Stakeholders in Sustainable Business Transformation
The use of open cook-stoves has adverse effects to the local environments as it contributes to pollution. Pollution is not only a threat to the local environments but also puts human health at risk. The use of open cook-stoves contributes to pollution through the emission of black carbon into the atmosphere. According to Lawrence & Weber, (2017), black carbon forms the largest portion of pollutants found in the atmosphere. Therefore, integrating the widespread use of clean cook-stoves will help to reduce the level of black carbon that is being released into the atmosphere by the use of open cook-stoves that majorly rely on combustion of biomass as cooking fuel. Besides, integrating the widespread use of clean cook-stoves will help reduce global warming emissions. The use of open cook-stoves is associated with emissions of black carbon and soot that are some of the pollutants that contribute to global warming. Reducing global warming, the adoption of widespread use of clean cook-stoves will also help to reduce climate change.
The use of cook-stoves relies heavily on wood fuel for cooking. The use of wood fuel paves the way to the cutting of trees, leading to deforestation and loss of biodiversity. In recent years, a high rate of deforestation and loss of biodiversity has raised concerns among the general public. The global society has largely focused on the need to come up with sustainable alternative fuels that can be used for cooking rather than the use of firewood and charcoal (Lawrence & Weber, 2017). The widespread use of clean cook-stoves will help to reduce firewood consumption as a cooking fuel, and reduce the high rates of deforestation being experienced across the globe.
The use of open cook-stoves is dependent on firewood as fuel. The use of open cook-stoves is a common practice in Africa, and fetching of wood fuel is the role of women across various traditional communities in the continent. Many people use firewood as cooking fuel due to poverty, implying that they are unable to afford purchasing alternative fuel sources such as gas. Widespread use of cooking stoves in such communities will relieve women of the tiresome duties of fetching firewood, thus enabling them to focus their efforts on economic activities such as cultivating and selling of groceries.
The use of open cook-stoves is associated with the release of harmful substances such as black carbon and soot polluting the environment and posing health risks to individuals. Treatment of such diseases poses an economic burden to poor households. Thus, adopting widespread use of clean cook-stoves will help to reduce the number of harmful substances released into the environment that put human health at risk (Lawrence & Weber, 2017). The widespread use of clean cook-stoves will reduce the release of such harmful substances into the atmosphere, as well as ease the economic burden poor households encounter related to treatment and management of various diseases. As a result, the finances that households need to use in treating their members will be channeled to various projects of economic benefit to local communities.
Clean cook-stoves help to save energy by using fuel efficiently. Adopting the wide use of clean cook-stoves will save poor households from the high costs of purchasing cooking fuel. Besides, clean cook-stoves are made from locally-acquired materials hence are affordable to poor households compared to other average cook-stoves. Since clean cook-stoves are sold at low prices, its widespread use will save poor households from purchasing other highly-priced cook-stoves.
Royal Dutch Shell
Royal Dutch Shell is a global company that majorly deals in products such as energy, oils, and petrochemicals. The firm has its headquarters in the Netherlands, and is responsible for the production of 3 percent of the world’s energy. The company has been applauded by many environmentalists for incorporating a more sustainable corporate approach to the oil and energy industry. By shifting its focus from the production of traditional energy to the production of renewable energy, the company has been applauded for its effort to champion for a clean and pollution-free environment. The integration of environmentally and socially responsible business management has been of great benefit to Royal Dutch Shell Company and to the global economy at large.
Section 1: External Forces or Influences
One of the external factors that influenced Royal Dutch Shell company to shift to environmentally and socially responsible operations and practices in various regions it has its branches is national and international laws. National and international laws related to production and distribution of oil and energy were established to regulate the operations of various companies in that industry. The aim of establishing the laws was to regulate the adverse impacts that various oil and energy companies would bring to the global economy. Those national and international laws related to the production and distribution of oil and energy products across the world has ensured that various companies in the oil and energy industries integrate sustainable business practices to positively impact the global economy. Various countries across the world have established national laws and regulations to help guide operations and practices of oil and energy industries operating in such nations (Lawrence & Weber, 2017). Before an oil and energy company is issued with a license of operation, they are required to adhere to the laws and regulations of various countries. Despite Royal Dutch Shell Company having its headquarters in the Netherlands, the firm operates numerous branches in various countries across the world. The U.S. is one of the countries in which the company operates. For the company to operate its branch, Shell U.S.A, it must comply with policies and laws that regulate the production of oil and energy in the U.S.
