Idiosyncrasies in CSR disclosure. A comparison of Chinese ...

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Idiosyncrasies in CSR disclosure.

A comparison of Chinese National Oil Companies and State-Owned Enterprises.

Master Thesis

MSc. International Business & Management

Yair R.M. Kerkmeester

S3751287

[email protected]

Faculty of Economics and Business

University of Groningen

Duisenberg Building, Nettelbosje 2, 9747 AE Groningen, The Netherlands

P.O. Box 800, 9700 AV Groningen, The Netherlands

http://www.rug.nl/feb

Supervisor: Dr. O. Lindahl

Co-assessor: Dr. M.M. Wilhelm

Date of submission: Monday, June 8th, 2020

Word count: 14.952

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Abstract

The aim of this exploratory study was to qualitatively analyze and compare CSR disclosure of

Chinese NOCs, SOEs, and MNEs as well as non-Chinese MNEs in oil and gas, to discover

how and why disclosure differs amongst Chinese NOCs and SOEs. Prior research on Chinese

SOEs’ CSR disclosure is inconsistent and does not differentiate between industries. Prior

research also indicates firms originating from emerging markets tend to report more CSR

activities, whereas firm from industries like oil and gas tend to disclose more environmental

information. These three ‘influences’ have, combined, yet not been researched, implying little

is known about CSR disclosure of emerging market SOEs from environmentally sensitive

industries. A comparative research design (multiple case study) and thematic analysis was

applied to CSR disclosure in annual and stand-alone CSR reports to fill this gap in an

innovative manner. This study reveals Chinese NOCs and SOEs have significant uniformity in

CSR disclosure, yet also differences which are attributed to various causes. Both NOCs and

SOEs deprioritize disclosure on employment-related topics, while emphasizing disclosure on

topics like rights, fair competition, and third-party CSR initiatives (United Nations Sustainable

Development Goals). Moreover, Chinese NOCs place a higher emphasis on community and

climate change-related topics in CSR disclosure than other Chinese SOEs. On a general level

this study also indicates Chinese NOCs and SOEs disclose less extensively on CSR than the

sampled MNEs. The causes for idiosyncrasies in CSR disclosure of NOCs and SOEs serve as

a point of departure for future research within this topic area and provide room for new

discussions.

Keywords: National Oil Companies, State-Owned Enterprises, Multinational Enterprises,

Corporate Social Responsibility, Organizational Legitimacy, Environmentally Sensitive

Industry, Emerging Market, Disclosure, and Triple-Bottom Line.

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Acknowledgement

I would like to express my gratitude towards my family, close friends, the Fusie, and faculty

staff for the continuous support not only throughout the process of this Master thesis, but

throughout the entire MSc. International Business & Management. My interests in China have

only increased by performing this research and I look forward to studying at Fudan University

in Shanghai next academic year as part of the double-degree Master program.

Amstelveen, 2020

Yair R.M. Kerkmeester

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Table of Contents

1. Introduction ..............................................................................................................6

2. Literature review .......................................................................................................9

Institutional Theory (Neo-Institutionalism) and Legitimacy ..............................................9

Institutions and Isomorphic Pressures ..............................................................................9

Organizational Legitimacy ................................................................................................9

State-Owned Enterprises ................................................................................................ 11

SOEs’ Existence ............................................................................................................. 11

SOEs & Legitimacy ........................................................................................................ 12

Corporate Social Responsibility ...................................................................................... 14

Defining CSR ................................................................................................................. 14

Triple-Bottom Line ......................................................................................................... 15

Views on CSR................................................................................................................. 16

Chinese CSR Guidelines ................................................................................................. 16

Literature Gap ................................................................................................................ 17

3. Methodology ........................................................................................................... 18

Research design ............................................................................................................. 18

Case Studies ................................................................................................................... 19

Data ............................................................................................................................... 19

Sample ........................................................................................................................... 19

Method ........................................................................................................................... 21

4. Findings ................................................................................................................. 22

CSR Reporting Intensity ................................................................................................. 22

Annual Reports .............................................................................................................. 22

Stand-alone CSR Reports ............................................................................................... 22

Extent of CSR Disclosure ............................................................................................... 23

Thematic Analysis .......................................................................................................... 23

5. Analysis .................................................................................................................. 31

Analysis of CSR Reporting Intensity ............................................................................... 31

Implications of Thematic Analysis .................................................................................. 32

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6. Discussion and Conclusions .................................................................................... 37

Theoretical Implications ................................................................................................. 41

Managerial/Practical Implications .................................................................................. 42

Limitations and Future Research.................................................................................... 43

References ..................................................................................................................... 45

Appendices ..................................................................................................................... 55

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1. Introduction

China is the world’s second largest economy (Bajpai, 2020) and oil consumer (U.S. EIA, 2020).

To fuel its economy, China seeks secured access to natural resources in the Americas and

Africa (Vasquez, 2019), Europe (Amaro, 2019) and the Middle East (Xu, 2007). It does so

through for instance the, controversial (Hornby & Zhang, 2019), Belt & Road Initiative (BRI)

(Yan, 2017), which also aims to expand China’s political influence through state-owned

enterprises (SOEs), such as National Oil Companies (NOCs) (Rajah, Dayant, & Pryke, 2019).

Before the BRI, an NOC’s bid on a US oil firm was blocked by the US government (Lohr,

2005), as it did not want Chinese SOEs active in the region (Hook, Sakoui, & Kirchgaessner,

2012). Yet, evidence indicates that Chinese SOEs increasingly internationalized over recent

years (Alon, Leung, & Simpson, 2015). However, upon expansion, state-ownership causes

challenges towards organizational legitimacy (Li, Xia, & Lin, 2017), which is the perception

that a firm’s actions are socially acceptable (Suchman, 1995) and comply with rules and

expectations (Jacobsson & Bergek, 2011).

Organizational legitimacy entails firm acceptance (Deephouse & Zhang, 2018), allowing a

firm to maintain access to resources and operate. It can be ob- and/or maintained by abiding to

isomorphic pressures (DiMaggio & Powell, 1983) or CSR disclosure (Marano, Tashman, &

Kostova, 2017). Emerging market (EM) MNEs tend to disclose more on CSR to mitigate

prejudices towards their origins that harm organizational legitimacy (Marano et al., 2017).

SOEs experience legitimacy challenges as they are perceived as non-transparent firms (Li, Li,

& Wang, 2019) with political motives (Li et al., 2017). SOEs’ CSR disclosure, in particular

that of Chinese SOEs, is often frowned upon and doubted (Lin, 2010). As Chinese SOEs

originate from an EM, they face a combination of the two aforementioned challenges.

Contrary to literature on EM MNEs, literature on Chinese SOEs is inconclusive on the

reasoning behind CSR disclosure and does not differentiate between industries, which is

problematic as industry characteristics influence CSR practices and disclosure (Hung et al.,

2013; Li et al., 2013; Marquis & Qian, 2014). Literature on Chinese SOEs also shows higher

compliance of environmental laws compared to domestic MNEs, (Hung, Shi, & Wang, 2013),

as governmental CSR goals differ from private shareholders’ goals. Lastly, MNEs from

environmentally sensitive industries (ESIs), i.e. oil and gas, are frequently subject to public

backlash and damages to organizational legitimacy. To mitigate this, they disclose more

environmental information (Kuo, Yeh, & Yu, 2012). However, it is unspecified if this also

applies to SOEs.

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While the influences of EM origins, ESI origins, and state-ownership on CSR disclosure

are discussed separately in the literature, a combination of these three influences is overlooked.

Thus, insights on CSR disclosure of EM SOEs from ESIs (i.e. NOCs) are missing. This

knowledge is relevant to discover as it furthers understanding of how industry origins of

various Chinese SOEs influences CSR disclosure and how and why these differ from other

(Chinese) SOEs and MNEs. Additionally, over 15 Chinese firms (including SOEs) are on the

Top-100 MNEs ranking by the UN Conference on Trade & Development (UNCTAD, 2019),

implying significant international activities, consequential challenges to organizational

legitimacy and responses to these challenges through CSR. Oil and gas, the NOCs’ industry,

is also relevant nowadays as it relates to geo-politics and climate change. By exploring Chinese

NOCs’ CSR disclosure and comparing it to other Chinese SOEs, MNEs, and international oil

and gas MNEs the literature gap is covered by combining the three ‘influences’ and insights

arise on how and why Chinese NOCs’ CSR disclosure differs from other Chinese SOEs.

Currently, little is known about the underlying motives of Chinese SOEs’ and NOCs’ CSR

disclosure (Li & Zhang, 2010), i.e. if it should mitigate EM or ESI origins, or compensate for

state-ownership. This is interesting as SOEs do not require financial support of foreign

stakeholders (Li et al., 2013) which stems from organizational legitimacy (caused by CSR

practices and disclosure). Kuo et al. (2012) argue future research in this topic area must focus

on CSR reports shared involuntarily, which is the case for Chinese SOEs (Hicks, 2019).

Evidently, this study fills a literature gap and continues where others stopped. The research

question is: How does CSR disclosure of Chinese NOCs differ from that of other Chinese SOEs?

Due to the unexplored nature of this topic and need for novel theory (Eisenhardt, 1989),

this research applies an inductive comparative research design using a multiple-case study

analysis (Yin, 2013). The comparative case-study analysis comprises a thematic analysis in

which the most recent annual and/or CSR reports are coded to find trends, patterns, and

differences (Braun & Clarke, 2006) related to CSR. This approach allows for knowledge

accumulation on the topic, so that the differences in CSR disclosure can be discovered. The

sample (Appendix 1) comprises four groups of three firms. The firms are chosen to account for

variation in CSR disclosure. The sample is deemed appropriate as only three Chinese NOCs

exist, few Chinese SOEs publish annual reports, many ‘Chinese firms’ on the UNCTAD list

are from Taiwan and thus disregarded, and to remain consistent, three private oil and gas MNEs

are chosen. Group 1 (Chinese NOCs) comprises the three Chinese NOCs. Group 2 and 3

(Leading non-financial Chinese MNEs and SOEs) are based on the UNCTAD (2019) MNE

ranking on foreign assets. The ranking is applied in other CSR research (Fortanier, Kolk, &

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Pinkse, 2011). Group 4 (Leading oil & gas MNEs) comprises the largest private oil and gas

MNEs based on turnover.

Other scholars who qualitatively analyzed annual and CSR reports performed content

analyses (Dam & Scholtens, 2012; Kolk, 2003; Marquis, Ying & Yang, 2017). Yet, while both

thematic and content analysis imply a qualitative approach and thus are quite similar, content

analysis allows for quantifying data through a descriptive approach in the coding and

interpretation, resulting in quantifiable sums of codes (Vaismoradi, Turunen, & Bondas, 2013).

Yet, this is not possible with the current sample, therefore, thematic analysis is the most

appropriate method for this research. It offers a qualitative and detailed understanding of data

(Braun & Clarke, 2006), for instance through quotations.

The coding scheme is based on a CSR Reporting Indicators Framework (Fortanier et al.,

2011) which identifies themes, goals, and initiatives in reports, and categorizes them into a

framework. The framework contains five themes and 25 codes related to Triple Bottom Line.

It is applied in previous CSR research (Marano et al., 2017) and thus suitable for this study.

Open coding is further applied to identify CSR disclosure themes and topics beyond the

existing framework. Through the aforementioned methods, this study discovers how Chinese

NOCs’ and other SOEs’ CSR disclosure differ, what and how is disclosed on, whether there is

variation in disclosure, and what the reason may be for it. The reporting intensity, a quantitative

measure, is also analyzed through the number of pages and content devoted to CSR, which is

common for research on CSR reporting (Deegan & Gordon, 1996; Guthrie & Parker, 1989; &

Patten, 1992).

This paper contributes to literature on CSR disclosure by comparing the CSR disclosure of

firms with varying ownership structures as well as industry and/or geographic origins. It offers

a firm-based view of CSR dimensions and the level of reporting. While empirical evidence for

generalization lacks due to the small sample size, this paper offers a discussion and clearer

understanding of the differences between Chinese NOCs’ and other SOEs’ CSR disclosure and

what may be the root cause of it. Moreover, this study follows advice by Kuo et al. (2012) and

Xu and Yang (2010) as stipulated in the next chapter, thus extending the literature and

improving understanding on these topics. This paper is organized as follows: the next section

shows the extant relevant literature. The third section discusses the methodology applied. The

fourth section comprises the findings and the fifth section the analysis. The sixth and final

section contains the discussion and conclusions, including limitations, implications and advice

for future research.

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2. Literature review

This section highlights extant literature on institutional theory (legitimacy), SOEs, and CSR,

as these are deemed most relevant for this study, sample, and proposed approach. This section

ends with a detailed description of the literature gap.

Institutional Theory (Neo-Institutionalism) and Legitimacy

Institutions and Isomorphic Pressures

The Neo-Institutionalist stream of Institutional Theory views institutions, as “the rules of the

game” (North, 1990), meaning they set boundaries on societal and business-related behavior.

Institutions are divided into three pillars, regulatory (laws, rules, and regulations), normative

(norms, values, and beliefs), and cognitive (intrapersonal rules) institutions (Budzinski, 2003).

Institutions differ per country, and affect MNEs’ strategies differently (Scott, 2014). MNEs

attempt to adhere to rules set out by these institutions in order to be legally allowed to operate,

to be accepted, and recognized by and in a host-environment. Simultaneously, MNEs aim to

maintain legitimate statuses in their home-environment and ensure that subsidiaries located

abroad stay well integrated within the MNE’s network (Meyer, Mudambi, & Narula, 2011).

Host-country ‘rules’ to which MNEs adhere are isomorphic pressures, which are pressures

that make firms behave alike by acting as constraints on behavior (Deephouse, 1996).

Isomorphic pressures consist of three types. Coercive pressures entail organizations require

permission by stakeholders to operate, for instance laws are equally applicable to all

organizations to make them act similarly (Spencer & Gomez, 2011). Normative pressures entail

that organizations require support from stakeholders, driven by expectations. Mimetic

pressures entail that organizations require recognition by stakeholders, which is gained by

copying appropriately deemed behavior of other firms (DiMaggio & Powell, 1983). In order

to operate successfully in a foreign environment, MNEs must comply with host-country norms,

rules, expectations, and beliefs (the pressures). Yet, MNEs are also expected to align foreign

activities with their home-country stakeholders’ values, objectives, and expectations (Meyer,

Ding, Li, & Zhang, 2014). This duality may lead to difficulties, known as dual embeddedness

(Meyer et al., 2011).

Organizational Legitimacy

The central notion of institutional theory is that MNEs adhere to rules and pressures to gain

legitimacy, as complying with host-country pressures generates organizational legitimacy

(Kostova & Zaheer, 1999). Legitimacy is a generalized perception that an entity’s actions are

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socially acceptable (Suchman, 1995). Organizational legitimacy is an important social

phenomenon for firm survival as it entails acceptance of an MNE’s activities in a host-

environment (Deephouse & Zhang, 2018), allowing it to maintain access to resources and to

operate. Lacking organizational legitimacy constitutes to a firm’s liability of foreignness, the

costs of doing business in an unfamiliar environment (Zaheer, 1995). Legitimacy consists of

three types. Pragmatic legitimacy derives from the perceived impact of an MNE’s actions on

its stakeholders. Moral legitimacy reflects on whether an MNE’s actions are morally correct.

Cognitive legitimacy is the acceptance of an MNE based on taken-for-granted beliefs, like

sustainability reports (Suchman, 1995). MNEs can enhance organizational legitimacy by

complying to isomorphic pressures (Villiers & Alexander, 2014) by for instance imitating

behavior of other firms (Chan & Makino, 2007), aligning firm practices with local standards

(Kostova & Roth, 2002), and reporting CSR practices (Marano et al., 2017).

The process of obtaining organizational legitimacy, the legitimation process, is “a process

by which acts in specific, concrete situations of action are justified in terms of the norms, values,

beliefs, practices, and procedures of pre-given structure” (Zelditch, 2001: 14). The legitimation

process occurs due to social interactions between an MNE, or its subsidiaries, and local actors,

such as other firms, consumers, and national authorities (Marano & Tashman, 2012). Kostova

and Zaheer (1999) stipulate that unfamiliarity with a host-environment diminishes

organizational legitimacy and weakens the legitimation process due to a lack of information

available on the MNE, stereotypes, differing principles in judging foreign firms, and “use of

MNEs as targets for attacks by interest groups” (Kostova & Zaheer, 1999: 68).

From a legitimacy perspective, firms that perform well should also demonstrate their efforts

in contributing to society or the community (Patten, 1991) by for instance disclosing CSR

activities and other non-financial information (Cho & Patten, 2007). In fact, nowadays it is not

only expected of firms, many countries consider it mandatory (Carrots & Sticks, 2016), to some

extent including China (Lin, 2010). This coercive and normative nature of CSR disclosure

implies organizational legitimacy is obtained if firms comply and disclose CSR practices,

meaning firms depend on CSR disclosure for legitimacy (Fortanier et al., 2011). Moreover, all

Chinese SOEs are mandated to file CSR/sustainability-related reports under new laws, codes,

and guidelines (Harper Ho, 2013). Boosting legitimacy through CSR practices could be

relevant for Chinese NOCs, as CSR-based legitimacy strategies, aimed at upholding perceived

appropriateness in a host-environment, prove to help maintain access to (national) strategic

resources (Zhao, 2012), i.e. oil and gas. However, current literature on CSR disclosure of

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Chinese SOEs and home-environment legitimacy provides contradicting findings (Hung et al.,

2013; Li et al., 2013; Marquis & Qian, 2014).

