Corporate Social Responsibility: Do Companies Have Souls?

leadership

By Bill Novelli

The harshest criticism of corporate social responsibility is that companies are essentially immoral, or rather amoral. It’s said that money trumps everything, and that ethical behavior will always surrender—or simply be ignored—in the eternal quest for wealth. As the Spanish and Portuguese conquistadors pillaged and destroyed in the name of gold (and God), so too will companies chase profits no matter the consequences. Critics say that it’s in their DNA. Pollution, industrial accidents, obesity, low wages, global warming, and other misfortunes that may result are just collateral damage. The charge is that companies may – at least most of the time — observe the letter of the law, but not the spirit of the law. My experience is that that’s an accurate description of the tobacco industry. But what about other, more legitimate industries? Are they inherently amoral? What about the giant gas and oil companies, which are often attacked for rapaciousness? There’s certainly cause for criticism.

The 2010 BP oil spill in the Gulf of Mexico was the largest marine oil crisis and one of the largest environmental disasters in American history. The oil discharge, estimated to total about 5 million barrels, created enormous damage to beaches, wetlands, fishing, tourism, and wildlife. A 2013 study reported that dolphins and other marine life were continuing to die in record numbers. BP pled guilty to manslaughter and other felonies, including lying to Congress. You can’t put a company in jail, but BP ended up paying more than $18 billion in fines and has so far spent more than $65 billion for cleanup, penalties, and other payments. Why did this happen? Was it avoidable? A US District court ruled that BP was primarily responsible because of its gross negligence and reckless conduct. A US government report identified defective cement on the well, with responsibility falling mostly to BP but also partly to the rig operator, Transocean, and the contractor, Halliburton. A White House commission blamed BP and its partners for cutting costs and for an inadequate safety system. It certainly seems that BP was putting profit above safety and social responsibility.

A well-publicized indictment of the oil and gas industry is Rachel Maddow’s 2019 book, Blowout: Corrupted Democracy, Rogue State Russia, and the Richest, Most Destructive Industry on Earth. Maddow, the MSNBC commentator whose progressive views are counterweights to Sean Hannity and others on Fox News, refers to the oil and gas industry as “Godzilla over downtown Tokyo” and says it is indeed amoral. When a lion kills a gazelle, says Maddow, “you really can’t blame the lion. It’s who she is; it’s in her nature.” Maddow charges that Big Oil and Gas have weakened democracies across the world, caused enormous environmental damage, and propped up Vladimir Putin (Maddow calls Russia a “second-rate, second-world piker”) and other authoritarian rulers. She cites Oklahoma as an example of public harm due to earthquakes caused by fracking (“frackquakes”). After years of enduring the problem, Oklahoma’s governor finally empowered a commission to order operators to shut down injection wells or prove they were not sending wastewater into basement rocks, where the added pressure could trigger earthquakes. Maddow focuses on BP, Chevron, and other big players, especially Exxon Mobil.

It’s hard to observe the BP oil spill or read about the excesses of the oil and gas companies without believing that the industry is causing worldwide problems and despoiling the planet. Exxon Mobil has also been criticized as a long-time leader in climate change denial, opposing regulations and funding academics and others to influence public opinion against the scientific evidence that global warming is caused in large part by the burning of fossil fuels. (More recently the company partly reversed course and supported a carbon tax and a gasoline tax.)

Action against the industry appears to be increasing. At the 2019 Harvard-Yale football game, climate change activists took the field at halftime to protest the universities’ investments in fossil fuel companies. Some five hundred people held their ground, and the game was delayed for more than an hour. More recently, Georgetown, the university where I teach, said it will divest from fossil fuel companies. One report said that the fossil fuel divestment movement is now global, with commitments from more than a thousand organizations and tens of thousands of individuals controlling over $8 trillion in combined assets.

What does responsible corporate behavior look like in light of the charges against this industry? Ed Maibach, who oversees the Center for Climate Change Communication at George Mason University, identifies the industry as part of the problem, to be sure, but believes they also must be a key part of the solution. He says we have to accelerate the transition to a clean energy economy (“100 percent clean energy for everything— heating, cooling, transportation, manufacturing”). He argues that we need carbon-capture technologies to put the heat-trapping pollution in our skies back into the ground. And he calls for “every community, state, and nation to prepare for the unavoidable impacts of climate change that are already happening.” While the energy industry should play a leading role in all this, Ed doubts that they will take the major steps that are needed. “Shell appears to be leaning into the challenge,” he observes, “but their vision for what can get done falls far short of what must get done.”

