AN EVALUATION OF ENVIRONMENTAL ISSUES AND

CORPORATE SOCIAL RESPONSIBILITY IN NIGERIA

BY

MOMODU MUHAMMED BELLO

MGS0605109

DEPARTMENT OF ACCOUNTING
FACULTY OF MANAGEMENT SCIENCES
UNIVERSITY OF BENIN
BENIN CITY

FEBRUARY, 2010

1
AN EVALUATION OF ENVIRONMENTAL ISSUES AND
CORPORATE SOCIAL RESPONSIBILITY IN NIGERIA

BY

MOMODU MUHAMMED BELLO

MGS0605109

BEING A PROJECT WORK SUBMITTED TO THE

DEPARTMENT OF ACCOUNTING, FACULTY OF
MANAGEMENT SCIENCES, UNIVERSITY OF BENIN
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF
THE AWARD OF BACHELOR OF SCIENCE (B.Sc) IN
ACCOUNTING, BENIN CITY

FEBRUARY, 2010

2
 DECLARATION

I hereby declare that:

1.) This project work is based on the study undertaken by me in

the Department of Accounting, University of Benin, under

the supervision of Mrs. P.A. Donwa

2.) This work has not been previously submitted for the award

of degree elsewhere, at least to the best of my knowledge.

3.) All ideas, opinions and views are products of my personal

research and where the views of others have been expressed,

they have been duly acknowledged.

_______________________________
MOMODU MUHAMMED BELLO

_____________________
DATE

3
 CERTIFICATION

We hereby certify that this project was carried out by

Muhammed Bello .I. Momodu and here by recommend to the

board of studies, University of Benin, Benin city Edo State. The

acceptance as satisfactory of the project titled ‘Environmental

Issues and Corporate Social Responsibility in Nigeria’’ A Case

Study of Nigerian Petroleum Development Company Limited

(NPDC), Edo State.

_____________________ _______________________
Ms. P.A. Donwa
Project Supervisor Project Coordinator

Date: ______________ Date:______________

_________________________

Head of Department

Date: ______________

4
 DEDICATION

This project work is dedicated to my parents Alhaji & Alhaja

Idris Momodu for their generous support to my academic work.

5
 ACKNOWLEDGEMENT

I am grateful and thankful to almighty Allah for his

protection and guidance through out my educational programme

and for his continues blessings.

I sincerely express my profound thanks to my parents for

their continuous support financially, morally and otherwise to my

brothers and sisters and friends.

My greatest appreciation goes to my supervisor Ms P.A.

Donwa for her constructive criticism and encouragement which

made this project a reality.

I am also grateful to the entire Accounting department for

giving me the opportunity to carry out this study.

My regards also goes out to all well wishers, for giving me

the much needed physical and moral support during the course of

6
my studies, they include Gl, Maria, Salem, Dokpe, Valerie, Jude,

Peter, Titi and others who I did not mention thanks to you all.

Lastly to the entire staff of Nigerian Petroleum Development

Company limited, Benin City, Edo State, who assisted me through

out my research, without you this entire project wouldn’t have

been completed. Thank you all.

7
 TABLE OF CONTENTS

Title page - - - - - - - - - i

Certification - - - - - - - - ii

Declaration - - - - - - - - iii

Dedication - - - - - - - - iv

Acknowledgement - - - - - - - - v

Table of contents - - - - - - - - vii

Abstract - - - - - - - - - x

CHAPTER ONE: Introduction

1.1 Statement of problem - - - - - - 5

1.2 The objectives of the study - - - - - 7

1.3 Research Hypothesis - - - - - - 8

1.4 Scope of the study - - - - - - 9

1.5 Significance of the study - - - - - 10

1.6 Limitation of the study - - - - - 12

1.7 Definition of terms - - - - - - 13

References - - - - - - - - 18

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CHAPTER TWO:

Literature Review - - - - - - - 20

References - - - - - - - - - 44

CHAPTER THREE

3.1 Methodology - - - - - - - 47

3.2 Research Design - - - - - - - 47

3.3 Population of study - - - - - - 47

3.4 Sampling technique - - - - - - 48

3.5 Instrument for data collection - - - - 48

3.6 Method of data analysis - - - - - 50

3.7 Validity of research instrument - - - - 53

References - - - - - - - - 54

CHAPTER FOUR:

Data Presentation and Analysis - - - - - 55

Test of hypothesis - - - - - - - 74

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CHAPTER FIVE: Summary, Findings, Recommendations and

Conclusion

5.1 Summary - - - - - - - - 79

5.2 Findings - - - - - - - - 81

5.3 Conclusion - - - - - - - 84

5.4 Recommendations - - - - - - 87

Bibliography - - - - - - - 89

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 ABSTRACT

This project focuses on environmental degradation and the need

for corporate organization to fulfill their social responsibilities.

Using the system theory, the interdependence among the

environment, organization and sustainable development was

examined. The system theory was modified t emphasize the need

for corporate firms to forsee potential environmental consequences

of a given activity, process or product from the planning stage with

a view to ensuring the implementation of adequate and timely

response strategies. Some prevalent environmental problems in

Nigeria were also examined. Environmental audit was discussed to

enable organizations assess the impact of their activities on the

environment.

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 CHAPTER ONE

INTRODUCTION

As a result of the quest of industrialization and sustainable

development in Nigeria and the attendant improvement in the

quality of life of the populace has taken its toll on the environment

(Aina, 1998).

There is widespread interest in the way in which companies

conduct themselves, including the environmental and social

impact of their activities. Companies and those who govern their

affairs do not operate in a value-free zone and their activities are

and should be open to evaluation and criticism. CAMAC’s report

on the social responsibility of corporations, is aimed at providing a

pathway through the mass of material and opinions on the subject

12
as well as respond to questions raised in the terms of reference

from the government.

While largely focused on the conduct of business

corporations, the report notes that issues of social responsibility

also arise for other entities, including public sector, non-profit and

unincorporated bodies. Companies operate in a shifting market

place of legal requirements, consumer preferences, employee

views, investor sentiments, community attitude and other

pressures where social and environmental issues arises in relation

to a companies business, they need to be managed, as do other

issues that may infringe on business success or failure.

According to COMAC’s (Richard St. John), …….. Companies

should be judged on the way they conduct themselves in the

context of pursuing their business aims and their overall economic

and other contribution and impacts. This includes the way they

13
deal with environmental or social issues that relate to their

business. They should not be expected to direct their efforts to

social ends regardless of the relevance of those ends to their own

business. Therefore the report suggests that a company will be

socially responsible if it operates in an open and accountable

manner, uses its resources for productive ends, complies with

relevant regulatory requirement and acknowledges and takes

responsibility for the consequences of its action.

The effect of different industrial sector activity on the

environment vary enormously but its an incontrorotible statement

that damage is being done to the environment world-wide.

Environmental concerns rarely terms an integral part of

development plans, particularly in Third World Countries like

Nigeria. The realization that sustainable development can only be

achieved through an interdependence between economic growth

14
and environmental quality has compelled some governments to

now regard the environment as a valued and an integral part of

economic growth. Subsequently, environmental problems are now

at the forefront of international and domestic as well as local

government’s agenda.

