Formal Report The purpose of our report is to inform the board of directors of British Petroleum, p.l.c. about the importance of introducing and maintaining a new CSR strategy/program and shaping our portfolio accordingly in order to stay competitive in the future, futu re, meet demand affordably, support local communities and address the issue of climate change.
Summer Intern Team Kristina Bacelic Kevin Williams Reto V. Hess
4/26/2011
501 Westlake Park Boulevard Houston, Texas 77079 Phone: +1 (281)366 2000
MEMO OF TRANSMITTAL
DATE: TO: FROM: SUBJECT:
April 14, 2011 Senior Management Reto Hess, Kristina Bacelic, Kevin Williams – Williams – Summer Summer Intern Team INCREASING COMPANY CORPORATE SOCIAL RESPONISIBLITY
The attached report, requested by senior management, mana gement, focuses on the status of British Petroleum’s corporate citizenship standing, standing, how we fare against our competitors in regards to the standing, and recommendations on how the company can improve immediately in those areas before next year’s report. This study includes secondary research which focuses on our strengths and weaknesses. As we approach the one-year anniversary of the catastrophic oil spill caused by one of our offshore rigs in the Gulf of Mexico, we believe there is a great opportunity to turn around the fate of those devastated in the region and reassert our company’s company’s image by creating a stronger CSR presence. Public relation efforts have been be en successful in controlling the media outcry; however, the healing aspect has not been as aggressive. The recommendations formed by this committee were specifically d eveloped to be useful in demonstrating the effectiveness of BP to:
Represent a corporate citizen that protects the global glob al landscape. Allocate resources on R&D for alternative sources of renewable ene rgy. Commit to a partnership with employees, stakeholders, suppliers and distributors as well as local communities in order to promote economic growth and development.
Strong improvement takes dedication and willpower, as it is never an easy undertaking. However, we are certain that the return on investment from improved performance in these areas is exponential. We will be presenting this report and the recommendations to you on May 3, 2011, and look forward to answering any questions relating to this report. report. The summer intern team thanks you for allowing us to prepare this important analysis in hopes that it will be of assistance in future decisions concerning Corporate Social Responsibility. Page | i
Table of Contents Executive Summary ........................................................................................................................ 1 ExxonMobil Corporation ............................................................................................................ 1 Chevron Corporation: ............................................. .................................................................................................. ..................................................... ................ 1 Occidental Corporation: ................................................... ....................................................................................................... .................................................... ....... 2 Conoco Phillips Corporation ..................................................... .................................................. 2 Hess Corporation .................................................... ..................................................... ................ 2 Introduction .............................................. .................................................................................................... ...................................................... ................................. 3 Current Corporate Social Responsibilities at BP .................................................... ........................ 3 Operational Energy Efficiency Efficienc y ................................................. .................................................................................................... ................................................... 4 Renewable Energy....................................................................................................................... 4 Conclusion ..................................................... ...................................................... ........................ 5 Competition..................................................................................................................................... 5 ExxonMobil Corp. .......................................................................................................................... 6 CSR Program – Program – Malaria Malaria Initiative ..................................................... .......................................... 6 CSR Program – Program – Women’s Women’s Economic Opportunity Initiative...................................................... Initiative ...................................................... 7 The CSR Results ......................................................................................................................... 7 ChevronTexaco Corp. ..................................................................................................................... 9 CSR Program – Program – ESHIA ESHIA & Wheatstone Project .......................................................................... 9 CSR Program – Program – Global Global Fund .................................................................................................... 10 The CSR Results ....................................................................................................................... 10 Occidental Petroleum Corp. ................................................. ..................................................................................................... .................................................... ..... 11 CSR Program – Program – Health, Health, Environment, and Safety ........................................................ ............ 12 The CSR Results ....................................................................................................................... 12 Conoco Phillips ................................................. ....................................................................................................... ...................................................... ...................... 13 CSR Program – Program – SPIRIT SPIRIT ............................................................................................................ 13 The CSR Results ....................................................................................................................... 14 Hess Gasoline................................................................................................................................ 15 CSR Program - PRODEGE ....................................................... ................................................ 15 CSR Program - Hurricane Response ................................................. ......................................................................................... ........................................ 16 The CSR Results ....................................................................................................................... 16 Page | ii
British Petroleum’s CSR Benefits ................................................................................................ 18 Conclusion .................................................................................................................................... 19 Proposal/Recommendations ................................................. ..................................................................................................... .................................................... ..... 20 Employee Volunteer Strategy ................................................................................................... 20 Natural Disaster Relief Strategy............................................... ................................................................................................ ................................................. 20 Invisible Children ................................................... ........................................................................................................ ..................................................... .............. 21 Plant a Billion Trees ............................................... .................................................................................................... ..................................................... .............. 21 Works Cited .................................................................................................................................. 22 Grading Rubric............................................................................................................................... A
List of Tables Table 1 – 1 – Exxon Exxon Mobile Corp. – Corp. – Sources: Sources: (Mergent Online, 2010), (Forbes, 2009) ..................... 6 Table 2 – 2 – ChevronTexaco ChevronTexaco Corp. – Corp. – Sources: Sources: (Mergent Online, 2010), (Forbes, 2009) .................. 9 Table 3 – 3 – Occidental Occidental Petroleum Corp. – Corp. – Sources: Sources: (Mergent Online, 2010), (Forbes, 2009) ....... 11 Table 4 – 4 – Conoco Conoco Phillips Corp. – Corp. – Sources: Sources: (Mergent Online, 2010), (Forbes, 2009) ................ 13 Table 5 – 5 – Hess Hess Corp. - Sources: Sou rces: (Mergent Online, 2010), (Forbes, 2009) ................................... 15
List of Figures Figure 1 - Emission to Air – Source – Source Data: (British Petroleum, 2011) ........................................... 4 Figure 2 – 2 – Community Community Investments – Investments – Source Source Data: (ExxonMobile, 2009) ................................... 8 Figure 3 – 3 – HES HES One Management System – System – Source: Source: (Occidental Petroleum, 2010)................... 11 Figure 4 – 4 – Social Social Responsibility Spending by Time – Time – Source Source Data: (Hess, 2009) ...................... 17 Figure 5 – 5 – BP BP CSR and its effects - Source Data: (CSR (CS R and Management, 2009) ...................... ........ .............. 18
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Executive Summary The purpose of this report is to show how BP can increase their Corporate Social Responsibility (CSR). BP Corporation can undoubtedly benefit ben efit from being better corporate citizens, not only financially but also socially, as it is a tremendously generous gesture to society and also enhances the image and reputation of our company. We have analyzed five of our major competitors’ competitors’ techniques and strategies which make them some of the nation’s nation’s top corporate citizens. Their efforts have also landed them on the Forbes 100 Best Corporate Citizens List of 2009. This report contains an in-depth analysis of these five companies and their CSR flagships. In order to get the most versatile perspective while staying in ou r industry, we have chosen the following companies:
ExxonMobil Corporation For over 100 years, ExxonMobil Exxon Mobil has focused much of their CSR efforts on Africa by helping people infected with malaria. ExxonMobil not only donates money to this cause but also collaborates with the African government and surrounding agencies to battle this illness. Another contribution of ExxonMobil is the Women’s Economic Opportunity Initiative, which helps women advance into higher positions in the workplace. The company believes that since women make up 50 percent of our population, their potential to contribute to the economy is substantial.
