Corporate Engagement Review Shell February 2007

This is the third Corporate Engagement Review of Shell. In 2005 we reviewed Shell prior to their sponsorship of WPY (Appendix II), and the earlier one was done in 1997 prior to the start of our relationship with Shell (Appendix III) This review is intended to update the 2005 review, and includes major issues raised, or continuing to dominate the press since they began their sponsorship, changes in their CSR & environmental policies and new major gifts/sponsorships/awards of other organisations.

About the company and Shell Transport and Trading were unified on 20th July 2005 under a single new parent company, Royal Dutch Shell plc. Previously the company group was 60% owned by the Royal Dutch Company and 40% by the Shell Transport and Trading Co. plc.

The major issues currently surrounding Shell which need to be considered are:  Sakhalin – this was raised in the 2005 review. Shell no longer has a controlling stake since Gazprom took over control in December 2006, but they do remain a major shareholder.  – this was raised in both the earlier reviews, and still remains a serious issue.  Ireland – the Corrib field, a proposed development subject to much protest at the moment. This is a newer development, and so wasn’t raised in the earlier reviews  Charity Commission complaint against the  Shell’s profits  Negative press surrounding Shell’s sponsorship of WPY (Appendix I)

Sakhalin Shell has bowed to pressure from the Russian government to allow state-owned energy company Gazprom to take a controling interest in the Sakhalin-2 oil and gas field.. The Sakhalin deal was struck in the early 1990s when oil was around $20 a barrel and Russia's ailing economy needed foreign earnings. But with oil touching $60 a barrel, Russia wants to reclaim a greater share of earnings. Gazprom took control of the project last December after months of pressure from Moscow, which accused the project, led by Shell and Japan's Mitsui and Mitsubishi, of violating environmental legislation. Gazprom will receive 50 pct of the project plus one share in return for 7.45 bln usd, while the three original shareholders will see significant reduction in their stakes -- from 55 pct to 27.5 pct in the case of Shell, from 25 pct to 12.5 pct for Mitsui and from 20 pct to 10 pct for Mitsubishi. The arrangements were finalised in February this year.

According to the Sakhalin Environment Watch website, www.sakhalin.environment.ru, in a press release dated the 7th of December 2006, the Sakhalin regional prosecutor had released information detailing over one hundred violations of Russian legislation by Shell's Sakhalin phase 2 project. Violations were found by the Sakhalin regional prosecutor office when visiting between the 21st-27th of November and included violation of forestry protection legislation, including expansion of the pipeline corridor and the illegal felling of forest without permission and the violation of water protection legislation in seven Sakhalin regions.

The CEO of the WWF launched a scathing attack on energy giant Royal Dutch Shell for failing to meet environmental standards on its $20 billion Sakhalin-2 project. WWF believes the project risks making endangered whales extinct and threatens other marine life. (The Observer 27/11/05) An article on the World Wildlife Fund website, www.panda.org, dated the 29th of November 2006, commented on a report released by the Western Gray Whale Advisory Panel which revealed that Shell's Sakhalin construction activities in 2006 breached three of the panel's recommendations by exposing its

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 1 endangered gray whales to excessive noise. The report was said to criticise Shell for the lack of data it provided and concluded that limited analysis had shown that the noise had effected the whales by displacing them offshore. There were concerns that this could reduce their access to food.

In November 2005 WWF-UK published a report on the Sakhalin project, entitled “Risky Business,” had been found not to have complied with Russian Environmental Impact Assessment legislation to conduct public hearings on the impacts of its offloading jetty at the Liquified Natural Gas plant under construction at Sakhalin Island. The report found that Shell had not followed its own Environmental Impact Assessment (EIA) guidelines when carrying out the EIA for its Sakhalin II oil and gas project. The report found that Shell had not taken social and environmental interactions into account and that a lack of strategic planning was resulting in damaging infrastructure development. The EIA was said to use baseline data that was not fit for purpose and had obvious limitations in understanding of the Western Gray Whale and failed to recognise indigenous communities. Shell had failed to incorporate environmental information into decision making or conduct a valid, early assessment of alternative project designs. The report also stated that Shell had handled consultation so badly that it had seriously damaged relations and trust with key stakeholders. According to the report, it was possible that Shell's activities at Sakhalin would result in the extinction of the Western Gray Whale. Shell's mitigation was described as being in some cases ineffective (e.g. observers who couldn't operate in the conditions present), in others not implemented (e.g. contractors failing to apply erosion control measures) and in still others non-existent (eg no recognised technique to clean up oil spills under ice). Shell refused to wait for the best scientific advice before installing the platform base, and had not acknowledged the importance of many of the local salmon streams for spawning, and so hadn't developed appropriate crossing techniques and mitigation measures. The European Bank for Reconstruction and Development stated that the Sakhalin II EIA was "not fit for purpose". The report concluded that Shell's activities were already resulting in irreversible impacts on the and natural resources of Sakhalin Island. A third of Sakhalin's 553,000 population was employed in the , and a complaint had been made to the EBRD because the catch in Aniva Bay, where Shell was constructing its LNG and loading terminal, had gone down by 70% in 2005. Salmon spawning grounds have been seriously damaged by the rerouting and erosion of water courses. Shell's use of limited surveys was said to have resulted in inaccuracies - for example, the EIA found that there were 5 braces of Steller's sea eagles around the Chaivo Gulf in 2005, but a study by the Wildlife Prevention Bureau and Moscow State University found 15 braces. Local indigenous people have protested about the lack of recognition from Shell and actions such as Shell constructing a storage facility on a sacred burial ground.

According to the 10th January 2007 issue of CSR Asia Weekly, Russian and US scientists were said to have warned that the sakhalin taimen, an endangered fish, was facing extinction. The fish's numbers were said to have decreased significantly in recent decades, and the planned Sakhalin oil and gas developments were predicted to be a future deteriorating factor, along with dam development sand water contamination in Hokkaido.

According to a report based on interviews with the local community around the Sakhalin island oil project published by CEE Bankwatch Network and Gender action ("Big oil's gender impacts in Azerbaijan, Georgia and Sakhalin", 2006), local feeling was that the impact on their lives were predominantly negative. The report highlighted a number of social and economic problems, including: damaged and threatened subsistence fishing, hunting and gathering, especially impacting the indigenous peoples of Sakhlalin; decreased possibilities for recreation in nature; damage to the local fishing industry and decreased security and quantity of drinking water supply.

Nigeria Shell’s operations in Nigeria continue to be the subject of much controversy.

Royal Dutch Shell risks permanently losing some of its oil production in Nigeria amid growing anti- Western sentiment in the build-up to April's presidential election. Advisers to the two leading

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 2 presidential candidates are considering whether bringing some of the fields in the most contested areas of the back under government control might be a way of bringing an end to violence in the region. Shell's operations in Nigeria have been seriously disrupted by violence in the Niger Delta. A fifth of Nigeria's oil production capacity, or about 600,000 barrels per day, has been shut down for a year because of militant attacks. (The Business 17/02/07)

An environmental report stated that up to 1.5 million tons of oil, 50 times the pollution unleashed in the Exxon Valdez tanker disaster, has been spilt in the ecologically precious Niger Delta over the past 50 years. Environmentalists accuse Shell of failing to meet promises to replace ageing pipes and swamp flowlines that, it is claimed, are steadily leaking oil into the once pristine waters of the delta. Shell estimates that 95 per cent of discharges over the past five years have been caused by sabotage. The report accused the oil companies of "double standards" by using technologies not in line with more advanced practices carried out elsewhere in the world. It called for international action to implement an immediate rescue plan, backed by the oil and gas industries which have exploited the region for up to half a century. (Independent 26/10/06)

Gunmen invaded an oil facility operated by Royal Dutch Shell in the southern Niger Delta, taking 60 people hostage and forcing the company to shut down 12,000 barrels a day of oil output. Disputes between local people and oil companies are frequent in the delta, fuelled by poverty and neglect of local communities by state governments. Many delta communities have no running water or electricity and look to oil companies to provide basic services in return for them pumping oil from their tribal lands. But many community projects embarked on by multinationals end up failing because of corrupt contractors. Local people increasingly hire gunmen to settle disputes. (FT 11/10/06)

Royal Dutch Shell has admitted to subcontracting work to companies run by Nigerian militant activists involved in a 2003 insurrection that shut down 40% of the country's oil output. The activists have links to a rebel group, the Movement for the Emancipation of the Niger Delta (Mend) that attacked Shell oil facilities this year. Analysts say subcontracting work to local strongmen is a practice used by companies to buy off militants threatening attacks on oil facilities in the region. (Financial Times 27/04/06)

