Essay: Production of energy

“Sources of Energy”

The result of this spans from the production of energy which is inevitable, that is a society cannot be independent of the use of energy. Dorothy (2008) claims that “It determines the level of a society’s economic, financial, education, social and mortality rate”. However in the result of its use its disadvantages cannot be underestimated especially to the environment, so the need for a balance and in the interest of future generations the issue of sustainable development stems into light.

Sustainability according to the dictionary means the act of preserving or maintaining, The term ‘sustainability’ was once associated with the need to preserve and maintain the environment through the use of these natural resources, (Susan, 2006). Since it is not expected for sustainability to be static but to progress, it became essential that development was needed. Kazi argues ‘Sustainability is chosen to bridge the gulf between development and the environment’ creating a relationship between subsisting human life and preserving the environment.

One of the most widely known definition of ‘sustainable development’ evolved from the need for sustainability, but came into existence in 1987 over a published report titled our ‘common future’ also called the Brundtland report, by the united nations world commission on environment and development, They defined sustainable development as

“Development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (Simon, 2008).

Enhancing sustainable development would involve a relationship of the society making better use of its scarce resources in promoting economic growth but reducing its negative effects on the environment, (Susan, 2006).

With a growing need for ‘sustainable development’. The need for these entities to take up a mantle of responsibility directly or indirectly is seen on its impact on the Environment and society, in which it finds itself,

‘Since it cannot operate in isolation from the environment of which they are a part of: business require the use of factors of production and other facilities and in return, the society needs the goods and services created and supplied by business, including the creation and distribution of wealth,’ Kenneth Amaeshi, (2006).

It takes a form of corporate reporting as a medium of communication to report on what it has been held accountable for, One of which is the is the non-financial aspect of reporting, this is usually non-monetary and in a stand alone report called sustainable reports, as said above it relates information on the effects of there activities on the environment, society and economic growth and things done to retain natural resources to the best of there abilities, The act of doing this has been widely been accepted as sustainable reporting. (www.aicpa.org).

The financial aspect of corporate reporting discloses the monetary information of a company in report, usually an annual report, Shahed Iman, (2000), pg 1 defines it as

‘The communication of information about an entity’s resources, earnings, expenditures and revenue to users through a report.”

However all of such reports fall under a larger umbrella of Corporate Reporting.

5.2 REPORTING OF SOCIAL AND ENVIRONMNETAL ACCOUNTING INFORMATION

Reporting on social and environmental issues discloses the activities of corporations and there effects on the environment as well as the society in which the find themselves. However in the case of reporting by multinationals a collective report (group report) is used to disclose there activities in countries they operate, which instead of individual report for each country, which disclose in detail the countries of their operations, their activities in these countries, their effects and other areas companies are being held accountable for.

So questions of the very essence of group reporting, what it should contain and other major shortfalls are addressed in this research. Often it is overlooked that in reporting “content is king” or that these “reports acts as databank of information that feeds the needs of a diverse audience” www.businessgreen.com.

CHAPTER 2

Literature Review

This literature review has been structured to give insight into various issues: Corporate reporting, corporate responsibility and reasons for social and environmental reporting, reporting in developing and developed countries, oil and gas sector reporting and the quality of the reporting.

Corporate Reporting

The drive for Reporting is a corporate phenomenon that permits the understanding of

Corporate activities. Bebbington et al (2008). It is said to be

“a means for the Organization or its representatives to communicate the past actions, and the intended future actions of the corporation”. REFRENCE

Nola Buhr, (2007) maintains reporting takes any framework that can be used to relay information. Guthrie and Petty, (2000) claim “annual reports are viewed as a communication device that allows corporations to connect with various external and internal stakeholders”, and Stanton and Stanton (2002) hold that corporate reporting companies mostly quantitative information, narratives, photographs and graphs” Corporate reporting, especially the annual report has been extensively focused upon in social and environmental research (see for example, Cowen et al., 1987; Guthrie and Parker 1989, 1990; Roberts 1992; Neu et al., 1998). Researchers have measured disclosure levels example (Campbell, 2000) There have, however been concerns expressed that analysing annual reports alone does not act as a good judge for evaluating the extent of disclosure levels, so it should not be used as an ultimate performance measurement with regard to social and environmental reporting (Jupe, 2007).

Since reporting media can be multi dimensional, as argued in Unerman’s (2002) study, online reporting could also be perceived as an acceptable form of reporting as it is less expensive, reaches out to a wider audience. A question however, is how effective is when compared to the annual report. Williams et al (1999) studied the disclosure levels of companies comparing disclosures through the web sites and the annual report to identify the differences or similarities between web based reports and annual reports as a medium of communication. Using a comparative analysis approach, they examined four countries: Singapore, Malaysia, Australia and Hong Kong, They concluded that the 172 companies based in the four countries disclose more descriptive information on the web than in their annual reports. Further Singaporean firms and Australian firms provide more information on their websites when compared with firms based in Malaysia and Hong Kong.

Corporate Responsibility

It is important to highlight what corporate responsibility means. There are although different definitions (Mattews, 1997; David G. Woodward 2007). These different definitions affect what is being reported, as organizations structure their understanding of corporate responsibility to suit their goals (Milne and Gray, 2007). Dahlsud (2008) studied ‘37 definitions of corporate social responsibility’. He categorized the contents of the definition, and concluded that 8 out of 37 had definitions that included: (5) stakeholder, social, economic, environmental and voluntaries,

UK government, 2001,

Corporate social responsibility recognizes that the private sector’s wider commercial interests require it to manage its impacts on society and the environment in the widest sense. This requires it to establish an appropriate dialogue or partnership with relevant stakeholders, be they employees, customers, investors, suppliers or communities. CSR goes beyond legal obligations, involving voluntary, private sector led engagement, which reflects the priorities and characteristics of each business, as well as sectoral and local factors.

The contents of 12 out of 37 had conveyed: stakeholder, Economic, social, Environmental and social or voluntariness, economic, social and environmental,

Commission of the European communities, 2002, says

“Corporate social responsibility is about companies having responsibilities and taking actions beyond their legal obligations and economic/business aims. These wider responsibilities cover a range of areas but are frequently summed up as social and environmental- where social means society broadly defined, rather than simply social policy issues. This can be summed up as the triple bottom line approach: i.e. economic, social and environmental”.

11 out of 37 had (3) contained in the definitions such as stakeholder, environmental and social,(6) or social, environmental and economic,(3) or voluntariness, social and environmental(3).

Marsden, 2001,

“Corporate social responsibility (CSR) is about core behaviour of companies and the responsibility for their total impact on the societies in which they operate. CSR is not an optional add-on nor is it an act of philanthropy. A socially responsible corporation is one that runs a profitable business that takes account of all the positive and negative environmental, social and economical effects it has on society”.

2 out of 37 contained (2) either voluntariness and stakeholder or voluntariness and social,

Business for social Responsibility, 2003a,

“Socially responsible business practices strengthen corporate accountability”

(4) Out of 37 contained 1 of either social, voluntariness (2) and stakeholder.

Piacentini et al, 2000

“CSR is the voluntary assumption by companies of responsibilities beyond purely economic and legal responsibilities”.

Corporate Social Responsibility was defined by Gray et al. (1987, p. 3)as follow:“Is the process of communicating the social and environmental effects of the organization’s economic actions to particular interest groups within society and society at large, As such, it involves extending the accountability of organizations (particularly companies), beyond the traditional role of providing a financial account to the owners of capital, in particular, shareholders. Such an extension is predicated upon the assumption that companies do have wider responsibilities than simply to make money for their shareholders.’

It is important to highlight the need for clarity with Grays’s definition as he contradicts corporate social responsibility to corporate reporting. Corporate social responsibility shouldn’t be the process of communicating (like a report), It should specify the act of carrying out social and environmental duties. Corporate reporting amongst others is an after math of corporate social responsibility and should be expressed as such.

