https://orcid.org/0000-0001-9247-3064
Abstract
We examine the spread and persistence of corporate social responsibility (CSR) to mitigate oil conflict, despite its failures. Our work challenges the ideas versus interests debate, arguing for a third way in which reinforcing feedbacks between ideas (problem narratives) and interests (power disconnects) interact to shape the persistence of failed CSR. Using Ogoniland, Nigeria, as a case study, we present novel findings showing that Shell and the Nigerian government developed problem narratives for CSR that reinforces rather than narrows existing power disconnects. In contrast, as those most negatively affected by oil extraction, the Ogoni people have a more complex understanding of the problems associated with extraction and the necessary solutions. Therefore, they are disappointed with failed CSR applications practiced by Shell since 1997 and continue to protest ongoing impacts of oil extraction. Oil companies need to change their problem narratives and concede more power to communities, and governments should cease enabling failed CSR strategies. Additionally, governments should reflect on and address the role they play in enabling CSR as a failed strategy, whether they are oil-producing host countries such as Nigeria or oil-consuming home countries such as Holland. Last, we discuss the generalizability of our theoretical framework and propose that the international community could play a role in narrowing domestic power disconnects.
Dans cet article, nous examinons la portée et la persistance, malgré leur échec, de pratiques de responsabilité sociale des entreprises (RSE) destinées à limiter les conflits liés à l'extraction pétrolière. Notre travail souhaite dépasser l'opposition classique entre idées et intérêts, en avançant l'existence d'une troisième voie, au sein de laquelle le renforcement des interactions entre idées (récits construits autour des problématiques) et intérêts (désengagement des autorités) contribue à la persistance de politiques de RSE formatées et infructueuses. Selon nous, ces interactions prolongent davantage ces pratiques que ne le ferait chacun des deux facteurs pris isolément. En prenant le territoire de l'Ogoniland au Nigeria en exemple, nous présentons de nouvelles conclusions démontrant que Shell et le gouvernement nigérian ont développé des récits en matière de RSE ayant renforcé ce désengagement des autorités. Par opposition, en tant qu'individus les plus affectés par l'extraction de pétrole, les membres du peuple Ogoni présentent une compréhension plus approfondie des problèmes associés à l'extraction, ainsi que des solutions requises. Par conséquent, l’échec de la mise en œuvre des politiques de RSE appliquées par Shell depuis 1997 est source pour eux de déception, et ils continuent de protester contre les impacts persistants de l'activité extractive. Les compagnies pétrolières doivent modifier les récits construits autour de ces problématiques et octroyer davantage de pouvoir de décision aux communautés. Les gouvernements, quant à eux, doivent cesser de valider des stratégies de RSE ayant démontré leur inutilité. Par ailleurs, ils doivent réfléchir à leur propre rôle dans l’échec de cette stratégie et y remédier, qu'il s'agisse de pays producteurs de pétrole tels que le Nigeria ou de pays importateurs tels que les Pays-Bas. Enfin, nous abordons le potentiel de généralisation de notre cadre théorique, et suggérons à la communauté internationale de contribuer à limiter le désengagement des autorités nationales.
En este artículo, analizamos la proliferación y la persistencia de la responsabilidad social corporativa (RSC) como forma de mitigar el conflicto del petróleo, a pesar de sus fracasos. Nuestro trabajo cuestiona el debate centrado en las ideas frente a los intereses, y defiende que existe una tercera vía mediante la cual reforzar la retroalimentación entre las ideas (narrativas de los problemas) y los intereses (desconexiones de poder) que hace que estos dos conceptos interactúen para perpetuar una RSC fallida. Utilizando Ogonilandia, Nigeria, como estudio de caso, presentamos hallazgos novedosos que muestran que Shell y el gobierno nigeriano desarrollaron narrativas de problemas en materia de RSC que, en lugar de reducir, refuerzan las desconexiones de poder existentes. En cambio, al ser los más afectados por la extracción de petróleo, el pueblo Ogoni tiene una comprensión más compleja de los problemas asociados a la extracción y de las soluciones que son necesarias. Por consiguiente, están decepcionados con las fallidas políticas de RSC practicadas por Shell desde 1997 y siguen protestando debido a los impactos actuales provocados por la extracción de petróleo. Las empresas petroleras tienen que cambiar su narrativa con respecto a los problemas y conceder más poder a las comunidades, y los gobiernos deben dejar de permitir la implantación de estrategias de RSC fallidas. Además, los gobiernos deberían reflexionar y abordar el papel que ellos mismos desempeñan en la habilitación de la RSC como una estrategia fallida, ya sean países subdesarrollados productores de petróleo, como Nigeria, o países desarrollados consumidores de petróleo, como los Países Bajos. Por último, discutimos la generalización de nuestro marco teórico y proponemos que la comunidad internacional podría desempeñar un papel en la reducción de las desconexiones de poder nacionales.
Introduction
Theoretically, corporations can use stakeholder engagement and corporate social responsibility (CSR) approaches to build trust with local communities, resolve disputes, and create social license by proactively minimizing the negative social and environmental impacts of their operations; investing in public goods such as healthcare, education, and water supply; and ensuring adequate compensation for any damages that occur (Simon, Powers, and Gunnemann 1972). In practice, however, CSR is often applied as a pro forma practice of consultation without compromise that ultimately alienates local communities, increases conflict between communities and corporations, and fails to provide promised social and environmental benefits (Blowfield 2005; Frynas 2005; Cash 2012; Loe et al. 2017). In spite of this evidence, many corporations still treat CSR like a silver bullet solution to all of their social and environmental problems. In fact, some companies have persistently invested in CSR for decades despite ample evidence that it is not meeting their stated goals. In this, they are often supported by governments that have also jumped on the CSR bandwagon, transferring governance power to private corporations rather than improving public governance (Newell and Muro 2006; Zulkifli and Amran 2006; Frynas 2009; Idemudia 2010; Garcia-Rodriguez et al. 2013; Kirat 2015).
As described in the second section, we expand on previous explanations of the persistence of CSR as a failed governance strategy using a modified stakeholder model in which ideas (problem narratives) and interests (power disconnects) are mutually constitutive, creating reinforcing feedbacks that lead to different patterns of CSR application (Young 2001). Specifically, stakeholders’ problem narratives, or their understanding of the causes, effects, and solutions to problems in the oil industry, shape their incentives to engage in CSR and vice versa. This coevolution of ideas and interests allows corporations and the governments that sponsor them to rationalize using CSR to maintain control over the costs and benefits of oil production, rather than ceding substantial power to local communities as per CSR theory. This, in turn, ensures that power disconnects remain wide, with most decisions being made by corporate actors who are insulated from the costs of their decisions, while people who experience externalities from oil production are still sidelined. Although local communities recognize the inherent contradiction in this pro forma approach to CSR, corporate and government actors do not. Instead, they focus on a much smaller array of goals (e.g., investment in local infrastructure, relationships with local elites) and so deem CSR successful even as environmental degradation and conflicts with local communities continue.
