444 By Susan Ariel Aaronson and David Deese With a reaction by ...

deliver adequate and dependable oil and gas supply to customers in an efficient, safe andhealthful way. These companies are held accountable to do just that, as capital marketsrespond to their efficacy by either rewarding or punishing share price andcreditworthiness. Quarterly earnings are an important but by no means the sole measureby which management’s performance is judged.More relevant to this essay, it is hard to find any correlation between thesupposedly narrow, short-sighted and socially irresponsible approach of an IOC focusedon shareholder value versus the necessity of an enlightened longer-term view in order toact responsibly. On the contrary, short-term market mechanisms have been quite effectivestimuli for corporate responsibility. Take BP, whose recent safety record in the US wasso poor that an outside commission chaired by former Secretary of State James Baker hadto be brought in, and senior management was replaced in order to restore credibility.Once BP’s share price had been punished for this poor performance, it was compelled toact.The comparison between national oil companies (NOCs) and private firms onlyreinforces the point. State-run Pemex, PdVSA and Gazprom—with their insulation frommarket forces—actually have miserable social responsibility records in their operations inMexico, Venezuela and Russia. In fact, the anecdotal evidence is that, as NOCs competeabroad and become partially publicly-traded (such as Petrobras and Petronas), theydevelop more social and environmental responsibility precisely because they becomesubject to market discipline.Admittedly no one’s record is perfect. However, is the focus on shareholder valuereally the barrier or part of the answer? It can be argued that shareholders also have an468