Corporate Social Responsibility in the Oil and Gas sector

This literature review is going to talk about Corporate Social Responsibility (CSR) and its
role in the oil and gas sector. The term ‘Corporate social responsibility’ was first coined in
1953 by American economist Howard Bowen in his book 'Social responsibilities of the
Businessman.' CSR is defined as a self-regulating business model that helps a company be
socially accountable—to itself, its stakeholders, and the public(Investopedia)—although after
getting a recognition early in 1953, CSR got its widespread approval in the 1990s through a
publication 'Corporate Social Performance Revisited' published by Donna J. Wood in
1991which provided an actual framework for assessing the impacts and outcome of CSR
programs. However, why is it so important to have CSR in the oil and gas sector?

Without any doubt, the oil and gas industry is driving the motor of development. However,
this industry is also at the core of the sustainability debate. Questions on their CSR agendas
have been the case due to the adverse effects of their operations, such as oil spills, oil tanker
accidents, which then result in protests by civil society. Notwithstanding the claims of the
society, oil organizations offer more prominent empty talk to CSR, and they connect more
with neighborhood networks than multinationals in numerous different segments. It is
illustrated, among others, by the exceptional development of corporate sets of principles and
social announcing among European or American firms as well, such as likes of Petrobras,
Indian Oil, and Kuwait Petroleum. Oil organizations have additionally grasped significant
universal CSR activities, for example, the United Nations Global Compact and the U.K.
Government's Extractive Industries Transparency Initiative. The CSR strategies of some oil
and gas companies have led them to establish schools and hospitals, design finance plans for
the local community, and develop employment programs for the youth, especially in
developing countries. Companies such as Royal Dutch/Shell and B.P. are heading major
international CSR initiatives like the Global Compact and the Global reporting
initiative(Corporate Social Responsibility in Oil and Gas Industry ....
https://insights.energydais.com/corporate-social-responsibility-in-oil-and-gas-industry/).
After all, the question remains whether the CSR strategies in the oil and gas sector are
enough to allow them to continue their operations?

Talking about an example of the Royal Dutch Shell, in 2013, it was held liable for The Hague
for oil pollution in the Niger Delta. It was found guilty by the district court for neglecting its
duty and not taking action to stop sabotage occurring at their crude oil wellhead. Shell
already had an inconvenient past in Nigeria, whether it was oil leaks, lawsuit it was facing in
the U.S., or having accused by United Nations Environment Program over its inadequate
oilfield infrastructure. Shell was put under much pressure by civil society, and global media
and questions were asked on their operations being continued. After the last hearing of niger
delta case held in 2015 Shell was only charged to compensate one of the farmers and was free
of all other charges in Dutch courts and is currently continuing its operations successfully
(Business and Human Rights Resource Centre) in fact, its revenue in 2019 was 344.88 billion
U.S. dollars (Statista, 2020). One must wonder if this is right, a company managing to make
such profits even after being accused of so many social violations but, Is CSR in the oil and
gas sector only responsibility of private corporations?

One needs to know that the majority of the world's oil and gas are owned by the government.
In fact, about half of the world's known oil reserves are controlled by just five national
companies in the Middle East - Saudi Aramco, Kuwait Petroleum, the National Iranian Oil
Company, Sonatrach of Algeria and the Abu Dhabi National Oil and six out of the world's ten
most prominent oil and gas producing organizations are state-owned(Oil Titans - Brookings.
https://www.brookings.edu/book/oil-titans-national-oil-companies-in-the-middle-east/). We
know very little about the social and environmental records of these companies because of
them being mostly domestic means these companies have no foreign production and hence
are under less scrutiny from civil society groups. What follows after this is the focus is
shifted to multinational corporations and their CSR agendas.

Conclusion

We need to understand that the work of oil and gas companies is not only technically
complex but also socially and politically complicated. They have a constant and robust
demand worldwide for their products. Being a producer of one of the essential things in day
to day life and a giant contributor to the economy of the world is always going to have some
cons. Instead of looking at some of its characteristics as a threat to the environment and
society, we should strive to build a common ground where environment and business
interests go hand in hand and form better relationships with communities. Further research
can be done on the topic of whether development can be prioritized on the cost of degrading
societies and the environment?

References

Hennchen, E. Royal Dutch Shell in Nigeria: Where Do Responsibilities End?. J Bus

Ethics129, 1–25 (2015). https://doi-org.ezproxy.otago.ac.nz/10.1007/s10551-014-2142-7

David B. Spence, Corporate Social Responsibility in the Oil and Gas Industry: The
Importance of Reputational Risk, 86 Chi.-Kent L. Rev. 59 (2011).

Gayatri, G., & Gayatri, G. (2019, June 13). Corporate Social Responsibility in Oil and Gas
Industry - Insights - Energy Dais. Retrieved from https://insights.energydais.com/corporate-
social-responsibility-in-oil-and-gas-industry/

Frynas, George. (2009). Corporate social responsibility in the oil and gas sector. The Journal
of World Energy Law & Business. 2. 178-195. 10.1093/jwelb/jwp012.