In the third section, we apply this framework to the case of Shell Oil in Ogoniland, Nigeria, showing how converging interests and incentives shaped the implementation of CSR in the region. Through decades of experience, Shell, the Nigerian government, and some local elites developed a version of CSR that focuses on regional economic growth through investment in large-scale infrastructure projects with limited benefits to local communities. They staunchly refuse to admit responsibility for environmental destruction in the Ogoni region and have done very little to address the concerns raised by community members in stakeholder engagement sessions. In contrast, as those most negatively affected by oil extraction, communities in Ogoniland have a complex understanding of the problems associated with the industry and their necessary solutions. They are therefore disappointed with the pro forma version of CSR practiced by Shell since the mid-1990s, and continue to protest the ongoing socioeconomic and environmental impacts of oil extraction, sometimes using violence as a means to amplify their concerns. Nevertheless, Shell continues to spend millions of dollars annually on CSR activities and claims that its approach to CSR has been a great success. Indeed, based on their problem narrative, Shell's CSR has been successful, but if considered through the lens of CSR theory—or the perspective of local communities—it clearly has not.
We discuss the generalizability of our theoretical framework in the fourth section, showing how reinforcing feedbacks between problem narratives and power disconnects can produce favorable or unfavorable outcomes in governance of the oil industry. As shown in the Ogoni case, unfavorable outcomes result when power disconnects are wide and the problem narratives espoused by corporations and other powerful actors are overly simple. Based on our framework, we can also expect that CSR will be effective over the long run when power disconnects are narrow and corporate problem narratives are accurate and inclusive of local communities. However, the most interesting contribution of the framework is observed when we consider the dynamics that occur when problem narratives and power disconnects are aligned in opposite directions. For instance, when corporate problem narratives are inclusive and accurate, but power disconnects are wide, CSR has the capacity to either become more effective and less pro forma (if corporations narrow power disconnects by listening to local communities and using their resources to amplify community voices) or less effective and more pro forma (if corporations use CSR to rationalize existing power disconnects by replacing their complex narratives with simpler and less accurate narratives). Analysis of these dynamics suggests that transitioning away from the ineffective, pro forma version of CSR described in the Ogoni case requires both the narrowing of power disconnects and the realignment of problem narratives across all components of the governance system. Piecemeal increases in the power of local communities or incremental improvements in corporate/government problem narratives will quickly be eroded if ideas and incentives are not addressed simultaneously. Indeed, effective CSR may not be a solution in itself but rather one outcome of larger democratic/egalitarian forces (Mitchell 2021).
We conclude this paper by considering the scholarly and applied implications of this work. Understanding the relationships between ideas and incentives in policy making is difficult, as they are so closely interconnected. Much additional work is required to build out the framework presented here, both within the context of understanding CSR as a failed approach to governance and in the broader realms of political science, international relations, and related disciplines. New methods for integrating lessons from psychology and decision science would be particularly useful in this pursuit. On the applied side, our work suggests that oil companies will need to change their problem narratives and concede more power to communities to really attain the goals set out by CSR theory. However, if power disconnects remain wide, such transformation is unlikely. People who are interested in improving social responsibility in the oil industry might be better served finding ways to empower local communities, whether through better representation in domestic governments or through international mechanisms, such as the court cases brought by the Ogoni people against Shell Oil in the United Kingdom and Holland. Without increased pressure and perhaps, larger societal change (Mitchell 2021), Shell and its supporters will continue their business-as-usual approach to CSR, because their incentives to maintain the status quo are reinforced by problem narratives that rationalize its shortcomings.
CSR and the Oil Industry
From the literature, it is clear that CSR is generally applied as a simple solution to the multiple problems associated with oil extraction, particularly internalizing externalities and reducing conflict with local communities. Although some studies find that CSR has the potential to address sustainability problems around oil extraction, others have pointed out the failure of CSR to address its intended social and environmental goals (Blowfield 2005; Frynas 2005; Cash 2012; Garcia-Rodriguez et al. 2013). One important source of failure is lack of attention to the complex context in which oil production occurs (Loe et al. 2017). The literature also reveals that in most cases of failure, CSR was used superficially (Idemudia 2010). That is, communities were asked about their concerns, but these issues were never sufficiently addressed by corporations. Instead, corporations tried to placate local actors with a rather haphazard array of high-profile projects, such as the construction of highways and hospitals that might look good in the press but did not really address concerns such as increased pollution, lack of opportunity, and a fair distribution of the wealth gained from oil production. In this, companies were often supported by local and national governments, which also viewed CSR as an easy answer to governance failures in oil-producing regions.
We argue that feedbacks between problem narratives and power disconnects drive the spread and persistence of pro forma versions of CSR in the oil industry. Our theoretical framework is built on a modified stakeholder model of oil governance. A stakeholder is an individual or group that can influence or is influenced by a firm's actions (Freeman 1984). In Freeman's framework, the firm is at the center of direct and bilateral relationships with a variety of stakeholders. However, in oil extraction, the firm is not central per se, but instead is one important actor in an interconnected web of relationships. For the sake of simplicity, we consider relationships among three primary actors: the oil company, the host government, and the host community. Scholars observe that the relationships between host communities and both the corporation and the national governments are mediated by local elites, who straddle the boundaries between host government and host communities, and we illustrate this observation in figure 1 (Smallman et al. 2007; Rajan 2011; Barma et al. 2012).
Relationships among oil industry actors.
The host government negotiates and administers contracts with oil companies, regulates the industry, and receives revenue from oil extraction through royalties and taxes paid by oil companies (Johnston 1994). Oil companies can also choose to lobby, bribe, or otherwise influence government regulation of the industry (Gupta 2017). The government's relationship with the host community (society) centers around the redistribution of revenues earned from extraction to boost development, although its role as a regulator can also be important for reducing the negative externalities associated with oil extraction (Mahdavy 1970; Sandbakken 2006; Gonzalez and Lodola 2019). In theory, host communities should be able to influence the host government through elections or other democratic institutions, but in reality, host communities are often politically marginalized and so primarily influence government through representation by local elites, whose effectiveness and accountability can vary substantially (Hancock and Sovacool 2018). Indeed, in many oil-dependent economies, a combination of pressure from oil companies for minimal regulation and the lack of accountability for host governments and local elites results in long-term neglect of host communities, who may suffer degraded environmental, economic, and social conditions for decades due to oil extraction in their regions (Rajan 2011; Aaron 2015).
