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Department of Business Administration Bacherlor’s thesis

With supervision by Mai S. Linneberg

CSR in the Oil Industry

An institutional approach

Aarhus School of Business and Social Sciences By Mads R.B. Thomsen (mt87243) HA.int (eng) May 2012

Abstract

The importance of oil in the development and sustainment of the global economy is indisputable. Over the last 100 years the demand for oil has been on the rise, and this trend is projected to continue until more efficient alternative energy sources are developed. However, in recent years, ground-breaking scientific discoveries have verified the damaging properties of fossil fuels hence a paradigm shift in society’s sentiments toward the oil industry and the combustion of fossil fuels has emerged. At the same time, increased monitoring of corporate practices along with the evolvement of corporate social responsibility has resulted in intensified surveillance of the oil industry. Consequently, oil companies have been confronted with a myriad of inconsistent demands to which these companies have been compelled to conform so as to maintain their legitimacy in the eyes of the public. This leads to the purpose of this paper, which is to investigate how the oil industry satisfies these inconsistent demands through CSR reporting.

This paper adopts a new institutional approach to investigate how the oil industry through CSR reporting responds to stakeholder pressures. By means of a qualitative content analysis, the content and ethical perspectives represented in the four leading oil companies’ CSR reports are analyzed after which similarities are discussed and related to institutional isomorphic processes. Conclusively, the study suggests how the oil industry uses CSR reports to divert negative publicity from the reality of its business practices using the theory of organizational hypocrisy.

The thesis found obvious similarities between the leading oil companies’ CSR content. The topics covered in the reports and the rhetoric applied were somewhat convergent among the companies. The congruence in CSR content was explained by drawing on the concepts of coercive, mimetic and normative isomorphic processes in order to exemplify how the oil companies adopt similar CSR strategies so as to respond to institutional demands emanating from NGOs, consumers, competitors and regulators. Conclusively, it was found that companies within the oil industry use CSR as means to divert undesired scrutiny from its actual business practices. In this regard, the study found evidence suggesting the presence of organizational hypocrisy within the oil industry.

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Table of contents

1. Introduction

5

1.1 Problem statement

6

1.2 Structure

7

1.3 Methodology

7

 

1.3.1 Hermeneutics

8

1.3.2 Qualitative content analysis

9

1.3.3 Multi-case study as research design

10

1.3.4 Induction or deduction

10

1.3.5 Validity in qualitative research

11

2. Data

12

2.1 Data and collection methods

12

 

2.2 Case

descriptions

13

3. Ethical categories

15

3.1

Ethical theories

15

3.1.1 Consequentialism

16

3.1.2 Non-consequentialism

18

3.2

Presentation of ethical categories

21

3.2.1 Agency

21

3.2.2 Benefit

21

3.2.3 Contract

21

3.2.4 Duty

22

3.2.5 Ethos

22

3.3

Categorical taxonomy

22

4. Theoretical framework

23

4.1 Institutions defined

24

4.2 New institutionalism

24

 

4.2.1

Isomorphic processes

25

4.3

Organizational hypocrisy

26

4.3.1 Legitimacy

28

4.3.2 Decoupling

29

5. Analysis and discussion

30

5.1

BP plc

30

5.1.1

Safety

31

3

5.1.2

Environment and renewable energy

32

 

5.1.3

Communities and human rights

33

5.2

Royal Dutch Shell

33

5.2.1 Safety

34

5.2.2 Climate change and emission reductions

34

5.2.3 Communities and human rights

35

5.3

ExxonMobil

36

5.3.1 Financial performance and political activity

36

5.3.2 Safety, security and health

37

5.3.3 Environment

37

5.3.4 Communities and human rights

38

5.4

Chevron

38

5.4.1 Safety

39

5.4.2 Environment

39

5.4.3 Communities and human rights

40

5.5 Summary of content and rhetoric

41

5.6 Isomorphism in the oil industry

42

 

5.6.1 Coercive pressures

43

5.6.2 Mimetic pressures

44

5.6.3 Normative pressures

45

5.7

Hypocrisy in the oil industry?

46

5.7.1 Safety regulations

46

5.7.2 Lobbying and climate change

47

5.7.3 Human rights issues

48

7. Conclusion

50

8. Bibliography

51

9. Appendices ……………………………………………………………………………………

CD

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1. Introduction

Since the early 20 th century the world has become increasingly dependent on oil to fuel the global economy. Increasing population growth combined with staggering economic growth rates most noticeably seen in the developing countries have further contributed to the global dependence on oil (OPEC, 2011). These demographic and economic trends have spurred oil depletion, making the onset of peak oil a reality in 33 out of the 48 largest oil producing countries (Hirsch, 2006: pp. 6-7). Consequently, easily accessible oil deposits in mainly Western countries have been exhausted, causing oil companies to undertake oil exploration and drilling activities in more sensitive geographic areas of the world. In this regard, disputes have emerged over human rights abuses, oil spill incidents and alleged disregard for the environment. This development has subjected the most predominant oil companies to public scrutiny and vast media attention thus creating a rather negative perception of the oil industry in the general population (BCCCC, 2011). Meanwhile, interest groups, governments and consumers have become more attentive to the doings of corporations while academic theorists of business ethics have introduced new business perspectives emphasizing the importance of addressing all stakeholder interests, and not only shareholder interests. Companies are now expected to demonstrate how ethical behavior is embedded in the company’s operations, which has lead to the emergence of corporate social responsibility (CSR) reporting.

The growing pressure for oil companies to display good corporate citizenship and simultaneously maximizing profits appear rather inconsistent with one another. When these companies report on their environmental awareness and commitments to human rights it seems somewhat discrepant considering the numerous scandals surrounding these oil companies. The nature of the oil business and the rhetoric it presents in its CSR reports seem to represent opposing forces. Is it at all possible for an oil company to preserve the environment, support climate change action and protect human rights when it operates in social hot spots around the world and extracts resources that has proven to be harmful to the environment? This paper operates on the assumption that these corporations are confronted with numerous conflicting demands from its stakeholders, hence it becomes inevitable that oil companies display ethical behavior to which they do not conform.

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This paper aims to identify what content and ethical rhetoric the oil industry presents in its CSR reporting so as to determine how the industry’s CSR perspectives comply with its business conduct. By analyzing the CSR reports published by the leading companies in the petroleum industry, this paper examines statements, commitments and content presented to stakeholders and relate these to the allegations oil companies have been confronted with in recent times. In this regard, a new institutional approach is taken, which establishes certain presuppositions as to how organizations operate and homogenize in their institutional environments.

1.1 Problem statement

In Ditlev-Simonsen and Wenstøp (2011) the authors argue that a relevant place to determine the “ethical attitudes behind a company’s CSR” (p. 66) is in the rhetoric applied in its CSR report. This paper is built on the same conception in that it seeks to analyze how ethical statements and commitments are reflected in the CSR reports published by the leading oil companies, while considering the topics mostly emphasized by these companies. In addition, this paper seeks to investigate and explore how the oil industry is addressing these matters when it is confronted with inconsistent demands from its stakeholders. This leads to the following research questions:

What are the ethical principles and general topics reflected in the oil companies’ CSR reports and how do they compare to each other?

How do the oil companies respond to the numerous and often inconsistent demands they are confronted with?

These questions result in a paper consisting of two parts. The first part combines traditional ethical theories with contemporary business perspectives to form a categorical taxonomy which is used to identify statements and commitments presented by the oil companies in their CSR reports. This part of the analysis looks at what is being said in each CSR report and compares the identified topics and statements to each other to make a generalization of the entire industry. In the second part, the content and ethical statements identified in the first part are discussed from a new institutional approach and it is suggested how the oil industry is

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responding to external demands using the theory of organizational hypocrisy as presented by Brunsson (2002).

1.2 Structure

The structure of this paper consists of six chapters:

Chapter 1 presents an introduction, an outline of the paper (this sub-chapter) and methodological considerations in relation to the literary review and the analysis. Chapter 2 presents the cases chosen as analytical material and explains how and why these cases have been collected. Moreover, it briefly explains what literature will be used and how it is gathered. Chapter 3 delves into the ethical categories that will be used in the analysis to categorize statements in the CSR reports. In this context, the ethical theories and perspectives upon which these categories are built will be described. Chapter 4 introduces new institutionalism which will be the theoretical framework of the second part of the analysis. Chapter 5 consists of two parts. The first part is an analysis of the CSR reports in which ethical statements are extracted and content categories are identified to determine what these companies are saying and how they relate to each other. The second part discusses how the oil industry is responding to pressures in their institutional environment by drawing on ‘new’ institutionalism and organizational hypocrisy. Chapter 6 summarizes and synthesizes the findings in this paper.

1.3 Methodology

In seeking answers to the research questions a theoretical review of relevant literature will be conducted in order to derive the ethical categories and clarify the theoretical framework. In this regard, academic literature within the field of business ethics and organizational studies will be drawn upon. Reviewing this literature requires interpretation and comprehension hence a hermeneutic approach is adopted to thoroughly review this literature. The research method used in the analysis of the CSR reports is a qualitative content analysis applied to a multi-case study. The following sub-chapters explain these methodologies after which the concepts of deduction, induction and validity are explained and related to this paper.

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1.3.1 Hermeneutics

Hermeneutics evolved from the supposition that the methods developed in natural science are inadequate when a deeper comprehension of social phenomena is sought. Wilhelm Dilthey, a late renowned hermeneutic philosopher, argued that because humans have inner emotional thoughts which cannot be observed, language becomes the means by which we obtain understanding (Schmidt, 2006: p. 7). Through interpretation, the hermeneutic approach tries to provide a shared vision and understanding of the literature. In this context, the hermeneutic circle becomes an important concept when researchers seek to understand literature in which the meaning becomes incredibly important, and when the meaning is difficult to grasp. Hans-Georg Gadamer described the hermeneutic circle as the relationship between the reader and the text, which the reader wishes to comprehend. He viewed hermeneutics as a connection between the ‘parts’ and the ‘whole’ (Malpas, 2009). When reading only one part of a text say a paragraph the reader immediately develops an opinion about the whole text and its content. As the reader continues to read the subsequent parts, he/she changes his/her understanding of the text as a whole, hence this concept is often portrayed in the shape of a circle or a spiral.

