oil transnational crops-csr and env

Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment

* Correspondence to: Felix M. Edoho, Ph.D., Dean/Professor of Management, College of Business and Professional Studies, Lincoln University, Jefferson City, MO 65102, USA. E-mail: [email protected]

Corporate Social Responsibility and Environmental ManagementCorp. Soc. Responsib. Environ. Mgmt. 15, 210–222 (2008)Published online 25 April 2007 in Wiley InterScience(www.interscience.wiley.com) DOI: 10.1002/csr.143

Oil Transnational Corporations: Corporate Social Responsibility and Environmental Sustainability

Felix M. Edoho*College of Business and Professional Studies, Lincoln University, Jefferson City, MO, USA

ABSTRACTCorporate social responsibility (CSR) occupies the center stage of the debate on the oper-ations of transnational corporations in the developing countries. The quest for profi t maximization as the overriding value at the expense of corporate social responsibility puts some transnational corporations on a collision path with their Niger Delta host communi-ties, who are demanding environmental sustainability. Militant groups have shut down fl ow stations and taken oil workers hostage. Unresponsiveness of oil fi rms to community demands for CSR is heightening the volatility of the Nigerian oil industry. The problem will intensify until oil fi rms initiate authentic CSR strategies to address the environmental havocs emanating from their operations. At the core of such strategies is recognizing the host communities as bona fi de stakeholders and addressing their socioeconomic needs. Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment.

Received 31 July 2006; revised 21 December 2006; accepted 9 January 2007

Keywords: Nigeria; transnational corporations; social responsibility; environmental sustainability; militancy

Introduction

CORPORATE SOCIAL RESPONSIBILITY (CSR) OCCUPIES THE CENTER STAGE OF THE DISCOURSE ON THE operations of transnational corporations (TNCs) in the extractive industry in the developing countries

(Cragg and Greenbaum, 2002; Wheeler et al., 2002; Jenkins, 2004; Kapelus, 2002). The ease of access

to information and communication technologies in this age of globalization has galvanized community

groups, environmentalists and human rights entities across national borders to challenge the social performance

and environmental records of TNCs in developing countries. The crusade against TNCs hinges on the claims that

they undermine environmental laws in the developing countries (Aiyede, 2004; Phillips, 1999). Oil fi rms are par-

ticularly notorious for violating environmental laws in Nigeria and fostering unsustainable development (Boele

et al., 2001a, 2001b). They have been accused of ‘taking away the peoples oil and polluting the environment with-

out giving them anything in return’ (Okonta, 2000).

This paper examines CSR relative to the operations of oil fi rms in the Niger Delta region (NDR) of Nigeria.

Neglect of environmental sustainability by oil TNCs has spurred their host communities into social movements

and militant actions. As an analytical device, a CSR framework could help oil fi rms to understand how their

Oil Transnational Corporations 211

Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment Corp. Soc. Responsib. Environ. Mgmt. 15, 210–222 (2008) DOI: 10.1002/csr

unresponsive posture could trigger militancy against them. CSR is a useful conceptual framework for probing

corporate attitudes of fi rms towards stakeholders (Wheeler et al., 2002). Corporate attitudes determine the nature

of the relationship between oil TNCs and their host communities (Anderson and Bieniaszewska, 2005; Jenkins,

2004), and whether such a relationship is harmonious or antagonistic. For communities in the NDR, CSR con-

stitutes a frame of reference for addressing environmental problems and socioeconomic dislocation caused by the

operations of oil transnational corporations.

Conceptual Framework: Clarifying CSR

The literature on CSR is extensive (see, e.g., Carroll, 1979, 1991, 1999, 2004). For this paper, we use the concep-

tualization endorsed by the World Business Council on Sustainable Development (WBCSD): CSR is ‘the continu-

ing commitment by business to behaving ethically and contributing to economic development while improving

the quality of life of the workforce and their families as well as of the community and society at large’ (Holmes

and Watts, 2000). This approach has an affi nity with the earlier views of CSR as ‘the managerial obligation to take

action that protects and improves both the welfare of society as a whole and the interests of the organization’ (Davis

and Blomstrom, 1975, p. 6), or the obligation of business to contribute to social welfare beyond their role of pro-

ducing goods and providing services (Frederick, 1994).

Evidence in the literature suggests two opposing views of CSR. First is the conventional view that considers CSR

a ‘misguided virtue’ (Henderson, 2001). This view is vehemently opposed to CSR, and advocates a limited role for

business in society. The conventional view is widely embraced by TNCs operating in the developing countries. In

Nigeria, the Shell Petroleum Development Company (SPDC) has stated that

our most signifi cant contribution comes from carrying out our direct business activities effi ciently, profi tably

and to high standards. It also comes from the sizeable investments we make. These create wealth for the

nation, through the substantial amounts of taxes and royalties generated, and the direct and indirect employ-

ment created (SPDC, 2003, p. 4).

Until recently, oil TNCs were vehemently opposed to suggestions that they helped to provide infrastructures for

socioeconomic development of their host communities in Nigeria ‘on the ground that it was not their responsibil-

ity to do so’ (Idemudia and Ite, 2005, p. 3). In fact, Shell had argued that its subsidiaries ‘do not hold the solution

to community demands for more amenities, more development, more employment and more control over

oil revenues. That is primarily a government responsibility’ (Shell International, quoted by Boele et al., 2001a,

p. 75).

The second is a contemporary view of CSR that advocates social contributions, in addition to an economic role,

of fi rms in society based on social contract. This view stems from the knowledge that the conventional view rec-

ognizes only shareholders, while ignoring other key stakeholders (Michael, 2003). The importance of recognizing

host communities as stakeholders is articulated by Ken Saro-Wiwa, who can be called the fi rst ‘environmental

martyr’ in Nigeria:

We refuse to accept that the only responsibility which Shell-BP owes our nation is the spoliation of our

lands. . . . We shall continue to appeal to the . . . government . . . to . . . take cognizance of our desires with regard

to companies prospecting or operating on our soil (quoted by Boele et al., 2001a, p. 76).

Thus, for communities severely affected by oil spills and pollution, Shell’s contribution to the federal revenue

base alone is insuffi cient to grant it social legitimacy in its operating environment. Firms in the extractive indus-

try face questions of legitimacy regarding how they address CSR through strategic initiatives (Wheeler et al., 2002).