However, environmental policies are rarely enforced in some

Third World Countries. The inability of government to implement

a stringent environmental regulations is compounded by the fact

that the goal of most corporate organizations are purely economic.

The attention is devoted to their social responsibilities.

The environment is being endangered because economic

policy stresses increase in production, but neglects to account for

the depletionof natural resources and damage to the environment.

The continued damage to the tangible natural environment and

health of the exploitation of crude oil and natural gas.

15
 These activities have led to numerous spillages, gas flaring,

pollution, flooding, coastal erosion, earth tremors, etc. all of which

constitute a threat to the people survival. The result has been a

rapid decline in the quality of life of the people, many of them

forced out of their traditional occupation of farming, fishing and

the production of palm oil and kernels. There is need for

organizations and government to reorganize “defensive

expenditure” to protect or restore the environment and “user cost”

for the depletion and the degradation of natural resources as part

of their production cost.

Companies should be committed to minimizing the impact of

its operations on the environment and they should have programs

updated annually that will help bring about measurable

development.

16
1.1 STATEMENT OF PROBLEM

The first attempt of this work will be to discuss the

interdependence among the environment, organization and

sustainable development, nature of some environmental

degradation in Nigeria, corporate social responsibility,

environmental audit and corporate environmental management

strategies.

The problems that this study intends to address are as

follows:

i.) What are legal or standards available with regards to

accounting for the use of resources from the environment.

ii.) What programs are in place to reverse the degradation

that has occurred and how they are funded.

17
 iii.) To examine environmental issue as it relates to companies

or firms and corporate users as it relates to the

environment.

iv.) What are the effects of companies on the host

environment.

1.2 THE OBJECTIVES OF THE STUDY

The increase in agitation for more compensation and

participation in companies operation by host communities is as a

result of neglect of developmental program for the communities in

their area of operations.

The objective of this study, is simply to find out the effects of

companies operations on their host communities or environment,

the extent to which they account for the resources they are

exploring from the environment and the programs they have in

18
place to tackle the environmental and socio-economic problems of

the region of their operations for development that is

environmentally sustainable.

The objectives of this research is to;

i.) To ascertain the policies put in place by organizations for

the development of the environment.

ii.) Examine the extent to which firms or organizations are

aware of these policies and the effect of these policies on

corporate performance.

iii.) To measure the social responsibility of corporate bodies.

1.3 RESEARCH HYPOTHESIS

Hypothesis I

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Ho: There are no fully funded programmes put in place to

reverse the degradation that has occurred in the country

(environment).

H1: There are fully funded programmes put in place to reverse the

degradation that has occurred in the country (environment).

Hypothesis II

Ho: There are no legal implications or standards available with

regards to accounting for the use of resources from the

environment.

H1: There are legal implications or standards available with regards

to accounting for the use of resources from the environment.

Hypothesis III

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Ho: The host communities do not know their right as regards to

companies operating in the environment.

H1: The host communities know their right as regards to companies

operating in the environment.

1.4 SCOPE OF THE STUDY

The area of focus of this study will be restricted to the

Nigerian Petroleum Development Company (NPDC) limited and

its area of operations. The study will focus on the effect of

companies operations on the environment, the depletion and

degradation of natural resources ad the responsibilities of

companies in restoring the environment from the side effects of its

operations and the provision of developmental projects for the host

communities and the society at large.

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1.5 SIGNIFICANCE OF THE STUDY

The three trends related to globalization are during the rise of

“Corporate Social Responsibility”, the rising protest movement

against economic globalization, the “war on terrorism” that began

on September 11 and recent corporate scandals.

The issue of corporate social responsibility is a complex one

for any industry, and environmental accounting is a new concept

in accounting. This companies have failed to recognize the effects

of production and consumption activities on the environment as

part of their cost of production. As a result of this form of

accounting for the use of resources, the conventional accounting

method has led to companies preventing misleading financial

statements.

The recent development of community clashes with

companies operating in their host communities is as a result of the

22
non recognition of their negative side effects of their operations on

the environment and the need for sustainable development of the

host community and the society at large. Industrialist believe that a

systematic integration of corporate social responsibility into their

business practices can make a positive impact on their economic,

social, environmental performance.

There is need for adequate procedure for evaluation and

recognition of environment effects in the determination of the

company cost of operations. This study will thereore provide some

enlightenment to companies of the need to have a proper

procedure for evaluation and recognition of environment effects

for sustainable development of the environment and for

sustainable performance of the company.

1.6 LIMITATION OF THE STUDY

23
 The study will be focused on the various methods of

organizations use in accounting for the use of natural resources,

the side effects of their operations on the environment and the

plans they have for the future operation of inhabitant of the

communities and the society at large.

Also, there is now a growing interest on environmental

issues, but organization researchers and scholars rarely discuss

environmental issues and corporate social responsibility. Issues of

discuss have always been ethics, organizational structures and

processes, the impact of the environment on organization, etc.

Thus, there is a death of literature on the impact of corporate

activities on the environment and more so there is also the problem

of corporate secrecy in the area of releasing information relating to

real companies financial statements as recorded in the books.

24
 Due to the constraints, this study will be limited to the

Nigerian Development Company Limited engaged in the

exploration and drilling of crude oil.

1.7 DEFINITION OF TERMS

i.) Environment: Environment is defined in Oxford

Dictionary as surroundings surrounding objects or a

condition, region, circumstances, influences. According to

Ikporukpo (2001), environment is the totality of human

surroundings, hence human environment is derived from

physical environment. Human environment is regarded as

human construct created by man in their struggle for

survival and resistance on earth crust at times called the

inhabited environment.

25
ii.) Development: Oguntunde defined development as “a

measure of the ability of an individual or a society to

utilize its resources in the production of goods and

services (wealth), which are needed for modern living”.

iii.) Sustainability: Oguntunde defined sustainability as the

production of this wealth continuously both now and in

the future.

iv.) Sustainable Development: McCarthy (1992) defines

sustainable development as development that meets the

needs of the present without compromising the ability of

future generations to meet their own needs”.

v.) Social Responsibility: Osaze (1998) defines social

responsibility as the obligation of decision makers to take

action which projects and improve the welfare of the

society as whole along with their own interest. Drucker

26
 (1974) defines social responsibility as “what business

should do or might do to tackle and solve problems of

society”.

vi.) Income: Adams (1999) sees the notion of income as “the

amount that a person can consume in a year and still be as

well as the beginning” an approach to accounting

measurement that much later became known as “capital

maintenance”. Harrison (1989) defined income as what

you can consume in the period and be as well as of at the

end as at the beginning – this equivalent to saying that

new capital consumed during the year so that the capital

stock at the end is as great at the start.

vii.) CAMAC: Corporations and Markets Advisory

Committee.

