Corporate Social Responsibility and Environmental Management

Corp. Soc. Responsib. Environ. Mgmt. 20, 371384 (2013)

Published online 3 April 2013 in Wiley Online Library
(wileyonlinelibrary.com) DOI: 10.1002/csr.1320

Corporate Social Responsibility of Oil Companies

in Developing Countries: From Altruism to
Business Strategy
Francisco J. Garca-Rodrguez,1*Jos Len Garca-Rodrguez,1Carlos Castilla-Gutirrez1
and Silvrio A. Major2
1

University of La Laguna, Tenerife, Spain

Agostinho Neto University, Luanda, Angola

ABSTRACT
The growing importance of corporate social responsibility (CSR) in todays competitive
business climate is well known. CSR is particularly important for rms in sectors characterised
by their close ties with their social and environmental context, especially multinational enterprises (MNEs) operating in resource-rich developing countries and, more specically, in the oil
sector. Numerous question marks surround the extent to which oil MNEs really contribute,
through CSR activities, to sustainable development in these countries. Based on a case study, this
paper examines the adoption of an environmental management system (EMS) in Luanda Oil
Renery in Angola. The results illustrate the potential of CSR, when integrated into MNE business
strategy, to improve the social and environmental situation of such countries, due not only to its
impact on the companys immediate surroundings but on the wider legislative, administrative
and entrepreneurial context also. Copyright 2013 John Wiley & Sons, Ltd and ERP Environment
Received 9 July 2012; revised 30 October 2012; accepted 23 November 2012
Keywords: corporate social responsibility; oil company; environmental policy; developing countries; Angola; business strategy;
sustainable development

Introduction

NDER THE CLASSIC VIEW OF ECONOMIC ACTIVITY, THE GOALS OF BUSINESS WERE LIMITED TO MAXIMISING PROFIT,

subject only to the constraints imposed by law (Friedman, 1970). However, some authors argue that
we are currently witnessing a real change in paradigm with respect to the concept of business (Kotler
and Lee, 2005), one at odds with this classic view. Prominent among the factors driving this change
are trade globalisation and liberalisation, the phenomenon of market hyper-segmentation, the more exible production model, the technological revolution and shorter product life-cycles (Kotler and Lee, 2005; Olcese et al., 2008).
Recent years have seen a broader concept of responsibility prevail that incorporates an ethical approach to corporate legitimacy, transcending prot-making and compliance with laws (McWilliams and Siegel, 2001; Garriga and
Mel, 2004). The European Commission (2001), for example, has dened corporate social responsibility (CSR) as
*Correspondence to: Francisco J.Garca-Rodrguez, University of La Laguna, C/ La Hornera, s/n. Campus de Guajara, La Laguna, Tenerife 38071,
Spain. E-mail: fgarciar@ull.es
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F. J. Garca-Rodrguez et al.

a concept whereby companies integrate social and environmental concerns in their business operations and in their
interaction with their stakeholders on a voluntary basis. This concept of CSR has gradually taken root in the
business environment, not in the sense of a merely altruistic approach to company activity but from a global
perspective premised on the fact that, in the long run, strategies that engage the ever-broader range of stakeholders
in decision-making (Carroll, 1979, 1991; Freeman, 1984; Donaldson and Preston, 1995; Harrison and Freeman,
1999; Alniacik et al., 2011) improve a companys chances of creating and maintaining competitive advantages
(Porter and Kramer, 2002, 2006; Ramachadran, 2011; Marn et al., 2012; Melo and Garrido-Morgado, 2012). In
the medium to long term, these competitive advantages are likely to translate to economic benets for the
organisation (Hart and Ahuja, 1996; Waddock and Graves, 1997; Judge and Douglas, 1998; Orlitzky et al.,
2003; Allouche and Laroche, 2006; Wu, 2006; Bird et al., 2007; Lankoski, 2008; Godfrey et al., 2008;
Blomgren, 2011).
This applies most notably to multinational enterprises (MNEs), given their global inuence and activities in
which they are confronted with a range of issues, stakeholders and institutional contexts, in both home and host
countries (Kolk and Tulder, 2010). However, implementing a CSR approach is more complex in developing
countries, given that MNEs are often confronted with a context characterised by social, economic, cultural, and
political dynamics that are completely different to those of developed countries (Dobers and Halme, 2009;
Idemudia, 2011; Kolk and Lenfant, 2012), including the absence of strong and stable states, with t-for-purpose
ofces and staff, which can functionally manage those states (Cash, 2012). Coupled with a context of extreme lack
of resources, this fragile state situation means that the resident population of the countries concerned often expects
CSR actions by MNEs to act as a vehicle for development, replacing the state (Idemudia, 2011).
On the other hand, the willingness of MNEs in developing countries to engage in CSR activities raises the debate
as to what extent this is mere window dressing and public relations or a realised strategy (Dobers and Halme, 2009;
Kolk and Tulder, 2010; Ackah-Baidoo, 2012; Hilson, 2012; Kolk and Lenfant, 2012). In this regard, the resource
curse perspective suggests that resource-rich countries tend to obtain poorer economic and social results than their
resource-scarce counterparts (Sachs and Warner, 1997), the main reasons for this phenomenon being the lack of
transparency and the undemocratic nature of their institutions (Le Billon, 2001; Collier and Goderis, 2007).
In the specic case of oil companies operating in developing countries, where petroleum extraction activities are
often located, the aforementioned doubts are even more pertinent (Anderson and Bieniaszewska, 2005; Frynas and
Paulo, 2007; Edoho, 2008; Ackah-Baidoo, 2012), often due to the complexity of and interaction between international, home and host country governance mechanisms (Alstine, 2009). The question arises as to the extent to
which oil MNEs contribute to the sustainable development of developing countries through their CSR activities
(Idemudia and Ite, 2006; Dobers and Halme, 2009; Idemudia, 2011). The clearly positive responses put forward
(Ite, 2007) contrast with visions that not only point to a lack of positive effects but even suggest that CSR activities
may contribute to community fragmentation (Akpan, 2006). Wiig and Kolstad (2010) note in this context that the
CSR activities of oil companies in Angola appear to be used strategically by the corporations to increase their
chances of winning licenses and contracts, with the consequent danger that the resource curse may be further
exacerbated. They conclude further that oil MNEs have little interest in altering the non-transparent and undemocratic institutional context given that if institutional reform shifts resource rents from oil companies to host country
populations, institutional improvement may not be in the interest of corporations (Wiig and Kolstad, 2010). The
foregoing might be understood in the context of the new scramble that Africa is experiencing thanks primarily
to its oil and gas wealth (Frynas and Paulo, 2007).
A possible constraint on the positive impact of the CSR activities of oil MNEs may well be the tendency to
replicate CSR programmes without paying sufcient attention to local culture and context, a situation which has
prompted Idemudia (2011) to advocate analysis of context issues as opposed to the habitual content issues in
the case of oil industry CSR. From the methodological perspective, the need exists for case studies showing interlinkages between the macro, meso, and micro levels of society and the relevance of the absence or presence of an
enabling environment (i.e. the role of government) for CSR practices and their impact on the intended beneciaries,
using a bottom-up approach that allows the set of impacts generated by the activities in each specic context to be
identied (Idemudia, 2011).
With this in mind, this paper analyses a specic case of CSR action: the adoption of an ISO 14001-based environmental management system (EMS) by the Luanda Oil Renery (37% of which is owned by Sonangol, the Angolan
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Environmental Responsibility of Oil Companies in Developing Countries