Firms must address the welfare of all parties affected by their decisions and operations (Cragg and Greenbaum,

2002; Freeman, 1984). This is crucial because fi rms coexist symbiotically with other parties in a complex web of

interlocking and mutually dependent relationships, reciprocal exchanges and expectations, and shared interests.

212 F. M. Edoho


CSR brings into sharp focus how the aggregate costs and benefi ts of resource exploitation are distributed among

the stakeholders (Cragg and Greenbaum, 2002). In the oil industry, CSR would entail ‘balancing the diverse

demands of communities and the imperative to protect the environment with the ever present need to make profi t’

(Jenkins, 2004). CSR strategies can help oil fi rms in the NDR to re-evaluate their behavior towards their stake-

holders in order to foster healthy relationships (Idemudia and Ite, 2005).

Macro-Context and an Overview of the Nigerian Oil Industry

Shell-BP commenced oil production in Nigeria in 1958, with crude oil export of 5000 barrels per day (bpd). When,

in the 1960s, Gulf, Mobil, Agip, Elf, Chevron, Texaco and other oil prospecting TNCs joined Shell-BP in produc-

ing oil, Nigeria was ‘ushered onto the international oil stage’ (Pearson, 1970, p. 15). Nigeria is the largest oil

producer in Africa, the fi fth largest among the Organization of Petroleum Exporting Countries (OPEC) and the

fi fth largest crude oil supplier to the US. At present, oil production averages about 2.5 million bpd. Proven oil

reserves are estimated at 35.3 billion barrels, while natural gas reserves are estimated at 176 trillion cubic feet (tcf ),

placing Nigeria ninth in the world (US DOE, 2005). Thus, oil and gas will continue to dominate the Nigerian

economy for decades to come.

The worldwide oil crisis of the 1970s contributed to increases in the prices of Nigeria’s premium crude oil. From

a mere 0.7 percent of the total exports in 1958, oil accounted for 15.2 percent of total exports in 1964, surging to

73 percent in 1971 and over 97 percent in 1985. Export earnings rose over sixfold, from a mere US$4 billion in

1975 to a staggering US$26 billion in 1980, while per capita income skyrocketed from US$360 to over US$1000

(World Bank, 1989). The importance of oil to Nigeria’s economic life is refl ected in Table 1. In 1988, oil revenues

accounted for 72 percent of total revenues; this leaped to 93 percent in 1990, but declined to 77 percent in 2001.

During 1990–2000, the oil sector on average accounted for 73 percent of the total revenues. At present, the oil

sector accounts for nearly 80 percent of government revenues, 96 percent of export revenues, over 95 percent of

foreign exchange earnings and 40 percent of GDP (US DOE, 2005; SPDC, 2004).

Cognizant of the criticality of oil to its survival, the state has appropriated the oil industry as its exclusive domain

of accumulation (Edoho, 1992). The Land Use Act vests all lands and mineral resources in the state, while the

Petroleum Act gives the state the power to seize any land needed for oil activities. In the 1970s, the state used

Year Total revenue (million US$) Oil revenue (million US$) (2) as % of (1) (1) (2)

1988 27-595 19-832 721989 47-798 39-131 821990 69-788 65-216 931991 100-992 82-666 821992 190-453 164-078 861993 192-769 162-078 841994 201-911 160-192 791995 459-988 279-902 791996 520-190 408-783 791997 582-811 416-811 721998 463-609 324-311 701999 949-188 724-423 762000 1906-110 1591-676 842001 2-231-533 1-707-513 77

Table 1. Contribution of oil revenue to Nigeria’s economySource: Central Bank of Nigeria Annual Report and Statement of Account (several years).



indigenization policies to nationalize the oil sector, paving ways for it to enter into joint ventures (JVT) with oil

TNCs (Boele et al., 2001a). The Nigerian National Petroleum Corporation (NNPC) was established in 1977 to

manage the JVT between the state and oil TNCs. As a proxy for the state, the NNPC is the senior partner in all

JVT arrangements, holding an average of 59 percent share. By law, the agency is responsible for the enforcement

of the environmental policies in the oil industry.

As the sole owner of oil and gas, the state collects mining rents, royalties and petroleum taxes. Massive oil rev-

enues led to bureaucratic centralism and corruption. A World Bank report, published in 2004, indicated that one

percent of the population appropriated up to 80 percent of the oil revenues (US DOE, 2005). ‘Nigeria’s politics

revolve about the distribution of the oil money, whether offi cially . . . or un offi cially . . . and as long as the oil fl ows

it will be diffi cult to change this legacy’ (HRW, 1999). In Nigeria, where the state is the ‘major avenue for private

wealth and the instrumentalities of state are used to grant favors, politics becomes a zero-sum game’ (Edoho, 1992,

p. 107). Williams (1976, p. 43) had analyzed the dysfunctional Nigerian political economy in which the ‘ethics of

business penetrated politics, the ethics of politics penetrated business, and the ethics of gangster penetrated both’.

Oil fi rms are aware that they can buy off offi cials and ignore the environmental laws with impunity. Thus, systemic

corruption contributes to the cavalier attitude of oil TNCs towards environmental sustainability in the NDR.

Niger Delta Region: CSR and Environmental Sustainability

The NDR is the actual goose that lays the golden egg for Nigeria, the cash cow for its economy and the source of

enormous profi ts for oil TNCs. The region comprises several ecological zones: sandy coastal ridge barriers, brack-

ish or saline mangroves, freshwater permanent and seasonal swamp forests, and lowland rain forest. Its area of

70-000-km2 is considered the world’s third largest wetland, after Holland and Mississippi. The region’s population

of 20 million is composed of over 40 different ethnic groups, who speak 250 different dialects, and live in 3000

communities that traverse nine states (Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo and Rivers)

out of Nigeria’s thirty-six states. Subsistent trading, farming and fi shing are the major occupations.

Rich in biodiversity, the NDR boasts various species of rare and endangered fl ora and fauna. The ecosystem is

very sensitive to changes that can trigger a disequilibrium. The area is prone to a high incidence of tropical dis-

eases. Early Europeans explorers dreaded the region and dubbed it the ‘white man’s graveyard’ (Ibeanu, 2000).

