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BEYOND CORPORATE SOCIAL RESPONSIBILITY


Corporate Social Responsibility (CSR) has emerged as an important
approach for addressing the social and environmental impact of company
activities. Yet companies are increasingly expected to go beyond this. They
are now often expected to assist in addressing many of the world™s most
pressing problems, including climate change, poverty and HIV/Aids. With
increasing expectations placed on business, this book asks if CSR is capable
of delivering on these larger expectations. It does so by investigating an
industry that has been at the centre of the CSR development the oil and
gas sector. Looking at companies from developed countries such as Exxon
and Shell, as well as companies from emerging economies such as Brazil™s
Petrobras and China™s CNOOC, the book investigates the potential of CSR
for addressing three important challenges in the business society relation-
ship: the environment, development and governance.

J ed rz ej G e o r g e F ry nas is Professor of Corporate Social Responsibility
and Strategic Management at Middlesex University Business School,
and Honorary Senior Research Fellow at Birmingham Business School,
University of Birmingham. He has wide experience in executive education
at six different UK universities and leads training courses on CSR for
managers and public sector decision-makers in conjunction with a leading
responsible business consultancy Article 13. He has published widely in
journals such as International Affairs, Strategic Management Journal and
Third World Quarterly. His books include Oil in Nigeria (2000) and Global
Strategic Management (2005).
Beyond Corporate Social
Responsibility
OIL MULTINATIONALS AND SOCIAL
CHALLENGES



Jedrzej George Frynas
CAMBRIDGE UNIVERSITY PRESS
Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo

Cambridge University Press
The Edinburgh Building, Cambridge CB2 8RU, UK
Published in the United States of America by Cambridge University Press, New York

www.cambridge.org
Information on this title: www.cambridge.org/9780521868440
© Jedrzej George Frynas 2009


This publication is in copyright. Subject to statutory exception and to the
provision of relevant collective licensing agreements, no reproduction of any part
may take place without the written permission of Cambridge University Press.
First published in print format 2009


ISBN-13 978-0-511-54010-3 eBook (EBL)

ISBN-13 978-0-521-86844-0 hardback




Cambridge University Press has no responsibility for the persistence or accuracy
of urls for external or third-party internet websites referred to in this publication,
and does not guarantee that any content on such websites is, or will remain,
accurate or appropriate.
Contents




List of figures page vi
List of tables vii

Chapter 1 Introduction 1
Chapter 2 The logic of CSR strategies 12
Chapter 3 The context of CSR 38
Chapter 4 The environmental challenge 64
Chapter 5 The development challenge 102
Chapter 6 The governance challenge 134
Chapter 7 Conclusions and recommendations 165

Glossary 177
References 182
Index 201




v
Figures




page 43
Seismic survey
3.1
Seismic method at sea and in riverine areas
3.2 44
Typical oil production activities
3.3 45
Stakeholders of Shell International
3.4 50
Number of marine oil spills over 700 tonnes, 1970“2007
4.1 77
Quantity of marine oil spills (tonnes), 1970“2007
4.2 77
Layers of an Exxon-funded agricultural development
5.1
project in Nigeria 112




vi
Tables




1.1 Multiple interpretations of Corporate Social
page 5
Responsibility
1.2 The world™s largest oil and gas companies, by total
production, in 2005 10
2.1 Perspectives on CSR strategies 14
2.2 Summary of theoretical perspectives on CSR strategy 18
2.3 Key data on analysed oil companies 22
2.4 Summary of CSR policies and initiatives by company 26
3.1 Key stakeholder groups in the oil and gas sector and their
interest in CSR 51
3.2 The world™s largest oil and gas service multinational
companies, by foreign assets, 2005 (in US$ million) 58
4.1 Overview of environmental impact of oil companies and
mitigating activities 66
4.2 Potential environmental impact of oil production
activities 67
4.3 Comparison of environmental performance indicators 70
4.4 Core environmental indicators reported by selected oil
companies in 2006 72
4.5 Number of oil spills by selected companies, 2002“6 76

vii
List of tables
viii *




4.6 Changes in greenhouse gas emissions and production
levels by selected companies, 2002“6 82
5.1 Community investments by selected oil companies
in 2006 107
6.1 Countries with highest dependence on oil and gas
exports (percentage of total exports, five-year
average), 2000“4 137
6.2 Support for revenue transparency by selected oil
companies in 2006 140
6.3 Civil liberties and media freedom in largest
oil-producing countries in 2007 150
6.4 Level of formal access for business interest groups 159
one