Growth of corporate responsibility and reasons for reporting

According to John et al, (2001), social and environmental reporting has gained the attention of researchers (such as Tinker et al, 1981; Tinker 1985; Parker, 1986; Puxy, 1986; Gray et al, 1988 and 1991; Guthrie and Parker, 1990; Roberts,1991; Harte and Owen, 1991; Gray and Laughlin, 1991; Cooper, 1992; Bebbington, 1994; Gray et al, 1995; Adams et al, 1995; Lehman, 1995 and 1999; Deegan and Gordon, 1996; Owen et al, 1997; Mattews, 1997; Parker, 1997; Adams et al, 1998; Neu, 1998; Unerman, 2000; Milne and Adler 1999;)

Growth of literature in corporate social responsibility has asked mainly questions such as: What is being reported by companies and what is expected from companies (see for example Teoh and Thong 1984; Guthrie and parker 1990; Harte Owen 1991; Milne 1991; Lynn 1992; Niskala and Pretes 1995; Deegan and Gordon 1996; Gamble et al. 1996; Bebbington and Gray 1997; Adams et al; Choi 1999; Bell and Lehman 1999; Newson and Deegan 2002).

Research has shown that the reasons for social responsibility reporting are between and or external factors, such as, increased bottom line on long term, stakeholder group, claiming legitimacy, size of company, place of origin, industry, (see for example Ullmann 1985; Cowen et al 1987; Adams et al 1998; Guthrie and Parker 1989; Pattern 1992; Hackston and Milne, 1996; Gray et al 1999; Deegan 2002; Deegan et al 2002; Newson and Deegan 2002).

Research has also shown the importance of external controls of the practice of reporting, (see Grojer and stark 1977; Gray and Collinson, 1991; Geddes, 1991; Gallhofer and Haslam, 1995; Owen et al 2000; Gray 2002; Ball et al 2000; Gray and Milne 2007)

Although its major growth skipped from the 1990s, ACCA/Corporateregister.com, (2004) have been able to produce empirical evidence on the state of global reporting from 1993-2005. They found a steady increase from less than 100 in 1993 to over 1500 in 2005. An earlier survey by Ernst and Ernst (1978) on disclosure levels from 1972 to 1978of 500 fortune companies, reported a fall in reporting from 91% in 1972 to 89.2% in 1978.

The ACCA survey (2004) per regions from 2001-2003, recorded that disclosure was highest in Europe with 54%, Asia, and Australia 25% and America 19%. Studies have further shown a higher number ofCSR in other countries, but the reasons for this cannot be quantified, not even on the voluntarily or mandatory bases. Moon andChapple, (2005)examined ‘corporate social responsibility in Asia’ to gain insights into whether the country’s level of development, or its globalized advantage shapes better reporting in Asia. Using the content analysis method, 50 companies in seven countries were surveyed: The study found that in Thailand, Malaysia, South Korea, India, Singapore and Indonesia CSR variations occur between these countries but no relationship was found between disclosure levels and the country’s level of development.

In summary, the commonalty between these countries and their reporting is the increase in reporting. It can, however be argued that the demand of CSR reporting is still not taken seriously by most of these corporation, despite the growth that has been observed in CSR disclosure.

Researchers in their work have on a theoretical and empirical level identified reasons for CSR disclosure, either of a voluntarily or mandatory nature.

Deegan (2002,) suggest companies report to satisfy legal demands, for example

“Within Australia, the Australian Minerals Industry has a code for environmental Management (as do other industries, such as the Australian Electricity Industry). There are certain pressures to sign to such codes. Such codes can have associated reporting requirements (Deegan and Blomquist, 2001).

Wallace (1988), studying reporting in Nigeria and looking at the annual reports of 47 listed companies on the Nigerian stock exchange so as to analyse the total contents of disclosure and to compare the disclosure to the contents required by law, found through his analysis that reports were not in compliance with the contents required by law.

If a general requirement for social and environmental accounting information does not effect change, a more effective standard (guidelines) will be imposed. Given this, one could assume that companies would rather report than invite more rigid rules (Deegan, 2000).

Achieving long term profit has been observed to drive contemporary CSR (Gray et al, 1995; Roberts, R.W., 1992). Although this fact can propel CSR, the financial situation of a country can also affect implementing CSR (see, for example, Kuasirikon and Sherer (2004)aimed to ascertain if a company’s financial situation can affect its disclosure content, comparing the annual reports of two years 1993 (when the economy was at its peak and 1999 (when the economy experienced a down fall). Using the content analysis method they were able to conclude that a reduction occurred in social and environmental reporting from 86 percent in 1993 to 77 percent in 1999, due to the reduction in economic growth because of the country’s financial recession in 1997.

Ethics and transparency have been perceived by some researchers (Hasnas, 1998; Donaldson and Preston, 1995; Freeman and Reed, 1983) to be a reason companies disclose.

Some stakeholders groups have been identified to influence reporting, (Roberts, 1992; Neu et al., 1998; Evans and Freeman, 1998; Ullman, 1985, Windsor (2001) realistically states:

“Any profit oriented firm (private or public) subjected to stakeholder “CSR” demands can react positively when it is not less profitable to do so”.

This positively reflects The Task force comment on corporate social performance report on business & society, (1980 pp. g 32) .that

“Entities should have a major objective of producing goods and services and if it’s not successful with it, shouldn’t be expected to achieve any other objectives.”

An extremist position is that by Friedman (1970, p.4) who states that:

“Businesses operates for profit maximization for its shareholders and if it choose to be socially responsible its eye goes of the ball”

Or Sternberg www.mallenbaker.net/csr/biog.php,who argues against because it,

“Deprives shareholders of their property rights, Most of them are forced into the act as a response to its country’s Code of practice”.

Claiming legitimacy could be a way these companies respond to elite stakeholder groups if profit maximization is not achieved, (Pattern 1992; Gary Deegan et al 2000; O’Donovan 2002; Milne and Pattern 2003; Bebbington, 2008) suggests that these cases of claiming legitimacy have also been found to drive social and environmental reporting, Deegan (2002) analyzed the social and environmental disclosures of one of Australia’s largest companies, BHP ltd from 1983-1997. He focused on the extent and type of disclosures made using publicly available information. Using the content analysis method, they found that the company made mostly positive disclosures inline with society’s expectations. The company had perceived the need to claim legitimacy, perhaps that continuous need to claim would lead to better reporting in annual reports in years to come. Deegan (2002) claims, without empirical evidence, that a:

‘‘Desire to comply with borrowing requirements can prompt such disclosures, that is with increased lending, institutions are requiring, as part of their own risk management policies, borrowers to periodically provide various items of information about their social and environmental policies and performance”.

REPORTING IN DEVELOPING AND DEVELOPED COUNTRIES

According to Gray et al (1999) disclosures among countries differ, this is the subjects of disclosure, Volume of disclosure and forms of disclosure (see also Adams et al., 1995); Guthrie and Parker (1990); Roberts, (1990). Van der Laan Smith et al (2005)claims the level and type of disclosure a firm makes is determined by its country of origin:

‘We argue that the manner in which the role a corporation and its stakeholders are defined in a society, will affect the extent and quality of corporate social disclosure in annual reports’.

As regards reporting in developed and developing countries studies (Milne and Gray, 2007; Kolk, 2003; Kolk and Val Tulder, 2004) have concluded that reporting is a ‘developed country phenomenon’. According to Tsang (1998) comparing the levels of CSR in business of both contexts would not bring the same conclusions as some factors have different effects on results in both context.

Visser, highlights on the drivers of CSR in developing countries to emphasize on how these could influence uniformity in disclosure levels between both developing and developed countries.

Guthrie and Parker’s (1990)study shows that differences in disclosure still exist in developed countries. They carried out a study by looking at the annual reports disclosure of three countries the United States, the United Kingdom and Australia. Their major areas of interest were the disclosures of the social impacts of firms in these countries. Their research showed that differences occurred in the disclosure levels, methods, location of disclosure in reports and social content themes.

It is imperative to mention the scarcity of information in the area of what affects disclosure levels between countries (Visser, 2006a) found that with a total number of 53 African countries, that in the literature of CSR in journals from 1995 to 2005 only 12 countries with South Africa accounting for 57% and Nigeria 16%. A further analysis also noted CSR priorities were not balanced, 42% of the articles emphasised on Ethics. Visser (3006) concludes

“It is because CSR debates in Africa have historically been framed in terms of the ethics of colonialism and apartheid and the prevalence of corruption and fraud on the continent”.