However, since the discovery of the black gold in 1956 in the region, the white man’s graveyard has become the

white man’s gold mine. The region has witnessed exponential growth in the number of oil fi elds, from 78 in the

1980s to over 606 now. It hosts over 18 oil TNCs and many service fi rms. The SPDC is the largest and oldest oil

and gas fi rm. It controls over 43 percent of Nigeria’s oil production as well as 53 percent of the country’s hydro-

carbon reserves. This corporate leviathan boasts over 6000-km of pipelines and fl ow lines, 87 fl ow stations, eight

gas plants and more than 1000 producing oil wells, all in an area around 31-000-km2, representing about 44 percent

of total area of the NDR (SPDC, 2003). As the pioneer of the Nigerian oil industry, Shell’s continued

dominance is attributable to the fi rst mover advantages (Frynas et al., 2000).

Although oil revenues from the NDR have transformed the Nigerian economy, paradoxically, however, the region

itself remains the most underdeveloped and backward in terms of human capital, industrial infrastructure and

basic social services. Comprising mostly ethnic minorities, the NDR suffers from severe economic deprivation and

political marginalization. These have been exacerbated by environmental degradation and pollution by oil fi rms

that have turned farmlands into wastelands. Loss of farmlands means loss of income and source of livelihood and

sustenance. The region is a classic case of blatant neglect in the midst of its phenomenal oil wealth.

A World Bank (1995) study catalogued the depth of poverty in the region thus: GNP per capita is below the

national average of US$280; health indicators rank worse and lag far behind the national average; fatality rates

from water-borne diseases, malnutrition and poor sanitation, among other causes, are disproportionately high,

and only about 20–24 percent of rural communities and fewer than 60 percent of urban communities have access

to safe drinkable water, while less than 20 percent of the region is accessible by a good road, even during the dry

season. Similarly, a columnist wrote ‘the Delta has become a killing fi eld . . . The people have no roads, no portable

water, they are unable to enjoy like other compatriots, even the pleasure of peaceful sleep at night. Oil exploration

214 F. M. Edoho


companies have overrun the Niger Delta. They are destroying the land, polluting the air and the sea’ (Vanguard,

1999).

The irony is that, while oil has been a blessing to Nigeria, it has been a curse to the NDR (Nnadozie, 1995). The

inhabitants of the Niger Delta live in a Hobbesian state where life is brutish and short. People who protest against

oil spills, gas fl aring and pollution are routinely killed by the security operatives retained by oil TNCs, troops dis-

patched by the state or blowouts/pipeline explosions. Various NGOs have documented the gruesome details of

human rights abuses and repressive tactics by the agents of the oil TNCs and the state (ND-HERO, 2000; HRW,

1999; Essential Action, 2000). The operating standards of the oil TNCs in the NDR have been determined to be

below accepted international norms. Despondency and desperation in the region make headlines in the media,

attracting international outcry and solidarity from the NGOs, who are united in condemning oil fi rms for ruining

the Niger Delta environment without helping to improve the socioeconomic conditions of the people in the region

(Okonta, 2000).

Magnitude of Oil Spills and Pollution in the Niger Delta Region

Oil exploration is a risky venture, and oil spill is one of the acceptable risks. However, the frequency and quantum

of oil spills in the NDR by oil TNCs border on ecocide. It has been estimated that the actual quantities of oil spilled

in the 1970s totaled more than ten times that of the Exxon Valdez tragedy in 1989 in the US (Watts, 1997). A

study by Environmental Resource Management (ERM, 1997) indicated that during 1976–1996 there were 4835

oil spill incidents, which resulted in the discharge of 2-446-322 barrels of oil, of which 1-896-930 (77%) were lost

to the environment. Data collated by the Department of Petroleum Resources (DPR, 1997) from oil TNCs indicate

that over 6000 oil spill incidents had been recorded during the 40 years of oil exploration in Nigeria, with an

average of 150 spills per year.

During 1976–2000, 5733 oil spill incidents occurred, resulting in the discharge of over 2-567-966 barrels, of

which 549-060 barrels were recovered while 1-820-411 barrels were lost to the environment (Table 2). It is imper-

ative to note that the number of spill incidents and the corresponding volumes of oil indicated in the table do not

actually represent the true picture. This is because the Nigerian National Petroleum Corporation (NNPC) petro-

leum inspectorate guidelines classify spillage into minor, medium, major and disaster. Minor spill occurs when

oil discharge is less than 25 barrels in inland waters or less than 250 barrels on land, offshore or coastal waters

that does not threaten public health or welfare. In the case of medium spill, the discharge must be 250 barrels or

less in inland water or 250–2500 barrels on land, offshore or coastal water. Major spill involves a discharge of oil

in excess of 250 barrels into the inland waters or 2500 barrels on land, offshore or coastal waters. Finally, disaster

refers to any uncontrolled well blowout, pipeline rupture or storage tank failure that poses an imminent threat to

public health or welfare. Unfortunately, this classifi catory scheme provides convenient excuses for oil fi rms to

ignore some oil spill incidents on the basis that the volumes discharged were insignifi cant. Thus, not all spillages

are reported for documentation (Tolulope, 2004).

Ikein (1990, pp. 171–175) analyzed oil production and pollution distribution by the NDR state. The data indicated

that oil spills and pollution distribution are most severe in the Bendel1 and Rivers2 states. The two states account

for over 92 percent of total number of oil spills, and approximately 91 percent of the volumes of oil involved. Ikein

(1990, p. 170) noted the correlation between intense oil production and the number of oil spill incidents. The

number of oil spill incidents and ecological catastrophe in Bayelsa and Delta states largely account for increased

violence and heightening militancy against oil TNCs in the NDR. These are demonstrated by hostage-taking,

pipeline sabotage, shut-down of fl ow stations, blockade of oil rigs and deadly shootout with security operatives.

A study by ERM (1997) identifi ed various sources of oil spills: corrosion (33%); equipment failure (38%); blow-

out (20%); accident from third party (1%); operator or maintenance error (2%) and natural (3%). Overall, over 90

1 Bendel State ceased to exist in 1991 after it was split into Delta and Edo states by the Babangida regime. Although disaggregated data of oil spills for the two states are not available, it is likely that most of the oil spills occurred in the Delta State because of extensive exploration and intensive drilling there.2

Bayelsa State was created out of Rivers State in 1996 by the Abacha regime. Similarly, disaggregated data of oil spills for the two states are not available; but it is likely that most of the oil spills occurred in the Bayelsa State.



percent of oil spills are preventable. Most of the oil pipelines were laid in the 1970s. They have not been properly

maintained or replaced in a timely manner. The same study indicates that 60 percent of total spills during that

period occurred offshore, 25 percent in swamp and 16 percent on land.