A Nigerian court last year ordered Royal Dutch Shell to pay £858m in damages for polluting the Niger delta, a fresh blow to the company which was already reeling from a kidnap crisis and a wave of sabotage against its installations. A federal high court in Port Harcourt, the heart of the country's oil industry, ruled that Shell must compensate communities in Bayelsa state for degrading their creeks and spoiling crops and fishing. The decision was a major victory for the Ijaw people - who have campaigned for compensation for more than a decade - and one of Shell's worst legal setbacks. Shell says most spills are caused by saboteurs trying to steal the oil for sale by international criminal syndicates on the world market. (Guardian 25/02/06)

Friends of the Earth reported on their website (www.foe.co.uk) on 21 November 2006 that in November 2005, Shell was ordered by a Nigerian court to stop flaring gas in Iwherekan Community, in the Niger Delta. Shell applied for a stay of execution but was ordered by the court to produce a detailed plan of action showing how they would stop gas flaring in Iwherekan Community by April 2007. At the time of the Friends of the Earth report Shell had not produced the plan of action and instead launched an appeal opposing the finding that gas flaring was a human rights violation. A Nigerian judge stated that Shell's interventions were designed as delaying tactics. Six other communities had taken legal action against gas flaring in their local area. The Iwherekan judgement had already found that gas flaring was a gross human rights violation and Nigerian laws allowing gas flaring are unconstitutional, null and void. Friends of the Earth claimed that through flaring gas for over 50 years, Shell and the Nigerian government had wasted billions of dollars’ of Nigeria’s natural resources. Friends of the Earth "Lessons not Learned: The Other Shell Report" (2004) stated: "Gas is flared in Nigeria 24 hours a day, producing deafening noise and pollution. Gas flaring has severe health consequences and is a primary contributor to a host of environmental problems that include acid rain in the Niger Delta and significant

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 3 greenhouse gas emissions." The practice of flaring polluted local communities and produced more greenhouse gas emissions than all other sources in sub-Saharan Africa combined.

According to the Autumn 2006 issue of Earth Island Journal, Shell was one of a number of companies involved in supporting the West Africa Gas Pipeline, a major gas pipe to be built between the Niger Delta and Ghana. Although the pipeline was said to deliver some environmental benefits in that it was using gas which was normally flared, causing massive pollution in the Niger Delta area, the pipeline was itself said to be likely to cause environmental damage in its course, and to be built in some places on land where inadequate compensation and consultation had been carried out with local people.

Ireland – the Corrib field According to "Lessons Not Learned - the Other Shell Report 2004", Shell was proposing to construct a massive high pressure pipeline and gas refinery in a "particularly beautiful and sensitive area" of the Irish coast in . The pipeline is planned to bring on shore gas from its offshore field 35 miles west of the Mullet Peninsula, and would be five miles long (the longest of its type in the world), crossing protected dunes, traversing an estuary, cutting through blanket bog, passing homes and villages, slicing up farms in the village of and ending at a hilltop where a gas refinery would be built. Local residents were fearful about the health and safety aspects of the proposed project, and among their chief concerns were the September 2003 landslides at Dooncarton Mountain, close to the pipeline route, and the potential for an explosion from the high pressure pipeline. The proposed refinery would clean the incoming gas of impurities such as and toxins like , , magnesium, phosphorous, and , and the toxic waste would be pumped into , a designated special area of conservation. Due to the bay's circular tidal pattern and semi-enclosed nature, much of the toxic waste would be likely to stay in the bay, posing significant concerns for the stocks of fisheries such as salmon and crab, other aquatic species and numerous species of birds. The refinery would be built in a bog, which is a dangerously unstable landscape. Shell wrote to all landowners in the path of the proposed pipeline in December 2004, saying that the company would enter properties to begin their work, even though the government's' decision to approve the pipeline was being appealed in court. Rossport property owners posted "No trespassing" signs and prepared to peacefully turn Shell away until the legal issues were resolved, but, according to Global Community Monitor, on 10 January 2005 Shell representatives attempted to enter the landowners' property. The Shell representatives videotaped local landowners who asked them to leave and threatened to take legal action against them

The “”, who went to jail last year for their protests against the planned Shell pipeline in Ireland, have warned that the company will need army protection if it does not change its plans. A shareholder pressure group, the Ecumenical Council for Corporate Responsibility (ECCR), last year put forward a resolution requesting that the company consult with local communities affected by such development plans as the Corrib project. The Rossport Five were five villagers jailed for refusing Shell access to their land because they feared a proposed gas pipeline was unsafe. Subsistence farmers in Rossport have accused Shell of using them as "human guinea pigs" by building a £600m high-pressure gas pipeline near their homes. The five Bogoni - named after the Ogoni people in Nigeria who have opposed Shell's operations – were jailed "indefinitely" until they "purge their contempt" and agreed to let Shell onto their land, Residents have described the peat as "wobbly as blancmange" and want the gas to be processed on an offshore shallow water platform instead. Shell stated that the company was certain that the project had met all the stringent health and safety, planning and environmental requirements to build the pipeline to "world-class standards".

The Irish Times March 1, 2007 reported that the parish priest of Kilcommon has just lodged his objections to the Environmental Protection. In his submission, Fr Michael Nallen argues that "[our] environment is more precious, in both the long and short term, than economics". Fr Nallen said his primary concern, he said, was for "the decent, good and ordinary people who are hurting". Fr Nallen's submission is among 12 objections to the preliminary decision by the EPA to grant an Integrated

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 4 Pollution Prevention and Control (IPPC) licence to Shell, four of which have called for an oral hearing. In his written observation, he observes "[it] is evident that the is adversely impacting on many people whether they are for or against the chosen method of development". He adds that people have "health, safety, environmental and sociological worries for the future facing them". RPS(the engineering consultancy and Shell say they also intend to contact landowners and local residents over the coming weeks. RPS has opened an office in , Co Mayo, and its group director, P J Rudden, said he was "pleased with the response" to the company's first public meeting on the new pipeline route.

Royal Dutch Shell came under fire over corroded gas pipes. A shareholder group lambasted Shell for letting gas pipes corrode in Ireland. Canon Christopher Hall, a Shell shareholder and spokesman for the Ecumenical Council for Corporate Responsibility (ECCR), said he had alerted Shell in May to the corroded pipeline sections which await installation to bring gas ashore from the Corrib field. They have been stored for years in the open air in a quarry at Killybegs, Co Donegal. (Independent 29/08/06)

Other issues: Profits For the last couple of years, Shell’s annual profit announcements have generated controversy.

ExxonMobil and Shell, two of the biggest carbon emitters in the world, reported combined annual profits yesterday of nearly £90m a day, earned largely from oil production, refining and petrol stations. The earnings triggered protests from trade unions and fuel poverty groups as well as environmental campaigners. Shell declined to give a figure for the company's carbon emissions for the 12-month period but the company confirmed that the figure for 2005 was 102m tonnes - more than some 150 countries produce each. (Guardian 2/2/07) According to an article on The Guardian's online website viewed on 31 January 2007 (www.guardian.co.uk), environmental and human rights groups including Friends of the Earth, suggested Shell should use its expected annual profits for 2006 of over US$20bn to reverse alleged damage caused by its oil activities. These groups demanded that the company pay $10bn to 'clean up oil spills and compensate communities in the Niger Delta'. They said that Shell should also pay $1.5bn to end gas flaring in Nigeria

Charity Commission Complaint An attempt by Shell to portray itself as a model of corporate social responsibility was undermined after Whitehall documents showed its charitable arm discussing a key commercial project with a British government minister. Shell says the Shell Foundation is completely independent and contributes nothing towards its profits. But documents released to the Guardian under the Freedom of Information Act show the director of the charity, Kurt Hoffman, and the chairman of Shell UK, James Smith, lobbied the secretary of state for international development, Hilary Benn, in January at a meeting they had asked for. Mr Hoffman discussed the controversial Sakhalin-2 scheme. The £11bn gas project is the target of vociferous opposition from environmental groups and is being investigated by the Russian government. Mr Hoffman is quoted in the government's minutes of the meeting as having said: "Shell hoped to turn their experience of Sakhalin-2 into a learning opportunity and in future to work with progressive partners to assess the impact of their work on the environment and local communities." (Guardian 28/09/06) Following the Guardian revelations The Charity Commission criticised the Shell Foundation. The Charity Commission stated that the charity "has fallen short of the good governance and decision-making that we expect from large charities...the foundation needs to be acutely aware of the potential criticism that it is in effect the corporate social responsibility programme for the Shell Group and part of its public relations strategy.”

