Royal Dutch Shell towards sustainable development.

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Company profile

Among the world’s largest corporations, Royal Dutch Shell is one of the largest independent companies whose main scope is energy production and distribution. With over 100,000 employees, Royal Dutch Shell operates in more than 130 countries.

Royal Dutch Shell consults on:

  • Technical services
  • R & D (Research and Development)
  • Oil and Gas (Primary investment)
  • Hydrogen, Wind and solar power
  • Biofuel

According to what is written on their website, Shell’s primary contribution to sustainable development is their creation of energy which ‘fuels development’. In Canada, the company makes assertive efforts to increase employment by hiring local people in their projects of development and production. Royal Dutch Shell shows a responsible attitude towards a sustained development of the society by investing in programs intended to grow awareness among the masses on the issue of using energy resources in an environmentally responsible way.

External factors of influence

In their movement towards sustainability, Royal Dutch Shell has been influenced by three important factors which are:

  1. Changes in the global market equilibrium for energy
  2. Government policies
  3. External innovation

Royal Dutch Shell is facing a competitive environment while the shortage of fossil fuels is eminent and the demand for energy is rising. The company is highly impacted by various stakeholders, consumers being the primary ones. The consumers demand fuel from sources where they can get it the cheapest despite the climatic effects fossil fuels are imparting on the atmosphere.

On the contrary, people including environmentalists and general masses are more concerned and focused to see the energy division to promote innovate solutions of clean energy. But companies in the energy sector face problems while inculcating such solutions against those who still produce and distribute traditional fuel like fossil fuels irrespective of what consequences will they cause to the environment we live in. Though, if somehow the cost of consuming fossil fuels gets higher than that of implementing renewable energy sources, the demand for the later will rise as well.

In a business-oriented perspective, Royal Dutch Shell prefers to be on the safe side by avoiding projects that indicate loss and tries its best to maintain the fiscal stability. This point was more emphasized in the address by the In-charge of modelling future energy market scenarios for Shell, Martin Haigh at the ‘Planet Under Pressure conference’ at the UN’s Rio+20 summit where he elaborated that Royal Dutch Shell could neither move too fast or too slow in pursuing clean energy because they risked acquiring more losing business ventures if they moved too fast or having their current business become a losing venture if they moved too slowly (Clark, 2012).

Royal Dutch Shell despite being aware of Corporate Social Responsibility is maintaining the equilibrium with social and environmental contributions. As per Martin Haigh, some solar and wind power plants already established by the company are going through loss and through predictions it is more likely that the general public, the primary consumers and stakeholders, will go on with the market norms and clean energy seems to be ways off (Clark, 2012).

As a company encompassing social responsibility, Royal Dutch Shell is prepared and dedicated to go along with the market through slow but steady progress while it is making its major move towards its eventual goal of sustainable development. As per Martin Haigh’s point of view, the behavior of energy production and distribution companies is dictated by the consumers’ demands. But the critics of globalization are of the view that the industry is the main controller of their behavior since they limit environmental and social legal requirements for the energy  sector. Both point of views can be chosen, but in order to favour sustainable development, either industry wide collusion is required or the government needs to implement by force the use of clean energy on the consumers because the consumers give more importance to their energy demands in the short-run though they are optimistically more stretchy in the long-run. As a result, for the company to produce sustainable energy in sustainable ways, the consumers are needed to be willing to pay sustainable prices. The people concerned with the oil and gas industry might argue that oil producing companies do not take into account these sustainable sources in the developing countries as much as they do in the more technologically advanced and developed countries of the world.

Royal Dutch Shell is ready to take the step towards sustainable development but they haven’t put all their investment in it yet since they are waiting for the government’s action to promote clean energy.

The Shell corporation has evaluated three main issues with the global energy situation.

  1. Increasing demand for fuel fueled by the fast-paced developing world
  2. Decreasing supply and accessibility of oil and natural gas which are expected to go short by 2015
  3. Despite global awareness of climate change, GHG emissions are on the rise.

