Contemporary Issues in the Global Business Environment Report

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Shell Nigeria

There are various challenges companies face when implementing corporate social responsibility like issues with transparency, lack of clear CSR guidelines and lack of community participation. Shell Nigeria operates in an environment where it is faced with issues that are context and area-specific. Shell moved to Nigeria in 1937, but oil was first found in the Niger-Delta in 1956. Rather than being used in CSR to help the people in the Niger-Delta region who are living on less than $1 a day, ‘the rapidly expanding oil industry was dogged in controversy from early on, with criticism that its financial proceeds were being exported or lost in corruption’ (Vaughan, 2011).

The lack of governance from the Nigerian government allowed Shell Nigeria to initially ignore the stakeholder theory rule that ‘those whose lives are touched by a corporation hold a right and obligation to participate in directing it’ (Brusseau, 2012). It is seen by many as exploitation by Shell because the lack of awareness within the Niger-Delta community.

Although Shell Nigeria subsequently made attempts to improve the lives of the communities in the Niger-Delta, the company’s CSR strategy of assisting ‘seemed to place importance on giving one-time ‘gifts’’ (Ite, 2004). This opened the doors for corruption and theft as some of the monies allocated for the development of the communities, were in many instances, embezzled by the corrupt village chiefs and leaders.

Shell Nigeria’s inadequate efforts to involve the beneficiaries of the corporate social responsibility they seek to implement has birthed a challenge for the company. ‘Participation and self-help are regarded as the best routes for development assistance by organizations as diverse as the World Bank and Oxfam’ (Frynas, 2005), for ‘[if] the rural people of the developing countries are helped to help themselves’ (Schumacher, 1973), there’s a good chance that genuine development will occur.

Shell Nigeria not including the local people is even more of a bigger challenge because of the social attitudes of the company’s staff and the social values that guide the decision makers. ‘Oil companies like Shell tend to have a managerial and/or engineering background and are highly skilled at dealing with technical issues’ (Adenuga, 2013). This is reflected upon the way the company goes about their CSR. The ways the rural communities are consulted are restricted by the technical and managerial methods. Consultation from a technical/managerial perspective causes firms to speed up discussions with the local people and to try to achieve immediate goals ‘rather than to build bridges with the community and spend long periods discussing the causes of problems’ (Frynas, 2005). This method of consultation acts as a barrier to Shell Nigeria in achieving effective corporate social responsibility through involving the beneficiaries.

Coca-Cola India

Up until 1977, Coca-Cola was the largest beverage manufacturer in India. Rather than reveal the secret to their success after the Foreign Exchange Regulatory Act (FERA) introduced by the Janta Party ‘to govern foreign organisations in India’ (Hills and Welford, 2005), the company left the country. This ban was lifted in 1993 and Coca-Cola made a comeback to India. The company has since invested over $1billion making it the country’s biggest international investors in India. Despite a number of corporate social responsibility initiatives by Coca-Cola India like energy conversation programmes and building water treatment facilities, the company has come under scrutiny from activists such as Amit Srivastava India (Hills and Welford, 2005). Allegations were made against Coca-Cola India regarding distribution of toxic waste and pollution and this pressured the company to shut down plants in areas such as ‘Plachimada, Kala Dera and Mehdiganj’ (Hills and Welford, 2005). Based on the triple bottom line, the value of a company is to be measured ‘at the intersection of ethics and economics, sustainability’ (Brusseau, 2012). Coca-Cola India were seen to the public as damaging the environment and were not sustainable.

The lack of community participation in the implementation of corporate social responsibly activities challenge Coca-Cola India’s efforts to fulfil environmental sustainability. There is a ‘lack of local community interests in involving or contributing to the CSR activities’ (Berad, 2011). This can be attributed to the lack of awareness about CSR in the communities around such as ‘Kala Dera and Plachimada’ (Adenuga, 2013)

The ‘Non-availability of efficient non-governmental organisations’ (Berad, 2011) intensified the challenges for Coca-Cola India in implementing corporate social responsibility. Companies need reliable NGOs to ensure the successful implementation of CSR. In areas such as Plachimada and Kala Dera, there aren’t such NGOs available. ‘…There is non-availability of well organized non-governmental organizations in remote and rural areas that can assess and identify real needs of the community’ (Berad, 2011).

Recommendations

Firstly, although corporate social responsibility is a voluntary act and is seen in many parts of the world as philanthropy, CSR should be embedded in to the core aims of a firm. It is found from this report that some of the challenges faced can be grouped together as ones caused due to a lack of awareness. Firms and stakeholders like the media can enlighten the local communities about the works that the companies are doing to enhance development in the areas. ‘…This will bring about effective changes in the approach and attitude of the public towards CSR initiatives undertaken by corporate houses’ (Berad, 2011).

Government rewarding companies and their non-governmental partners is a good way to encourage more corporate social responsibility activities. ‘This will be instrumental in encouraging enhanced voluntary participation of greater number of corporate houses in CSR activities’ (Berad 2011). This also encourages NGOs to challenge themselves to be more efficient, thereby giving the big firms a better chance of effectively implementing their CSR through fruitful partnership.

Proper evaluation of the problems within the communities before implementing social responsibility initiatives will go a long way in improving the effectiveness of CSR. The Porter value chain framework can be used to identify, analyse and prioritise what areas CSR initiatives would have a more effective impact that the other. ‘Porter and Kramer's value chain enables us to tell whether some functions