Accounting Disclosure and Human Rights in the Oil Industry

Abstract

During the past decade, companies operating in environmentally and political sensitive areas have placed increasing emphasis on corporate social responsibility (CSR) and corporate social disclosure (CSD). While there is clear evidence that the amount of ‘socially’ relevant information reported within the annual reports of most companies has increased – often in both absolute and relative terms – it is less apparent why companies provide this information and, even more so, how differences in their levels of disclosure should be interpreted. Drawing on concepts of incrementalism and focusing on oil companies that operate in regions which are characterised by severe human rights abuses, this chapter examines differences in the nature of CSD reporting among these companies with the CSD of companies which do not operate in these areas. In analysing this disclosure data, it is noted that companies with extensive operations in politically sensitive areas are more likely to focus on wider issues such as environmental and broader community concerns, which tend to impose relatively few concrete commitments and restrictions on these companies. By contrast, companies operating in less-sensitive areas emphasise issues relating employee welfare, which tend to carry more tangible obligations. These observations follow a ‘restrictive adaption’ pattern of CSD whereby companies adapt CSR ends to available means in an incrementalist fashion, making environmental and social reporting a tool for the reinforcement of inertia.

Keywords: oil industry, human rights, corporate social responsibility, corporate social accounting

JEL Classification: L95, M14, M41