Ultimately, it is this failure of public governance that makes room for private governance through CSR. In theory, CSR creates opportunities for host communities to communicate with companies about the effects of extraction on their lives (Laplante and Spears 2008). Companies then hold themselves accountable for addressing community concerns through investments that address socioeconomic ills and changes in their production processes that prevent or remedy localized harms from extraction (Anderson and Bieniaszewska 2005; Kirat 2015; Csevár 2021). At its best, CSR is an iterative process that provides communities with powers to shape company policy and oversight to ensure that remedies are implemented in accordance with community preferences. Unfortunately, CSR can also be implemented in a pro forma manner, where communities are consulted but their input does little to change a company's operations or direct social investment in ways that address community needs. In this watered-down version of CSR, local elites often act as intermediaries, creating opportunities for further corruption of the process if elites themselves are not accountable to host communities. In the rest of this section, we explain problem narratives and power disconnects, and how they reinforce each other to result in pro forma applications of CSR even though there is little evidence that it has had the desired effect on conflict communities or environmental protection.
Problem Narratives and the Power of Ideas
Problem narratives are just-so stories that people use to understand what causes a problem, who is affected by the problem, and who is responsible for solving the problem (Bayes et al. 1998; Bevir 2006). When people believe that a problem is simple, they are more likely to believe that it has a simple solution. Furthermore, the content of the problem narrative tends to shape the willingness to accept some types of solutions over others (Young et al. 2018). For instance, neoliberal ideology focuses on government interference in markets as the source of most economic problems, and so reduced government and increased market-based solutions (such as CSR) are the most common solutions associated with this problem narrative.
In oil governance, the three main types of actors described in figure 1 have different problem narratives associated with CSR. Oil companies express a fairly simple problem narrative. For them, the main problem is the conflict between the industry and local communities, particularly over the economic and social costs of disruptive resistance to oil extraction. An additional issue may be the perceptions of shareholders, the stock markets, employees, and the general public, particularly when conflicts with local actors receive international attention (Johnston 2008; Sabet et al. 2012). Corporations generally identify poverty as the primary cause of host community grievances regarding oil production, with some recognition that negative environmental impacts on communities contribute as well (Newell and Frynas 2007). With this simple definition of the problem, a superficial application of CSR that helps to reduce some poverty in local communities and that mitigates the most egregious environmental impacts should solve the problem as they see it (Idemudia 2010).
Governments share a similar problem narrative, but they can also view the more violent forms of community conflict with industry as a threat to the rule of law and to their monopoly over military and political power. This view is particularly strong for authoritarian regimes and in countries where host communities are already politically and socially marginalized. These governments may blame “powerhungry troublemakers” for violent conflicts with oil companies, along with poverty in the region (Frynas 2001). Thus, national governments can embrace industry-led CSR and even spend public funds on development projects in oil-rich regions while at the same time repressing their citizens and engaging in armed conflicts with insurgent groups (Nwapi 2010; Patey 2010). In some cases, this perception is shared by industry, and so oil companies have hired security forces to defend their assets and interests in local communities as well (Choukroune 2013).
As those most directly affected by the decisions of oil companies and governments alike, host communities tend to have more nuanced, context-specific problem narratives. They identify a range of problems including harmful operational practices, ineffective regulatory oversight, and economic and political marginalization. The last issue may be historically determined, but is usually seen to be exacerbated by oil extraction. Responsibility for this complex set of problems is laid at the feet of the industry and national governments, but many local people also recognize that their community leaders can be complicit in these activities (Patey 2010; Bridge and Le Billon 2016). With this complex understanding of the problem, no simple application of CSR will be acceptable. Host communities demand the power to hold governments and oil companies accountable. When this is denied, they seek to gain power through other means, such as armed conflict, material attacks, protests and activism, and legal challenges (Patey 2010; Anifowose et al. 2012; Davis and Franks 2014; Jaskoski 2020). This brings us to the next component of our main argument, power disconnects.
Power Disconnects and the Influence of Incentives
Power disconnects occur when the people who are affected by social and environmental problems lack the power to solve them or, conversely, when the people who have the power to solve social and environmental problems do not experience the negative impacts. In the oil sector, host communities have borne the brunt of the socioeconomic and environmental costs of oil extraction, even though they have little political or economic power to control the methods of extraction or the distribution of revenue from oil production. Instead, the benefits of extraction accrue to the government, oil companies, and local elites, all of whom therefore have a vested interest in using their political and economic influence to keep profits high (Newell and Frynas 2007; McFerson 2010). Thus, power disconnects are wide in the oil industry. In theory, CSR is supposed to bridge the gap between winners and losers from extraction, narrowing power disconnects by shifting decision-making power to host communities. However, in practice, governments and companies often work together to control the CSR process because they are unwilling to relinquish either political or economic power.
This helps to explain why CSR is implemented in a pro forma manner; corporations are willing to “listen” to host communities but still make decisions based on short-run profits rather than the “triple-bottom line,” “win-win” solutions, or any of the other criteria they claim to adhere to in their CSR commitments. Corporations also tend to work selectively with decision-makers who are not accountable to host communities. By placating local elites, corporations can claim that CSR activities are successful even though there is limited distribution of benefits to members of the broader community (Watts 2005; Gardner 2015; Bridge and Le Billon 2016; Frederisken 2019). Corporations also lobby national governments, often using CSR as a rationale for maintaining a lax regulatory environmental regime that allows them to maintain control over their production process, to pay lower taxes and fees, and to otherwise make decisions that are contrary to the best interests of the host community (Idemudia 2010).
Regional and national governments may also have a vested interest in maintaining high corporate profits—and high revenues from corporate taxes or from profits when the government is a major shareholder—and so embrace superficial CSR as a cheaper alternative to effective governance (Moon 2004). They can do this in part because host communities tend to be economically and politically marginalized, so they have difficulty holding regional or national governments accountable (Mayes 2015). Nevertheless, there are other types of power available to the host community that could either hurt or help their goal of reducing externalities. Rogue community members can commit criminal acts by sabotaging firm and government assets for their own material gain. For example, pipeline sabotage to steal crude oil aimed to hurt government and multinational corporation interests (Adebayo and Dada 2008; Kraidi et al. 2019). Although criminal in nature, acts such as sabotage or kidnapping are attempts to assert the power-denied communities. Unfortunately, they often hurt the local environment, produce limited economic prospects in the local community, and can serve as an excuse for further government repression. Host communities could also turn to the international community (figure 2), through the media, courts, and activist groups, to raise awareness about their concerns, which could put pressure on oil companies and governments to correct harms (Watts 2015). In the conclusion, we discuss how future research can incorporate the international community into this analysis.
The role of the international community.
A Third Way: Feedbacks between Ideas and Incentives
Several scholars have noted the limits of CSR broadly, and many have identified its ineffectiveness in the extractive sector (Idemudia 2010; Visser 2010; Banerjee 2014; Kirat 2015). Geopolitical analyses can help explain the political strength and persistence of the oil industry (e.g., Mitchell 2021), but, as described above, scholars have advanced both ideas (problem narratives) and incentives (power disconnects) to explain the persistence of pro forma CSR as applied by corporations such as Shell. We bridge this gap by challenging the ideas versus interests debate to make an original argument for a third way in which ideas and interests are mutually constitutive, creating reinforcing feedbacks that can lock in pro forma CSR, even in the face of domestic and international pressure for improvement.
