shellreport

Behind the shineThe other Shell Report 2003

Dedicated to the memory of ourkasama, good friend, hard worker

for the people’s cause, Dick Gabac, Pandacan resident whocampaigned tirelessly to oust Shell’s

depots from his community.

Before, his untimely passing in early2004, Dick had planned to attend

the Shell AGM in London this year totell Shell personally about theurgent need to relocate their

dangerous fuel depot.

Foreword by Tony Juniper 2

The year in review 3

Global recognition for people standing up to Shell 6

Durban, South Africa: social development schemes to ignore refinery hazards 8

Port Arthur, Texas: environmental injustice by Shell refineryplagues African-American neighbourhoods 11

Manila, the Philippines: Pandacan oil depots—a disaster waiting to happen 14

Norco, Louisiana: health problems still not addressed by Shell 17

Nigeria: the strange case of Shell’s vanishing oil reserves 20

Sao Paulo, Brazil: Shell contamination at the Vila Carioca 22

Curaçao, Caribbean: Polluted paradise 24

Sakhalin Island, Russia: Shell’s broken commitments 26

Examples of Shell’s documented spills, fires, and toxic releases since the 2003 Shell AGM 28

Smoke and mirrors: social development and assessments, pay offs, and community advisory panels 29

Corporate lobbying under scrutiny—the case of Shell 30

Why the voluntary approach just isn’t good enough 32

Conclusions 34

Message from the Independent Auditors and assurance report 36

Endnotes 37

Report Coordinator: Denny Larson, GlobalCommunity Monitor.

Contributors: Anne Rolfes, Louisiana BucketBrigade, Hilton Kelley, Community In-powerDevelopment Association, Karen Read, SouthDurban Community Environmental Alliance,Melissa Coffin, Environmental Health Fund,Norbert George, Humane Care FoundationCuraçao, Denny Larson, Global CommunityMonitor, Vanessa Stasse, JED Collective Center,Cesar Augusto Guimarães Pereira & ElsonMaceió dos Santos, Coletivo Alternative Verde,Hope Tura, UFO-OD, Francesca Francia, GlobalCommunity Monitor, Monique Harden & NathalieWalker, Advocates for Environmental HumanRights (AEHR), Dmitry Lisityn, SakhalinEnvironmental Watch, Ikuko Matsumoto, Friendsof the Earth (Japan), Peter Roderick, DougNorden, Pacific Environment, Marc Pagani.

Editors: Simon McRae, Friends of the Earth(England, Wales & Northern Ireland), MoniqueHarden & Nathalie Walker, AEHR.

Thanks to: Adam Bradbury, Rita Marcangelo,Calliste Lelliott, Phil Michaels, Brian Shaad, TriciaPhelan, and Craig Bennett.

Design and printing by Design Action Collectiveand Inkworks Press. Printed on 100% post-consumerrecyled paper, Processed Chlorine Free.

Want to know more? Additionalinformation on Shell can be found in Riding theDragon: Royal Dutch/Shell and the Fossil Fire byJack Doyle, published by the EnvironmentalHealth Fund, available at www.shellfacts.com.

The Other Shell Report 2003 1

Contents

This report will highlight Shells poor performance as a leading corporate social responsibility advocate, its failure to address

the concerns of Shell fenceline communities from last year’s AGM and the link between Shell’s exaggerated oil reserves fiasco

and its exaggerated cliams about its social and environmental performance in order to highlight the need for urgent reform of

UK company law and Shells attitude to fenceline communities.

This report is based largely on evidence from people around the world who live in the shadows of Shell’s various operations.

This report is written on behalf of Friends of the Earth (FOE), Coletivo Alternative Verde (CAVE), Community In-power

Development Association (CIDA), Concerned Citizens of Norco, Environmental Rights Action of Nigeria (FOE Nigeria), Global

Community Monitor (GCM), groundWork (FOE South Africa) & groundWork USA, Louisiana Bucket Brigade, Sakhalin

Environmental Watch, South Durban Community Environmental Alliance (SDCEA), and United Front to Oust Oil Depots (UFO-OD).

Dear Stakeholder

2 The Other Shell Report

Foreword

This is the second alternative Shell Corporate Social Responsibility (CSR) report that Friends ofthe Earth has been privileged to produce with, and for, the many communities that live onShell’s “fencelines”.

For several years now, Shell has been overstating its social and environmental performance.Our report, Failing the Challenge—The Other Shell Report 2002, documented what it is likefor the many communities living next to Shell’s refineries, depots, and pipelines in differentparts of the world. We were able to show that, despite making a public commitment tosustainable development eight years ago, Shell is still putting more effort into green spin thangreen delivery, and that little has changed on the ground.

Behind the Shine—The Other Shell Report 2003 provides an update on the main cases profiledin Failing the Challenge and chronicles Shell’s inaction and procrastination over the last 12months. In Texas, Durban, Manila and the Niger Delta, communities have been offered endlessdialogue, projects, and pilot projects instead of the concrete action needed to stop the harm therefineries, depots, gas flares, and pipelines are causing. Together with these cases, we profilethree new case studies. We also challenge the failure of CSR and the use of voluntary codes ofpractice to address the significant social and environmental impacts of corporations.

Since Shell’s Annual General Meeting in April 2003, shareholders and institutional investorshave discovered what fenceline communities have known for a long time: that what Shellsays in its reports and what happens in reality are often not one and the same. Thecompany’s announcement in January 2004 that it had overstated its oil and gas reserves by20% sent shockwaves through world energy markets and the corporate sector as a whole. Butat least shareholders have rights established in law, through which they can hold Shellaccountable when it fails to act in their interest.

The same cannot be said, unfortunately, for the people who live next door to Shell. Thesestakeholders have little or no rights of redress, and Shell is working to destroy what few rightsthey have by lobbying against an important UN standard, Norms on the Responsibilities ofTransnational Corporations and Other Business Enterprises with Regard to Human Rights.Existing laws governing companies are flawed because they focus on delivering short termprofit rather than considering the wider social and environmental impacts of companies.

The time has come for laws governing corporations to protect the environment and the peoplewho are most directly affected by Shell’s poor performance: the fenceline communities.Friends of the Earth is campaigning as part of the Corporate Responsibility (CORE) Coalitionto reform UK law so that companies are required to address their impacts on human rightsand the environment, both here in the UK and wherever these companies operate overseas.

Justice and accountability should be rights for the stakeholder—not just for the shareholder.

Tony JuniperExecutive Director, Friends of the Earth (England, Wales and Northern Ireland)

Behind the Shine

In the year since Sir Philip Watts’statement, shareholders have come torealize the deep irony of his words.Rather than demonstrating “goodfinancial performance . . . accompaniedby the highest standard of governance”,Shell has created an internationalcorporate scandal by exaggerating its oiland gas reserves. Chief Executive SirPhilip Watts has been compelled toresign, and governmental entities in theUnited States and Europe have launchedinvestigations of Shell’s business practices.

Just as important, people living near thefencelines of Shell’s facilities havewitnessed the emptiness of Sir PhilipWatt’s statement pertaining to sustainabledevelopment and the commitment hemade to them during Shell’s AnnualGeneral Meeting “AGM” in April 2003.At the AGM, shareholders listenedpatiently while one fenceline communityrepresentative after another seized theopportunity to finally put their casedirectly to Shell’s Board of Directors.Under the glare of the media and investorspotlight, Sir Philip Watts made numerouspersonal and corporate commitments toensure action would be taken. However,Shell has failed to deliver any significanton-the-ground improvement in itsoperations.

The reality, as known all too well byShell’s many fenceline communities, is thatShell has been overstating its social andenvironmental performance for years. Formany, the company has becomesynonymous with the word “greenwash”,i.e. giving the impression of acting in anenvironmentally protective way whilecarrying on with unsustainable businessas usual. It was in an effort to expose thisgap between rhetoric and reality thatFriends of the Earth and the Global ShellFenceline Alliance last year published thefirst alternative Shell CorporateResponsibility (CR) report, Failing theChallenge—The Other Shell Report 2002.


The year in review

“Our commitment to contribute to sustainable development is not a cosmetic publicrelations exercise. We believe that sustainable development is good for businessand business is good for sustainable development. Last year’s financial results wereencouraging, in a very difficult business environment. However, the corporatescandals of the past year underlined that good financial performance must beaccompanied by the highest standards of governance. Shell’s Business Principlesassurance process ensures we meet and maintain those standards.”

Sir Philip Watts (then) Chairman of Shell’s Committee of Managing Directors in his Foreword to the Meeting the Challenge—The 2002 Shell CSR Report.

Shell neighbors, Desmond D’Sa, Hope Tura, and Oronto Douglas engage SirPhilip Watts at last year’s AGM meeting in London. (Denny Larson, GlobalCommunity Monitor)

Shell has always been a big advocate of“corporate social responsibility” or CSRand voluntary codes of conduct, but therecomes a time when this isn’t enough.Friends of the Earth believes thatcompanies like Shell should be requiredby law to consider a duty of care to theenvironmental and social impacts of itsoperations. Fenceline communities wantShell to stop polluting their environmentand damaging their health.

This report provides an update on themain case studies profiled in Failing theChallenge, and chronicles a pattern ofprocrastination, inaction, and continuingpoor social and environmentalperformance by Shell over the last 12months. Little has changed.

it causes and live up to its statedcommitments to human rights andenvironmental standards. Unfortunately,Shell fails to respond to communityconcerns unless and until its bad practicesare brought to public attention. And evenwhen Shell comes under public scrutiny,such as in Nigeria, Durban, South Africa,and Port Arthur, Texas, it often fails to act,or does not act in good faith.

In response to Shell’s 2003 annual reportto shareholders, and its multi-milliondollar public relations campaign toportray itself as being sociallyresponsible, this report brings to the lightof day the truth about Shell’s harmfuloperations. The communities from aroundthe world that are featured in this reportshare their inspiring and courageousstories about their daily struggle todefend their health and environment fromShell.

Who knows the real Shell best—its fenceline neighboursyear in review continued...


This report is a message from peoplearound the world who are severelyimpacted by Shell’s operations. It presentscase studies from a few of the manycountries, towns, and suburbs that havebeen damaged by Shell’s environmentaland social failures. People living nearShell refineries, pipelines, andpetrochemical facilities from places as farapart as Texas in the USA and Nigeria inAfrica want the world to know that thismultinational corporation is jeopardisingtheir families’ health, destroying theirquality of life, and threatening their lives.In all of these cases, ordinary peoplehave had to put a great deal of personaltime and energy into advocating thatShell take responsibility for the problems

The year in review

Behind the Shine

Norco residents remember playing beneath these live oak trees as children, before they were moved off their land when Shell built their chemical plant in the 1950’s. The trees are now fenced within the Shell Chemical facility. (Louisiana Bucket Brigade)

? To stop wasting its resources on “feelgood” social projects that do nothingto solve the serious health andenvironmental problems of its facilityoperations that plague communitiesaround the world.

? To eliminate hazardous and life-threatening facility accidents byreplacing antiquated and dilapidatedpipelines and relocating them to non-residential areas.

? To significantly reduce pollution whereShell operates in communities of color,just as Shell has done at its facilities inDenmark and other locations that arepredominantly populated byCaucasians.

? To comply with local legislation andrelocate oil depots away from Manila,where the densely populated area issubjected to the depot’s constant toxicemissions, as well as the threat of thedepot being a terrorist target.

? To improve and enhance itsidentification and measurement offacility pollution by employing state-of-the-art real-time environmentalmonitoring, which thoroughly involvescommunity participation.

? To cease any and all delays interminating the odious practice of gasflaring in Nigeria.

? To take full responsibility for pastenvironmental damage that continuesto impact the health and environmentof people in places like Sao Paulo,Brazil and Curaçao, Caribbean.

? To fully and accurately assess thesignificant impacts of massive projects,like the Sakhalin II oil and gas drilling,processing, and export complex inRussia, which could ultimately subjectSakhalin Island to irreversibleenvironmental disasters anddevastating economic losses.

