Karlstad Business School Handelshögskolan vid Karlstads Universitet

Faculty of Economic Science, Communication and IT

Business Administration

Suleiman Ahmad Said Ali Abdallah Mohammed

Could Stakeholder Dialogue Influence the New Governance of Unsustainable Business?

Embedded on Corporate Governance and Corporate Social Responsibility: The Case Study of BP.

Business Administration

Master’s Thesis

30 ECTS

Term: Spring, 2013

Supervisor: Samuel Petros Sebhatu

Karlstad Business School

Karlstad University SE-651 88 Karlstad Sweden

Phone: +46 54 700 10 00 Fax: +46 54 700 14 97

E-mail: handles@kau.se www.hhk.kau.se

i

ABSTRACT

Being ethical and sustainable is a fate in doing business, since unsustainable business practice

damages the environment, and causes lack of resources currently and in the future which

discontinue economic development. The purpose of this study is to understand and analyze

the influence of stakeholder dialogue in the new governance integrated in CG & CSR for

unsustainable business such as oil and gas industry particularly in BP Company, as well as

how and why the notion “new governance” including self and meta-regulation affects on BP

Company to perform ethical business. This study based on the case study methodology

whereby the theoretical framework of secondary data of CG, CSR and the new governance

found in journal articles, relevant textbooks, NGO reports and the information found on BP’s

website were employed. Furthermore, the main findings of this study is that there is a

significant variation in BP’s CSR adoption regarding the TBL of CSR in which social

responsibility performance found the worst performance among the TPL of CSR since the

company selects where to demonstrate great interest on social responsibility and where to

ignore. Consequently, BP’s self-regulation is ineffective which signifies lack of transparency

and accountability. More importantly, meta-regulation is very effective in keeping BP on

track in the face of wrong doing. The study conclude that BP’s non-financial reporting need

to move beyond the traditional reporting on company’s policies, philanthropic actions, and

CSR successes and give priority to risks and incidents considering the seriousness and

impacts. More importantly, BP needs new standards of transparency and effective

management system to ensure good CSR performance. The study assures that for as long as

BP’s operations touch the daily life of people and other organisms in our planet it must

prioritize the interest of its stakeholders via continual dialogue since it is one of the

fundamental principles of corporate citizenship.

Key words: Corporate Governance, Corporate Social Responsibility, New Governance,

Stakeholders, NGOs, accountability, transparency and ethics.

ii

ACKNOWLEDGEMENT

First of all we are thankful to Almighty God for granting us good health throughout the

period of pursuing our Master degree in Accounting and Finance, without his wishes all these

would have not been possible. We would like also to express our sincere appreciation to the

Government of Sweden through Swedish Institute (SI) and Centrala Studiestödsnämnden

(CSN) for giving us full scholarship to study here at Karlstad University, to learn and explore

multinational cultures.

We would also express our gratitude to Karlstad University for enrolling on this program, and

its abundant facilities available and provided to us during the period of our study; particularly,

university library for its huge online database which was very assistive during our thesis

writing. Since this Master thesis studies the case of BP Group, we are thankful to all

information provided in the company’s website.

We would also like to express our gratitude to our supervisor, Dr. Samuel Petros Sebhatu

for his patient guidance, support, encouragement and valuable comments. His supports and

excellence advice contributed to a great extent towards accomplishment of this thesis. We are

also grateful to Professor Luke Bailey, instructor for the English for Practical and

Professional Purposes, fall 2012 for the course contents that improved our professional

writing skills, without his contribution our work could have faced some difficulties. Also, we

are grateful for the contents of two courses; Corporate Governance and Advanced

Professional Skills for giving us more insight about the two concepts of CSR and CG that we

are examining in this thesis.

Lastly but not least, we would like to express our deepest gratitude to our family’s members;

wives and children for their understanding, encouragement, tolerance and support during the

whole period we have been away for our studies.

Karlstad University, May 2013.

_____________________ _____________________

SAID, Suleiman Ahmad Ali Abdallah Mohammed

iii

Abbreviations

AGM Annual General Meeting

AMPM A brand for fuel stations located in the USA

Amoco A producer and marketer of oil, natural gas, petroleum products,

chemicals and solar power

ARAL Brand for Automobile Fuels and Gas Stations

ARCO Brand for low-cost fuels

BOP Blow Out Preventer

BP British Petroleum

CASTROL A global brand for motor oil and specialist lubricants

CG Corporate Governance

CNPC China Petroleum Corporation

CSR Corporate Social Responsibility

EDTP Enterprise Development and Training Program

EPA Environmental Protection Agency

EXXON Multinational Oil Company

iv

FNI Fridtjof Nansens Institutt

HRW Human Rights Watch

IFAW International Fund for Animal Welfare

GCRO Gulf Coast Restoration Organization

GHG Green House Gas

MNEs Multinational Enterprises

MNCs Multinational Corporations

NGOs None-Governmental organizations

OECD Organization for Economic Co-operation and Development

SME Small Medium Enterprises

MTE Million Tones

SEEA Safety, Ethics, and Environmental Assurance Committee

SPLA Sudan People’s Liberation Army

TBL Triple Bottom Line

WWF Worldwide Fund for Nature

v

List of figures

Figure no: 1 The Pyramid of Corporate Social Responsibility ……………………….….. 17

Figure no: 2 Greenhouse gas emissions (Mte CO2 equivalent) …………………………… 33

vi

Table of contents

Abstract ……………………………………………………………………………….....i

Acknowledgement ……………………………………………………………………... ii

Abbreviations ……………………………………………………………………..…….iii

Chapter 1: Introduction …………………………………………………………………. 1

1.1 Background information ……………………………………………... 1

1.2 Company selection ……………………………………………………...2

1.3 The statement of the problem …………………………………………...3

1.4 The purpose of the study ………………………………………………..4

1.5 Research questions ……………………………………………………...4

1.6 Organization of the study ……………………………………………….4

Chapter 2: Methodology …………………………………………………………………6

2.1 Research methodology ……………………………………………………..6

A. Case study …………………………………………………………………..6

B. Narrative approach ………………………………………………………….8

2.2 Data collection ………………………………………………………………8

2.2.1 Primary data ………………………………………………………9

2.2.2 Secondary data …………………………...………………………10

2.3 Data analysis ……………………………………………………………….11

2.4 Trustworthiness and Reliability ……………………………………………11

2.5 Limitations. ………………………………………………………………..12

Chapter 3: Theoretical framework …………………..………………………….………13

3.0 Introduction. ………………………………………………………………...13

3.1 Definitions of CG...……………………….. ………………………………..13

3.2 Definitions of CSR ………………………………………………………....15

3.3 The triple bottom lines (TBL) ……………………………………………...17

3.3.1 Economic responsibility ………………………… …....18

3.3.2 Social responsibility …………………………………….…18

3.3.3 Environmental responsibility ………………………….…..19

vii

3.4 Stakeholder theory. …………………………..…………….…………….... 20

3.5 The role of NGOs …………………………………………………………21

3.6 The new governance – The convergence of CG & CSR …………….…...22

3.6.1 Self-Regulation ………………………………….………...23

3.6.2 Meta-Regulation ………………………………….……….23

3.7 Summary ……………………………………………………….…………..24

Chapter 4: Empirical (case study) ………………………………………………….…..25

4.1 Introduction ……………………………………………………………….……25

4.2 BP governance …………………………………………………….....…………25

4.3 BP corporate social responsibility ……….………………………………….….28

4.3.1 Economic responsibilities …………………………………….....29

4.3.2 Social responsibilities ………………………………………..….29

4.3.3 Environmental responsibilities ……………………………….....31

4.3.3.1 Gulf of Mexico oil spills ……………………………..….33

4.4 stakeholder engagement ………………………………………………………....34

4.5 Perspectives of BP’s stakeholders on its operation………………………………35

4.6 Summary …………………………………………………………………….......37

Chapter 5: Analysis and Discussion. …..........................................................................39

Chapter 6: Conclusion & Managerial implication ………………………………..…....47

Further Research ...………..….………………………………………………………...50

References ……………………………....…………………………………...…………51

Appendices ……………………………………………………………….…………….59

1

CHAPTER 1: INTRODUCTION

1.1 Background information

The business world has changed today and each business practitioner is aware of what is

happening surrounding the company’s business operation and its effects, (Aluchna (2010).

Furthermore, the emergences of various national and multinational companies on the same

industry have increased the competition as each company strives to its best to attract more

customers. Moreover: “our economy, environment and social well-being are interdependent”,

(Štreimikienė & Jakubauskienė, 2012, p. 589).

In the last few decades CG & CSR has attracted companies and researchers alike for the

reason that these concepts take into consideration the necessity of involving shareholders and

stakeholders in business. In this sense, Beltratti (2005) discuss the complementarities

between CG and CSR and found that: “both CG and CSR are positively related to the market

value of the firm”, (p. 373). In fact, CG & CSR are complementing each other in achieving

the objectives of business practice which are profit maximization and conducting ethical and

sustainable business, (ibid). Moreover, the new governance boosts regularity process,

reversibility, and transparency which in turn create pressure for compliance, (Bamberger &

Mulligan, 2011). Therefore, business practice will not continue in a good way unless primary

and secondary stakeholders’ interests and demands are regarded when doing business. That is,

today’s financial performance goes alongside with ethics and sustainability.

Basically, the concept “corporate governance” has caught the attention of primary and

secondary stakeholders, especially after the financial crisis in the last two decades as a result

of agency problem, (Mallin, 2010). It can be argued that, the objective of corporate

governance is to maintain company’s survival in business arena; moreover, to prevent

corporate crisis to happen again by maintaining companies’ relationship with stockholders

and stakeholders, transparency, accountability, and managing the internal and external

control i.e. monitor organizational behavior, Mallin (2010).

Moreover, the integration of corporate social responsibility in business practices for many

organizations is not an additional cost or burden to the organization any more. Instead, CSR

is broadly seen: “not only as making good business sense but also contributing to the long-

term prosperity of companies and ultimately its survival” (World Business Council on

Sustainable Development, 2000, p. 3). Furthermore, Tang et al (2012) insists that a positive

relationship exist between CSR and companies’ financial performance i.e. CFP, because CSR

2

implementations lead to: “improve firm– stakeholder relationships and enhance the firm’s

reputation among customers, employees, regulators, and suppliers”. (p. 127).

Fundamentally, being socially responsible on the one hand and having a prosperous business

on the other hand are two faces of the same coin. Additionally, sustainable business practice

has been found to have a positive relationship with the company’s image and reputation, in

this context: “CSR may be considered one of the important reputation attributes, especially

from the aspect of customers. In-depth analysis of certain reputation attributes has confirmed

that socially responsible companies rank certain reputation elements which they develop at

the same time”, (Vitezic, 2011, p. 93). Therefore, companies need to be careful when doing

its business operations and ensure that their activities do not cause any harm to people and

environment neither presently, nor in the future. Otherwise the company’s image and

reputation may be deteriorated hence poor performance.

On the one hand, stakeholders like customers, governments, NGOs, environmental activists

demand more transparent, ethical and environmentally friendly business operations;

moreover, they want to see the company being fair to them by operating ethically by offering

quality products at affordable prices, which means company’s successful depends on the

cooperation with stakeholders, (Tullberg, 2013). On the other hand, shareholders and

investors want their company to survive and maximize their value through wealth creation,

(Coombs & Holladay 2012); at the same time they want the business practice to go far

beyond and perform sustainable business in order to maintain its reputation which is an ideal

destination for company’s survival. Therefore, sustainable business practice is no longer

conducts in voluntary basis; rather it is inevitable.

1.2 Company selection

BP is a large multinational oil and gas company operating in more than 70 countries with

86000 employees, headquartered in London, United Kingdom. This company is among

largest companies which are dominating oil industry in the world such as ExxonMobil and

Shell Group. Previously, its name was “British Petroleum”. However, 98.25% of its

shareholders have voted to change the name to BP or “Beyond Petroleum” in the AGM in

2001. The main reason for this change was to rebrand the company as beyond petroleum and

enhance its reputation to ensure its survival in business arena especially after the emergence

of climate change and global warming which is attributed to unsustainable practices.

Additionally, BP merged with other brands such as AMOCO, ARCO, CASTROL, ARAL,

3

and AMPM to create a unit in performing sustainable business and produce different types of

alternative energy that characterized as having “low carbon emissions” like natural gas, solar,

energy from wind farms, biofuels, etc, (BP, 2013; BP sustainability report, 2012).

We select this company to do our study because of its global operations in oil industry for

more than 100 years since it was founded in 1908, (BP, 2013). During its long history in oil

industry, it has been involved in many environmental and safety incidents including Texas

City refinery explosion, deepwater horizon oil spills, and greenhouse gas emissions. As these

incidents involve the welfare of people (disregarding stakeholders) and the environment, the

company has received many controversies regarding its negative role in sustainable

development through oil industry. Also, the company has received considerable debates on its

effort in practicing sustainable business such as alternative energy in addition to its social

activities. Basically, the company seems to have strong and effective corporate governance

since the company develops its ethical behavior continuously, involving in stakeholder

dialogue, having transparency through annual disclosure, accountability, and social

responsibility. Taking the aforementioned controversies into consideration, we want to

analyze how BP faces the challenge “sustainable development” and to what extent the

integration of CG & CSR can affect company’s sustainability and reputation.

1.3 Statement of the problem

Every company especially those operating in oil and gas industry face huge challenge to

make its operations environmentally friendly. This is because of the nature of their activities

which to the great extent involves the safety of both people and environment. How these

companies control and maintain clean environment and safety of people within and outside

the company premises remains a big challenge. To make these impacts at the minimum level,

many companies nowadays incorporate the corporate social responsibility into their business

practices. Integration of CSR in business operations helps the company to work closely with

its stakeholders such as the community and environmental activists to reduce its operations

impacts to them. Furthermore, as multinational enterprises the company also faces great

challenges on transparency and disclosure of information about the business practices of the

company. This involves how board members and executive managers behave on operating

the company. Shareholders and investors require more transparent, accountability, and ethical

operation of the company. Moreover, Sarra (2011) argued that “transparency in disclosure”

is the fundamental criteria to enhance investors’ confidence hence company must recruit

4

skilled and competent directors to accomplish the investors’ demands (p.582). Adoption of

good governance and compliance of country corporate governance code may substantiate the

transparent, accountability, and ethical operation of the company. Furthermore, the corporate

governance practices need to incorporate the stakeholders’ representative as the new

governance suggests. Sarra (2011), contended that the emergence of new governance suggest

the involvement of stakeholders in the corporate governance because multinational

enterprises have great influence to the community and their operations impact directly the

economics of stakeholders like workers, social life and their environment, therefore there

should be someone in the corporate board on their behalf. Directors and executive staffs

always prioritize to maximize profit to satisfy investors and financiers (ibid). That’s why in

this study we seek to get in-depth analysis on how BP Company as an unsustainable business

integrates Corporate governance and CSR to its business operations to satisfy its shareholders

and investors, and at the same time compromises its environmental and social impacts to its

various stakeholders.