27
viii.) Pollution: Blades (1989) defines pollution as “the disposal

of wastes in ways that harm people or reduce the

enjoyment of their surroundings”. He also sees pollution

as causes of damages, such as sickness, and premature

death, stunted growth of crops, disappearance of wildlife

or corrosion of metals and masonry.

ix.) Pollution Abatement: Blades (1989) defined pollution

abatement as the activities, like scrubbing smoke or colony

waste water which are undertaken because of recent anti-

population legislations.

x.) Oil Mining Lease (OML): SAS 14 defined OML as a

license granted to a company under the Petroleum Act

1969 for the purpose of mining petroleum or any

assignment of such lease. This usually has a term between

twenty (20) and thirty years (30yrs).

28
29
 REFRENCES

1.) Drucker, B.O. (1996), Role and Responsibilities, in the Private

Sector in Infrastructure Strategy, Regulation and Risk,

World Bank, Finance and Infrastructure Network,

Washington D.C.

2.) Blades, D.W. (1989), “Measuring Pollution Within the

Framework of the National Accounts, A UNEP –

World Bank Symposium, Washington D.C., the World

Bank.

3.) Osazee, E. B. (1998), Business Policy in Nigeria, Nigeria Center

for Management Development.

4.) Adam, R. (1994), “Performance Indicators for Sustainable

Development” Accounting and Business, A Journal of

the Association of Chattered Accountants, Vol.2,

Number A.

30
5.) Aina, E.O: The State of the Nigerian Environment. Pp 16-42. in:

Poverty, Health and the Nigerian Environment. A

Osuntogun (ed) – FEDEN, Lagos (1998).

6.) Ajayi, D. and Adesina, D: Man’s Natual Environment Pp.139-

146. In: Introduction to Basic Concepts in

Government, Society and Economy, S.K. Balogun and

A.O. Taiwo (Eds). Gsp Publication, Ibadan (2005).

31
 CHAPTER TWO

LITERATURE REVIEW

Environment

Environment can be said to be the total surroundings in

which human society finds itself, all the factors that in any way

affect its mode of life. It also a resource base for economic

development. Emphasis was often placed for growth and

development in the choice of economic planning policies to the

neglect of the environment. Most indicators of economic

development design were only sensitive to the increase I income

and man-made capital without any consideration given to the

environment.

The phenomenal increase in the rates of industrialization and

urbanization process brought unprecedented pressure on

environment as resource-based. The sudden awareness of

32
environmental limit and the dangerous consequences of the abuse

and misuse of environmental resource on the quality and welfare

of mankind on earth and have led toa re-think of the nature of

man’s environment development relationships. The nexus between

man-environment economic development ahs become increasingly

complex to the extent that there are growing concerns on the need

to understand the consequences of any developmental planning.

Environmental Standards

An environmental standard is a policy guideline that

regulates the effect of human activity upon the environment. It also

be said to be set of quality conditions that are to be adhered or

maintained for a particular environmental component and

function.

33
 Also the environmental standard in Nigeria with regards to

exploration and production operations are subject to separate

environmental permitting and licensing procedures administered

by two governmental organizations. The Federal Environmental

Protection Agency (FEPA) and the Development of Petroleum

Resources (DPR) of the Ministry of Petroleum Resources.

As part of the legislative response to increase pressure on

environmental management, the federal government promulgated

the Federal Environmental Protection Agency (FEPA) Decree NO.

59 of 1992. The decree is in charge of regulating industrial

efflucants and commission and the review and approval of

environmental impact assessment submitted in the authorization

process application.

Environmental Protecting in Nigeria

34
 The period of National Development Plans from 1962-1980

received very little environmental consideration the

implementation of the major projects in Nigeria and as a result, the

land, water and even the air quality have become so degraded and

in some cases, the ecosystem has suffered disequlitarian. This does

not mean that there has not been laws designed to prohibit the

pollution of water, air and land, for example, there has been the

water ordinance of 1913 which has not been updated, the Federal

Public Health Ordinance of 1958. There are also many existing Acts

designed to control and protect the environment from possible

negative impacts from petroleum industries.

In 1979, the country witness a re-organization to the

ministries which led to the creation of the Federal Ministry of

Housing and Environment. Related to the issue of environment in

general, the (1%) one percent, ecological fund was set up in 1980.

35
This fund established that 1% of the National Account shall be

used for protecting the nation’s environment for the present and

future generations.

Another re-organization in 1983 saw the environmental

division, which was then called the Environmental Planning and

Protection Division (EPPO) becoming part of the present Ministry

of Works and Housing. All through these years since 1975, it

would be fair to say the decision makers came to realize through

several positive actions of the Environmental Planning and

Protecting Division (EPPD) that environment and development are

ultimately dependent on each other, given the fact that

environment and economic activities are mutually impacting.

Aspirations and expection increase as societies developed

and economic growth increases. Consequently, it has become so

clear over the years, that a more effective mechanism is needed for

36
involving the countries national agencies in cooperative action

oriented program relating to environmental protection and

controls. The greatest challenges today is to design development

plans so that while it satisfies basic needs, it is environmentally

realistic and does not transgress. The limits imposed by the

absorptive capacity of the environment. It is on this note that the

Federal Environmental Protection Agency (FEPA) was established

in December 1988 by Decree No. 58, in response to the Moutig

environmental degradation problems in the country.

According to Nwhoko (……..), there is now a renewed

attention by all nations of the world accord the ecosystem because

of the importance of man’s existence, these has prompted the

nations to adopt a proactive attitude towards sustainable

environment and gives environmental matters priority attention, in

October 1999, the then president, Chief Olusegun Obasanjo

37
upgraded the Federal Environmental Protection Agency to a full

fledge Ministry and its known as Federal Ministry of Environment.

The ministry will initiate programs that would facilitate the

implementation of the national policy on environment.

Environmental Problems

Environmental problems are simply problems caused by

civilization i.e. urbanization and industrialization of this pose

major threat to the environment. For instance, theexplorration and

production of crude oil in Nigeria is a major industrial

development at the expense of the environment. It has played a

major role in the socio-economic development of the country, but it

also has its negative environmental effects especially in the oil

producing areas of the Niger Delta Basin with its very delicate

riverine and mangrove ecology which serves as an important

38
source of foods, particularly for shrimps as an estimated yields of

about 50,000 matric ton annually. At present most of the oil in this

country is predicted off shore.

Exploration and production of oil whether carried out on

land or offshore, it has a number of environmental impacts for

example, land must be provided for the facilities such as unlimited

pipeline, terminals, etc and these could have a number of potential

environmental impact. During the acquisition of land, villagers

may be relocated also the clearing of land for laying pipeline may

cause the destruction of agricultural lands, fish ponds, etc. and as a

result of these changes the social and cultural life of the community

may come to a holt. Aina (1990) classified environmental problems

according to the nature of the damage to human which are as

follows:

39
 i.) Indirect effect on human welfare through interference

with services provided for society such as disruption of

biological systems, pollution of natural ecosystem and

acceleration of erosion, etc.

ii.) Direct efforts on human welfare such as damage to health,

social description (such as displacement of persons from

their living areas), and other direct effects on the quality of

life of humans.

There is need for assessment, surveillance, research and

public information test these unknown suffering in the foreseeable

future.

