Executive Summary
Analyse Royal Dutch Shell’s recently reported carbon emission targets from a stakeholder theory point of view.
To begin with, a summary of the scenario will be provided, followed by definitions of what a ‘stakeholder’ and ‘stakeholder theory’ is. The report will continue with an analysis of the different stakeholder views based on stakeholder theory, along with the identification of three solutions and the author’s recommendation.
Table of Contents
⦁ Introduction
With the climate crisis, contemporary businesses are moving towards more sustainable practices. It has been reported that Royal Dutch Shell aims to halve their emissions by 2030 and reach net-zero emissions by 2050. However, they are being criticized for their plan to reach those goals.
This report will use stakeholder theory to analyse the various views of the stakeholders at Shell, and identify three solutions to move forward, as well as a recommendation of which of the three solutions proposed to use and why.
⦁ Summary of scenario
Royal Dutch Shell is an established group of companies within the petrochemical and energy sector (Shell, 2021b). BBC News (Jack, 2021) reported that Shell aims to halve their emissions by 2030 and reach net-zero emissions by 2050. Their plan to reach their 2050 goal, however, is to increase their oil and gas resources. Next year, gas and oil development are planned for four times more funding than renewable energy. Jack means it’s questionable if the company will reach its goal with the current plan. A research employee, Shu Ling Liauw, further analysed Shell’s spending and stated that the 2050 goal is not possible with the current plan. By 2030 they even seem to increase their emissions, not halve them as promised (2021).
In addition, Shell can be questioned for portraying themselves as working towards sustainability, but all while increasing the negative environmental impact short-term. One could even argue it’s a potential case of greenwashing (Watson, 2016). However, is worsening something to improve the future ‘wrong’?
Restructuring an organisation is expensive, nonetheless for a company with over 80,000 employees (Shell, 2021a).
Could the short-term negative impact to gain more capital for the restructuring be argued to be justifiable to improve the lives of greater society in the longer-term?
The current plan doesn’t risk tens of thousands of jobs, decreased demand, lower profits, but it can come at the expense of customer relationships and the society with the climate change crisis and increased climate awareness.
How can Shell balance their responsibility to shareholders, whilst working towards meaningful environmental targets?
⦁ Description of stakeholder theory – 300 words
To begin to understand what stakeholder theory is, it’s relevant to define what a stakeholder is. According to the Cambridge Dictionary Business English, a stakeholder is “an employee, investor, customer, or citizen who is involved in or buys from a business and has an interest in its success” (2021).
However, Miles (2017) argues the definition of stakeholder is more complex and can’t have one universal definition. But in this report, stakeholder theory will be based on the definition that stakeholders are individuals, groups or organisations that are impacted by or can impact the success of an organisation’s objectives and activities (Svendsen, 1999, p. 1) (Bryson, 2004, p. 22).
And Freeman (corporateethics, 2009) means stakeholder theory is the concept that a business must create value for its stakeholders to be successful. He means it’s essential that all stakeholder interests align, and not to look at them in isolation from each other.
⦁ Analysis – 650 words
Owners/CEO – profit and growth, ethics, environment
Other managers and shareholder – profit and growth
Investors – profit and growth, ethics, environment
Employees – keep jobs, pleasant working environment, growth opportunities, diversity, environmental awareness
Customers – the product, price, environmental impact
Suppliers/Strategic Partners – keep demand, profit and growth
Government/Regulators/NGOs – the environment
Community/Society – environment
⦁ Identification of 3 alternative solutions – 250 words (3 paragraphs)
⦁ Recommendations – 100 words
⦁ Conclusion – 100 words
This report has analysed Shell’s recently reported emission targets based stakeholder theory, and looked at the various views of its stakeholders.
References
Cambridge University Press. (2021). Stakeholder. In Cambridge Dictionary. https://dictionary.cambridge.org/dictionary/english/stakeholder
corporateethics. (2009, October 1). What is Stakeholder Theory? – R. Edward Freeman [Video]. YouTube. https://www.youtube.com/watch?v=bIRUaLcvPe8
Jack, S. (2021, November 3). Oil giant Shell says it needs oil to pay for green shift. BBC News. https://www.bbc.com/news/business-59154930
Miles, S. (2017). Stakeholder Theory Classification, Definitions and Essential Contestability. Stakeholder Management, 21–47.
https://www-emerald-com.torrens.idm.oclc.org/insight/content/doi/10.1108/S2514-175920170000002/full/html
Shell. (2021a). Our climate target.
https://www.shell.com/energy-and-innovation/the-energy-future/our-climate-target.html#if
rame=L3dlYmFwcHMvY2xpbWF0ZV9hbWJpdGlvbi8
Shell. (2021b). Who we are.
https://www.shell.com/about-us/who-we-are.html
Svendsen, A. (1998). The Stakeholder Strategy: Profiting from Collaborative Business Relationships (1st ed.) [E-book]. Berrett-Koehler Publishers.
https://web-p-ebscohost-com.torrens.idm.oclc.org/ehost/detail/detail?vid=0&sid=a611bb66-0b82-41c6-8266-70b8beeec201%40redis&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d
Watson, B. (2016, August 20) The troubling evolution of corporate greenwashing. The Guardian.
https://www.theguardian.com/sustainable-business/2016/aug/20/greenwashing-environmentalism-lies-companies