Across several epistemic fields that include environmental governance, climate change, human rights, and foreign policy, scholars have examined the ideas (or norms) versus interests debate (Klotz 1995; Raymond 1997; Young 2001; Kim and Passoni 2010; Rodio and Schmitz 2010; Gupta 2012; Opp 2017; Dawson 2021). For instance, Young (2001, 10) compares social practice models (ideas) and collective action models (interests) and their ability to determine which institutions explain human–environment interactions. In another example, Klotz (1995, 453) argues that norms (ideas), separate from material considerations (interests), were a determining factor in generating sanctions against apartheid South Africa. Ideas are appropriate standards of behavior derived from culture, beliefs, and habits that can inform the behavior of actors, while interests inform the behavior of actors based on rational choice calculations maximizing utility. Our work contributes to this debate by challenging the ideas versus interest dichotomy in environmental governance to argue that ideas (problem narratives) and interests (power disconnects) are mutually constitutive, and in shaping each other, influence the persistence of CSR as a failed strategy in the extractive sector.
In this, we draw on insights from social psychology, particularly the concept of motivated reasoning, where people rationalize conflicting beliefs or values to justify self-interested decisions (Kunda 1990). Using the concepts described above, oil companies and complicit governments can use their overly simple problem narratives to justify an overly simple application of CSR that allows them to maintain conflicting values regarding social responsibility on the one hand and maintaining control over benefits from oil production on the other. Furthermore, the biases engendered in these overly simple problem narratives prevent learning through experience as communities express increasing dissatisfaction with pro forma applications of CSR. This allows elite actors to maintain and even widen the power disconnects between local communities and corporations/governments. Since the construction and maintenance of problem narratives that reinforce power disconnects is an iterative and largely internal process, it is difficult to study without access to the very decision-makers who are engaged in motivated reasoning around CSR. However, we can track the evolution of problem narratives across key actors and assess the effects of these narratives on applications of CSR. In the case study below, we use process tracing to further explore the coevolution of ideas and interests in failed approaches to CSR in Ogoniland, Nigeria.
Case Study: Royal Dutch Shell in Nigeria
The literature review above gives us a general picture of how feedbacks between problem narratives and power disconnects permit pro forma approaches to CSR to persist and spread in the oil industry, but it is useful to look more closely at a single case study. We chose to examine how Royal Dutch Shell has used CSR in Ogoniland, Nigeria. In addition to being well documented, and therefore providing us with sufficient data for the analysis, this case is representative of many other contexts where corporations—often backed by governments—try to use pro forma approaches to CSR to end decade-old conflicts with host communities, but have failed. As noted in the introduction, this case permits us to demonstrate our framework as it applies to a most unfavorable outcome of CSR application. We will return to the generalizability of the framework in the next section.
Royal Dutch Shell (then Shell D'Arcy) was the first corporation to produce oil in Nigeria, sinking the first wells in Oloibiri (now in Bayelsa state) in 1956, and it remains one of the largest producers of Nigerian oil to date (Klieman 2012; Bousso 2019). Shell began implementing CSR in the mid-1990s, in response to ongoing conflicts in Ogoniland and resulting external pressures from international actors. Since 1998, they have increasingly relied on CSR to resolve conflicts with host communities throughout Nigeria, often with backing from the Nigerian government. Nevertheless, conflicts with host communities persist in Ogoniland and elsewhere (Aaron and Patrick 2013; Prpich, Sam, and Coulon 2019).
This section firsts explains why Shell decided to use pro forma CSR as a solution to conflicts with host communities in Ogoniland and then goes on to explain why the company continues to rely on CSR as a failed strategy in spite of long-term disappointments to mitigate conflict with the Ogoni people. Our explanatory variables are problem narratives and power disconnects. Data for this analysis are gleaned from public statements by each group of actors as well as the peer-reviewed literature. For our dependent variables, we rely on the same data sources, describing how Shell has implemented CSR (pro forma or not) and what impacts CSR has had on conflict with the local community and internalizing the negative externalities associated with Shell's activities in Ogoniland. We find that Shell has, indeed, relied on pro forma CSR, that this has not been an effective approach, but was adopted and persists due to the divergent problem narratives and incentives to maintain power disconnects among actors in the case study. Our novel findings show that feedbacks between these two factors permit and reinforce failed CSR.
Selecting CSR as a Conflict Mitigation Approach
Prior to the adoption of CSR in Ogoniland, power disconnects were wide and problem narratives were quite different for the three main actors: Shell (through their subsidiary Shell Petroleum Development Company; SPDC), the Nigerian government, and the Ogoni community. The result was more than forty years of environmental degradation and socioeconomic disruption, and escalating cycles of violence in the region (Yakubu 2017; David, Bodo, and Gimah 2019). By the mid-1990s, a combination of local protests and international pressure finally convinced Shell that a change in their corporate policy was needed. With support from the Nigerian government, Shell chose to use CSR as their primary method for reducing conflict with the Ogoni people, addressing the chronic externalities associated with oil production in the region, and polishing their tarnished international reputation. Even from this early period, implementation of CSR was superficial, reflecting the combination of overly simple problem narratives and an unwillingness to give up power on the part of Shell and the Nigerian government.
As shown in figure 3, Ogoniland is a small region in southern Nigeria. Geographically, Ogoni is far away from Abuja, the capital of Nigeria (694 km) and the headquarters for Shell Nigeria in Lagos (635 km). Like many other host communities in the Niger Delta, the Ogoni are an ethnic minority in Nigeria, where politics tends to be dominated by majority groups such as the Hausa/Fulani, Igbo, and Yoruba. The Ogoni are also socioeconomically marginalized; only about 45 percent have up to a secondary school education, 63.25 percent of the population earn less than US$29.95 (adjusted for inflation in 2021) per month, and 46 percent of the population earn a subsistence living in either farming or fishing (Bodo and Ukpong 2018). Corruption and failure of the rule of law further undermine the ability of the Ogoni people to affect decision-making regarding oil production in their region. Thus, their primary recourse has been public protest, through peaceful and violent means (Frynas 2001). They have also effectively leveraged international concern, although at a great cost as described below.
Map of Nigeria showing Ogoniland.
Oil production in Ogoniland started in the 1950s, and was exclusively undertaken by the Royal Dutch Shell (Shell) Nigerian subsidiary, Shell Petroleum Development Corporation (SPDC), as the main operating partner, in their joint venture partnership with the Nigerian National Petroleum Company (NNPC), Agip, and Elf.1 The volume of crude oil they extracted from Ogoniland (until 1993) is valued at US$5.2 billion, 79 percent of which was paid to the Nigerian government in equity take, taxes, and royalties (Boele, Fabig, and Wheeler 2001). Regulation of production was lax under colonial rule and remained inadequate after independence in 1960. Shell's policies were also purely extractive, with little regard for the local community or the environmental degradation caused by their operations. As a result, the Ogoni people suffered from increasing socioeconomic marginalization and increasing levels of environmental degradation, including constant low-level oil spills that have not been remediated and at least two big spills in 2008 in Bodo (estimated at 280,000 barrels) that have yet to be completely cleaned up (Vidal 2011).
