Corporate Social Responsibility In The Oil And Gas Industry

Overview of Corporate Social Responsibility in the Oil and Gas Industry

Question:

Write a report on Oil and Gas Production in the USA.

The purpose of this task is to provide an overview of the corporate social responshebilities of the company present in oil and gas industry. The report provides the social responsibilities of the oil and gas industry with respect to its stakeholders and shareholders. It also states the Gulf of Mexico issue faced by the industry which degraded the environment. Further recommendations to the companies are provided with the precautionary measures so that such issues get depleted. Oil and gas industry is majorly related to the environment extraction due to which mishappening of the company leads to make negative changes in nature. Further details about the task are discussed below:

Corporate social responsibility refers to the duty of all the organization present in that industry to initiates the business activities in such a way that it does not harm any stakeholder in the industry. As discussed above it shall be noted that the oil and gas industry is highly risky and prone to threat industry under which a minor mistake can adversely affect the nature. The initial responsibility of the organization is to recognize and understand the complexity of the business. With this effect, major problem of the industry will reduce (Gutierrez-Miravete 2013). Further, in the oil and gas industry major work which is performed is the extraction of natural resources from the land. So, it can be said that work of the industry is involved with nature and environment, so the industry shall initiate activities with which no person present in the society (suppliers, neighbors, government, and investors) get dissatisfied with the business activity. Also, these activities shall not cause any harm to any person as well. On the part of the industry, a prior intimation of changes in the system application of organization, prior approval of stakeholders of the organization, compliance of social and ethical norms etc. are some of the corporate social responsibility which the industry on a whole shall aim to follow (Berkowitz, Bucheli, and Dumez 2017).

The shareholders of the oil and gas industry are the companies working in this industry. Talking about two companies working under the oil and gas industry are ExxonMobil and Chevron Corporation. Further, the CSR activities of both the company are discussed below:

ExxonMobil Company

The fact shall be remarked that ExxonMobil is renowned as the best company which understands and successfully initiates the corporate social responsibilities. Talking about the corporate social responsibility of the company, the corporate citizenship report states the following aspects of the company:

• The company aims to initiates the sustainability of the managerial activities so as to create a brighter future ahead. The company works to expand the supplies of reliable and affordable energy for the purpose of economic growth of the whole community (ExxonMobil 2016).
• Safety and workplace management is another social responsibility which the company ExxonMobil successfully manages in the society. As the company aims to provide personal safety to each and every employee connected to the organization. The company regularly aims to mitigate the risks associated with the daily activities of the employees.
• Also considering the responsibility towards securing the nature, the organization initiated climate change risk management strategy. Growth in demand for energy is a threatening situation for the society as it is depleting the natural resources. So, the organization is developing solution to reduce the effects of greenhouse gases and save the environment (Ahmad, et. al., 2017).

Stakeholders and Corporate Social Responsibility

Stakeholder of ExxonMobil Company

The two stakeholders of the company are government and shareholders of the company. With respect to them, ExxonMobil Company initiated activities of the conservation of environment and protects the community from calamities. The company timely paid the rent and taxes to the government to avoid problems. And with regards to the shareholder the company always gave prior intimation of the extraction related activities. Also the shareholders are interested in the profits earned by the company and the investment of the company in different sectors. So, the company contributes a share of the income on securing the environment (ExxonMobil 2017).

Chevron Corporation

Chevron Corporation is world renowned Oil and Gas Company whose approach for oil and gas industry is to be socially responsible and ethically right for the activities which the company performs in the external environment. The organization supports the human right and aims to provide benefits to the employees who work there. Further activities initiated by the company are:

• Creating prosperity is the objective of the company. This refers to the initiation of the organization to build a lasting image on the mindset of the stakeholders of the company by providing effective and efficient services.
• Safety is of people is the topmost priority of the company. Chevron Corporation initiate all the activities in the organization concerning to the health and safety of the people connected to that activity (Chevron, 2017).
• Due to operating services in oil and gas industry, the company somehow harms the environment. Thus in order to negotiate the effects of the activities, the organization operates robust, cost-efficient and practical activities to save the nature.

Stakeholder of Chevron Corporation

Talking about the two stakeholders of Chevron Corporation that are government and shareholder, it shall be noted that the organization contribute the share towards the stakeholder engagement activities. Initially talking about the government, the companies pay taxes as it is the revenue source of the government and also the companies as discussed above supports the government in implementing action plans to save the nature. Apart from that prior approval of the government is always taken before initiating any extraction activity on the land.