Other issues:  Royal Dutch Shell expects to be in full dialogue with State department officials in Washington as part of its due diligence on whether to go ahead with a controversial investment in Iran. Under the 1996 Iran-Libya Sanctions Act and the 1992 Freedom Support Act, the US can

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 5 impose sanctions on companies which invest more than $22m in Iran's energy sector. The gas field project could involve investment of up to $10bn. (Daily Telegraph 31/01/07)

 The US Securities and Exchange Commission has decided not to take action against Sir Philip Watts, the ousted chairman of Royal Dutch Shell, the energy group. The decision ends the regulator's two-year investigation into the role Sir Philip played in the reserves scandal that cost the Anglo-Dutch energy group its three most senior executives and £8bn of its market value. (Financial Times 30/09/06)

 Shell has set aside £270m to settle outstanding class action litigation related to the oil major's mis-statement of reserves in 2004. A payment at this level would dwarf the £81m it has already paid out in fines to the financial authorities in Britain and the US. (Daily Telegraph 28/07/06)

 An email to staff from , Shell's chief executive, stated that top management at Shell believes the company has a second-rate safety record in the and has failed to tackle the problem because parts of the organisation are in denial. (Guardian 27/07/06)

 According to the January-March 2006 issue of Hazards, in 2006 Shell had been fined £100,000 over an incident in which failure to follow the company's own regulations on dealing with the volatile chemical toluene had resulted in an explosion inside a chemical tanker.

 According to the Jan/Feb 2006 issue of Multinational Monitor, Woodside Energy was the lead company in the Sunrise joint gas venture in the Timor Sea. The project had been criticised by supporters of East Timor on the grounds that the Australian government, with the help of the companies involved, had appropriated resources which belonged to the small, struggling new nation.

 According to "Lessons Not Learned - the Other Shell Report 2004", odour and fumes from Shell's oil depot in the Manila suburb of Pandacan were a continual source of complaints from residents, and there was clear indication that people were exposed to carcinogens and other harmful toxins stored at the oil depot.

Positive press  Shell has signed a groundbreaking partnership with Abu Dhabi Future Energy Company (Adfec) based in Dubai to help industrialised nations cut the emission of harmful greenhouse gases. The deal is part of the Middle Eastern oil state's ambition to position itself at the forefront of the development of clean energy technologies. It is due to launch a $250m investment fund in London this week that will take stakes in companies focused on developing such technologies. (Sunday Telegraph 12/11/06)

 Ensus, a green fuels company that plans to build Britain's first bioethanol plant is to raise up to £90m by floating in London. Shell Trading has signed a 10 year deal to buy all the plant's production. (Sunday Times 12/11/06)

 Royal Dutch Shell, has invested $1bn over the past five years in renewable energy, compared with its total capital spending this year of almost $20bn. (FT 27/10/06)

 Shell is on the hunt for small businesses with big ideas on the environment. The oil group this week launched its annual search for innovative product ideas that lead to a reduction in greenhouse gasses. (Financial Times 16/09/06)

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 6 Shell Sustainability Report The Shell General Business Principles (SGBP) were revised in August 2005 to take account of the establishment of Royal Dutch Shell plc and other developments since the last update in 1997. (The 2005 report covers the Shell General Business Principles in more detail). The key changes are:

 The emphasis on compliance  Growing concern about security post 9/11  Emphasis on social performance and engagement with communities  Diversity and inclusiveness  Shell’s Enterprise First values and behaviours  A focus on dialogue as opposed to the dissemination of information  Development of sustainable development principles  Clarity on treatment of facilitation payments.  All Shell companies are expected to comply with the Principles as a matter of course. In joint ventures, we use our influence to persuade our partners to adopt and apply principles consistent with ours. We also expect contractors to conform to the Principles in all aspects of their work with Shell companies.

The Shell Foundation Their relationship with the Smithsonian continues. An interview with David L Evans, Under Secretary for Science at the Smithsonian Institution can be found http://www.shellfoundation.org/index.php?newsID=305 in which he expands on the relationship.

Their current priorities are:  Supporting the start-up and growth of Small and Medium-sized Enterprises in Africa as a way to reduce poverty:  Bringing down the number of deaths caused by indoor air pollution;  Easing the traffic congestion and pollution clogging up developing country mega-cities and;  Giving developing-country producers improved access to world markets.

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 7 Appendix I

Negative Press Surrounding Shell’s Sponsorship of WPY

Aberdeen Press and Journal February 5, 2007 Monday Climate protesters target petrol station Campaign Against Climate Change staged a one-day protest outside a in Aberdeen to demonstrate against gas flaring by Shell in Nigeria. The group says the flaring is contributing to climate change by emitting more greenhouse gases than all the other emissions from sub-Saharan Africa combined, and is causing health problems for the people who live in the vicinity. Protesters held placards and a large banner reading, "Shell stop gas flaring in Nigeria", at the King Street petrol station and handed out leaflets to pedestrians and motorists. The protest coincided with an action, inspired by the Camp for Climate Action, at the Natural History Museum in London to protest about Shell's sponsorship of the Wildlife Photographer of the Year exhibition.

Londonist February 5, 2007 Monday 5:05 PM EST Oily History Museum Feb. 5, 2007 (Londonist delivered by Newstex) -- You are reading Londonist: a website about London. MoreEditor: Mike Atherton, M@ BrownPublisher: Gothamist What is more absurd than an oil company sponsoring a wildlife photography contest? Possibly someone destroying wildlife photography in order to protest an oil company sponsoring a wildlife photography contest. Protestors from the "Camp For Climate Action" smeared a substance resembling oil onto photographs displayed at London's Natural History Museum. The photos were finalists in the Wildlife Photographer Of The Year Competition, which was sponsored by multinational petrochemical company, Shell. So that's sort of like beating up children in order to draw attention to the issue of child abuse. Or invading a sovereign nation in order to show how wrong it is to invade a sovereign nation. Or ... we know you can come up with your own example. Camp for Climate Action member, Dan Baker, said "This is not an attack on the work of the photographers" - which is a weird thing to say, because, well, they attacked the work of the photographers. But there have been other - less dimwitted - protests against the Natural History Museum's partnership with Shell. Websites like the 'Tragic History Museum' have been created for the sole purpose of denouncing Shell in general, and the photo competition in particular. The Wildlife Photographer of the Year Competition has been running since 1964. This year's other corporate sponsor is Microsoft. (NASDAQ:MSFT)

Lancashire Evening Post February 1, 2007 Business round-up - Thursday 01/02/07 Some business news in brief from around the country. Shell's £1.5m profits an hour Royal Dutch Shell today reported another profits record, after higher oil prices lifted its annual earnings to £12.94bn. The figure, which is 21% higher than a year earlier, included a better-than-expected performance in the final three months of the year, when the company's earnings figure rose 11% to £3.06bn. The recent fall in the price of oil means analysts are expecting the year ahead to be much tougher for Shell, particularly as it will be under increasing pressure to find new sources of oil. Today's results mean Shell generated profits of almost £1.5m an hour. Carefree families face financial ruin A growing number of families are facing financial ruin because of a carefree attitude to debt, a government watchdog warned today. The Financial Services Authority issued a stark warning that Britain's "live for today" attitude has meant many people have become complacent about the size of the debt they are carrying. As a result, few are in a position to tighten their belts if the economy makes even a modest downturn. A million adults are now regularly falling behind with payments on bills. 8,000 jobs lost in manufacturing

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 8 Almost 8,000 manufacturing jobs were lost in the past month, according to "worrying" research today. The British Chambers of Commerce says the figures show the "fragile" state of the sector, where employment has fallen to a record low. Director general David Frost says that 2007 is looking "ominous" for manufacturing, adding: "There has been a relentless decline in the number of jobs which it provides." Burberry staff in Baftas protest Workers from a Burberry factory which is set to close with the loss of hundreds of jobs are to stage a protest outside a reception being sponsored by the clothes firm to honour nominees for a Bafta award, it was announced today. Union activists will join the protest outside the Natural History Museum in London on February 10.The protesters, including some from the factory in Treorchy in South Wales, said they will wear black ties . Food buoys pubs The UK's growing appetite for pub food today helped All Bar One and Harvester owner Mitchells & Butlers report strong sales across its 2,200-strong estate. Like-for-like food sales growth of more than 7% offset a slow pre- Christmas market according tresults for the 16 weeks to January 20.

