CSR in The Oil Industry

Department of Business Administration With supervision by
Bacherlors thesis Mai S. Linneberg

CSR in the Oil Industry
An institutional approach

Aarhus School of Business and Social Sciences
By Mads R.B. Thomsen (mt87243)
HA.int (eng)
May 2012
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Abstract
The importance of oil in the development and sustainment of the global economy is
indisputable. Over the last 100 years the demand for oil has been on the rise, and this trend
is projected to continue until more efficient alternative energy sources are developed.
However, in recent years, ground-breaking scientific discoveries have verified the
damaging properties of fossil fuels hence a paradigm shift in societys sentiments toward
the oil industry and the combustion of fossil fuels has emerged. At the same time,
increased monitoring of corporate practices along with the evolvement of corporate social
responsibility has resulted in intensified surveillance of the oil industry. Consequently, oil
companies have been confronted with a myriad of inconsistent demands to which these
companies have been compelled to conform so as to maintain their legitimacy in the eyes
of the public. This leads to the purpose of this paper, which is to investigate how the oil
industry satisfies these inconsistent demands through CSR reporting.

This paper adopts a new institutional approach to investigate how the oil industry through
CSR reporting responds to stakeholder pressures. By means of a qualitative content
analysis, the content and ethical perspectives represented in the four leading oil companies
CSR reports are analyzed after which similarities are discussed and related to institutional
isomorphic processes. Conclusively, the study suggests how the oil industry uses CSR
reports to divert negative publicity from the reality of its business practices using the
theory of organizational hypocrisy.

The thesis found obvious similarities between the leading oil companies CSR content. The
topics covered in the reports and the rhetoric applied were somewhat convergent among
the companies. The congruence in CSR content was explained by drawing on the concepts
of coercive, mimetic and normative isomorphic processes in order to exemplify how the oil
companies adopt similar CSR strategies so as to respond to institutional demands
emanating from NGOs, consumers, competitors and regulators. Conclusively, it was found
that companies within the oil industry use CSR as means to divert undesired scrutiny from
its actual business practices. In this regard, the study found evidence suggesting the
presence of organizational hypocrisy within the oil industry.

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Table of contents

1. Introduction ...................................................................................................................................... 5
1.1 Problem statement ...................................................................................................................... 6
1.2 Structure ..................................................................................................................................... 7
1.3 Methodology .............................................................................................................................. 7
1.3.1 Hermeneutics ...................................................................................................................... 8
1.3.2 Qualitative content analysis ................................................................................................ 9
1.3.3 Multi-case study as research design .................................................................................. 10
1.3.4 Induction or deduction ...................................................................................................... 10
1.3.5 Validity in qualitative research ......................................................................................... 11
2. Data ................................................................................................................................................ 12
2.1 Data and collection methods .................................................................................................... 12
2.2 Case descriptions ...................................................................................................................... 13
3. Ethical categories ........................................................................................................................... 15
3.1 Ethical theories ......................................................................................................................... 15
3.1.1 Consequentialism .............................................................................................................. 16
3.1.2 Non-consequentialism ....................................................................................................... 18
3.2 Presentation of ethical categories ............................................................................................. 21
3.2.1 Agency .............................................................................................................................. 21
3.2.2 Benefit ............................................................................................................................... 21
3.2.3 Contract ............................................................................................................................. 21
3.2.4 Duty ................................................................................................................................... 22
3.2.5 Ethos.................................................................................................................................. 22
3.3 Categorical taxonomy............................................................................................................... 22
4. Theoretical framework ................................................................................................................... 23
4.1 Institutions defined ................................................................................................................... 24
4.2 New institutionalism................................................................................................................. 24
4.2.1 Isomorphic processes ........................................................................................................ 25
4.3 Organizational hypocrisy ......................................................................................................... 26
4.3.1 Legitimacy ........................................................................................................................ 28
4.3.2 Decoupling ........................................................................................................................ 29
5. Analysis and discussion ................................................................................................................. 30
5.1 BP plc ....................................................................................................................................... 30
5.1.1 Safety ................................................................................................................................ 31
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5.1.2 Environment and renewable energy .................................................................................. 32
5.1.3 Communities and human rights ........................................................................................ 33
5.2 Royal Dutch Shell .................................................................................................................... 33
5.2.1 Safety ................................................................................................................................ 34
5.2.2 Climate change and emission reductions .......................................................................... 34
5.3 ExxonMobil .............................................................................................................................. 36
5.3.1 Financial performance and political activity ..................................................................... 36
5.3.2 Safety, security and health ................................................................................................ 37
5.3.3 Environment ...................................................................................................................... 37
5.4 Chevron .................................................................................................................................... 38
5.4.1 Safety ................................................................................................................................ 39
5.4.2 Environment ...................................................................................................................... 39
5.5 Summary of content and rhetoric ............................................................................................. 41
5.6 Isomorphism in the oil industry................................................................................................ 42
5.6.1 Coercive pressures ............................................................................................................ 43
5.6.2 Mimetic pressures ............................................................................................................. 44
5.6.3 Normative pressures .......................................................................................................... 45
5.7 Hypocrisy in the oil industry? .................................................................................................. 46
5.7.1 Safety regulations .............................................................................................................. 46
5.7.2 Lobbying and climate change ........................................................................................... 47
5.7.3 Human rights issues .......................................................................................................... 48
7. Conclusion ..................................................................................................................................... 50
8. Bibliography................................................................................................................................... 51
9. Appendices .. CD

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1. Introduction
Since the early 20
th
century the world has become increasingly dependent on oil to fuel the
global economy. Increasing population growth combined with staggering economic growth
rates most noticeably seen in the developing countries have further contributed to the
global dependence on oil (OPEC, 2011). These demographic and economic trends have
spurred oil depletion, making the onset of peak oil a reality in 33 out of the 48 largest oil
producing countries (Hirsch, 2006: pp. 6-7). Consequently, easily accessible oil deposits in
mainly Western countries have been exhausted, causing oil companies to undertake oil
exploration and drilling activities in more sensitive geographic areas of the world. In this
regard, disputes have emerged over human rights abuses, oil spill incidents and alleged
disregard for the environment. This development has subjected the most predominant oil
companies to public scrutiny and vast media attention thus creating a rather negative
perception of the oil industry in the general population (BCCCC, 2011). Meanwhile,
interest groups, governments and consumers have become more attentive to the doings of
corporations while academic theorists of business ethics have introduced new business
perspectives emphasizing the importance of addressing all stakeholder interests, and not
only shareholder interests. Companies are now expected to demonstrate how ethical
behavior is embedded in the companys operations, which has lead to the emergence of
corporate social responsibility (CSR) reporting.

The growing pressure for oil companies to display good corporate citizenship and
simultaneously maximizing profits appear rather inconsistent with one another. When
these companies report on their environmental awareness and commitments to human
rights it seems somewhat discrepant considering the numerous scandals surrounding these
oil companies. The nature of the oil business and the rhetoric it presents in its CSR reports
seem to represent opposing forces. Is it at all possible for an oil company to preserve the
environment, support climate change action and protect human rights when it operates in
social hot spots around the world and extracts resources that has proven to be harmful to
the environment? This paper operates on the assumption that these corporations are
confronted with numerous conflicting demands from its stakeholders, hence it becomes
inevitable that oil companies display ethical behavior to which they do not conform.

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This paper aims to identify what content and ethical rhetoric the oil industry presents in its
CSR reporting so as to determine how the industrys CSR perspectives comply with its
business conduct. By analyzing the CSR reports published by the leading companies in the
petroleum industry, this paper examines statements, commitments and content presented to
stakeholders and relate these to the allegations oil companies have been confronted with in
recent times. In this regard, a new institutional approach is taken, which establishes certain
presuppositions as to how organizations operate and homogenize in their institutional
environments.

1.1 Problem statement
In Ditlev-Simonsen and Wenstp (2011) the authors argue that a relevant place to
determine the ethical attitudes behind a companys CSR (p. 66) is in the rhetoric applied
in its CSR report. This paper is built on the same conception in that it seeks to analyze how
ethical statements and commitments are reflected in the CSR reports published by the
leading oil companies, while considering the topics mostly emphasized by these
companies. In addition, this paper seeks to investigate and explore how the oil industry is
addressing these matters when it is confronted with inconsistent demands from its
stakeholders. This leads to the following research questions:

What are the ethical principles and general topics reflected in the oil companies
CSR reports and how do they compare to each other?
How do the oil companies respond to the numerous and often inconsistent demands
they are confronted with?

These questions result in a paper consisting of two parts. The first part combines traditional
ethical theories with contemporary business perspectives to form a categorical taxonomy
which is used to identify statements and commitments presented by the oil companies in
their CSR reports. This part of the analysis looks at what is being said in each CSR report
and compares the identified topics and statements to each other to make a generalization of
the entire industry.
In the second part, the content and ethical statements identified in the first part are
discussed from a new institutional approach and it is suggested how the oil industry is
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responding to external demands using the theory of organizational hypocrisy as presented
by Brunsson (2002).

1.2 Structure
The structure of this paper consists of six chapters:
Chapter 1 presents an introduction, an outline of the paper (this sub-chapter) and
methodological considerations in relation to the literary review and the analysis.
Chapter 2 presents the cases chosen as analytical material and explains how and why these
cases have been collected. Moreover, it briefly explains what literature will be used and
how it is gathered.
Chapter 3 delves into the ethical categories that will be used in the analysis to categorize
statements in the CSR reports. In this context, the ethical theories and perspectives upon
which these categories are built will be described.
Chapter 4 introduces new institutionalism which will be the theoretical framework of the
second part of the analysis.
Chapter 5 consists of two parts. The first part is an analysis of the CSR reports in which
ethical statements are extracted and content categories are identified to determine what
these companies are saying and how they relate to each other. The second part discusses
how the oil industry is responding to pressures in their institutional environment by
drawing on new institutionalism and organizational hypocrisy.
Chapter 6 summarizes and synthesizes the findings in this paper.

