DISASTER
Organizations’ environmental CSR reporting after the 2010
Gulf of Mexico spill
A content analysis of organizations’ environmental sustainability
disclosure before and after an environmental disaster
Name: Theresa Brongers Student number: 10428445
School: Graduate school of communication Master programme: Corporate communication Supervisor: Iina Hellsten
Abstract
This paper analyses the environmental report and media release disclosures of three of the largest oil companies in reaction to the Gulf of Mexico spill on April, 20, 2010. A content analysis was used to analyse the environmental disclosures of the oil companies before and after the disaster. An increase in environmental disclosures and legitimacy strategies in organizations’ environmental disclosures after the oil spill was predicted, based on legitimacy theory. The results indicate that there was a non-significant increase in the organizations’ environmental disclosures after the environmental disaster. There was a weak association between the oil spill and several of the elements of the image enhancement strategy and avoidance/deflection strategies used by the oil companies. The organizations never used the disclaimer strategy in their disclosures. When compared separately, only British Petroleum has a significant increase in their legitimacy strategies after the environmental disaster. Gazprom and ConocoPhillips did not have a significant increase when tested for separately. This study contributes to the knowledge of organizations’ disclosure patterns in response to an environmental disaster, which can be useful to relevant stakeholders.
Key words: oil spill, environmental disclosure, legitimacy
Introduction
There has been a growing awareness of the negative effects of human activity on the natural environment, which has led to organizations paying an increasing amount of attention to the issue (Delgado-Ceballos, Aragón-Correa, Ortiz-de-Mandojana & Rueda-Manzanares, 2012). This attention to environmental issues has become an increasingly important matter for organizations to manage, since various stakeholder groups are continuously putting pressure on organizations to accept accountability for the environmental impact of their activities (Summerhays & de Villiers, 2012).
Corporate social responsibility (CSR) and sustainability are two of the main terms used to refer to the environmental and social contributions and consequences of the activity of organizations (Jenkins & Yakovleva, 2006). The most often used definition of CSR is the one by Caroll (1979, p .500), stating that “CSR is the social responsibility of organizations
encompassing the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time”. Sustainability, on the other hand is defined by Devuyst (2001, p.9) as “a tool that can help decision-makers and policy-makers decide what actions they should take and should not take in an attempt to make society more sustainable”.
Three dimensions exist in sustainability/CSR, namely economic development,
environmental protection and social cohesion (Jenkins & Yakovleva, 2006). The dimensions will be further discussed in the theoretical part of this study.
The focus of this study lies on the dimension of environmental protection in CSR. The choice to focus on this aspect is made because of the growing awareness of the negative effect of harmful human activity on the environment (Delgado-Ceballos et al., 2012).
Environmentally responsible business practices have therefore deemed to be more important than ever, as society’s expectations of organizations environmental responsibility have increased (Babiak & Trendafilova, 2011).
A huge oil spill represents an event which has in the past focused a lot of attention on public policy debates for better management of the environment and environmental issues (Darrel & Schwartz, 1997). It will therefore be interesting to get to the core of CSR in the case of an environmental crisis. This will be done on the basis of a case study regarding the oil spill on April 20, 2010 in the Gulf of Mexico. This spill was the result of an explosion on the Deepwater Horizon platform owned by British Petroleum (BP). This disaster is chosen because it is one of the largest environmental disasters in American history and therefore it is to be expected to have an impact on organizations and their stakeholders, as a crisis can have an impact on the legitimacy of an organization (Robertson & Krauss, 2010: Summerhays & de Villiers, 2012).
CSR is an important aspect related to the oil spill, as it is the means to strengthen the organizations’ legitimacy in the case of a crisis (Jenkins & Yakovleva, 2006). Organizations rely on environmental disclosures to communicate to stakeholders about their CSR activities (Farache & Perks, 2010). Environmental disclosures are associated with the broader aspects of corporate social reporting (Darrel & Schwartz, 1997). Organizations report about their environmental sustainability mostly in their owned media (Lovett & Staelin (2016). Owned media are defined by Lovett and Staelin (2016) as media that are owned by an organization whose original business is not in the media market.
Although there are quite some studies that analyse disclosures, only a few studies have examined how an external event impacts the disclosure strategies and decisions of
organizations (Deegan, Rankin & Voght, 2000; Patten, 1992). The insights of the existing literature indicate that disclosure decisions and strategies can be complex and are still not fully understood (Summerhays & de Villiers, 2012). Examining organizations’ environmental disclosure before and after a disaster will therefore provide further insights into the
These insights can be useful for stakeholders like regulators, environmental groups, investors etc.
This paper examines organizations’ environmental disclosure patterns before and after an environmental disaster, namely the 2010’ Deepwater Horzizon oil spill in the Gulf of Mexico. This is done so that there can be an indication made about the way an environmental disaster would affect the environmental disclosure of an organization. This has led to the following research question:
RQ: How does an environmental crisis affect the organization’s environmental sustainability disclosure?
Theoretical background
Legitimacy theory
Legitimacy theory is one of the main theories to understand the disclosure strategies of organizations (Summerhays & de Villiers, 2012). Dowling and Pfeffer (1975, p.122) define legitimacy as a condition or status which exists when an entity’s value system is congruent with the value system of the larger social system of which the entity is a part. Legitimacy theory predicts that an organization will use various disclosure strategies to preserve an image of a socially responsible citizen to ensure continued access to the resources needed for
business success (Summerhays & de Villiers, 2012). Organizations will constantly attempt to make sure that their activities are seen as legitimate by outside parties to ensure their own survival (Cho, 2009).
Central to legitimacy theory is the notion of a ‘social contract’ (Deegan, 2006). A social contract indicates that organizations have contracts with society and by fulfilling these contracts the organization earns legitimacy for itself and its actions (Cormier & Gordon, 2001; Deegan, 2006). Because the social contract justifies the organization’s goal and its survival, much effort will be made to ensure its conservation (Cho, 2009). When a disparity, actual or potential, exists between the value systems of the organization and society, there is a threat to the organizations’ legitimacy. A legitimacy threat can be caused by sudden
revelations about an organization that differs from prior perceptions of an organizations relevant public (Summerhays & de Villiers, 2012). This threat might occur because of either corporate performance has changed while society’s expectations of corporate performance stay the same, society’s expectations have changed of corporate performance while corporate
performance stays the same or both society’s expectations and organizations’ corporate performance have changed but in a different direction. (O’Donovan, 2002).
