Corporate social responsibility in the oil industry in Iraq

Abstract

This thesis examines Corporate Social Responsibility (CSR) in the context of International Oil Companies operating in Iraq. International oil companies are the focus for examining CSR because the oil and gas industry is the backbone of the Iraqi economy and the primary source of government revenue. Corporate social responsibility requires corporations to act as good corporate citizens. At the very minimum, corporations, in addition to complying with their legal obligations, should be responsible for negative externalities created by their activities; otherwise the community bears these costs rather than the corporation. Corporations should act responsibly to avoid negative impacts of its activities on society, its employees, the natural environment as well as respecting human rights, and taking measures to combat corruption and bribery. This is justified according to the key theories of corporate governance. It is now generally accepted that, according to stakeholder theory, corporations should take into account the interests of stakeholders who may be seriously harmed by the corporation's activities. Although the primary concern of corporations is to maximise profits for the shareholder, modern elaborations of the shareholder primacy theory, namely enlightened shareholder value and enhanced shareholder welfare, now recognise that recognising stakeholder interests is important for a corporation's long-term sustainable development. Consequently, directors, in for example, the UK and the US are required to promote the long-term success of the company taking into account the concerns and interests of relevant stakeholders and the social and environmental impact of the company's activities. Putting aside negative externalities, CSR does not require corporations to contribute to social welfare in ways that do not advance the long-term sustainability or reputation of the corporation. The thesis argues that, for Iraq, a broader conception of CSR should be used to require International Oil Companies to positively contribute to community welfare by assisting with local infrastructure, training and local content. This is because Iraq and its citizens have not fairly shared in Iraq's oil wealth. The thesis argues that Iraq can learn from other developing countries which, rather than relying on voluntary CSR, have legislatively required large corporations (and International Oil Companies) to contribute to development and social welfare. This approach recommends imposing legal obligations on International Oil Companies through oil contracts and where possible by legislation. This approach recognises the limitations of CSR based on voluntary conduct and its principal concerns with negative externalities. The thesis proposes a framework for implementing CSR in the oil industry which responds to the Iraqi context and makes recommendations for future policies and the imposition of legal obligations on International Oil Companies not only to avoid negative externalities but requiring them to positively contribute to social welfare.

Date of Award	2020
Original language	English