Saying versus doing : a study of corporate social responsibility reports and involvement in human rights abuses by firms in the oil industry

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Master Thesis

Ann-Christine Lindholm 10656618

Saying versus doing: A Study of Corporate Social Responsibility

Reports and Involvement in Human Rights Abuses by Firms in

the Oil Industry

MSc. Business Administration – International Management University of Amsterdam

March 16th 2015

First supervisor: Dr. M.K. Westermann-Behaylo Second Reader: dhr. D.J.H.M. van den Buuse

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Statement of Originality

This document is written by Ann-Christine Lindholm who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Abstract

This paper examines the link between levels of Corporate Social Responsibility reporting in the oil industry and allegations of human rights abuses. Corporate social responsibility reports have become a standard business practice around the world highlighting the attention society now gives to responsible business practices. Human rights abuses continue to occur so a divide exists between what is being reported by companies and what is being done. This study aims to add to the debate on corporate social responsibility reporting and determine to what extent reports are rhetoric.

The study takes a qualitative approach and conducts a multiple-case study analyzing Corporate Social Responsibility reports of six corporations in the oil industry adding to a previous study on the links between CSR adoption and allegations of human rights abuses. Findings indicate that in the extreme cases, companies with high levels of reporting are less likely to be involved in corporate abuse allegations. Poor reporting levels indicate a company is more likely to be involved in serious allegations of human rights abuses resulting in deaths. The study also confirms home-country regulatory effects on CSR reporting indicating more regulations will increase the level of reporting. This study adds to the debate on the effectiveness of corporate social responsibility policies and whether companies that appear responsible also act responsibly.

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Figures and Tables

Table 1.0: CSR Reporting Legislation Figure 2.0 Conceptual Model

Table 3.0 Description of Selected Cases Table 4.0 CSR Reporting Levels

Figure 5.0 Reporting Level Continuum Lowest to Highest Table 6.0 Abuse Allegations timeline and CSR reporting Figure 7.0 Abuse Allegations by Country

Figure 8.0 Bar Chart CAAs by Category

Table 9.0 Regulations and CSR Reporting Level Figure 10.0 Human Rights commitment

Figure 11.0 Environmental Commitment Figure 12.0 Corporate Abuse Allegations Table 13.0 Approaches to Global Warming Table 14.0 Summary of Findings

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Introduction

The world has seen rapid globalization and because of this many regions are forced to deal with governance gaps where companies are able to exploit their positions and commit human rights violations without consequences (Ruggie, 2008; Scherer & Palazzo, 2011). This issue is gaining prominence due to stakeholder pressure bringing attention to social issues and the impact of business on society. There is a growing demand for responsible business practices and companies are attempting to develop the appearance of implementing higher standards of operations that are in line with societal expectations. This is illustrated by the growing number of corporate social responsibility (CSR) reports published by organizations and the mounting pressure consumers place on businesses to conduct operations that adhere to ethical standards (KPMG, 2013).

CSR reporting is becoming a standard business practice (Brown, De Jong & Lessidrenska, 2009; KPMG, 2013). With the popularity of CSR reports increasing, it is prudent to investigate whether companies are providing accurate information on their activities and implementing actions stated in reports. Companies that appear to be dedicated to responsible operations should be investigated to determine whether they are also effectively carrying out responsible business practices.

Opposing views exist on the function and outcome of corporate social responsibility and reporting. Critics view CSR reports as tools for companies to increase their legitimacy and hide negative social impacts (Laufer, 2003). Some studies argue that CSR is a way for companies to control the discourse on their responsibilities by promoting a form of self-governance which would reduce government scrutiny (Banerjee, 2008).

Despite growing popularity of corporate social responsibility, human rights violations occur on a regular basis and corporations are increasingly involved in legal disputes regarding

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human rights violations (Drimmer, 2010; Wright, 2008). This is especially salient in the extraction industries which is one of the main industries involved in the most serious human rights violations (Ruggie, 2007). Violations of human rights can also result in long lasting detrimental consequences for people and the environment, as seen with large scale disasters such as the Deepwater Horizon event in 2010 (Clement, Hayworth & Valentine, 2011).

Empirical studies have yet to fully investigate the social impacts and outcomes of social responsibility policies including more specifically the links between reporting and implementation of these policies. Most empirical studies measure adoption and compliance through corporate CSR reports however these may not give an actual representation of the situation since reports published by companies possibly do not provide objective information. Institutions such as Human Rights Watch advocate for further research in this field beyond looking at what companies are disclosing and the need to study the impact and effectiveness of policies (Scherer & Smid, 2000).

This study will aim to establish whether companies with more sophisticated CSR reporting policies presented through higher levels of reporting are less likely to be involved in human rights abuses. More detailed reporting suggests higher levels of transparency and more commitment to CSR operations which would indicate less involvement in human rights abuses. A qualitative study is conducted using content analysis based of publically available corporate reports and information provided by the Corporate and Human Rights tracking allegations of corporate abuse.

This paper addresses the research gap between what companies are reporting and what happens beyond reporting through a longitudinal case study analysis further elaborating on the links between corporate social responsibility reporting and allegations of Human Rights abuses against companies in the oil extraction industry. The study builds on research

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conducted by Fiaschi and Giuliani (2013) which established a link between companies stating a commitment to CSR and allegations of human rights abuses. The study finds support for links between the levels of CSR reporting and involvement in certain types Human Rights abuses indicating there are more complex links between the extent of CSR commitment and the occurrence of different types of abuses.

The content and nature of reporting analyzed indicates that high levels of reporting combined with a straightforward approach and acknowledgement of problems were less likely to be involved in allegations of abuse. Companies that mainly report favorable information are more often involved in allegations of corporate abuse despite having high levels of social responsibility reporting. Companies that did not report on CSR issues or had low levels of CSR reporting are found to be more involved in abuses resulting in deaths in relation to all of the abuse allegations. The study also finds further support for the findings of Fiaschi and Giuliani adding perspective to the degree of CSR communications by companies may be linked to the types of abuses involved in. Firms that disclose more in their reports are less likely to be involved in what are perceived as more serious abuses such as those resulting in deaths whereas firms that had little to no reporting were more likely involved in serious abuses. Clear differences still exist in reporting standards and the last ten years has seen a distinct evolution in reporting standards. The study also finds a positive relationship between the introduction of home country regulations on reporting requirements and levels of CSR reporting.

This paper is structured as follows; an overview of the current research into Human Rights, corporate social responsibility and CSR reporting will be provided followed by the theoretical framework. The research design will then be described after which the results will be presented with the discussion and final conclusions.