Morning Star January 22, 2007 Monday Britain - Give the lie to Shell's green PR Friends of the Earth urged photographers at the weekend to submit images highlighting the harm done to wildlife by oil and gas companies to the 2007 Shell Wildlife Photographer of the Year competition. The competition, which was launched on Saturday by the image-conscious oil and gas giant, is organised jointly by the Natural History Museum and BBC Wildlife Magazine. "Shell's environmental impact is overwhelmingly negative," said FoE Scotland chief executive Duncan McLaren. "We want people to submit images that highlight the destructive impact that Shell and other oil and gas companies have on wildlife."

M2 Presswire October 18, 2006 FRIENDS OF THE EARTH: Shells Neighbours Expose Hypocrisy of Wildlife Prize M2 PRESSWIRE-OCTOBER 18, 2006-FRIENDS OF THE EARTH: Shells Neighbours Expose Hypocrisy of Wildlife Prize ©1994-2006 M2 COMMUNICATIONS LTD Communities living next door to the oil giant Shell will be in London next week to expose the oil giant's hypocrisy in sponsoring the Wildlife Photographer of the Year competition - to be announced on Wednesday 18 October [1]. Shell is the new sponsor of this year's prestigious wildlife prize, which is jointly organised by the Natural History Museum and BBC Wildlife Magazine, contributing £750,000 [2]. But Shell's neighbours have branded the oil giant a wildlife destroyer and say that Shell is trying to hide the damage it does to wildlife and the environment behind the prestigious wildlife prize [3]. They are calling on the Natural History Museum to end the relationship with Shell, which they believe jeopardises the museum's reputation and credibility. The museum is entering into the sponsorship despite carrying out an ethical review of Shell which identified problems with the company [4]. Friends of the Earth's Corporates Campaigner Hannah Griffiths said: Shell's sponsorship of the Wildlife Photographer of the Year award completely undermines its value. Shell's is causing massive damage to wildlife and the environment, and no amount of sponsoring of green prizes will change that. The Natural History Museum should not accept sponsorship from such a destructive company. The visitors, who will be speaking at public meetings in London, Birmingham and Manchester as well as visiting the Houses of Parliament [5], are in the UK to draw attention to the real impacts Shell has on wildlife, the environment and people around the world. One of the speakers will be Terry Clancy from the campaign in County Mayo, Ireland, where Shell plans to build an on-shore pipeline and gas terminal. The development threatens the unique habitat offered by Broadhaven Bay - an internationally important nature reserve - and will destroy peatlands and damage coastal grasslands [6]. Earlier this week some 200 protesters were moved on by Irish police after attempting to blockade construction work.

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 9 The speakers will also highlight the damaging impacts on wildlife on the Russian island of Sakhalin, where Shell's new platform and pipeline threaten the survival of the already critically endangered Western Pacific Grey Whale. Friends of the Earth has also seen details of a report this week, which states that Shell has destroyed several hundred Sakhalin or Glehn spruce - listed on the IUCN threatened species list. Part of a protected area over a kilometre long has been clear cut by Shell to make way for the pipeline [7]. Friends of the Earth, which is hosting the tour, has launched an online image gallery showing the damage caused by Shell [8]. Notes: [1] See www.nhm.ac.uk/visit-us/whats-on/temporary-exhibitions/wpy/exhi b-index.html[1] [2] Shell is contributing £750,000 over two years for the two year deal it has signed with the Natural History Museum [3] A briefing on Shell's impacts on wildlife is available from Friends of the Earth www.foe.co.uk/resource/briefings/shell_wildlife_destroyer.pdf[2] [4] A copy of the ethical review is available for Friends of the Earth [5] The Shell Neighbours will be speaking in London on Monday 16 October at 7pm at the London Action Resource Centre, 62 Fieldgate Street, London E1 1ES; on Tuesday 17 October at 6:30pm at Imperial College, Lecture Theatre 208, Skempton Building, Imperial College Road, London SW7; in Birmingham on Thursday 19 October; 7:30pm at the Warehouse Caf, Birmingham Friends of the Earth, 54-57 Allison Street, Digbeth, Birmingham, B5 5TH; and in Manchester on Friday 20 October 7pm - Friends Meeting House. [6] See http://www.corribsos.com/[3] [7] A translated copy is available from Friends of the Earth [8] See http://www.foe.co.uk/campaigns/corporates/news/shell_wildlife_ gallery.html[4] [1] http://www.nhm.ac.uk/visit-us/whats-on/temporary-exhibitions/wpy/exhib-i ndex.html [2] http://www.foe.co.uk/resource/briefings/shell_wildlife_destroyer.pdf [3] http://www.corribsos.com/ [4] http://www.foe.co.uk/campaigns/corporates/news/shell_wildlife_gallery.ht ml (M2 Communications Ltd disclaims all liability for information provided within M2 PressWIRE. Data supplied by named party/parties. Further information on M2 PressWIRE can be obtained at http://www.presswire.net on the world wide web. Inquiries to [email protected]).

Africa News October 17, 2006 Tuesday Shell's Neighbors Expose Hypocrisy of Wildlife Prize Communities living next door to the oil giant Shell are in London this week to expose the oil giant's hypocrisy in sponsoring the Wildlife Photographer of the Year competition - to be announced on Wednesday 18 October. Shell is the new sponsor of this year's prestigious wildlife prize, which is jointly organised by the Natural History Museum and BBC Wildlife Magazine, contributing 750,000 GBP or 1,117,000 Euros. But Shell's neighbours have branded the oil giant a "wildlife destroyer" and say that Shell is trying to hide the damage it does to wildlife and the environment behind the prestigious wildlife prize. They are calling on the Natural History Museum to end the relationship with Shell, which they believe jeopardises the museum's reputation and credibility. The museum is entering into the sponsorship despite carrying out an ethical review of Shell which identified problems with the company. Paul De Clerck, Friends of the Earth International Corporates Campaigner said: "Shell's sponsorship of the Wildlife Photographer of the Year award completely undermines its value. Shell's is causing massive damage to wildlife and the environment, and no amount of sponsoring of green prizes will change that." Friends of the Earth's Corporates Campaigner Hannah Griffiths added: "The Natural History Museum should not accept sponsorship from such a destructive company." The visitors, who will be speaking at public meetings in London, Birmingham and Manchester as well as visiting the Houses of Parliament, are in the UK to draw attention to the real impacts Shell has on wildlife, the environment and people around the world. One of the speakers will be Terry Clancy from the Shell to Sea campaign in County Mayo, Ireland, where Shell plans to build an on-shore pipeline and gas terminal. The development threatens the unique

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 10 habitat offered by Broadhaven Bay - an internationally important nature reserve - and will destroy peatlands and damage coastal grasslands. The speakers will also highlight the damaging impacts on wildlife on the Russian island of Sakhalin, where Shell's new platform and pipeline threaten the survival of the already critically endangered Western Pacific Grey Whale. Friends of the Earth has also seen details of a report which states that Shell has destroyed several hundred Sakhalin or Glehn spruce - listed on the IUCN threatened species list. Part of a protected area over a kilometre long has been clear cut by Shell to make way for the pipeline. Friends of the Earth, which is hosting the tour, has launched an online image gallery showing the damage caused by Shell.

The Guardian (London) - Final Edition October 17, 2006 Tuesday g2: Ethical living: Campaign of the week: Friends of the Earth vs Shell The Shell sponsorship of the Wildlife Photographer of the Year award - hosted by BBC Wildlife and the Natural History Museum (and handed out tomorrow night ) - is causing a bit of a headache. According to Friends of the Earth, as one of the world's major oil companies, Shell is a "wildlife destroyer" and "has played a significant part in contributing . . . to climate change. Shell's sponsorship of the award completely undermines its value." In response to this, the director of the Natural History museum has told FoE: "It is not, of course, my role to defend the specific environmental impact of Shell." Shell obviously takes this all very seriously. The Shell Sustainability Report has come out every year since 1998, and covers everything from renewable energy strategies to disputes with local groups in Ireland over the Corrib development. "Climate change is the biggest problem," it clearly states, making heaps of promises to invest in renewable energies and "make a positive contribution to conserving global biodiversity". But the reputation is proving hard to shake off, especially after a Nigerian judge handed Shell a bill for $1.5bn for pollution earlier this year (Shell is appealing), and a Russian government agent accused Shell of "destroying our nature" at the Sakhalin-2 project in eastern Russia: Shell's environmental permit has been revoked by the Russian government, although the company denies mismanagement. FoE is bringing some neighbours of Shell projects around the world to the UK to talk about their experience of Shell's work. Maybe you'd like to let Shell know your views on these matters, too? Bibi van der Zee foe.co.uk

Morning Star October 16, 2006 Monday Britain - Museum urged to end Shell deal Green campaigners urged London's Natural History Museum to end its relationship with "destructive" oil giant Shell on Sunday as the company prepares to sponsor the Wildlife Photographer of the Year competition.Shell is the new sponsor of this year's prestigious prize, which is jointly organised by the Natural History Museum and BBC Wildlife Magazine. But Friends of the Earth corporate campaigner Hannah Griffiths said that such sponsorship "completely undermines" the value of the award."Shell is causing massive damage to wildlife and the environment and no amount of sponsoring of green prizes will change that," Ms Griffiths insisted. "The Natural History Museum should not accept sponsorship from such a destructive company," she said.