373

National Oil Company, and 56% by the French multinational Total Fina), bearing in mind that preventing and
minimising environmental impacts represent one of the pillars of CSR strategy (Wiig and Kolstad, 2010) and
EMS, one of its main tools. The aim of the study is to establish the extent to which the adoption of this CSR strategy
by an oil multinational in a resource-rich developing country (Angola) has driven improvements in environmental
performance, as appears to be the case in more advanced countries (Arimura et al., 2011). It also aims to illustrate
the consequences of adoption on the countrys socio-economic environment and institutional context, while
also highlighting the difculties associated with the process. The approach adopted endeavours to integrate the
micro-level and macro-level impacts, based on contextual factors specically affecting the company studied
(Idemudia, 2011).
The paper begins by looking at the socioeconomic, political and environmental background to the case study,
which focuses on the oil sector in Angola. It will then discuss the concept of CSR, particularly in relation to the
oil industry and with special reference to developing countries. This will be followed by an analysis of the case study
and, lastly, a brief discussion of the conclusions reached.

The Oil Sector in Angola: Institutional, Socio-economic and Environmental Context

In terms of size, Angola is the seventh largest country in Africa. Its 1 246 700 km2 are divided into 18 provinces. It
boasts an abundance of natural resources and has fertile (albeit little) farmland. It is rich in mineral deposits of
diamonds, iron, bauxite, gold, manganese, uranium natural gas and above all in terms of production and
reserves oil. The country has an estimated population of 1718 million.
The prolonged civil war, in which the economy and geography of oil and diamonds played a crucial role
(Le Billon, 2001), ended in 2002 with the Luena Memorandum of Understanding, based on the 1994 Lusaka
Accords. Since then, Angola has set about rebuilding its productive apparatus, modernising its political system
and diversifying the economy. The benets are already being seen: GDP has grown annually by an average of
15% since 2006, with growth in 2010 estimated at approximately 10%, despite the global crisis. Such growth
levels have helped stabilise the economy, with ination falling from 325% in 2000 to 13.7% by December
2009 (World Bank, 2011).
The Angolan economy cannot be understood fully without oil production in the Gulf of Guinea. The Gulf is
currently an area of great strategic importance on account of its massive reserves, estimated at 40 000 million
barrels of top-grade oil, for which companies from Europe, North America and, of late, China compete, as occurs
in other African countries also (Frynas and Paulo, 2007). The elds are particularly attractive given that most of
the sites are offshore, which facilitates protection and makes shipment of the crude oil to western consumer
markets easier, avoiding complicated transit through the Suez Canal and Arabian Straits (Fuentes Cobo, 2005).
Oil production by the Gulf of Guinea countries (Nigeria, Congo, Gabon, Cameroon, Equatorial Guinea, and
Angola) currently exceeds 5 million barrels per day, more than Iran, Saudi Arabia or Venezuela (EIA, 2011). The
United States imports approximately 8% of its oil from the region, a gure expected to rise in the coming years.
For its part, the European Union was already importing 22% of its oil from the Gulf back in 2000.
Angola has become one of Africas leading oil producers over the last decade, with 2.01 million barrels per day in
2008 or 2.35% of world output. For a short time in 2009 it was the continents biggest producer, its 1.94 million
daily barrels surpassing Nigeria after the latter cut production in the aftermath of the attacks on its oil
infrastructures in the Niger Delta. However, OPEC limits on Angolas ofcial output due to the global economic
crisis have seen the gure fall to 1.521.66 million barrels per day (EIA, 2011). Nonetheless, during the rst half
of 2009 Angola exported over 1.87 million barrels of crude per day (more than 90% of its total production),
primarily to China and the United States. According to gures from Global Energy (EIA, 2011), its exports of
approximately 500 000 barrels daily (27% of its production) to the United States made it the latters sixth biggest
supplier, while the 790 000 barrels per day exported to China ranked it as the Asian giants second most important
supplier, behind Saudi Arabia (890 000). There is no question, therefore, that crude oil is now the mainstay of the
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F. J. Garca-Rodrguez et al.