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Literature Review Human Rights

The Universal Declaration of Human Rights (UDHR) was adopted in 1948 and still stands as the established standard for what constitutes a Human Right (Ruggie, 2008). It has been referenced in many significant legal documents such as the United Nations Charter, the European Union Constitution and by international organizations such as the Organization for Economic Co-operation and Development (OECD) and the International Labor Organization (ILO) demonstrating the global importance of the declaration (Addo, 2014). Human Rights are universal and considered to be inalienable fundamental rights afforded to everyone regardless of gender, age, nationality, religion, ethnicity or place of residence (Giuliani & Fiaschi, 2012).

The declaration clarifies what is officially recognized as a Human Right and is proclaimed “as a common standard of achievement for all peoples and all nations.” (UN General Assembly, 1948, Preamble) The document contains thirty articles defining the rights of an individual, the legality of Human Rights, political and spiritual freedoms, and Social, Economic and Cultural rights. (UN General Assembly, 1948) The Human Rights defined by the UDHR cover a multitude of areas such as health, the environment, labor, development and poverty. Various international organizations such as the ILO and the World Health Organization (WHO) have clarified the standards for their respective areas for example the constitution of the WHO states that health is a fundamental Human Right (WHO, 1960).

Human rights links to Health, the Environment and Labor

The concept that the promotion and protection of health is a Human Right has been promoted by various studies as violations of Human Rights have important consequences to health (Mann, Gostin, Gruskin, Brennan, Lazarini & Fineberg, 1994; Snell, 2014). The right to health is a Human Right as an extension of existing articles established in the UDHR.

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Without guaranteeing health, it would not be possible to uphold the other rights such as the right to participation. Humans cannot function without health and for this reason articles such as the right to food and nutrition are included in the UDHR (WHO, 1960).

The rights to life and health specified by the UDHR extend to the establishment of a healthy environment as a Human Right. The UDHR establishes the right to life and security in Article three, the right to an adequate standard of living and health in Article twenty-five, the inherent right to human life in Article six (UN General Assembly, 1948). None of these rights can be supported without a sound environment. The environment is directly linked to human existence and by not protecting the environment, human life is endangered (Shelton, 1991). Various studies link human rights to environmental elements such as access to clean water and the right to survive without being exposed to harmful chemical elements. (Shelton, 1991; Snell, 2014). This right has also been formally recognized in various constitutions such as the constitutions of Spain and Portugal (Shelton, 1991.) In 2001, the African Commission officially recognized the link between the environment and Human Rights in their findings that Nigerian state had violated Human Rights in relation to oil pollution in the Niger Delta (Amnesty International, 2013).

Labor rights are also recognized as Human Rights by the UDHR (UN General Assembly, Universal Declaration of Human Rights, 1948). The following are recognized as labor rights under the articles of the UDHR; “the right of freedom of association, the effective recognition of the right to collective bargaining, the elimination of all forms of forced or compulsory labor, the effective abolition of child labor and the elimination of discrimination in employment and occupation” (UN General Assembly, Universal Declaration of Human Rights, 1948).

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Labor rights are justifiably human rights due to the recognition of human dignity and the value of a person as described in the UDHR including a person’s ability to control their own circumstances (Adams, 2008). By ignoring these rights, employers would potentially have extreme power over their employees resulting in a master-servant relationship. This imbalance of power would allow workers to be identified as ‘items of commerce,’ denying their humanity and conflicting with the standard of human value agreed upon in the UDHR (Adams, 2008 p.52).

Irresponsible behavior can occur in many forms negatively impacting individuals, communities and their surroundings. Harmful actions negatively affecting people need to be considered Human Rights violations to reflect the seriousness of the acts and allow for appropriate remedies to situations. Labor rights, Health and the right to Environment have been established as Human Rights and when these areas are negatively affected, it should be considered a Human Rights violation.

Human Rights and Business – The Protect, Respect and Remedy Framework

The Protect, Respect and Remedy framework (PRR) was created in order to address the role and responsibilities of business in society and the lack of guidance on Human Rights issues (Ruggie, 2008). It is a ‘principles based policy framework’ based on the UDHR developed by John Ruggie, the UN Secretary-General’s Special Representative for Business and Human Rights (Ruggie, 2008). The Special Representative position was specifically created to develop the debate on business and Human Rights issues (Ruggie, 2009).

The framework is built on the concepts of protecting Human Rights, respecting those rights and the needs to offer a remedy for violations. It also emphasizes the need for states to play a larger role in getting firms to comply with Human Rights standards (Ruggie, 2008; Ruggie, 2011). This has led to some criticism of the framework due to the narrow definition of responsibilities applicable to corporations (Wettstein, 2012).

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The framework is divided into three pillars; Protect, Respect and Remedy. The first pillar is ‘Protect’ is largely seen as the responsibility of the State to create laws and regulations that would protect Human Rights as laid out in the UDHR. The framework states that governments should foster a corporate culture to respect Human Rights and establish accountability based on corporate actions and intentions when violations occur (Ruggie, 2008).

The ‘Respect’ pillar addresses a company’s obligation to respect Human Rights and responsibility to conduct due diligence when operating in different countries. The PRR framework contains three factors that are needed to be taken into consideration as a part of the due diligence process; the country context, which Human Rights may be impacted by business operations and finally whether business relationships or affiliations within operations contribute to any violations. This pertains to suppliers and other key players along the value chain. The due diligence process outlined by the PRR states that companies need to adopt a Human Rights policy, have impact assessments, integrate policies throughout their operations and finally that there should be performance assessments to regularly track Human Rights impacts (Ruggie, 2008).

The last pillar of the framework addresses access to remedies which recommends both states and companies should improve judicial mechanisms, non-judicial mechanisms and organizational complaint processes (Ruggie, 2008). The PRR was formally operationalized in the UN’s Guiding Principles providing states and companies with guidelines on implementing the framework (Addo, 2014).

The framework has been the first building block to establish societal guidelines on tackling Human Rights issues by corporations. This study aims to explore whether companies have implemented responsible business practices.

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The Oil Industry

Studies exploring the state of Human Rights in different industries find that different types of violations such as discrimination and forced labor occur throughout industries (Hamann, Sinha, Kapfudzaruwa & Schild, 2009). The extraction industry is perceived as irresponsible when it comes to Human Rights and the likelihood of violations of Human Rights increases in countries with high risks and weak formal institutions such as where many oil extraction companies operate. Violations continue to occur with the extraction industry being some of the worst offenders. (Drimmer, 2010; Wright, 2008).