1.3 Methodology
In seeking answers to the research questions a theoretical review of relevant literature will
be conducted in order to derive the ethical categories and clarify the theoretical framework.
In this regard, academic literature within the field of business ethics and organizational
studies will be drawn upon. Reviewing this literature requires interpretation and
comprehension hence a hermeneutic approach is adopted to thoroughly review this
literature. The research method used in the analysis of the CSR reports is a qualitative
content analysis applied to a multi-case study.
The following sub-chapters explain these methodologies after which the concepts of
deduction, induction and validity are explained and related to this paper.
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1.3.1 Hermeneutics
Hermeneutics evolved from the supposition that the methods developed in natural science
are inadequate when a deeper comprehension of social phenomena is sought. Wilhelm
Dilthey, a late renowned hermeneutic philosopher, argued that because humans have inner
emotional thoughts which cannot be observed, language becomes the means by which we
obtain understanding (Schmidt, 2006: p. 7). Through interpretation, the hermeneutic
approach tries to provide a shared vision and understanding of the literature. In this
context, the hermeneutic circle becomes an important concept when researchers seek to
understand literature in which the meaning becomes incredibly important, and when the
meaning is difficult to grasp.
Hans-Georg Gadamer described the hermeneutic circle as the relationship between the
reader and the text, which the reader wishes to comprehend. He viewed hermeneutics as a
connection between the parts and the whole (Malpas, 2009). When reading only one
part of a text say a paragraph the reader immediately develops an opinion about the
whole text and its content. As the reader continues to read the subsequent parts, he/she
changes his/her understanding of the text as a whole, hence this concept is often portrayed
in the shape of a circle or a spiral.

Figure 1: The hermeneutic process

Source: Own construction

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A central element of the hermeneutic concept is the presuppositions and prejudices held by
the interpreter prior to reading the text. The readers comprehension of the text is
constantly revised as the reader continues to read the parts, although our preconceptions
can be so rigid that our interpretations become predetermined. Therefore, interpreters must
identify any prejudgments so that the effects of these on the interpretation process can be
acknowledged so not to distort the interpretation itself.
In this thesis, hermeneutic principles are applied mainly in the examination of
academic literature. However, many of the hermeneutic principles are also applied in the
qualitative content analysis as this method holds certain interpretative aspects.

1.3.2 Qualitative content analysis
The qualitative content analysis is a research methodology used to make valid inferences
from recorded communication (Weber, 1985: p. 9). It seeks to analyze latent as well as
manifested content while stressing the importance of the context, which exists independent
from the text itself (White & Marsh, 2006). According to Krippendorff (as cited in White
& Marsh, 2006), qualitative content analysis consists of four proponents, or steps: [1] text
sampling based on relevance, [2] text categorization, [3] considerations regarding the
circumstances surrounding the text, and [4] adapting the analysis to the proposed research
questions. In this paper, all these will be considered in the analysis of the CSR reports.
First, the data will be purposively collected to ensure that the analysis will be based on
relevant material. Second, the CSR reports will be categorized based on emerging themes
and topics in the texts. Third, the context of each case will briefly be explained to give an
idea of the situation in which the cases exist. Finally, the content analysis will be adapted
to consider the ethical categories represented in the reports.
The qualitative content analysis has been chosen due to its flexibility and its gradual
approach to written texts which precludes predetermined structures and frameworks
(Kohlbacher, 2006). Especially flexibility becomes important as it allows the researcher to
adapt the analysis to unforeseen content and patterns which may be of relevance in
answering the problem statement.

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1.3.3 Multi-case study as research design
The research conducted in this paper is based on a multi-case study research design, which
as the name implies, contains two or more cases. By drawing on a multitude of cases this
approach allows the researcher to look at each case on their own terms to find similarities,
dissimilarities and patterns across the cases (Baxter & Jack, pp. 550-551). Moreover, the
multi-case study enables researchers to test theories and hypotheses rather than building
them. In this regard, certain misunderstandings regarding the utility purposes of the case-
study approach have emerged. However, Flyvbjerg (2011) refute these erroneous
assertions by conversely stating that case-studies are relevant for making generalizations
and testing hypotheses and theories.
In this paper, a generalization of the entire oil industry is sought and organizational
theories are applied to infer how this industry may respond to institutional inconsistencies.
A multi-case study has been chosen as it implies making relatively in-depth research on a
relative small number of cases, which is what this study aims to do.

1.3.4 Induction or deduction
When doing research there are two different methods of reasoning researchers can adopt
depending on the nature of their research. These methods are identified as either deduction
or induction.
Utilizing the deductive method the researcher draws conclusions based on a
constituted theory or a set of general principles. In such cases, the researcher goes from
general to specific information. It contends that if the theoretical premises are true the
conclusion must also be true.
In the inductive process, the researcher makes inferences from a particular case to a
general case. In other words, with inductive reasoning the researcher attempts to develop a
general theory or hypothesis based on empirical data or concrete examples.

As it follows from the research questions, the analysis conducted in this paper is divided
into two parts. In the first part, a qualitative content analysis is utilized to categorize the
rhetoric and content applied in the oil companies CSR reports. This analysis will be
conducted using the inductive method as no over-ruling theory will be guiding the analysis.
Instead, thematic categories and quotes will be derived carefully as the analysis goes along.
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In the second part of the analysis, new institutional theory and organizational
hypocrisy are applied to the cases. In this context, making inferences regarding the
behavior of these companies will be carried out deductively since specific presuppositions
and conceptions of organizational behavior influence the emphasis and outcome of the
analysis.

1.3.5 Validity in qualitative research
To determine the validity of qualitative research can be a complicated task since such
research necessarily involves subjectivity. Nevertheless, Guba and Lincoln (1985) propose
four criteria for determining the validity of qualitative research. These are credibility,
transferability, dependability and confirmability.
Credibility relates to whether the results of the research are credible, believable (or
both) from a research participants perspective. In other words, do the results correspond to
reality? In this paper, assuring as much credibility as possible is achieved by employing a
well-established qualitative method to the analysis, i.e. the qualitative content analysis on a
multi-case study. Furthermore, external data, documents and articles will be included in the
second part of study to explain corporate behavior from an external point of view hence
providing more credibility to the research. However, the researchers inexperience in
conducting qualitative research may present some credibility issues to the research results.
Transferability relates to the generalizability of the findings to other contexts. In this
study, the aim is to determine the CSR rhetoric, CSR content and organizational behavior
of an entire industry based on a few cases. The use of a multitude of cases should aid in the
process of making the results more transferable to other companies within the same
industry. Nevertheless, generalizing to other contexts should always be done with great
caution and with great attention to contextual differences in each case.
Dependability refers to whether similar results would be found if the research was to
be repeated, i.e. would the same conclusions be made in a continuously changing context?
In relation to this paper, assuring dependability is difficult to assess due the lack of prior
knowledge of the chosen theories applicability to this particular study. However, Guba
and Lincoln (1985) suggest that by ensuring credibility, dependability will be positively
affected.

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Confirmability refers to the extent to which the results could be validated by others, or
put differently; how objective are the results. This may, for example, be achieved by
providing detailed descriptions of the methodology applied in the research to allow others
to scrutinize the research process. Moreover, the researcher can assure objectivity by
taking a neutral stance on the subject matter to elude potential personal biases.

2. Data
This chapter serves the purposes of presenting the chosen data and to explain how it has
been gathered. The first part presents the data used in this paper and explains how is has
been collected. The second part presents the four cases that have been chosen for
investigation.

2.1 Data and collection methods
As mentioned in chapter 1.3.3 this paper is based on a multi-case study, thus the material
has been purposively selected to meet the specific needs of the study. By using four cases
instead of one or two, this paper aims to make a broader generalization concerning an
entire industrys CSR content and corporate behavior.
The cases have been chosen based on their size, their geographic context and also for
reasons of convenience. Choosing the four largest oil companies gives the researcher more
easily accessible information regarding the practices and behaviors of these companies,
whereas choosing by geography allows for a cross-regional comparison of CSR content to
suggest whether geographic contextual differences exist between the cases. The analytical
material will be the four companies most recently published CSR reports, and all will be
gathered from the companies websites.

In relation to the literary review, a series of academic articles and books will be used to
derive the ethical categories which will be employed in the analysis of the companies CSR
content. These categories will be identical to those presented by Ditlev-Simonsen and
Wenstp (2011). In the clarification of the ethical categories, books of ethical philosophy
will be used along with academic articles within the field of business ethics.
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In explaining the theoretical framework of this paper the researcher will draw upon
academic articles authored by institutional theorists. Furthermore, Nils Brunssons book
The Organization of Hypocrisy will be included as a suggestion to how the oil industry
deals with inconsistent demands.
All academic articles are found using the comprehensive article database Business
Source Complete or through internet search engines.

In the last part of the paper, it will be discussed how organizational hypocrisy may be
reflected in the oil industry. In this context, articles and raw data from news media and
research groups will be used to provide indications of how organizational hypocrisy is
present in the oil industry based on their CSR reporting. This information will be gathered
using media news websites and other internet websites relevant to the issue.

2.2 Case descriptions
For this study, the four largest oil companies have been chosen for CSR content
assessment. These are BP plc, Royal Dutch Shell, Chevron Corporation and ExxonMobil.
In choosing the material, the most recently published CSR reports have been picked as to
represent the companies most current CSR reporting perspectives.

BP plc (Great Britain)
In 1909, BP plc (then the Anglo-Persian Oil Company) discovered its first oil field in
Persia. In the following years the British government bought a 51 percent stock majority in
the Anglo-Persian Oil Company thus leaving the company in the hands of the state. Later
in 1969 and 1970, the company discovered vast oil fields in Prudhoe Bay (Alaska) and the
North Sea, and in 1987 the company (then British Petroleum) was privatized by the
Thatcher government (BP, 2012). Today, BP plc is the third largest oil company and the
fourth largest corporation in the world based on revenue (CNN Money, 2011). The
companys headquarter is currently located in Great Britain but the company is operational
on six continents and present in more than 80 countries. BP plcs main products are
petroleum and natural gas, but it also invests in alternative energy sources such as biofuels
and wind energy.
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This study will draw on BPs Sustainability Review (2011) as analytical material
(Appendix 1).

Royal Dutch Shell (The Netherlands/Great Britain)
Royal Dutch Shell started operating in the late 19
th
century in Russia. In 1958 it discovered
one of Africas largest oil fields in the Niger Delta in Southern Nigeria where Royal Dutch
Shell still operates (Shell, 2012a). In 1990, the company became the largest publicly traded
energy company in the world with revenues exceeding $100 billion. Today, Shell operates
in more than 80 countries and it is currently employing 90.000 people globally (Shell,
2012b). Shell still holds the position as the largest publicly traded energy company, and it
is today the second largest corporation in the world (CNN Money, 2011).
The companys main products are petroleum and natural gas, although it also operates
wind farms and biofuel projects.
In this report, Royal Dutch Shells Sustainability Report (2011) will be analyzed
(Appendix 2).

