Personal and Corporate Ethics

Session 5: Learning Sheet

This session of PCE was devoted to Corporate Social Responsibilities (CSR) that an organization
and an individual takes or should take and are these responsibilities undertaken just to follow
law or some other hidden motives. This was aided with a discussion of a case of ‘Royal Dutch
Shell in Nigeria’. Finally, we touched upon the few key points of utilitarianism by discussing about
issues of bribery.

Nigeria, even though one of the richest oil reserves in the world, still lives under acute poverty.
There are numerous international mining companies operating in Nigeria, making huge
investments for their own business as well as for the wellbeing of the environment they are
operating in. Shell is one such company which had faced constant criticism at the local and global
levels in detoriating the lives of Nigeria people. Many NGOs had shunted Shell for its negative
impact and tried to threaten its working by influencing unions to go on strikes. Shell was always
aware of some of the negative effects its business was causing to the environment and widely
welcomed the criticisms along with bring tactical measures in its own company to prevent issues
of corruption, pollution and unemployment as well as taking concrete steps through policies,
investments and in association with government to help improve the socio-environment. But the
question raised that were these measures really genuine or was Shell just wearing a mask with
some other intentions to defend itself. The morality of the company was being judged. There
were massive riots and the operations of Shell was halted for quite a few time. In addition, there
was an incumbent government which did nothing for its people’s safeguard and Shell was slowly
seen as being a controlling force in the politics and governance of the country. But the main
questions to address are: Should the company which exists and work for a different motive, with
a motive to gain profits for its shareholders, whose future and existence depends on these
factors, indulge in non-financing activities for public good given an incumbent government and
to what extent should it go. And the other opposite question is whether the company should use
the resources of an area of which the people are constantly living a low life and mask its wrong-
doings to society with other public investments.

We next looked into the rationale of companies indulging in CSR activities. They, through their
investment adopt policies to address human rights and environment abuses. But how far the
companies should go on doing something they are not legally required to do. The reasons why
companies involve in CSR activities may be different: strategic, defensive, altruistic or public
spirited. But it is only worthwhile if the virtue pays off. In today’s world and market place,
companies are mostly forced/threatened to acquire such policies by their own customers or
investors.

CSR indulgence began when companies were alleged to give focus more on their businesses,
profits and shareholder’s funds. They extract money from employees, customers and investors
in the form of taxes and get involved in bribery. But this depends on the environment the
company operates in. If the competitors are al indulging in bribery and making money and the
company through its righteous ways is in a threat to make losses, there is little or no incentive
for the company to switch paths and get in the game, else it might become bankrupt. Is it
responsible for companies to use their shareholder’s resources to provide public goods if doing
so makes them less profitable? A company cannot act like a government; it has certain limits
after which it will eventually bribe in the free market. These moral standings that organizations
uphold are often inconsistent. The idea of CSR has also faced criticism because this gives
companies the liberty to be risk-averse and then cover up their activities and also criticism that
companies no longer focus on the work they should be doing, to be dedicated to its shareholders.

We then discussed about manipulation through bribery. Whether is it always bad or are there
situations when is it good too? If you as a person or as a company has some activists opposing
your functioning and is seriously hampering you, is it okay to bribe them or with a longer
perspective, kill them instead so that you can function properly? A company should sometimes
take the utilitarianism view and try to base its decisions keeping in view the life of the customers
as well as its shareholders. It might not always be in the interest of a company to kill an activist
else you might get into unwanted controversies.
Lastly we went back to the case in order to see what could have happened alternatively if ethics
and morality were given a strong view point. Since Shell had an influence on the government, it
could help government impose certain regulatory standards and do investments for its people.
Shell being an MNC could bring in global standards from developed nations in order deal with
the situation in Nigeria. Lastly there could have been an arise of Civil regulations (activists, etc.)
as a second alternative to help mitigate the local problem at Nigeria.

Debasish Sahoo

PGP 1

Roll: 17098, Sec: E