Kenneth and Olufemi (2008) focused on the corporate code of conducts of Multinationals (CSR initiatives for multinationals: employees welfare, transparency, disclosure of information, consumer protection, environmental issues, ,human rights, labour issues, corruption, bribery ), when operating in other countries (not there home of ownership). Looking at the oil and gas sector they analysed 4 multinationals based in Europe and 3 based in US, with their operations in Nigeria. With empirical evidence from their content analysis they found that the disclosures, labor issues accounted for 60%, environmental issues for 58.9%, consumer protection for 47.6%, information disclosure for 18.3%. They came to the conclusion that the practices in their home countries affect their practices in the countries they go to. I do not agree with this probably only a country with weaker power would agree to the practices of MNSs. For example but without empirical evidence, such practices might not influence the UK, but likely influence Nigeria.

However the harmonization of international standards might overcome such difference in the importing of companies.

Visser (2006) also made this point

“CSR is driven by standardization imposed by multinational striving to achieve global consistency among its subsidiaries and operations in developing countries.”

Oil and gas sector reporting

Belkaoui and Karpik 1989, Hackston and Milne 1996, Deign and Gordon 1996, and Gray et al 1995 believe that reporting varies according to sectors. Gary et al (1999) believe they are larger companies. KPMG’s survey on the largest companies, however acknowledges that they report but at a slow pace. Further although globalization is expected to increase uniformity in reporting, research so far shows that this is not the case.Brammer and Pavelin (2008) include the size of company has an effect on disclosure. For example, Carol et al., (1996) examined the factors influencing social disclosures in six European countries from 1986 to 1995. They found company size and industrial grouping affect reporting.

This is the case for the Oil and Gas sector (Ness and Mirza, 1999; Frynas, 2005; Owolabi, 2009). This sector is highly pioneered by the multinationals in Nigeria (Amaehsi et al., 2006; Amao 2008).

Freedman and Stagliano (2004),carried out a comparison between firms that published environmental reports and firms that voluntarily published environmental reports to add up to their financial statements. They chose the top 500 firms in U.S. those known for their pollution and hazardous effects on the environment, which in the long run would be most expected to disclose more information, and analyse their social and environmental disclosure. They analyzed the non-environmental aspects such as: workforce and supplier diversity, employee safety and /health, community involvement, energy usage, product safety. Using the content analysis method, they came to the conclusion that more environmental damage prone firms disclose far more information than the other firms.

Rookmin and Irene (2006) carried out research to find out Shell’s motivation for being one of the first oil companies to report its environmental initiatives in 1991 in Canada. They looked at historic reports and documents. The also gathered information using the interview method, In conclusion they found that Shell has gained reputation for transparency in its reporting. However, whatever forms the reporting has taken to prove transparency there is still the belief that oil operations in industries have caused a lot of harm to individual countries, with Nigeria being the most leading example.

Friends of the earth, (2004) carried out a case study titled “The other Shell report”, which contrasts what was published by Shell in their report. They looked at Shell operations and their negative effects on communities in continents for a two year period which included: Sakhalin Island, Russia; County Mayo, Ireland; Curacao, Netherlands Anthilles; Pandacan the Philippines; Norco and Coastal Lousiana, Port Arthur, Texas; USA; Sao Paulo, Brazil; Durban, South Africa; Niger Delta, Nigeria. Friends of the Earth (2004) argue that:

“What these communities have in common is that they have been used by shell as the dumping grounds for oil refinery, chemical manufacturing, oil and gas drilling, storage of oil products, still sharing in common history of generations of people who were able to live in harmony with there environments”

They maintain there is a need to make reporting mandatory by highlighting Shell’s failures to address the cases featured in their report.

The Quality of the Reporting

There has been a growing concern for reports to be externally verified. But would this improve the quality of reporting. The UNEP/Sustainability and the Global Reporting Initiative (GRI) provide guidelines for reporting. Of 503 companies using the GRI guidelines in August 2004, only 26 clearly reported in alliance with the GRI principles (ACCA/Corporate.com,2004).Gary’s (2006) work, showed an increase of companies using GRI guidelines in March 2005 to 639 users but with only 51 companies reporting in line with the standards. Further in November the number had increased to 732 users with 106 reporting in line with the guidelines. Also the UNEP/Sustainability‘s analysis on 100 reports, found an increase from 51 in 2002 to 92, reporting GRI users were better in terms of disclosure at 55 percent than other users at 48percent.

The implementation of guidelines have not affected a positive impact according to study on ‘The content and disclosure of Australian corporate environmental policies’ (the implementation of CEP) Tilt (2000) had aimed to find out if corporate environmental policies of CEP had impacts on subsequently produced annual reports. With evidence from the content analysis method, she came to the conclusion that the content of the environmental policies did not correlate with a company’s disclosure, that is, impacts were not noticed.

However, a similar study was carried out in Spain by Llena et al (2007). The analyzed the annual reports of Spanish companies in a bid to uncover the quality of their annual reports and to ascertain if reporting had increased over the years with the implementation of a new compulsory standard on environmental information in annual reports in 2002. They compared earlier work done from 1992-1994 by Moneva andLlena (2000) and 2001-2002 by Llena et al (2007).Using the content analysis method they conclude that there was a significant increase in reporting in the first year of implementation of the standards on environmental information.

Sudipta (2006), studied environmental accounting and reporting in the Bangladesh oil, gas and mineral corporation (Petrobangla) using the content analysis method. He found an increase in reporting from a 45.5% during 1998-1999 to a 63% between 2000 and 2001 and 81.81% between 2001 and 2003. The quality of reporting however was still poor as the only reported information was positive in character. The information was only disclosed in the ‘Directors report or chairman’s statement’.

Milne et al (2003) and Chapman and Milne (2004) study on the usage of UNEP/Sustainability’s standards in New Zealand reports come to conclusion that the use of these standards do not increase the quality of reports. Morhardt et al., (2002) come to the same conclusion saying these disclosure contents do not meet the standards (GRI and UNEP/Sustainability.

It has been understood that organisations report, but that the quality of such reports was questionable. Such a belief in the poor quality of reporting existed more generally until Unerman’s study (2000) on the ‘quantification in corporate social reporting’. He argued that there was a possibility of researchers conveying the wrong message from their analysis. For example, he analysed Shell reports for 100 years, with evidence that analyzing the annual report alone does not present a complete picture of the amount of reporting organizations are involved in. There were also problems with the methodologies used in statistics the use of its methodology(content analysis) should be made more reliable, by incorporating an evaluating technique for coders because the ‘key assumption underlying the use of content analysis is, volume of disclosure signifies the importance of the items being disclosed’ (Unerman, 2002). This is different measurement methods (sentence, word count) can have an influence on the assessment of the quality of the report produced.

Whatever the present situation, reporting so far has failed the test of quality because they have not fulfilled the expectations (Milne and Gray, 2007). But if Unerman’s (2002) view is valid do we still concluded that quality in reporting is a failure?

According to Milne and Gray, (2008, p. 191):

“Failure of organisations to address their core business issues in relation to SD,

failure of organisations to provide a sufficient overview of the organisation’s activities to provide a context for interpreting the reports,

failure to link the report and organisations to the wider political and policy context, with particular reference to lobbying activities, the need to improve the quality of external assurance statements, and how the organisation has improved relative to previous recommendations and

failure to link the organisation’s reporting to its wider sector through benchmarking’.

This shortfall affects reporting, but if implemented and integrated the organizations goals, would give hope to quality reporting. This is highly agreeable with or without implementing Unerman’s (2000) study.

CHAPTER 3

METHODOLOGY and Method

Research is defined by the Random House Dictionary of English language as a:

‘Diligent and systematic inquiry or investigation into a subject in order to discover or revise facts, theories, applications etc’. or

Hoque, (2006, p. 1) defines research as:

‘Voyage of discovery or a choice of theoretical perspective, as well as gathering empirics or facts on a problem or situation”.

Abdel-khalik and Ajinkya, (1979), point out the universally accepted objectives of any research is to illustrate, explain, and predict phenomena. In any research a philosophical viewpoint is addressed, as has been noted by Burrell and Morgan, (1979) in their work on the nature of science. They claim

“All social sciences approach their subject via explicit or implicit assumptions about the nature of the social world and the way in which it may be investigated”. Burrell and Morgan, 1989, p.

