Modern oil and gas production takes place in environments that are increasingly challenging, environments that pose very high levels of technical risk, as well as political, social, environmental, heal and safety risks. The people of the oil-rich nations of the world are growing more assertive politically and more sensitive to the environmental, health, and safety risks posed by oil and gas development. Governments, nongovernmental organizations (NGOs), and local people seek the means to control oil and gas development so as to minimize the risk of harm and provide redress in the event harm is done. Oil and gas companies have had to adapt to this new political and social environment, in part by developing sophisticated corporate social responsibility (CSR) programs. Learning from some of the industry's high-profile mistakes, oil and gas companies have begun to embrace levels of environmental and social performance that often exceed what is legally required in the host nation. Central to that process is the task of managing relationships with external stakeholders, and incorporating stakeholder interests into company plans. Consequently, oil and gas companies have also begun to participate in multilateral arrangements with NGOs, international organizations such as the World Bank, and national governments to address issues like environmental protection, workers rights, human rights, and corruption. Critics of CSR argue that it undermines the regulatory process and/or cheats shareholders, but oil and gas companies justify these efforts as a way of managing social and political risk over the long term and, thereby, maximizing shareholder return.
David B. Spence,
Corporate Social Responsibility in the Oil and Gas Industry: The Importance of Reputational Risk,
Chi.-Kent L. Rev.
Available at: https://scholarship.kentlaw.iit.edu/cklawreview/vol86/iss1/4