Several studies have investigated how a crisis can lead to a legitimacy threat for an organization (Patten, 1992; Summerhays & de Villiers, 2012). An environmental disaster linked to an organization is an example of an event that can lead to a legitimacy threat (Summerhays & de Villiers, 2012). The legitimacy threat would in this case be caused by society’s expectation of corporate performance changing, while the organization did not alter their activities (O’Donovan, 2002).
Social disclosures can be seen as a method of responding to the crisis caused by organization, as it can change perceptions of the relevant public (Patten, 1992). Disclosures are an important legitimising management tool, as they provide a relatively cost effective way of influencing the public opinion (Cormier & Gordon, 2001). Studies focussing on
organizations’ legitimacy after an oil spill are the most relevant here. (Cho, 2009; Darrel & Schwartz, 1997; Deegan, Rankin & Voght, 2000; Patten, 1992; Summerhays & de Villiers, 2012). Patten (1992) and Deegan, Rankin & Voght (2000) show that the annual report
environmental disclosures of oil organizations increased after ExxonMobil’s Alaskan oil spill, caused by Exxon. The other oil organizations, besides the responsible ones, are included in these studies as Patten (1992) argues that the legitimacy of the oil industry does not relate to a specific tie to an accident, but rather on the general impact of an oil spill on society’s attitude towards oil organizations. Darrel & Schwartz (1997) show an increase in environmental disclosures as well and link the increase of organizations’ environmental disclosures after the Alaskan oil spill to public policy pressure. Summerhays & de Villiers (2012) show an
increase in environmental disclosures after the Gulf of Mexico oil spill, caused by British Petroleum. Summerhays & de Villiers (2012) also agree with the fact that multiple oil organizations should be included in the study, next to the responsible one, because of the general impact of an oil spill on society’s attitude towards oil organizations. They proved this statement by comparing the increases in environmental disclosures across the different oil companies. The responsible one (BP) did not have a higher increase of disclosures after the oil spill than the other oil companies.
An increase in (positive) environmental disclosures has been identified by Deegan (2006) as the most prevalent way to manage perceptions of the relevant public. It is therefore proposed that organizations are likely to respond to a legitimacy threat by increasing their environmental disclosures related to the accident, hereby aiming to legitimize the ongoing operations of the organization.
H1: The quantity of disclosures of an organization’s environmental CSR practices increases after an environmental disaster.
Defining the construct of corporate social responsibility (CSR) and sustainability
Corporate social responsibility (CSR) and sustainability are two of the main terms used to describe the social and environmental contributions and consequences of the activity of organizations (Jenkins & Yakovleva, 2006). Even though CSR and sustainability refer to the same environmental and social management issues, the existing literature has not yet dictated a clear distinction between the two terms (Montiel, 2008). CSR and sustainability share the same goal, as they strive to balance different commands of shareholders and economic responsibilities with environmental and social ones (Jenkins & Yakovleva, 2006;
Montiel, 2008). Therefore the two terms can and will be used interchangeably
To categorize the activities of CSR, the literature subdivides these corporate activities into several dimensions. There are three dimensions within the constructs of corporate social responsibility or sustainability, namely economic development, environmental protection and social cohesion (Jenkins & Yakovleva, 2006). The dimension of economic development is the means by which organizations attempt to tackle issues that might arise in their interactions with stakeholders, suppliers and customers in the market place (Torugsa, O’Donohue, &
Hecker, 2013). The social cohesion dimension brings recognition to the safety, health and general well-being of employees; enables organizations to act as good citizens in their local community and motivates their workforce by offering development opportunities and training
(Torugsa, O’Donohue, & Hecker, 2013). The dimension of environmental protection has a
focus on eco-efficiency, pollution prevention, innovation and environmental leadership
(Torugsa, O’Donohue, & Hecker, 2013). The aim of the dimension of environmental
protection often lies in the minimizing of the organizations’ environmental impact,
characterized by environmental management systems that are internationally compliant to ensure that the activities of organizations that have an environmental impact are
systematically managed and monitored (Torugsa, O’Donohue, & Hecker, 2013).
Why practice CSR?
CSR calls for an organization to respond to the demands of its shareholders, including customers, the general public, employees and affected communities, to issues like climate change, human rights and employee welfare (Hamann, 2003). CSR can be understood as a
means of strengthening organizations’ legitimacy as it is an opportunity for them to communicate to stakeholders about the congruence between organizations’ activities and society’s expectations and perceptions of organizations’ activities (Farache & Perks, 2010).
Besides strengthening its legitimacy, the CSR activities of organizations are driven by the potential business returns that organizations can receive from their CSR actions (Du, Bhattacharya & Sen, 2010). By being a good corporate citizen, an organization can receive possible business returns like: generating favourable stakeholder attitudes, better support behaviors, strengthen stakeholder-company relationships, over the long run, build corporate image and enhance stakeholders’ advocacy behaviours (Du, Bhattacharya & Sen, 2010). Communicating CSR activities to stakeholders forms an essential part in the implementation and success of CSR, as this will form the perception of the stakeholders towards the
organization (Crane & Glozer, 2016).
Walker and Howard (2002) outlined several reasons why CSR is in particular important for mining organizations.
The first reason is that the public opinion of the sector as a whole is poor because the opinion about resource extraction industries is mostly influenced by concern over environmental and social performance. Mining is perceived to represent the depletion of a limited stock of natural resources, which has led to a view of the mining industry as a unsustainable industry (Peck & Sinding, 2003).
Secondly, pressure groups consistently target the sector, challenging the industry’s legitimacy (Walker & Howard, 2002). A legitimacy threat can endanger continued survival of the
organization, because stakeholders can withdraw support and limit resources (Summerhays & de Villiers, 2012). An example of pressure groups targeting the sector is the fact that several NGO’s have campaigns that target the mining sector; for example Greenpeace with their campaign called people vs oil. Greenpeace aims with their campaign to stop the mining of oil by mining organizations by getting together people to join their movement.