Based on the different philosophical assumptions about ontology. (I.e. the way we see the world) and epistemology (i.e. the way we achieve knowledge). Burrell and Morgan (1989) designed the following schema:

Subjective Approach Objective Approach

ONTOLOGY

(The way we see the world)

Normalism Realism

(What we know exist in our minds) (What we know exists outside our minds)

EPISTEMOLOGY

(The way we acquire knowledge)

Anti-positivism Positivism

(Knowledge is experienced) (Knowledge is obtained via experimentation)

HUMAN NATURE

Freewill Determinism

(We have the freewill) (Our actions are determined by our environment)

METHODOLOGY

Ideographic Nomothetic

(To understand we become a part of) (To understand by creating general laws that explains human behavior)

Assumptions on nature of social science. Burrell and Morgan, (1979).

Methodology is the philosophy or general principles that guide a research project, (Catherine Dawson, 2002). It is said that the research methodology adopted is determined by the researcher’s ontological and epistemological stance, (Burrell and Morgan, 1979; Tomkins and Groves, 1983)

Research in Accounting and Finance.

Research in Accounting and finance, as a social science, can employ either quantitative or qualitative methods in answering its research questions. However, there have been arguments regarding the choice of methods used in accounting research. There are also debates about the type of research approaches that should be applied in accounting and finance research. Tomkins and Grooves (1983, p. 364), in their work on “The Everyday Accountant and Researching his Realities” argue that the use of a more naturalistic approach would help the researcher create an “intimate knowledge of human behaviour in its natural setting”.

They made the following point:

“Accounting research is concerned with the effects of accounting practices upon social action, whether the action relates to account producers, users or those otherwise affected, there is a strong case for examining naturalistic research approaches. Such approaches may also provide additional insights where scientific approach may be used” (Tomkins and Grooves, 1983, p. 367)

Tomkins and Grooves (1989, p. 367) further focuse on Morgan and Smircich (1980)’s work on the six sets of ontological assumptions and, emphasized its use would create a wider range of research methods for accounting and finance.

1. Reality as a concrete structure
2. Reality as a concrete process
3. Reality as a contextual field of information
4. Reality as a symbolic discourse
5. Reality as a social construction
6. Reality as projection of human imagination

Tomkins and Groove’s (1983) concern about the suitability of scientific analysis for accounting research is shared by Blumer, (1978, p. 362) who argues:

‘This conventional protocol of scientific analysis is not suitable or satisfactory for the kind of analysis that is needed in direct examination of the empirical social world, it forces data into artificial framework that seriously limits and impairs general empirical analyses. )

Morgan (1983, p.385) also argued that methods convenient for studying the natural world ‘as a concrete existence’ are not convenient for studying the social world, taking into consideration an understanding that accounting is a social practice:

“The naturalistic approach, if pursued with the seriousness which Tomkins and Grooves suggest is necessary, may bring accounting theory and accounting practice much closer together than currently is, encouraging a theory of practice developed from the point of view of those involved in practice, rather than from that of a detached researcher-observer, as currently the case. The promise is no less than that of a new perspective on both accounting theory and practice.” (Morgan, 1983, p.387)

The selection of which methodology to use is considered the most important stage in the research design, so the researcher should search for the most beneficial available. The choice of methods depends mainly on the nature of the research problem and the researcher’s philosophical orientation as the methodology we choose to employ depends on our philosophical assumptions.

This MSc thesis adopts a subjective and anti-positivist approach. Accounting is understood to be socially constructed and to be embedded in an organisational and wider socio-economic, political and cultural context. Accounting reflects the context but also impacts upon the context. The researcher aims to critically analyse the social and environmental disclosure practices of oil companies in Nigeria.

Research Methods

Methods are strategies used to collect and analyze data (Holloway, 1997, p.103). They help to find answers to the research question(s). As this research is concerned to critically analyse the disclosure practices of oil companies operating in Nigeria content analysis of annual reports was chosen. Content analysis will give insight into the type of information the companies disclose.

Content analysis is a research technique used to ascertain the contexts of a message, that is it adds meaning to a text (Unerman, 2000; Wilkinson, 2003). It was structurally defined by Krippendorff (2004) “as a research technique for making replicable and valid inferences from texts to the contexts of their use” p. 18,

Berelson, (1952, p.19) defined content analysis ‘as a research technique for the objective, systematic and qualitative description of the manifest content of communication”. Bryman (2008) believes it can be argued that if content analysis is a technique used to analyse documents, then it’s not a research method because it is not used to generate data, however it’s used because of its distinguishing characteristics to analysis.

According to Denscombe’s (1998) the characteristics include:

Content analysis reveals by measuring

What the text establishes as relevant what is contained (words, ideas)

The priorities portrayed through the text how frequently it occurs; in what order it

The values conveyed in the text Positive and negative views on things

How ideas are related proximity of ideas within the text.

Table 1: Denscombe (1998)

The most significant characteristic of content analysis is its ability to quantify the contents of a written text, structured or unstructured (Denscombe, 2003). Krippendorff (1980) has argued that there is a need to make content analyses an efficient and effective tool for research, which is having the ability to be reliable and valid in the long term. The importance of reliability pinpoints the need for data to be generated that is precise no matter the circumstances or measurements at any time. Further, for the information that is generated through the usage of this method to be valid, the research is grounded in reliable data. (Unerman, 2000; Milne and Adler, 1999; Gray et al., 1995; Hackston and Milne, 1996) Methods of measurement are important in the context of content analysis. For example it has been assumed that quantity implies importance (Deegan and Rankin, 1996; Krippendorff, 1980) that is measuring quantity as an important aspect of content analysis. There are different measurement scales for quantifying data; examples are number of lines, pages, sentences and paragraphs. Given the importance of measurement there is a need for coders to implement methods of measurements that can enhance the validity and reliability of the work done.

The use of content analysis has long existed in Accounting and Finance research. Its use has predominately been in the area of social and environmental reporting research that has concerned to answer “questions of who gets reported, what gets reported, where does the issue get reported, how much gets reported and why its gets reported” (Bryman 2008). Examples of such research include the following: Dunne, 2003; Roberts, 1991; Abbott and Monsen, 1979; Guthrie and Mathews, 1985; Ernst and Ernst, 1978; Guthrie and Parker, 1989; Hackston and Milne, 1996; Mile and Adler, 1999; Unerman, 2000; Bowman and Haire, 1976; Gray et al., 1995a; 1995b; Tinker and Niemark, 1987; Trotman and Bradly, 1981; Deegan Gordon, 1996; Cowen et al, 1987. The text analysed in such research are the annual reports. According to (Tilt, 1994) annual reports are in high degree because of their use for the corporate social responsibility research, So the group annual report of 10 oil and gas multinationals operating in Nigeria will be used to answer “questions of who gets reported, what gets reported, where does the issue get reported, how much gets reported and why it gets reported”.(Bryman,2008, p.2). The dissertation compares the disclosure in the annual report more generally and that on Nigeria more specifically.

The focus on this sector was guided by its status as the highest sector that causes hazard on the natural environment Frynas (2005) and so the most to be held accountable. Further focus on multinationals in Nigeria was to analyse the ‘how much’ of reporting on Nigeria in a group report. Nigeria was chosen to better stress the issue of multinationals and reporting outside their country, in a developing country rich with the resources to probably exploit, to answer questions on who is more important in a group report lastly my vast knowledge on the country and its past and present day issues with these oil and gas multinationals.

This analysis has been restricted to 10 MNC because there are only 10 multinationals currently operating in Nigeria formally 16, the include; Exxon Mobil, Shell, Chevron, Addax petroleum, Total (France), Eni, Nexen, Petrobras (Brazilian), Hardy, Conoco Philips.

Content analysis will be used to analyse the reports in line with Guthrie and Parker, 1990 work on ‘comparative international analyses with a slight difference of fifteen categories and four themes while this research will contain 3 themes, 18 categories.

Themes:

Environment: Waste & recycling, water management, Energy saving, Oil spills, Climate change, and Biodiversity.

Social: Health & safety, Employee wellbeing, Community involvement, Indigenous peoples, Ethics, Community investment and Human rights.

Evidence: Monetary, Non-monetary, Narrative, graphs & Tables and photograph.

Amount: page and line measurement.

