3.2 Why Do O&G Social Investments Succeed?
37
approach that entailed “the full participation of population segments of the communities” (Ite, 2004, p. 6). Within this approach, Shell also developed partnerships with
different social actors, such as NGOs and other development agencies, to address
poverty. Community participation was a key determinant in ensuring that Shell’s
investment benefited the host community, therefore significantly reducing levels of
poverty in the region (Ite, 2004).
Similarly, ExxonMobil and the Chad-Cameroon pipeline social investments were
notable “for [their] attention to local concerns, company-community dialogue and
social-economic investments” (Chen, 2007, p. 24). This had not always been the case,
for during the beginning of the 2000s, the Chad-Cameroon pipeline project encountered a series of difficulties. ExxonMobil shifted its social investment approach
when the Chad government used ExxonMobil’s oil revenues on military expenditure. ExxonMobil reduced the social investment revenue that was provided directly to
the Chad government, and increased the social investment spending in programmes
designed with the participation of host communities. For instance, the company
held 1200 public consultation meetings to determine its investment within the host
communities (Chen, 2007) and spent US$8 million funding programmes in health,
education and environment conservancy (Chen, 2007).
O&G social investment is more likely to succeed where it is meaningful for local
community (Gilberthorpe & Banks, 2012). Social investment is meaningful to host
communities if the communities inform the project’s design and implementation
(Blowfield & Frynas, 2005). Communities may espouse values that are different
from those held by the firm (Blowfield, 2005). Cultural and value differences have
to be taken into consideration in order to ensure that social investment is meaningful
for the host community (Blowfield, 2005; Blowfield & Frynas, 2005; Gilberthorpe
& Banks, 2012).
Anderson and Bieniaszewska (2005) undertook a study in the Faroe Islands, an
autonomous group of small islands in the North Atlantic with a population of around
47,000 inhabitants. Oil prospection began in the Faroe Islands at the beginning of
the 1990s. In 2001, the Faroe Islands government issued Clause II-13 that stated oil
explorations were subjected to oil companies providing employment, education and
research opportunities to locals (Anderson & Bieniaszewska, 2005). According to
Anderson and Bieniaszewska (2005), BP conducted research exploring the “social
necessities” (p. 5) of the country. BP designed its social investment in the Faroe Island
based on (1) social audits as a form of community engagement; (2) social, legal,
environmental and technological analysis and (3) risk mitigation assessment. After
consulting with the locals, BP developed social investment in areas of poverty alleviation and environmental preservation (Anderson & Bieniaszewska, 2005). According
to Anderson and Bieniaszewska (2005), O&G social investment in the Faroe Island
has fostered a positive relationship with the host communities because it respected
the unique socio-economic context, local culture, and values of the host communities.
Garcia and Vredenburg (2003) argue that O&G companies operating in countries
with different values, customs and institutional organisations should adjust their
managerial behaviour to the demands of the host country. Their study describes
the work of Pacalta, a Canadian oil exploration company that began operations
37
approach that entailed “the full participation of population segments of the communities” (Ite, 2004, p. 6). Within this approach, Shell also developed partnerships with
different social actors, such as NGOs and other development agencies, to address
poverty. Community participation was a key determinant in ensuring that Shell’s
investment benefited the host community, therefore significantly reducing levels of
poverty in the region (Ite, 2004).
Similarly, ExxonMobil and the Chad-Cameroon pipeline social investments were
notable “for [their] attention to local concerns, company-community dialogue and
social-economic investments” (Chen, 2007, p. 24). This had not always been the case,
for during the beginning of the 2000s, the Chad-Cameroon pipeline project encountered a series of difficulties. ExxonMobil shifted its social investment approach
when the Chad government used ExxonMobil’s oil revenues on military expenditure. ExxonMobil reduced the social investment revenue that was provided directly to
the Chad government, and increased the social investment spending in programmes
designed with the participation of host communities. For instance, the company
held 1200 public consultation meetings to determine its investment within the host
communities (Chen, 2007) and spent US$8 million funding programmes in health,
education and environment conservancy (Chen, 2007).
O&G social investment is more likely to succeed where it is meaningful for local
community (Gilberthorpe & Banks, 2012). Social investment is meaningful to host
communities if the communities inform the project’s design and implementation
(Blowfield & Frynas, 2005). Communities may espouse values that are different
from those held by the firm (Blowfield, 2005). Cultural and value differences have
to be taken into consideration in order to ensure that social investment is meaningful
for the host community (Blowfield, 2005; Blowfield & Frynas, 2005; Gilberthorpe
& Banks, 2012).
Anderson and Bieniaszewska (2005) undertook a study in the Faroe Islands, an
autonomous group of small islands in the North Atlantic with a population of around
47,000 inhabitants. Oil prospection began in the Faroe Islands at the beginning of
the 1990s. In 2001, the Faroe Islands government issued Clause II-13 that stated oil
explorations were subjected to oil companies providing employment, education and
research opportunities to locals (Anderson & Bieniaszewska, 2005). According to
Anderson and Bieniaszewska (2005), BP conducted research exploring the “social
necessities” (p. 5) of the country. BP designed its social investment in the Faroe Island
based on (1) social audits as a form of community engagement; (2) social, legal,
environmental and technological analysis and (3) risk mitigation assessment. After
consulting with the locals, BP developed social investment in areas of poverty alleviation and environmental preservation (Anderson & Bieniaszewska, 2005). According
to Anderson and Bieniaszewska (2005), O&G social investment in the Faroe Island
has fostered a positive relationship with the host communities because it respected
the unique socio-economic context, local culture, and values of the host communities.
Garcia and Vredenburg (2003) argue that O&G companies operating in countries
with different values, customs and institutional organisations should adjust their
managerial behaviour to the demands of the host country. Their study describes
the work of Pacalta, a Canadian oil exploration company that began operations