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LONDON-Royal Dutch/Shell Group is resisting a shareholder resolution to amend its environmental and corporate responsibility policies, claiming it already has improved and continues to improve its long-established health, safety and environmental policy.
During the past two years the oil company, like many other multinational companies, has faced increasing criticism from shareholders, special interest groups, the media and the public about its environmental standards and human rights issues. The thrust of the criticism of Shell relates to its operations in Nigeria and the disposal of the Brent Spar oil rig.
Greenpeace forced Royal Dutch/Shell Group to abandon its plans to dispose of the rig in the North Sea. The public outcry included bombings of Shell Oil stations in Germany (BI, Oct. 2, 1995). The rig is currently in a Norwegian fjord awaiting Shell's decision on how to dispose of it.
At next month's annual general meeting of Shell's holding company, The Shell Transport and Trading Co. P.L.C., the oil company faces a shareholder resolution promoted by Pensions Investment Research Consultants Ltd., which accounts for about 10% of Shell's shareholders. London-based PIRC is an independent adviser to pension funds and institutional investors set up, among other things, to advise on socially responsible corporate governance.
PIRC's members include 30 private and public sector pension funds representing (British pounds) 150 billion ($245.2 billion) of investment, said PIRC Research Director Stuart Bell.
The resolution calls on the holding company, which is headquartered jointly in London and The Hague, Netherlands, to:
Designate responsibility for the implementation of environmental and corporate responsibility policies to a named member of the Committee of Managing Directors.
Establish effective internal procedures for the implementation and monitoring of such policies.
Establish an independent external review and audit procedure for such policies.
Report to shareholders regularly on the implementation of such policies.
Publish a report to shareholders on the implementation of such policies in relation to the company's operations in Nigeria by the end of 1997.
Shell directors, meanwhile, have written to shareholders, recommending that they vote against the resolution at the annual meeting in London. The vote will be binding and as the PIRC members represent a minority, Shell directors expect the resolution to be defeated.
The directors point out that they have reviewed the company's Statement of General Business principles and environmental policy and are taking steps to reinforce and monitor standards.
They also point out that health, safety and environmental policies already have been brought under the responsibility of Cor Herkstroeter, President of Royal Dutch Petroleum Co., as the PIRC resolution requests.
Shareholders also got a brochure outlining the community welfare program undertaken by the Shell Petroleum Co. of Nigeria Ltd. as well as its environmental performance. Additionally, they received a copy of the group's health, safety and environmental policy, endorsed by the Committee of Managing Directors last month. It states that every Shell company:
Has a systematic approach to HSE management designed to ensure compliance with the law and to achieve continuous performance improvement.
Sets targets for improvement and measures, appraises and reports performance.
Requires contractors to manage HSE in line with this policy.
Requires joint ventures under its operational control to apply this policy and uses its influence to promote it in its other ventures.
Includes HSE performance in the appraisal of all staff and rewards accordingly.
The directors point out that while they have already responded positively to most of the resolution's recommendations, they are opposed to establishing an independent audit.
"Your directors are responsible, and accountable to their respective shareholders, for the content of these policies and standards and for ensuring that they are effectively implemented and monitored. These responsibilities do not belong to any outside body, although outside bodies many be used," according to the directors' statement.