1.4 Purpose of the study

The purpose of this study is to understand and analyze the influence of stakeholder dialogue

in the new governance integrated in CG & CSR for unsustainable business such as oil and gas

industry particularly in BP Company.

1.5 Research questions

From study purpose above, we derived three research questions as follows:

Q1 – How do CG & CSR can shape the new governance concept of unsustainable business?

Q2 – How does stakeholder dialogue influence BP’s CSR & CG in its business operations

and its impact on company’s sustainability?

Q3 – To what extent self-regulation and meta-regulation affect on BP’s stakeholder

engagement?

1.6. Organisation of the Study

The rest of the study is organised as follows:

Chapter 2: comprises the methodology used in the study; data collection methods and how

they are going to be analysed.

Chapter 3: specifies the theoretical framework of the thesis, different concepts and theories

used to analyse this study will be presented in depth.

5

Chapter 4: will include the empirical finding of the case study BP Company; descriptions of

what company doing in the field of CSR and CG and the narration of stakeholders’ responses.

Chapter 5: will present the analysis and discussion of what found in the study.

Chapter 6: which is the last section of the study will cover the conclusion, recommendations

and areas for further studies.

6

CHAPTER 2: METHODOLOGY

In this chapter the methodology used in this research will be presented. We are going to

present the methods used to gather data to help us answering our mentioned research

questions, also we will give details on how collected data will be analyzed so that we can

have thorough understanding of our research topic.

2.1 Research methodology

Scientific research method has divided into two main branches; qualitative and quantitative

methods. The main purpose of quantitative method is to establish and use mathematical

models and explain their relationship (Fisher, 2007). Qualitative method is commonly used in

social sciences academic disciplines. Vaivio (2007) explains qualitative method as “case-

based research that relies on rich empirical material collected from a single target

organization or a handful of case-organizations and strives towards theoretically valuable

interpretations”, (p. 426). Moreover, qualitative method involves the investigation aimed to

answer questions that follow predetermined procedures (Fisher, 2007). Also qualitative

method is used to get thorough understanding of different social development. For that matter,

we found out that qualitative method suit best for our case in BP group as it can leads us to

in-depth understanding on how stakeholder dialogue influence social responsibility and

governance in unsustainable business. Through this method there are different tools

employed to collect data for example “multiple sources of evidence, such as interviews,

documents and other texts as well as forms of participant observation within the research site”

(Vaivio, 2007, p. 427). Furthermore, This study will employ both narrative approaches to get

in- depth analysis on how different stakeholders react on the matter relating to CG & CSR

and governance in gas and oil industries particularly in BP group. However, in this study, our

methodology mainly based on the available public sources like company’s annual reports,

journals, articles and company’s web page (Spitzeck & Hansen, 2010).

A. Case study

Yin (1984) defined case study research method as “an empirical inquiry that investigates a

contemporary phenomenon within its real-life context; when the boundaries between

phenomenon and context are not clearly evident; and in which multiple sources of evidence

are used” (p.23). That is why in this study we are going to use case of BP as it will help us to

7

enhance our understanding of the matter under investigation, especially when the study is

done in real-life circumstance. The case study approach provides a room for researchers to

explore many ideas and subjects by focusing much more on different individuals,

organizations, communities (Gray, 2009). Case study helps to investigate the difficult matters

with the assistance of previous studies and background of the problem. With the help of

available information case study method can enable researchers to investigate any

phenomenon. Additionally, case study approach is ordinarily used in qualitative studies (Yin,

1994). Moreover, Eisenhardt (1989) explained case study as the research approach that

focuses “on understanding the dynamics present within single settings”.

However, Yin (2003), who is among pioneers of case study research, argued that, this

approach, is yet to be accepted globally by researchers as worthy, objective and authentic.

The main problem of this method is its difficulties to generalize the results from a particular

case. In defending this viewpoint, Yin (2003) contended that case study findings can be

generalized in theoretical prepositions instead of populations. The main objective of case

study is to enlarge theories and make its application general (analytic generalization) rather

than statistical generalization.

Case study method may involve one case or more than one case, and can include various

stages of analysis (Yin, 1984). Furthermore, a single case approach is appropriate to a single

experiment especially when the case “provides a critical test to a well-established theory, or

where the case is extreme, unique, or has something special to reveal”. Moreover, this design

can be applied as “a preliminary or pilot in multiple case studies” (Rowley, 2002, p.21).

Therefore, a single case study approach is appropriate to our case as it seeks to get in- depth

understanding on how stakeholder dialogue influence the sustainability and governance in an

unsustainable business practices. We choose oil and gas company; BP, as we believe that it

is among unsustainable business and through it we can be able to study it and answer our

developed research questions. BP faces many challenges in the area of CSR and governance

so it will be interesting case to study. For instance BP is facing different challenges in

human right violation, corruption and lack of transparency, and environmental degradation

especially the Gulf of Mexico incident which are not well explained in BP’s non-financial

reporting that is why we need to investigate these issues to see to what extent stakeholders

view point can shape the impact of CG and CSR in BP’s business practice.

8

B. Narrative Approach

According to Gudmundsdottir (2001), narrative research is the research approach that deals

with how mankind experiences the world, and hence researchers gather these stories and

develop narratives of experiences (as cited in Moen, 2006, p. 6). Furthermore, narrative

approach involves human experience whereby it provides connections and meaningful of the

activities done by human beings. The stories narrated by human beings can be connected to

put together various faces of human life. Narrative can use different ways as data collection

includes storytelling, life background, exhaustive interview, targeted groups, video recording,

“journal records; interview, one’s own and other’s observations; letter writing;

autobiographical writing; documents such as school and class plans, newsletters, and other

texts, such as rules and principles; and pictures” (Moen, 2006). Narrative research is

commonly applied in the educational practices and experiences researches (Connelly &

Clandinin, 1990).

Moreover, Polkinghorne (1988) classified the narrative research into descriptive and

explanatory. Through descriptive research, the researcher may need to describe: “individual

and group narrative of life stories or particular life episodes; the conditions under which one

storyline, or employment and signification of events, prevails over, coheres with, or conflicts

with other storylines; the relationships between individual stories and available cultural stock

of stories; and the function that certain life episodes serves in individuals’ employment of

their lives”. Whereas, under explanatory narrative the researcher wants to find out why

something happened through narrative (cited in Sandelowwski, 1991, p. 163). In this context,

we are going to use different narrative methods including video interviews that involve

different stories, for example the interviews with different stakeholders in New York streets

which is available in BP video library. Additionally, we will use documents such as different

BP sustainability and annual reports and scientific articles. Last but not least, video recording

from different media will be used, for instance Hardtalk and Huffpost live from BBC and

Huffpost respectively.

2.2 Data collection

According to Cooper & Emory (1995) data collection process counts on the research method

used such as a qualitative research method used in this study. Qualitative researches depends

much more on qualitative data that can be gathered by conducting interviews, obtaining

documents, in addition to the observations (Merriam, 1988).

9

However, Yin (2003) insists: although it is true that a case study may have specific plan; it

may appear that the information which expected to be pertinent “relevant” to the case under

investigation is not easily predictable. For this research, the data collection method comprises

primary data collection and secondary data collection as follows:

2.2.1 Primary data

According to Bryman & Bell (2007), there are three kinds of interviews i.e. structured, semi

structured, and unstructured. The semi structured interviews comprise predefined questions

that should be covered in the interview (Saunders et al, 2009).

Primary data collection was achieved through interviews. We found that the semi-structured

interview (Bryman & Bell, 2007) suits our case study since it provides a room to get

additional information. Interview questions were designed carefully eliminating yes and no

questions as recommended by Wellington (2007). We contacted different stakeholders such

as FNI, HRW, and Greenpeace who were expected to have good knowledge in new

governance, CG and CSR, but only Moe Arild –the Deputy Director of FNI and senior

research fellow who wrote many articles in energy and climate change – accepted to offer us

an interview. In this context, telephone interview was conducted.

Moreover, we went through different websites to find appropriate video interviews for the

case of BP; for instance YouTube, HRW, Greenpeace and we found about one hundred video

interviews. However, all these videos seems to lack authenticity as many of them their

authors are not known, therefore we decided to rely on BP’s video library since they are

produced by the company itself and they can only be accessed with log in password.

In addition, we used an interview conducted by BP in New York City which is available in

BP video library. This video was selected out of 70 videos we were able to access and

analyze from BP video library. Also, they give thorough understanding on how stakeholders

react against oil industry in general. The interview comprises four questions that directed to 7

stakeholders in New York streets investigating various sub issues of the mentioned trends.

This video lasts about 8 minutes. Additionally, the video contains BP’s claims on the

concerns that provoked by the stakeholders “interviewees” and what the company did and

how it is going to handle these concerns.

10

2.2.2 Secondary data

Theoretically, Ticehurst & Veal (2000) explain that secondary data enables the researchers to

identify many related aspects and view points to the case under investigation. In this sense,

according to Bryman & Bell (2007) there are two kinds of secondary data, for instance

researchers reports “external”; in addition, the data that prepared by the organizations through

their business practices “internal”. Equally, Ticehurst & Veal (2000) insist that secondary

data collection can be achieved through two sources, for example internal data sources and

external data sources. Moreover, Davis (1999) reveals that the internal data sources include

annual reports, and many different documents that the organization release; that means the

business organizations are the main source for the internal data. Whilst, other sources such as

research reports, government publications, newsletters, indexes, etc, provide the external data.

In this report, we the search for secondary data began by general searching about the concept

of CG, CSR and the new governance. The search engine of Google, Yahoo, and Google

scholar were firstly employed to look for academic articles, media and NGOs reports on the

subject in question. Furthermore, we used university library for books and scientific journal,

specifically we concentrated our search on the following data base which we found them

more appropriate to our study such as Academic Search Elite, Business search Premier, e-

library, Science direct and EBSCO. Moreover, in our search we used the following key words,

corporate social responsibility, new governance, corporate governance, stakeholders, BP,

NGOs. In these searches we came up with abundant of hits ranging from one million to

hundreds of millions, but only appropriate hits were chosen to be used in our study.

Additionally, we visited very frequently to BP website and we checked out various reports

such as annual reports, sustainability reports, the code of conduct, and other information

available in the website. Furthermore, we visited websites of different media and

international NGOs dealing with social, the environment, and human rights. Among

international NGOs we visited, and we found out that the following NGOs such as Human

Right Watch (HRW), Greenpeace, FNI, and Amnesty International fit to our concepts we are

analyzing. On the other hand, BBC Hardtalk, and Huffpost were found more appropriate to

our study among the media were scanned out.

11

2.3 Data analysis

Fundamentally, in the analysis process, this report relied heavily on the “interpretation

process in the dialectic between the theoretical framework and the empirical level”, to create

a profound understanding of CG & CSR adoption in BP business practice (Enquist &

Johnson, 2006). Furthermore, according to Ghauri & Grönhaug (2005), the data collection

and the analysis process in qualitative research are carried out jointly taking into

consideration the interplay and the common ground among the theoretical framework and the

empirical data.

Thus, in this thesis, analysis was performed by making comparisons of the data from

company’s documents, interviews obtained from media and BP video library and scientific

articles, all these data where screened out to get relevant information that is appropriate to our

study. Then the data was categorized into CG and CSR categories to help us to analyze them

accordingly. As we mentioned earlier in this part, our analysis will focus on analyzing the

gaps found between empirical study and theoretical framework including media and NGOs

reports, therefore the categorized data was analyzed under aforementioned procedures.

Moreover, these procedures were concluded by authors’ reflections as part of the contribution

of the thesis.

2.4 Trustworthiness and Reliability

The term reliability is all about the findings’ consistency (Bryman & Bell 2007), which

means that reliability attributes to relevant data collection and the analysis process that

generate consistent results. In this context, Saunders et al (2009) and Christensen et al (2001)

reveal that the term reliability denotes the extent to which data collection process and the

analysis method generate the same outcomes when the study applied again, using the same

circumstances. In other words, the purpose of reliability is to make sure that the results and

the conclusion of the case study are the same if reiterated (Yin, 2003). Briefly, the notion

“reliability” is used to minify the biases and errors in the case study, (ibid). Furthermore,

according to Krefting (1991) validity means: “the term validity in a qualitative sense to mean

gaining knowledge and understanding of the nature (i.e., the meaning, attributes, and

characteristics) of the phenomenon under study”.

For the current study, we use multiple methods of data collection using reliable sources, the

data was collected through interviews, also we reviewed reliable data from the company’s

website such as different sustainability reports, annual reports, the code of conduct, etc.

12

Moreover, our study used relevant secondary data such as books, and articles in CG and CSR

using the database of Karlstad University like academic search elite and science direct. It

should be noted that, using various methods in case study creates triangulation. In this context,

according to Hussey and Hussey (1997), triangulation can be defines as: “the use of different

data collection techniques within one study in order to ensure that the data are telling you (the

researcher) what you (the researcher) think”. Therefore, collecting data from various sources,

moreover using different methods in the same context provide triangulation.

It is obvious that, in connection with our data collection process, we obtained correct and

relevant information from different sources which provide us better understanding regarding

the case under investigation, and make our study more reliable and valid. In a nutshell, we

gain thorough understanding and more insight through analyzing the data, making connection

with the literature, and using our reflection on the case we are analyzing to find the answers

for our research questions.

2.5 Limitation

Our main hindrance of our data collection is the reliance of the analysis of company’s reports.