ExxonMobil (USA)
ExxonMobil was founded by John D. Rockefeller (as a part of Standard Oil of New Jersey)
in 1870. It expanded its operations to Latin America and the Middle East in the early 20
th

century where it still operates today. In 1972 the company came to be known as Exxon and
later in 1999 Exxon merged with Mobil to become ExxonMobil (ExxonMobil, 2012a). The
company is currently operating in North America, South America, the Middle East, Europe
and South-Pacific where it mainly extracts natural gas and crude oil (ExxonMobil, 2012b).
ExxonMobil is currently the second largest energy company and the third largest
corporation in the world (CNN Money, 2011).
In the content analysis, ExxonMobils Corporate Citizenship Report (2010) is used as
analytical material (Appendix 3).

Chevron Corporation (USA)
Chevron (then the Pacific Coast Oil Co.) was founded in 1879 in California (USA). The
company later merged with other companies and came to be Chevron Corporation in 1984.
Today, Chevron operates in more than 32 countries and employs approximately 58.000
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people worldwide (Chevron Corporation, 2011). The company produces petroleum, natural
gas and it operates geothermal energy plants. Moreover, Chevron invests in renewable
energy sources such as biofuels and solar power (ibid). Chevron Corporation is currently
fourth largest energy company and the 10
th
largest corporation in the world (CNN Money,
2011).
In relation to this study, Chevrons Corporate Responsibility Report (2010) will be
analyzed for content and ethical categories (Appendix 4).

3. Ethical categories
In analyzing the content of the oil companies CSR reports, an emphasis will be placed on
the ethical statements presented under each identified content category to give an idea how
the companies apply ethics in their CSR reporting. This will allow the researcher to look
for patterns, not only in content, but also in rhetoric.
This chapter seeks to explain by what means and measures the CSR rhetoric will be
analyzed. It draws on the taxonomy of ethical categories as presented by Ditlev-Simonsen
and Wenstp (2011) and combines it with the philosophical schools arranged by Crane and
Matten (2007). The purpose of this chapter is to demonstrate how these ethical categories
are derived, and how they relate to traditional ethical theories.

3.1 Ethical theories
In the examination of CSR reports, one will find that corporations apply rhetoric directed
towards a myriad of stakeholders. Employees, local communities, NGOs and customers are
just some of the recipients to which corporations target their CSR communication. In these
corporate endeavors, rhetoric becomes the means by which corporations provide value
statements and commitments. Such statements often carry moral and ethical elements from
traditional ethical theories. These ethical theories are either categorized as consequentialist
or non-consequentialist. Each of these two doctrines constitutes moral principles
formulated by some of the most well-known moral philosophers. The next paragraphs
elaborate on these principles, which are fundamental elements in the ethical categories
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applied in the analysis. To illustrate the principles relevance, these ethical theories are
briefly related to contemporary business perspectives within business ethics.

3.1.1 Consequentialism
The principal idea of consequentialism is that the morality of an action is determined by
the outcome it produces. Consequently, an action is morally justifiable if it results in more
good than bad. Theories characterized as consequentialist are built on the assumption
that the consequence of an action is the only criterion from which morality can be judged.
Therefore, actions which are normally frowned upon or even considered to be immoral can
be justified if the end result promotes welfare, either to the general public or to the
individual. This idea of outcome-based ethics emerged in the 18
th
century as utilitarianism
and later in the form of ethical egoism. The following sub-chapters account for each of
these theories. Conclusively, each theory is related to contemporary business perspectives
in order to accentuate their relevance to modern businesses.

Utilitarianism
Utilitarianism is a branch of consequentialism introduced by the British moral philosopher
Jeremy Bentham (1748-1832). Bentham argued that humans are governed exclusively by
pain and pleasure, and therefore, these human drivers determine what we ought to do and
what we shall do (Bentham, 1789: p. 1). Benthams successor, John Stuart Mill (1806-
1873), elaborated on the idea of utilitarianism and introduced the concept of the greatest
happiness principle which holds that actions are right in proportion as they tend to
promote happiness, wrong as they tend to produce the reverse of happiness (Mill, 1906:
p. 9).

At present time, the utilitarian stance on ethics is still held by moral philosophers. Most
noticeably is Peter Singer who added the importance of impartiality when contemplating
the outcome of ones actions. He suggested that ethical judgments should be made from a
universal point of view, thereby stressing the significance of taking everyones interests
into account (Singer, 1993: pp. 12-13). Moreover, Singer (1993) points out that the natural
environment serves as a utility to humans, and that non-human life has intrinsic value.
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Therefore, we must consider the environmental implications of actions when
contemplating or reasoning our behavior.

In contemporary business theories we see many of the utilitarian elements. Ditlev-
Simonsen and Wenstp (2011) contend that the utilitarian approach bear resemblance to R.
Edward Freemans stakeholder theory. As with utilitarianism, stakeholder theory proposes
that business leaders and managers consider every stakeholder who might be affected by
their actions (Green & Donovan, 2010a: p. 22). In either instance, the acting agent is
obliged to identify all relevant stakeholders in order to maximize utility and thereby
promote the greatest welfare for anyone who carries a stake in the outcome of that
particular action.

Ethical egoism
The theory of ethical egoism argues that in order for a person to be moral, he or she must
act in accordance with his or her self-interest. In other words, we should always take the
course of action that maximizes our personal utility or pleasure (Gibson, 2007: pp. 15-16).
Ayn Rand (1905-1982), one of the most renowned advocates of ethical egoism stated:
The first right on earth is the right of the ego. Mans first duty is to himself. His moral
law is never to place his prime goal within the persons of others. His moral obligation is to
do what he wishes, provided his wish does not depend primarily upon other men (Rand,
1961: p. 66). The essence of Ayn Rands statement is that humans are obligated to pursue
their own happiness or egotistic goals as longs as one does not harm other people in the
process.

Ayn Rands ethical egoism does not imply that we cannot do good for other people. On
the contrary, it may in certain situations be in our self-interest to consider the interests of
others. If an individual believes that by behaving altruistic he or she will gain future
benefits which ultimately exceed the happiness that otherwise would have been obtained
from acting out of immediate pleasure, one should do so as it would still be an act of self-
interest.

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The perspectives represented in ethical egoism are somewhat similar to those delineated in
shareholder theory. As with shareholder theory, ethical egoism emphasizes the obligation
of moral agents to pursue their own happiness. In a business context that may be translated
into the pursuit of profits as Friedman (1970) eloquently argued in his well-known article
The Social Responsibility of Business is to Increase Its Profits.

3.1.2 Non-consequentialism
Whereas consequentialism judges morality of an action based on its outcome, non-
consequentialism looks at the moral correctness or incorrectness of the action itself. In
other words, all actions are inherently moral or immoral; consequently, non-
consequentialist ethics provide moral agents with a set of indisputable moral rules which
they must abide by. This means that the consequence of an action plays no role in moral
judgment. Rather, our actions are determined by rights, duty and virtue as represented in
the most predominant non-consequentialist theories, which are contractarianism,
Kantianism and Aristotelian virtue ethics.

Contractarianism
Contractarianism stems from the idea that people set up rules and restrictions by
establishing governmental institutions aiming to maintain social order (i.e. social
contracts). For social order to prevail, individuals must give up some of their liberties by
accepting the social contract that exists between individuals and society. The governed
must voluntarily waive these rights and liberties. The social contract is therefore said to be
based on mutuality between acting agents in society (Cudd, 2008).

The concept of social contract was introduced by Thomas Hobbes (1588-1679) in the 16
th

century. Hobbes argued that man has natural individual rights, but that the egocentric and
opportunistic character of man necessitates the establishment of authorities in the form of
political institutions and civil societies (Tuck, 2006). Succeeding philosophers such as
John Locke (1632-1704) and Jean-Jacques Rousseau (1712-1778) elaborated on Hobbes
concept of a social contract from a libertarian and egalitarian point of view, respectively.

19

John Rawls (1921-2002), a contemporary moral and political philosopher developed a
theory of justice by drawing on the classic contractarian perspectives. In this regard, he
introduced the veil of ignorance; a method that would help moral agents to determine the
rightness or wrongness of their actions by depriving them of any prior knowledge about
their wealth, social status or role in society. Under this veil of ignorance, Rawls believed
that people would automatically act in accordance with principles of fairness and justice
(Mulhall & Swift, 2003: pp. 464-465). It is out of these principles that the social contract
emerges and eventually determines the composition of laws and regulations within society.

The concept of a social contract is still applied in contemporary business theories. Most
noticeably in the integrative social contract theory (ISCT) which employs many of the
perspectives presented in classic contractarianism. ICCT provides a framework for
business leaders to assess particular ethical issues in different business situations. The
theory states that the morality of business practices is determined by a set of hypernorms,
or universal norms, and by the prevailing norms and values within the community in which
business is conducted (Donaldson & Dunfee, 1999).

Kantianism
Immanuel Kant (1724-1804) was a German philosopher well-known for placing moral
emphasis on duty. Kant was a strong proponent of moral universalism inasmuch he argued
that a moral principle would have to be binding to all rational agents, at all times and in
all places (Kerstein, 2002: p. 2). This came to be the categorical imperative. A method
that would determine whether the duty one holds is true.

The categorical imperative was built upon three maxims or codes of behavior. The first
maxim states that a moral law cannot be valid unless it is universally applicable. The
second maxim asserts that we must refrain from using humans as a means to our own ends.
And the last maxim states that we must impose duties upon ourselves based on our reason.
Kant believed that reason is the same for all people, thus similar duties and moral laws
would be applied by all rational beings (DeGeorge, 2006: pp. 82-86).

20

Kants duty-based principles are still pertinent in contemporary business theories. In 1999,
Norman Bowie introduced a Kantian perspective to business ethics in which he applies the
categorical imperative to argue that managers have other responsibilities besides making a
profit (Green & Donovan, 2010: p. 25). In recent years, several articles have discussed
different business perspectives using Kants moral principles (Feng, 2010; White, 2009;
Reynolds & Bowie, 2004).

Virtue ethics
Contrary to other ethical theories, virtue ethics stress the importance of a persons inherent
moral character, rather than a persons moral obligations to society. People develop
virtues, or moral traits, from which their actions must be determined no matter the
consequences of their actions. By constantly exercising these virtues, people will through
moral habits learn how to become moral and better people.

These ideas of moral character were initially put forth by Aristotle (384 BC-322 BC) who
identified a series of virtues. Among them are modesty, fairness, generosity and
temperance. To act in accordance with these virtues a person must gain practical wisdom,
which is only obtained through experience. Thus, a person may be virtuous, but without
practical wisdom acquired through experience that person is incapable of converting his or
her virtues into moral actions.