Shell’s neighbours tell Shell:


Global Delegation of Shell neighbors from Asia, Africa and North America in front of the Shell AGM meeting last year. (Nick Cobbing/Friends of the Earth).

The Goldman Environmental Prize,considered the “Nobel Prize for theEnvironment,” is the world’s largest prizeprogram honouring grassrootsenvironmentalists from the six continentalregions of Africa, Asia, Islands andIsland Nations, Europe, North America,and South and Central America. Overthe last several years, the GoldmanEnvironmental Prize has been awardedin three separate instances to communityleaders for their inspiring work incombating Shell’s destructive practicesand related injustices in their countries.In 2004 the Goldman Prize wasawarded to Margie Richard from Norco,Louisiana, USA; in 1998 Bobby Peekfrom Durban, South Africa won theprize; and in 1995 the late Ken Saro-Wiwa from Nigeria was posthumouslyawarded the prize. These awards standas a testament to both the profoundlynegative global impacts that Shell has oncommunities around the world, and theexceptional courage, commitment, andpersonal sacrifice of the people living inthese communities, who tirelessly fightfor justice.

Margie was first motivated to take onShell in 1973 when a Shell pipelineexploded, killing an elderly woman andteenage boy only a block from her house.In 1988 there was another majoraccident at the plant which killed sevenworkers and resulted in over 150 milliontonnes of toxins being spewed into theair. In 1989 Margie formed theConcerned Citizens of Norco to seekjustice from Shell.

Margie has led the 13-year campaign ofConcerned Citizens of Norco for a fairbuy-out of their contaminatedneighbourhood. Margie was awarded theGoldman Environmental Prize 2004 forpersuading Shell to relocate residentswho had grown up living next door to thechemical plant and to reduce its toxicemissions from their operations by 30%.

Margie Eugene Richard, Goldman Prize Winner 2004


“If a person does not live wherepeople live who are impacted,they really, I think, havesomething missing inunderstanding the daily ills ofnot being able to enjoy whereyou live, where you work andwhere you play.”

Margie Richard, Goldman Prize Winner, 2004

Margie Richard grew up in thecommunity of Diamond and lived within25 feet of the Shell chemical plant inNorco, Louisiana. Margie and herneighbours believe that the high rates ofcancer, birth defects, and serious ailmentssuch as asthma were caused by pollutionfrom Shell’s operations. The Shell plant atNorco dumps more than two millionpounds of toxic chemicals into theenvironment each year.

Behind the Shine

Global recognition for people

Margie Richard on the banks of the Mississippi River, Louisiana,along a 136 kilometer stretch known as "Cancer Alley", because

of the high concentration of industrial chemical facilities .(Marc Pagani, Louisiana Bucket Brigade)

Ken Sarowiwa, Goldman PrizeWinner 1995

Ken Saro-Wiwa, a well-known Nigerianaward-winning author and activist, wasexecuted by the Nigerian government in1995. Ken Saro-Wiwa was president ofthe Movement for the Survival of theOgoni People (MOSOP), an organizationfighting to defend the environmental andhuman rights of the Ogoni people.

Since the late 1950’s, Shell has beenoperating in Nigeria, extracting morethan US$30 billion of oil andcontaminating the farmland and fisheriesof the Ogoni. Many of the fish andwildlife in the area have vanished. KenSaro-Wiwa mobilized his people todemand compensation from Shell for oilspills on Ogoni farmland and in thewetlands, rivers, and streams of the NigerDelta. In January 1993, Ken broughttogether 300,000 Ogoni who took to thestreets in the largest demonstrationagainst an oil company in history.

In May 1994, Ken was abducted from hishome and arrested with other MOSOPleaders for the alleged murder of fourOgoni leaders. In October 1995, despitethe protests of people around the world,including government officials from othercountries and human rights organizationssuch as Amnesty International, Ken andeight co-defendants were convicted by amilitary tribunal and hanged. ManyOgoni believe that the only crimecommitted by Ken Saro-Wiwa was hisdaring to stand up to Shell. Bobby Peek, Goldman Prize

Winner 1998

Sven ‘Bobby’ Peek grew up in SouthDurban in South Africa next to one of thelargest oil refineries in Africa, the SouthAfrican Petroleum Refinery (SAPREF). Therefinery, which is jointly-owned by Shelland BP, operates in communities wherepoor black, Indian, and mixed racepeople live. Every family on the blockwhere Bobby lives has lost at least onemember to cancer.

Bobby was awarded the GoldmanEnvironmental Prize in 1998 for his visionand leadership in uniting multi-ethniccommunities, in post-apartheid SouthAfrica, to advocate for reductions inShell’s significant pollution levels.

Previous winners of the Goldman Prize who stood up to Shell


standing up to Shell

Ken Saro-Wiwa

Bobby Peek addresses a rally of South Durban residentsconcerned with pollution from Shell’s refinery. (SouthDurban Community Environmental Alliance)

Durban is home to the massiveSouth African Petroleum Refinery(SAPREF) which is the largestcrude oil refinery in South Africa.Jointly owned by Shell and BP,the SAPREF refinery beganoperating in the 1960s and hasthe capacity to process more than185,000 barrels of oil per day.The refinery complex is in anarea of south Durban populatedby poor black, Indian, andmixed-race communities.SAPREF’s aging infrastructure hascaused an appalling catalogue ofaccidents in recent years thathave had devastatingconsequences for local peopleand the environment.

Double standards

Shell asserts that it uses the bestenvironmental standards at its facilitiesworldwide. In fact, however, Shell is guiltyof using a double standard, one thatoften provides cleaner facilities in areasaround the world with predominantlyCaucasian populations as compared todirtier and more hazardous facilitieslocated in places where people of colorlive. For example, on a daily basis, theSAPREF refinery dumps 19 tons ofsulphur dioxide into the air that people inthe neighbouring communities breathe1,which is more than six times the amountof sulphur dioxide released by Shell’srefinery in Denmark2. Sulphur dioxide isa severe respiratory irritant which cantrigger asthma attacks, and a 2002health study by the Durban EnvironmentalHealth Department and two universitiesconfirms the significant incidence ofchronic asthma among Durban residents,especially children3. Further, unlike Shellfacilities in Europe, the SAPREF refinerydoes not employ an effective rust-detecting system, which has resulted inthe leakage of 25 tons of tetra ethyl lead,a harmful neurotoxin, into theenvironment.

8 The Shell Report

Shell’s assurance to Durban atthe 2003 AGM

Desmond D’Sa is a Durban resident andChairperson of the South DurbanCommunity Environmental Alliance(SDCEA), a coalition of communityorganisations from diverse racial, ethnic,and religious backgrounds that advocatesfor industrial pollution reduction andaccident prevention. In 2003, Desmondtravelled to the Shell AGM in London andeloquently spoke out against Shell’shazardous operations in Durban. Duringthe AGM, Sir Philip Watts, then CEO ofthe Shell Group, gave Desmond hispersonal assurance that action would betaken to clean up the SAPREF facility.Such action has not occurred. One yearafter Watts’ assurance, the South Durbancommunities continue to suffer fromrepeated industrial accidents andhazardous spills. (See section entitledExamples of Shell’s documented spills,fires, and toxic releases since the 2003Shell AGM).

Durban, South Africa Social development schemes to ignore refinery hazards

Behind the Shine

Shell refinery flaring in South Durban, South Africa.(South Durban Community Environmental Alliance)


Ignoring the problem

SDCEA and groundWork (Friends of theEarth South Africa), an environmentaljustice organisation, have repeatedly urgedShell to deal specifically with theenvironmental issues of its refinery thatplague Durban residents. However, ratherthan taking action to remedy the excessivepollution and frequent accidents at itsoperations, SAPREF has gone to theexpense of bringing internationalconsultants from Shell’s headquarters inLondon to spend their time and resourceson what they believe are social issuesaffecting fenceline communities4. This isreflective of a strategy increasinglyemployed by Shell to offer “feel good”projects, such as academic scholarships andnew playgrounds, in order to divert

attention from the serious health andenvironmental impacts of its operations.

In those instances when SAPREF doesattempt to address environmental issues,such attempts are woefully inadequate,fail to respond to community demands,and ignore the root of the problem. Forexample, although SAPREF brought Shellexperts from its offices in the Hague andLondon to assist in cleaning up aroundleaking pipes that have spilled over 1.3million litres of petrol under the homes ofDurban residents, SAPREF and Shellexperts refuse residents’ demands forrelocation of the faulty pipelines awayfrom their homes, and the implementationof appropriate environmentalimprovements in SAPREF’s refineryoperations5.

Dialogue without action

SAPREF has been holding CommunityLiaison Forum meetings for a number ofyears. However, people in the communityare tired of “talkshops” that haveachieved nothing. SAPREF managers saythey that want to build trust and movebeyond an adversarial role with thecommunity, but these managers havecompletely ignored the community’srepeated admonitions that trust cannot bebought with so-called “social projects”.

How meaningful are Shell’s voluntary environmental management standards?

In attempting to defend its indefensible operation of the SAPREF refinery, Shell points to its ISO 14001 certification asevidence that its environmental management of the SAPREF refinery is entirely appropriate. However, ISO 14001 is merelya body of voluntary environmental standards which pertain to on-site industrial activities. These standards do not requireShell to consider either the environmental sustainability of its operations, or the off-site impacts that these operations haveon local communities. In short, the ISO 14001 certificate is meaningless to communities who bear the significant off-sitehealth and environmental consequences of SAPREF’s toxic pollution and frequent industrial accidents.

South Durban residents protest pollution problems in front of Shell refinery. (South Durban Community Environmental Alliance)

SAPREF’s leaks waste moneyand disrupt the community

The community is outraged that SAPREF’sroutine response to its frequently leakingpipelines consists of nothing more thanexcavating some of the contaminatedland in their neighbourhoods, andapplying patches to corroded segments ofthe antiquated pipelines. SAPREF’s leaksand attendant excavations are a continualnuisance that severely disrupt the lives ofresidents. Why isn’t there a program torelocate and replace all the pipelines?Why doesn’t Shell recognize that it is aninjustice to jeopardize the health and livesof residents with faulty pipelines that leakdangerous substances? Why does Shellcontinue to waste shareholders’investments by failing to fully and finallystop the leakage of refinery materials intothe ground of South Durban?

? Turned away community leadershipfrom Remediation Site Meetingspertaining to massive leakage of oilunder their homes

? Locked out community leaders from ameeting when members of the SouthAfrican Portfolio on the EnvironmentCommittee visited SAPREF


? Polluted the community with accidentsand leaks

? Exceeded air quality guidelines

? Offered little other than excuses whenthe community complained about toxicemissions and flaring

? Withheld information from communitygroups by using old apartheidlegislation known as the NationalKeypoint Act

Durban

Behind the Shine

What has SAPREF done for South Durban residents since the ShellAGM in April 2003?

Desmond D’Sa of SDCEA (right) reads a list of environmental justice demands to South African government officials. (South Durban Community Environmental Alliance)


Shell’s assurance to Port Arthur,Texas at the 2003 AGM

Hilton Kelley, Founding Director ofCommunity In-power DevelopmentAssociation (CIDA), a communityenvironmental justice organisation in PortArthur, Texas, USA, travelled to the 2003Shell AGM in London. At the AGM,Hilton confronted Sir Philip Wattsregarding the health-damaging pollutionfrom the Motiva Refinery. Speakingimmediately after the AGM, Hilton said “Iam hopeful that something will be done.Sir Philip looked me in the eye andpromised. Things have to change. And ifthey do not, I will be here next year andin coming years.”

After returning to Texas, Hilton found thatShell hadn’t changed. (See sectionentitled Examples of Shell’s documentedspills, fires, and toxic releases since the2003 Shell AGM). A few months later,Hilton and his community decided thatthey had no option left but to bring legalproceedings against Shell.