Chevron Corporation: Chevron is one of the top contributors to the fight against AIDS, tuberculosis, and malaria. They also have a program, called ESHIA, to show if a future project will, in any way, harm h arm the environment or surrounding communities. If the project proves to be harmful, they the y will either cancel production or move to another site. In order to obtain the most current and accurate information, Chevron has created c reated the Wheatstone Project which consults a large quantity of renowned specialists in multiple fields of study.
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Occidental Corporation: As a part of their environmental programs, Occidental Petroleum (Oxy) launched their HES (Health, Environment, and Safety) initiative over 35 years ago. HES promotes safety in the workplace in addition to ensuring their employees’ employees’ health. In the past ten years, injuries and illnesses of employees at Oxy have declined by 60 percent. It also helps protect the environment by trapping methane and CO₂ into underground enhanced oil recovery operations.
ConocoPhillips ConocoPhillips Corporation For over 30 years, ConocoPhillips has been donating money to help preserve habitats of migratory birds. In 2005 they launched their own project called the SPIRIT of Conservation Migratory Bird Program. By 2011, ConocoPhillips hopes to reach their goal of raising $10 million for their SPIRIT program. Overall, ConocoPhillips amassed a contribution of $2.4 million together with the National Fish and Wildlife Foundation and its partners.
Hess Corporation In 2009, Hess Corporation introduced the PRODEGE PRODE GE program in West Africa. This program has helped to build 40 schools in this Third World region and gave children in Equatorial Guinea a proper education. PRODEGE also assisted this country by providing fresh-water wells in order to give children clean, drinkable water and reduce the chances of disease. In addition, Hess donated $3 million towards the Ike Relief Fund, which contributed to the rebuilding of New Orleans.
By doing research of these companies, as well as an examination of BP, we have come up with a few recommendations reco mmendations to boost our corporate social responsibility. Not only will these recommendations help BP become better corporate citizens but it may also help our company join the ranks of the top oil companies on the Forbes Best Corporate Citizens List. Here are just a few examples of recommendations for our company to improve its status as corporate citizens: 1. 2. 3. 4.
Employee Volunteer Strategy Natural Disaster Relief Strategy Invisible Children Plant a Billion Trees Page | 2
Introduction British Petroleum p.l.c 1. is one of the world's largest and leading oil companies in the market of exploration and production, refining and chemicals. Founded on April 14, 1909, the company now employs 79,700 workers and is headquartered in London, United Kingdom. BP focuses its business mainly on exploration and production activities relating to oil and natural gas, as well as pipeline transportation, natural gas processing, and gas/power marketing. Add itionally, BP specializes on chemicals, specifically petrochemical manufacturing and marketing, and has a solar energy energ y business which is one of the world's largest manufacturers of photovoltaic modules and systems. This research team has chosen to look loo k at five competitors in the Oil industry and analyze their Corporate Social Responsibility (CSR) strategies and programs in order to find shortcomings in our own CSR programs. To compare BP with its competitors, the research team has analyzed our own company’s CSR efforts and compiled them in a short review on the next few pages.
Current Corporate Social Responsibilities at BP As a company with extensive operations in developing countries, BP needs to carefully manage its approach to human hum an rights, and also ethical business practices while still satisfying stakeholder demands. According to Archie B. Carroll, a good corporate citizen has to ―honor multiple duties in order to be considered socially responsible; Economic Responsibility, Legal Responsibility, Ethical Responsibility and Philanthropic Responsibility.‖ (Carroll, 1991) The most important but also most difficult part is to achieve the status of being a philanthropically responsible company, while not reducing the stakeholder return on investment. As of 2010, there are only a few aspects of how a company behaves as a corporate citizen that do not apply to BP’s BP’s nature and volume. volume. The most significant issue that we have been confronted with in the past is our environmental impact. While undoubtedly a substantial part, it is not the extraction of crude oil and its refining process that is a concern, but the impact on climate change caused by the oil use of our customers. As a ―player on a globally leveled playing field‖, field‖, BP is immensely powerful and able to lead on the social development of the planet much better than national governments. (Freidman, 2005) Currently, we focus our philanthropic responsibilities on the two major problems for most oil concerns: operational energy efficiency and renewable energy.
