Climate Responsibility : The Instrumental Rationales of Private Oil Companies

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Title: Climate Responsibility : The Instrumental Rationales of Private Oil Companies
Author: Mustakallio, Vili
Contributor: University of Helsinki, Faculty of Social Sciences
Publisher: Helsingin yliopisto
Date: 2020
Language: eng
Thesis level: master's thesis
Degree program: Globaalin politiikan ja kommunikaation maisteriohjelma
Master's Programme in Global Politics and Communication
Magisterprogrammet i global politik och kommunikation
Specialisation: Global and Political Economy
Global and Political Economy
Global and Political Economy
Abstract: This study examines the climate responsibility, a sub-category of corporate social responsibility (CSR), of two oil companies, ExxonMobil and Shell. The study is a comparative case study of the climate responsibilities of two private oil companies, that makes use of academic literature and recent primary sources of the case companies, such as sustainability reports and statements. The study has a theoretical emphasis, and at first, it discusses the theoretical debates involving CSR. The separation of ownership and control in corporations that occurred in the early 20th century enriched the later discussion about the contradictions between capitalism and CSR, which was emerging slowly. From the 1970s, the practice of CSR became more familiar, and for instance, the orthodox liberal viewpoint became more positive about it: It was possible to combine profit-maximizing and CSR. Later, in the 21st century, governance studies gave a new perspective on interdisciplinary CSR studies. The study shows that climate responsibility might differ extensively between two same-sized oil companies. ExxonMobil’s climate responsibility has changed in the past twenty years: First, the company doubted whether climate change was true. Later, it admitted that it is a fact, and the company has committed to the Paris Climate Agreement. However, it commits to greenwashing regarding finding solutions. The company emphasizes its expertise and authority and is against government climate regulation. For ExxonMobil, the responsibility remains on the level of talk. It is not attempting to withdraw from oil. Shell’s climate responsibility, however, materializes in practice, too, even though the company has committed to greenwashing in the past. Shell has invested substantially in renewable energy sources and states that it aims to transform its business model to correspond with ambitious climate objectives. Further, contrary to ExxonMobil, Shell relies on a climate scenario, which follows an estimate that global warming from the pre-industrial era will not exceed 2°C. The study underlines that instrumental factors can explain the forms of corporate climate responsibility. However, the study does not exclude institutional, relational, nor philanthropic reasons for climate responsibility. This study discusses broad instrumentalism, which includes profit-maximizing and pursuit of corporate power. Profit-maximizing explains the form of climate responsibility that both companies practice. ExxonMobil’s climate responsibility speech is explained by maintaining a reputation and advertising matters, that is, short-term profits. However, its climate responsibility in practice remains modest, even irresponsible: The company is not withdrawing from oil nor investing in renewable energy sources. That is because, whereas the new oil resources are becoming harder and harder to exploit, ExxonMobil has relatively large oil resources compared with other oil companies. In turn, Shell’s climate responsibility is explained, especially by the long-term profits. Shell has relatively low oil reserves. Thus, it prepares for future regulation and positions as a progressive actor regarding energy transition to maximize profits in the 22nd century. Also, the case companies differ in the way they pursue corporate power. In the case of ExxonMobil, its climate responsibility speech is an attempt to pursuit corporate power against government regulation and to obtain autonomy. On the other hand, in climate issues, Shell highlights cooperation with the government and other stakeholders instead of self-regulation through its CSR. In the end, the thesis discusses the implications of the results to a broader question of global climate governance. When sustainability has become a growing business, and there are challenges in global climate governance, it is important to recognize the limits of climate responsibility, and more broadly, the limits of corporate social responsibility as a long-term solution. However, in the short term, the climate efforts of corporations are necessary to fill the regulatory gaps of global climate governance.
Subject: corporate social responsibility
climate responsibility
oil companies
global governance

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