Shell: Global business, home community.

Mike Tuffrey

 

Posted in: Strategy

Shell: Global business, home community.

June 01, 1994

The oil giants have long had some of the largest community programmes. With the privatised colossi like BT and British Gas joining the scene, achieving a distinctive approach in a more crowded arena becomes harder, yet Shell in the UK continues to run one of the most interesting programmes.

The Shell group was established as a unique Anglo-Dutch commercial venture at the turn of the century following a merger between Shell Transport and Trading and Royal Dutch Petroleum. Now operating in most countries of the world, it directly employs 117,000 people, 10,000 of whom are based in the UK. Annual turnover of the group as a whole is £83.7 billion, yielding profits of £3 billion. Implementation of community affairs is left to the discretion of local management, as appropriate for each local community. So in Anglo-Saxon countries, expenditure is around 1-2% of net income, while in continental Europe, for example, it is around 0.2-0.3% of net income.

Shell UK

In the UK, Shell has adopted an explicitly business rationale for community involvement. Projects must benefit both the community and the company. It makes a long term commitment to a limited number of issues and within that to only a few projects. High priority is also given to a systematic approach to evaluation and monitoring.

The UK budget for community involvement totals over £5 million in 1994, split into the following major areas:

education (£1.1 million)

enterprise (£1.1 million)

environment (£0.8 million)

arts (£0.4 million)

grants and donations (£1.6 million).

Education

The Shell Education Service has provided resource materials to schools since 1956, and now responds to 22,000 requests a year. Materials cover the oil industry, science and technology, economic awareness, business and the environment. Links between local Shell sites and schools are encouraged, such as in-service training and support for teachers.

Enterprise

The Shell Enterprise Unit administers two main enterprise programmes. Since it began in 1982, the Livewire scheme has offered support and advice to around 50,000 young people aged between 16 and 25 thinking of setting up in business. The Shell Technology Enterprise Programme (STEP), supported by other companies such as British Steel (Industry) Ltd and by the DTI, offers eight weeks’ paid work experience in small and medium-sized enterprises to undergraduates during the summer, working on a specific business project. Launched in 1986, 1,000 businesses will benefit from the scheme this year, which has attracted a record 5,000 applications from students.

Environment

The Shell Better Britain Campaign, a partnership with 15 environmental organisations, is the company’s main environmental programme. Originally established as a competition for schools in 1970, it is now a nationwide scheme, helping 10,000 local projects every year and providing advice and guides to many more. The company also supports Waste Watch which promotes recycling. Shell UK’s previous chairman, John Collins headed the government’s Advisory Committee on Business and the Environment and the company is therefore co-sponsoring with the government three of ACBE’s pilot Business Environment Associations hosted by Groundwork Trust.

Grants and volunteering

Shell UK’s Grants and Donations programme is shifting away from one-off donations, little benefit being derived by either party if no sustainable partnership is forged. Instead, while local budgets remain, at a national level the aim is to forge flagship relationships with a few major charities.

The Community Service Fund offers grants of up to £350 to community groups with which a member of the company’s staff is involved. While the company has restructured and shed jobs, active support for employee volunteering has not been a feature of the company’s community programme.

Organisation

Having pilot tested new projects in-house, they are then often put out to external management, usually in the voluntary sector. This helps to achieve Shell’s aim of getting others involved, bringing leverage for additional resources. Thus Livewire is managed by Project North East while the Shell Better Britain Campaign is run by BTCV. As part of involving others in the project while keeping Shell’s input steady, major customers and suppliers are being invited to co-sponsor projects – all part of building ‘shared destiny’ partnerships.

Internally, community relations is part of public affairs at the centre and linked to personnel in the businesses. At the centre, nine programme managers oversee the enterprise, education, arts and grants and donations programmes, while a community liaison officer identifies opportunities for linkage with the businesses. Externally, about twenty people run the initiatives, with 11 Shell retirees involved assessing applications under the Shell Better Britain Campaign..

Evaluation

If the community programme has a business rationale, then it ought to be capable of being judged by business standards. Shell UK is moving from measuring the output of the programme – number of businesses helped, number of schools resource packs issued, etc – to track its effectiveness, finding measures of quality – new businesses still running after one or two years, schools packs re-ordered. This last measure, distinguishing between fresh orders and satisfied customers returning for more, shows that evaluation can be kept simple while producing valuable information about quality. The company also carries out regular surveys of opinion, such as through MORI, tracking staff and external opinion.

Communication

Shell UK believes that the primary determinant of corporate reputation is the day-to-day conduct of its business. The community programme cannot overcome a poor business reputation, but it can offer “platforms for dialogue”, where the public is willing to give the company and its line managers a fair hearing. This proved useful after the Mersey spillage in 1990 – Shell’s established relationship with several environmental agencies meant it set up a team of experts quickly, willing to give the necessary advice, confident that they could trust the company. Criticism of Shell’s mistake was not muted, but put in the context of sincere motivations and a willingness to learn lessons.

As an experiment to raise public awareness, in the late 1980s, Shell UK placed full-page adverts on different aspects of the programme in national broadsheet newspapers. The response from those directly interested, for example teachers and community groups, was high, but tracking surveys afterwards revealed that the wider public was suspicious. What was this oil company trying to hide? No further mass advertising has been attempted; rather target groups are contacted directly. However, surveys do indicate that the public increasingly accepts the need for companies to secure a commercial payback.

Future challenges

The challenge for a company with a long established and well developed programme is simply to keep it relevant. In the environment, the Rio Conference and Agenda 21 poses questions about the relevance of the 24-year-old Shell Better Britain Campaign in an age when sustainable economic development is the crucial issue. Shell is planning a review in time for the 25th anniversary. In enterprise, the received wisdom is moving to favour support for existing small and medium sized businesses, rather than new start-ups. STEP addresses this but Livewire needs to ensure adequate back-up beyond the start-up phase.

Internally too, Shell UK needs to spread good practice more internationally. If corporate community involvement is really good for business and part of corporate culture, group companies outside the Anglo-Saxon culture should be investing. This is starting and there are hopeful signs that Shell UK schemes are being replicated – Livewire has been established as far afield as Australia, Chile, and more recently, Hungary; French and British undergraduates are coming to Britain this summer under the STEP scheme and it is being developed in the Netherlands.

FactFile

Royal Dutch/Shell Group

Year ended 31 December 1993

Chairman: Mr C A J Herkstr”ter

Main business: Oil, natural gas, chemicals, coal, metals

Turnover: £83.7 billion Profit before tax: £5.8 billion Employees: 117,000 worldwide FT UK Top 500 ranking: 2 (Shell Transport & Trading plc 1/1/94)

Declared charitable donations: £2.2m (1993) Total community contribution: £40.9m Contribution as % of profits before tax: 0.7%

Head of UK Community Relations: Peter Hunt Address: Shell-Mex House, Strand, London WC2R 0DX Phone: 071 257 3571 (fax: 071 257 1382)

Corporate Citizenship Briefing, issue no: 16 – June, 1994

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