The reputation of the oil and gas industry is among the lowest compared to other industries lying only ahead of the mining industry (Ipsos Global, 2013). The industry has very low levels of favorability and trust especially in western countries such as the United States. In surveys conducted in the United States, oil companies are frequently listed at the bottom of reputation surveys among all industries (Reputation Institute, 2008). The companies are affected by high prices and reported high profits along with poor environmental and social responsibility track records. High profile incidents such as the Exxon Valdez are memorable to the public and affect the perceptions of the industry as a whole. Due to these negative perceptions the oil and gas industry face stronger pressure to conduct CSR activities compared to other industries (Ipsos Global, 2013).

As violations occur frequently, this subject demands attention. There are few systematic sources of information documenting the current state of business and Human Rights. The negative perception of the oil adds stakeholder pressure for oil companies to appear responsible and requires more effort to develop a more responsible image. This study will add to the discussion on the different types of Human Rights violations occurring within the oil and gas industries and examine the what oil companies are communication on their social responsibilities.

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Corporate Social Responsibility

Corporate social responsibility has been defined as a multidimensional construct which relates to the “Responsibilities of business and its role in society (Scherer & Palazzo, 2007 p.1096).” Opinions on businesses’ role in society remains conflicted as companies strive to address the demands of various stakeholders. This mounting pressure, mainly from external stakeholder groups such as consumers and non-governmental organizations, leads companies to adopt more responsible operations and communicate these actions (Cerin, 2002). A lack of clear accountability still allows for ethically questionable actions beyond the scope of the law to persist (Cerin, 2002).

Drivers of CSR

Research has looked at the various reasons that motivate corporations to adopt CSR policies such as enhancing financial performance (Margolis, Elfenbein & Walsh, 2009) or improving their corporate image by using it as a marketing tool and achieving social legitimacy (Parguel, Benoit-Moreau & Larceneux, 2011). Studies have criticized the lack of methodical, quantitative studies assessing the impacts of CSR initiatives across given industries (Bhushan, Chan, Lund-Thomsen, Prieto-Carron, & Muro, 2006; Giuliani & Fiaschi, 2012).

The adoption and implementation of CSR policies have been found to be influenced by company size and the industries involved (Hamann et al. 2009). These studies found that company size affects the communication of CSR to external parties and the method of implementation. MNE’s place more importance on the communication of CSR activities and focus less on incorporating CSR into their main operations (Baumann-Pauly, Wickert, Spence & Scherer, 2013). These findings indicate the importance of determining whether CSR reports are merely rhetoric and the effectiveness of CSR policies.

Studies have shown that it is not enough to simply state a CSR policy but distinct actions must be taken by companies in order to achieve CSR goals such as improved gender equality

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in board rooms and usage of renewable energy (Graaflund & Smid, 2014). Importantly, these findings illustrate the need for action before there are any benefits from CSR policies. It is important to note many performance indicators used in studies assessing achievements are based on CSR reports published by companies. This affects the credibility of findings because companies may be motivated to provide false or enhanced information for additional gains or to avoid legal issues making the objectivity of the information questionable. Studies such as these contribute to the need to determine how large the gap is between what companies are saying and in reality what is being done.

Corporate Social Responsibility Reporting

This report examines the communication of CSR activities by corporations in the form of standalone CSR reports. Companies are increasingly publishing separate social responsibility reports that report on non-financial aspects taking the triple bottom line approach. These reports include information on social and environmental aspects of company operations.

Corporate social responsibility reporting has become a global trend (KPMG, 2013). A survey by KPMG including the largest companies across 41 countries found that in all sectors studied, more than half of the companies had some form of CSR report. The largest growth in CSR reporting between 2010-2013 has taken place in the Asia-Pacific with the Americas also overtaking Europe in reporting numbers (KPMG, 2013).

Global Reporting Initiative

International standards for CSR reporting have been established with many companies following guidelines developed by respected international institutions. However, these guidelines remain mainly voluntary in nature. The most widely adopted standard is developed by the Global Reporting Initiative (GRI). According to a 2013 survey, seventy eight percent of 4100 global companies use the GRI guidelines for their CSR reports (KPMG, 2013). The Global Reporting Initiative was established in 1997 in collaboration with the United Nations

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Environment Program (UNEP) and the Coalition for Environmentally Responsible Economies (CERES) (Ioannou & Serafeim, 2014). The aim was to develop reporting standards according to the triple bottom line approach taking into account social and environmental aspects at a comparably rigorous level to financial reporting creating more clarity and unity in reporting on social aspects (Brown, De Jong & Lessidrenska, 2009; Ioannou & Serafeim, 2014).

The first GRI guidelines for CSR reporting were published in June 2000, the most recent version known as the G4 Sustainability Reporting Guidelines was published in 2013 (GRI, 2013). The GRI guidelines are built around the reporting of three pillars of sustainability: economic, environmental and social indicators with a goal to create a reporting framework based on the principles of transparency, inclusiveness and auditability ( Moneva, Archel & Correa, 2006). The GRI standards are widely considered the global benchmark for CSR reporting but there are still large discrepancies between the level of CSR reporting done by companies (Jenkins & Yakovleva, 2005; Nielsen & Thomsen, 2007).

Legislation

Over the last decade, there has been a global increase in regulation for social responsibility reporting with more disclosure requirements. A collaborative report by KPMG, the United Nations Environmental Programme (UNEP), the Global Reporting Initiative and the Centre for Corporate Governance in Africa (2013) outlines the global regulatory progress on social responsibility reporting. The main current global trend indicates an increase in regulations for reporting and a mix of complementary mandatory and voluntary approaches to disclosure. The report identifies 180 national reporting policies and found two thirds to be mandatory (KPMG et al., 2013). A growing number of countries are becoming involved in the trend with many favoring a ‘report or explain’ approach allowing for flexibility in reporting (KPMG et

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al., 2013). This approach means companies are able to choose whether they provide a report but must be able to explain with appropriate reasons if they choose not to.

The majority of the laws on social responsibility reporting have been implemented within the European region with some specific laws adopted at the country level. Most of the global laws are regarding environmental factors such as the requirement to publish a separate environmental report or to disclose energy use and greenhouse gas emissions (KPMG, 2013: Hauser Kennedy School, 2014). All quantitative requirements are related to environmental factors while other requirements such as reporting on social issues are less specific about what information needs to be provided. For example, a law introduced in Brazil in 2001 demonstrates the ‘report or explain’ principle. The law offers the option to publish a separate social and environmental report based on GRI guidelines but if this is not done it requires a reason for why the company chooses not to publish (KPMG & UNEP, 2013). The GRI guidelines themselves are also voluntary providing only guidance on content which companies can choose not to provide.

The laws introduced mainly target large corporations or specifically require listed companies to provide the information. The following table provides an overview of the relevant legislation in the selected countries for this study.

