Corporate Social Responsibility Performance of Oils
All organization have an impact on society and the environment through their operations, product or services, and their interactions with key stakeholders groups including employees, customers, suppliers, investors and the local community. There is no single, commonly accepted definition of the notion of Corporate Social Responsibility and the concept is often used interchangeably with other terms including corporate governance, corporate citizenship, corporate accountability, business ethics, corporate responsibility and sustainability. Moreover definition vary in different cultural and national settings. The legally defined mandate of today’s corporation is to pursue relentlessly and without exception, its own self interest, regardless of the often harmful consequences it might cause to others. From the 1950’s till date, the concept of CSR has gained considerable acceptance and the meaning has been broadened to include additional components. Corporate Social Responsibility in a globalized industrial world is about making the business investment and the community promise sustainable for the company and for the communities we operate in, its people and environment. It demands responsible governance-based on principles of leadership, integrity, respect, commitment and relationships. Philopher Ayn Rand contends that our one and only social responsibility is to ourselves, but this concern does not act as a barrier to helping others.
The moral purpose of one’s life is the achievement of happiness. This does not mean that he is indifferent to all men, that human life is of no value to him and that he has no reason to help others in an emergency – but it does not mean that he does not subordinate his life to the welfare of the others, that he does not sacrifice himself to their needs, that the relief of his suffering is not his primary concern, that any help he gives is an act of generosity, not of moral duty.
The beginning of the debate on CSR is marked by a landmark study commissioned by the Federal Council of Churches of Christ in America, entitled “The Social Responsibility of Business man” (1953) and authored by Howard Bowen. Yet, two year earlier, in May 1951, Frank Abrams, a top executive with Standard Oil, published a remarkable piece of reflection on “Management’s Responsibilities in Complex World” in the Harvard Business Review, a title that seems even more topical today than almost sixty years ago. Abrams urged his fellow managers, i.e., businessmen, to think of themselves as professionals with an explicit sense of duty not just to shareholders, employees, and customers, but also to the public in general: “management must understand that the general public – man and women everywhere – have a very deep interest in, and are affected by, what is going on”. He thus introduces an early stakeholders perspective. Bowen’s study, in contrast, is concerned with detailing the specific social responsibilities of businessmen. He argues that businessmen must assume “ a large measure of responsibilities if the economic system of free enterprise is to continue and prosper”, appealing to enlightened self interest. And although Bowen addresses questions such as “ What constitute good citizenship for a business enterprise? How does a moral enterprise behave? Or what kind of business decisions promote the end of modern society and what kinds detract?” his and Abrams’ early contributions focus on the responsibilities of individuals within an enterprise or corporation. Thus, in hindsight the beginning of CSR is in fact marked by a discussion on individual responsibilities of managers vis-à-vis theire constituencies and society in general. Put differently, CSR was more like “SR” – social responsibility – and inextricably bound up with the responsibilities of executives.
It was not until the 1960s, however, that academia took serious notice of the emerging interest in CSR and the level of analysis still continues to be focused predominantly on the individual manager, or “businessman” for that matter. It is Milton Friedman’s piece on CSR (1970), which first appeared in the New York Times Magazine, that arguably had the most sustainable impact. Friedman famously claimed “that the social responsibility of business is to increase its profits”(and nothing else). He argues that business and corporations have in fact no responsibilities, in contrast to a corporate executive(i.e., the individual). As a business person and “an agent serving the interest of his principal” the executive has direct responsibility to the principal, namely “to conduct business in accordance with their desires, which generally will be to make as money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical customs.