Figure 1: The hermeneutic process

is often portrayed in the shape of a circle or a spiral. Figure 1: The hermeneutic

Source: Own construction

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A central element of the hermeneutic concept is the presuppositions and prejudices held by

the interpreter prior to reading the text. The reader’s comprehension of the text is constantly revised as the reader continues to read the ‘parts’, although our preconceptions can be so rigid that our interpretations become predetermined. Therefore, interpreters must identify any prejudgments so that the effects of these on the interpretation process can be acknowledged so not to distort the interpretation itself. In this thesis, hermeneutic principles are applied mainly in the examination of academic literature. However, many of the hermeneutic principles are also applied in the qualitative content analysis as this method holds certain interpretative aspects.

1.3.2 Qualitative content analysis

The qualitative content analysis is a research methodology used to make valid inferences from recorded communication (Weber, 1985: p. 9). It seeks to analyze latent as well as manifested content while stressing the importance of the context, which exists independent from the text itself (White & Marsh, 2006). According to Krippendorff (as cited in White

& Marsh, 2006), qualitative content analysis consists of four proponents, or steps: [1] text

sampling based on relevance, [2] text categorization, [3] considerations regarding the circumstances surrounding the text, and [4] adapting the analysis to the proposed research questions. In this paper, all these will be considered in the analysis of the CSR reports. First, the data will be purposively collected to ensure that the analysis will be based on relevant material. Second, the CSR reports will be categorized based on emerging themes

and topics in the texts. Third, the context of each case will briefly be explained to give an idea of the situation in which the cases exist. Finally, the content analysis will be adapted

to consider the ethical categories represented in the reports.

The qualitative content analysis has been chosen due to its flexibility and its gradual approach to written texts which precludes predetermined structures and frameworks (Kohlbacher, 2006). Especially flexibility becomes important as it allows the researcher to

adapt the analysis to unforeseen content and patterns which may be of relevance in answering the problem statement.

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1.3.3

Multi-case study as research design

The research conducted in this paper is based on a multi-case study research design, which

as the name implies, contains two or more cases. By drawing on a multitude of cases this

approach allows the researcher to look at each case on their own terms to find similarities,

dissimilarities and patterns across the cases (Baxter & Jack, pp. 550-551). Moreover, the multi-case study enables researchers to test theories and hypotheses rather than building them. In this regard, certain misunderstandings regarding the utility purposes of the case- study approach have emerged. However, Flyvbjerg (2011) refute these erroneous assertions by conversely stating that case-studies are relevant for making generalizations and testing hypotheses and theories. In this paper, a generalization of the entire oil industry is sought and organizational

theories are applied to infer how this industry may respond to institutional inconsistencies.

A multi-case study has been chosen as it implies making relatively in-depth research on a

relative small number of cases, which is what this study aims to do.

1.3.4 Induction or deduction

When doing research there are two different methods of reasoning researchers can adopt

depending on the nature of their research. These methods are identified as either deduction

or induction. Utilizing the deductive method the researcher draws conclusions based on a constituted theory or a set of general principles. In such cases, the researcher goes from general to specific information. It contends that if the theoretical premises are true the conclusion must also be true. In the inductive process, the researcher makes inferences from a particular case to a general case. In other words, with inductive reasoning the researcher attempts to develop a general theory or hypothesis based on empirical data or concrete examples.

As it follows from the research questions, the analysis conducted in this paper is divided into two parts. In the first part, a qualitative content analysis is utilized to categorize the rhetoric and content applied in the oil companies’ CSR reports. This analysis will be conducted using the inductive method as no over-ruling theory will be guiding the analysis. Instead, thematic categories and quotes will be derived carefully as the analysis goes along.

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In the second part of the analysis, new institutional theory and organizational hypocrisy are applied to the cases. In this context, making inferences regarding the behavior of these companies will be carried out deductively since specific presuppositions and conceptions of organizational behavior influence the emphasis and outcome of the analysis.

1.3.5 Validity in qualitative research

To determine the validity of qualitative research can be a complicated task since such research necessarily involves subjectivity. Nevertheless, Guba and Lincoln (1985) propose four criteria for determining the validity of qualitative research. These are credibility, transferability, dependability and confirmability. Credibility relates to whether the results of the research are credible, believable (or both) from a research participant’s perspective. In other words, do the results correspond to reality? In this paper, assuring as much credibility as possible is achieved by employing a well-established qualitative method to the analysis, i.e. the qualitative content analysis on a multi-case study. Furthermore, external data, documents and articles will be included in the second part of study to explain corporate behavior from an external point of view hence providing more credibility to the research. However, the researcher’s inexperience in conducting qualitative research may present some credibility issues to the research results. Transferability relates to the generalizability of the findings to other contexts. In this study, the aim is to determine the CSR rhetoric, CSR content and organizational behavior of an entire industry based on a few cases. The use of a multitude of cases should aid in the process of making the results more transferable to other companies within the same industry. Nevertheless, generalizing to other contexts should always be done with great caution and with great attention to contextual differences in each case. Dependability refers to whether similar results would be found if the research was to be repeated, i.e. would the same conclusions be made in a continuously changing context? In relation to this paper, assuring dependability is difficult to assess due the lack of prior knowledge of the chosen theoriesapplicability to this particular study. However, Guba and Lincoln (1985) suggest that by ensuring credibility, dependability will be positively affected.

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Confirmability refers to the extent to which the results could be validated by others, or put differently; how objective are the results. This may, for example, be achieved by providing detailed descriptions of the methodology applied in the research to allow others to scrutinize the research process. Moreover, the researcher can assure objectivity by taking a neutral stance on the subject matter to elude potential personal biases.

2. Data

This chapter serves the purposes of presenting the chosen data and to explain how it has been gathered. The first part presents the data used in this paper and explains how is has been collected. The second part presents the four cases that have been chosen for investigation.

2.1 Data and collection methods

As mentioned in chapter 1.3.3 this paper is based on a multi-case study, thus the material has been purposively selected to meet the specific needs of the study. By using four cases instead of one or two, this paper aims to make a broader generalization concerning an entire industry’s CSR content and corporate behavior. The cases have been chosen based on their size, their geographic context and also for reasons of convenience. Choosing the four largest oil companies gives the researcher more easily accessible information regarding the practices and behaviors of these companies, whereas choosing by geography allows for a cross-regional comparison of CSR content to suggest whether geographic contextual differences exist between the cases. The analytical material will be the four companies’ most recently published CSR reports, and all will be gathered from the companies’ websites.

In relation to the literary review, a series of academic articles and books will be used to derive the ethical categories which will be employed in the analysis of the companies’ CSR content. These categories will be identical to those presented by Ditlev-Simonsen and Wenstøp (2011). In the clarification of the ethical categories, books of ethical philosophy will be used along with academic articles within the field of business ethics.

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In explaining the theoretical framework of this paper the researcher will draw upon academic articles authored by institutional theorists. Furthermore, Nils Brunsson’s book ‘The Organization of Hypocrisy’ will be included as a suggestion to how the oil industry deals with inconsistent demands. All academic articles are found using the comprehensive article database ‘Business Source Complete’ or through internet search engines.

In the last part of the paper, it will be discussed how organizational hypocrisy may be reflected in the oil industry. In this context, articles and raw data from news media and research groups will be used to provide indications of how organizational hypocrisy is present in the oil industry based on their CSR reporting. This information will be gathered using media news websites and other internet websites relevant to the issue.

2.2 Case descriptions

For this study, the four largest oil companies have been chosen for CSR content assessment. These are BP plc, Royal Dutch Shell, Chevron Corporation and ExxonMobil. In choosing the material, the most recently published CSR reports have been picked as to represent the companies’ most current CSR reporting perspectives.

BP plc (Great Britain) In 1909, BP plc (then the Anglo-Persian Oil Company) discovered its first oil field in Persia. In the following years the British government bought a 51 percent stock majority in the Anglo-Persian Oil Company thus leaving the company in the hands of the state. Later in 1969 and 1970, the company discovered vast oil fields in Prudhoe Bay (Alaska) and the North Sea, and in 1987 the company (then British Petroleum) was privatized by the Thatcher government (BP, 2012). Today, BP plc is the third largest oil company and the fourth largest corporation in the world based on revenue (CNN Money, 2011). The company’s headquarter is currently located in Great Britain but the company is operational on six continents and present in more than 80 countries. BP plc’s main products are petroleum and natural gas, but it also invests in alternative energy sources such as biofuels and wind energy.

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This study will draw on BP’s Sustainability Review (2011) as analytical material (Appendix 1).

Royal Dutch Shell (The Netherlands/Great Britain) Royal Dutch Shell started operating in the late 19 th century in Russia. In 1958 it discovered one of Africa’s largest oil fields in the Niger Delta in Southern Nigeria where Royal Dutch Shell still operates (Shell, 2012a). In 1990, the company became the largest publicly traded energy company in the world with revenues exceeding $100 billion. Today, Shell operates in more than 80 countries and it is currently employing 90.000 people globally (Shell, 2012b). Shell still holds the position as the largest publicly traded energy company, and it is today the second largest corporation in the world (CNN Money, 2011). The company’s main products are petroleum and natural gas, although it also operates wind farms and biofuel projects. In this report, Royal Dutch Shell’s Sustainability Report (2011) will be analyzed (Appendix 2).

ExxonMobil (USA) ExxonMobil was founded by John D. Rockefeller (as a part of Standard Oil of New Jersey) in 1870. It expanded its operations to Latin America and the Middle East in the early 20 th century where it still operates today. In 1972 the company came to be known as Exxon and later in 1999 Exxon merged with Mobil to become ExxonMobil (ExxonMobil, 2012a). The company is currently operating in North America, South America, the Middle East, Europe and South-Pacific where it mainly extracts natural gas and crude oil (ExxonMobil, 2012b). ExxonMobil is currently the second largest energy company and the third largest corporation in the world (CNN Money, 2011). In the content analysis, ExxonMobil’s Corporate Citizenship Report (2010) is used as analytical material (Appendix 3).

Chevron Corporation (USA) Chevron (then the Pacific Coast Oil Co.) was founded in 1879 in California (USA). The company later merged with other companies and came to be Chevron Corporation in 1984. Today, Chevron operates in more than 32 countries and employs approximately 58.000

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people worldwide (Chevron Corporation, 2011). The company produces petroleum, natural gas and it operates geothermal energy plants. Moreover, Chevron invests in renewable energy sources such as biofuels and solar power (ibid). Chevron Corporation is currently fourth largest energy company and the 10 th largest corporation in the world (CNN Money,

2011).