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Table 1.0 CSR Reporting Legislation

Country Legislation Year

Brazil Brazilian electric energy agency has required all energy companies to publish annual social and environmental reports using GRI guidelines

2001

China Chinese government revised Article 5 of the Company Law requiring companies to “undertake and report on social responsibility” in the course of business.

2006

China An influential directive strongly encourages state-owned enterprises to follow and report on sound CSR practices.

2008 China The government’s “Green Securities” policy requires

listed companies to disclose more information about their environmental record.

2008

European Union Large emitters of greenhouse gases are to collect and report data with respect to their greenhouse gas emissions.

2010

European Union EC proposes Directive of the European Parliament and of the Council to require CSR disclosure in annual financial reporting.

2013

European Union Investors support amendments proposed by European Commission (EC) to improve transparency on environmental, social, and governance (ESG) reporting.

2013

European Union The European Parliament’s Legal Affairs Committee approved a draft law on corporate non-financial reporting requiring large companies to disclose information on their environmental, social and employee-related impact, as well as their diversity policy.

2013

European Union The European Parliament passed a law requiring oil, gas, mining and logging companies to disclose the payments they make for access to natural resources in all countries where they operate.

2013

Norway All enterprises need to include environmental reports in yearly balances

1999 Norway Gender equality and environmental issues are to be

included in companies’ directors’ reports, no specification of indicators to report against.

1998

Norway Listed companies must publish a statement on the companies’ principles for corporate governance.

2007 Norway Norwegian Accounting Act proposes amendments to

extend public reporting to include sustainability performance.

2009

Norway The Norwegian government passed legislation in April, requiring large companies to disclose information on how they integrate social responsibility into their business strategies.

2013

The Netherlands The Environmental Protection Act includes a section on environmental reporting for the ‘largest polluters.’

1993

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The Netherlands Listed companies are required to publish annual environmental reports including information on environmental management systems and quantitative data on relevant pollutants

1999

United Kingdom Companies listed on the London Stock Exchange are to disclose information on environmental, workplace, social, and community matters that are material to their business.

2006

United Kingdom Companies that use more than 6,000MWh per year are to report on all emissions related to energy use

2010 United Kingdom The Financial Reporting Council (FRC) in the UK is

finalizing guidance on companies' disclosures on environmental, social, and diversity issues.

2013

United States of America

The Sarbanes-Oxley Act (SarbOx) requires the CEO and CFO of public companies to certify annual and quarterly reports as fair presentations of companies’ financial conditions.

2002

United States of America

The Mandatory Reporting of Greenhouse Gases rule, often referred to as 40 CFR Part 9, states that the EPA now requires large emitters of greenhouse gases to collect and report data with respect to their greenhouse gas emissions.

2010

Source: “Carrots and Sticks” UNEP & KPMG, 2013

The laws listed above illustrate the growth in mandatory regulations for reporting. This study will examine whether the laws have an effect on overall reporting practices of companies and if they increase the sophistication of CSR reporting.

CSR Report Criticism

Despite the current popularity of CSR reporting, many remain skeptical about its purpose. Motivation for CSR reporting has been divided into two main functions. Reports are either used as a medium for reporting strategy to stakeholders or they are used for self-promotion (Bartlett, Ihlen & May, 2012).

Companies face a battle to present themselves as sustainable and ‘green’ due to increased environmental regulations and public scrutiny (Banerjee, 2008). However, there is little agreement on the definition of sustainability. Aras and Crowther directly criticize the extraction industry for their flexible definitions of sustainability which seem to be linked

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more with the continuing existence of the firm than responsible operations improving sustainability of the planet (Aras & Crowther, 2008). Companies may also have additional motivations to appear socially responsible and produce these reports for example to benefit from tax breaks indicating it may be beneficial for companies to be disingenuous in their CSR reports (Aras & Crowther, 2008).

Some studies argue that CSR reports are biased due to lack of regulation and do not reflect the real world actions highlighting inconsistencies in what companies are saying and what is being done (Cerin, 2002). Many are critical of the uses of CSR and claim CSR reports to be purely a form of greenwashing disparaging the use of ‘glossy’ CSR reports that do not give a true representation of business operations (Banerjee, 2008). Greenwashing has been described as an activity that provides “disinformation … seeking to repair public reputations and further shape public images” (Laufer, 2003, p.43). Criticism about these reports ranges from giving a falsely improved image of the firm to directly hiding unethical actions, moving blame to other parties and obscuring problems and allegations (Laufer, 2003). .

The concept of CSR has been accused of being used as a method for companies to control the discussion on business in society (Banerjee, 2008). Companies use it to control the discourse on their responsibilities by promoting a form of self-governance which would reduce government scrutiny and avoid stringent regulations (Banerjee, 2008). Corporate Watch phrases it as “an active attempt to increase corporate domination rather than simply a

defensive 'image management' operation (Corporate Watch Website,2015).” Critics argue

that the movement for sustainability has been taken over by corporate interests rather than representing a genuine movement towards sustainability (Banerjee, 2008).

Further criticism addresses the measurement of social factors used in CSR reporting. Current frameworks such as the one developed by the GRI move towards a system of measuring and

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comparing social actions however, flaws remain in the frameworks. The GRI indicators are criticized for having retrospective focus ignoring the future aspect of sustainability. This makes it difficult to identify cumulative impacts and adverse trends (Fonseca, McAllister & Fitzpatrick, 2012). The indicators have also been criticized for not being specific enough allowing for broad generalizations in reporting that do not offer real information on performance but still comply with the reporting requirements for example geographically aggregating all data over a global context does not allow for performance to be adequately measured (Fonseca, McAllister & Fitzpatrick, 2012).

The criticism of CSR reporting need to be addressed especially considering the growing adoption of reporting by companies globally. This study aims to aid in analyzing the research gap in determining how much of what is being said by corporations in respect to their responsibility to society is reflected in their real world actions.

Theoretical Framework

There are still clear differences in how and how much companies report in CSR communications. This study conducts a multiple-case study to analyze the links between the CSR reporting standards of oil companies around the world and their involvement in allegations of Human Rights abuses. This study will add to the research on CSR practices across different countries analyzing home country regulation effects on CSR reporting standards of corporations in the oil industry. (Jackson & Apostolakou, 2010). Institutions have been found to influence reporting standards with research finding clear country of origin effects (Fortanier, Kolk & Pinkse, 2011). Formal institutions such as governments and industry associations can apply pressure on corporations to report on their CSR practices and raise standards of transparency.

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Link between CSR and Human Rights Abuses

Giuliani and Fiaschi (2013) look at the direct link between CSR adoption and alleged Human Rights abuses. The study is the first to explore the relationship between CSR adoption and involvement in Human Rights abuse allegations. They define the concept of ‘Adoption’ as corporations that have openly and explicitly declared a commitment to undertake responsible policies and will conduct business in an ethical and moral way. The report measures adoption through an explicit declaration made by a company including information on corporate websites dedicated to CSR.

