The Lies Shell is Telling About Oil Spills in the Niger Delta

This is the text of my new blog on the Amnesty International USA website: “The Lies Shell is Telling About Oil Spills in the Niger Delta.”  To see the accompanying illustrations and photos, click though to my Amnesty blog piece.

In the powerful new report “Bad Information,” Amnesty International and the Center for Environment, Human Rights and Development (CEHRD) reveal that Shell has manipulated investigations into its oil spills in Nigeria.

“Shell is being disingenuous about the devastation caused by its Niger Delta operations. This new evidence shows that Shell’s claims about the oil spills cannot be trusted,” said Audrey Gaughran, Director of Global Issues at Amnesty International.

New analysis from an independent expert found that so-called official investigation reports into the cause of oil spills in the Niger Delta can be “very subjective, misleading and downright false.”

The report highlights systemic weaknesses in the way the cause of a spill and the volume are determined – with some significant errors in the volumes that are recorded as spilt. The oil companies do not have to back up the claims with full and independent evidence. The evidence that does exist remains firmly under their control.

The consequences for the affected communities are devastating and can result in them receiving little or no compensation.

“Shell looks to blame others based on investigation reports that, in some cases, amount to nothing more than dodgy dossiers,” said Styvn Obodoekwe, Director of Programs at CEHRD.

At Amnesty International and CEHRD’s request, the independent U.S. oil pipeline specialist Accufacts assessed a number of oil spill investigation reports, as well as responses from oil companies operating in the Niger Delta and Nigeria’s national oil spill agency.

The expert found cases where the stated cause of an oil spill appears to be wrongly attributed to sabotage. In many other cases, sabotage was listed as the cause when there was little or no data recorded to back up the claim.

Overall, Accufacts concluded that many official investigation reports were “technically incomplete,” and others “appear to be serving another agenda, more driven by politics…than pipeline forensic science.”

Nigeria’s under-resourced regulatory agencies have little oversight or control of the process and are dependent on the oil companies to carry out investigations. In one incident, a regulator sent a student on work experience as their sole representative to an oil spill investigation.

This is a system that is wide open to abuse – and abuse happens. There is no one to challenge the oil companies and almost no way to independently verify what they say. In effect it’s ‘trust us – we’re big oil,” said Gaughran.

Shell has made some improvements to its investigation reports since 2011, including the addition of images of oil spills on its corporate website. But serious flaws remain, including weaknesses in the underlying evidence used to attribute spills to sabotage.

Information listed in oil spill investigation reports determines whether oil companies are liable to pay compensation to affected communities. Despite serious flaws, the reports are cited as evidence in litigation.

Amnesty International and CEHRD found evidence of Shell having changed the officially recorded cause of a spill after an investigation had taken place.

In one incident, secretly filmed video of an investigation shows how officials from Shell and the regulator tried to subvert the evidence by persuading community members on the investigation team not to attribute the cause to equipment failure.

Video footage of a leak from an oil spill in Bodo from 2008 reviewed by Accufacts shows that Shell seriously under-recorded the volume spilt. Shell’s official investigation report claims only 1,640 barrels of oil were spilt in total, but other evidence points to the amount being at least 60 times higher.

Hundreds of oil spills occur in Nigeria every year, causing significant harm to the environment, destroying livelihoods and placing human health at serious risk. These spills are caused by corrosion, poor maintenance of oil infrastructure and equipment failure as well as sabotage and theft of oil.

Shell has repeatedly claimed to its investors, customers and the media that sabotage and theft were behind the vast majority of spills. But the facts do not support this assertion.

“Instead of being in the dock when there is an oil spill in Nigeria, Shell gets to act as judge and jury. It is the communities that suffer a life sentence, with their land and livelihoods destroyed by the pollution,” said Gaughran.

“Shell and other oil companies refer to sabotage and theft in the Niger Delta as if it absolved them of responsibility. The Niger Delta is the only place in the world where companies brazenly admit to massive oil pollution from their operations and claim it is not their fault.”

“Almost anywhere else, they would be challenged on why they have done so little to prevent it.”

Shell’s claims about how much oil is spilt due to sabotage and theft are increasingly being challenged. In June 2013, a Dutch agency found that the oil giant’s statements were based on disputed evidence and flawed investigations.

“As Shell’s claims on sabotage and theft come under scrutiny the company’s story is changing; we now hear more about illegal refining being the cause of oil pollution. Yet again, Shell is spinning a real problem into a PR shield for the company,” said Obodoekwe.

“Illegal refining causes pollution, but Shell cannot claim it is occurring in specific cases unless and until it produces reliable proof.”

The report argues that companies should be legally liable for failure to take effective action to protect their systems, including from sabotage.

Amnesty International and CEHRD are calling on the oil companies to publish all investigation reports, associated photos and videos. They must provide verifiable evidence of the cause and damage to the impacted area.

The Nigerian government must also substantially strengthen the capacity of the regulators including by providing an increased budget for its operations.

 

Demanding Justice: How An Indian Court Took on Dow Chemical – And Won

There’s a great new blog – Demanding Justice: How An Indian Court Took on a U.S. Chemical Giant – And Won – on the Amnesty International USA website.  It’s under my byline but I did not write it.

James Mutti wrote the piece.  He’s the India Country Specialist for Amnesty International USA.  All I did was some minor editing, principally making the opening sentence a bit crisper and more likely to grab the reader’s attention.  Natalie Butz – an awesome staff communications assistant – added the pictures.

It’s under my byline because I’m a trained and accredited blogger for Amnesty International USA and Jame Mutti is not.  But I did make a point of crediting James for his work on the piece.

I will be posting pieces on this blog that I write – or appear under my byline – on other blogs and publications.  Please read this piece.  It’s great to hear some good news about corporate accountability for a change.  I’m astounded that the post has already been “liked” by over 1,100 people on Facebook!

