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the US Government assured on issues such as climate change,
American companies had relatively little to fear from other stake-
holder groups. In addition, non-governmental pressures were stron-
ger in Europe than the United States. The 2001 boycott campaign
against Exxon made little impact on the company™s strategy, despite
shareholder resolutions and media publicity (Gueterbock 2004).
The boycott was supported mainly by European non-governmental
groups and failed to make real impact in Exxon™s and Chevron™s
home base “ the United States. In contrast, BP™s and Shell™s CSR
initiatives fitted nicely with the Dutch and the British Government
support for the Kyoto Treaty, and the companies faced many
powerful London-based non-governmental organisations. BP and
Shell simply encountered a much more powerful combination of
stakeholders, including the government and non-governmental
organisations.
In all four cases, therefore, the stakeholder perspective can
explain major strategic change (BP and Shell) or the absence of
strategic change (Exxon and Chevron). Having said this, Exxon
and Chevron have engaged in CSR over time, and this cannot be
explained by the stakeholder perspective. Indeed, despite the pop-
ular rhetoric about Exxon™s seeming corporate irresponsibility, the
steps taken by all of the oil majors towards CSR are surprisingly
similar today. All four companies “ Shell, BP, Exxon and Chevron “
support policies such as CO2 emission reductions, community devel-
opment projects and transparency of revenues paid to governments.
All four companies support broad initiatives such as the Voluntary
Principles on Security and Human Rights and the Extractive
Industries Transparency Initiative (see Table 2.4). Indeed, one former
senior oil company executive suggested to the author that Shell and
BP have been simply much better at public relations and there is not
that much difference between Shell, BP or Exxon with regard to
CSR; he stated: ˜Exxon is a Southern Baptist company, what you see
is what you get.™
table 2.4: Summary of CSR policies and initiatives by company

CSR policies CSR multi-stakeholder initiatives
Reductions Community Government United Voluntary Extractive World Business
in CO2 development revenue Nations Principles on Industries Council for
emissions projects transparency Global Security and Transparency Sustainable
Compact Human Rights Initiative Development
Shell YES YES YES YES YES YES YES
BP YES YES YES YES YES YES YES
Exxon YES YES YES NO YES YES NO
Chevron YES YES YES NO YES YES YES
Petrobras YES YES YES YES NO NO YES
Indian Oil NO YES NO YES NO NO NO
PDVSA NO YES NO NO NO NO NO
Kuwait NO YES NO NO NO NO NO
Petroleum
The logic of CSR strategies 27
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The similarity between the different oil companies can be
explained through isomorphic pressures “ the different companies
have imitated each other, and their CSR policies have become more
similar over time. Levy and Kolk (2002) have predicted that initially
companies are influenced by diverse local institutional pressures, as
the local context influences a company™s reactions towards emerging
social and environmental issues. Later on, a better understanding of
the social and environmental issues and mechanisms for dealing with
these issues become institutionalised within an industry. In other
words, companies initially react to the pressures in their home coun-
try, but eventually common CSR tools and approaches become
established within an industry.
This line of thought can, for instance, explain why initially the
corporate reactions to climate change were very different between
American and European companies. European companies Shell and
BP accepted the inevitability of the Kyoto Treaty and worked to
shape the climate change agenda. American companies Exxon and
Chevron denied the validity of scientific evidence on climate change
and opposed any mandatory reductions in CO2 emissions (Rowlands
2000; Skj¦rseth and Skodvin 2003). National institutions can also
explain different reactions by different subsidiaries of the same com-
pany. Levy and Kolk (2002) noted that Shell Europe had accepted
the need for international emissions controls in the mid-1990s, while
Shell US was still a member of the Global Climate Coalition (GCC),
a corporate lobby group which spent tens of millions of dollars trying
to undermine the international climate negotiations.
Levy and Kolk™s (2002) line of thought can also explain why the
policies of the different oil companies have converged over time.
Taking climate change strategies as an example of this convergence,
they argued:
Participation in industry associations and climate change meetings
provided arenas within which expectations concerning science,
policy, markets and technologies tended to converge. Key managers
28 Beyond Corporate Social Responsibility
*




responsible for climate strategy in each of the companies studied were
on first name terms and had met each other frequently during many
official negotiating sessions and conferences. European companies
have participated in the American Petroleum Institute and the
GCC, while American companies attend European industry
meetings. (Levy and Kolk 2002, 294)