During the Enlightenment virtue ethics lost its significance due to an emergence of
alternative ethical theories, such as those summarized above (Smith, 2003: pp. 67-74). In
recent years, however, virtue ethics have been readopted and reformulated by
contemporary philosopher, Alasdair MacIntyre, who added that virtues are subject to
constant change and that our virtues differ depending on the societal context (Solomon,
2003: pp. 138-141).

Virtue ethics have also recently been applied in business ethics. Robert Solomon (1992)
proposes an approach to business ethics based on virtues. He argues that corporations
main purpose is to create welfare and prosperity. In order to fulfill this purpose,
21

corporations must break with the dogmatic thinking of corporations as chiefly profit-
maximizing entities.

3.2 Presentation of ethical categories
This sub-chapter presents the ethical categories formulated by Ditlev-Simonsen and
Wenstp (2011). These categories have been derived from the traditional ethical theories
summarized above along with the contemporary business perspectives associated with each
of these theories. The subsequent paragraphs briefly explain the emphasis of each category
and their relation to the traditional theories.

3.2.1 Agency
Agency emerges out of ethical egoism; the idea that individuals, and in this case
businesses, are obliged to promote their self-interests. In the case of a business, the interest
would often equate to profits or to put it differently the interest of shareholders as in the
spirit of Milton Friedman. Commitments and statements categorized as agency adopt the
shareholders approach to business, meaning that these aim to satisfy groups and
individuals with a financial stake in the company.

3.2.2 Benefit
The category identified as benefit make up commitments and statements with utilitarian
elements. Particularly, utilitarianism as formulated by Peter Singer in which the interests of
every group or person affected by the firms decisions must be accounted for. This also
includes environmental aspects and concerns for non-humans. As mentioned earlier,
recognizing everyones interest in business matters conforms to stakeholder theory,
meaning that statements within the benefit category are intended to satisfy demands from
stakeholders with other interests than a companys financial performance.

3.2.3 Contract
As the name implies the contract category is associated with Rawlsian contractarianism.
It is based on concepts such as rights, justice, laws and regulations. Statements and
commitments classified as contract adhere to a companys obligation to follow laws,
22

regulations and customs. Statements and commitments holding an agency perspective do
not go beyond respecting the rules and rights formulated by authorities and governments.

3.2.4 Duty
The duty category encompasses Kantian ethical perspectives which stress the importance
of rightness and wrongness. For companies to determine whether their actions are right or
wrong, Trevio and Nelson (as cited in Crane and Matten, 2007: 98) suggest that firms
imagine their actions being reported in a major newspaper. If the firm would feel uneasy
about such disclosure they ought to reconsider their action. Statements categorized as
duty include commitments that companies should make no matter what.

3.2.5 Ethos
The ethos category relates to virtue ethics as those formulated by Aristotle and Alasdair
MacIntyre. Statements and commitments classified as ethos depict how companies ought
to be rather than what they should do. Ditlev-Simonsen and Wenstp (2011) divides
ethos into two sub-categories: agency-related ethos and benefit-related ethos. The
former idealizes more business-oriented virtues such as excellence and leadership. The
latter sub-category takes a more abstract approach in the sense that it emphasizes broader
ideals such as trustworthiness and fairness (p. 71).

3.3 Categorical taxonomy
In the paragraphs above, traditional ethical theories have been accounted for and ethical
categories have been derived using the denotations formulated by Ditlev-Simonsen and
Wenstp (2011). The illustration below summarizes these ethical categories and provides
an overview of their relation to ethical theories and contemporary business perspectives.

23

Figure 2: Ethical categories

Source: Own construction with inspiration from Ditlev-Simonsen and Wenstp (2011) and Crane and Matten (2007)

These ethical categories (or rhetorical strategies) will be applied in the analysis to give an
idea of what moral principles the oil companies relate to, how they are reflected in their
statements and what firm values the companies communicate to their stakeholders.
Combinations of two or more categories may occur in the CSR reports. For example, a
statement or commitment may be targeted at external stakeholders (benefit) as a means to
fulfill commitments to shareholders (agency). Any combination is plausible although
some combinations may be more common than others.

4. Theoretical framework
This chapter looks at the concept of new institutionalism which will be the theoretical
framework and perspective shaping the discussion after the content analysis has been
conducted. First, a definition of what constitutes an institution is presented. Secondly, new
institutionalism will be explained in more detail by including fundamental terms such as
legitimacy and isomorphism. Finally, Nils Brunssons theory of organizational hypocrisy is
introduced to give an idea of how organizations may deal with inconsistent demands from
stakeholders.

Traditional
ethical theory
Ethical egoism Utilitarianism Contractarianism Kantianism
Type Consequentialist Consequentialist
Non-
consequentialist
Non-
consequentialist
Focus
Shareholders
Profits
Environment
Collective welfare
Stakeholders
Laws
Rules
Rights
Jeremy Bentham
John Stuart Mill
Peter Singer
Thomas Hobbes
John Rawls
Business
theorists
Milton Friedman Edward R. Freeman
Thomas Donaldson
Thomas W. Dunfee
Philosophical
contributors
Ayn Rand
Legitimacy
Moral laws
Duty
Virtues
(e.g. leadership,
excellence,
trustworthiness)
Agency Benefit Contract Duty Ethos
Immanuel Kant
Aristotle
Alasdair MacIntyre
Norman Bowie Robert Solomon
Virtue ethics
Non-
consequentialist
24

4.1 Institutions defined
In The International Encyclopedia of Organization Studies (Powell, 2007) it is contended
that an organization is not merely a reflection of technical demands and resource
dependencies. The definition is extended even further to integrate forces such as rational
myths, knowledge legitimated through the educational system and by professions, public
opinion, and the law (p. 1). Powells definition acknowledges that organizations consist
not only of formal structures and rules, but also of informal and unquantifiable facets. Scott
(2010) defines institutions as entities comprising three essential elements. These are the
cultural-cognitive element, the normative element and the regulative element.
The cultural-cognitive element elucidates the intangible and symbolic representations
existing in an institution. They provide normative prescriptions and regulatory
controls which become reflected in an institutions norms and rules (Scott, 2010: p. 7). In
other words, cognitive elements describe the institutional forces which exert cognitive
control over members range of action.
The normative element emphasizes the existence of norms in institutions. These
norms serve as institutional ground rules and guidelines which ensure somewhat
standardized courses of action. Furthermore, it sets up institutional expectations which
consolidate behavioral trends in order to prevent free riding and self-interested behavior
(Scott, 2010: p. 6).
The regulative element consists of more explicit and formalized regulatory processes
such a rule establishment and incentive systems. Institutional members obey these
regulations as to avoid sanctions and gain rewards (Scott, 2010: p. 7).

4.2 New institutionalism
New institutionalism is a theory residing in the field of organizational studies. It seeks to
explain how organizations create legitimacy through conformity and adaption to societal
norms, values, laws and paradigms. This institutional approach operates on the assumption
that organizational rationality is limited as organizations are confronted with societal
demands to which they must conform in order to maintain their legitimacy. This need to
conform may not always comply with economic rationality (Nee, 2003: pp. 26-28).

25

In new institutional theory, organizations are described as open systems. This openness,
along with organizations need for legitimacy, necessitates organizations to comply with
societys perception of what constitutes a legitimate organization. Consequently, the
norms, values and structures needed to comply with this perception are institutionalized
and duplicated among organizations within an organizational field (Manza, 2006: p. 416).

According to DiMaggio and Powell (1983) this need for conformity homogenizes
organizations within organizational fields. An organizational field relates to those
organizations that, in aggregate, constitute a recognized area of institutional life: key
suppliers, resource and product consumers, regulatory agencies, and other organizations
that produce similar services or products (p. 148). They argue that organizational
homogenization is a result of three isomorphic processes: coercive, mimetic and normative
processes (ibid).

4.2.1 Isomorphic processes
DiMaggio and Powell (1983: p. 150) contend that organizations do not merely compete
over customers and resources. They add that organizations are constantly competing for
legitimacy and political power which results in homogenization through isomorphic
behavior. Isomorphism is defined by DiMaggio and Powell (1983) as a constraining
process that forces one unit in a population to resemble other units that face the same set
of environmental conditions (p. 149). The following paragraphs describe these three
distinct processes.

Coercive isomorphism
Coercive isomorphism occurs as a result of formal and informal pressures imposed on one
institution by other institutions in the same field. This pressure may arise from
governmental institutions in the form of environmental regulations, tax increases, working
conditions requirements and so forth. Apart from that, pressures to which an organization
must adapt may also stem from a competitor or a parent company (DiMaggio & Powell,
1983: pp. 150-151).

26

Mimetic isomorphism
As the name implies, mimetic isomorphism concerns how organizations within an
organizational field imitate and adopt each others structures, innovations and initiatives.
When an organization is confronted with uncertainty or ambiguous problems they tend to
model other organizations which they perceive as more legitimate (DiMaggio & Powell,
1983: pp. 151-152). To clarify the matter, organizations within a field are inclined to
duplicate organizational structures, technologies and communication methods of other
organizations that appear more productive, successful and socially legitimate in the eyes of
internal and external stakeholders.

Normative isomorphism
The last isomorphic process is normative isomorphism which arises from
professionalization. Larson (as cited in DiMaggio & Powell, 1983) defines
professionalization as the collective struggle of members of an occupation to define the
conditions and methods of their work, to control the production of producers, and to
establish cognitive base and legitimation for their occupational autonomy (p. 152).
Through this process emerges occupational networks across organizations within
organizational fields, and as result, homogenized norms and understandings evolve. This
process is aided by labor unions, trade associations, educational programs and so forth.

These three isomorphic processes are essential elements in new institutionalism. They
provide a general understanding of how and why organizations within organizational fields
become homogenized over time, and why organizations sometimes are deemed to act
irrationality in order to uphold or improve their legitimacy. Moreover, it is important to
note that these isomorphic processes may not result in efficiency improvements. Modeling
organizational behavior and structures take place deliberately and unintentionally, without
the organizations actually knowing whether this modeling will result in improved
efficiency or legitimacy (DiMaggio & Powell, 1983: pp. 151-154).

4.3 Organizational hypocrisy
In continuation of the isomorphic processes, the term organizational hypocrisy becomes
vital to organizations confronted with inconsistent demands and pressures from their
27

institutional environments. In Nils Brunssons rather controversial book, The
Organization of Hypocrisy, he argues that organizations through talk, decisions and
actions cultivate a plurality of ideologies as responses to the inconsistent demands
emerging from their institutional environments. He refers to hypocrisy as an organizational
necessity that organizations involuntarily adopt as a means to satisfy conflicting demands.