national economy and of the State itself, accounting for over 95% of Angolas export earnings and more than 75% of
government revenue, according to International Monetary Fund gures (2010).
As many researchers correctly note, oil is also the main source of riches for the ruling elite. Public revenue has
beneted from the recent massive oil price increases spurred by demand growth in China and India, although the
extremely volatile prices that marked the end of the last decade wreaked havoc on the countrys budgetary planning.
As occurs in other countries, however, oil has brought its own resource curse in the shape of serious imbalances
and distortions in Angolas political and economic development model (Hodges, 2001, 2003). The heavy
dependence on the oil sector produces an outward-oriented development model (geared to foreign needs) which
is concentrated geographically in a small number of areas, particularly the north coast. The model is economically
distorted given that other sectors play a negligible role and derive scant benet from the oil boom. This generates
economic dependence on uctuating world oil prices, a situation that, according to Demurtas (2007), needs to
change in the near future, with Angola reverting to its former export economy based on commodities such as
coffee, sugar and sh. Also generated is a social model characterised by serious inequalities (oil creates little
employment but brings riches to the elite), as well as a political system that lends itself to opacity, corruption and
authoritarianism (Prez Armio, 2007).
One of the ercest criticisms levelled at the Angolan government in recent years is its lack of transparency in oil
revenue management. Although the revenue goes to nance the State, this wealth does not nd its way to the entire
country but is conned rather to an isolated enclave employing a mere 11 00012 000 people and with virtually no
direct links to the national economy. In this regard, various studies have concluded that, if all the oil revenue were
reinvested in the economy, Angola would be signicantly more prosperous and productive than is presently the case
(Demurtas, 2007). However, international investors would argue that the continuity of the current regime is
important for political stability in Angola, which is all the more pertinent bearing in mind both the countrys
growing importance as an oil exporter and the upheaval triggered by political violence in other producer countries
such as Nigeria or the countries in the Middle East (Corkin, 2009).
Approximately 30 oil companies operate in Angola at present and it appears, from numerous sources, that they
have paid substantial sums to the government for oil concessions. The payments are never disclosed publicly and
various organisations have long drawn attention to the lack of government transparency in the use of the funds
received. A Human Rights Watch study, for instance, has denounced that over $4.2 billion from oil were diverted
to secret accounts in foreign banks (Human Rights Watch, 2010) and tax havens between 1997 and 2002, evading
the scrutiny of the national budget and domestic laws (Niekerk and Peterson, 2002).
In addition to the aforementioned social impacts, it is important to underline also the oil sectors considerable environmental impacts on ecosystems and climate change, the atmosphere, as well as on the health and
quality of life of the population (solid waste, atmospheric pollution, heavy metals, etc.). These very serious
impacts are a direct consequence of the strong oil-based growth of the last decade, referred to above (Angell
and Klassen, 1999).
Angola has approximately 1600 km of coastline, including bays and inlets. However, the main environmental
impacts are felt in the coastal regions of Benca, Catete, Bajo Kwanza and, in particular, Luanda Bay, which is
20 km long and has over 1500 wells and approximately 1200 km of abandoned pipelines that cause spills and,
consequently, pollution. Between 1958 and 1997 the slum district of Petrangol (named after the old oil company)
grew up around the Luanda Renery, its population consisting of renery employees and immigrants from rural
areas seeking work there. The district has no sanitation or waste collection and hence the Bay is constantly affected
by patches of oil from drains, discharges from industry and from streams, as well as by urban waste. These patches
spread across the surface of the water and form a coating of oil that poses a serious threat to beaches and sh. The
heaviest components of the spills form balls of tar which hamper the development of coastal ora and fauna
(Ferreira Baptista, 2005).
According to the above author, a comparison (using general sediment classication data from the US Geological
Service) of the heavy metals found in sediment samples taken on the Angolan coast, particularly Luanda Bay, during
PhD eld work shows that over 50% of the site samples fall within the moderate to extreme pollution categories.
This situation can be a danger to native biota and, although it cannot be conrmed reliably from the information
contained in the aforementioned work, the high pollutant levels in the Bay may have been responsible for the deaths
of sh and other marine species in 2002, as well as on other previous and subsequent occasions. In overall terms,
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Environmental Responsibility of Oil Companies in Developing Countries

375

the Cu, Hg and Pb levels present in the samples exceed the accepted limits for aquatic life, according to the US
Environmental Protection Agency (Ferreira Baptista, 2005).
The serious environmental impacts caused by the oil industry prompted the rst denunciations and calls for
accountability by Luanda Bay shermen and by the authorities. In the latter case, in the rst ever action over
oil spills taken by Angola against an oil multinational operating in its territorial waters, the government led
a $2 million suit 2002 against Chevron-Texaco for environmental damage, specically that caused to beaches
and sh in the Cabinda region, which is one of the countrys most important offshore oil zones.