To avoid the possible worst market failure resulting in a 20% loss, the Stern review calls for only a 2% investment of GNP into sustainable development.

The Royal Dutch Shell has established two settings and both of them, relative to the progress and vision of other companies, are not so positive. As per the first case, the governments worldwide cannot come to consensus on any agreement and for that reason the GHG emissions are going to rise far beyond the safe limits by 2050.

To contribute to second scenario, Shell is using technologies like tar-sands and its solar and wind power plants.

Internal factors of influence:

The two main internal factors which influence the Royal Dutch Shell’s practices are:

  1. Technical staff
  2. Economic interests of the shareholders.

As eminent in any industry, the technical staff at Shell has primarily focused its energy in creating innovative technology solutions to improve the older ones and replace terminated ones.

According to Shell Canada President and Country Chair, Lorraine Mitchelmore, “Canada’s emergence as a global energy superpower hinges on the country’s ability to develop a truly national approach to energy. A national energy strategy will support a balanced approach to strengthening the economy, improving the environment, and turning environmental stewardship into economic advantage.”(Shell, 2011)

As emphasized in the entire article, Royal Dutch Shell is focused and mainly concerned about the results of its projects and the overall company’s stability in the marketplace. Avoiding loss-making project, Shell stands on its stance to develop sustainable ways to stabilize the results of the consumption of other non-environment friendly energy sources and their impact on the climate and environment as a whole.

Impacts of sustainable development

With the goal to keep up with long-term profitability, Royal Dutch Shell, in reference to the Canadian perspective, mad0e attempts like buying 1800 acres of land area for the purpose of recovery process of their tar-sands operations and the currently renamed fueling change program, both of which, are directed to introduce improvements that are either equal of more than the environmental effect of its extraction and distribution.

The Canadian environment is improved by the annual $2 million grants to environmental projects by the help of Royal Dutch Shell’s ‘Fueling Change’ program. Specifically, these grants are granted to the most voted projects on their website of the Fueling Change program.

Another program in partnership with the Canadian Geographic was formed by Royal Dutch Shell known as Energy Diet Challenge with involved the participation of two hundred K-12 classrooms across Canada who competed for awards and prizes by learning about production and environmental impacts of energy (Shell, 2012).

Royal Dutch Shell has invested to put in equilibrium its environmental and social impacts in Canada through two things (1) focusing on their powers including socio-political environment in the country and (2) approaching sustainable development with the intention in mind to produce lasting results from steady progression.

Royal Dutch Shell is now making profit from the environment of Canada’s natural resources by introducing many other different programs that emphasize on the safety of the employee and the prospective future employee education in the very elementary schools of the country.

Apart from the improvement across Canada only, Royal Dutch Shell, in the worldwide perspective, works in a very similar strategy or pattern by directing its energy on either offsetting their actions or by investing in and creating programs that provide awareness of sustainable development and latest technologies. For instance, one of the many global programs is the Eco-Marathon program by Shell which calls for students all over the world to participate by creating energy-efficient vehicles. Though Shell’s operations are dictated by the consumer’s demand, the company is creating a pattern of shift towards sustainable equilibrium by investing in programs of awareness of clean energy and responsible environmental practices.



Harnessing Technology for Sustainable development:

As far as the advancements in technology within the company are concerned, the technical staff at the Royal Dutch Shell has penetrated itself in R & D to be able to achieve the goal in its actual operations being run among the different divisions of the company. The company is among the very first oil and gas production companies to concentrate its research and development to minimize the impact of fuels on environment by setting a biodiversity standard within the company. Technology plays a crucial part in the company’s efforts in order to primarily change the people’s view on using fossil fuels and hence changing their demand. Royal Dutch Shell has uploaded a significant amount of knowledge-based articles about the efforts it is making towards sustainable energy practices on its website is available in many different languages. The site also provides informations on the company’s environmental efforts geographically through its geography-specific configuration database of the website.

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