Sample Management Paper on Stakeholders in Sustainable Business Transformation

Stakeholders in Sustainable Business Transformation

Part A

Question 1

Pollution originating from the use of open cookstoves poses a danger not only to the environment but also to the health of members using the open cookstoves in their households. Widespread use of clean cookstoves will reduce the amount of black carbon being emitted into the atmosphere. The combustion of biomass as cooking fuel contributes more than a quarter of the world’s black carbon emission (Lawrence & Weber, 2017). Therefore, clean cookstoves are essential for reducing soot in the atmosphere and reducing global warming emissions. The release of smoke and soot into the atmosphere contributes significantly to global warming and climate change in the long run. Thus, the role of clean stoves in averting global warming and climate change cannot be understated. Clean cookstoves reduce the consumption of firewood as fuel for cooking. Open cookstoves rely heavily on the use of firewood, which paves the way for the cutting of trees. On the other hand, the cutting of trees promotes deforestation, loss of biodiversity, and degradation of watersheds. In recent years, there have been campaigns against the use of firewood as fuel, with people pushing for alternative renewable energy with minimal impact on the environment. The clean cookstove saves energy, as its design enables it to use cooking fuel efficiently, thus minimizing the use of fuel such as charcoal. This reduces the exploitation of the environment for solid fuels such as firewood and charcoal.

Question 2

Due to the over-reliance on firewood for open cookstoves, women spend vast swathes of their time collecting firewood.  The use of wood as fuel is common in developing countries across Africa and Asia. The use of firewood is mainly attributed to the inability to afford other alternative fuel sources, such as gas. The widespread use of clean cookstoves frees up the women from collecting firewood, and the time may be spent in economic activities, such as operating businesses. Clean cookstoves reduce the number of harmful by-products of solid fuels, such as soot, from affecting household members. Therefore, they reduce the chances of diseases, which are an economic burden to households. The economic impact is evident in the fact that families have to spend when it comes to treating sick persons. The money spent on treating significantly ill persons would otherwise be channeled to other projects with economic benefit to the community. Moreover, the cookstoves are fuel-efficient, and therefore, save households from the high costs of buying cooking fuel. The fact that the clean cookstoves are made from local materials makes the costs of acquiring them much lower as compared to other average cookstoves.

Part B

Corporation Selected: Royal Dutch Shell

Royal Dutch Shell is a global company with its headquarters in the Netherlands. The company deals in oil, petrochemicals, and energy. Commonly known as Shell, the company produces more than three percent of the entire world’s energy. The company has adopted a more sustainable corporate approach to the oil and energy industry. It has shifted its focus from the traditional sources of energy to clean and renewable energy. The efforts of the company have been applauded by environmentalists and other organizations that champion a clean and pollution-free environment. The Royal Dutch Shell has incorporated sustainability as a cornerstone of its operations. This has impacted not only its activity in the oil and energy industries but also the sustainable development progress of the entire world.

 

Section 1: External Forces or Influences

Numerous external influences and factors helped the Royal Dutch Shell Company to adopt a more sustainable management approach. The numerous national and international laws and that regulate the oil and energy sector world-over influenced the company’s shift to a more environmentally and socially responsible business management practices. The oil and energy industry is one of the most regulated industries world over because of the impact of the sector not only on the environment but also on the social and economic order of the world. Different nations have different laws and policies that regulate the exploitation of both oil and energy (Lawrence & Weber, 2017). Companies have to comply with specific national regulations on oil and energy for them to be licensed to extract and process oil and energy in any particular country. Royal Dutch Shell Co. is an international company with different branches in various nations in the world. For example, Shell USA is a branch of the Royal Dutch Shell Co. that is located and operates in the United States. The different departments of the company have to meet various regulations imposed by the countries in which they are located and base their operations (Lawrence & Weber, 2017). Shell USA has to meet the policies and laws that regulate oil and energy production in the U.S.

International conventions also regulate the oil and energy industry as the industry’s impacts are felt all over the world. The international community, through the United Nations and other bodies and institutions with the requisite international personality, has come up with international rules and policies that regulate the entire process of extraction, manufacturing, and selling of oil and energy products (Lawrence & Weber, 2017). The international laws and policies are aimed at maintaining international standards of oil and energy companies to encourage sustainable management practices. The Royal Dutch Shell Co. adopted a sustainable approach to comply with international regulations, such as the United Nations’ sustainable development goals. Besides, its sustainable management practices are heavily informed by the United Nations Paris Agreement on Climate Change of 2015. The agreement aims at curbing the rise in global temperatures by reducing greenhouse gases emissions. This is aimed at dealing with global warming. In line with those regulations, Shell conducts in-depth analysis and assessments of environmental, social, and health impacts for every project it undertakes. It has also instituted a mandatory control framework known as Health, Safety, Security, Environment, and Social Performance (HSSE&SP) upon which all projects are based (Bamberg, 2010). The framework ensures the safety and sustainability of all projects the company is involved with.