CSR and the Oil Industry in Developing Countries

Many oil industry operations and processes cause serious environmental impacts in the form of atmospheric
emissions, liquid efuents and solid and hazardous waste. Accordingly, preventing and minimising environmental
impacts can be considered the main focus of the CSR strategy of such companies, with EMSs the main tool at their
disposal (Anderson and Bieniaszewska, 2005).
The origins of EMS understood here as meaning mechanisms for systematising processes that might harm the
environment date back to the 1990s and arose from developments in quality standards (Gmez Fraile, 1999). Of
the various existing options there can be no doubt that the standards developed by the International Organization for
Standardization (ISO, 1996a, 1996b) are now rmly established as the most widely accepted standards due
precisely to their global nature. Also deserving of mention are the Spanish UNE 77801 standard and Council
Regulation (EEC) 1836/93 on the Community Eco-management and Audit Scheme (EMAS). EMSs, particularly
those based on ISO 14000, have been shown to impact positively on the Environmental Performance not just of
the companies adopting them but also on associated stakeholders, including suppliers (Arimura et al., 2011; Guoyou
et al., 2012). This impact on environmental performance extends in turn to CSR and, lastly, to the competitiveness of
the rm, especially in the case of larger organizations which follow a proactive strategy (Marn et al., 2012).
However, the worlds oil and gas reserves are not necessarily situated in democratic countries and oil companies
are frequently criticised and challenged by civil society to account for their operations in nations ruled by repressive
regimes, their ties with the governments concerned, the security measures employed to protect their facilities, and
the way host countries spend their oil revenue. As a result, virtually all oil companies adopt CSR measures beyond
purely environmental protection and management and include actions aimed at helping address the problems of the
community in which they conduct their business, as well as problems of a more global nature. The broad and
diverse set of actions includes those at micro-level (social infrastructure such as roads, hospitals, etc.) and macrolevel (to tackle poverty, and assist the declining manufacturing and agricultural sectors. . .) and, as a result, expectations are often generated among local stakeholders with respect to their contribution to the development of the
country (Edoho, 2008; Idemudia, 2011).
However, as noted by S de Abreu (2009), strategic orientation towards CSR by MNEs in developing countries is
not homogenous and indeed four strategic generic types of organization can be dened: sleeper, reactor, defender
and innovator. This typology is constructed depending on, on the one hand, the environmental pressure (weak or
strong) on the rm and, on the other, the degree of environmental conduct (not developed to developed).
Nonetheless, various studies show that the set of strategic actions implemented by MNEs in developing countries
contributes positively and signicantly to both the short-term protability and longer-term competitiveness of the
rms concerned (Luken and Stares, 2005; Vazquez and Liston-Heyes, 2008; Shah, 2011a, 2011b).
However, these actions are not exempt from criticism given the arguably greater importance of basic investment
compared to specic actions of this nature, which often merely serve to mask deeper problems. Investment in
development (macro-level) is what really generates long-term benets for the country. In this regard, Allan Cain,
the director of Development Workshop, an NGO that funds micro-credit projects in Luanda and Huambo province,
notes that if the big foreign companies contracted small Angolan rms, the benets would reach people from the
underprivileged classes who are unemployed or get by on the informal economy (Bianchini, 2007). A possible
explanation for this situation is the scant interest shown by the above-mentioned corporations in changing
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F. J. Garca-Rodrguez et al.

the rules of the game, since to do so could undermine their privileged ties with the local ruling elites (Wiig and
Kolstad, 2010).
Such activities and the logic underlying them are set out in Table 1, which details examples of general CSR
actions, and those for environmental management in particular, by the main oil multinationals in developing
countries. The details are drawn from information provided by the corporations on their respective websites.

Case Study: The Total Fina Elf Renery in Angola

In the following section we consider the consequences arising from the design and implementation of an EMS at
Luanda Renery, whose majority shareholder is the French oil multinational Total Fina Elf. The EMS process
commenced in 2005 and concluded in 2007. In terms of characteristics, the empirical research proposed in the
present work corresponds to qualitative analysis based on a case study (Eisenhardt, 1989; Yin, 2002).
Throughout the EMS denition and implementation process, the inclusion of a researcher in the team responsible for identifying the different tasks allowed us access to rst-hand information. Other primary information
sources were individual, in-depth interviews with local authorities, Total Fina managers and government ofcials.
Fieldwork was of particular importance to measure the environmental impacts produced by hydrocarbons and
urban waste in Luanda Bay. The work consisted of two quarterly campaigns for systematic collection of information
(during the rainy and dry seasons of 2006 and 2007), which enabled us to obtain samples of dead sh and
contaminated soil, as well as to measure seawater pH to determine the level of contamination, depending on its
acidity or alkalinity.
In addition to the primary sources indicated above, secondary data were used where appropriate to remedy the
absence of institutional, administrative, and company information. The data were obtained from a range of national
and international organisations and institutions (Energy Information Administration, Ministrio dos Petrleos de
Angola, etc.). Of particular value was the information obtained from Ferreira Baptista (2005) concerning the
environmental situation of Luanda Bay.
It should be noted that the case study will not address issues such as the technical details of the implementation
process given that the focus of the study is not the technical side but the potential of CSR in general, and EMS
specically, to inuence the environmental performance of oil rms in developing countries and, by extension,
their potential inuence on the rms social and environmental context and the institutional context of the
country concerned.

