The Symbiotic Benefits of Corporate Responsibility in the Developing World

With the omnipresence of gas and oil, the energy industry has a constant influence across the world. As former UN Secretary-General, Ban Ki-moon said, “energy is the golden thread that connects economic growth, increased social equity, and an environment that allows the world to thrive”. Oil being the largest energy source, it is integral to our daily life, and a key to international development in the 21st century.

Businesses do not exist in a social or environmental vacuum, and this is particularly true for oil and gas, which often operate in resource-rich developing countries. Being under constant public scrutiny, oil companies must strike a balance between the economic, environmental, and social impacts, ensuring economic growth while integrating social, environmental, ethical, and human rights concerns into their operations. The concept of corporate social responsibility (CSR) is therefore particularly important for industry players.

Fundamentally, CSR refers to a company’s organizational ethics and obligation to address the environmental and social impact of their operations. Contrary to common belief, CSR is more than a few philanthropic gestures undertaken to improve the firm’s external perception. CSR is a systematic attempt to converge environmental and business interests that have symbiotic benefits for all parties involved. Yet few oil companies pursue worthwhile CSR that really makes a difference to the societies in which they work.

Naturally, oil companies are cautious of criticism, particularly when it comes to addressing some of the world’s most pressing problems, but this should not deter them from involvement in causes they are passionate about. Through CSR activities, oil companies can pave the way for positive transformation in the developing world. Providing investments and jobs to local communities are essential ways to stimulate regional growth in an area that concentrates a large proportion of the world’s unemployed youth and ‘working poor’. GPB Global Resources and its affiliates for instance consequently employ around 4000 people in many countries including Ethiopia and Niger. These local talent pools have in turn offered a huge amount to the company in cultural knowledge, language skills, and economic growth. As natives to the region, they have strong ties with the local communities, enabling them to navigate potential challenges more effectively.

Listening to local communities and capacity building are at the core of CSR activities that improve the relationship between the companies and their host countries. The mineral and petroleum extraction industry can easily disrupt traditional ways of developing a country with an agriculture-based way of life. As such, it’s important to demonstrate to local communities that the disruptions can bring around positive change; namely development, education, infrastructure and improvement to areas that have previously seen little investment. Engaging in CSR allows governments in developing countries to create social value and improve social welfare, develop public policy capacity and utilize new resources through the partnerships. Since 2014, GPB GR has made a firm financial and organizational commitment to supporting local projects in Ethiopia. The company began hydrocarbon exploration in the region in 2014, and since then, has supported numerous community projects on food security, water access, medical training, and education.

CSR affects companies’ internal and external growth, having multiple benefits beyond reputation management. Through CSR activities, companies can find their voice, and differentiate themselves from competitors. Engaging in sustainability helps companies to cut costs, improve the quality of materials and equipment that adhere to safety and environmental regulations, reduce the likelihood of environmental damage and the need for constant maintenance.

HR teams should not overview the fact that CSR is good for employee relationships too. Having the power to improve the lives of others is a privilege and can positively impact company sentiment and staff morale, so corporate social responsibility mandates in developing regions should be taken very seriously. Employees respond positively to their company’s CSR activities and have a higher self-image, resulting in higher employee satisfaction, increased commitment, lower turnover, and higher growth. CSR has also become an increasingly important factor for millennials for choosing a company, making it easier to identify with the business they work for.

While CSR might not be the ultimate solution for all problems, it certainly debunks the myth that short term corporate objectives and long-term development objectives are mutually exclusive. CSR is an effective tool to strengthen the cooperation between the private and public sector, generating lasting change in regions that need it most, and fostering economic development in the interest of all stakeholders.

About the author: Boris Ivanov, is the Founder, and Managing Director, GPB Global Resources.

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