Lastly, maintaining a ‘licence to operate’ is challenging (Walker & Howard, 2002). A license
to operate can be considered to exist when a project has the broad acceptance and ongoing approval of the society to conduct its activities (Prno & Slocombe, 2012). There is a need for organizations, especially in the mineral sector to gain a license to operate in order to avoid exposure to social risks and potentially costly conflict (Bridge, 2004; Prno & Slocombe, 2012). When an organizations’ activities do not seem to fit within the bounds of what the society thinks is appropriate, then its ability to continue operating might be negatively affected (Deegan & Rankin, 1996).
These findings are consistent with the fact that the oil industry has increasingly been forced to justify their existence and document their social and environmental performance (Peck & Sinding, 2003). This is why most mining organizations now disclose information about their CSR practices (Jenkins & Yakovleva, 2006). Organizations that have the most environmental impact even tend to have more environmental disclosures than other
organizations in order legitimise their activities in the eyes of society ( De Villiers & Lubbe, 2001)
Legitimacy strategies
Most organizations are expected to react to a crisis by undertaking certain disclosure strategies to reduce the negative effects from a legitimacy threat (Deegan, Rankin & Voght, 2000). Cho (2009) classified three types of communication tactics for legitimacy-seeking organizations based on the studies of Dowling and Pfeffer (1975), Lindbolm (1993) and O'Donovan (2002). The types are the following: Image enhancement; avoidance/deflection; disclaimer. The image enhancement strategy entails that an organization attempts to appear legitimate by linking itself to positive social values, hereby disclosing self-praising
information about its accomplishments and commitments in regards to environmental and social matters (Cho, 2009).
The literature provides five possible tactics to respond to a legitimacy threat within the image enhancement strategy (Cho, 2009; O’Donovan, 2002; Summerhays & de Villiers, 2012). First of all, the organization might make symbolic disclosures that announce an immediate inquiry into the cause of the spill. Second, they might assure the relevant public that any measure to prevent a similar future accident will be undertaken. They might reiterate past achievements, emphasize current positive environmental activities and/or frame the actions taken in regards to the legitimacy threat in a positive way.
With the avoidance/deflection strategy, an organization attempts to appear legitimate by avoiding or deflecting attention from specific environmental concern issues to other related or non-related matters (Cho, 2009). Hereby challenging the link between the environmental disaster and the organization (Summerhays & de Villiers, 2012). The avoidance/deflection strategy can be subdivided by two tactics. The organization tries to appear legitimate by identifying with symbols/values seen as legitimate or the organization would not mention the disaster in their disclosures.
The disclaimer strategy entails that an organization attempts to appear legitimate by denying its responsibilities about harmful or negative events, incidents or matters and/or using
disclaimer statements. The tactics used in the disclaimer strategy are the organization claiming to not be responsible and/or the organization claiming that it is unfair for organization’s like themselves to be held responsible.
In summary, after a crisis, organizations will most likely attempt to regain legitimacy by using the image enhancement, disclaimer, and/or avoidance/deflection strategy in their disclosures. Legitimation strategies are dependent upon the aims or purposes of the
organizational response (O’Donovan, 2002). Legitimation strategies will differ depending on whether the organization is trying to gain, maintain or repair the legitimacy when threatened (O’Donovan, 2002). An environmental disaster like the Deepwater Horizon oil spill can be seen as an example of a crisis that needed repairing legitimacy (Summerhays & de Villiers, 2012). Cho (2009) indicates that when an organization faces multiple and major crises, the need to use deflection and disclaimer disclosure increases. But according to O’Donovan
(2002) it is not feasible in the case of a high profile crisis event to completely ignore the event in the disclosures of the organization. Therefore, it is proposed that organizations will focus more on image enhancement and disclaimer strategies and less on avoidance/deflection strategies after the disaster then they did before the disaster. Keeping in mind that the organization most likely aimed to maintain legitimacy through their disclosures before the disaster and after the disaster aimed to repair their legitimacy (O’Donovan). This has led to the following hypotheses.
H2 (a): Organizations will use the image enhancement strategy more after an environmental disaster than before the disaster.
H2 (b): Organizations will use the disclaimer strategy more after an environmental disaster than before the disaster.
H2 (c ) : Organizations will use the avoidance/deflection strategy less after an environmental disaster then before the disaster.
Owned media
Today’s media landscape is systemized by owned, paid and earned media (Lovett and Staelin, 2016). Owned media are defined by Lovett and Staelin (2016) as media that are owned by an organization whose original business is not in the media market. Paid media are paid for by the organization to have the media present their communication offers (Lovett and Staelin (2016). Earned media are earned when the media talks about the organization without
being paid (Lovett & Staelin, 2016). Since the focus of this study lies on the disclosures of organizations themselves, only owned media will be analysed.
Organizations often use multiple media platforms to create complementary versions of crisis response (Chewning, 2015). Therefore multiple media sources will be analysed, as the oil companies might use different media sources for their sustainability communication. The two media sources that will be analysed are the annual sustainability reports and media releases on the websites of the oi companies.
The choice to use annual reports lies in the fact that they are the most publicised and visible documents produced by companies (Jenkins & Yakovleva, 2006). They are a primary source of information for investors employees, environmental groups and other stakeholders (Neu, Warsame & Pedwell, 1988) and are perceived as a credible source of information as they are required by legislation (Jenkins & Yakovleva, 2006: Neu, Warsame & Pedwell, 1988). Besides the traditional annual report, the standalone sustainability or environmental report has been used by organizations to send out environmental information (Cho, 2009). This type of report provides more detailed information about the organizations’ sustainable activities than the traditional annual reports (Cho, 2009). Because this study focuses on environmental disclosures, the annual sustainability reports will therefore be used for analysis instead of the traditional annual reports
Besides the annual report, there are also other channels on which an organization communicates with their stakeholders. A relatively new platform used by organizations and their public is online media (Muralidharan, Dillistone & Shin, 2011). The media releases are posted regularly over time on the websites of the oil companies. Since the speed in which an organization can process and deliver information is an important measure of the effectiveness of crisis communication, online media can provide the right platform to communicate to the public (Muralidharan, Dillistone & Shin, 2011). For this reason, this study will also focus on media releases besides the annual environmental reports.