Oil and energy impacts are also felt across the world, and international laws have been established to regulate the operations and practices of the sector. Various international organizations such as the United Nations has established laws and regulations that control the operations and practices of oil and energy companies including the production and distribution of oil and energy products across the world. The laws also regulate the selling of those products in the global market. The oil and energy laws established by the international community are aimed at ensuring that companies within the oil and energy industry adopt more sustainable corporate approaches and practices that are friendly to the general environment; that is, the global, social, and economic environment. According to Setiawan, (2018), United Nations development goals is one of the international regulations that Royal Dutch Shell Company has tried to meet its requirements by integrating environmentally and socially responsible business management practices into its operations. The United Nations development goals require oil and energy companies to engage in pollution-free operations that ensure a clean environment. United Nations Paris Agreement on Climate Change of 2015 is the other regulation that the company tried to meet its requirements by integrating environmentally and socially responsible business management practices. The regulation requires oil and energy companies to engage in practices reducing global warming such as releasing a minimal amount of harmful gases into the atmosphere. Global warming has been a major problem across the world in recent years. To comply with such regulations, the Royal Dutch Shell Company usually conducts depth analysis and assessments of the negative impacts its operations and practices may have on local environments, as well as social and economic environments, thus coming up with strategies to improve on its operations. To ensure safety and sustainability in its operations and practices in various regions across the world, Royal Dutch Shell Company has integrated a Health, Safety, Security, Environment, and Social Performance (HSSE&SP) framework.
Another factor that impacted the company’s shift to environmentally and socially-responsible business management practices was the international pressure mounted on it due to its previous unsustainable and environmentally-degrading processes. The unsustainable practices that Royal Dutch Shell Company incorporated in its business management practices severely tainted its image in the global society. Royal Dutch Shell Company has had a bad image and reputation for a long time, and it was before criticized for engaging in environmentally and socially irresponsible business management practices. The company’s long and tainted history is attached to the Ogoni people humanitarian crisis that occurred from 1976 to the late 1990s (Setiawan, 2018). In 1956, Royal Dutch Shell Company began extracting oil in Nigeria and it named the region as oil block OPL 245. Oil block OPL 245 was located in the Southeast of Nigeria, and the region’s inhabitants were the Ogoni people. Due to the company engaging in environmentally and socially irresponsible practices, Royal Dutch Shell made over 2900 spills of oil onto the Ogoni’s people’s lands (Setiawan, 2018). The oil that the company extracted and manufactured was responsible for the environmental degradation of the Ogoni people’s lands, which led to adverse health repercussions for the community. Royal Dutch Shell’s unsustainable practices tainted its reputation, and an international campaign was launched to call for international intervention into that matter. The Movement for the Survival of Ogoni People (MOSOP) exposed the company for its environmentally and socially-irresponsible practices; the movement called for the international community to take strict measures over Royal Dutch Shell Company for its unsustainable practices.
Royal Dutch Shell Company was also involved in other oil-spill disasters in the 1980s. The first oil disaster incidence that the company was involved in is when its U.S based branch, Shell Martinez refinery located in California spilled massive amounts of oil into a waterway that led to its pollution (Jefferson & Voudouris, 2011). The first oil disaster incidence occurred in 1986. Besides, the company was yet involved in another oil disaster incidence its branch in England spilled over 150 tons of oil into River Mersey. The incidence occurred in 1989. Also, the company was involved in another oil spillage disaster in 2016. The company’s U.S. branch’s pipeline spilled over ninety-thousand barrels of oil into the Gulf of Mexico that led to massive pollution and degradation of land (Jefferson & Voudouris, 2011). The discussed oil spills raised concerns over the company’s unsustainable practice, which prompted international bodies such as the United Nations to intervene. The company was penalized and mandated to compensate all people that had been affected by the disasters. Considering the general public’s outcry and hefty fines imposed on the company by the international bodies, the Royal Dutch Shell Company decided to shift to environmentally and socially responsible business management practices.
Another factor that has influenced Royal Dutch Shell Company to shift to environmentally and socially responsible business management practices is the changes brought about market trends. In recent years, the global community has attempted to shift towards the production and use of sustainable and renewable energy, which has prompted the Royal Dutch Shell Company to streamline its operations with such changes. Thus, the company has adopted a sustainable corporate structure and strategy to ensure that it focuses on the production of clean energy and helps in the fight against global warming that has become a major environmental problem in the world.
