Undermining governance through corporate activity

Most oil company executives tend to reject the notion that they could play a constructive role in helping to address governance issues, and they have a legitimate concern over corporate involvement in the political process. However, such a stance denies the reality that 1 multinational companies already intervene in the political process to attain corporate objectives e.g., lobbying for new legislation Frynas et al. 2006 Shaffer and Hillman 2000 2 corporate activities such as tax avoidance and...

CSR among oil multinationals

The oil and gas sector has been among the leading industries in championing CSR. This is at least partly due to the highly visible negative effects of oil operations such as oil spills and the resulting protests by civil society groups and indigenous people. Prominent examples of publicised industry 'debacles' include oil tanker accidents such as the Exxon Valdez, indigenous unrest such as anti-Shell protests in Nigeria and the involvement of oil companies in human rights abuses such as BP in...

Importance of context

This book focuses on the oil and gas sector and some of the lessons are specific to that sector. Above all, Chapter 6 shows that resource extraction creates particular economic, political and social problems. Many other economic sectors do not create such negative effects. Therefore, issues such as wider societal governance and revenue transparency may be less relevant to companies from other sectors. The nature of an industry determines CSR concerns, and any CSR guidelines, standards and...

Social Responsibility Of Business Introduction

Companies are increasingly expected to assist in addressing many of the world's pressing problems including climate change, poverty and HIV Aids. According to a 2007 survey by the consultancy firm McKinsey carried out among the chief executive officers CEOs of companies, 95 per cent of those questioned believe that society has greater expectations than it did five years ago that companies will assume public responsibilities. More than half of the CEOs believe that these expectations will...

Royal Dutch Shell

Buying Your Way into Trouble The Challenge of Responsible Supply Chain Management. London Insight Investment Management. Adams, Ronald. 2005. Fast food, obesity, and tort reform an examination of industry responsibility for public health. Business and Society Review 110 3 297 320. Aguilera, Ruth V., Deborah E. Rupp, Cynthia A. Williams, and Jyoti Ganapathi. 2007. Putting the S back in corporate social responsibility a multilevel theory of social change in organizations. Academy of...

The context of CSR

Discussions on CSR often revolve around attempts to find 'universal' solutions that can be uniformly applied across the world. Ethical codes and principles such as the United Nations Global Compact, certification schemes such as the ISO 14001 or standards for reporting such as the Global Reporting Initiative attempt to universalise social and environmental standards. There are good arguments for applying the same universal standards certain standards are becoming a legal requirement,...

The basis of environmental success

The success of CSR in addressing various environmental issues can be explained by the convergence of environmental and business interests. Both companies and the environment can benefit from energy efficiency and a reduction in gas flaring, as the sale of previously flared natural gas or energy savings can lead to better financial performance. Indeed, the general evidence for a business case or win-win outcomes of CSR is strongest with regard to environmental issues, as opposed to 'social'...

Conclusions on CSR strategies

The above analysis of oil companies suggests that all three perspectives - stakeholder theory, institutional theory and Austrian economics - have a part to play in explaining the social and environmental strategies of multinational companies. However, it appears that the explanatory strength of a particular perspective varies between companies and over time. Stakeholder government pressures have played a key role in influencing the social and environmental strategies of state-owned companies....

Austrian economics as an alternative perspective

Recent attempts to construct a multilevel theory for explaining CSR strategies focused mainly on stakeholder theory and institutional theory and were guided by the idea that social and environmental strategies are externally driven, with the role of managers confined largely to adapting to external demands Aguilera et al. 2007 Campbell 2007 . However, this exclusive emphasis on adaptation to external pressures fails to allow for active managerial choices about the direction of the social and...

Conditions of success and limitations of transparency

As revealed by previous research, the success of transparency initiatives in the oil and gas sector depends on the following conditions Media. Evidence suggests that independent media is an important tool for increasing accountability and the beneficial effects of transparency Besley and Prat 2006 . Better flows of information about revenues and spending allow the public and interest groups to observe the causes and effects of fiscal policy and thereby improve political accountability. There is...