State-Owned Enterprises

SOEs’ Existence

SOEs differ from MNEs as MNEs are private firms while SOEs are partially or majority state-

owned. SOEs’ existence is explained by two distinct views. The economic view argues that

SOEs are governments’ tools to counter market imperfections (Cuervo-Cazurra, Inkpen,

Musacchio, & Ramaswamy, 2014). The political view sees SOEs as governments’ tools to

serve socio-political and socio-economic goals, driven by ideological (political) objectives

(Cuervo-Cazurra et al., 2014). Under the economic view, market imperfections consist of moral

hazards caused by information asymmetries (Levy, 1987), natural monopolies in which society

would benefit more from one supplier (Lindsay, 1976), and positive externalities for which a

provider would not gain recognition, which subsequently lowers the willingness of the provider

to provide said externality in the future (Cuervo-Cazurra et al., 2014). The political view

debates that SOEs are a result of four economic ideologies (political strategies), namely

communism, nationalism, social & strategic (Cuervo-Cazurra et al., 2014).

The economic communist ideology justifies the creation of SOEs and nationalization

(regulation) of private firms in order to distribute wealth evenly across all social classes, mainly

to the benefit of the working class (Marx, 1887). The economic nationalist ideology reasons

that SOEs are more capable of speeding up economic development than private firms (Bruton,

1998). The economic social ideology states that SOEs are required to achieve ‘socially

desirable objectives’ (i.e. poverty alleviation). Lastly, the economic strategic ideology finds

that SOEs are indispensable for strategic purposes, like national defense. The existence of

SOEs differ depending on the political strategies and motives of a government (Cuervo-

Cazurra et al., 2014). Therefore, SOEs often have differing objectives (Shleifer, 1998) and

more access to resources than private firms (Meyer et al., 2014).

China applied an economic communist ideology until market reforms in the late 1970s (Lin,

Cai, & Zhou, 1998). After the ‘open-door policy’, China followed an economic nationalist

(Callahan, 2004) and strategic ideology as natural resources were vital for the military

(Bergsager & Korppoo, 2013) and economy (Jiang & Sinton, 2011). History indicates that

SOEs are often used to kick-start industrialization. Countries seeking industrialization, mostly

developing countries, apply the infant-industry argument, stating that government support is

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necessary for industrialization as ‘young’ firms and industries are unable to achieve scale

economies (Kremer, van Lieshout, & Went, 2009). Yet, China already experienced

industrialization, and its NOCs are mature firms existing for some time now (Gamer et al.,

2012). Nonetheless, SOEs constitute a large percentage of the economy.

SOEs & Legitimacy

SOEs experience legitimacy challenges as, by foreigners, they are perceived as non-transparent

organizations (Li et al., 2019) with political motives operating for a foreign government (Li et

al., 2017). In fact, SOEs are considered to be ambiguous (Shleifer, 1998), opaque (Li et al.,

2017) and possible political actors (Meyer et al., 2014). Transparency and access to validated

information are vital for business, however, governments tend to limit the information available

on their SOEs, thus creating opaqueness to prevent unintended information spillover, maintain

political flexibility, and limit public scrutiny on activities that may be illegitimate elsewhere

(Li et al., 2019). Chinese SOEs are often labeled as corrupt organizations, as they are known

to bribe foreign officials without being prosecuted due to a lack of home-country restrictions

which enable the SOEs to conduct business abroad with more freedom (Chow, 2015), and thus

with a higher chance of engagement in corruption (Jiang & Nie, 2014). Chinese SOEs hold a

relative advantage compared to Western MNEs on this aspect, however they often carry a

negative public image as a burden (Chow, 2015). This burden makes their internationalization

attempts less successful than private firms’ attempts (Cuervo-Cazurra et al., 2014). But, the

label ‘corrupt organization’ is subjective, as in China there is a different way of doing business,

following ‘guanxi’ principles, known as relationships. ‘Guanxi’ is considered fundamental and

the modus operandi of business in China, yet its principles are often misunderstood by

Westerners (Ambler, Witzel, & Xi, 2017).

Corruption, defined as the abuse of power for private gain, is common in emerging

countries (Cuervo-Cazurra, 2008), and creates uncertainty (Cuervo-Cazurra, 2006). Firms

originating from countries that actively enforce the OECD’s anti-corruption practices are less

likely to perform FDI, as laws against bribery overseas “act as a deterrent against engaging in

corruption in foreign countries”. On the other hand, firms originating from countries that have

high levels of corruption are more likely to perform FDI, as normalized home-country

corruption results in firms seeking new locations “where corruption is prevalent” (Cuervo-

Cazurra, 2006: 803). Moreover, exposure to corruption in the home-environment creates an

“uncertainty management capability” which helps firms overcome internationalization

challenges (Cuervo-Cazurra et al., 2018: 209), like the liability of foreignness (Zaheer, 1995).

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Existing literature highlights how corruption in a host country affects inward FDI (Cuervo-

Cazurra, 2006; 2008), but little attention is paid to home-country corruption and implications

for firms performing outward FDI (Estrin, Meyer, Nielsen, & Nielsen, 2012). Spencer and

Gomez (2011) however stipulate that normalized corruption in a home-country negatively

impacts MNEs’ organizational legitimacy abroad. Similarly, firms from countries where the

rule of law is weak encounter legitimacy challenges abroad (Kostova & Zaheer, 1999).

China’s business system abides by ‘state capitalism’ (Szamosszegi & Kyle, 2012) and is

considered a ‘socialist market economy’. A socialist market economy is influenced by socialist

ideologies, which inherently creates a conflict between the coexistence of state ownership and

free-market principles. For Chinese NOCs, this implies that they function as a bureaucracy

under governmental control and follow government policies, but also are profit-making

enterprises conducting business independently from the government (Kobayashi, 2008). Due

to its state capitalistic nature, China’s economy enables crony capitalism. Which is defined as

deals made between elite individuals and high-ranking government officials which result in

winners and losers based on political influence and ties (Aligica & Tarko, 2015). This allows

elites to gain high-ranking positions in businesses, such as SOEs, (Bai, Hsieh, & Shong, 2014).

This also applies to Chinese NOCs. Van den Beukel (2016) mentions “the top executives

of the NOCs are deeply connected to the top leadership of the government and the Chinese

Communist Party; they must wear two hats, as leaders of major commercial enterprises and as

top Party operatives. It is in the interests of both the government and the Party that the NOCs

are commercially successful, and that they secure adequate oil and gas supplies. Leaders have

a great deal of freedom in how they achieve these aims, and those who fulfill them have

leverage in bargaining for future promotions.”

Moreover, he mentions “the limited oversight and opaque way in which overseas assets are

acquired or work is contracted out create an environment where widespread corruption is

possible” (van den Beukel, 2016). Western societies, governments, and firms therefore tend to

be hesitant towards Chinese firms, especially SOEs such as NOCs, as they are deemed corrupt,

ambiguous organizations originating from a crony capitalist environment. This generalized

perception harms organizational legitimacy. It is unclear how SOEs deal with these generalized

perceptions and what they do to mitigate damages to organizational legitimacy. However,

Marquis and Qian (2014) state that since SOEs receive government support and protection,

they won’t feel the necessity to change anything about their public image. Contradictory, Li et

al. (2013) argue that SOEs require legitimation of their positions, for instance through CSR

disclosure.

https://www.economist.com/node/17460954

https://www.economist.com/node/17460954

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Corporate Social Responsibility

Defining CSR

Defining CSR is difficult as many scholars tend to use various definitions (Dahlsrud,

2008). This is caused by several issues; there is variation in the factors constituting the criteria

for CSR, CSR has similarities with and sometimes is interchangeably used with other concepts

like (corporate) sustainability (Campbell, 2007), and the concept CSR itself has changed over

time (Carroll, 1999). As the concept, and use of definitions, of CSR have varied over time, they

are considered inexplicit, imprecise and harmful to the development of theory (McWilliams,

Siegel, & Wright, 2006). A widely known definition of CSR is “the social responsibility of

business encompassing the economic, legal, ethical and discretionary expectations that a

society has of organization at a given point in time.” (Carroll, 1979: 500). A more recent

definition “actions that appear to further some social good, beyond the interests of the firm and

that which is required by law” (McWilliams & Siegel, 2001: 117) is slightly broader. A broad

definition as such is more beneficial to this study, as the topic is unexplored.

Dahlsrud (2008) identified five properties of CSR; the voluntary aspect of CSR initiatives,

stakeholder engagement, an economic dimension, a social dimension, and an environmental

dimension. Carroll’s (1991) CSR pyramid in which CSR is broken down into four

responsibilities (economic, legal, ethical, and philanthropic) is related to Dahlrud’s (2008)

three CSR dimensions. Overall, CSR can be portrayed as a firm’s commitment to give

something back to society, as well as recognizing responsibilities beyond a profit-maximizing

self-interest, hence taking on philanthropic, environmental, and ethical roles (Chin, Hambrick,

& Treviño, 2013; Johson & Whittington, 2009).

The concept of sustainability is related to CSR. It was introduced in the 1980s, and at the

time primarily focused on sustainable development and poverty alleviation (Meakin, 1992).

Nowadays, sustainability is broad and concerns all sorts of issues related to climate change and

the depletion of natural resources (Fagerberg, 2018). In general, it can be defined as meeting

the present-day needs without compromising future generations’ ability to meet their needs

(Heizer & Render, 2013). Hence, sustainability considers the entire external environment in

which a firm operates, and like CSR, focuses on three aspects, namely economic, social, and

environmental dimensions of firm activities. Sustainability is also known as triple-bottom line

(Elkington, 1997).

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Triple-Bottom Line

The concepts CSR and sustainability overlap with each other and are frequently applied

interchangeably (Loew, Ankele, Braun, & Clausen, 2004). Many firms, in their sustainability

and/or annual reports, often mention either CSR, sustainability, or both. Thus, both concepts

are applied in this research. Yet, the core focus of this research lies on Triple-Bottom Line

(TBL), as a CSR Reporting Indicators Framework (Fortanier et al., 2011) is utilized to analyze

corporate reports, and its framework relies on TBL. TBL is known as a sustainability

framework that examines a firm’s strategy on its social, environment, and economic impact

(Elkington, 2018). It is also referred to as the three Ps, ‘People, Planet, Profit’. This concept

was coined in 1994 by John Elkington, as he argued that firms are unable to achieve sustainable

growth by solely focusing on financial objectives. Instead, to achieve sustainable growth, firms

should have economic, social, and environmental objectives, which he depicted in a framework.

The Economist (2009) categorized TBL’s dimensions as follows:

- Economic dimension: “Traditional measures of corporate profit—the “bottom line” of

the profit and loss account”

- Social dimension: “The bottom line of a company's “people account”—a measure in

some shape or form of how socially responsible an organisation has been throughout

its operations” (towards employees, clients, other stakeholders etc.)

- Environmental dimension: “The bottom line of the company's “planet” account—a

measure of how environmentally responsible it has been”

Wilson (2015) argues that the TBL’s economic dimension covers more than profits, it also

considers market presence, economic impact, procurement, and initiatives aimed at achieving

economic growth within regions or communities. Moreover, he states that the social dimension

relates to alignment of firm practices with moral standards and societal expectations, like

human rights, and safe working conditions. Additionally, the environmental dimension seeks

minimization of a firm’s impact on its operational environment, including emissions and

energy usage (Wilson, 2015). Positive TBL increases firm profitability and shareholder value

(Henriques & Richardson, 2013).

While sustainable or CSR policies can be implemented in most firm activities, often

operations- or supply-chain managers hold the responsibility of a firm’s sustainability or CSR

goals. They are critical in ensuring that such goals or objectives are employed and adhered to,

as otherwise a firm is unable to improve its TBL (Heizer & Render, 2013). This is relevant, as

Chinese NOCs operating differently compared to oil and gas MNEs or Chinese MNEs.

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Views on CSR

There are different views on CSR, most notably from a shareholder (Friedman, 1970) and

stakeholder (Freeman, 1984) perspective. Friedman (1970) argued that the social responsibility

of a firm is to make profits, and that firms performing CSR-related activities results from

managers’ self-serving behavior which in turn destroys shareholder value and wastes

shareholder capital. This perspective is considered to be the more ‘negative’ view on CSR. A

more ‘positive’ view in that sense is stakeholder theory, which argues that firms should not

only focus on serving shareholders, but instead take into account a multitude of stakeholders

(employees, clients, contractors etc.) (Freeman, 1984).

Over time more views on CSR were established: the institutional view, arguing that

institutions create sustainable firms (Jennings & Zandbergen, 1995; Aguilera, Rupp, Williams

& Ganapathi, 2007 ); the resource-based view, arguing that CSR enables competitive

advantages (Hart, 1995); and the future profits view, arguing that CSR results in future profits

when socially responsible clients are targeted and when NGOs are utilized to spread awareness

(Baron, 2001; Feddersen & Gilligan, 2001). More recent literature views CSR, and its

disclosure, as MNEs moving towards self-regulation, considering large MNEs have global

operations, which makes it difficult to regulate them by law as laws are applicable domestically,

not globally (Sheehy, 2012). Other research on CSR and firm performance found that CSR

results in higher performance (Chin et al., 2013). Overall, CSR is the new norm of business,

firms cannot operate without tackling any related issues (Carrot & Sticks, 2016; Kolk, 2007;

Lin, 2010).

Chinese CSR Guidelines

To maintain governmental support, SOEs must ensure legitimation of their position and, hence,

are likely to disclose CSR activities (Li et al., 2013) and adhere to environmental regulations

(Hung et al., 2013). However, it is often so that their need for political legitimacy leads them

to deviate from global practices and instead to follow indigenous guidelines (Marquis et al.,

2017). Indigenous Chinese CSR initiatives have emerged over the years comprising several

laws, regulations, guidelines, and standards (Xu & Yang, 2010). The Chinese government’s

political, social, and economic motives strongly affect the development of these initiatives, as

it is said that the government seeks encouragement and control of CSR. For instance,

environmental issues have developed in China, while human rights are mostly overlooked (Lin,

2010). China also has voluntary CSR measures, however, as all SOEs fall under supervision

of the government, voluntary measures are basically mandatory for SOEs.

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In addition, the most strict CSR guidelines are always first applicable to SOEs, then to

MNEs (Harper Ho, 2013). Despite indigenous guidelines and regulations, China also promotes

global CSR-related guidelines like the Global Reporting Indicators (GRI), which focuses on

including environmental, social, and governance (ESG) metrics in corporate reports (Harper

Ho, 2013; Marquis & Qian, 2014; Fitzpatrick, 2019).

Literature Gap

Despite significant coverage of the aforementioned topics in existing literature, there are still

inconclusive and contradictory results. While the individual influences of EM origins, ESI

origins, and state-ownership on organizational legitimacy and CSR disclosure are discussed in

the literature, a combination of influences is overlooked. Existing literature hence offers a

limited perspective, and insights specifically on CSR disclosure of Chinese NOCs are missing.

This knowledge is relevant to discover as investigating a combination furthers understanding

of how industry origins of Chinese SOEs influences CSR disclosure and how and why these

differ from other (Chinese) SOEs and MNEs. Additionally, over 15 Chinese firms (including

SOEs) are on the Top-100 MNEs ranking by the UN Conference on Trade & Development

(UNCTAD, 2019), implying significant international activities, consequential challenges to

organizational legitimacy and responses to these challenges through CSR disclosure. Oil and

gas are also relevant topics as they relate to geo-politics and climate change. Exploring Chinese

NOCs’ CSR disclosure and comparing it to other Chinese SOEs, MNEs, and international oil

and gas MNEs covers the literature gap by combining the three ‘topics’ and provides insights

on how and why Chinese NOCs’ CSR disclosure differs from that of other Chinese SOEs.

Little is known about the underlying motives of Chinese SOEs’ CSR disclosure, let alone

the Chinese NOCs’ CSR disclosure (Li & Zhang, 2010). For instance, if it should mitigate the

EM/ESI origins or compensate for state-ownership. Prior research indicates that oil and gas

firms’ decisions to report CSR practices stems from the opportunity it offers to minimize

political exposure (Erica, van Staden, & Steven, 2011). This is supported by findings indicating

that oil and gas firms’ CSR rationale is mostly their self-interest (Spence, 2011). However, this

research does not cover SOEs such as NOCs, which is relevant as SOEs are backed by

governments (Li et al., 2013) and hence do not require outsider (financial) support stemming

from organizational legitimacy caused by CSR disclosure, or a minimization of political

exposure. Moreover, it is argued that Chinese SOEs in general hold the most political

legitimacy in the domestic business system. Therefore, they have the least need to report CSR

activities to seek a preferred status or resources from the government (Marquis & Qian, 2014).

18

But, contradicting this, Li et al. (2013) argue that to maintain governmental support, SOEs

must ensure legitimation of their position and, hence, are likely to disclose CSR activities.

Hung et al. (2013) argue similarly that Chinese SOEs have higher compliance of environmental

regulations compared to MNEs. This showcases that literature on SOEs’ CSR disclosure is

inconsistent in argumentation.

Scholars furthermore hypothesized that state-ownership is positively associated to CSR,

yet, this proved not to always be the case (Dam & Scholtens, 2012). Hence, the results on

Chinese SOEs CSR disclosure vary greatly. Scholars also argue that future research should

look into the various firm types in China (state-owned, private, and foreign) in order to make

a comparative study of CSR disclosure (Xu & Yang, 2010), as well as focus the research on

CSR reports that are not published voluntarily, but instead are published by mandate

(involuntarily), which is the case for Chinese SOEs (Kuo et al., 2012). This study draws upon

both these directions.

