Managing our social impacts

Benefits for local people

Our oil and gas operations aim to create economic and social development while minimising negative impacts. Benefits to local people can include jobs, tax revenue, contracting and business opportunities and social investment.

We work to manage impacts on:

• livelihood;
• health;
• safety;
• cultural and community lifestyle;
• security, conflict and violence; and
• economic development.

In Nigeria, the Shell Petroleum Development Company of Nigeria (SPDC) has spent a total of $4.5million since 1985 on community development projects.

Livelihood

Oil and gas operations sometimes require temporary or permanent access to areas of land or sea that were previously the basis of economic livelihood for local people.  This disruption can damage a community’s fabric or lifestyle.  In some cases, projects may require the permanent physical relocation and resettlement of communities, which can affect social cohesion. We recognise our responsibility to minimise these impacts and, if relocation is required, to help communities to re-establish themselves and to restore their livelihoods.

For example, at the Shell Nanhai petrochemicals complex in China, we developed a Resettlement Action Plan, in line with Chinese legislation and World Bank Standards - opens in new window, to help manage this process. Read more on the Nanhai website - opens in new window.

Health

During both construction and operation, oil and gas operations can impact community health. For example, construction can create mosquito-breeding areas and increase exposure to malaria. Migrant workers can introduce new diseases for which local people have no natural defences. An influx of construction workers can also increase exposure to different kinds of diseases, especially sexually transmitted diseases such as HIV/AIDS. Read about our approach to HIV/AIDS.

Air and water emissions can affect health and damage food stocks through impacts on farming and fishing.

To respond to community concerns about local air quality at our refinery and chemicals plant in Norco, Louisiana, an air monitoring Working Group was set up, including members of the community and Government. The group designed and implemented an air monitoring system, and their findings are regularly updated and shared with the community. Read more on the Norco website.

Safety

Communities living close to our operations, especially near refineries, often have concerns over safety aspects of the facilities. We help to overcome these fears by earning the trust of those people through operating the facilities safety and communicating openly on plans and emergency procedures.  

Experience has shown that one of the greatest impacts for neighbouring communities during the construction of projects is an increased probability of road accidents, due to increased levels of traffic. We continue to work in partnership with international agencies, companies and governments to improve road safety. Read more about our work on road safety.

Cultural and community lifestyle

Oil and gas operations can bring social change.  In areas populated by indigenous or subsistence-based people, they have the potential to undermine and even lead to the breakdown of local traditions, cultures and values.

Typical factors contributing to such a decline include:

• interaction between "outsiders" and local communities;
• introduction of monetised exchange systems and increased disposable incomes;
• increased consumption of alcohol and drugs, and prostitution;
• impacts on natural assets (such as hunting areas) on which traditional culture and livelihoods may be based;
• inflation of local living costs due to spending power of workers; and
• employment of low-paid but important civil workers (teachers, police) away from their original jobs.

Other activities such as hiring practices and social investment, especially if not appropriately managed, can unintentionally aggravate and undermine traditional community ways of life and culture. For example, lack of consideration of ethnic divisions as part of a hiring policy can serve to accentuate rather than reduce such divisions.

We established a “Good Neighbour Policy” at the Athabasca Oil Sands Project (AOSP) to develop mutually prosperous long-term partnerships with the local indigenous community. The project has taken an active role in involving the community in decisions that affect it, with the objective of finding solutions that are positive for both parties. These have included building business capacity, allowing the community to establish a number of enterprises capable of bidding competitively for project work. For more details, see the AOSP website.

Security, conflict and violence

Communities can be intimidated by the need for security around oil and gas operations and can be vulnerable to abuse by militias or other armed forces. In addition, if a project is not properly managed, competition for employment, contracts, land compensation payments and social investment can result in conflict within and between communities.

During the construction phase, oil and gas projects can act as a magnet for people and organisations seeking to benefit economically from the project, not only directly, for example through employment, but also indirectly, for example through illegal practices like extortion. 

Our company-wide Security Standard define how we protect our people and facilities (including circumstances that permit the use of armed security), while respecting the human rights of others, including local communities. Read more about our approach to human rights and how we are using our influence responsibly.

Economic development

Oil and gas production generally brings a flow of money into a local area, which can mean, for example, that house prices rise while availability of accommodation falls. This can happen in the construction phase of projects, when the economic impact of a project is large, relative to the regional or national economy as a whole. Local costs of products and services can increase, and traditional economic activities such as agriculture can be marginalised. If this happens, livelihood opportunities and related standards of living for those individuals or groups not directly benefiting from oil and gas activities can decline.

However, some of the most important benefits that accompany oil and gas projects are the royalties and accompanying revenues paid to host country governments.  In some cases, such as Nigeria, Colombia and the Philippines, there are explicit provisions for a proportion of these revenues to be returned to producing areas; in others it is at the discretion of the national government. We support efforts such as the UK Government’s Extractive Industries Transparency Initiative (EITI) to promote full, public disclosure of the money paid to governments by oil, gas and mining companies. Read about payments to governments.

Local employment and supply chain opportunities provide income-generating opportunities for local stakeholders and an accompanying sense of ownership in the project. However, expectations for employment often far exceed the actual requirements, and meeting particular requirements for skilled labour is often a great challenge for small communities. Taking early and proactive steps like providing education and skills training can be extremely beneficial. Read more about hiring locally.