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British Petroleum Public Limited Company: From now on referred to as BP
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Operational Energy Efficiency "Our aim is to be successful in everything we do by delivering outstanding performance. The test of success will be our ability to generate strongly competitive returns in a sustainable manner that aligns us with society." (British Petroleum, 2011) True to our company vision, we have already engaged in multiple tasks to further our CSR and become a leading provider in clean, sustainable energy. In 1997, we set a clear target for our greenhouse emissions to be realized in the year 2010 – 2010 – ――Greenhouse gas emissions from our operations would be 10% lower than 1990 levels.‖ levels.‖ (British Petroleum, 2011) This target was realized nine years early in 2001 and we have gained over $650 million in net value from augmented operational efficiency. efficienc y. With increased technological innovation and improved energy management, we have also managed to decrease poisonous emission to air even further. As illustrated in the bar chart below, BP has efficiently reduced its emissions from 2,400,000 tons to almost 1,200,000 tons annually which puts us almost at the top of emission friendly corporations.
Figure 1 - Emission to Air – – Source Source Data: (British Petroleum, 2011)
Renewable Energy BP believes that gas will be the interim fuel for several decades; yet a substantial part for the business is focused by the challenge ―to build a material and profitable renewables business‖ based on solar and wind. (British Petroleum, 2011) Our company emphasizes the latent po tential of Page | 4
renewable energy because we see these ―key low-carbon areas as being both strongly aligned with our core capabilities‖ capabilities‖ and are confident that we will fulfill ―substantial portions for the world’s energy needs in the future.‖ future.‖ (British Petroleum, 2011). The challenge for us however, has been to make renewable energy a sustainable and profitable business proposition. Today, the monetary returns from renewables do not come close to oil, gas, and nuclear power. However, we have been funding multiple projects to develop sustainable business propositions in the area of renewables. This has resulted in the beginnings be ginnings of our solar and wind programs, which are still in their infancy, but beginning to have an impact on the global energy market.
Conclusion Although our research team is impressed by the current CSR programs and the results they produced over the recent years, we have concluded that BP is missing one important part of being a philanthropic business – business – a CSR program that is unique to British Petroleum. In order to give this argument more weight, we have compared compa red our own CSR programs p rograms with the ones of our direct competitors.
Competition The shape of the oil and gas exploration and production industry is very much defined by the nature, amount, and location of the raw materials that it exploits. Without an exception, all big companies compan ies in this industry are involved in the exploration and production of oil. Because oil is one of the world's most soughtsou ghtafter raw materials, many companies have started to practice CSR in order to minimize social impacts from their operations and to honor hono r their philanthropic responsibilities. Although there are many ways to practice CSR and meet a company’s philanthropic responsibilities, most businesses in the oil industry focus their CSR programs on problems in the Third World, especially countries in which they refine or drill for oil.
Our team has analyzed five competitors co mpetitors and dissected their CSR programs as well as their corporate philosophies in order to locate weaknesses, issues, or opportunities in our own CSR programs. All of the companies listed below have made it into the top 100 10 0 list of socially responsible corporations and employ specific plans and programs to further their CSR even more.
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ExxonMobil Corp. Form of Enterprise: Chairman, Chief Executive Officer: Number of Employees: Number of Shareholders: Market Cap: Revenue: Net Income: CSR Rank: Environment Rank: Climate Change Rank: Human Rights Rank: Philanthropy Rank:
Corporation Rex Tillerson 80,700 525,529 $ 417,960,225,420 $ 383,221,000,000 $ 30,460,000,000 11 96 144 51 142
Table 1 – 1 – Exxon Exxon Mobile Corp. – Corp. – Sources: Sources: (Mergent Online, 2010), (Forbes, 2009)
ExxonMobil is an American multinational corporation that has its core business in the oil and gas industry. As the biggest player in the oil industry, ExxonMobil Exxo nMobil does not only have to be a leader in innovation and emission reductions, but also be the prime example of conducting CSR. According to ExxonMobil, ―meeting ―meeting the challenge of sustainability requires that we effectively address and engage on all these issues while delivering on our primary responsibility to society – society – finding finding and providing the reliable supplies of energy ene rgy needed for progress and development.‖ development.‖ (ExxonMobile, 2009) But sustainable energy is not the only goal for ExxonMobil’s long-term long-term community and development goals. In recent years, Exxon Mobile has established multiple initiatives and programs in order to strengthen their corporate citizenship. Our team has selected two o f these programs in order to express how important CSR truly is for this oil giant.
CSR Program – Malaria Initiative ExxonMobil has had a presence in Africa for over 100 years and has witnessed at firsthand, the health and economic impact imp act of malaria on its workforce, their families and the communities. They have realized how ―malaria traps families, communities and countries in cycles of disease disease and poverty.‖ (ExxonMobil, 2009) For ExxonMobil, improving health is a necessary foundation for economic growth and development as it contributes to a stable and productive workforce. Their support however is more than monetary donations. They are actively partnering with governments and agencies in affected countries, ―empowering them to combat malaria with the same disciplined, results based business practices that ExxonMobil employs in its global Page | 6
operations.‖ operations.‖ (ExxonMobil, 2009) One example is of their efforts is Dr. Steven C. Phillips, Medical Director and Global Issues Specialist at ExxonMobil. He serves on the board of Malaria Malaria No More and participates in active roles such as: workforce training, supply chain management, and data collection. His in-depth knowledge of economics and marketing along with his expertise on how to staff, helps employers reduce their accidents and establish medical care for everyone employed.
CSR Program – Women’s Economic Opportunity Initiative According to ExxonMobil, ―women’s untapped potential p otential is great — they — they make up half of the world’s population, yet earn just 10 percent of the world’s income.‖ (ExxonMobil, 2005) ExxonMobil launched the Women’s Economic Op portunity Initiative as a global effort in 2005 in order to help women fulfill their economic potential and become a key driver of economic and social change in their communities. A spokesman at ExxonMobil said that: ―We’ve chosen this focus area because of its enormous positive economic and social impacts — impacts — more more stable, healthy, well-educated and thriving communities.‖ communities.‖ (ExxonMobil, 2005) According to their web site, ExxonMobil focuses on three major concepts in their Women’s Economic Opportunity Initiative:
Develop women entrepreneurs and business b usiness leaders through skills development training, mentoring programs and businesswomen’s networks. Create opportunities for women’s women’s economic participation through advocacy and research programs. Identify and deploy technologies that accelerate women’s women’s economic advancement through support of high-impact and sustainable innovations, research and sharing best practices. (ExxonMobil, 2005)
To date, ExxonMobil has committed grants totaling close to $40 million. They have also worked on projects in Angola, Cameroon, Canada, Chad, Colombia, Egypt, Equatorial Guinea, Indonesia, Kazakhstan, Kazakh stan, Malaysia, Nigeria, Qatar, and Thailand towards enabling women from 77 developing countries to participate in leadership and skill development programs.