But the 1970s are also marked by serious attempt to define CSR more broadly. The Committee for Economic Development (1971) e.g., came up with a multilevel perspective: the inner circle consisting of a corporations basic economic responsibilities, the middle level of “ current social and environmental concern” and the outer circle of “emerging responsibilities”. Moreover, CSR is defined as “enlightened self interest” (steiner, 1971), as what goes beyond obeying the law in terms of “what every good citizen does……” (Davis, 1973), that is we find reference to “good corporate citizenship.” Eels and Walton (1974) define it as “concern with the needs and goals of society”, but we also find multiple reference to the “legal responsibility” of a corporation, to “being ethical”, doing charitable action, or ensuring legitimacy. One of the founding definition of the modern concept of CSR is much-cited four-part model of CSR by Carroll (Carroll, 1979). According to this model, the corporation have four types of responsibilities: first the economic responsibility to be profitable; and second, the legal responsibility to abide by the laws of the respective society. These two parts are the mandatory part of business responsibility. The third responsibility is ethical and obliges corporations to do what is right, just and fair even when business is compelled to do so by the legal framework. Rather than being mandatory, the issues linked to the ethical responsibilities should lead to voluntary action by corporations, but are – as Carroll puts it – “expected” from business. The fourth area of responsibility is labeled philanthropic and describe those activities “desired” by society, such as contributing resources to various kinds of social, educational, recreational or cultural purposes.
It was in the 1980s that the discussion on CSR became at once more diverse and more theoretical: scholars inquired about corporate responsibility in more general, i.e., ethical terms and attempted to define the moral status of the corporation. The discussion around corporate moral agency (Donaldson, 1982; French, 1984; Velasquez, 1983) marked in some way the emergence of business ethics as an academic discipline. It become clear that corporations can indeed be considered moral agents, because they have specific intention and decision structures and thus the capacity to engage in moral decision making, to control their policies, rules, and actions and even to respond to ethical criticism, e.g., by external stake holders. (Donaldson, 1982; French, 1995) Consequently, at the same time ‘stakeholders theory’ was developed and put forwarded (Freeman, 1984). Moreover, Europe enters the discussion – a discussion that is propelled by “dark cases” like Bhopal (union Carbide) and Exxon Valdez; the European Business Ethics Network (EBEN) is founded in 1987 and, last but not certainly not least, this journal, the Journal of Business Ethics, begins its influential work.
After 1990s bring further specialization and first business ethics theories: global warming and environmental concerns shift attention to issue of sustainable development and beyond mere social towards “triple botton line” – performance (Elkington, 1998); the speed and scope of market globalization lead to increasing concerns about ‘global business ethics’ (De George, 1993; Donaldson, 1989; Maak and Lunau, 1998). Moreover, Donaldson and Dunfee put forward an “Interrative Social Contract Theory” (ISCT, 1994; 1999), Ulrich (1997/2008) an “Integrative Business Ethics”, Bowie (1998) “ A Kantian Perspective” on business ethics, and the late Bob Solomon an Aristotelian, i.e., “Virtue Ethics Perspective” (1993, 1999)
Frederick (1998) divided the first fifty or so years of CSR into four phases: CSR-1 (1960s – 1970s) as “doing the right things”; CSR –2 (1980s), according to Frederick, is marked by more responsive corporate behavior toward social responsibilities, i.e., “corporate social responsiveness”; CSR -3 (1990s) is marked by compliance and Frederick imagines that CSR- 4 (Since then) will bring more on cosmological and spiritual aspects. It remains to be seen whether or not CSR will indeed become more holistic in nature. As it stands, it is a stretched out construct – maybe not a “tortured” one, but certainly hard to pinpoint. It took Archie Carroll (1999) e.g., almost thirty pages to revisit 50 years of CSR and provide an evolutionary perspective of a “definitional construct.”
By “strategic Corporate responsibility” (Maak, 2008) connote the increasingly instrumental use of CSR as a strategic positioning device in the post-Enron environment. In order to succeed in an environment of contested values (Diermeier, 2006) CSR is “used” for reputational gains; CSR strategy in and of corporations is seen as a means to gain competitive advantage on “the market for virtue” (Vogel, 2006). Not surprisingly, the number of CSR reports has risen exponentially in recent years, demonstrating just how responsible corporations behave and that they should be trusted as good citizens around the world. Yet, the way CSR has been transformed into “strategic Corporate Responsibility” since the beginning of the millennium leaves the door wide open for moral hypocrisy (Bastenson et al., 2006), i.e., it may motivate corporations to appear moral without bearing the costs and consequences of actually being moral.