3. Methodology

Research design

A research design provides directions for the procedures in research and frameworks for

collecting and analyzing data (Creswell, 2003). This study aims to discover how and why CSR

disclosure of Chinese NOCs differs from other Chinese SOEs by providing an overview of and

comparing CSR disclosure of NOCs, MNEs and other SOEs, as well as international oil and

gas MNEs. However, there is a literature gap in this area. Literature on CSR disclosure focuses

mainly on one characteristic, namely state-ownership, ESI origins, or EM origins, but not a

combination, which is necessary to understand the differences in CSR disclosure of Chinese

NOCs and SOEs. Due to the unexplored nature of the topic there is a need for new theory on

which future research can build, hence this research has an inductive exploratory nature

(Saunders et al., 2007).

An inductive approach is useful for exploratory research (Eisenhardt & Graebner, 2007)

and the development of theory when a topic, as in this study, is unexplored (Bettis, 1991). This

study has an exploratory (comparative) multiple case study research design (Eisenhardt, 1989;

Feilzer, 2010; Yin, 2013). This form of qualitative research allows for wider interpretation of

data than quantitative research (Ritchie et al., 2014). Moreover, as qualitative research is often

inductive (Quinlan, 2011), qualitative research is deemed appropriate for this study. By

applying a qualitative approach through a multiple case study, it is easier to generalize findings

19

compared to a single-case study, and easier to understand the phenomena based on qualitative

data rather than quantitative data. Furthermore, this approach generates propositions that can

be tested in future studies (Johannesson & Perjons, 2014).

Case Studies

Case studies are considered to be a common way of performing qualitative research (Stake,

2005) and are suitable for exploratory research and comparing a small amount of organizations

(Jennifer, 2002). Case studies are “well suited to new research areas or research areas for which

existing theory seems inadequate and are useful in early stages of research on a topic or when

a fresh perspective is needed” (Eisenhardt, 1989: 548). Comparative case studies are used for

comparisons and contrasts of cultural or social entities (Lewis-Beck, Bryman, & Liao, 2004),

and are considered to be an extension of case study design (Bell, Bryman, & Harley, 2018).

Bell et al. (2018) argue that a comparative case study design is useful when there are at least

two cases of which data is collected, as it allows distinguishing the characteristics which then

function as a starting point for reflecting theory on variation in the findings. As this research

seeks to compare CSR disclosure of different firms to understand how and why there is

variation in disclosure, a comparative case study is deemed appropriate.

Data

Data comprises information on CSR activities published in annual or stand-alone CSR reports

(depending on availability). This data is most suitable for this study as in these reports,

companies elaborate on their CSR practices. Using data from these reports is justified by

previous research on CSR disclosure (Fortanier et al., 2011; Hung et al., 2013; Kuo et al., 2012;

Marano et al., 2017). The corporate reports are retrieved from the investor relations and

sustainability webpages. The CSR reports cover topics discussed in the previous chapter. While

CSR disclosure is quite flexible abroad, with the exception of China, as discussed previously,

there may still be variation in the reporting, for instance the choice of covering certain topics.

Table 1 on the following page provides an overview of the data (reports) gathered.

Sample

Sampling is important as it allows a study to focus on a small portion of a total population

(Johannesson & Perjons, 2014). This study utilizes non-probability purposive sampling (Etikan,

Musa, & Alkassim, 2016) as firms with major international exposure and an equal number of

firms for each ‘firm category’ were sought. The goal was to obtain an as representative but also

consistent sample as possible. The sample comprises four groups (firm categories) of three

20

firms as shown in Table 1 below. Group 1 comprises the only three Chinese NOCs. Group 2

and 3 are based on the UNCTAD (2019) Top-100 MNEs’ ranking on foreign assets, which

indicates the degree of firm internationalization and international embeddedness, which

consequently leads to more organizational legitimacy challenges. The UNCTAD ranking is

also used in prior research on CSR disclosure. Group 4 comprises the leading private oil and

gas MNEs, based on the 2018 turnover. The sampled firms are chosen to account for variation

in the findings of CSR disclosure. The first category allows for discussing and comparing with

the other categories. The second category falls within the literature on EM MNEs’ CSR

disclosure, the third category falls within literature on SOEs’ CSR disclosure, whereas the

fourth category falls within the literature of firms from ESIs’ CSR disclosure.

By having these different categories, a discussion can be held based on the comparison and

resulting similarities and differences. The sample is deemed appropriate as only three Chinese

NOCs exist, few Chinese SOEs listed on the UNCTAD ranking provide annual reports, the

subsequent Chinese MNEs on the UNCTAD list are from Taiwan and thus disregarded, and to

remain consistent with the number of firms per category, the three largest private oil and gas

MNEs are sampled. A brief introduction of the sample can be found in Appendix 1.

Table 1 – Overview of data

Annual report Stand-alone CSR report

Sinopec 2018 2018

CNPC 2018 2018

CNOOC 2018 2018

CK Hutchison 2018 -

Tencent 2018 -

Legend Holdings 2018 -

COSCO 2018 2018

China Minmetals - 2018

Chemchina - 2017

Royal Dutch Shell 2018 2018

BP 2018 2018

Exxon Mobil 2018 2018Leading private oil & gas MNEs

Groups of sampled firms

Chinese NOCs

Leading private non-financial Chinese MNEs

Leading non-financial Chinese SOEs

Note: Most firms (excl China Minmetals and ChemChina) released annual reports for 2018. Neither the corporate

webpages nor Orbis database could provide the missing reports. Chinese SOEs are not required to publish annual reports.

All Chinese SOEs and firms from ESIs published stand-alone CSR reports. The non-financial Chinese MNEs do not

devote an additional report to this as they are not mandated to do so, and CSR is discussed separately in their annual

reports. Hence, there is no missing data, each firm provides at least 1 report containing CSR-related content used for

analysis.

21

Method

Johannesson and Perjons (2014) postulate that research methods refer to how data is collected

and analyzed, and it can be seen as a technique for performing research. This study collects

data from annual and stand-alone CSR reports. Yin (2013) argues that using several data

sources, as is the case here, increases reliability. The data is analyzed through thematic coding

and analysis, in which trends, patterns, and differences in information related to CSR are sought

to discover how and why CSR disclosure differs amongst NOCs and SOEs. Thematic analysis

is “a method for identifying, analyzing, and reporting patterns (themes) within data. It

minimally organizes and describes a data set in detail.” (Braun & Clarke, 2006: 6). Eisenhardt

(1989) states data analysis should enable in-case and cross-case analysis. Thematic analysis

satisfies this by offering ‘steps’ for analysis, which results in codes and themes from in-case

analysis that can be compared to other cases. The steps are familiarizing oneself with the data,

generating initial codes, searching for themes, reviewing themes, defining and naming themes,

and producing output (Braun & Clarke, 2006).

Content analysis is a common practice for CSR research (Dam & Scholtens, 2012; Ehsan

et al., 2018; Kolk, 2003; Marquis, Ying & Yang, 2017), as interviews may be difficult to

conduct or result in bias. Both thematic and content analysis imply qualitative analysis, yet,

content analysis quantifies data by applying a descriptive approach in the coding and

interpretation, resulting in quantifiable codes (Vaismoradi et al., 2013). Due to the sample size,

thematic analysis is applied, which offers a qualitative and detailed understanding of data

(Braun & Clarke, 2006). The reporting intensity is analyzed through the number of pages and

content related to CSR, which is common for this type of research (Deegan & Gordon, 1996;

Guthrie & Parker, 1989; & Patten, 1992). To ensure trustworthiness, the thematic analysis is

based on the Global CSR Reporting Indicators Framework (Table 2, Appendix 2). It identifies

themes, goals, and initiatives in reports, and categorizes them. The framework contains five

themes and 25 codes related to TBL.

By applying it, some aforementioned steps of thematic analysis are omitted. The framework

functions as support, as open coding is also applied to understand and categorize what the firms

disclose on, thus identifying new themes/topics beyond the framework. Moreover, illustrative

quotations (Appendix 4) are added to strengthen the qualitative side of analysis. This study

builds upon previous research by offering a comparison of different firm types’ CSR disclosure

(Xu & Yang, 2010). Through the aforementioned methods, this study discovers how and why

CSR disclosure differs amongst NOCs and SOEs, what is disclosed on, and how it is disclosed.

22

4. Findings

CSR Reporting Intensity

Annual Reports

All sampled firms, excluding China Minmetals and ChemChina, had publicly available annual

reports of 2018 by March 2020. These annual reports were reviewed for CSR content. After

identifying applicable content, the number of pages and words were counted to obtain a first

impression of the scope of CSR disclosure. To account for visual representations, the ratio of

words to pages is found most important, as visual representations allow for easier

understanding of data, but fill up reports easily, thus influencing the number of words or pages.

Table 3 below provides the results, which vary significantly. Legend Holdings devotes 38

pages and nearly 14.500 words to CSR content, the most out of all firms, but based on the ratio

it does not disclose the most. Sinopec and COSCO, a Chinese NOC and SOE, devote less than

five pages and roughly 1000 words, the least out of all firms. This is also reflected in their ratio.

Based on the ratio of words to pages, Shell and BP disclose the most, while Sinopec and

COSCO disclose the least.

Table 3 – CSR Reporting Intensity

Stand-alone CSR Reports

All firms, excluding the Chinese MNEs, had publicly available CSR reports of 2017 or 2018

by March 2020. This initial analysis provides a first impression of the scope of CSR disclosure.

Table 4 indicates the results of the reporting intensity analysis for CSR reports. Nearly all

Chinese NOCs and SOEs devote at least 20.000 words to CSR. While Shell and BP stood out

Number of pages Number of words Number of words per page

Sinopec 4 1116 279

CNPC 12 4838 403

CNOOC 4 1993 498

CK Hutchison 25 10.230 409

Tencent 23 8961 390

Legend Holdings 38 14.448 380

COSCO 3 1005 335

China Minmetals - - -

ChemChina - - -

Royal Dutch Shell 15 13.772 918

BP 9 6643 738

ExxonMobil 3 1499 500Leading private oil & gas MNEs

CSR content in annual reports

Chinese NOCs



23

with disclosure in annual reports, here it seems they use more graphs/images as disclosure

based on the ratio is lower. COSCO and ExxonMobil had low disclosure in annual reports but

have significant disclosure in their CSR report. Based on the ratio of words to pages, Shell,

COSCO, and ExxonMobil disclose the most, while ChemChina, China Minmetals, and

CNOOC disclose the least.

Table 4 – CSR Reporting Intensity

Extent of CSR Disclosure

The tables above indicate that CSR disclosure differs amongst the firms. NOCs, other SOEs,

and oil and gas MNEs report more on CSR in stand-alone CSR reports than in annual reports,

as shown in the columns ‘number of pages’ and ‘number of words’. Yet, this is not always the

case for the ratio. Private Chinese MNEs do not create stand-alone CSR reports, but instead

have a large section in annual reports devoted to CSR. Content tends to vary, as in annual

reports mostly short examples of CSR practices are provided, whereas the stand-alone CSR

reports contain supplementary information on what is disclosed on in the annual reports.

Thematic Analysis

Content in corporate reports is analyzed to identify programs, goals, and/or initiatives. Relevant

content is categorized and coded following the Global CSR Reporting Indicators Framework

(Fortanier et al., 2011), covering five themes and 25 topics related to TBL, as shown in Table

2 (Appendix 2). This framework is applied in previous research on EM firms’ CSR disclosure

and functions as a baseline. The five themes together constitute the TBL dimensions.


Sinopec 70 20.233 289

CNPC 70 25.938 371

CNOOC 84 23.846 284

CK Hutchison - - -

Tencent - - -

Legend Holdings - - -

COSCO 38 19.429 511

China Minmetals 126 32.401 257

ChemChina 79 20.442 259

Royal Dutch Shell 84 48.313 575

BP 84 28.608 341

ExxonMobil 39 17.196 441Leading private oil & gas MNEs

CSR content in CSR / sustainability reports

Chinese NOCs



24

Disclosure on the 25 topics yield varying results, as firms choose differently what should

be disclosed and how. This is interesting to investigate as it allows for discovering how CSR

disclosure differs between NOCs and SOEs and what causes it. Topics hardly covered by firms

are excluded as they do not contribute enough towards this study. The additional theme ‘other

CSR initiatives’ and its two topics are derived through inductive open coding and constitute

programs, goals, and/or initiatives that cannot be categorized into the existing framework, as

these go beyond it.

To enable correct comparisons, the thematic analysis is performed separately for each

theme and firm category. Tables 1-36 in the supplementary document to this thesis indicate

which topics of the themes are disclosed on in each report by each firm, and also the extent of

it. These detailed findings are summarized on a general qualitative level in Tables 6-11

(Appendix 2). Illustrative quotations (Appendix 4) further indicate how disclosure between

firms and categories differ and clarify what is disclosed on. Below, the topics are discussed

one by one (per theme) as disclosed on by the sampled firms.

Employment

The analysis of CSR disclosure on ‘employment’ topics is found below. The supporting

summarized qualitative results and illustrative quotations are in Table 5 (Appendix 2) and

Appendix 4.

Employee satisfaction

Neither NOCs nor SOEs disclose on this topic. The Chinese MNEs and ExxonMobil mention

deploying employee satisfaction surveys, but do not provide results. Shell and BP mention

deploying surveys to measure employee satisfaction, results are also provided.

Diversity

CNOOC and CNPC mention workforce diversity in both reports, while Sinopec mentions it

in its CSR report. Legend Holdings is the only Chinese MNE to provide figures on gender

diversity. COSCO and China Minmetals provide figures on diversity, while ChemChina

does not. All oil and gas MNEs disclose diversity figures. Only BP and Shell highlight

diversity-related initiatives and goals, whereas the other firms simply provide diversity-

related figures. The NOCs and SOEs emphasize compliance with laws.

Equal opportunity

Sinopec, COSCO, and ExxonMobil do not disclose on this topic in annual reports. All firms

with CSR reports disclose on it. Most firms tend to mention compliance with non-

25

discrimination and equality standards, laws, or regulations, especially the NOCs and SOEs.

Legend Holdings and CK Hutchison provide examples of initiatives aimed at equality. Shell

and BP also provide extensive examples of policies, programs, and recognitions of

workplace equality. While information on equal opportunities is slim in annual reports, the

CSR reports cover it more extensively.

Working conditions

NOCs disclose on actions improving employees’ health and safety through health, safety,

and environmental protection (HSE) programs. Salary and benefits are also covered. NOCs

also provide statements on ‘strictly’ abiding by Chinese labor laws and regulations. In the

MNEs category, Tencent and Legend Holdings provide examples of employee benefits and

to an extent disclose on employee safety and health. CK Hutchison does not cover salary or

benefits, instead it focuses on employee safety and health. COSCO similar to the NOCs

states abiding by Chinese labor laws and discloses policies improving employee safety.

ChemChina highlights its safety program for employees and its performance-based salary-

and-welfare system. China Minmetals focuses less on benefits, and more on employee safety

and compliance with Chinese labor laws. The oil and gas MNEs disclose on safety and

benefits but do not emphasize compliance with laws.

Training

All firms provide information or figures on total number of training hours, participants or

spending on training (averaged or absolute). Also, examples of initiatives and programs are

frequently provided. E.g. Tencent has an in-house academy and CNPC has a program called

Four Talent Training Projects, focused on training managers, technical experts, operators,

and talent.

Rights

The analysis of CSR disclosure on ‘rights’ topics is found below. The supporting summarized

qualitative results and illustrative quotations are in Table 6 (Appendix 2) and Appendix 4.

Freedom of association

The NOCs and SOEs state complying with the Chinese Trade Union Law and mention

establishing and improving trade and labor unions to protect employees’ rights and interest.

Sinopec, China Minmetals, and ChemChina also disclose a 100% employee membership

rate at labor unions. Both MNE categories do not disclose on this topic.

26

Collective bargaining

This topic goes hand in hand with freedom of association, as trade/labor unions are the

workers’ representatives and negotiate on their behalf. Chinese Trade Union Law (to which

the NOCs and SOEs refer) states “trade unions coordinate the labor relations and safeguard

the rights and interests of employees through equal negotiation and collective contract

systems”. All Chinese NOCs and SOEs cover this topic and provide examples of the unions’

responsibilities. Legend Holdings and BP are the only MNEs to cover this topic. Legend

Holdings mentions abiding by a collective bargaining agreement. BP discloses on its Works

Council.

Human rights

Nearly all firms disclose on human rights. Tencent, CK Hutchison, and Sinopec do not cover

this topic in their annual reports but, all firms with CSR reports cover it. Disclosure varies,

most Chinese NOCs and SOEs focus on protecting employees’ rights. They often state they

abide by national laws and international regulations/conventions on human rights. Yet,

examples of initiatives are missing in most cases. The oil and gas MNEs disclose more on

this topic, providing examples on how human rights issues are confronted or tackled. Also,

they focus on human rights in the entire value chain, not just that of employees as is the case

for NOCs and SOEs.

Child and forced labor

This topic relates to the previous topic. The Chinese NOCs, SOEs, and MNEs provide

statements on prohibiting child and forced labor, and compliance with laws and regulations,

yet often lack examples. Only COSCO and CK Hutchison indicate how they tackle child and

forced labor through a program to raise awareness as well as reviewing suppliers. The oil

and gas MNEs focus not on child and forced labor, but on ‘modern slavery’ and how this is

tackled by for instance complying with the UK Modern Slavery Act or putting extra

measures in place.

Corruption and bribery

Corruption and bribery are not discussed in any of the NOCs’ and SOEs’ annual reports. The

Chinese MNEs cover this topic in their annual reports and express their efforts against

corruption and bribery. They all have whistle-blowing mechanisms to counter corruption.