In relation to this study, Chevron’s Corporate Responsibility Report (2010) will be analyzed for content and ethical categories (Appendix 4).

3. Ethical categories

In analyzing the content of the oil companies’ CSR reports, an emphasis will be placed on the ethical statements presented under each identified content category to give an idea how the companies apply ethics in their CSR reporting. This will allow the researcher to look for patterns, not only in content, but also in rhetoric. This chapter seeks to explain by what means and measures the CSR rhetoric will be analyzed. It draws on the taxonomy of ethical categories as presented by Ditlev-Simonsen and Wenstøp (2011) and combines it with the philosophical schools arranged by Crane and Matten (2007). The purpose of this chapter is to demonstrate how these ethical categories are derived, and how they relate to traditional ethical theories.

3.1 Ethical theories

In the examination of CSR reports, one will find that corporations apply rhetoric directed towards a myriad of stakeholders. Employees, local communities, NGOs and customers are just some of the recipients to which corporations target their CSR communication. In these corporate endeavors, rhetoric becomes the means by which corporations provide value statements and commitments. Such statements often carry moral and ethical elements from traditional ethical theories. These ethical theories are either categorized as consequentialist or non-consequentialist. Each of these two doctrines constitutes moral principles formulated by some of the most well-known moral philosophers. The next paragraphs elaborate on these principles, which are fundamental elements in the ethical categories

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applied in the analysis. To illustrate the principles’ relevance, these ethical theories are briefly related to contemporary business perspectives within business ethics.

3.1.1 Consequentialism

The principal idea of consequentialism is that the morality of an action is determined by the outcome it produces. Consequently, an action is morally justifiable if it results in more ‘good’ than ‘bad’. Theories characterized as consequentialist are built on the assumption that the consequence of an action is the only criterion from which morality can be judged. Therefore, actions which are normally frowned upon or even considered to be immoral can be justified if the end result promotes welfare, either to the general public or to the individual. This idea of outcome-based ethics emerged in the 18 th century as utilitarianism and later in the form of ethical egoism. The following sub-chapters account for each of these theories. Conclusively, each theory is related to contemporary business perspectives in order to accentuate their relevance to modern businesses.

Utilitarianism Utilitarianism is a branch of consequentialism introduced by the British moral philosopher Jeremy Bentham (1748-1832). Bentham argued that humans are governed exclusively by pain and pleasure, and therefore, these human drivers determine what we ought to do and what we shall do (Bentham, 1789: p. 1). Bentham’s successor, John Stuart Mill (1806- 1873), elaborated on the idea of utilitarianism and introduced the concept of ‘the greatest happiness principle’ which “holds that actions are right in proportion as they tend to promote happiness, wrong as they tend to produce the reverse of happiness” (Mill, 1906:

p. 9).

At present time, the utilitarian stance on ethics is still held by moral philosophers. Most noticeably is Peter Singer who added the importance of impartiality when contemplating the outcome of one’s actions. He suggested that ethical judgments should be made from a universal point of view, thereby stressing the significance of taking everyone’s interests into account (Singer, 1993: pp. 12-13). Moreover, Singer (1993) points out that the natural environment serves as a utility to humans, and that non-human life has intrinsic value.

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Therefore, we must consider the environmental implications of actions when contemplating or reasoning our behavior.

In contemporary business theories we see many of the utilitarian elements. Ditlev- Simonsen and Wenstøp (2011) contend that the utilitarian approach bear resemblance to R. Edward Freeman’s stakeholder theory. As with utilitarianism, stakeholder theory proposes that business leaders and managers consider every stakeholder who might be affected by their actions (Green & Donovan, 2010a: p. 22). In either instance, the acting agent is obliged to identify all relevant stakeholders in order to maximize utility and thereby promote the greatest welfare for anyone who carries a stake in the outcome of that particular action.

Ethical egoism The theory of ethical egoism argues that in order for a person to be moral, he or she must act in accordance with his or her self-interest. In other words, we should always take the course of action that maximizes our personal utility or pleasure (Gibson, 2007: pp. 15-16). Ayn Rand (1905-1982), one of the most renowned advocates of ethical egoism stated:

“The first right on earth is the right of the ego. Man’s first duty is to himself. His moral law is never to place his prime goal within the persons of others. His moral obligation is to do what he wishes, provided his wish does not depend primarily upon other men” (Rand, 1961: p. 66). The essence of Ayn Rand’s statement is that humans are obligated to pursue their own happiness or egotistic goals as longs as one does not harm other people in the process.

Ayn Rand’s ethical egoism does not imply that we cannot do ‘good’ for other people. On the contrary, it may in certain situations be in our self-interest to consider the interests of others. If an individual believes that by behaving altruistic he or she will gain future benefits which ultimately exceed the happiness that otherwise would have been obtained from acting out of immediate pleasure, one should do so as it would still be an act of self- interest.

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The perspectives represented in ethical egoism are somewhat similar to those delineated in shareholder theory. As with shareholder theory, ethical egoism emphasizes the obligation of moral agents to pursue their own happiness. In a business context that may be translated into the pursuit of profits as Friedman (1970) eloquently argued in his well-known article ‘The Social Responsibility of Business is to Increase Its Profits’.

3.1.2 Non-consequentialism

Whereas consequentialism judges morality of an action based on its outcome, non- consequentialism looks at the moral correctness or incorrectness of the action itself. In other words, all actions are inherently moral or immoral; consequently, non- consequentialist ethics provide moral agents with a set of indisputable moral rules which they must abide by. This means that the consequence of an action plays no role in moral judgment. Rather, our actions are determined by rights, duty and virtue as represented in the most predominant non-consequentialist theories, which are contractarianism, Kantianism and Aristotelian virtue ethics.

Contractarianism Contractarianism stems from the idea that people set up rules and restrictions by establishing governmental institutions aiming to maintain social order (i.e. social contracts). For social order to prevail, individuals must give up some of their liberties by accepting the social contract that exists between individuals and society. The governed must voluntarily waive these rights and liberties. The social contract is therefore said to be based on mutuality between acting agents in society (Cudd, 2008).

The concept of social contractwas introduced by Thomas Hobbes (1588-1679) in the 16 th century. Hobbes argued that man has natural individual rights, but that the egocentric and opportunistic character of man necessitates the establishment of authorities in the form of political institutions and civil societies (Tuck, 2006). Succeeding philosophers such as John Locke (1632-1704) and Jean-Jacques Rousseau (1712-1778) elaborated on Hobbes’ concept of a social contract from a libertarian and egalitarian point of view, respectively.

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John Rawls (1921-2002), a contemporary moral and political philosopher developed a theory of justice by drawing on the classic contractarian perspectives. In this regard, he introduced ‘the veil of ignorance; a method that would help moral agents to determine the rightness or wrongness of their actions by depriving them of any prior knowledge about their wealth, social status or role in society. Under this veil of ignorance, Rawls believed that people would automatically act in accordance with principles of fairness and justice (Mulhall & Swift, 2003: pp. 464-465). It is out of these principles that the social contract emerges and eventually determines the composition of laws and regulations within society.

The concept of a social contract is still applied in contemporary business theories. Most noticeably in the integrative social contract theory (ISCT) which employs many of the perspectives presented in classic contractarianism. ICCT provides a framework for business leaders to assess particular ethical issues in different business situations. The theory states that the morality of business practices is determined by a set of hypernorms, or universal norms, and by the prevailing norms and values within the community in which business is conducted (Donaldson & Dunfee, 1999).

Kantianism Immanuel Kant (1724-1804) was a German philosopher well-known for placing moral emphasis on duty. Kant was a strong proponent of moral universalism inasmuch he argued that a moral principle “would have to be binding to all rational agents, at all times and in all places” (Kerstein, 2002: p. 2). This came to be the ‘categorical imperative’. A method that would determine whether the duty one holds is true.

The ‘categorical imperative’ was built upon three maxims or codes of behavior. The first maxim states that a moral law cannot be valid unless it is universally applicable. The second maxim asserts that we must refrain from using humans as a means to our own ends. And the last maxim states that we must impose duties upon ourselves based on our reason. Kant believed that reason is the same for all people, thus similar duties and moral laws would be applied by all rational beings (DeGeorge, 2006: pp. 82-86).

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Kant’s duty-based principles are still pertinent in contemporary business theories. In 1999, Norman Bowie introduced a Kantian perspective to business ethics in which he applies the categorical imperative to argue that managers have other responsibilities besides making a profit (Green & Donovan, 2010: p. 25). In recent years, several articles have discussed different business perspectives using Kant’s moral principles (Feng, 2010; White, 2009; Reynolds & Bowie, 2004).

Virtue ethics Contrary to other ethical theories, virtue ethics stress the importance of a person’s inherent moral character, rather than a person’s moral obligations to society. People develop virtues, or moral traits, from which their actions must be determined no matter the consequences of their actions. By constantly exercising these virtues, people will through moral habits learn how to become moral and better people.

These ideas of moral character were initially put forth by Aristotle (384 BC-322 BC) who identified a series of virtues. Among them are modesty, fairness, generosity and temperance. To act in accordance with these virtues a person must gain practical wisdom, which is only obtained through experience. Thus, a person may be virtuous, but without practical wisdom acquired through experience that person is incapable of converting his or her virtues into moral actions.

During the Enlightenment virtue ethics lost its significance due to an emergence of alternative ethical theories, such as those summarized above (Smith, 2003: pp. 67-74). In recent years, however, virtue ethics have been readopted and reformulated by contemporary philosopher, Alasdair MacIntyre, who added that virtues are subject to constant change and that our virtues differ depending on the societal context (Solomon, 2003: pp. 138-141).

Virtue ethics have also recently been applied in business ethics. Robert Solomon (1992) proposes an approach to business ethics based on virtues. He argues that corporations’ main purpose is to create welfare and prosperity. In order to fulfill this purpose,

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corporations must break with the dogmatic thinking of corporations as chiefly profit- maximizing entities.

3.2 Presentation of ethical categories

This sub-chapter presents the ethical categories formulated by Ditlev-Simonsen and Wenstøp (2011). These categories have been derived from the traditional ethical theories summarized above along with the contemporary business perspectives associated with each of these theories. The subsequent paragraphs briefly explain the emphasis of each category and their relation to the traditional theories.