Port Arthur, TexasEnvironmental injustice by Shell refinery plaguesAfrican-American neighbourhoods

The Motiva Refinery, a Shell jointventure in Port Arthur, Texas, isone of North America’s busiestand most productive oilrefineries, currently processingmore than 235,000 barrels of oilper day. Shell profits financiallyfrom the refinery at the expenseof the low-income communitythat lives in its shadow. Localresidents call the area aroundWest Port Arthur “GasolineAlley” because of the high levelsof toxic pollution.

Community mobilizes indefence of their health

In December 2003, CIDA opened theCenter for Environmental Education andHealth. The Center provides informationon health and toxic exposure, offers youthactivities, and in the future will makecomputers, faxes, and printers available tothe public. CIDA has organizedcommunity health surveys conducted bythe University of Texas at GalvestonMedical Branch, which document that80% of the surveyed residents inneighbourhoods near the refinery haveheart conditions and respiratoryproblems, compared to 30% of people innon-refinery areas.

Global Delegation of Shell neighbors holds a pressconference in Port Arthur, Texas, to highlight Shell’s poorenvironmental performance. (Global CommunityMonitor)

A young Port Arthur, Texas,child with acute asthmaduring breathing treatments.(Hilton Kelley, Community In-power DevelopmentAssociation).


Port Arthur

Behind the Shine

Hilton Kelley’s Story

“Last year I went to the AnnualGeneral Meeting in London,England, and I met with Sir PhilipWatts, Chairman of the ShellCorporation. Upon meeting himand telling him about thepollution problems from theShell facility that plague ourcommunity, he assured me thathe would do everything in hispower to rectify the situation. Ileft that meeting thinking that hisword would hold true.

“Upon arriving back to the US, Ithought that I would receive acall from the Shell facility

informing me about the new waythey would be dealing with ourcommunity but this did nothappen. Nothing has changed[since last year’s AGM]. Pollution-wise, emissions are still high andthe plant manager is stillignoring our concerns from lastyear. Apparently Sir Philip Wattsnever talked with the plantmanager at the Shell Facility inPort Arthur, Texas, so we had nochoice but to file a lawsuitagainst the Shell facility.

Now we will let the courts decidewho is dumping what.”

Residents hold Shell liable forhealth-damaging refinery

For many, Texas and oil go together, butfor the residents of the West-Sideneighbourhoods of Port Arthur, such amixture is a hazard to their health. As inmany of the communities where Shelloperates, community members in West-Side believe that their concerns aboutShell’s pollution have been ignored.

The West-Side of Port Arthur is anAfrican-American community that isliterally located “on the other side of thetracks”. People living in the public housingdevelopments and single-family homes onthe West-Side suffer from high levels ofasthma and cancers. They bear the bruntof Shell’s pollution most directly. Residentsbelieve that Shell has exploited them; ifthey were white and affluent, they reason,Shell’s response would be different.

In the summer of 2003, representatives ofCIDA met with Tom Purvis, the managerof the Shell facility. CIDA offered him andexecutives from Shell’s corporate office inHouston, Texas the opportunity tonegotiate steps for addressing the seriousenvironmental and health problems in thecommunity. When the managers refusedto enter negotiations, the residents feltcompelled to file a lawsuit against Shell.


Shell refuses to address the significanthealth concerns of Port Arthur’s West-Sideresidents, all of which are related torefinery pollution. Instead, Shell hasfunded a health clinic, which is locatedon the other side of town, and thusinaccessible to most of the residents in theWest-Side neighbourhoods.

Hilton Kelley of Port Arthur explains the impact on Shell’s neighbors of toxic releases on April 14, 2003, when therefinery lost power and sent all their product to the flare—see photo on page 13. (Denny Larson, Global CommunityMonitor)


Legal action against Shell

Over 1,200 Port Arthur pollution victimsare alleging air, soil, and othercontamination due to the release of“noxious fumes, vapours, odours andhazardous substances.” The number ofcitizens participating in the lawsuit isexpected to grow dramatically. Thelawsuit seeks medical monitoring andreimbursement of medical expense, aswell as compensation for loss of quality oflife. The specific legal claims includetrespass, nuisance, and negligence, aswell as fraud and misrepresentation of theharm caused by the toxic releases6.

The lawsuit is being brought pursuant tothe common laws of Texas and theWrongful Death Act and the SurvivalStatute. According to the citizens’attorneys, “The evidence we haveobtained shows a habitual pattern ofemissions and discharges that endangerthe health of the public. These are clearlynot ‘unavoidable accidents’.”

Don Maierson, one of the attorneys forthe fenceline neighbours in Port Arthursaid, “The industries have destroyed thequality of life of their neighbours. It isclearly illegal to deny citizens the right tobreathe clean air and have full use andenjoyment of their property.” The legal

pleadings charge that local industrieshave “violated these basic human rightswhich we must honour as a society if weare all to live in peace and well-being.”

Because management refused to even talkwith affected neighbours, Shell is nowbeing sued in Port Arthur. Is this a goodway to manage shareholders’investments?

Bad air day in Port Arthur, April 14, 2003 (Hilton Kelley, Community In-power Development Association)

Pandacan is a residentialneighbourhood of the city ofManila in the Philippines whereShell owns a massive oil and gasdepot. Shell refuses to relocate itsdepot, despite legislationrequiring them to do so. Over thepast year, Pandacan has beenthe site of an ongoing battlebetween residents and Shell (andtwo other oil companies, Caltexand Petron) regarding thecompanies’ refusal to remove theoil and gas depots located on 33-hectares of land.

Circumventing the law: ignoring health and safety risks

The oil depots are located in a densely-populated district located in the heart ofManila. Pandacan has a population ofabout 84,000 people who come fromdiverse economic backgrounds, themajority of whom are urban poor. Morethan 15,000 students are enrolled inelementary and high schools situatednear these facilities. The largest universityin Asia, the University of the Philippines,which has a student population of about25,000, is located directly across fromthe depots on the banks of the PasigRiver. Daycare centers, churches, andsmall businesses are located in the areaas well. The Malacanang PresidentialPalace is just two kilometers away fromthe depots.

Philippines’ activist exposestruth about Shell’s oil depot at2003 Shell AGM

Hope Esquillo Tura, a member of theUnited Front to Oust the Oil Depots (UFO-OD), travelled to the 2003 Shell AGM inLondon where she presented communityconcerns that the continued presence ofShell’s oil depot was circumventing a cityordinance that requires its removal. Sheexplained that Shell had used itssignificant influence to secure a specialpermit to operate, rather than respect andcomply with the local ordinance. At theAGM, Sir Philip Watts announced thatShell would protect the local communityby creating a “buffer zone” between theoil depots and nearby residents. However,Hope exposed the misleading nature ofthis announcement, pointing out that theso-called “buffer zone” was only going tobe a few meters wide.

Pandacan oil depots A disaster waiting to happen


Behind the Shine

Residential neighborhoods in Metro Manila, the Philippines, in an area known as Pandacan, co-exist adjacent to fuelstorage depots operated by Shell and other oil companies. (Francesca Francia, Global Community Monitor)


Local residents and governmental officialsadvocate for the removal of the oil depotsbecause the continuous presence of thedepots in Pandacan is a disaster waitingto happen. They warn that an accident orterrorist attack could result in the biggestdisaster in the history of petrochemicalfacilities, affecting the 10.9 millionresidents of metro Manila7.

On November 28, 2001, the city ofManila passed ordinance number 8027requiring Shell, Caltex, and Petron torelocate their oil depots outside of Manilacity limits by the end of April 20038.However, in June 2002, the Mayor ofManila, Lito Atienza, signed amemorandum of understanding (MOU)with the three companies allowing themto “stay” if certain conditions were met,including the construction of the woefullyinadequate “buffer zone”9. The legaladequacy of this MOU was obviously notapparent to the companies, whothereafter each filed separate petitionswith the Manila Regional Trial Courtseeking injunctions to suspend theordinance from taking effect10. On April30, 2003, the trial court denied Shell’spetition for an injunction, but granted thepetitions by Caltex and Petron11. TheMayor then issued “special permits” toCaltex and Petron to continue operationsduring the pending litigation12. And, in ahighly controversial decision, the Mayoralso issued a similar permit to Shell,notwithstanding Shell’s failure to prevail

in court13. An alliance of universitystudents, professors, and employeesjoined UFO-OD in filing a complaint withthe Office of the Ombudsman against theMayor for issuing the permit to Shell,claiming that the Mayor violated his dutyto enforce the ordinance. The alliancealso requested that the Ombudsmaninvestigate “three Pandacan [officials] forseeking ‘benefits’ from the oil firms inreturn for their support of the depots”.14

Exponentially exacerbating Shell’s brashcircumvention of local law requiring Shellto move its operations out of Pandacan isthe fundamental fact that Shell’s lease fromthe University of the Philippines for use ofthe property expired on May 3, 2000. TheUniversity was so outraged by Shell’sfailure to honor the terms of its leaseagreement that it urged the Supreme Courtto direct the mayor to enforce “the cityordinance banning oil companies frommaintaining oil depots in Pandacan15”.Warning the court that the presence ofShell’s depot in Pandacan poses a “majorthreat to national security, considering thepresent escalation of terrorist activities”16,the University expressed concerns about itsliability for “death and destruction” fromShell’s continued presence17.

Children of Pandacan living in the shadow of Shell’shuge fuel depot. (Francesca Francia, Global CommunityMonitor)


Pandacan

Behind the Shine


Instead of complying with the existinglaw, Shell uses its seemingly limitlessresources to fund a massive publicrelations campaign. That campaignpromulgates misleading claims by thecompany, and also employs Shell’sincreasingly routine tactic of enticingresidents with “feel good” offers, such asscholarship programs and supposedemployment opportunities18, which, ofcourse, do nothing to address residents’complaints of environmental and healthproblems, as well as security concerns.Rather than acting as a sociallyresponsible corporation, Shell perverts theprinciple of social responsibility intosomething more akin to “pay-offs” in anattempt to pacify serious local communityconcerns.

Buffer zone: false sense ofsecurity

After entering into a scandalousarrangement with the Mayor of Manila,Shell and the other oil companies scaleddown their operations and constructed aso-called green buffer zone. Although thisarea measures only 5 to 7 meters inwidth, Shell claims that it provides a safedistance between fenceline communitiesand the oil depots. Commericaladvertisements paid for by Shell and thetwo other oil companies falsely describethe buffer zone as a “park” or“promenade area”. Continuing the farce,Shell painted its depot with pictures ofbushes and trees.

The United Firefighters of the Philippinesand international experts on disastermanagement estimate that an accident orexplosion in the Pandacan oil depotscould result in devastation within a two-kilometer radius19. Local residentscontinue to complain about the foul odourfrom emissions released by the depots,and continue to suffer from respiratorydiseases, skin diseases, and otherailments associated with toxic pollution.

In short, Shell’s scaling down ofoperations, creating a so-called bufferzone, and offering air monitors do notadequately address the serious healthand environmental risks to the entirepopulation of Pandacan and metropolitanManila. The continued presence of the oildepots in Pandacan is a disaster waitingto happen. The health, safety, andwelfare of residents is of paramountimportance, and must take precedenceover the business interests and profits ofShell and the other oil companies. Street scene in Pandacan community is dominated by looming fuel storage tanks. (Francesca Francia,

Global Community Monitor)

Norco, on the banks of theMississippi River in Louisiana, ishome to a large Shell oil refinery(now a joint venture calledMotiva) and a Shell chemicalfacility. Norco is located in“Cancer Alley”, a 136 km spanof the Mississippi River whereover 130 refineries andpetrochemical facilities operate incommunities that complain ofhigh rates of cancer. The Norconeighbourhood of Diamond,where generations of close-knitAfrican American families havelived since the1700’s, is lockedbetween the two Shell facilities.In 2002, Diamond residents,organized as Concerned Citizensof Norco, compelled Shell to offerthem relocation and reduce thepollution from its facilities. Thisunprecedented victory was abittersweet one for residents,who left their homeland in orderto find a healthy place to live.

firms, progressive members of the USCongress, and scientific experts. Withsignificant public scrutiny, the communityorganisation compelled Shell to enter intonegotiations for a fair and just relocation.In 2002, Shell finally agreed to buy outthe polluted neighbourhood at a fair pricethat allowed residents to move. Shellclaims that the rationale for its relocationdecision was simply to create a “green”buffer zone by offering to move residentson the first two streets abutting the facility.Shell also claims that it was onlyinterested in maintaining the “historicunity” among residents by offeringrelocation to the remainder of thecommunity. To date, Shell has neveracknowledged any of the health impactsof its operations, although residents madeit abundantly clear that the issue of healthwas their motivating factor in demandingrelocation.

