Corporate Social Responsibility in Oil and Gas Industry
Without an iota of doubt, the oil and gas industry is driving the engine of growth. The absence of this major energy source would bring the world to a grinding halt. The pillars of development in an economy rest upon the availability and exploration of this precious resource. However, this industry is also at the core of the sustainability debate. With climate change becoming more and more visible with the passage of time and the growing concerns attached to the limits of our planet, it is important to divert our attention towards solutions for sustainable development. The challenge is to create a world which is more prosperous, healthier in all aspects, cleaner and safer for present and posterity. The prime idea is to strike a balance between the freedom to rise and the responsibilities that come along with the growth. Considering the omnipresence of oil and gas, it is not hard to believe that this industry has a direct or indirect influence on everything that surrounds us. And amidst this backdrop, the concept of ‘corporate social responsibility’ (CSR) assumes the center stage.
“Energy is the golden thread that connects economic growth, increased social equity, and an environment that allows the world to thrive.”
-UN Secretary General Ban Ki-moon
The concept of ‘corporate social responsibility’ emphasizes upon the duties of the organizations established within society and how they should effectively contribute towards social, economic and environmental progress that would pave the way for positive transformation. We cannot measure the growth and success of a corporation only in terms of pecuniary profits. It is equally important to assess the support and contribution it makes towards the well-being of society and its people. This idea gained popularity in the 1960s and now, forms the indispensable part of business operations. In the 1990s, CSR developed into a strategic issue and gained visibility as a concept whereby social and environmental concerns got integrated with the business of companies and their interaction with their stakeholders.
We must acknowledge the fact that CSR is now a part of organizational ethics and this has led to an increase in expectations of what the companies owe to the society. We can witness a commendable growth of ethical codes of conduct in corporations and social reporting. This trend can be observed not only among the European or American firms but also in companies like Petrobras, Indian Oil, and Kuwait Petroleum. The companies in developing countries are also commencing social and environmental programs and investing huge sums on the development of local communities.
It is remarkable how the oil and gas companies are embracing major international CSR initiatives like the UN Global Compact and the UK Government’s Extractive Industries Transparency Initiative. The farsightedness of some oil companies must be appreciated as they are investing in renewable energy resources. Some oil and gas companies have come up with constructive community development schemes. Their CSR strategy has led them to establish schools and hospitals, design micro-credit schemes for the local community and support employment programs for the youth, particularly in the developing nations.
(Click here to learn about the CSR initiatives of the leading Oil & Gas companies.)
Oil and Gas industry is actively participating in collaborations with well-established development agencies like the US Agency for International Development (USAID) and the UNDP to build a future that is in sync with our social and environmental concerns. They are being helped by numerous NGOs to execute the development agenda on the ground. However, unevenness has been observed in the CSR industry. Firms like Royal Dutch/Shell and BP have especially been recognized as champions in corporate citizenship across the globe. They are heading major international CSR initiatives like the Global Compact and the Global Reporting Initiative. On the other hand, the other companies who seem to have a lot of potential to work in this regard have done much less. There is a need to bridge this divide for a well-balanced growth.
The question is whether the oil and gas industry is doing enough for the society considering the enormous scale and fallouts of its operations. This industry addresses more than half of the world’s energy needs and at the same time, leads to emissions on a significant scale. Thus, the companies dealing with oil and gas should focus on certain areas while defining their CSR roadmap in order to fill the social vacuum.
- Sound policies and safety measures should be designed considering the huge risks involved in oil spills. There needs to be a framework in place that addresses its impact on the ecology and environment and the people inhabiting the spaces around the site of the accident.
- The companies should realize the need to create a fine blend of renewables. This involves innovation with a foresight and exploring more gateways of growth with mitigated environmental damage.
- There should be renewed focus on enhancing internal energy efficiencies while bringing down the environmental impact. Important lessons should be learned in the light of global initiatives such as the ‘Carbon Disclosure Project’ and the ‘Global Methane Initiative’.
- The operation of these companies requires a considerably large amount of water. The future of their business lies in incorporating water wisdom strategically and their willingness to compensate for the complete ecological and other costs of water.
- For making a genuine difference in the environment, the oil and gas industry must collaborate with other industries which are based on the energy derived from the oil and gas industry. They can work together to find feasible and workable solutions.
The industry must strive to build a common ground where the environmental and business interests can converge with confidence. The need of the hour is to rise above the limitations and reap the myriad benefits of corporate social responsibility in the form of better relationships with communities, enhanced governance, less operational losses, reduced corruption and much advanced corporate reputations.
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(The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of Energy Dais.)