3.2.1 Agency

Agencyemerges out of ethical egoism; the idea that individuals, and in this case businesses, are obliged to promote their self-interests. In the case of a business, the interest would often equate to profits or to put it differently the interest of shareholders as in the spirit of Milton Friedman. Commitments and statements categorized as ‘agency’ adopt the shareholder’s approach to business, meaning that these aim to satisfy groups and individuals with a financial stake in the company.

3.2.2 Benefit

The category identified as ‘benefit’ make up commitments and statements with utilitarian elements. Particularly, utilitarianism as formulated by Peter Singer in which the interests of every group or person affected by the firm’s decisions must be accounted for. This also includes environmental aspects and concerns for non-humans. As mentioned earlier, recognizing everyone’s interest in business matters conforms to stakeholder theory, meaning that statements within the ‘benefit’ category are intended to satisfy demands from stakeholders with other interests than a company’s financial performance.

3.2.3 Contract

As the name implies the ‘contract’ category is associated with Rawlsian contractarianism. It is based on concepts such as rights, justice, laws and regulations. Statements and commitments classified as ‘contract’ adhere to a company’s obligation to follow laws,

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regulations and customs. Statements and commitments holding an ‘agency’ perspective do not go beyond respecting the rules and rights formulated by authorities and governments.

3.2.4 Duty

The ‘duty’ category encompasses Kantian ethical perspectives which stress the importance of rightness and wrongness. For companies to determine whether their actions are right or wrong, Treviño and Nelson (as cited in Crane and Matten, 2007: 98) suggest that firms imagine their actions being reported in a major newspaper. If the firm would feel uneasy about such disclosure they ought to reconsider their action. Statements categorized as ‘duty’ include commitments that companies should make no matter what.

3.2.5 Ethos

The ‘ethos’ category relates to virtue ethics as those formulated by Aristotle and Alasdair MacIntyre. Statements and commitments classified as ‘ethos’ depict how companies ought to be rather than what they should do. Ditlev-Simonsen and Wenstøp (2011) divides ‘ethos’ into two sub-categories: agency-related ‘ethos’ and benefit-related ‘ethos’. The former idealizes more business-oriented virtues such as excellence and leadership. The latter sub-category takes a more abstract approach in the sense that it emphasizes broader ideals such as trustworthiness and fairness (p. 71).

3.3 Categorical taxonomy

In the paragraphs above, traditional ethical theories have been accounted for and ethical categories have been derived using the denotations formulated by Ditlev-Simonsen and Wenstøp (2011). The illustration below summarizes these ethical categories and provides an overview of their relation to ethical theories and contemporary business perspectives.

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Figure 2: Ethical categories

Agency

Benefit

Contract

Duty

Ethos

Traditional

ethical theory

 

Type

Philosophical

contributors

Business

theorists

  Type Philosophical contributors Business theorists   Focus
  Type Philosophical contributors Business theorists   Focus
 

Focus

  Type Philosophical contributors Business theorists   Focus
Non- Non- Non- Consequentialist Consequentialist consequentialist consequentialist consequentialist Jeremy Bentham
Non- Non- Non- Consequentialist Consequentialist consequentialist consequentialist consequentialist Jeremy Bentham
Non- Non-
Non-
Consequentialist
Consequentialist
consequentialist
consequentialist
consequentialist
Jeremy Bentham
Thomas Hobbes
Aristotle
Ayn Rand
Immanuel Kant
John Stuart Mill
John Rawls
Alasdair MacIntyre
Peter Singer
Thomas Donaldson
Milton Friedman
Edward R. Freeman
Norman Bowie
Robert Solomon
Thomas W. Dunfee
Virtues
Shareholders
(e.g. leadership,
Collective welfare
Rules
Moral laws
Profits
excellence,
trustworthiness)

Ethical egoism

Utilitarianism

Contractarianism

Kantianism

Virtue ethics

Environment

Laws

Legitimacy

Stakeholders

Rights

Duty

Source: Own construction with inspiration from Ditlev-Simonsen and Wenstøp (2011) and Crane and Matten (2007)

These ethical categories (or rhetorical strategies) will be applied in the analysis to give an idea of what moral principles the oil companies relate to, how they are reflected in their statements and what firm values the companies communicate to their stakeholders. Combinations of two or more categories may occur in the CSR reports. For example, a statement or commitment may be targeted at external stakeholders (‘benefit’) as a means to fulfill commitments to shareholders (‘agency’). Any combination is plausible although some combinations may be more common than others.

4. Theoretical framework

This chapter looks at the concept of new institutionalism which will be the theoretical framework and perspective shaping the discussion after the content analysis has been conducted. First, a definition of what constitutes an institution is presented. Secondly, new institutionalism will be explained in more detail by including fundamental terms such as legitimacy and isomorphism. Finally, Nils Brunsson’s theory of organizational hypocrisy is introduced to give an idea of how organizations may deal with inconsistent demands from stakeholders.

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4.1

Institutions defined

In The International Encyclopedia of Organization Studies (Powell, 2007) it is contended that an organization is not merely a reflection of technical demands and resource dependencies. The definition is extended even further to integrate forces such as “rational myths, knowledge legitimated through the educational system and by professions, public opinion, and the law” (p. 1). Powell’s definition acknowledges that organizations consist not only of formal structures and rules, but also of informal and unquantifiable facets. Scott (2010) defines institutions as entities comprising three essential elements. These are the cultural-cognitive element, the normative element and the regulative element. The cultural-cognitive element elucidates the intangible and symbolic representations existing in an institution. They provide “normative prescriptions” and “regulatory controls” which become reflected in an institutions norms and rules (Scott, 2010: p. 7). In other words, cognitive elements describe the institutional forces which exert cognitive control over members’ range of action. The normative element emphasizes the existence of norms in institutions. These norms serve as institutional ground rules and guidelines which ensure somewhat standardized courses of action. Furthermore, it sets up institutional expectations which consolidate behavioral trends in order to prevent free riding and self-interested behavior (Scott, 2010: p. 6). The regulative element consists of more explicit and formalized regulatory processes such a rule establishment and incentive systems. Institutional members obey these regulations as to avoid sanctions and gain rewards (Scott, 2010: p. 7).

4.2 New institutionalism

New institutionalism is a theory residing in the field of organizational studies. It seeks to explain how organizations create legitimacy through conformity and adaption to societal norms, values, laws and paradigms. This institutional approach operates on the assumption that organizational rationality is limited as organizations are confronted with societal demands to which they must conform in order to maintain their legitimacy. This need to conform may not always comply with economic rationality (Nee, 2003: pp. 26-28).

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In new institutional theory, organizations are described as open systems. This openness, along with organizations’ need for legitimacy, necessitates organizations to comply with society’s perception of what constitutes a legitimate organization. Consequently, the norms, values and structures needed to comply with this perception are institutionalized and duplicated among organizations within an organizational field (Manza, 2006: p. 416).

According to DiMaggio and Powell (1983) this need for conformity homogenizes organizations within organizational fields. An organizational field relates to those organizations that, in aggregate, constitute a recognized area of institutional life: key suppliers, resource and product consumers, regulatory agencies, and other organizations that produce similar services or products(p. 148). They argue that organizational homogenization is a result of three isomorphic processes: coercive, mimetic and normative processes (ibid).

4.2.1 Isomorphic processes

DiMaggio and Powell (1983: p. 150) contend that organizations do not merely compete over customers and resources. They add that organizations are constantly competing for legitimacy and political power which results in homogenization through isomorphic behavior. Isomorphism is defined by DiMaggio and Powell (1983) as a “constraining process that forces one unit in a population to resemble other units that face the same set of environmental conditions” (p. 149). The following paragraphs describe these three distinct processes.

Coercive isomorphism Coercive isomorphism occurs as a result of formal and informal pressures imposed on one institution by other institutions in the same field. This pressure may arise from governmental institutions in the form of environmental regulations, tax increases, working conditions requirements and so forth. Apart from that, pressures to which an organization must adapt may also stem from a competitor or a parent company (DiMaggio & Powell, 1983: pp. 150-151).

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Mimetic isomorphism As the name implies, mimetic isomorphism concerns how organizations within an organizational field imitate and adopt each others’ structures, innovations and initiatives. When an organization is confronted with uncertainty or ambiguous problems they tend to model other organizations which they perceive as more legitimate (DiMaggio & Powell, 1983: pp. 151-152). To clarify the matter, organizations within a field are inclined to duplicate organizational structures, technologies and communication methods of other organizations that appear more productive, successful and socially legitimate in the eyes of internal and external stakeholders.

Normative isomorphism The last isomorphic process is normative isomorphism which arises from professionalization. Larson (as cited in DiMaggio & Powell, 1983) defines professionalization as the collective struggle of members of an occupation to define the conditions and methods of their work, to control ‘the production of producers’, and to establish cognitive base and legitimation for their occupational autonomy” (p. 152). Through this process emerges occupational networks across organizations within organizational fields, and as result, homogenized norms and understandings evolve. This process is aided by labor unions, trade associations, educational programs and so forth.

These three isomorphic processes are essential elements in new institutionalism. They provide a general understanding of how and why organizations within organizational fields become homogenized over time, and why organizations sometimes are deemed to act irrationality in order to uphold or improve their legitimacy. Moreover, it is important to note that these isomorphic processes may not result in efficiency improvements. Modeling organizational behavior and structures take place deliberately and unintentionally, without the organizations actually knowing whether this modeling will result in improved efficiency or legitimacy (DiMaggio & Powell, 1983: pp. 151-154).

4.3 Organizational hypocrisy

In continuation of the isomorphic processes, the term ‘organizational hypocrisy’ becomes vital to organizations confronted with inconsistent demands and pressures from their

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institutional environments. In Nils Brunsson’s rather controversial book, ‘The Organization of Hypocrisy’, he argues that organizations through talk, decisionsand actionscultivate a plurality of ideologies as responses to the inconsistent demands emerging from their institutional environments. He refers to hypocrisy as an organizational necessity that organizations involuntarily adopt as a means to satisfy conflicting demands.