The environmental disaster (Background)
On April 10, 2010 an explosion emerged on the Deepwater Horizon drilling platform in the Gulf of Mexico (Pallardy, 2010). The explosion killed eleven people and is considered to be the largest oil spill in the history of the petroleum industry (Pallardy, 2010). Therefore, the oil spill has gone down into history as one of the largest environmental disasters in
later sank on April 20th followed by a huge discharge of 4.9 million barrels of oil into the Gulf of Mexico (Pallardy, 2010). Although BP tried to close the channel through which the oil was drawn, the fail-safe mechanism malfunctioned (Pallardy, 2010). The environmental costs of the leak were huge (Meiner, 2020). Thousands of sea animals, like sea turtles, birds, fish and mammals living in the sea were plastered with leaked oil (Meiner, 2020). A lot of these sea animals got sick or died and stranded on nearby beaches (Meiner, 2020). Society’s perception was that BP was responsible for the harm of the oil spill (Dittrick, 2010). This subsequently led to a huge legitimacy treat for the whole oil industry (Summerhays & de Villiers, 2012).
Method
This study examines organizations’ environmental disclosure in their annual
environmental reports and media/press releases before and after the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. This will provide more information about the way that an environmental disaster affects the environmental disclosure patterns of organizations. The oil spill led to critique of the extraction methods used by the whole oil industry (Patten, 1992). Therefore, next to BP, the communications of the other two biggest oil companies around that time will be examined as well. The three oil companies analysed will be three of the biggest oil companies present around the time of the disaster (Hussain, 2011). These are: British Petroleum, ConocoPhillips, and Gazprom (Hussain, 2011). The annual environmental reports and media releases of the three oil companies will be analysed for two reasons. The first reason is to determine if the amount of environmental disclosure of the organizations went up after the oil spill disaster. The second reason is to determine which crisis response strategy is used by the organizations before and after the oil spill, namely image enhancement, avoidance/deflection and/or disclaimer strategy.
The method used for the analysis is content analysis. Content analysis is a technique for gathering and analysing the content of text (Aureli, 2017). This method is fitting for this study since this technique has been utilised a lot with social and environmental disclosures of organizations to for example describe organizations’ reactions to industrial disasters and other legitimacy issues (Aureli, 2017).
Changes in the environmental disclosure of the three oil companies before and after the oil spill will be examined by analysing the annual environmental reports and social media of the companies before and after the disaster. The oil companies have a separate annual report for their environmental responsibility, namely the environmental report. Therefore the
unit of analysis of the three oil companies is the environmental reports as a whole. Of every organization, the annual environmental reports of 2008, 2009, 2011 and 2012 will be analysed. Besides the annual environmental reports, the media releases of the oil companies will also be examined. The media releases can be found on the website of the oil companies. The analysis of the media releases will be done from approximately a month before the disaster and a month after the disaster. The time period before the disaster consists of media releases from the 1st of March till the 21nd of April and the period after the disaster will last from the 22nd of April till the 7th of June. Because the amount of media releases during that time period differs per organization, a random sample will be taken of the amount of media releases that are available in the chosen time period per organization. BP had 12 media releases available in the time period before the disaster and 37 media releases after.
Conocophillips had 10 media releases available before the environmental disaster during the chosen time period and 11 releases after. Gazprom had 73 media releases available in the time period before the disaster and 36 releases after the disaster.
The unit of analysis of the media releases is the whole media release post. Since the media releases are relatively short to read, it is feasible to take the whole post into account. In order to have the same amount of articles for every organization, the aim was to have 20 articles per oil company. 10 of the month before the disaster and 10 of the month after the disaster. This will add up to 30 articles before the environmental disaster and 30 articles after the disaster. The time period before the disaster
The quantity of environmental disclosures was measured using six categories of environmental statements or discussions. The categories are based on the literature of Cho, Patten, and Roberts (2006). The legitimacy strategies were measured using multiple elements per strategy. The elements were based on the literature of Summerhays and de Villiers (2012). The image enhancement strategy was measured with five items. The avoidance/deflection strategy was measured with two items and the disclaimer strategy was measured with two items as well (see Appendix A).
To test the intercoder reliability of the codebook, a sample of 10% of the sample is independently coded by two coders. Since ten percent of a total of 12 annual reports is 1.2 report, 1 environmental report of BP is used for intercoder reliability. This is done because 0.2 of a report would not be useful to code, since the unit of analysis is a whole environmental report. With the use of Krippendorff’s Alpha, the 2018 annual environmental report and 2 media releases per oil company of the last week of June 2010 were analysed. The intercoder reliability test points out that the codebook is reliable. The codebook has excellent reliability
for fifteen of the variables, α > .90. One of the variables has a good reliability, α > 80. Four of the variables have a sufficient reliability, α > .67. The specific reliability for every single variable can be found in appendix B.
Results
Descriptive statistics
The analysis of 60 media releases and 12 annual environmental reports showed that the overall amount of organizations’ environmental disclosures increased with 84.1%% after the oil spill. Gazprom increased their environmental disclosures the most with 132.9% after the oil spill. BP increased their disclosures with 115.5% after the oil spill and Conocophillips increased their environmental disclosures the least, with 33.5% after the disaster.For a full breakdown of the organizations’ environmental disclosure descriptive statistics per
environmental disclosure category, refer to the tables in Appendix C.
The descriptive statistics show that the organizations increased the element of making symbolic disclosures that announce an immediate inquiry into the cause of the spill, of the image enhancement strategy the most. They used the element in 13.9% of the disclosures before and in 44.4% of the disclosures after the disaster. The descriptive statistics show that the organizations increased the disclosures, where they reiterated past achievements, the least. They used the element in 19.4% of the disclosures before the disaster and in 25% of the disclosures after the disaster. The descriptive statistics show that none of the elements of the disclaimer strategy are ever used by the organizations, therefore no analysis can be made with them. For a full breakdown of the descriptive statistics of organizations’ legitimacy strategy elements per category, refer to the tables in Appendix D.
