The National Post: Shell game
By Peter Foster
April 21, 2004
The release this week of sections of an internal report from Royal Dutch/Shell Group makes for dramatic reading.
Ousted chief executive Sir Philip Watts stands revealed as a liar who cooked the books on petroleum reserves while head of the exploration and production division.
Then, after being elevated to the top job, he managed to damp the increasingly vociferous complaints of his successor in the upstream business, Walter van de Vijver.
Mr. van de Vijver might emerge as a hero from this report if it did not reveal that -- when the cooked figures were about to hit the fan -- he wanted to destroy the evidence.
The debacle, which has seen two other executive heads roll in addition to Messrs. Watts and van de Vijver, may draw others into the controversy. As the Post noted yesterday, this may include Linda Cook, the CEO of Shell Canada, who was on the group's exploration and production committee while Sir Philip was conjuring oil from thin air.
One major aspect of this fiasco has not as yet received the attention it deserves. Sir Philip Watts wasn't just a liar, he was a glorious hypocrite, a leading proponent of Corporate Social Responsibility and Sustainable Development. CSR and SD are subversive concepts hatched by socialists, supported by starry eyed and/or self-interested NGOs and consultants, and adopted by corporate dupes and/or hypocrites. But Sir Philip wasn't just any lying dupe/hypocrite. He is still the chairman of the World Business Council on Sustainable Development, an organization masterminded by Canada's own Maurice Strong at the time of Mr. Strong's anti-capitalist festival in Rio in 1992.
Along with Swiss businessman Stephan Schmidheiny, a long-term co-conspirator of Mr. Strong, and Charles Holliday, Jr., head of DuPont, Sir Philip co-authored a 2002 book titled Walking the Talk: The Business Case for Sustainable Development. The book was the usual combination of vapid and toxic ideas. Into the latter category came the vague notion of "assigning financial values to the Earth's resources" outside the concept of private property, and "spreading" consumer purchasing power. Just like in the Communist Manifesto. Charles Holliday's contribution was to allow leftist canards to be shoved into his mouth. Example: "Given existing technology and products, for all six billion people on the planet to live like the average American, we should require the equivalent of three planet Earths to provide the material, create the energy and dispose of the waste."
And your point is?
Within Shell, Sir Philip (do they take back knighthoods?) produced a constant stream of high-sounding boilerplate. "We have," he declared, "to explain ourselves better to continue to earn our licence to operate [another anti-business notion eagerly sucked up by the vacuum between executives' ears]. We therefore recognize the need for transparency and engagement with all stakeholders."
Except shareholders, it seems.
Meanwhile Sir Philip told the Conference Board in New York in 2003 that sustainable development "has become central to how we do business."
He should have stuck to generally accepted accounting principles.
Sir Philip claimed that CSR and SD were ways of "differentiating ourselves from our competitors." Which means that Shell's competitors are now ecstatic, in particular ExxonMobil, which has consistently refused to jump on the CSR/SD bandwagon, support Kyoto or pour funds into renewable energy. As ExxonMobil chairman and CEO Lee Raymond told his annual meeting last year, "[W]e don't invest to make social statements at the expense of shareholder return." That focus has also helped ExxonMobil concentrate on business essentials such as, say, not falsifying reserves.
Corporate "useful idiots" who buy into Corporate Social Responsibility and Sustainable Development implicitly acknowledge that business is essentially irresponsible and unsustainable. But prudent concern for genuine "stakeholders" -- that is, employees, suppliers, lenders and communities -- increasingly efficient use of resources and the cultivation of reputation are not optional add-ons to business success. They are fundamental to it.
There can be no more powerful case against the triple-bottom line than the revelation that the two bogus metrics -- social and environmental -- were in Shell's case apparently merely a cover for falsification of the one that really counts.
CSR and SD have always represented a potentially bottomless pit of demands. Companies rush in, eager to display their sustainability and responsibility, but somehow they can never do enough. Like a hydra-headed monster, social and environmental concerns multiply with their being addressed, let alone solved. Worse, corporate acceptance of these "voluntary" responsibilities lead to demands that they should be not merely extended but legislated. Sir Phil's fall will now lead to a strengthening of such cries. Look, the NGOs and consultants will scream, Sir Philip was just pretending to be "good." And he is a possible corporate criminal to boot! We must strengthen legislation!
In fact, the lesson is exactly the reverse. Critics often accuse CSR of being so much hypocrisy. In this case they are certainly right. But hypocrisy is not the main problem. A case can be made for doing the right thing for the wrong reason, but only if it is the right thing. CSR and CD are designed to undermine free markets and free societies. They should go the way of their champion at Shell. Out the door.
© National Post 2004