Corporate social responsibility (CSR) in the petroleum industry: ideas and practice with links to risk management.

Abstract

In recent years several authors have argued for the adoption of Corporate social responsibility (CSR) which highlight people, planet and profit. The theoretical rationale for the CSR is well established, large number of investment has been involved into CSR activities, but the practical implications have not been so clearly demonstrated and incidents are still happening. The fact is that most companies have beautiful CSR policies but still have problems on achieving its CSR goal in practice. We argue that it is because that the current CSR practices suffer from severe weaknesses related to risk and uncertainty treatment. And there is a need to show how the CSR is described and communicated in real-life situations and in its turn the effects on the risk management and decision making. The present paper aims at contributing to this end by study on the relationship between CSR and risk management, considering two cases related to petroleum industry, Petrobras corruption scandal and Statoil Horton case. The bridge between risk management and CSR is established and the integration process is optimized, through the concept research on CSR issues and risk management issues, comparing the different process of integrating CSR and risk management in an organization. The critical issues during CSR practices with link to risk management are presented, through cases study, analyzing similarities and differences between Petrobras corruption scandal and Statoil Horton case. A creative model and thinking which is named as “umbrella model” is created to better clarify the relationship between CSR and risk management. An applicable modified process of decision making related CSR risk management is also introduced to help companies to make better decisions. In brief, the thesis aims to gain new insights into how companies can apply CSR to help risk management and what CSR can gain from risk management.