Negative brand perception dogs oil firms despite huge CSR spend

A few weeks ago, the Environmental Rights Action/ Friends of the Earth Nigeria, ERA/FoEN, called on oil companies in the country to put an end to their corporate social responsibilities, CSRs, ‘stunts’ on the grounds that oil pollution continued to impact negatively on host communities thereby raising the question of possible wastage of several billions spent on CSR and sustainable development by the oil companies over the years. ADEDEJI ADEMIGBUJI examines why the companies’ CSR initiatives fail to dampen host community’s hostility towards oil firms.

The failure of CSR, Community Engagement, Sustainability and other PR initiatives to reverse the negative perception of oil majors operating in the Niger Delta is not a surprise to experts in marketing communications. For any company to succeed in exploring these PR tools to address crisis between organisation and the public, it must do the right thing to earn respect in host communities. Perception managers believe that past records of corporate entities often shape their future but rebuilding a bad brand reputation is often a daunting task.

For oil majors in Nigeria, the long-time neglect of oil communities in Niger Delta with attendant degradation of the environment has attracted a hostile perception from the communities. A recent report rated the oil sector the lowest in global rating of Most Trusted Brands, which feature industries that people think should be well regulated.

For indigenes of the Niger Delta where multinational companies have been exploring oil since 1956, the perception rating of oil firms’ ranks could not be different from the global rating. The communities have for long been made to bear the brunt generated from about 123 gas flaring sites which together burn 1.8 billion cubic feet of gas everyday leading to temperatures that render large areas inhabitable.

With over 1.5 million tons of oil spilled and yet to be cleaned up for several decades with resultant contamination of rivers, stream and forest, which constitutes the major income source for the majority of the local population inhabiting the region, the crave for positive brand name through CSR and sustainability might remain elusive for long time.

While some youth groups within the communities over the years have resorted to militancy, kidnapping, regular shutdown of operations by oil firms as a result of attack on equipment and expatriates staff working with the multinational companies, several efforts to placate the host communities with scholarships, provision of healthcare facilities, HIV/AIDS awareness and treatment, employment opportunities in oil firms, building of schools, provision of water supply have been largely ineffective as litigations in international court against oil firms are on the rise.

In one of the recent cases, The Dutch court on January 30, 2013 ruled against Shell as being responsible for the pollution of farmlands at Ikot Ada Udo, Akwa Ibom state but the communities were disappointed with another court ruling on Goi and Oruma communities in Rivers and Bayelsa States respectively where oil spills are not cleaned up.

While the Goi and Oruma appealled the ruling, the Executive Director, ERA/FoEN, Mr. Godwin Ojo, faulted oil companies’ CSRs saying they have become subject to manipulation and abuse.

With frosty relationship putting the firms’ brand name on the edge, perception managers’ doubt if they can get desired image if they fail to proffer solutions to agitation of the host communities.

According to the Managing Partner, TruContact Limited, a leading PR firm and CSR advocacy company, Mr. Ken Egbas, the negative perception of oil firms, “is as a result of long- term image damage that may have resulted from their previous unfavourable activities, which in turn may have garnered a negative reputation for them.”

A 2011-2012 Nigeria Social Enterprise report stated that oil and gas sector accounts for as much as about 45 per cent of the spend on CSR in Nigeria but Egbas said they are still rated worse than companies in telecoms who account for about 28 per cent or the banking sector.

“This may also be that it is possible that the public perceive or suspect that some of them try to use CSR to cover a deluge of wrongs. So, I think there are some work to do there for the companies and thought leaders in the area of public relations and CSR and sustainability road map design,” said Egbas.

National Mirror gathered from Chevron Nigeria website that the firm in 2011 through a partnership with the U.S. Agency for International Development, contributed $50 million to the Niger Delta Partnership Initiative (NDPI) Foundation, which Chevron established to address the socioeconomic challenges facing the area.

According to Chevron, a $25 million commitment was drawn from a $50 million endowment created in 2010 to launch the NDPI Foundation.

Since 2005, Chevron said it has provided funding for the Niger Delta Development Commission, a government agency tasked with developing the region as part of new approach to community engagement in the Niger Delta to improve local participation in determining the needs the programmes should address under the Global Memorandum of Understanding, which gives communities a greater role in managing their development through newly created Regional Development Councils.

While the objective is to enhance a global perception as a socially responsible firm, Chevron stated that through the memorandums, it generated approximately 200 projects in more than 400 communities, villages and chiefdoms and benefited some 600,000 community members, the brand perception of the oil firm remains negative as more villagers continue to engage the firm in litigations hence defeating the purpose of the CSR/Sustainability projects and Communities relations and engagement strategies.

Also, National Mirror leant that Shell Nigeria spent $103.2 million to support and finance voluntary social investment in focus areas of education, community health, enterprise development for youths and women, and community-driven development initiatives via the global Memorandum of Understanding (gMoU) between Shell Companies in Nigeria (SCin) and communities but in the 2012 ranking of the best CSR and Sustainability reporting, both Shell Nigeria and Chevron were not listed as reputable.

“You know out there, the perception about the extractive sector of the economy and how a huge percentage of the populace concludes that they are responsible for expansive cases of environmental degradation.

This can be said to have become their reputation. So, you cannot possibly correct your reputation by tweaking your external image through donations and adhoc philanthropy without doing anything to correct or adjust the factors that negatively affect public perception of your organisation,” Egbas pointed out

Meanwhile, the CEO/Lead Consultant at ThistlePraxis Consulting Limited, organiser of African Roundtable on CSR, Mrs. Ini Onuk said though most of the oil giants spend huge sum of money on CSR and sustainable development projects but they have failed to assess the impact of their spending. She said lack of framework makes it difficult to measure the impact of the oil firms CSR efforts.

“The problem is that most of the oil firms bring project that they feel that the communities need rather than what actually the community needs,” she said. She also blamed the failure of scholarships given to indigent students to change the perception to lack of monitoring of the beneficiaries.

“It often appears that they just dump some of these projects on the communities rather than monitoring the beneficiaries to ensure that the desired impact is achieved,” she said.

Onuk advised oil firms to have framework for their CSR and sustainability projects, address the oil spillage issue and pollution as stated in the Petroleum Industry Bill.

She said how well the oil firms address the issues will change the negative perception before the fishermen who can’t fish. According to Egbas, reputation restoration and recovery processes are usually a long-term process and the fourth phase of the conflict management life cycle called the recovery phase.

“One research I saw recently by Burson Marsteller found out that it takes an organisation three years to recover from a crisis that damages their reputation.

So I think that most of these companies in the extractive industry may not have systematically and consistently worked on a programme to that helps them overcome their poor image,” he affirmed. With failed effort of the oil firms, the PIB is the latest effort aimed at addressing the challenges posed by oil exploration.

The PIB was originally designed to force Nigeria’s oil sector to conform more closely to international norms. The draft PIB submitted to the National Assembly by President Goodluck Jonathan recommended increased funding for oil-rich areas.

The draft Bill recommended the creation of the 10 per cent Petroleum Host Communities Fund (PHCF) which will be saddled with the responsibilities of mobilising funds for mitigating environmental degradation as well as speeding up the development of communities where oil is produced but how well oil firms address the problems on selfregulatory basis could foster the search for positive brand name they yearn for, say experts.


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