The Shell Company’s Business Ethics

Hello, Mr. van Beurden!

Due to Apple’s declining performance during the coronavirus pandemic, I am writing to you with a proposal to improve the ethics of your business. At the reporting conference for the fourth quarter of 2021, you admitted making large-scale plans to reduce costs against the background of the COVID-19 coronavirus epidemic and lower oil prices (Aureli et al. 2020). You also want to reduce operating expenses by $3-4 billion for the year compared to the level of 2019 (Aureli et al. 2020). Moreover, you announced that you are planning to reduce the share repurchase program launched in 2018 by $5 billion — from the originally planned $25 billion to $20 billion (Aureli et al. 2020). In my opinion, with the help of improving business ethics, you will be able to improve the situation.

To improve and sustain corporate performance through better governance, you will need to somewhat revise and adjust the existing ethical approach to doing business. At the same time, the changes will have to cover various sides of company government, such as the ethical assessment of the internal and foreign policy of the organization. Such changes can help the company overcome the current challenge from a governance perspective. A combination of different methods would allow the introduction of ethics of communication at different levels of management (Karamoy & Tulung 2020). Establishing business relations with partners with the help of a new business ethics would be a very effective means.

Discussion

Even if external conditions do not allow current activities to be cost-effective, for example, during a pandemic, the company will make a profit. Therefore, the company’s purpose should be in sustainability and not solely profit, one of the most important components of which is business ethics. The balance of financial flows, organized with its help, guarantees the availability of funds for the continuation of the company’s activities (Mahmood et al. 2018). Likely stakeholders in this situation will be both employees of the company and business partners. Its presence or absence directly affects the specifics of interaction with managers, colleagues and subordinates (Nalukenge et al. 2018). All company’s employees are required to observe business ethics with business partners (suppliers, customers, banks, etc.). Establishing mutual relationships that contribute to the success of the company depends on all of the listed stakeholders.

The importance of serving them all is reflected in the stakeholder’s interdependence with the shareholder. The theory states that the success of the latter directly depends on the interest of stakeholders (Matanda & Matanda 2019). If they do not treat partners with respect for business ethics, it will not be possible to conclude a profitable cooperation. If shareholders do not follow business ethics with employees, their motivation will decrease, and their performance will also decline. Corporate governance is an organizational model designed, on the one hand, to regulate the relationship between company managers and their owners (Hickman & Petrin 2021). On the other hand, corporate governance is needed to coordinate the goals of various stakeholders, thereby ensuring the effective functioning of companies (Mansour & Bhatti 2018). Thus, corporate governance is a set of methods of influence or a process by which the activities of corporations are managed and controlled.

The principles of good corporate governance in the company are transparency, accountability and responsibility. In this case, instead of the interests of individuals, there are actions of directors and managers based on an impeccable professional reputation and in the interests of the entire business. The voluntary commitment of directors and top managers to act on the basis of the above principles forms the basis of the best business ethics (Sugiyanto et al. 2020). An example of the consequences of poor management of a company with non-compliance with business ethics can be the scandal with Enron. This energy company was worth more than Amazon, but in 2001 its image was destroyed, and its shares fell to zero (Habib & Hasan 2019). Enron has become a symbol of corporate deception and the ruinous violation of business ethics.

Typical governance issues that Shell should work on include non-compliance with business ethics within the company. The Mic has published letters from several former and current Shell employees (Şahin 2018). They accuse the company’s management of encouraging an aggressive internal culture and turning a blind eye to manifestations of intolerance towards women and minorities. According to them, this leads to dismissals and serves as a reason for contacting the supervisory authorities. If a company does not pay attention to leading with morality and integrity and poor corporate governance, it may lose not only employees, but also customers (Maher & Aquanno 2022). Rumors about a toxic corporate atmosphere can greatly reduce the reputation of the company and negatively affect the brand. In this case, it will become impossible to achieve the strategic goals of the company even under conditions of well-organized management.

Business Ethics

As mentioned above, the main ethical issue for the Shell organization is gender discrimination. This discrimination is especially noticeable when determining the salary level. The salary of women at Shell is on average 30% less than that of men in the same position (Rashid 2018). Judging by the anonymous reviews of employees, quite often the basis for discrimination is also religious affiliation and even the appearance of a person, especially the presence of excess weight (Naciti 2019). This problem has quite serious consequences, the least of which is the mass dismissal of female employees. Social space is limited, and journalists are closely monitoring the leakage of information about the corporate structure of the company (Tibiletti et al. 2020). Thus, such details quickly become public and the company loses its reputation and, as a result, a large percentage of customers.

An important role in the emergence of problems with business ethics is assigned to corporate governance, the effectiveness of which directly affects the well-being of the company in the long term. The vast majority of investors are willing to pay for shares of the company where corporate governance is implemented and works, even if current financial indicators are inferior to competitors (ElGammal et al. 2018). However, in case of problems with business ethics, investors are not willing to cooperate.

The concept of a triple criterion for building a business together forms corporate sustainability. According to it, entrepreneurs and managers should take into account not only financial indicators (Waweru 2020). The social and environmental results of the company’s activities are also important. Therefore, the correct conduct of business ethics within the organization affects other indicators of its activities. Compliance with ethics in the company carries a number of significant advantages for it, which favorably distinguish the company from others (Bae et al. 2018). Corporate ethics unites employees: its presence allows to create a team of like-minded people with the same goals and mission. In the modern world, when there are more and more companies, having a positive image is not a privilege, but a necessity. The presence of corporate ethics will help the business not only attract customers, but will also guarantee the quality of services among partners.

Recommendations

At the moment, the strategic plan for the company is to ethically correct the official behavior of Shell employees and managers. It is also worth launching the development of company codes, after which it will train employees in ethical standards. In the future, it is necessary to organize monitoring of compliance with ethical requirements. The creation of the company’s code of ethics implies the adoption of corporate governance principles (Sahut et al. 2021). First of all, it is the introduction of the principle of equal and fair treatment of all shareholders and employees, including minority shareholders. In addition, the principle of transparency and information openness should be observed. The company must regularly publish information about its activities and attitude towards employees.

The Board of Directors determines the company’s corporate development strategy and adopts an annual financial and economic plan. The UK governance code imposes on the board of directors the responsibility to determine priority areas for the development of corporate culture (Tedja 2020). Due to the crucial role of the governing body, it is necessary to modernize its composition by increasing the number of women in its composition to combat discrimination.

Recommendations regarding the creation of an ethnic culture at Shell will also relate to the psychological atmosphere associated with business ethics. The author of the theory of the Doughnut economics offers a radically new compass for the direction of the company’s global development, and also sets new standards for what economic success looks like (Correa-Garcia et al. 2020). Among these standards is a comfortable way for employees to achieve it, which will be ensured through compliance with corporate ethics. Cash management is also of critical importance, and how the board of directors distributes it. It is necessary to introduce the inadmissibility of money laundering and financial fraud into the norms of corporate culture.

Reference List

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