Background and Implementation Process

Luanda Renery is located in Alto da Mulemba, 14 km from the centre of Luanda and a mere 500 m from the sea
(Luanda Bay). It stands on a site of approximately 170 hectares, 75% of which is occupied by the current facility.
The processing/distillation performed at the Renery essentially consist of the vaporisation of the hydrocarbons
present in the crude oil, which are then condensed in successive stages by means of temperature changes.
Luanda Renery, which has been in operation for nearly 60 years, is a catalytic cracking facility that processes raw
material from a number of oil elds. It has a distillation capacity of 39 000 barrels per day. The company is a joint
venture between the Angolan National Oil Company (Sonangol, 37%) and Total Fina Elf (56%).
Prior to the adoption of the EMS, the company demonstrated its environmental behaviour and concerns through
efforts to comply with Angolas minimal environmental legislation and to promote a series of CSR actions in
coordination with the authorities in order to improve conditions in the capital region, reduce wastewater pollution,
limit pollution risks, control emissions and prevent noise and foul smells. However, these actions were not
structured formally and there were no protocols or specic documentation to regulate the range of activities clearly.
Moreover, although the company did have an Environment Department, it was inefcient and lacked the planning
and staff training, etc., needed to be in any way effective.
The lack of adequate environmental management produced numerous negative consequences, both directly for
the company and indirectly for the environment and the population of the immediate area. The main negative
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Environmental Responsibility of Oil Companies in Developing Countries

Company

Royal Dutch Shell

British PetroleumAmoco

Total Fina Elf

Exxon-Mobil

Chevron-Texaco

Management principles /mission

statement

Other CSR actions

377
References to developing
countries

HIV/AIDS programme; programme Reference to CSR actions in

Nigeria
to tackle poverty and violence in
the Niger Delta. Company states
that at our operations we try to
address social concerns and work
to benet local communities, to
protect our reputation and
support our business.
Responsible practices in communities Reference to fact that the
Company states that its approach
(dene a code of conduct);
company operates across
to sustainability covers issues
programme of independent advisors; six continents and specically
relating to governance and risk
that activity in Africa is
creating jobs for local communities,
management, safety, the
focused on Algeria, Angola
environment, the energy future
tax revenues and opportunities;
and Egypt. No mention of
and its local and global
employees and rm donate money
individual CSR actions in
socio-economic impact.
and time to good causes.
these countries.
Reference to specic actions in
It has created Total Foundation,
Since 2002, Total is committed
Sudan and Myanmar (Burma):
focused on three groups of
to upholding the principles of
cooperation with local
actions: community support and
the Global Compact, as
communities and authorities
health, environment and
explicitly stated in the
in a strategy to support local
biodiversity, and cultural heritage.
corporations Code of Conduct.
development, actions for
protecting wildlife.
ExxonMobil Malaria Initiative:
ExxonMobil Foundation, strategic
Committed to managing safety,
different projects across
focus on education; respect for
security, health, environmental
Africa and in Papua New
human rights and to serving as a
and social risks at our facilities
Guinea.
positive inuence in the
worldwide; protecting and
Womens economic opportunity:
communities, contributions to
promoting the safety and health
work with a range of partners,
non-prot organizations as well
of their employees; operating in
including community-based
as funds invested in social
a way that protects the
organizations, global NGOs,
projects; supports programmes
environment; reducing emissions
universities and government
targeted to worldwide health
by end users of energy and
agencies. Many of these
issues, specically malaria,
planning and emergency
initiatives are undertaken in
programmes to enhance
preparedness.
developing countries.
womens economic opportunities;
Angola Partnership Initiative
Three primary focus areas for
It is stated that the Company
(promote robust micro, small
outreach: invest in small and
conducts their business in a
and medium-size businesses
micro enterprises and support
socially responsible and ethical
outside the oil industry;
programmes that create
manner, respecting the law,
Cultivate Angolas Fertile Land;
sustainable employment
supporting universal human
fund vaccination campaign
opportunities (for example,
rights, protecting the
against the wild poliovirus);
Womens Initiative for Selfenvironment and beneting the
Kazakhstan Artisan Business
Employment); Health (Fight AIDS,
communities where they work.
Development Programme and
Tuberculosis and Malaria) and
Their values are: Integrity, Trust,
Micronancing Grows
promotes education (particularly
Partnership, Diversity, Ingenuity,
in the areas of science,
Protecting People and the
Businesses programme in
technology, engineering and math)
Environment and High
Indonesia
Performance

Denes two broad principles:

Sustainable development and
Technology and innovation.
Speaks of core values: honesty,
integrity and respect for people

Table 1. Corporate Social Responsibility in oil companies

Source: Based on information from corporate websites, June 2011.

