As Managing Director and Chairman of Royal Dutch Shell, Sir Mark Moody-Stuart learned that a company of that size cannot and should not try to stay completely out of politics.
Today he sees great room for businesses, civil society and governments to work together on sustainable development.
Foundation for the Global Compact
In the early 1990s, Royal Dutch Shell had a very clear company policy: “we don’t get involved in politics”. Along with the company’s other great commandment, “we don’t bribe people”, this was firmly rooted as the foundation of how Shell conducted
business. And the company believed all was well.
Then, in 1995, the company was hit by a double crisis – the execution of environmental and human rights activist Ken Saro-Wiwa in Nigeria and the planned sinking of the Brent Spar oil storage facility in the Atlantic. These cases exploded, with Shell being accused of complicity in human rights abuses in the oil-rich Niger Delta and of using the seabed as a dumping ground for crude oil, PCBs, heavy metals and low-level radioactive waste.
“Inside the company, the cases brought shock and disbelief,” says Moody-Stuart, at the time Group Managing Director and, from 1998 to 2001, Chairman of the Board.
“We had our company principles – we had had them for a long time and they were actually pretty good for the time – and we thought that we had behaved responsibly, but the world as a whole didn’t think we had done a very good job,” he says.
In Nigeria, Shell had called for clemency, but maintained that it would not get involved in politics. And the company was firm that disposing of the Brent Spar facility in deep waters was the best solution from a safety point of view. Shell had done the calculations. Still, the world did not think the company had done a very good job.
“That attacked Shell’s self-esteem. We’re a very analytical company, and we thought we’d conducted the right analysis,” says Moody-Stuart. But being an analytical company, Shell also tried to figure out what the matter was. It arranged workshops around the globe with internal and external stakeholders to ask them what they believed a responsible corporation should be doing and, as Moody-Stuart puts it – “surprisingly, even our critics agreed to attend”.
In fact, these turned out to be much more constructive than he had anticipated. Shell did not avoid criticism, but “they knew the positives as well as the negatives”. The result was three modifications to Shell’s principles, including to the company policy of not getting involved in politics.
“People basically told us that there was no way a company like Shell can be outside of politics. Inaction is also political activity, and that rang true with me,” says Moody-Stuart. Shell maintained that it would not give political contributions, but became open to the prospect of working with civil society on specific matters affecting its business. Moreover, it added the responsibility of respecting human rights in its own organization and the communities and countries in which it works.
However, Moody-Stuart says that the greatest difference was not the changes to the principles themselves; it was the fact that the principles had been formulated together with a group of external stakeholders and that Shell started reporting on them. “Any set of principles would be criticized if you made them on your own and didn’t report transparently on them,” he says.
From that starting point came the Shell report on environmental and social performance in 1997, an early example of what would later become the norm in global corporations. As Moody-Stuart recollects – “our core owners at the time had no idea what we were talking about”.
In 2000, the company became a founding member of the UN Global Compact and, although it has not avoided criticism since then, Shell has continued the course of involvement.
Today Moody-Stuart is the Chair of the Foundation for the Global Compact and Vice Chair of the UN Global Compact itself. He sees still greater room – and need – for businesses to become involved in sustainable development. The contribution of business to the work of developing the Sustainable Development Goals is a testament to that.
“When Kofi Annan announced the Global Compact and the ambition to involve private business in solving greater societal problems, he got into some trouble with some member states, which said that: “this is government business”, but today I see a growing acknowledgement by governments that corporations and businesses are also part of the solution to large societal problems. They are not just the part of society that creates jobs and money.”
WHAT’S NEXT? CORPORATIONS AS DIPLOMATS
Though he does not like the term, Sir Mark Moody-Stuart believes businesses have a unique chance to act as “corporate diplomats” – promoting stability and reconciliation in conflict- ridden zones.
“Companies have the ability to work across fragile international boundaries. When the politicians are not talking to each other, or are at each other’s throats, we business people can continue to talk to each other, and this is a huge stabilizing factor across fractured political and societal boundaries. We may not agree. Our politicians may be calling each other names, but if we can get on with the business, it is a stabilizing, I would almost say a civilizing, factor,” he says.
However, he stresses that this needs to be defined as a principle. “It needs to be done with openness; not secret deals. That’s why I’m very enthusiastic about the UN Global Compact Business for Peace initiative. I think it’s an indication of a change in the Global Compact’s way of operating.”