Beyond Greenwashing: Environmental Commitments and Gas Flaring in the African Oil Sector

Abstract

Corporations make substantial progress toward their Zero Routine Flaring commitments globally, particularly in Africa where preexisting environmental standards are weak. Moreover, committers’ flaring reductions on the continent are driven primarily by operational improvements rather than offloading assets and are concentrated among committers facing greater stakeholder pressure. While flaring is higher for assets continuously operated by, awarded to, or divested to non-committers, corporate actions to uphold commitments are associated with a conservatively estimated 10% net reduction in flaring in Africa without a corresponding reduction in oil production or local economic activity in extraction communities. Our findings suggest that environmental commitments are backed by corporate policies akin to establishing a uniform cost of pollution across the firm’s global operations and therefore may alleviate the problems posed by globally fragmented regulation.

Keywords: Sustainability, Corporate commitments, Corporate social responsibility, CSR, Corporate governance, Stakeholder pressure, ESG, Environmental regulation, Natural gas flaring, Oil and gas, Greenhouse gas emissions, Africa

JEL Classification: F18, K23, K32, L71, M14, M48, N57, O13, Q35, Q52, Q53, Q56