Section 2. Internal Forces or Influences
One of the internal forces that forced Royal Dutch Shell Company to shift to environmentally and socially responsible operations and practices is changes in its leadership and ways of management that each Chief Executive Officer implemented. The company’s change in leadership has led to adopting sustainable corporate laws and practices. Between the 1980s and early 2000s, the company’s objective was to expand its operations and increase the sales of its products. However, the company’s management did not focus on engaging in sustainable corporate operations and practices, which led to various oil spill disasters in various countries such as Southeast Nigeria. The oil spills led to massive pollution triggering the general public’s outcry. In the process, the company’s image was tainted across the world, and its sales reduced. Royal Dutch Shell appointed Jeroen Van der Veer in 2004 to be the company’s Chief Executive Officer. His main objective was to positively influence the global society’s beliefs about the company. To attain this, he came up will policies that aimed at creating sustainability in the company’s operations. Jeroen Van der Veer also restructured the company’s previous management practices by aligning it with his objective. Ben Van Beurden was appointed as the company’s CEO after Van der Veer’s retirement. Beurden is the current CEO of Royal Dutch Shell Company, and his aim is to often ensure that the firm engages in sustainable environmental and social practices (Beurden, 2017). Beurden has heavily invested in the harnessing of clean and renewable energy. As well, he has developed a program that focuses on the reduction of carbon emissions into the atmosphere.
Another factor that also influenced the company to shift to environmentally and socially responsible operations and practices is financial challenges related to compensation suits that had been filed against the firm for engaging in unsustainable practices. Due to involvement in various oil spillage disasters, the Royal Dutch Shell Company has been involved in several compensation suits. The company has paid over $1 billion in compensation to many people who sued for its unsustainable practices (Waskey, 2008). For example, Royal Dutch Shell Company was forced to compensate the Ogoni people over $50 million for putting their health at risk and degrading their land (Waskey, 2008). Another challenge that the company experienced was a decline in its stock value across the world. The company was forced to shift to more sustainable corporate practices. A shift to sustainability has enabled the company to reduce the risks of facing legal and compensation suits.
Section 3. Global Impacts of Sustainable Development Initiatives
The integration of sustainable corporate approach into its operations has not only been of significance to Royal Dutch Shell Company, but it has also positively impacted the global economy and environment. Shifting the focus to promoting environmental conservation and reducing pollution marks one of the sustainable corporate initiatives adopted by the company. To promote environmental conservation, the company has come up with the HSSE&SP framework that helps in analyzing and assessing its projects to ensure that they all meet the requirements of international environmental regulations and that the projects do not negatively impact the local environments (Rands & Sayers, 2008). The company also focuses on treating its waste products before emitting them into the surrounding. Notably, it has put efforts to prevent oil spills or leaks from its pipelines.
The sustainability approach adopted by the Royal Dutch Shell Company has enabled it to conserve biodiversity. To conserve biodiversity, the company has invested over $100 million since 2006 (Rands & Sayers, 2008). According to Rands and Sayers (2008), the company has been promoting sustainable fishing along the Caribbean Coast, in Colombia. The company also educates women and men along the Caribbean coast in Colombia on the advantages of integrating sustainable practices into fishing.
Section 4. Harnessing Technology for Sustainable Development
Royal Dutch Shell Company has integrated the use of Artificial Intelligence applications to ensure that it maintains environmentally and socially responsible business operations and practices across various countries it has branches in. Some of the AI applications that it uses include machine learning, which is a computer system that synthesizes a huge load of data and allows a company to identify problems in internal operations (Soofastaei, 2019). The Royal Dutch Shell Company utilizes machine learning to detect problems in its internal operations early, thus coming up with effective strategies with how to prevent disasters. For instance, the application helps the company to detect potential oil leaks from its pipelines, which enables the company to attend to such problems before they lead to massive pollutions.
Beurden, B. V. (2017). Royal Dutch Shell in a Changing World: Navigating Uncertainty. Management for Professionals Evolving Business Models, 195–207. https://doi.org/10.1007/978-3-319-48938-4_13
Jefferson, M., & Voudouris, V. (2011). Oil Scenarios for Long-Term Planning: Royal Dutch Shell and Generative Explanation, 1960-2010. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1949943
Lawrence, A. T., & Weber, J. (2017). Business and society: Stakeholders, ethics, public policy. New York, NY: McGraw-Hill Education.
Rands, G. P., & Sayers, T. (2008). Royal Dutch/Shell Group. Encyclopedia of Global Warming & Climate Change. https://doi.org/10.4135/9781452218564.n605
Setiawan, A. (2018). The Beginning Of The Royal Dutch/shell And Standard Oil Company Rivalry In The Dutch Indies 1865-1910. International Review of Humanities Studies, 1(1). https://doi.org/10.7454/irhs.v1i1.56
Soofastaei, A. (2019). The Application of Artificial Intelligence to Reduce Greenhouse Gas Emissions in the Mining Industry. Green Technologies to Improve the Environment on Earth. https://doi.org/10.5772/intechopen.80868
Waskey, A. J. (2008). Royal Dutch Shell. Encyclopedia of Business in Today’s World. https://doi.org/10.4135/9781412964289.n802
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