“We realized that under no circumstanceswould it ever be fair for people to livenext to a toxic industrial facility. For us,relocation was the only option.” MargieRichard, Goldman Prize Winner 2004.

Margie Richard and Iris Carter are Norcoresidents who have been fighting for yearsto get Shell to relocate residents and dealwith the health problems in theircommunity that are associated with thetoxic pollution released by the Shellfacilities. Margie and Iris travelled toShell’s headquarters in both London andin the Netherlands to demand action.Margie, who organized ConcernedCitizens of Norco, also spoke out aboutthe community’s environmental justicestruggle to overcome Shell’s resistance atthe 2003 AGM.

Leaving home

Concerned Citizens of Norco developed aresidential relocation plan and workedtirelessly to bring Shell’s harmful practicesto international attention. Theorganisation garnered the support of adiverse international coalition ofenvironmental, health, and human rightsadvocates, socially responsible investment

Norco, Louisianahealth problems still not addressed by Shell


Shell Norco refinery flares again. (Louisiana Bucket Brigade)

The legacy of health problems

Now out of harm’s way, many Norcoresidents are reflecting on the trauma theysuffered living next to Shell. They recalltheir neighbours who were killed byShell’s accidents, the cluster of rarediseases, and the respiratory problemssuffered by so many in the community.Numerous residents continue to sufferwhat they believe are the effects ofchemical exposure, and are burdened bythe associated crippling health care costs.

As Iris noted, “We’re still dealing withthat, we’re still dealing with health issues.I went to England, to Shell’s headquarters,and was promised that Shell was going towork on it. We had a meeting… and westill haven’t resolved anything.”

Since the relocation in 2002, Shell hasbegun several community initiatives inNorco. Among these initiatives are ahealth survey and an air monitoringprogram. Unfortunately, both the healthsurvey and the monitoring program arereflective of Shell’s pattern of designingself-serving programs that fail tomeaningfully address the vitally importantenvironmental and health problemsassociated with its massive pollutionimpacts on the community. Further, thesupposed “health survey”, conducted bythe Tulane University School of PublicHealth, merely focused on residents’perceptions about the environment, noton residents’ actual health conditions,exposure to toxic chemicals, or medicalneeds.

Concerned Citizens of Norco werecertain that, notwithstanding Shell’srepresentations to the contrary, they werebeing exposed to significant pollutionfrom Shell’s facilities, and so set about todocument that fact. With the assistance ofGlobal Community Monitor and theLouisiana Bucket Brigade, organisationsthat train local residents to collect samplesof air pollution in their neighbourhoodwhich are then analyzed by anaccredited laboratory, Norco residentswere finally able to make their case. Inthe air samples they collected, Shell’stoxic chemicals were detected at levelsexceeding health based standardsestablished by the State of Louisiana.


Behind the Shine

Norco

Air samples taken by Norco community members with their buckets have provenongoing exposure to toxic chemicals. (Marc Pagani, Louisiana Bucket Brigade)


PROBLEM

Takes an air sample once everysix days

■ People do not breathe once every sixdays. Chemical exposure in Norco isongoing, 24 hours a day.

■ The monitoring system offers noinformation whatsoever on air emissionsduring each 5-day interval betweensampling dates, and the majority ofemissions could be released during suchintervals.

Does not detect sulphur compounds

■ Sulphur compounds are a primaryemission of oil refineries.

■ Sulphur has a highly offensive rottenegg odor and is scientifically known toharm the respiratory system.

Uses inferior technology

■ Shell employs Suma canisters to collectair samples.

■ Although Suma canisters are used atmany industrial facilities, they are farinferior to many other state-of-the-art airmonitoring devices.

Problems with Shell’s airmonitoring program

Following the relocation of Diamondresidents, Shell initiated an air monitoringprogram in Norco pursuant to the termsof a settlement agreement it had reachedwith the Louisiana Department ofEnvironmental Quality pertaining tovarious air and water quality violations atits facilities in Norco and another facilityapproximately 30 miles from Norco 21.However, this air monitoring program iswoefully inadequate — the monitors donot even detect sulphur compounds,which are lung-damaging pollutantsroutinely released in massive quantities byShell facilities in Norco.

SOLUTION

Shell should install real-timemonitors that detect and recordemissions occurring 24 hours aday.

Shell should install a monitorthat detects, speciates, andmeasures the various sulphurcompounds released by itsfacilities.

Shell should employ effective,reliable monitors that provideinstantaneous data on emissions.Such monitors are readilyavailable at reasonable cost.

One of the homes of Norco residentsadjacent Shell Chemical plant beingtorn down during relocationprogram. Relocation and thedestruction of their historiccommunity was the only option forShell’s neighbors in Norco,La.(Louisiana Bucket Brigade)

In the last year, shareholdershave come to learn what oil-producing communities in Nigeriahave known for decades: Shellcan’t be trusted to regulate itself.

scrapped in 2000 by Nigerian PresidentObasanjo. A Shell spokesman told TheIndependent newspaper in February2004, “I do not know whether it was amatter of public record that theseincentive payments were being made inreturn for booking reserves.”23

It was unclear at the time this report wentto print, if the March 2003 decision ofShell’s new Board of Directors to drop itsclaim that Shell made the Nigerianbookings of its reserves “in good faith” isrelated to the tax breaks Shell received.The US Securities and ExchangeCommission and US Department ofJustice who are currently investigatingShells misquoting of oil reserves shoulddetermine if any influence has occurred.


Exaggerated oil reserves

In January 2004, Shell shocked itsshareholders by announcing that it hadoverstated its oil and gas reserves by20%. Shareholders were then leftwondering how Shell could lose almost 4billion barrels of oil and gas22. Initially,Shell stated that it revised its Nigerianreserves over concerns about the cost ofinfrastructure investments needed to dealwith the natural gas found in its oil fields,but it appears that there well may havebeen other influences at work.

During the 1990s, Shell and othercompanies received incentives underNigeria’s bonus scheme in the form of taxcredits for every barrel of oil booked. Thescheme ran for nine years, but was finally

NigeriaThe strange case of Shell’s vanishing oil-reserves

Behind the Shine

Damage from oil spill and fire in a wetlandsarea in first reported to Shell on December3rd 2003 by local villagers of Rukpokwu.(Copyright Stakeholder Democracy Network2004)

Polluted land—oil spills, fires,and gas flaring

Flaring natural gas from oil fields is oneof the visible impacts the oil industry hason daily life in Nigeria. Flares tower overfarms, schools, and communities, spewingflames and acrid plumes of charredsmoke, day and night, seven days aweek. The Nigerian government wantsflaring to stop, and has passedenvironmental laws that should end thepractice beginning in 2010. Shellcommitted to ending its flaring earlier, in200824, but unfortunately Shell is nowbacksliding on this commitment byclaiming that it will be expensive.

Speaking in February 2004, ChrisFinlayson, chairman of SPDC [ShellNigeria] told the Financial Timesnewspaper, “To put in an integrated gasand oil development is more expensivethan a simple oil development […] with alimit on the funding going into theindustry, clearly that does constrain howmuch you can do.”

Local people have suffered from decadesof pollution as a result of oil spills andfires from Shell’s rusting network of pipes.In early December 2003, a high pressureoil pipeline in Rukpokwu, which has been

a problem since 1963, ruptured, causingan oil spill and fires. It took Shell morethan six weeks to put out the fires andcarry out basic repairs. Rukpokwu is lessthan an hour’s drive from Shell’sheadquarters.

Speaking about the oil spill and fires,Paramount Ruler, Chief Clifford E.Enyinda, and Chairman of the MgbuchiCommunity, Azunda Aaron, have said,“Our only source of drinking water,fishing stream, and farm-lands coveringover 300 hectares of land with aquaticlives, fishing nets and traps, farm crops,animals, and economic trees worthseveral billions of naira (equivalent tomillions of US dollars) are completelydestroyed by the spillage and was madeworse by the three separate fires thatbroke out of the spill site”25.

What happened to the moneyfor development?

Shell has benefited from the billions ofdollars of oil that have been pumped outof the ground in Nigeria while basiceconomic development—hospitals,schools, running water—are seriouslyunder funded. Shell claims that 75% ofthe development projects it supports aresuccessful, but Shell only allows externalreviewers to examine projects that are nomore than one year old.

A recent Christian Aid news articlerevealed that a critical internal Shellreport about community relations wasshredded. “Even the computer hard discswere wiped”, according to one Shellinsider. Oil-producing communities inNigeria want to know how Shell canspend US$69 million a year ofshareholders’ money on socialdevelopment projects in the Niger Delta,with no visible benefits for the majority ofpeople who own the land which containsthe oil and gas26.

“If Shell wants to put US$69 million intocommunity development, why doesn’t itset up a foundation which has no directlinks to the company and let developmentworkers who know what they’re doingmanage the projects?” asks OrontoDouglas of Environmental Rights Action(Friends of the Earth Nigeria).


Rukpokwu, Nigeria, January 7th 2004, fire erupts in ahigh-pressure, 28-inch pipeline operated by SPDC,Shell's Nigeria affiliate, (copyright StakeholderDemocracy Network 2004)

For decades the residents of VilaCarioca in Sao Paulo, Brazil,have been using drinking watercontaminated by the nearby jointShell ExxonMobil facility. In 1993local unions joined ColetivoAlternativa Verde or the GreenAlternative Collective (CAVE) andGreenpeace, and filed acomplaint in the courts, citingcontamination of Vila Cariocawith hydrocarbons, heavymetals, and organochlorides.Since then, despite investigationsby local health andenvironmental authorities,progress, if any, has been slow.Despite evidence which indicatesbreaches of environmental law,Shell has yet to be prosecuted.

Toxic drinking water

For decades, residents have been usingthe drinking water wells on theirproperties, which have beencontaminated by industrial waste. Thethousands of families of Vila Cariocahave used that water not only fordrinking, but for their gardens and forgrowing fruit trees as well.


Shell, along with ExxonMobil, arrived inBrazil in 1912 as Anglo MexicanPetroleum, Inc. The company establisheda facility in the neighbourhood of AguaFunda, next to the Santos-Jundiai railroadline on which it transported gasoline,kerosene, diesel, cooking oil, insecticides,and pesticides to the Port of Santos/SãoPaulo.

Shell and ExxonMobil continued tooperate in Agua Funda until 1942, whenthe Santos-Jundiai oil pipeline wasinaugurated. After this, Shell built a newstorage tank depot and shipping terminalin Vila Carioca and ExxonMobil built afacility in Mooca. In 2001, ExxonMobilclosed its Mooca facility and became apartner with Shell at Vila Carioca, buying21.66% of the land and 45% of Shell’sprocessing capacity.

Sao Paulo, BrazilShell contamination at the Vila Carioca

Behind the Shine

Panel in the Chamber of the Representatives Brasilia—Commission of Environment—Public Hearing aboutenvironmental contamination in Villa Carioca, includingrepresentatives from Shell Brazil, ExxonMobil Brazil,Petrobras and Coletivo Alernativa Verde - 04/09/2003(Cláudio Guimarães, Coletivo Alernativa Verde)

Vila Carioca has over 40,000 residents,mostly working-class, who are at themercy of carcinogenic, mutagenic, andteratogenic contamination from Shell’spractices.