The logic of CSR strategies

Hundreds of academic papers have been published on CSR, but there is no consensus on how to explain the rise and direction of CSR, and there is no agreement on how CSR should be studied. The emergence of CSR has been explained as a consequence of the actions or inaction of governments and changing global governance Jenkins 2005 Moon 2004 the spread of global communications and greater scrutiny of corporate activities by non-governmental organisations Fabig and Boele 1999 Spar 1998 and...

Oil companies from emerging economies

The CSR strategies of oil companies from emerging economies are far less well-documented than those by Shell or Exxon, so it is more difficult to trace their evolution. The strategies of these companies are also likely to be different because they are fully or partially government-owned. Kuwait Petroleum and Venezuela's PDVSA are 100 per cent government-owned. The Indian government holds just over 80 per cent of Indian Oil shares, while the Brazilian Government controls 57 per cent of the...

Limitations of environmental reporting

There is a recognition that CSR reports are better at covering environmental issues than social ones and environmental reporting has been practised by companies for longer than social reporting Blowfield 2007 KPMG 2005 . Yet criticism of corporate reporting comes both from academics and mainstream organisations such as the Association of Chartered Certified Accountants ACCA . Despite the standardisation of environmental reporting mentioned earlier, there is evidence that corporate reporting has...

Consumption of oil and gas

While some oil companies were successful in achieving environmental improvements, their absolute impact on the industry's environmental footprint remains questionable. A 2005 report by Henderson Global Investors - Carbon 100 - analysed the carbon emissions of the 100 largest companies listed on the UK stock exchange the FTSE 100 . The report found that the oil and gas sector was responsible for 41 per cent of direct carbon emissions among the FTSE 100 companies, followed by electricity 21 per...

Stakeholders vs institutions

Following Freeman's 1984 influential book, stakeholder theory has become the key theoretical perspective utilised within CSR debates. A stakeholder is typically defined as 'any group or individual who can affect or is affected by the achievement of the organisation's objectives' Freeman 1984, 46 . To put it differently, stakeholders are those groups that can either help or damage the firm, including employees, customers, suppliers, shareholders, banks, governments and non-governmental...

CSR strategies in the oil and gas sector

The above discussion of theoretical perspectives can help to guide us in studying to what extent CSR is driven by stakeholder demands, institutions or entrepreneurial activity. The purpose of this inquiry is not to determine which perspective is correct - each perspective can add interesting insights rather, the purpose is to determine under what circumstances companies have acted in particular ways. This chapter looks at CSR strategies within two different groups of companies multinational oil...

Importance of government regulation

Critics of voluntary CSR initiatives from the NGO community often have an ideological preference for government regulation and legal liability as the desirable alternatives for improving corporate standards of behaviour Christian Aid 2004 International Council on Human Rights Policy 2002 . In contrast to this position, the author of this book believes that we need a clear cost-benefit analysis of regulation or 'hybrid' voluntary-regulatory solutions. Indeed, many developing nations may not have...

Multinational oil companies

Shell and BP have been seen as pioneers of CSR within the oil and gas sector, and the role of stakeholders can to a large extent help to explain the birth of CSR in this sector. A series of crises led to strategic shifts in the two companies. table 2.3 Key data on analysed oil companies table 2.3 Key data on analysed oil companies PDVSA figures from Latin Business Chronicle 25 February 2008 . Source Fortune Global 500 23 July 2007 . PDVSA figures from Latin Business Chronicle 25 February 2008 ....

Conclusion

This chapter has demonstrated that some companies have made progress on the environmental aspects of their operations. Environmental reporting is improving, new technologies are developed and tangible improvements are made. BP s achievement in reducing greenhouse gas emissions encapsulates the creativity and capacity of oil companies to deal with environmental issues. Judging by the evidence in this chapter, CSR has potential for addressing environmental challenges. However, we have also...