Aina (1991) chapter 1, pg.18 also mentioned some of the

major problems facing the environment in the nation, they are as

follows:

40
 i.) Liquid Waste: Domestic and industrial liquid waste in

Nigeria is to a large extent still discharged, unheated, into

open drains streams.

ii.) Oil Pollution: This is as a result of oil exploration and

transportation operations, being undertaken in the oil

producing areas.

iii.) Deforestation: This is caused by uncontrolled tree felling

activities, which leads to erosion and loss of soil fertility.

Implication of these Problems

Environmental problems concerns the quality of our

surrounding terrestrial aquatic, and atmospheric, unfortunately

however, these problems are often difficult to analyze in cost

benefits terms as most of the cost has no monetary value.

41
 Over-exploitation of the environment which can produce

short-term benefits for small groups of people causes irremediable

harm for a majority of the present population and the future

generation.

According to Emevon (1991) chapter 3, pg.71, raises a three

fold ethical, amoral and dilemma:

i.) The over-exploitation of resources which belong to society

benefits a few and harm the majority.

ii.) The same inequitable distributory of costs and benefits because

apparent in the long term favouring present at the expense of

future generations.

iii.) The human species is only one among countless others all of

them interrelated and interacting in ecosystems which

constitute the common bedrock of life for all species.

42
 The deterioration of environment affects work opportunities

and the quality of life in rural as well as urban areas and seriously

contributes to poverty and ill health. Depletion of deterioration of

resources means an increase in the economic cost of growth,

because of the loss in the natural productivity of the resources, has

to be offset by energy and technology subsidies, meanwhile, ad hoc

remedies must be found for the negative effects of environmental

deterioration in heal and living standards.

Federal Environmental Protection Agency (FEPA)

Federal Environmental Protection Agency (FEPA) ws

established by Decree No. 58 of December 1988 in response to the

mounting environmental degradation problems in the country. the

creation of the agency as the autonomous body charged with the

overall responsibility of protecting the Nigerian environment

43
marked the delighted turning point in the chequered history and

made the environmental protection in Nigeria.

FEPA’S MANDATE

The agency has a responsibility for the protection and

development of the environment in general and environmental

technology including institution of policy in relation to

environmental research and technology as well as:

i.) Co-operating with federal and state ministries, local

government councils, statutory bodies and research

agencies on matters and facilities relating to

environmental protection.

ii.) Advising the federal government on, national

environmental policies and priorities and scientific and

technological activities affecting the environment.

44
 iii.) Promoting co-operation of environmental science and

technology with similar bodies in other countries and with

international bodies connected with protection of the

environment.

Environmental Policy

Policies are statements or principles which define the style in

which a company aims to conduct its business SPDC (1996). They

provide the principle, the operational and social objectives and the

framework for setting objectives and targets. In terms of the

environment, companies should plan and execute their activities in

a manner that minimizes the impact of operations on the

environment, and they should be sensitive to the needs and

concerns of their host communities.

45
National Policy on the Environment Introduction

Nigeria is committed to a national policy that ensures

sustainable development based on proper management of the

environment in order to meet the need of the present and future

generations. This demands positive and realistic planning that

balance human needs against the potential that the environment

has for meeting them, since development remain a national

priority. It is recognized that the actions designed to increase the

productivity of the society and to meet essential need must be

reconciled with the environmental issues that had been neglected

or not given sufficient attention. The policy aims to produce a

national practical coherent and comprehensive approach to the

pursuit of economic and social development in a way that

minimizes contractions and duplication while enhancing

cooperation and effectiveness at all levels.

46
 Since the health and welfare of all Nigerians depends on

making the transaction to sustainable development as rapidly as

possible. This national policy on the environment provides the

concepts and strategies that will lead to the procedures and other

concrete action required for larding Nigeria into an era of justice,

self-reliance and sustainable development.

Policy Goal

i.) Conserve and use of the environment and natural

resources for the benefit of present and future generations.

ii.) Secure for all Nigerians a quality of environment adequate

for their health and well being.

iii.) Raise public awareness and promote understanding of

essential linkages between environment and development

47
 and to encourage individual and community participation

in environmental improvement efforts.

Environmental Impact Assessment (EIA)

The Environmental Impact Assessment (EIA) is a study of

the probable changes in the various socio-economic and

biophysical characteristic of the environment which may result

from a proposed of impending action. (Thomas and Dawin 1976).

The EIA identify the environmental consequences of development

projects or activities in the conceptual stage to prevent or to

mitigate adverse effects.

According to Awogbade (1996), chapter 1, pg.20 stated that a

responsible approach to environment requires companies to

identify the impact of their activities so as to be able to set targets

for improvement and to implement system to monitor that

48
improvement and reduce the risks of failure to meet minimum

standard required by law.

Environmental Management System (EMS)

Environmental Management System (EMS) is designed to

enable any organization to establish an effective management

system as foundation for both sound environmental performance

and participation in environmental auditing scheme. This system is

generic, proactive, on going, voluntary and system based. It also

the ISO 900 and BS 1750 systems of Total Quality Management

(TQM) Ofunne (1996). To adopt this system means the company

must be prepared to integrate the environmental considerations

into corporate management. For the management system to be

effective, successful and ongoing, it should utilize a well defined

and comprehensive procedure designed to integrate the policy,

49
organization and administrative measures for understanding,

controlling and reducing potential negative impact of a company’s

activities on the environment.

Environmental Accounting

Environmental Accounting is a new concept that tries to

recognize the size of effects of production consumption on the

physical environment and most company do not make reference to

the roles played by the environment as a resource base and as a

“sink” to receive the residues of the production and consumption

process. These effects of production and consumption on the

environment should be recognized in the financial reporting

statements of the organization.

According to Sarafy and Lutz (1989), pg.67, man-made asset

buildings and equipment for example are valued as productive

50
assets and are written off against the value of production as they

are not so valued adequately accounted for in most instances.

There is the assumption that natural resources are so abundant that

they are costless or have no marginal value and historically they

have been regarded as true gifts of nature.

Environmental Auditing

Environmental Auditing (EA) is a systematic documented

process of obtained evidence whether or not an environmental

activity or management system conform with present audit

criteria, the aim of environmental auditing programme is to serve

as a means to evaluate proper implantation and maintenance of an

environmental management system as well as to identify areas of

potential improvement. Guidance in how organizations are to

conduct internal environmental management system audit as well

51
as the qualification criteria for auditors and contained in TC 207.

Some general principles of environmental audit in an objective and

systematic manner and to a well defined methodologies, objective

and criterion. The evidence audit findings should be based on the

analysis interpretation and documentation of appropriate

information. The means of collecting evidence include interviews,

examination of documents and sampling procedures as well as

observation of activities.

Environmental Reporting

Environmental Reporting is a state of evolution ranging from

the comments in the annual report to stand-alone.

Environmental investment is no longer seen as an additional

cost, it is an essential party being a good corporate citizen and

52
environmental reports are seen as necessary in communicating

with stakeholders to address their environmental concerns.

