The Shell Saga: NEMA, community engagement and social responsibility

Shell has halted its plans to conduct a seismic survey along the entire Wild Coast of South Africa. The company made the decision citing ongoing legal battles and a limited weather window to conduct the work. This after the Eastern Cape High Court in Makhanda via Judge Gerald Bloem ruled against the company on the 28th of December (Sustaining The Wild Coast NPC and Others v Minister of Mineral Resources and Energy and Others (3491/2021) [2021] ZAECGHC 118). Bloem granted an interim interdict to stop the seismic survey until a ruling can be made on whether further environmental authorisation is required. Shell along with the Minister of Mineral Resources and Energy, Minister of Environment, Forestry and Fisheries, Impact Africa Ltd and BG International Ltd argued that the company had the necessary authorisation in terms of a licence granted under the Mineral and Petroleum Resources Development Act and a 2013 Environmental Management Programme (EMPr) that detailed the survey and proposed measures for environmental mitigation.

The applicants, which included residents, traditional leaders and fishers on the Wild Coast were represented by Richard Spoor Attorneys and the Legal Resources Centre. They were also supported by two civil society organisations, Sustaining the Wild Coast and All Rise Attorneys for Climate and the Environment. The applicants challenged Shell’s environmental authorisations under the EMPr granted in line with the Minerals and Petroleum Resources Development Act, claiming that further authorisation is needed in terms of the National Environmental Management Act (NEMA). It was submitted by Reinford Sinegugu Zukulu, a director and programme manager of Sustaining the Wild Coast, that if multinational corporations want to conduct seismic surveys or exploration activities then they need to have approvals in terms of the NEMA, which Shell does not have. Zukulu further noted that communities were not engaged on the matter. The affidavit read, ‘We are, of course, very concerned that the proposed seismic survey will have an impact on our ability to sustain ourselves from the sea’.

Bloem, in his ruling, confirmed that Shell did not properly consult with the impacted communities and had not respected local ‘practices and beliefs’, which is required by the Constitution. He stated: ‘It seems to me the exploration right, which was awarded on the basis of a substantially flawed consultation process, is thus unlawful and invalid’. In order to obtain the interdict, the applicants had to prove irreparable harm. Bloem rule that although Shell had set out its mitigation measures to minimise harm to marine life, ‘implicit in its contentions was an acknowledgment of harm’. Ten experts provided evidence on the threat to marine life, which Bloem characterised as a ‘massive body of evidence’ and ‘[t]he opinions expressed are based on objective facts. There is no reason not to accept their evidence that establishes that without intervention by the court, there is a real threat to marine life. Shell did not adduce any expert evidence to neutralise this evidence. Shell’s denial that its activities will have an adverse impact on marine life cannot be sustained.’

Before the ruling, a group of prominent South African marine scientists called on government to halt Shell’s seismic survey. In a letter is addressed to President Cyril Ramaphosa and Ministers Gwede Mantashe and Barbara Creecy, the scientists that include several leading global figures in the fields of marine biology and marine ecology, explained recent scientific studies that suggest that seismic surveys are harmful to both large marine mammals, like whales and dolphins, and to tiny plankton. The letter states that there is ‘a growing body of evidence pointing to the immediate and long-term, and largely unmitigable, negative impacts of this invasive method on marine creatures…. We point out that much of this evidence, and a growing global opposition to this method of surveying (it has been stopped in some countries’ exclusive economic zones), has only come to light after the granting of current permits, notwithstanding their questionable legal status.’

Bloem further stated that Shell, on the issue of the balance of convenience, had submitted that if the interdict would be granted, it would result in an immediate cost of R350 million and an estimated total loss that exceeds R1 billion. Bloem ruled, however, that the financial loss could not justify the infringement on applicants’ constitutional rights, ‘the balance of convenience favours those rights’. These rights include section 30 of the Constitution that provides for the right to an environment that is not harmful and environmental protection and conservation as well as sections 24 and 31 that deals with rights to language, culture life, and religious and linguistic communities.