The CSR Results ExxonMobil has a long-term focus on the key k ey aspects of corporate citizenship, including reducing environmental impacts, protecting safety Page | 7
and health, and promoting economic development. Finding, developing, and delivering reliable and affordable supplies of energy energ y to support economic progress, have long been the foundation of ExxonMobil’s business. A key goal of their corporate citizenship efforts is to address the challenge of sustainability through six key focus areas:
Corporate Governance Safety and health in the workplace Environmental Performance Managing climate change risks Economic Development Human Rights and Security
ExxonMobil issues an annual CSR Report, which focuses on the corporation’s performance in these six areas. The report describes ExxonMobil’s efforts to meet the projected increase in energy demand d emand to support growing populations and expanding economies, eco nomies, while also protecting the environment and reducing greenhouse gas emissions. Although CEO, Rex Tillerson, once quoted that ―success ―success is measured by the service you render and the character of citizen you make rather than by the amount of money money you amass‖, the chart below below clearly shows that ExxonMobil also intends to support communities financially. (Tillerson, 2010) With such substantial financial support to communities, it is no wonder that ExxonMobil has managed to rank 11 on the Forbes List in 2009 and will continue to push their CSR programs even further.
Figure 2 – 2 – Community Community Investments – Investments – Source Source Data: (ExxonMobile, 2009)
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ChevronTexaco Corp. Form of Enterprise: Chairman, Chief Executive Officer: Number of Employees: Number of Shareholders: Market Cap: Revenue: Net Income: CSR Rank: Environment Rank: Climate Change Rank: Human Rights Rank: Philanthropy Rank:
Corporation John Watson 62,000 186,000 $ 213,271,488,000 $ 204,928,000,000 $ 19,024,000,000 29 82 108 78 349
Table 2 – 2 – ChevronTexaco ChevronTexaco Corp. – Corp. – Sources: Sources: (Mergent Online, 2010), (Forbes, 2009)
Chevron is one of the leading corporations in terms of corporate citizenship. They pride themselves in the implementation of the Environmental, Social and Health Impact Assessment (ESHIA), the fight against AIDS, tuberculosis, malaria, and 2 the sanctioning of the Gorgon Project . These three programs encompass what it means to do things the ―Chevron Way.‖
CSR Program – ESHIA & Wheatstone Project The purpose of ESHIA is to identify if a future project can negatively impact the environment, natural resources, public health, or the local community. It has been proven successful in specifically one instance – instance – the Wayúu Territory Territory in northern Colombia. By implementing ESHIA, ESHIA, Chevron learned that the site for a gas production facility would disturb the tribe’s water reserves and their their pathways to reach the the ocean. This posed a huge problem for the Wayúu tribe because the most prominent way to earn a living was to fish. Chevron changed the location of the site site and developed a ―long-term ―long-term program to protect the environment and improve the fishermen's safety, quality of life and income.‖ (Chevron, 2010) As part of its ESHIA process, Chevron is currently undertaking a wideranging assessment on social impacts for what they call the Wheatstone Project . This child of the ESHIA parent project includes ―20 separate studies on any potential project impacts to the Onslow community and the broader Pilbara region.‖ region.‖ (Chevron, 2011) According to Chevron, approximately 330 stakeholders, residents, government agencies, major 2
The Gorgon Project is one of the world's largest natural gas projects
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industries, tourism operators, visitors, service providers and local businesses were consulted in order to acquire the most reliable information.
CSR Program – Global Fund Chevron is the leading private contributor to the Global Fund to Fight AIDS, Tuberculosis, and Malaria. In 2010, Chevron invested $55 million over a six-year period to the global fund. Chevron also co-developed the Dunoon Home Community Based Care Center (HCBC) in Dunoon, South Africa, where more than half of the community communit y is infected with HIV/AIDS. The HCBC offers meals to more than 150 patients a week, as well as support services for the AIDS AIDS victims. Chevron does not only help with those who have been infected with the disease, but also plays a major role in prevention of AIDS, tuberculosis and malaria. In the mid-1980’s, mid-1980’s, Chevron was one of the first corporations to produce a video on AIDS to enlighten and emphasize awareness to all workers. According to Rhonda Zygocki, Executive Vice President of Policy and Planning, in 2005 Chevron was also ―the first in our industry to implement a global HIV/AIDS policy and program.‖ (Chevron, 2010)
The CSR Results John S. Watson, CEO of Chevron, feels that, that, ―it's ―it's an honor to lead Chevron into a future that builds upon a tradition of producing energy in a safe, environmentally sound and socially responsible manner.‖ (Watson, 2010) Highlights of Chevron’s Corporate Social Responsibilities include:
Safer conditions in the workplace Reducing Chevron’s carbon footprint Reducing emissions from flaring Launched the Gorgon Project Reporting total waste
According to Watson, Watson, ―developing ―developing that energy safely and responsibly is an imperative.‖ (Watson, 2010) As one of the leading corporations in the world, Chevron is not taking any chances chanc es when it comes to Corporate Social Responsibility.