Therefore, the issue of considering company statement’s in reports as fact. Inclusion of other

qualitative data collection methods could assist us to demonstrate extensive critical analysis.

Though, we have tried several times to get access to the company’s and NGO’s management

to verify some of the information available in their website and reports. We contacted them

via different means like telephones and emails to get access to them but the response was not

good, and we were able to get only few viewpoints from some stakeholders. It is our belief

that the inclusion of stakeholders and management responses might have great impact to our

study as it could modify our study and makes it more reliable; therefore, this thesis is limited

to the empirical information accessed in the company’s reports and website.

13

CHAPTER 3: THEORETICAL FRAMEWORK

3.0 Introduction

This chapter comprises the theoretical framework and literature review of the theories and

concepts which are going to be used in this study, the background of CSR and its

fundamental pillars of three bottom lines is presented. Later on this chapter we will present

the concept of corporate governance and its convergence with CSR. Moreover, stakeholder

engagement and the role of NGOs will be presented.

3.1 Definitions of CG

There are various definitions of CG; the broadest one refers to Sir Adrian Cadbury (1999)

who says: “corporate governance is concerned with holding the balance between economic

and social goals and between individual and communal goals…the aim is to align as nearly as

possible the interest of individuals, corporations, and society”, (cited in mallin, 2010, p.7).

The aforementioned definition clarifies that CG deals with the relationship between managers,

shareholders, and non-shareholders stakeholder which prevents the concentration of power

and influence on a single body; moreover, it fosters transparency and accountability that

shareholders and stakeholders are looking for, (Mallin, 2010).

Furthermore, the uses of the term corporate governance in business practitioners has

increased rapidly in recent years, this concept emerged about fifteen years ago but the

theories led to the development of this term have been there ever since and they have been

used in different disciplines such as: “finance, economics, accounting, law, management, and

organization behavior” (Mallin, 2010). Moreover, the important point to bear in mind is that,

the emergence of corporate governance happened worldwide and it involves very difficult

sections like “legal, cultural, ownership, and other structural differences” therefore these

theories may not be suitable and appropriate to all countries (ibid). Hence, each country set

its own corporate governance according to its environment.

Moreover, Tickers (2009) insist that: “corporate governance, as yet, does not have single

widely accepted theoretical base nor accepted paradigm …the subject lacks a conceptual

framework that adequately reflects the reality of corporate governance”. In other words, when

looking at the disciplines and theories that inspired the development of CG such as

management, law, economics, accounting and finance, agency theory, stakeholder theory,

stewardship theory, culture and ownership, one can conclude that although CG is a

mechanism by which companies achieve their objectives; however, CG still complex,

14

suffering from the lack of theoretical foundation. Moreover, the aforementioned point

signifies why CG differs from country to another.

Conventionally, corporate governance set the rules regarding how decisions are made in the

business using internal structures of the company. This sets of rules and regulations helped to

build relationships among “boards of directors, shareholders and managers” and settle agency

problems. Basically, the traditional viewpoint of corporate governance has changed after the

collapse of Enron, and now the concentration is stressed on the issues that were beyond that

viewpoint like “corporate ethics, accountability, disclosure and reporting.” This is because

the companies want to prove to the investors and shareholders that they are committed to

transparency and accountability of the corporation that is why they are practicing fairly and

honestly the corporate governance principles (Gill, 2008).

Recently, the corporate governance phenomenon has become significant to many

corporations as it assist to enhance economic performance of the corporations through

governance components such as transparency, accountability and disclosures. Moreover, the

development of corporate governance assures the safety of investor’s funds and hence attracts

more investors to the firms and maintaining the current ones.

Furthermore, Hampel report (1998) reveals that: “the directors as a board are responsible for

the relations with stakeholders; but they are accountable to shareholders”. As a consequence,

being responsible for investors and stakeholders’ interest at the same time makes the directors’

role intertwined and that may confuse the directors; moreover, it would be very hard to

specify which stakeholder group should be given the priority and the extent of the

responsibility.

Moreover, Gill (2008) argued that the movement of CSR has developed the concept of CG as

the mechanism for the management to take a wide range of ethical responsibility whereby

recently, it managed to make companies “balancing shareholder goals with the need to reduce

externalities that impact other stakeholders” (p.454). The CSR has made corporations more

concerned about environment and society by practicing CG as a means for the boards and

executive staffs to address employees, societies and customers in the same way as

stockholders (ibid).

Consequently, big companies have established framework of CG that attempt to make

“investor accountability and stakeholder engagement”, some of these framework include

committee board relating to CSR issues, “corporate codes of conduct, non-financial reporting

practices, and stakeholder complaint and dialogue channels” and many others. All these

15

governance components are usually created on a voluntary ground under “corporate self –

regulation” (Gill, 2008, p.454).

3.2 Definitions of CSR.

The concept of Corporate Social Responsibility has no consensus definition yet, different

scholars and institution have defined CSR differently. For example, CSR concept was defined

by European Commission (2001) as “a concept whereby companies integrate social and

environmental concerns in their business operations and in their interaction with their

stakeholders on a voluntary basis” (p.3). According to World Business Council on

Sustainable Development (2000), CSR means; “the continuing commitment by business to

behave ethically and contribute to economic development while improving the quality of life

of the workforce and their families as well as of the local community and society at large” (p.

8).

All these definitions imply that the CSR concerning about the company paying back to its

surrounding communities and other stakeholders. Furthermore, CSR emphasis that company

should not pay attention only on maximizing profit but also consider a good care for

communities and environment. The issue of environmental mitigation and protection of

customers should be among company priorities. Furthermore, the company should take care

of the social and environmental impacts caused by its business practices. However, this

perspective was criticized by Friedman (2007), who argued that the company has the sole

objective that is to maximize the profit for its shareholders. This perspective was greatly

defended by various researchers in the field of CSR which contend that CSR is the concept

that company practicing beyond the economic motives and legal requirements.

The idea of CSR is not new concept in the business practices; it has emerged since very long

time back to 1950s. During the early 1950s CSR concept was basically concentrated on the

businesses to practice good things for the community. During 1980s the organizations and

community interests coincided and organizations began to being responsible to their

stakeholders. From 1990s, the popularity of the concept of CSR increased dramatically and it

was accepted worldwide as a significant company’s business strategy (Moura-Leite, 2011).

The earlier scholars argued that CSR includes making decision and the use of different

resources on the issues like pollution, poverty, racial discrimination and any other social

difficulties (Carroll, 1979).

16

Previously many companies took CSR practices as something to be included in their annual

reports. It was not considered as something important to be incorporated into business

strategy (Vogel, 2005). The CSR concept is focused on the idea that business and society are

interrelated elements; therefore the community anticipates something from the business

practices and outcomes (wood, 1991). The significance of Corporate Social Responsibility is

increasing at increasing rate recently. CSR has great affects on how customers comprehend

the companies and therefore it assists the companies to face a stiff competition (Chaudhry &

Krishnan, 2007).

Carroll (1979), developed three-dimensional corporate social performance model explained

CSR as the responsibility that includes economic, legal, ethical and discretionary

expectations that society anticipates from the company at a certain time. Economic is the

heart of social responsibility of any business because it has the duty to make goods and

services available to the society as per their demands at an appropriate price to enable the

company to earn profit. Under legal perspective the company are supposed to comply with

the laws and regulations enacted in the society in doing its normal business operations. Apart

from complying with the laws and regulations, business are expected to go further by

practicing their business ethically, even though the word ethical is ambiguous, the society

anticipates the company to conduct their business above what is required by laws and

regulations such as producing healthier and safer products. The discretionary category entails

that social responsibilities remain to the judgment and choice of businesses management for

example philanthropic contributions (Carroll, 1979).

Later on in 1991, Carroll introduced CSR pyramid with the main focus on four different types

of social responsibilities: Economic, legal, ethical and philanthropic. These forms of

responsibilities are not new phenomenon, they have been available ever since, but lately the

significance of the ethical and philanthropic responsibilities has highly increased. Economic

is the cornerstone on this pyramid as it braces up all other elements. Legal component

suggests that the business has to comply with the law; ethical responsibility means that the

company has “to do what is right, just and fair and to avoid or minimize harm to

stakeholders”. Through philanthropic responsibility community expects the company to be a

good corporate citizen by paying back to the society in terms of financial aids and in kind in

order to improve the quality of life (Carroll, 1991). See figure 1 below:-

17

Fig 1: The Pyramid of Corporate Social Responsibility (Carroll, 1991, p. 42)

3.3 The triple bottom line (TBL)

Theoretically, Štreimikienė & Jakubauskienė (2012) reveal that the term sustainable

development is all about ensuring the basic needs for people in the present, and also in the

future “future generations”. Therefore, the concept “sustainable development” shows that:

“our economy, environment and social well-being are interdependent”, (cited in Štreimikienė

& Jakubauskienė, 2012, p. 589).

It is obvious that being ethical is a fate in doing business, since unsustainable business

practice damages the environment, and causes lack of resources in the future which

discontinue economic development; in addition unsustainable business: “affect the quality

of life for people”, (ibid). Furthermore, Coombs & Holladay (2012) insist that the “triple

bottom line” refers to people, environmental, and economic issues. Therefore, the triple

bottom line of CSR is about sustainable development in business practice and how business

18

organizations manage environmental, social, and economic responsibilities. In this context,

Enquist & Johonson (2006) reveal that business organization nowadays interested in the

development of CSR, for the reason that stakeholders such as customers, governments, NGOs,

environmental activists, etc, demand more transparent, ethical and environmentally friendly

business practice. For that reasons, the implementation of CSR has become an integral part of

sustainable business as it explained in the following sections:

3.3.1 Economic Responsibility

According to Carroll (1991), economic responsibility leads companies to compete and

maintain their survival in business field. Therefore, wealth creation that maximizes

shareholder’s value and other economic benefits are a substantial motive for business

organizations to survive in business arena. Furthermore, Williams et al (2006) reveal that

stakeholder’s demands or expectations can be achieved through: “adopting progressive

human resource management practices” (p. 1). In this context, Tang et al (2012) insists that a

positive relationship exist between CSR and companies’ financial performance i.e. CFP,

because CSR implementations lead to: “improve firm– stakeholder relationships and enhance

the firm’s reputation among customers, employees, regulators, and suppliers”. (p. 127). Thus,

besides creating economic benefits, CSR implementation maintains firm’s reputation which

is a fundamental aspect for a firm to compete and survive in today’s business practice.

3.3.2 Social responsibility

Social responsibility attributes to the benefits that the community generates from business

practices. In this context, Rogers et al (2008) shows that business organizations can affect on

the society through their business practice and CSR implementations, whereas the society in

turn affects on business organizations through practicing their rights.

Moreover, Friedman has shown that: “There is one and only one social responsibility of

business—to use its resources and engage in activities designed to increase its profit so long

as it stays within the rules of the game, which is to say, engages in open and free competition,

without deception or fraud”, ( Cited in Coombs & Holladay, 2012, p. 83). According to the

aforementioned point of view, the primary objective of business organizations is to benefits

shareholders through making money which in turn does not set aside social concerns, since

“stakeholders shapes the action of business” through customer behaviour and investment

19

behaviour which means organizational financial concerns and social responsibility are

integral or are complementary.

According to Aluchna (2010), stakeholders nowadays are aware and paying attention to the

effect of companies’ business practice; that is the reason why more expectations and demands

are placed on companies. Therefore, the primary and secondary stakeholders such as

customers, government, interest group, local community, etc, should be regarded when doing

business even if they are not essential for company’s survival.

3.3.3 Environmental responsibility

According to Coombs & Holladay (2012), the primary function of business is to make money

for shareholders which in turn results in job opportunities, tax revenues, etc ; however, some

kinds business practices effects on the environment, therefore: “businesses must consider

their effects on the natural and social environments” (p 81). Moreover, when it comes to

multinational companies, environmental responsibility becomes a complex problem and

challenge since: “multinational corporations face levels of environmental and social

responsibility higher than their national counterparts, because of the two mechanisms of

international reputation side effects, and foreign stakeholder salience”, (Zyglidopoulos, 2002,

p. 148). In addition, compared to national companies, environmental responsibilities of

multinational corporations (MNCs) should comply and be compatible with the law of the

country in which the organization operates; since laws and regulations differ from country to

another. Therefore, multinational organizations face more challenges, since companies need

to please various stakeholders groups who differ in their expectations and demands from

companies across countries; moreover, companies must comply with legal issues which is

also differ among countries according to codes of conducts; and maintain their reputation as

well, (ibid)

However, environmental responsibility regarded as impenetrable barrier for profit

maximization; as evidence: “most of the methods, concepts, ideas, theories, and techniques

used in business do not put business, ethics, and the environment together”, (Freeman et al,

2012, p. 3), perhaps the reason for this is due to the fact that business language is

predominating directed to see ethics as a problem in doing business, especially when it comes

to maximizing business profits; in other words ethical business reduces profits i.e. they are

not compatible at all, (ibid).

20

Regardless the aforementioned obstacles, nowadays business organizations highly response

to ecological issues and “go green” in doing business, because there are many reasons and

motives that compel companies go green for instance: “regulatory compliance, competitive

advantage, stakeholder pressures, ethical concerns, critical events, and top management

initiative”, (Bansal & Roth, 2000, p. 717).

3.4 Stakeholder theory.

The stakeholder theory was introduced by Freeman (1984) in corporate strategy by

contrasting the traditional definition of stakeholder which include only owners or

stakeholders of an organization. Freeman (1984) defined the term stakeholder widely as “any

group or individual who can affect or is affected by the achievement of the firm’s objectives”

From this broader definition stakeholders may include customers, suppliers, government,

employees, communities and environmental activists, etc.

Additionally, stakeholders are generally categorized into primary and secondary stakeholders.

Clarkson (1995) defines a primary stakeholder group as “the one without whose continuing

participation the corporation cannot survive as a going concern,” the primary stakeholders

including “shareholders and investors, employees, customers and suppliers, together with

what is defined as the public stakeholders groups: “the governments and communities that

provide infrastructures and markets, whose laws and regulations must be obeyed, and to

whom taxes and obligations may be due''. The secondary groups were defined as “those who

influence or affect, or are influenced or affected by the corporation, but they are not engaged

in transactions with the corporation and are not essential for its survival” (p.106). For

example the media and other special interest group such NGOs.