The oil and gas MNEs mention in their annual reports that corruption and bribery are

prohibited and compliance with codes of conduct and laws/regulations is mandated. All CSR

reports, including those of SOEs and NOCs, contain statements against corruption and offer

27

more details and examples of measures of how firms counter corruption and bribery. Some

NOCs as well as SOEs, similar to Chinese MNE, deploy whistleblowing mechanisms.

Community

The analysis of CSR disclosure on ‘community’ topics is found below. The supporting


Appendix 4.

Health programs

Information on contribution sizes to, or effects of health programs are scarce. The SOEs do

not disclose anything on this topic, as their health-related programs focus on employees, not

communities. The NOCs provide figures on healthcare investments and/or healthcare

initiatives in either their annual or CSR report. The oil and gas MNEs similarly provide

examples of initiatives or investments to support local communities’ health. In the Chinese

MNEs category, Tencent and CK Hutchison stand out by providing extensive examples of

investments or initiatives, as well as collaborations with universities.

School/education programs

All firms excluding COSCO disclose either in annual or CSR reports on contributing to

school/education programs. The Chinese SOEs and NOCs disclose donations and funding

of education, rather than actual programs. The Chinese MNEs on the other hand mention

scholarships, collaborations, and their own initiatives/programs related to education.

Similarly, the oil and gas MNEs elaborate on collaborations with NGOs and their own

initiatives/programs aimed at improving education, as well as increasing popularity of the

industry’s key topic, like math and engineering.

Water projects

Despite all firms disclosing on water projects, these projects are mostly focused on firms’

water management. Yet, CNPC, China Minmetals, ChemChina, and Shell provide

information on improving clean water supply, sanitation conditions, or water storage for

agricultural purposes around the world.

Foundation

All firms, excluding CNOOC and ChemChina, provide information on contributions to

foundations. Whereas the NOCs and SOEs mostly mention collaboration efforts with the

China Foundation for Poverty Alleviation (CFPA), the Chinese MNEs and oil and gas MNEs

highlight contributions to their own foundations (e.g. Shell Foundation). The NOCs’ and

28

SOEs’ donations to the CFPA are focused on poverty alleviation while the other foundations

focus on a wider spectrum of topics, like healthcare, education, and entrepreneurship.

Economic Impact

The analysis of CSR disclosure on ‘economic impact’ topics is found below. The supporting


Appendix 4.

Climate Change

The analysis of CSR disclosure on ‘climate change’ topics is found on the next page. The

supporting summarized qualitative results and illustrative quotations are in Table 9 (Appendix

2) and Appendix 4.

29

Climate change issues

All firms mention climate change issues and provide information on efforts to mitigate it.

The NOCs and SOEs mostly discuss environmental protection/management, often having

chapters named ‘environmental protection’. The oil and gas and Chinese MNEs focus on a

variety of topics like renewable energy, low-emissions solutions, energy transition, resource

usage etc, rather than just environmental protection. Only Shell, BP, ExxonMobil, and

CNPC disclose member statuses of the Oil & Gas Climate Initiative (OGCI), an initiative to

lead the industry’s response to climate change. This topic is the aggregated disclosure on the

remaining four topics of this theme.

Direct GHG emissions

Only Sinopec and CNOOC do not disclose on GHG emissions or related initiatives in their

annual reports. All other firms mention figures on GHG emissions and/or related initiatives

in their annual reports. Contrary to this, all CSR reports contain information on GHG-related

initiatives, however, not all firms (China Minmetals and ChemChina) reported figures on

their GHG emissions in CSR reports.

Voluntary agreements

Findings on this topic vary. Legend Holdings discloses a voluntary agreement on waste

management, Sinopec mentions a partnership to build hydrogen refueling stations, whereas

ExxonMobil discloses on research agreements on low-emission solutions and biofuels.

Moreover, most firms mention the Paris agreement and provide examples of corresponding

goals, initiatives, and/or results. Only Sinopec, China Minmetals, and ChemChina do not

mention the Paris agreement.

Emissions trading

Only NOCs and oil and gas MNEs disclose on emissions trading. The oil and gas MNEs

support governments’ carbon-pricing mechanisms, as carbon pricing comes either in a

carbon tax or a requirement to buy permits to pollute (known as emissions trading), making

energy efficiency more attractive, and low-carbon solutions more cost competitive.

However, they do not provide any figures on carbon emissions trading. The NOCs do not

mention support for such initiatives, but rather compliance with regulations on emissions

trading to reduce GHG emissions. Sinopec is the only NOC to provide figures on carbon

emissions trading.

Carbon reduction

30

This topic yields similar results as the previous topic as they are related. However, carbon

reduction also comprises initiatives other than emissions trading. While all firms disclose on

how they intend to reduce carbon emissions, firms from ESIs disclosed more elaborately.

Other CSR Initiatives

The analysis of CSR disclosure on ‘other CSR initiatives’ topics is in the table below. These

topics, in which firms disclose efforts towards UN SDGs and affiliation with UN Global

Compact, are derived through open coding. The supporting summarized qualitative results and

illustrative quotations are in Table 10 (Appendix 2) and Appendix 4. The SDGs and Global

Compact Principles are listed in Appendix 3.

31

5. Analysis

Analysis of CSR Reporting Intensity

Tables 3 and 4 (page 22 and 23) contain the results of the initial intensity analysis and indicate

uniformity in CSR disclosure of Chinese NOCs and SOEs, and to a lesser extent also in that of

Chinese MNEs. These firms’ CSR disclosure based on the ratio of words to pages fall within

a somewhat similar range. The tables overall indicate that private oil and gas MNEs and to a

lesser extent Chinese MNEs disclose more on CSR in both reports whereas NOCs and SOEs

disclose less on CSR in both reports. One view on explaining this uniformity is the effect of

isomorphic pressures (DiMaggio & Powell, 1983) and community isomorphism (Marquis,

Glynn, & Davis, 2007). Community isomorphism implies that firms from similar regions are

interconnected. This interconnectivity results in experiencing similar isomorphic pressures,

leading to similar (uniform) responses to, i.e. CSR disclosure.

Though coercive and normative pressures are relevant as Chinese NOCs, SOEs, and to a

lesser extent MNEs, experience similar laws, regulations, and expectations, mimetic pressures

are especially interesting. Mimetic pressures entail that firms copy other firms’ behaviors due

to uncertainty or interconnectedness (Galaskiewicz & Wasserman, 1989). Pereira and

Fernandes (2006) further argue that more-interconnected firms cooperate to achieve

competitive advantages or tackle region-specific concerns. Examples of this are the 24 gas

pipeline connectivity projects in which the NOCs collaborate to provide gas in China. As firms

from same regions are interconnected, cooperate, and experience community isomorphic and

mimetic pressures, there tends to be uniformity in responses to these pressures. That may be

one explanation as to why NOCs and SOEs, and to some extant Chinese MNEs, have similar

CSR disclosure in the intensity analysis.

Another view on explaining the uniformity is the role of the government, or the ‘heavy

hand of the state’. This leans more towards coercive isomorphic pressures, as the Chinese

central government maintains strict control and regulation of business (Yinghong, 2020),

especially that of SOEs (Garschagen, 2019). Thus, it is not very surprising that NOCs and

SOEs, interconnected due to their relationship with the central government, show significant

uniformity in CSR disclosure. These two views differ as the first view perceives societal-like

pressures as the reason for interconnectivity and uniformity, whereas the second view perceives

governmental-like pressures as the reason for interconnectivity and uniformity. Yet, the

bottom-line is that NOCs and SOEs indicate more uniformity than private Chinese MNEs.

32

Hence, I state:

P1. Chinese NOCs are more (less) interconnected with other Chinese SOEs (MNEs), resulting

in more (less) uniformity in CSR disclosure compared to Chinese MNEs (SOEs).

Implications of Thematic Analysis

Tables 11-16 (Appendix 2) show the reporting intensity for each firm per theme. Since the

Chinese MNEs, ChemChina and China Minmetals publish one report, while all other firms

publish two reports, the reporting intensity varies as it is based on averages. The results of the

thematic analysis are compared to the results of the intensity analysis. Propositions are derived

from the idiosyncrasies.

Employment

The intensity analysis indicates that ChemChina, Shell, and BP report the most, and Sinopec,

Tencent, and Legend Holdings the least (Table 11). Contradictory, the thematic analysis (Table

5) indicates that ChemChina covers the least topics within this theme, while Legend holdings

mentions all topics within this theme. None of the NOCs and SOEs disclose any information

on employee satisfaction, whereas both groups of MNEs do, implicating uniformity between

SOEs and NOCs. The NOCs and SOEs also continuously mention strict compliance with

domestic (labor) laws and regulations on diversity, equal opportunity, and working conditions,

to provide the most suitable workplace for workers. These statements are given without

information of initiatives as backup. Thus, it is unknown whether workers are actually satisfied

with their job and workplace. On the other hand, more of such information is available in the

MNEs’ reports.

The economic nationalist ideology, stating that SOEs are more capable of achieving

economic development than private firms (Bruton, 1998; Callahan, 2004; Jiang & Sinton,

2011), may explain this. To achieve economic development, production must be maximized,

however this may go at the expense of workers’ interests and/or rights. Workers may not be

satisfied with this, yet their opinion on certain matters may be overlooked or deliberately

excluded, as these opinions go against the ideology of the state. This also relates to the ‘heavy

hand of the state’. It further explains the lower commitment of Chinese workers towards SOEs

than to foreign firms (Wang, 2004). Moreover, the government’s political, social, and

economic motives are known to affect the development of CSR-related policies and initiatives

(Xu & Yang, 2010), which currently mainly emphasize the environment (Lin, 2010) rather than

33

social-oriented areas of interest (Garschagen, 2019). Illustrative quotations of the

aforementioned findings are provided in Appendix 4.

Hence, I state:

P2. Chinese NOCs and other Chinese SOEs place a low emphasis on employment-related

topics in CSR disclosure.

Rights

The intensity analysis indicates that Shell, BP, and Tencent report the most, and Sinopec,

CNPC, and ChemChina the least (Table 12). Contradictory, the thematic analysis (Table 6)

indicates that Tencent and CK Hutchison cover the least topics within this theme, while the

NOCs and SOEs mention all topics extensively and detailed. Illustrative quotations of this

finding are provided in Appendix 4.

For the oil and gas MNEs, and to some extent Chinese MNEs, most topics within this theme

are self-explanatory and expected of by shareholders and society, as otherwise these publicly

traded firms from developed societies (the West and Hong Kong) may not be listed on stock

exchanges and run the risk of incurring fines or invoked licenses. Hence, some topics are not

covered, as these topics are not considered ‘hot topics’ that result criticism. The MNEs

prioritize disclosing on practices against corruption and child labor, as these are nowadays still

relevant topics, even for global MNEs. As enforcement of host-country regulations against

both corruption and child labor are often weaker compared to MNEs’ home-country, it also

makes sense for these firms to disclose on these topics in particular.

However, for Chinese NOCs and other SOEs it is more important to disclose on all topics

to gain or maintain legitimacy. This is because of the Chinese government’s reputation of not

prioritizing or upholding others’ interests or rights (Harper Ho, 2013), again referring to the

heavy hand of the state (Yinghong, 2020). Moreover, the perception of being opaque and

corrupt organizations, as Chinese SOEs are often perceived as such, is another reason to

explicitly disclose on all topics within this theme, so as to counter these negative perceptions

that damage organizational legitimacy (Chow, 2015; Li et al., 2017; Li et al., 2019).

Hence, I state:

P3. Chinese NOCs and other Chinese SOEs place a high emphasis on rights-related topics in

CSR disclosure.

34

Community

The intensity analysis indicates that the Chinese MNEs report the most, and COSCO, China

Minmetals, and ExxonMobil the least (Table 13). The thematic analysis (Table 7) indicates all

SOEs and CNOOC do not mention three to four topics within this theme while CNPC, Shell

and CK Hutchison mention the most topics within this theme. The findings of the thematic

analysis tend to vary within all firm categories. In the NOC group, CNOOC discloses

significantly less than CNPC. However, this is because some topics may be location bound.

CNOOC may not disclose on HIV/aids relief or water projects because these are not required

in its operational regions. CNPC operates in Africa, hence disclosing on these topics makes

sense.

The thematic analysis further shows that nearly all firms except the SOEs category disclose

on initiatives or investments in health programs for communities, thus indicating less

uniformity between NOCs and SOEs. Moreover, all firms provide information on contributions

to foundations, however the SOEs lack in this. The Chinese MNEs and oil and gas MNEs

disclose information on contributions to their own foundations, whereas the NOCs disclose on

contributions to a third-party foundation. Uniformity between NOCs and SOEs is found in

disclosure on school/education programs, as both firm categories disclose on contributions

towards this topic.

Seemingly, the NOCs and oil and gas MNEs prioritize disclosing on foundations and school

and health programs compared to the other SOEs and Chinese MNEs. The logic behind this

may be that the firms’ activities are bad for local communities’ health or cause negative

externalities (e.g. air, water, or soil pollution). Thus, to ensure that this is ‘offset’, NOCs and

oil and gas MNEs contribute to community-centered programs and foundations. Illustrative

quotations of the above findings are provided in Appendix 4.

Hence, I state:

P4. Chinese NOCs place a higher emphasis than other Chinese SOEs on community-related


Economic Impact

The intensity analysis indicates that CK Hutchison, Tencent, and CNPC report the most, and

China Minmetals, ChemChina, and ExxonMobil the least (Table 14). The thematic analysis

(Table 8) indicates that all firms equally cover the topics. E.g. firms disclose on tax rates and/or

taxes paid, and information on philanthropy relates to the contributions to foundations.

35

Interestingly, there is variation in disclosure on fair competition, as both NOCs and SOEs

report not only measures against corruption and bribery that enable fair competition, as the

remaining MNEs categories also do, but they also provide statements on compliance with

relevant laws on competition, such as Chinese anti-monopoly and anti-unfair competition law,

which the MNEs do not do. This can be explained by the negative public image that SOEs

carry as a burden caused by widespread corruption amongst SOEs. To counter this public

image which harms organizational legitimacy, Chinese NOCs as well as other SOEs may feel

the need to extensively cover this topic and emphasize compliance with laws.

Similarly, governmental support towards SOEs is often criticized as it results in

overproduction, thus leading to sales below market prices (dumping), thus undermining

competition (United States-China Economic and Security Review Commission, 2016). To

counter this critique, it makes sense to emphasize this topic. Illustrative quotations of the above

findings are provided in Appendix 4.

Hence, I state:

P5. Chinese NOCs and other Chinese SOEs place a high emphasis on fair competition in CSR

disclosure.

Climate Change

The intensity analysis indicates that Shell, BP, and CK Hutchison report the most, and Sinopec,

CNOOC, and ChemChina the least (Table 15). Contradictory, the thematic analysis (Table 9)

indicates that the Chinese SOEs and MNEs do not cover voluntary agreements and emissions

trading, whereas the NOCs and oil and gas MNEs covers all topics within this theme.

Illustrative quotations of the above findings are provided in Appendix 4.

This variation can be explained by industry origins, as it is necessary for oil and gas firms

to disclose on their GHG emissions and participation in emissions trading, considering these

firms are large polluters and are often scrutinized for this (Erica, van Staden, & Steven, 2011;

Spence 2011). The stigma surrounding the oil and gas industry forces them to prioritize this

theme in CSR disclosure. This necessity is less the case for the other SOEs and MNEs, as their

industries are considered less pollutant.

Hence, I state:

P6. Chinese NOCs place a higher emphasis than other Chinese SOEs on climate change-related


36

Other CSR Initiatives

The intensity analysis indicates that ChemChina, China Minmetals, and Shell report the most,

and CNOOC, ExxonMobil, and COSCO report the least (Table 16). The thematic analysis

(Table 10) indicates that CNOOC mentions all topics within this theme, COSCO and

ExxonMobil only mention the least topics within this theme, which is a similar finding to that

of the intensity analysis. As this theme covers topics related to existing framework, it is

interesting to include firms that at least mentioned the topics derived through open coding to

some extent. Tencent and Legend Holdings do not mention this theme’s topics and thus are

excluded from the analysis.

Interestingly, the oil and gas MNEs have a narrow scope and disclose on SDGs in which

they believe they can make a meaningful impact, whereas the NOCs and SOEs provide

statements on efforts towards all SDGs. Yet, examples and information provided are missing

or at most meager and slim, whilst the oil and gas MNEs provide extensive information for

their ‘selection’. In China there are many domestic guidelines and regulations regarding CSR

practices, especially those applying to SOEs. However, China also promotes global CSR

guidelines, like the GRI, emphasizing environmental, social, and governance metrics in reports

(Harper Ho, 2013; Marquis & Qian, 2014; Fitzpatrick, 2019). This may be one reason why

some reports contain information, though mostly slim, on all SDGs.

Another reason could be that the SDGs are part of the UN, in which China is represented.

The Chinese government will be appraised or criticized depending on its performance towards

these SDGs by 2030. As SOEs receive governmental support and protection, they need to

legitimize their position (Li et al., 2013) towards the government. This can be done by

disclosing on all SDGs so as to improve China’s efforts as a country towards the SDGs. This

reasoning is further supported by China’s efforts in legitimizing its position as a world power

for instance by becoming a ‘greener’ economy, opening up to foreign trade and western

business practices, and providing aid to impoverished (neighboring) countries (Garschagen,

2019). These examples all link to the 17 UN SDGs. Illustrative quotations of the above findings

are provided in Appendix 4.

Hence, I state:

P7. Chinese NOCs and other Chinese SOEs place a high emphasis on UN SDGs in CSR

disclosure.