The study by Giuliani and Fiaschi divides corporate abuse into two categories based on principles of international law. The two categories are Jus Cogens and Non Jus Cogens. Jus Cogens abuses are considered legally binding by the international community and are judged to be the worst abuses including violations such as slavery, ‘arbitrary deprivation of life’ and torture (Giuliani & Fischi, 2013). Non Jus cogens are classified as less serious abuses such as worker discrimination and environmental contamination (Giuliani & Fischi, 2013).

The focus of the study by Giuliani and Fiaschi was on firms that had adopted a CSR policy versus firms that had no policy and whether those CSR adopters were likely to be involved in allegations. The study used the existence of a CSR policy as a binary variable and looked at the largest corporations in the US, Canada, EU, Japan and South Korea. The study incorporated information across twenty-eight sectors including primary, manufacturing and services industries. An econometric analysis based on information provided by the Business and Human Rights Database found support for the relationship between CSR adoption and Human Rights abuses.

The findings indicate the relationship between CSR adoption and allegations of violations change according to the type of abuse. Companies with CSR policies are less likely to be

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involved in Jus Cogens allegations such as slavery and racial discrimination. However, these companies were more involved in No Jus Cogens abuses which are considered to be a less serious kind of abuse in the study. (Giuliani & Fiaschi, 2013).

This study expands on the concept of Adoption viewing it as a type of CSR communication and analyzing the different degrees of communication through CSR reporting. This study aims to confirm the findings by Giuliani and Fiaschi and to provide more depth in the analysis to explore whether corporations that disclose more information regarding their CSR activities also reflect this in their actions. The findings of Giuliani and Fiaschi provide the basis for theory suggesting firms that have more sophisticated CSR reporting indicating a more advanced adoption of CSR would be less likely to be involved in serious abuse allegations while companies that provide less CSR disclosure would be more likely to be involved in serious abuse allegations.

Legitimacy

Formal institutions such as governments establish rules and laws that determine social norms. Companies are expected to adhere to these norms. Legitimacy is defined as a perception that organizations operate according to socially constructed values, beliefs and definitions and that they act appropriately within accepted social norms (Hrasky, 2012). Legitimacy is extended to companies by external parties based on perceptions of the companies. Organizations require legitimacy to gain support and trust of important stakeholders such as government officials and the general public (Hrasky, 2012). Without this trust, companies may not be able to obtain a license to operate and may not gain access to vital resources (Hrasky, 2012). An increasingly important aspect of legitimacy is how companies impact the natural environment (Hrasky, 2012). Companies within the oil extraction industry have been

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specially scrutinized due to their public disasters which have had significant negative impacts on the environment.

Countries with more regulations pertaining to social responsibility reporting indicate that it is important in that context to report on social issues to maintain legitimacy. In order for companies to establish legitimacy they need to appear to be complying with local regulations in order to gain a license to operate. This suggests that countries with more regulations and requirements would mean companies will have to provide a higher level of reporting in order to comply with social norms and gain legitimacy. This study proposes companies headquartered in countries with reporting regulations will have higher levels of CSR reporting.

Studies find that firms can increase legitimacy through more disclosures (Hrasky, 2012; Patten,1992). By producing more social information, firms aim to establish and communicate to stakeholders that they are indeed operating within social norms. This is more evident in cases where organizations face a threat to legitimacy. Allegations of corporate abuse will reflect poorly on an organization’s reputation. This indicates more allegations will increase a firms reporting activities and lead to increased levels of social responsibility reporting.

Companies have been found to take a reactive CSR strategy approach responding to scandals and situations after incidents have occurred. (Ihlen, Bartlett & May, 2011 p.129). Serious incidents and media pressure increase the acute awareness of consumers about corporate irresponsibility which companies then aim to address after a scandal. In light of this it is expected for CSR communications to increase after accusations of violations occur.

The links between allegations of abuse and levels of CSR reporting lead to the following proposition that prior allegations of corporate abuse will have a positive effect on the level of corporate social responsibility reporting.

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Voluntary Disclosure Theory

Despite the growth in regulations concerning CSR reporting, there still remains a large voluntary aspect that provides leeway to companies on what and how they report. Voluntary disclosure theory has been used to explain what firms disclose in their social responsibility reports in terms of discretionary environmental disclosures. Bewley and Li (2000)

A previous study looked at the relationship between discretionary disclosure in social responsibility reports and environmental performance in terms of toxic output by firms in the five most polluting industries in the United States including oil, gas and mining (Clarkson, Li, Richardson & Vasvari, 2008). They found support for the economics based voluntary disclosure theory where superior performers are more forthcoming in discretionary channels. As the right to a healthy environmental is a facet of Human Rights, this finding builds the basis for the proposition that superior performers i.e. companies with more responsible operations that disclose more in their CSR reports will be less likely to be involved in allegations of corporate abuse (Clarkson et al. 2008).

In addition to this, the study finds firms with a poor environmental record measured in negative media coverage the year before were more likely to make unverifiable soft claims about environmental commitment. Soft claims in the paper were described as un-measurable claims related to vision and strategy for example a CEO statement in the report. The study argues that firms whose environmental legitimacy is threatened they are more likely to make soft claims (Clarkson et al., 2008).

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CSR Reporting

Jenkins and Yakovleva (2005) developed a CSR reporting classification system based on research on the mining industry. The system ranks companies into three reporting typologies. These are Mature, Adolescent and Infant reporters. The criteria are based on adherence to GRI guidelines and terminology used by companies. (Jenkins & Yakovleva, 2005).

The reporting types were defined using a time variable and reporting sophistication based on existing GRI guidelines. Companies with a longer history of CSR reporting were given a higher ranking. The types were defined as follows; The Mature reporters were identified as having a long term commitment to disclosure (over 5 years, states as from 1999 in the study) and increased sophistication of information provided determined by nature and style. The Adolescents have disclosed some information in a shorter time frame and have been slower to develop stand-alone reports. The reporting by Adolescents is mainly accomplished over a few pages in corporate annual reports with some adherence to GRI guidelines. The Infant group encompasses the late-comers who have yet to develop standalone reports and are not following GRI guidelines. The study concludes there is a broad range in reporting standards by companies in the mining industry (Jenkins & Yakovleva, 2005). However, the study does not include a grouping for companies that have no CSR reporting procedure

The findings of Yakovleva and Jenkins indicate time and learning are an important factor in developing reporting levels. Companies will adapt with new regulations but also learn from previous reporting suggesting that the longer a company reports on CSR activities, the more advanced the reporting style will be. They will also learn from negative events taking place that need to be reported on such as visible environmental accidents that are highly reported. This leads to proposition indicating time will have a positive effect on the level of reporting.

