CSR and Audit Issue
The first section of this report provides a critical analysis of the corporate social responsibility (CSR) and audit issues based on the annual reports of BP and Shell companies in 2019. Critical elements related to the overall business strategy are summarized in the following table and are further used as a background for recommendations in the consequent section.
Table 1. CSR and audit issues, BP and Shell companies, 2019.
Recommendations
The following recommendations are further provided for the improvement of non-financial information to meet the expectations and needs of the stakeholders based on the analysis of two annual reports. First, there is a certain gap in explaining how CSR principles help to maintain human rights in both companies since both figures and excerpts are primarily related to the āimportanceā of pursuing those and ārecognitionsā received from the printed articles. BP certainly outperforms Shell in describing the aforementioned, while there is still an uncertainty in understanding how protecting human rights coincides with corporate social responsibility, as well as what type of audit should be performed to evaluate these efforts.
For this case, the recommendation is to leverage the opportunity of engaging independent research companies to conduct anonymous surveys of employee opinions on human rights management in terms of CSR standards adopted by both companies, which will provide explanatory specifics based on the pre-designed questionnaire (Wang & Sarkis, 2017). However, it is important to ensure that such a survey opportunity is highly structured and eventually focused on the contractual workforce rather than company management, where the effort of asking for input will be mostly tolerated.
Second, it is notable that both companies are somewhat enthusiastic about their recent efforts in disclosing financial operations related to the government controls in African countries, which will certainly attract the attention of auditing firms and reaffirm the provision of the Sarbanes-Oxley Act of 2002 where necessary. The African approach to doing business, as well as the cultural heritage of the non-transparency evident for financial operations and bribery remains unresolved and requires more effort to become accepted by the audit professionals (Wang & Sarkis, 2017).
Analyzing the efforts of both companies, it is evident that BP takes a more proactive position towards audit transparency, while Shell still needs to provide more specific details on its operations in developing countries. Hence, it is advised to develop new guidelines for the oil and gas companies in terms of reporting their activities in such regions with respect to the anti-bribery and corruption risks.
Overall, the analysis shows that BP and Shell are following both CSR and performance audit requirements, while the former appears to be more successful in reporting those transparently. Nevertheless, further efforts are required to access their adherence to the aforementioned rules through better standardization of the corporate auditing standards. Eventually, it could be achieved through industry benchmarking and research, while currently, this effort is hard to be realized because of the extensive economic depression caused by the pandemics. Nevertheless, the aspect of transparency in demonstrating economic and social commitment should be recognized as a contribution to future human development.
References
BP Sustainability Report (2019). Energy with purpose. Web.
Shell Sustainability Report. (2019). Web.
Wang, Z., & Sarkis, J. (2017). Corporate social responsibility governance, outcomes, and financial performance. Journal of Cleaner Production, 162, 1607-1616. Web.