Table 21. ESA – Oil & Gas Company

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to the wellness of people and ecosystem conservation and protection. The company has co-financed social projects in low-income communities located near to the facilities of the firm, reaching investment values of 5.9 million USD in 2017 and 14.5 million USD in 2018.

The adoption of industry standards included ISO 14001, AA1000 and ISO 26000, in addition to their commitment to reporting initiatives according to the GRI guidelines. Oil & Gas Company adopted voluntary programs such as UN Global Compact principles, the CEO Water Mandate and voluntary principles on security and human rights. Finally, the company participated in green awards such as Green Vendor Rating award, the CSR award and the CSR initiative award.

Reputational strategies included the management of relations with communities for the positioning of the company in the country and the design of a new brand replacing the pre-Colombian figure that represented the company for 50 years, to reflect the sustainability vision of the company. Finally, Biodiversity conservation programs included study and conservation of wetlands, reforestation plans and specific actions in conservation of wild species.

Table 21. ESA – Oil & Gas Company.

observed environmental practices

* Adoption of compliance practices associated with environmental impact assessments, preparation of environmental management plans, mitigation and compensation activities, substitution of restricted materials and renewal of permits associated to the use and exploitation of natural resources. * Adoption of pollution reduction practices associated to process monitoring, improvement of operations to achieve efficiency in resource management and the implementation of closed loops (i.e. gas, water and wastewater). * Reputational practices through the establishment of effective relations with regulators, dialogues with communities to inform about the environmental impacts of projects, * Support for culture-based educational programs, co-financing of infrastructure and public utilities, financing of social entrepreneurship and support for rural development projects. * Adoption of industry standards and voluntary programs such as ISO 14001 and ISO 26000 standards and UN Global Compact principles, the CEO water mandate and human rights principles. * Pollution compensation through the support for environmental conservation programs such as study and conservation of wetlands, reforestation plans and specific actions in conservation of wild species.

Case studies | 119

• ESA factors

a) Business context

Oil & Gas Company, is ascribed to the Ministry of Mines and Energy and thirty percent of its board members represent the Colombian governmental ministries and administrative departments. The authorities that regulate the company include the Ministry of Mines and Energy, the National Hydrocarbons Agency and the Gas and Energy Regulatory Commission. Additionally, due to its public nature, five different superintendents oversee specific company activities (i.e., public utilities, finance, transport, companies and health) and it is subject to control by the Government Comptroller (Oil&Gas, 2015).

Oil & Gas Company develops its operation through oil exploitation. As a consequence of such condition, the company requires to apply for an authorization, before the National Environmental Licensing Authority, for the use of natural resources. In order to obtain the environmental license, the Company is required to develop a plan to manage the impacts originated in the development of facilities and the execution of oil extraction projects. On a daily basis, the firm`s environmental strategy includes the renewal of the environmental permits associated to forest exploitation, water usage, landfills, emissions and concessions of underground or surface water.

In the case of water use, the law states that “any project requiring an environmental license and involving in its execution the use of water taken directly from natural sources for any activity, must allocate not less than 1% of the total investment to the recovery, conservation, preservation and surveillance of the watershed” (Resolución 182087, 2007).

Finally, hearing processes and informed consent occur mainly in industry sectors in which there is a plan to develop projects associated to the exploitation of natural resources, which is the case under analysis (G. Rodriguez, 2014).

In addition to local authorities, communities put social pressure on Oil & Gas Company when it operates in locations that are next to its activities. Besides, the company has presence all over the country and during decades it has executed social development programs.

According to the sustainability reports, the management of relations has been assumed as part of the strategy of the Company to shield the achievement of a profitable and sustainable growth. Because of that, communities expect that their basic needs be solved by the company. For example, Company supports sport activities and gives scholarships to children from rural

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areas in addition to the financial aid that give to farmers for agricultural projects (Oil&Gas, 2019).

It is also visible in the documents of the Company that its practices are strongly shaped by regulators and communities:

“[…] According to the material analysis carried out by the company, dialogues with communities, water management, pollution emissions and transparency in business constituted the most relevant aspects identified in the analysis…” (Oil & Gas, 2015).

Normative pressures such as voluntary initiatives and industry standards instituted an influencing factor for the adoption of environmental strategies. Specifically, Oil & Gas Company has been committed to voluntary programs, including: UN Global Compact principles, the CEO Water Mandate and voluntary principles on safety and human rights. Besides, the company has adopted industry standards such as: ISO 14001, AA1000 and ISO 26000. Finally, they have been endowed with different awards, including: The Green Vendor Rating award in 2011, the CSR award granted by ACCENTURE in 2013 and the CSR initiative award granted by MERCO and the newspaper “Portafolio” in 2015.

The firm received the Green Vendor Rating award for its green procurement strategy, through which they sought to promote environmental practices in its suppliers. On the other hand, the company has developed a program focused on the recovery of degraded marine environments through the construction of more than 100 artificial reefs that use obsolete stretches of oil pipelines, which has allowed the company to receive the Accenture prize. Finally, the company was granted the MERCO award because of its ethical practices and transparency of corporate governance.

In addition to coercive forces, it was observed that Company is continuously checking its practices of their main competitor in the Oil & Gas sector. The Company maintains an agreement with a competitor, which they consider exhibiting high performance in the oil industry, for acquiring knowledge about green standards and biodiversity conservation practices. Furthermore, “both companies have signed different agreements to comply with cleaner operations and minimize CO2 emissions (Oil & Gas - Company, 2009).

Oil & Gas Company is the second most profitable oil company in Latin America after its main competitor (Vargas-Vega, 2020). The main competitor is the leader of the market in Latin America and has been ahead of the Oil