Shell Oil Threatened by Environmental Groups Seeking Legal Action (2019) By: David Pence

Shell Oil

Ethics Case Controversy
        On February 12th 2019 seven environmental and human rights organizations in the Netherlands announced that they are prepared to sue Royal Dutch Shell. Shell Oil is a British-Dutch oil and gas company headquartered in the Netherlands. It is one of the six oil and gas "supermajors" and the fifth-largest company in the world measured by revenues.  The seven organizations are Greenpeace, ActionAid, Both ENDS, Wadden Sea Forum, Longeron Milieu Actief, Fossilvrij NL, and Friends of the Earth Netherlands/Milieudefensie. The organizations are going to sue Shell Oil if they refuse to change their business model to comply with the Paris Climate Agreement. The groups suing are accusing Shell of "deliberately obstructing" efforts to keep global warming well below 2 degrees Celsius, which violates the Paris Climate Agreement. “The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius” (UNFCC).

UNFCC Paris Climate Agreement

       Shell put out a statement defending themselves saying "We strongly support the Paris Agreement and the need for society to transition to a lower carbon future.  We’re committed to playing our part and have set an ambition to reduce Shell’s net carbon footprint, including emissions both our own operations and from our customers’ use of our energy products” (Drugmand). If Shell fails to meet the activists demands, they plan to deliver a court summons to Shell on April 5th. The groups are hoping to obtain a court ruling that would force Shell to ditch oil and make a major shift towards renewable energy.

                                                       Stakeholders

Major Oil Refinery

 A stakeholder is anyone that is affected by the business decision. In this case the stake holders are, Shell Oil, the 7 environmental groups listed above, other major oil companies, oil refineries, the human population and our planet.



Individualism

Maximizing Profit

        According to Milton Friedman, “Business actions should maximize profits for the owners of a business, but do so within the law” (Salazar, 17). This is the main rule of individualism, to maximize profit, legally. Individualism is the only ethical theory that Shell conforms to. From the perspective of an individualist Shell Oil’s management is maximizing profit while still abiding the law. Shell is
thinking about what is best for their company to make the most profit possible. There has been no proof by the activists that Shell is breaking any laws. “Laws therefore restrict what a business is ethically allowed to do to profit” (Salazar, 18). Although the way they do their business may be affecting the environment and making people unhappy, an individualist would do the same thing Shell is doing.  As long as Shell continues to follow the law, they do not have to change anything about their business and can continue operations being one of the worlds leading companies in revenues.

Utilitarianism
        Under the utilitarianism theory, the main focus is happiness. “Business actions should aim to maximize the happiness in the long run for all conscious beings that are affected by the business action” (Salazar, 19). Under utilitarianism it is very important to consider the cost and benefits of a certain course of action. When applying utilitarianism to business decisions you have to weigh all possible outcomes and see if it will affect any stakeholders by making them unhappy. From a utilitarian point of view this case would be considered unethical. Shell’s business decisions have affected many stakeholders such as, the activist’s groups, other major oil companies, the human population, and oil refineries. The consequences caused by shell has made all these stakeholders unhappy. The activist groups are currently unhappy because Shell is emitting too much greenhouse gases harming our environment and disobeying the Paris Climate Agreement. “This means that animal testing and the destruction of ecosystems in building, manufacturing, and dumping are all bad outcomes under utilitarianism, and should be avoided unless greater benefit can only be achieved through such losses” (Salazar, 20). Shell is not only harming our environment, but is also harming animals. By emitting these greenhouse gases animals and people are being harmed and it is very dangerous. Shell is also unhappy in this case being they are facing accusations that they believe are not true.

Kantianism

Immanuel Kant

        The ethical rule of Kantianism is “Always act in ways that respect and honor individuals and their choices. Don’t lie, cheat, manipulate or harm others to get your way. Rather, use informed and rational consent from all parties (Salazar, 20). Immanuel Kant who was a philosopher in the late 18th century originated this ethical theory. His main values were rational decision-making, autonomy of individuals, honesty and freedom. He believed to not make decisions based on the consequences of the outcome, like in utilitarianism, instead make decisions based on “good will”. A big part of the Kantian theory is the formula of humanity “which states that it is wrong to use people as a mere means to get what you want. Treating someone as a mere means uses them or exploits them. It disregards their rationality and freedom and usually it involves an attempt to manipulate them” (Salazar, 22). A Kantian thinker would consider this case to be unethical. By continuing to release greenhouse gases and not abiding the Paris agreement Shell is acting non-rational and practicing bad will. Shell is not applying the formula of humanity, which states to never treat someone as a means to an end. A mean is something or someone you view as valuable because it will get you something valuable in return. Shell sees its customers as means because in their eyes it’s all about making money since they will be buying their product no matter what. They do not care about the customers at all.

