The influence of firm corporate governance model and performance on human rights issues. Evidence from the European Oil and Gas Industry

Purpose - In last decades, an increasing number of scholars as well as top managers and consultants realized that Corporate Social Responsibility (CSR) is gaining a momentum in line with the recent documents issued by the European Commission (European Directive 2014/95/UE). Human rights principles are becoming a crucial topic in embedding sustainability issues in key company functions. An increased number of organizations therefore have begun to articulate their social responsibilities using the language of human rights (Bernaz, 2013). In order to deliver the companies’ commitment to respect human rights some actions are straightforward to adopt such as publishing a policy on human rights or establishing a grievance mechanism (www.csreurope.org). Research design/Methodology - The empirical analysis is focused on a sample of companies belonging to the Oil & Gas industry and listed on major European stock markets. The data collection covers the period 2010-2014 and follows by authoritative secondary sources (Asset4, Thomson Reuters and Amadeus, Bureau van Dijk). In our research design, the dependent variable is a social score that is a proxy meant to record the controversies linked to violations to the rights to freedom of association. The independent variables seek to capture some scopes inherent to the corporate governance practices, focused on CSR, the corporate governance model effectiveness, the stakeholder engagement approach and the firm performance. Expected findings - Our results show that corporate governance practices, addressed on CSR, help improve the social score above mentioned. Specifically, this analysis looked into the influence of some internal drivers on firm social performance that can produce clear benefits for refining, on one side, the corporate governance model and, on the other side, the corporate culture, on the basis of the effects ensuing from the adoption of a stakeholder engagement approach. Originality value – The relationship between sustainable variables and firm performance has been discussed in several studies (Michelon et al. 2013; Martìnez-Ferrero, Frìas-Aceituno, 2015; Boesso et al., 2015). However, this research aims to investigate the slightly investigated sub-area of Human Rights within the CSR field (Preuss, Brown, 2012) linked to different aspects of corporate governance model and firm performance through the analysis of the Oil & Gas industry that should be strongly engaged in corporate social responsibility activities focused on human rights, labor rights, working conditions and anti-corruption measures (Raufflet et al., 2014; Kirat, 2015). Practical implications/research limitations – Five years after the adoption of the Guiding Principles (UN Human Rights Council, 2011) companies are well aware of their engagement in embedding human rights across their functions and processes. This study may contribute to support CSR/sustainability managers in identifying best practices to make human rights part of business. Our findings are also useful to assess the effectiveness of the companies’ effort to entrench human rights aspects into business activities.