A senior executive at Exxon Mobil, now retired, has addressed my corporate social responsibility class on several occasions. The students were not always a friendly audience. One student challenged him about why Exxon Mobil was in Angola, with its corrupt government. He replied that his company operated throughout the world, where the oil is, and engaged with many governments. He said that Exxon Mobil was always careful to adhere to the US Foreign Corrupt Practices Act.

Rachel Maddow might not agree, but US companies do follow strict laws about avoiding corruption in other countries. And regarding energy sources, the Exxon executive presented the CSR class with a graph with Exxon Mobil’s 25-year projections of the world’s use of energy. It showed carbon-based fuels declining over time but still representing an important part of the world’s fuel supply for decades to come. “We can talk about electric cars,” he said, “but for now the auto industry is built around liquid fuels, and we have to bring new technologies along while still supporting a modern, vibrant economy.” His point was that his company was about energy, not fossil energy. It is therefore working on new sources and aiming toward a vision of worldwide clean energy as part of the solution.

Heather Kulp is one of the strongest proponents of corporate social responsibility I know. Now the manager of strategy and analytics for Chevron, Heather began her career with a strong belief in the power of non-government organizations (NGOs) to create social impact. She worked for an NGO called Search for Common Ground in Angola. Chevron was there working in oil extraction and engaged in what Heather saw was most important to local people—creating jobs. Her epiphany was that the private sector was critical for economic development. She decided to join Chevron, and when she did, “many of my NGO friends dumped me.” She became part of an internal consulting group within Chevron and went to several other African countries, working with her company’s business units on how to be more effective in “stakeholder and community engagement.” For a time, she managed the company’s Niger Delta Partnership Initiative. Heather learned how to make local partnerships into a competitive advantage for Chevron and “institutionalize it” within the company. Heather says, “Other companies were engaged in this, but we were always a leader. We did it the Chevron way: people, partnerships, process.”

Strong, ethical leadership is better leadership and results in smarter decisions for the company and its stakeholders as well as for society as a whole.

After a few years, the company sent Heather on a six-month assignment to Richmond, California, where Chevron had a refinery. In this challenged community Kaiser Shipyards had once thrived, “but now there had been years of declining investment.” Heather stayed six years. She helped fund organizations working to resolve conflicts between youth gangs and the community at large. She was reminded of the child soldiers she had encountered in Sierra Leone. As Chevron invested in trying to solve the problem, Heather decided to turn the “philanthropic model into a community development model.” She found that she could take experiences from the developing world and apply them at home. Heather says that Chevron employees recognize the company’s social impact efforts and are proud to participate through volunteerism, matching donations for good causes, and employee networks, including Latino, women’s, and LGBTQ groups that provide scholarship funds and other community benefits. Heather started by picketing energy companies; today she sees herself as a champion of corporate responsibility for this generation. She says there’s no need for a person or group to be solely in charge of Chevron’s corporate responsibility because it’s “baked into the company.”

At this point, there’s not much agreement among the protagonists – social activists, investors, regulators and the oil and gas companies themselves about corporate social and environmental responsibility. Rachel Maddow says the sector is “Godzilla over downtown Tokyo.” Industry executives say they see the writing on the wall and are moving toward a safer world. Ed Maibach says they both have valid points, but the planet is burning, and the industry needs to be a big and immediate part of solving the problem. As for BP, the company that had the enormous oil spill, they now have a stated commitment to help the world achieve net zero emissions and for the company itself to achieve net zero by 2050 or sooner.

So, do companies have souls? Their people do, and their leaders must. Strong, ethical leadership is better leadership and results in smarter decisions for the company and its stakeholders as well as for society as a whole. Social responsibility is the right thing to do, and it is also the way to keep companies strong and society in good health.

This article was originally published on 23 February 2021.

About the Author

Bill Novelli

Bill Novelli, author of GOOD BUSINESS, has a distinguished career as a leader in the corporate and non-profit worlds. He was CEO of AARP, founder and president of the Campaign for Tobacco-Free Kids, EVP of CARE, and president of Porter Novelli, the global public relations agency. He began his career at Unilever and also was Director of Advertising & Creative Services at the Peace Corps. Today, Novelli is a professor in the McDonough School of Business at Georgetown University where he teaches in the MBA program, and also founded and oversees the Georgetown Business for Impact initiative. Novelli is co-chair of the Coalition to Transform Advanced Care, a national alliance to reform advanced illness/end of life care in the U.S, and serves on a number of other boards and committees. In addition to GOOD BUSINESS, Novelli is the author of Managing the Older Worker and Fifty Plus. He holds a B.A. and M.A. from the University of Pennsylvania. For more information, go to: http://billnovelli.com

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