ERM (1997) and ERA (1998, 2005) have documented cases of rampant blowouts at oil wells and the estimates

of the quantities of oil discharged into the environment. The 1970 blowout at the Bomu oil fi eld destroyed many

acres of fertile, cultivable land. Between September 1974 and October 1975 there were 17 major fi re outbreaks in

18 wells at Afam oilfi eld. The January 1980 offshore well blowout involved at least 200-000 barrels of oil spewed

into the Atlantic Ocean from a Texaco Faniwa oil well. Shell’s Awoba fl ow stations (Bille I and II) are notorious

for blowouts, pipeline leakages and explosions. There was a blowout there on 20 January 1997, two blowouts in

January and August 1998 and four blowouts in 1999 (HRW, 1999). Each of these incidents involved large quan-

tities of oil spewed into the environment, causing damages to the farmlands, rainforest, mangroves, creeks and

ponds.

Environmental and Economic Impacts of Oil Spills and Pollution

Oil spills and pollution have adverse effects on farmlands, food security, marine life and health. The 1980 offshore

well blowout at the Texaco Faniwa oil well released over 400-000 barrels of oil into the environment and destroyed

Year Number of spills Quantity spilled (barrels) Quantity recovered (barrels) Net loss to the environment (barrels)

1976 128 26-157.00 7-135.00 19-021.501977 104 32-879.25 1-703.01 31-176.751978 154 489-294.75 391-445.00 97-849.751979 157 64-117.13 63-481.20 630-635.951980 241 600-511.02 42-416.83 558-094.191981 238 42-722.50 5-470.20 37-252.301982 257 42-841.00 2-171.40 40-669.601983 173 48-351.30 6-355.90 41-995.401984 151 40-209.00 1-644.80 38-564.201985 187 11-876.60 1-719.30 10-157.301986 155 12-905.00 552.00 12-358.001987 129 31-866.00 6-109.00 25-358.001988 208 9-172.00 1-955.00 7-207.001989 195 5-956.00 2-153.00 3-830.001990 166 14-150.35 2-092.55 12-057.801991 258 108-367.01 2-785.96 105-912.051992 378 51-187.90 1-476.70 49-711.201993 453 8-105.32 2-937.08 6-632.111994 515 35-123.71 2-335.93 32-787.781995 417 63-677.17 3-110.02 60-568.151996 430 399-036.67 11-838.07 387-198.601997 339 59-272.30 N/A N/A1998 390 98-345.00 N/A N/A1999 198 29-337.00 N/A N/A2000 219 11-542.00 N/A N/ATotal 4-647 2-567-966.34 549-060.38 1-820-410.50

Table 2. Oil spill data in Nigeria, 1976–2000N/A = not available.Source: Department of Petroleum Resources (various years).

216 F. M. Edoho


over 340 hectares of mangroves (ERM, 1997). The 12 January 1998 oil spill from ExxonMobil’s ruptured pipeline

affected some 200-km of coastline, from Akwa Ibom State in the east to Lagos State in the west (Post Express, 1998). The spillage severely threatened the livelihood of various communities in Akwa Ibom State, particularly in

Eket, Esit Eket, Ibeno and Ikot Abasi local government areas. The 21 October 2000 oil spillage in Batan manifold

disrupted economic life in over 200 communities. The 30 November 2000 oil spill from Texaco oil pipe at Funtwa

Five platform spread to lands and creeks of the Nun River, Sanagana River and Fishtown River and destroyed the

livelihood of several communities (The Guardian, 2000).

Oil spills are detrimental to marine life, devastating the livelihood of the communities dependent on subsistent

fi shing. In communities surrounding the ExxonMobil areas of operation, crawfi sh, crabs and periwinkles – major

sea foods for the locals – have died out. Akinmalodun (1976, p. 374) noted the ‘nostalgia in many part of the oil

producing area to think of fresh fi sh soup. Even fi shermen in the area have come to depend on the frozen fi sh

from the supermarkets and from foreign countries’. Oil spills have devastated crops and economic trees and

deprived farmlands of vital nutrients. Reduced sedimentation, caused by the construction of dams, also contributes

to decreased fertility. Yam productivity in the oil producing areas has reportedly fallen in weight and size, corn is

often found with empty cobs, cassava have mere fi brous roots, with little or no starch, and cocoyams and red

species of cocoyams are extinct, thus wiping out not only food supply for families, but also sources of incomes to

meet household fi nancial needs.

The oil industry is highly capital intensive, and cannot absorb unskilled dislocated farmers and fi shermen whose

livelihoods have been devastated by frequent oil spills. Loss of livelihood means parents cannot feed and clothe

their families and pay school fees for their children. As a result, young girls have resorted to prostitution as an

economic necessity. Oil workers heavily patronize the emerging prostitution industry (Essential Action, 2000).

Some young boys have become street hawkers, while others are engaged in deviant behavior, such as cultism, and

criminal activities, such as armed robbery. For Nigeria as a whole, the economic costs of environmental degrada-

tion are also signifi cant. Evans Aina, former head of the Federal Environmental Protection Agency (FEPA), noted

that ‘Losses due to environmental degradation have been put at N25 billion [about US$1.5 billion, 13 percent of

GNP] while 50 million Nigerians are at risk due to environmental degradation’ (quoted by Ayeni, 1992, p. 750).

Health Hazards of Oil Spills and Pollution

Crude oil contains thousands of different chemicals, many of them toxic and some known to be carcinogenic with

no determined safe threshold for human exposure. Dangers and fear of diseases threatening the oil-producing

communities are palpable. A two-year (January 1998–January 2000) empirical study and scientifi c analysis by

Akpofure et al. (2000) concluded that ‘[t]he effects of the crude oil on the impacted victims were enormous as was

verifi ed by our biochemical analysis of soil and water sampling from six different points’. The effects of acid rain

from gas fl aring are unbearable. A study by the Nigerian Environmental Study Action Team (NEST, 1991) found

increased ‘discomfort and misery’ due to fumes, heat and combustion gases as well as increased illnesses. Higher

rates of certain diseases, such as bronchial asthma, respiratory diseases, gastro-enteritis, bronchitis, tuberculosis,

malaria, cholera and cancer as a result of the oil industry have been reported among the people in the NDR (Essen-

tial Action and Global Exchange, 2000).