Shell denies responsibility for anycontamination. Numerous residents havetestified to serious health problems,among them tumours, cancers, infertility,leukaemia, respiratory problems, anddepression, which they believe arecaused by Shell’s operations27.

The Sindicato dos Trabalhadores noComércio de Minérios e Derivados dePetróleo de São Paulo (SIPETROL), or theUnion of Workers in Mining, Petroleumand Related Industries of the state of SãoPaulo, is a member of a working groupthat is preparing a report on the healthhazards faced by workers andneighbouring residents of the facility, aswell as on the environmentalcontamination of the soil and the water.

Above the law?

For years, Shell and ExxonMobil wereable to act with impunity because theyhad a virtual monopoly on thedistribution and importation of petroleumderivatives, pesticides, and herbicides.However, in 1993 SIPETROL, incollaboration with CAVE andGreenpeace, filed a joint complaint incourt, citing contamination of VilaCarioca with hydrocarbons, heavymetals, and organochlorides. Heavymetals were identified, including lead,mercury, and arsenic, as were traces ofchromium, barium, strontium and cesium.

Since the filing of the complaint, bothShell and ExxonMobil have been thesubject of investigations by the São PauloState Department of Health and by theState Environmental Protection Agency. In2002, the investigations revealed thatShell’s large fuel-holding tanks located inVila Carioca had been operating withouta valid permit28. Governmental officialsdetermined that the permit had expired in1985, and ordered an immediate shut-down of the facility29. Although Shell wasable to obtain a court order overturning

the shut-down, shortly thereafter Brazil’senvironmental agency fined the companyfor its “grave fault” in polluting the VilaCarioca site30. Shell currently facesmounting potential liabilities, as agrowing number of lawsuits andcomplaints continue to be filed byresidents and local governments31.

The poisoning of an entire community iscontinuing with the complicity of someregulatory agencies. Although CAVE andSIPETROL are pressuring the Ministry ofthe Environment to fine Shell under theEnvironmental Crimes Law, thus far,despite clear evidence of violations, theMinistry has not been willing to enforcethe law. The struggle continues, with theaim of forcing federal authorities toinvestigate the potential commission ofenvironmental crimes by Shell andExxonMobil.


Authors of this chapter are Cesar Augusto Guimarães Pereira, ExecutiveDirector of SIPETROL-SP and Director of the Coletivo Alternativa Verde(CAVE), and Elson Maceió dos Santos, CAVE Co-ordinator.

Shell neighbours hold a protest in Vila Carioca (ColetivoAlternative VerdE)

The small island of Curaçao hasa population of approximately130,000 inhabitants and only444 km2 of land. The island hasover 20 km of coral reefscontained inside the UnderwaterMarine Park, sandy beaches inthe south, and remnants of oldmahogany forests insideChristoffel National Park in thenorth32. In 1914 Shell constructedthe largest oil refinery in thewestern hemisphere on Curaçao.Shell was able to dominate themicro-scale island community,which found itself trapped in a

Poisoning the community

In 1982, a Venezuelan lab reported thatthe concentrations of sulphur compoundemissions from the Shell refinery weremore than twice the levels established bythe US EPA and could be responsible forthe respiratory diseases suffered bypeople living on the island33.

The following year, the CentralEnvironmental Management Service ofRijnmond (DCMR, Rotterdam), visited thesite and conducted interviews. Thisagency concluded that “The continuousemission of extremely high concentrationsof sulphur dioxide and particulate matter,on relatively low stacks, is a hugeproblem. Measurements of theconcentrations of pollutants in the airdownwind of the Shell refinery indicatethat the pollution is influencing anddamaging the health of the people livingdownwind of the refinery. The


so-called enclaved economy. Theecological balance anddevelopment of the islandgradually became contaminatedby toxic pollutants. In particular,the Shell refinery caused majorenvironmental damage toCaracus Bay, the SpanishWaterlake, Bullen Bay,Schottegat Bay, Sint Anna Bay,Valentijn Bay, and Brusca Bay.Ultimately, Shell sold the refineryto the Curaçao government forUS$1 and left behind a toxiclegacy that continues to plaguewhat was once an islandparadise.

Curaçao, CaribbeanPolluted paradise

Behind the Shine

Shell sold this aging refinery to thegovernment of Curaçao for US $1 in 1985,but the toxic legacy lives on today. (January23, 2004, Norbert Gerorge Humane CareFoundation Curaçao)

concentrations of pollutants on Curaçaoare approximately four times higher thanmaximum concentrations acceptedanywhere else in the world. This impliesthat irreparable damage is being inflictedto the health of human beings that inhalethe chemical, organic and toxic pollutantsemitted by Shell.”34 Epidemiologists fromthe Pubic Health Services of Curaçaofurther noted that the scope of the public

health crisis is evidenced by the highnumber of poor townships exposed toexcessive emissions35.

In 1985, Shell sold the aging refinery tothe island for US$1 on terms thatincluded an indemnity clause transferringto the local government financialresponsibility for anyenvironmental/health impacts caused byShell’s 70 years of operation. Localauthorities now bear the financialresponsibility for the premature deaths,cancers, birth defects, bronchitis, chronicobstructive pulmonary diseases, asthma,skin diseases, respiratory disorders, andchildhood illnesses suffered by residents36.

Just as the case in Nigeria and thePhilippines, Shell has been accused ofexhibiting an undue influence over theisolated Antillean/Curaçaongovernments. As a former Shell managerexclaimed in an interview in 1980, “TheAntillean government? We are thegovernment!”37 During its 70 years as themajor employer in Curaçao, Shell clearlywielded its financial might as the supremerule of the island.

Curaçaons hold Shell liable formassive environmental damage

In 2003, the people of Curaçaoorganised a campaign called the HumaneCare Foundation Curaçao, in order tohold Shell liable for the massive damagethat it has inflicted on the community. Thevital habitats and natural resources on theisland have sustained significant toxicdamage38 that affects more than 12.5% ofthe population, including more than5,500 children39. Central to the campaignis obtaining redress for Shell’s legacy ofenvironmental devastation that violatesthe fundamental human rights of peopleliving on Curaçao.


Residents have named this refinery dumping area: theasphalt sea (Norbert George Humane Care FoundationCuraçao)

“Shell’s policy to save money atthe expense of Russia’senvironment and the health oflocal people is causing a reactionfrom Russian and internationalnon-governmental organisations.Shell must finally take fullresponsibility for its Sakhalin IIproject and conduct appropriatestudies of its impacts to societyand the rich environment inSakhalin. Shell has taken anenormous risk with its Sakhalin IIproject. In its haste to savemoney there is considerableevidence that Shell is violatingRussian environmental laws. It isessential to ensure species arenot put at risk.” — DmitryLisitsyn, Chairman of SakhalinEnvironmental Watch

Endangered gray whales underthreat

The waters off Sakhalin Island are hometo 25 marine mammal species, 11 ofwhich are endangered, including theworld’s most critically endangered graywhale species, the Western Pacific graywhale. This whale has been identified bythe International Union for Conservationof Nature and Natural Resources as“critically endangered” with only 100whales estimated to remain, including just23 reproductive females40. The ScientificCommittee of the International WhalingCommission is concerned about SakhalinII and noted that “it is a matter ofabsolute urgency. . . to reduce varioustypes of anthropogenic disturbances tothe lowest possible level” [emphasismaintained]41.


About Sakhalin Island andSakhalin II

On Sakhalin Island in the Far East ofRussia, Shell is proposing to build theworld’s largest single integrated oil andgas facility that is known as Sakhalin II.This massive facility would include off-shore oil and gas drilling platforms, anenormous liquefied natural gasprocessing and export facility, an oilexport terminal, and over 800 kms ofonshore pipelines. The off-shore waters ofSakhalin Island are some of the mostspecies-rich marine environments on thePacific Rim with crab, herring, cod, andsalmon—including the unique masucherry salmon—as well as theendangered Sakhalin taimen, the mostancient salmonid. The off-shore platformswill be adjacent to the Western Pacificgray whales’ feeding and migratinghabitat, and undersea pipelines will betrenched directly through that habitat.

Sakhalin Island, RussiaShell’s broken commitments

Behind the Shine

Whales living in the shadow of oil drilling platforms in watersoff shore of Sakhalin Island, Russia. (Gravilov/Greenpeace)

Damaging local fisheries

Traditionally, Sakhalin Island’semployment has centered on the fishingindustry, which in recent years has seen asteady decline in the number of fishcaught. Now the rich salmon fishinggrounds are under threat as Shell hasrefused to stop dumping one milliontonnes of tailings into Aniva Bay to buildpiers for Sakhalin II, rather than dump itat an alternative site that would avoiddamaging local fisheries. Local fishermenare angry as they believe this violatesRussian environmental regulations thatprotect rich fisheries42.

Flawed environmental impactassessment

Local environmental organisations haveuncovered flaws in Shell’s environmentalimpact assessment (EIA) of SakhalinIsland. A study of Steller’s sea eagles bythe Wildlife Preservation Bureau ofHokkaido/Moscow State University found15 pairs of Steller’s sea eagles, inaddition to many other hatchlings andjuveniles, while the Shell EIA indicatedonly five pairs43. The EIA information failsto correctly describe the currentconditions and thus the potential impactof Sakhalin II on the rare Steller’s seaeagles.44

Shell has also failed to carry outadequate consultation with Japanesegovernmental officials and citizens, inparticular the fishermen, even thoughHokkaido, the northern island of Japan,is just 40 km away from Sakhalin Island.

Earthquake risks

Shell proposes to bury on-shore oil andgas pipelines across 800 kms ofSakhalin, an area that includes 22 activefaults. Further exacerbating this problem,these pipelines would traverse hundredsof wild salmon-bearing streams. Thesestreams support fisheries vital to theisland’s communities and indigenouspeople. An independent report released 2March 2004 by environmentalorganisations exposes flaws in the seismicrisk analysis conducted by Shell for theSakhalin II project, including understatingthe seismic risks45.

Oil spill preparation is secondbest

In October 1999, environmental groupsbrought independent consultants fromAlaska and the North Sea, who haveexpertise in oil spill prevention andresponse, to review Sakhalin’s standardsfor spill prevention and response. Thereport, Sakhalin’s Oil: Doing It Right,contains 78 recommendations, and notesthat Shell’s current Oil Spill ContingencyPlan in Sakhalin falls far short ofmeasures taken in Alaska and the NorthSea46. Given the difficult climate andseismic conditions of the Sea of Okhotsk,along with the great value of marineresources, an oil spill anywhere along thecoast of Sakhalin would be disastrous.

Not benefiting local people

Local Sakhalin residents feel betrayed, aspromises to supply gas to the island havenot been fulfilled. Ludmila Ponomaryova,a 61 year-old Sakhalin inhabitant, wasquoted recently by the BBC, “We don’tsee the oil and gas. We can’t even buycoal to keep warm. So us mortals, we’renot counting on it.”47

Shell claimed that the Sakhalin II projectwas supposed to bring significanteconomic benefits to the people ofSakhalin, while protecting theenvironment. However, a review by theAuditing Chamber of the RussianFederation on the Sakhalin II ProductionSharing Agreement shows that “…theinterests of the State in issues of ecology,mineral use, tax and customs legislation,as well as government control, were notadequately taken into consideration,which has led to damaging the interestsof the Russian Federation during theprocess of realization of the givenprojects”.48 Further, the Chamberdetermined that inappropriate financialtransfers pertaining to the Sakhalin IIproject amounting to US$19.7 millionoccurred49.


Cartoon depicting oil spill threat from drilling in Sakhalin(Sakhalin Environment Watch)

Durban, South Africa

October 2003SAPREF pipeline leaks 75,000 litres ofdiesel into Durban Harbour. Dead fishwere found floating in the Harbour thenext day50. Monitoring data from theSettlers Monitoring Station show thatSAPREF is partly responsible forexceeding sulphur dioxide emissionlimits51.