37

The reporting intensity analysis (Tables 11-16, Appendix 2), a quantitative measure as opposed

to the qualitative thematic analysis, indicates that based on disclosure in the words to page ratio,

Shell, BP, CK Hutchison, and Tencent (all MNEs) most frequently disclose the most on CSR

themes and topics. ChemChina, Sinopec, and ExxonMobil are found to most frequently

disclose the least on CSR themes and topics. This indicates a (generalized) trend that overall

international oil and gas and Chinese MNEs report more on CSR (quantitatively) than Chinese

NOCs or other Chinese SOEs.

Though seemingly this contradicts some of the previous analyses and derived propositions,

as NOCs and SOEs seem to emphasize certain topics, it is justified by the qualitative findings

(quotations) of the thematic analysis. This indicates that though NOCs and SOEs cover certain

topics related to the themes, topics are mostly covered by merely providing statements, instead

of also providing examples of initiatives, programs, or further information to backup statements

with concrete evidence. This finding gives the impression of greenwashing, which is the

practice of reporting CSR activities in such a way to come across as a green, sustainable, and

ethical company, whereas actually this is not the case. This peculiar finding is also portrayed

in the coding for each topic, as shown in Tables 1-36 in the supplementary document to this

thesis.

Hence, I state:

P8. Chinese NOCs and other Chinese SOEs disclose less extensively and in-depth on CSR than

international oil and gas MNEs and Chinese MNEs.

6. Discussion and Conclusions

EM MNEs are known to disclose more CSR activities to mitigate prejudices that harm

organizational legitimacy (Marano et al., 2017). SOEs also experience organizational

legitimacy challenges, as they are perceived as non-transparent with political motives (Li et al.,

2017; Li et al., 2019). SOEs from EMs, i.e. Chinese NOCs, face a combination of both

challenges, however, literature on Chinese SOEs’ CSR disclosure is inconclusive on the

reasoning behind disclosure and does not differentiate between SOEs’ industries (Hung et al.,

2013; Li et al., 2013; Marquis & Qian, 2014). It further indicates higher compliance of

environmental laws amongst SOEs than MNEs (Hung et al., 2013). Similarly, oil and gas firms

disclose more environmental information as they are frequently scrutinized for their operations

(Kuo et al., 2012).

While the individual influences of EM/industry origins, and state-ownership on CSR

disclosure are discussed, a combination of influences is overlooked. Existing literature hence

38

offers a limited perspective, and insights specifically on CSR disclosure of Chinese NOCs are

missing. This study sought to explore and compare Chinese NOCs’ CSR disclosure to that of

other Chinese SOEs and MNEs, and international oil and gas MNEs to discover how and why

CSR disclosure of NOCs differs from that of other SOEs.

Generally, all firms perceive the importance of CSR, as they disclose on it in annual and/or

stand-alone CSR reports. It is likely that disclosure and mode of reporting is influenced by

industry/EM origins, and/or state-ownership. However, CSR disclosure cannot be attributed

solely to these issues. It is more or less mandatory, and certainly expected of by society (Carrot

& Sticks, 2016; Kolk, 2007). Seemingly ample CSR-related information is disclosed by NOCs

and SOEs, yet often it merely comprises statements lacking additional information (i.e.

initiatives as back-up). The MNEs provide more details. Therefore, though NOCs and other

SOEs focus on CSR-related topics/themes, the information disclosed is questionable, as per

their reputation (Lin, 2010).

This study reveals the extent of reporting varies amongst the firm categories and generally

results in two distinct overarching groups: SOEs and MNEs. This is due to uniformity between

NOCs and SOEs, as previously discussed. Overall, the MNEs disclose more, both

quantitatively as shown in the intensity analyses, and qualitatively, as shown in the detailed

and summarized coding (tables) of the thematic analysis. Uniformity between NOCs and SOEs

and differences in disclosure of the two distinct groups can be explained by the, deeply rooted

in Chinese culture, notion of ‘saving face’ (Ambler et al., 2017; Gamer et al., 2012).

Contrary to the MNEs, the NOCs and other SOEs may not have much CSR initiatives or

programs in place due to weak profitability (Garschagen, 2019). Thus, they can only provide

general statements on topics, as they for instance lack funds for costly initiatives/programs,

whereas the profitable MNEs with initiatives/programs in place can discuss details. This results

in ‘losing face’ as government-related firms lack in something compared to private (foreign)

MNEs. For government-related issues, like SOEs, it makes sense to ‘save face’ (Ambler et al.,

2017). To create a perception of ‘similarity’, NOCs and SOEs disclose as much as possible on

CSR to ‘save face’, even if there is not much to disclose. This explains why often merely

general statements/information are provided by NOCs and other SOEs, and why disclosure

often lacks in-depth additional information which MNEs tend to provide. This also reflects the

governmental-like pressures causing uniformity between NOCs and SOEs.

Proposition two seems counterintuitive, one would expect Chinese firms to have high

disclosure on employment-related topics to mitigate prejudices (Marano et al., 2017),

considering China’s reputation on upholding worker/citizen rights. As NOCs and SOEs do not

39

emphasize employment-related topics, the reasoning must lie within the state-ownership

ideology, indicating it is the strongest ‘effect’ in this case. Prior research found that state-

ownership is not always positively associated to CSR (Dam & Scholtens, 2012), which holds

true in this case.

Proposition three is in line with the literature and applies a similar reasoning. NOCs and

SOEs emphasize rights-related topics, which may be explained by China’s weak reputation of

upholding rights/interests. To counter this ‘image’, it is beneficial to report extensively on such

topics. Surprisingly, Chinese MNEs do not emphasize this topic, hence the state-ownership

effect seems most prevalent and disclosure on rights-related topics should compensate for it.

The analysis shows NOCs and SOEs emphasize rights-related topics whilst de-emphasizing

employment-related topics, yet these are related as workers also have rights/interests. It is

debatable whether employment-related topics are actually deemphasized or perhaps considered

included in disclosure on rights-related topics. However, this can also be explained by the lack

of initiatives/programs, as it is easier to provide statements on upholding rights/interests than

elaborating on employee initiatives/programs, as these require additional information.

Proposition four is slightly counterintuitive as literature argues how firms from ESIs

disclose more environmental information to minimize political exposure (Kuo et al., 2012),

indicating a self-interested rationale. Findings somewhat contradict this, as NOCs and oil and

gas MNEs disclose more on community-related topics, indicating a focus beyond

environmental information. However, the rationale remains self-interested as firm activities

harm local communities through externalities. CSR can mitigate community backlash or

political exposure. In this case, ESI origins have the strongest effect due to less uniformity

between NOCs and SOEs, and more between NOCs and oil and gas MNEs. NOCs’ disclosure

on community-related topics thus seemingly should mitigate ESI origins.

Proposition five is in the line with prior research. SOEs are more likely to engage in corrupt

practices. Widespread corruption creates a negative image of SOEs (Chow, 2015; Li et al.,

2017; Li et al., 2019). Chinese policies aimed at tackling corruption (Garschagen, 2019) seek

to redeem the ‘status’ of SOEs and create a more ‘business-friendly’ image of China. This

however does not cover dumping resulting from governmental support for ‘national

champions’. Yet, dumping, like corruption, sparks controversy, as it contradicts free

competition. It seems beneficial for all SOEs to disclose heavily on topics related to free

competition, which indirectly also relate to corruption. Therefore, the state-ownership effect

seems strongest which is reflected by disclosure uniformity on fair competition.

40

Proposition six is somewhat in line with the literature. Oil and gas firms disclose more

environmental information to offset industry origins (Kuo et al., 2012). Hence, it is not

surprising that NOCs emphasize climate change topics. Indeed, Chinese SOEs are known to

show higher compliance of environmental regulations than MNEs. In this case, NOCs indicate

even higher compliance, (or disclosure) than SOEs. NOCs emphasize climate change more

than other SOEs, possibly due to the need to legitimize their position so they maintain access

to resources. To maintain governmental support, they provide extensive information and put

programs/initiatives in place. Therefore, ESI origins seem to have the strongest effect.

Proposition seven is also in line with prior research. It is peculiar that NOCs and other

SOEs disclose on all SDGs, while MNEs make a selection. The reason may be the ‘saving face’

culture and mitigation of EM origins. Moreover, since SDGs are related to the UN, it amplifies

the importance of disclosure, as ultimately China’s reputation is on the line. That is exactly

what the government seeks to protect vis-à-vis its pursuit of becoming a globally recognized

superpower (Garschagen, 2019; Yinghong, 2020). Thus, the state-ownership effect seems

strongest.

This exploratory study extends knowledge on CSR disclosure of Chinese SOEs, more

specifically, NOCs, through a firm-based view on CSR dimensions and disclosure. CSR

disclosure of twelve global firms with varying but relevant characteristics was analyzed. A

CSR reporting framework was applied, indicating its suitability for CSR research. This

framework was extended with findings drawn through open inductive coding, resulting in an

additional theme. This study serves as a point of departure for related future research and

emphasizes the significance of Chinese SOEs, their CSR practices, and its reporting. Though

Chinese SOEs’ CSR disclosure is discussed in the literature, the argumentation and findings

are inconsistent, moreover the influence of industry origins is often not considered. This study

aimed to fill that gap and took an innovative approach to compare Chinese NOCs’ CSR

disclosure to that of other Chinese SOEs and MNEs, and international oil and gas MNEs by

identifying and comparing themes, goals, and initiatives to discover how Chinese NOCs’ CSR

disclosure differs from that of other Chinese SOEs and why that may be.

Based on the thematic analysis, reporting intensity analysis, and discussion, it becomes

apparent that NOCs and SOEs seem to similarly emphasize and deemphasize CSR-related

themes/topics. Chinese state-ownership seemingly influences NOCs’ CSR disclosure similarly

to other Chinese SOEs. NOCs and SOEs prioritize topics like rights, fair competition

(economic impact), and larger CSR initiatives of third parties (the UN), while deprioritizing

topics related to employment, though this is still debatable and requires further research.

41

Governmental policies and underlying ideologies are likely to be the reason. The differences

between NOCs’ and SOEs’ CSR disclosure can be attributed to industry origins as NOCs,

similar to oil and gas MNEs, disclose more on community and climate change-related impacts.

Theoretical Implications

The findings of the thematic analysis are largely in line with the known difficulty of defining

CSR, as substantial variations were found in the content of firm disclosures. This implies that

though firms use similar CSR guidelines like GRI or Global Compact, and thus report on

similar CSR themes and topics, there still is no single approach to understanding CSR. A

clearer definition of CSR would benefit SOEs pursuing sustainable practices, especially

considering current definitions, like the working definition of this thesis by McWilliams and

Siegel (2001), emphasize voluntary aspects of CSR. Yet Chinese SOEs, as discussed, are often

mandated to act sustainably (or at least create the perception of it). This is also reflected in the

way information is disclosed, with many references being made to laws and emphasis on

compliance. Thus, current definitions of CSR seem less suitable to Chinese NOCs and SOEs.

Theoretical guidance on implementing and subsequently reporting CSR, voluntarily or

involuntarily, would further benefit such firms pursuing sustainable practices, regardless the

underlying motives.

The thematic analysis further indicates that NOCs, and SOEs, do not equally place

importance on the TBL dimensions, even though TBL literature argues firms pursuing

sustainable practices would equally balance their efforts. This finding sheds a new light on

TBL literature. Despite many statements being provided on sustainable and CSR-related

practices/activities, and commitment to sustainable development, a balanced approach was not

observed in this study, partially due to the frequent lack of in-depth additional information as

previously mentioned. Further understanding of this would require additional research,

preferably with a larger sample so that a balanced approach of CSR disclosure can be explored

and compared between NOCs, and other SOEs from varying industries.

The findings also indicate Chinese NOCs and SOEs somewhat contradict the notion of EM

firms disclosing more on CSR-practices, as NOCs and SOEs deemphasize reporting on

employment-related topics. This challenges the notion of EM firms disclosing more on CSR to

mitigate prejudices towards their origins (Marano et al., 2017). This finding however does

extend the literature by supporting prior research indicating state-ownership is not always

positively associated to CSR, which is interesting as in this case it exemplifies the significance

and strength of the Chinese government’s ideologies on SOEs, the business system, and the

42

workforce, as opposed to the influences of outsiders’ ‘perceptions’ or prejudices. On the other

side of the spectrum, the NOCs and SOEs prioritize disclosure on rights-related topics. This

contradicts the above argumentation. However, the rights and employment themes could be

perceived as interconnected by NOCs and SOEs, implying disclosure on rights-related topics

automatically comprise disclosure on employment-related topics. This would explain why

employment-related topics are de-emphasized. Another explanation is the ease of disclosing

on ‘rights’, which is high, as opposed to that on ‘employment’. Regardless, this finding

provides room for further research on both themes.

Oil and gas firms are known to disclose more environmental information out of a self-

interested rationale to minimize scrutiny. Yet, this study surprisingly finds that oil and gas

firms also disclose more than the other firm categories on community-related topics. While the

rationale remains self-interested, it indicates that the focus oil and gas firms in CSR disclosure

goes beyond the environment, thus extending the general understanding of CSR disclosure of

firms from ESIs. Moreover, Chinese SOEs are known to participate in unfair business practices.

However, literature on Chinese SOEs does not discuss how they prioritize this topic in the

wake of recent domestic policies aimed at tackling corruption in political and business spheres.

Though greenwashing may still be the case, this study indicates that policies may have made a

direct impact on SOEs’ disclosure on topics like corruption and fair competition, as they

emphasize these. This discovery is considered novel and also provides room for new research.

Chinese SOEs are further known to have higher compliance with and report more on

environmental regulations than Chinese MNEs. This study however reveals NOCs do this to

an even larger extent than other SOEs, thus extending the understanding of SOEs’ compliance

with Chinese environmental regulations. This finding also relates to and thus solidifies the

known fact that firms from ESIs have higher disclosure on environmental topics. This finding

also extends the understanding of the Chinese government’s CSR focus, through mandatory

CSR policies, on environmental aspects. Lastly, this study reveals that NOCs and SOEs try to

disclose on all of the UN’s SDGs, however, the relevance and impact of initiatives disclosed

on are doubtful and provide room for further investigation. As prior research does not cover

the SDGs in relation to Chinese SOEs and CSR disclosure, this finding indicates a high degree

of novelty.

Managerial/Practical Implications

This study verifies and contradicts findings of previous studies, as well as provides new novel

findings, implicating its function not only as a steppingstone for future research, but also its

43

ability to make a meaningful impact for practice and policy making. The results presented in

this study are informative for managers with CSR (disclosure) responsibilities, policy makers,

and other CSR-related NGOs, collaborations, or initiatives. This study further acts as a

benchmark tool and can inspire firms on certain CSR (disclosure) practices. This can benefit

firms as it allows them to perceive their ‘position’ compared to competitors in terms of CSR

efforts, and offers inspiration on what they can do to catch up in case they are lacking.

This study found extensive variation in CSR disclosure concerning structure of reporting,

measurements, choice of information, examples provided etc. This variation is present despite

adherence to reporting standards like GRI or Global Compact and may cause confusion about

the impact of CSR. It also increases the difficulty of meaningfully comparing firms. This brings

into question whether standardized guidelines such as GRI or Global Compact can be infused

into one, as often either one is applied, and mandated or promoted even more in CSR reporting

amongst various industries so that the ease of comparing improves. Nevertheless, literature on

CSR describes its voluntary nature, though this is not always the case in China, therefore,

flexibility in reporting is pertinent. Despite that, this study can inspire policy makers or

managers to look into this issue and find suitable solutions to ease the comparison of CSR

activities and disclosure.

On a more general level, this study also reveals that Chinese NOCs and SOEs wish to create

a sense of similarity when compared to MNEs, which can be attributed to the saving-face

culture. As discussed, this may however lead to over-emphasized CSR disclosure, hence for

managers and policy makers it remains important to not take all CSR information disclosed on

by Chinese NOCs and SOEs too literally. To counter this issue, policy makers could argue for

adopting independent third-party research on the CSR practices and subsequent disclosure by

Chinese SOEs so as to verify the validity of information. This would imply a more involuntary

nature of CSR rather than a voluntary nature as emphasized by current definitions of CSR.

Limitations and Future Research

This study finds limitations in its scope, resulting in weakly generalizable results. This is

caused by the small sample size. A larger sample size would have benefited this study greatly,

however, considering China only comprises three NOCs and not all SOEs listed on the

UNCTAD ranking publish annual reports, it can be quite a challenge to increase the sample

size with SOEs that have relevant information publicly available. Nevertheless, this study, as

mentioned before may serve as a point of departure for new exploratory studies on CSR

reporting of Chinese SOEs. It would also be interesting to explore additional firm categories,

44

if possible, with SOEs from multiple other industries, as this study has grouped ‘other SOEs’

together rather than within their own industry category, as it the case for NOCs.

This study aimed to discover and compare CSR activities as disclosed on, however, it

should be acknowledged that disclosure occurs through a firm’s own perspective and hence

corporate reports do not fully represent an exhaustive source concerning relevant CSR practices.

Therefore, another limitation of this study comprises the data. It is possible that additional

information on CSR practices is made public through other sources than those applied, for

instance, disclosures or statements of PR departments or other sources considered to be external

(i.e. NGO reports or studies). By comparing other sources to the results of this study, one may

find discrepancies in CSR disclosure, providing room for new discussions.

Additionally, the implementation of disclosed CSR initiatives or programs falls outside the

scope of this study. However, it would be interesting if future research could extend this study

by looking into this. For instance, by collecting different data and using other methods, like

interviews, surveys, or questionnaires with employees and/or industry experts. This study may

then also serve as a point of departure for future comparisons of findings related to what is

disclosed on and what is actually being implemented by Chinese SOEs. Somewhat similar, the

overall impact of disclosed CSR initiatives and programs can also be explored to uncover

whether or not what is disclosed on is actually being implemented and is true. In that case,

future research may benefit from interviewing stakeholders in the value chain to gain an

understanding of their perceptions of the CSR performance of Chinese SOEs, which can then

be compared to the results of this study.