International pressure exerted on the company to align its practices with the internationally set safety standards contributed to the company’s shift to environmentally and socially responsible business management practices. Significant international pressure and damaged reputation of the company for its previously unstainable and environmental degrading processes made the company to embrace a sustainable approach.  Shell has a long and tainted history of oil and energy disasters that have led to it being blamed for the non-observance of existing international environmental regulation policies. The Royal Dutch Shell Co. was heavily implicated in the Ogoni people humanitarian crisis that happened from 1976 to the late 1990s (Rosenau, Chalk, McPherson, Parker, & Long, 2009). In 1956, Shell, in collaboration with the British government, started oil exploration and mining in Nigeria oil block OPL 245. This oil block was located among the Ogoni people of Southeastern Nigeria. Due to inadequate and unstainable operations in the region, massive amounts of oil were spilled in Ogoni land with estimations of over 2900 spills being made. The spills account for roughly two million barrels of oil. This led to massive environmental degradations of Ogoni land and enormous health consequences. An international campaign, the Movement for the Survival of the Ogoni People (MOSOP), was launched to call for international intervention (Rosenau et al., 2009). The role and indifferent operation of Shell Company were brought to the limelight, and its numerous flaws were exposed.  The international company impacted hugely on the image of the company.

The 1980s saw significant oil spills by the Shell apart from the Nigerian oil spill. In 1986 Shell’s Martinez refinery in California released huge volumes of toxic water into a local waterway leading to its massive pollution. Two years later, in 1988, the refinery spilled over four hundred thousand gallons of crude oil, reducing into a wasteland the surrounding environment of the refinery. In 1989, almost one hundred and fifty tons of crude oil was spilled by the company’s pipeline into River Mersey in England (Rosenau et al., 2009). In 2016, the company’s U.S branch was involved in an oil spill in the Gulf of Mexico in the United States. Almost ninety thousand barrels of oil were spilled on the gulf after an underwater pipe system that was owned and operated by the company developed numerous leaks. These numerous spills have led to an international outcry against the environmentally degrading practices of the Royal Dutch Shell Co. The boisterous outrage, coupled with the multiple compensation litigations, forced the company into switching to sustainable management.

Shifts in the market trends also informed the company’s transformation to environmentally and socially responsible corporate management practices. The world is shifting towards sustainable and renewable energy from the previous energy sources. The need to change and streamline its operations following the changes in the modern world has contributed to Shell’s adoption of a sustainable corporate structure and strategy. Numerous campaigns by international organizations, national bodies, and non-governmental organizations aimed at fighting global warming have transformed the world’s population perception on renewable and clean energy (Sanders et al., 2018). The oil and energy industry has also changed with the industry focused on reducing the exploitation of traditional forms of energy while increasing the exploitation of green, clean, and renewable energy (Schneider, Vargo, Campbell, & Hall, 2011). Besides, all the major companies involved in oil and energy, such as British Petroleum and Exxon, have also adopted a sustainable approach to management and exploitation of oil and energy. The above issues, coupled with the shifting consumer’s trend in favor of green energy, influenced Shell’s adoption of sustainable practices.

Section 2. Internal Forces or Influences

An internal factor that has influenced the company’s shift to environmentally and socially responsible business management practices is leadership and management. The company’s change in leadership triggered its shift to sustainable strategies and policies. Shell’s management from the 1980s to the early 2000s was focused on business expansion and the making of profit at the expense of safety practices and concerns. This led to the company getting involved in several disasters that had negative consequences on Shell’s image and reputation. The international outcry for an emphasis on environmental safety by the company instigated a need for change in leadership in the company. In 2004, the company appointed Jeroen Van der Veer as its CEO, and he prompted several changes. He came up with policies that were aimed at creating sustainability in the company’s operations, restructured Shell’s corporate structure to make it conform to the sustainable model of leadership (Sluyterman, 2010). The current CEO, Ben Van Beurden, is following in his footsteps and has further entrenched sustainability into the company. Under Beurden’s leadership, Shell has invested billions of dollars in harnessing green, clean, and renewable energy. Besides, he has instigated an ambitious program, Net Carbon Footprint, to ensure the company cuts down on its carbon emissions.

Financial and budgetary constraints are also part of the internal forces. Due to the company’s involvement in numerous tragedies involving oil globally, Shell has been involved in several compensation suits. The company has paid an excess of $1 billion in compensation fees to the numerous complainants who have sued it for compensation. For example, in 2015, Shell was ordered to pay over $50 million to the Ogoni people due to the company’s involvement in the human rights violation of the people. This, coupled with other numerous compensations and the decline in the stock value of the company in the stock market, led the company to shift to a sustainable business model. A shift to sustainability has enabled Shell as a company to reduce its costs of operations as it now focuses on renewable and green energy, which comes much cheaply (Lawrence & Weber, 2017). It has also lowered the company’s risk of legal costs and insurance costs due to the company’s focus on the safety of both its workers and projects. The model focuses on safety practices that reduce the company’s risks of being involved in oil and energy disasters.