It is important to note that hypocrisy in this context does not hold a negative moral
connotation, rather it describes an inconsistency between what is being said and what
actually takes place. Brunsson (2002) defines organizational hypocrisy as the difference
between words and deeds, the eventuality that organizations may talk in one way, decide in
another and act in a third (p. xiii). This means that organizations may meet some of its
demands by means of talk, others through decision-making and a third group of demands
using actions. The inconsistency and irreconcilability of these demands result in
organizational hypocrisy. Therefore, companies may consciously or unconsciously
direct talk which pleases a certain stakeholder group while acting in a contradictory way to
satisfy another group of stakeholders whose demands and expectations appear inconsistent
with the first stakeholder groups demands.

These organizational practices deviate significantly from traditional decision theory in
which management talk and decisions pointing in one direction are assumed to increase
the likelihood of that corresponding action will be taken (Brunsson, 2002: xiv). Brunsson
rejects traditional decision theory arguing that organizations do the complete opposite.
They talk in one way to compensate for their opposing actions. However, it is this
traditional theorys predominance and general acceptance that makes organizational
hypocrisy efficient (Brunsson, 2002: xiv).

Over the years, it has become increasingly important for organizations operating within a
free market economy to address the continuous growth of external demands if the
organizations are to be successful (Brunsson, 2002). A business can no longer allocate all
its attention to production efficiency and profit maximization as organizations have
become involved in the creation, clarification, transmission and application of rules,
norms and interests all of which can greatly impede the prospects for efficiency (p. 1).
28

Products and practices are expected to reflect the values and norms in the organizations
environments if businesses are to be considered legitimate (Brunsson, 2002: p. 6).

4.3.1 Legitimacy
According to Brunsson (2002), organizations are dependent on their external environments
in two respects. The first concerns an organizations need for obtaining resources such as
capital, labor and materials. The second relates to an organizations need for acceptance. In
this regard, Brunsson presents two ideal types of organizations: action organizations and
political organizations. An action organization is legitimized through organized action
while the political organization depends on its reflection of opposing demands and
attentiveness to environmental inconsistencies.

Action organizations
An action organization can be characterized as a resource exchanging organization as it is
highly dependent on exchanging resources with its external environment. Brunsson (2002:
pp. 14-19) presents eight features inherent to such organizations.
Agreement as a principle for recruitment: Recruited members share the
organizations mission and vision.
Strong organizational ideology: Rules, norms and conventions limit members
freedom of action.
Lack of decision-making: The strong organizational ideology makes actions
predictable and obvious which omits the need for decision-making.
Consistency between ideology and actions: The action organization does what it
says as its legitimacy is determined solely by its actions.
Specialization focus: Solutions are the action organizations main product.
Firm confidence: Strong organizational ideology and norms give members a strong
belief in the organizations excellence.
Limited rationality: The action organization cultivates a single perspective about
how it ought to operate.
Action organizations require coordinated action and uniformity in order to be as efficient
as possible. But on the contrary, such organizations do not require organizational hypocrisy
since their legitimacy is determined exclusively by the actions they produce.
29

Political organizations
In contrast to action organizations, a political organization is not reliant on producing
action. Rather, its survival depends on its ability to satisfy inconsistent demands in its
environment. To reflect this myriad of demands, the political organization recruits
members with different ideologies, values and approaches in order to create decisions and
talk which meet these inconsistent demands. Conflict is perpetuated and skepticism is
encouraged to ensure that the organization will continue to represent the different
ideologies it is confronted with. Therefore, hypocrisy becomes a fundamental behavior in
the political organization (Brunsson, 2002: pp. 19-26).

It is important to note that political and action organizations represent two extremes on an
organizational continuum. Often, organizations have to deal with both legitimation
perspectives as they are expected to reflect inconsistent demands while producing actions.
This creates a dilemma for organizations, which is dealt with by separating the
organizations in a process called decoupling.

4.3.2 Decoupling
When organizations find themselves in situations where they are incapable of fulfilling
certain norms and requirements for action and processes, decoupling becomes essential in
dealing with these issues. Meyer and Rowan (as mentioned in Brunsson. 2002: p. 7) refer
to decoupling as the separation of an organization into two structures denoted formal and
informal organizations. The formal organization deals with demands originating from the
institutional environment such as those expressed by politicians, consumers and interest
groups. Informal organizations focus on coordinating actions internally to maximize and
improve efficiency. What is conveyed to the outside world in the formal organization may
well be different from what is conveyed internally in the informal organization, hence
hypocrisy becomes the unavoidable outcome if all interests and demands are to be met.

In relation to decoupling, Brunsson (2002) identifies four ways by which organizations can
separate these two principal elements. The first encompasses a separation of time where
organizations respond to demands for politics at one time and demands for actions at
30

another time. The second involves a separation by topic where certain issues are dealt with
using political means (i.e. talk), and other issues using concrete action. The third separation
method looks at separation by environments where legitimacy depends on the environment
with which the organization interacts. The last approach is separation by organizational
units where some of the organizations units respond to political demands while other units
primarily attend to action related demands (Brunsson, 2002: pp. 33-38).

5. Analysis and discussion
In this chapter, the four leading oil companies CSR reports are analyzed using a
qualitative content analysis and the ethical categories presented in chapter 3.2 and 3.3. The
content categories are determined based on the emphasis of the given themes in the reports.
Under each content category, statements holding ethical perspectives are presented and
ethical categories are allocated to these statements.
In introducing each of these cases, a brief summary of the main allegations held
against these companies is presented. This will give an indication of what themes the CSR
reports will be elaborating on.
In the second part, the concept of isomorphism is used to discuss the content and
rhetoric of the reports. It looks at how isomorphic pressures may explain the similarities in
the oil companies CSR reports. Finally, a discussion drawing on organizational hypocrisy
exhibits how the oil industry responds to inconsistent demands using organizational
hypocrisy.

5.1 BP plc
Since 2010, BP plc (hereafter BP) has been subjected to immense media attention and
public criticism due to its inadvertent oil drilling operations in the Gulf of Mexico, causing
one of the largest marine oil spills in history. Numerous stakeholders have been affected
directly and indirectly by the incident at BPs Deepwater Horizon oil rig, consequently
damaging the corporations year-long struggle to create a perception of BP as an
environmentally conscious corporation (Krauss, 2010). Moreover, the companys clumsy
31

response to the incident has made matters worse hence exacerbating BPs reputation as
irresponsible and untrustworthy (Webb, 2010).
In the aftermath of the oil spill, BP has initiated multiple public relations and ad
campaigns aimed to rebuild the companys image and regain the trust of its stakeholders.
These endeavors are clearly reflected in BPs 2011 Sustainability Review where much
attention has been allocated to the issues concerning the oil spill. The particularity of BPs
current situation and its ongoing crisis communication result in a sustainability report
which emphasizes topics such as safety and environment; oftentimes, in relation to the oil
spill incident and the mistakes made in this regard.
In the following paragraphs, thematic categories in BPs sustainability report are
identified and corporate statements and commitments to stakeholders are elicited from
each category (Page references from appendix 1).

5.1.1 Safety
BP introduces its sustainability report by recognizing the need for improved safety and risk
management as a result of its insufficient security measures at its oil rigs in the Gulf of
Mexico. The safety aspect is the overarching topic and sets the tone for the entire report.
This emphasis on safety emerges clearly from the reports opening statement:
We [BP] strive to be a safety leader in our industry (p. 5) and adds that Safety is good
business (p. 5).
Relating these statements to the ethical categories presented in chapter 3, it follows that BP
strives to be the best in the industry; a leader. Being a leader is an overt expression of a
business-related ideal, and therefore, it can be categorized as something BP does out of
virtue (ethos). However, from the subsequent statement it follows that being a leader in
safety is good for business, which indicates that BP has certain self-interested motives for
adopting this virtue of safety leadership (agency).
BP continues on the safety issue by stressing the importance of safety in the workforce
and throughout its entire operations:
Safety and risk management are at the heart of our people policies and safety has been
re-emphasized within our values as a top priority. Our performance management and
reward systems encourage excellence in safety (p. 23).
32

Again, BP accentuates virtues in its company culture by emphasizing how excellence in
safety permeates its business operations. Overall, it is appears apparent that BP is trying to
address the lack of safety associated with its operations.

5.1.2 Environment and renewable energy
BPs reporting on environmental issues and the future of renewable energy sources is
rather comprehensive. The companys CSR report devotes whole chapters to matters
concerning the companys environmental impact and its investments in renewable energy
sources such as wind and biofuels.

In continuation of the BP oil spill, the report presents several commitments to the
stakeholders affected by, and concerned with, the ecological impact of the incident in the
Gulf of Mexico:
As part of our commitment to environmental restoration, BP is providing $1 billion for
yearly restoration projects designed to accelerate efforts to restore natural resources that
were injured as a result of the incident (p. 2).
In this commitment, BP recognizes that it has certain responsibilities, i.e. it has a duty to
rectify the negative impact of its operations. If BP decided not to take responsibility, its
failure to do so would appear in every major news media as described by Crane and Matten
(2007).

Despite the nature of the products it extracts, and the oil industrys stained reputation as
anti-carbon abatement actors in Washington DC (Mayer, 2008), BP emphasizes the
importance of taking a proactive stance on legislation seeking to reduce carbon dioxide in
the earths atmosphere. BP expresses a concern for the increasing emission of greenhouse
gases caused by staggering economic growth in developing countries:
BP supports government action to limit emissions and deliver a sustainable energy mix,
including placing a price on carbon, increasing energy efficiency and providing
transitional incentives that enable renewable energy to become competitive at scale (pp.
2-3).
BP openly commits itself to support any legislation aiming to limit the emissions caused by
the combustion of its own products because it shares the widespread concerns about the
33

rising global CO
2
emission levels (p. 2). In other words, it is implied that BP supports
legislation because the consequences of not taking action are seen as undesirable ends, i.e.
BPs motive for supporting carbon abatement legislation holds a benefit perspective since
it goes beyond profits and benefits others than the corporation itself.

5.1.3 Communities and human rights
In addition to the chapters focusing on safety and environmental issues, BPs CSR report
includes topics relating to human rights and the local communities affected by its
operations. BP acknowledges that it often operates in sensitive socio-economic
environments where involuntary resettlement, community disturbances and cultural
implications are some of the issues it must deal with on a regular basis. In this regard, BP
asserts that it has certain commitments:
We aim to fulfil our commitments to communities throughout the lifecycle of our
operations (p. 43).
These commitments emphasize that BP has certain obligations when it operates in different
communities. In other words, BP has moral obligations, or duties (duty) toward external
stakeholders (benefit) and these are acknowledged.