 

So What Have Shareholder Activists Ever Done For Us?

Props to Dan Jubelirer, a climate change student activist for 350.org through “Tufts Divest For Our Future,” for posing the following question to me after reading my last blog.  Dan asks:

“What specific climate victories have been won through active shareholder engagement, beyond measures asking companies to report GHG emissions? Since we know fossil fuel companies have way more oil, coal, and gas in their reserves than they can burn, the only way we can avoid catastrophic warming is to make sure the largest FF companies keep about 3/5ths of their reserves underground.  Is it realistic to think that a shareholder resolution could pass asking, say, Exxon to leave a majority of their oil reserves underground, or to have them cease all new exploration for fossil fuels?”

This is an excellent question.  The shareholder demand of the fossil fuel companies is indeed a very high one. The ask is for the companies to value their reserves accurately by writing down the booked value of their unburnable reserves. More importantly, it is to stop investing capital in developing further unburnable reserves and instead invest that money in renewables and/or, more realistically, return the cash to shareholders in the form of higher dividends.

Those are very high – but logical – demands for shareholders to make of fossil fuel companies.  Of course, the higher the demand, the more pressure required to force it.  It will take time and organizing to build that pressure. However, what will reduce that pressure is if shareholders, who currently take action on climate change, instead divest and sell their stock to investors who don’t care about climate change.

The fact is that – up till now – those investors that have taken action on climate change have done so with a good combination of both divestment and shareholder advocacy. Socially responsible investors have traditionally limited their investment in fossil fuel companies that in effect constitutes partial divestment.  At the same time, social investors have used shareholder advocacy with those companies in which they have maintained a holding.

Both public divestment and shareholder advocacy have fueled the political action to achieve a price on carbon.  For instance, using shareholder resolutions at ExxonMobil, investors have helped successfully press the company to stop funding climate denial groups and even publicly advocate for a carbon tax.

Noted progressive pundit, David Sirota illustrated this very well in his book “The Uprising: An Unauthorized Tour of the Populist Revolt Scaring Wall Street and Washington.”  In the chapter “Blue Chip Revolutionaries,” Sirota recounts his trip to the 2007 annual shareholder meeting of ExxonMobil in the company of shareholder activists, including the noted Sister Pat Daly.  I can’t recommend the book highly enough for Sirota’s incisive assessment of the impact of shareholder advocacy.  (So buy it!)

Sirota concludes:

“[T]he enormous size that makes multinational companies like ExxonMobil seem so immovable is precisely why these seemingly minute victories are actually huge.  If you get a giant corporation with global reach to change even a tiny bit, you have made a global impact.  If, like these activists did today, you force the company that has produced 5 percent of all the human-created carbon emissions in history to even vaguely acknowledge that global warming is occurring, you have potentially started changing the planet.”

Since that 2007 annual shareholder meeting, ExxonMobil has significantly cut back on its donations to climate change denial groups and even come out publicly in favor of a carbon tax.   These small but very significant changes are due in principal part because shareholders have organized pressure on the company through direct dialogue with the company, filing and campaigning for shareholder resolutions, and intervening publicly at ExxonMobil’s annual shareholder meetings.

I strongly argue that, for investors doing active shareholder advocacy, it makes more strategic sense for them to hold onto their shares.  Isn’t that better than if they divest their stock and throw away their leverage?

In my next piece, I will explain why – for strategic reasons – I strongly support Dan Jubelirer and “Tufts Divest For Our Future” in their campaign to press Tufts University to divest its fossil fuel stocks.

The Case for Shareholder Advocacy on Climate Change

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The Interfaith Center on Corporate Responsibility (ICCR) has just published an excellent report on how investors can respond to the call for stock divestment of fossil fuel companies by 350.org.  Most significantly, ICCR makes the case for more stepped-up shareholder advocacy rather than just stock divestment.

This recommendation for stepped-up shareholder advocacy deserves respect.  It comes from a coalition of investors that has for decades been in the forefront of efforts to use shareholder power to curb climate change.  It should not be countered with the glib assertion – by supporters of stock divestment only – that “shareholder engagement has been tried and has not worked.”

Disclosure: I serve on the Committee on Socially Responsible Investment of the Unitarian Universalist Association, a member of ICCR.  I have also actively participated in discussion at the ICCR on how investors should respond to Bill McKibben’s call for stock divestment of fossil fuel companies. Some of my expressed views are in the report.

For me this is the report’s key quote:

The ICCR model of active ownership maintains that shareholders have an obligation to use their voices to positively influence corporate decision-making. Even if this voice is only used to vote their proxies in favor of others’ resolutions, for the purposes of engagement, shareholder advocates may choose to hold problematic companies in their portfolios in order to retain a “seat at the table”. To divest is to relinquish those shares to another owner who may not be practicing active ownership. This approach, in effect, serves to strengthen management control. ICCR members advocate for amplifying our collective voice by bringing more shareholder advocates to the table – that is, we support engagement.

It is not true to say that shareholder engagement of fossil fuel companies has been tried and has failed.  The fact is that shareholders have tried a combination of both divestment and shareholder advocacy.  For instance, socially responsible investors have largely divested from or avoided investing in most fossil fuel companies.  At the same time, where social investors have held stock in those companies, many have used their shareholder clout to press those corporations to address climate change.  It is that combination of divestment AND advocacy that has only marginal impact on the fossil fuel companies thus far.  However, for social investors to abandon shareholder advocacy entirely – as Bill McKibben advocates – and to divest from all fossil fuel company stocks would be to throw away one of the more effective tools in the investor toolbox.

Anxious to remove the pressure, corporate executives have often told shareholder advocates to just divest and go away.  Why give the fossil fuel companies a victory?