Although the national government tried to balance out the negative effects of oil production after independence in 1960, these good intentions were eroded by internecine conflicts, inadequate development in the area, and corruption (Klieman 2012). Revenue allocation formulas for redistribution of resource rents illustrate the economic marginalization of the Ogoni and other oil-producing communities. Table 1 shows the major postcolonial formulas in place during the period of oil extraction in Ogoniland. Since independence in 1960, the bulk of resource revenue accrues to the federal government, followed by the states, and then local governments. It was not until a successful legal challenge by a state governor that the federal government drafted oil-producing areas into the allocation formula in 1982, at 1.5 percent share (Lukpata 2013; Ogunyemi 2014). Like other oil-producing communities, the Ogoni people do not control the redistribution of oil revenue. What little that comes directly to them through the revenue formula and subnational development parastatals has mostly been lost to corruption and mismanagement (Boele et al. 2001; Omotola 2007). The power that the government and oil companies derive from the earned oil wealth is not available to the Ogoni people. Hence, they remain at a disadvantage. The similarities of the revenue- and profit-seeking interests of the government and SPDC foreshadows that governments can be driven by interests that align with firm interests (Prpich, Sam, and Coulon 2019). Government regulation, too, was insufficient. Although the environmental regulatory regime to address the environmental grievances of the Ogonis exists, it is ineffective due to technical and expertise deficiencies, competing policy visions by key regulatory agencies, and importation of foreign policy initiatives that are inappropriate for the Nigerian context (UNEP 2011; Prpich, Sam, and Coulon 2019).
Nigeria's major postcolonial revenue allocation formulas during the period of oil extraction in Ogoniland.
| Regions/tiers of government | Binns’ Commission (1964)* | Aboyade Report (1977) | Okigbo Report (1980) |
|---|---|---|---|
| North | 42 percent | ||
| West | 30 percent | ||
| East | 20 percent | ||
| Midwest | 8 percent | ||
| Federal | 50 percent | 55 percent | |
| State | 30 percent | 32.5 percent | |
| Local | 10 percent | 10 percent | |
| Other** | 3 percent | 2.5 percent |
| Regions/tiers of government | Binns’ Commission (1964)* | Aboyade Report (1977) | Okigbo Report (1980) |
|---|---|---|---|
| North | 42 percent | ||
| West | 30 percent | ||
| East | 20 percent | ||
| Midwest | 8 percent | ||
| Federal | 50 percent | 55 percent | |
| State | 30 percent | 32.5 percent | |
| Local | 10 percent | 10 percent | |
| Other** | 3 percent | 2.5 percent |
Source: Lukpata (2013), Ogunyemi (2014).
*The Binns’ Commission formula is a precolonial holdover (Ogunyemi 2014).
**Other includes allocation to various targeted accounts such as ecology and special fund.
Nigeria's major postcolonial revenue allocation formulas during the period of oil extraction in Ogoniland.
| Regions/tiers of government | Binns’ Commission (1964)* | Aboyade Report (1977) | Okigbo Report (1980) |
|---|---|---|---|
| North | 42 percent | ||
| West | 30 percent | ||
| East | 20 percent | ||
| Midwest | 8 percent | ||
| Federal | 50 percent | 55 percent | |
| State | 30 percent | 32.5 percent | |
| Local | 10 percent | 10 percent | |
| Other** | 3 percent | 2.5 percent |
| Regions/tiers of government | Binns’ Commission (1964)* | Aboyade Report (1977) | Okigbo Report (1980) |
|---|---|---|---|
| North | 42 percent | ||
| West | 30 percent | ||
| East | 20 percent | ||
| Midwest | 8 percent | ||
| Federal | 50 percent | 55 percent | |
| State | 30 percent | 32.5 percent | |
| Local | 10 percent | 10 percent | |
| Other** | 3 percent | 2.5 percent |
Source: Lukpata (2013), Ogunyemi (2014).
*The Binns’ Commission formula is a precolonial holdover (Ogunyemi 2014).
**Other includes allocation to various targeted accounts such as ecology and special fund.
Thus, by the 1980s, power disconnects were very wide, with the vast majority of benefits accruing to Shell and the Nigerian government and the vast majority of costs falling on the Ogoni people. When the Ogoni organized to protest the negative effects of oil production through the Movement for the Survival of the Ogoni People (MOSOP), the military government saw this as a secessionist movement and chose to violently repress peaceful and violent activists alike (MOSOP 1992; Okafor 2018).
Protection of oil-producing assets is a joint interest of the Nigerian government and SPDC. The Nigerian government and SPDC ignored the Ogoni Bill of Rights’ (OBR) demands to address social and environmental upheaval from oil production (Senewo 2015). Instead, the Abacha regime responded with a ferocious military crackdown between 1993 and 1995. We assert that this was an effort to protect economic assets that the government and oil companies relied on for their revenue and profit maximization interests. It is not unreasonable for a multinational corporation to rely on a host government to guarantee political stability around their investment (Busse and Hefeker 2007). It is likely why SPDC reached out to the Nigerian government for protection.2 However, some scholars and observers argue that SPDC made this appeal knowing that the security forces had used repressive force against protesters in the past (Frynas 2001, Amnesty International 2017b). There is further evidence that in putting pressure on the Nigerian government to address the anti-oil protests, SPDC invoked their joint material interests (Amnesty International 2017a; Al Weswasi 2019). The worst of the military crackdown on the Ogoni people was the 1995 execution of Ken Saro-Wiwa and eight other Ogoni activists by the Nigerian government. Joint blame has been placed on the Nigerian government and SPDC for the repression and executions, but SPDC refuses to accept blame (Shell Petroleum Development Company n.d.).
For more than a decade, Shell washed its hands off the Ogoni protests, taking no actions to address their concerns or to prevent repression. Instead, Shell limited its actions to public condemnation of the violence, passing the blame back to local communities and the national government (Shell Petroleum Development Company n.d.). This approach backfired in two important ways. First, by 1993, violence in the region forced Shell to halt oil production in order to protect its (largely foreign) workforce. The conflict also threatened several other Shell properties in the region, including the Trans Niger Pipeline, which is a major artery, transporting 180,000 barrels of oil per day through Ogoniland to their Bonny export terminal. Second, due to the escalating violent oppression by the government, Ogoni community activists were successful in gaining international attention for their cause. The 1995 executions of the Ogoni activists turned Nigeria into a pariah state in the international community and, although Shell quickly distanced itself from these killings, it too came under strong international pressure to take responsibility for its past abuses in the region (Wheeler, Fabig, and Boele 2002; Pegg 2015).