24 December 2003SAPREF refinery engulfs the community inhuge clouds of black smoke. Residentsare exposed to toxic gases affecting theirhealth52.

28 December 2003SAPREF pipeline leaks marine fuel oil intoDurban Harbour53.

12 January 2004SAPREF pipeline leaks approximately20,000 litres of marine fuel into DurbanHarbour, once again affecting marinelife54.

21 April 2004Power failure at SAPREF shuts downsteam boilers, causing flare gases to beburnt off, forming thick black soot55. Localresidents wake up to sirens at the refineryand a cloud of thick black smoke overtheir homes56.

“The Deer Park plant has emittedsubstances into the air in suchconcentration and duration as toadversely affect human health or welfare.These activities are also in violation of airpermits governing emissions.”

—Harris County Attorney, Harris County, Texas

From 1 February to 31 December2003 the refinery had 27accidental releases, emittingmore than 700,000 pounds ofpollution, according to a HoustonChronicle news report.

3 April 2002a tank that caught fire as it was beingcleaned enveloped a local highway indense black smoke, closing a highwayand causing a nuisance in nearbycommunities.

13 May 2002another fire ignited natural gas, inviolation of open burning laws, andclosed the freeway.

September 2003a pungent odour from a holding pondgenerated complaints from Jacinto Port toTomball.

December 2002a storm snuffed out a flare, releasingthousands of pounds of hydrogensulphide.

Durban, South Africa Port Arthur, Texas Deer Park, Texas


Since February 2003, Shell’s MotivaRefinery reported 18 toxic releases andspills to the Texas Commission onEnvironmental Quality.

13 September 2003An underground line to Motiva tank no.1475 ruptured and caused the spill ofover 120,000 pounds of hexane, butane,and isopentane. Later that day, a loss ofelectrical power to certain units led to anhydrocracker shutdown resulting in therelease of 2,100 pounds of sulphurdioxide. A plant-wide power outage dueto poor electrical connections caused thefluid catalytic cracker unit (FFCU) toshutdown. The FCCU pressure reliefvalves depressured to the alkylation flareand the FCCU flare, due to temporarypower failure. Over 1,000 pounds ofsulphur dioxide are released.

14 October 2003Power failure results in emergencyshutdown because of lack of back-uppower systems at the refinery, resulting inover 24,000 pounds of sulphur dioxidebeing released to the air.

27 October 2003The FCCU shutdown when the combustionair blower tripped off, resulting in a flareoff of over 5200 pounds of sulphurdioxide. The filter on the hydrocrackingunit plugged, resulting in the unitdepressuring to the flare. Over 1,100pounds of sulphur dioxide were releasedto the air in just a 15 minute period.

6 December 2003The refinery lost vacuum on the vacuumtower and vented gases to the flare forover 3 hours, resulting in over 3,000pounds of toxic chemicals being released.

Examples of Shell’s documented spills, fires,and toxic releases since the 2003 Shell AGM

Behind the Shine

Flaring in Port Arthur, Texas. (Hilton Kelley, Community In-power Development Association)

Money given by Shell to civicorganisations and local governments.

? The recipients are those who do notcomplain about the harmful impacts ofShell’s operations on human health andthe environment.

? The recipients unwaveringly describeShell as a “good neighbour”, anddeny all criticisms pertaining to thecompany’s environmental record.

? The donations are used as“greenwash” to portray Shell as anenvironmental steward for contributingto non-controversial public events, suchas litter pick-ups and maintenance ofhiking trails. To create the impressionthat the event is widely embraced bythe local community, Shell often directsnumerous of its employees toparticipate.

Members of local communities whoregularly meet with industrial facilitymanagement. The CAP was conceived bythe chemical industry as a form ofdamage control following the 1984Dow/Union Carbide industrial disaster inBhopal, India.

? CAP members are usually hand-pickedby Shell from communities that are notaffected by Shell operations becausethey are located miles away from Shellfacilities or are not in the wind path ofShell’s pollution. (This suggestion formember selection is found in theofficial CAP manual.)

? CAP meetings are not open to thepublic and meeting minutes are notreadily available to the public.

A process initiated by Shell to determinewhat it believes to be the social factorsrelated to community needs.

? The assessments often includegeographic areas where people do notsuffer from or do not acknowledge thatthey suffer from the impacts of Shell’soperations, in order to avoid anaccurate assessment of the impacts ofthe company’s operations.

? The assessments usually take months, ifnot years, to design and implement,diverting resources away from anddelaying solutions to the environmentaland health problems related to Shell’soperations.

Social development and assessments, pay offs, and community advisory panels

Shell spends substantial resources on itsso-called Sustainable DevelopmentProgram. However, these resources arelargely wasted, as they do notmeaningfully address Shell’s endemicproblems.

Untold sums have been spent by Shell toportray itself as a good corporate citizen.It is not difficult to find media coverage,circulated in communities where Shelloperates, that features beaming Shellofficials standing beside an oversizedcheck presented to a local school or civicprogram. The photographs suggest to theworld—and emphasize to the local

community—that Shell values and protectsthe communities where it operates.

However, as documented in this report,Shell operations severely threaten thehealth and environment of people aroundthe world. Far from living up to itsadvertised image, Shell does little morethan dismiss local community demands forsafety and better environmentalconditions—whether in the form oflegislation, health reports, or citizenadvocacy. The stronger the local demandfor safety, health, and environmentalprotection, the harder Shell works toengineer public relations programs that it

believes will placate the local community.If Shell hopes to make any progress, itmust undertake actions that are responsiveto the demands articulated bycommunities affected by Shell’s pollutionand facility hazards.

Shell should realise by now that its publicrelations tactics are completelytransparent to affected communitiesaround the world. In fact, thecommunities profiled in this reportprovided the following summation of thevarious tactics used by Shell to countertheir fundamental demands for a healthyenvironment.


Smoke and mirrors

Financial donations Social assessments

Community Advisory Panel(CAP) or Community LiaisonForum

Walking bridge in London leading to area where Shell headquarters is located. (Denny Larson Global Community Monitor)

“From a Shell perspective we don’t findthe Norms helpful.”

Robin Aram, Vice President of External Relationsand Policy Development, Shell57

In response to the pressures that Shellfound itself under in Nigeria during themid 1990s, when it was being associatedwith human rights violations committed bythe government of General Abachaagainst the Ogoni people, Shell changedits statement of business principles torecognise its responsibility for humanrights. Shell was one of the firstcompanies to recognise the relevance ofinternational human rights standards,referring to the Universal Declaration ofHuman Rights in its policy documents andreports. Shell even produced amanagement primer on human rights in

The UN Sub-Commission on thePromotion and Protection of HumanRights unanimously adopted the UNNorms in August 2003. This representeda major step forward in establishing acommon global framework for definingthe responsibilities of business enterpriseswith regard to human rights. The UNNorms set out in a single, succinctstatement, a coherent and comprehensivelist of the human rights obligations ofcompanies. The UN Norms do not createnew legal obligations, but simply codifyexisting obligations under internationallaw that are applicable to business.

Shell is leading the opposition to the UNNorms, which includes the InternationalChamber of Commerce, the InternationalOrganisation of Employers, the USCouncil of International Business, and theUK Confederation of Business andIndustry. Shell asserts that the UN Normsseek to impose responsibilities onbusinesses that are not appropriate forthem. However, the entire thrust of the UNNorms is to encourage the developmentof stable environments for investment andbusiness, regulated by the rule of law, inwhich contracts are honoured, corruptionis reduced, and business enterprises, bothforeign and domestic, have clearlydefined rights and responsibilities.


1998, which remains one of the mostadvanced corporate statements on humanrights in existence. Until this ground-breaking activity by Shell, theinternational business community hadconsidered human rights to be a politicalissue beyond its sphere of influence. Thetragic events in Nigeria signalled the startof a journey by Shell to convince theworld that human rights are “at the heartof our business”.

However, Shell’s journey came to anabrupt end in 2003 when the companyembarked on a lobbying campaignagainst unprecedented efforts by theUnited Nations (UN) to define the humanrights responsibilities of companies.Thisinitiative, known as the UN Norms on theResponsibilities of TransnationalCorporations and Other BusinessEnterprises with Regard to Human Rights,is widely supported by international non-governmental organisations (NGOs) andhas also received the support of somecorporations.

Corporate lobbying under scrutiny

Behind the Shine

The case of Shell

Decorative sphere at ShellLondon headquarters depicts thecorporate logo circling theearth. (Denny Larson, GlobalCommunity Monitor)

In opposing the UN Norms, Shell arguesthat human rights standards should bevoluntary for businesses, and notmandated by law58. Shell further assertsthat it is already implementing humanrights standards, so that the UN Normsoffer little value59. If Shell is trulycommitted to upholding human rights,then why is the company leading effortsto block human rights standards forbusinesses? Any impacts from Shell’ssupposed implementation of human rightsstandards are clearly not evidenced inany of the communities documented inthis report, who suffer significant harmsas a result of Shell’s operations.

Attempting to minimise theiraccountability for the social andenvironmental impacts of their operations,Shell and other business associationshave lobbied not only against the UNNorms, but also against recent lawsuitsbrought under the Alien Tort Claims Act(ATCA), which has become a vitalchannel for victims of human rightsabuses that are committed abroad. ATCAenables any victim of an alleged violationof international law to use the US courtsto sue the alleged violator, provided thealleged violator has assets in the US. Inthe case of Wiwa v. Royal DutchPetroleum, Shell has been sued forviolating human rights under ATCA and

other laws60. Specifically, the lawsuitclaims that Shell and its subsidiarycolluded with Nigeria’s militarygovernment to bring about the arrest andexecution by hanging of Ken Saro-Wiwaand John Kpuinen, two of nine leaders ofthe Movement for the Survival of theOgoni People (MOSOP), an organizationthat campaigned against Shell’soperations in Nigeria61. The lawsuitfurther alleges that Shell and itssubsidiary gave money and weapons tothe Nigerian government to crush theprotest movement, and bribed witnessesto give false testimony62. Shell andbusiness groups are advocating that UScourts dismiss human rights cases broughtunder ATCA, and the US Supreme Courtis expected to decide this issue63 withinthe next several months.

The enormous resources that Shellexpends on attacking laws and standardsthat would make the companyaccountable for any human rightsviolations belies Shell’s purportedcommitment to human rights, as stated byShell’s Vice President of ExternalRelations, Robin Aram:

“Addressing human rights abuses calls foraction at many levels from political willand high policy, to ‘bearing witness’ andpractical actions by companies andothers. Our job is to work out whatrealistically we can do to enhance humanrights in the context of doing ourbusiness—and then do it.”

It seems that human rights considerationsare relegated to Shell’s CSR and externalrelations functions—in other words, theyare at the periphery of the organisation.Such fundamentally importantconsiderations should be part and parcelof Shell’s day-to-day business decisionsand operations throughout the ShellGroup.

In the words of the Financial Timeseditorial of 5 April 2004, “There is arespectable body of opinion that believessocial responsibility is a costly distractionfrom companies’ one true purpose ofmaking a profit.” Despite Shell’s rhetoricto the contrary, it appears that Shell ispart of that body of opinion.

Shell’s opposition to legal protections forhuman rights is fast becoming the subjectof growing public scrutiny andcondemnation. Such public attention tothe stance of corporations on humanrights laws and standards may wellbecome a new trend, similar to the publicpressures that some energy companieshave come under for opposing the KyotoProtocol. In the future, the socialresponsibility of companies may beassessed not just on the basis of theirpolicies and practices, but also on thepositions they take regarding humanrights and other critical issues pertainingto international laws and policies. Shellshould take notice.


Black smoke from pipeline spill fire fills the sky in Rukpokwu, Nigeria, January 7, 2004. (Copyright Stakeholder Democracy Network 2004)

“Our core values of honesty, integrity andrespect for people define how we work.These values have been embodied formore than 25 years in our BusinessPrinciples, which since 1997, haveincluded a commitment to support humanrights and to contribute to sustainabledevelopment. We continue to makeprogress in translating our commitment tocontribute to sustainable development intoaction.”