Virtue Theory
        Under virtue theory the main focus is about character and how their actions reflect who they are as a business. “Act so as to embody a variety of virtuous or good character traits and so as to avoid vicious or bad character traits” (Salazar 22). The main values of virtue theory are character traits that promote wellness or flourishing of individuals within a society. Virtue focuses on a person’s character and they analyze this based on four main virtues, courage, honesty, self-control, and fairness. A virtue theorist would consider this case to be unethical because Shell failed to reach the four main virtues.  Shell showed very little courage so far in this case because they refused to switch their business model because they were afraid of losing profit, so they didn’t want to advance and make the people happy by trying to make a switch. This shows lack of courage because they did not want to risk switching over and possibly losing money. Acting selfish and not flourishing. Shell has also showed a lack of honesty throughout this battle because they continue to argue they are doing nothing wrong and are not affecting anyone, even though it is scientifically proved that they are harming the environment. Shell clearly has no self-control because every chance they get to make money they take advantage of it no matter the consequences it causes. Finally, Shell shows no fairness to anybody but themselves. They are very selfish and show no consideration towards the activists’ groups trying to make this planet a better place.

Justified Ethics Evaluation
        In my opinion, Shell Oil acted unprofessional and unethical in this case. All of this could have been avoided if Shell just did the right thing by following the Paris climate agreement and take the right step in their business model by adding some renewable energy. Now that Shell is being accused of this, they are going to have to do something to recover from this. If this case ends up going bad for them it could ruin their entire company and they will fall down the gutter. There are many other big oil companies that are willing to or already have switched to renewable energy, and if Shell does not do this these companies will take over the industry and Shell will slowly become nonexistent. Millions of customers would be willing to switch to a better company and that is Shell’s main problem. Overall, Shell needs to smarten up, stop acting selfish, and a find a way to continue to be as dominant as they are using renewable energy instead of oil.

Action Plan

Examples of renewable energy sources

        Shell is clearly facing numerous problems and needs to act quickly to implement actions to make up for their mistakes. The primary concern of the lawsuit is that Shell is "deliberately obstructing" efforts to keep global warming well below 2 degrees Celsius, which violates the Paris Climate Agreement. Although this case has not been brought to court yet, Shell should still take this very seriously. Shell has said that they plan to reduce carbon emissions, but that is not nearly enough. They need to make major changes to their business model. In order for Shell to make up for this I believe they have to completely switch over to renewable energy and ditch oil. Obviously, they can’t switch their whole business right away, but they need to start taking steps in the right direction. This will take a lot of planning and time, but I strongly conclude that this is their only option to get the environmental group off their backs, not only just now but for the future. If I were to come up with a new mission statement it would be, “Shell Oil globally sets high standards to protect our climate by using renewable energy that will shape the future of energy around the world”. This new mission statement has the same idea as Shell's current mission statement that they want to safely distribute energy but emphasizes the fact that it will be renewable energy. Some core values that Shell should implement are safety, integrity, dedication, and ingenuity. If Shell follows these values and lives by this mission statement, I think they will be back on track and will be able to strive for greatness.

                  -D. Pence









References

“Our Values.” Shell Global, www.shell.com/about-us/our-values.html. 

“Royal Dutch Shell Mission, Vision & Values.” Comparably,                                                                                                                      www.comparably.com/companies/royal-dutch-shell/mission. 

Salazar, Heather. The Business Ethics Case Manual. n.d.

“Shell Faces Lawsuit in the Netherlands, a New Legal Front in Climate Battle.” Climate Liability                                                           News, 14 Feb. 2019, www.climateliabilitynews.org/2019/02/12/shell-netherlands-lawsuit-                                                         climate-change/. 

“What Is the Paris Agreement?” UNFCCC, unfccc.int/process-and-meetings/the-paris-                                                                             agreement/what-is-the-paris-agreement.