Companies are realizing that is their corporate responsibility

to achieve sustainable development whereby they meet the present

without compromising the ability of future generations to meet

their own needs. Economic growth is important for both

shareholders and other stakeholders alike in that it provides the

condition in which protection of the environment can best be

achieved, and environmental protection in balance with other

human goods is necessary to achieve growth that is sustainable.

However, there is still a long way to go and the EU’s sixth

Action Programme Environemnt 2010. Our future change

recognizes that effective steps have not been taken by all members

states to implement European Commission Environmental

53
directives and there is weak ownership of environment objectives

by stakeholders.

Pollution

Blades (1989) defines pollution to mean the disposal of waste

solid, liquids or gases, heat and noise in ways that harm people or

reduce the enjoyment of their surroundings. Pollution causes

damage, such as sickness and pre-mature death, stunted growth of

crops, disappearance of wild life, or corrosion of metals and

masonry.

There are two sides to studying pollution:

i.) Act of Pollution such as by discharging of noxious gases

or fluids into the environment. This is further divided into

two parts. The output of pollutant, which may be

regarded as unwanted type of industrial output, and

54
 pollution damage. Pollution causes damages such sickness

and premature death disappearance of wild life.

ii.) Abatement of Pollution which covers government

monitoring of pollution levels as well as measures taken

by industry and household to reduce the output of

pollutants. There are two aspects abatement of pollution,

the cost and benefits of pollution abatement.

Dimensions of Sustainability

Ajam (1999) sees sustainability in the following dimensions.

An enterprise with the appropriate mix and balance of

activities and human ecological and economic resources should be

able to diversify –

i.) Its business economical

55
 ii.) Social employment (including employment of minorities

disabled people and empowerment of women).

iii.) Environmentally the use of resources, consumption of

non-renewable natural resources and renewable

resources.

An enterprise can achieve increasing relative work utility or

importance through increases in the following:

i.) Social activities in terms of intangible value (e.g. good

will), information or knowledge held by employee,

employee’s satisfaction and customer’s satisfaction.

ii.) Economic activities in terms of return of capital employed,

shareholders value, economic added and investor’s

satisfaction.

56
 REFERENCES

1.) Aina, E.O.A. (1991:17, 18), The Journey So Far FEPA

Monograph 1. The Making of Nigeria Environmental

Policy, Nigeria: Federal Environmental Protection

Agency.

2.) Adam R. (1994:4) “Performance Indicators for Sustainable

Development” Accounting and Business, A Journal of

Association of Chartered Accountants, Vol.2, Number

A.

3.) Daly, H.E. (1989), “Toward a Measure of Sustainable Social

Net National Product”, An UNEP – World Bank

Symposium Washington DC. The World Bank.

4.) Odoeha, J.N.K. (1992:43), “The Danger of Oil Spillage”

Excerpts at the National Annual General and

57
Scientific Conference of the Association of Resident

Doctors, NPDC Monitor, Second Quarters.

58
 CHAPTER THREE

3.8 METHODOLOGY

This deals with the method used in the study. It is designed

to present and explain the various aspects of research method used

in the research of the evaluation of environmental issues and

corporate social responsibility in Nigeria.

3.9 RESEARCH DESIGN

This research work is to give a clear insight about social

responsibilities of companies to their host communities. It also

aimed at knowing difficulties that are associated with it, and how

these problems will be solved.

3.10 POPULATION OF STUDY

59
 The population of the study included the major oil

companies and subsidiaries of NNPC. However, the list of

organization are inexhaustible, but considering the constraint of

time, inadequate resources and the enormous size of the

population, the research had to make do with a sample of the

population.

3.11 SAMPLING TECHIQUE

Random sampling was used in selecting those interviewed in

the course of this study. This method was employed in order to

give every member of the population equal chances of being

represented in other not to have a biased report.

3.12 INSTRUMENT FOR DATA COLLECTION

60
 The conventional data collection techniques that were

employed in this study includes oral interview, examination of

past records and the use of questionnaires.

Personal Interviews

Personal interviews or oral interview were held with relevant

officers of the company under study to obtain adequate

information to clarify major issues:

1.) The objectives of the company

2.) The environmental policy of the company

3.) The nature of business of the company

4.) The legal environmental standards available and to the

extent to which they comply.

Questionnaires

61
 The questionnaires contains about twenty (20) questions. The

nature of questions asked were mainly lose-ended and few open-

ended. The open ended questions requested the respondent to

state in full the answers while in the close ended questions,

respondents were asked to choose among selected responses which

provided along side the questions.

3.13 METHOD OF DATA ANALYSIS

Data obtained through the various sources were analyzed

using the following:

a.) Drilling exploration and depletion, showing how the cost

incurred and written-off through depletion to cost of sales

for the four (4) year period.

b.) Operating statements for (2005-2008) showing income

generated and how it was utilized.

62
 c.) Community projects executed (2005-2008) showing various

projects executed by the company.

A total of thirty-five (35) questionnaires were administered

out of which thirty were filled and received. Of the 36 copies

administered, 25 copes were distributed to the NPDC community

relation staff, 10 copies to indigenes of the host community. The

chi-square (X2) test is used for analysis. The formula for calculating

chi-square statistics is given by:

The Greek letter X2 was first used by Karl Pearson in the year

1900 to describe the magnitude of discrepancies between theory

and observations.

X2 : is simply called chi-square

O : is the observed frequency

63
e : is the expected frequency.

Decision Rule

The calculated X2 is compared with the table X2. The table X2

is obtained form the sampling distribution table at a particular

degree of freedom. The degree is calculated using the formula.

Where v = (C – 1) (r – 1)

= The degree of freedom

= Number of columns

= Number of rows

If the calculated X2 is greater than the table X2, then the null

hypothesis is rejected. But if the calculated X 2 is less than the table

X2, the null hypothesis is accepted, while the alternative hypothesis

is rejected.

64
3.14 VALIDITY OF RESEARCH INSTRUMENT

The validity of the test to be carried out will be based on the

response that will be provided in the questionnaire. It will bring

out the bases of acceptance and rejection of the hypothesis.

65
 REFERENCES

1. Agbonfoh, B.A. (1999), Research Methodlogy in Social

Education, Benin City: University of Benin.

2. Baridan, D.M. (1995), Research Method in Administrative

Science: Port Harcourt: Buck Publishers,

Port Harcourt.

3. Izedonmi, F.O. (2005), A Manual for Academic and

Professional Research, Lagos: Bamadek

Prints, Lagos.

4. Oaikhenan, H.E. and Udegbunam, R.J. (2004), Modern

Statistics for Economic and Business, Benin

City: H. Henans Publishers.

66
 CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

This chapter actually focuses on the organization and

analysis of data obtained from verification of historical records and

personal interviews and the administered questionnaires to the

officials of Nigeria Petroleum Development Company Limited.

Table 1: Drilling/Exploration and Depletory Expenditure

2005 2004 2003 2002

N N N N
Drilling 1,462,182 1,105,331 1,713,187 1,449,413

Expenditure 173,099 555,100 489,259 36,431

1,635,281 1,660,431 2,202,446 1,485,844

Depletion 115,102 153,916 147,133 208,952

Table 1 shows information on expenditure incurred by the

company on drilling, flow lines and flow station construction and

67
exploration activities for the period indicated. It is a capital

intensive industry that needs huge investment for the company to

achieve positive results.