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F. J. Garca-Rodrguez et al.

environmental impacts of the renerys activity can be summed up as follows: waste production, soil contamination,
wastewater generation, excessive water loss, and atmospheric and noise pollution.
The waste generated included production-related waste (contaminated sand impregnated with hydrocarbons
accumulated in the bottom of oil tanks, for example); container waste (empty containers, lters, contaminated sand,
etc.); scrap and metal waste (lids, tubes, electricity cables, used pumps, valves, broken vehicle parts, electrodes, etc.);
grease and oil from tank-cleaning, equipment maintenance and storage of hydrocarbons; special waste (large and
small batteries, dyes, etc.); and construction waste (including contaminated land).
A private rm was responsible for collecting and treating all the waste generated by the renery, although little
was known about this treatment, with no information available on the method or location. Indeed, there were
suspicions that the waste was simply being dumped given that the rm in question did not possess the required
technology to deal with it properly. As part of the Total Fina Elf Group, the renery did have a waste management
plan and a policy in line with Group directives, in this case compliance with existing national and regional
environmental legislation. However, the fact that the countrys regulatory framework imposed very little by way of
requirements meant that the impact of renery activity was extremely high.
With regard to wastewater, water loss, and water pollution, the existing poor facility resulted in water being
discharged into the sea with high hydrocarbon concentrations. Serious pollution was caused in Luanda Bay by oil
not just from the renery but from neighbouring companies also. The discharge of inadequately treated wastewater
had serious negative effects on the waters in the Bay, generating large patches of surface oil which affected the
regions ora and fauna, as well as the shing industry and tourism, in the latter case due to beach pollution.
Major failings were also seen with respect to atmospheric pollution control, due largely to the lack of an
appropriate measurement mechanism, specialist technician or environmental legislation/regulations setting out
the maximum permitted pollution levels. The renerys operations also produce signicant noise pollution, the
main sources being high-speed compressors, control valves, oil pipeline systems, steam turbines and gas ares.
The decision to adopt an EMS stemmed from the managements belief that ISO 14001 certication could help the
renery operate more efciently and responsibly, improve its impact management, including impacts over which it had
control or inuence, and assist compliance with environmental legislation and (as a multinational) with its own
corporate policies based on the corporations global strategic plan. In 2004, the Luanda Renery hired Det Norske
Veritas to carry out a diagnosis in the form of an Environmental Impact Analysis, with the following objectives:
a) Determine the impacts caused by the renery in the immediate vicinity, including its physical, biological and
socio-economic environments.
b) Identify the environmental protection laws and regulations applicable to company activities.
c) Identify the severity and frequencies of the environmental impacts of the renery.
d) Identify the actions required to mitigate negative impacts.
e) Draw up a plan to detect and control environmental impacts during operations.
In 2007, following the introduction of the EMS and two years of continuous improvement, the renery was
awarded certication ISO 14001:2004, which is recognised by ANAB (USA) and UKAS (UK). Previous to this
award, the company had received two additional certications: ISO 9001 (quality management system) and OSHA
1800 (safety management system).

Main Results and Lessons

The environmental situation of the company has improved considerably following the adoption of the EMS (ISO
14001:2004). It is important to recall that no previous impact study had been conducted for the renery, whose
pollution levels were extremely high. Hence, the implementation of ISO 14001:2004, which, combined with
quality standard ISO 9001 and safety standard OSHA 18000, led to the creation of an integrated system, has
marked a signicant improvement in terms of the sustainable management of the company in all respects, as soon
became evident. The following aspects deserve particular mention:
a) An environment plan, approved by the renery management, is now in place.
b) Environmental regulations are now in place for all sectors sensitive to renery activities, including local residents.
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Environmental Responsibility of Oil Companies in Developing Countries