Oteri (1981) indicated that groundwater contamination from hydrocarbon spills is widespread. Olusi (1981)

documented the negative impact of oil pollution on health. For example, following a major Texaco spill of 1980,

180 people died in one community as a result of the pollution (Fekumo, 1990, p. 268). In January 1998, about

100 people from the communities affected by the major ExxonMobil spill on 12 January 1998 were hospitalized

as a result of drinking contaminated water. In another community in 2000, 20 persons between ages 5 and 17

were reported dead after drinking contaminated water following an oil spill in Bayelsa state. A state legislator from

the area lamented that ‘fl oating crude oil from the spill had polluted the rivers and streams, the only sources

of drinking water in the Niger Delta area, thereby constituting serious threat to aquatic and human lives’ (The Guardian, 2000).

In the regulatory guideline, the DPR sets a limit of 20-ppm hydrocarbon contamination for effl uent discharge

to near-shore waters and 10-ppm for inland waters, while the FEPA’s limit is 10-ppm for near-shore waters. In



April 1997, samples taken from the water used for drinking and washing were analyzed in the US. A sample taken

from Luawii in Ogoni had 18-ppm of hydrocarbon in the water, 360 times the level allowed in drinking water in

the EU. A sample from Ukpeleide in Ikwerre contained 34-ppm – that is, 680 times the EU standard (Kretzmann

and Wright, 1997, p. 6). Evidently, oil TNCs routinely ignore these guidelines. Both the state and corporate attitudes

toward the needs of the NDR have forced the people to resort to violence against the oil fi rms and state

interests.

Several plausible reasons explain the failure of the federal government to implement its environmental regula-

tory policies. First is the fact that the NDR is marginalized in national politics. The region lacks political leverage

because oil and gas resources, which would have given the NDR competitive advantage, are, by law, owned and

controlled by the federal government. Second, the laxity in enforcing the existing environmental regulations may

be due to the fact that the federal government is heavily dependent on oil revenues, and cannot afford to do or say

anything that would tend to discourage the operations of the oil fi rms. Moreover, the government does not want

oil fi rms to question its lukewarm commitment to alleviating problems in the NDR, given the glaring neglect.

Third, Ile and Akukwe (2001) have argued that the ‘inability of the Federal government to meet its cash call and

other statutory obligations in the joint ventures with the oil and gas companies further eroded its regulatory author-

ity’. Finally, the lack of regulatory enforcement may also be blamed on endemic corruption. Oil fi rms are aware

of the vulnerability of Nigerian offi cials, who can easily be bought off.

Mobilizing for CSR and Environmental Sustainability

The unresponsiveness of oil TNCs to the demands by the locals for CSR and environmental sustainability in the

NDR has engendered militancy and violence. The following are just a few of the violent actions by militant groups

against oil fi rms in the past several years.

• In March 1997, youths captured a barge delivering goods to a Chevron facility. The crew of 70 Nigerians and

20 expatriates were held hostage for three days on the vessel.

• In August 1997, the Iyokiri community in Rivers State blocked access to Shell employees who sought to repair

a pipeline leak. The community closed down three fl ow stations for days.

• In September 1997, the 10-000-bpd Diebu fl ow station was closed for several weeks by the Peremabiri com-

munity demanding compensation for fi shing nets damaged by an oil spill.

• In November 1997, Nigerian opposition radio reported that about 3000 people from Ekakpamre village in Delta

State had forced the closure of a fl ow station for several days, demanding N20 million (US$222-000) compensa-

tion for encroachment on their land, a new access road and other projects. Shell confi rmed that about 6500-bpd

had been shut in by the protest.

• From 25 November to 23 December 1997, Tunu and Opukoshi fl ow stations, together pumping 80-000-bpd,

were closed by villagers, forcing Shell to declare on 19 December that it would be unable to meet all commit-

ments on time at its Farcados terminal for about three weeks.

• In January 1998, Odeama Creek fl ow station, pumping 18-000-bpd, was closed for several days by youths who

demanded environmental tests, a reduction of gas fl aring, clean water supply etc.

• In January 1998, Texaco’s offshore Funiwa platform was occupied for a week by youths from the neighboring

Koluama community, shutting in 55-000-bpd.

• In March 1998, Shell reported that it had shut in 200-000-bpd at its Tora manifold in the Nembe area after

youths had protested for compensation, jobs and development projects.

• In March 1998, Texaco’s Funiwa platform was again occupied for over a week by youths, causing an 11-day

stoppage in the export loading schedule from the Pennington terminal.

• In July 2002, a group of 100 women occupied ChevronTexaco’s export terminal, making several demands,

including provision of clean water. They held up 500-000-bpd over a 10-day period.

• In March 2003, the militants attacked oil installations, cutting off 800-000 barrels of oil, representing 40 percent

of Nigeria’s daily production. As such, Nigeria could not take advantage of OPEC’s suspension of the production

quota to meet the shortfall in the world supply due to the US invasion of Iraq.

218 F. M. Edoho


Responses to Militancy in the Niger Delta Region

Responses by oil TNCs to the militant groups demanding environmental stewardship have been a mixture of carrot

and stick. Oil TNCs have employed oppressive strategies to emasculate groups that protest against farmland

destruction, environmental pollution and water contamination. In certain cases, confrontations have been deadly.

The atrocious activities and human rights abuses by oil TNCs and the Nigerian state against the Niger Delta people

have been extensively documented by various NGOs (see, e.g., Essential Action, 2000; ERA, 1998, 2005; HRW,

1995, 1999; ND-HERO, 2000).

