<<

. 19
( 32 .)



>>

donated mosquito nets to the health ministry for malaria prevention,
but the ministry then reportedly sold the nets, not least through
export to Cameroon. In Angola, BP reportedly distributed Asian-
made condoms as part of an Aids campaign, but the condoms turned
out to be too small for African men. In Nigeria, the author witnessed
many non-functioning white elephants, including unfinished build-
ings designed to be health clinics or schools, water projects where
water is unfit for consumption or projects such as health clinics which
lack lighting, running water, basic equipment or staff.
Since delivering development is not a primary motive for compa-
nies to engage in social initiatives, the business case frequently leads
122 Beyond Corporate Social Responsibility
*




to the failure of projects such as the construction of health clinics.
According to a leaked 2001 independent audit commissioned by
Shell, less than one third of Shell™s development projects in Nigeria
were fully successful in the sense that they were functional
(Anonymous 2001). The audit found that Shell was still essentially
trying to buy off the local people with gifts rather than trying to offer
them genuine development, which followed the logic of using CSR
for maintaining a stable working environment and improving per-
ceptions about Shell. For example, while Shell™s SCD unit in Nigeria
has been ahead of other oil companies in terms of its development
approaches and professionalism, major flaws in its development work
remain, and the results of Shell™s development work are likely to
remain disappointing. Even a number of senior Shell staff and con-
sultants have admitted in private conversations that the creation of
the SCD unit is unlikely to have a major impact on the company™s
behaviour in local communities.


Implementation problems

In addition to the constraints of the business case, the Nuffield
Foundation study identified a number of important constraints in
the implementation of CSR:

country- and context-specific issues
*

failure to involve the beneficiaries of CSR
*

lack of human resources
*

social attitudes of oil company staff/focus on technical and mana-
*

gerial solutions
no integration into a larger development plan.
*



This list is not exhaustive, but it can serve to point out the limited
development potential of CSR initiatives. We shall briefly outline
these constraints and suggest why the development benefits are
inherently limited.
The development challenge 123
*




Country-specific/context-specific issues
Operating in specific countries or contexts may make it difficult for
firms to implement even the best CSR ideas. In countries as diverse as
Nigeria, Colombia or Yemen, CSR work may also be seriously
impeded by conflict (e.g., a guerrilla war or inter-ethnic conflict).
Sometimes oil companies have contributed to a conflict, while on
other occasions they may be affected by existing conflicts. In either
case, a conflict can render oil operations “ and notably community
relations “ particularly challenging. In Nigeria, Chevron™s community
development projects in Delta State had to stop completely because of
inter-ethnic fighting in 2003 and did not resume for at least a year.
Corruption can also prove to be a major obstacle. The author has
encountered various oil-company-funded development initiatives
which failed as a result of corruption; examples include flawed stake-
holder consultation as a result of fraud by a company™s community
liaison officers, buildings that were not completed as a result of fail-
ures by contractors and a micro-credit scheme that collapsed as a
result of fraud by those in charge.
The example of Shell in Nigeria demonstrates some of these prob-
lems. While Shell™s SCD unit has some excellent development strat-
egies and skilful staff, the company also faces many practical
implementation problems. SPDC™s Nigerian subsidiary, SPDC, suf-
fered from corruption: for example, funds allocated for local com-
munities were on some occasions kept by Shell™s community liaison
officers, with the collusion of corrupt village chiefs. SPDC also
suffered from internal implementation problems as a result of its size
and internal company procedures. SPDC™s internal company structure
was cumbersome, and different arms of the organisation (the SCD
unit, the company™s area managers and its major project managers)
conducted development work without much co-ordination.
Community development may suffer as a result of local factors that
are independent of companies, and there is relatively little that a
124 Beyond Corporate Social Responsibility
*




single company can do about corruption or conflict. However, coun-
try- and context-specific problems notwithstanding, there are more
fundamental limitations to the efficacy of CSR work, such as the
failure to involve the beneficiaries of CSR.

Failure to involve the beneficiaries of CSR
Participation and self-help are regarded as the best routes for develop-
ment assistance by organisations as diverse as the World Bank and
Oxfam. A central idea expressed in the World Bank™s Comprehensive
Development Framework is that the ˜doer™ (a person, a community, a
country, etc.) needs to be ˜in the driver™s seat™ and actively help itself
(Ellerman 2001). To quote E. F. Schumacher: ˜[If] the rural people of
the developing countries are helped to help themselves, I have no
doubt that a genuine development will ensue ¦ [But it] cannot be
“produced” by skilful grafting operations carried out by foreign tech-
nicians or an indigenous elite that has lost contact with the ordinary
people™ (Schumacher 1973, 204“5).
In contrast to best development practice advocated by the World
Bank and other development institutions, CSR initiatives have often
been conceived by the ˜helpers™ in the air-conditioned offices of oil
companies and consultancies rather than through ongoing participa-
tion with the beneficiaries, an approach which follows the logic of
CSR serving corporate objectives. An oil company contractor sug-
gested to the author that the failure of some projects was due to the
lack of initial consultation and ˜emphasis on construction rather than
people™. As one example of the failure to consult the local people, a
quay was built by an oil company in one riverine village in Nigeria but
it was unsuitable for the canoes used by the local people.
Where oil companies have consulted local communities, the
consultation exercises have often been superficial and grossly inad-
equate. In villages visited by the author in West Africa, the local
people sometimes saw an oil company representative less than once a
year, even in villages where the local community had signed a formal
The development challenge 125
*