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Occidental Petroleum Corp. Form of Enterprise: Chairman, Chief Executive Officer: Number of Employees: Number of Shareholders: Market Cap: Revenue: Net Income: CSR Rank: Environment Rank: Climate Change Rank: Human Rights Rank: Philanthropy Rank:
Corporation Ray Irani 11,000 35,577 $ 80,276,967,240 $ 19,157,000,000 $ 4,530,000,000 75 752 37 15 362
Table 3 – 3 – Occidental Occidental Petroleum Corp. – Corp. – Sources: Sources: (Mergent Online, 2010), (Forbes, 2009)
Occidental Petroleum Corporation (Oxy) contributes to corporate citizenship in a very prominent way. In the late 1970’s, Oxy created the HES (Health, Environment, and Safety) management system, which is a program that concentrates on helping employees, keeping them safe, and minimizing damage to the environment. In 2007, Oxy added another part to their HES system; Social Responsibility. As displayed in the chart below, all four elements of HES are a substantial part of what it takes to be a socially responsible corporation. As a regular practice in new projects, Oxy nowadays evaluates social impact concurrently with environmental impact assessments.
Figure 3 – 3 – HES HES One Management System – System – Source: Source: (Occidental Petroleum, 2010)
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CSR Program – Health, Environment, and Safety HES focuses primarily primarily on the safety and health of Oxy’s employees. The HES committee believes that it should empower its employees to make decisions for themselves. According to Rodolfo Segovia, Chairman of the HES Committee, ―the Committee and and management authorize and expect employees to stop activities or operations if they have safety or environmental concerns.‖ (Occidental Petroleum, 2009) In 2010, injuries and illnesses of employees have declined by 60 percent since 2000. The HES system furthermore, not only concentrates on the safety of their workers, but also on the safety of the environment. The HES committee is also keen on reducing and capturing methane and CO₂ before these gasses get flared out into the atmosphere. at mosphere. Oxy is currently working on technology that would capture carbon dioxide before being emitted in to the atmosphere and administering those emissions into underground Enhanced Oil Recovery (EOR) operations. Oxy’ Oxy’s diligent efforts have been recognized by the U.S. Environmental Protection Agency’s Natural Gas STAR and Methane to Markets programs. HES also aims to control its oil spills to less than 0.01 percent of a production on a three-year rolling average basis. This is, of course, excluding spills caused by natural disasters or a third th ird party.
The CSR Results Oxy is doing everything in its power to maintain its status as one of the top oil corporations with high corporate citizenship. Some So me of these efforts include:
Engage the stockholders Establish Environmental Management Systems Employ local workers throughout the globe Promote Human Rights Preserve wildlife habitats worldwide
Ray R. Irani, CEO of Occidental Petroleum, believes belie ves that ―social responsibility is not merely for good business- it is everyone’s business.‖ (Occidental Petroleum, 2009) Strong CSR is essential for Oxy’s for Oxy’s goal to maintain one of the highest ranks of an oil company as a corporate corpo rate citizen.
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Conoco Phillips Form of Enterprise: Chairman, Chief Executive Officer: Number of Employees: Number of Shareholders: Market Cap: Revenue: Net Income: CSR Rank: Environment Rank: Climate Change Rank: Human Rights Rank: Philanthropy Rank:
Corporation James J. Mulva 29,700 58,644 $ 113,113,749,760 $ 198,655,000,000 $ 11,358,000,000 44 137 87 137 297
Table 4 – 4 – Conoco Conoco Phillips Corp. – Corp. – Sources: Sources: (Mergent Online, 2010), (Forbes, 2009)
ConocoPhillips is a U.S based, multinational energy energ y corporation with its headquarters located in Houston, Texas. ConocoPhillips is committed to protecting the environment by implementing highly controlled environmental standards in their processes. In order to ensure that their operations today will not only deliver the energy needed to drive their economic growth and social welfare, but also secure a stable and healthy environment for tomorrow, ConocoPhillips has established multiple CSR programs in order to uphold it philanthropic responsibilities.
CSR Program – SPIRIT One of ConocoPhillips’ CSR projects is conserving the natural habitat of migratory birds such as the Rainbow Bee-eater or the Griffon Vulture. Although there have been some contributions to funds and organizations helping these birds since 1970, ConocoPhillips Cono coPhillips has not had a specific project on its own. This changed in 2005, when they founded the SPIRIT of Conservation Migratory Bird Program, which was a result of the company’s extensive relationship with the National Fish and Wildlife Foundation (NFWF). According to ConocoPhillips, ―the ―the program strives to protect, restore and improve the natural systems and habitats upon which migratory birds depend for survival, and to benefit declining bird species.‖ (ConocoPhillips, 2005) From its conception, the SPIRIT program has been be en extremely successful and ―27 ―27 grants have been awarded to 19 conservation groups in seven states and four countries.‖ (ConocoPhillips, 2005) According the a ConocoPhillips press release in 2010, more than ―55,000 acres of priority Page | 13
bird habitats have been protected and restored and at least 250,000 metric tons of carbon will be sequestered as a result.‖ result.‖ (ConocoPhillips, 2010) Overall, ConocoPhillips amassed a contribution of $2.4 million and together with the NFWF and its partners, will hit the $10 million mark in 2011.
The CSR Results As a result of their CSR efforts, ConocoPhillips was selected b y The Nature Conservancy of Texas for their annual 2007 Corporate Conservation Leadership Award . Carter Smith, the organization’s director, wrote, ―ConocoPhillips has distinguished itself as the industry leader in its commitment to conserving imperiled places and restoring habitats for fish and wildlife around the globe.‖ (Smith, 2007) In accepting the award, the CEO of ConocoPhillips, James Mulva, explicitly declared that although the effort has been great and the results rewarding, ―more ―more successes are needed‖, and that ―in ―in too many places, the clock is ticking.‖ ticking.‖ (Mulva, 2007) Mulva also mentioned that it is of the utmost importance that mo re corporations work together and act now in order to save more habitats and ended his speech by saying, ―we must keep up the fight!‖ fight!‖ (Mulva, 2007) And keeping up the fight is what ConocoPhillips does! In 2011, the number of programs and initiatives supported by the oil o il giant is simply astonishing. So far their efforts include:
Climate Change Energy Efficiency Ever-Cleaner Energy Clean Air & Water Biodiversity (SPIRIT) Material Efficiency Remediation
Even though ConocoPhillips only found itself in the mid-field of the Forbes 2009 List of the Top 100 Corporate Citizens, their continuous efforts for an ecologically stable world will have an enormous impact on their CSR results in the near future. As we mentioned previously however, CSR is not about the numbers, ranking, return of investment or good public relations, but about trying to help the world and its inhabitants to recover from the myriad of wounds that it sustained over time.