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c) Control of emissions, waste, etc has been improved and is more effective.
d) An additional waste separator is now in use.
e) All employees have received environmental training.
Over and above the above direct results seen in the environmental performance of the company, a number of
lessons have been drawn from the experience which may be extrapolated to similar contexts in developing countries.
These will be discussed below.
The Emergence of a Need: A Centralised Directive
The proposal to introduce EMS ISO 14001 in Luanda Renery came originally from Total Fina Elfs head ofce
in France and stemmed from a desire to integrate all the corporations companies, whether in Europe, Africa or
America, using an up-to-date EMS to reduce impacts on land, sea and air. It was thus a direct result of the renery
belonging to a multinational structure, the certication initiative forming part of the corporations centralised
planning. Based on this centralised directive, the Luanda Renery management, which consisted largely of French
personnel, steered the Environment Department towards the adoption of EMS ISO 14001. Hence, it was a decision
by the parent company, rather than one responding to the specic characteristics and conditions of the Angolan
production facility.
EMS Adoption: An Innovative Element in the Context of Angola
Based on the aforementioned directive, the renerys Environment Department drew up a road map for the
introduction of the EMS. To that end, it set up a working group tasked with establishing and maintaining contact
with the Angolan Ministry of Fisheries and the Environment and the municipal and community authorities in
Sambizanga to apply for authorisation to implement EMS ISO 14001 in Luanda Renery. It should be emphasised
at this point that the local and national authorities were unfamiliar with the specics of the system. Luanda Renery
was the rst experience of its kind in the African country, a situation that hampered initial understanding of the
proposal, although once it was explained it was warmly received. A specialist international rm was chosen to
implement the EMS. The choice of this particular rm was largely due to its trans-national nature and to previous
contacts from a similar experience undertaken in the Brazilian subsidiary of the parent company.
Participation in Implementation: A Key Factor
Without doubt one of the keys to the success of the EMS implementation process was company staff information
the involvement (internally and externally). In this regard, debates on the EMS, focusing on the potential improvements in work quality and the inuence on company competitiveness, were promoted among employees. In
addition, an EMS information campaign outlining its characteristics and the benets for residents and society in
general was organised for stakeholders and for the local population.
Positives and Negatives in the Adoption Process: The Constraint of Novelty
Numerous constraints and problems were detected during the implementation process. For instance, no concrete
information or details of other companies who had implemented the ISO 14001 management system were available
from the Ministry of Fisheries and the Environment, given that the Luanda Renery was the rst company to adopt
it anywhere in the country. The same was true at municipal and commune level. Moreover, there were no
specialised Environment Departments to act as potential interlocutors. An added factor was the high initial level
of pollution, with many effects not recorded in any way in the renerys own Environment Department. Also
detected was waste which had been simply abandoned with no control whatsoever (piping, old engine parts,
turbines, lters, electricity cables, iron nails . . .).
Administrative and human resource problems made the implementation process slower than was desirable.
Such problems included the poor level of general training among rank and le personnel, which limited their ability
to understand the new environmental laws and made it necessary to prepare virtually all the environmental
documents and procedures for the renerys Environment Department. The timeframes envisaged for document
preparation (procedures) etc proved impossible to meet. In addition to the poor level of general training of rank
and le employees, it should be noted that the level among operations staff and even Environment Department
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heads was also very low. A further factor of importance was the excessive dependence on and high cost of the hired
consultant, which eventually led the company to seek a replacement.
Notwithstanding the above, there were some positive elements that facilitated the implementation of the EMS in
the renery. The fact that the renery did have an Environment Department, albeit one with a negligible role and
weaknesses, assisted the adoption process. It also had a waste management contract with an external company
already in place. Moreover, both the management and the Environment Department expressed a keen interest in
pursuing environmental management in accordance with international standards and protocols.
Consequences Close to Home: Changes in the Renery and in Local Enterprise
The adoption of the EMS brought important consequences both for the functioning of the company itself and, due
to a strategic imitation dynamic, in local competitors. Broadly-speaking, clear improvements were seen in company
hygiene and in its image; environmental legislation began to be applied; the renerys gas emissions into the
atmosphere were measured systematically; and improvements were made to the wastewater treatment system.
Selective waste collections were put in place, with waste taken to a purpose-built separate storage facility. In addition,
the waste management company was instructed to improve its waste transport conditions. Crucially, all renery
employees acquired a basic knowledge of environmental management and familiarity with basic waste management
regulations.
Furthermore, a knock-on effect of the EMS process has been seen to some degree in neighbouring businesses,
with companies located near the renery developing their own EMS. Moreover, SONLS and EMUL, two rms that
produce petroleum-based products such as engine oil and brake uid, etc., have set up an Environment Department
coordinated by a manager.
Consequences Further Aeld: Legislative and Administrative Changes
The novelty of the initiative in the context in which it was adopted helped ensure that the consequences of the
introduction of the EMS extended far beyond the actual company and direct competitors.
The Angolan authorities used the Luanda Renery example to require other rms (oil and non-oil) to adopt an
EMS. Based on the experience, the government introduced a requirement for new companies wanting to set up
in the country to sign up to an environment contract. In addition, the government made it compulsory for all
companies to take out contracts with waste management organisations. Furthermore, all companies were required
to create Environment Departments in their corporate structures in order to oversee control of the waste and gases
produced. Luanda Renery is considered an example to be followed and constantly receives visits from other oil
companies interested in adopting the ISO 14001 system.
The Luanda Renery experience prompted the government of Angola to create a Ministry of the Environment in
2009 (Decree-Law No. 4/09, 18 May) and environmental cooperation agreements have since been established
between the Ministry and its counterparts in Brazil, Portugal, and South Africa, among other countries.
Decree 51/2004 (23 July) on environmental impact assessment for oil companies was passed by the Council of
Ministers of the Republic of Angola to regulate public and private oil-related projects. Furthermore, the Ministry
for Oil now has an Environment Oversight Department that inspects and veries oil companies and regularly issues
reports on impacts, spills and other activities affecting the environment.
The visibility of environment problems has been raised considerably in the country through forums, debates,
television programmes, advertising campaigns, etc. Environmental education and training programmes have also
been put in place in various areas and levels of education.
Lastly, the Council of Ministers has passed new and much stricter legislation governing oil companies (DecreeLaw No. 4/09, 18 May). The Law applies to hazardous waste that arises or is located in areas under national
jurisdiction or is transported outside a province or territory, as well as to waste that might affect people or the
environment beyond the province in which it arises. It also applies where the economic repercussions of the
measures required advise country-wide standardisation of said measures to ensure effective competition among
the companies affected.
For their part, oil companies must adopt a plan that complies with existing legislation. The plan, including an
implementation time-frame which needs to be submitted for government approval, must be in place prior to the
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Environmental Responsibility of Oil Companies in Developing Countries

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commencement of activities which have the potential to harm the environment. It must also set out the operational
and maintenance measures to be taken to prevent spills.

