COMMUNICATIONS IN BUSINESS 100

Name: Anonymous 2

Student Number: 12345678

Email: anonym2@mail.au

Company: Chevron Corporation

Title: Corporate Social Responsibility: An Analysis of Chevron

Other Details: Semester 1 2014, Bentley Campus

(Word Count: 1568)

Introduction

Multinational Energy Companies, like Chevron Corporation, have a broad and significant social, economic and environmental impact on the globe and as such are in a position to influence the lives of many people. Chevron is involved in many different facets of the energy business, including exploration, refining, production and transportation. The company employs approximately 60 000 people in the oil and natural gas industry, with interest in 180 countries (Chevron Corporation SWAT, 2009). With the rise in global communication associated with the information age, companies like Chevron have to establish symbiotic relationships, focused on sustainable development, with society in order to satisfy increasingly environmentally conscious stakeholders. In this context a symbiotic relationship refers to one that is cooperative and mutually beneficial (Langella et al. 2012, 51). At the foundation of such a relationship is respect for health and wellbeing of communities that interact with the company and its operations. Chevron has displayed care and respect for the local communities and their welfare on a number of occasions, more notably their efforts in the fight against AIDS, tuberculosis and malaria (HIV/AIDS; Chevron 2010). However this has been eclipsed in the media by the company’s display of profound negligence in their inappropriate waste disposal procedure in Ecuador (Olsen 2002) and reckless conduct in Richmond (Rogers 2013), both occasions had a detrimental impact on the health of those in the local communities. This critical essay will explicitly examine Chevron’s actions and their implications on their stakeholders and more specifically the wellbeing of those in the neighbouring communities.

The Case against Chevron

Chevron’s reckless and irresponsible procedures in both Richmond, California and Ecuador have not only harmed the welfare of the respective local communities but also significantly tainted the company’s public image in the process. By acting only in the interest of maximising profit and without consideration for others, Chevron has failed to minimize the negative externalities of their operations. This focus on economic results without factoring their effects is an illustration of the “short-termism” mentioned by Mitra et al. (2011), whereby bad decision making has tragic effects. In Ecuador from 1972 to 1992, Texaco, one of Chevron’s subsidiaries, was responsible for destroying the land of the local Amazonian tribes and causing widespread damage to both the environment and the health of the forest’s inhabitants. This was the result of Texaco’s substandard drilling practices and daily dumping of 4.3 million gallons of oil waste water into the freshwater bodies of the Amazon. The oil waste water contaminated the drinking water of the local tribesman, causing a series of health issues (Widener 2007). Locals have since reported unusually high cancer rates, along with frequent fevers, gastro-intestinal diseases, stomach aches, skin rashes and respiratory problems. Many of the forest’s residents attribute these ailments to petroleum-related contamination (Rochlin 2011, 11). Court reports have shown that 98% of the water samples taken contain chemical toxin levels that violate the country’s environmental laws. Texaco’s dumping of approximately 18 billion gallons of oil into the Amazon has reportedly affected some 30,000 people (van Schaick 2005, 41). The violation of the indigenous people’s basic right to clean water was one of the many factors that brought up a civil action lawsuit against Chevron-Texaco charging the company with negligence with damages initially estimated in the billions of dollars (Payne 2012, 1067). The lawsuit has been ongoing for the last decade with Chevron appealing the initial judgement that ordered them to pay billions in damages; this was despite Texaco’s $40 million payment in 1995 to clean-up the damages (Rochlin 2011, 11). Chevron’s failure to take full responsibility and undertake programs to restore and mitigate the damage caused by Texaco has severely stained the public perception of the company.