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Hess Gasoline Form of enterprise: Chairman, Chief Executive Officer: Number of Employees: Number of Shareholders: Market Cap: Revenue: Net Income: CSR Rank: Environment Rank: Climate Change Rank : Human Rights Rank : Philanthropy Rank :
Corporation Hess, John 13,800 5,791 $26,636,277,280 $34,613,000,000 $2,125,000,000 15 27 2 1 196
Table 5 – 5 – Hess Hess Corp. - Sources: (Mergent Online, 2010), (Forbes, 2009)
Hess Corporation is a prime example of philanthropic ph ilanthropic corporate citizenship not only because of their involvement for cleaner, more sustainable energy, but also because of their involvement in Third World countries. The centerpiece of their CSR program is a large scale effort to renovate education in the West African nation of Equatorial Guinea. Their recent CSR C SR initiative, PRODEGE (Program for Educational Development of Equatorial Guinea), is a $40 million partnership directed by Hess Corp. and the government of Equatorial Guinea and implemented by the Academy for Educational Development.
CSR Program - PRODEGE The objective of the PRODEGE program is to transform the primary education in this country to a standard that can eventually compete with the developed world. Although the project p roject is still in its pilot phase, the scope of the project is quite significant as the country only has a small population (about half a million people). According to Hess Corp., PRODEGE has ―established 40 model schools and introduced accelerated course work in basic basic math, language and science.‖ (Hess, 2009) The schools use an active learning technique that encourages students to build critical thinking skills and learn cooperatively. To take PRODEGE even a step further, Hess Corp. launched a national teacher teach er diploma course in order to create a self-sustainable circle of students and teachers. In addition to their effort to raise the level of education educ ation in the Third World, the partnership has also built sanitary facilities and drilled freshwater wells to ensure that students now have safe and a nd proper sanitation. But Hess Corp. is not only concerned about abou t the education in Equatorial Page | 15
Guinea, but also boosting the local economy. As an example, new classroom furniture, building materials and office supplies are all being purchased from local businesses.
CSR Program - Hurricane Response In 2008, hurricanes destroyed countless homes in several parts of the United States and for numerous victims the resources to rebuild w ere scarce at best. In order to assist with the rebuilding process, H ess created the Hurricane Response Program which is targeted at helping people immediately after the natural disaster occurred. Instead of pursuing a purely economic strategy, Hess puts the safety and wellbeing of their employees first. According to a Hess spokesman, Hess has ―kept in touch with each [employee], providing regular condition updates through their emergency notification system, which uses two way communications with voice, text and internet based systems. s ystems.‖‖ (Hess, 2008) Not only did the company offer psychological services for disaster victims, but also provided the most basic physiological and safety needs, needs, ―including ―including free dining room access, salary continuity during the week of post-hurricane clean up, and no interest loans for those who were most disadvantaged by the storms.‖ storms.‖ (Hess, 2008) Hess’s Hess’s care for its community and employees has been one of the reasons why this company ranked No. 1 in the Forbes List of Human Rights and although there is still much to accomplish, Hess has already done more than was ever expected from them. After the 2008 hurricane in Houston, Texas, Hess donated $3 million to the Ike Fund in order to restore the damaged parts of the city. The best way to show how much CSR means to a community is by asking the community on how they feel about a contribution. When asked how Bill White, the mayor of Houston, felt about the help the city received from Hess, he answered: ―There ―There was a moment, during the worst part of the crisis after Hurricane Ike when I got a call from one of our biggest corporate co rporate citizens, the Hess Corporation, about a large gift, $3 million, for the Ike Relief Fund. I was touched. Houston is about neighbors helping neighbors and this was beyond expectations. It was a moment I will never never forget. We are so grateful.‖ (White, 2008)
The CSR Results When the Director of Corporate Social Responsibility, Paula Luff, was asked if the internal processes of Hess Corp. have improved since it embraced corporate responsibility, responsibility, she responded: ―In the late 90’s, the Page | 16
company began to think more systematically about corporate responsibility and the company became really focused on o n measuring its environmental impact. All our efforts came together, became more refined over the last eight-ten years and have positively impacted our partners and stakeholders.‖ (Luff, 2009) Hess Corp. has successfully addressed many issues concerning CSR in the past years including:
Safety Record and transparency issues Environmental impacts on society Environmental impacts on the planet The UN Global Compact Security and Human Rights Program for Educational Development of Equatorial Guinea
In addition to their outstanding CSR efforts, Hess Corp. also supports local communities, health institutions, educational institutes and disaster relief funds. As displayed in the bar chart below, we can see that education edu cation was one of Hess’s biggest concerns in 2007 and an d 2008. In the more recent years however, Hess has put more focus on healthcare and the overall health of their employees.