CSR as “srrategic corporate responsibility” ranges from risk and reputation management (Fombrum, 1996; Jackson, 2004) and measure to enhance client focus and benefits (Kotler and Lee, 2005) to initiative in which “ social and business benefits are large and distinctive” (Porter and Kramer, 2006). Consequently, Burke and Logsdon (1996) define CSR as strategic “when it yealds substantial business-related benefits to the firm.” Moreover, Porter and Kramer (2006) as leading proponents of instrumental theory argue that “the essential test that should guide CSR is not whether a cause is worthy but whether it presents an opportunity to create shared value”. Consequently, corporations should engage in “truly strategic CSR”; “it’s about choosing a unique position – doing things differently from competitors…” (2006). In other words, CSR is no longer considered a social or even a moral obligation of a corporation to society at large, but a mere market opportunity to achieve competitive advantage.
A study by Professor Stephen Erfle and Michel Frantantuono found that firms that were ranked highest in terms of their record on a variety of social issues had greater financial performance because such practices are capable of enhancing brand value of positive publicityA. Zairi(2000) proposes that given the proven impact of social responsibility on business performance and corporate image, CSR should be included in business excellence models. By extrapolation, it can be argued that if CSR impacts on factors including company reputation and corporate image, that it shares characteristics with, and therefore can be regarded implicity as, an integral component of at least some models of corporate identity.
Objectives of the Study:
The paper examines the various social initiatives taken by Oil and Gas PSUs in India and its impact at large.
The study is based mainly on both primary and secondary data. Primary data were collected through field visit in different places of Assam and some interaction with the company officials and local people. Secondary data which have been collected from companies annual reports, Magazines and websites. Some reputed journal in the field of business ethics and corporate responsibility were also consulted.
Oil PSUs and Government:
Government of India is also taking measures and setting guide lines for the public sector undertakings for discharging their social commitments. Public sector oil companies like ONGC, Indian Oil, Gail India, BPCL, HPCL and Oil India will spend at least 2% of their net profits for 2008-09 on social development projects this year as the government has set a floor for their social spending, petroleum secretary R. S. Pandey said on 17th April, 2009. After steel public sector units (PSUs), the government has set a mandatory target on social welfare activities for oil PSUs. The move could also be extended to public sector companies in other sectors.
AS part of the President, Dr A.P.J. Abdul Kalam's Vision 2020, ONGC will launch its Corporate Social Responsibility (CSR) project on providing urban amenities in rural areas (PURA) on April 18, 2005. The project will start with a seed money of Rs 10 crore. Same project has started by other PSUs in the field of Oil and Natural Gas and in some other sector also.
Corporate Social Responsibility performance of ONGC in Assam:
In Assam, most of the companies in corporate Oil and Natural Gas sector has been incurring expenditure for social cause as a part of their corporate citizenship policy.
Despite the main concern to find more oil and gas, the corporate oil and gas PSUs has always given top priority towards the upliftment of the less privileged sections of the society in which it operates. Since, this sector generate profits, it has a philosophy to contribute for well-being of the society to improve the quality of the people amongst whom it works, to the extent possible. It is also committed to provide safe working conditions to its employees and to maintain ecological balance and protection of the environment in its operational activities. Special emphasis of pollution control and safety measure have been undertaken to prevent environmental degradation and accidents respectively.
Here in this paper, researcher has tried to find out specific activities done by the respective corporate body for upliftment of weaker section of the society and the community, and environment at a large.
ONGC was set up by an act of parliament known as ONGC Act 1959 to take over the activities of oil and natural gas directorates set up by the government of india in 1956. The main objectives of ONGC are maximize production and conservation of hydrocarbons, self reliance in technology, promoting indigenous effort in oil and gas related equipment, materials and services for more efficient use of energy and development of alternate source of energy and environment protection.
ONGC has its head quarters at Dehradun with project centers and liason offices throughout the country. Regional office of ONGC for Eastern Region is at Nazira, Assam. The eastern Regional Business Centre has three projects area, namely Dhansiri Vally Project office at Jorhat, Sibsagar Project, and Cachar project with project office at Silchar.
ONGC has been contributed contributed Rs. 30,020 Crore to Central Exchequer in 2007-08, and contributing more than Rs. 300 Corers per annum to the state exchequer.
The presence of ONGC in Assam has generated a lot of employment opportunities. About 80 percent of the employees in assets hail from the state
Corporate Social Responsibility Initiatives of ONGC in Assam:
The ONGC has a policy which is kinwn as “Corporate citizen policy”. According to this policy ONGC is actively involved in promoting education, helthcare, entreprenurship and supporting water management in the community, in and around its area of operations. ONGC is also providingcalamity relief throughout the country.