Consequently, the pressure from stakeholders rather than stockholders to corporations to meet

their expectations for making social responsible decision has been rapidly increased, for

example the pressure from the public to have cleaner environment, many countries have

developed complex environmental regulations, therefore any company enters global market

has to get prepared to face its environmental concerns (Clement, 2005). Moreover, “The basic

practical idea of stakeholder theory is that the success of a company is very dependent on

smooth cooperation with its stakeholders”, (Tullberg, 2013, p. 128). Moreover, when

company operates to maximize the profit should not involves activities that may harm and the

social welfare; Laczniak & Murphy (2012), argued that the firms should act in an

“accountable and socially sustainable manner without causing damage to the physical

21

environment or the social exploitation of stakeholders” when struggling to earn a

“competitive return on investment for shareholders” (p.288). Therefore, the corporations have

to meet the needs and wants of their stakeholders very attentively.

Moreover, stakeholder theory is idea of the social contract, which argues that CSR is a

function of current terms of general agreement between business and society. These terms

have experienced basic changes recently meaning a wider corporate commitment to the

surrounding community. This theory goes above the narrow viewpoints of cost considerations,

profit making and compliance in the short run (Dunfee et al., 1999).

Furthermore, it contends that organizations are not only responsible to their stockholders but

also accountable to different groups in the society which have interests in the corporations

because corporations’ operations and decisions affect societal interests and similarly societal

decisions also affect corporate interests. This theory considers that corporations have a vast

power base in society, both in financial and political terms. If organizations do not perform

their social responsibility very attentively, consequently, they will be punished in terms of

“increased regulatory compliance, fines, lost business and corporate image in the long term”,

as a result they may lose their significant power and influence on the community. “The

stakeholder theory takes into account the possible profit potential arising out of social

commitments in the long run, in terms of increased market share, positive customer ratings

and loyalty” (Quazi, 2003, p. 823).

3.5 The role of NGOs

NGOs are special group of stakeholders whose main objective is to safeguard the rights of

other stakeholders, it is responsibility of NGOs to point out some issues in the business

enterprises that go contrary to the laws and regulations and they are socially irresponsible.

Lantos (2002) argued that the primary purpose of NGOs is “the promotion of social and/or

environmental goals rather than the achievement of economic power in the marketplace”.

Many local and international NGOs play a great role in making sure that energy company are

doing their operations sustainably, among others include Worldwide Fund for Nature (WWF),

Conservation International, Amnesty International, Fridtjof Nansens Institutt (FNI), and

Greenpeace. NGOs play a critical role between the companies and outside stakeholders, and

sometimes act as watchdogs for the environment. All these organizations individually or

collectively do something to protect the nature and the environment, all these efforts have

great impacts on sustainability as they force business enterprises especially those in oil and

22

gas industry to stay in line with preserving nature and environment. In this study, we will use

some of these NGOs viewpoints to analyze our case; this will help us to see to what extent

BP’s sustainability reports diverge from reality.

3.6 The New Governance – the convergence of CG and CSR

According to Gill (2008), the convergence of CG and CSR relies on the background of “New

Governance Theory” that comes from the participation of private sector in regulation and

policy strategies. Previously, the formal regulatory power was centralized due to the

ownership structure which was the state ownership. As a result of globalization and economic

transformation the regulatory power became decentralized; moreover it has been substituted

by: “mixture of public and private, state and market, traditional and self-regulation

institutions that are based on collaboration among the state, business corporations, and

NGOs”, (p. 464). Therefore, it can be argued that the new governance driven by market

orientation that compels transparency, disclosure, non-financial reporting, etc, (ibid). The

most challenge that face the new governance is how to inspire a suitable atmosphere for the

new players in governance process to work effectively. However, the new governance needs

stakeholder enforcement, it also need from business organizations to follow up stockholders

and non-shareholders stakeholders aspirations for accountability, (ibid). Moreover, according

to Bamberger & Mulligan (2011), a considerable attention has been paid to: “new forms of

governance that promote regulatory ambiguity, diversity, and reversibility; ….that rely on

transparency to create legal and market pressures for compliance”, (p. 477).

However, CG & CSR has become in line with new governance; while CG developed further

from concentrating on agency problems to manage issues such as: “ethic, accountability,

transparency, and disclosure” to protect shareholders and non-shareholder stakeholders,

(Mallin, 2010); CSR demonstrates responsibility toward social and the environmental

issues, creating benefits not only for shareholders but also for many stakeholders groups,

(Elkington (2006). It is obvious that CG & CSR adapt business practice by ethical norms,

accountability and stakeholder friendly strategies. This point reveals that CG & CSR

complement each other to perform responsible business that accommodate benefits for

shareholders, non- shareholder stakeholder’s protection, in addition to social and

environmental concerns, (Gill, 2008). Therefore, the new governance manages: “self-

regulation and meta regulation” in which governance interlinked with responsibility i.e. CG

& CSR interaction, (Gill, 2008, p. 466).

23

3.6.1 Self-Regulation

According to Gil (2008), the notion of self-regulation has gained special attention from

international agencies and business enterprises as it stand out as a suitable ersatz to the formal

regulatory power i.e. governmental regulation. Substantially, the most effective instruments

in self-regulation are “codes of conduct and none financial reporting trends”, these trends

illustrate how governance connects with responsibility, since self-regulation exposes business

practice with a mixture of regulatory principles. Therefore self-regulation is a canal for

convergence between CG and CSR, (ibid).

Basically, Hsieh (2006) reveals that codes of conduct appoint the work to be performed by

MNCs when there is a battle or dispute between business organization and the society;

furthermore, codes of conduct: "have become de rigueur for all MNCs that profess to be good

corporate citizens and to conduct their operations in a professional and socially responsible

manner", (p. 119). Therefore, it can be argued that codes of conduct manage corporate ethics,

moral directives, and CSR elements such as sustainable development, human rights, (Gill,

2008). Notwithstanding that codes of conducts have prominent role in self-regulation; they

are not free of criticism, for instance in connection with new governance, self-regulation

relies on the free market ideology which is complex in making revision and changes; in

addition, codes of conducts have failed to enhance corporate behavior around the world,

(ibid).

Equally, “non-financial reporting trend” which release periodically on voluntary basis by

business organizations is also an effective instrument in self-regulation because this trend

cover corporate policies such as CG & CSR policies and assure transparency, disclosure

especially environmental issues; moreover, it opens canals for dialogue with non-

shareholders stakeholders that encourage accountability. Therefore, non-financial reporting

trend connects governance with sustainability, (Gill, 2008; Hess, 2008).

3.6.2 Meta-Regulation

It is obvious that self-regulation happens in voluntary basis through corporate codes of

conduct and non-financial reporting. However, to be dynamic and effective, self- regulation

needs an involvement of external actors or supervisors who cause Meta-Regulation.

Therefore, meta-regulation achieves through the involvement of social groups in regulatory

process for example non-shareholders stakeholders such as media, NGOs, etc. (Gill, 2008). It

24

can be argued that meta-regulation resembles to great extent self-regulation as a tool of

interaction between CG & CSR in creating regulatory trends, (ibid).

According to Shahin & Zairi (2007), CG has developed step further from focusing on

protection and value maximization of shareholders and stakeholders to open canals for

dialogue with stakeholders which reveal the interaction between CG & CSR. Furthermore,

both CG & CSR comprises concepts which make it very difficult to distinguish between them

for example stakeholder engagement, social responsibility, sustainability, non-financial

reporting, etc. Furthermore, the convergence between CG & CSR has become pivotal in

nowadays business practice, particularly in MNEs; as evidence: “CSR, corporate governance

and their interlink seem particularly relevant for multinational enterprises” (MNEs), (Klok &

Pinkse, 2010, 15), for that reason it is not voluntary any more to disclose socio-legal issues i.e.

non-financial reporting, moral commitments, and activities such as stakeholder dialogues,

(Gill, 2008; Hess, 2008).

3.7 Summary

Theoretical framework of this thesis introduced different theories and concepts that found

appropriate to our topic. We reviewed the development of CSR and its main pillars; three

bottom line of CSR which are economic, social and environment, and how they affect the

business practices. Moreover, we discussed the emergence of new governance and how it can

shape the company through Meta and self regulation. The theoretical section was concluded

by discussing stakeholder theory and its implications to the adoption of CSR practices in

companies.

25

CHAPTER 4: EMPIRICAL

4.1 Introduction

In this chapter we will introduce the implementation of CG and CSR concepts in BPs’

viewpoint, we are going to explain briefly what CG and CSR means to the company,

different strategies and activities done by the company under the umbrella of these two

concepts will be analyzed. What effort BP is taking to ensure that it operates sustainably. BP

Company was founded 1908, it is a large multinational oil and gas company operating in

more than 70 countries with 86000 employees, headquartered in London, United Kingdom.

This company is among largest companies which are dominating oil industry in the world

such as ExxonMobil and Shell Group. Previously, its name was “British Petroleum”.

However, 98.25% of its shareholders have voted to change the name to BP or “Beyond

Petroleum” in the AGM in 2001.

4.2 BP governance

The governance of BP is centered on the board of directors which also has the direct

reflection on its subsidiaries’ governance. The BP developed board governance principles to

help the board and its executive management to conduct their activities in an acceptable

governance framework. Moreover, these principles explain the relationship between the

board with shareholders and executive management, how board should perform its activities

and board committee’s works and its requirements, (BP, 2013).

BP board of directors consists of 15 members, a chairman of the board, four executive

directors and ten non- executive directors. The BP’s governance framework requires the “the

non-executive directors to be independent in character and judgment and free from any

business or other relationship which could materially interfere with the exercise of their

judgment.” The board through its usual board meeting ensures the existence of independence

for the non-executive directors and there are no conflicts of interest for those directors who

save other entities outside BP. “The nomination committee keeps under review the nature of

non-executive directors’ other interests to ensure that the effectiveness of the board is not

compromised” (BP annual report, 2012, p.112).

Moreover, BP emphasis the importance of diversity especially gender in all managerial levels

in the company and the board. The company devoted to boost diversity all over its operations

and currently it has varieties of operations “to support the development and promotion of

26

talented individuals, including women”. In 2011 the board agreed to increase the participation

of women in the board “by two by 2013 and aspired to reach his recommendation of 25%

female board representation by 2015”. In 2012, the nomination committee confirmed to

implement diversity policy set by the board, which involves split of gender and “geographical

background” of the member. Currently, the board has two female members out of 15

directors and among them, six are from UK, five from USA, two from Europe, one from the

rest of the world and the other one has dual citizenship of US and UK (BP annual report,

2012, p.113).

Furthermore, the board is externally evaluated annually to ensure transparent and

effectiveness of its operations; the crucial sections that are tested by external legal counsel

include “strategy, monitoring, risk and governance processes”. This evaluation also measures

the balance of “skills, experience, independence and knowledge of the company on the board,

its diversity (including gender)”. Annual general meeting is held annually and “webcast and

advance electronic and paper voting services” as given as shareholders scattered all over the

world, (BP annual report, 2012, p. 115).

In order the company to operate in good governance manner, the board established various

board committees to enable the board to perform its activities efficiently and effectively, the

board committees include nomination committee, remuneration committees, chairman’s

committee, Gulf of Mexico committees, SEEAC and Audit committee. The roles and

composition of these committees are explained in brief in the following paragraphs.

Audit committee is always composed with non-executive directors from four to six; these

directors are appointed to offer the maximum expertise on the areas of financial, audit,

international and commercial so that the committee’s responsibilities are achieved perfectly.

This committee has various roles including the obligation to review “the effectiveness of the

group’s financial reporting, internal control policies and procedures for the identification,

assessment and reporting of risk”. It also supervises the integrity of the different disclosure of

BP’s documents, maintains the relationship “with the external auditors under review

(including the policy on non-audit services) and monitors the effectiveness of the internal

audit function”. However, the committee ensures that the auditor objectivity and

independence are maintained, by constraining “non-audit services to tax and audit-related

work that fall within defined categories”, (BP annual report, 2012, p121).

Another committee is Safety, Ethics and Environment Assurance Committee (SEEAC), this

committee is also composed with non-executive directors from four to six; the SEEAC has

27

the role to analyze the procedures taken by BP’s executive management to “identify and

mitigate significant non-financial risk, including monitoring process safety management”, it

also obtains assurance that they are suitable for the “design and effective” for the

implementation (BP annual report, 2012, p.123).

The Gulf of Mexico committee is another board committee that composed with members

from the SEEAC and the audit committee. Since 2012 the membership structure of this

committee was changed and nowadays it includes three non-executive directors based in US.

The main objective of this committee is to give non-executive “oversight” of the Gulf Coast

Restoration Organization GCRO; to supervise the “management and mitigation of legal and

license-to-operate risks” that resulted from the Deepwater Horizon accident and its

accompanying response; and to enhance the efforts that help to revive the trust and reputation

of BP, with a special concentrate on the US. (BP annual report, 2012, p. 124).

Other board committee is nomination committee which is build up with board chairman and

the chairmen of the SEEAC, audit and remuneration committees. The committee has the role

to “identifies, evaluates and recommends” potential candidates to be appointed or appointed

in the second time in both the directorship positions and secretary of the company. The

committee with the help of committee chairman always make regular follow-up to ensure that

combination of “knowledge, skills and experience of the board” is maintained; this helps

proper succession of board members. The committee also supervises the nomination of

external directors and the wider commitments of non-executive directors. These works is

revisited and approved each year, (BP annual report, 2012, p.125).

Chairman’s committee is composed of the chairman and all the non-executive directors. The

main responsibilities of the committee are; to examine the “performance and effectiveness”

of the senior executive of BP group. To reexamine the “structure and effectiveness” of the

organizational business of BP, to reexamine the organizations of chief executive development

and decide about taking over plan for the group senior executive, executive directors and

other senior staffs of administrative management, (BP annual report, 2012, p.126).

Apart from all other mentioned committee, there is another important committee which is

remuneration committee. This committee should have at least three non-executive directors.

Furthermore, the committee has the main responsibilities on behalf of the board to ascertain

the “terms of engagement and remuneration of the group chief executive and the executive

directors and to report on these to the shareholders”. Other task includes reexamination and

approval of the policies and activities in rewarding all senior executives except executive

28

directors to ascertain “alignment and proportionality”. It also makes recommendations on

how the board’s chairman remuneration should be. This committee is doing its activities in a

high level of independence, all committee members must be independent without any conflict

of interest in the decision made by the committee like financial interest except shareholder’s

interest, (BP annual report, 2012).

