Ethics Case
Controversy
Royal Dutch Shell is one of the
world’s largest companies and is among the top for the oil and gas
corporations. The company is
headquartered the Netherlands but controls all of its own processes from
drilling oil to shipping it. Like most
oil and gas companies, Shell has had it fair share of threats and protests from
environmental groups that are against the harmful effects that these companies
have on the environment and climate.
However, seven human rights and environmental groups led by the Friends
of the Earth Netherlands have banded together to file a lawsuit against
Shell.
The Lawsuit seeks to force shell to
align its current business model with the goals of the Paris Agreement. The agreement seeks to “strengthen the global
response of the threat of climate change by keeping global temperature rise
this century well below two degrees Celsius”, while also strengthening the
ability for countries to fight the impacts that climate change has had
(UNCC).
Stakeholders
In the
case of the Royal Dutch Shell lawsuit, there are several stakeholders. The stakeholders in the lawsuit itself are,
Shell, which includes employees and shareholders, the Netherlands government
were the suit will be taking place, and the seven climate groups going against
Shell, which includes Friends of the Earth Netherlands, Greenpeace, ActionAid,
Both ENDS, Wadden Sea Forum, Young Friends of the Earth, and Fossil Free
Individualism
When
looking at Shell’s actions from an individualistic standpoint, their current
business model aligns with the ethical rule that their actions should maximize
the profits for the business while staying within the confines of the law. Current laws that combat climate change are
relatively vague and therefore easy to move around and find loopholes in. An example of this is the Paris Agreements NDCs,
or Nationally Determined Contributions, which leave deciding whether or not a
company’s contributions to fighting climate change are adequate or not to the
company’s national government. Therefore,
prior to the lawsuit, Shells actions and business model are completely ethical
from an individualistic stand point as the company is primarily focused on
making profits within the law. If the
lawsuit goes through and the Netherlands government decides that Shell’s
current actions are not sufficient enough to meet the Paris Agreement, they
will be legally required to change their business model. If they do not then change in that case,
their actions would no longer be individualistically ethical.
Utilitarianism
A
Utilitarian would view Shell’s current business model and practices as being
unethical because Utilitarianism seeks happiness for any and all beings that
are capable of feeling it and happiness and pleasure are the only things of
intrinsic value. Shell may currently be
making its owners happy with the profits it is making off of the current oil
business, however it is not maximizing the happiness of the other stakeholders
that are affected by its decisions. The
simple fact that environmental and human rights groups are trying to sue Shell
for their current practices means they are not happy with what the company is
doing and the decisions it is making. If
Shell wished for its actions to be seen as ethical from a utilitarian view the
company would need to start shifting towards alternative means of fuel and
energy to please environmental and human rights groups, as well as the general
public, while also maintaining the happiness of company owners and investors by
likely making a profit.
Kantianism
For Kantianism,
one must use the Formula of Humanity as well as making sure that the right
motivation is present when looking at Shell’s actions. Currently they do not follow this formula as
they view both the environment where they dig for oil and those who purchase
their products as purely a means of making money for the company. If they saw their customers or the
environment as having true value, Shell would likely take more steps to ensure
their safety. Shell also fails to find
the right motivation in this case. They
are not motivated to agree with and support the Paris Agreement because it is
good for the environment and will help build a more sustainable future, instead
they make statements that they agree with and support the agreement to make the
company look better and create a better image for themselves. They acted inconsistently with their own
statements to make themselves seem better than they actually were making shells
actions unethical from a Kantian perspective.
Virtue Theory
From a
business perspective, there are four main virtues that are used to evaluate a
business’s characteristics in Virtue Theory.
The virtues are courage, honesty, temperance, and justice. Shell fails to contain even one of these
virtues in their recent actions and practices.
Shell did not show courage but instead cowardice as it did not take any
risks in changing its business strategy for the betterment of the
environment. Shell was also not honest
in their actions towards the Paris Agreement and were dishonest when saying
they supported the Paris Agreement. They
also did not set reasonable expectations and desires for its own practices and
instead acted as if their actions were fine and did not affect the environment,
which was unreasonable and failing to show temperance. Because shell fails to
display any of the four virtues of business, their current strategy is unethical
from the point of view of Virtue Theory.
Ethics Evaluations
As it currently stands, Shells
business practices and actions are still legal due to some of the vagueness
that exists in the Paris Agreement.
However, the outcome of the seven environmental group’s lawsuit could
change the Netherlands governments view on what Shell is doing. Based on these facts, I personally believe
Shell to be unethical in this situation because they are claiming to support
actions like the Paris Agreement, that act for the better of the environment
and the climate, while using loopholes to avoid changing their harmful tactics
is very underhanded and unethical. If all
goes well for the Friends of the Earth and the other groups, Shell will need to
make some big changes to move its business towards more sustainable
activities.
Action Plan
Shell will need to start changing
its current business strategy to better align with the Paris Agreements goals
of sustainability. They will need to
create a business plan that will lay out its plan to move towards sustainable
energy in the coming years. Asking the
company to switch to renewable energy overnight would impossible to do, so instead,
the plan should allow Shell to slowly start to move the companies resources
from oil and gas to renewable energy.
They would start by moving the budget used to further develop oil and
gas to developing sustainable energy technology.
Trent Robinson
References:
Climate Investigations Center. (n.d.). Shell Climate
Documents. Retrieved from https://climateinvestigations.org/shell-oil-climate-documents/
CNN WIRE. (2019, February 12). Climate groups threaten lawsuit
to force Shell to ditch oil. Retrieved from
https://wgno.com/2019/02/12/climate-groups-threaten-lawsuit-to-force-shell-to-ditch-oil
Drugmand, D. (2019, February 14). Shell faces lawsuit in the
Netherlands, a new legal front in climate battle. Retrieved from https://www.climateliabilitynews.org/2019/02/12/shell-netherlands-lawsuit-climate-change/
Hone January 18, D. (2019, February 06). Increasing ambition
under the Paris Agreement. Retrieved from
https://blogs.shell.com/2019/01/18/increasing-ambition-under-the-paris-agreement/
Kottasová, I. (2019, February 12). Climate groups threaten
lawsuit to force Shell to ditch oil. Retrieved from
https://www.cnn.com/2019/02/12/business/climate-change-shell-oil/index.html
Salazar, H. (n.d.). The Business Ethics Case Manual: The
Authoritative Step-by-Step Guide to Understanding and Improving the Ethics of
Any Business.
Shell Global. (n.d.). What we do. Retrieved from https://www.shell.com/about-us/what-we-do.html
Shell Global. (n.d.). Our values. Retrieved from https://www.shell.com/about-us/our-values.html
UNCC. (n.d.). The Paris Agreement. Retrieved from
https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement
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