— Shell, How We Work, report available onShell website www.shell.com

Shell has been recognized by many asone of the pioneers of “corporate socialresponsibility” or CSR, based on its initialresponse to the international outcry overthe execution of Ken Saro-Wiwa, and theproposed dumping of its Brent Spar oilplatform in the North Sea. CSR was apromise that companies would go beyondtheir existing legal obligations to addressissues of sustainability, development, andhuman rights.

One of the obstacles to theimplementation of CSR strategies is thatcompany law promotes the pursuit ofshort term profit above all else. This focuson the short term means that importantlong term environmental and social issuesare simply not addressed. The lack of real“on the ground” success in CSR alsoclearly demonstrates how it is drivenlargely by the PR and marketingdepartments rather than any genuinedesire to change business policies andpractices.

So the real reason for CSR appears to beto maintain and enhance a company‚sreputation locally, nationally and globallywhich in turn; enables companies todeflect bad PR with good PR, neutraliselocal opposition and watchdog NGOs,attract foreign investment and reduceregulatory pressures by arguing that thecompany is being a “socially responsible”corporation.

The concept of the socially responsiblecompany is used to most effect bycompanies to support of the use of thevoluntary approach rather than legallybinding regulations and legislation. Thehidden agenda of CSR, though, is tomask the private lobbying that company’sdo which often contradicts the positiontaken in their CSR reports (see“Corporate lobbying under scrutiny—thecase of Shell”).

Great expectations—corporate social responsibility (CSR)


In 1998, Shell produced its first CSRreport, Profits and Principles—Does ThereHave to Be a Choice? Thereafter, Shellbegan withdrawing from anti-environmental lobby groups such as theGlobal Climate Change Coalition, anindustry lobby group which had spentUS$60 million denying the existence ofclimate change in the 1990s.

So where did it all go wrong?

CSR—what is it all about?

Corporate social responsibility impliesthat the values that drive multinationalcorporations are compatible with thevalues that drive society and our concernfor the environment and human rights.The experience of many communitiesliving in the shadow of companiesoperating in their backyard, as illustratedin this report, show that this is far fromreality.

The corporate values that appear to driveShells managers are exaggeration, greedand cover-up. An internal reportcommissioned by Shell after the fiascorelated to its report of inflated reservesrevealed a three-year plan to deceiveinvestors regarding the level of reserves.Eventually the production managerresponsible was forced to concede in aninternal email to the CEO: “I am sick andtired of lying about the extent of ourreserves” although he didn’t subsequentlyinform investors.”64

Why the voluntary approach just isn’t good enough

Behind the Shine

From a stakeholder perspective thevoluntary approach is flawed because itprovides little incentive for a companybeyond its protecting its reputation tosignificantly improve its social andenvironmental performance, doesn’t giveaffected stakeholders the right of redress,and fails to deal with companies thatchoose to ignore it.

Companies favour the voluntaryapproach as they want self regulation.They claim by using the voluntaryapproach they have more flexibility andfreedom to implement various codes ofconduct, such as the Global Compact,rather than comply with new legislation.More and more Governments in turnfearful of company threats to relocate orlay off workers are also encouraging thisapproach as it easier to implement andrequires little if any governmentaloversight.

The UN Global Compact is typical ofmany voluntary approaches toincorporate codes of conduct foraddressing social and environmentalissues. A motivating factor for manycompanies to join the Global Compact is

to enhance their reputation in the areas ofsustainability, international developmentand human rights. All companies have todo to comply with the lofty aimsembedded in the nine general principlesof the Global Compact is file an annualreport. Effectively, companies monitorthemselves while affected stakeholders areleft on the outside.

The irony of the Global Compact is thatthe reputation most likely at risk is that ofthe United Nations itself by associationwith corporations with poor human rightsand environmental records as well as themore sinister cultural impact of beingoverly influenced by the short-term profitdriven ideology of major corporations.”65

The myth of CSR and the effectiveness ofthe voluntary approach need to beexposed to prevent inhumane andenvironmentally unsustainable businesspolicies and practices continuing.

Currently, UK law governingcompanies does not consider thesignificant impact that companieshave on human rights,communities, and theenvironment. What is clearlyneeded is a law that holdscompanies accountable for theirsocial and environmentalimpacts, and affords redress toaffected stakeholders.

As this report demonstrates,there is an urgent need to reformcompany law so that directorshave a “duty of care” to considerthe significant environmental andsocial impacts of theircompanies’ policies andoperations. This duty of careshould apply not just in the UKbut wherever a companyoperates in the world.

Pitfalls of the voluntary approachNeed to reform UK company law


Cultivation of its image as a responsiblemultinational corporation is a significantpriority for Shell. It spends millions ofdollars on glossy brochures andadvertising to convince us all—andperhaps itself — that it is a leader incorporate social and environmentalresponsibility.

At conferences and internationalmeetings, such as the 2001 UN WorldSummit on Sustainable Development inJohannesburg, Shell trumpets togovernmental officials its commitment tosustainable development and humanrights. But in trumpeting this commitment,Shell advocates for an entirely voluntaryapproach, which has not resulted insecuring the vitally important changesthat communities in the shadows of Shellfacilities are demanding. The real-lifestories in this report demonstrate the needfor Shell’s senior management to spendless time on the message and more onmaking a difference where it mattersmost—in the communities living next toShell’s operations.

? Improve and enhance its identificationand measurement of facility pollutionby employing state-of-the-art real-timeenvironmental monitoring, whichthoroughly involves communityparticipation.

? Cease any and all delays interminating the odious practice of gasflaring in Nigeria.

? Take full responsibility for pastenvironmental damage that continuesto impact the health and environmentof people in places like Sao Paulo,Brazil and Curaçao, Caribbean.

? Fully and accurately assess thesignificant impacts of massive projects,like the Sakhalin II oil and gas drilling,processing, and export complex inRussia, which could ultimately subjectSakhalin Island to irreversibleenvironmental disasters anddevastating economic losses.

Each case documented in this reportrepresents a potential and significantliability for Shell. It is important thatShell’s shareholders and financial analystsrecognize that for every case detailedhere, there are many more around theworld.

The fenceline communities tell Shell...


Shell has not met the sustainabilitychallenge it set for itself in 1995, and isstill putting short-term profit before peopleand the environment. It is time for Shell tomove beyond the PR. In order to do so,Shell CEO Jeroen van der Veer must:

? Stop wasting its resources on “feelgood” social projects that do nothingto solve the serious health andenvironmental problems of its facilityoperations that plague communitiesaround the world.

? Eliminate hazardous and life-threatening facility accidents byreplacing antiquated and dilapidatedpipelines and relocating them to non-residential areas.

? Significantly reduce pollution whereShell operates in communities of color,just as Shell has done at its facilities inDenmark and other locations that arepredominantly populated byCaucasians.

? Comply with local legislation andrelocate oil depots away from Manila,where the densely populated area issubjected to the depot’s constant toxicemissions, as well as the threat of thedepot being a terrorist target.

Conclusions

Behind the Shine

The UK is the fourth largest economy inthe world, and the largest foreign directinvestor. The way UK plc goes about itsbusiness directly affects the lives ofhundreds of millions of people across theglobe.

When the Labour Party came to power in1997 it promised to implement an ethicalforeign policy. In 1998 the Governmentannounced a review of company law thatwould recognise the role of stakeholdersin company law. Three years on, theForeign Secretary Jack Straw stated “wecannot leave companies to regulatethemselves globally any more than wecan in our national economies. Settingcommon standards at a global levelrequires legislation.”66

Unfortunately we don’t have much toshow after six years of broken promises.The Government-appointed CompanyLaw Review Steering Group published areport in 2001 that marginalises the roleof stakeholders and the consideration ofwider social and environmental issues67.Rather than legislate in this area, theGovernment believes that companies canbe made accountable through CSR,voluntary codes of conduct, andpartnerships with civil society andgovernment.

As this report shows, relying on CSR andthe voluntary approach to makecompanies accountable for their socialand environmental impacts isfundamentally flawed.

Friends of the Earth (England, Wales andN. Ireland) is working as part of theCorporate Responsibility (CORE) Coalitionwhich includes trade unions, environment,human rights, development and faithorganisations including Amicus, AmnestyInternational, Christian Aid, Transport &General Workers Union, New EconomicsFoundation, Save the Children, Traidcraft,the public service union UNISON, and theUnity Trust Bank to promote the reform ofcompany law to take into account socialand environmental impacts 68.

We call on the UK Government tosupport the reform of company law aspromoted by the CORE coalition in orderto:

? Place a duty of care on directors totake reasonable steps to reduce anysignificant social or environmentalimpacts.

? Require all UK companies to reporton the significant negativesocial or environmental impactof their operations, polices, products,and procurement policies withindependent verification.

? Create foreign direct liability forcompanies so that affectedcommunities can seek redressin the UK for human rights, social andenvironmental abuses as a direct resultof their operations or of their overseessubsidiaries.

We call on Shell to cease relying on CSRand voluntary codes of conduct toaddress corporate abuse of theenvironment and human rights, andinstead to:

? support initiatives like CORE to reformcompany law to address social andenvironmental impacts, and

? stop lobbying against internationalcorporate accountability initiatives likethe UN Norms on theResponsibilities ofTransnational Corporations andOther Business Enterprises withRegard to Human Rights, andthe US Alien Torts Claim Act.

Friends of the Earth tells Shell...


As Shell’s neighbours, we have beencomparing—for decades—theinformation that Shell presents in glossybrochures against what’s reallyhappening on the ground.

We have aligned ourselves withstandards of truth, accuracy and justicefor all. We live in the hot spots that Shellhas created by placing refineries,pipelines and wells in our communities.We do not represent a hand-pickedexternal panel of so-called expertsworking in comfortable offices hundredsor even thousands of miles away. We arethe true experts, and pay the price for ourproximity to Shell’s polluting activities.

We do not use complicated symbols tocategorise data. We have no caveats,complicated disclaimers, limitations oraggregate numbers in our testimonies.

Our first-hand accounts are based onsomething far more reliable: ourexperience of having Shell as a neighbor.

—Shell’s Fenceline Neighborsaround the world

Message from the Independent Auditors


Assurance reportTo: Friends of the EarthFrom: Global Community MonitorRe: the Other Shell Report 2003

IntroductionWe have been asked to provide assurance over the community testimonies and firsthand accounts detailed in this Report. This Report is the responsibility of Friends of theEarth. Our responsibility is to express an opinion on the information, testimonies andstatements indicated, based on our experiences referred to above in “Message from theIndependent Auditors.”

In our opinionThe social and environmental performance of Shell, as indicated in this report, properlyreflects reality. Personal statements are sufficiently supported by experience of livingnext to Shell’s polluting activities.

Assurance work performedIn forming our opinion, we have studied this report in the context of our expertise andexperiences as detailed above in “Message from the Independent Auditors”. We useda multi-disciplinary team, comprising fenceline neighbors and environmental and socialspecialists.

Considerations and limitationsNone

We believe our experiences provide a reasonable basis for our absolute opinion.

Global Community Monitor / A project of the Tides Center

Message from the Independent Auditors

Behind the Shine

1 SAPREF, Social and Environmental Performance Report 20022 SDCEA and Danish Fund for Nature, 2002, Comparison of

Refineries in Denmark and South Durban in an Environmentaland Societal Context—a 2002 Shapshot.

3 Robbins, et al, The Settlers Primary School Health Study, DraftFinal Report, University of Natal Faculty of Medicine, DurbanInstitute of Technology’s Department of Environmental Health,University of Michigan (USA), 2002.