Next talking about the shareholders of the companies, thee organizations provide safety and practice sustainable activities to achieve the satisfaction. Greenhouse gas emission is another area in which the customers are majorly interested, so for that, the companies initiate mitigation to support the nature of such hazardous gases (Alazzani, and Wan-Hussin 2013).

One of the issues related to the oil and gas industry which caused a huge disaster in the environment is the Deepwater Horizon explosion and oil spill. In early 2010, on 20^th April the deepwater horizon oil platform located near the Louisiana coast got attracted to a calamitous explosion. The Deepwater Horizon rig was owned and operated by Transocean and oil company BP (Farrell 2011). On this horizon, the oil well was located on the seabed 1,522 meters below the surface. Further, on April 20, a surge of natural gas exploded through concrete core which was being installed by the contractor company Halliburton for the purpose of sealing the well for the later consumption. The core of the rig was too weak to uphold the pressure due to which such event happened. Post this event, the natural gas traveled Deepwater rig riser to the platform, this resulted in ignition due to which around 11 workers died and 17 got injured (BBC 2017). The rig sank on 22 April morning which continued to escape the oil in the water which got in touch with the methane gas and drilling water which resulted in explosion and firestorm. Further, this effect was protected with blind shear ram but this device also failed. Lastly, the oil spill continued till July 15 and later was closed with a cap; also relief well was used to permanently seal the well. The Gulf of Mexico oil spill is one of the biggest spills of all times which resulted in huge environmental damage and cause the death of many people as well (Kostka, et. al., 2011).

Corporate Social Responsibility of ExxonMobil

Further it shall be noted that there are many other issues caused due to this problem. Relating to the corporate social responsibilities adhered by organization, it is important to look after the human rights and environmental health as well. It is the right of the people to live in clean environment and also ask the organizations to initiate activities which can help them to sustain in the environment. Also the companies present in the oil and gas industry shall focus on environment health due to which substantially health of people will improve.

With respect to the Gulf of Mexico problem caused in the country, many people were adversely affected with this activity. Thus, oil and gas industry being more prone to risk shall work carefully. Also the stakeholders present in the oil and gas industry shall make use of best practices so as to eliminate the catastrophic problems. Further the best practices which shall be followed by companies are discussed below:

Safety measures around oil spills: As noticed in the above mentioned statements that the industry has several issues which cannot be ignored at any cost but it can be prevented to some extent. So, if policies and safety measures are developed around the working culture of the company then such destruction might end. The organizations develop a framework of policies and safety measures which shall be used by the company in case of emergencies. These policies will help the company to seek rightful measures when it faces any kind of problem during the course of action (Lin, and Mendelssohn 2012). Also such policies help the company to initiate the day to day activities. Risk assessment measures initiated in the organization will help them to look for the areas and activities in the company which are higher prone to risk and correct them (Solomon, and Janssen 2010).

Renewables: the oil and gas industry play a huge impact on the greenhouse gases emission in the external environment, thus considering to that it is the need of the current ear that the companies shall switch the activities a product mix that consists of renewables. With the initiation of such activities it will become effective for the organization to manage activities without emitting waste and hazardous gases. However this activity will take its time to initiate in the organization, also the company might incur higher charges than expected in this process but the outcomes of this approach will successfully occur positive only. Further it shall also be noted that along with policies implementation, strategic decision making is also needed in the organization so as to make this framework work in long run (Perks, et. al., 2013). So, the organization shall focus on decision making and implementation process which shall help the organization to effectively run the newly developed framework. Also innovative tools and activities shall be initiated in the organization which shall eliminate the use of hazardous substances and create good environmental impact (Comyns, and Figge 2015).

Corporate Social Responsibility of Chevron Corporation

Collaborate to change: energy consumption is an integral part of lives of human beings. Starting from all the basis day to day activities and ending to all the complex activities initiated by people, people require energy in the activities. Oil and gas sector provides such energy to people for usage, and as the consumption level of energy increases subsequently the company starts to increase the production as well. Resulting to which, this process genuinely harass the resources; so in order to create a midway to resolve such problems the organizations shall collaborate with other industries and customer advocacy as well. With this process all and industries can work by co-operating with each other and use substitute resource to create sustainability in the environment. Looking at the above mentioned case of Gulf of Mexico, if all the industries would have cooperated with each other to resolve the issue then the problem might not become disastrous (McNutt, et. al, 2012).