The cost accumulated on drilling and expenditure activities

are systematically written off to the revenue account based on the

value of crude oil produced compared to the crude oil reserve

available at the commencement year.

68
Table 2: Operation Statement

Turnover 2005 N % 2004 N % 2003 N % 2002 N %

3,450,915 100 2,923,091 100 3,471,655 100 4,642,237 100

Applied as 560,597 15.96 545,857 18.67 782,858 22.58 66,015 18.44

follows
Royalties & 115,200 3.34 153,916 5.27 47,133 4.28 208,952 4.50
OPL/OML
rentals
Production 790,307 22.90 777,245 26.59 407,033 11.72 561,552 12.0
overhead
Pollution 6,944 820 12,093 0.41 11,369 0.33 6,627 0.14
control and
composition
Depreciation 52,118 0.51 56,147 .92% 54,721 1.58 52,851 1.14

Local 8,403 0.24 15.571 0.53 19,589 0.56 17,876 0.39

community
development
Taxation 184,742 5.35 149,750 5.12 162,060 4.67 216,080 4.65

Administrative 523,520 15.17 304,614 10.42 304,433 8.77 337,296 7.27

overheads
Reserves 1,219,182 35.33 907,898 31.06 1,581,459 45.55 2,384,988 51.38

3,450,915 100.0 2,923,091 100.0 3,471,655 100.0 4,642,237 100.0

Source: Nigerian Petroleum Development Company Limited

Financial Statements (2005-2002)

Table 2 shows information in the value of crude oil sold and

realized from the drilling and exploration of crude oil from the

69
environment. It also shows information on how these proceeds are

utilized for the four year period. Expenditure on the environment

is through the development progamme in the host communities

and population control/compensation.

The developmental programmes are the provision of

electricity, road maintenance and provision of educational facilities

and other assistance to improve the standard of living of the

people within its operational areas. Pollution controls /

compensation expenditure are incurred or restoring the

environment to its spillage causing damages of wild life, aquatic

life and crops and compensating those people in the operating

areas whom had suffered losses.

In the year 2002, N16,627 and N17,876 were expended on

pollution control/compensation and local community development

respectively which represents 0.14% and 0.39% of turnover of the

70
company. In the same year, N4,856,015, N4,216,080 and

N42,384,988 were also expended on payment of royalties OML /

OPL rentals, taxation and reserve for future expansion respectively

representing 18.44%, 4.65% and 51.38% of turnover of N4,642,237.

In the year 2003, N11,269 and N19,589 was expended on

pollution control/compensation and local community development

respectively which represents 2002. This compared to N783,858,

N162,660 and N1,581,459 expended on royalties and OML/OPL

rentals, taxation and reserve respectively representing 22.58%,

4.67% of turnover N3,471,655. There was a drop in the expenditure

in these areas compared to 1999 as a result of a fall in value of

crude oil to the world market.

In the year 2004, N12,093 and N15,571 was expended on

pollution control/compensation and local community development

which represent 0.20% and 0.24% of turnover same level as in the

71
previous years. This compared to N550,597, N184,742 and

N1,219,182 expended on royalties and OML/OPL rental, taxation

and reserve respectively representing 15.96%, 5.37% and 35.33% of

turnover of 3,450,915.

The expenditure/investment level on local community

development prrogrammes confirmed the position of most rights

and agitation of most commodities of complete neglect by

companies operating in their environment. The expenditure

investment on local community development represents the

benefits derivable by the people in the host communities. This

trend constitutes the world create unhealthy community and

company relationship.

Governmental Projects

In the areas of operations of this company, the project

embarked upon by the government and its agencies are in the

72
areas of road constructions, schools, etc. (i.e. construction of school

blocks), electricity and provision of available water supply. These

projects tends to improve on the welfare of the people and do not

actually guarantee the income of future generations of the people

in the operational areas.

In the table 3 below are list of developmental projects

executed by the company in its areas of operations. The projects

executed are all in respect of provision of roads, electricity, water

and construction and maintenance of schools. These projects are

mainly for the improvement in the standard of living of the people

within its operational areas.

Table 3: Community Project Executed (2002-2005)

Total 2005 2004 2003 2002

N N N N N
Oghior Electricity 14,028,355 -- -- 4,028,353 --
Project

73
Mini water 4,210,000 -- 4,210,000 -- --
scheme at Ologo
2 block of 4,554,366 2,277,183 2,277,183 -- --
classroom at
ologbo
Reactivation of 1,543,000 -- -- -- 1,543,000
ogbe-Udv I
electricity project
Extension of 7,475,843 -- 2,498,358 2,507,645 2,469,840
electricity to
Masobo
Madaja electricity 2,220,400 -- -- 2,220,400 --
scheme
Rehabilitation of 3,936,786 1,138,786 2,798,000 -- --
NWV/Urobo road
Rehabilitation of 4,987,500 4,987,500 -- -- --
oviri-olomo road
Oghior-Imale road 7,642,014 -- 2,730,114 4,911,900 --
project
Rehabilitation of 20,841,950 -- 1,057,555 5,921,167 13,863,228
Ekin Old Ughelli
Road
6,440,214 8,403,469 15,571,210 19,589,467 17,876,068

Source: Nigerian Petroleum Development Company Limited

Financial Statement (2002-2005)
Income Distribution in Value

Questionnaire

74
 For the purpose of this study or research, a total of thirty five

(35) topics of questionnaires were administered to the staff of

community relation department of NPDC and its host

communities.

Table 4: Analysis of Response Rate

Number Number Percentage

Administered Returned returned
NPDC Officials 25 22 73%

Host 10 8 27%
Communities
Total 35 80 100

Source: Field Work 2009.

Out of the 35 (thirty five) questionnaires administered, 25

(twenty-five) were intended for NPDC staff, while 10 (ten) were

intended for host communities.

75
 A total of 30 questionnaires were completed and returned.

Twenty two (22) (i.e. 73%) of the collected copies were from staff of

NPDC while 8 (27%) were collected from host communities to

whom they were administered to.

The following are analyzed questions from the

questionnaires.

Question 1: Are they fully funded progammes put in place to

reverse the degradation that has occurred in the community?

76
Table 5:

Responses Frequency Percentage

Yes 16 53.30

Not certain 8 26.70

No 6 20

Total 30 100

Source: Field Work, 2009.

Question 2: Does the management have responsibility for

environmental disclosure

Table 6:

Responses Frequency Percentage

Yes 28 93.3

No 2 6.70

Total 30 100

Source: Field Work, 2009.

77
 The analysis in table 6 shows that over 93% of the are of the

view that management have responsibility for environmental

disclosure while about 7% of the respondents are of the view that

management does not have responsibility for environmental

disclosure.

Question 3: Is there any law on environmental protection in

Nigeria?

Table 7:

Responses Frequency Percentage

Yes 26 86.70

No 4 13.30

Total 30 100

Source: Field Work, 2009.