All above mentioned governance framework is consistence with the UK corporate

governance code with the exception of three areas in which BP is not fully complying to the

UK corporate governance code which are; UK code requires the letters of appointment to

have fixed time commitments but BP governance does not have this requirement because

they do not have fixed schedule for board and committee meetings, All directors are required

to show their commitment to the tasks of the board on continues basis. Another area is the

chairman remuneration is not determined by remuneration committee as UK code requires.

The committee only makes recommendations and final approval lies on the hands of board

under consideration of the limit set by the shareholders. The last part that the BP governance

is not complying with UK code is on the copy of annual report; UK code wants the report

copy to be mailed within the period of twenty working days before the annual general

meeting.

4.3 BP corporate social responsibility

As far as we know oil industry in general, BP Company particularly has faced considerable

debates and controversies regarding its unsustainable business practice that causes mining

crises, environmental violation, greenhouse gas emissions, etc. These crises affect negatively

in the environment and disregard many stakeholders’ quality of life; moreover environmental

crisis such as climate change would affect the availability of resources in the future. For that

reasons, BP Company strives to apply the term “Sustainable development” in which

economic, social, and environmental concerns manage effectively to perform ethical and

responsible business; more specifically: “BP’s objective is to create value for shareholders

and supplies of energy for the world in a safe and responsible way”, (BP sustainability report,

2012, p. 5).

To put it clearer, according to sustainability report (2012) we found that the company’s

objectives in doing business include shareholder’s value, safety in practicing oil industry, risk

management. Furthermore, the objectives include preserving trust interior and exterior

“within and outside the company” by being fair, transparent, and conduct open dialogue with

29

various stakeholder groups; moreover, supplying alternative energy for people which bolster

economic development and improves people’s quality of life

The aforementioned objectives and activities reveal beyond doubt that the company is trying

to perform sustainable business by addressing the triple bottom line of CSR “economic,

social and environmental responsibilities” which can be illustrated more as follows:

4.3.1 Economic responsibilities

BP’s business model enables the company to perform many economic activities which is in

line with CSR dimensions in creating value for stockholders and stakeholders, for instance:

“Through our business model we aim to create value… we seek to add value at each stage of

our operations, from exploration to marketing” (BP annual report, 2012, p. 15). Moreover,

this model manifests that the company’s wealth creation more efficiently accompanied by

economic benefits for various stakeholder groups, as evidence: “Our activities also generate

jobs, investment, infrastructure and revenues for governments and local communities”, (ibid).

Currently, the company is trying to reposition itself by executing ethical business, and create

economic benefits for stakeholders while maximizing shareholders’ value by wealth creation.

In this sense, it is true that the main BP’s product is oil which is unsustainable product;

however, to be regarded as a sustainable, the company seeks for other revenues which can be

described as sustainable business practices by which wealth is created and shareholders’

value is maximized, and stakeholders’ demands are met, for example the investment in

renewable energy, in this sense the company announced that: “We develop and invest in bio

fuels and wind. BP’s low-carbon businesses and investments in future options are operated

through our alternative energy business”, (BP sustainability report, 2012, p. 3). This kind of

investments have two benefits i.e. increase the economic benefits by creating wealth for

shareholders; moreover enables the company to perform sustainable business for as long as

oil and gas industry regarded as unsustainable business practice.

4.3.2 Social responsibilities

It is true that stakeholders’ awareness of their right has led companies, especially

multinational companies, to perform socially responsible business; therefore, accompanying

stakeholders’ demands is a fate, and is one of the success factors in business arena.

According to BP sustainability report (2012), to manage its operational impact, the company

regards various stakeholders groups including the local community in which the company is

30

operating; as evidence: “To BP, working responsibly means seeking to have positive impacts

on the areas where we operate by managing our activities and impacts in a systematic way”,

(p. 40). In other words, managing operational impacts come from BP objectives to avoid

unfavorable impacts of business practice in the community; moreover, to construct an open

and robust relationships with various groups of stakeholders; in addition, to honor human

rights and avoid any abuses that impinge the society’s safety.

To achieve these goals, BP company intends to handle, in voluntary basis, socio-economic

effects that have positive consequences in: “peoples’ health, wellbeing, culture and

livelihoods”, (p. 41). In this sense, BP aims to benefit the host communities by offering job

chances and ameliorate their representation in its workforce, as evidence: “we have provided

internships for 125 University of Alaska students and extended full-time offers to more than

140 students”, (BP sustainability report, 2012, p. 43). Furthermore, in some business

locations, BP run some programs to develop the skills of the local suppliers to enhance the

standard required for supply, for example: “BP’s Enterprise Development and Training

Programme (EDTP) in Azerbaijan is designed to support local companies’ efforts to achieve

international standards, enhance their competitiveness in supplying the oil and gas sector”,

(BP sustainability report, 2012, p. 43).

Moreover, BP support local communities by executing some programs which known as

“Community investment”; this program has meaningful impact on the local community. One

of these programs is “Enterprise investment” in which BP works with local banks in many

countries to provide loans “capital” for SMEs. Also, under the program “Community

investment”, the company executes educational programs in the regions where the company

is operating, for example BP’s educational program in Angola, for example: “Angolan

Association for Visually Impaired and Partially Sighted War Victims in the Alpha-braille

project”, (BP sustainability report, 2012, p. 43). In addition, “Community investment”

program comprises issues like helping the local communities by offering access to its energy,

for instance: in Georgia, the company provides some buses by free energy, also in Angola the

company provide the schools by “solar power, clinic, and water”. Furthermore, the company

executes “Community program on health” in order to alleviate the operational impacts on

health, for example the company has executed more than 500 eye operation in Egypt.

Equally, according to sustainability report (2011) the company used to offer some livelihoods

to stakeholders in responsible manner, especially those who affected largely by company’s

31

operation, these livelihoods lasts even if the company stops its operation in the region, for

example “fishing and farming” livelihoods provided by the company in Indonesia, (p. 43).

It should be noted that, the aforementioned social activities executes in voluntary basis to

keep in touch, and maintain open and constructive dialogue even with: “all relevant

government agencies, ministries and regulatory departments at every stage of our presence in

a country”; moreover, BP’s direct spend on societal programs in 2012 was about $90.6

million encompassing disaster reliefs, (BP sustainability report, 2012, p. 43).

4.3.3 Environmental responsibilities

When it comes to environmental responsibility, oil industry in general, multinational

companies such as BP particularly have a very ugly picture for environmental violation

caused by its business practice. For the reason that many researches assure that oil industry

companies have large contribution in environmental problems; in addition, stakeholders

know about the impact of business on the environment; the company intend to reframe its

business practice using some makeup to improve its appearance, especially when the issue of

climate change get into the surface, and became a serious problem to all organisms, and even

threaten its existence on earth.

According to sustainability report (2012) we found that sustainable business practices, and

managing environmental issues are challenges that faces BP Company, in this sense:

“Today’s challenge is to manage and meet growing demand for secure, affordable energy

while addressing climate change and other environmental and social issues”, (p. 10). The

aforementioned challenges have led the company to take many steps to conduct

environmentally friendly business practices to repair its reputation and respond to

stakeholders’ demands as follows:

To practice ethical business and comply with the law, BP issued the code of conduct

in 2005 to create safety, respect, excellence, courage, and work as one team. The code

of conduct regarded as guidance for BP workforce to perform sustainable business

practice, as evidence: “Our Code represents our commitment to do the right thing,

including respecting the rights of others”, (BP code of conduct, 2011, p. 8).

Since oil industry is an unsustainable business practice, BP strove to conduct

sustainable business to be as an alternative income stream which known as alternative

energy that includes “biofuels and wind energy”, which can be illustrated as follows:

32

1. BP produces biofuels which is sustainable energy, and at the same time it is an

alternative income stream. Moreover, it is: “deem to be affordable, low carbon,

sustainable and scalable”. BP investment in biofuels has increased in 2012, for

instance the extraction of ethanol miles from sugar cane in Brazil was 7.2

million tons, and the company is struggling to increase this kind of business in

the future, (BP sustainability report, 2012, p. 15).

2. Furthermore, BP uses wind business to produce sustainable energy, i.e

producing energy using wind farms. BP is a leading company in such business,

especially in the USA in which the company has about “16 wind farms in nine

states”, (BP sustainability report, 2012, p. 15).

BP has planned to achieve the growth rate “7.6 % each year” in renewable energy in the

period 2011 - 2030. The total spend in alternative energy between 2005 and 2012 is about

$7.6 billion. It should be noted that alongside producing sustainable energy, this king of

business have tangible financial benefits to the communities in which the company is

operating, i.e. job creation for local communities, (BP sustainability report, 2012, p. 11) .

The company has implemented an effective a program to reduce the direct

“operational Greenhouse Gas” emissions. According to sustainability report (2012),

the direct reduction of greenhouse gas emission in 2012 was 2 million tons. See

figures 2 below:-

33

Fig.2: Greenhouse gas emissions (Mte CO2 equivalent) Source: BP sustainability, 2012, p.

36.

Moreover, the company has water management program because BP Company uses

the water in both sustainable and unsustainable business practices, for that BP treats

the water waste and then discharge it back to the environment after it is being used in

the operational practices, (sustainability report 2011), since: “40% of BPs operations

are located in areas where the availability of fresh water is considered stressed or

scarce” (sustainability report, 2012). Furthermore, in 2012 the company has delegated

Harvard University to do research on water distribution and use in United Arab

Emirates, Jordon, Oman, and in Iraq.

4.3.3.1 Gulf of Mexico oil spills

On April, 2010 an accident occurred in the Gulf of Mexico as a result of gas discharges and

subsequent explosion which took the life of eleven people and many others injured. The

accident happened due to the “failure of well integrity, loss of hydrostatic control of well

followed by a failure to control the flow from the well with the blow out preventer (BOP)

equipment, which allowed the release and subsequent ignition of hydrocarbons. Ultimately,

the BOP emergency functions failed to seal the well after the initial explosions” (BP, 2013).

34

Nevertheless, the company accepted the responsibility for the clean-up of the environment

under the guidance of federal government, the company used different tools and technologies

to clean both offshore and shoreline of the Gulf, for example used “offshore skimmers and

shallow water equipment to skim the oil from the surface of the water”. To ensure that

excessive oil does not reach the Gulf shoreline, BP used dispersants; “dispersants act like

dishwashing detergent, breaking up oil into smaller droplets that are more easily dispersed

and can be consumed more quickly by microbes. The dispersants used in the deep water

horizon response degrade naturally in the environment” (BP, 2013). All these dispersants

were approved to be used in the oil spills clean up by the National Contingency Plan Product

and the Environmental Protection Agency (EPA) (ibid). According to the company, the area

was closed until responsible authorities satisfy themselves that the seafood is safe to the

human health.

Moreover the company agreed to compensate those people affected by the consequences of

that incident, including taking care of the health, safety and welfare of the people along Gulf

coast. Furthermore, BP in collaboration with other natural resources institutions conducted

researches to examine the impact of the incident to the natural resources in the area. Up to the

end of 2012, the company had spent about 14 billion USD for these purposes. However, BP

still have long term commitment to provide funds to independent researchers to get more

insights about the ecosystem of the Gulf of Mexico and to understand the better way to

reduce the possible impacts of oil spills within the area and any other place (BP, 2013).

4.4 Stakeholder engagement

BP has a wide range of stakeholders groups from individuals to organizations who are

affected directly or indirectly by the activities of the company. These groups include local

communities, governments and regulators, shareholders and analysts, customers, employees,

contractors and partners, non-governmental organizations in this industry. BP feels

responsible to improve the life of its stakeholder especially local communities. The company

engaged with stakeholders in different ways and levels from the questions raised through

their website to physical meeting with various stakeholders. Furthermore, the interactions

between company and each stakeholder are clearly provided in the online reports (BP

sustainability report, 2011, p.28).

It is very important for the company to have a talk with local communities since it helps the

company to understand the impacts on local communities caused by its operations. Moreover,

35

it also assists the company to know the wider possible environmental and social effects of its

activities. It is important that the interaction with local community starts as far as project

started and goes on until the lifetime of the project as these projects are expected to provide

some effects in the local society like “jobs, support for local development and capacity

building for local suppliers” (BP sustainability report, 2012, p.25).

Furthermore, the company has primary obligation to inform its shareholders what is

happening in the company, shareholders is informed about any progress made in the company

through normal dialogue and feedback. The official engagement with shareholders is done

through annual general meeting and other events such as “road shows, webcasts and one-to-

one meeting”. Not only shareholders need to know about the company but also employees;

BP has about 86,000 employees in more than 70 countries therefore, they need to know about

circumstances within which they are working. To make this happens; the company

established a wide range of “internal communication channels” (BP sustainability report,

2012, p.25).

Non-governmental organization (NGOs) is very important stakeholder especially in energy

industry as it plays great role to help the company to practice in such a way that no one get

hurt because of its operations. Because of this, the company keeps consulting appropriate

local and international NGOs to get “specialized expertise on managing impacts”. The

company also interacts with NGOs at a group level. For example in 2012, the company

discussed with NGOs in the matter regarding “biodiversity, climate change and energy policy,

revenue transparency, human rights and operating in sensitive areas”. It is obvious that there

is no operation that can be done without the involvement of governments and regulators;

these are key stakeholders that have to be contacted even before the project has started. The

company needs permissions and license to do their operations and use certain environments

for their works. Therefore, BP engaged with government especially on the issue of

“environmental regulations and revenue transparency to collaborating on community or

entrepreneurial initiatives”. The company’s employees and contractors are working honestly

when dealing with government, (BP sustainability report, 2012, p.25).

4.5 Perspectives of BP’s stakeholders on its operation

In its investigation on the Gulf of Mexico incident, Greenpeace found that the oil was still

flowing deeper into some areas despite claims of victory from BP (Greenpeace, 2011).

Furthermore, Greenpeace contends that BP provided large funds to the researchers but some

36

of them denied because BP wanted them to “work within company’s parameters,

(Greenpeace, 2011, p.5).