Oil TNCs have belatedly formulated and implemented CSR strategies to potentially pacify their enraged host

communities. Between 1994 and 1998, Elf invested US$13.78 million in different community causes and US$13.48

million between 1999 and 2000. Table 3 shows that Elf invested a total of US$27.26 in community assistance

projects during 1994–2000 (Okafor, 2003a). The projects included road construction, building of market stalls,

water projects and provisions of school buildings and health care facilities. From 1991 to 2002, ChevronTexaco

invested US$56 million in community development projects. By 2003, the company reported that the total amount

it had invested in community causes since 1992 had increased to US$90 million (Okafor, 2003b). ExxonMobil

spent US$12 million in community development projects in 2001.

Shell invests signifi cantly in the socioeconomic projects in the NDR. Between 1997 and 2004, its expenditure

in community development projects was US$361.8 million. The highest expenditure (US$67 million) occurred in

2002, while the lowest (US$25 million) in 2004 (SPDC, 2002, 2003, 2004). Shell has entered into partnerships

with international organizations and agencies such as the US Agency for International Development (USAID),

Africare, the United Nations Development Programme (UNDP) and the International Institute for Tropical Agri-

culture (IITA) to engineer sustainable development in its operating environment in the NDR. In its 2000 annual

report, Shell acknowledged that ‘by recognizing and helping to meet the broader needs and aspirations of the

community where we work, we will earn their support for peaceful and stable environment for our business’

(SPDC, 2003, p. 18). Thus, Shell’s commitment to CSR has evolved from being a defensive strategy to strategic

initiatives. This evolution has been dubbed ‘Shell’s Damascene conversion on the road to corporate social respon-

sibility’ (Wheeler et al., 2002, p. 300).

Three phases of the evolution can be identifi ed. The fi rst phase, 1960–1997, was community assistance (CA).

This focused on traditional corporate philanthropy, which emphasized one-time grant-making for education, agri-

culture and health. Internal review revealed that the approach did not foster sustainability (SPDC, 2003). In the

second phase, 1998–2003, Shell moved from CA to community development (CD). In this phase, the emphasis

Year Major project1 (US$) Sundry works2 (US$) Pit fencing3 (US$) MTCE/guards4 (US$) Total

1994 1.91 0.10 0.06 – 2.071995 1.22 0.33 0.07 0.28 1.901996 1.49 0.18 0.22 0.93 2.821997 1.60 0.25 0.14 1.48 3.471998 1.55 0.26 0.25 1.46 3.52Subtotal 7.77 1.12 0.74 4.15 13.781999 2.88 0.32 0.10 1.77 5.072000 5.44 0.37 0.21 2.39 8.41Total 16.09 1.81 1.05 8.31 27.26

Table 3. Community related costs, 1994–2000Source: Okafor (2003a).1 This represents major infrastructural projects.2 These are petty jobs involving public relations, small project site clearing and other menial tasks.3 Expenses on fencing burrow pits arising from company’s operations.4 MTCE is an abbreviation of maintenance. MTCE/guards are expenses on maintenance of community projects and security guards.



was on community empowerment, capacity- and confi dence-building, participation and partnership. Communities

were empowered to assess their own needs and produce community development plans (CDPs) with the assistance

of Shell’s Community Development Advisers (CDAs).

Finally, in the third phase, 2003 to the present, Shell transitioned from CD to sustainable community develop-

ment (SCD). This involves a thematic approach to economic empowerment, human/social capital development,

entrepreneurship, basic services and infrastructure (SPDC, 2003, 2004). Programs such as micro-credit, logistics

and business development are all intended to leverage skills and foster synergies. Shell’s SCD strategy offers a

model for other TNCs for several reasons. The shift to an SCD paradigm is an acknowledgement of the inadequa-

cies of the traditional approach to CSR. Emphasis on community empowerment, human and social capital devel-

opment and entrepreneurship is a signifi cant departure from the traditional approach that viewed host

communities as passive benefi ciaries of corporate benevolence. Increasingly, oil TNCs have come to recognize the

importance of bottom-up development planning that seeks not just the input from their host communities but

their active engagement in the sustainable development planning process. The SCD model will deepen long-term

corporate involvement in their host communities and institutionalize the process of sustainable development and

livelihoods.

Conclusion

Effective solutions to deplorable human tragedies in the NDR require strategies that recognize the vital interests

and needs of the major stakeholders in the Nigerian oil industry: the federal government, oil TNCs and host com-

munities. Although the interests of these stakeholders are not mutually exclusive, they are not necessarily the

same. The various interests must be balanced and accountability located.

Federal Government

While the state appropriates oil revenues, it has failed in governance – particularly in the areas of environmental

sustainability and provisions of infrastructure for socioeconomic development of the NDR. As one environmental

activist puts it, ‘because the people at the end of the burning sticks are so oppressed, they question the legitimacy

of the government under which they are forced to live’ (Bassey, 2001). The state, as the senior partner in all JVT

with oil TNCs, must demand environmental stewardship from oil fi rms, by enforcing existing environmental

policies. The state must address the developmental challenges in the region by providing adequate funding

(ThisDay News, 2003a, 2003b). Beyond this, however, the NDR wants to participate in the management and

decision-making process in the oil industry. The reason is to ensure environmental accountability and sustain-

ability by the oil fi rms.

Oil TNCs

Oil TNCs and the NDR are worlds apart. Oil TNCs see themselves as doing legitimate business in the NDR, fulfi ll-

ing their CSR in terms of the revenues they generate for the state (SPDC, 2003). Because of this reasoning, they

alienate their host communities, mismanage their relationships with their host communities and fail to engage

them. As Boele et al. (2001b) have noted, ‘effective management of relationships is not the same as effective stake-

holder engagement’ (emphasis in original). The absence of commitment to effective stakeholder engagement meant

that projects initiated were more often in response to crisis on hand, than a genuine interest in social contribution

to sustainable development. As a result, projects were often ad hoc in design and haphazard in implementation.

It can be argued, as Wood (1990, p. 136) does, that ‘[a] piecemeal approach to social responsibility and responsive-

ness will not protect a fi rm’s legitimacy. Responding to a few stakeholder challenges or environmental conditions

but failing to have an integrated plan for achieving social and economic aims leaves the fi rm vulnerable to attack

from all quarters’.

