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defined differently depending on the social “ especially national “
context (Baskin 2006; Frynas 2006); for instance, CSR among
Malaysian firms is partly motivated by religious notions and Islam™s
prescriptions of certain business practices (Zulkifli and Amran 2006);
the specific flavour of CSR in Argentina can be partly attributed to
4 Beyond Corporate Social Responsibility
*




Argentina™s economic crisis in December 2001 (Newell and Muro
2006); while companies in South Africa are forced to address racial
inequality as a result of the unique legacy of apartheid (Fig 2005).
Companies in Malaysia focus on charitable activities, especially
around Muslim and Chinese religious holidays, while companies in
South Africa focus on black empowerment schemes. Therefore, CSR
or ˜being socially responsible™ clearly means different things to differ-
ent people in different countries.
Although these differences in the understanding of CSR are per-
haps inevitable given the wide range of issues that companies need
to deal with, they can be frustrating, not least to company managers
who might prefer a bounded concept similar to quality control or
financial accounting. Instead, managers find themselves wrestling
with issues as diverse as corporate governance, environmental man-
agement, corporate philanthropy, human rights, labour rights, health
issues and community development. To complicate matters further,
new terms have entered the vocabulary of business and civil society “
concepts such as corporate accountability, stakeholder engagement
and sustainable development, aimed variously at replacing, redefining
or complementing the CSR concept (see Table 1.1 for an overview).
Indeed, some companies now prefer to use terms such as ˜sustainability™
or ˜citizenship™ instead of CSR.
We should also be careful not to superimpose Western notions of
CSR on the reality in developing countries. Philanthropy is a key
example. In Europe, the notion of philanthropy was previously dis-
missed and often not regarded as part of CSR because it does not
relate to the impact of the day-to-day operations of the firm. But firms
are primarily expected to actively assist their local communities in
many developing countries. When asked by the World Business
Council for Sustainable Development (2000) how CSR should be
defined, people in Ghana, for instance, stressed local community
issues such as ˜building local capacity™ and ˜filling-in when govern-
ment falls short™. Studies on countries as diverse as Nigeria, Pakistan,
Introduction 5
*




table 1.1: Multiple interpretations of Corporate Social Responsibility

Interpretation Relevant authors
Business ethics and morality Bowie 1998; ; Freeman 1994; Phillips 1997, 2003;
Phillips and Margolis 1999; Stark 1993
O™Dwyer 2005; Owen et al. 2000
Corporate accountability
Corporate citizenship Andriof and Waddock 2002; Carroll 2004;
Matten and Crane 2005
Corporate giving and Carroll 1991, 2004
philanthropy
Corporate greening and green Crane 2000; Hussain 1999; Saha and Darnton
marketing 2005
Diversity management Kamp and Hagedorn-Rasmussen 2004
Environmental responsibility DesJardins 1998; McGee 1998
Human rights Cassel 2001; Welford 2002
Responsible buying and supply Drumwright 1994; Emmelhainz and Adams
chain management 1999; Graafland 2002
Socially responsible Aslaksen and Synnestvedt 2003; Jayne and
investment Skerratt 2003; McLaren 2004; Warhurst 2001
Stakeholder engagement Donaldson and Preston 1995; Freeman 1984, 1994
Sustainability Amaeshi and Crane 2006; Bansal 2005;
Korhonen 2002
Source: Amaeshi and Adi 2007.


Malaysia and Argentina suggest that philanthropic activities are
considered the main social responsibility of business in these coun-
tries (Ahmad 2006; Amaeshi et al. 2006; Newell and Muro 2006;
Zulkifli and Amran 2006). Many philanthropic activities by business
in developing countries are likely to be genuine and may be guided by
traditional notions of business obligations with regard to health or
education issues, in the absence of the sort of government action that
is taken for granted in developed countries. Yet these activities are
not regarded as part of CSR by many Europeans, whose governments
6 Beyond Corporate Social Responsibility
*




have shouldered a large element of the social responsibilities related
to health, education and poverty alleviation.
Given the problem of encompassing different viewpoints in one
inclusive definition of CSR, Blowfield and Frynas (2005) have pro-
posed to think of CSR as an umbrella term for a variety of theories
and practices that each recognise the following: (a) that companies
have a responsibility for their impact on society and the natural
environment, sometimes beyond that of legal compliance and the
liability of individuals; (b) that companies have a responsibility for
the behaviour of others with whom they do business (e.g., within
supply chains); and (c) that business needs to manage its relationship
with wider society, whether for reasons of commercial viability or to
add value to society. This general definition is adopted in this book.



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 Colombia. Such events “ widely reported by the
media “ have put particular pressure on multinational oil companies
such as Shell and BP, which are perhaps more visible and whose brand
image is more vulnerable than companies in some other sectors of the
economy. The oil and gas industry appears to be under greater pressure
to manage its relationship with wider society, as illustrated by the
following quotation from Lord Browne, former chief executive of BP:

Geology has not restricted the distribution of hydrocarbons to areas
governed as open pluralistic democracies. The cutting edge of the issue
Introduction 7
*




of corporate responsibility comes from the fact that circumstances
don™t always make it easy for companies to operate as they would
wish. (Quoted in Levenstein and Wooding 2005, 9)