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Propositions and Research Question

This study answers the question how are allegations of human rights violations linked to

corporations’ reporting on corporate social responsibility? Based on the theoretical framework above, the following conceptual model has been developed illustrating the main propositions of this study.

Figure 2.0 Conceptual Model

The model presents four propositions based on the theoretical framework which are stated as follows:

Proposition 1: Home country regulations on social responsibility reporting will have a positive effect on CSR reporting levels of firms.

Proposition 2: Time will have a positive effect on the level of CSR reporting of firms.

Proposition 3: Prior allegations of corporate abuse will influence the level of reporting.

Proposition 4: The level of CSR reporting will be linked to the type and number of abuse allegations involved in.

Home Country Regulation

CSR reporting Level None

Low Mid High

Corporate Abuse Allegations P1

P2

P3 P4

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Methodology

This section will outline the methodology and the research methods used. The method of data collection, coding framework and data analysis are described. Proposing that higher levels of corporate social responsibility reporting indicates a lower chance of involvement in certain types of Human Rights abuses the analysis compares firms with different levels of reporting to establish patterns.

Using a deductive approach, a theoretical framework was developed based on existing theory and qualitative content analysis was done to analyze the textual data in order to gain knowledge and provide an understanding of the studied phenomenon. (Hsieh & Shannon, 2005). Hsieh and Shannon define qualitative content analysis as “a research method for the subjective interpretation of the content of text data through the systematic classification process of coding and identifying themes or patterns. (Hsieh & Shannon, 2005 p. 1278).” This study aims to extend the theory of Giuliani and Fiaschi by looking more closely at the CSR statements of the companies and determine whether companies that appear more committed to CSR through their CSR reporting are also doing so.

Multiple-Case Study

A multiple-case study approaches the research question by studying multiple cases in order to establish patterns through either theoretical or literal replication(Yin, 2003). Multiple-case studies can supply more robust evidence for propositions by offering more compelling evidence across multiple cases as opposed to one scenario (Yin, 2003). The study will use literal replication to predict similar results across chosen cases with similar levels or theoretical replication which states contrasting results will be produced but for predictable reasons(Yin, 2003).

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Case selection

The unit of analysis for this study is the corporation. Cases are purposefully selected on the basis of the following criteria in order to address the research question; headquarter home country, operations within oil industry, duration of CSR reporting and involvement in abuse allegations. As the research question relates to CSR reporting, a range of companies were chosen that represent both ends of the spectrum including a company that does not report on their social responsibilities at all and those that have more advanced levels of reporting.

A corporate abuse allegation (CAA) is an allegation made against a company alleging the company has violated Human Rights during the course of their operations. The company is alleged to have violated Human Rights when operations have a negative human impact. These allegations are divided into five distinct categories; Environment, Health, Development and Poverty, Labor and Abuses. These categories have been decided by the Corporations and Human Rights Database project. This study does not include the allegations of Development and Poverty abuses as they are outside the scope of the research. Home country regulation influence is addressed by selecting cases with headquarters located in different countries. In order to eliminate any industry effects the sample is limited to firms operating within the oil and gas extraction industries .

The corporate abuse allegations analyzed cover incidents occurring in Africa, South America, Asia and part of North America. The sample only includes firms operating within these regions. The data used to assess corporate abuse allegations includes the subsidiaries of the parent companies identified by the Corporations and Human Rights Database. The selected sample consists of six case studies. The sample contains one case without any abuse allegations and another case without any social responsibility reporting and various levels of CSR reporting. The cases also cover a broad range of firm sizes from multinational corporations to state owned companies operating in one country. Ownership is also

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represented in cases being either state owned or private companies. The data provided by the CHRD covers a time frame from 1999-2013 so the chosen cases have been in operation during this period. The CHRD is the most extensive database of its kind currently available covering allegations of corporate human rights.

This research takes a theoretical sampling approach choosing cases which are extreme examples and represent different levels of reporting and involvement in Human Rights abuses. A broader variety across cases is chosen to allow for more generalizability of the findings (Eisenhardt & Graebner, 2007). This approach enhances pattern recognition by making contrasting patterns more easily observable (Eisenhardt & Graebner, 2007).

CSR Reporting Levels

The level of reporting refers to the sophistication and depth of reporting on social responsibility activities of companies. The reporting level of the companies is determined by four factors; length of the reports, compliance with GRI guidelines, reporting experience and finally the content of the reports.

The length of the report was determined by number of pages as a proxy to the amount of disclosure, this method has been previously used in studies to determine amount of disclosure in social responsibility reporting. Compliance with GRI guidelines is determined using grades provided by the companies producing the reports, the best grade is an A+. The grades are listed on the GRI global reporting database(http://database.globalreporting.org/) and verified by the GRI. The grades are based on the GRI Index which is included in reports and lists which parts of the GRI guidelines have been covered in each report. Reporting experience refers to the time period of reporting and is measured by the number of years the company has reported on social issues with longer term reporting indicating a higher reporting level.

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Lastly the content of disclosure was analyzed determining whether content is either positive or negative and if the report contains more ‘soft’ disclosures referring to difficult to verify statements or objective ‘hard’ disclosures such as measurable output and fact based on the framework developed by Clarkson et. al which categorized the GRI guidelines into either soft or hard claims (Clarkson et al., 2008; Sutantoputra, 2009). Soft disclosure items in the GRI framework include vision and strategy claims and environmental initiatives. Hard disclosures include performance indicators such as emissions and adoption of GRI reporting guidelines (Clarkson et al., 2008). The final reporting level established reflected in the table below is a cumulative judgment based on the CSR reports published by the companies in the examined period reflecting their current status.

Data Collection

Data was collected from various sources including archival data in the form of CSR reports, company websites, annual reports and news articles. Data regarding corporate abuse allegations was provided by the Corporation and Human Rights Database project and additional information on CSR reports was provided by the GRI’s Global reporting database.

The CHRD, is a joint project between the University of Oxford and the University of Denver, aims to gather and code data on human rights abuses by corporations across the globe including claims from 2000 to present day. Information gathered relates to allegations of Human Rights abuses by corporations including specifics such as abuse types and company responses. The project uses data available on the Business and Human Rights Resource Center (BHRRC), the most comprehensive database available on the subject. The CHRD database currently contains abuses allegations occurring South America, Africa , Asia and the United States with more data to be added. In order to gather data for this paper, coding was also done by the author prior to the data analysis period and research planning period.

