Shell´s Environmental Responsibility in Vila Carioca, Sao Paulo, Brazil
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by Jose Antonio Puppim de Oliveira Associate Professor Brazilian School of Public and Business Administration - EBAPE Getulio Vargas Foundation - FGV Praia de Botafogo 190, room 507 CEP: 22250-900, Rio de Janeiro - RJ, Brazil phone: (55-21) 2559-5737 2 559-5737 fax: (55-21) 2559-5710 e-mail:
[email protected]
Introduction:
Shell defines its aim as “to meet the energy needs of society, in ways that are economically, socially and environmentally viable, now and in the future.”2 Shell was one of the pioneers in the movement move ment for Corporate Social Responsibility. Respo nsibility. The company says it is committed to sustainable development and human rights: “Our core values of honesty, integrity and respect for people define how we work. These values have been embodied for more than 25 years in our Business Principles, which since 1997 have included a commitment to support human rights and to contribute to sustainable development.”3 The case in Vila Carioca (São Paulo City) below illustrates a tough decision the company must make in order to keep its
were also other industrial companies with environmental problems in the region that may have contributed to the problem. Shell argues that many perceptions of people involved are based on rumors and non-scientific facts. The company says that it worked with scientific information and the problem is not as terrible as the media portrays. Therefore, to what extent is Shell responsible for solving the problem? Should the company be liable for the problem? Can the behavior of Shell in the case be considered ethical and acting according to its principles of social and environmental responsibility?
Vila Carioca
Vila Carioca is a typical working class neighborhood that could be found around many industrialized areas in developing countries (DC). The region grew as a mix of industrial and residential areas with little planning for separating the population from risk activities, such as oil tanks and pipelines (see Figure 1 at the end of the case). Initially, in the 1950s, Vila Carioca was only an industrial zone, but as the city of São Paulo grew at a fast (and unplanned) pace, people started to move in and establish their residences around the industrial plants. After the 1970s, many plants closed down or moved due to the de-industrialization of parts of the city of São Paulo. This significantly increased the proportion of residential settlement in São Paulo. The settlements were both formal (titled and licensed) and informal (slums or favelas, and unlicensed housing built on untitled land). The environmental history of Shell in Vila Carioca started in 1951, when the company built a storage tank and a terminal in the area. These facilities were upgraded several times and
However, the case was criticized much earlier than the 2003 lawsuit. In 1993, Greenpeace and the Union of Workers in the Mining and Petroleum Sector (Sinpetrol) filed a joint court complaint against Shell. The case was left to the State Environmental Agency (CETESB), who took only minor measures before the city officially entered in the case. For decades, industrial plants in the region discharged toxic pollutants in the soil and air, and in doing so they had also contaminated the underground water. Initially, six wells in the region were closed. Although there was only one officially registered well in the region, there were others that were “unofficial” or clandestine. In one of the wells, whose water was used for human consumption, the level of dieldrin (one of the “Drins”) in the water was 0.327 micrograms per liter, more than one hundred times the permitted limit of 0.03 micrograms per liter. A report from the public attorney (Ministerio Publico) estimated that the pollution could affect the population. The city public attorney for accusation (Promotor Publico) estimated that as many as 30,000 people in the neighborhood could have been affected.9 Those dwelling in the area were in despair when they f ound out about the pollution problems that they barely understood. Many of them were not informed officially about the problem, as a woman said: “I was born here and I only knew about the case through the newspapers. I had 10 always planted vegetables in the yard, and I thought my family was eating healthy food....” Others
even said they suspected that something was wrong with the water. “The water is yellowish, smelly and the drops even stain the clothes...” another woman mentioned. Until 2002, almost ten years after the first charges in 1993, many people still felt abandoned by the public authorities and Shell, as they fought in court. Meanwhile, nothing was done and almost no one was properly informed about the situation. The population underwent a few voluntary medical tests which were completed by two private clinics at the request of an
have a pesticide plant until the 1970s. There were 165 employees in the terminal in 2002, a number that is relatively low compared to the number of workers in the past when Shell produced pesticides.15 The city government claims that the soil and underground water in the region surrounding Shell’s property is contaminated with organic and lead compounds, which in the past were used as additives to the gasoline. Before the 1970s and prior to the magnitude of current environmental issues, those compounds were the result of Shell’s normal procedures to clean up gasoline tanks. The residues from the internal crust of the gasoline tanks were simply buried in the soil during several decades until the 1970s. In the past, these were the standard procedures in the petroleum sector around the world. The company had taken several actions to remedy this problem, such as conducting studies to make the company’s procedures more environmentally friendly and incinerating 2,500 tons of contaminated soil and fuel crust. However, representatives of Sinpetrol (labor union) said these actions were not enough. They claimed Shell had the responsibility of avoiding the dispersion of the pollutants to areas outside the company by walling off the affected areas with concrete. The public attorney thought the state environmental agency (CETESB) was too lenient with Shell in the case and said in April 2002, “Shell’s actions limited the material that was the source of the contamination and left the decay of the pollutants in the subterranean water to nature… Moreover, CETESB agreed with this situation.”16 The official from the state environmental agency (CETESB) argued “the awareness and techniques to deal with contaminated areas are recent, both to us and to the companies, so we expect things go faster now than they did ten years ago”17
