BP Oil - Corporate Social Responsibility

Introduction 

BP has a long history of misconduct, and since 1995, 63 incidents have been reported about their misconduct. The major stakeholders affected by the spill were the environment, fishers, wildlife, the oil industry, the tourists driven business as well as the communities. The causes of the destructive gas explosion and the blowout in the Deepwater Horizon offshore drilling as well as the Gulf of Mexico oil spill is far from being determined. However, BP’s activities are facing unprecedented examination because of the long history of ethical and legal issues that critics, judges as well as Congress member have expressed that the company is focused on putting profits first. 

Ethical Issues and Legal Issues 

In the last two decade, BP subsidiaries have committed at least three crimes on the environment in Texas and Alaska, and they were put on probation. Additionally, the company has obtained the biggest fine ever for safety violations in the history of the US, and it has been a subject of various investigations on safety. For instance in Washington State the company was fined $ 69,000 for 13 severe safety violations in one of its subsidiary “cherry point refinery.” Even though the company has accepted accountability of the spill, it still denies that it is guilty of failures in safety and environment. The company maintained that it is a professional and responsible company (Warren, 2012). 

However, an analysis of the history of BP indicated a pattern that is ethically questionable and the illegal behaviors that have persisted for decades. The explosion in Texas City in 2005 killed at least 15 workers and injured 180 people while thousands of the adjacent residents had to remain in their homes. The explosion was investigated thoroughly by the US chemical safety ad Hazard, investigation board which stated that the company had organizational and deficiencies in safety in all stages of the BP Corporation and these management failures were traced back to London (Warren, 2012). 

The Theory of Utilitarianism 

The four-part structure of corporate social responsibility (CSR) has demonstrated that CSR comprises of four elements of responsibility namely, economic, ethical and philanthropic. BP has executed interests in the distribution of the stages of CSR. BP has implemented a progressive method to protect the environment by setting objectives and creating reports about their program on environmental developments. The “ Ethical Conduct Policy ” takes into account factors like observing the human rights principles, ensuring that are the activities are legal and fair and zero tolerance to gifts and bribery. BP has partnered with the Red Cross plea for financial support and all these shows its devotion to becoming an ethical company. Hence it can be disputed that BP is an ethical organization. 

However, many of BP’s actions have contrastingly been considered as extremely unethical. The Alaskan oil spills, treatment of farmers from Colombia refinery fire at Texas City and the Gulf of Mexico explosion. Decisions were made which led to the destructive repercussions to the stakeholder groups. Utilitarianism theory offers an insightful view about the case of BP’s activities based on the consequentialist viewpoint. Utilitarianism is referred to actions that are morally right if the results cause the greatest good to the majority of the people. Arguably, BP should implement riskier policies that cause higher returns, reduces safety costs and takes advantage of the small minority. Executing this outlook, FDI host nations, shareholders and the customers can benefit the most and hence leading to higher revenues and a great level of investment. Therefore, more investment is required in BP to create alternative sources of energies by promoting more sustainable future. 

The Stakeholders Affected By the Gap 

Stakeholder theory describes that the company stakeholders are not only the direct owners but also any individual, group or entity that an organization has profited or burdened with their actions. The first stakeholders who were affected by the Deepwater Horizon oil spill were the men working on the rig itself. During the explosion of the rig, 126 were present on the platform, and only 115 people were evacuated. After three days of search that covered an area of 5,200 miles, the coast guards finally stopped the rescues operation because the reasonable expectations of human survival were minimal. Sadly the 11 people who were presumed dead were not the only ones who were affected by the tragedy. Other market stakeholders comprise of the environment, the fishing industry at Gulf and the tourist-driven businesses and communities ( Brennan, 2013) . 

Fig 1: Stakeholders of the BP Oil Spill 

The environment is a major stakeholder of the oil spills. The oils spill had environmental impacts especially to the marine life and their ecosystems. The 1990 oil pollution act obligates the Natural Resources Damage Assessment to gather each oils spill. The report gathered about the BP oils spill indicate that nearly 1,100 miles of the coastal wetland were victimized by the effects of the spill. It was established that the areas were covered with vegetation were eradicated by the oil spill and hence it would be converted from marshland to open water. The wildlife service and U.S Fish also established that 32 National Wildlife Refuges experienced risks such as the Breton National Wildlife Refuge which is one of the oldest refuges ( Brennan, 2013) . 

The fishermen, restaurants, hotels and other businesses that are linked to tourism were also affected by the oil. Fish production increased by 20% because of the fishery closures. Due to heavy coverage of the media comprising of pictures of the ruined coastlines led to negative perceptions of the public and hence tourism in the Gulf of Mexico has steadily declined. One year after the oil spill, rental reservations had decreased to 25%. 

