The oil and gas sector has been among the leading industries in championing Corporate Social Responsibility (CSR). Oil companies attach greater importance to their social and environmental impact and they engage more with local communities than they used to in the past. This shift is demonstrated by, among other things, the remarkable growth in corporate codes of conduct and social reporting. Oil companies have also embraced major international CSR initiatives such as Kofi Annan’s Global Compact and the Global Reporting Initiative (established by CERES, the Coalition for Environmentally Responsible Economies). Royal Dutch/Shell and BP have become significant players in renewable energy, and have professed to be combating carbon dioxide emissions in order to minimize their contribution to global warming.
Furthermore, oil companies have initiated, funded and implemented significant community development schemes. According to one estimate, global spending by oil, gas and mining companies on community development programmes in 2001 was over US$500 million. Oil companies now help to build schools and hospitals, launch micro-credit schemes for local people and assist youth employment programmes in developing countries. They participate in partnerships with established development agencies such as the US Agency for International Development (USAID) and the United Nations Development Programme (UNDP), while using NGOs to implement development projects on the ground.
However, the effectiveness of CSR initiatives in the oil, gas and mining sectors has been increasingly questioned, and there is mounting evidence of a gap between the stated intentions of business leaders and their actual behaviour and impact in the real world.
The false developmental promise of Corporate Social Responsibility: evidence from multinational oil companies