Nottingham Evening Post August 25, 2006 Friday Wild at art Wildlife Photographer of the Year - Yard Gallery, Wollaton Park THE annual Wildlife Photographer of the Year competition opens at the Natural History Museum in London on October 21. However, from this weekend you can get an early glimpse of some of the 84 winning and commended entries at the Yard Gallery, Wollaton Park. A selection are reproduced here. In all, judges received almost 17,000 images from 55 countries for the competition, now in its 42nd year and sponsored by Shell - something which (as was mentioned in a recent EG) has caused the show to be criticised by environmental groups, since

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 11 when can an oil giant claim that environmental protection is a priority? - it would be interesting to see if any protest is mounted against the Nottingham show for the same reason). Nevertheless, the London show is going ahead, bringing together images from amateur and professional photographers. The only hitch in the Nottingham show is a possible delayed opening, due to storm damage at Yard Gallery. Peter Milton, Nottingham City Council's services director for culture, says: "We are pulling out all the stops to make sure it can be up and running in the next few days." Visitors are advised to contact the site on 0115 915 3900 for an update before visiting. The exhibition is scheduled to end on September 24.

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 12 APPENDIX II FOR INTERNAL USE ONLY Review of Shell Transport and Trading

May 2005

Background

The NHM conducted its original ethical review of Shell in 1997. This review raised a number of issues relating to the company’s environmental practices, its human rights record, its perceived lack of commitment to sustainable development, and its general public profile. Issues of particular concern included Shell’s long-standing involvement in the Niger River delta and the impact of this on the local community and environment, and Shell’s controversial disposal plans for the platform in the Atlantic.

Following the review, it was decided that the Museum could legitimately build a relationship with Shell and for the past 8 years, the company has been included in the corporate prospect pool. In this period, the NHM has not entered into any formal relationship with the company.

This review is intended as an update of the 1997 Ethical Review of Shell and will look at the company’s current position with regards to the NHM’s mission statement.

Brief introduction to company

Royal Dutch/Shell Group is the world's number three oil and gas group. The group is a joint venture between Royal Dutch Petroleum (60%) and Shell Transport and Trading (40%). It has proved reserves of 14.4 billion barrels of oil and operates more than 46,000 gas stations worldwide. It generates sales mainly from oil products, but it also makes chemicals, transports natural gas, trades gas and electricity, and develops renewable energy sources. Key competitors are BP, Exxon Mobil and TOTAL.

Environmental and human rights history Historical issues - 1997 ethical review update

The Development Department’s 1997 ethical review of Shell identified a number of issues of concern, notably Shell's activities in Nigeria, and its plans to dispose of the Brent Spar platform in the North Sea. (Please see 1997 ethical review for original assessment).

In response to the criticism Shell received over these issues, particularly the international outcry over the death of Ken Saro-Wiwa, the company released its groundbreaking CSR report Profits and Principles – Does There Have to Be a Choice? It has been acknowledged by independent NGOs such as

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 13 Friends of the Earth, that Shell was one of the pioneers of 'corporate social responsibility' in the mid 90s (See Behind the Shine, The Other Shell Report, FOE, 2003, Appendix I). At this time, Shell was praised for its commitment to addressing issues of sustainability, development and human rights. Its decision to pull out of lobby groups such as the Global Climate Change Coalition – an industry group which was slow to recognise the possibility of climate change – was also praised.

In response to the scandal caused by the death of Saro-Wiwa and related issues in particular, Shell also became one of the first companies to embrace international human rights standards and even produced a document on the subject for its senior management in 1998 which Friends of the Earth have described as "one of the most advanced statements on human rights in existence." Policy statements on human rights and sustainability have since become a facet of Shell company policy and business principles. (See Appendix II for Shell Business Principles)

Niger Delta update

Shell has recognised its controversial role in the communities affected by its operations in the Niger Delta. In the 2003 Annual Report for The Shell Petroleum Development Company of Nigeria, Chairman Chris Finlayson recognises "that our development activities [in the Niger Delta] in the past have been less than perfect." SPDC states it is now committed to protecting the environment, investing in people and partnering for community development. To this end, the company has in its own view achieved a number of positive goals, from reducing the number and volume of spills and adopting a biodiversity policy, to signing partnership agreements with USAID and Africare, giving $54 million to the Niger Delta Development Commission, and spending at least $30million on community development programmes.

However, critics still continue to make allegations against Shell's activity in the Niger Delta area. According to an October 2004 Friends of the Earth communiqué, inhabitants of oil rich areas in the country live with the day-to day pollution caused by the activities of Shell, in particular, non-stop gas flaring. The report alleges that, “more gas is flared in Nigeria than anywhere else in the world”. Gas flaring is a red flag issue for environmental agencies. General flaring has been illegal in Nigeria since 1984, but it is still allowed in specific circumstances with ministerial permission – presumably Shell et al have such permission, but FOE etc report that the process for obtaining such exemption certificates is not transparent. An original deadline to ban flaring outright in 2004 has been extended by Nigerian President Obasanjo until 2008. Shell has made a general commitment to stop all gas flaring outright in 2008. (Source: http://www.foe.co.uk/resource/media_briefing/gasflaringinnigeria.pdf),

A November 2004 Amnesty International Report, focuses on a spill from part of an oil pipeline in Rukpokwu in Rivers State in Nigeria. The pipeline is operated by the Shell Petroleum Development Corporation in partnership with the Nigerian National Petroleum Corporation. According to Amnesty, at the time of writing the report, neither Shell nor the Nigerian government had cleaned up after the spill. The spill resulted in the devastation of surrounding farmland and significant loss of livelihood to members of local communities. (Source: http://web.amnesty.org/library/index/ENGAFR440322004)

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 14 Brent Spar update

Whilst this incident may retain some kind of totemic value in activist circles, it certainly does not feature heavily in the public conscious and is rarely referred to in the press. Research has found no mention of the incident in the press in recent months.

Current issues and concerns Shell and CSR

From a position of relative success as one of the drivers of corporate social responsibility, Shell has come under increasing criticism that its current CSR strategy is a smokescreen for its failure to address the environmental and social impacts of on the ground operations. Organisations like Friends of the Earth and CorporateWatch claim that CSR is driven by PR and marketing concerns and is largely unrelated to business policy or operational practices. This sits in a wider debate within the environmental lobbying sector about the true value of CSR.

The crux of the argument against Shell lies in the allegation that where it matters most - in the fence- line communities which share natural resources with industry - Shell is not effecting the vital changes necessary to ensure safety and sustainability. Friends of the Earth clarified its position in 2002 by producing an alternative annual report for the company, Failing the Challenge – The Other Shell Report 2002, which used input (largely in the form of anecdotal evidence) from fence-line communities to illustrate the company's failure to honour the promises of its CSR policies in its actions. (See Appendix III for full report)

Shell does make a positive contribution to local communities through its outreach work, educational scholarships and funding for environmental projects, but these activities are increasingly being viewed with suspicion. FOE’s alternative annual report from 2003, Behind the Shine – The Other Shell Report 2003 rejects these projects, which form a cornerstone of Shell's CSR output, as 'feelgood' gestures. They call instead for direct, measurable action in operational terms, reducing pollution, eliminating hazardous accidents, replacing ageing exploration and refinery equipment and so forth. The 2003 alternative Annual Report revisits many of the fence-line communities profiled in the 2002 report to underline that despite the positive impact of such feelgood gestures, communities are still feeling the negative impact of Shell's slowness to clean up its operating practices.