Additionally, in Big Fix documentary (2011), BP was found misleading the media by

preventing the media from accessing the gulf beaches to hide their mistakes, and it was even

harder to get interviewed the clean-up workers. Furthermore, it argues that toxic oil

dispersants which are harmful to organisms were used to clean up the oil instead of skimming

and burning out (ibid). Moreover, in Hufpost interview some fishermen from Louisiana

claimed that they lose huge fishing production which affected their economic situation. For

example George Barisich, a fisherman, claimed that: "right now my oyster production is

down 93% …… shrimp production is down at least 40% in my area" (HuffPost Live, 2013).

According to Amnesty International (2000), BP has found guilty in human right violation in

Sudan as BP-Amoco invested in CNBC which has 40% of oil industry in Sudan. More

importantly, Amnesty International (2000), reveals that there was strong evidence that the

troops which provided security to multinational oil companies had child combatant; as

evidence, a commander of the government allied militias “Paulino Matip” has committed to

Amnesty International that they used child combatant. In fact, BP as important stakeholder

didn’t encourage the investee company to engage in intrinsic dialogue with the local

community since the rich oil area was unsettled by local conflict; instead, BP turned a blind

eye and became a silent witness to the science in which mass displacement and death

happened to the local community as a result of CNBC’s siding to the government to get

security to its staff and assets, (ibid).

Equally, according to FNI (2002) BP has accused by corruption and lack of transparency in

Angola because oil area was unsettled. In this context, according to Human Right Watch

(HRW), oil revenues have been misused by Angolan government in purchasing weapons to

put out the civil war; as evidence: “It has also allegedly paid for arms purchases through

funds generated from signature bonus payments for oil exploration, of which BP-Amoco,

Exxon and Elf Aquitaine were the main contributors”, (cited in FNI, 2002, p. 11).

Likewise, BP has found guilty in human rights violation in Colombia. According to FNI,

However, the oil fields in Colombia was not safe because the conflict in the areas evidence:

“In 1995, BP and partners signed formal contracts with the Colombian Defense Ministry and

National Police to assign army brigades and police to defend their operations” (FNI, p.9).

However, Human rights Watch (HRW) assured that the Colombian army is: “one of the few

37

in the hemisphere still [April 1998] engaged in a pattern of gross violations of human rights”

(cited in FNI, 2002, p.9).

Furthermore, from the interview conducted by BP in New York City, different stakeholders

got the chance to speak out they view point s about BP’s operations. Seven stakeholders were

interviewed on the issues of CSR and the community including the future generations, and

BP’s governance. Moreover, in responding the question about company executive, the

stakeholders had the following viewpoints; for instance, stakeholder 11 claims that: “the

company executives have to think about children’s and the future generations’ quality of life

and they have to concentrate on alternative energy if they still want to make money for

shareholders”. Furthermore, stakeholder 2 stats that: “the executives should make some

changes in the way oil is produced and used, and they have to have an influence on other

companies such as Exxon Mobile and car manufactures to have concerns to what is

happening to the world”. Additionally, stakeholder 3 explains that: “Company executives

have to use the available technology to produce alternative fuels which will be alternative

revenue stream for the company”. Besides, stakeholder 5 claims that: “company executives

have to remember that they have an obligation on the rest of the world and they should not

touch just the bottom lines of profits”.

Likewise, the stakeholder 2 asked to comment on whether to have oil benefits or clean

environment, she claims that: “I will choose clean environment, because I am concerning

about children’s and future generations’ quality of life”. The third question was about oil

company’s operations and was directed to stakeholder 1; he argues that: “oil companies

should approach the public and let them know by giving them information about new fuels”.

The last question was directed to stakeholder 6, and it was about the concerns of oil

companies for the future; he responds that: “oil companies are not going to push any other

technologies; furthermore, there are some lobbies against technologies because it needs a lot

of money. The lobbies do not care what the technology is and what the technology can bring,

they just against them”.

4.6 Summary

In the empirical part we incorporate what the company is actually doing in its business

practices regarding the concept of CSR especially the triple bottom line such as economic,

social, and environmental responsibilities. In addition to the Gulf of Mexico crude oil spills

1 Stakeholders have been numbered from number 1 to 6 as they were not identified by names in the original video clip.

38

that comprised both social and environmental responsibilities and how the company

responded to the crises. Since BP’s business practice is unsustainable the company is trying

to reflect CSR successes to be regarded as socially responsible and conducting business that

is environmentally friendly. Furthermore, we explained BP governance through studying the

structure of the BP board of directors and how it works; moreover, how BP engages its wide

range of stakeholders who are affected directly or indirectly by its unsustainable business

practices has been discussed. The information for the mentioned activities was derived from

the recent BP annual and sustainability reports.

39

CHAPTER 5: ANALYSIS AND DISCUSSION

The analysis and discussion on this chapter will base on the theoretical frame work and

empirical developed earlier in this study, we will associate our analysis with the research

questions for this study.

1. How do CG & CSR can shape the new governance concept of unsustainable business?

Naturally, any company operating in oil industry in one way or another its operations affect

the life and welfare of people and their surrounding environment, company tries to find the

means to mitigate these affects voluntarily and sometimes forcibly by the respective

government regulators. Not all the time, the companies are practicing this responsibility fairly

and in an ethical manner, that’s why we need a third party to watch them and keep them in a

right path when they go astray. NGOs play this role to the great extent as they always critical

to the company for what are against the will of people.

According to BP sustainability report (2012), safety of employees and the community in

which the company practicing its business is one of BP objectives. Basically, BP has dark

sides which are in human right violation, corruption, and lack of transparency that challenge

its reputation to great extent.

However, drawing a direct connection between multinational oil activities and the violation

against the local community is much more difficult. More precisely, it can be argued that oil

companies’ bias or siding with the government, which can be regarded as a part of conflict,

raise the accusation against oil companies in being involved in human right violation by

“turning a blind eye, in the name of security” or by being silent witness to the scene which

cannot be as a neutral position. In other words, oil companies have become beneficiaries of

this conflict in which a mass violation has been committed; in addition this conflict has a

direct positive impact on the safety of their staff for that reason multinational companies

cannot ignore the linkage between the conflict and oil industry (Amnesty International Report,

2000).

Moreover, oil companies have committed violation against their staff by conducting business

activities in an unsettled business area which endangers their life that contrary to international

law and norms with respect to the work environment. Rather, these companies should

suspend their activities as Chevron Oil Company did when three of its staff were kidnapped

and killed by Sudan People’s Liberation Army (SPLA) in the same oilfields in Sudan in 1984,

40

considering that work environment in Sudan is dangerous to its workers, (Amnesty

International Report, 2000).

According to BP code of conduct (2013), BP has created five core values such as safety,

respect, excellence, courage, and one tea. Fundamentally, these core values create well-

meaning for BP business practice since they create safety, honesty, and respect of the

community around its business in terms of human right, quality outcomes, and collaboration.

But it seems that BP has ignored its core values when it has become the biggest investor in

CNBC Company which practiced oil industry in Sudan. Based on the aforementioned

circumstances, BP-Amoco has “turned a blind eye” and has become a silent witness in the

name of getting security to the staff and assets of the investee company (CNPC). Therefore,

BP is responsible for human right violations in Sudan in terms of killing innocent people who

did not involved in direct hostilities and the mass displacement of the local community

although its contribution in the conflict was indirectly. It should be noted that BP could have

been in a good position, as shareholder stakeholder, if it encouraged the investee company

(CNPC) to engage in an intrinsic and meaningful dialogue with the local community where

the investee company (CNPC) conducted its operation. In a nutshell, it can be argued that BP

has become a part of the conflict and responsible for the human rights violation committed in

Sudan which means that the company contradicts its core values. However, Moe Arild in his

interview caution from drawing general conclusion about BP contradiction about its core

values since some of these allegations are misunderstanding of what BP is doing.

Moreover, under the pressure of some NGOs such as HRW that resulted international

attention against BP activities in the name of human rights violations and abuses in

Colombia, BP renegotiated the formal contracts with Colombian government forces;

furthermore, BP requested the “Human Rights Unit of the Colombian Prosecutor General’s

office (the Fiscalia)” to investigate the abuses alleged; moreover BP involved in consultation

with various NGOs and organize many workshops; in addition the company: “has spent $30

million on social investment programs” (FNI, 2002, p. 10). It is obvious that the company has

tried its best to compensate the aforementioned allegations, but it seems beyond doubt if BP

finds a lucrative oil business it ignores its core values and the CSR issues.

Furthermore, sometimes the aforementioned payments override the “Ministry of Finance and

the central banks” to the “Presidency” which is responsible for importing weapons to

deactivate the civil war, this actions reveal beyond doubt that BP has fully sunken in

corruption in the name of getting lucrative oil business in Angola. These activities perceived

41

by HRW as lack of transparency and accountability that needs “a new standard of fiscal

transparency for oil companies in Angola”, (FNI, 2002, p. 12).

In a nutshell, in the last two decades BP Company has faced up deep crisis. These crisis and

incidents have provoked the international attentions and criticism against BP, Specially

NGOs which compelled the company to rethink and perform considerable changes starting

from re-branding the company by changing its name to “Beyond Petroleum” in 2001.

Moreover, BP drafted its ethical standards through its code of conduct in 2005. Furthermore,

the company merged with other energy brands such as Amoco, ARCO, CASTROL, ARAL,

and AMPM to create a unit in performing sustainable business, and perceive CSR issues as

strong emphasis to company’s survival. The aforementioned strategic trends have been

chaperon by reinforcement of BP’s management system techniques, strategies, and reporting

in the face of lack of transparency as it was in Angola. In addition, the company learned

much, but the arduous way since the incidents and the international attention that provoked

accordingly have led the company to implement social investment programs, stakeholder

engagement, and the detailed reporting on social and environmental performance,

demonstrating great interest CSR issues.

However, human rights violation, corruption, and the lack of transparency mentioned above –

which was committed by BP Company in Sudan, Colombia, and Angola - cannot be found in

the previous BP’s non-financial reporting; rather, it can only be found in NGO reports such as

HRW, Amnesty International, and FNI, etc. which reveal, to the greater extent, that BP’s

non-financial reporting such as sustainability reports and annual reports are not in line with

the new trends of corporate non-financial reporting.

According to Amnesty International (2013), the corporate non-financial reporting should

comprise all indispensable information that makes shareholders and none-shareholders

stakeholders to grasp the impact of their company’s business practice on human rights and

environmental issues that show more emphasis on transparency. More fundamentally, the

OECD Guidelines on Multinational Enterprises regarding corporate non-financial reporting

reveal that: “Clear and complete information on enterprises is important to a variety of users

ranging from shareholders and the financial community to other constituencies such as

workers, local communities, special interest groups, governments and society at large. To

improve public understanding of enterprises and their interaction with society and the

environment, enterprises should be transparent in their operations and responsive to the

publics’ increasingly sophisticated demands for information” (cited in Amnesty International

42

Report, 2013). Therefore, corporate non-financial reporting ought to move beyond the

traditional reporting on company’s policies, philanthropic actions, and CSR successes; rather

it should include: “the human rights and environmental risks companies have identified in

connection with their operations and how these risks were addressed (including methodology,

actions taken to prevent or mitigate, monitoring activities)” (Amnesty international Report,

2013). Thus, taking into consideration the aforementioned new trends on non-financial

reporting and compare these trends with BP’s recent non-financial reporting such as annual

report (2012), and sustainability report (2012) it can be argued that these reports have quite

limited value in connection to what the company has selected to be included in the report and

what must be excluded. This argument is in line with the comment given by Moe Arild

during the interview because he contended that the company reports are not sufficient enough

as they include many good items and left behind the wrong doing. In other words, the priority

should be given to risks and incidents considering the seriousness and impact, for example

the risks that the company’s operation causes to the environment and human rights rather

than concentrating on CSR successes.

2. How does stakeholder dialogue influence BP’s CSR & CG in its business operations

and its impact on company’s sustainability?

The Gulf of Mexico oil spills incident is one of the incidents that BP was greatly criticized on

how they handled and responded by the NGOs and media, there are claims that BP was not

open and transparent on dealing with this incident. For example in their report, they claimed

to successfully removed oil from Gulf of Mexico while some areas in Louisiana oil was still

flowing deeper into the ocean.

Additionally, the BP’s response to Gulf of Mexico critics are found in the documentary “The

Big Fix” filmed by Josh and Rebecca Tickell, which disclosed the facts of what really

happened during and after the incident. The documentary claimed that the incident was not

just an accident but was caused by greedy and carelessness as no serious efforts done to avoid

this catastrophe, (The Big Fix, 2011). The author of this film argues that the company was

not fully responsible for what happened as they took less efforts to restore the welfare of

surrounding communities rather it concentrate on how to restore its economic position. And,

where they took measures; they were not compatible with the international standards like the

use of toxic oil dispersants which are dangerous to organisms.

43

Eventually, some of the allegations against BP by NGOs prevailed as the courts found them

guilty of misconduct or negligence of their ships in relation to the loss of eleven people. “BP

pleaded guilty to 11 felony counts of misconduct or neglect of ships officers relating to the

loss of 11 lives” BP also convicted in several misdemeanor counts such as clean water act

and migratory bird treaty. Due to that, BP is going to pay $4 billion as criminal fines and

payment to different foundations and institutions. Moreover, “BP has agreed to a civil penalty

of $525 million and to an injunction prohibiting it from violating certain US securities laws

and regulations” (BP annual report, 2012, p.24). Generally, we can conclude that the role of

NGOs, media and an investigative journalism has great impact to the wrong doings of the

organizations; since what they claimed for turned out to be legitimate claims. Absence of

these whistle blowers and watchdogs many of the wrong doings of the companies might be

ended unrevealed. Therefore, the third parties reports and analysis breach the information gap

between the companies’ desires to tell the public and what public is supposed to know from

them.

Although, the company claims to restore economic situation of the affected people in the gulf

area, the situation is still worse for most of fishermen in the area, this is evident on the

interview by Huff Post live with the member of the board of Gulf Organized Fisheries in

Solidarity & Hope (GO FISH) coalition. In this clip fishermen claimed the company by

ignoring their stake hence reducing their ability to catch more fishes and lower their

economic situation. From this interview, we can argue that BP has not taken enough

measures to deal with the impacts of gulf incident.