78
 From the table above, it is evident that 86.70% of the

respondents agree that there is a law on environmental petroleum

in Nigeria, while 13.30% disagree.

Question 4: Does the company have environmental policy?

Table 8:

Table 8:

Responses Frequency Percentage

Yes 16 53.30

No 8 26.7

Total 30 100

Source: Field Work, 2009.

The analysis in table 8 depicts that 16 (i.e. 53.3%) of the

respondent believed that the company has environmental policy;

while 8 (26.7%) are of the opinion that the company has no

environmental policy in place.

79
Question 5: Do the people know their right in the community in

which the company operates?

Table 9:

Responses Frequency Percentage

Yes 1 3.30

Not certain 1 3.30

No 28 93.30

Total 30 100

Source: Field Work, 2009.

The above analysis reveals that 93.3% of the host

communities do not know their right, 3.3% are not certain whether

they know their right, while 3.30% are of the view that host

communities do not know their rights.

Question 6: Does the management contribute to the companies

environmental sensitivity?

80
Table 10:

Responses Frequency Percentage

Yes 8 26.70

No 22 73.30

Total 30 100

Source: Field Work, 2009.

The table above depicts that 8 (26.70%) of the respondents are

of the view that management contributes to the companies

environmental sensitivity, while 22 (73.30%) are of the contrary

view that management does not contribute to companies

environmental sensitivity.

Question 7: Does the company have a social responsibility to

voluntarily incur cost to protect the environment?

81
Table 11:

Responses Frequency Percentage

Yes 27 90

Not certain 3 10

No 0 0

Total 30 100

Source: Field Work, 2009.

The table above shows that 90% agreed that the company has

social responsibility to voluntarily incur costs to protect the

environment while only 3 respondents are not certain as to

whether the company has social responsibility to voluntarily incur

cost to protect the environment.

Question 8: Are the resources exploited from the environment

properly utilized?

82
Table 12:

Responses Frequency Percentage

Yes 5 16.70

No 25 83.30

Total 30 100

Source: Field Work, 2009.

The table above shows that only 5 respondents are of the

opinion that resources exploited from the environment are

properly utilized while 25 of the respondents are of a contrary

view.

Question 9: Are the effect of the companies operation on the

environment properly managed?

83
Table 13:

Responses Frequency Percentage

Yes 4 15.20

Not certain 26 86.70

No 0 0

Total 30 100

Source: Field Work, 2009.

It is evident from table 13 that 4 of the respondents are of the

view that the effect of the company’s operation in the environment

is properly managed, while 26 disagree that the effect of the

company’s operation on the environment is not properly managed.

Question 10: Does environmental contribution improve the

company’s image?

84
Table 14:

Responses Frequency Percentage

Yes 16 53.30

Not certain 8 26.70

No 6 20

Total 30 100

Source: Field Work, 2009.

The analysis in table 14 depicts that 16 of the respondents

believes that the environmental contribution improve the

company’s image, 8 are not certain whether the environmental

contribution improve the company’s image. However, 6 o the

respondent are of the believe that the environmental contribution

has not improve the company’s image.

Question 11: Are companies responsible to their host

communities?

85
Table 15:

Responses Frequency Percentage

Yes 4 13.30

No 26 86.7

Total 30 100

Source: Field Work, 2009.

This table simply tells us that 26 out of the total 30 responses

disagreed that companies are responsible to their host

communities. This represents 86.70% of the entire response size.

This leaves us with 4 respondents to the effect that they agree with

the above question.

TEST OF HYPOTHESIS

This section addresses the hypothesis that were proposed in

chapter one.

86
Hypothesis 1

Ho: Are there fully funded programs put in place to reverse the

degradation that has occurred in the host communities.

H1: Fully funded programs are put in place to reserve the

degradation that has occurred in the host communities.

Response Fo Fe (Fo – Fe) (Fo – Fe)2 (Fo – Fe)2

Fe
Yes 16 10 6 36 3.6

Not clear 8 10 -2 4 0.4

No 6 10 -4 16 1.6

Total 30 5.6

Empirical value X2 = 5.6

Critical value =

Degree of freedom = 3-1-2

Significance level = 5%

87
Decision Rule

We accept Ho if computed value is less than the critical

value. Otherwise, we reject the Ho and accept Hi

Decision

Since the computed X2 = 5.6 is less than the value 3.841, we

accept Ho ad reject H1.

Hypothesis 2

Ho: There are no legal implications or standard available with

regards to accounting for the use of resources from

environment.

H1: There are legal implications or standard available with

regards to accounting for the use of resources from

environment.

Response Fo Fe (Fo – Fe) (Fo – Fe)2 (Fo – Fe)2

88
 Fe

Yes 17 15 2 4 0.26667

No 13 15 -2 4 0.26667

Total 30 0.53334

Given a degree of freedom (df) of 1 and 5% level of significance,

(c – 1) (r – 1) where c = 2, r = 2

(2 – 1) (2 – 1) = 1 degree of freedom

Empirical value = 0.53334

Critical table value = 3.841

Decision Rule

We accept the null hypothesis (Ho) if the computed value is

less than the critical value. Otherwise, we reject the (H0) and accept

the alternative hypothesis (H1) if the computed value is greater.

89
Decision

Since the computed value of 0.53334 is less than the table or

critical values 3.841, we accept the Ho and reject H1

90
 CHAPTER FIVE

SUMMARY, FINDINGS, RECOMMENDATIONS AND

CONCLUSION

5.5 SUMMARY

This study focuses on the environmental issues and

corporate socio-responsibilities of companies in Nigeria Petroleum

Development Company as a case study. Historically, the concept of

socio-corporate responsibilities is a new concept that has been

given prominent importance by companies over the years.

The economic realities and the awareness created by the

World Bank and many non-governmental organizations

worldwide and the advancement of knowledge of the people in the

host communities. It is against this background that the Nigeria

Petroleum Development Company Limited ahs embarked on

notable projects in the host communities to improve the welfare of

91
the people within its operational area and to create enabling

working environment for operational staff.

The various aspects of environmental responsibilities of

companies was looked into in relation to the protection of the

environment from environmental pollution arising from their

operational activities and investments on sustainable projects in

their host communities. We equally summed up the projects that

have been executed in the operational areas since 1999 and up to

2000 accounting year and assess how sustainable they are to the

host communities and the country as in general.

Sustainable development is a concept suffered with several

meanings and divine sometimes conflicting objective. As “Hotz

(p.93) argues, to guide decision and an ideal that may never be

reached but which is still the lodestar of a new vision of human

society”. There is this need in the Nigerian context to make critical

92
choice or selection of attainable and sustainable developmental

goals and criteria based on our culture, environmental settings and

developmental needs as indeed the National Policy on Education

seems to be emphasizing. Overall, greater balance and harmony

between environment and development and sustainability in

resource use could be achieved through interdisciplinary

environmental impact assessment.

5.6 FINDINGS

Problems of the Company

As a result of the low level of the company concern for the

welfare of the host communities as reflected by the table bar and

questionnaires, the company encountered a lots of problems.