Energy Efficiency: the oil and gas industry is a highly sensitive industry under which the greenhouse gases emitted in the environment from the combustion of stationary and mobile internal combustion engines causes major effect on the environment sometimes leads to unseen calamities as well. So, the oil and gas organization present in the environment shall mitigate emissions, global initiatives shall start which shall measure, manage and reduce the emission (Reddy, et. al., 2012).

Partnership initiative: in order to inculcate the CRS approach in the organization, the companies shall develop the partnership with the stakeholders including the government. With this coalition the companies shall co-operatively develop new principles to address and make changes in the social issues affected in the industry and the people present in it. “Extractive Industries Transparency Initiative” (EITI), is one of the initiative which was initiated by ExxonMobil, World Bank and other companies so as to ensure that adequate sum of money is invested in the social programs and corruption by officials is reduced (Liu, Garcia, and Vredenburg 2014).

Communication: Communication for the cause is one of the most important tasks as it helps of the organizations to beware of it and take proactive measures for it. Communication the framework shall be defined which shall initiate communication between all the organizations present in the oil and gas industry. Looking at the case, if prior intimation had been issued to organizations for help then other organizations would have collaborated to help and secure the environment (Raufflet, Cruz, and Bres 2014).

Gulf of Mexico Issue and Corporate Social Responsibility

The above-mentioned practices are regarded as best practices because these practices satisfy the requirements of nature and halt the organizational activities which can adversely affect human lives and environment.

Relating the above-mentioned statements to the normative ethical theory it shall be noted that the theory states that people should attempt activities in the environment if it is ethically correct. All activities presented in the environment should help the community a better living. Further the deepwater horizon act was not ethically correct as it destroyed the nature and attacked many unnatural deaths as so. So, to compensate for the cause, the organizations involved in the case shall make use of best practices mentioned above. Also with reference to the traditional theory of ethics, organizations which are part of the oil and gas industry shall use modern techniques in the business process so that operations are also followed without hurting the nature (Isaak 2017).

Furthermore relating the Utilitarianism theory to the CSR practices used in the organization it shall be noted that any activity which produces good values on moral good can be regarded as CSR practice. With regard to this, the organization shall initiate activities which are morally right irrespective of loss of profits in organization.

The above mentioned are the best practices which shall be initiated in every organization present in the oil and gas industry. Further there is a scope of improvement in the activities of the business so as to such Gulf of Mexico issues from happening. So the recommendations are discussed below:

• Develop protocols to pass information: protocols shall be developed in the organization so that proper safety measures can be initiated in the organization. If there is efficient and effective information communication system in the organization, then would get easy for the companies involved in the issue to take proactive measure to save the environment from degradation. Such protocols will initiate flow of transparent information in the organization due to which every person will get to know the real facts about the case and information shall be provided to the people related to the issue only. This will result in more helping hands to the organization (White, et. al., 2012).
• Catalogue and contact area expert in marine: In the coastal region, where people are more prone to disasters, at those places the organization shall place employees who are capable enough to handle the emergencies occurred with them. Areas in contact with the hazardous substance shall have at least one or more expert who are qualitative and efficient inn solving such issues.
• Offshore cleanup options: due to the extraction and other practices of the organization present in the oil and gas industry, the environment gets affected adversely. So the nature requires regular cleaning of the land and the marine area where such oil reserves are present. This will show positive effect on the life of animals living in that area and it will also positively affect the life of people as well. Offshore cleaning will also save the nature and oil reserves from depleting to some extent. So, machinery and regular land and sea checkups shall be initiated by the organization to fulfill the corporate social responsibilities of the company (Allan, Smith, and Anderson 2012).
• Also the organization shall give prior notice for the activities which the companies are going to implement in the society. This will help people to suggest the organization corrective action and if the people are still not satisfied then such people can complaint about it as well. So human right shall be taken care by oil and gas industries.
• Chemistry of oil and weathered products: the organizations shall understand the chemistry of various oils and the products of the weather. The company shall look after the chemical reaction caused by combining of both the products in the environment (Jain, Aguilera, and Jamali 2017). So all the products which can create a negative reaction by mixing itself with other gases present in the environment shall be kept at safe so as to avoid problems. With the help of this the company can easily avoid most of the problems attracted with the organization.
• Technical response incidents: responses to the issues shall be sought with the help of scientific and technical solutions. Instead to applying solution related to political aspects, the companies shall consider scientific and technical solutions to avoid and excavate the problem (Michel, et. al., 2013).
• The organizations shall initiate environmental clean activities which analyze the society needs as well and implement actions (Mariano, et. al., 2011).

