WATCHING THE WORLD SHELL'S ENVIRONMENTAL STANCE

With Roger Vielvoye from London The Royal Dutch/Shell Group is embarking on a difficult, potentially risky strategy for the 1990s. When it comes to the environment, the Anglo-Dutch group wants to become the industry's model. Shell already considers it is an industry leader in the environmental field. But in a letter to chief executives of group operating companies around the world, Senior Managing Director Lo van Wachem provides guidelines designed to enhance Shell's position.

Feb. 18, 1991

3 min read

The Royal Dutch/Shell Group is embarking on a difficult, potentially risky strategy for the 1990s.

When it comes to the environment, the Anglo-Dutch group wants to become the industry's model.

Shell already considers it is an industry leader in the environmental field. But in a letter to chief executives of group operating companies around the world, Senior Managing Director Lo van Wachem provides guidelines designed to enhance Shell's position.

STRIVING TO BE THE MODEL

In the letter, Van Wachem said he wants Shell's commitment to environmental excellence to make the group the model other companies wish to emulate "not because of what we say but because of what we do."

After outlining the general principles of Shell's environmental thinking, Van Wachem's letter made two specific points.

He said excellence in environmental stewardship might appear to be expensive, impairing the company's competitiveness in some areas. However, Shell has always taken the longer view, and there need be no incompatibility between business and environmental objectives.

"Also, we have learned that improved environmental performance often does not require additional capital investment but better understanding and better operating procedures," Van Wachem wrote.

On the other hand, Shell companies might be faced with unreasonable potential risks such as unlimited liability for the consequences of failure or an accident including those attributable to human error in which negligence is not a factor.

In such a situation, Van Wachem said, Shell might have to withdraw from certain activities even though leaving the field to others would not improve overall safety or reduce society's exposure to environmental risk.

Shell has shown it means business when it is confronted with unjustifiable risks. Last year it announced the withdrawal of its tankers from trading with the eastern seaboard of the U.S. when threatened with legislation that exposes the company to unlimited liability for an oil spill regardless of the circumstances of an incident.

Van Wachem said Shell must be bold and lead the way when it can, but the company must not gamble its reputation or its assets where it might be exposed to unreasonable, unpredictable penalties.

NO CONSENSUS

Shell and other companies have to face the lack of international and even regional consensus on environmental standards and sometimes on the scientific causes and effects of phenomena.

This handicap is not an excuse for inaction, and Van Wachem urged Shell companies to work for adoption of rational policies and standards in an international context.

He also made the point in the letter that environmental issues are complex. Regrettably, industry generally suffers at present from a lack of environmental credibility among the public.

And however well the industry does, Van Wachem said, it's likely that public expectations will run ahead of the company's abilities and achievements.