As a balanced approach, as stated in TBL literature, was not found in CSR disclosure of

Chinese NOCs and SOEs, future research may also benefit from looking into this issue, as this

finding somewhat contradicts TBL literature. Therefore, future research is encouraged to

explore this, as this may also lead to a clearer understanding as to why Chinese SOEs in general

frequently lack in-depth additional information in CSR disclosure. Moreover, as it is debatable

whether employment and rights-related topics are considered by Chinese SOEs to be

interconnected, literature on Chinese SOEs and their CSR disclosure would also benefit from

an in-depth exploratory study on these two themes. Future research in this topic area is also

advised to explore anti-corruption policies and SDGs-related initiatives and programs to

understand whether policies and contributions disclosed on and implemented are effective.

Lastly, as this study finds that firms from ESIs, besides emphasizing environment-related

topics, also emphasize disclosure on community-related topics, it would be interesting to

discover whether this holds true for all sorts of firms from ESIs, or merely firms in oil and gas.

45

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Appendices

Appendix 1 – Sample Introduction

- Sinopec: Sinopec Corporation is one of the largest integrated energy and chemical companies

in China. Its principal operations include the exploration and production, pipeline transportation

and sale of petroleum and natural gas; the production, sale, storage and transportation of

refinery products, petrochemical products, coal chemical products, synthetic fiber, and other

chemical products; the import and export, including an import and export agency business, of

petroleum, natural gas, petroleum products, petrochemical and chemical products, and other

commodities and technologies; and research, development and application of technologies and

information.

- CNPC: China National Petroleum Corporation (CNPC) is an integrated international energy

company with businesses covering oil and gas operations, oilfield services, petroleum

engineering & construction, equipment manufacturing, financial services, and new energy

development. Its largest and most well-known subsidiary is PetroChina. Its goal is to be a first-

class integrated international energy company.

- CNOOC: CNOOC is the largest producer of offshore crude oil and natural gas in China and

one of the largest independent oil and gas exploration and production companies in the world.

The Group mainly engages in exploration, development, production and sale of crude oil and

natural gas. The Group’s core operation areas are Bohai, Western South China Sea, Eastern

South China Sea and East China Sea in offshore China. Overseas, the Group has oil and gas

assets in Asia, Africa, North America, South America, Oceania and Europe.

- CK Hutchison: CK Hutchison Group is a renowned multinational conglomerate committed to

development, innovation and technology in many different sectors. It operates a variety of

businesses in over 50 countries across the world with over 300,000 employees. It has a strong

commitment to the highest standards of corporate governance, transparency and accountability,

as recognized by numerous international awards and commendations. Its operations consist of

five core businesses – ports and related services, retail, infrastructure, energy, and

telecommunications.

- Tencent: Tencent was founded in Shenzhen, China, in 1998, and listed on the Main Board of

the Stock Exchange of Hong Kong since June 2004. Tencent uses technology to enrich the lives

of Internet users. Its communications and social platforms Weixin and QQ connect users with

each other, with digital content and daily life services in just a few clicks. Its high-performance

advertising platform helps brands and marketers reach out to hundreds of millions of consumers

56

in China. Its financial technology and business services support partners' business growth and

assist their digital upgrade. Tencent invests heavily in talent and technological innovation,

actively participating in the development of the Internet industry.

- Legend Holdings: Legend Holdings Corporation was founded in 1984 by researchers with

funding from the Computing Institute of the Chinese Academy of Sciences. Starting from the

IT industry, Legend Holdings has gone through the development of over three decades, and

now it is a leading diversified investment holding company in China. It builds up a unique

business model of “strategic investments + financial investments” with synergy between the

two-wheel-drive businesses. Through value creation and value discovery, the company

cultivates and manages an outstanding investment portfolio with growth potential, driving

sustainable value growth. Its investment portfolio consists of IT, financial services, real estate,

agriculture, manufacturing, venture capital, investment management, and investment properties.

- COSCO: China COSCO SHIPPING Corporation Limited is an SOE headquartered in Shanghai.

It is the merged entity of China Ocean Shipping (Group) Company (COSCO) and China

Shipping (Group) Company (China Shipping). Thanks to its complete global service network,

COSCO SHIPPING has become a top international brand. The upstream and downstream links

along the industry chain, such as terminals, logistics, shipping finance, ship repair and

shipbuilding, have formed a sound industrial structure. The vision of China COSCO Shipping

is to undertake the mission of globalizing Chinese economy, consolidate advantageous

resources, take global shipping, integrated logistics, and shipping related financial services as

core business, and develop diversified industrial clusters, so as to build a world-leading

business entity that provides integrated logistics and supply chain services.

- China Minmetals: China Minmetals Corporation, founded in 1950, is an international metals

and mining corporation committed to providing high-quality services globally, adhering to a

development philosophy of “cherishing limited resources to pursue boundless development”.

It primarily engages in exploration, mining, smelting, processing and trading for metals and

minerals, finance, real estate, and mining and metallurgic technology with business coverage

over 28 nations and regions in the world. China Minmetals has maintained a staff force of

177,000 employees and has controls over eight listed companies in China and abroad. In 2013,

China Minmetals achieved operating revenue of approximately RMB402.8 billion and total

profit of RMB8 billion, ranking 192nd among the US Fortune Global top 500 enterprises and

ranking 5th among metal companies.

- ChemChina: ChemChina, founded in 1984, is an SOE established by reorganizing companies

affiliated to the former Ministry of the Chemical Industry, People’s Republic of China.

57

ChemChina ranks 144th on the “Fortune Global 500” list and is the largest chemical enterprise

in China. The Company has 160,000 employees including 86,000 outside China. Strategically

oriented towards “new science, new future”, ChemChina operates in six business sectors

covering new chemical materials and specialty chemicals, agrochemicals, oil processing and

refined products, tire & rubber products, chemical equipment, and R&D design. Headquartered

in Beijing, ChemChina has production and R&D bases in 150 countries and regions worldwide

and boasts a full-fledged marketing network. ChemChina operates 7 strategic business units

(SBUs), 4 directly affiliated units, 89 production and operation enterprises. It also holds 9 listed

companies, has 11 overseas subsidiaries, and possesses 346 R&D institutes, among which 150

are overseas ones.

- Royal Dutch Shell: Royal Dutch Shell, founded in 1907, is a British-Dutch global group of

energy and petrochemical companies with an average of 86,000 employees in more than 70

countries. It uses advanced technologies and takes an innovative approach to help build a

sustainable energy future. Shell is considered one of the largest companies in the world. Its

operations span all areas of the oil and gas industry, including exploration, production, refining,

transport, distribution, marketing, petrochemicals, power generation, and trading. Besides these

activities, Shell also focuses on renewable energy, such as biofuels, hydrogen, and wind energy.

- BP: BP, founded in the UK in 1909, is an integrated energy business with operations in Europe,

North and South America, Australasia, Asia and Africa. It has operations in 79 countries and

has over 70.000 employees. BP used to be known as British Petroleum, however, due to climate

change issues, BP foresaw that its name should be changed to something more neutral.

Nowadays, BP stands for Beyond Petroleum. BP owns a 19.75% stake in the Russian ‘Rosneft’,

the world's largest publicly traded oil and gas company.

- ExxonMobil: ExxonMobil is a US based oil and gas MNE. It was founded in 1999 through a

merger between Exxon and Mobil. ExxonMobil is considered to be a descendant of

Rockefeller’s Standard Oil Corporation, the world’s first and largest MNE. Nowadays, it one

of the world’s largest publicly traded energy providers and chemical manufacturers. It develops

and applies next-generation technologies to help safely and responsibly meet the world’s

growing needs for energy and high-quality chemical products. ExxonMobil considers fueling

the world safely and responsibly its mission.

58

Appendix 2 – Tables

Table 2 – Global CSR Reporting Indicators Framework (Fortanier et al., 2011)

Firm

is con

sidered

to rep

ort o

n d

imen

sion

an

d th

eme if its rep

ort co

nta

ins, in

clud

es, or m

entio

ns:

Info

rmatio

n o

n firm

s com

mitm

ent to

mitig

ating

climate ch

ang

e

Info

rmatio

n o

n a firm

’s direct G

reen H

ou

se Gas em

ission

s

If firm p

articipates in

a vo

lun

tary ag

reemen

t and

on

the ach

ievem

ent o

f targets related

to th

ose ag

reemen

ts

Th

e size of a firm

’s eng

agem

ent in

emissio

ns trad

ing

schem

es

Info

rmatio

n o

n th

e div

ersity o

f the firm

’s wo

rkfo

rce, by

either g

end

er or eth

nicity

, or b

oth

Info

rmatio

n o

n p

olicies o

r pro

gram

s aimed

at pro

mo

ting

/ensu

ring

equ

al op

po

rtun

ities regard

ing

gen

der an

d eth

nicity

Info

rmatio

n o

n a firm

’s prim

ary an

d seco

nd

ary w

ork

ing

con

ditio

ns an

d b

enefits

Info

rmatio

n o

n firm

efforts to

train em

plo

yees (o

ften h

ou

rs or ex

pen

ses of train

ing

)

Statem

ents d

enu

nciatin

g co

rrup

tion

and

brib

ery, in

com

bin

ation

with

detail o

n im

plem

entatio

n

Statem

ents co

nd

emn

ing

child

and

forced

labo

r, in co

mb

inatio

n w

ith d

etail on

imp

lemen

tation

Statem

ents o

n co

mm

itmen

ts to h

um

an rig

hts in

com

bin

ation

with

detail o

n im

plem

entatio

n

Th

e pro

cess of co

llective b

argain

ing

with

in th

e firm, in

clud

ing

e.g. a W

ork

s Co

un

cil

Info

rmatio

n o

n size o

f con

tribu

tion

to, o

r effects of, h

ealth p

rog

rams

Info

rmatio

n o

n size o

f con

tribu

tion

to, o

r effects of, H

IV/A

IDS

relief efforts

Th

e size of a firm

’s eng

agem

ent in

carbo

n-red

ucin

g

Info

rmatio

n o

n p

hilan

thro

pic co

mm

itmen

ts that su

rpass co

ncrete co

mm

un

ity p

rog

rams

Info

rmatio

n o

n firm

’s com

mitm

ent to

fair com

petitio

n

Info

rmatio

n o

n size o

f con

tribu

tion

to, o

r effects of, sch

oo

l/edu

cation

pro

gram

s

Info

rmatio

n o

n size o

f con

tribu

tion

to, o

r effects of, w

ater pro

jects

Info

rmatio

n o

n size o

f the fo

un

datio

n o

r its effects

Info

rmatio

n o

n tax

issues, su

ch as tran

sfer pricin

g p

olicies, o

r the firm

s’ effective tax

rate

Info

rmatio

n o

n firm

’s eng

agem

ent in

fair trade

Info

rmatio

n o

n th

e size of th

e firm’s eco

no

mic im

pact o

n so

ciety

Statem

ent th

at firm allo

ws its em

plo

yees to

join

un

ion

s and

pro

mo

tes freedo

m o

f associatio

n, o

r the %

of w

ork

force u

nio

nizatio

n

Info

rmatio

n o

n w

heth

er emp

loy

ees are con

tent w

ith w

ork

ing

for th

e firm

Carb

on

Red

uctio

n

EC

ON

OM

IC IM

PA

CT

Tax

Issues

Eco

no

mic Im

pact

En

gag

emen

t in F

air Trad

e

Ph

ilantro

ph

y

Fair C

om

petitio

n

CL

IMA

TE

CH

AN

GE

Clim

ate Ch

ang

e Issues

Direct G

HG

Em

ission

s

Vo

lun

tary A

greem

ents

Em

ission

s Trad

ing

Fo

un

datio

n

Freed

om

of A

ssociatio

n

Co

llective B

argain

ing

Hu

man

Rig

hts

Ch

ild an

d F

orced

Lab

or

Co

rrup

tion

and

Brib

ery

CO

MM

UN

ITY

Health

Pro

gram

s

HIV

/AID

S R

elief Effo

rts

Sch

oo

l/Ed

ucatio

n P

rog

rams

Water P

rojects

RIG

HT

S

Dim

ensio

ns &

them

es

EM

PL

OY

ME

NT

Em

plo

yee S

atisfaction

Div

ersity

Eq

ual O

pp

ortu

nity

Wo

rkin

g C

on

ditio

ns

Train

ing

59

Table 5 – Summarized CSR disclosure on ‘employment’ theme

Sinopec

Does not cover employee satisfaction . Covers diversity by providing figures of gender diversity. Covers

equal opportunity by providing statements on compliance with relevant (labor) laws or other statements on

equal opportunity, but examples for supporting the statements are missing. Covers working conditions by

stating that it abides by relevant labor laws and provides information on actions that improve employees'

health and safety. Also mentions employee benefits such as the salary & promotion system, and insurances.

Covers training by providing figures on total number of training hours, participants or spending on

training.

CNPC







training. Also provides examples of how trainings are offered.

CNOOC







training.

CK Hutchison

Covers employee satisfaction but results of employee satisfaction survey are missing. Does not cover

diversity . Covers equal opportunity by providing examples of programs or initiatives that support

statements of compliance with relevant (labor) laws or other statements on equal opportunity. Covers

working conditions by providing statements of and information on actions that improve employees' health

and safety. Does not mention employee benefits. Covers training by providing figures on total number of

training hours, participants or spending on training. Also provides examples of how trainings are offered.

Tencent

Covers employee satisfaction but results of employee satisfaction survey are missing. Does not cover

diversity . Covers equal opportunity by providing statements on compliance with relevant (labor) laws or

other statements on equal opportunity, examples for supporting the statements are missing. Covers working

conditions by providing statements of and information on actions that improve employees' health and

safety. Also mentions employee benefits such as the salary & promotion system, and insurances. Covers

training by providing figures on total number of training hours, participants or spending on training. Also

provides examples of how trainings are offered.

Legend Holdings

Covers employee satisfaction but results of employee satisfaction survey are missing. Covers diversity by

providing figures of gender diversity. Covers equal opportunity by providing examples of programs or

initiatives that support the statements of compliance with relevant (labor) laws or other statements on equal

opportunity. Covers working conditions by stating that it abides by relevant labor laws and provides

information on actions that improve the employees' health and safety. Also mentions employee benefits

such as the salary & promotion system, and insurances. Covers training by providing figures on total

number of training hours, participants or spending on training. Also provides examples of how trainings

are offered.

COSCO



equal opportunity, examples for supporting the statements are missing. Covers working conditions by

stating that it abides by relevant labor laws and provides information on actions that improve the

employees' health and safety. Also mentions employee benefits such as the salary & promotion system, and

insurances. Covers training by providing figures on total number of training hours, participants or

spending on training.

China Minmetals



equal opportunity, examples for supporting the statements are missing. Covers working conditions by

providing statements of it abiding by relevant labor laws and information on actions that improve

employees' health and safety. Does not mention employee benefits. Covers training by providing figures

on total number of training hours, participants or spending on training.

ChemChina

Does not cover employee satisfaction nor diversity . Covers equal opportunity by providing statements on

compliance with relevant (labor) laws or other statements on equal opportunity, examples for supporting

the statements are missing. Covers working conditions by stating that it abides by relevant labor laws and

provides information on actions that improve employees' health and safety. Also mentions employee

benefits such as the salary & promotion system, and insurances. Covers training by providing figures on

total number of training hours, participants or spending on training.

Royal Dutch Shell

Covers employee satisfaction by providing results of employee satisfaction survey. Covers diversity by


initiatives that support statements of compliance with relevant (labor) laws or other statements on equal

opportunity. Covers working conditions by providing statements of and information on actions that

improve employees' health and safety. Does not mention employee benefits. Covers training by providing

figures on total number of training hours, participants or spending on training. Also provides examples of

how trainings are offered.

BP

Covers employee satisfaction by providing results of employee satisfaction survey. Covers diversity by


initiatives that support the statements of compliance with relevant (labor) laws or other statements on equal

opportunity. Covers working conditions by providing statements of and information on actions that

improve employees' health and safety. Also mentions employee benefits such as the salary & promotion

system, and insurances. Covers training by providing figures on total number of training hours,

participants or spending on training. Also provides examples of how trainings are offered.

ExxonMobil

Covers employee satisfaction but results of employee satisfaction survey are missing. Covers diversity by


initiatives and statements on equal opportunity, but does not provide statements of compliance with relevant

(labor) laws. Covers working conditions by providing statements of and information on actions that

improve employees' health and safety. Does not mention employee benefits. Covers training by providing

figures on total number of training hours, participants or spending on training. Also provides examples of

how trainings are offered.

Summarized disclosure theme: Employment

Chinese NOCs



Leading private oil & gas MNEs

60

Table 6 – Summarized CSR disclosure on ‘rights’ theme

Sinopec

Covers freedom of association by providing statements on complying with Chinese Trade Union Law

and establishing/improving trade/labor unions to protect employees’ rights. Also discloses a 100%

worker membership rate at unions. Covers collective bargaining by providing information on the

unions' responsibilities towards workers and the firm itself. Covers human rights by providing

statements on compliance with domestic and international regulations on human rights, and examples of

initiatives. Focuses on employee-related human rights. Covers child & forced labor by providing

statements on prohibiting it in compliance with laws. Examples of initiatives are missing. Covers

corruption & bribery by providing statements on complying with domestic/international regulations

against corruption, and examples of measures to counter it.

CNPC


and establishing/improving trade/labor unions to protect employees’ rights. Covers collective

bargaining by providing information on the unions' responsibilities towards workers and the firm itself.