It is important to note that hypocrisy in this context does not hold a negative moral connotation, rather it describes an inconsistency between what is being said and what actually takes place. Brunsson (2002) defines organizational hypocrisy as the difference between words and deeds, the eventuality that organizations may talk in one way, decide in another and act in a third” (p. xiii). This means that organizations may meet some of its demands by means of talk, others through decision-making and a third group of demands using actions. The inconsistency and irreconcilability of these demands result in organizational hypocrisy. Therefore, companies may consciously or unconsciously direct talk which pleases a certain stakeholder group while acting in a contradictory way to satisfy another group of stakeholders whose demands and expectations appear inconsistent with the first stakeholder group’s demands.

These organizational practices deviate significantly from traditional decision theory in which management talk and decisions pointing in one direction are assumed to increase the likelihood of that corresponding action will be taken” (Brunsson, 2002: xiv). Brunsson rejects traditional decision theory arguing that organizations do the complete opposite. They talk in one way to compensate for their opposing actions. However, it is this traditional theory’s predominance and general acceptance that makes organizational hypocrisy efficient (Brunsson, 2002: xiv).

Over the years, it has become increasingly important for organizations operating within a free market economy to address the continuous growth of external demands if the organizations are to be successful (Brunsson, 2002). A business can no longer allocate all its attention to production efficiency and profit maximization as organizations have become involved in the creation, clarification, transmission and application of rules, norms and interests – all of which can greatly impede the prospects for efficiency” (p. 1).

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Products and practices are expected to reflect the values and norms in the organizations’ environments if businesses are to be considered legitimate (Brunsson, 2002: p. 6).

4.3.1 Legitimacy

According to Brunsson (2002), organizations are dependent on their external environments in two respects. The first concerns an organization’s need for obtaining resources such as capital, labor and materials. The second relates to an organization’s need for acceptance. In this regard, Brunsson presents two ideal types of organizations: action organizations and political organizations. An action organization is legitimized through organized action while the political organization depends on its reflection of opposing demands and attentiveness to environmental inconsistencies.

Action organizations An action organization can be characterized as a ‘resource exchanging’ organization as it is highly dependent on exchanging resources with its external environment. Brunsson (2002:

pp. 14-19) presents eight features inherent to such organizations.

Agreement as a principle for recruitment: Recruited members share the organization’s mission and vision.

Strong organizational ideology: Rules, norms and conventions limit members’ freedom of action.

Lack of decision-making: The strong organizational ideology makes actions predictable and obvious which omits the need for decision-making.

Consistency between ideology and actions: The action organization does what it says as its legitimacy is determined solely by its actions.

Specialization focus: Solutions are the action organization’s main product.

Firm confidence: Strong organizational ideology and norms give members a strong belief in the organization’s excellence.

Limited rationality: The action organization cultivates a single perspective about how it ought to operate. Action organizations require coordinated action and uniformity in order to be as efficient as possible. But on the contrary, such organizations do not require organizational hypocrisy since their legitimacy is determined exclusively by the actions they produce.

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Political organizations In contrast to action organizations, a political organization is not reliant on producing action. Rather, its survival depends on its ability to satisfy inconsistent demands in its environment. To reflect this myriad of demands, the political organization recruits members with different ideologies, values and approaches in order to create decisions and talk which meet these inconsistent demands. Conflict is perpetuated and skepticism is encouraged to ensure that the organization will continue to represent the different ideologies it is confronted with. Therefore, hypocrisy becomes a fundamental behavior in the political organization (Brunsson, 2002: pp. 19-26).

It is important to note that political and action organizations represent two extremes on an organizational continuum. Often, organizations have to deal with both legitimation perspectives as they are expected to reflect inconsistent demands while producing actions. This creates a dilemma for organizations, which is dealt with by separating the organizations in a process called ‘decoupling’.

4.3.2 Decoupling

When organizations find themselves in situations where they are incapable of fulfilling certain norms and requirements for action and processes, decoupling becomes essential in dealing with these issues. Meyer and Rowan (as mentioned in Brunsson. 2002: p. 7) refer to decoupling as the separation of an organization into two structures denoted formal and informal organizations. The formal organization deals with demands originating from the institutional environment such as those expressed by politicians, consumers and interest groups. Informal organizations focus on coordinating actions internally to maximize and improve efficiency. What is conveyed to the outside world in the formal organization may well be different from what is conveyed internally in the informal organization, hence hypocrisy becomes the unavoidable outcome if all interests and demands are to be met.

In relation to decoupling, Brunsson (2002) identifies four ways by which organizations can separate these two principal elements. The first encompasses a separation of time where organizations respond to demands for politics at one time and demands for actions at

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another time. The second involves a separation by topic where certain issues are dealt with using political means (i.e. talk), and other issues using concrete action. The third separation method looks at separation by environments where legitimacy depends on the environment with which the organization interacts. The last approach is separation by organizational units where some of the organization’s units respond to political demands while other units primarily attend to action related demands (Brunsson, 2002: pp. 33-38).

5. Analysis and discussion

In this chapter, the four leading oil companies’ CSR reports are analyzed using a qualitative content analysis and the ethical categories presented in chapter 3.2 and 3.3. The content categories are determined based on the emphasis of the given themes in the reports. Under each content category, statements holding ethical perspectives are presented and ethical categories are allocated to these statements. In introducing each of these cases, a brief summary of the main allegations held against these companies is presented. This will give an indication of what themes the CSR reports will be elaborating on. In the second part, the concept of isomorphism is used to discuss the content and rhetoric of the reports. It looks at how isomorphic pressures may explain the similarities in the oil companies’ CSR reports. Finally, a discussion drawing on organizational hypocrisy exhibits how the oil industry responds to inconsistent demands using organizational hypocrisy.

5.1 BP plc

Since 2010, BP plc (hereafter BP) has been subjected to immense media attention and public criticism due to its inadvertent oil drilling operations in the Gulf of Mexico, causing one of the largest marine oil spills in history. Numerous stakeholders have been affected directly and indirectly – by the incident at BP’s Deepwater Horizon oil rig, consequently damaging the corporation’s year-long struggle to create a perception of BP as an environmentally conscious corporation (Krauss, 2010). Moreover, the company’s clumsy

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response to the incident has made matters worse hence exacerbating BP’s reputation as irresponsible and untrustworthy (Webb, 2010). In the aftermath of the oil spill, BP has initiated multiple public relations and ad campaigns aimed to rebuild the company’s image and regain the trust of its stakeholders. These endeavors are clearly reflected in BP’s ‘2011 Sustainability Review’ where much attention has been allocated to the issues concerning the oil spill. The particularity of BP’s current situation and its ongoing crisis communication result in a sustainability report which emphasizes topics such as safety and environment; oftentimes, in relation to the oil spill incident and the mistakes made in this regard. In the following paragraphs, thematic categories in BP’s sustainability report are identified and corporate statements and commitments to stakeholders are elicited from each category (Page references from appendix 1).

5.1.1 Safety

BP introduces its sustainability report by recognizing the need for improved safety and risk management as a result of its insufficient security measures at its oil rigs in the Gulf of Mexico. The safety aspect is the overarching topic and sets the tone for the entire report. This emphasis on safety emerges clearly from the report’s opening statement:

“We [BP] strive to be a safety leader in our industry” (p. 5) and adds that “Safety is good business” (p. 5). Relating these statements to the ethical categories presented in chapter 3, it follows that BP strives to be the best in the industry; a leader. Being a leader is an overt expression of a business-related ideal, and therefore, it can be categorized as something BP does out of virtue (‘ethos’). However, from the subsequent statement it follows that being a leader in safety is good for business, which indicates that BP has certain self-interested motives for adopting this virtue of safety leadership (agency). BP continues on the safety issue by stressing the importance of safety in the workforce and throughout its entire operations:

“Safety and risk management are at the heart of our people policies and safety has been re-emphasized within our values as a top priority. Our performance management and reward systems encourage excellence in safety” (p. 23).

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Again, BP accentuates virtues in its company culture by emphasizing how excellence in safety permeates its business operations. Overall, it is appears apparent that BP is trying to address the lack of safety associated with its operations.

5.1.2 Environment and renewable energy

BP’s reporting on environmental issues and the future of renewable energy sources is rather comprehensive. The company’s CSR report devotes whole chapters to matters concerning the company’s environmental impact and its investments in renewable energy sources such as wind and biofuels.

In continuation of the BP oil spill, the report presents several commitments to the stakeholders affected by, and concerned with, the ecological impact of the incident in the Gulf of Mexico:

“As part of our commitment to environmental restoration, BP is providing $1 billion for yearly restoration projects designed to accelerate efforts to restore natural resources that were injured as a result of the incident” (p. 2). In this commitment, BP recognizes that it has certain responsibilities, i.e. it has a ‘duty’ to rectify the negative impact of its operations. If BP decided not to take responsibility, its failure to do so would appear in every major news media as described by Crane and Matten

(2007).

Despite the nature of the products it extracts, and the oil industry’s stained reputation as anti-carbon abatement actors in Washington DC (Mayer, 2008), BP emphasizes the importance of taking a proactive stance on legislation seeking to reduce carbon dioxide in the earth’s atmosphere. BP expresses a concern for the increasing emission of greenhouse gases caused by staggering economic growth in developing countries:

“BP supports government action to limit emissions and deliver a sustainable energy mix, including placing a price on carbon, increasing energy efficiency and providing transitional incentives that enable renewable energy to become competitive at scale” (pp.

2-3).

BP openly commits itself to support any legislation aiming to limit the emissions caused by the combustion of its own products because it shares the widespread concerns about the

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rising global CO 2 emission levels(p. 2). In other words, it is implied that BP supports legislation because the consequences of not taking action are seen as undesirable ends, i.e. BP’s motive for supporting carbon abatement legislation holds a ‘benefit’ perspective since it goes beyond profits and benefits others than the corporation itself.

5.1.3 Communities and human rights

In addition to the chapters focusing on safety and environmental issues, BP’s CSR report includes topics relating to human rights and the local communities affected by its operations. BP acknowledges that it often operates in sensitive socio-economic environments where involuntary resettlement, community disturbances and cultural implications are some of the issues it must deal with on a regular basis. In this regard, BP asserts that it has certain commitments:

“We aim to fulfil our commitments to communities throughout the lifecycle of our operations” (p. 43). These commitments emphasize that BP has certain obligations when it operates in different communities. In other words, BP has moral obligations, or duties (‘duty’) toward external stakeholders (‘benefit’) and these are acknowledged.

