Regulating corporate social responsibility in energy and extractive industries: The case of international oil companies in a developing country

Abstract

Corporate Social Responsibility (CSR) of business enterprises to reduce and redress the adverse impacts of their operations on the environment and local communities is a controversial topic, especially in developing countries. Drawing lessons from the Kurdistan Region of Iraq (KRI), this article aims to know the role of laws and regulations at the local level in promoting the practice of CSR in energy and extractive industries. The research also seeks to know to what extent International Oil Companies (IOCs) have considered social and environmental problems in the communities where they operate. To achieve these aims, an online survey questionnaire was conducted with major IOCs in the Kurdistan region to know their perspectives on CSR and the scope and extent of their legal obligations in this regard. Then, we analysed annual reports, social responsibility reports, and other publicly available documents to support our arguments and investigate the issue deeply. The article found that while there are broad legal provisions relating to CSR with respect to social and environmental protection, enforcement of such legal requirements remains the main challenge in adapting CSR in developing countries, including the KRI. The results revealed that CSR had been used as a mask by the Kurdistan Regional Government (KRG) to convince the public, opposition parties, and the federal government regarding the transparency and legitimacy of KRG's oil and gas policy in the region. On the other hand, the IOCs highlighted CSR in their reports to convince their shareholders and enhance their reputation. However, their actual contribution to the Kurdistan region's social and environmental condition is minimal.