Covers human rights by providing statements on compliance with domestic and international

regulations on human rights, and examples of initiatives. Focuses on human rights in the value chain.

Covers child & forced labor by providing statements on prohibiting it in compliance with laws.

Examples of initiatives are missing. Covers corruption & bribery by providing statements on complying

with domestic/international regulations against corruption, and examples of measures to counter it.

CNOOC





regulations on human rights. Examples are missing. Focuses on employee-related human rights. Covers

child & forced labor by providing statements on prohibiting it in compliance with laws. Examples of

initiatives are missing. Covers corruption & bribery by providing statements on complying with

domestic/international regulations against corruption, and examples of measures to counter it.

CK Hutchison

Does not cover freedom of association, collective bargaining, and human rights . Covers child & forced

labor by providing statements on prohibiting it in compliance with laws, and examples of initiatives.

Covers corruption & bribery by providing statements on complying with domestic/international

regulations against corruption, and examples of measures to counter it.

Tencent

Does not cover freedom of association, collective bargaining, and human rights . Covers child & forced

labor by providing statements on prohibiting it in compliance with laws. Examples of initiatives are

missing. Covers corruption & bribery by providing statements on complying with


Legend Holdings

Does not cover freedom of association . Covers collective bargaining by mentioning it abides by a

collective bargaining agreement originating from Luxembourg. Covers human rights by providing

statements on compliance with domestic and international regulations on human rights. Examples are

missing. Focuses on employee-related human rights. Covers child & forced labor by providing




COSCO





regulations on human rights. Examples are missing. Focuses on employee-related human rights. Covers

child & forced labor by providing statements on prohibiting it in compliance with laws, and examples

of initiatives. Covers corruption & bribery by providing statements on complying with


China Minmetals










ChemChina










Royal Dutch Shell

Does not cover freedom of association nor collective bargaining . Covers human rights by providing

statements on compliance with international regulations on human rights and examples of initiatives.

Focuses on human rights in the entire value chain. Covers child & forced labor by providing statements

on prohibiting modern slavery in compliance with laws, and examples of initiatives. Covers corruption

& bribery by providing statements on complying with domestic/international regulations against

corruption, and examples of measures to counter it.

BP

Does not cover freedom of association . Covers collective bargaining by mentioning it has a functioning

works council. Covers human rights by providing statements on compliance with international

regulations on human rights and examples of initiatives. Focuses on human rights in the value chain.

Covers child & forced labor by providing statements on prohibiting modern slavery in compliance with

laws, and examples of initiatives. Covers corruption & bribery by providing statements on complying

with domestic/international regulations against corruption, and examples of measures to counter it.

ExxonMobil

Does not cover freedom of association nor collective bargaining . Covers human rights by providing

statements on compliance with international regulations on human rights and examples of initiatives.

Focuses on human rights in the value chain. Covers child & forced labor by providing statements on

prohibiting modern slavery in compliance with laws, and examples of initiatives. Covers corruption &

bribery by providing statements on complying with domestic/international regulations against

corruption, and examples of measures to counter it.

Summarized disclosure theme: Rights

Chinese NOCs




61

Table 7 – Summarized CSR disclosure on ‘community’ theme

Sinopec

Covers health program by providing examples of initiatives or amount of investments

in health programs to improve local communities' health. Does not cover HIV/aids

relief project . Covers school/education programs by providing information on

donations and funding for education of poor students. Does not have its own

programs. Does not cover water projects. Covers foundation by providing

information on collaboration efforts with CFPA to alleviate poverty in poor regions in

China. Does not have its own foundation.

CNPC





programs. Covers water projects by providing information on improving clean water

supply, sanitation conditions, or water storage for agricultural purposes. Covers

foundation by providing information on collaboration efforts with CFPA to alleviate

poverty in poor regions in China. Does not have its own foundation.

CNOOC





programs. Does not cover water projects nor foundation .

CK Hutchison


in health programs to improve local communities' health. Covers HIV/aids relief

program by providing information on an initiative that donated HK$7 million to an

HIV/AIDs project in Africa. Covers school/education programs by providing

information on donations and funding for education of poor students. Has its own

programs with scholarships. Does not cover water projects . Covers foundation by

providing information on contributions to its own foundation. Focuses on more than

just poverty alleviation.

Tencent



relief project. Covers school/education programs by providing information on

donations and funding for education of poor students. Has its own programs with

scholarships. Does not cover water projects . Covers foundation by providing

information on contributions to its own foundation. Focuses on more than just poverty

alleviation.

Legend Holdings

Does not cover health program nor HIV/aids relief project. Covers school/education

programs by providing information on donations and funding for education of poor

students. Has its own programs with scholarships. Does not cover water projects .

Covers foundation by providing information on contributions to its own foundation.

Focuses on more than just poverty alleviation.

COSCO

Does not cover health program, HIV/aids relief project , and school/education

program . Does not cover water projects . Covers foundation by providing information

on contributions to its own foundation. Focuses on just poverty alleviation.

China Minmetals



students. Does not have its own programs. Covers water projects by providing

information on improving clean water supply, sanitation conditions, or water storage

for agricultural purposes. Does not cover foundation .

ChemChina



students. Does not have its own programs. Covers water projects by providing

information on improving clean water supply, sanitation conditions, or water storage

for agricultural purposes. Does not cover foundation .

Royal Dutch Shell





scholarships. Covers water projects by providing information on improving clean

water supply, sanitation conditions, or water storage for agricultural purposes. Covers

foundation by providing information on contributions to its own foundation. Focuses

on more than just poverty alleviation.

BP







alleviation.

ExxonMobil







alleviation.

Summarized disclosure theme: Community

Chinese NOCs




62

Table 8 – Summarized CSR disclosure on ‘economic impact’ theme

Sinopec

Covers tax issues by providing information on tax rates and/or

amount of taxes paid. Does not cover engagement in fair trade .

Covers philanthropy by providing information on contributions to

other foundations, like donations and investments. Covers fair

competition by mentioning its measures against corruption & bribery.

Also mentions compliance with relevant laws on competition.

CNPC


amount of taxes paid. Also mentions compliance with industry

initiative on taxes. Does not cover engagement in fair trade . Covers

philanthropy by providing information on contributions to other

foundations, like donations and investments. Covers fair competition

by mentioning its measures against corruption & bribery. Also

mentions compliance with relevant laws on competition.

CNOOC







CK Hutchison



Covers philanthropy by providing information on its own foundation

and corresponding philanthropic activities like donations and

investments. Covers fair competition by mentioning its measures

against corruption & bribery.

Tencent







Legend Holdings







COSCO






against corruption & bribery. Also mentions compliance with relevant

laws on competition.

China Minmetals







ChemChina







Royal Dutch Shell




philanthropy by providing information on its own foundation and

corresponding philanthropic activities like donations and investments.

Covers fair competition by mentioning its measures against corruption

& bribery.

BP




philanthropy by providing information on its own foundation and

corresponding philanthropic activities like donations and investments.

Covers fair competition by mentioning its measures against corruption

& bribery.

ExxonMobil







Summarized disclosure theme: Economic impact

Chinese NOCs




63

Table 9 – Summarized CSR disclosure on ‘climate change’ theme

Sinopec

Covers climate change issues by providing information on a variety of efforts to combat it. Focuses

primarily on environmental protection and emissions reduction. Covers direct GHG emissions by

providing information on initiatives to reduce GHG emissions, as well as figures on direct GHG

emissions. Covers voluntary agreements by mentioning it joined the Hydrogen Council & signed

strategic cooperation agreements with domestic enterprises to build hydrogen refueling stations. Does

not mention Paris agreement. Covers emissions trading by providing figures on it. Covers carbon

reduction by providing examples of how it intends to reduce carbon emissions.

CNPC


primarily on environmental protection and emissions reduction. Also mentions being member of the

Oil & Gas Climate Initiative (OGCI), a CEO-led initiative to lead the industry’s response to climate

change. Covers direct GHG emissions by providing information on initiatives to reduce GHG

emissions, as well as figures on direct GHG emissions. Covers voluntary agreements by mentioning

the Paris agreement & associated targets, as well as OGCI targets. Covers emissions trading by

mentioning it participates it in according to regulations, figures are missing. Covers carbon reduction

by providing examples of how it intends to reduce carbon emissions.

CNOOC




emissions. Covers voluntary agreements by mentioning the Paris agreement & associated targets.

Covers emissions trading by mentioning it participates it in according to regulations, figures are

missing. Covers carbon reduction by providing examples of how it intends to reduce carbon

emissions.

CK Hutchison


on a variety of topics like renewable energy, sustainable resource usage, and emissions reduction.

Covers direct GHG emissions by providing information on initiatives to reduce GHG emissions, as

well as figures on direct GHG emissions. Does not cover voluntary agreements nor emissions trading .

Covers carbon reduction ( to a lesser extent) by providing examples of how it intends to reduce

carbon emissions.

Tencent


on sustainable resource usage. Covers direct GHG emissions by providing information on initiatives

to reduce GHG emissions, as well as figures on direct GHG emissions. Does not cover voluntary

agreements nor emissions trading . Covers carbon reduction (to a lesser extent) by providing

examples of how it intends to reduce carbon emissions.

Legend Holdings


on sustainable resource usage and emissions reduction. Covers direct GHG emissions by providing

information on initiatives to reduce GHG emissions, as well as figures on direct GHG emissions.

Covers voluntary agreements by mentioning a voluntary agreement on waste management. Does not

cover emissions trading . Covers carbon reduction (to a lesser extent) by providing examples of how

it intends to reduce carbon emissions.

COSCO




emissions. Covers voluntary agreements by mentioning the Paris agreement, associated targets are

missing. Does not cover emissions trading . Covers carbon reduction by providing examples of how

it intends to reduce carbon emissions.

China Minmetals



providing information on initiatives to reduce GHG emissions, figures on direct GHG emissions are

missing. Does not cover voluntary agreements . Does not cover emissions trading . Covers carbon


ChemChina



providing information on initiatives to reduce GHG emissions, figures on direct GHG emissions are

missing. Does not cover voluntary agreements . Does not cover emissions trading . Covers carbon


Royal Dutch Shell


on a variety of topics like renewable energy, low-emissions solutions, energy transition, sustainable

resource usage etc. Also mentions being member of the Oil & Gas Climate Initiative (OGCI), a CEO-

led initiative to lead the industry’s response to climate change. Covers direct GHG emissions by


emissions. Covers voluntary agreements by mentioning the Paris agreement & associated targets, as

well as a long-term ambition to reduce the Net Carbon Footprint of its energy products. Covers

emission trading by providing examples of initatives to support governments' efforts in carbon

pricing, figures are missing. Covers carbon reduction by providing examples of how it intends to

reduce carbon emissions.

BP







well as supporting a resolution from institutional investors to describe in corporate reporting how its

strategy is consistent with the Paris agreement. Covers emission trading by providing examples of

initatives to support governments' efforts in carbon pricing, figures are missing. Covers carbon


ExxonMobil







well as a cooperative research agreement. Covers emission trading by providing examples of

initatives to support governments' efforts in carbon pricing, figures are missing. Covers carbon


Summarized disclosure theme: Climate change

Chinese NOCs




64

Table 10 – Summarized CSR disclosure on ‘other CSR initiatives’ theme

Sinopec

Covers UN SDGs by providing information on efforts to achieve

all SDGs. Places equal emphasis on all SDGs. Examples of

initiatives for SDGs are often slim in size or contribution. Covers

UN Global Compact by mentioning its report is based on the 10

principles.

CNPC


all SDGs. Places more emphasis on SDGs #10, #11, & #12.

Examples of initiatives for other SDGs are often slim in size or

contribution. Covers UN Global Compact by mentioning its

report is based on the 10 principles & its efforts towards the 10

principles. Is an active member of UN Global Compact.

CNOOC

Covers UN SDGs by stating it acted according to them, examples

of initiatives are missing. Covers UN Global Compact by

mentioning its report is based on the 10 principles & its efforts

towards the 10 principles.

CK HutchisonCovers UN SDGs by providing information on efforts to achieve

only SDG #12. Does not cover UN Global Compact .

Tencent Does not cover UN SDGs nor UN Global Compact .

Legend Holdings Does not cover UN SDGs nor UN Global Compact .

COSCODoes not cover UN SDGs . Covers UN Global Compact by

mentioning its efforts towards the 10 principles.

China Minmetals


all SDGs. Places equal emphasis on all SDGs. Examples of

initiatives for other SDGs are often slim in size or contribution.

Covers UN Global Compact by mentioning its report is based on

the 10 principles & its efforts towards the 10 principles.

ChemChina


all SDGs. Places more emphasis on SDGs #9 & #12. Examples

of initiatives for other SDGs are often slim in size or

contribution. Covers UN Global Compact by mentioning its

report is based on the 10 principles.

Royal Dutch Shell


a selection of SDGs related to the core business. Places more

emphasis on SDGs #7, #8, & #13. Covers UN Global Compact

by mentioning its efforts towards the 10 principles, and is a

founding member.

BP


a selection of SDGs related to the core business. Places more

emphasis on SDGs #7, #8, & #13. Covers UN Global Compact

by mentioning its efforts towards the 10 principles, and is a

founding member.

ExxonMobil


all SDGs. Places more emphasis on SDGs #7, #8, & #13. Does

not cover UN Global Compact .

Summarized disclosure theme: Other CSR initiatives

Chinese NOCs




65

Table 11 – Average reporting intensity theme: Employment

Table 12 – Average reporting intensity theme: Rights

Table 13 – Average reporting intensity theme: Community


Sinopec 6 983 133

CNPC 7 1586 289

CNOOC 8 1388 217

CK Hutchison 6 1283 214

Tencent 7 1101 157

Legend Holdings 11 1979 180

COSCO 4 1666 238

China Minmetals 13 3216 247

ChemChina 6 1864 311

Royal Dutch Shell 5 1483 327

BP 7 2470 430

ExxonMobil 4 996 229

Average reporting intensity theme: Employment

Chinese NOCs





Sinopec 4 417 52

CNPC 4 500 111

CNOOC 2 489 266


Tencent 5 1866 373


COSCO 2 585 146


ChemChina 4 262 66


BP 5 1278 277


Average reporting intensity theme: Rights

Chinese NOCs





Sinopec 3 330 126

CNPC 3 470 185

CNOOC 2 467 117


Tencent 4 1300 325


COSCO 1 129 64


ChemChina 5 990 198


BP 3 365 83

ExxonMobil 4 298 43

Average reporting intensity theme: Community

Chinese NOCs




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Table 14 – Average reporting intensity theme: Economic Impact

Table 15 – Average reporting intensity theme: Climate Change

Table 16 – Average reporting intensity theme: Other CSR initiatives


Sinopec 2 101 91

CNPC 1 291 291

CNOOC 1 115 115


Tencent 3 794 265


COSCO 1 152 76


ChemChina 2 120 60


BP 2 298 201

ExxonMobil 1 65 33

Average reporting intensity theme: Economic Impact

Chinese NOCs





Sinopec 10 3768 240

CNPC 10 2744 318

CNOOC 5 1607 179


Tencent 5 1684 337


COSCO 3 1361 321




BP 14 5194 454


Average reporting intensity theme: Climate Change

Chinese NOCs





Sinopec 3 408 116

CNPC 25 8467 169

CNOOC 1 50 25


Tencent 0 0 0


COSCO 1 87 87




BP 2 404 135

ExxonMobil 1 61 61

Average reporting intensity theme: Other CSR Initiatives

Chinese NOCs




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Appendix 3 – UN Sustainable Development Goals & UN Global Compact Principles

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Appendix 4 – Illustrative quotations

Employment theme:

- CNPC: “We emphasize the employment of local residents, women, ethnic minorities and

college students in order to increase job opportunities for local communities. We strictly

implement regulations on female employees’ confinement and lactation to protect their rights

and interests. We continue to open recruitment to the public, without restrictions on applicants’

ethnicity, gender or religion”

- CNOOC: “In China, we act in strict compliance with international conventions ratified by the

Chinese Government, such as the Convention on the Elimination of Discrimination in

Employment and Occupation, and local laws and regulations such as the Labor Law of the

People's Republic of China, the Labor Contract Law of the People's Republic of China,

Employment Ordinance, etc”

- COSCO: “We provide equal opportunities in recruitment, career development, promotion,

training and awards, regardless of skin colour, nationality, race, age, gender, religious belief

or physical ability. COSCO SHIPPING Lines works hard to safeguard legitimate and special

interests of female employees, according to the Labour Law of the People's Republic of China,

the Law of the People's Republic of China on the Protection of Rights and Interests of Women

and the State Council Special Provisions on Labour Protection of Female Employees, as well

as the Special Collective Contract for Special Interests of Female Employees formulated by the

labour union”

- ChemChina: “We have strictly abided by international and domestic labor laws and

regulations, upheld the employment policy of equality and non-discriminatory, treated

employees of different nationalities, races, genders, religious beliefs and cultural backgrounds

fairly, prohibited employment discrimination and forced labor, and resolutely put an end to

child labor”

- Shell: “The Shell People Survey is one of the principal tools used to measure employee

engagement, motivation, affiliation and commitment to Shell. It provides insights into

employees’ views and has had a consistently high response rate. In 2018, the response rate was

82%, which was an increase of 2% compared with 2017, and the average employee engagement

score was 77 points out of 100, which was an increase of one point compared with 2017”

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- CK Hutchison: “CK Hutchison hires and rewards staff for their performance and follows a

stringent anti-discrimination employment policy by which staff is employed regardless of race,

gender, physical ability or faith. The Group has adopted policies that provide equal

employment opportunities to recruit, promote and assign employees based on their skillset,

abilities and how these fit the job requirements. For instance, Watsons Singapore has signed

up and adopted the Singapore government initiative of Tripartite Alliance for Fair and

Progressive Employment Practices since 2017”.