Interactions of this type within an industry can help to explain the
dissemination of ideas on how to deal with a given social and envi-
ronmental issue. Michael Marvin, the director of the Business
Council for Sustainable Energy, stated that ˜companies don™t come
[to our meetings] expecting to change their positions, but they move
by a process of osmosis™ (quoted in Levy and Kolk 2002, 295).
Therefore, while the CEOs of Exxon “ Lee Raymond (1993“2005)
and Rex Tillerson (CEO from 2006) “ never fully embraced CSR,
even Exxon have come to accept the need for precautionary action
and the adoption of a range of CSR policies, which were increasingly
viewed as an industry standard. The company has moved from a
position of not even acknowledging the existence of global warming
towards discussing the merits of a carbon-cap-and-trade system versus
a carbon tax and engaging with critics, including environmentalists
and religious groups (Colvin 2007).
None the less, while institutional pressures are clearly at work, the
strategies of the major oil companies are far from identical. As one
example, neither Exxon nor Chevron has joined the United Nations
Global Compact (see Table 2.4). While Shell and BP have invested
billions of dollars in renewable energy such as wind and solar, Exxon
has chosen to keep away from wind and solar energy and has invested
in new technology for reducing CO2 emissions from hydrocarbons;
Exxon has also partnered up with the automotive industry to render car
engines more efficient. Somewhere in between these two strategies,
Chevron has invested in hydrogen fuel cell technology and batteries for
hybrid cars. According to interviewees, the reason for these differences
was, to a certain extent, different interpretations of future markets.
The logic of CSR strategies 29
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In the late 1990s, Shell and BP envisaged large markets for renew-
able energy in the future. The creation of Shell International
Renewables in November 1997 was reportedly based on Shell™s opti-
mistic expectation that renewable energy will supply 5“10 per cent of
the world™s energy needs by 2020, which could perhaps rise to more
than 50 per cent by mid-century (Knott 1999). In contrast, Exxon
experts dismissed the potential for renewable energy, based on their
own forecast that renewable energy will only reduce petrol consump-
tion by no more than 5 per cent by 2020. As one Exxon interviewee
put it bluntly: ˜We will run on gas in twenty years, you can™t change
that.™ In the case of Exxon “ as in the case of BP and Shell “ the
decision to invest or not invest in renewable energy was driven by
entrepreneurial foresight.
In the case of Exxon, its anticipation of future markets was addi-
tionally influenced by its individual entrepreneurial experience. In
the wake of the 1970s oil crises, the company made significant invest-
ment in solar energy research, and it reportedly still holds dozens of
patents in the solar energy field. However, the programme was dis-
continued on account of the lack of profitability (Colvin 2007), so
new investment in renewable energy would seem an unwise entre-
preneurial choice to many Exxon managers.
There is also evidence that oil majors have used CSR strategies to
enter new markets or to protect existing ones. Frynas (2005) has found
that social investments can provide companies with competitive
advantages vis-à-vis other companies with less social engagement.
This is all the more important today, since the oil majors have only
restricted access to many of the world™s oil reserves. Access to Saudi
Arabian oil reserves is restricted, and partial nationalisations in
Venezuela and Russia in recent years have heightened uncertainty
among Western companies, while increasing competition from oil
companies from emerging markets such as China, India, Brazil and
Malaysia has further limited access to oil resources for Western
companies.
30 Beyond Corporate Social Responsibility
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In a number of oil-producing countries, socially responsive oil
companies appear to have been favoured by the government in the
award of oil and gas concessions. For instance, Chevron in Angola
appears to have strategically used its social investments in its bid to
renew its stake in Block 0, Angola™s most prized oil asset (see
Chapter 5 for more details). The Chevron-Angola example demon-
strates that corporate expertise in managing social and environmental
issues can be used as a proactive weapon in global competition.