Combined economic and reputational losses convinced Shell that it needed to take some action to reduce violent conflict in the region, although its problem narrative largely remained the same. Shell still blamed poor government investment in social infrastructure as the primary driver of conflict in Ogoniland and the Niger Delta (Shell 1998). However, recognizing that national policies were not going to change anytime soon, Shell turned to CSR as a method of filling the gap left by the government. This led to a bifurcated approach to CSR. On the one hand, Shell's earliest foray into community engagement focused on a 1995 environmental survey that underplayed their responsibility for environmental damage in the region (Wheeler, Fabig, and Boele 2002). Later that decade, Shell formalized their CSR process initiating stakeholder engagement with Ogoni communities and investing in a number of development projects throughout the region. They also tried to increase transparency, publishing their first official CSR report in 1998. In this document, Shell continued to emphasize that the government was responsible for development of the Niger Delta, but acceded to a vague “responsibility to act” that compelled them to spend US$32 million on community and development projects in the region in 1997 (Shell 1998). All of these funds were spent on high-profile projects that largely benefited local elites more than local communities (Isumonah 2015; Osobajo and Moore 2017).
Aside from a small subset of local elites who benefited from Shell's early efforts at CSR, the majority of Ogoni were not satisfied. This is largely because Shell's efforts did not address their concerns. As early as 1990, through MOSOP, the Ogoni expressed a detailed problem narrative in the OBR that clearly placed blame on both Shell and the government for a wide array of problems in the region. Thus, Shell's determined refusal to accept responsibility for environmental degradation undermined their claims to CSR from the beginning. Specific community complaints include from the OBR: (1) unfair revenue sharing, with US$20 billion transferred from oil-producing communities to non-oil-producing communities over thirty-three years; (2) pollution of air, land, and water bodies from oil operations that has resulted in loss of farmland, fishing, wildlife, and health hazards; (3) political marginalization and eradication of Ogoni culture; and (4) socioeconomic stagnation and poor public infrastructure (MOSOP 1992). Of these, Shell only recognized the last as a matter for discussion during its early CSR activities.
The Ogoni people made clear in the OBR the avenues for redress they were seeking from the government and SPDC. They made a systematic case for their appeal grounded in Nigeria's colonial history (MOSOP 1992). MOSOP argues that their claim to their land was first violated under British colonial rule, and further, after Nigeria gained independence and they were handed over to the ruling authority of the dominant Nigerian ethnic groups (MOSOP 1992). As such, the British colonial government and the Nigerian government have denied them agency in deciding how to develop their land in the best interests of their community. To this end, they first request political autonomy over their land and resources, however, maintaining that they wish to remain under the authority of the Nigerian government (MOSOP 1992). In 2007, the Ogoni people adjusted their demand for self-determination by requesting the creation of Bori state, a new state for the Ogoni people and their neighbors (Senewo 2015). Further requests made in the OBR were acquisition of their rights to the resources, adequate representation in national decision-making institutions, freedom to develop their culture and languages, and a cessation of environmental and ecological harm (MOSOP 1992). These proffered solutions from the Ogoni community derived directly from their articulation of their problem narrative and the need for the government and Shell to cede power to the community.
However, the Ogoni problem narrative differs from Shell's and the Nigerian government. The latter identifies low levels of socioeconomic development as drivers of the conflict with the Ogoni, as do the Nigerian government. Such a simplified problem narrative is a reduction of the case the Ogoni have made in the OBR. Yet, it is what has informed Shell's CSR initiatives in Ogoniland such as the provision of electricity and drinking water and support of agriculture and education. Nonetheless, such initiatives do not address the heart of the Ogoni people's appeal, which is to wrest power away from Shell and the government so they may achieve self-determination and stewardship over their land and resources. Hence, CSR is a failed strategy in Ogoniland, particularly evidenced by the legal challenges the Ogoni continue to bring against Shell (Vidal 2015; Corder 2021).
While it continued to condemn violence in the region, Shell made no efforts to support Ogoni demands on the national government, to address the environmental damage that it had caused in the region, or to invest in the local economy. Further, the violent military crackdown resulted in violation of physical integrity rights of the Ogoni people (Amnesty International 1994; Isumonah 2015). As previously stated, the military governments of General Abacha and General Babangida prior, viewed the OBR and public protests of the Ogoni people as a secessionist movement, so responded with repression (Amnesty International 1994; Okafor 2018). Both military administrations mounted harsh responses by launching military crackdowns to dispel the protests and discourage other Niger Delta communities from following the Ogoni lead (Mbeke-Ekanem 2000; Senewo 2015). Security forces committed attacks, assaults, detention, and looting of the Ogoni community (Amnesty International 1994; Pegg 2015; Yakubu 2017), with the worst of the repression resulting in the 1995 extrajudicial killings of the nine Ogoni activists (Yakubu 2017). This use of violence to curb the Ogoni protests has been coupled with economic and political marginalization. Therefore, it is not surprising that the Ogoni community was not swayed by Shell's limited attempts at CSR.
Failing to Learn about CSR
Although the level of violence in Ogoniland declined after Nigeria transitioned to democracy in 1999, conflict between Shell and the host community continues to this day. Host communities protested through demonstrations, damage to Shell property, and threats to Shell employees, but they also used Western courts to address historical injustices (Isumonah 2015; Enneking 2019). Nevertheless, Shell continues to tout their version of CSR as a successful approach to mitigating conflict with the Ogoni and with other host communities in the Niger Delta. More importantly, Shell also continues to invest considerable time and effort into their CSR activities in the region. In this, they are supported by the Nigerian government, which also espouses a positive view of CSR as a cornerstone for improving oil governance in Ogoniland and throughout the Niger Delta. This section shows how overly simple problem narratives and incentives to maintain power disconnects are mutually constitutive and explain corporate and governmental reliance on CSR in spite of the evidence that it has not achieved the primary goals of reducing conflict with host communities, internalizing externalities, or creating social license.
Violence in Ogoniland did decrease in the early 2000s, but this can largely be attributed to Nigeria's transition to democracy, which shifted the government's problem narrative substantially. Rather than actively repressing Ogoni activists as a secessionist threat, the administration of President Olusegun Obasanjo identified the cause of the conflict as one of development deficits and environmental degradation in Ogoniland (and the broader Niger Delta). Subsequent administrations took the same view of the issue (Boele, Fabig, and Wheeler 2001; Senewo 2015). Because of this change in narrative, the government shifted from tolerating Shell's approach to CSR in the region to actively supporting the company's efforts. They also passed laws requiring at least 15 percent revenue sharing with host communities and oil companies to contribute 3 percent of their annual budget to a development fund (NDDC Act 1999). Interestingly, like CSR funding, revenues shared out by the government largely concentrated on increasing investment in infrastructure and other development projects. Although an environmental regulatory framework for the oil industry of over twenty-five laws exists, implementation and enforcement remain weak (Yakubu 2017). The government also consistently resists calls for greater autonomy for the Ogoni and neighboring oil-producing communities (Senewo 2015).