However, BP is doing some positive things to restore its reputation as many of the above

mentioned allegations ruin the reputation of the company, the company manages its

reputation by actively keeping its relationship with main stakeholders, “We are committed to

rebuilding trust with all our stakeholders and continue to co-operate with all investigators,

monitors and regulators, furthermore, we are clear that we always seek to comply with local

regulations and, in some cases, our required practices will exceed regulations if our

assessment of the operating risk indicates it would be beneficial to do so” (BP annual report,

2012, p.31).

Moreover, BP claims to take appropriate measures to restore the gulf environment and

economic recovery of affected people, as by the end of 2012 “BP had paid a total of $11.7

billion in claims, advances and other payments”. In collaboration with state and federal

trustees BP continuing to assess the impacts of the accidents to both environment and natural

44

resources. Moreover, on top of that, BP claims to fund independent research, “we supported

independent research through the Gulf of Mexico Research Initiative” (BP annual report,

2012, p.23). As a prove to what we have mentioned previously in the theoretical framework;

the provoked concerns by the Ney York City interviewees described in empirical section

explains to what extent stakeholders nowadays have become more aware about the negative

effect of oil industry. For that reason, BP feels responsible to engage with stakeholders in

different ways and gain some reactions for its activities. However, its engagement with

stakeholders is not sufficient enough because this matter depend on the situation of particular

country where the company operating for example in democratic countries the situation is

different than non-democratic countries and it is also difficult to identify who are the

stakeholders to interact with” ( Moe Arild ).2

Moreover, as we have mentioned in the empirical part, BP does not touch only the profit

bottom line; rather, the company is trying to perform sustainable business by addressing the

triple bottom line of CSR with special concentration on environmental responsibilities.

More precisely, with regard to environmental problems which endanger our planet; BP is

fighting to reduce the effect of oil impact on the environment by using technologies that

resulted in producing biofuels and cleaner energy such as energy from wind farms and solar

energy that started 44 years ago. Moreover, BP has spent billions of US dollars in alternative

energy even before it mandates in some countries such as the USA. It should be noted that

alternative energy invented by BP has become a new revenue stream for the company,

although the company has spent a lot of money in the beginning. Furthermore, to reduce its

oil effect, BP tends to reduce its direct GHG emissions as we have mentioned earlier in the

empirical part. In this context, the former BP chief executive, Lord Browne in his words

when he was interviewed by BBC HARDtalk’s host, Stephen Sackur, he emphasized the

GHG emission by saying: “…. you can replace the heavier to more heavy carbon fuels with

lighter carbon and so gas will make a big difference as we go forward in lightening the load

of CO2 which is being produced in atmosphere” (BBC, 2013).

Likewise, BP discharges the water back to the environment after the operational activities to

contribute in the availability of fresh water since 40% of BP oil practices located in regions

where fresh water is stressed or scarce. Moreover, the company is working with many

companies to produce sustainable vehicles.

2 Interview with Moe Arild

45

The aforementioned efforts reveal that BP is trying to change the way energy is produced and

the way energy is used, which signifies to great extent that the company is performing its

environmental responsibility to a feasible extent by conducting ethical business as

responsibility beyond petroleum which is in line with the term “Sustainable Development”.

Therefore, the integration and implementation of the concept CSR in BP’s business practice

impacts the company’s sustainability to great extent.

3. To what extent self-regulation and meta-regulation affect on BP’s stakeholder

engagement?

Compared to the Gulf of Mexico incident and what the company did and still doing in order

to tackle the negative effects of environmental violation; and human rights violation and

corruption committed by BP in Sudan, Colombia, and Angola, one can conclude that the

environmental effects in the Gulf of Mexico is minor compared to the tens of thousands of

people’s life ended on account of BP’s oil industry. Moreover, to revive the trust and

reputation with a special concentration on the US; in addition to prove interest on CSR and

good governance manner to Obama administration as a result of the incident in the gulf, BP

established the Gulf of Mexico Committee which comprises three non-executive directors

from the SEEAC and the audit committee. Besides, BP has paid billions of dollars as fines to

clean up or to scratch out the effects of oil spills, because in the USA the law is effective, but

the company did nothing to erase human rights violation in the mentioned countries. The

aforementioned point reveal beyond doubt that BP tend to ignore its core values in some

business areas. For that reason, in brief, BP’s self-regulation is very weak or performs

unethically since the company selects where to demonstrate great interest on CSR issues and

manage its negative effects properly and where to ignore; this point also signifies lack of

transparency and accountability. Moreover, the effective factors in self-regulation are codes

of conduct and non-financial reporting because these drivers explain how governance

connects with responsibility since they have mixture of regulatory principles. Based on that,

BP’s self-regulation needs revival because the company tend to ignore its core values as it

was in Sudan, Colombia, and Angola; and also its non-financial reporting does not come in

line with the new trends of information disclosure. Furthermore, in the face of wrong doing, it

seems that the company becomes on track only by the effect meta-regulation i.e. the pressure

and intervention of social groups such as media and NGOs. Therefore, it can be argued that

the impacts of new governance on BP business practices as an unsustainable business is not

46

sufficient enough; therefore, the company need an effective governance and management

system that demonstrates responsibility and interest on CSR issues wherever the company is

practicing its business i.e. even if the company practicing its business in countries where the

regulatory process is weak, or the rule of law is absent as it is in countries where human

rights violation and corruption were committed by the company.

Furthermore, from the theoretical framework we have it can be seen clearly that CG and CSR

concepts has many contributions to new governance trends for instance CG is focusing

mainly on agency problems to mange issues such as accountability, disclosure, ethics, and

transparency to safe guard the interest of shareholders and other stakeholders. On the other

hand CSR reveal the issues of social and environmental responsibilities that also affect both

shareholders and stakeholders. Therefore, CG & CSR complements each other to perform

responsible business that accommodates benefits for shareholders, non- shareholder

stakeholder’s protection.

47

CHAPTER 6: CONCLUSION & MANAGERIAL IMPLICATION

A. CONCLUSION

Naturally, each company is responsible for the people and environment internally and

externally. Among responsibilities that company have include the safety of its workers and

surrounding communities; because safety is an important element in fulfilling any project.

Companies operating in oil and gas industry are frequently faced with opposition from local

people and other activists which endanger the safety of both workers and local residents, as

we have seen for the case of Sudan and Colombia, where BP was involved in these incidents.

Under this circumstance, it is responsibility of the company to take appropriate measures to

deal with this situation like winding up their operations because the cost of continuing is

higher than winding up as the life and safety of many people will be in danger. Unfortunately,

BP which was involved in similar incident did not take any measure to show that it is

concerned about the situation.

Although it is true that CSR component parts should be performed according to the

circumstances that surround the company’s activities to perform sustainable business practice.

However, there is a significant variation in CSR adoption in BP, especially the

implementation of the triple bottom line components of CSR such as the economic, social

and environmental responsibilities. BP’s economic responsibility performs very well as it is a

sustainable motive for BP survival in business field. Furthermore, beside oil industry BP tend

to seek out new revenue streams such as solar energy that developed by the company 44

years ago even before sustainable energy mandates in some countries to maximize

shareholder value by wealth creation, providing solar energy over 160 countries.

However, BP does not touch only the profit bottom line; the company is also trying to

perform social and environmental responsibilities in a good way. But environmental

responsibility performs better than social responsibility as we have seen the great effort from

the company to mitigate the effect of oil production and use by using technologies that

resulted in producing biofuels, solar energy, energy from wind farms, water discharge to the

environment, and partnering car manufacturers to produce sustainable vehicles. The

aforementioned efforts make the company to spend billions of US dollars maybe because the

stakeholders nowadays become more aware about the effect of unsustainable oil industry as

we have seen in interview with stakeholders in New York streets; moreover, all human

beings in the planet concerns about the environment. Thus, environmental responsibility

performance reveal that the BP conducts ethical business as responsibility beyond

48

petroleum which boosts the term “sustainable development”; therefore, the integration and

implementation of CSR affects BP’s sustainability to some extent.

In contrast, BP’s social responsibility performance is the worst among CSR components as

we have seen the human right violation committed by the company in Sudan and Colombia;

and corruption in Angola in which BP side or align to the governments, turning blind eye and

becoming a silent witness to what had happened to the local communities becoming a part of

the conflict that contradicts its core values and affects its reputation to great extent.

Moreover, in the face of wrong doing, BP’s CSR performance, in general, vary according to

the strength of law in the region in which the company practices its business. In comparison

with CSR implementation in Sudan, Angola, Colombia, and in the USA in the face of Gulf of

Mexico incident, BP put many efforts to tackle the effect of the crude oil in the Gulf,

spending billions of US dollars as fines to scratch out the effects since law enforcement is

strong in the USA; whereas in the countries where law enforcement and regulatory process

are weak or absent BP neglected the displacement and death of tens thousands of people on

account of its oil industry as we have seen in Sudan, Angola, and Colombia. Therefore, BP’s

self-regulation is ineffective which reveal lack of transparency and accountability. Thus, BP

needs self-regulation’s revival since the company selects and performs where to demonstrate

great interest on CSR and where to ignore. More precisely, an effective self-regulation

requires some drivers that connect governance with responsibility such as the recent trends of

none-financial reporting and codes of conducts. However, BP’s code of conduct has well

meaning since it includes core values such as safety, respect, excellence, courage, and one tea.

But its recent none-financial reporting such as sustainability and annual reports have very

limited value and are not in line with the new trends of corporate reporting in which all

indispensible information should be disclosed to make stakeholders know about the effect of

business on the society and the environmental.

B. MANAGERIAL IMPLICATION

From our conclusion we argue that BP should give the priority to the risks and incidents

considering the seriousness and impacts which moves the reporting process beyond the

traditional reporting on company’s policies, philanthropic actions, and CSR successes.

Moreover, in the face of wrong doing in regions where regulatory process is weak BP tend to

demonstrate interest on CSR issues only by the effect of meta-regulation in which the media

and NGOs play a prominent role. Therefore, the effect of new governance on BP’s

49

unsustainable business needs new standards of transparency and effective governance and

management system that demonstrate interest on CSR issues everywhere.

Furthermore, company like BP should not ignore stakeholders in their operations as they can

give them important inputs on how to run the company sustainably, for instance media and

NGOs . BP’s operations touch the daily life of people and other organisms; therefore it

should consider stakeholders’ opinions because stakeholders are the ones affected by its

practices, and it must also prioritize the interests of its stakeholders when doing its operations

because it is one of fundamental principle of corporate citizenship.

Additionally, both CG & CSR shape the new governance concept by focusing on

accountability, disclosure, ethics, transparency, and the issues related to social and

environmental responsibilities to protect shareholders and stakeholders.

Although, BP tries to engage stakeholders in its business, it obvious that this engagement is

not sufficient enough since the company is working in different countries with different

political circumstances which create difficulties to identify which stakeholder should be

given the priority or to interact with. Despite this insufficiency still the company has an

opportunity to engage in few dialogues with stakeholder for example stakeholder engagement

in New City which helped the company to shape its CSR & CG policies in line with the

viewpoints raised by stakeholders.

50

FURTHER RESEARCH

For as long as BP’s final product is still oil which violate the environment and disregard

people in areas where BP operates. As mentioned earlier in this study that the company is

trying to implement good CSR practices such as environmental preservation like producing

biofuels, solar energy, greenhouse gas emission reduction; in addition to the good social

practices to compensate people affected by the oil industry’s practices. Therefore, further

research can examine if BP’s CSR practices can compensate the negative effects of oil

production and its uses.

Furthermore, regarding data collection, more methods need to be employed so that we get

more reliable findings and results for example observations and interviews with management

including members of the board and workers in different managerial levels should be given

higher consideration.

51

REFERENCE LIST

Aluchna, M. (2010). Corporate Social Responsibility of the top ten: examples taken from the

Warsaw Stock Exchange. Social Responsibility Journal, 6 (4), 611-626.

Amnesty international (2013). Corporate Non-Financial Reporting Amnesty International

position paper. Available:

http://www.amnesty.org/en/library/asset/POL30/001/2013/en/6be0b2a3-cc5c-4764-8bab-

3064bd4f2749/pol300012013en.pdf [2013-04-25]

Bamberger, K. & Mulligan, D. (2011). New governance, chief privacy officers, and the

corporate management of information privacy in the United States: An Initial Inquiry. Law &

Policy, 33 (4), 477 – 508.

Bansal, P. & Roth, k. (2000). Why companies go green: A model of ecological

responsiveness. Academy of Management Journal, 43 (4), 717 – 736.

Beltratti, A. (2005). The complementarity between corporate governance and corporate social

responsibility. The International Association for the Study of Insurance Economics, 30, (373–

386).

BP annual report (2012). Annual report. Available:

http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/set_branch/STAGING/

common_assets/bpin2012/downloads/BP_Annual_Report_and_Form_20F_2012.pdf [2013-

04-01]

BP (2013). Gulf of Mexico restoration. Available:

(http://www.bp.com/sectiongenericarticle800.do?categoryId=9048918&contentId=7082603

[2013-04-25]

BP (2011). The code of conduct. Available:

http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/C/C

ode_of_Conduct_2011.pdf [2013-03-015]

52

BP (2011). Sustainability report. Available:

http://www.bp.com/assets/bp_internet/globalbp/STAGING/global_assets/e_s_assets/e_s_asse

ts_2010/downloads_pdfs/bp_sustainability_review_2011.pdf [2013-03-18]

BP (2012). Sustainability report. Available:

http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/S/B

P_Sustainability_Review_2012.pdf [2013-03-15].

BBC (2013). World news TV. Available: http://www.bbc.co.uk/news/world-radio-and-tv-

22350971. [2013-05-06].

BP video library. (2013). BP Man on the Street Commercials. Available:

http://www.bpvideolibrary.com/Search/TapeAndClipDetails.aspx [2013-04-17]

Bryman, A . & Bell, E (2007). Business Research Methods: Second Edition. Oxford

University press: New York.

Carroll, A B. (1991). The Pyramid of Corporate Social Responsibility: Toward the Moral

Management of Organizational Stakeholders. Business Horizons, 34 (5) 39-48.

Carroll, A.B. (1979). A three-dimensional conceptual model of corporate performance:

Academy of Management Review, [online], 4(4), 497-505.