plant was transferred to Paulinea in the state of Sao Paulo.19 The company also argues that the organic lead found in the area was not from the company, because it transformed its organic lead into inorganic lead before burying it underground. From the beginning of Shell’s environmental problems in Vila Carioca, the company received several fines. It was fined once by the regional office of the city government (for operation without proper license) and four times by the state environmental agency (for water contamination and delay in reporting the conditions of its water and soil) between 1993 and 2003.20 However, until 2003, the company had yet to pay and had appealed all of these fines. The contamination of the water charge was also challenged by Shell. In the beginning, Shell only admitted to the contamination of its property even after Shell hired a firm who produced a technical report which mentioned the contamination of the neighborhood’s water in 2000. The water contamination was also found by the municipal sanitary agency at a later date. The city started to identify the people, who live around the company, to analyze the degree of exposure they had to the contamination of the water . The company has carried out several studies to find out about the contamination and its impacts on the environment and on the population, including risk analysis and remediation plans for the whole region. According to a Shell Environmental Health and Safety manager, the company’s Risk Assessment and Environmental Report of the region is the “largest and most complete environmental 21 study in a specific area ever done in Brazil.” These studies were needed to satisfy demands from
both the state and municipality; however, the state environmental agency (CETESB) concluded that the studies conducted for the municipality did not fit the state requirements. This disagreement between the two governmental units created more confusion. The company says that it is “acting in a clear, transparent and responsible manner regarding 22
However, until 2002
remedy the environmental problems and seek treatment for the affected population. Though the company was always open to negotiation, it was reticent regarding the health issues. Shell indicated it needed a clear assurance that the environmental issues resulted directly from their activities, and were not the consequences of the contamination from the many other companies in the region. Shell argues that “we are part of the society, so we want to solve the problem jointly.”24 The company is willing to assume some responsibility in the case as a socially responsible corporation, and promises to treat the case properly and scientifically by contributing to the needs and welfare of the community; however, Shell wants to make sure that similar cases will not happen again. The company wants to treat the case purely from the scientific point of view by using the best methods and techniques of risk assessment and risk management. They see no point in spending huge amounts of resources to clean up the area completely because the risk is overcome if no one drinks the subterranean water. Moreover, Shell claims other companies may also be responsible and the problem quite possibly may continue into the future. The cleanup will not improve the quality of life of Vila Carioca or São Paulo´s inhabitants since underground contamination and other environmental problems such as air and water pollution are common in the city. Shell argues that it prefers to use its resources to contribute to the society in a more sensible way with other social and environmental initiatives.
Shell´s Environmental Responsibility
Questions about Shell: 1. To what extent is Shell responsible for the problem? 2. Have its actions been enough to cope with the problem? 3. Should the company assume liability and pay for the complete cleaning up and compensate the people who were contaminated? 4. Can the behavior of Shell in the case be considered ethical and acting according to its Business Principles?
Questions about multinational companies and regulatory issues based on the case: a) Should multinational companies apply in the host country’s the same environmental standards they have in their home countries? Even if these standards make their activities much more expensive and less competitive? If the Shell case were in a developed country (USA or Europe for instance), would Shell’s behavior be different? b) Should multinational companies be expected to follow higher environmental standards than a local company in a developing country because they have more access to financial resources and technology? c) Should a company like Shell agree with the perception of the people in the community and act according to this, even if this perception is not based on scientific information? Or should it act only according to scientific information?
Figure 1 – Photo of the Shell Plants and other facilities in Vila Carioca
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About Figure 1
Source: Shell. Explanation: Shell Facilities in bright color (BIP I, BIP II and Colorado). Other industrial plants and relevant sites are marked with red letter. All other buildings are housing. Translations of the marked sites: -
Air Liquid = company that produces industrial gases Antiga Matarazzo Refinaria/Fábrica de Pesticidas = Matarazzo Pesticide Plant that was closed down Antiga Lagoa de Decantação da Matarazzo = Matarazzo Effluent Lagoon Antigo Lixão = former site of a municipal uncontrolled garbage disposal Condominio = Housing development Detran = State Department of Vehicle Control Agency Distribuidora de Combustível = Fuel distributor Linha Ferrea = Railroad Lopsa = Metal working company Metalúrgica = Metal working company Recauchutadora de Pneus = tire recovering firm Ribeirão dos Meninos = River Riberão dos Meninos Sommer = company that produces flooring Transdupla = Chemical products transportation company Trikem = company that produces industrial gases
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