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 further increase significantly during the
next five years (Bielak et al. 2007).
Corporate Social Responsibility (CSR) has emerged as a business
approach for addressing the social and environmental impact of
company activities. With increasing expectations placed on business,
one needs to ask if CSR is able to fulfil these larger expectations.
Therefore, the aim of this book is to analyse CSR™s potential and
limitations for contributing towards wider societal ˜challenges™.
The central part of the book investigates the potential of CSR for
addressing three challenges in the business“society relationship: the
environment, development and governance. The book suggests that
CSR has some potential for dealing with environmental issues such as
carbon emissions and oil spills. Yet, in general, the current CSR

1
2 Beyond Corporate Social Responsibility
*




agenda largely fails to deal with the three challenges, and a number of
important economic and political issues are not yet addressed. The
book explains the existing constraints to CSR and provides some
recommendations in the conclusion.
The author firmly believes that any discussion of the CSR agenda
must have a solid basis in reality. Too many books on CSR are based
on superficial examples and unfounded arguments. Too many books
fail to appreciate the importance of context in the evolution of CSR.
That is why this book has focused in greater depth on companies from
a single industry: the oil and gas sector, which includes two of the
world™s leaders in the CSR movement: Shell and BP. Throughout the
book we also look at companies from developing nations such as
Brazil™s Petrobras and South Africa™s Sasol. Business now operates in a
global arena and companies from the so-called emerging markets such
as China, India and Brazil are increasingly expected to make social
and environmental contributions.
The book is based on more than ten years™ experience in research-
ing the oil and gas industry, and the author has had hundreds of
conversations with oil company staff, civil society advocates, govern-
ment officials, consultants, development specialists, journalists and
local people around these issues.1 The author has published widely on
CSR and leads CSR training courses for managers and public sector
decision-makers in conjunction with a consultancy firm. The lessons
from this research are general and go beyond the oil and gas industry.


What is CSR?

In order to understand the meaning of contemporary CSR, it is useful
to go back in time. While CSR is a recent term, preoccupation with


In the course of this research, the author has interviewed staff from the following
1

multinational oil companies: Shell, BP, Exxon, Chevron, Total, Agip, Statoil, BG
Group, Petrobras and PDVSA.
Introduction 3
*




business ethics and the social dimensions of business activity has a
long history. Business practices based on moral principles and ˜con-
trolled greed™ were advocated by pre-Christian Western thinkers such
as Cicero in the first century BC and their non-Western equivalents
such as the Indian statesman and philosopher Kautilya in the fourth
century BC, while Islam and the medieval Christian church publicly
condemned certain business practices, notably usury.
The modern precursors of CSR can be traced back to the
nineteenth-century boycotts of foodstuffs produced with slave labour,
the moral vision of business leaders such as Cadbury and Salt, who
promoted the social welfare of their workers, and the Nuremberg war
crimes trials after the Second World War, which saw the directors of
the German firm I. G. Farben found guilty of mass murder and slavery
(Ciulla 1991; Pegg 2003; Sekhar 2002). From a historical perspective,
CSR is simply the latest manifestation of earlier debates as to the role of
business in society. What is new, according to Fabig and Boele, is that
˜today™s debates are conducted at the intersection of development,
environment and human rights, and are more global in outlook than
earlier in this century or even in the 1960s™ (Fabig and Boele 1999).
While the role of business in society seems to have been changing
for some time, there is no agreement among observers on what
CSR stands for or where the boundaries of CSR lie. Different people
have interpreted CSR differently. For example, CSR means different
things to practitioners seeking to implement CSR inside companies
than to researchers trying to establish CSR as a discipline. It can
also mean something different to civil society groups than to the
private sector.
The responsibilities of companies in developing nations are also

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