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 voting shares of Petrobras.
Given that the government is the key shareholder/stakeholder in all
of the four companies, it can use the companies to advance its own
agenda, sometimes at the expense of minority shareholders. Indeed,
many of the social and environmental strategies of the four companies
can be explained as a result of government policy. This can help to
explain the oil companies™ emphasis on contributions to the local social
and economic development. To a varying extent, all four companies
have been expected to contribute towards national infrastructure
development, including road and hospital construction, agricultural
initiatives, and skills development. Indeed, local community develop-
ment (or philanthropy in Western terms) is considered the central part
of social responsibility for Indian Oil, PDVSA and Petrobras.
Indeed, the government influenced the very meaning of ˜socially
responsible™ in respective countries. From its inception, Kuwait
The logic of CSR strategies 31
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Petroleum was expected to help in the development of the country™s
infrastructure as part of its responsibilities; however, over time the
government took on many of its previous infrastructure responsibil-
ities and redefined the company™s primary social responsibility as
driving economic growth and employing local staff. In Venezuela,
the government did the opposite. Before 2002, PDVSA was largely
seen as a commercial entity with the primary responsibility of gen-
erating economic benefits for the country. President Chavez rede-
fined the social responsibilities of PDVSA from 2002 and (in the
words of one interviewee) ˜turned PDVSA into a social change
agent™. Accordingly, the influence of government can explain the
fact that ˜the social strategies of PDVSA after 2002 have been idio-
syncratic by international standards™ (in the words of one inter-
viewee); for instance, PDVSA helped to establish and fund rural
co-operatives (a Marxist-influenced idea).
Similarly in Brazil, Petrobras pursued certain social and environ-
mental strategies as a result of government pressures. For instance,
Petrobras previously made investments in thermoelectric projects as a
result of the Brazilian Government™s plans in 2000“1; the projects
turned out to be loss making, and the company then attempted to
reduce its investments over the course of several years.
In all of these cases, stakeholder pressure (the government) can
explain the companies™ social and environmental strategies.
Government pressure can also explain the big differences between
the social and environmental strategies in the different companies “
after all, the different governments have very different agendas. In
summary, stakeholder theory can explain many of the social and
environmental strategies of state-owned companies.
However, there is evidence that stakeholder pressures from the
government have become less important for the different state-owned
companies over time, except for PDVSA. Most notably, Indian Oil
has undergone a major transformation over the last decade or so; in
the 1970s, the Indian government specified a twenty-point economic
32 Beyond Corporate Social Responsibility
*




programme (including such goals as provision of drinking water and
rural electrification), and Indian companies were evaluated against
these goals (Prasad 2005), whereas today Indian Oil has a large
measure of autonomy from the government in setting its social and
environmental goals.
At the same time, the stakeholder perspective still fails to explain
why specific state-owned firms have pursued certain CSR strategies in
the absence of stakeholder pressures. In 2006, Kuwait Petroleum
hired the UK-based Institute of Business Ethics to design an ethical
policy for the company, including a code of conduct “ despite the fact
that the company faced little external pressure to do so. Before 2002,
PDVSA had started to develop Western-style social and environ-
mental strategies and even won a CSR award in Brazil in 2002, despite
the fact that it faced no pressure from the Venezuelan Government or
the weak Venezuelan civil society to do so. Indeed, stakeholder
pressures cannot explain why PDVSA started to develop CSR poli-
cies in the first instance.

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