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The corporate social responsibility reports that formed the basis of the data analysis were located on company websites. According to GRI guidelines, CSR information must be publically available so only data that was retrievable through the websites was considered in establishing the level of reporting. In order to gather evidence on the evolutionary aspects of CSR reporting, the reporting period covered the years 1999-2013. Five years were selected over an even period from the start to the end to represent the CSR reporting styles of the companies and to provide information on the changes over time in reporting levels. The years chosen for analysis include 1999, 2002, 2006, 2010 and 2013. In total, nineteen CSR reports were analyzed to gather evidence for this paper.

Table 3.0 Description of Selected Cases

Company Petrobras Royal Dutch Shell Plc Statoil ASA

HQ Location Brazil (1953) The Netherlands (1907) Norway (1972)

Ownership Semi-Public

Majority State Owned

Public Semi-Public Majority

State Owned

Number of Employees

80,497 (2010) 92,000 (2014) 23,000 (2013)

Operations 18 Countries mainly in South America

+70 countries 36 Countries across the Asia-Pacific, South and North America and Africa.

Revenue US$ 130.0 billion

(2013) US$ 451.235 billion (2013) NOK 637.4 billion (2013) approx: US$ 93 billion Description Petrobras is a majority state owned Brazilian Multinational headquartered in Rio de Janeiro. It is the largest company in the Southern Hemisphere and the 11th largest in the world.

Shell is an Anglo-Dutch multinational with the headquarters located in the Netherlands and incorporated in the United Kingdom. It is considered one of the oil and gas 'Super majors' of the world and is the second largest oil and gas company in the world.

Statoil is partially owned by the

government and is the world's 11th largest oil company (2013). Operations are concentrated in the Norway but also operate oil and gas fields across the Asia-Pacific, South and North America and Africa.

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Company Exxon Mobil Corp. China National Petroleum corp. (CNPC) Nigerian National Petroleum corp. (NNPC)

HQ Location United States (1999) China (1988) Nigeria (1977)

Ownership Public State Owned State Owned

Number of Employees 75,000 (2013) 1,668,072 (2011) N/A Operations Exploration in 38 countries and production operations across 24 countries around the world

52 countries across Central Asia and Russia, Asia-Pacific, Middle East,

America and Africa

Nigeria Revenue US$ 420.836 billion (2013) US$ 378.025 billion (2011) N/A

Description Exxon was formed by the merger of two major oil companies in 1999. It operates in upstream, downstream and chemical operations with refineries in 21 countries. Exxon is the world's 5th largest company by revenue

CNPC is a solely-state owned

enterprise and one of China's largest gas and oil producers and suppliers. It has been ranked 5th in the Fortune Global 500 list in 2013 owns oil and gas assets in over 30 countries. CNPC

NNPC is a state-owned corporation established in 1977, they are used to regulate the national oil industry but also participate in exploration and

production. It manages joint ventures with foreign MNE's operating in Nigeria such as Shell.

Very little information is available on the Nigerian National Petroleum Corporation. It was not possible to locate basic company information such as number of employees by neither online searches nor browsing databases such as Orbis. The company itself does not publish any additional information that is available to the public.

Data Analysis

Coding methodology

The data was reduced by coding the material using a coding framework to dissect the text into meaningful segments (Attride-Stirling, 2001). Coding was done systematically using a combination of independent coding themes based on the GRI framework and derived codes developed to ascertain additional information salient to the research question during the data

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reduction process (Levine, 1985). The two methods were combined in order to provide a further perspective on the data and allowing for subcategories within the initial coding framework (Levine, 1985). The coding initial coding framework is available in Appendix VI.

As the theoretical framework bases CSR reporting levels on the GRI guidelines, the coding themes were derived directly from the guidelines for firms operating in the oil industry known as the Sector Supplement. The goal of the GRI is to convey information on sustainability comparable to financial reporting, so the initial coding framework was based on the latest GRI guidelines index which lists the necessary items to be included in CSR reporting (GRI, 2013). There were originally five main GRI themes including GRI reference, Economic, Environmental, General Standard Disclosures and Social Issues.

In total sixty-six codes were identified using the GRI matrix. Five main themes were broken down into specific issues that are applicable to all organizations adopting the framework and additional items specifically related to the oil and gas industry. These included codes such as human rights, labor, diversity and equal opportunity. These guidelines provided the definitions for the themes setting the boundaries for coding. The length of text applied to a code varied from a single word to few paragraphs of text. By basing it on existing guidelines it ensured consistency in determining the degree of compliance in reporting according the GRI requirements. The data was analyzed chronologically on a case by case basis to effectively explore evolutionary aspects within cases.

The analysis followed the analytical method presented by Attride-Stirling (2001) for thematic networks in qualitative research. The first step of the analysis stage included coding material in order to reduce the data using a devised coding framework, identifying themes, constructing networks. This was followed by the exploration of the texts where themes were explored and summarized concluding with integrating the data and interpreting patterns.

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Data reduction consists of systematically reading and analyzing the CSR reports of all six cases. The salience of information coded was determined based on the coding framework developed according to the GRI guidelines and the relevance to the research question. Data was analyzed and coded utilizing Nvivo, a qualitative data analysis software package, to systematically code and transform the raw data into a data set. This was an iterative process throughout the analysis. Using software for data analysis adds rigor to qualitative research and allows for efficient data organization and expedient access to coded text (Attride-Stirling, 2001 ; Welsh, 2002).

The compiled information was subsequently analyzed comparing statements and content for patterns and links to the research question. The analysis consisted of a within-case analysis and cross-case analyses.

Within-Case Analysis

Within-Case analysis was done reading CSR reports chronologically per company and establishing reporting levels based on available evidence. The results section will begin with the within-case analysis. The cases were analyzed within categories based on CSR reporting levels in order to develop initial insights and provide a descriptive overview of the cases. The analysis is supported by quotes derived from the iterative coding process conducted during the data collection phase which is refined throughout the analysis phase. The cases have been grouped along their respective levels of CSR reporting based on the GRI framework. The category assists in developing the framework to address the research question. Comparison of firms within the categories where more than one case is available will allow for literal replication to support the findings of the analysis in answering the research question.

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Cross-Case Analysis

The analysis benefits from a cross-case perspective which is able to provide new perspectives and possibility to observe for theoretical replication (Yin, 2002). The cases are compared across relevant categories where evidence is gathered comparing different variables such as home country factors in order to identify new patterns which are not apparent in singular cases or within a single category. A comparison is done of the cases across levels of CSR reporting and the links to corporate involvement in Human Rights abuses.

Results

This section provides the results of the qualitative analysis. The first section describes the determined levels of reporting by the companies. A within-case analysis of the six individual case studies will follow and a cross-case analysis is done to identify patterns. The research question is investigated by first determining the reporting levels of the six cases in the study. This is followed by a description and analysis of the abuse allegations of the cases and a categorical analysis of the reporting levels.