In Richmond, California, Chevron failed to act on recommendations made by personnel regarding the durability of the piping against corrosion and the lack of safeguards against hazards, resulting in an oil leak. Even after the leak was discovered, the plant was not shut down. Firefighters inspected the corroded piping, inadvertently puncturing it in the process. This lead to the release of a hydrocarbon vapour that ultimately ignited, discharging a large and toxic plume of smoke over the surrounding area (CSB Releases Draft Report 2013). The extent of the plume was such that 15,000 local residents had to be medically treated for respiratory ailments (Chevron Richmond Refinery 2013). Residents of Richmond attribute the unnaturally high asthma rates of the area to the presence Chevron’s refinery. The company had set up a claims process to assist with the medical and property expenses that resulted from the incident (Berkley 2012). However, 11,000 members of the community sought legal compensation and subsequently a negligence lawsuit was filed (Rogers 2013). Chevron has displayed a lack of responsibility through its substandard environmental procedures in Ecuador and its failure to establish proper safeguards at its Richmond refinery. Both cases negatively impacted the health and wellbeing of those the surrounding communities, tarnished the company’s public image and resulted in lawsuits being filed against the company. In order to avoid such occurrences in the future, the company should adhere to proper protocols with regard to safety and waste disposal. Furthermore Chevron needs to accept full responsibility for their actions, not only to avoid legal action, but also to prevent their relationship with society from becoming parasitic.

The Case for Chevron

Chevron has been operating in many areas with communities suffering from HIV/AIDS and other infectious diseases. Since 1986, Chevron has made contributions to the welfare of communities affected by HIV/AIDS, tuberculosis and malaria by working hand in hand with local organizations in Nigeria, Angola, South Africa, Thailand and Indonesia. Chevron’s corporate policy involves cooperation with a number of non-governmental community health organisations (Brooks 2010). The company has partnered with the Global Fund in their commitment to fight deadly diseases in developing countries. Chevron’s prominent role in the fight against HIV/AIDS has potentially saved the lives of many people, whilst supporting the United Nation’s millennium goal to stop the spread of HIV/AIDS (HIV/AIDS; Chevron 2010). In Nigeria alone, Chevron has committed $5.3 million to the PROMOT project, which involves raising awareness and assisting pregnant woman who are HIV positive (Energy Companies; Chevron 2014). Already the project has conveyed crucial HIV/AIDS related information to 6,500 people, organized counselling for 700 people and tested over 7,000 women (Nigeria: Chevron Raises 2014). In the battle against HIV/AIDS, the company’s partnership with The Global Fund has helped approximately 300,000 people gain access to antiretroviral treatments. Chevron’s commitment to PMTCT programs recognizes the prevention of mother-to-child transmission of HIV. The company has implemented programs focused on providing its employees and their families with medical care order to prevent the spread of HIV. These programs have met with success, with no recent reports of mother-to-child transmission amongst all of their employees in Nigeria and Angola (Chevron Announces Partnership 2012). Moreover, the partnership with The Global Fund has helped peer education programs reach 1,9 million people in South Africa. Chevron’s involvement in the health and wellbeing of our society has not been limited to HIV/AIDS; the company has also made large strides in the fight against tuberculosis and malaria. Part of Chevron’s $60 million contribution to The Global Fund has been allocated towards the prevention and treatment of malaria and tuberculosis. Resources have been assigned towards distributing approximately 1 million insecticide- treatment bed nets in Angola and detecting in excess of 9,000 cases of tuberculosis (HIV/AIDS; Chevron 2010). Direct community involvement has enabled Chevron to further their efforts to support health of communities in many developing countries. Chevron’s efforts as a world leader in the fight against HIV/AIDS have had an impact on lives of many people and as a result the company has developed strong ties with many affected communities (Brooks 2010). The company has successfully recognised the value of a healthy community and their actions have had promising ramifications on the quality of life of its stakeholders.

Conclusion

It is clear that multinational corporations such as Chevron have an important role to play in the welfare and development of the communities in which they operate. However, in many cases these companies have failed to act in a manner that suits both the interests of the company and the community as a whole. As examined by the analysis of Chevron’s involvement in Ecuador and Richmond, the company has failed to operate responsibly on several occasions. In Ecuador the Texaco had neglected to implement suitable environmental procedures, resulting in a disastrous impact on the Amazon and its inhabitants. In Richmond, the company failed in its duty to apply proper safeguards and make necessary upgrades to its plant and equipment leading to tragic consequences. In both cases the detrimental outcome to the health of the respective communities was completely avoidable through responsible practices. Chevron’s failure to properly compensate for the damages is still a concern and the company is still facing repercussions from these actions. One can only hope that Chevron has learnt from its mistakes and applies the same degree of care and concern for the wellbeing community as it has in its fight against infectious disease like HIV/AIDS. If the company applies this level of responsibility to all of its future operations, it can expect to maintain a mutually beneficial relationship with society. Companies like Chevron should prioritize the integration of societal and environmental concern into their decision-making by enforcing strict standards, allocating resources towards communities and engaging in productive research. In the case of Chevron it is arguable as to whether their achievements in contributing to the welfare of developing communities has mitigated some of the mistakes they have made in the past, however one can safely say that the company has the potential to support contemporary society in its quest towards sustainable development.

