WASHINGTON - On the eve of what is expected to be rancorous annual meeting of angry shareholders, Royal Dutch/Shell is coming under strong attack by environmental activists who charge that the oil giant is not living up to its promises of environmental and social responsibility.
In a new report released at the House of Commons in London Wednesday, Friends of the Earth (FoE) and half a dozen other groups mostly from communities around the world where Shell is pumping, transporting or refining oil concludes that the company's claims that it is a model corporate citizen are hollow.
"Shell is currently under investigation for overstating its oil reserves, but this report shows the company has for many years also been overstating its social and environmental performance," said FoE's executive director, Tony Juniper.
"Unlike shareholders, however, the communities living next door to Shell have little or no rights of redress. Many suffer ill health, pollution and environmental damage as a result of Shell's pursuit of profits," he charged.
The report, 'Behind the Shine,' covers eight specific cases where local communities have organized to make Shell accountable for serious pollution and related negative environmental, social, and health impacts.
The featured communities include Durban, South Africa; Port Arthur, Texas; Manila, the Philippines; Norco, Louisiana; the Niger Delta of Nigeria; Sao Paulo, Brazil; the Caribbean island of Curacao; and Sakhalin Island in the Bering Sea off the coast of Russian Siberia.
The report is being released in advance of Shell's annual meeting that will be held simultaneously next Monday in both London and The Hague.
Shell's directors are under heavy fire from shareholders, including major institutional investors, as series of four reports that reduced the amount of oil that the company though it had in reserve by nearly 4.5 billion barrels.
U.S.-based Institutional Investor Services (ISS) is advising its clients to vote against two resolutions that would effectively absolve directors from responsibility for the company's setbacks. If a large percentage of shareholders vote against the two resolutions, it would amount to a vote of no-confidence and could lead to an unprecedented shake-up in one of the world's largest multinational corporations.
Shell has long been under attack by environmental activists and, since the late 1990s, has tried hard to project an image of environmental consciousness and responsibility, particularly with respect to developing alternatives to fossil fuels in the interests of reducing carbon emissions that cause global warming. Indeed, just last week, the new chairman of its British wing, Lord Ronald Oxburgh, told London's Guardian newspaper that he sees "very little hope for the world" unless greenhouse gas emissions are reduced."
While environmental groups have generally lauded such statements, the FoE report says that good environmental citizenship begins with taking responsibility for the damages caused by pollution of the water, soil, and air of communities around Shell's operations, as well as investing more in renewable energy sources.
Thus, representatives from all of the local communities highlighted in the new report intend to be present at next week's meeting to tell shareholders, parliamentarians, and the interested public about the problems they say Shell has caused and failed to adequately address.
In the Niger Delta, for example, where Shell gets about ten percent of its oil, 700 million cubic feet of gas per day was burnt off into the environment aid last year, an increase over the previous year, despite a company commitment to end all flaring by 2008. Gas flaring, which is exists throughout the Delta, not only wastes energy and contributes to global warming, but also pollutes the environment.
Last year, nearly 10,000 barrels of oil spilled from pipelines that crisscross the region, contaminating farmland, water courses, and fish, as they have for many years, according to FoE.
"Shell's business practices in t he Niger Delta have destroyed our environment, our farmland, and our fisheries," said Oronto Douglas, a representative of FoE Nigeria, who will attend next week's meeting. "Shell must work with local communities to clean up the Delta and make sure the communities receive the benefits of their operations there."
Hilton Kelley, a citizen of Port Arthur who will also be attending the meeting, said he hopes to talk about the lawsuit that has been brought against Shell for its operations there. Some 1,200 residents allege that air, soil and other contamination caused by the release of "noxious fumes, vapors, odors, and hazardous substances" from the local Motiva refinery have affected the health of the community members.
"I really expected Shell's practices to change after I spoke with (former Chairman) Sir Philip Watts at the annual meeting in London last year," he said. "But the only thing that has changed is that Watts was fired. Now, we will let the courts decide who is dumping what on our community."
Similarly, Shell is facing legal action in Manila where the company's oil depot is located in the center of a residential community and in Sao Paulo where it is accused of contaminating drinking water and causing serious health problems, including cancers, infertility and respiratory diseases.
In Curacao, where Shell sold its refinery to the government 17 years ago after 70 years of operation, local residents are also seeking to hold Shell liable for pollution that they say has damaged both the coral reef which surrounds the island and the health of members of the community.
Similarly, in Norco, residents are demanding that Shell provide health care for years of exposure to pollution caused by its refinery there. Margie Richard, a local activist, won this year's Goldman Prize - the most prestigious international award for environmentalists - for her efforts to hold Shell accountable there.
In Sakhalin, local activists have been joined by a dozen major international green groups in efforts to force Shell to halt a US$10 billion off-shore oil and gas project that they say threatens to render extinct the Western Gray Whale.
FoE is calling on the British parliament to enact corporate-accountability legislation to ensure that British-based companies can be held accountable by the communities they work in. "It is time the British government legislated and gave communities the right to protection from such corporate abuse," said Juniper. "And they must be compensated when abuse occurs."
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