Thus these are the following measures with the help of which the organizations can sought to solve the problem occurring in the oil and gas organization.

Conclusion

Thus in the limelight of above mentioned events, the facts that shall be noted is that without oil and gas sector, no person would survive in this entire world. But somehow the activities present the oil and gas industry adversely affect the nature, so for that purpose the organizations need to understand the corporate social responsibilities and work on them so as to reduce or compensate the effect of the business activities. Thus, the above mentioned task discusses about the issues caused in the organization and the best practices to improve the environmental degradation.

References

Ahmad, W.N.K.W., Rezaei, J., Sadaghiani, S. and Tavasszy, L.A., 2017. Evaluation of the external forces affecting the sustainability of oil and gas supply chain using Best Worst Method. Journal of Cleaner Production, 153, pp.242-252.

Best Practices for Corporate Social Responsibility in the Oil and Gas Industry

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BBC, 2017. Geography. Viewed on November 25, 2017 from < https://www.bbc.co.uk/schools/gcsebitesize/geography/wasting_resources/waste_pollution_rev5.shtml>

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Chevron, 2017. Helping communities Succeed. Viewed on November 25, 2017 from https://www.chevron.com/corporate-responsibility

Comyns, B. and Figge, F., 2015. Greenhouse gas reporting quality in the oil and gas industry: A longitudinal study using the typology of “search”,“experience” and “credence” information. Accounting, Auditing & Accountability Journal, 28(3), pp.403-433.

ExxonMobil, 2016. ExxonMobil named best overall company in Corporate Social Responsibility (CSR). Viewed on November 25, 2017 from < https://corporate.exxonmobil.com/en/company/worldwide-operations/locations/nigeria/news-releases/exxonmobil-named-best-overall-company-in-csr>

ExxonMobil, 2017. Corporate Citizenship Report.  . Viewed on November 25, 2017 from https://corporate.exxonmobil.com/en/community/corporate-citizenship-report

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Gutierrez-Miravete, E., 2013. Deepwater Horizon Oil Spill.

Isaak, R., 2017. Green logic: Ecopreneurship, theory and ethics. Routledge.

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Kostka, J.E., Prakash, O., Overholt, W.A., Green, S.J., Freyer, G., Canion, A., Delgardio, J., Norton, N., Hazen, T.C. and Huettel, M., 2011. Hydrocarbon-degrading bacteria and the bacterial community response in Gulf of Mexico beach sands impacted by the Deepwater Horizon oil spill. Applied and environmental microbiology, 77(22), pp.7962-7974.

Lin, Q. and Mendelssohn, I.A., 2012. Impacts and recovery of the Deepwater Horizon oil spill on vegetation structure and function of coastal salt marshes in the northern Gulf of Mexico. Environmental science & technology, 46(7), pp.3737-3743.

Liu, X., Garcia, P. and Vredenburg, H., 2014. CSR adoption strategies of Chinese state oil companies: effects of global competition and cooperation. Social Responsibility Journal, 10(1), pp.38-52.

Mariano, A.J., Kourafalou, V.H., Srinivasan, A., Kang, H., Halliwell, G.R., Ryan, E.H. and Roffer, M., 2011. On the modeling of the 2010 Gulf of Mexico oil spill. Dynamics of Atmospheres and Oceans, 52(1), pp.322-340.

McNutt, M.K., Camilli, R., Crone, T.J., Guthrie, G.D., Hsieh, P.A., Ryerson, T.B., Savas, O. and Shaffer, F., 2012. Review of flow rate estimates of the Deepwater Horizon oil spill. Proceedings of the National Academy of Sciences, 109(50), pp.20260-20267.

Michel, J., Owens, E.H., Zengel, S., Graham, A., Nixon, Z., Allard, T., Holton, W., Reimer, P.D., Lamarche, A., White, M. and Rutherford, N., 2013. Extent and degree of shoreline oiling: Deepwater Horizon oil spill, Gulf of Mexico, USA. PloS one, 8(6), p.e65087.

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Solomon, G.M. and Janssen, S., 2010. Health effects of the Gulf oil spill. JAMA, 304(10), pp.1118-1119.

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