Corporate Social Responsibility Reporting Levels

The table below shows the results of the analysis establishing the levels of reporting of each case study.

The table maps out the findings based on the four factors used to determine the reporting level of each case. The factors are; GRI compliance, the length of the report measured in number of pages, the content as a percentage of the amount of negative disclosures in the report and finally the number of years of the company has produced a standalone social responsibility report up until 2013. ‘N/A’ in the table refers to years when a standalone report was not published.

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Table 4.0 CSR Reporting Levels

Source: Author

In the case of Statoil 2010, an online version of the information was available but not in a downloadable report form so there is no comparable figure for the number of pages or content ratio but the reporting grade was verified by the GRI. Partial compliance indicates some of the GRI criteria have been met and an index has been provided showing what information has been given.

Content is analyzed based on statements in the reports and determined whether the statement was a positive statement or a negative statement and whether the statement made ‘soft’ claims or verifiable and measurable ‘hard’ claims. Examples of statements that are judged to be positive statements include: “We need to challenge ourselves to make sure we always do

the right thing and seek solutions that share benefits with the communities where we operate.

(Shell, 2013)” and “In the future we will continue to support charitable and public welfare

activities, care for school dropouts and the poor, and take steps to secure greater social progress and prosperity. (CNPC, 2006)” Negative statements include admissions of fault and

mistakes made, as well as negative events that have occurred which may result in reputational

Level Factor Year NNPC CNPC Exxon Shell Petrobras Statoil

GRI Compliance 1999 n/a n/a n/a no n/a n/a

2002 n/a n/a no Yes - Partial n/a Yes - Partial

2006 n/a Yes - C Yes - Partial Yes - A+ Yes - A+ Yes - Partial 2010 n/a Yes - Partial Yes - Partial Yes - A+ Yes - A+ Yes -A+ 2013 n/a Yes - Partial Yes - Partial Yes - A+ Yes - A+ Yes - A+

Length of Report 1999 n/a n/a n/a 24 n/a n/a

(pages) 2002 n/a n/a 34 52 n/a 72

2006 n/a 70 57 44 160 77

2010 n/a 74 53 40 59 n/a

2013 n/a 68 84 44 71 44

Content 1999 n/a n/a n/a 0.77% n/a n/a

(negative disclosure) 2002 n/a n/a 0% 1.33% n/a 0.22%

2006 n/a 0.24% 0.03% 0.77% 0.03% 0.42%

2010 n/a 0.09% 0.07% 0.21% 0.08% n/a

2013 n/a 0.21% 0.24% 0.65% 0.93% 0.97%

Reporting years (as of 2013) 0 8 12 16 11 13

Level of Reporting None Low Medium High High High

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damage. For example the following statements were evaluated as negative: “The overall

safety situation in 2006 remained far from ideal. Seven major accidents took place in 2006 including the leaking of a gas well in Kai County, Chongqing Municipality, on March 25, in which 26 people were killed.(CNPC, 2006)” and “we had a crude oil spill in Mayflower, Arkansas — a regrettable incident for which we are deeply sorry (Exxon, 2013) .”

The results show that the highest level reporters make more negative disclosures in their reports pertaining to accidents and environmental impacts. The three cases that consistently report the highest amount on issues that may have a negative impact are Shell, Petrobras and Statoil. Though it is notable that the negative disclosures form a very small percentage in all cases. Most of the negative content was followed by a positive explanation to explain the context in a more positive way or explain how the situation was remedied for example, “In

two countries, where armed security is provided by contractors, they do not operate in line with our Guidelines. Plans are in place to correct this situation. (Shell, 2002).” This

approach to disclosure indicates the efforts made to control any reputational damage and adds to the critical view of CSR that reports are predominantly used for promotional purposes in order to establish legitimacy and that the company operates within social norms.

The length of the reports is used as a proxy to the amount of disclosure in the report. Though this factor needs to be taken into consideration alongside the content and presentation of information. A longer period of reporting indicates more experience. Experience has allowed for the companies to develop better performance indicators and implement them in their systems. Social measures are still being developed and the main method of measurement appears to be financial contributions to social issues such as community projects.

Based on the four factors, the companies were placed on a continuum of reporting levels as presented in figure 5.0.

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Figure 5.0 : Reporting Level Continuum Lowest to Highest

The results show an uptake in adoption of GRI standards after 2006. The general improvement in reporting grades, the increased adoption of the GRI reporting framework and the generally growing amount of disclosure in reporting indicates support for the second proposition that states CSR reports will improve over time.

Within-Case analysis

The following table Figure 6.0 depicts corporate abuse allegations made against the companies over the studied period, every ‘X’ in the table represents one allegation. This study investigates the environmental, labor, health and abuse categories as they are most relevant to the extractive industries. The grey highlighted cells in the table display when a CSR report has been published by the corporation.

Table 6.0 Abuse Allegations timeline and CSR reporting

Source: Author

In total, fifty-seven CAA’s occurred during the period 1999 – 2013, including allegations made against subsidiaries of the companies. The table in figure 5.0 shows that allegations of Human Rights abuses occur consistently throughout the period. In total, thirty-three cases of

None Low Med High

NNPC CNPC ExxonMobil Statoil Petrobras Shell Home Corporation 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Brazil Petrobras X X X X XXXX X X X XXX China CNPC X XX X X XX X X XX Nigeria NNPC X X X X X NL/UK Shell X XX X XX X XX X XX XX X X X Norway Statoil US ExxonMobil X X X X XX XXX X

X Corporate Abuse Allegation

Xxx Published CSR report

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Environmental abuse allegations were recorded. This category is the dominant type of alleged violation comprising 59% of recorded CAA’s in the sample. The Abuses category is the second most reported category with seventeen reported cases. Four health related accusations were recorded in which health issues were caused by damage to the environment and three labour incidents occurred. The following figure shows where the abuses happened.

Figure 7.0 Abuse Allegations by Country

.

The Nigerian oil industry is strictly controlled by the Nigerian Government. The economy relies heavily on revenues from the oil industry, which accounts for twenty percent of GDP and has been the country’s main source of revenue since 1974 (Shinsato, 2005). The country is embroiled in political instability with weak institutions. Although environmental regulations exist, few are enforced as a result of the country’s reliance on oil revenues (Shinsato, 2005). Because of the country’s reliance on the oil industry and the weak institutions, companies are held to lower standards when operating in the area. The situation is reflected in the location of the abuse allegations as the majority of abuses occurred in Nigeria with violations caused by multiple companies.

Saying versus doing : a study of corporate social responsibility reports and involvement in human rights abuses by firms in the oil industry