Corporate Social Responsibility or Government Regulation? Evidence on Oil Spill Prevention

Major oil spills normally occur from oil pipelines and oil tankers that are under operational control of companies, namely, oil companies and tanker owners. There are two generic responses for changing the behavior of companies with regard to oil spill prevention: mandatory government regulation or voluntary initiatives often pursued under the banner of Corporate Social Responsibility (CSR). Here we investigate to what extent voluntary CSR initiatives can be effective in oil spill prevention. A global perspective on voluntary mechanisms is taken by looking at the progress of 20 oil and gas firms from around the world toward oil spill prevention, using the companies’ 2010 sustainability reports for self-reported oil spill information. The analysis includes ten oil companies from OECD countries (including Exxon and Shell, among others) and 10 oil companies from nonOECD countries (including Brazil’s Petrobras and Indian Oil, among others). The study finds that oil spill prevention has generally improved over recent decades. Government regulation played a significant part in these improvements whereas it is less clear to what extent CSR played a significant part in these improvements. Some of CSR’s key limitations are highlighted. It is not suggested that CSR should be abandoned; however, new hybrid forms of regulation that combine voluntary and mandatory elements are advocated.