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Time is running out; get appropriate CSR strategy for oil companies – IDB urges
By Kiana Wilburg
Oil companies often send most, if not all of their profits back to their headquarters overseas. Because of this trend, there is continuous international pressure on these entities to enhance their reputation as good corporate citizens in the countries they are exploiting.
The Inter-American Development Bank (IDB) is one such agency that has constantly advocated for resource rich nations such as Guyana to ensure oil companies provide ample compensation in every sphere of their operation. It said that this is especially as it relates to Corporate Social Responsibility (CSR).
The IDB said that Guyana must move quickly to put a national CSR strategy in place for all in the industry. In the eyes of the IDB, time is running out for Guyana to get this in order or else, it runs the risk of being cheated in this area.
In a special report, the IDB noted that for CSRs to be relevant, it must address the most pertinent pillars of the economy. The IDB argues that “building a town hall or health clinic in a mining community where the most apparent impact of the mining activity is large-scale environmental degradation or forced relocation of villages might be viewed as simply an attempt to buy off the community and create space to go on with business as usual.”
On this note, the IDB stressed that CSRs must be relevant to the needs of a country’s communities.
To further solidify the importance of CSRs being relevant, the Bank cited a successful case study called the Mayaro Initiative for Private Enterprises Development (MIPED) programme. The programme was deployed in 2002 in Mayaro, a small off the southeast coast of Trinidad.
The Bank noted that this programme which was envisioned by TT’s government has helped facilitate the growth of small businesses in that area. Recognizing the challenges of small businesses and their access to finance, the TT government ensured that MIPED programme was started in 2003 by British Petroleum of Trinidad and Tobago (bpTT) in the Mayaro community.
The IDB said that MIPED began operations with a TT$7 million-dollar investment from bpTT to develop Mayaro and its environs into a model community, creating self-sustaining employment, improving training and establishing business opportunities to help build self-esteem and improve the quality of life.
Since 2003, the MIPED programme has created over 3000 jobs. Today, it has an asset base in excess of TT$70m.
HARTWICK RULE
The IDB also argues that CSRs must be informed by the Hartwick rule.
That rule ensures that while oil companies are allowed to extract a country’s resource, meaningful investment must be aligned to the development of a country’s human and social development.
In this regard, the IDB notes that Christmas parties and hampers alongside Carnival programmes for children would not cut it. It said that CSRs which do not seek to transform the country’s human capital only compromise the growth of the communities within the country.
The IDB said, “CSR initiatives have often been conceived by the ‘helpers’ in the air-conditioned offices of oil companies and consultancies rather than through ongoing participation with the beneficiaries; again, that approach follows the logic of CSR serving corporate objectives. Where oil companies have consulted local communities, the consultation exercises have usually been superficial and grossly inadequate.”
The IDB said, too, that if the government is not skillful in developing a strong CSR strategy then, oil companies can end up aiming for “soft targets” that can be seen as a form of hush money and may even help to precipitate a type of dependency mentality in some host communities of the country. It said that this often takes the form of monetary donations to clubs, government entities etc.
The Bank stressed, “Meaningful CSR must be in sync with the core developmental needs of the country from a Hartwick perspective. In this regard, Guyana must put in place an appropriate national CSR strategy to promote the avenues through which large firms, both national and multinational, are guided to link their CSR strategy with the pertinent Hartwick rule needs of communities.”
According to the 2016 Petroleum Agreement between the Government of Guyana and ExxonMobil, the CSR from ExxonMobil will amount to US$300,000 per calendar year, and any unspent funds will be taken over into the ensuing year.
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