Date of Graduation

Winter 12-13-2013

Document Type

Project

Degree Name

Master of Public Affairs (MoPA)

First Advisor

David Ryan

Second Advisor

Corey Cook

Third Advisor

Angela Fleekop

Abstract

Corporate Social Responsibility (CSR) is a practical and strategic implementation process corporations often use to build social trust with the communities they serve. This process of developing social trust, according to Francis Fukuyama, creates conditions for corporations and communities to deepen their investments in each other, thus increasing the probability of economic prosperity. By seeking to balance social, environmental, and economic imperatives, corporations seeks to create a lasting, sustainable relationship with the communities they partner with. CSRs are not merely about re-branding and impression management, for they are about establishing a healthy, trusting relationship with the customers that corporations identify in order to generate social trust.

CSR is especially important in an industry as crisis prone as the oil industry. In The Texaco Incident, Hoff (1987) argues that corporations have a moral responsibility to keep their workers safe, regardless of whether harm was intended or not. Events leading up to an industrial accident at a Texaco Oil Refinery point to poor regulatory enforcement of health and safety codes on part of both the refinery and the federal government.

Creating and implementing a CSR is one way corporations can responsibly enforce health and safety codes to keep their workers and communities safe and build lasting relationships with their communities. Similarly, in Risk Management, Real Options, and Corporate Social Responsibility, Husted (2005) argues about the merits of understanding CSR as a means to ensure economic returns by investing in communities. Husted (2005) argues CSR should be thought of as a real option: an investment strategy that decreases business risk and encourages investment within communities of interest, thus generating reciprocal partnerships—a point Fukuyama also makes.

While Husted (2005) demonstrates the importance of reducing business risk, Hooghiemstra (2005) suggests that corporations must take part in CSR in order to remain socially relevant. In Corporate Communication and Impression Management: New Perspectives Why Companies Engage in Corporate Social Reporting, Hooghiemstra (2005) posits that corporations need strong social relationships, a robust corporate identity, and an effective communication strategy that focuses on developing and strengthening public relations and social capital.

Since CSR is a prevalent, significant, and valuable business strategy that Chevron developed and implemented within its corporation, why was it not used effectively during the Richmond Refinery fire in 2012? For this project a case analysis of the Richmond Refinery is performed, which evaluates steps taken by Chevron following the fire. Though Chevron markets itself as a corporation that is heavily involved with its community partners, its inability to prevent a crisis, take ownership of an anticipated crisis, and establish a healthy relationship with the community of Richmond created dire consequences. These consequences include a lawsuit filed by the citizens of Richmond citing negligence, funding for the nonprofit For Richmond, and a $15.5 million pledge to Richmond's education system and business sector—steps Chevron is taking to regain the public's social trust. Though these actions are steps in the right direction, Chevron's inability to be bold, active, and relationship-oriented at the time of the crisis has had negative repercussions on both the community's ability to trust Chevron and Chevron's ability to sustain that trust.

Developing and maintaining social trust is what CSR is ultimately about. Chevron's inability to maintain worker and facility safety suggests deep ethical problems for Chevron’s management and its approach to implementing their CSR. Chevron's reactionary mindset is prone to handling a crisis when it occurs, as opposed to working diligently to prevent ones from happening. This mindset is a reflection of the leadership at Chevron, which must be changed if a robust and productive corporate-community relationship is a priority.

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