The Ecumenical Council for Corporate Responsibility intends to bring a shareholder resolution to Royal Dutch Shell plc’s 2006 AGM.
ECCR believes that Shell’s impacts on `frontline’ communities and the environment in County Mayo, Ireland, the Niger Delta, and at Sakhalin II in Russia merit urgent attention.
The resolution calls for a major improvement in Shell’s performance in terms of community and stakeholder consultation, risk analysis, and social and environmental impact analysis.
ECCR needs 100 Shell shareholders to co-sign the resolution before the end of February.
The resolution wording and supporting statement are printed below and are also available on ECCR’s website at www.eccr.org.uk or from Miles Litvinoff ([email protected], +44 (0)20 8965 9682) or from ECCR, PO Box 500, Oxford OX1 1ZL, UK. Shell resolution.
At this the first Annual General Meeting of Royal Dutch Shell, the shareholders request that, in the interests of the good reputation of the Company, and the avoidance of costly delay to, or interruption of, production, and for the present and future peace, safety, environment and prosperity of local communities directly affected by the Company’s operations:
1. the Directors undertake, in all the Company’s international operations, to collaborate with local stakeholder communities in order to reach, before project works begin, a mutually acceptable Memorandum of Understanding based on an independently conducted and transparent Social and Environment Impact Assessment;
2. the Directors undertake on the acquisition of companies (or assets and operations of other companies) to exercise due diligence in respect of risk, by subjecting social and environmental reports relating to business operations and activities to qualified independent assessment, and to revise the Company’s plans or adopt alternative methods of extraction and refinement in the light of such assessments;
3. the Directors institute rigorous policies in risk assessment and community consultation particularly when proposing to use unproven techniques such as untested gas production and processing on peat and in proximity to occupied dwellings, or when operating in ice-infested waters;
4. the Directors ensure, through proper oversight by the Board’s Social Responsibility Committee, that all policies, procedures and standards on environmental and social issues are rigorously enforced at all stages of project planning and operation;
5. the Directors report to the shareholders by the 2007 AGM how the Company has implemented these measures.
The Ecumenical Council for Corporate Responsibility (ECCR) proposes this resolution because of significant concerns relating to the loss of production, environmental costs and reputational risk faced by our Company.
ECCR has actively engaged with Shell since 1994, initially in relation to issues in the Niger Delta. Seeing no change, in1997, along with the Pensions and Investments Research Consultants (PIRC), we sponsored a resolution on environment, human rights and local communities. In 2001 an ECCR delegation visited Nigeria to check on progress and we have continued to raise questions with the Company.
Our involvement with the Corrib gas field development, off County Mayo, Ireland, began in 2002 when we were contacted by concerned residents. We provided an international observer to the Irish National Planning Board hearings in that year, which rejected the Company’s application. We raised questions with the Company then and subsequently. However, the day after the 2005 Shell AGM five local Mayo residents were imprisoned for denying the Company access to their land, leading to national public demonstrations against Shell.
The issues faced by the Company largely stem from:
· failing to carry out effective and complete environmental and social impact assessments of new developments or modifications to existing facilities, in contravention of its own guidelines;
· failing to develop and abide by memoranda of understanding with local communities.
Experience in the three different areas outlined below indicates the importance of supporting this resolution.
(1) Corrib, Ireland
The first application for developing the Corrib Gas project was made by Enterprise Energy Ireland in 2000. This involved a sub-sea tieback to a gas processing plant 9 km inland. The consequences of this highly unusual development concept included the need to run a production pipeline though a populated area and through unstable Atlantic bog terrain.
When Shell took over Enterprise Oil in 2002 it adopted, without change, this production concept. This was despite significant local opposition, which centred on the routing of the high-pressure production pipeline 70 metres from people’s homes. Residents instead proposed that the gas be processed offshore before being piped past their homes. Shell, despite its claims of engagement with local communities, has consistently rejected this demand, usually on cost grounds.
The cost of an offshore platform is approx. 300 million Euros. The value of the Corrib Gas field is at least 8 billion Euros. The gas was meant to be ashore in the summer of 2003, but Shell’s conflicts with local residents have put paid to any immediate prospect of this happening. The return on Shell’s investments will be delayed until a mutually acceptable Memorandum of Understanding is reached. The only way that the field can be developed is with local consent.
(2) Niger Delta
Shell Petroleum Development Company (SPDC) Nigeria has achieved a bad reputation in the Niger Delta based on its history of poor stakeholder engagement, lack of transparency, and environmental and human rights abuse.
SPDC understands the critical necessity of effective project management if it is to sustain its Gbarain-Ubie Integrated Oil and Gas Project (IOGP) operations and profit-making in the long term. However, its current actions are in direct opposition to its own business interests in the region. SPDC’s practice thus far in the preparatory stages of the IOGP is a serious threat to the success of the project. SPDC’s failure to apply its Environmental Impact Assessment (EIA) guidelines because of poor stakeholder engagement is a major problem. The Company considers that local communities are unable to participate in, or understand, an EIA due to lack of education.
However, the IOGP presents an opportunity to resolve past issues and lay the foundation for sustainable mutual benefits to SPDC and the 92 communities in the project area. As the highest investment ever to be made in the region, it could represent a new era of positive stakeholder engagement, community development and standards-based operations. With such improved relationships, the Company is more likely to gain community support for this and other activities, as well as the favour of shareholders and NGOs.
SPDC needs to engage effectively with the stakeholders – especially the impacted communities – so as to ensure that the process delivers environmental, social and financial benefits.
(3) Sakhalin, Russia
Shell’s Sakhalin II project threatens the future of a Russian island the size of England, and the communities and species which rely on the natural resources there. Shell’s activities have already resulted in the 100 remaining critically endangered Western Gray Whales being exposed to excessive noise levels. The whales’ only feeding habitat will be threatened by the risk of oil spills in sea-ice conditions, which Shell have no recognised technique for cleaning up.
Local communities meanwhile are seeing the fishing industry which supports one third of the island’s economy destroyed. Dredging activity in Aniva Bay has resulted in reduced fish catches and lost business for local fishing companies. Inland, Shell’s inability to apply environmental measures to river crossings has seen salmon spawning areas ruined.
The root of these problems can be traced back to Shell’s original environmental and social impact assessments. Shell made its decisions on project design before gaining essential information on biodiversity and local people. The ineffective project management has compounded problems and seen costs double to US$20 billion. As a result, the project is far from meeting international expectations or standards.