Shell provides a template of sustainable development initiatives that other oil TNCs should emulate. Shell’s

efforts notwithstanding, oil TNCs need to do much more to alter their negative images in the NDR given their

220 F. M. Edoho


abysmal past records of neglect, environmental destruction and human rights abuses. Oil TNCs should obey

environmental laws even if the state is wanting in regulatory enforcement. They must curtail oil spills, given the

fact over 90 percent of the oil spills in the NDR are preventable. Where oil spills occur, they should take steps

immediately to contain them to avoid severe environmental damage. Oil fi rms need to maintain and update their

pipelines, equipment and facilities. Portraying themselves as victims in the present climate in view of the enormity

of cumulative environmental havoc they have unleashed in the NDR for over 40 years of their operations would

be most unhelpful. Working with their host communities with a view to empowering and engaging them in sus-

tainable development projects will foster cordial relationships between them.

Host Communities

Aggrieved by successive corrupt governments and arrogant oil TNCs, the Niger Delta communities are suspicious

of both. They believe oil TNCs have worked in concert with successive oppressive regimes to appropriate their

lands for oil exploration; yet, they have deprived them of the benefi ts of oil extracted from their lands (ND-HERO,

2000). Militants are aware that the state is dependent heavily on oil revenues. Thus, disrupting oil production

poses a fi nancial threat to the state. However, Niger Delta communities should be more strategic in venting their

frustrations. They should not engage in any action that would cost them international support that they have built

up over the years by publicizing the environmental atrocities and human rights abuses by oil TNCs. Traditional

rulers should warn their communities to avoid the areas where leaks occur for several reasons. Their presence in

the disaster areas might be misinterpreted as deliberate acts of sabotage. Moreover, they need to avoid the disaster

areas for their personal safety. In all cases, the Niger Delta communities should explore and pursue avenues for

constructive dialogue and peaceful resolution of confl icts.

References

Aiyede ER. 2004. Global civil society, social justice and oil exploitation in Nigeria: a risk analysis approach. In Berlin Workshop on Transna-

tionality: Transnational Activism Since RIO-Natural Resources, Global Confl icts and Civil Society, 2004.

Akinmoladun RO. 1976. Oil in Nigeria. In A Study in Political Economy of Underdevelopment, Ph.D. Dissertation. Howard University:

Washington, DC.

Akpofure EA et al. 2000. Niger Delta: Integrated Grass Root Post-Impact Assessment of Acute Damaging Effects of Continuous Oil Spills in the Niger Delta January 1998–January 2000. http://www.waado.org/environment/petrolpollution/oilspills [1 May 2001].

Anderson CL, Bieniaszewska RL. 2005. The role of corporate social responsibility in an oil expansion into new territories. Corporate Social Responsibility and Environmental Management 12: 1–19.

Ayeni O. 1991. Nigeria: rectifying the damage. West Africa 13–19 May. 750.

Bassey N. 2001. Oil and Gas in Africa. Paper presented at the Friends of the Earth International’s (FoEI’s) Globalization, Ecological Debt, Climate Change and Sustainability: a South–South Conference, Cotonou/Ouida, Benin Republic, 2000. http//www.waado.org [15 April 2004].

Boele R, Fabig H, Wheeler D. 2001a. Shell, Nigeria and the Ogoni. A study in unsustainable development: I. The story of Shell, Nigeria

and the Ogoni people – environment, economy, relationships: confl ict and prospects for resolution. Sustainable Development 9: 74–

86.

Boele R, Fabig H, Wheeler D. 2001b. Shell, Nigeria and the Ogoni. A study in unsustainable development: II. Corporate social responsibility

and environmental management and ‘stakeholder management’ versus a rights-based approach to sustainable development. Sustainable Development 9(2): 121–135.

Carroll AB. 1979. A three-dimensional conceptual model of corporate performance. Academy of Management Review 4: 497–505.

Carroll AB. 1991. The pyramid of corporate social responsibility: toward the moral management of organizational stakeholders. Business Horizons 34(4): 39–48.

Carroll AB. 1999. Corporate social responsibility: evolution of a defi nitional construct. Business and Society 38(3): 268–295.

Carroll AB. 2004. Managing ethically with global stakeholders: a present and future challenge. Academy of Management Executive 18(2):

114–120.

Cragg W, Greenbaum A. 2002. Reasoning about responsibilities: mining company managers on what stakeholders owed. Journal of Business Ethics 39: 319–335.

Davis K, Blomstrom RL. 1975. Business and Society: Environment and Responsibility. McGraw-Hill: New York.

Department of Petroleum Resources (DPR). 1997. Annual Report. Abuja, Nigeria.

Edoho FM. 1992. Technology Relocation and Structural Dependency: the Experience with the Nigerian Petroleum Industry, Ph.D. Dissertation.

University of Delaware: Newark, DE.



Essential Action and Global Action. 2000. Oil for Nothing: Multinational Corporations, Environmental Destruction, Death and Impunity in the Niger Delta. Report from Essential Action and Global Exchange (January 25). http://www.essentialaction.org/shell/report/index.html

[16 July 2003].

Environmental Resource Management (ERM). 1997. Niger Delta Environmental Survey Final Report Phase I, Vol. I.

Environmental Rights Action (ERA). 1998. Shell Double Barrel Attack, ERA Field Report 12.

Environmental Rights Action (ERA). 2005. The Shell Report: Continuing Abuses in Nigeria – 10 Years After Ken Saro Wiwa. Lagos, Nigeria.

Essential Action. 2000. Oil for Nothing: Multinational Corporations, Environmental Destruction, Death and Impunity in the Niger Delta, Report

from Essential Action and Global Exchange.

Fekumo JF. 1990. Civil liberty for damage caused by oil pollution. In Environmental Laws in Nigeria Including Compensation, Omotola JA (ed.).

University of Lagos: Lagos, Nigeria. 254–284.

Frederick WC. 1994. From CSR1 to CSR2: the maturing of business and society thought. Business and Society 33(2): 150–164.

Freeman RE. 1984. Strategic Management: a Stakeholder Approach. Pitman: Boston, MA.

Frynas JG, Beck PM, Mellahi K. 2000. Maintaining corporate dominance after decolonization: the ‘fi rst mover advantage’ of Shell-BP in Nigeria.

Review of African Political Economy 27(85): 407–425.

The Guardian Online. 2000. Polluted water kills 20 in Bayelsa oil spills. 8 December. http://ngrguardiannews.com [6 February 2001].