Section 3. Global Impacts of Sustainable Development Initiatives

The sustainability approach by the Royal Dutch Shell Co. has had several positive impacts not only on the company but also on the globe. One significant global impact of the sustainable development initiatives adopted by Shell is the improvement in environmental conservation and reduction in pollution. The company has come up with a sustainability control framework known as Health, Safety, Security, Environment, and Social Performance (HSSE&SP). The framework is essential in ensuring that all projects undertaken by the company meet international environmental regulations (Mackenzie, 2019). Besides, it also ensures that the company manages its emissions, minimizes its use of freshwater, and conserves biodiversity. This has resulted in the company preventing oil spills and leaks and reducing gas flaring, which are environmental hazards.

The sustainability approach has enabled the company to invest in biodiversity protection. Since 2006, Royal Dutch Shell Co. has invested over $100 million in the research and conservation of biodiversity. In Canada, the company is involved in massive conservation efforts of Canadian marine life. Shell Canada has developed a Native Plant Nursery that focuses on planting local indigenous plant species to ensure they do not become extinct (“Climate change and energy transitions,” n.d.). In Colombia, the company was involved with local communities along the Colombian Caribbean coast to promote sustainable fishing. The company trained the local fishermen and women on new safety practices and sustainable fishing methods. In South Korea, Shell fitted industrial silencers in its floating gas production plant to reduce noise pollution by the production plant that was negatively affecting the nearby community.

Section 4. Harnessing Technology for Sustainable Development

Shell has invested in technological advancements to streamline its corporate sustainability management and its goals as a company. For the achievement of the company’s sustainability goals, it has invested heavily in artificial intelligence, more so in its extractive and manufacturing processes. The company uses two applications of artificial intelligence, which are machine learning and data science. Machine learning is a computer system that interprets loads of data with minimal human input and allows the company to monitor complex internal operations (Ali, 2019). It enables the company to detect concerns, which its workforce may not identify. It will allow the company to avoid disasters before they happen. Besides, machine learning helps the company to perform various experiments and trials of new projects using several inputs (Anadon et al., 2016). This enables the company to make well-informed decisions that have minimal impacts on the environment, among many other factors.

Data science enables Shell to extract information and insights from data using a network of neural networks that join relevant pieces of data together (Ali, 2019). This is used by the company in its offshore oil and gas exploration and reduces environmental degradation as the company does have to perform unnecessary drillings due to the correct outputs of data science.

 

 

References

Ali, U. (2019, June 20). Application of artificial intelligence in the oil and gas industry: Exploring its impact. Retrieved from https://www.offshore-technology.com/features/application-of-artificial-intelligence-in-oil-and-gas-industry/

Anadon, L. D., Chan, G., Harley, A. G., Matus, K., Moon, S., Murthy, S. L., & Clark, W. C. (2016). Making technological innovation work for sustainable development. Proceedings of the National Academy of Sciences113(35), 9682-9690. Retrieved from https://www.pnas.org/content/pnas/113/35/9682.full.pdf

Bamberg, J. (2010). History of Royal Dutch Shell. Volume 1, From Challenger to Joint Industry Leader, 1890-1939. Volume 2, Powering the Hydrocarbon Revolution, 1939-1973. Volume 3, Keeping Competitive in Turbulent Markets, 1973-2007. Vol. 4, Appendices, Figures and Explanations, Collective Bibliography, and Index.

Climate change and energy transitions. (n.d.). Retrieved from https://www.shell.com/sustainability/environment/climate-change.html

Lawrence, A. T., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy. New York, NY: McGraw-Hill Education.

Mackenzie, L. (2019). Sustainability. In Premodern Ecologies in the Modern Literary Imagination (pp. 150-163). Toronto; Buffalo; London: University of Toronto Press.

Rosenau, W., Chalk, P., McPherson, R., Parker, M., & Long, A. (2009). Corporations and counterinsurgency (Vol. 259). Rand Corporation.

Sanders, A. K., Falcão, T., Haider, A., Jambeck, J., LaPointe, C., Vickers, C., & Ziebarth, N. (2018). World Economic and Social Survey 2018: Frontier Technologies for Sustainable Development. Retrieved from https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/WESS2018_full_web.pdf

Schneider, J., Vargo, C., Campbell, D., & Hall, R. (2011). An analysis of reported sustainability-related efforts in the petroleum refining industry. Journal of Corporate Citizenship, (44), 69-84. Retrieved from https://www.jstor.org/stable/pdf/jcorpciti.44.69.pdf

Sluyterman, K. (2010). Royal Dutch Shell: company strategies for dealing with environmental issues. Business History Review84(2), 203-226. Retrieved from https://www.cambridge.org/core/journals/business-history-review/article/royal-dutch-shell-company-strategies-for-dealing-with-environmental-issues/48A81649B137A656BB59FF4B356CDFDC