Importance of Corporate Social Responsibility in the Energy Sector

By : Jalaj Govil, Law Student, Galgotias University 


Energy companies are increasingly stimulated to deal with the growing societal challenges such as the scarcity of resources, climate changes, pollution, employment. The citizens, environmental and government organizations define energy company environmental and social responsibility as the duty. This clearly means that for energy companies CSR is a requirement. A company working in an energy sector should acknowledge the social, environmental and economic repercussions, in all the regions which get affected by its activity. These drivers are market-based or requirement-based and they can be categorized in three groups- economic, social and political drivers. This paper deals with the development and growth of Corporate Social responsibility in the energy sector. 

KEYWORDS- Corporate Social Responsibility, Energy Sector, CSR drivers, advanced CSR


The expectations by the businesses has been evolved in great extent as the consumer consciousness has evolved. In the relation with national and international developments of Corporate social responsibility (CSR) is becoming an important element on the national and transitional policy agendas. An even more diverse range of businesses are adopting CSR strategies as a core part of their business model. In the past two decades, Europe has become captivated with CSR and there is considerable evidence that scholars and practitioners in Europe are taking seriously this social concern, often manifested in the form of formal writings, research, conferences and consultancies. It is hard to sum up the history of how corporate social responsibility came to be in the European Union as a whole. For one, it was formed only twenty-five years ago in November of 1993, second, it is made of 28 countries that have their own extensive histories, traditions and cultures. Still, Europe has historically been concerned with the ethical business practices for a long time, Particularly, with the rise of Industrial Revolution, criticism quickly emerged about the factory system and its treatment of employees. From these concerns, an industrial welfare movement professed with the aim of preventing labor problems, improving performance and giving back to various stakeholders of business. The demand of energy is increasing, both in developed and in developing countries. Also an increasing pressure is put on the issue of climate change, that is strongly related to the efficiency of usage of energy resources. All business sectors are affected by the growing challenges of the society. However, especially companies in the energy sector are increasingly stimulated to deal with the social and environmental issues, like the most impacting on public wellness and environmental stability. Companies in energy industry are pushed to prepare their CSR strategies to the pressure of the external contexts. It is generally recognized that energy is essential for social and economic development, both in the developed countries as well as in the developing countries. Also the energy supply, especially the electricity, should serve the needs of a growing population, that is expected to reach 9 billion by 2050 and support its economic progress and industrial rebirth. The global economy is estimated to grow four times faster from now and 2050, this growth could reach ten-fold in emerging countries, such as China and India. This could contribute to economic benefits and enormous improvements in people’s standards of living, but it also implies a greater use of energy. Specifically, referring to developing areas, there are more than 1.2 billion people who still lack access to modern energy, while energy can help the poor to move out of poverty, support business and grow local economies. It means that for energy companies the challenge of resources is scarcity is deeply connected with their core business. CSR could help to manage it through a better integration of economic and socio-environmental goals.