For last few years ONGC has spent Lakhs of rupees every year to develop educational infrastructure in various primary and middle level school of Assam. ONGC has spent about Rs.64 lakhs in two years i.e., 2004-05 and 2005-06 on education with special thrust on Information Technology. Over 140 computer were distributed to various schools, colleges and other educational institutions to spread computer awareness.
ONGC has spent more than Rs.42 lakhs in the year 2004-05 and 2005-06 on health care, drinking water scheme and medical camps. ONGC in an extra ordinary gesture and good will given One modern mobile cancer detection unit costing Rs. 48.2 lakhs to the people of Sibsaga, Assam in 2005. ONGC doctors organize health awareness programms to promote mass consciousness for health and hygiene, including HIV-AIDS Awareness. Besides this , ONGC extends monetary assistance for the development of specialized medical facilities in some of the hospitals of Assam.
A massive entrepreneurship scheme by way of developing and supporting genuine Self-Help Groups has been undertaken by ONGC in the Sivasagar district in collaboration with the District Administration and the State Institute of Rural Development(SIRD).
To set-up an example ONGC has contributed Rs. 2 lakh for purchase of milk van, deep freezer, and cycles for distribution of milk to Sundar Pukhuri Milk Co-operative Society which on collaboration with State Veterinary Department.
Yuva samridhi is a project undertaken by ONGC for the promotion of Self-Helf Groups and creation of self employment opportunities in Sivasagar district. Under the District Administration, Bank and ONGC created approximately 4000 direct employment for unemployed youth in the district.
The natural disasters like flood, cyclone and earthquake have been often wreaked havoc in Assam. ONGC has always risen to the occasion and offered immediate aid to the people in distress, through contribution to the Chief Minister’s Relief Fund and NGO’s like Red Cross Society of India. It also extends assistance by way of sending medical teams, distributing food packets, water, clothing and other material in the affected areas. ONGC donated Rs. 25 laks to the Chief Minister’s Relief Fund and Rs. 15 laks to Red Cross Society for flood affected people of Assam in 2004.
With an objective to uplift the weaker section of the society, ONGC, Assam Asset has been spending nearly Rs. 15 lakh per annum under the sc/St Component plan on education and training, medical care and entrepreneurship scheme for the for the members of the weaker communities. It has done some remarkable work in certain areas like, Subodh Nagar village under Cachar District is one of the most backward village comes under the area of India-Bangladesh Border. ONGC has build one school and given all types of furniture, which makes it one of the model school in Cachar District.
ONGC has contributed Rs.7 lakhs to centre for Rural development (CRD) for the innovative project “Rickshaw Bank Guwahati”. Under this project it provide Rickshaws to participating pullers, and in turn the Rickshaw pullers have to refund a daily minimum amount of Rs. 20 towards the cost of Rickshaw. And on one year, the participants are the owners of their rickshaws.
ONGC is running different health programme in Assam, one of this is mobile cancer detection unit in Assam. It is fully supporting a project known as “Aakha” the Boat of hope a mobile medical ships for tribal living in Majuli island in Assam. It also supported Shankar Nethralaya, Guahati for upgradation of Diagnostic services. ONGC is also supporting Old Age Homes at hereby area of its operation in different places of Assam.
The amount invested by ONGC under socio-economic development progrrame was earlier .75% of their annual net profit, now from 2008-09 onward the company have to spend 2% of their net profit which was announced by petroleum secretary R. S. Pandey said on 17th April, 2009.
Corporate social responsibility has become an increasingly significant phenomena in today’s business world. Public sector corporate houses are more aware about it, and acting to the social problems more appropriately and consciously. Apart from giving philanthropy public sector corporate houses are interested for social capacity building, through providing training and educational facilities to the weaker section of the society, developing entrepreneurial skill among the youth, and trying to make people self-employed by providing facilities to the needy. Here in Assam ONGC has played a great role in every spare including infrastructure building, creating employment through training and education, market accessibility needs, emphasis on improving health, as well as empowering the weaker section of the people.
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