Figure 4 – 4 – Social Social Responsibility Spending by Time – – Source Source Data: (Hess, 2009)
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British Petroleum’s CSR Benefits
Although one specific CSR program may ma y sound not like much, the areas it affects are the most crucial parts that make a successful corporation. The diagram below should illustrate how much effect one initiative could have on our company and its perception by its employees, customers, communities, suppliers, distributors and stakeholders. We have decided to look at the benefits for seven focus areas in which we believe BP could increase its Corporate Social Responsibility:
Figure 5 – 5 – BP BP CSR and its Effects - Source Data: (CSR and Management, 2009)
Purchases: Applying CSR to our purchases will give our company improved access to the resources and at the same time, will reinforce our relations with suppliers and distributors. Most importantly however, a CSR will enhance t he pride of collaboration with all our business partners. Operations: By responsibly planning and executing our operations, we can reduce the social and environmental env ironmental impact of our activities. Furthermore, it will strengthen the relationship between our corporation and local communities. By explaining our long term goals to the population in the areas in which we conduct our operations, we can increase the overall comprehension of our activities which will ultimately lead to greater community support . Credit: With the support of our suppliers, distributors and local communities, we can insure a greater safety of our assets. Not onl y will this prevent partners from violating our company financially , but will also reduce stock volatility.
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on e of the most affected Marketing: Our marketing machine will probably be one areas, although it is not directly related to a CSR program. With every new development of a program, we can market our company as more socially responsible. This will ultimately have an effect on al l of our corporate divisions , regardless of their connection to the program. Additionally, increased CSR marketing can allow us to expand ex pand and reinforce existing markets as well as penetrate new markets. With a fortification of our company image, we will also gain a competitive advantage , a better comprehension of new customer’s needs and more information on target markets. Management: A powerful CSR program will also have a great impact on our management. We should not forget that a CSR program is completely voluntary, and in order for it to function, it needs the assistance of the upper management mana gement as much as financial support. Only with the experience and expertise of our managers, we can successfully start, maintain and expand ex pand our CSR programs. Not only will this enhance our managers risk management skills , but will also elevate innovation for the whole company. Human resources: All our competitors excel in this area because they put the safety of their employees first. Resourcing, hygiene and safety are a crucial part towards employee motivation. Pride in the company and work is one of the most important parts in increasing employee motivation as our compan y can not only profit from greater insights in the labor levels, but also connect our business with families, friends, and their communities. Stakeholders: Last but not least important, is the tremendous impact a successful CSR program can have on o n our stakeholders. Similarly to our employees, our stakeholders will be able to better identify themselves as a part of us . This will undoubtedly lead to an increase in stakeholder pride, which can lead to increased investments or even financial support of our CSR program .
Conclusion By looking at five of our competitors, this research team can conclude that there are multiple possibilities on how to strengthen BP’s Corporate Social Responsibility. Many of the above examples ex amples are in the realm of possibility for a company with the size and assets of BP. Although some programs can have a very high initial cost, the competition shows that the initial investment in CSR initiatives can even produce actual revenue. As mentioned previously in this report, profit should not be the first concern when looking at CSR programs. Rather than generating revenue, our company should focus on generating pride of collaboration, community support, employee motivation, customer satisfaction and environmental recovery .
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Proposal/Recommendations In order to help our board of directors to make a more informed decision and give a CSR program a more tangible character, ch aracter, our research team has compiled a list of possible program strategies that would help us to increase our global corporate citizenship. Most of our proposals are ultimately related to one o f the studies conducted about our competitors, com petitors, but we think that it is crucial to create a program that is purely BP from head to toe .
Employee Volunteer Strategy By encouraging employees to participate in community activities through company sponsored volunteer programs, BP could contribute a lot to building better communities. For example, many corporate leaders have showed a renewed interest in corporate philanthropic gestures focused on racial, ethnic, and cultural diversity. In a study of multinational corporations, participants stated diversity most often as ―a corporate giving program area that will have greater importance in 2006 than in the past.‖ (The Conference Board, 2006) For example, Aetna, a national leader of health and related benefits offering health insurance, ph armacy, dental, life, Medicare insurance etc., focuses a lot of its corporate giving on reducing racial and ethnic discrepancies in healthcare. Their strategy focuses on improving health related issues while also developing Aetna’s capacity to serve diverse populations. As this example ex ample clearly shows, corporate volunteering allows people to contribute their skills and knowledge to a nonprofit organization in a similar field and actively participate in the community. Not only does this help to make people feel good about their involvement, but they can actually contribute to something in their area of expertise.
Natural Disaster Relief Strategy In order to support the local communities in the areas where BP is active, we could establish a housing program in order to help people in need. One opportunity would be to help with the rebuilding of the homes lost during Hurricane Katrina. Throughout the myriad of natural disasters in 2005, many employees sought opportunities to respond to the people in need. As a reaction, disaster response volunteering experienced a great increase in supporters worldwide. In response, corporations are currently developing a new set of policies, procedures, and initiatives to support disaster response volunteering. On the heels of Japan’s largest earthquake and tsunami, BP could assist in rebuilding large parts of Japan by donating d onating a small portion of its ―$303 billion revenue‖. (Mergent Online, 2010) Page | 20
Invisible Children ―Many children grow up being afraid of the dark. In Uganda, fear of the dark isn't about fictitious monsters under the bed or in the closet — — it's it's the fear of losing their lives.‖ lives. ‖ (Winfrey, 2011) Oprah Winfrey’s Invisible Children Initiative has gained a lot of attention in the past few days. This program fights the inhumane habits by Ugandan rebel forces of taking young children to fight for their cause. Most of these children do not have an option to refuse, and failure to participate will most likely result in either torture or death. In order to avoid these horrors, ho rrors, thousands of children leave their families and homes and journey journe y into the darkness. They usually travel in packs for protection and sleep at bus parks or deserted buildings. In the morning, these children walk back to their homes, only to repeat that ―same ritual-walk each time the sun goes down.‖ down.‖ (Winfrey, 2011) Oprah is helping these children by providing p roviding shelter and assisting the weak government to control the savage rebel forces and has raised more than $33 million for its cause together with the founders of the program, Jason Russell, Bobby Bailey and Laren Poole. As one of the most powerful and wealthy wealth y corporations, BP can participate by doing the following few steps provided by Oprah’s web site:
Join the Invisible Children community Create a personal fundraising page Share your page with friends and family; raise $25 Go silent beginning on May 24 at 7 p.m. Break your silence on May 25 at 8 p.m.