FOE campaign

This debate is set to gain considerable publicity in the coming months as FOE launches a further high profile campaign during the summer AGM season. The group is preparing to bring campaigners from fence-line communities in Nigeria, South Africa, and Brazil to Shell’s London AGM on June 28 2005. This is a strategy FOE has used in the past, targeting a number of companies at a time, but this year, the organisation is focussing its protests on Shell and Tesco. FOE is also to call on MPs to put pressure on the group to improve its social and environmental record. This story has been picked up so far by the Evening Standard and may well continue to make the press in the coming months. (Source: Evening Standard 16.5.05)

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 15 Shell response

Shell revised its business principles in 1997 to include a commitment to contribute to sustainable development. Part of this commitment rested on improving relationships with stakeholders (including those in fence-line communities) and better understanding and managing the impact, both positive and negative, of its operations and products on society and the environment. Shell acknowledges that translating this commitment into action is a massive and potentially lengthy process and that the company still has work to do in this area. Shell does claim to have made good progress in the area citing its increasingly transparent reporting processes, (its Annual Report in particular), and its application of sustainable development to appraisal and reward systems, training modules and investment proposals for new projects as examples of improvement.

All of Shell’s major Chemicals sites have a social performance plan with internal reviews for high-risk facilities. A similar programme for oil products sites and exploration and production companies and projects was due to be rolled out in 2004. A programme of social performance reviews was also launched in Shell’s gas and power business. Shell has also created a central Social Performance Management Unit providing leadership, tools and support. See the Shell website for further details:

The Sakhalin II development, Russia

Shell are operators of Sakhalin Energy Investment Company Limited (Sakhalin Energy), which is developing oil and gas reserves in the Sea of Okhotsk off Sakhalin Island in the Russian Far East. According to Shell, the Sakhalin II pipeline development represents a important area of future growth for Shell, a means of meeting its strategic objectives of both increasing exploration and production assets and providing a greater focus on gas.

The island of Sakhalin is an important seasonal stopover for migratory birds, and provides a habitat for a number of rare and endangered species such as the western gray whale, Steller’s sea lion, Sakhalin Taimen (giant trout), the Glen spruce, the Steller’s sea eagle and the Japanese snipe. The seas around the island also represent important fishing grounds for local communities, some of the most significant of Russia’s fishing grounds.

Shell’s activity in the area has caused concern for a number of national and international pressure groups. According to Pacific Environment, an environmental organisation which highlights issues in the Pacific Rim, development of the Sakhalin II pipeline in this currently pristine environment is risky, and in particular, will threaten the habitat of the Western Pacific Gray Whale. In 2003-2004, Pacific Environment led a Responsible Finance campaign to urge for best practices on Sakhalin II which concentrated pressure on key public funders for the project. As a result, the European Bank for Reconstruction and Development temporarily halted finance calling the project’s environmental impact assessment “unfit for purpose”. Other campaign groups have emulated this tactic, putting pressure on Sakhalin II’s investors. Rainforest Action Network is currently running a campaign (Tell Credit Suisse to dump Shell’s Sakhalin Oil Project!) encouraging individuals to put pressure on Credit Suisse to cease advising Shell in the project. (Sources: http://action.ran.org/action/index.asp?step=2&item=21290; http://www.pacificenvironment.org/russia/sakhalin.htm for further details)

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 16 Shell’s problems in the area were compacted in September 2004 when one of its dredging vessels ran aground causing a Category 2 oil spill at Kholmsk on Sakhalin. Environmentalists criticised the company’s response to the spill - it reportedly took 9 hours for Royal Dutch/Shell's contractor for oil spill emergency response to arrive and conduct visual observations, and more than 48 hours for it to transport necessary equipment to the site. According to Russian regulations, Shell should have localised the spill with equipment within four hours. Environmental groups have often criticised the company for its lack of an effective spill response plan – and they were further angered when the company appointed a Crisis Management Specialist to its External Affairs Department to work on the Sakhalin project, a PR specialist, rather than a specialist in environmental monitoring and risk management.

It is notable that all the major developers of the area are coming under fire for their operations. A recent article in Ethical Corporation highlighted Sahkalin Environmental Watch’s protests at the 2002 Exxon Mobil AGM over the human costs of exploration in the area. (Sources: http://www.ethicalcorp.com/content.asp?ContentID=3695; http://www.sakhalin.environment.ru/en/sakhalin2/downloads/2004/press_09-04.html)

Shell response

Shell maintains that it has put considerations for biodiversity at the forefront of the Sakhalin II development and that Sakhalin Energy is fully aware of ‘the current and potential threats’ to conservation of the area. According to its website, the company has put a number of measures in place:

 Developing detailed environmental assessments and an awareness of biodiversity issues (campaigners says these assessments are not adequate)  Producing a series of position papers setting out policy, commitment and approach to a long- term protection of the environment on Sakhlin  Providing funding for initiatives to protect rare and endangered species, notably the annual Sakhalin Island Western Gray Monitoring Programme  Sakhalin Energy has also pledged US$300,000 to a Steller’s Sea Eagle Monitoring Programme, which will be carried out by independent Russian researchers with information being exchanged with Japanese specialists

According to Shell, the Sakhalin II development demonstrates Shell’s commitment to contribute to the sustainable development of the communities and environments in which it operates. It underlines how it thinks Sakhalin islanders stand to benefit from Sakhalin Energy’s US$300 million investment into infrastructure upgrades, citing improvements to roads, bridges, hospitals, ports and airports as big benefits as well as a further donation of $100 million to a local government Sakhalin Development Fund.

Shell points out that Sakhalin II will also provide a new source of clean-burning gas for Asian markets. It states that the project complies fully with Russian and international environmental standards and is introducing environmental best practice into Russia.

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 17 In August 2004, Shell commissioned the IUCN-World Conservation Union to review the effectiveness of mitigation measures to minimise the impact of Shell’s operations on Western Gray Whales in the Sakhalin area. This was in response to growing concerns from pressure groups and a specific warning from the International Whaling Commission that energy exploration could kill off the 100 or so remaining gray whales on the oil-rich shelf near Russia's Pacific coast. The report was also required for Shell to receive a US$ 5 billion loan from the European Bank for Reconstruction and Development and the British Department of Trade and Industry.

Completed in February 2005, the report concluded that drilling for oil could perturb whale life because of noise, the danger of collision between whales with ships, oil spills, and destruction of bottom feeding grounds. Although it commended Sakhalin Energy’s substantial funding of gray whale conservation programmes, it noted that there were gaps in information provided by the group and that proposed mitigation measures were of questionable efficacy. The report recommended that “the most precautionary approach would be to suspend present operations and delay further development of the oil and gas reserves in the vicinity of the gray whale feeding grounds off Sakhalin, and especially the critical near-shore feeding ground that is used preferentially by mothers and calves. This would allow much-needed refinement of risk assessment and further development of appropriate, independent mechanisms for monitoring and verification of mitigation practices.” (Source: http://www.iucn.org/themes/business/Docs/ISRP_Executive_summary_in_English.pdf)

Greenwash

Shell has come under fire from a range of environmental organisations for what is alleged are ‘greenwash’ tactics. The OED defines greenwash as ‘disinformation disseminated by an organization so as to present an environmentally responsible public image’. CorporateWatch has been particularly vociferous in its criticism of Shell, focusing particularly on its expansive PR campaigns, and this issue is also the source of a number of negative notices for the company posted on the environmental monitoring database Corporate Critic run by Ethical Consumer.

(Source: ethicalconsumer.org)

The concept of Greenwash also covers Shell's high profile relationships with NGOs such as Earthwatch, and WWF. It is reasonable to assume that any formal relationship of this kind, from a straightforward sponsorship deal, to a long-term partnership, would at this time provoke claims of greenwash from some quarters. Until Shell begins to deliver a more satisfactory level of operational service in fence-line communities – satisfactory at least to the independent NGOs currently campaigning for such operational changes - such accusations of greenwash will always be encountered. It is also reasonable to assume that a relationship with the NHM will also be seen as an attempt at greenwash. (Source: Corporate watch http://www.corporatewatch.org.uk/profiles/oil_gas/shell/shell4.html)

Renewable energy and climate change

Shell, like all the major oil companies, continues its exploration of potential sources of oil and gas. The industry comes in for harsh criticism from environmental campaigners as they maintain their sometimes aggressive exploration agendas. Oil companies would ague that this exploration is balanced by new research into renewable sources of energy. However, new areas of exploration are often in parts

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 18 of the world that are ecologically and environmentally vulnerable as is witnessed in the Sakhalin II development referred to above.

