By Eddie Ramírez
Corporate social responsibility (CSR) is a concept that broadens the traditional business system by taking into account its range of stakeholders: shareholders, employees, customers, suppliers, surrounding communities, and regulatory bodies. A company’s reputation is not only a consequence of the quality of the product it manufactures or the service it provides, but also of how it is perceived by stakeholders, and constitutes an important asset, albeit an intangible one. The longevity of a company requires that each of its stakeholders perceive it as useful and value-generating, that they feel it is theirs, because in the long run, they are the ones who grant it the license to operate and ensure its sustainability.
As for the relationship with communities, some theorists, fortunately fewer and fewer, argue that since companies pay taxes, it is up to the government to solve all problems. Given this view, it is necessary to clarify that CSR applies to the areas surrounding companies, generating a win-win situation that benefits companies by promoting a harmonious relationship that facilitates their activities and encourages communities to improve their quality of life.
On the other end, there are some governments that try to avoid assuming their responsibilities and offload much of what they should be doing onto companies, especially public ones. This undermines the mission of business entities and, of course, damages the productivity of companies and the country. Obviously, neither of these extremes is acceptable.
Socioeconomic development cannot be conceptualized from the state, i.e., top-down, or only from communities, i.e., bottom-up, but rather as a permanent two-way flow in which companies play a central role. CSR is a three-dimensional concept that involves the development of social teams comprising the state, companies, and communities. An important point to consider is that the construction or improvement of roads or health centers is not social responsibility if it only benefits the company.
Historical relationship between PDVSA and its partners (1976-2002)
With its shareholders: Every company must conduct its operations with sustainability in mind, meaning it must be economically profitable, socially acceptable, and environmentally friendly. It must provide accurate operational, accounting, and financial information, without hiding problems or manipulating figures. In the case of PDVSA, the shareholders are the Venezuelan people, theoretically represented by the ministry known during this period as the Ministry of Energy and Mines. Plans, budgets, and results were approved by the shareholder. To keep all Venezuelans informed, it promptly presented a widely disseminated Annual Report. Now, since 2016, PDVSA has not presented this report.
With its workers: Salaries and wages were set based on the 75th percentile of the best Venezuelan companies, training plans, a good savings fund, excellent health service, home purchase plans, and in the operational areas there were recreational facilities and great importance was given to staff safety. The contributory retirement fund was not indexed, so in times of inflation, the amount was drastically reduced. A meritocratic promotion system was applied, with the flaws of any system managed by humans. In addition, career development and extensive training were offered in line with the employee’s path and potential.
With its customers: Supply was reliable, although leaded gasoline was used for a long time before being replaced by less polluting products. Lubricants were of good quality and always available. Energy security existed, as there was a reliable supply of liquid fuels and direct gas, bottled gas, industrial gas, and gas for electricity. Internationally, there was compliance and transparency with customers.
With its suppliers: PDVSA established win-win agreements, advising through the research institute (INTEVEP) and the Center for Education for Development (CIED) on the improvement of products and services and staff training. Of course, payments to suppliers were made on time and the creation of private service companies was encouraged.
With its environment: The hydrocarbon environment is very broad, ranging from the areas surrounding wells in rural areas, often on farms, to cities where refineries are located. In general, donations continued during the first few years after nationalization. Many of these donations were given to government agencies or non-governmental organizations to carry out specific actions to avoid or reduce conflicts with communities or local authorities. Their main characteristic was that they were reactive, sporadic, and scattered.
With the implementation of CSR, this policy was abandoned, although not entirely. Social investment became the new policy. It consisted of supporting communities through long-term programs and projects with social, economic, and environmental impact. The keyword was sustainability. Projects were born from assessments in surrounding areas with the participation of community leaders, where priority areas (water, education, local economy, etc.) were determined. Projects were developed with community participation. Where possible, relationships with other companies were developed, and the participation of state agencies was always taken into account.