memorandum of understanding with an oil company for the delivery
of a range of development projects. When oil company representa-
tives do visit local communities, they do not stay overnight and their
consultation exercise may involve only one or several meetings with
the key community representatives. In the words of one development
professional: ˜No one is happy to stay in the village, so they [oil
companies] do quick PRAs [participatory rural appraisals] to put it
on paper [rather than staying overnight in the village].™ The author™s
research suggests that such brief encounters usually result in the local
people spontaneously demanding obvious amenities such as electri-
city, a school or a hospital, without proper consideration of the
economic cost, the local needs, the impact of such schemes or the
causes of the community™s problems. Oil companies usually fail to
consult more broadly beyond local chiefs and community leaders.
The involvement of the beneficiaries of CSR in implementing
projects tends to be limited or non-existent, and it may be limited
at best to awarding contracts to locally based companies. While the
involvement of locally based companies can be beneficial, as it
creates local employment, the author™s conclusions from experiences
in Africa are that these companies are often linked to local strong-
men, and the award of contracts simply serves to maintain a stable
working environment. The reason that Shell built three town halls in
one village (see above) was that three different local chiefs reportedly
asked for three construction contracts for themselves and Shell duly
complied, while ordinary members of the community were not
involved. Such an approach to initiating projects inherently limits
the benefits of any potential development schemes.
Worse still, the failure to involve the local people has fostered a
dependency mentality. Since the development projects do not gen-
uinely involve the local people, they are seen as ˜gifts™ from outsiders,
and the local people do not feel that they ˜own™ the projects.
Therefore, a given scheme cannot remain functional without the
continued support of outsiders, which contravenes a basic principle
126 Beyond Corporate Social Responsibility
*




of development. When the author visited one village and found
that the drainage system had broken down, he was told that ˜We
are appealing to Shell [who built the system] to come do it [sic].™
This dependency mentality is aggravated by a widespread belief in
many oil-producing countries that oil is part of the people™s herit-
age, and that the local population can expect to share in this
wealth. Even the ˜best™ development projects such as micro-credit
schemes can suffer from this mentality; one NGO funded by a gas
company claimed that the repayment rate for their micro-credit
schemes in the Niger Delta was 86 per cent, while their average
repayment rate in Nigeria as a whole was 95 per cent, and that this
disparity was ascribed to the ˜mentality that they [the local people]
deserve it and shouldn™t repay™. But even if the local people have the
will to fix their drainage system or run another project imposed from
outside by themselves, they may not have the right skills or tools to
do so, since most projects will not have been designed to use local
resources and to be run by the local people themselves once external
assistance has dried up.
Many of these problems could be avoided through in-depth con-
sultation and the participation of the local people in genuine self-help
initiatives using local knowledge, skills and tools. But the involvement
of local communities is inherently constrained by the companies™ lack
of human resources and the technical/managerial approaches of oil
company staff.

Lack of human resources
There are undoubtedly some highly competent staff in oil companies
with prior experience in international development issues. As men-
tioned earlier, companies also use third parties such as consultancy firms
and NGOs to help them design and implement community develop-
ment projects. However, despite the professionalisation of such projects,
multinational companies still tend to lack the human resources to plan
and execute genuine long-term development schemes.
The development challenge 127
*




Few people with international development expertise move into
companies, and community development units are often staffed with
managers, former administration staff, engineers or former govern-
ment officials. The lack of a ˜career path™ for community development
specialists inside companies further limits the potential of developing
expertise. In one instance narrated to the author, a pipeline manager
who reached the top of his salary scale was promoted to the company™s
community development unit, even though he had no community
development expertise. Indeed, the international development train-
ing of company staff in community development units is often
rudimentary. When BP initiated courses to teach BP managers
about issues such as biodiversity and global warming, they typically
turned to a business school (the Judge Management Institute at the
University of Cambridge) rather than a development institution.
Internal workings of oil companies also render long-term develop-
ment initiatives more difficult. Asset managers are often rotated
between subsidiaries in different countries (e.g., every four years in
BP), so they tend to lack a long-term commitment to the local
communities where the firm operates. Even if one asset manager has
commitment to genuine CSR, his/her successor may not be as com-
mitted, and a social initiative may simply be halted by the successor.
The championing of development projects with a long-term planning
horizon therefore may often depend on the leadership of individual
managers, whose term of office is inherently limited. Furthermore,
managers often spend very little time in the field and lack an under-
standing of specific local problems.
To sum up, the lack of systematic human resource processes for the
training, appraisal and progression of community development staff
limits the effectiveness of community development units, while
senior managers may have few personal incentives to maximise the
long-term development benefits to local communities. Even if a
company has a specialised community development or community
relations unit, the rest of the company (such as the major contracts
128 Beyond Corporate Social Responsibility
*




managers, who conduct company operations in rural areas) operates
according to ˜business as usual™, with little regard for long-term devel-
opment needs.

Social attitudes of oil company staff
Related to the lack of human resources, CSR initiatives are inher-
ently flawed as a result of the social attitudes of oil company staff,

<<

. 19
( 32 .)



>>