4 Personal Communication by Mr. Mustafa, Shell consultant,December 2003.

5 Personal Communication by Mr. Mustufa, Shell consultant,2001 & 2002.

6 Refinery Reform Campaign media release, LegalActionAgainstShell, 3 June 2003

7 The Philippine House of Representatives, Question of Privilegeof Rep. Rosales, Journal No. 58, 4 March 2003, pp. 10—12.

8 Job T. Realubit, Court Order Gives Pandacan Oil Depots a 20-day Reprieve, THE MANILA TIMES, (Manilla, the Philippines), 1May 2003, available atwww.manilatimes.net/national/2003/may/01/top_stories/20030501top4.html.

9 From the Shell official website, Shell in the Philippines:Background on Pandacan Scale-Down Project, available athttp://www.shell.com/home/Framework?siteId=ph-en&FC2=/ph-en/html/iwgen/about_shell/pandacan_

scaledown/zzz_lhn.html&FC3=/ph-en/html/iwgen/about_shell/pandacan_scaledown/psd_home_1114.html.

10 DOE Seeks Permanent Solution to Oil Depot Issue, INQUIRER

NEWS SERVICE, 2 May 2003.11 Id. 12 Id.13 Id.14 Jerome Aning, Atienza Sued for Allowing Oil Firm to Operate

in Depot, INQUIRER NEWS SERVICE, (Manilla, the Philippines),12 May 2003.

15 Joel R. San Juan, UP Moves to Get Back Pandacan Oil DepotLand, THE MANILA TIMES, (Manilla, the Philippines), 10 July2003, available atwww.manilatimes.net/national/2003/jul/10/top_stories/20030710top3.html.

16 Id.17 Id.18 Shell official website, Shell in the Philippines: Community

Activities, information detailing various social projects andevents that surged in frequency beginning in the year 2002,available at http://www.shell.com/home/Framework?siteId=ph-en&FC2=/ph-en/html/iwgen/about_shell/pandacan_scaledown/zzz_lhn.html&FC3=/ph-en/html/iwgen/about_shell/pandacan_scaledown/psd_comrel_011604.html.

19 The Philippine House of Representatives, Question of Privilegeof Rep. Rosales, Journal No. 58, 4 March 2003, pp. 10—12.

20 This section of the report was compiled from the followingsources: (1) Shell-Norco, Good Neighbour Initiative, (2) theRefinery Reform campaign, and (3) Commonweal, NorcoStudies Project: A Victory for Collaboration, available atwww.commonweal.org/norcovictory.html.

21 “. . . Also, in March [1999] DEQ made the largestcompliance settlement in its history, with Motiva EnterprisesLLC, for air and water quality violations at the company’sNorco and Convent refineries. The settlement, part of anationwide case against Motiva, will result in a $500,000cash payment to DEQ and $4 million in “BEP” [beneficialenvironmental projects] agreed to by Motiva. To satisfy theBEP requirements, the company has committed to spending . .. $750,000 for an ambient air monitoring network for the

Norco area. . .” Steve Clark, Shift in Priorities, BUSINESS

REPORT, 31 July 2001, available athttp://www.businessreport.com/pub/19_24/environment/.

22 Shell media release, Proven Reserve RecategorisationFollowing Internal Review: No Material Effect on FinancialStatements, 9 January 2004

23 Michael Harrison, Shell Chief Faces Nigerian Challenge, THE

INDEPENDENT, (London, England), 2 February 2004.24 Shell official website, “SPDC [Shell Nigeria] is committed to

ending routine gas flaring by 2008 through effectiveeconomic utilisation of the gas for the benefit of Nigeria”,available at www.shell.com.

25 Okon Bassey, Oil Spill: Community Cries Out, THIS DAY, (PortHarcourt, Nigeria), 12 January 2004, available athttp://www.thisdayonline.com/archive/2004/01/12/20040112news35.html.

26 Andrew Pendelton et al, Behind the Mask: The Real Face ofCorporate Social Responsibility, CHRISTIAN AID, (London,England), 21 January 2004, available athttp://www.christian-aid.org.uk/indepth/0401csr/index.htm. Alan Detheridge, aShell representative, confirmed this level of Shell’sexpenditures during a face-to-face meeting with Christian Aidin 2003.

27 Dr. Antony Wong, Head of the Department of Toxicology atthe Hospital das Clínicas of the University of São Paulo(HC/USP), Report on Environmental Contaminations of theTown House of São Paulo.

28 Jack Doyle, Riding the Dragon: Royal Dutch Shell & the FossilFire (Environmental Health Fund, 2002), p. 50.

29 Id.30 Id.31 Id. at p. 51.32 From The Lonely Planet website

www.lonelyplanet.com/destinations/caribbean/curacao.33 Section on Chemicals and Air Pollution of the Laboratory for

Environmental Technology, Department of Foreign Affairs ofVenezuela, Research of Air Pollution on the Island ofCuracao, 1982.

34 Central Environmental Management Service of Rijnmond(DCMR), Environmental Research Shell Curaçao, 1983.

35 Epidemiology Department of the Public Health Service ofCuracao, The Curaçao Health Study, 1996

36 Norbert George, Kingdom Policy Fatal for Curaçao, 2003.37 Rudie Kagie, The Last Colony, 1982.38 Caribbean Research and Management Institute, Memo dated

24 Sept 2004; RPM Bak, Effects of Chronic Oil Pollution on aCaribbean Coral Reef, 1987; Government of the NetherlandsAntilles, National Environmental Report, 1992.

39 Environmental Services Curacao, Environmental Report,1997.

40 Sakhalin Environmental Watch websitewww.sakhalin.environment.ru.

41 International Whaling Commission, Report of the ScientificCommittee, Section 10.7.5, 22 July 2001, p. 54

42 Sakhalin Environmental Watch, Report on the Fisheries Valuesof Aniva Bay, May 2003.

43 SEIC ESHIA 2003, Volume 2, Chapter 1, Existing Environmentand EIA 2002, TEOC Volume 7, Book 1-EIA, Chapter 1,Baseline Environment.

44 Breeding only in Far East Russia, the Steller’s sea eagle is aspecies protected by the Japan-Russia Migratory Bird TreatyAct, and also is designated as a natural treasure (CulturalProperties Protection Law) in Japan and considered underdomestic rare wild animals and plants (Species PreservationLaw). IUCN considers it an endangered species.

45 Richard A. Fineberg, Seismic Risk and the Onshore PipelinePortion of Sakhalin Energy Investment Company’s Sakhalin IIPhase II Phase 2 Project: Unanswered Questions, 25 January2004.

46 Dan Lawn et al, Sakhalin’s Oil: Doing It Right — ApplyingGlobal Standards to Public Participation, EnvironmentalMonitoring, Oil Spill Prevention & Response, LiabilityStandards in the Sakhalin Oblast of the Russian Federation,(a publication of Sakhalin Environment Watch and the PacificEnvironment & Resources Center), November 1999.

47 Alan Quartly, Oil Wealth Flows Past Russia’s Islanders, BBCNEWS WORLDWIDE, 24 September 2003, available athttp://news.bbc.co.uk/2/hi/europe/3129608.stm.

48 Auditing Chamber of the Russian Federation on the SakhalinII Production Sharing Agreement Report, Section 3.2, 21March 2000, p. 15. This report focuses on the results of acomplex evaluation of the use of government propertyprovided on the basis of the right for use of mineral resourcesto subjects of entrepreneurial activity on the basis ofretribution, in particular the payment of taxes, collections,and other payments to the federal budget, as well asinsurance payments to government non-budget funds duringthe execution by them of the Production Sharing Agreements‘Sakhalin-1’ and ‘Sakhalin-2’ and the fulfilment of theconceptions of the Auditing Chamber, adopted at theCollegium of the Auditing Chamber of the Russian Federationon April 17 1998 based on the results of a thematicevaluation of the organization of levying of taxes andpayments into the budget during the execution of theProduction Sharing Agreement in correspondence with thefederal law ‘About Production Sharing Agreements’ atenterprises and organizations of Sakhalin RegionÅh.

49 Id.50 The Natal Mercury, 10 October 2003 51 eThekwini Municipality Multi-Point Plan (MPP).52 South Durban Community Environment Alliance GIS record of

complaints.53 Personal communication by SAPREF, December 2003.54 The Natal Mercury, 15 January 2004. 55 SAPREF press release, Power Failure, 21 April 2004.56 Southern Star, ‘Black Wednesday’, 23 April 2004.57 Corporate Europe Observatory, Shell Leads International

Business Campaign Against Human Rights Norms, CEO InfoBrief, March 2004, available athttp://www.corporateeurope.org/norms.pdf.

58 Id.59 Id.60 Center for Constitutional Rights, Wiwa v. Royal Dutch

Petroleum/Wiwa v. Anderson/Wiwa v. Shell PetroleumDevelopment Company, Synopsis, available athttp://www.ccr-ny.org/v2/legal/corporate_accountability/corporate

Article.asp?ObjID=sReYTC75tj&Content=46. 61 Id.62 Id.63 The US Supreme Court heard oral arguments on the case,

Sosa v. Alvarez-Machain, brought under the Aliens TortClaims Act, on March 30, 2004.

64 Katherine Griffiths, Lies, Cover-Ups, Fat Cats and an OilGiant in Crisis, THE INDEPENDENT, (London, England), 20 April2004.

65 Corporate Watch & Transnational Resource & Action Center,Tangled Up in Blue: Corporate Partnerships at the UnitedNations, September 2000.

66 Jack Straw, UK Foreign Secretary, Local Questions, GlobalAnswers, 10 September 2001. A speech on globalisation atthe Museum of Science and Industry, Manchester, England.

67 UK Company Law Review Steering Group, Modern CompanyLaw for a Competitive Economy, Final Report, June 2001.

68 CORE webite www.corporate-responsbility.org.


Endnotes

Friends of the Earth26-28 Underwood StreetLondon N1 7JQTel: 020 7490 1555Fax: 020 7490 0881Email: [email protected]: www.foe.co.uk

Global Community MonitorA project of the Tides Center222 Richland AvenueSan Francisco, CA 94110 USATel: + 415 643 1870Website: www.gcmonitor.orgEmail: [email protected]

groundWorkP.O. Box 2375Pietermaritzburg 3200Tel: + 27 33 342 5662Fax: + 27 33 342 5665Email: [email protected]: www.groundwork.org.za

Environmental Health Fund41 Oakview TerraceJamaica Plain, MA 02130Tel: + 617 524 6018Fax: + 617 524 7021

South Durban CommunityEnvironmental AlliancePO Box 211150BluffDurban 4036Tel: + 27 31 461 1991Fax: + 27 31 468 1257Email: [email protected]

Advocates for Environmental HumanRights1050 S. Jefferson Davis Parkway, Suite 333New Orleans, LA 70125 USATel: + 504 304 2775Fax: + 504 304 2276Emails: [email protected]

[email protected]

Coletivo Alternative Verde (CAVE)P.O. Box 111Cep: 11010-010Santos, Sao Paulo, BrazilTel: (13) 9142-6729Website: www.cave.org.brEmail: [email protected]

Sakhalin Environmental WatchKomunisticheskyj prospect 27aOffice 301693 007 Juzhno-SakhalinskRussiaEmail: [email protected]: www.sakhalin.environment.ru

Community In-power DevelopmentAssociation, Inc.648 East Sixth StreetPort Arthur, TX 77640Tel: +409-498-1088Email: [email protected]: http://www.refineryreform.org/

community_portarthur.asp

Louisiana Bucket Brigade1036 Napoleon AvenueNew Orleans, LA 70115 Tel: + 504 269 5070Fax: + 270 626 1615 Email: [email protected]: www.labucketbrigade.org

Environmental Rights Action214 Uselu-Lagos RoadP.O. Box 10577Benin City, Nigeria Tel/Fax: + 234 52 600 165Email: [email protected] Website: www.essentialaction.org/shell/

era/era.html

Humane Care Foundation Curaçao Pimpiriweg 28Curaçao, Netherlands AntillesTel: +599 (9) 521 62 08Email: [email protected]

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