Corporate Responsibility and Sustainability in Oil and Gas Industry

UGB264 Business Ethics
Responsibility and
Sustainability

Table of Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
Corporate Social Responsibility and Sustainability....................................................................2
Key Challenges relating to CSR and sustainability of Oil and Gas Industry..............................2
Best Practice along with Ethical & Moral Issues in the Oil & Gas Industry...............................4
Recommendations........................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
1

INTRODUCTION
Sustainability essentially means decrease in the impact a company has on the
environment through processes of reduce, recycle or reuse thereby reducing the consumption.
Whereas, corporate social responsibility (CSR) denotes the wider and broadened relationship
between the companies and its primary groups of stakeholders and communities. The following
report thus will be examining and discussing the constraints and challenges which relates to the
corporate responsibility and sustainability of the oil and gas industry. Then the report will be
critically analysing and explaining the best practices in this oil and gas industry discussing in
detail the ethical and moral issues involved in these best practices. And then finally, the
recommendations will be made for the organisations in the oil and gas industry to make sure that
the responsibility with respect to such issues is taken into account considering the global
considerations.
MAIN BODY
Corporate Social Responsibility and Sustainability
Corporate Social Responsibility refers to the responsibilities of the corporates towards the
society. It is based on a concept that such corporates operate and functions in and around such
society and communities and utilizes the resources available in these societies and communities
therefore, these corporates shall be accountable socially towards itself, the public, society &
community and the stakeholders which are affected by the operations of the corporates
(Woolfson and Beck, 2019). It shall be noted that the impact that these corporates may have can
be economic, environmental or even social. Thus, it can be said that such responsibility and
sustainability will serve and help both society as well the company itself in improving its brand
image and in this way it will be able to enhance the morale of its personnel in its workplace.
The sector/industry chosen for the purpose of writing this report on corporate
responsibility, sustainability and best practice is ‘Oil & Gas Industry’.
Key Challenges relating to CSR and sustainability of Oil and Gas Industry
The operations of the oil and gas industry are such that there are bound to be several
adverse impacts on the environment during the process of exploring and producing such oil and
gas which will lead to land clearances, spillage of oil on the land and in the water bodies where
the operations are being carried out resulting into the contamination of land and water body,
emissions of natural gas in the in the air contaminating the atmosphere around it and making it
2

unhealthy and sometimes even poisonous (Pizzi and et.al., 2021). Now, one thing to note is that
these plants are often located in the areas of developing economies which are near the areas
which has rich biological diversity and high vulnerable ecologically for example mangroves,
national parks and natural reserves which are protected and rain & tropical forests. Therefore, the
companies need voluntary introduction of certain initiatives for protecting the atmosphere and
environment.
Initially, the adverse effects of these oil and gas companies were focussed on the
degradation of the marine population but since 1970s, agendas and issues like climatic changes
and risk to biodiversity are also included. All these environmental reporting and environmental
practices although very beneficial to the companies and the environment as it leads to sustainable
operations and enhanced impact on the environment and the society in and around it (Phan and
et.al., 2021). It shall be noted that as per the survey of 2005 of CSR carried out by KPMG, 16 out
of the 20 companies engaged in the industry of oil and gas which are listed among the largest
250 companies around the world resorted to the reporting the issues related to the corporate
responsibility which resulted in the increase in the CSR reporting from 2002 to 2005 from 58%
to 80%. Key challenges in this industry also covers the issues like emissions of carbon dioxide,
policies relating to zero – spillage of the oil and other elements, replacement of steel tubes in the
plants with the chrome tubes which are more environment friendly, etc. Also, it is a major
challenge for the companies operating in the oil and gas industry to have capable and efficient
technical and managerial skills which will give birth to new responsibility issues like installation
of new oil pipe lines, improving the process of combustion, implementing new processes of
production of oil and gases, increase in the levels of production of gases, reduction in the costs of
production, etc.
CSR activities are implemented by the companies of oil and gas industry for improving
and enhancing the environmental performance and practices and coping up with the negative
effects of the operations of the company in this industry. But, such there are certain constraints
and restrictions to the enhanced and improved environmental performance which are barriers to
the effective CSR reporting and compliances (Chowdhury and et.al., 2019). One of these barriers
is reluctance and ignorance on the part of the companies to make such improvements in
environmental issues without due pressure from the government and the resultant legal and
regulatory obligations to report such issues and improvements. Another major constraint to this
3