Conclusions
In this paper we have analysed the introduction of an EMS based on ISO 14001 in the Luanda Oil Renery, which is
jointly owned by the Angolan National Oil Company (Sonangol, 37%) and the French multinational Total-Fina-Elf
(56%). The example used allows us to extrapolate a number of general conclusions concerning the potential
repercussions of CSR strategies adopted by oil multinationals in resource-rich developing countries on their
immediate surroundings and also concerning the difculties entailed in the process.
The process was initiated in a context marked by the absence of a formal structure for environmental management in the company, which had no protocols or specic environmental documentation to clearly regulate its
activities. Although the company did have an Environment Department, it was inefcient and lacked the planning
and trained staff, etc, needed to ensure a minimum of organisational effectiveness. In all likelihood, this is a
common starting point in similar contexts.
The lack of adequate environmental management produced numerous negative consequences, both directly
for the company and indirectly for the environment and population of the immediate area. The main negative
environmental impacts of the renerys activity can be summed up as follows: waste production, soil contamination,
wastewater generation, excessive water loss, and atmospheric and noise pollution.
The introduction of the ISO 14001:2004 environmental system improved the companys environmental
performance considerably, while also giving it an integrated management system since the Luanda Renery has also
adopted ISO9001 (quality) and OSHA 18000 (safety). Environmental management would thus appear part of a
wider strategic framework in which quality is viewed by the company as a key variable.
The above would appear to conrm, therefore, that oil companies operating in developing countries and which
view CSR as an opportunity rather than a threat, along the lines suggested by Luken and Stares (2005), can contribute to a greater level of sustainability in their operating environment and at the same time increase their protability
and competitiveness. In this regard, the results obtained here would appear to coincide with those noted by
Anderson and Bieniaszewska (2005), namely, that CSR is an increasingly important component of the business
strategy of such rms in their expansion into developing countries.
It is important to underline also the key EMS implementation role played by the multinational which is the main
shareholder in the company. Generally speaking, it seems that oil multinationals operating in developing countries
have an important role to play in promoting the widespread adoption of ISO 14001 environmental management
systems or other CSR protocols in all their production units, as part of their global strategies. This points to a
positive answer in the ongoing debate in the literature concerning the potential impact on development of the
CSR activities of oil MNEs (Idemudia and Ite, 2006; Dobers and Halme, 2009; Idemudia, 2011), provided such
activities are undertaken with appropriate adaptation to the specic context.
Difculties are likely to arise due to the local and national authorities ignorance and lack of legal and environmental culture with respect to environmental management, difculties which can only be overcome through
adequate communication strategies. In this regard, stakeholder information and involvement, both internally
(workers) and externally (authorities, the local population living near the facility), are crucial to successful
EMS implementation.
Also likely to arise in similar processes are added difculties such as administrative and human resource
problems: inadequate level of general training among staff, slow and/or excessively bureaucratised decision-making,
lack of previous records of impacts or environmental risks, etc.
However, the successful implementation of an EMS will probably enable oil activity and its impact on the
environment to be managed much more adequately, not just by the company but at the local and regional levels also.
In this regard, as our case study has shown, the repercussions of the introduction of the EMS fostered, facilitated or
created the conditions for signicant improvements to environment-related legislative and administrative structures
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F. J. Garca-Rodrguez et al.

in both oil and non-oil companies, while also encouraging the public authorities to promote the adoption of
environmental management systems by other rms.
Accordingly, an appropriate strategy for harnessing the potential of CSR business strategies in developing
countries might be to encourage innovator oil companies, to borrow the term used by S de Abreu (2009), to
implement them with a view to their eventual adoption by other companies through a process of competitive
imitation. This public policy approach (fostering CSR leaders) could complement the required environmental
regulations and restrictions.
Thus, despite the absence of an enabling environment in developing countries for the CSR activities of oil MNEs
owing to the existence of a fragile state and weak governance structure an issue which has merited extensive
treatment in the literature (Idemudia and Ite, 2006; Edoho, 2008; Dobers and Halme, 2009; Kolk and Tulder,
2010; Cash, 2012; Kolk and Lenfant, 2012) small actions such as the introduction of an EMS using a bottomup approach (Idemudia, 2011) can generate important impacts in terms of strengthening the institutional context
and helping . . .develop structures and institutions that contribute to social justice, environmental protection and
poverty eradication (Dobers and Halme, 2009).
Consequently, the proliferation of CSR tools appears to afford an opportunity to improve the social and environmental repercussions of MNE activities in developing countries, particularly in the case of the oil sector. Whether or
not this is the underlying motivation, it also appears that CSR actions can inuence far-reaching institutional
changes in host countries. This nding is not necessarily at odds with the conclusion reached by Wiig and Kolstad
(2010) that oil MNEs prefer to keep the rules of the game that allow them to obtain higher earnings via nontransparent relations with ruling elites and local authorities. Thus, although MNEs might not be interested in
using CSR to change the institutional framework in which they operate, such an outcome cannot be ruled out.
Further study into this area of research is warranted, including more extensive analysis covering other, different
locations of oil-related business activity in developing countries and to test whether the conclusions obtained in the
present work can be extrapolated. To that end, further case studies in other countries, as well as quantitative studies,
are required.

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