These categories were used to highlight the subject under research, its disclosures will help understand ‘what was said and how it was said’. Informs the themes, but majorly used to achieve the major question.

Tilt (1994) annual reports are a popular focus in social responsibility research. This dissertation therefore also focuses on annual report. The sample of annual reports analysed in this dissertation consist of the annual reports of ten Oil and Gas multinationals operating in Nigeria. A content analysis of the sample of annual reports is carried out consists of to answer “questions of who gets reported, what gets reported, where does the issue get reported, how much gets reported and why it gets reported” (Bryman 2008)

The focus on the Oil and Gas sector was chosen because of its status as a sector that causes a significant hazard on the natural environment (Frynas 2005). It can therefore be argued that these companies need to be accountable for their actions. Further, focus on multinational Oil and Gas companies operating in Nigeria was chosen so as to analyse ‘how much’ of reporting Nigeria can be found in the group report.

Further, Nigeria as the country for the analysis was chosen because it’s a developing and resource rich country. And finally, the choice of Nigeria and the oil and gas sector was also motivated motivated by the authors knowledge of and familiarity with issues relating to Nigeria and the Oil and Gas sector.

This analysis has been restricted to ten Oil and Gas companies because there are only ten multinational companies currently operating in Nigeria (formally 16).The companies are; Exxon Mobil, Shell, Chevron, Addax petroleum, Total (France), Eni, Nexen, Petrobras (Brazilian), Hardy, Conoco Philips.

The content categories used in this study are based on Guthrie and Parker (1990) with slight modifications. They consist of three themes, eighteen categories.

THEMES	CATEGORIES
Environment	Waste & recycling Water management Energy saving Oil spills Climate change Biodiversity.
Social	Health & safety Employee wellbeing Community involvement Indigenous peoples Ethics Community investment Human rights
Evidence	Monetary Non-monetary Narrative, graphs & Tables Photograph
Amount	Page Line measurement

These categories were used to highlight the subject under research, its disclosures will help understand ‘what was said and how it was said’. Informs the themes, but majorly used to achieve the major question.

CHAPTER 3

CHAPTER 4

DETAILED CONTENT ANALYSIS OF GROUP REPORTS

In the following content analysis the group report of 10 oil and gas companies operating in Nigeria will be analysed so as to ascertain their level of social and environmental disclosure, it is of note that does not necessarily mean that corporations with the highest level of disclosure will be an example of the best reporting practice. Reports for the following multinationals will be analyzed: Total, Eni, Addax, ConocoPhillips, Nexen, Petrobras, Shell, Hardy, Exxon Mobil and chevron.

Themes as outlined in chapter 4 environmental disclosure of waste & recycling, climate change, biodiversity, energy saving, water management, oil spills(land and water) and social disclosure of health and safety, employee wellbeing, community involvement, indigenous peoples, ethics, community investment and human rights.

Table 1 shows the environmental disclosure of 10 multinational oil and gas companies operating in Nigeria. In the table (X) represents information ‘disclosed’ and (-) will stand for no ‘disclosure’.

	GROUP REPORTS
	Conoco	Nexen	Chevron	Total	Addax	Shell	Exxon Mobil	Eni	Hardy	petrobras
Environment
Waste & Recycling	x	–	–	x	–	–	x	x	–	X
Water management	x	x	x	x	–	X	x	x	–	X
Energy saving	x	x	x	x	–	X	x	x	–	X
Oil spills	x	x	x	x	–	X	x	x	x	–
Climate change	x	x	x	x	–	X	x	x	x	X
Biodiversity	x	x	x	x	–	X	x	x	–	X

In totality the result from the table indicated a total of 46 disclosures and 14 non disclosures from the ten multinational, in six categories per company.

It indicates nine of the ten companies provide some form of environmental disclosure. The most reported issue is climate change with all nine companies disclosing information. Eight companies provide information on water management, energy saving, oil spills and biodiversity The least reported issue is waste and recycling with only five companies disclosing information, and the only company not providing any environmental information is Addax. The following examples of how the companies report environmental information is provided.

REDUCING OUR FRESH WATER USE

“By 2025 two-thirds of the world’s population could be living in areas where fresh water supplies are under serious stress. Our industry is not a big water user, compared for example, to agriculture. But growing crops to make biofuels and mining bitumen from oil sands can be water intensive; and some oil and gas operations use (and produce) quantities of water that can be significant in water stressed areas.

In 2008, our operations used approximately 224 million m3 of fresh water.

Much can be done to reduce our water footprint. Our Pearl GTL plant (see page 25), for example, has been designed to take no fresh water from its arid surroundings. The Schoonebeek project (see page 27) in the Netherlands will re-use municipal wastewater to make steam. In Oman, a project is moving ahead to plant reed beds that will clean up all the 45,000 m3 a day of water brought to the surface when the joint venture we are part of produces oil. This will allow that water to be put to use”.

NEXEN: Climate change

“A growing awareness of the possible causes and effects of climate change has increased concern over the ways the world produces and consumes energy. We recognize climate change is an issue of growing importance to our stakeholders, including government, investors and the public at large. Nexen has been working to actively manage our own emissions through energy efficiency measures, wind power and technology development while also contributing to constructive dialogue on climate change public policy”.

HARDY: Air Quality

“On evaluation of environment impacts regular ambient air quality studies have confirmed that the air quality is not affected by offshore operations and the main focus of monitoring is of the impact on the immediate marine ecological system”.

Table 2

	Conoco	Nexen	Chevron	Total	Addax	Shell	Exxon Mobil	Eni	Hardy	Petrobras
SOCIAL
Health & Safety	x	x	x	x	x	X	x	x	x	x
Employee-wellbeing	x	x	x	x	x	X	x	x	x	x
Community Involvement	x	x	x	x	–	X	x	x	x	x
Indigenous Peoples	x	x	–	–	–	–	–	–	–	–
Ethics	x	x	–	x	–	–	x	x	x	x
Community investment	x	x	x	x	x	X	x	x	x	x
Human rights	x	x	x	x	–	X	x	x	x	x

Table 2 is the Social group report of the 10 multinationals and 7 sub categories, as above

An evaluation from table 2 implies a total of 57 disclosures and 13 non disclosures from the 7 sub categories.

All ten companies provide some form of social disclosure. The most reported issues were health and safety, employee wellbeing and community investment with all ten companies disclosing information, nine companies provide information on human rights and community involvement, seven on ethics, the least reported issue is indigenous people with only two companies disclosing information. The following examples of how the companies report information is provided

Conoco Philips: Human Rights

Conoco has adopted a position statement on human rights that includes our intent to conduct business consistent with the human rights philosophy expressed in the universal declaration of human rights and the international labour organization declaration on fundamental principles and Rights at work. The position also states our commitment to participate in the Voluntary Principles on Security and Human Rights initiative. We use several tools for assessing human rights risk during new ventures and projects. In addition, our new country entry process includes specific questions on potential human rights risk, and we also assess human rights risk during our due-diligence efforts prior to entering into new partnerships or acquisitions.”

Chevron: Humankind Community Involvement

“In 2008, chevron introduced a new community involvement program that replaced four existing programs for U.S- based employees and retirees. Called “Chevron Humankind,” the program complements our global community investments and builds on the company’s belief that meaningful partnerships can help improve our communities. It includes company matching of participants’ financial contributions to U.S-based non-profit organizations, grants for volunteer time, and company sponsored volunteer programs. In 2008, U.S employees and retirees recorded more than 110,000 hours of volunteering through Humankind, and program participants and the company contributed $20 million to advance the work of non-profit organisations”

EVIDENCE

The following section analyses how the information was reported, that is the forms used in disclosing such information and how well these companies reporting used such information in disclosing. The forms used include: Monetary, Non-monetary, Narrative, Graphs and Tables and Photographs. Monetary, Non-monetary, narrative is mostly used in reporting but the use of photographs according to Gallhofer et al ( ), ‘may be deemed of importance, because it creates particular images of companies’ and the use of graphs and tables provide a more explanatory view. Tables 3 and 4 are content analysis tables showing the environmental and social issues and how the are reported.