Similarly, Shell has done little to change its approach to CSR since the late 1990s. Researchers describe Shell's CSR process as consultation without representation. Community members are asked for their opinions, but ultimately decisions regarding the use of funds (approximately $US31.06 million a year for the whole Niger Delta) are made by Shell executives and local elites (Ako 2015; Isumonah 2015). For example, in their 2006 CSR report, Shell referenced traditional Ogoni rulers as siding with them and the Nigerian government to restart oil operations (Shell 2006). The government–company alliance relies on distribution of private and public goods to the elites to marshal their support at the expense of the broader Ogoni community (Boele, Fabig, and Wheeler 2001; Ako 2015). This includes SPDC and Ogoni traditional rulers brokering an agreement to restart operations in February 2015; however, this plan was thwarted by MOSOP (Isumonah 2015). Shell routinely details its CSR initiatives in Ogoniland in CSR reports. However, it has not been transparent about its expenditures and whether such initiatives meet community demands.
Furthermore, Shell uses the 2011 United Nations Environmental Programme (UNEP) report that identified its operations as being responsible for environmental harm wrought in Ogoniland to frame its remediation efforts. The report recommended a joint government-company US$1 billion remediation fund, of which Shell elected to contribute US$900 million over five years, which represents 7.6 percent of the US$13 billion compensation demanded by the Ogoni (Asimoji 2019). The recommendations in the UNEP report have since served as Shell's ceiling for redress; however, given the numerous court cases they have faced in Europe, we argue that the UNEP recommendations fall short of what has been demanded by the community (Jensen and Kron 2018; Amnesty International 2020).
Protection from liability and environmental regulation also remains a high priority for Shell. For instance, in 2008, there were two oil spills from a transitional pipeline in Bodo community in Ogoniland, estimated to have spilled 280,000 barrels of oil (Vidal 2011). Shell has not completed cleanup of the Bodo spills and initially offered the community £4000 in compensation (Vidal 2015; Africa Times 2020). In response, the affected community members sued Shell and eventually came to a £55 million settlement in 2015, paid directly to community members, and not local chiefs (Shell 2015; Vidal 2015). Indeed, independent research and reports reveal that the cleanup efforts have been inadequate throughout Ogoniland and that the UNEP recommendations have not been satisfactorily met (Yakubu 2017; Clowes 2020). Most recently, Ogoni farmers won a case against Shell in the Dutch courts, although compensation for the 2004–2005 oil spill has not been set yet (Corder 2021). These court cases demonstrate how sometimes, the Ogoni turn to the international community—media and courts—to pressure Shell and the government to address the operational harms in the Ogoniland. This suggests that the international community could perhaps play a role in helping host communities reduce domestic power disconnects to hold oil companies accountable. However, at present, such actions by the international community have not been sufficient to bring the relief desired by the Ogoni people.
Based on Shell's half-hearted implementation of CSR, it is not surprising that the Ogoni continue to feel that both Shell and the Nigerian government have not taken full responsibility for either past harms or present inequalities. Environmental degradation and socioeconomic marginalization continue, as evidenced by the Bodo oil spills described above. In addition, research has found a range of second-order effects from oil production. Health effects include signs of mental illness and behavioral challenges in children and developmental, reproductive, and neurological irregularities exhibited in community members (Yakubu 2017; David, Bodo, and Gimah 2019). Food and water sources are still contaminated, and in some cases, residents without alternatives are compelled to consume polluted drinking water, which also causes health problems (Yakubu 2017). Ecological changes brought on by the environmental degradation have adversely affected farming and fishing livelihoods, eroded cultural practices related to water, and destroyed large areas of mangrove vegetation (UNEP 2011; Lindén and Pålsson 2013; Yakubu 2017). Oil spills have been found to be impossible to clean up because of the chronic nature of the oil contamination (Lindén and Pålsson 2013). Furthermore, peaceful protest and violent conflict with host communities continues, although at lower levels since the Nigerian government reduced its reliance on repressive measures.
Clearly, CSR has not proved to be a true solution to Shell's many problems in Ogoniland or even lived up to moderate expectations as a method for improving community relations, internalizing externalities from oil production, and building social license. Why, then do Shell, the Nigerian government, and local elites still engage in CSR? The interest-based explanation is that CSR provides a veneer of good governance to hide the maintenance of the wide power disconnects that allow these actors to appropriate the majority of benefits from oil production without paying concomitant costs. Ironically, the end of military oppression in the region also helped reduce international pressures on both Shell and the Nigerian government. At the same time, however, these actors also clearly rationalize the continued use of pro forma CSR by maintaining narratives that oversimplify the problems faced by Ogoni communities. Shell and the government rely on misdiagnosed narratives to design CSR, while at the same time use their economic and political power to marginalize the Ogoni people from proper participation in the CSR process that could alleviate harms from extraction. This switches assessments of success from the primary goals of CSR to secondary goals such as investment in development projects and accolades from local leaders. We turn next to a discussion about the generalization of our framework.
Lessons beyond the Ogoni Case
The case of the Shell and the Ogoni in Nigeria provides evidence that feedbacks between problem narratives and power disconnects matter in the implementation of CSR in the oil industry. Much more work needs to be done to understand the nuanced effects of these factors as they play out in different institutional contexts. In general, the framework described in this paper predicts that implementation of CSR will be more comprehensive and effective when power disconnects are narrower and elite problem narratives are more inclusive and accurate. In ideal cases, CSR may not even be necessary because a well-functioning government provides both protection and voice for the citizens affected by oil production (e.g., Norway).3 If CSR does occur in such situations, it is more likely an outcome of effective, egalitarian governance rather than a “solution” to governance failures like those described in the Ogoni case. At the other extreme, when power disconnects are wide and elite problem narratives are overly simple and inaccurate, we would expect entrenched conflict under pro forma applications of CSR like the Ogoni case described above. Between these extremes, there is variation in the degree or “quality” of CSR activities depending on differences in power disconnects (e.g., communities are politically more influential) and problem narratives (e.g., local elites take a more comprehensive view that is closer to that of the affected communities and so are better at guiding the redistribution of wealth).
For instance, in the Ogoni case, local communities managed to organize to briefly narrow power disconnects and assert their own problem narratives, winning at least some concessions or settlements from Shell. However, in each instance, the feedbacks between problem narratives and power disconnects among the elite groups shown in figure 2 consistently pushed CSR back into pro forma versions that did not solve the fundamental problems faced by local communities. Although, in theory, CSR itself is supposed to help break down this reinforcing feedback, it may instead simply become part of it. In these instances, wider social, economic, and political changes are necessary to truly reform the oil industry, host governments, and local power structures. We do not have space to delve into the already extensive literatures on economic development and good governance here, so instead point to a few additional areas of investigation.