In continuation of describing its operations in sensitive geographic areas, BP commits itself to the Universal Declaration of Human Rights and UN’s Guiding Principles for Business and Human Rights. “BP supports the Universal Declaration of Human Rights, which lays out the rights to which all human beings are entitled. We have also supported recent multi-stakeholder efforts to establish clear, universally-applicable guidelines on the responsibilities of businesses in relation to human rights issues” (p. 29). BP presents a clear commitment to protect human rights, i.e. this statement holds obvious contractarian elements (‘contract’) in that it relates to the rights and justice of humanity.

5.2 Royal Dutch Shell

Royal Dutch Shell (hereafter Shell) has over the years been subjected to public scrutiny due to allegations of human rights abuses, illegal gas flaring practices and insufficient operational security measures in the Niger Delta where a great portion of the company’s oil

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extraction takes place. Moreover, Shell has been criticized for environmental and operational misconduct in the North Sea, most noticeably exemplified in Shell’s disposal plans for its Brent Spar storage buoy, which initially was planned to be dumped into Atlantic waters These incidents and their implications are clearly manifested in the content of Shell’s Sustainability report since many of the themes in the report seem to be replying these allegations. Topics concerning climate change, renewable energy, human rights and operational safety are all highlighted in Shell’s CSR report. In the following sub-chapters, commitments and statements relating to these topics are presented to accentuate what moral stance is taken in each of these areas (Page references from appendix 2).

5.2.1 Safety

It clearly emerges from Shell’s sustainability report that the devastation caused by the incident at BP’s Deepwater Horizon oil rig has affected the content of its CSR report. On numerous occasions, Shell stresses the importance of operational and environmental safety everywhere it operates while continuously accentuating the rigor of their safety standards:

“After the BP Deepwater Horizon tragedy in 2010, the energy industry rightly came under intense scrutiny. For Shell, safety remains our top priority” (p. 1). Shell does not express any pursuit of being the ‘best’ or a ‘leader’ in safety matters. It merely contends that safety is a company priority and that preventing incidents while creating a culture of safety is of great importance to the company (p. 4). However, Shell points out that the public, regulators, their employees and their contractors expect them to deliver energy and products safely and responsibly (p. 4), i.e. the company must do what the company is expected to do thus it imposes a ‘duty’ upon itself based on reason.

5.2.2 Climate change and emission reductions

Shell’s reporting on environmental issues relating to global climate change, renewable energy sources and the protection of wildlife are vast and ubiquitous throughout the report. It addresses broad as well as specific environmental issues, but particularly issues relating to climate change to which Shell emphasizes the need for immediate action:

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“[…] climate change remains a global threat, while countries are facing mounting tensions over fresh-water supplies and food prices” (p. 2) and continues “[…] our response to the challenges of energy and climate change are not to wait for government policies or international coalitions to form. We are taking action today” (p. 2). These statements represent an indirect commitment from Shell to proactively partake in carbon dioxide emission reductions. The motive does not appear to be one of profit- maximization or self-interest considering the damaging properties innate to its products. On the contrary, the perspectives reflected in these exact statements appear to benefit societies and local communities that are negatively affected by the effects of climate change (‘benefit’). However, when taking the reading further, it appears as if these emission reduction measures also hold self-motivated aspects:

“We work continuously to improve the efficiency of our own operations, both to help reduce CO 2 emissions and to be more cost competitive” (p. 7). That is to say, that reducing carbon dioxide is not merely an attempt to satisfy stakeholders concerned about emissions, but also a means to cut expenses and thereby improve the company’s financial performance (‘agency’).

5.2.3 Communities and human rights

As mentioned in the introduction to this chapter, Shell has been accused of violating basic human rights in Nigeria through its cooperation with the oppressive military regime during the 1990s. (Vidal, 2011). Shell indirectly addresses these accusations by emphasizing its commitment to human rights and its contribution in the formulation of human rights principles:

“Our business principles require our employees and contractors to respect the human rights of other employees and the communities where we work” (p. 9) and “Shell was a founding member of the UN Global Compact and we support its principles in human rights, labour, environment and anti-corruption” (p. 1). Respecting basic human rights adheres to a company’s obligation to obey a constituted set of universally applicable moral rules. Again, respecting such fundamental moral principles is in line with a contractarian perspective (‘contract’).

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5.3 ExxonMobil

ExxonMobil (hereafter Exxon) was in 1989 implicated in one the most environmentally devastating oil spill accidents in history when the Exxon Valdez oil tanker ran aground along the coast of Alaska. Exxon was later criticized for inadequately responding to the incident, which resulted in consumer boycott campaigns and a severely damaged reputation (Mulkern, 2010). Recently, ExxonMobil has once again been subject to public scrutiny due to a rupture in one of its pipelines running across the sensitive ecological zone of the Yellowstone National Park. In addition to dealing with oil spills, ExxonMobil has been widely criticized for its involvement in American politics and funding of scientists disputing the reality of global warming (Ball, 2007; Oreskes & Conway, 2010). These political activities along with financial performance, operational safety, environmental issues and human rights are some of the main topics dealt with in ExxonMobil’s CSR reporting. In the following paragraphs, the most predominant themes in ExxonMobil’s corporate citizenship report are identified, and statements relating to these are clarified using the ethical categories presented in chapter 3 (Page references from appendix 3).

5.3.1 Financial performance and political activity

Being a profitable and financially stable corporation is undoubtedly ExxonMobil’s main objective. Throughout the entire report, performing well financially is explicitly expressed as a top priority:

“We seek to deliver superior shareholder value through disciplined capital investments, operational excellence, and the maintenance of long-term industry perspective. We expect this approach to translate into strong earnings and cash flows […]” (p. 10) and “ExxonMobil’s responsibility is to provide competitively priced energy supplies to our customers while delivering value to our shareholders” (p. 10). From these statements follow that ExxonMobil is decidedly driven by a profit motive (‘agency’). Being profitable is its main responsibility, which is in line with Friedman’s (1970) view of the business.

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In continuation of ExxonMobil’s straightforward rhetoric regarding its profit motives, the company openly states that it takes an active political role through contributions to political candidates and advocacy groups:

“ExxonMobil makes political contributions to candidate committees, political parties, associations, and other political organizations, as permitted by applicable laws in the United States and Canada, and as authorized by the Board of Directors” (p. 23). ExxonMobil reasons its engagement in politics by emphasizing that it is within the company’s right to do so. Hence, it does not explicitly adhere to any specific moral principles, but rather it justifies its actions by relating to the laws of society (‘contract’). It later follows that ExxonMobil finds it necessary to employ these practices if it is to maintain superior financial performance:

“Lobbying and advocacy activities are necessary to ensure the company’s long-term success and protect shareholder value” (p. 23). The statement indicates that engaging in political activities arises primarily out of self- interest, i.e. to ensure that dividends are paid out to its shareholders (‘agency’).

5.3.2 Safety, security and health

Safety, health and security are some of the recurring topics in ExxonMobil’s CSR report, and clearly top priorities for the company. In its corporate citizenship report the company is continuously emphasizing its efforts to be the best in these areas:

“We hold our commitment to excellence in safety, security and health in the workforce as a core value – one that shapes the decision making at every level” (p. 13) and “In addition, we are emphasizing safety leadership behaviors […]” (p. 13). Here, ExxonMobil makes use of a business-related ‘ethos’, i.e. it has aspirations to be the best in practicing safety, security and health. However, most noticeably, it strives for leadership in safety, which is stressed on numerous occasions in the report.

5.3.3 Environment

ExxonMobil allocates much attention to environmental issues; however, its reporting on these matters is rather technical and the company refrains from making obvious commitments to protecting the environment. Instead, it thoroughly explains how it utilizes

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its Operations Integrity Management System to supervise its environmental performance and climate change strategy. In addressing environmental concerns regarding its operational facilities, ExxonMobil takes a rather neutral stance:

“We comply with all applicable host-country regulatory requirements and where there are none, we perform to standards that are protective of the environment” (p. 25). The statement holds contractarian elements (‘contract’) in that ExxonMobil does not make any explicit commitments to particular moral principles; rather, it expresses that it is doing the bare minimum by following environmental laws and regulations, although it claims to go beyond these laws when these are not present.

5.3.4 Communities and human rights

Knowing that it operates in diverse geographic regions with stakeholders from different cultural backgrounds, ExxonMobil stresses the importance of containing the impact it has on these local communities (p. 45). In this regard, ExxonMobil commits themselves to the human rights principles set forth by the United Nations:

“Our commitment to human rights […] are consistent with the spirit and intent of the United Nations Universal Declaration of Human Rights […]” (p. 46). Respecting these universally applicable moral guidelines is in keeping with a contractarian perspective (‘contract’); and although ExxonMobil is required to respect the moral codes formulated in the declaration, the company respects human rights not just because doing so fosters a stable business environment, but more importantly, because it is the right thing to do” (p. 46). In other words, respecting human rights is something everyone ought to do, i.e. it is considered a moral ‘duty’.

5.4 Chevron

Prior to 1992, Chevron (then Texaco) was accused of discharging huge amounts of contaminated water into the Ecuadorian rainforest causing environmental damage to one of the planets most sensitive eco-systems. Moreover, roughly 30.000 plaintiffs have sued Chevron for negligent operation practices resulting in vast health damages and severe water contamination. Recently, after 19 years of ongoing litigation, a $18 billion verdict

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was upheld against Chevron by an Ecuadorian court. Chevron appealed the court ruling calling it illegitimate and corruptly exerted (Chevron Corporation, 2012a). In addition to the negative publicity followed by year-long litigation processes in the US and Ecuador, Chevron has been criticized for its involvement in national politics and for its support of science disputing the fact of anthropogenic climate change (Levy & Kolk, 2002: p. 275). Chevron’s corporate responsibility report introduces aspects of its operational activities in different geographic regions. In each of these regions, topics relating to safety, environment, local communities and human rights are presented. In the following text, these main topics are introduced and statements relating to these are categorized using the categorical taxonomy (Page references from appendix 4).

