A new 'neighborhood watch': Azeri horsemen guard BP pipeline

The $100 million effort stretches across 450 towns and is part of a growing push for corporate social responsibility.

from the March 12, 2008 edition

Page 2 of 2

Page 1 | 2

"I don't think I have ever worked so closely with the private sector," says Pamela Flowers, the country director for the International Rescue Committee, which partnered with BP on community projects along the BTC. "They put a lot of effort into it."

This strategy, which some view as "enlightened self-interest," may seem like common sense. But compared with a decade ago, it represents a shift for companies that today face ever more scrutiny. "It's fundamental, good security practice, in terms of protecting our asset, to make sure that we are good neighbors to the communities we impact," says BP spokeswoman Clare Bebbington.

Prodding BP and others forward is the CSR movement, which presses firms to hoist their human rights, environmental, and labor standards. Launched in the mid-1990s by nongovernmental organizations, the movement spawned related campaigns such as the United Nations Global Compact, the "Voluntary Principles on Security and Human Rights" created by Washington and London, and the Oslo-based Extractive Industries Transparency Initiative.

But the movement has only picked up steam in recent years, as CSR advocates press for voluntary, nonbinding "soft law," says Mr. Gulbrandsen, the CSR expert. While lawsuits have had limited success, he adds, the real catalyst has been bad press beamed worldwide and immediately via the Internet.

Earlier, energy companies routinely failed to live up to these standards. Critics often cite Shell in Nigeria, which in the mid-1990s was accused of supporting military attacks against Niger Delta tribes. Shell denied those allegations. Today, Shell officials in Nigeria say that at more than $60 million, theirs is one of the largest private social investment programs in Africa.

"If you're looking at a long-term investment, being more responsible about how you treat the local community and local environment is the smart move, and I think global companies are realizing this," says Charles Esser, an energy analyst for the International Crisis Group in Brussels and a former US Department of Energy official. In Azerbaijan's underdeveloped countryside, analysts say the deluge of oil revenue pouring into state coffers – estimated at $10 billion a year – would generate one of the greatest growths in national income recorded in history. It also heightens public expectations. Yet so far it's barely visible. "The trickle down of money is certainly happening, but not in a transparent or predictable way," says one Western diplomat in the capital.

That may be why BP's investments seem to pay off. In the dusty farming village of Duzdag, a new five-room school building, freshly painted in light pink and built by BP and its partners, stands across the street from the old one-room school with broken windows and a leaky roof.

In return, the Azeri locals say they're invested in helping BP.

"We have felt some positive benefits from BP, so, of course, we must show them the same," says Rauf, a farmer.

1 | Page 2