Table 3

	Conoco	Nexen	Chevron	Total	Addax	Shell	Exxon Mobil	Eni	Hardy	petrobras
ENVIRONMENT
Monetary	1	1	1	1	0	1	1	1	0	1
Non-monetary	1	1	1	1	0	1	1	1	1	1
Narrative	1	1	1	1	0	1	1	1	1	1
Graph and tables	1	1	1	1	0	0	1	1	0	0
Photographs	1	1	1	1	0	1	1	1	0	0

In totality the result from the table indicated a total of 39 disclosures and 11 non disclosures.

Nine of the ten companies use some form to disclosure information. Six companies evidently report using all these forms, one company discloses monetarily, non-monetarily narratively also using photographs. One company discloses monetarily, non-monetarily narratively and one company disclosing Non-monetary and narratively. The least reporting form used in disclosing information was the photographs, and the only company not employing any form is Addax. The following examples of how the companies report environmental information is provided.

Petrobras

Total: €3.45 million spent on the environment by the Total foundation, which provides funding and skills to scientific programs on marine and coastal biodiversity conducted by its institutional partners. The corporate foundation supports projects implemented by specialised partners to restore damaged ecosystems, rebuild communities and preserve threatened species, paying particular attention to initiatives focusing on marine areas.

ENI: Strategies to combat climate change.

The international debate on policies for mitigating climate change has continued with the aim of reaching a post-Kyoto international agreement, this agreement is expected to be implemented in December 2009 in Copenhagen. In meantime, the EU has already approved an energy policy for 2020 is to reduce greenhouse gas emissions by 20% compared to 1990.Within this context, the strategy for combating climate change developed by Eni has already allowed for the attainment of significant results in the past years, particularly with regards to the efficiency of process for the transformation of oil products (refining, petrochemicals, electrical generation) thanks to the technologies adopted and the carbon density of the fuels utilized. Eni’s a strong presence within the gas market and the simultaneous production of high-performance fuels also mark Eni as a company which promotes the utilization of efficient energy products amongst its customers.

Table 4

	Conoco	Nexen	Chevron	Total	Addax	Shell	Exxon Mobil	Eni	Hardy	petrobras
SOCIETY
Monetary	1	1	1	1	0	1	1	1	0	1
Non-monetary	1	1	1	1	1	1	1	1	1	1
Narrative	1	1	1	1	1	1	1	1	1	1
Graph and tables	1	1	0	1	0	1	1	1	1	1
Photographs	1	1	1	1	1	1	1	1	1	1
Total	5	5	4	5	3	5	5	5	4	5

The result from the table above indicated a total of 46 disclosures and 4 non disclosures. All ten companies use some form to disclosure information. Seven companies evidently report using all these forms, one company disclose monetarily, non-monetarily narratively also using photograph, another company disclose monetarily, non-monetarily, narratively with use of graphs and tables, and one company disclosing Non-monetary and narratively with use of photographs.

The least reporting form used in disclosing information was graphs and tables. The following examples of how the companies report environmental information is provided.

Conoco Philips

Addax Petroleum

NEXEN

Indigenous People: Supporting Leadership and Education.

“Nexen made a five-year, $350,000 sponsorship commitment to the National Aboriginal Achievement Foundation (NAAF), an organization that encourages and celebrates excellence in Canada’s Aboriginal community .Approximately $75,000 of Nexen’ s contribution will be used to support NAAF’s annual career fair. The balance will help fund the national Aboriginal Achievement Awards, which annually recognize 14 Aboriginal people who have excelled in their careers and who serve as exceptional role models”.

Petrobras

Fig 1, is a bar graph showing the disclosure levels in tables 3 and 4 (evidence on environment and social), this was used to know which aspect (environmental or social) companies are more explanatory in reporting.

All indications show forms used in disclosing information were mostly used in the social aspect of all companies as opposed to the environmental aspect, and in total (environmental + social) Conoco, Nexen, Exxon, Eni, had total disclosures (ten) in both aspects, chevron and Shell had disclosures in nine, Total, and petrobras had eight in both aspects and Hardy with six, Addax was the least with 3 disclosures in both environmental and social aspects.

VOLUME OF REPORTING

Now we explore the volume of reporting as regards Nigeria, below are the detailed report on the volume of each disclosure, and table its summary.

Table

	Conoco	Nexen	Chevron	Total	Addax	Shell	Exxon Mobil	Eni	Hardy	petrobras	Total
ENVIRONMENT
Waste & recycling	42	125	–	18	–	–	27	30	–	42	284
Water management	35	28	53	74	–	–	41	49	–	37	317
Energy saving	116	15	140	194	–	5	88	27	–	50	635
Oil spills : water		25	23	33	–	11	46	41	19	–	198
land	24	–	–	34	–	27	28	–	–	–	113
Climate change	128	26	122	217	–	129	257	43	17	47	986
Biodiversity	19	10	165	192	–	24	87	135	–	152	784
Total	364	229	503	762	0	196	574	325	36	328

Figure 4 shows a graphical analysis on environmental disclosure content of the ten multinationals from tables 5.1 and 5.2. Its vertical axis represents the total measure of disclosure and horizontal axis represents the names of the companies.

The bar graph shows that Total’s disclosure with regards to the environment as the highest,

Followed by Exxon Mobil, Chevron, Conoco, Petrobras, Eni, Nexen, Shell, Hardy and Addax with the no disclosure.

A further analysis was done by looking at the individual themes and there ‘disclosure’ levels. Climate change was 35%, Water Management 11%, Biodiversity 10, Waste & Recycling 10%, Water (pollution) 7% and Land 4%, overall climate change was found to be the major area of reporting with Total, Shell, and Exxon Mobil.

Social Report.

Table 6.2

	Conoco	Nexen	Chevron	Total	Addax	Shell	Exxon Mobil	Eni	Hardy	petrobras
SOCIAL
Health & Safety	131	115	203	394	3	74	259	250	–	121
Employee-wellbeing	101	79	150	416	48	20	162	292	–	194
Community Involvement	32	64	78	345	–	13	66	117	–	128
Indigenous Peoples	17	75	–	–	–	–	–	–	–	–
Ethics	17	32	–	53	–	–	171	79	–	138
Community Investment	8	58	503	–	79	40	267	391	–	347
Human rights	14	46	150	–	–	10	179	38	–	228
Total	320	469	1084	1208	130	157	1104	1167	0	1156

Social

Graphically is the social disclosure content (that is the sum) with its vertical axis as total measure of disclosure and horizontal axis with the names of the companies, this was obtained from the table 7.

As with the environment Total discloses the highest amount of to disclosure information on society for the year 2008, followed by Eni, petrobras, Mobil, chevron, Nexen, Conoco Shell, Addax and Hardy with the lowest.

Based on the table 6.1 and 6.2, figure 6 shows the level of disclosure by individual themes and there disclosure contents. Community investment 25%, Health and safety 23%, employee wellbeing 22%, community involvement 12%, human rights 10%, ethics 7% and indigenous people 1%. In totality community investment was found to be the major area of concentration with Total, Shell, and Exxon Mobil, making it a major priority contrasting with Conoco Chevron, Hardy, Petrobras and Eni, Addax remained neutral by not disclosing any information.

THE NIGERIAN OIL AND GAS SECTOR

It was evident that Agriculture stood at the fore front of the Nigerian economy and as such the farming was the means of there livelihood which they had great joy in doing it because, apart from the fact that it fed them it also enriched their pockets giving them a sense of control over their lives and resources. They country’s rich resources projected it as the largest exporter of food products.

By late 1906 the emergence of oil began to evolve in areas of the country, discovered then by the British colonial masters from the United Kingdom, however

“No legislation was introduced to govern the oil industry until the end of 1914 with the introduction of ordinance no 17. Under this law oil exploration and exploitation was limited to the British citizens and British companies which in turn gave exploration license to Shell-Bp, Mobil, Gulf, Agip, Tenneco and Amoseas now (Texaco and chevron)” Amao (2008,p.91)

Nigeria became independent and took control of affairs bordering the country from the United Kingdom in 1960, but by the 1970s

“It became and currently still the largest producer of crude oil in Africa, the fifth largest producer with the organization of petroleum exporting countries (OPEC) and the eight largest exporter of crude oil in the world and until now still earns over 95 percent of its export revenue from oil and gas sector” Amao (2008, p.94).