The survey, which was to be conducted over four months, started in December after an application for an interdict was dismissed also in the Eastern Cape High Court. In the preceding matter (Border Deep Sea Angling Association and Others v Minister of Mineral Resources and Energy and Others (3865/2021) [2021] ZAECGHC 111), Acting Judge Avinash Govindjee ruled in early December that the submissions made by the applicants (Border Deep Sea Angling Association, Kei Mouth Ski Boat Club, Natural Justice and Greenpeace) regarding the detrimental impact on the environment and marine life were ‘speculative’ and that the applications did not prove reasonable apprehension of irreparable harm. The applicants were not granted their request to return to court to make further representations and present expert evidence on irreparable harm. In a joint statement, the collective stated that ‘[t]he application had to be made on a hyper-urgent basis … which meant that it had not been possible for experts to finalise detailed reports and affidavits by the time the application was launched’. The applicants applied for leave to appeal.

In referring to the earlier matter, Judge Bloem noted that there had not been expert evidence before Judge Govindjee and that it was therefore not surprising that the court rule against the applicants. Bloem went on to state that ‘[t]hat case is completely distinguishable from the present matter. In addition to the harm to marine life, the applicants have established a negative impact on the livelihood of fishers and cultural and spiritual harm.’ 

It is important to note, however, that the court, in the earlier matter, did state that the applicants successfully argued the importance of public interest in the matter and the apparent lack of public participation. Furthermore, the applicants sought the interdict to stop Shell from pursuing the survey under an exploration right obtained in 2014 and twice renewed, arguing that it was unlawfully rewarded and in breach of the public’s rights. Govindjee ruled that the applicants may indeed enjoy success in terms of a review of the second renewal, but that they did not prove irreparable harm in light of Shell’s proposed mitigation measures as set out in the EMPr plan. Govindjee therefore also confirmed the applicants’ argument regarding public interest, public participation, and issues regarding lawful environmental authorisations.

   Two significant issues were raised by the applicants in the second matter:

    Environmental authorisation under NEMA

As mentioned that Shell had not secured environmental authorisation under NEMA and only relied on an EMPr that was submitted and approved as part of an application for an exploration right. Shell’s advocate, put it to the court that the EMPr was in fact an environmental authorisation under NEMA. Similarly, in an affidavit, Minister Gwede Mantashe submitted that the environmental management programme used to support the application for renewal of the exploration right in itself constitutes environmental authorisation as envisaged under NEMA.

In his judgment Bloem stated that whether or not Shell requires an environmental authorisation under NEMA involves a difficult legal issue and that it is a matter that should be considered by the court which will determine the relief sought under Part B of the motion that deals with prohibiting the survey unless and until an environmental authorisation has been granted under NEMA. The court did however rule that because of the fact that the exploration right was awarded based on a ‘substantially flawed consultation process’, the authorisation is unlawful and invalid, constituting a prima facie right which deserves to be protected by way of interim interdict.

    Community engagement and consultation

The prima facie right relates to second important issue raised during the matter, namely that Shell failed to consult with the affected rural communities in a meaningful manner. Ngcukaitobi put it to the court that Shell ‘failed to adequately notify affected, traditional, rural communities, particularly the fishing communities’ and that the consultation was based on ‘exclusion and not inclusion’. 

Ngcukaitobi also submitted that meaningful consultation requires providing communities with the necessary information and proposed activities and then affording them an opportunity to make informed representations. The applicants further submitted that the consultative approach followed by Shell was inconsistent with communities’ customs of seeking consensus. Shell only consulted with certain parties that were not duly empowered to speak on behalf of the affected communities.

The court, in no uncertain terms, rejected Shell’s community consultation process, pointing to its substantially flawed methods of setting up an exclusionary ‘stakeholder database’ and conducting stakeholder analysis. The court also pointed to Shell’s method of only advertising in four newspapers in English and Afrikaans, thereby excluding isiZulu and isiXhosa languages spoken in the community. Further, the newspaper advertisements are only accessible to literate people and subsequent stakeholder meetings were held in Port Elizabeth, Port St Johns and East London, thereby excluding rural community members from attending. The court stated that community practices and beliefs must be respected and where conduct offends those practices and negatively impacts the environment, the court has a duty to step in.

Commentators have heavily criticised Shell for ‘abandoning’ its corporate social responsibility when it declared after the dismissal of the first application for an interdict halting the survey that ‘[w]e plan to go ahead with the survey, because we have met all our legal obligations’ under South African law as it existed in 2013. Rather than merely checking the legal boxes, environmental, social, and corporate governance, as an organisation’s collective conscientiousness for social and environmental factors, requires creating sound principles of inclusion, and respect for different voices, rights, interests and responsibilities.