In continuation of describing its operations in sensitive geographic areas, BP commits
itself to the Universal Declaration of Human Rights and UNs Guiding Principles for
Business and Human Rights.
BP supports the Universal Declaration of Human Rights, which lays out the rights to
which all human beings are entitled. We have also supported recent multi-stakeholder
efforts to establish clear, universally-applicable guidelines on the responsibilities of
businesses in relation to human rights issues (p. 29).
BP presents a clear commitment to protect human rights, i.e. this statement holds obvious
contractarian elements (contract) in that it relates to the rights and justice of humanity.

5.2 Royal Dutch Shell
Royal Dutch Shell (hereafter Shell) has over the years been subjected to public scrutiny
due to allegations of human rights abuses, illegal gas flaring practices and insufficient
operational security measures in the Niger Delta where a great portion of the companys oil
34

extraction takes place. Moreover, Shell has been criticized for environmental and
operational misconduct in the North Sea, most noticeably exemplified in Shells disposal
plans for its Brent Spar storage buoy, which initially was planned to be dumped into
Atlantic waters
These incidents and their implications are clearly manifested in the content of Shells
Sustainability report since many of the themes in the report seem to be replying these
allegations. Topics concerning climate change, renewable energy, human rights and
operational safety are all highlighted in Shells CSR report.
In the following sub-chapters, commitments and statements relating to these topics are
presented to accentuate what moral stance is taken in each of these areas (Page references
from appendix 2).

5.2.1 Safety
It clearly emerges from Shells sustainability report that the devastation caused by the
incident at BPs Deepwater Horizon oil rig has affected the content of its CSR report. On
numerous occasions, Shell stresses the importance of operational and environmental safety
everywhere it operates while continuously accentuating the rigor of their safety standards:
After the BP Deepwater Horizon tragedy in 2010, the energy industry rightly came under
intense scrutiny. For Shell, safety remains our top priority (p. 1).
Shell does not express any pursuit of being the best or a leader in safety matters. It
merely contends that safety is a company priority and that preventing incidents while
creating a culture of safety is of great importance to the company (p. 4). However, Shell
points out that the public, regulators, their employees and their contractors expect them to
deliver energy and products safely and responsibly (p. 4), i.e. the company must do what
the company is expected to do thus it imposes a duty upon itself based on reason.

5.2.2 Climate change and emission reductions
Shells reporting on environmental issues relating to global climate change, renewable
energy sources and the protection of wildlife are vast and ubiquitous throughout the report.
It addresses broad as well as specific environmental issues, but particularly issues relating
to climate change to which Shell emphasizes the need for immediate action:
35

[] climate change remains a global threat, while countries are facing mounting
tensions over fresh-water supplies and food prices (p. 2) and continues [] our
response to the challenges of energy and climate change are not to wait for government
policies or international coalitions to form. We are taking action today (p. 2).
These statements represent an indirect commitment from Shell to proactively partake in
carbon dioxide emission reductions. The motive does not appear to be one of profit-
maximization or self-interest considering the damaging properties innate to its products.
On the contrary, the perspectives reflected in these exact statements appear to benefit
societies and local communities that are negatively affected by the effects of climate
change (benefit). However, when taking the reading further, it appears as if these
emission reduction measures also hold self-motivated aspects:
We work continuously to improve the efficiency of our own operations, both to help
reduce CO
2
emissions and to be more cost competitive (p. 7).
That is to say, that reducing carbon dioxide is not merely an attempt to satisfy stakeholders
concerned about emissions, but also a means to cut expenses and thereby improve the
companys financial performance (agency).

As mentioned in the introduction to this chapter, Shell has been accused of violating basic
human rights in Nigeria through its cooperation with the oppressive military regime during
the 1990s. (Vidal, 2011). Shell indirectly addresses these accusations by emphasizing its
commitment to human rights and its contribution in the formulation of human rights
principles:
Our business principles require our employees and contractors to respect the human
rights of other employees and the communities where we work (p. 9) and Shell was a
founding member of the UN Global Compact and we support its principles in human
rights, labour, environment and anti-corruption (p. 1).
Respecting basic human rights adheres to a companys obligation to obey a constituted set
of universally applicable moral rules. Again, respecting such fundamental moral principles
is in line with a contractarian perspective (contract).

36

5.3 ExxonMobil
ExxonMobil (hereafter Exxon) was in 1989 implicated in one the most environmentally
devastating oil spill accidents in history when the Exxon Valdez oil tanker ran aground
along the coast of Alaska. Exxon was later criticized for inadequately responding to the
incident, which resulted in consumer boycott campaigns and a severely damaged
reputation (Mulkern, 2010). Recently, ExxonMobil has once again been subject to public
scrutiny due to a rupture in one of its pipelines running across the sensitive ecological zone
of the Yellowstone National Park.
In addition to dealing with oil spills, ExxonMobil has been widely criticized for its
involvement in American politics and funding of scientists disputing the reality of global
warming (Ball, 2007; Oreskes & Conway, 2010). These political activities along with
financial performance, operational safety, environmental issues and human rights are some
of the main topics dealt with in ExxonMobils CSR reporting.
In the following paragraphs, the most predominant themes in ExxonMobils corporate
citizenship report are identified, and statements relating to these are clarified using the
ethical categories presented in chapter 3 (Page references from appendix 3).

5.3.1 Financial performance and political activity
Being a profitable and financially stable corporation is undoubtedly ExxonMobils main
objective. Throughout the entire report, performing well financially is explicitly expressed
as a top priority:
We seek to deliver superior shareholder value through disciplined capital investments,
operational excellence, and the maintenance of long-term industry perspective. We expect
this approach to translate into strong earnings and cash flows [] (p. 10) and
ExxonMobils responsibility is to provide competitively priced energy supplies to our
customers while delivering value to our shareholders (p. 10).
From these statements follow that ExxonMobil is decidedly driven by a profit motive
(agency). Being profitable is its main responsibility, which is in line with Friedmans
(1970) view of the business.

37

In continuation of ExxonMobils straightforward rhetoric regarding its profit motives, the
company openly states that it takes an active political role through contributions to political
candidates and advocacy groups:
ExxonMobil makes political contributions to candidate committees, political parties,
associations, and other political organizations, as permitted by applicable laws in the
United States and Canada, and as authorized by the Board of Directors (p. 23).
ExxonMobil reasons its engagement in politics by emphasizing that it is within the
companys right to do so. Hence, it does not explicitly adhere to any specific moral
principles, but rather it justifies its actions by relating to the laws of society (contract). It
later follows that ExxonMobil finds it necessary to employ these practices if it is to
maintain superior financial performance:
Lobbying and advocacy activities are necessary to ensure the companys long-term
success and protect shareholder value (p. 23).
The statement indicates that engaging in political activities arises primarily out of self-
interest, i.e. to ensure that dividends are paid out to its shareholders (agency).

5.3.2 Safety, security and health
Safety, health and security are some of the recurring topics in ExxonMobils CSR report,
and clearly top priorities for the company. In its corporate citizenship report the company
is continuously emphasizing its efforts to be the best in these areas:
We hold our commitment to excellence in safety, security and health in the workforce as a
core value one that shapes the decision making at every level (p. 13) and In addition,
we are emphasizing safety leadership behaviors [] (p. 13).
Here, ExxonMobil makes use of a business-related ethos, i.e. it has aspirations to be the
best in practicing safety, security and health. However, most noticeably, it strives for
leadership in safety, which is stressed on numerous occasions in the report.

5.3.3 Environment
ExxonMobil allocates much attention to environmental issues; however, its reporting on
these matters is rather technical and the company refrains from making obvious
commitments to protecting the environment. Instead, it thoroughly explains how it utilizes
38

its Operations Integrity Management System to supervise its environmental performance
and climate change strategy.
In addressing environmental concerns regarding its operational facilities, ExxonMobil
takes a rather neutral stance:
We comply with all applicable host-country regulatory requirements and where there are
none, we perform to standards that are protective of the environment (p. 25).
The statement holds contractarian elements (contract) in that ExxonMobil does not make
any explicit commitments to particular moral principles; rather, it expresses that it is doing
the bare minimum by following environmental laws and regulations, although it claims to
go beyond these laws when these are not present.

Knowing that it operates in diverse geographic regions with stakeholders from different
cultural backgrounds, ExxonMobil stresses the importance of containing the impact it has
on these local communities (p. 45). In this regard, ExxonMobil commits themselves to the
human rights principles set forth by the United Nations:
Our commitment to human rights [] are consistent with the spirit and intent of the
United Nations Universal Declaration of Human Rights [] (p. 46).
Respecting these universally applicable moral guidelines is in keeping with a contractarian
perspective (contract); and although ExxonMobil is required to respect the moral codes
formulated in the declaration, the company respects human rights not just because doing
so fosters a stable business environment, but more importantly, because it is the right thing
to do (p. 46). In other words, respecting human rights is something everyone ought to do,
i.e. it is considered a moral duty.

5.4 Chevron
Prior to 1992, Chevron (then Texaco) was accused of discharging huge amounts of
contaminated water into the Ecuadorian rainforest causing environmental damage to one of
the planets most sensitive eco-systems. Moreover, roughly 30.000 plaintiffs have sued
Chevron for negligent operation practices resulting in vast health damages and severe
water contamination. Recently, after 19 years of ongoing litigation, a $18 billion verdict
39

was upheld against Chevron by an Ecuadorian court. Chevron appealed the court ruling
calling it illegitimate and corruptly exerted (Chevron Corporation, 2012a).
In addition to the negative publicity followed by year-long litigation processes in the
US and Ecuador, Chevron has been criticized for its involvement in national politics and
for its support of science disputing the fact of anthropogenic climate change (Levy & Kolk,
2002: p. 275).
Chevrons corporate responsibility report introduces aspects of its operational
activities in different geographic regions. In each of these regions, topics relating to safety,
environment, local communities and human rights are presented. In the following text,
these main topics are introduced and statements relating to these are categorized using the
categorical taxonomy (Page references from appendix 4).