In the country today, are controversies brought about by the oil companies in the oil producing areas. The youths in this present day have taken violence (killing and ask for huge ransoms, the oil moguls sleep with one eye and some flee away from the state because of the threat upon there lives and families) into there own hands to fight for environmental and social justice, as a result they are portrayed as demons called militants who act inhumane especially towards the oil companies and there expatriates, bringing them at losses by blasting oil wells, kidnapping the citizens and there expatriates at huge ransoms.

If these multinational companies had paid strict attention to the social and environmental issues in the state, and loud cries of the people represented by activists Ken Saro Wiwa who maintained the people in the oil producing environment are

“Completely devastated by three decades of reckless oil exploitation or ecological warfare by shell …an ecological war is highly lethal, the more so as it is unconventional. It is omnicidal in effect. Human life, flora, fauna, the air, fall at its feet and finally the land dies”.

The evaluation that the country suffers these negative outcomes from there activities (Gas flaring, environmental degradation from oil spills without compensation or cleanups also affected farming and fishing which was a provided food to eat, loss of landed property without compensation, prostitution, no employment) and still loses off profiting from oil revenue can’t be comprehended. Human rights watch (1999, p.8). An instance where such occurred were,

“There was an oil spillage that occurred in Epubu community that was discovered and reported on the 5th and 14th of December, 1998. The operators of the current burst [pipe] .is Nigerian Agip Oil Company. And up till this moment of this interview that spill has not been cleaned. The flora and fauna and the entire ecosystem of the place is destroyed. To be candid, I don’t know what Epubu community has done to Nigerian Agip Oil Company. We are contributing to the growth of Nigerian Agip Oil Company. We know that the operators of the . . . oil [com-panies] are there to maximize [their] profit. But you don’t maximize your profit to the detriment of the people. [This] oil spillage that has occurred since December 1998 to 9th of September 1999 has not been cleaned. Thegovernment of the state is also aware of that. You can see the level of injustice the community is going through. We have approached Nigerian Agip Oil Company on several occasions to go and clear this spill.

We have written [a] series of letters guaranteeing the security of their personnel. Yet Nigerian Agip Oil Company has refused and the ecosystem of the place is destroyed. www.essentialaction.org/shell/report/index.html.

Environmental degradation is higher in African countries when compared to the western countries, but a question of if efforts made by these MNC to correct such situations are really on the rise. So with current issues, it is expected by any multinational coming into the country to be prepared to be as transparent as possible, however the MNC already existing and experiencing the violence from the public are expected to be up to date and carry out there jobs with sustainable development of the country in mind.

REPORTING IN NIGERIA

The table below is a content analysis of all multinationals operating in Nigeria, in summary it shows if social and environmental reports on Nigeria are included in the group reports of these multinationals that have been evaluated, this analysis will help in the comparability of disclosure level in the group reports and what is being reported on Nigeria in group report.

CONTENT ANALYSIS OF GROUP REPORT IN RESPECT OF NIGERIA

Name of Company	Annual Report for the Group	Information on Nigeria contained in Group Report
Hardy oil	yes	yes
Nexen	yes	no
Addax petroleum	yes	yes
Chevron	yes	yes
Eni petroleum	Yes	yes
Exxon Mobil	Yes	yes
Petrobras	yes	yes
Shell	yes	yes
Total	yes	yes
ConocoPhillips	yes	no

Table 7, shows two companies do not discuss on Nigeria in there group though there operations in the country still go on, and eight do, however this cannot be estimated here if it was a page, paragraph, or few lines, photograph, graphs or tables were used to report on the country, but an answer to this question introduces the latter question of the extent such reporting on Nigeria is done in group reports

To find out the extent to which such reporting have been done, a content analysis on the social and environmental disclosures in reporting in Nigeria will be evaluated.

	NIGERIA
	Conoco	Nexen	Chevron	Total	Addax	Shell	Exxon Mobil	Eni	Hardy	petrobras
Environment
Waste & Recycling	–	–	–	–	–	–	–	x	–	–
Water management	–	–	–	–	–	–	–	–	–	–
Energy saving	–	–	–	–	–	–	–	–	–	–
Oil spills	–	–	–	–	–	x	x	–	–	–
Climate change	–	–	x	–	–	–	x	x	x	–
Biodiversity	–	–	–	–	–	–	x	x	–	–

The result from the Table 8 indicated a total of 9 disclosures and 51 non disclosures, with five companies (Chevron, Shell, ExxonMobil, Eni and Hardy) disclosing some form of environmental disclosure on Nigeria, and the five companies (Conoco, Nexen, Total, Addax and Petrobras) not providing any environmental information on Nigeria, these companies provide some sort of information on oil spills, climate change, waste and recycling and biodiversity. The most reported issue is climate change with all five companies disclosing information and the least reported issue is waste and recycling with only one company disclosing information. The following examples of how the companies report on environmental information in Nigeria is provided.

Eni: Waste management

In 2008, waste from production activities increased by about 97,600 tons compared to 2007 as a result of new drilling activities in Alaska and the disposal of drill cuttings in Nigeria and Algeria. Similar to the last four years, waste from reclamation activities accounted for more than 80% of waste produced.

ExxonMobil: Biodiversity.

ExxonMobil helped sponsor a research project on the negative effects of desert encroachment and dry land degradation, including poverty, hunger, and loss of biodiversity and natural resources in northern Nigeria and other countries bordering the Sahara Desert. The project plans to plant nearly 1 million trees to serve as a buffer to prevent further desert encroachment along a 16,000-kilometer stretch across 20 countries from western Africa to Europe.

Hardy: Flaring

The Nigerian Government has mandated an end to the pervasive flaring practice in the Niger Delta. The development plans for the Oza and Atala fields provide for the monetisation or reinjection of produced gas.

	Conoco	Nexen	Chevron	Total	Addax	Shell	Exxon Mobil	Eni	Hardy	petrobras
SOCIAL
Health & Safety	–	–	x	–	x	x	–	–	–	–
Employee-wellbeing	–	–	x	–	x	–	x	x	–	–
Community Involvement	–	–	x	x	–	x	–	x	–	–
Indigenous Peoples	–	–	–	–	–	–	–	–	–	–
Ethics	–	–	–	–	–	–	–	–	–	–
Community investment	–	–	x	x	x	x	x	x	–	–
Human rights	–	–	–	x	–	–	–	x	–	–

Table 9 shows 19 disclosures and 51 non-disclosures from the social report on Nigeria by the ten multinationals. Six companies provide some form of social disclosure on Nigeria, and four companies don’t. The most reported issue is community investment with all six companies disclosing information, and the least reported issue is human rights.

The following examples of how the companies report information is provided.

Addax petroleum: Community Involvement

Addax is steadfast in its determination to have a hand in creating long term sustainability in communities throughout all areas of operation. Amongst other scholarship and local infrastructure programs in Nigeria, Addax petroleum carried out a health care program entitled ‘kick out malaria’ for communities living in, and in areas surrounding OML 123, OML 124 and OML 126.Doctors from Lagos and Local communities participated; blood pressure as well as Malaria checks were provided, medication and 7,000mosquito nets were distributed. This program benefited 5,000 local inhabitants from the communities of Imo, Cross River and Akwa Ibom states.

Shell: Safety performance

We are deeply saddened that 26 people (two employees and24 contractors) lost their lives working for Shell in 2008. That wasfive more than in 2007, based on our updated scope of reportingof these fatalities, nine happened on the road. A further 10 occurred in Nigeria, where three people werekilled as a result of security incidents and seven contractors died inone tragic incident when repairing a pipeline.

As regards these reports, the tables below 10 and 11 show the ways in which such reports (environmental and social report) were conveyed, making the analysis easily interpreted and with respect to exploring the quality of the reporting in Nigeria.

	Conoco	Nexen	Chevron	Total	Addax	Shell	Exxon Mobil	Eni	Hardy	petrobras
ENVIRONMENT
Monetary	0	0	0	0	0	0	1	0	0	0
Non-monetary	0	0	1	0	0	1	1	1	1	0
Narrative	0	0	1	0	0	1	1	1	1	0
Graph and tables	0	0	0	0	0	0	0	1	0	0
Photographs	0	0	0	0	0	0	0	0	0	0

Table 10 shows 38 disclosures and 12 non disclosures. Five companies evidently report on the environmental issues in Nigeria using some form or another to disclose. Most of such disclosures were monetary and the least reporting form used in disclosing such information was the photographs, the companies not employing any form are Conoco, Nexen, Total, Addax and petrobras. The following examples of how the companies report environmental information is provided.