5.4.1 Safety

Chevron, one of the major oil drilling operators in the Gulf of Mexico, expresses an evident concern for the BP oil spill in the Gulf of Mexico by continuously emphasizing the importance of operational and environmental safety. By way of introduction, Chevron makes certain to stakeholders that the company upholds the highest standards when it comes to safety and security:

“The incident reinforced our own safety imperative to reach our goal of zero incidents wherever we operate. Toward that goal, all of our projects are guided by our strong safety culture” (p. 3) because it has a “[…] personal stake in operating safely – to sustain the public’s trust in its operations, to bring our employees safely home and to bring value to those who invest in us” (p. 3). Here, Chevron describes how by fulfilling their moral obligation (‘duty’) of providing safety, trust from its stakeholders can be achieved (‘benefit’) and value can be returned to investors (‘agency’). This safety imperative is repeatedly emphasized in the description of each geographic region in which Chevron operates.

5.4.2 Environment

In the reporting of its environmental performance, Chevron makes use of several concrete examples to illustrate how it is dealing with environmental concerns. In relation to a natural gas project in Australia, Chevron asserts that it is exhibiting environmental

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stewardship(p. 6). In other words, it has been entrusted to the company that it will be environmentally responsible, and Chevron is taking on this responsibility or moral obligation (‘duty). Doing so is important for the company and its endeavor to maintain their “[…] reputation as an environmental champion of Barrow Island (Australia)”.

5.4.3 Communities and human rights

Chevron recognizes that its presence in sensitive socio-economic areas impacts local communities, thus it holds certain social responsibilities toward these stakeholders. In its reporting on oil drilling activities in Angola, Chevron stresses how it subsidizes the local community:

“Our investments in health, education and economic development in Angola improve livelihoods and foster stable operating environments that contribute to our ability to conducts business” (p. 11). In this case, investing in the local community (‘benefit’) becomes a means to foster an environment conducive to business, i.e. contributions are made to reduce the risk of local uncertainties interfering with its business (‘agency’). In the section covering Chevron’s operations in Nigeria, a similar perspective is presented. Here, Chevron emphasizes how local communities are struggling with the threat of HIV/AIDS, malaria and tuberculosis, and how Chevron is investing in programs aiming to reduce these threats because doing so is the right thing to do, and it is good business(p. 28), i.e. it is fulfilling its moral obligation (‘duty’) because it enhances its business performance (‘agency’).

In relation to human rights, Chevron thoroughly describes how human rights considerations practically have been implemented in the corporation:

“Our commitment to respecting human rights is embodied in the Chevron Way” (p. 31) It follows from the statement that Chevron respects and upholds human rights principles (‘contract’). However, a commitment to the Universal Declaration of Human Rights is not explicitly made in the report.

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5.5 Summary of content and rhetoric

Despite the fact that the four major oil companies have published rather comprehensive CSR reports covering a variety of topics, the number of commitments and statements to which ethical categories can be allocated are quite limited. Instead, the oil companies apply rhetoric describing concrete measures taken by the companies in each of the identified areas while avoiding more abstract ethical rhetoric. In this regard, Chevron and ExxonMobil’s rhetoric stands out as more technical and more focused on presenting examples of good corporate citizenship. BP and Shell, on the other hand, present themselves as more proactive to the needs and expectations of their stakeholders, especially in relation to climate change and renewable energy.

With respect to content, the CSR reports of the four oil companies are remarkably similar. Issues relating to safety, human rights, environment and local communities are presented in all the reports. It appears, however, that the safety aspect is the topic prioritized the most by all companies. Thereafter, environmental issues, and mainly those relating to climate change for which all companies express their concerns. In relation to reducing CO 2 emissions, all companies assert that they are in the process of addressing these issues either by investing in improved efficiency or by investments in renewable energy. Moreover, all four companies express their dedication to protect human rights and respect local communities.

However similar these reports are in relation to content, ExxonMobil’s report deviates from the thematic pattern by disclosing financial priorities and political engagement. In addition, ExxonMobil refrains from making open commitments to invest in renewable energy and it does not openly support greenhouse gas cap-and-trade schemes, whereas BP and Shell both supports such measures. Chevron does not make explicit commitments to support the implementation of carbon cap-and-trade; however, investments in renewable energy are emphasized and climate change issues are addressed by the Chevron.

Another similarity is found in the ethical categories applied in the reports. In relation to safety, rhetorical statements holding virtues such as ‘excellence’ and ‘leadership’ are emphasized along with the companies’ moral obligation to practice superior safety. With

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respect to human rights, all companies commits themselves to basic human rights by applying contractarian arguments, i.e. people hold inherent rights that are universally applicable across cultures hence these are to be respected at all times. The ethical categories applied in relation to environmental issues are more varied as several ethical perspectives were presented. In this regard, ethical commitments and statements holding moral principles are and often presented in relation to concrete examples.

In conclusion, the overall content and the ethical statements represented in the reports are notably similar. Not only that, but also the structure and the emphasis placed on the subjects carry resemblance. The reasons for this CSR convergence are briefly explained in the next chapter by presenting the isomorphic processes and pressures surrounding the oil industry.

5.6 Isomorphism in the oil industry

In order to explain the similarities identified in the content and rhetoric analysis conducted in the previous chapters, new institutional theory suggests that one investigates the isomorphic pressures pervading the institutional environment in which the organizations operate. According to Sharma (2000), organizations within the same institutional environment adopt similar strategies in responding to external pressures. When strong norms develop within an organizational field, organizations sense an obligation to adopt these norms in order to maintain legitimacy. In this regard, institutional isomorphic processes help to explain why corporate responsibility communication within the oil industry appears so relatively similar. Furthermore, DiMaggio and Powell (1983) assert that “the greater extent to which an organizational field is dependent upon a single (or several similar) source of support for vital resources, the higher the level of isomorphism” (p. 155). The oil industry is clearly categorized as one such organizational field hence it is highly plausible that the oil companies have undergone these processes.

As previously explained, new institutionalism operates with three distinct isomorphic processes which collectively promote homogenization of organizations within institutional environments. These processes (or pressures) are coercive, mimetic and normative. Coercive isomorphism emerges from political forces and the problems relating to external

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legitimacy whereas normative and mimetic processes occur due to uncertainties within the institutional environment (DiMaggio & Powell, 1983). In relation to this analysis, identifying intra-industrial pressures can be rather complicated due to the researcher’s external approach to the cases. To ascertain the significance of these isomorphic processes requires a deeper and more thorough analysis of the cases, preferably one of more ethnographic character. Nevertheless, the following paragraphs will provide examples of pressures which may be contributing to the identified convergence of CSR strategies in the oil industry.

5.6.1 Coercive pressures

It goes without saying that the oil industry faces a variety of external coercive pressures. Formal pressures from regulators such as safety standards, pollution control and anti-trust laws together with informal pressures like consumer boycott and transparency claims are just some of the coercive pressures confronting the oil industry. Moreover, the multinational status held by these companies amplifies these pressures as it requires the companies to consider several pressures emanating from several different countries. In addition, these pressures may appear contradictory as some of the interests held by external agents have different objectives. A classic example of such differences involves the shareholder and the environmentalist. The rational shareholder will expect the highest possible dividend payout whereas the environmentalist might demand investments in renewable energy sources which may prove unprofitable for the company. One of the most predominant examples of a coercive pressure causing isomorphism in the oil industry involves the Kyoto Protocol and the science put forth by the Intergovernmental Panel on Climate Change (IPCC). First of all, the ratification of the Kyoto Protocol in a vast majority of the countries in which these companies operate has resulted in the imposition CO 2 emissions constraints. Second, the oil industry has been coerced to take a stand on climate change. In continuation of the cases, it follows that all the companies are addressing climate change emphasizing the importance of taking action either by improving efficiency or investing in renewable energy. However, as already mentioned, Chevron and ExxonMobil present a more reactive approach to climate change. Fassin and Buelens (2011) suggest that such divergences in climate change policies may be due to the fact that European oil companies are experiencing a more intensive coercive

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pressure from NGOs, governments and consumers to display superior environmental responsibility. Conversely, American companies have been more reluctant to accept the basis for implementing carbon abatement legislation as Americans in general tend to be more individualistic and averse to governmental restrictions (Levy & Kolk, 2002: p. 275). This implies that cultural and ideological differences between the companies result in slight deviations in the companies’ climate change strategy. Nonetheless, climate change policies have been adopted by all the companies and this may be attributed to such coercive pressures. Despite the slight deviations in the emphasis on environmental issues, the oil companies appear to be facing many of the same coercive pressures. Their role as multinational corporations operating in many of the same regions suggests that these companies experience similar pressures. These similarities may be a contributing factor to the convergence of CSR strategies.

5.6.2 Mimetic pressures

A mimetic pressure emerges when an organization suspects that one or more organization within the same institutional environment is considered to be more legitimate in the eyes of the stakeholders. In these situations, organizations tend to duplicate the activities of other organizations that appear to have a more legitimate social profile (Godfrey, 2007: p. 212). To assert the degree to which CSR strategy homogenization is caused by mimetic processes is complicated in practice. However, the fact that the CSR reports hold many similarities in relation to content indicates that such processes are present in the oil industry. To understand these processes, one must investigate the historic development of CSR content to affirm whether mimetic processes have affected the content of an industry’s aggregate CSR contents. In this study, the historical development of the oil industry’s CSR content has not been investigated. Nevertheless, Escobar and Vredenburg (2011) conducted a comprehensive study suggesting that mimetic processes exist in the oil industry. The findings of the study show that the more environmentally reactive American oil companies have a tendency to imitate the sustainability policies of the more proactive European companies (Shell and BP), hence this modeling is reflected in the content of the oil companies’ CSR reports.

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5.6.3 Normative pressures

The normative isomorphic pressure stems from the establishment of professional networks and associations within an institutional environment. Through these organizational units, shared norms and values emerge which lead to similar conceptions of how organizations ought to act in a given situation. As with mimetic pressures, normative pressures and their affect on CSR convergence can be difficult to assess since such pressures occur internally in the industry. However, there are certain obvious intra-industrial pressures or norms which appear to have an influence on CSR homogenization. An example is the numerous trade associations such as the American Petroleum Institute (API) and the European Petroleum Industry Association, which both represent the oil industry. In these organizations, oil companies align themselves against regulators, NGOs and governments. Moreover, these organizations establish operational and safety standards which members may feel compelled to adopt in order to conform to the institutional norms hence gaining acceptance and legitimacy in the industry. In relation to the cases, it is noted that all four companies report in accordance with the guidelines on voluntarily sustainability reporting formulated by the International Petroleum Industry Environmental Conservation Association (IPIECA) and the API. The establishment of such industry standards will obviously have a significant effect on the topics covered in the industry’s CSR reporting thus normative processes exist in the form of industry guidelines.