First, what are the mechanisms that either prevent or facilitate change in specific cases? For instance, in the Ogoni case we saw that using the media to appeal to the international community and ultimately taking Shell to court outside of Nigeria were the best methods for narrowing power disconnects and starting to address community concerns. However, we also note that Shell did not change its problem narratives and there were no real changes in the power structures that marginalized the Ogoni in both local and national politics. Court cases have been a window of opportunity to follow the “positive path” outlined in table 2, where elites would embrace more inclusive and accurate problem narratives while accepting institutional changes that would narrow power disconnects over the long term. However, instead of shifting from the lower left-hand box to the upper right-hand box, elites followed the “negative path,” pursuing palliative measures to widen power disconnects again (e.g., moving out of Ogoniland) and using motivated reasoning to maintain their overly simple problem narratives. Comparative research across multiple cases could help to identify the conditions under which positive paths are taken instead of negative paths and vice versa.4
Reinforcing feedbacks and the coevolution between problem narratives and power disconnects.
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Reinforcing feedbacks and the coevolution between problem narratives and power disconnects.
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Second, how can we integrate the wider socioeconomic and political context into analysis? Given that larger-scale socioeconomic and political change is needed to break the reinforcing feedback loops that entrench pro forma CSR, then it is likely that much greater levels of political will are needed to initiate these larger-scale reforms (Mitchell 2021). Momentum toward a positive path could be garnered by coalitions of communities that have been negatively affected by the oil industry, but it might also require pressure on multiple fronts. Indeed, it may be that the kind of changes that are needed can only occur when powerful groups also feel the costs of poor governance, not just of the oil industry but for the country as a whole. Yet, converging crises can also lead to breakdown of governance, so it is important that we look more closely at the interactions among forces for change to better understand how larger-scale transformation of the power structures depicted in figure 2 can occur peacefully, setting the stage for long-term solutions to the problems faced by people like the Ogoni.
Conclusion
Oil is a strategic natural resource that interacts with society in ways that produce social harms. It is known to motivate friction that could escalate to armed conflict and complicate the establishment of inclusive and transparent governance structures, but has been argued to have the potential to support peace in post-conflict development (Jensen and Kron 2018). In theory, CSR promises great rewards for corporations, communities, and governments in addressing oil's social and environmental impacts. However, in practice, CSR is most often carried out in a pro forma fashion, where communities are consulted, but decisions remain in the hands of corporate executives. Our research suggests that the pro forma version of CSR has become a failed strategy in the industry because it fits with simplistic corporate and government problem narratives regarding oil governance and it can be used to maintain rather than narrow existing power disconnects. As described in the literature review, the Ogoni case is representative of contexts in which CSR has failed. Shell uses the same approach throughout the Niger Delta and in other regions where conflict with local communities harms its operations. Although there are a few examples in which CSR has been used successfully by some oil companies, most oil companies are also using pro forma approaches to CSR in much the same way and are maintaining that their efforts are successful in spite of evidence to the contrary (Aaron and Patrick 2013; Gardner 2015).
Other authors have used either interests (power disconnects) or ideas (problem narratives) to explain the prolonged failure of CSR as an approach to governance in the oil industry. Here, we provide novel findings showing that interests (power disconnects) and ideas (problem narratives) reinforce each other, creating feedbacks that prevent learning or real communication among groups of actors. This, in turn, helps to explain why corporations, governments, and some nongovernmental organizations (NGOs) pursue the same failed CSR strategies for decades, spending scarce resources in the process. Furthermore, it indicates that changing interests without changing ideas or changing ideas without changing interests will not lead to productive long-term improvements in the system. Both power disconnects and problem narratives must be addressed simultaneously across the entire oil extraction ecosystem to ensure real change in governance. That is, for CSR to work as advertised, governments, corporations, and local elites will need to adopt more complex and accurate problem narratives that align with those of local communities, while also ceding sufficient power to those local communities to narrow power disconnects.
This conclusion raises a number of areas for future research. First, additional work is required to apply our framework to other cases and to identify the mechanisms that shape relationships between problem narratives and power disconnects. This can be accomplished in part by drawing more heavily on existing literatures on the diffusion of norms and construction of interests, but we also recommend drawing insights from political psychology and the decision sciences more broadly. In particular, surveys and interviews with individuals from different stakeholder groups could better reveal how factors such as motivated reasoning and group think might contribute to the spread and persistence of pro forma applications of CSR (Janis 1982; Kunda 1990; Young et al. 2018). Although difficult, this type of research is needed to move past the false dichotomy of the ideas versus interests debate.
Second, much more work is needed to understand the role of the international community in the spread and persistence of CSR in spite of its many failures. To date, the focus has been on corporate–community–host government interactions, as described in figure 1, but as shown in our case and supported by several others, some communities have been successful at raising international awareness of the negative effects that they experience from oil extraction through court cases and the press (see figure 2). In fact, one could argue that narrowing power disconnects at the domestic level might also require narrowing power disconnects internationally, particularly when the power imbalance between transnational oil companies and domestic actors in oil-producing states is so large. This suggests a need to extend research on preemptive approaches to international governance from the extractive sector to consider the role of CSR as a method to avoid international regulation (Auld, Betsill, and VanDeveer 2018).
Footnotes
The equity share of the partnership is distributed thus: NNPC with 55 percent, SPDC with 30 percent, Elf Petroleum Nigeria Limited with 10 percent, and Nigerian Agip Oil Company Limited with 5 percent (NNPC 2020).
It was revealed in the court case XM Federal Limited vs. Shell that SPDC attempted to import weapons and ammunitions worth over US$1.4 million in 1993 and 1994 in contravention of an arms embargo.
As an egalitarian society with a strong social welfare system, Norway has less need to embrace the dominant forms of CSR utilized globally (von Weltzien Hoivik 2011). Although we cite Norway as an example of a country that needs CSR less, domestically, compared to other countries, Norwegian companies use CSR abroad in typical ways to acquire social license (Ihlen and von Weltzien Hoivik 2015). However, they are required by their government to maintain the high CSR standards enforced at home (Ihlen and von Weltzien Hoivik 2015; Knudson n.d.). Other scholars have explained why there is less demand for CSR in Norway compared to developing countries or other developed countries such as the United States (von Weltzien Hoivik 2011; Ditlev-Simonsen, von Weltzien Hoivik, and Ihlen 2015; Ihlen and von Weltzien Hoivik 2015; Loe and Kelman 2016).
Potential cases include CSR and oil production in the Russian Arctic (Henry et al. 2016), Mexico (García-Chiang 2018), the Canadian Tar Sands (Wanvik 2016), Colombia (Jiménez-Piernas García 2019), and Peru (Esteves et al. 2021).