Notwithstanding the motives of the executives, oil companies pay
greater lip service to CSR and they engage more with local commun-
ities than companies in many other sectors. This is demonstrated by,
among other things, the remarkable growth of corporate codes of
conduct and social reporting, not only among European or American
firms but also the likes of Petrobras, Indian Oil and Kuwait Petroleum.
Oil companies have also embraced major international initiatives
such as the United Nations Global Compact and the UK govern-
ment™s Extractive Industries Transparency Initiative (see Chapter 2).
A small number of multinational oil companies have invested in
renewable energy as an alternative source of income and have
pioneered climate change initiatives.
Furthermore, oil companies have initiated, funded and implemented
significant community development schemes. Oil companies now
help to build schools and hospitals, launch micro-credit schemes for
local people and assist youth employment programmes, particularly
in developing countries. They participate in partnerships with estab-
lished development agencies such as the US Agency for International
Development (USAID) and the United Nations Development
Programme (UNDP), while using non-governmental organisations
(NGOs) to implement development programmes on the ground.
Given the importance of CSR activities, the oil and gas sector is an
instructive example for analysing to what extent the CSR movement
can transform practices in an industry. However, the most important
observation is that CSR has been adopted in the industry very
unevenly. Royal Dutch Shell and BP have specifically been recog-
nised as leaders in corporate citizenship world-wide. They spear-
headed major international CSR initiatives such as the Global
Compact and the Global Reporting Initiative (GRI). They have
become significant players in renewable energy and have professed
8 Beyond Corporate Social Responsibility
*




to combat carbon dioxide emissions in order to minimise their con-
tribution to global warming. But other companies appear to have
done less. The improvements by Shell and BP have often been
contrasted with the relative lack of social and environmental engage-
ment by Exxon “ a company of a similar size to Shell and BP
(Rowlands 2000; Skj¦rseth and Skodvin 2003).
However, Exxon has also quietly made voluntary improvements to
its social and environmental performance. As Chapter 2 demon-
strates, oil companies from developing countries such as Brazil™s
Petrobras are also initiating social and environmental programmes
and have spent large sums on local community development. This
suggests that the CSR movement is global in nature and that there are
increased expectations of what companies are responsible for.
The analysis of oil company CSR activities in Chapter 2 suggests
that the companies most engaged in CSR are companies that expand
internationally and are dependent on international financial markets
and international reputations. This can help to explain, for instance,
the growing engagement in CSR initiatives by companies such as
Brazil™s Petrobras, which are increasingly operating at an international
level. In contrast, CSR has not been fully embraced by companies from
other developing countries, such as China and Malaysia. For instance,
PetroChina continues to invest in the most repressive regimes such as
those in Burma and Sudan, where the major international oil compa-
nies have long withdrawn due to human rights concerns.
One needs to remember that most of the world™s oil and gas is
controlled by state-owned companies from non-Western countries
such as Russia, Saudi Arabia and Iran “ not corporations such as
Exxon and Shell. Indeed, about half of the world™s known oil and gas
reserves are controlled by just five national oil companies in the
Middle East “ Saudi Aramco, Kuwait Petroleum, the National
Iranian Oil Company, Sonatrach of Algeria and the Abu Dhabi
National Oil Company (Marcel and Mitchell 2005). Six out of the
world™s ten largest oil and gas producing companies are state-owned,
Introduction 9
*




and more than half of the world™s fifty largest oil and gas companies
are state-owned (United Nations Conference on Trade and
Development 2007, 117). The oil and gas production of the state-
owned companies is largely domestic; for instance, the national
companies of Saudi Arabia, Iran and Mexico have no foreign pro-
duction (see Table 1.2). The social and environmental records of
these companies are usually under less scrutiny from civil society
groups; we know, in fact, very little about their social and environ-
mental impact. What follows is that multinational companies pri-
marily drive the CSR agenda and we mainly focus on these companies
in this book.


The aims and structure of the book

The main aim of the book is to investigate the potential of the oil and
gas industry to contribute to society in its broadest sense. To put it
differently, the book investigates the extent to which the development
of local communities, society at large and indeed the natural environ-
ment can benefit from the voluntary activities of oil companies.
Therefore, the core chapters of the book focus on the key areas of
CSR policies where oil companies are expected to make a positive
contribution: improvements in environmental performance, devel-
opment and governance. We want to ask to what extent the current
CSR agenda can yield real improvements in these three areas.
Chapter 2 analyses the logic of CSR strategies. By providing a
number of theoretical perspectives, it tries to make sense of the factors
behind engaging with CSR activities. It scrutinises the CSR activities
of eight oil companies around the world “ ranging from Shell and BP
to Indian Oil and Venezuela™s PDVSA “ to compare and contrast
what factors pushed them to engage in CSR.
Chapter 3 provides a context for CSR in the oil and gas sector in
order to set the scene for the rest of the book. It explains the basics of
oil and gas production and introduces the main actors.
table 1.2: The world™s largest oil and gas companies, by total production, in 2005

State
Rank in world ownership Total production (million Foreign share of total
production Company Home country (%) barrels of oil equivalent) production (%)
1 100 4 148.8 0
Saudi Aramco Saudi Arabia
2 51 3 608.5 0.2
Gazprom Russia
3 100 1 810.7 0
NIOC Iran
4 0 1 725.7 82.7
Exxon USA
5 100 1 666.2 0
Pemex Mexico
6 0 1 572.6 82.1
BP UK
7 0 1 482.7 70.5
Royal Dutch Shell Netherlands/UK
8 100 1 119.6 16.8
CNPC/PetroChina China
9 0 997.6 75.1
Total France
10 100 911.8 0.2
Sonatrach Algeria

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