38
3 Literature Review: Social Investment …
in Ecuador in 1997. Pacalta implemented a management strategy that fostered a
‘sound’ relationship with host communities. Engaging with the communities that
lived nearby the operational area through an NGO funded by Pacalta, called Fundacion Nan Paz, they developed the following community-centred social investments:
Centre for Technology Transfer, System of Sustainable Tropical Forestry, a recycling
programme, health programmes, fish-farming initiatives and coffee producers’ initiatives. According to Garcia and Vredenburg (2003), Pacalta developed a successful
approach to social investment in Ecuador because it was based on the demands and
reality of the host communities.
A participatory approach to social investment is crucial to its success, as exemplified by the Faroe Islands and Ecuador social investment studies. However, Frynas
(2009a) argues that the involvement of the beneficiaries of the social investment in
planning social investment projects is still limited or non-existent in many cases.
This lack of community involvement in O&G social investment results in limited
sustainable benefits to communities (Frynas, 2009b). Further, as noted earlier, a lack
of community participation in O&G social investment potentially fosters a mentality
of dependency by the host community (Frynas, 2005).
Frynas (2005) believes that a lack of community participation in companies’
decision-making around social investment is due to a lack of development experts
working in O&G companies. Studies suggest that there is a disconnection between
social investment development goals, and expertise within the O&G industry (Blowfield, 2005; Blowfield & Frynas, 2005; Frynas, 2005). The literature on social investment in the extractive industries reveals that the majority of O&G social responsibility experts are not from the social science field (Banks, Scheyvens, McLennan, &
Bebbington, 2016; Frynas, 2005; Harvey, 2014; Jenkins & Yakovleva, 2006). For this
reason, social investment programmes often do not have facilitators with the relevant
skills to engage in community participation, which may hinder the development of
social investment that actually address communities’ needs.
As already mentioned, Pacalta, conducted social investment in Ecuador, its host
nation (Garcia & Vredenburg, 2003). The Pacalta Fundacion’s personnel were social
science experts whose objectives went beyond operational objectives (Garcia &
Vredenburg, 2003). According to Garcia and Vredenburg (2003), these experts have
placed local indigenous voices, values and customs at the centre of a participatory
development-focussed approach to social investment. They argue that this approach
was central to benefiting the communities that lived near Pacalta’s operations.
3.2.2 Transparent and Accountable O&G Social Investment
Bad governance, corruption and lack of transparency are directly related to poverty
(Ackah-Baidoo, 2012). Corrupt and authoritarian regimes may jeopardise O&G goals
of poverty reduction (Ackah-Baidoo, 2012; Cash, 2012; Ite, 2005), while lack of
government involvement hampers long-term poverty reduction.
3 Literature Review: Social Investment …
in Ecuador in 1997. Pacalta implemented a management strategy that fostered a
‘sound’ relationship with host communities. Engaging with the communities that
lived nearby the operational area through an NGO funded by Pacalta, called Fundacion Nan Paz, they developed the following community-centred social investments:
Centre for Technology Transfer, System of Sustainable Tropical Forestry, a recycling
programme, health programmes, fish-farming initiatives and coffee producers’ initiatives. According to Garcia and Vredenburg (2003), Pacalta developed a successful
approach to social investment in Ecuador because it was based on the demands and
reality of the host communities.
A participatory approach to social investment is crucial to its success, as exemplified by the Faroe Islands and Ecuador social investment studies. However, Frynas
(2009a) argues that the involvement of the beneficiaries of the social investment in
planning social investment projects is still limited or non-existent in many cases.
This lack of community involvement in O&G social investment results in limited
sustainable benefits to communities (Frynas, 2009b). Further, as noted earlier, a lack
of community participation in O&G social investment potentially fosters a mentality
of dependency by the host community (Frynas, 2005).
Frynas (2005) believes that a lack of community participation in companies’
decision-making around social investment is due to a lack of development experts
working in O&G companies. Studies suggest that there is a disconnection between
social investment development goals, and expertise within the O&G industry (Blowfield, 2005; Blowfield & Frynas, 2005; Frynas, 2005). The literature on social investment in the extractive industries reveals that the majority of O&G social responsibility experts are not from the social science field (Banks, Scheyvens, McLennan, &
Bebbington, 2016; Frynas, 2005; Harvey, 2014; Jenkins & Yakovleva, 2006). For this
reason, social investment programmes often do not have facilitators with the relevant
skills to engage in community participation, which may hinder the development of
social investment that actually address communities’ needs.
As already mentioned, Pacalta, conducted social investment in Ecuador, its host
nation (Garcia & Vredenburg, 2003). The Pacalta Fundacion’s personnel were social
science experts whose objectives went beyond operational objectives (Garcia &
Vredenburg, 2003). According to Garcia and Vredenburg (2003), these experts have
placed local indigenous voices, values and customs at the centre of a participatory
development-focussed approach to social investment. They argue that this approach
was central to benefiting the communities that lived near Pacalta’s operations.
3.2.2 Transparent and Accountable O&G Social Investment
Bad governance, corruption and lack of transparency are directly related to poverty
(Ackah-Baidoo, 2012). Corrupt and authoritarian regimes may jeopardise O&G goals
of poverty reduction (Ackah-Baidoo, 2012; Cash, 2012; Ite, 2005), while lack of
government involvement hampers long-term poverty reduction.