The quantity of disclosures after the oil spill
For the analysis, the organizations’ disclosures before the environmental disaster and the disclosures after the environmental disaster are compared. With both the hypotheses, there is also a comparison made across the three companies to see if the results change when testing for a specific oil company. An alpha level of .05 is used for significance in all statistical tests. To test the first hypothesis, the disclosures of the oil companies before the environmental disaster are compared to the disclosures after the disaster. To test the difference in the amount of environmental disclosures in the situation before the oil spill and the situation after the spill, an independent sample t-test is used. The assumptions of the t-test are tested and are
met. The data of the media releases are a simple random sample. The independent and dependent variable are measured on a continuous scale. The independent variable consists of two categorical, independent groups. There is a reasonable sample size used of 36 disclosures before and 36 disclosures after the environmental disaster. There is a normality of data
distribution and there is an equality of variance in standard deviation.
This study found that the total of organizations’ environmental statements and/or discussions in their disclosures increased after an environmental disaster (M = 33.61, SD = 79.54), relative to the disclosures before the disaster (M = 61.92, SD = 143.41). This increase was however found to not be significant, t (55) = -1.04, p = .305. The results do not become significant while testing for the separate oil companies. The statements and/or discussions about environmental regulations increased after the environmental disaster (M = 11.92, SD = 32.67), relative to the disclosures before the disaster (M = 4.25, SD = 10.16), This increase was found to not be significant, t (42) = -1.34, p = .186. These results do not become significant when conducting the test for the separate oil companies. The statements and/or discussions about environmental requirements increased after the environmental disaster (M = 12.28, SD = 28.67), relative to the disclosures before the disaster (M = 5.90, SD = 14.22). This increase was also found to not be significant, t (52) = -1.20, p = .237. The significance of the results does not change when testing for the separate oil companies. The statements and/or discussions about the reduction of environmental degradation increased after the
environmental disaster (M = 10.44, SD = 24.13), relative to the disclosures before the disaster (M = 8.19, SD = 18.98), but this increase was not significant, t (70) = -.44, p = .661. While testing for the different oil companies, the results do not become significant. The statements and/or discussions of environmental policy increased after the environmental disaster (M = 7.39, SD = 22.01), relative to the disclosures before the disaster (M = 4.36, SD = 10.53). However this increase was found to not be significant, t (70) = -.75, p = .459. While testing for the separate oil companies, the results do not become significant. The statements and/or discussions of organizations’ environmental concern increased after the environmental disaster (M = 3.53, SD = 9.89), relative to the disclosures before the disaster (M = 1.81, SD = 4.92). This increase was found to not be significant, t (52) = -.94, p = .354. While testing for the separate oil companies, the results do not become significant. The statements and/or discussions of the organizations’ commitment to protect the environment increases after the environmental disaster (M = 16.36, SD = 43.33), compared to the disclosures before the disaster (M = 9.11, SD = 28.64). This increase was also found to not significant, t (70) = -.84, p = .405. While testing for the different oil companies, the results did not become significant.
Although increases were found in the environmental disclosures after the environmental disaster, none of the increases were found to be significant. Therefore the first hypothesis will be rejected.
The use of legitimacy strategies by the oil companies
The second hypothesis is tested with a Chi Square test. The assumptions for this test are met. The two variables are measured at a categorical level and the variables consist of two independent groups.
The study found the following results for the elements of the image enhancement strategy. There is no significant association between the environmental disaster and
organizations reiterating past achievements, χ2(1) = .32, p = .571. This significance does not change when testing for the different oil companies. There is no significant association between the environmental disaster and organizations emphasizing current positive
environmental activities, χ2 (1) = 1, p = .317. The significance of the results changes when testing for the separate oil companies as there is a significant but weak association between the environmental disaster and British Petroleum emphasizing positive environmental activities, χ2 (1) = 4.20, p = .041, tau = .18. BP emphasized current positive environmental activities in 25% of their disclosures before the environmental disaster and in 66.7% of their disclosures after the disaster. There is no significant result when testing for Gazprom and ConocoPhillips. There is a non-significant association between the environmental disaster and organizations framing actions towards the disaster in a positive way, χ2 (1) = 1.29, p = .257. There is no significant change in these result while testing for the separate oil companies. There is a weak association between the environmental disaster and the symbolic disclosures of organizations that announce an immediate inquiry into the cause of the spill, χ2 (1) = 8.13, p < .05, tau = .11. The organizations discussed an immediate inquiry into the cause of the spill in 13.9% of their disclosures before the disaster and in 44.4% of their disclosures after the disaster. While testing for the separate oil companies, there were some changes in the results. There is a strong association between the environmental disaster and the symbolic disclosures that announce an immediate inquiry into the spill from British Petroleum, χ2 (1) = 13.59, p < .05, tau = .57. BP made symbolic disclosure that announce an immediate inquiry into the cause of the spill in 16.7 % of their disclosures before the disaster and in 91.7% of their disclosures after the disaster. The association becomes non-significant when testing for
Gazprom and ConocoPhillips. There is a weak association between the environmental disaster and the organizations’ assurance to take measures to prevent a similar accident in the future,
χ2 (1) = 5.45, p = .020, tau = .08. The organizations used discussions of measures to prevent a similar accident in the future in 16.7% of their disclosures before the disaster and in 41.7% of their disclosures after the disaster. While testing for the separate oil companies, the results changed. There is a strong association between the environmental disaster and BP’s
discussions of measures to prevent a similar accident in the future, χ2 (1) = 14.40, p <.05, tau = 0.60. BP never assured of measures to prevent a similar accident in the future in their disclosures before the environmental disaster. They assured of taking preventative measures in 75% of their disclosures after the environmental disaster. The association becomes non-significant when testing for only Gazprom or ConocoPhillips.