Rights theme:

- CNOOC: “We respect and support the association freedom of our employees complying with

the law. Guided by the Trade Union Law of the People’s Republic of China and other laws in

foreign countries, we have established labor unions, which have the responsibility and

obligation to protect employees’ legitimate rights and interests as well as to monitor the

Company’s practices. Labor unions also oversee all operational activities related to employee

benefits and communicate with the Company on behalf of its members. We also maintain close

communication with legal department and labor unions to jointly guarantee employees’ rights

and interests. CNOOC Limited highly focuses on anti-corruption, and sets strictly internal

punitive mechanisms and management policies strictly abiding with by national and local

policies, laws and regulations related to anti-corruption and business ethics, such as the Anti-

Money Laundering Law of the People’s Republic of China, Prevention of Bribery Ordinance,

and Anti-Unfair Competition Law of the People’s Republic of China. Should there be any

practice of employee corruption and malpractice with no exception, we would take down with

no exception”

- Sinopec: “The labour union extensively solicits the opinions of employee representatives and

submits to the Workers' Congress for approval. The Company complies with all national laws

and anti-corruption regulations, and laws and regulations of countries and areas where we

operate. We keep promoting the enforcement of anti-corruption measures and carry out

punishment and prevention mechanism in order to build a clean company”

- China Minmetals: “In 2018, the labour union establishment rate was 100%, the employee

membership rate was 100%. We attach great importance to anti-corruption, focusing on key

targets that have been investigated and dealt with in recent years, especially the personnel

selection and employment, the major investment projects, the key business areas and the critical

posts, to curb and deter the corruption with strong and high-pressure for a better business

environment. The measures are as follows: Strengthening Ideological Consciousness; The

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party organizations at all levels in China Minmetals Group take the initiative to strengthen the

"Four Awareness" and practice the "Two Maintenance", which is highly consistent with the

CPC Central Committee. Improving System Construction; The party group formulates the

implementation plan for the reform of discipline inspection and supervision, clarifying the

timetable, road map and specific missions. Promoting System Implementation; We step up

efforts to ensure the effectiveness of various reform tasks, so as to strengthen the monitoring of

supervision system and enhance the ability of corporate governance”

- BP: “Our code of conduct explicitly prohibits engaging in bribery or corruption in any form.

Our group-wide anti-bribery and corruption policy and procedures include measures and

guidance to assess risks, understand relevant laws and report concerns. We provide training

to employees appropriate to the nature or location of their role. We assess any exposure to

bribery and corruption risk when working with suppliers and business partners. Where

appropriate, we put in place a risk mitigation plan or we reject them if we conclude that risks

are too high. We also conduct anti-bribery compliance audits on selected suppliers when

contracts are in place. We take corrective action with suppliers and business partners who fail

to meet our expectations, which may include terminating contracts. We are developing a more

systematic approach to managing the risk of modern slavery and other labour rights issues by

building it into our management systems, processes and procedures. Some of our business

activities and parts of our supply chain may pose a higher risk of labour rights and modern

slavery issues than others. Since 2016 we have been taking a risk-based approach to monitoring

our contractors and suppliers”

- CK Hutchison: “The Group upholds labour standards and complies with the relevant

employment guidelines and regulations throughout its businesses. The Group’s policies strictly

prohibit the use of child labour and forced labour, rigorous measures and audits are taken to

prevent such practices in the Group’s operations. For example, since 2016, ASW has become

one of the Mekong Club members to help it develop a set of tools in raising awareness towards

modern slavery. The awareness toolkit is shared with different business units and suppliers,

with a target to cover all own-brand (“OB”) suppliers”

Community theme:

- CNPC: “In 2018, we invested RMB 97.49 million in 44 projects, including infrastructure

reconstruction, education and training, healthcare, and industrial collaboration, in 13 counties

and districts, directly benefiting more than 80,000 people. We set up scholarships, offer grant

loans and subsidies to students from underprivileged families, improve teaching conditions for

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impoverished regions, and support scientific and cultural activities as well as relevant

competitive activities. In 2018, we granted CNPC Scholarships worth a total of RMB 3.99

million to 635 students. In addition, we explore new models to support education, and call on

the public to pay attention and work together to achieve education equality. In cooperation

with China Foundation for Poverty Alleviation (CFPA), Beijing Normal University Group and

Tencent Foundation, we sponsor the Xuhang Educational Program and the Teacher Training

Program to help students from poor families complete their studies”

- Sinopec: “In 2018, we invested RMB 25.83 million in education to improve education

infrastructure, purchase education and teaching equipment, and provide 1,374 student

subsidies. We set up "Spring Bud" classes to help school-deprived girls return to school. We

also have organised the Summer Camp themed with "Great Wall Lubricating Oil · Chinese

Astronauts Experience Camp" for 11 consecutive years, and helped over 70 students to

participate in winter camps so as to broaden the vision of outstanding students from

impoverished areas”

- CNOOC: “On October 27, 2018, the Zhanjiang branch collaborated with No. 2 Zhanjiang

People's Hospital to carry out medical checkups and treatment in Gantang Town, ensuring the

public to receive free medical services at their doorstep. Five doctors attended the activity and

provided medical services for nearly 100 people”

- Shell: “We spent almost $175 million on social investment. We spent $113 million on voluntary

social investment, of which around $66 million was in line with our global themes. The

remaining $47 million was spent on local programmes for community development, disaster

relief, road safety, health and biodiversity. Shell Foundation is an independent charity that

applies business thinking to the global development challenges of access to energy and

transport services. Shell Foundation provides business support, grants and market connections

to help pioneering social entrepreneurs prove new business models in low-income communities.

The charity selects partners with the potential to benefit 10 million people within a 10-year

time frame, achieve financial independence and spur international replication. Shell

Foundation has long-term strategic partnerships with UK and US international development

agencies to incubate new ideas, demonstrate the viability of market-based solutions and

support the growth of new inclusive markets. Together with Wetlands International, we

delivered a project in Brunei to restore local habitats and prevent erosion”

- ChemChina: “Donated RMB 300,000 as education poverty alleviation funds, donated a “New

Great Wall High School Student Self-improvement Class” to a high school in Gulang County,

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and provided financial support for 50 poor students with outstanding performance to help them

complete the three-year high school education. Invested RMB 132,000 to organize ten

outstanding poor students and one teacher to participate in the 23-day 28th Bluestar

International Summer Camp event for broadening horizon and gaining experience. In the

context of the “Belt and Road” initiative, Hangzhou Water Treatment Technology Development

Center and Djibouti Special Economic Zone successfully established a strategic partnership

for desalination and signed the first contract on integrated intelligent containerized

desalination plant. The partnership would help solve the problem of drinking water, industrial

water and freshwater supply in Republic of Djibouti, and provide strong support for later

investment in Djibouti Special Economic Zone and creation of a city with complete functions”

- COSCO: “We take part in the Poverty Alleviation Day actively, act on President Xi Jinping's

strategic thinking for poverty alleviation and development, as well as perform social

responsibilities as a central enterprise. On that day, all employees of COSCO SHIPPING Lines

made charity donations out of sincere love. We totally raised RMB 466,823.47. Our employees'

made great efforts on fighting poverty and supporting rural revitalization, regarding it their

responsibilities to contribute to the development of poverty-driven areas. The fund raised was

donated to the COSCO SHIPPING Charity Foundation”

Economic impact theme:

- CNOOC: “CNOOC Limited highly focuses on anti-corruption, and sets strictly internal

punitive mechanisms and management policies strictly abiding with by national and local

policies, laws and regulations related to anti-corruption and business ethics, such as the Anti-

Money Laundering Law of the People’s Republic of China, Prevention of Bribery Ordinance,

and Anti-Unfair Competition Law of the People’s Republic of China. We seek to identify and

punish Should there be any practice of employee corruption and malpractice with no exception,

we would take down with no exception”

- COSCO: “We fight against improper competition and monopoly. During the 2018 reporting

period, we consistently abide by the anti-monopoly laws and competition policies of all

countries and regions, participate in fair market competition, and provide better services to

our customers. Based on the fierce market competition situation, we made independent

judgments and decisions, followed and timely tracked changes in international anti-monopoly

policies and regulations, and adopted follow-up measures. In 2018, the anti- monopoly

compliance awareness of the company's management personnel at all levels was further

improved”

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- CNPC: “We abide by business ethics and market rules, and adhere to the principle of honesty

and credibility, equal consultation, mutual benefit and common development, and promote

transactions with high business integrity and transparency, in order to maintain fair and

impartial competition in our business activities. We strictly comply with the Anti-monopoly Law

of the People’s Republic of China, the UN Guiding Principles on Business and Human Rights

and other applicable laws, regulations and international practices on commercial bribery,

extortion and fraud. We oppose monopolies and do not abuse our dominant market position.

We fight against unfair competition in any form and comply with trade restrictions, and never

conduct, participate in or support any forms of money laundering”

- ExxonMobil: “We recognize the importance of disclosing relevant payments to governments to

reduce corruption, improve government accountability and promote greater economic stability

worldwide. We consider the most successful transparency initiatives are those that: Apply to

all foreign, domestic and state-owned companies; Protect proprietary information to promote

commercial competitiveness; comply with international trade conventions and treaties; and Do

not violate host government laws or contractual obligations”

Climate change theme:

- BP: “There was a decrease in our direct GHG emissions in 2018. The primary reasons for this

include actions taken by our businesses to reduce emissions in areas such as flaring, methane

and energy efficiency as well as operational changes, such as increased gas being captured

and exported to the liquefied natural gas facility in Angola. To reinforce our ambitions, we

implemented our Advancing Low Carbon accreditation programme, which aims to inspire

every part of BP to identify lower carbon opportunities. To gain accreditation by BP, each

activity must meet certain criteria, including delivering what we call a better carbon outcome.

This means either reducing GHG emissions, producing less carbon than competitor or industry

benchmarks, providing renewable energy, offsetting carbon produced, furthering research and

technology to advance low carbon or enabling BP or others to meet their low carbon objectives.

Deloitte conducts independent assurance on the Advancing Low Carbon activities, including

assessing the application of BP’s process and criteria for accrediting activities, and GHG

emissions offset and saved within the programme. A total of 52 activities met the criteria for

accreditation or reaccreditation in 2019, up from 33 in 2018. These include emission

reductions in our operations, carbon neutral products, more efficient ships, investments in

electrification and support for low carbon technologies”

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- ExxonMobil: “Management of environmental performance is guided by a fundamental

scientific understanding of the impacts of energy and petrochemical production and a

commitment to develop, maintain, and operate facilities using appropriate environmental

standards. One area of critical importance is climate change. We manage the risks by reducing

our emissions, helping consumers reduce theirs, participating in policy discussions, and

advancing research to find new low-emissions technologies. For example, in 2018, we outlined

measures to reduce methane emissions by 15 percent and flaring by 25 percent by 2020. We

also continued to advance our research into next-generation, breakthrough energy solutions,

including biofuels, carbon capture and storage, and technology to lower the energy intensity

of industrial processes. Since 2000, we have invested more than $9 billion in lower-emission

energy solutions. On the policy front, ExxonMobil supports the Paris Agreement and market-

based approaches to reduce greenhouse gas emissions, such as a revenue-neutral carbon tax”

- Sinopec: “We implemented Green and Low-carbon Development Strategy and continued to

address climate change. We set up the goal of greenhouse gas emission reduction, deployed

the Energy Efficiency Improvement Plan, and conducted evaluations on energy efficiency and

carbon emissions. The carbon trading volume reached 1.06 million tonnes, with carbon trading

turnover of about RMB 24.11 million. The Company attaches great importance to GHG

emission, sets emission reduction targets and measures, continuously carries out carbon

capture and methane recovery, and promotes the development of alternative energy such as

bio-aviation coal, biodiesel and photovoltaic power generation. In 2018, the Company emitted

172 million tonnes (CO2 equivalent) of GHG with an increase of 2.07 percent year-on-year”

- CNOOC: “The Company manages energy conservation, emission and carbon reduction

throughout the year and tackles major issues. We set up a set of metrics and KPIs for energy

conservation and carbon emission reduction in light of the regulations and reviewed the annual

performance of subsidiaries accordingly. In 2018, we established a low-carbon management

system with reference to the national policies and practices of leading energy companies in

China and abroad as well as requirements to implement climate and carbon management. The

system was found based on one measure and five rules: Low Carbon Management Measures,

Rules for Carbon Emission Statistics and Reporting, Rules for Carbon Emission Impact

Assessment and Review of Fixed Asset Investment Projects, Rules for CCER1 Project

Development Management, Rules for Carbon Asset Management, and Rules for Carbon

Assessment. Through this system, the Company has worked out the “division of work” for the

overall carbon management and the corresponding data collection methods and laid out

managing rules for carbon reduction work including CCER projects, carbon evaluation and

carbon assets assessment. In 2018, we initiated the compilation of a "Green Low-Carbon

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Development Roadmap" and its implementation plan, which outlines the short-term, medium-

term and long-term carbon emission reduction action plans for the Company. The Plan aims

to optimize and integrate the energy control and low-carbon management information system

that combines production with energy saving and carbon emission reduction. We have made a

more progressive annual plan on energy-saving and low-carbon targets, incorporating KPIs

of carbon emissions, emission intensity and emission reduction completion into the

performance evaluation of each unit”

- COSCO: “In 2018, the Company continued to promote and use various advanced energy

conservation and emission reduction technologies, and effectively reduced fuel oil consumption

through management measures such as optimizing structure of its fleet and design of its

shipping routes and improving operation efficiency of vessels at port, thereby reduced the

environmental impact and carbon emission from the business operation”

Other CSR initiatives theme:

- BP: “Our core business of delivering energy to the world contributes directly to goals 7, 8 and

13. The way we operate supports the implementation of goals 3, 6, 9, 12, 14, 15 and 17 in the

countries where we are present. We are working with our peers to create an industry framework

for human rights supplier assessments. We established EverSource Capital with Everstone to

manage the Green Growth Equity Fund aiming to raise up to $700 million of investment in low

carbon energy infrastructure projects across India. To promote an inclusive culture, we

support employee-run advocacy groups in areas such as ethnicity, gender, sexual orientation,

parenting and disability. We consider greenhouse gas reduction opportunities from the design

stage for our major projects. We developed a programme, in collaboration with local

government, NGOs and the private sector, that reduced the rate of malaria infection from 9%

in 2006 to 0.02% in 12 pilot villages in Bintuni Regency, Indonesia. We are proud to be part of

the first coalition of global businesses working together to support youth-led innovation for the

SDGs. As the challenge partner for SDG 7, we will fund and mentor an initiative with a tangible

impact on improving access to sufficient and reliable energy that is affordable and clean.”

- ChemChina: “We support the UN 2030 Agenda for Sustainable Development Goal 6, Goal 7,

Goal 13, Goal 14 and Goal 15. We support the UN 2030 Agenda for Sustainable Development

Goal 8 and Goal 9. We support the UN 2030 Agenda for Sustainable Development Goal 12.

We support the UN 2030 Agenda for Sustainable Development Goal 3. We support the UN

2030 Agenda for Sustainable Development Goal 6, Goal 7, Goal 13, Goal 14 and Goal 15. We

support the UN 2030 Agenda for Sustainable Development Goal 3, Goal 4, Goal 5 and Goal 8.

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We support the UN 2030 Agenda for Sustainable Development Goal 1, Goal 2, Goal 4, Goal 9,

Goal 10 and Goal 11.”

- CNOOC: “We also actively responded to the 17 UN 2030 SDGs, and strove to enhance the

integrated value of economic growth, environmental protection, and social progress, the three

perspectives that are of most concern to our stakeholders”

- Shell: “We welcome the SDGs and believe we have an important role to play in supporting the

ambitions. All the SDGs are relevant to Shell operations to varying degrees and we are already

contributing to many of these goals. In 2018, following a review by senior executives, we

decided to focus on supporting the three goals where we can make the greatest contribution:

Goal 7 (Ensure access to affordable, reliable, sustainable and modern energy), Goal 8 (Decent

work and economic growth) and Goal 13 (Climate action). Today, around 1 billion people live

without access to electricity. The same number live with unreliable or unsafe supplies of

electricity. Access to reliable and safe energy is critical to enabling economic and social

development and improving health, education and livelihoods. Goal 7 is crucial to achieving

almost all the SDGs. For our part, we announced our ambition to provide a reliable electricity

supply to 100 million people in the developing world by 2030. We continue to work on

developing a longer-term strategy to achieve this ambition. Employment is a critical route out

of poverty and towards prosperity. We provide jobs and follow applicable labour, health and

safety standards. We encourage local businesses to be part of our supply chain and seek to

ensure our suppliers meet Shell standards. We work with governments and others to offer

training to build local skills and expertise. We support entrepreneurs through various

programmes, which helps young people start their own businesses. We also contribute to

economic growth by paying taxes and royalties to local governments”

- China Minmetals: “SDG7, ensure access to affordable, reliable, sustainable and modern

energy for all; Build energy-saving and environmental-protection research and demonstration

projects to improve energy utilization efficiency. SDG8, promote sustained, inclusive and

sustainable economic growth, full and productive employment and decent work for all; Pay

attention to the career development of employees and provide all kinds of practical

opportunities through employee training and talent pool to broaden the development channels.

SDG11, make cities and human settlements inclusive, safe, resilient and sustainable; Develop

beautiful countries, intelligent cities, sponge cities, utility tunnels”

- Sinopec: “We mapped our business operations with United Nation's 17 SDGs, and enhanced

communication with stakeholders who concern climate-related financial disclosures and

analysed the Company's climate related risks and opportunities.”

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