Exxon Mobil (Narrative)

	Conoco	Nexen	Chevron	Total	Addax	Shell	Exxon Mobil	Eni	Hardy	petrobras
SOCIAL
Monetary	0	0	0	0	0	1	1	1	0	0
Non-monetary	0	0	1	1	1	1	1	1	0	0
Narrative	0	0	1	1	1	1	1	1	0	0
Graph and tables	0	0	0	0	1	0	0	1	0	0
Photographs	0	0	1	0	1	1	0	0	0	1

Table 11 shows 21 disclosures and 29 non disclosures. Seven companies evidently report on social issues in Nigeria using some form or another to disclose. Most of such disclosures were non-monetary and narrative, the least reporting form used in disclosing such information was the graphs and tables, the companies not employing any forms are Conoco, Nexen and Hardy. The following examples of how the companies report environmental information is provided.

EniPetrobras

The bar graph shows the disclosure levels in tables 10 and 11 (evidence on environmental and social report on Nigeria), this is used to know which aspect (environmental or social) companies are more explanatory in reporting on Nigeria.

All indications show more explanatory forms used in disclosing information were mostly in the social aspect of all companies as opposed to the environmental aspect.

VOLUME OF REPORTING

Volume of reporting is the amount of page or line dedicated to the report of each sub section by a company. Table 12 and 13 is the group report showing the volume of individual companies report according to the sub sections. This would help in evaluating the quantity of reports with regards to its quality in order to know the highest disclosing company for the environmental and social reports, and 12.2 and 13..2 will be summaries of the tables which will be used for graphical analysis.

Now we explore the volume of reporting as regards Nigeria, below are the detailed report on the volume of each disclosure, and 12.2 is its summary.

	Conoco	Nexen	Chevron	Total	Addax	Shell	Exxon Mobil	Eni	Hardy	petrobras
ENVIRONMENT
Waste & recycling	–	–	–	–	–	–	–	11	–	–
Water management	–	–	–	–	–	–	–	–	–	–
Energy saving	–	–	–	–	–	–	–	–	–	–
Oil spills : water	–	–	–	–	–	–	–	–	–	–
land	–	–	–	–	–	27	–	–	–	–
Climate change		–	11	–	–	–	82	3	4	–
Biodiversity		–	–	–	–	–	–	6	–	–
Total	0	0	11	0	0	27	82	21	4	0

A bar chart of the environmental report in Nigeria, it recognizes Exxon Mobil as the highest disclosing MNC in Nigeria to report on the environment in its report for 2008 with Hardy as the least, while Total, Conoco, Nexen, Addax, and Petrobras did not disclose.

Table 13 is the content analysis showing the volume of reporting in Nigeria as regards the social issues.

	Conoco	Nexen	Chevron	Total	Addax	Shell	Exxon Mobil	Eni	Hardy	petrobras
SOCIAL
Health & Safety	–	–	4	–	3	7	–	–	–	–
Employee-wellbeing	–	–	2	–	14	–	18	36	–	1
Community Involvement	–	–	–	116	–	18	–	–	–	–
Indigenous Peoples	–	–	–	–	–	–	–	–	–	–
Ethics	–	–	–	–	–	–	–	–	–	–
Community Investment	–	–	114	26	7	27	94	76	–	–
Human rights	–	–	–	22	–	–	–	4	–	–
Total	0	0	120	164	24	52	112	116	0	0

The social report recognizes Total as the highest disclosing on social issues in Nigeria and petrobras as the least. Conoco, Nexen and Hardy did not disclose.

In general the charts from both the environmental disclosure and social disclosure contents indicate MNC report more on social issues than on environmental issues that is to say the report more on what they have done right than what they have done wrong.

In reporting on Nigeria, multinational disclosure levels differed amongst issues such as, ExxonMobil was the highest to disclose on the environment and Total the highest to disclose on social issues but lowest on environmental issues.

The pie chart above represents the group reports of multinationals, it provides details on the amount of reporting on Nigeria in the group report in percentage, Out of the 100%, Reporting Nigeria was just 7%, meaning the group reports of MNC for 2008 recognizes Nigeria but in less than 3rd quarter of it’s reporting.

However a look at the individual MNC, it was sound that reporting by these multinationals were higher in there host countries as opposed to foreign countries where the operated. More it was noticed that there operations in these foreign countries were influenced either because of the need to claim legitimacy, profit gained from the country, the need to be responsible, and so on. Examples of such disclosures on Nigeria include the following:

Shell and the need to claim legitimacy:

Shell was expected to disclosure far more information on Nigeria because its operations in the country has existed far longer than any other multinational, so also its issues with the people and environment.

‘Shell, the leading corporation in the Nigerian oil and gas business, is being called to court to account in the Dutch courts for damage caused by oil spills in Nigeria. FoE Nigeria and FoE Netherlands are supporting four Nigerian fishermen and farmers who filed lawsuits against Shell’s headquarters in the Netherlands’ in November 2008′. www.foe.co.uk.

Still after all of this, shell still chooses to report poorly

Addax petroleum and profit gained:

The Addax report was a 17 paged report with a low level of disclosure when compared to other reports, however there disclosure on Nigeria was prominent

‘As during 2008, Addax petroleum’s operations in Nigeria accounted for 79% of the corporation’s total production’. p.10.

COUNTER ACCOUNTING ON REPORTING IN NIGERIA

The annual reports of these multinationals been analysed so far, paint quite a rosy picture, because they disclose what they mostly done right than what the done wrong but researches so far has pointed out there is always insufficient and missing information, a conflicting balance between the responsibilities of organization and their reporting practices, and the gaps between what has been said by these companies and what others are saying, so what is to be reported and what is to be left out are important issues especially in context of reporting on social and environmental issues which these companies do not disclose or disclose in rosy way, leaving campaign groups, activists, NGO’s and so on counter such in formations.

According to Gallhofer et al (2006) Counter accounting is

‘Constituted by information and reporting systems employed by groups such as campaigners and activists with a view to promoting their causes or countering or challenging the prevailing official and hegemonic position’. So can be regarded as an alternative report which is unofficial and very critical.

Such information’s are readily made available via the internet which has provided yet another means of communication, with an advantage to reach a wider public, otherwise called online reporting. A focus of the counter accounting on Nigeria alone was to further stress immeasurable impacts these operations cause to the extent of reporting.

In looking at the examples of such counter accounting, it would be important to also highlight the major social and environmental impacts from the activities of this oil companies, this impacts will be measured to see if the were reported or reported, examples include.

Oil leakage and Dumping of waste

Oil leaking from pipelines affects agricultural land, rivers and wetlands. Agriculture and fishery and depend on the rivers for drinking water.

Oil residues and other wastes from drilling are being dumped in rivers, wetlands and the sea or in open oil wells. http://www.foei.org/

Gas flaring

More than half of the gas that is released during oil exploitation in Nigeria is being flared (burned). People have to live near the flares, which make noise, and in some places it never gets dark at night. SO2 emissions are said to affect people’s health while CO2

emissions contribute significantly to global warming. http://www.foei.org/.

Gas flaring in the Niger Delta.

NIGERIA IS THE WORLD’S BIGGEST FLARER

“Traditionally, oil companies don’t like to find gas together with their oil fields – associated gas (AG). They prefer to find gas without it being mixed up with oil – so called non-associated gas (non-AG). Finding AG means they have to find ways to dispose of it in order to profit from the oil, the lucrative driver. Whereas finding non-AG gives them the freedom to control their gas production without reference to oil production. So flaring of AG has traditionally been much more common generally. But while AG flaring has been increasingly frowned upon in most parts of the world, in Nigeria it has flourished. Understanding the scale of flaring requires an understanding of oil and AG production, as well as of flaring data. Reliable data are difficult to find. In addition, oil production in the Delta is often affected by conflict, and a significant amount of oil is stolen (“bunkering”) by organised gangs. But it is possible to track a history of increased oil production. And more oil production means more AG production, and thus, without other means of dealing with the gas, more flaring.” http://www.foei.org/