The avoidance/deflection strategy had two elements that were tested. There is a weak association found between the environmental disaster and the identification of organizations with symbols/values seen as legitimate in their disclosures, χ2 (1) = 6.55, p = .011, tau = .09. The organizations used the identification with symbols/values seen as legitimate in 16.67% of their disclosures before the environmental disaster and in 44.4% of their disclosures after the disaster. The strength of the association changed when testing for British petroleum, χ2 (1) = 6.17, p = .013, tau = .26. BP used the identification with symbols/values seen as legitimate in 16.7% of their disclosures before the environmental disaster and in 66.7% of their disclosures after the disaster. The association becomes non-significant when testing for Gazprom and ConocoPhillips. The study found that there is a weak negative association between the environmental disaster and organizations not mentioning the disaster in their disclosures, χ2 (1) = 4.43, p = .035, tau = .06. The organizations did not mention the disaster 83.3% of their disclosures before the disaster and in 61.6 % of their disclosures after the disaster. The strength of the negative association becomes strong when testing for British Petroleum χ2 (1) = 40, p < .05, tau = .60. BP did not mention a disaster in 75% of the disclosures before the environmental disaster and the mentioned the disaster in every disclosure after the disaster. The association becomes non-significant when testing for Gazprom and ConocoPhillips. There can be no statistics computed for the disclaimer strategy variables, since they are a constant in the dataset. In all the coded disclosures in the dataset, the organizations never used any of the elements of the disclaimer strategy. The results prove that the hypothesis 2a can be assumed, as the environmental disaster was significantly associated with an increase of the use of some of the elements of the image enhancement strategies. Hypothesis 2b will be rejected as there are no significant associations found between the environmental disaster and the use of disclaimer strategies. Hypothesis 2c will also be rejected as the analysis shows that
the organizations actually used more of the elements of the avoidance/deflection strategy instead of less after the disaster then they did before.
Table 1
Chi Square test results of the legitimacy strategy elements
Strategy Element χ2 p tau
Image enhancement Reiterating achievements .32 .571** - Image enhancement Emphasizing current positive
environmental activities
1 .317** -
Image enhancement Frame actions towards the disaster in a positive way
1.29 .257** -
Image enhancement Symbolic disclosures 8.13 0* .11
Image enhancement Assurance of measures taken 5.45 .020* .08 Avoidance/deflection Identify with symbols/values/seen as
legitimate.
6.55 .011* .09
Avoidance/deflection No mention of the disaster 4.43 .035* .06 *significant, **not significant
Discussion
This study adds to the existing literature by giving more insight into the disclosure patterns of organizations after an environmental crisis. This study aimed to answer the
research question ‘’ How does an environmental crisis affect the organization’s environmental sustainability disclosure?’’. The research question was tested through various hypotheses. The first hypothesis predicted that the quantity of disclosures of an organization’s
environmental CSR practices increases after an environmental disaster. Based on the results of this study, this hypothesis was rejected. Although an increase was found as predicted by legitimacy theory (Deegan, 2006), this increase was found to be non-significant. When the results were compared across the three oil companies, the results did not change and remained non-significant. This difference of results with existing literature could be explained by the sample size of the study. The sample sizes of the existing studies, looking into the
environmental disclosures of organizations after an environmental disaster were relatively larger (Deegan, Rankin & Voght, 2000; Patten, 1992; Summerhays & de Villiers, 2012). The
relative small sample size in this study was chosen for its feasibility, but undermines the internal and external validity in this study (Faber & Fonseca, 2014)
The second hypothesis consisted of three sub-hypotheses. Hypothesis 2a predicted that organizations will use the image enhancement strategy more after an environmental disaster then they did before the disaster. This hypothesis was accepted since there was an association found between the environmental disaster and two of the tactics of the image enhancement strategy, namely organizations making symbolic disclosure to announce immediate inquiry into the cause of the spill and organizations assuring the stakeholders that measures to prevent a similar accident are undertaken. Although there was an association found, this association was found to be very weak. An explanation for this weak association could lie in the fact that organizations’ tried to steer the relevant publics perceptions into a more positive one, as explained by Cho (2009). When testing the associations between the environmental disaster and the use of legitimacy strategies by the separate oil companies, there was a strong association between the environmental disaster and several elements of the image enhancement strategies by BP. There was a weak association found association
between the environmental disaster and BP emphasizing positive environmental activities. The association between the environmental disaster and organizations making symbolic disclosures that announce an immediate inquiry into the spill from British Petroleum. There is a strong association between the environmental disaster and the discussions of British
Petroleum of measures to prevent a similar accident in the future. Gazprom and
ConocoPhillips had no significant increase. An explanation for this alteration of the results by BP can be explained by the factor of responsibility of the organization with the disaster. Prior research has shown that all organizations in the same crisis industry respond with an increase in their environmental disclosures (Deegan, 2006; Deegan, Rankin & Voght, 2000; Patten, 1992). Summerhays & de Villiers, 2012 also compared across oil companies and show that BP did not increase their environmental disclosures and strategies more than other oil companies after the disaster. It could be a possibility that because British Petroleum has caused the crisis, they would be perceived as less responsible than the other oil companies. Within a crisis context, an organization that is responsible for the crisis will likely cause society to hold the organization liable for the outcome of the harm of the crisis (Dean, 2004). The legitimacy of BP would therefore be questioned the most as society’s perceptions of BP’s corporate performance would have changed the most compared to their expectations of the corporate performance of other oil companies (O’Donovan, 2002). As a result of this shift of society’s perceptions, the legitimacy threat would be relatively bigger for BP and they would
have to focus more on legitimacy strategies to regain their legitimacy than the other oil companies would have to. Since organizations seem to focus more on repairing and gaining legitimacy instead of maintaining it, the other oil companies would not have increased their legitimacy strategies as much because they would not have as much of a legitimacy treat as BP (Cho, 2009). The testing for the separate oil companies also revealed that the association between the environmental disaster and the increase of legitimacy theories of ConocoPhillips and Gazprom became non-significant. This may also have to do with the responsibility factor as mentioned by Dean (2004). Legitimacy is a dynamic process (O’Donovan) and without the factor of responsibility, the society’s changes of perceptions of corporate performance of Gazprom and ConocoPhillips might be so relatively little that the organizations did not have that much of a legitimacy threat and therefore did not have to make a huge change in their legitimacy strategies.