5.4.1 Safety
Chevron, one of the major oil drilling operators in the Gulf of Mexico, expresses an
evident concern for the BP oil spill in the Gulf of Mexico by continuously emphasizing the
importance of operational and environmental safety. By way of introduction, Chevron
makes certain to stakeholders that the company upholds the highest standards when it
comes to safety and security:
The incident reinforced our own safety imperative to reach our goal of zero incidents
wherever we operate. Toward that goal, all of our projects are guided by our strong safety
culture (p. 3) because it has a [] personal stake in operating safely to sustain the
publics trust in its operations, to bring our employees safely home and to bring value to
those who invest in us (p. 3).
Here, Chevron describes how by fulfilling their moral obligation (duty) of providing
safety, trust from its stakeholders can be achieved (benefit) and value can be returned to
investors (agency). This safety imperative is repeatedly emphasized in the description of
each geographic region in which Chevron operates.

5.4.2 Environment
In the reporting of its environmental performance, Chevron makes use of several concrete
examples to illustrate how it is dealing with environmental concerns. In relation to a
natural gas project in Australia, Chevron asserts that it is exhibiting environmental
40

stewardship (p. 6). In other words, it has been entrusted to the company that it will be
environmentally responsible, and Chevron is taking on this responsibility or moral
obligation (duty). Doing so is important for the company and its endeavor to maintain
their [] reputation as an environmental champion of Barrow Island (Australia).

Chevron recognizes that its presence in sensitive socio-economic areas impacts local
communities, thus it holds certain social responsibilities toward these stakeholders. In its
reporting on oil drilling activities in Angola, Chevron stresses how it subsidizes the local
community:
Our investments in health, education and economic development in Angola improve
livelihoods and foster stable operating environments that contribute to our ability to
conducts business (p. 11).
In this case, investing in the local community (benefit) becomes a means to foster an
environment conducive to business, i.e. contributions are made to reduce the risk of local
uncertainties interfering with its business (agency).
In the section covering Chevrons operations in Nigeria, a similar perspective is
presented. Here, Chevron emphasizes how local communities are struggling with the threat
of HIV/AIDS, malaria and tuberculosis, and how Chevron is investing in programs aiming
to reduce these threats because doing so is the right thing to do, and it is good business
(p. 28), i.e. it is fulfilling its moral obligation (duty) because it enhances its business
performance (agency).

In relation to human rights, Chevron thoroughly describes how human rights
considerations practically have been implemented in the corporation:
Our commitment to respecting human rights is embodied in the Chevron Way (p. 31)
It follows from the statement that Chevron respects and upholds human rights principles
(contract). However, a commitment to the Universal Declaration of Human Rights is not
explicitly made in the report.

41

5.5 Summary of content and rhetoric
Despite the fact that the four major oil companies have published rather comprehensive
CSR reports covering a variety of topics, the number of commitments and statements to
which ethical categories can be allocated are quite limited. Instead, the oil companies apply
rhetoric describing concrete measures taken by the companies in each of the identified
areas while avoiding more abstract ethical rhetoric. In this regard, Chevron and
ExxonMobils rhetoric stands out as more technical and more focused on presenting
examples of good corporate citizenship. BP and Shell, on the other hand, present
themselves as more proactive to the needs and expectations of their stakeholders,
especially in relation to climate change and renewable energy.

With respect to content, the CSR reports of the four oil companies are remarkably similar.
Issues relating to safety, human rights, environment and local communities are presented in
all the reports. It appears, however, that the safety aspect is the topic prioritized the most
by all companies. Thereafter, environmental issues, and mainly those relating to climate
change for which all companies express their concerns. In relation to reducing CO
2

emissions, all companies assert that they are in the process of addressing these issues either
by investing in improved efficiency or by investments in renewable energy. Moreover, all
four companies express their dedication to protect human rights and respect local
communities.

However similar these reports are in relation to content, ExxonMobils report deviates
from the thematic pattern by disclosing financial priorities and political engagement. In
addition, ExxonMobil refrains from making open commitments to invest in renewable
energy and it does not openly support greenhouse gas cap-and-trade schemes, whereas BP
and Shell both supports such measures. Chevron does not make explicit commitments to
support the implementation of carbon cap-and-trade; however, investments in renewable
energy are emphasized and climate change issues are addressed by the Chevron.

Another similarity is found in the ethical categories applied in the reports. In relation to
safety, rhetorical statements holding virtues such as excellence and leadership are
emphasized along with the companies moral obligation to practice superior safety. With
42

respect to human rights, all companies commits themselves to basic human rights by
applying contractarian arguments, i.e. people hold inherent rights that are universally
applicable across cultures hence these are to be respected at all times. The ethical
categories applied in relation to environmental issues are more varied as several ethical
perspectives were presented. In this regard, ethical commitments and statements holding
moral principles are and often presented in relation to concrete examples.

In conclusion, the overall content and the ethical statements represented in the reports are
notably similar. Not only that, but also the structure and the emphasis placed on the
subjects carry resemblance. The reasons for this CSR convergence are briefly explained in
the next chapter by presenting the isomorphic processes and pressures surrounding the oil
industry.

5.6 Isomorphism in the oil industry
In order to explain the similarities identified in the content and rhetoric analysis conducted
in the previous chapters, new institutional theory suggests that one investigates the
isomorphic pressures pervading the institutional environment in which the organizations
operate. According to Sharma (2000), organizations within the same institutional
environment adopt similar strategies in responding to external pressures. When strong
norms develop within an organizational field, organizations sense an obligation to adopt
these norms in order to maintain legitimacy. In this regard, institutional isomorphic
processes help to explain why corporate responsibility communication within the oil
industry appears so relatively similar. Furthermore, DiMaggio and Powell (1983) assert
that the greater extent to which an organizational field is dependent upon a single (or
several similar) source of support for vital resources, the higher the level of isomorphism
(p. 155). The oil industry is clearly categorized as one such organizational field hence it is
highly plausible that the oil companies have undergone these processes.

As previously explained, new institutionalism operates with three distinct isomorphic
processes which collectively promote homogenization of organizations within institutional
environments. These processes (or pressures) are coercive, mimetic and normative.
Coercive isomorphism emerges from political forces and the problems relating to external
43

legitimacy whereas normative and mimetic processes occur due to uncertainties within the
institutional environment (DiMaggio & Powell, 1983).
In relation to this analysis, identifying intra-industrial pressures can be rather
complicated due to the researchers external approach to the cases. To ascertain the
significance of these isomorphic processes requires a deeper and more thorough analysis of
the cases, preferably one of more ethnographic character. Nevertheless, the following
paragraphs will provide examples of pressures which may be contributing to the identified
convergence of CSR strategies in the oil industry.

5.6.1 Coercive pressures
It goes without saying that the oil industry faces a variety of external coercive pressures.
Formal pressures from regulators such as safety standards, pollution control and anti-trust
laws together with informal pressures like consumer boycott and transparency claims are
just some of the coercive pressures confronting the oil industry. Moreover, the
multinational status held by these companies amplifies these pressures as it requires the
companies to consider several pressures emanating from several different countries. In
addition, these pressures may appear contradictory as some of the interests held by external
agents have different objectives. A classic example of such differences involves the
shareholder and the environmentalist. The rational shareholder will expect the highest
possible dividend payout whereas the environmentalist might demand investments in
renewable energy sources which may prove unprofitable for the company.
One of the most predominant examples of a coercive pressure causing isomorphism in
the oil industry involves the Kyoto Protocol and the science put forth by the
Intergovernmental Panel on Climate Change (IPCC). First of all, the ratification of the
Kyoto Protocol in a vast majority of the countries in which these companies operate has
resulted in the imposition CO
2
emissions constraints. Second, the oil industry has been
coerced to take a stand on climate change. In continuation of the cases, it follows that all
the companies are addressing climate change emphasizing the importance of taking action
either by improving efficiency or investing in renewable energy. However, as already
mentioned, Chevron and ExxonMobil present a more reactive approach to climate change.
Fassin and Buelens (2011) suggest that such divergences in climate change policies may be
due to the fact that European oil companies are experiencing a more intensive coercive
44

pressure from NGOs, governments and consumers to display superior environmental
responsibility. Conversely, American companies have been more reluctant to accept the
basis for implementing carbon abatement legislation as Americans in general tend to be
more individualistic and averse to governmental restrictions (Levy & Kolk, 2002: p. 275).
This implies that cultural and ideological differences between the companies result in
slight deviations in the companies climate change strategy. Nonetheless, climate change
policies have been adopted by all the companies and this may be attributed to such
coercive pressures.
Despite the slight deviations in the emphasis on environmental issues, the oil
companies appear to be facing many of the same coercive pressures. Their role as
multinational corporations operating in many of the same regions suggests that these
companies experience similar pressures. These similarities may be a contributing factor to
the convergence of CSR strategies.

5.6.2 Mimetic pressures
A mimetic pressure emerges when an organization suspects that one or more organization
within the same institutional environment is considered to be more legitimate in the eyes of
the stakeholders. In these situations, organizations tend to duplicate the activities of other
organizations that appear to have a more legitimate social profile (Godfrey, 2007: p. 212).
To assert the degree to which CSR strategy homogenization is caused by mimetic
processes is complicated in practice. However, the fact that the CSR reports hold many
similarities in relation to content indicates that such processes are present in the oil
industry. To understand these processes, one must investigate the historic development of
CSR content to affirm whether mimetic processes have affected the content of an
industrys aggregate CSR contents.
In this study, the historical development of the oil industrys CSR content has not
been investigated. Nevertheless, Escobar and Vredenburg (2011) conducted a
comprehensive study suggesting that mimetic processes exist in the oil industry. The
findings of the study show that the more environmentally reactive American oil companies
have a tendency to imitate the sustainability policies of the more proactive European
companies (Shell and BP), hence this modeling is reflected in the content of the oil
companies CSR reports.
45

5.6.3 Normative pressures
The normative isomorphic pressure stems from the establishment of professional networks
and associations within an institutional environment. Through these organizational units,
shared norms and values emerge which lead to similar conceptions of how organizations
ought to act in a given situation.
As with mimetic pressures, normative pressures and their affect on CSR convergence
can be difficult to assess since such pressures occur internally in the industry. However,
there are certain obvious intra-industrial pressures or norms which appear to have an
influence on CSR homogenization. An example is the numerous trade associations such as
the American Petroleum Institute (API) and the European Petroleum Industry Association,
which both represent the oil industry. In these organizations, oil companies align
themselves against regulators, NGOs and governments. Moreover, these organizations
establish operational and safety standards which members may feel compelled to adopt in
order to conform to the institutional norms hence gaining acceptance and legitimacy in the
industry.
In relation to the cases, it is noted that all four companies report in accordance with
the guidelines on voluntarily sustainability reporting formulated by the International
Petroleum Industry Environmental Conservation Association (IPIECA) and the API. The
establishment of such industry standards will obviously have a significant effect on the
topics covered in the industrys CSR reporting thus normative processes exist in the form
of industry guidelines.

