take practical
steps by initiating exchange of ideas that border on stakeholders’ interests and courting friendship. Companies
should be able to establish rapport with stakeholders such that stakeholders would have confidence that a
mutually beneficial relationship is in the offing. This can be achieved through direct invitations of stakeholders
by regular correspondences for discussions and articulations of issues of mutual interests. Stakeholders should
be involved in the articulation of both the short, medium and long term expectations. They should also be
involved in the analysis of those expectations. During the process of such discussions, certain questions would
be asked that require joint answers. Some of the questions may include: What are the broad objectives of
company activities? How is company operation going to affect each of the stakeholders? When these questions
are jointly raised, companies would be able to properly incorporate stakeholder’s concerns into corporate action-
plan from onset.
Step 3: Make Deal with Stakeholders towards finding solution to Specific Problems.
After they (Company and Stakeholders) have jointly determine the needs and concerns of stakeholders, the next
step is for company to create avenue for both parties to collectively strike deal on how the problems can be
solved. This is a crucial stage in CSR stakeholders’ involvement practices. It is also a stage for frank discussions
by both parties. Various articulations must be frankly and honestly discussed by both parties. Discussions must
be sincere, credible and down to earth. Discussions should cover how positive impacts of corporate activities can
be further increased while it should also focus on available remedies for mitigating negative impacts? In essence,
the aim is to ensure that stakeholders are practically involved in the analysis of stakeholders’ expectations and
how to satisfy those expectations. At this stage, available options, policies and actions required for dealing with
stakeholders’ interests must be clearly spelt-out. At the end of the exercise, both parties must put themselves in a
situation where they both agree to share the journey together. And as both parties agree eventually, the
agreement must never be based on winner-loser relationship. Rather, it must encapsulate a win-win rapport so
that all parties can remain satisfied with one another.
Step 4: CSR Initiative Program Implementation
This stage is also for CSR program implementation. Of course, most of the responsibility at this stage rests
heavily on corporate organizations. At this stage, it behooves on corporate organizations to ensure that every
item that were earlier agreed upon are fully implemented to the delight of both parties. Corporate organizations
must rigidly follow plans that were jointly agreed by both the stakeholders and the company. Stakeholders’
issues that have been agreed to in terms of problems and how to solve those problems must be religiously
prosecuted. When companies do this, there is no way they can be accused of insensitivity and renege on agreed
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action plans. This is the very essence of Stakeholders’ involvement in sustainable CSR practices.
Step 5: CSR Program Periodic, Review and Monitoring
This is a very critical stage. As programs are being implemented, there should be periodic monitoring and review
meetings. At such meetings, stakeholders would need to be invited; opinions sought about CSR initiatives as it
concerns stakeholders. Areas of successes should be noted for possible scale up. Where there are apparent
laxities suggestions are developed for incorporation into subsequent action-plans. Any suggestions that are
jointly agreed upon at this stage must be integrated for immediate implementations.
6. Conclusion
Shell in the Niger Delta region of Nigeria has invested billions of naira in the region, yet the host communities
and other stakeholders do not feel they have done something! Rather, the company has continued to experience
damning frustrations that threatens business existence. It is possible for them to spend less of the amount and
achieve fantastic result particularly if they strike a sincere deal with their stakeholders in the context of emerging
stakeholders’ engagement model for sustainable CSR practices. Clearly the Shell experience points to the
ineffectiveness of issues management approach to CSR practices which is very common to most companies.
Issues management is too simplistic and ineffective. It is not applicable in the context of critical stakeholders’
breaches like the Niger-Delta scenario. The issue based management approach may have been successful in
developed countries where crisis is less and awareness is higher. The same cannot be said of developing
countries particularly with the Niger Delta scenario. Quintessentially, we have been able to underscore the fact
that stakeholders’ strategic involvement is the best form of maximizing benefits of CSR activities by corporate
organizations. We have also exemplified the step by step technical and professional model stakeholders’
involvement towards effective CSR practices. One thing is also very sure, expectations in stakeholders relation is
never a one-way thing. When corporate organizations lived up to stakeholders’ expectations, there are ways in
which organizations reap the benefits of meeting stakeholders’ expectations. One of the ways is that they reap
the benefits of adequate supports from stakeholders. Stakeholders cherish and respect their involvements. When
corporate organization involves stakeholders, the stakeholders are on the long run bound by commitment.
Instead of taking up arms against such corporate organizations as it is often the case at the moment, they rather
will defend the business’ cause, no matter what it takes, after all their interest has been duly taken care of.
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