For years, corporate social responsibility, or CSR, typically meant one-time grants or programs aimed at assuaging local demands to "share the wealth."
This model failed to address the underlying development challenges confronting the communities meant to benefit from corporate largesse. All too often, in fact, within a few years many of the schools, roads, or clinics financed by CSR are defunct or, at best, inadequately maintained.
Chevron is creating a new model for CSR in the oil-rich Niger Delta by shifting the emphasis of its investment toward economic development, employment, and increasing local incomes—to benefit both local residents and Chevron itself.
Chevron is a major force in the Delta's economic ecosystem—in 2011, it pumped an average of 516,000 barrels of crude, 343 million cubic feet of natural gas, and 11,000 barrels of liquefied petroleum gas each day—and the company hopes to continue doing business there for generations to come.
Accordingly, Chevron has a compelling interest in the long-term outcomes of its CSR spend:
• By increasing local incomes and employment and improving the local business environment, Chevron reduces its operational risk.
• By promoting inclusive local growth and employment, Chevron reduces social risks such as youth unemployment, poverty, and other drivers of instability.
• By fostering competitive business practices, Chevron lowers the costs and improves the quality of locally sourced goods and services.
• By establishing long-term, mutually beneficial partnerships with local market stakeholders, Chevron improves its responsiveness to Nigerian local content laws.
As a pilot, Chevron founded the Niger Delta Partnership Initiatives (NDPI) Foundation in 2010 to support socioeconomic development in southern Nigeria. In turn, NDPI created a parallel Nigerian-registered foundation, the Partnership Initiatives in the Niger Delta (PIND), to institutionalize this new paradigm.
A $50 Million Investment
Backed with a $50 million investment, Chevron's new CSR approach is premised on the systematic analysis of local markets—to seize economic opportunities and find market-driven solutions to local problems—and on partnerships with local communities, development partners, and companies. Combining this approach with efforts to promote peace, build local capacity, and upgrade capabilities in analysis and advocacy, PIND is establishing an environment that enables economic growth in the Delta.
The potential is enormous. Tens of thousands of expatriate and local staff work for Chevron and the other oil companies, and they require an army of support. One catering operation, for example, serves 8,000 employees per day, three meals per day, at just one site. Imagine the (preferably local) inputs required in beef, poultry, fish, eggs, fruits and vegetables, labor, storage, and refrigeration.
The marine services sector is equally promising. Barges used as worksites and for hauling oil, tug boats to push the barges, speedboats for human transport, and giant houseboats like floating hotels represent just a portion of the Delta's waterborne industry. Cooking, cleaning, and laundry services for this fleet are among those that could fuel youth employment and female entrepreneurship.
Chevron has an entire team looking at ways to increase its Nigerian supply—and local content specifically from communities in the Delta—by working with existing market structures rather than introducing new elements that would distort that market. For their part, DAI and PIND have narrowed the list of promising local goods and services with an eye to determining those where Chevron's investment will have the most powerful benefit.
Recasting community engagement in this way is not simple. It requires a close understanding of local markets and the forces that shape them, especially those factors that limit market relationships and inhibit the success of local people and firms. Once these constraints are understood, they can be addressed, with the aim of enabling local enterprises to tap into the consumer markets buoyed by Chevron's local operation.
In addition to nurturing the local supply chains touched on above, PIND has identified and analyzed three broader, promising sectors or "value chains" in the Delta—oil palm, aquaculture, and cassava. With DAI's assistance, PIND has designed and is now implementing programs to address the gaps found in these key Nigerian markets and improve market performance, especially for the poor.
More and more, international corporations are appreciating their positions in local economies and looking for new ways to engage. Chevron's model, driven by its business interest in balancing natural resource extraction with local wealth creation, seems to offer the basis for sustainable development in places beyond the Niger Delta.
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