Ethic

Shell shocked: is Shell a case of ‘ethical epiphany’ or ‘lessons not learned’?

This case looks at the how Shell made efforts to develop new ways of managing business ethics in the aftermath of major problems in its international operations in the mid 1990s, only to be mired in further controversy during the 2000s. The case provides an opportunity for assessing the substantial challenges involved in business ethics management, and in particular for examining the benefits and drawbacks of various components of ethics management discussed in the chapter.

Operating in over 135 countries, and employing more than 90,000 people, the UK-Dutch oil giant Royal Dutch Shell is one of the world’s largest companies. In recent years, Shell has been at the forefront of developments in social reporting and stakeholder engagement, and looked to be finally overcoming the reputational crisis that overwhelmed the company in the mid 1990s when it became a prime focus of attack from environmental campaigners and other critics. However, the firm’s turnaround came off the rails in 2004 when a major accounting scandal erupted over its overstating of oil reserves. This, and the continued challenge posed by campaigners over its alleged ‘hypocritical’ approach to sustainability and social responsibility, has raised questions over the firm’s ethics at a time when it would have hoped to have finally converted the sceptics. So, whilst the firm has won prizes and plaudits for its actions, for many, the question still remains whether its attempts to marry profits with principles is just window-dressing for an essentially unsustainable approach to business.

1995: Shellshock!

For any multinational company, one huge blow to the corporate reputation in a year is a major cause for concern. However, two massive public relations disasters in the same year is about as close to out-and-out corporate catastrophe as you can get. That though is exactly what happened to Shell in 1995 when the firm...