In 1997, Shell established Shell Renewables, now one of the five core businesses of the Shell Group. Shell Renewables was established to develop commercial opportunities in both solar and wind energy. While much of the company’s efforts remain focussed on wind and solar PV, Shell is also involved in pursuing biofuels, geothermal and Hydrogen.

Shell has drawn up a number of measures to tackle the issue of climate change both for the present and for the future, some of which include:

 Actively managing greenhouse gas emissions in its worldwide operations such that by 2010 GHGs are still 5 percent or more below 1990 levels  Implementing aggressive new energy conservation programmes  Ending continuous operational flaring by 2008.  Promoting natural gas as a cleaner alternative for electricity, heating and transport.  Offering alternative energy options such as solar, hydrogen and wind power.  Providing lower emission fuels and the fuels needed by lower emission engines.  New lower carbon technologies. International cooperation and agreements to deal with this global issue.  Involving developing countries and helping them get onto a lower emissions energy path, for example via the Clean Development Mechanism.  Flexible market mechanisms like effective “cap and trade” emissions trading schemes. See ‘Using the market’ (link) for more information on how we are preparing for the EU Emissions Trading Scheme.

Shell fares relatively well in the climate change debate. Of its key competitors, it is Exxon Mobile which receives the most criticism for its record on climate change. and Friends of the Earth are particularly hostile to Exxon, in part because of its Global Climate Coalition role (in Friends of the Earth’s “ dirty dozen” league, the Global Climate Coalition comes 1st, Exxon 2nd).

Shell generally has a well-developed environmental policy. It has environmental minimum standards by which it measures its performance in this area and carries out impact assessments for all new projects and major facility developments. It also has a biodiversity standard and states on its website that considerations of biodiversity is a key element in its decision making process.

Shell is also reporting under the UN Global Compact with business. The Global Compact promotes the implementation of nine principles of human rights, labour and the environment and actions in support of United Nations goals. Shell has been involved with the initiative from its inception.

Other issues of note Inflated oil reserves

Shell’s recent past has been blighted by its admission in January 2004 that it had overestimated its oil reserves by 20%. The admission triggered a crisis internally - both UK Chairman Philip Watts and production chief Walter van der Vijver resigned over the matter – and externally, culminating in fines totalling £82.7m from authorities in the UK and US for the violation of market rules for reporting

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 19 reserves. During this time, Lord Oxburgh, former Chairman of the Board of NHM Trustees and a long- time Shell employee, took over the role as interim Chairman. Shell has since recovered financially and reported record annual profits in February this year – the highest annual profits in British corporate history.

Although Shell was widely criticised for its inflated reporting, to put things into perspective, Exxon also failed to replace all its reserves last year. During this period, Royal Dutch Shell Group came under much criticism for its complex board structure, which further contributed to shareholder's disenchantment with the company.

The 2003 Alternative Annual Report for Shell produced by Friends of the Earth goes so far as to draw parallels between Shell's exaggerated oil reserves and what FOE argues are exaggerated claims about the company's social and environmental performance. Research has been unable to substantiate these claims. (Sources: http://news.bbc.co.uk/1/hi/business/4231693.stm; http://news.bbc.co.uk/1/hi/business/4156107.stm; Economist April 30th 2005)

General perceptions of the company, including its relationship with benchmark organisations

Once a hugely respected and successful multinational, Shell has suffered greatly as a consequence of the oil reserves fiasco of 2003. Its reputation is tarnished, but its notable financial recovery of the last year may go some way to restoring confidence in the company.

Shell is not well perceived in certain areas of specialist environmental press and certainly not in the more radical echelons of the environmental movement. Large organisations such as Friends of the Earth and Greenpeace, as well as a wide range of national and community organisations across the world have been mobilised to protest against Shell’s activities. The Ethical Consumer’s Corporate Critic Database gives Shell a low 4 out of 15 in its ethiscore system, roughly on a par with BP but below former WPY title sponsor BG (scoring a 9). Although such scoring systems are by no means systematic, they do give an indication of the amount of negative press the company received.

Despite its rocky relationship with the world of environmental NGOs, Shell has nonetheless managed to establish relationships with some leading international conservation organisations. Shell is eager to point out that these relationships operate at both an institutional and on a project level on the ground.

 Smithsonian The Shell Foundation has facilitated a US$ 2.8 million partnership with the Smithsonian. The project, running from October 2000 to September 2005, will enable scientists from the Smithsonian Institution's Monitoring and Assessment of Biodiversity Program (SI/MAB) to accurately and independently assess the impact of oil and gas operations on areas of known biodiversity value, and recommend ways to minimise the impact of these operations.

The partnership is based upon the fundamental principles of transparency, full dissemination of results, building in-country capacity, and the intention to transfer experience to the energy industry as a whole. Scientists will have unique access to operating units in the Shell Group.

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 20 (Source: http://www.shellfoundation.org/flag_programmes/bio_002.html)

 Earthwatch – Project Better World A volunteer programme for Shell staff on biodiversity conservation projects

 Fauna and Flora International Shell is working with FFI on a number of projects across the world which relate to conservation, policy and education. Projects include conservation of the Cape Floral Kingdom in South Africa with FFI and the Flower Valley Conservation Trust, the development of an integrated Caspian Biodiversity Strategy and Action plan in the Caspian region, and support for the University if the Philippines-Los Baños biodiversity conservation programme aimed at helping to reverse the destruction of Mindoros .

 Friends of Conservation Shell International is supporting Friends of Conservation in a tiger conservation project in Ranthambhore National Park, Rajasthan, India.

 IUCN - The World Conservation Union Shell has forged close links with the IUCN, one of the world’s leading conservation organisations with more than 980 members in some 140 countries. In August 2001, IUCN staff member began a two-year secondment at Shell, the first time the conservation organisation has sent a staff member to the private sector. The secondment included a range of activities to develop guidelines and tools to implement the Group Biodiversity standard and working with Shell’s conservation partners.

Shell also contributes widely to society through its independent Shell Foundation. The Foundation has a range of programmes which address issues such as improving access to energy for communities in developing countries to finding solutions to health problems associated with household energy use. Highlights include:

 US$2.8million to fund a partnership with the Smithsonian Institution’s Monitoring and Assessment of Biodiversity Programme to assess the impact of oil and gas operations on areas of known biodiversity value.

 convened a series of consultation workshops on biodiversity in 2005. Attendees included major players in the oil and gas industry as well as Earthwatch, FFI, Living Earth, Plantlife International, and the National Biodiversity Network Trust.

 2005 publication of benchmark strategy paper Enterprise Solutions to Poverty widely seen as an effective and realistic way to think about international development See further positive comment in Third Sector. (Source: http://www.thirdsector.co.uk/charity_news/full_news.cfm?ID=14061)

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 21 Issues for the Museum/points to consider

 There have been a number of high profile campaigns against Shell, supported by popular environmental organisations such as Friends of the Earth and Greenpeace. Many are historic, but the impact of FOE’s next campaign against Shell this summer should be considered. We need to consider alienating segments of our potential donor base.

 Other organisations have received criticism and have been the target of protests for accepting sponsorship from the oil industry. For example in 2001, Friends of the Earth demonstrators dressed as tigers protested at the National Gallery, London during the special preview of the Pisanello exhibition. (Source: Art Review December 01, 2001)

 Despite Shell’s reputation, a number of credible, high profile organisations have worked with Shell including the Smithsonian, our nearest peer institution.

 We should also consider the implications of working with Shell at the time when the Museum is going through a re-branding exercise which is re-positioning us an environmental organisation.

 A high-profile relationship with Shell may also impact on the Museum’s relationships with the extractive industry as a whole, and with BP in particular. The Museum currently has a positive relationship with BP and there is a possibility this may develop in the future. This could be jeopardised if the Museum enters into a high-profile association with Shell at this point in time.

 Branding is an issue. The Museum needs to carefully consider the implications of positioning Shell branding alongside that of other companies, and needs to assess the possible outcomes of this: negative impact of Shell brand transferred to associated brands; dilution of Shell’s brand from other brand associations

 Specific consideration must be given to the impact an association with Shell may have on key WPY constituents, including visitors, photographers, and other sponsors. We also need to consider the risk of alienating key segments of the WPY visitor profile.

