Leadership’s Role in Corporate Social Responsibility (CSR)

Leadership’s Role in Corporate Social Responsibility (CSR)

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Leadership’s Role in Corporate Social Responsibility (CSR)

Saudi Aramco, also known officially as the Saudi Arabian Oil Company, is a large state-owned oil and gas company that is headquartered in Dhahran in the Kingdom of Saudi Arabia. It is one of the largest companies, having a market value exceeding two trillion dollars, which makes it the largest oil and gas company in the world (Reed, 2019). As a large public company in the country, Saudi Aramco is intimately integrated to the Saudi Economy and engages in extensive corporate social responsibility activities across the nation and in countries where it has wholly-owned affiliates, such as those in the Asia-Pacific region, in Europe and within the Middle East (Shenggao, 2017). Corporate social responsibility in the company is handled in a department domiciled in the public relations division, which was created in 2009, and the company has been improving on its sustainability reporting ever since (Gravem, 2010). The following discussion delves into the sustainability efforts at the Saudi Aramco, their opportunities and challenges, and their business value to the company.

Saudi Aramco has a formal sustainability program that is articulated in the company’s ethos of promoting sustainable social and economic development. Through its sustainability program, the company aims to be “an influential leader in creating social and economic opportunities for the welfare of the Kingdom and in other locations where our affiliates do business”, as articulated in the company’s corporate citizenship report (Saudi Aramco, 2010, p. 9). Moreover, the sustainability program is aligned to the ISO 26000 definition of corporate social responsibility that the company uses, and the commitment to ethical and transparent behaviour (Gravem, 2010). Therefore, Saudi Aramco’s sustainability program is consistent with global standards.   

Saudi Aramco has integrated sustainability into its overall strategic plan by incorporating sustainability into its vision, which is “to be the world’s preeminent integrated energy and chemicals company, operating in a safe, sustainable and reliable manner” (Saudi Aramco, 2019, p. 4). The company’s strategic focus on sustainability is evidenced in its application of the triple bottom approach in which the drive to make profits is accompanied by a pursuit for human development and environment protection (Energy Dais, 2018).

  The main social, environmental, and economic challenges and opportunities in the Saudi Aramco are encapsulated in the Vision 2030, which is championed by the Saudi government. Therefore, the challenges in sustainability that are experienced by Saudi Aramco are aligned to those experienced in the nation, considering that the company is a large, public, government-owned firm with a significant influence on the wellbeing of Saudi Arabia (Almohammedali, 2019). Notably, Saudi Aramco is confronted by the social and cultural rigidity of the Saudi people, which hinders progressive social transformation (Razak, 2015). Therefore, the company engages in various educational programs to educate Saudi nationals and prepare them for a modern global society. In this regard, the company has an opportunity to transform the retrogressive attitudes and perceptions of the Saudi nationals by providing education that does not conflict with the Islamic and Arabic traditions and culture. Saudi Aramco faces environmental challenges emanating from the desert conditions in most of the country and water scarcity, which is prevalent. In this regard, the company has the opportunity to develop innovative ways of purifying seawater for use in the country. Besides, Saudi Aramco faces environmental challenges such as air pollution, which are inherent in the oil and gas industry. Opportunities exist in the development of non-polluting technologies for extracting and processing petroleum and natural gas. The economic challenges faced by the company include the overreliance on the oil economy in the country. In this regard, the company has the opportunity to diversify its activities into alternative energy sources and other economic ventures that would diversify the economy of Saudi Arabia. Investment in a knowledge economy through education is an opportunity that the company can use to address the economic challenges in the country.  

The sustainability efforts at Saudi Aramco aim at improving operational efficiency to enhance environmental sustainability and promote sustainable growth. Also, the company strives to invest in communities to promote economic sustainability (Abro, Khurshid & Aamir, 2016). Altogether, sustainability practices strive to ensure the long-term viability of the company. To this end, the company has made significant progress in advancing its sustainability practices. For instance, the company has developed in-house technologies to enhance sustainability, such as water conservation, waste management, and fuel formulation technologies. Moreover, the company has invested in communities by sponsoring students in higher education and providing them with internships (Saudi Aramco, 2010). Besides, the company seeds startups in micro-industry to empower the Saudis economically. So far, the company has supported beekeepers in Al-Bahah, tailors in Dammam, coffee and olive tree farmers in Jazan and Al-Jouf, and fishermen in Yanbu (Saudi Aramco, 2019). Altogether, the sustainability efforts have achieved their aims, although more needed to be done by the company.             

The sustainable efforts have delivered business value to Saudi Aramco. Notably, these efforts have guaranteed the company’s social license to operate by endearing the firm to the Saudi’s, making it one of the most sought-after employers in the country. Therefore, the company attracts high talent from the labor market, providing it with a highly-skilled workforce. The company was able to attract huge investments worth $25.6 billion through its initial public offering (IPO) in December of 2019, which was the largest in the world (Horowitz, 2019). This positive public sentiment saw the company’s valuation reaching 2 trillion dollars, making it one of the highest valued companies in the world (Reed, 2019). The high investor interest assures the firm of capital for its operations.

Saudi Aramco has an elaborate corporate social responsibility program that dates back to its inception. The company has made significant strides to report on its sustainability programs, which are aligned to its mission and values. The entrenchment of sustainability has seen the company engage in various initiatives in human capital development and environment conservation. These sustainability efforts have delivered business value to Saudi Aramco, as demonstrated in the success of its IPO in 2009.    

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References

Abro, M. M. Q., Khurshid, M. A., & Aamir, A. (2016). Corporate social responsibility (CSR) practices: The case of Saudi Aramco. Journal of Competitiveness Studies, 24(1/2), 79.

Almohammedali, M. (2019). The real challenge facing Saudi Arabia’s transformation plan. Arab News. Retrieved 27 January 2020 from https://www.arabnews.com/node/1491661.

Energy Dais (2018). CSR by Saudi Aramco. Retrieved 27 January 2020 from https://insights.energydais.com/csr-by-saudi-aramco/.

Gravem, M. (2010). CSR in Saudi Arabia. Oslo University (unpublished MA Thesis).

Horowitz, J. (2019). Saudi Aramco shares spike after historic market debut. CNN Business. Retrieved 27 January 2020 from https://edition.cnn.com/2019/12/11/investing/saudi-aramco-shares/index.html.

Razak, R. A. (2015). Corporate social responsibility disclosure and its determinants in Saudi Arabia. Middle-East Journal of Scientific Research, 23(10), 2388-2398.

Reed, S. (2019). Saudi Arabia insisted Aramco was worth $2trillion. Now it is. The New York Times. Retrieved 27 January 2020 from https://www.nytimes.com/2019/12/16/business/energy-environment/saudi-aramco.html.

Saudi Aramco (2010). Saudi Aramco corporate citizenship ’09. Retrieved 27 January 2020 from http://argaamplus.s3.amazonaws.com/a3052cbf-783b-4f49-9997-878dfd55a87d.pdf.

Saudi Aramco (2019). Corporate overview. Retrieved 27 January 2020 from https://www.saudiaramco.com/-/media/publications/corporate-reports/saudi-aramco-corporate-overview-2019-english.pdf.

Shenggao, Y. (2017). Aramco Asia’s CST connects energy, opportunity and people. China Daily. Retrieved 27 January 2020 from  https://www.chinadaily.com.cn/cndy/2017-11/28/content_35084214.htm.