The isomorphic processes illustrate how the oil industry is confronted with many of the same pressures and demands, consequently aiding in the standardization of the oil industry’s CSR content. Despite the similarities in the oil companies’ institutional pressures, the pressures themselves do often arise from stakeholders whose demands are inconsistent with one another. The contradictory pressures and demands emerging from local communities, governments, NGOs and competitors are according to Brunsson (2002) impossible to satisfy. These inconsistencies may result in actions which fail to meet all demands hence the companies may become necessitated to satisfy some demands through talk (i.e. rhetoric) and others through actions.

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5.7 Hypocrisy in the oil industry?

Brunsson (2002) argues that for an organization to successfully address the pressures emanating from its institutional environment it must necessarily separate its rhetoric from its actions if the organization is to maintain legitimacy from opposing stakeholder interests. Thus, Brunsson does not relate to hypocrisy as a problem, but rather as a solution that gives organizations managerial maneuverability in their organizational field. If some actions are immediately satisfactory to some stakeholders but not to others, then organizations can simply talk about actions they plan to take in the future or through talk, make up for actions taken in the past. In this regard, CSR can be seen as communicative tool through which the oil companies express their good intentions and moral values so as to gain social legitimacy without the need of taking action. As described in chapter 4.3.1, organizations can be either political or action-oriented, or a combination of the two. In the case of the oil industry whose mere existence depends on its ability to be profitable producing actions in order to achieve financial objectives is undoubtedly the overarching concern. However, as Brunnson argues (2002), the ability to take efficient action may be diminished if the industry fails to satisfy non-financial demands. Therefore, oil companies must ascertain that all demands are satisfied in order to ensure legitimacy from both perspectives. Consequently, dilemmas arise as to whose demands the companies ought to satisfy and organizational hypocrisy becomes the unavoidable outcome. In the following sub-chapters, indications of dissonance between what is stated and emphasized in the oil companiesCSR reports, and what is being practiced in reality, are presented to exemplify how the oil industry may be using CSR as a communicative tool to practice organizational hypocrisy.

5.7.1 Safety regulations

From the CSR content analysis it appears evident that the oil companies present themselves as highly committed to safety. In all reports, safety is an omnipresent topic that is referred to either as a company priority or an area in which the companies are striving for excellence or leadership.

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Prior to the explosion at BP’s Deepwater Horizon oil rig in the Gulf of Mexico a series of new safety regulations were introduced by the American government, aiming to reduce the number of incidents and non-compliant drilling operations occurring in the Gulf of Mexico. Despite the oil companies’ great emphasis on safety and their numerous commitments to being the best in safety, the oil industry, represented by the API and the Offshore Operators Committee, fought off the regulations claiming their own voluntary safety programs were adequate and more suited to the needs of the industry (Baram, 2010). It was suggested that implementing the new regulations would incur significant costs to the oil companies, and it would require them to be audited by regulators to ensure that they were following safety protocols (ibid). In relation to the oil companiessafety measures, there seems to be a discrepancy between how the companies present themselves as safety ‘leaders’, and how safety is prioritized in reality. In this case, a dilemma arises for the oil companies. On one side, environmentalists, employees and governments expect the companies to implement the highest safety standards. On the other side, implementing such standards would have been costly and disruptive to its operations thus resulting in losses to shareholders. To rectify safety failures in relation to oil spills and rig explosions, companies can emphasize how they strive to be ‘leaders’ and ‘excellent’ in safety so to divert unwanted scrutiny and regain lost legitimacy, or to make up for inadequate action taken in the past.

5.7.2 Lobbying and climate change

In the four cases that have been analyzed it is stated directly or indirectly that climate change is being addressed through investments in renewable energy sources and/or efficiency programs. In short, the CSR reports indicate that the companies are committed to aid in the process of cutting carbon dioxide emissions, although with different approaches. Especially BP and Shell appear cooperative in the formulation and implementation of carbon abatement legislation as they both openly support putting a price on carbon. Nevertheless, these companies have been known to spend staggering amounts on lobbying campaigns aiming to persuade members of the American Congress to favor pro-industry legislation and oppose carbon abatement legislation (Menestrel et al., 2002). The table below illustrates how much the four leading oil companies and the API spent on advocacy campaigns in the US in 2011.

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Table 2: Lobbying expenditures in the US, 2011

British

Petroleum

Royal Dutch

Shell

ExxonMobil

Lobbying

expenditures 2011

$

8.640.000

$

8.130.000

Chevron

Corporation

API

$

14.790.000

$

12.730.000

$

9.510.000

Source: Own construction. Data gathered from ‘The Center of Responsive Politics’

ExxonMobil is the only company to openly admit that it engages in lobbyist activities as a means to ensure value to its shareholders. Nonetheless, the company expresses the need for the industry to address the risks concerning climate change, but the company continues to fund think tanks denying the reality of global warming (Adam, 2009).

API, which among others represents the four leading oil companies, recently opposed a climate bill aiming to reduce CO 2 emissions. API asserted that the enforcement of carbon abatement legislation would lead to job losses and increased costs (Greenpeace, 2009). Shell and BP claims to support such CO 2 emission schemes but through its representation (the API), these companies appear to be more averse to emissions schemes than is expressed in their CSR reports. Furthermore, both companies have been criticized for selling out on their renewable energy and for deceiving consumers through ‘greenwash’ campaigns such as ‘Beyond Petroleum’ (BP) and ‘A New Energy Future’ (Shell) (Pearce,

2009).

In relation to climate change, a dilemma emerges for the oil industry. Environmental stakeholders may urge oil companies to support carbon abatement legislation whereas financial stakeholders wish to ensure the future profitability of the companies, hence renouncing the support of emission constraints as such legislation would greatly impede the future business of the industry. However, the companies may feel coerced to express support for these regulations so as to gain legitimacy while act contradictory because such legislation necessarily would threaten their future existence.

5.7.3 Human rights issues

Throughout the last 30 years the oil industry has been accused of violating human rights and disrespecting local communities in some of world’s poorest countries. BP, Shell,

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ExxonMobil and Chevron are all operating in some of the most instable political environments which often mean that oil companies are cooperating with dubious governments and junta regimes (Terminski, 2011). The most conspicuous example in relation to human rights violations involves Shell and its operations in Ogoniland (Nigeria) where the company has been accused of cooperating with the brutal Nigerian military dictatorship to fight the opposition that rose from the Ogoni people in the mid-1990s. During a nonviolent protest by the Ogoni people, thousands of people were killed, beaten and raped by the military with which Shell was cooperating (Boele et al., 2001). Shell would later stand trial charged with complicity and egregious human rights abuses due to its indirect involvement. In the following years, Shell tried to reverse its damaged reputation by changing its communication strategy to present itself as highly committed to human rights (ibid). Another example involves Chevron’s activities in Myanmar where the company operates a gas pipeline running from Myanmar to Thailand. As with Shell, Chevron has been condemned for its cooperation with an oppressive military regime which has been linked to severe human rights violations such as forced labor, sexual harassment and brutal evictions (Terminski, 2011). The oil industry’s claimed commitments to human rights appear irreconcilable with the fact that these companies are collaborating financially with oppressive regimes. Once again, dilemmas arise for these companies operating in authoritarian countries. The products they extract are highly demanded and the companies’ existences depend on their ability to deliver oil and gas. On the contrary, extracting such products often involves collaboration with governments known to disregard human rights, which clearly reduce these companies’ perceived social legitimacy. Counteracting this dilemma, for instance, by avoid making open commitments to human rights would undoubtedly damage the companies’ perceived legitimacy. In this regard, the oil industry’s great emphasis on human rights in its CSR reporting may be a means to rebuild legitimacy lost as a consequence of these scandals.

It follows from the previous indications of hypocrisy that the oil industry tends to act in accordance with shareholder demands rather than stakeholder demands when inconsistencies arise. Relating this to the ethical categories, it seems that that oil industry

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have a tendency to act based on financial motives (i.e. ‘agency’) while using CSR to depict itself as being committed to its stakeholders (i.e. ‘benefit’) using a variety of ethical elements (‘contract’, ‘duty’ and ‘ethos’). That is not to say, however, that the oil industry’s CSR reporting is merely communicative manipulation seeking to achieve legitimacy without taking action. This suggests that the oil industry’s conflicting demands and its need for legitimacy occasionally results inconsistencies between what the industry does and the perspectives it reflects in its CSR reporting.

7. Conclusion

The purpose of this paper was not to scrutinize the oil industry for moral deficiencies or to contend that the oil industry’s CSR reporting is purely empty rhetoric. Rather, this paper aimed to analyze the content and rhetoric of the oil industry’s CSR reporting in order to investigate how this complies with some of the numerous allegations held against the industry. In approaching these objectives, ethical categories were derived using relevant business ethics literature, and the new institutional approach to organizations was adopted to examine the oil industry by applying concepts such as isomorphismand organizational hypocrisy.

The study discovered a notable similarity in the oil industry’s CSR content and rhetoric. Topics relating to safety, environment, climate change and human rights were some of the most common issues covered in the companies’ CSR reports. Moreover, it was found that the ethical perspectives reflected in the CSR reports were rather similar. In this regard, only small rhetoric-related deviations were to be identified among the CSR reports. It was suggested that the difference in content and rhetoric between the companies were related to cultural and ideological difference between the European and American oil companies.

To explain the CSR convergence identified in the content analysis, concepts of coercive, mimetic and normative isomorphic processes were discussed to suggest which institutional forces that may be the cause of the industry’s homogenization of CSR reports. It was found

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that the oil companies’ statuses as multinational corporations facing similar institutional demands and intensive oversight from numerous stakeholders resulted in four rather similar CSR reports.

Finally, the concept of organizational hypocrisy was discussed in the relation to the content and perspectives reflected in the CSR reports. Indications of organizational hypocrisy were presented based on some of the controversies surrounding the oil companies. These examples, compared with the content presented in the CSR reports, suggested that the oil industry may react to inconsistent demands by reflecting socially legitimate stances on a variety of issues while not always conforming to these perspectives.

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Characters excl. blanks: 95.283 Figures and tables: 2.400 Total: 97.683

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