Reference List

Berkley, Gail “Chevron Refinery Fire Sparks Rage in Richmond Residents” Sun Reporter 9 August 2012 http://search.proquest.com.dbgw.lis.curtin.edu.au/docview/1036696989?accountid=10382

Brooks, Jesse 1 December 2010 “Chevron’s a Global Corporate Leader in AIDS/HIV Education and Eradication” Oakland Post http://search.proquest.com.dbgw.lis.curtin.edu.au/docview/847082017?accountid=10382

“Chevron Announces Partnership to Amplify Efforts in Eliminating Mother-to-Child Transmission of HIV in Nigeria, Angola and South Africa” 26 July 2012, Business Wire http://search.proquest.com.dbgw.lis.curtin.edu.au/docview/1027917909?accountid=10382

“Chevron Corporation – SWAT Analysis” M2 Presswire 31 May 2009 http://search.proquest.com.dbgw.lis.curtin.edu.au/docview/444239371?accountid=10382

“Chevron Richmond Refinery 2013crude unit incident August 2012 - issue 234” Loss Prevention Bulletin 234 December 2013 http://search.proquest.com.dbgw.lis.curtin.edu.au/docview/1470085467?accountid=10382

“CSB Releases Draft Report on 2012 Chevron Fire” Professional Safety 58.9 September 2012: 22 http://search.proquest.com.dbgw.lis.curtin.edu.au/docview/1490466997?accountid=10382

“Energy Companies; Chevron Increases Support for HIV Prevention in Niger Delta” 2014 Energy Business Journal (257) http://search.proquest.com.dbgw.lis.curtin.edu.au/docview/1510115041?accountid=10382

“HIV/AIDS; Chevron Increases Total Investment to $55 Million in The Global Fund to Fight AIDS, Tuberculosis and Malaria” 18 October 2010 AIDS Weekly (415) http://search.proquest.com.dbgw.lis.curtin.edu.au/docview/757601060?accountid=10382

Langella, Carbo and Dao “An examination of the symbiosis between corporations and society with lessons for management education and practice” Global Virtue Ethics Review 6.3 2012: 51-82

Mitra, Gadhok, Shivan, Agarwal “The convergence of Sustainable Capitalism” Oct 2011Professional Communication Conference

“Nigeria: Chevron raises support for HIV Prevention” Mena Report March 25 2014 http://search.proquest.com.dbgw.lis.curtin.edu.au/docview/1509905982?accountid=10382

Olsen, Janeen E “Global ethics and the Alien Tort Claims Act: A summary of three cases within the oil and gas industry” Management Decision 2002: 720-724

Payne, Kendal “Aguinda v. Chevron: The Potential Rise or Fall of Mass Toxic Tort Claims Against U.S. Companies” The International Lawyer 46.4 Winter 2012: 1067-1077

Rochlin, James 2011 “Development, The Environment and Ecuador’s Oil Path: The Context and Nuances of the case against Texaco” Journal of Third World Studies 28.2 Fall 2011: 11-39

Rogers, Robert “Richmond sees opportunity to gain from Chevron refinery fire” Oakland Tribune 5 September 2012 http://search.proquest.com.dbgw.lis.curtin.edu.au/docview/1037995577?accountid=10382

van Schaick, Alex “Ecuador: Oil strike in the Amazon” NACLA Report on the Americas 39.3 November 2005: 41-42

Widener, Patricia “Oil Conflict in Ecuador” Organisation & Environment 20.1 March 2007: 84-105

Feedback:

This paper was well written and showed a very good level of research. You backed up your comments with evidence and clearly indicated critical analysis, particularly in terms of the impact on stakeholders – excellent work! Your on-balance view that weighed up the evidence you presented and rationalised your personal conclusion will guide you when thinking about your next assignment, as it bears directly on the direction of your proposal and the rationale for the recommendations.