Hypothesis 2b had to be rejected as well, since none of the disclaimer strategy elements were ever used by the organizations before or after the environmental disaster. This difference with the existing literature might be explained by the fact that the established public perception was that BP was to blame for the oil spill (Dittrick, 2010). It could therefore hurt the credibility of BP and the other oil companies if they would have claimed to not be responsible (Cho, 2009).
Hypothesis 2c had to be rejected. There was an association found between the environmental disaster and the element of the avoidance/deflection strategy where the organization identifies with symbols/values seen as legitimate. This was a positive
association, where they used the element more after the environmental disaster then they did before. This increase could be due to the organizations deflecting the attention away from the oil spill and focus more on positive disclosures (Cho, 2009). The second element of the avoidance/deflection strategy decreased after the disaster, since the organizations mentioned the disaster more in their disclosures after the oil spill. This might be explained by the high profile of the disaster (Summerhays & de Villiers, 2012). Because this oil spill was regarded to be the biggest one yet in American history, it would be difficult to not mention it in the disclosures (Pallardy, 2010). The hypothesis however predicted that organizations will use the avoidance/deflection strategy less after an environmental disaster, so it had to be rejected because one of the elements increased after the disaster. The comparison across the three oil companies altered the results, especially in the case of British Petroleum. The association between the environmental disaster and the identification of organizations with
association between the environmental disaster and organizations not mentioning the disaster in their disclosures also became stronger. This alteration of results can also be explained by the aspect of the perceived responsibility of BP by the stakeholders (Dean, 2004).
Conclusion
To conclude this study, an answer to the research question will be composed. The organizations increased their environmental disclosures after the environmental disaster. These increases were not significant, due to the sample size of the study. According to the analysis, only several elements of the image enhancement and avoidance/deflection strategy were used by the oil companies after the crisis. These findings are consistent with the predictions made on the basis of legitimacy theory that organizations will increase their legitimacy strategies after a crisis (Cho, 2009). The disclaimer strategy is not used by any of the organizations, which can be due to established public perception that BP was to blame for the oil spill and its harm (Dittrick, 2010). When comparing across the oil companies, BP is the only organization with a strong association between the image enhancement strategies and avoidance/deflection strategies, Which would be explained by the responsibility factor mentioned by Dean (2004).
Implications and future research
This study comes with its own set of limitations. The first limitation would be the lack of moderator variables. Responsibility can be a moderator in the relationship between the environmental disaster and the environmental disclosures of organizations. Another limitation would be the external validity of the study. The oil industry is a very environmentally
sensitive industry and the crisis depicts on one of the biggest environmental disasters in history. This may have resulted in more excessive results that could not be evident in
conditions of lesser legitimacy threats and other industries. The third limitation is the sample size. The sample size is relatively small and this might affect the internal and external validity of the study as it might have decreased the representativeness of the population. The last limitation would be the inclusion of organizations directly related to the crisis and other organizations from the same field of the oil industry. This inclusion limits the external validity, as it now can only be applied to organizations of the oil industry.
Taking these limitations into account, future research could address some of the following issues. The use of a bigger sample could increase the generalizability and strengthen the results. The second issue would be the use of moderator variables like for
example, responsibility of the organization into the environmental disaster. In this study, BP had de most responsibility into the disaster, since they owned the rig that caused the spill. In future research it would be interesting to analyse de different oil companies separately over a longer period of time and compare the results, to see if there is a significant difference between the organizations. This would also increase the amount of data and therefore strengthen the results. A third issue to take into account for future research are the other dimensions of CSR (economic development and social cohesion). These dimensions are often intertwined in organizations (Jenkins & Yakovleva, 2006). It could be possible that an
environmental disaster has an influence on the other dimensions as well. A fourth issue to consider in future research would be studying the disclosures of organizations in different types of industries in reaction to different kinds of social and/or environmental disasters. This would give results that have more external validity to organizations in general. A fifth issue to consider for future research would be to conduct this kind of study with an automated time-series analysis. This would give a more detailed result of the exact point in time when the disclosure changes. The last issue to consider for future research would be using more media sources, like earned and paid media in the analysis. This would give more insight into the difference in organizations’ environmental disclosure changes across media channels. It will also increase the amount of data, which was a limitation of this study.
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Appendix A: Codebook
A. General information
A1. Which oil company is the content from? 0. British Petroleum
1. Royal Dutch shell
2. Gazprom
A.2. Which content is analysed? 0. Annual report → Go to A.3 1. Media release → Go to A.4
A.3. Which year was the annual report published? 0. 2008
1. 2009 2. 2011 3. 2012
A.4. What is the date of the media release, coded as dd/mm/yy? A.5. Is the disclosure communicated before or after the disaster?
0. Before 1. After
B. Quantity of environmental disclosure.
To test the first hypothesis; the presence and amount of the following statements and/or discussions in the annual reports and media releases will be counted to measure an increase, decrease or stagnation in environmental disclosures. An information item will be classified as an environmental discussion/statement if it related to one or more of the following topics (Cho, 2009): If a statement or discussion relates to more than one of the categories, the category that it relates to the most should be chosen.
Mentioned in an environmental context: regulation(s), rules, law(s), guideline(s), legislation, norm(s)
0. No 1. Yes
B.1.1. How many times are they mentioned?
B2. Are there statements or discussions of environmental requirements present?
Mentioned in an environmental context: requirements, expectation, standard(s), specifications
Example: BP operates 26 oil tankers that go beyond the International Maritime Organization’s energy efficiency regulation requirements. (BP environmental report, 2018)
0. No
1. Yes
B.2.1. How many times are they mentioned?
B3. Are there statements or discussions of the organizations’ processes relative to reduction of environmental degradation present?
Mentioned in an environmental context: reduction, cutback, cutting back minimization, minimizing lowering
0. No
1. Yes
B.3.1. How many times are they mentioned
B4. Are there statements or discussions of the organizations’ environmental policy present? Mentioned in an environmental context: policy, intention(s)
0. No 1. Yes
B5. Are there statements or discussions of the organizations’ environmental concern present? Mentioned in an environmental context: concern, worry, worried, disturbed, attitude
0. No 1. Yes
B.5.1. How many times are they mentioned?
