Ethical Performance
inside intelligence for responsible business


terrorism threat emerges as CSR issue for Shell

November 2005

The threat of terrorism has emerged as a corporate responsibility issue for Shell, which has scaled down operations at a fuel depot in the Philippines due to fears from nearby residents that it could become a target for bombers.

Shell decided to make changes to the 30-hectare (74-acre) Pandacan site in a densely populated part of Manila after concerns were voiced by local community representatives and politicians in the wake of recent terrorist attacks across the globe.

The site had supplied around half of the country's fuel. While Shell considered shutting the depot, it felt this 'would have a major impact on the supply and cost of fuel, as well as its safe and efficient delivery'.

Instead, it has reduced the size of the facility and created a 10-50 metre wide buffer zone between the depot and residential areas. Shell also asked the University of the Philippines to establish a panel of environmental health specialists to oversee all testing and remedial work on or near the site. The company has now created a 'community park' between the facility and nearby homes and held question and answer meetings with local people.

Sebastian Quiniones, vice president of distribution for Shell Philippines Petroleum Corporation, said the issue had first emerged 'following the terrorist attacks in the US' and that the government of the Philippines had also 'raised security and safety concerns about having a large fuel depot here in central Manila'.

Shell said terrorism had gradually emerged in the past few years as a corporate responsibility issue for the company. 'We've been happy to do what was asked of us in Pandacan, but in terms of other areas we are not at liberty to discuss security details,' it said. 'We want to have good relationships with the communities we operate in, so while there were obvious financial difficulties with doing what we did in Pandacan, there were also clear business benefits in terms of our licence to operate.'

While terrorism has so far rarely featured as a significant element in the CSR checklists of companies, a 2002 study found that 36 per cent of 264 chief executives from Fortune 1000 companies said their company had become more conscious of corporate responsibility since the terrorist outrages of 11 September 2001. Fifty-two per cent felt that more responsible behaviour on the part of companies could help to reduce support for terrorist groups, the survey by Jericho Communications, a public relations agency, found.

Julie McDowell, head of SRI research at Standard Life Investments, told EP that fund managers have recently become more sensitive to reputational risks associated with defence company products falling into the hand of terrorists.

Michael Hopkins, chief executive of the consultancy MHC International, said that terrorism had brought new social responsibilities to some companies, but there was a need to keep things in proportion. 'Any organization has a security bureaucracy, and bureaucracies love to expand,' he said.


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