 It is to be noted that Shell’s sponsorship of WPY comes from an arts and cultural programme budget rather than an environmental programme budget, and as such, the impact of this association on our audiences may not arouse as much negative interest. Similarly, WPY is also part of the Museum’s arts and science programme.

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 22 APPENDIX III

FOR INTERNAL USE ONLY

SHELL - ETHICAL REVIEW COMPILED JUNE 1997

Background

The two main areas Shell has faced criticism over are its activities in Nigeria, and its plans to dispose of the Brent Spar platform in the Atlantic. First, I will look at the issues surrounding the Pirc resolution as this provides a useful introduction and highlights Shell’s current corporate governance stance. As a response to increasing criticism over its activities, Shell issued a statement of general business principles in March which I will look at last.

The Pirc Resolution at Shell’s AGM

The Pirc resolution was raised and defeated at the Shell AGM in May 1997. Pirc (Pensions Investment Research Consultants) is a pension fund advisory group consulting on corporate governance issues. The resolution called on Shell to tighten its environmental and human rights policies and submit them to an independent external review and audit. It also demanded a detailed report on Shell’s implementation of such policies in Nigeria.

Shell has said it shares the goals of the Pirc resolution, but Shell and Pirc are at odds over two issues:

1. Shell should apply the same environmental and social standards worldwide. 2. It should employ external auditors to review its progress in implementing environmental and corporate responsibility policies.

Phil Watts, group director of planning, environment and external affairs says Shell isn’t convinced external verification of its environmental reports and procedures is necessary across the group, although its UK subsidiary planned to have its next environmental report audited. Shell has said the same environmental standards applied in developed countries could not be afforded in the developing world.

Brent Spar

Shell UK backtracked on its plans to dump the Brent Spar 1.5 miles under the Atlantic as a result of consumer pressure (i.e. boycotting campaigns) in , Holland and Denmark. Pressure in the UK was limited but it did arouse enough anti-Shell feeling for the company to postpone the 25th anniversary celebration of its environmental showcase the “Shell Better Britain Campaign”. The campaigns were organised by Greenpeace.

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 23 There are reasonable arguments for saying that Shell had found the most environmentally-appropriate way of disposing of its oil rigs when it planned to dump them in the sea.

Shell undertook three years of analysis before submitting the deep sea proposal to the DTI. Mark Tasker, Head of Sea Birds and Cetaceans at The Joint Nature Conservation Committee, who were involved in the consultation process, agreed with Shell that deep-sea disposal was the best environmental option. Mark Sutherland at the Fishermen’s Federations (who also took part in the consultation process) agreed. He says the fact it is still there represents a real threat to fishermen’s livelihoods and lives.

Nigeria

Shell has been producing oil in Nigeria for over 30 years. Shell controls 60% of oil reserves in Nigeria. Oil accounts for 80% of Nigeria’s total revenues and 90% of its foreign exchange earnings.

The Ogoni tribe have been campaigning for self-determination and a greater share of Nigeria’s oil revenues. The Ogoni people (500,000) represent 0.55 of the Nigerian population, and inhabit a 404 square mile area called the Rivers State. Since 1958, $30 billion worth of oil has been taken from Ogoni land.

Shell has spilled 56 m gallons of oil onto farmlands and into water supplies. Ogoni activists organised to demand Shell clean up spilled oil and share oil profits more equitably with the Ogoni people. The Nigerian military dictatorship responded by conducting a campaign of terror in which at least 1800 Ogoni people have been killed. Shell reputedly provided financial assistance, logistical support and guns (Deborah Robinson et al, Ogoni, The Struggle Continues, World Council of Churches, December, 1996 p23,43,91-92). On November 10, 1995, the Nigerian government executed nine Ogoni environmental activists, including the writer Ken Saro-Wiwa. The World Council of churches say (Robinson et al Dec 1996 p43) key witnesses for the prosecution at Ken Saro-Wiwa’s trial have signed sworn affidavits saying they were bribed by Shell to testify against Saro-Wiwa.

Shell has 96 oil production wells in Ogoniland, 5 flow stations (large pumping stations) and numerous gas flares which have operated continuously for 35 years. Shell also maintains numerous high-pressure oil pipelines criss-crossing Ogoni land carrying oil from other parts of Nigeria to the shipping terminal at Bonny. Shell ceased production in Ogoniland in 1993 - but the World Council of Churches has evidence Shell is continuing production (there have been 24 more spills since Shell “ceased production” there). Shell admits to 3000 polluted sites affected by oil operations on Ogoni soil, and to flaring 1.1 billion cubic feet of natural gas each day for 35 years causing acid rain in the Niger delta during about 10% of the days each year. The flares also produce a rain of fine particles, a cancer-causing soot.

Shell’s Response On 13th May 1997, The Shell Petroleum Development Company of Nigeria Ltd (SPDC) published its first comprehensive public report on community and environmental issues in Nigeria. The report says current plans provide for an end to gas flaring by 2008 or earlier, while projects already agreed will absorb nearly 40% of flared gas within three years. A major programme of refurbishment is under way- 80 flow stations are being upgraded, and work is being carried out of the Forcados and Bonny terminals. 2,600 kilometres of path, cleared for seismic exploration in the mangrove swamps have been replanted and all former operational sites will be restored by 2003. It is

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 24 implementing a management system for Health, Safety and the Environment during 1997. It is also planning to set up environmental management planning systems at two facilities that meet the standards of the European community Environmental Management and Audit Scheme. This involves publishing environmental statements for the two facilities which are validated by an external auditor.

Shell’s Community Involvement in Nigeria. Shell has been giving money to various community projects, such as construction of schools and roads, health care, water borehole and tank facilities, provision of educational equipment, scholarships and agriculture programmes. Shell spent US$ 36m on community work in Nigeria in 1996, more than any other Shell operating company in the world. However, in 1995, the World Council of Churches sent observers to Ogoniland and found no piped water, good roads, electricity, telephones, or proper health care facilities.

Sustainable Development

In April of this year John Jennings said multinational energy companies must accept the challenge of meeting growing energy needs in a sustainable way. He said supplying fossil fuels was vital to continuing world-wide economic growth and Shell’s commitment to developing countries brought lasting economic and social benefits. He recognised dependence on fossil fuels was a challenge to sustainable development but argued Shell was helping to use such fuels more efficiently and to reduce their environmental impact. In March 1997, Shell issued a press release in which they said in the short term Shell sees no realistic alternative to the use of increasing amounts of fossil fuels to support increasing expectations in living standards. In the long term, alternative energy sources will become increasingly attractive. Shell International Petroleum Co is a signatory to the International Chamber of Commerce’s Business Charter for Sustainable Development, and a member of the World Business Council for Sustainable Development.

Renewable Energy

Shell has also been criticised for its lack of commitment to renewable energy sources. Shell conceded it could do more to develop renewable energy sources in response to environmentalist questioning at its AGM. Jennings said the company spends about £5.5m a year on research and development of renewables, namely solar power and biomass. Shell has also been criticised as its US subsidiary belongs to a lobby group, Global Climate Coalition which has been hostile to rapid action to cut greenhouse gas emissions to fight climate change. BP left the lobby group last year.

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 25 Shell’s Statement of General Business Principles

In March Shell issued a revised statement of general business principles and its policy on health, safety and the environment. The key points are:

 Shell recognises five areas of responsibility: to shareholders, customers, employees, those with whom they do business, and society.

 Shell now acknowledges the dangers of climate change, saying there is now sufficient evidence to support prudent precautionary action.

 Fundamental human rights are explicitly supported for the first time. Shell now says it has a duty to “express support for fundamental human rights in line with the legitimate role of business.”

 In making investment decisions, social and environmental considerations should be taken into account, not just economic ones.

Response to the statement

Shell has broadened its statement of general business principles to encompass support for human rights “in line with the legitimate role of business”, and for sustainable development. It has consulted widely with non-governmental organisations and vowed to take their concerns into account in future strategy. It has tightened its internal controls, and made more information available. The main criticisms are:

 Pirc want Shell to go further by establishing an independent external review and audit procedure. Its procedures on the environment are not as open as for example, British Petroleum.

 Friends of the Earth point out Shell is still a member of the Global Climate Coalition .

 Greenpeace International say even if Shell adopted good practice in drilling for oil in the third world the debate has now moved on, the real question is whether Shell can use its new openness to promote clean sustainable energy sources.

The Natural History Museum Cromwell Road London SW7 5BD +44 (0)20 7942 5000 www.nhm.ac.uk 26