B.6. Are there statements or discussions of the organizations commitment to protect the environment present?
Mentioned in an environmental context: protect, preserve, shield secure 0. No
1. Yes
B.6.1. How many times are they mentioned
C. Legitimacy strategies
To test the second hypothesis, the content will be analysed for making use of one or more of the three legitimacy strategies. The legitimacy strategies will be detected by answering the questions tied to the strategy. The questions are based on the codebook of Summerhays and de Villiers (2012)
Image enhancement strategy
While using the image enhancement strategy, an organization makes selective, symbolic, positive or self-laudatory disclosures aiming to repair image and legitimacy (Deegan & Gordon, 1996).
C. 1. Does the organization reiterate past achievements?
Example: At our Tangguh expansion project in Indonesia, the planned location of a new offloading facility and the route of a nearshore pipeline for our liquefied natural gas plant were identified as being close to mangrove habitat. We therefore took measures such as moving the location to the western side of the site and using horizontal drilling for the pipeline to avoid the habitat (environmental report Bp, 2018)
0. No 1. Yes
C.2. Does the organization emphasize current positive environmental activities? Positive is defined by the dictionary as good, looking towards the good side of things, showing certainty.
Example: In 2019, the Shell Petroleum Development Company of Nigeria Ltd (SPDC), the operator of the SPDC Joint Venture (SPDC interest 30%), focused on restoring and repairing wells and pipelines in the Niger Delta to restart oil and gas production. (Sustainability report Shell, 2019)
0. No 1. Yes
C.3. Does the organization frame the actions taken in regards to the activity that was a threat to their legitimacy in a positive way?
0. No 1. Yes
C.4. Does the organization make symbolic disclosures that announce an immediate inquiry into the cause of the spill?
Example: To strengthen our safety performance, we investigate incidents and near misses, take corrective action, apply what we have learned and focus on continually improving how we work. (environmental report BP, 2018)
0. No 1. Yes
C.5. Does the organization assure the stakeholders that any measures necessary to prevent a similar future accident will be undertaken?
A plan to build and deploy a rapid response system that will be available to capture and contain oil in the event of a potential future underwater well blowout in the deepwater Gulf of Mexico was announced today by Chevron, ConocoPhillips, ExxonMobil and Shell. Media release BP
Example: ‘’Over several years we’ve focused on building competency across BP, resulting in a safe system of work, which supports the identification of process safety risks and a
reduction in spills’’ (Environmental report Gazprom, 2019). 2. No
Avoidance/deflection strategy
While using the avoidance/deflection strategy, an organization attempts to appear legitimate by deflecting or redirecting attention from certain environmental concern issues to other related or non-related matters (Cho, 2009)
C.6. Does the organization identify with symbols or values seen as legitimate?
For example: Co-optation of political members on the organization’s governing board, or contributing to a charity.
Example: participating in global, including international, programs aimed at achieving sustainable development as well as climate and biodiversity conservation.(Sustainable report Gazprom)
0. No 1. Yes
C.7. Does the organization make no mention of the disaster in their disclosures?
For the previous disclosures to the environmental disaster, only look at mention of other spills 0. No
1. Yes
Disclaimer strategy
While using the disclaimer strategy, an organization will use disclaimer statements, deny its responsibility about negative or harmful events, matters or incidents (Cho, 2009)
C.8. Does the organization claim to not be responsible? 0. No
C.9. Does the organization claim that it is unfair to expect organizations like themselves to be held responsible for the environmental disaster?
Example: Nowadays Gazprom as a global energy company is accepting greater responsibility for the
environmental preservation as well as product supply safety and security when fulfilling the environmental and social commitments set out in this Environmental Policy. (environmental report Gazprom, 2008)
0. No 1. Yes
Appendix B: Krippendorff’s Alpha of the codebook variables
Table B1
Krippendorff’s alpha of the codebook variables
Variable α B.1 .71 B.1.1 .78 B.2 1 B.2.1 1 B.3. 1 B.3.1 1 B.4 1 B.4.1 1 B.5 .74 B.5.1 .89 B.6 1 C.1 1 C.2 1 C.3 .71 C.4 1 C.5 1 C.6 1 C.7 1 C.8 1 C.9 1
Appendix C. Descriptive statistics of organizations’ environmental discussions/statements
Table C1
Descriptive statistics of BPs’ environmental discussions/statements
Variable Before disaster After disaster Increase in %
B.1 32 61 90.6% B.2 57 189 231.6% B.3 67 87 29.9% B.4 42 37 -11.9% B.5 23 50 117.4% B.6 11 76 590.9% Total 232 500 115.5% Table C2
Descriptive statistics of ConocoPhillips’ environmental discussions/statements
Variable Before disaster After disaster Increase in %
B.1 67 274 309% B.2 96 145 51% B.3 115 148 28.7% B.4 48 185 285.4% B.5 32 73 128.1% B.6. 67 165 146.3% Total 425 990 132.9%
Table C3
Descriptive statistics of Gazproms’ environmental discussions/statements
Variable Before disaster After disaster Increase in %
B.1 54 94 74.1% B.2 59 108 83.1% B.3 113 140 23.89% B.4 67 44 -34.3% B.5 10 4 -60% B.6 250 348 39.2% Total 553 738 33.5%
Appendix D: Descriptive statistics of organizations legitimacy strategies
Table D1
Descriptive statistics of BPs’ legitimacy strategies Variable Before disaster % of disclosures After disaster % of disclosures C.1 2 16.7% 3 25% C.2 3 25% 8 66.7% C.3 2 16.7% 6 50% C.4 2 16.7% 11 91.6% C.5 0 - 9 75% C.6 2 16.7% 8 66.7% C.7 9 75% 0 - Table D2
Descriptive statistics of ConocoPhillips’ legitimacy strategies Variable Before disaster % of disclosures After disaster % of disclosures C.1 3 25% 2 16.7% C.2 2 16.7% 4 33.3% C.3 3 25% 6 50% C.4 2 16.7% 1 8.3% C.5 2 16.7% 1 8.3% C.6 2 16.7% 4 33.3% C.7 10 83.3% 11 91.6%
