In 2011, a medium sized petroleum company was evaluating a license acquisition in a risky part of Africa with promising reserves. In determining whether to bid for concessions, they not only analyzed the geological and commercial potential of the area, but the socio-political risks as well. Before they began negotiations with the government, they consulted with international NGOs and carried out a CR study of the social, environmental, economic and political risks. They were then able to put mitigating measures into place that minimized risks and costs.
In their 2008 Special Report on Corporate Responsibility, The Economist journal indicated that extraction companies are challenged in many ways including with environmental risks, health and safety issues, human rights, political influence and corruption. We have found some of the key drivers for effective organizational CR to include:
External Drivers
- Increased power and demands of national, state and local governments
- Pressure from non-market players such as NGOs, advocacy groups & communities
- Stricter regulatory standards
- IT connectivity: Internet, social networks…
Internal Drivers
- The need for an improved brand and reputation of the organization
- Higher long-term profits for companies with responsible CR practices due to cost savings from risk avoidance and impactful programs
- More effective corporate self-regulation as a result of well integrated CR practices
- Positive impact to local communities, employees, consumers and other stakeholders