Chaudhry, K., & Krishnan, V. R. (2007). Impact of corporate social responsibility and

transformational leadership on brand community an experimental study. Global Business

Review, [online], 8(2), 205-220.

Clarkson, M. E. (1995). A stakeholder framework for analyzing and evaluating corporate

social performance. Academy of management review, 20(1), 92-117.

Clement, R.W (2005). The lessons from stakeholder theory for U.S business leaders.

Business horizons, [online], 48, 255-264.

53

Connelly, M. F., & Clandinin, J. D. (1990). Stories of experience and narrative inquiry.

Educational Researcher, 19(5), 2-14

Coombs, W. & Holladay, S. (2012). Book highlight—Conceptualizing corporate social

responsibility. Global Business and Organizational Excellence ,31 (5), 78–97.

Cooper, D.R. and Emory, W. (1995). Business research methods. (5th ed). Chicago: Irwin.

Davis, R. (1999). “Behavior Research Methods, Instruments, and Computers”, Ann Arbor:

University of Michigan.

Dunfee, T. W., Smith, N. C., & Ross Jr, W. T. (1999). Social contracts and marketing

ethics. The Journal of Marketing,[online], 14-32.

Eisenhardt, K. M. (1989). Building theories from case study research. Academy of

management review, [online], 532-550

Elkington, J. (2006). Governance for Sustainability. Corporate Governance: An International

Review, 14 (6), 522-529.

Enquist, B., Johnson, M. & Skålen, P. (2006). Adoption of corporate social responsibility-

incorporating a stakeholder perspective. Qualitative Research in Accounting & Management,

3 (3), 188 – 207.

European Commission (2011). Communication from the commission to the European

parliament, the council, the European economic and social committee and the committee of

the region. Available: http://ec.europa.eu/enterprise/policies/sustainable-

business/files/csr/new-csr/act_en.pdf [2013-2-13].

Fisher, C. (2007). Researching and writing a dissertation. A guidebook for business students.

Second Edition, Pearson Education Ltd, Essex.

54

FNI. (2002). Beyond Petroleum: Can BP deliver?. Available

http://www.fni.no/doc&pdf/FNI-R0602.pdf Accessed [2013-05-03]

Freeman, R., York, J., Stewart, L. (2012). Ethics , Environment, Ethics, and Business.

Business Roundtable Institute for corporate Ethics. [Elektronic]. Available:

http://www.corporate-ethics.org/pdf/environment_ethics.pdf [ 2013-03-21].

Friedman, M. (2007). The social responsibility of business is to increase its

profits. Corporate Ethics and Corporate Governance, [online], 173-178.

Ghauri, P. and Grönhaug, K. (2005), Research methods in business studies: A practical guide.

Prentice Hall.

Gill, A. (2008). Corporate governance as social responsibility: A research agenda. Berkeley

Journal of International Law, 26 (2), 452-478.

GRAY, D., E. (2009) Doing Research in the Real World, London, Sage.

Greenpeace (2011). Deep water horizon report. Available:

http://www.greenpeace.org.uk/sites/files/gpuk/DeepwaterHorizonReportLoRes.pdf. [2013-

04-29].

Hampel, R. (1998). Committee on corporate governance: Financial Report, Gee &Co. Ltd.,

London.

Hess, D. (2008). The three pillars of corporate social reporting as new governance regulation:

Disclosure, dialogue, and development. Business Ethics Quarterly, 18 (4), 447 - 482.

Hsieh, N. (2006). Voluntary codes of conduct for multinational corporations: Coordination

duties of recue and justice. Business Ethics Quarterly, 16 (2), 119 – 135.

55

HuffPost Live (2023). Gulf coast fisherman. Available:

http://www.huffingtonpost.com/2013/02/28/gulf-coast-fisherman-bp-

commercials_n_2781446.html. [2013-05-03].

Hussey, J. & Hussey, R. (1997). Business Research: A Practical Guide for Undergraduate

and

Postgraduate Students, New York, Palgrave.

Klok, A. & Pinkse, J. (2010). The integration of corporate governance in corporate social

responsibility disclosures. Corporate Social Responsibility and Environmental Management,

17, 15–26.

Krefting, L. (1991). Rigor in qualitative research: The assessment of trustworthiness.

American Journal of Occupational Therapy, 45 (3), 214-22.

Laczniak, G.R & Murphy, P. E. (2012). Stakeholder theory and marketing: moving from

a firm-fentric to a societal perspective. Journal of Public Policy & Marketing. [online], 31(2),

284-292.

Mallin, C.A. (2010). Corporate governance. (3rd edn.). Oxford: Oxford University Press.

Merriam, S. B. (1988), Case study research in education: A qualitative approach. San

Fransisco: Jossey-Bass.

Moen, T. (2006). Reflections on the narrative research approach. International Journal of

Qualitative Methodology, 5(4), Article 5. Retrieved [2013-03-15] from

http://www.ualberta.ca/~iiqm/backissues/5_4/pdf/moen.pdf

Moura-Leite, R. C., & Padgett, R. C. (2011). Historical background of corporate social

responsibility. Social Responsibility Journal, [online], 7(4), 528-539.

Quazi, A.M. (2003),"Identifying the determinants of corporate managers' perceived social

obligations", Management Decision, Vol. 41 No.9, pp.822-31.

56

Rogers,P. P., Jalal, F. K., & Boyd A. J. (2008), An introduction to sustainable development,

Earthscan Ltd.

Rowley, J. (2002). Using case studies in research. Management Research News, [online],

25(1),16 –27.

Sandelowski, M (1991). Telling stories: narrative approaches in qualitative research. Journal

of nursing scholarship, 23(3), 161-166.

Sarra, J P. (2011). New governance, old Norms, and the potential for corporate governance

reform . Law & Policy, [online], 33(4), 576-602.

Saunders, M., Lewis, P. & Thornhill, A. (2009), Research methods for business students.

Edition 5. ed. Harlow: Financial Times Prentice Hall.

Spitzeck, H & Hansen, E.G (2010). Stakeholder governance: how stakeholders influence

corporate decision making. Corporate Governance, 10( 4), 378 – 39.

Štreimikienė, D. & Jakubauskienė, N. (2012). Sustainable development and quality of life in

Lituania compared to other countries. Technological and Economic Development of Economy,

18(4): 588–607.

Tang, Z., Eiríkur, C., Rothenberg, H. (2012). How Corporate Social Responsibility

Engagement Strategy Moderates the CSR–Financial Performance Relationship. Journal of

Management Studies, 49 (7), 1274 – 1303.

Ticehurst, G. W., and Veal, A. J. (2000), “Business Research Methods”, London: Longman.

The Big Fix (2011). Documentary. Available: http://www.1channel.ch/watch-2735539-The-

Big-Fix [2013-04-30].

57

Tricker, B. (2009). Corporate governance, principles, policies and practice, Oxford

University Press, Oxford.

Tullberg, J (2013). Stakeholder theory: some revisionist suggestions. The journal of socio-

economics, [online], 42, 127-136.

Vaivio, J. (2007). Qualitative research on management accounting: achievements and

potential. In Hopper, T., D. Northcott & R.W. Scapens (Eds.), Issues in Management

Accounting. Hertfordshire, UK: Prentice-Hall.

Vitezić, N. (2011). Corporate Reputation and Social Responsibility: An analysis of large

companies in Croatia. International Business & Economics Research Journal, [online], 10(8),

85-95.

Vogel, D., (2005), The Market for Virtue: The Potential and Limits of Corporate Social

Responsibility.[online]. Brooking Institution Press. Available:

http://site.ebrary.com.bibproxy.kau.se:2048/lib/kaubib/docDetail.action?docID=10141090

[2013-02-10].

Williams, A., Siegel, D., Wright, P. (2006). Guest Editors’ Introduction Corporate Social

Responsibility: Strategic Implications. Journal of Management Studies, 43 (1), 1 – 19.

Wellington, J., & Szczerbinski, M. (2007). Research Methods for Social Sciences. London:

Continuum.

Wood, D. J. (1991). Corporate social performance revisited. Academy of Management Review,

[online], 691-718.

World Business Council on Sustainable Development (2000). Corporate Social

Responsibility: Making Good Business Sense. Available:

http://research.dnv.com/csr/PW_Tools/PWD/1/00/L/1-00-L-2001-01-

0/lib2001/WBCSD_Making_Good_Business_Sense.pdf [2013-02-14].

58

Zyglidopoulos, S. (2002). The social and environmental responsibilities of multinationals:

Evidence from the Brent Spar Case. Journal of Business Ethics 36, 141–151.

Yin, R. (1984) Case study research. Beverly Hills, CA: Sage Publications

Yin, R. K. (1994), ―Case study research: Design and Methods”, 2nd ed. Sage, Newbury

Park, CA.

Yin, R.K. (2003), “Case Study Research: Design and Methods”, California, USA: Sage

Publications Inc.

59

Appendix 1:

Interview with stakeholders in New York City

The interview comprises four questions that directed to 7 stakeholders in New York streets

investigating various sub issues of the mentioned trends such as the issues that need more

thinking and should be given the priority from company executives with regard to

environmental problems; moreover if oil companies are forward thinking; furthermore the

interviewees’ preferences if they have to choose between a clean environment or oil benefits

such as using cars, and what an oil company should do to maintain our planet safety. The

interview lasts for 7 minutes and 3 seconds. Additionally, the video contains BP’s responses

claims on the concerns that provoked by the stakeholders “interviewees” and what the

company did and how it is going to handle these concerns

Q1: what would you say to company executives?

Stakeholder 1: Think about your children and future generations, they have to have a good

quality of life. Also you have to think about alternatives if you still want to make money.

BP response s actions beyond petroleum:

We were the first company that introduced cleaner fuels since 1999.

We are the largest producer of natural gas in the USA.

We bring solar energy to over 160 countries.

Stakeholder 2: she sends messages to company executives:

You have to have credibility of giving the world clear environment and I am worried about

future generations. I am begging you to make some changes in the way oil is used or oil is

produced. And also you can influence other large oil companies such as Exxon Mobil at least

to let them have some concerns about what is happening in the world and you have to be

sensor to the world.

BP response as accountability beyond petroleum:

We are working with Ford, GMC, and, Dailmer Chrysler to introduce cleaner fuels

and vehicles.

We are partnering with leading universities to research energy alternatives.

We started in Europe and we introduced hydrogen powered busses with Dailmer

Chrysler. The only emotion of these busses is water vapor.

60

Stakeholder 5: he sends a message to company executives:

You have to have conscious toward the planet, and you have to know that you have an

obligation on the rest of the world and do not touch just the bottom lines to the profits.

BP response as accountability beyond petroleum:

We bring solar energy to over 160 countries.

We started in Europe and we introduced hydrogen powered busses with Dailmer

Chrysler. The only emotion of these busses is water vapor.

Stakeholder 3: He sends a message to company executives saying:

There is enough technology for oil companies to use alternative fuels clean up engines form

oil, you just need to conduct researches. So, do what you have to do because you will get a lot

of money by investing in alternative energy.

BP’s response as alternative beyond petroleum:

We were the first company that introduced cleaner fuels since 1999.

We started in Europe and we introduced hydrogen powered busses with Dailmer

Chrysler. The only emotion of these busses is water vapor.

Stakeholder 7: He sends message to company executives and say:

Let me breathe, let my children and grand children breathe. Use intelligence to know

what people want.

BP:

We are working with the California fuel cell partnership to introduce hydrogen

powered vehicles. The only emission is water vapor.

Q2: Which would you rather have, your car or a clean environment?

Stakeholder 2: I love the car but if I had to choose between my car and clean environment, I

will choose a clean environment because I am concern for the future generations.

BP’s response as responsibility beyond petroleum:

We start producing cleaner fuels five years before the USA mandates as a

responsibility beyond petroleum.

Our alternative energy is: “like taking 100 000 cars off USA roads every day.

61

Q3: what do you think oil companies should be doing?

Stakeholder 1: oil companies should approach the public and let them know by giving them

information about new fuels.

BP’s response as actions beyond petroleum

We were the first company that introduced cleaner fuels since 1999.

We start producing cleaner fuels five years before the USA mandates as a

responsibility beyond petroleum.

Our alternative energy is: “like taking 100 000 cars off USA roads every day.

Q4: Are oil companies forward thinking?

Stakeholder 4: I think the technology has been there for years and years, but oil companies

do not want to use it until climate change has happened.

BP’s response as alternatives beyond petroleum:

44 yeas a go, we began developing solar power. Now we are the largest company that

produces solar energy.

We bring solar energy to over 160 countries.

Stakeholder 6: He does not think oil companies are forward thinking saying:

Oil companies are not going to push any other technologies; furthermore, there are some

lobbies against technologies because it spends of money are a huge in this trend. The lobbies

do not care what the technology is and what the technology can bring, they just against them.

BP’s response as alternative beyond petroleum:

We bring solar energy to over 160 countries.

We started in Europe and we introduced hydrogen powered busses with Dailmer

Chrysler. The only emotion of these busses is water vapor.

62

Appendix 2:

Interview with Moe Arild

1. Does BP contradict its core values in its business operations?

I do not think that the company contradicts its core values; the company is trying to

do good things as I saw in Azerbaijan.

Q1a- but we found that BP has wrong doings for example in Sudan, Angola, and

Colombia where mass human right violation were committed for the reason of BP

siding to the government?

You have to be careful in discussing these allegations because many of them are like

misunderstanding of what BP doing.

Q1b- But we found these information in Amnesty international reports like ( BP’s

payments such as signature bonus to the government to import weapons to stop the

conflict)?

Even these issues can be misunderstood; actually, it is difficult to say that signature

bonuses are like corruption because sometimes taxes paid in advance.

2. Does BP’s non financial report self-sufficient regarding the issues of CSR and CG? if

not, in which area do you think is weak.

No it is not sufficient enough they do write the good, they do not include everything.

Always there is something that is not included.

3. Do you think the BP dialogue with stakeholders including NGOs/media is sufficient

enough to accommodate their viewpoints especially in social and environmental

issues in its business practice?

No, it is not sufficient and this issue depends on the situation in the country in which

the company operating for example in democratic countries the situation is different

than non-democratically countries and it is also difficult to identify who are the

stakeholders to interact with.