The Checks and Balances 

BP estimated that the total expenditure for the crisis such as clean up and fines amounted to $42.4 billion. However, the question whether the legal system and particularly the government were properly holding the huge corporations liable even after causing economic and environment disasters yet they earn billions of profit annually. BP cannot easily write off their mistakes because they are irreparable such as the environmental harm, workers who lost their lives as the cost of conducting business ( Brennan, 2013) . The BP stock prices had declined due to the spillover, but some months later the prices had risen again. Although the prices are not necessarily where they were before the spill, it is not unreasonable to project that the stocks will soon recover its original values in some years to come. Although the company was fined and admitted to being guilty the costs of oil spills cannot be easily determined because there are many factors involved such as the spill location, the feature of the area and many others. 

Action Plan 

One positive feature that will come out because of the oil spill is the spotlight of the importance of new and enhanced prevention and response plan. There are obviously problems that were noted from the response plan in the tragedy of Gulf. There is clear evidence that indicates the impacts of the spillover to the wildlife such as the walruses, sea otters, sea lions, and seals, which are not found in the Gulf of Mexico. In 2009, the Mineral Management Service (MMS) who are accountable for supervising offshore drilling approved a 583-page plan ( Brennan, 2013) . The document has multifaceted issues such as the “Worst Case Discharge” part that utilizes unrealistic setups for maximum spill size and incorporation of an equation for assessing the size of the spill even though it underrates the thickness of the oil. Response plans are crucial, and they are utilized when the prevention plans have failed. The Proper establishment of these plans enables companies to reduce the damage caused to the environment, wildlife as well as the surrounding areas affected by the spill ( Mauer & Tinsley, 2010) . The commission that was directed to investigate the MMS and the spill by President Obama reported that MMS is an agency that lacks resources, technical experience or training in petroleum engineering. 

They further stated that it is critical to making sure that offshore drilling is conducted safely and responsibly. Any regulatory agency that fails to deliver the safety mission has no excuses. MMS was later renamed and allegedly it increase regulations that were only superficial. However, there have been some noticeable readjustments in prevention the spills. The public has been sensitized to issues of prevention and response in matters concerning oils spills as well as the new standards established to sentence BP and other related parties. The EU has taken steps to ensure they have improved their safety rules for natural gas excursions and offshore oil drilling. 

Proposed Steps 

Crisis management models are very important in managing the crisis, and the three-phase model is appropriate in dealing with the crisis. 

Pre –Crisis Phase 

The pre-crisis stage centers on prevention and preparation methods. Prevention comprises of methods or strategies of reducing the risks that can cause a crisis for instance implementation of risks audit, a control system, safety, and standards measure and scoreboards ( Mejri & De Wolf, 2013 . No organization is immune to a crisis, but they must be ready one. Preparation comprises of establishing a crisis management plan that is updated annually, crisis management team selection and training are some of the ways of preparing for a crisis. 

The Response Plan 

In this phase, it starts when the crisis occurs, and it involves the attempts made by the management to respond to the crisis. The management should focus on strategies for mitigating the crisis and providing support to people who are affected ( Mejri & De Wolf, 2013 . Actions that are taken at this juncture are very significant as they influence the opinion of the public about the crisis and the way the organization is handling the situation. The priority of the company is ensuring that the stakeholders are protected from harm. 

The Post-Crisis Phase 

The begins with the company’s efforts to return to its businesses operations as usual and finding ways so as to be better prepared for the next crisis. The company should also focus on commitments that were made during the crisis phases such as follow-up information. In this phase, the company should fulfill the promises made to the stakeholders ( Mejri & De Wolf, 2013) . The organization should also ensure that the stakeholders are updated on the recovery progress efforts such as corrective measures. Finally, the company should examine the crisis management to learn so as to integrate strategies that will help the company handle the crisis effectively. 

Conclusion 

The Gulf crisis serves as a lesson to the BP Company of the importance of crisis management. A crisis affects not only the organization but also the whole system in general. One year after the spillover it was revealed that BP Company was still perceived as the worst corporate in regarding its reputation. BP was also facing remarkable calls where the consumers were asked to boycott their products. The company has learned the hard way because the damage caused was irreparable. Today an intense assessment of oil companies as well as the organizations that work together with oil companies to establish the prevention and response plans has been observed. The stakeholders who were mainly affected include the marine life, workers, the tourist industry which is relied on by the businesses and communities and the environment. 

References 

Brennan, K. A (2013): Stakeholder Analysis of the BP Oil Spill and the Compensation Mechanisms Used to Minimize Damage. 

http://www.usf.edu/business/documents/undergraduate/honors/thesis-brennan-katelyn.pdf 

Mauer, R., Tinsley, A. M. (2010). Gulf oil spill: BP has a long record of legal, ethical violations:    McClatchy Newspapers . 

http://www.bradenton.com/news/special-reports/article34485282.html 

Mejri, M., De Wolf, D. (2013). Crisis management: lessons learnt from the BP Deep-water Horizon spill oil:    Business Management and Strategy ,    4 (2), 67. 

https://orbi.ulg.ac.be/bitstream/2268/165986/1/Crisis%20Management-%20BMS.pdf 

Warren, S. (2012). Is BP an ethical company?. Business Development Strategies Retrieved 5 November 2016, 

https://wearedevelopment.net/2012/05/18/is-bp-an-ethical-company/