The isomorphic processes illustrate how the oil industry is confronted with many of the
same pressures and demands, consequently aiding in the standardization of the oil
industrys CSR content. Despite the similarities in the oil companies institutional
pressures, the pressures themselves do often arise from stakeholders whose demands are
inconsistent with one another. The contradictory pressures and demands emerging from
local communities, governments, NGOs and competitors are according to Brunsson (2002)
impossible to satisfy. These inconsistencies may result in actions which fail to meet all
demands hence the companies may become necessitated to satisfy some demands through
talk (i.e. rhetoric) and others through actions.
46

5.7 Hypocrisy in the oil industry?
Brunsson (2002) argues that for an organization to successfully address the pressures
emanating from its institutional environment it must necessarily separate its rhetoric from
its actions if the organization is to maintain legitimacy from opposing stakeholder interests.
Thus, Brunsson does not relate to hypocrisy as a problem, but rather as a solution that
gives organizations managerial maneuverability in their organizational field. If some
actions are immediately satisfactory to some stakeholders but not to others, then
organizations can simply talk about actions they plan to take in the future or through talk,
make up for actions taken in the past. In this regard, CSR can be seen as communicative
tool through which the oil companies express their good intentions and moral values so as
to gain social legitimacy without the need of taking action.
As described in chapter 4.3.1, organizations can be either political or action-oriented,
or a combination of the two. In the case of the oil industry whose mere existence depends
on its ability to be profitable producing actions in order to achieve financial objectives is
undoubtedly the overarching concern. However, as Brunnson argues (2002), the ability to
take efficient action may be diminished if the industry fails to satisfy non-financial
demands. Therefore, oil companies must ascertain that all demands are satisfied in order to
ensure legitimacy from both perspectives. Consequently, dilemmas arise as to whose
demands the companies ought to satisfy and organizational hypocrisy becomes the
unavoidable outcome.
In the following sub-chapters, indications of dissonance between what is stated and
emphasized in the oil companies CSR reports, and what is being practiced in reality, are
presented to exemplify how the oil industry may be using CSR as a communicative tool to
practice organizational hypocrisy.

5.7.1 Safety regulations
From the CSR content analysis it appears evident that the oil companies present
themselves as highly committed to safety. In all reports, safety is an omnipresent topic that
is referred to either as a company priority or an area in which the companies are striving
for excellence or leadership.
47

Prior to the explosion at BPs Deepwater Horizon oil rig in the Gulf of Mexico a
series of new safety regulations were introduced by the American government, aiming to
reduce the number of incidents and non-compliant drilling operations occurring in the Gulf
of Mexico. Despite the oil companies great emphasis on safety and their numerous
commitments to being the best in safety, the oil industry, represented by the API and the
Offshore Operators Committee, fought off the regulations claiming their own voluntary
safety programs were adequate and more suited to the needs of the industry (Baram, 2010).
It was suggested that implementing the new regulations would incur significant costs to the
oil companies, and it would require them to be audited by regulators to ensure that they
were following safety protocols (ibid).
In relation to the oil companies safety measures, there seems to be a discrepancy
between how the companies present themselves as safety leaders, and how safety is
prioritized in reality. In this case, a dilemma arises for the oil companies. On one side,
environmentalists, employees and governments expect the companies to implement the
highest safety standards. On the other side, implementing such standards would have been
costly and disruptive to its operations thus resulting in losses to shareholders. To rectify
safety failures in relation to oil spills and rig explosions, companies can emphasize how
they strive to be leaders and excellent in safety so to divert unwanted scrutiny and
regain lost legitimacy, or to make up for inadequate action taken in the past.

5.7.2 Lobbying and climate change
In the four cases that have been analyzed it is stated directly or indirectly that climate
change is being addressed through investments in renewable energy sources and/or
efficiency programs. In short, the CSR reports indicate that the companies are committed
to aid in the process of cutting carbon dioxide emissions, although with different
approaches. Especially BP and Shell appear cooperative in the formulation and
implementation of carbon abatement legislation as they both openly support putting a price
on carbon. Nevertheless, these companies have been known to spend staggering amounts
on lobbying campaigns aiming to persuade members of the American Congress to favor
pro-industry legislation and oppose carbon abatement legislation (Menestrel et al., 2002).
The table below illustrates how much the four leading oil companies and the API spent on
advocacy campaigns in the US in 2011.
48

Table 2: Lobbying expenditures in the US, 2011

Source: Own construction. Data gathered from The Center of Responsive Politics
(http://www.opensecrets.org/lobby/indusclient.php?id=E01&year=2011)

ExxonMobil is the only company to openly admit that it engages in lobbyist activities as a
means to ensure value to its shareholders. Nonetheless, the company expresses the need for
the industry to address the risks concerning climate change, but the company continues to
fund think tanks denying the reality of global warming (Adam, 2009).

API, which among others represents the four leading oil companies, recently opposed a
climate bill aiming to reduce CO
2
emissions. API asserted that the enforcement of carbon
abatement legislation would lead to job losses and increased costs (Greenpeace, 2009).
Shell and BP claims to support such CO
2
emission schemes but through its representation
(the API), these companies appear to be more averse to emissions schemes than is
expressed in their CSR reports. Furthermore, both companies have been criticized for
selling out on their renewable energy and for deceiving consumers through greenwash
campaigns such as Beyond Petroleum (BP) and A New Energy Future (Shell) (Pearce,
2009).
In relation to climate change, a dilemma emerges for the oil industry. Environmental
stakeholders may urge oil companies to support carbon abatement legislation whereas
financial stakeholders wish to ensure the future profitability of the companies, hence
renouncing the support of emission constraints as such legislation would greatly impede
the future business of the industry. However, the companies may feel coerced to express
support for these regulations so as to gain legitimacy while act contradictory because such
legislation necessarily would threaten their future existence.

5.7.3 Human rights issues
Throughout the last 30 years the oil industry has been accused of violating human rights
and disrespecting local communities in some of worlds poorest countries. BP, Shell,
$ 8.640.000
Lobbying
expenditures 2011
British
Petroleum
Royal Dutch
Shell
ExxonMobil
Chevron
Corporation
API
$ 8.130.000 $ 14.790.000 $ 12.730.000 $ 9.510.000
49

ExxonMobil and Chevron are all operating in some of the most instable political
environments which often mean that oil companies are cooperating with dubious
governments and junta regimes (Terminski, 2011). The most conspicuous example in
relation to human rights violations involves Shell and its operations in Ogoniland (Nigeria)
where the company has been accused of cooperating with the brutal Nigerian military
dictatorship to fight the opposition that rose from the Ogoni people in the mid-1990s.
During a nonviolent protest by the Ogoni people, thousands of people were killed, beaten
and raped by the military with which Shell was cooperating (Boele et al., 2001). Shell
would later stand trial charged with complicity and egregious human rights abuses due to
its indirect involvement. In the following years, Shell tried to reverse its damaged
reputation by changing its communication strategy to present itself as highly committed to
human rights (ibid).
Another example involves Chevrons activities in Myanmar where the company
operates a gas pipeline running from Myanmar to Thailand. As with Shell, Chevron has
been condemned for its cooperation with an oppressive military regime which has been
linked to severe human rights violations such as forced labor, sexual harassment and brutal
evictions (Terminski, 2011).
The oil industrys claimed commitments to human rights appear irreconcilable with
the fact that these companies are collaborating financially with oppressive regimes. Once
again, dilemmas arise for these companies operating in authoritarian countries. The
products they extract are highly demanded and the companies existences depend on their
ability to deliver oil and gas. On the contrary, extracting such products often involves
collaboration with governments known to disregard human rights, which clearly reduce
these companies perceived social legitimacy. Counteracting this dilemma, for instance, by
avoid making open commitments to human rights would undoubtedly damage the
companies perceived legitimacy. In this regard, the oil industrys great emphasis on
human rights in its CSR reporting may be a means to rebuild legitimacy lost as a
consequence of these scandals.

It follows from the previous indications of hypocrisy that the oil industry tends to act in
accordance with shareholder demands rather than stakeholder demands when
inconsistencies arise. Relating this to the ethical categories, it seems that that oil industry
50

have a tendency to act based on financial motives (i.e. agency) while using CSR to depict
itself as being committed to its stakeholders (i.e. benefit) using a variety of ethical
elements (contract, duty and ethos).
That is not to say, however, that the oil industrys CSR reporting is merely
communicative manipulation seeking to achieve legitimacy without taking action. This
suggests that the oil industrys conflicting demands and its need for legitimacy
occasionally results inconsistencies between what the industry does and the perspectives it
reflects in its CSR reporting.

7. Conclusion
The purpose of this paper was not to scrutinize the oil industry for moral deficiencies or to
contend that the oil industrys CSR reporting is purely empty rhetoric. Rather, this paper
aimed to analyze the content and rhetoric of the oil industrys CSR reporting in order to
investigate how this complies with some of the numerous allegations held against the
industry. In approaching these objectives, ethical categories were derived using relevant
business ethics literature, and the new institutional approach to organizations was adopted
to examine the oil industry by applying concepts such as isomorphism and
organizational hypocrisy.

The study discovered a notable similarity in the oil industrys CSR content and rhetoric.
Topics relating to safety, environment, climate change and human rights were some of the
most common issues covered in the companies CSR reports. Moreover, it was found that
the ethical perspectives reflected in the CSR reports were rather similar. In this regard,
only small rhetoric-related deviations were to be identified among the CSR reports.
It was suggested that the difference in content and rhetoric between the companies were
related to cultural and ideological difference between the European and American oil
companies.

To explain the CSR convergence identified in the content analysis, concepts of coercive,
mimetic and normative isomorphic processes were discussed to suggest which institutional
forces that may be the cause of the industrys homogenization of CSR reports. It was found
51

that the oil companies statuses as multinational corporations facing similar institutional
demands and intensive oversight from numerous stakeholders resulted in four rather
similar CSR reports.

Finally, the concept of organizational hypocrisy was discussed in the relation to the content
and perspectives reflected in the CSR reports. Indications of organizational hypocrisy were
presented based on some of the controversies surrounding the oil companies. These
examples, compared with the content presented in the CSR reports, suggested that the oil
industry may react to inconsistent demands by reflecting socially legitimate stances on a
variety of issues while not always conforming to these perspectives.

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