It should be emphasized that a poor relationship with communities can lead to the seizure of drills for many days, or disrupt traffic flow on roads, among many other issues. It is therefore essential to stay ahead of events by offering development plans that improve quality of life in communities and, in the long term, lead to prosperous and sustainable development.
Priority areas for social investment during the period under review
Education: This included plans for integration with the university and society: training and updating of teachers, provision of laboratories, software, internet, summer courses for students, technical visits, oil education program, production of educational resources on oil, promotional and incentive activities for students and teachers.
Health: Consolidation of community health networks, comprehensive training for healthcare personnel, comprehensive assistance for marginalized sectors, prevention campaigns, and promotion of community participation and organization.
Environment: Watershed restoration, environmental remediation, restoration and maintenance of green spaces, environmental prevention and awareness programs, and community safety.
Local economy: Promotion of economic activities other than the oil sector, training in trades related to local needs, assistance and training for the creation of micro-enterprises, advice on marketing and product commercialization, support for the creation of microcredit funds, creation of joint ventures in areas with competitive or technological advantages such as the production of porcelain-type Criollo cocoa, forestry development for paper pulp production, merey production, cassava production and processing, plant tissue culture, biological insect control, certified seed production, and comprehensive agricultural service modules, including technical assistance to farmers.
Some critical observations from the past
One criticism of the past is that many community projects were suspended after one or two years of activity for budgetary reasons or to deal with an emergency. This is disastrous, as the work is not consolidated and communities become disappointed. It is preferable to have lower budgets, but without large fluctuations from year to year, depending on variations in the price of oil or the greater or lesser tendency of the Board. Another criticism is that social programs were scattered in terms of control, with some depending on Public Affairs, others on Operational Management in the areas, and others on the Palmaven subsidiary. Similarly, we consider it a mistake that social investment activities were given very little publicity under the erroneous criterion that “if we talk about it, they will demand more from us.” Nor was attention paid to the inhabitants of large cities, where an important matrix of opinion is generated. It is worth mentioning that most social investment projects were carried out with third parties, generally NGOs and official bodies. In recent years, an interesting volunteer program was launched, an aspect that should be encouraged and that is relatively underdeveloped in Venezuela.
Period after 2003: No information is provided for the period after 2003 because the concept of social responsibility was distorted with the creation of the so-called Missions, whose objective has been more political, with little transparency and a great deal of corruption.
Suggestions for the future
CSR is a management concept that allows companies to be viewed as a system of stakeholders and promotes social teams. It is a tool for maximizing prosperity for both companies and communities. This is especially true in oil companies, which in Venezuela cover almost the entire country, including poor communities that receive little government assistance.
CSR requires freedom to think, interact, discuss without fear, demand that governments fulfill their role, select true community leaders, and allow companies to freely dispose of their resources in accordance with the law.
Venezuela’s future lies in oil, and it is essential that the profits from this industry are transformed into a sustainable quality of life for Venezuelans. CSR is a fundamental tool for the development of communities surrounding the new industry and much of the country.
Considering that there are currently several joint ventures and that the new government envisages oil production being carried out by private companies, it is appropriate for these companies to identify with the communities and with the public and private organizations in the area what they should do in terms of social responsibility. It should be borne in mind that communities are watching oil operations closely, so it is vital to move forward with social responsibility policies that result in a win-win situation for both the company and the community.
The government should only make suggestions, such as: 1- That projects be selected in agreement with the communities and public and private organizations operating in the area. 2- That they be implemented by an NGO, but with the participation of the communities or directly by them, and not by the company. 3- That they be aimed at improving the economic situation of the participating population, their quality of life, and the environment in the area. 4-That the budget be stable year after year. 5-That projects be sustainable as far as possible, in the sense that after a certain time they can be economically independent. Of course, this is not possible in some projects that do not have an economic return, but which are important for improving the quality of life of the population. 6-Encourage the participation of company personnel in volunteering, considering this factor in evaluations.
