10 - Ethical Business Practice or Camouflage? Energy and Mining Companies and Corporate Social Responsibility

Summary

The Bay of Bengal region appears set to emerge as an important new oil and natural gas producing province. Major new discoveries have been made, mainly offshore, in eastern India, Bangladesh and western Myanmar. Development raises many issues for governments. One of the most important, but sometimes overlooked, in concerns over energy supply and security and then the euphoria that comes with new discoveries and their economic and commercial allure, is how to best manage the social and environmental impacts of petroleum development. Governments clearly have responsibility to ensure that oil and gas projects in their midst — upstream extraction, midstream pipelines and downstream processing — do deliver real benefits to local regions as well as the overall country, and do not harm them through social and environmental damage. This should also be seen to be vital in ensuring the long-run success of a project. What then is the role of corporations? They too must show responsibility in this regard — and again it is something in their commercial self-interest. There is a strong case then for a partnership between the corporate sector, central and local governments and local communities to deal with these wider dimensions of petroleum development.

The extractive industries — petroleum and mining — are burdened by often damaging stereotypes of their attitudes towards such issues. Record profits being declared by major international oil and mining companies as a result of high commodity prices are fuelling the old stereotypes about these corporate giants. Here, some say, is evidence again of behemoths selfishly and ruthlessly going about their business, extracting finite resources around the globe, especially from the developing world, with little care for the consequences of their operations on local communities and environments. In Bolivia, such fears about foreign oil companies have brought down governments and in late 2005 helped propel Evo Morales to office as Bolivia's new president, promising he would nationalize the country's petroleum industry.

The transnational oil and mining groups, with profits exceeding the gross domestic product (GDP) of some countries, are often seen as laws unto themselves, prepared to make deals with corrupt governments in the developing world and influence powerful Western governments to achieve their goals.