1. Community Disturbances: The youths and community

leaders for their demands for one project or compensation to

93
 the executed or paid always disrupt the operations of the

company. These demands are not before nay meaningful

operational activities can be carried out. The resultant effects

of these disruptions are high cost of equipment and labour

hire.

2. Vandalization of Companies Equipment: The equipment of

the company in the host communities are vandalized to

create room for spillage. These acts are carried out by few

individuals to enable them be paid for damage farmland

that was caused as a result of the spillage. Petroleum

exploration and production has however posed several

environmental, economic and social problems. The

exploration and drilling for oil on land involving certain

amount of alteration of land surfaces. Vegetations are

cleared to make way for seismic lines and roads, sites for

94
 drilling rigs are leveled, and drilling mud and oil may reach

streams surface, water and land. For operational accidental

and other reasons, some qualities of oil and its product are

released into the environment during oil exploration,

storage, processing and distribution. Nwankwo reported

that between 1976 – 1981, the country recorded 1,017

incidents of oil spillage which culminated in the loss of

1,359,715 barrels of oil to the Nigerian economy. This trend

displayed in table 1 as more expenditure was incurred on

pollution control and compensation.

3. Inter-Communal Clashes: There are also the problems of

communal clashes over ownership of the land and natural

resources in the environment.

95
Developmental Projects

The exploration and production of crude oil in Nigeria is a

major industrial development. It has played a major role in the

socio-economic structure of the country.

The projects executed in the company’s operational areas are

on provision of portable water, electricity, road construction and

maintenance of schools. The company embarked on sustainable

projects which are intended to improve the welfare of the people.

5.7 CONCLUSION

In the light of the research study and the result form data

analysis, we can draw the following conclusion about

environmental responsibilities of companies to their host

communities.

96
1. The company places more emphasis on ensuring that the

environment is highly protected from pollution form their

operational activities. They ensure that they comply with the

requirements of Federal Environmental Protection Agency and

Department of Petroleum Resources Regulations and

Standards.

2. The companies pays for the use of the natural resources

exploited from the environment through the paymentof

royalties and OML/OPL rentals to the federal government at

the federal government, the company now placed reliance on

the federal government to provide the communities with

developmental projects.

3. the projects exerted in the host communities are for the

provision of roads, electricity, water and construction and

maintenance of schools for the improvement of the standard of

97
 living of the people in its operational areas. The project are not

such that are sustainable to be able to generate income for the

future generation when the natural resources are exhausted.

4. The value of projects exerted compared to the value of crude

oil sold is insignificant over the four-year period.

5. There are no significant government development projects for

the people in the areas where these resources are tapped, to

guarantee the incomes of future generation of the host

communities.

6. The people in host communities are not adequately

represented in the company in terms of employing their

children into good position for which they qualify. Despite the

fact that their children are qualified for those positions.

7. There is much awareness by the people within the operational

areas of their rights for the company to provide them with

98
 developmental projects that are sustainable but their request

are always on project that will enhance their welfare and living

standards.

5.8 RECOMMENDATIONS

In view of the contribution of the host communities to the

success of the company and national income and the negative

effects of the company operation on the environment, the

following recommendations are made:

1.) The company should embark on project that will be able to

generate income for the future generations as the resource

from the environment are been exploited to generate current

income.

2.) The capital portion of income generated from the sales of the

resources exploited from the environment should be directed

99
 towards projects that are sustainable to generate income for

the future generation of the host communities.

3.) In recognition of the contribution of the companies to national

income through the payment of royalties and taxation, the

government should embark on developmental projects in the

host communities that will be able to sustain the people I the

future. The 13% derivation revenue for oil producing states,

should be extended to other income generating resources that

are exploited from various communities.

4.) Apart from the need for the communities and the government

project, there is need for the people in the host communities to

be adequately represented in the company.

Employment should be given to indigenes that are qualified to

be employed and they should also be represented at the board

100
level to be involved in taking critical decision making that affects

the company.

5.) Enlightenment should be carried out by the government and

companies to educate the people in their operational areas of

the benefit that will accrue from mutual relationship between

the company and the communities.

From the problems identified as the recommendations made,

it is my opinion that if the recommendations are properly taken

and implemented by the government and the company, the

following will fall into place.

1.) Welfare of the people of their operational areas will be

enhanced,

2.) The income of the future generations will be guaranteed,

3.) The company will have a conducive operating environment

4.) Astronomical growth and peace will be sustained.

101
 Department of Accounting,
Faculty of Management Sciences,
University of Benin,
Benin City,
Edo State.

7th December, 2009.

Dear Sir/Madam,

RESEARCH QUESTIONNAIRE

I am a final year student of the above named institution and as

part of the requirement for academic programme of an award of

Bachelor of Accounting, I am conducting a research titled “An

Evaluation of Environmental Issues and Corporate Socio Responsibility

in Nigeria”, your personality/enterprise has been selected as one of the

samples to use.

I wish to appeal to you to assist this study by kindly sparing a few

minute to complete this questionnaire, that comprises of section A & B

to the best of your knowledge. You are not required to disclose your

identity. I also wish to assure you that your answers will be treated in

strict confidence and only for academic purpose.

Yours faithfully,

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 Momodu Mohammed

QUESTIONNAIRE

Kindly respond to the statement below in section A and B as

objectively as possible making a tick [ ] mark against any

appropriate alternative which mostly apply to you.

SECTION A:

1.) Sex: Male [ ] Female [ ]

2.) Designation in the company: ……………………………

3.) Number of years in the company: ………………………

4.) Highest Educational Attainment:

a.) Post graduate degree/certificate [ ]

b.) University degree [ ]

c.) Post-secondary / diploma [ ]

d.) Secondary school certificate [ ]

e.) No schooling [ ]

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 f.) Others specify:…………………

5.) Area of study: ………………………………

SECTION B

1.) Is there any law on environmental protection in Nigeria? Yes

[ ], No [ ].

2.) Does the management contribute to the companies

environmental sensitivity? Yes [ ], No [ ].

3.) Is the company complying with the legal environmental

standard? Yes [ ], No [ ].

4.) Does the company incur extra cost to protect the

environment? Yes [ ], No [ ].

5.) Are the resources exploited from the environment properly

utilized? Yes [ ], No [ ].

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6.) Does the company have an environmental policy? Yes [ ], No

[ ].

7.) Does the environment contribution improve the company’s

logo? Yes [ ], No [ ].

8.) Does the company have any developmental programmes in

place for sustainability of the host community?

9.) Is the effect of the company’s operation on the environment

properly managed? Yes [ ], No [ ].

10.) Do the people know their right in the communities in which

the company operates? Yes [ ], No [ ].

11.) Are the explorable natural resources fully accounted for in

the financial statement of this company? Yes [ ], No [ ].

12.) Does the company have social responsibility to voluntarily

incur cost to protect the environment? Yes [ ], No [ ].

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13.) Does the management have responsibility for environmental

discussion? Yes [ ], No [ ].

14.) Are there fully funded programme put in place to reserve the

degradation that has occurred in the country? Yes [ ], No [ ].

15.) Does the company compensate communities that are affected

negatively as a result of exploration and production? Yes [ ],

No [ ].

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