Plant a Billion Trees The Plant a Billion organization has created an initiative to plant a billion trees in the Atlantic Forrest in order to restore damaged regions of the Brazilian natural environment. If this foundation reaches its goal b y 2015, then this could remove ―4 million tons of carbon dioxide from the atmosphere each year.‖ year.‖ (Plant a Billion, 2011) This effort will also help restore 88 percent of the forest, which has been destroyed over the years by our destructive nature. Furthermore, over 2,200 species of birds, mammals, reptiles, and amphibians call this forest home and a generous contribution from BP would help the program to be realized. For only one dollar for every tree, BP can significantly enhance this endeavor. This is also an opportunity for our company compan y to get involved in regions that are not directly related to our operations and would emphasize emph asize that our philanthropic intentions are unbiased.
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Works Cited British Petroleum. (2011, April 16). Sustainability - The Energy Challenge. Retrieved 2010, from BP Global Web Site: http://www.bp.com/sectionbodycopy.do?categoryId=3311&contentId=706 6754 Carroll, A. B. (1991, July-August). The Pyramid P yramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders. Business Horizons, pp. 7-15. Chevron. (2010). We agree. Defeating AIDS is our business, too. Retrieved April 16, 2010, from Chevron Web Site: http://www.chevron.com/weagree/?statement=aids Chevron. (2011). Human Rights. Retrieved April 20, 2011, from Chevron Web Site: http://www.chevron.com/globalissues/humanrights http://www.chevron.com/globalissues/humanrights// ConocoPhillips. (2005). SPIRIT of Conservation. Retrieved April 20, 2011, from ConocoPhillips Web Site: http://www.conocophillips.com/EN/susdev/communities/conservation/Pag es/index.aspx ConocoPhillips. (2010). Preserving precious habitat through the SPIRIT of Conservation. Retrieved April 20, 2011, from ConocoPhillips Web Site: http://www.conocophillips.com/EN/susdev/environment/programs/spirit_c onservation/Pages/conservation_article.aspx CSR and Management. (2009, October 24). CSR and its Advantages. Retrieved April 20, 2011, from CSR and Management Web Site: http://www.csrandmanagement.eu/rse-avantages-en.php ExxonMobil. (2005). Community And Development - Women’s Economic Opportunity Initiative. Retrieved Arpil 20, 2011, from ExxonMobil Web Site: http://www.exxonmobil.com/Corporate/community_women_invest.aspx ExxonMobil. (2009). Commuinity And Development - Malaria Initiative. Retrieved April 20, 2011, from ExxonMobil Exxo nMobil Web Site: http://www.exxonmobil.com/Corporate/community_malaria_initiative.asp x ExxonMobile. (2009). Exxon Mobil CSR Report . Retrieved April 19, 2011, from Exxon Mobil Web Site: http://www.exxonmobil.com/Corporate/community_ccr_business.aspx Page | 22
Forbes. (2009, March 06). The 100 Best Corporate Citizens. Retrieved April 16, 2010, from Forbes Web Site: http://www.forbes.com/2009/03/05/bestcorporate-citizens-leadership-citizenship-ranking.html Freidman, T. L. (2005). The World Is Flat: A Brief History of the Twenty-first Century (1st ed.). New York, CA: Farrar, Straus and Giroux. Hess. (2008). Hurricane Response. Retrieved April 16, 2011, from Hess Web Site: http://www.hess.com/sustainability/socialresponsibility/hurricane.aspx Hess. (2009). Performance Data 2009. Retrieved April 21, 2011, from Hess Web Site: http://www.hesscorporation.com/ehs/chartingtool/performancechartingtool .htm Hess. (2009). Social Responsibility In Action: PRODEGE . Retrieved April 16, 2011, from Hess Corp. Web Site: http://www.hess.com/sustainability/socialresponsibility/prodege.aspx Luff, P. (2009, April 13). Corporate and Responsible. Re sponsible. (L. Candu, Interviewer) Mergent Online. (2010). Mergent Online. Retrieved April 16, 2010, from U.S. and International Company Data: http://www.mergentonline.com/ Mulva, J. J. (2007). Environment & Conservation Leadership Awards. Retrieved April 21, 2011, from ConocoPhillips Web Site: http://www.conocophillips.com/EN/susdev/environment/Pages/index.aspx Occidental Petroleum. (2009). Dedicated Partner, Employer, Neighbor. Retrieved April 16, 2010, from Occidental Petroleum Web Site: www.oxy.com/sr/Documents/OxySR_09.pdf Occidental Petroleum. (2010). HES Management System Overview. Retrieved April 16, 2011, from Occidental Petroleum Web Site: http://www.oxy.com/sr/HESMgmt/Pages/Overview.aspx Plant a Billion. (2011). Plant a Billion Trees. Retrieved April 19, 2011, from Plant a Billion Web Site: http://www.plantabillion.org/ Smith, C. (2007). 2007 Corporate Conservation Leadership Award . Retrieved April 19, 2011, from Nature Conservancy of Texas Web Site: http://www.nature.org/ourinitiatives/regions/northamerica/unitedstates/tex as/newsroom/statement-from-the-nature-conservancy-of-texas-regardingdevils-river-land.xml Page | 23
The Conference Board. (2006). Philanthropy P hilanthropy and Business. The Changing Agenda. New York, NY: The Conference Board. Tillerson, R. W. (2010). The Future of Energy and the Role of Corporate Citizenship. Exxon Mobil Corporation. Houston: Houston World Affairs Council. Watson, J. S. (2010). A Message From Our CEO - Sustainable Energy for the 21st Century. Chevron Corporation. White, B. (2008). Hurricane Response - Ike Relief Fund. Retrieved April 19, 2011, from Hess Web Site: http://www.hess.com/sustainability/socialresponsibility/hurricane.aspx Winfrey, O. (2011, April 20). Invisible Children. Retrieved April 20, 2011, from Oprah Winfrey Show Web Site: http://www.oprah.com/oprahshow/Invisible-Children
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Grading Rubric
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