Henderson D. 2001. Misguided Virtue: False Notions of Corporate Social Responsibility. London: Institute of Economic Affairs.

Holmes L, Watts R. 2000. Corporate Social Responsibility: Making Good Business Sense. World Business Council for Sustainable Development:

Geneva.

Human Rights Watch (HRW). 1995. The Ogoni Crisis, Report 7/5. HRW: New York.

Human Rights Watch (HRW). 1999. The Price of Oil: Corporate Responsibility and Human Rights Violations in Nigeria’s Oil Producing Communi-ties. HRW: New York.

Ibeanu O. 2000. Oiling the Friction: Environmental Confl ict Management in the Niger Delta, Nigeria, Environmental Change and Security Project

Report 6 (Summer); 19–32.

Idemudia U, Ite UE. 2005. Corporate–community relations in Nigeria’s oil industry: challenges and imperatives. Corporate Social Responsibility and Environmental Management 12: 1–13.

Ikein A. 1990. The Impact of Oil on a Developing Country: the Case of Nigeria. Praeger: New York.

Ile C, Akukwe C. 2001. Niger Delta: issues, challenge and opportunities for equitable development. Nigeriaworld 8 March. http://nigeriaworld.

com [3 September 2001].

Jenkins H. 2004. Corporate social responsibility and the mining industry: confl icts and constructs. Corporate Social Responsibility and Envi-ronmental Management 11: 23–34.

Kapelus P. 2002. Mining, corporate social responsibility and the ‘community’: the case of Rio Tinto, Richard Bay Minerals and the Mbonambi.

Journal of Business Ethics 39(3): 275–296.

Kretzmann S, Wright S. 1997. Human Rights and Environmental Information on the Royal Dutch/Shell Group of Companies, 1996–1997: An Independent Annual Report. Rainforest Action Network–Project Underground: San Francisco, CA.

Michael B. 2003. Corporate social responsibility in international development: an overview and critique. Corporate Social Responsibility and Environmental Management 10: 115–128.

Niger Delta Human and Environmental Rescue Organization (ND-HERO). 2000. The Ecological Price and Violence of Oil Extraction in the Niger Delta. Being a Report of the Niger Delta Human and Environmental Rescue Organization on the Environmental Destruction and Human Rights Abuse in the Niger Delta Oil Bearing Communities in Nigeria. Port Harcourt, Nigeria.

Nigerian Environmental Action Study Team (NEST). 1991. Nigeria’s Threatened Environment. Ibadan, Nigeria.

Nnadozie E. 1995. Oil and Socioeconomic Crisis in Nigeria. Mellon: Lewiston, NY.

Okafor L. 2003a. Enhancing Business–Community Relations: Elf Petroleum Nigeria Limited. United Nations Volunteers: Bonn–UNDP: Lagos–New

Academy of Business: Bath. http://www.new-academy.ac.uk/research/businesscommunity/unvpages/index.html [5 January 2006].

Okafor L. 2003b. Enhancing Business–Community Relations: ChevronTexaco Case Study. United Nations Volunteers: Bonn–UNDP: Lagos–New

Academy of Business: Bath. http://www.new-academy.ac.uk/research/businesscommunity/unvpages/index.html [5 January 2006].

Okonta I. 2000. The Lingering Crisis in Nigeria’s Niger Delta and Suggestions for a Peaceful Resolution. http://www.cdd.org.uk/resources/work-

ingpapers/niger_delta_eng.htm [21 November 2005].

Olusi OS. 1981. Nigerian oil industry and the environment. In Proceedings of the 1981 International Seminar. NNPC: Lagos, Nigeria.

Oteri OU. 1981. A study of the effects of oil spills on ground water. In Proceedings of the 1981 International Seminar. NNPC: Lagos, Nigeria.

Pearson SR. 1970. Petroleum and the Nigerian Economy. Stanford University Press: Stanford, CA.

Phillips E. 1999. Responsibility of Multinational Corporations in Developing Countries. 49th Session Issues. Model United Nations Far West. http://

www.munfw.org/archive/49th/ecosoc2.htm [1 January 2005].

Post Express. 1998. Oil spillage: the challenge to the nation. 30 January. http://www.postexpresswired.com [3 November 2000].

Shell Petroleum Development Company (SPDC). 2002. Annual Report. http://www.shell.com [16 November 2005].

Shell Petroleum Development Company (SPDC). 2003. People and Environment. Annual Report. http://www.shell.com [5 February 2006].

Shell Petroleum Development Company (SPDC). 2004. People and Environment. Annual Report. http://www.shell.com [5 February 2006].

This Day News. 2003a. Niger-Delta chiefs lament poor funding of NDDC. 30 July. http://www.thisdayonline.com/news [5 July 2003].

This Day News. 2003b. NDDC: FG, oil fi rms owe N86b – Ugochukwu. 10 October. http://odili.net/news/source/2003/oct/10/205.html

[15 October 2003].

Tolulope AO. 2004. Oil exploration and environmental degradation: the Nigerian experience. Environmental Informatics Archives 2: 387–393.

US Department of Energy (DOE). 2005. Nigeria: Country Analysis Brief. http://www.eia.doe.gov/emeu [4 February 2005].

222 F. M. Edoho


Vanguard. 1999. The killing fi elds of Niger Delta. 3 January. http://www.lilima.com/abati/killingfi elds.html [16 October 2005].

Watts M. 1997. Black gold, white heat. In Geographies of Resistance, Pile S, Keith M (eds). Routledge: London. 33–67.

Wheeler D, Fabig H, Boele R. 2002. Paradoxes and dilemmas for stakeholder responsive fi rms in the extractive sector: lessons from the cases

of Shell and the Ogoni. Journal of Business Ethics 39: 297–318.

Williams G. 1976. Nigeria: a political economy. In Nigeria: Economy and Society, Williams G (ed.). Rex Collings: London. 11–54.

Wood DJ. 1990. Business and Society. London: Scott, Foresman/Little, Brown Higher Education.

World Bank. 1989. Sub-Saharan Africa: from Crisis to Sustainable Growth. World Bank: Washington, DC.

World Bank. 1995. Defi ning Environmental Development Strategy for the Niger Delta. Industry and Energy Operations, West Central Africa Depart-

ment, African Region, The World Bank: Washington, DC.

oil transnational crops-csr and env

Documents