LIFE students respond to BP case study

Posted April 28, 2011 by swgeorge in Business, Life University, Sustainability. Tagged: environment, green business,sustainability. Leave a Comment

The Presidents Climate Commitment requires LIFE to make sustainability a part of the curriculum for all students. A great example of LIFE fulfilling its commitment is in Wanda Benjamins Ethics in Business and Technology (BSN 201) class. Students in this class were asked to read and comment on a case study titled BP (Beyond Petroleum) Focuses on Sustainability. I have included responses from some of LIFEs future business leaders. BP (Beyond Petroleum) Focuses on Sustainability The case study provided a history of the company, delves into controversies regarding business practices, environmental damage and hazards to workers. The article also talks about BPs efforts to improve its image and manage decisions related to ethics and social responsibility. After reading the case study the students were asked to propose solutions to BPs dilemmas and to give a rationale for their recommendations. Joy Weaver, summed up the assignment with this question. Prior to the oil spill, BP was doing a great job at improving its image and the impacts of these efforts were being felt everywhere. So what should BP do now seeing as its image is back for public scrutiny again? Here is what some of the students had to say Having a department or outside party inspect to verify upkeep a nd maintenance is being followed [will] help ensure that employees are accountable and do not neglect or ignore early signs. Transparency will [ensure] that the company is really trying to redeem themselves and have nothing to hide. Benita Jackson Good publicity is only going to help BP as they strive for a new image and continue to become environmentally friendly. It also helps out all the stakeholders as well. Good media shows the stakeholders that what they are invested in is improving the world and not destroying it. Ben Mateialona I think that BPs efforts on renewable energy as well as its establishing a Code of Conduct are the first steps in the right direction. It is very hard for a company whose main business is drilling and extraction of fuel to truly gain a totally positive view from consumers; however its efforts to educate people on going green will greatly help.Megan Page It just seems to me that BP has repeated the same mistake time and time again for instance, The twenty-first century found stakeholders more wary of companies, especially after decades of repeated violations and misconduct on the part of the oil industry. ..So it seems apparent to me that if they just retrain their organization to abide more ethically by the leadership of upper executives that BP can prove to be sustainable. DeAires Peterson Upper Management should lead their employees by setting an example and making ethical decisions at all times. Peter F. Druker says, Management is doing things right and leadership is doing the right thing. BP should continue to show environmental stewardship and continue to make society more sustainable. BP should have a plan in place to fix oil leaks and they should act with a [sense] of urgency. BP should always make their stakeholders their first priority. Christina Thornton Community presence, BP should not just commit to the occurrence of future problems but create a sense of belonging within the communities where it has the drilling sites. Just like it did during its inception in founding a hospital, Abaden, for its employees, BP should look for more opportunities to work with the local communities. Joy Weaver

The Office of Sustainability would like to thank Wanda Benjamin and the entire class for their hard work and for allowing their work to be shared with our readers. Personally I was impressed and enlightened by their responses. What a great way to incorporate sustainability into the classroom

The Two Faces of BP

By RP Siegel | May 10th, 2010 2 Comments

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During the years 2004-07, I had the opportunity to meet a couple of key individuals from BP in the context of an international sustainability consortium. One was Duncan Eggar, who was responsible for defining future transport trends, and then later, Vivienne Cox who was on her way to becoming, the CEO of BP Alternative Energy. I heard them speak on multiple occasions and watched a number of presentations, and came away not only impressed with the caliber of these individuals, but also with the company and its commitment to sustainability. Here was a very large company, in the process of re-imagining itself as Beyond Petroleum, that had looked unblinkingly into the future, and truly grasped the fact that things need to change dramatically very soon. BP made huge investments in solar energy and after a series of acquisitions became the largest maker of solar panels in the world. Genuinely impressed and inspired, I went out and bought some BP stock. Lord John Browne, then-CEO of the company, said in a 2006 lecture entitled, The Purpose of Business, that, Any successful business is part of society, and exists to meet societys needs. He was the first oil company chief to publicly acknowledge the reality of human induced global warming, saying, in a later speech, I believe the judgment on the science of climate change on the basis of the available evidence is now beyond reasonable contradiction To do nothing, to live in denial, to pass the problem to another generation will increase the cost of the action and will increase the risk that the action comes too late. BPs website is filled with examples of sustainable development in places like Indonesia, Trinidad, Chinaand India . However, a couple of years later, Browne had departed under a personal scandal, and the company began to shift its emphasis. An article in Ethical Corporation said, Climate change no longer seems to be high on the oil giants agenda, based on the level to which BPs Sustainability Review 2008 skips over green efforts to concentrate instead on day-to-day operational performance. Its also worth mentioning that both of the individuals from BP, who had so impressed me a few years back, have also left the company to pursue other interests. The company has been plagued in the intervening years by a series of disastrous incidents including:

An explosion at a Texas City refinery in March 2005 that killed 15 workers. Lobbying for the opening of ANWR and the shutdown of a major Alaskan pipeline in August 2006 due to pipeline corrosion. In October 2007, it paid $303 million to settle a lawsuit alleging that it had fixed prices on the propane market. Problems with the cracking underwater pipes at the Thunder Horse platform in the Gulf of Mexico which delayed the onset of production which continues to fall short of expectations.

Yet, despite this continual progression of bad luck, the company has continued to oppose regulations that would have required stricter standards for safety and environmental protection. It is clearly not yet Beyond Petroleum. I find myself wondering if BP, in fact, wishes it were just now. But then, considering the $26.4 billion in profits on the $239 billion it took in revenues last year, mostly from fossil fuels, it might be hard to say. Regulators at the Minerals Management Service , an arm of the Dept. of Interior, who along with the Dept. of Energy has enjoyed alarmingly cozy relations with the entire oil industry, had been urging oil companies operating offshore to install backup systems to prevent catastrophic blowouts such as the one that occurred last month off the coast of Louisiana. The operative word here is urging which clearly should have been requiring. I happened to be down in Louisiana during the week following the explosion. It was pretty much all people were talking about. Their focus was primarily on the impact the spill would have on fishing in the gulf. Just about everyone I met down there either works in the seafood industry, enjoys recreational fishing or eats seafood as a favorite past time. In case youre wondering, when I returned home, I sold half of my BP stock. I guess that might be my way of saying that there might still be half a company worth believing in, though Ill be watching carefully.

Is BP an ethical company?
MAY 18 Posted by Sam Warren

Using Ethical Theories, To What extent Does BP plc Act Ethically To All Of Its Stakeholders? And To What Extent Is Its Corporate Social Responsibility Image Consistent With Its Practises? BP plc is one of the largest Oil and Alternative Energy companies in the world. It has set confident and meaningful targets with regard to reducing its CO2 emissions and development of alternative sources of energy such as solar power. However, in recent years BPs environmental image has been tarnished. However, whether BP has acted unethically is certainly ambiguous, indeed, to define ethics is itself problematical. Thus, to look at BPs business practises from contrasting theoretical stand points allows for juxtaposing arguments over the ethics of its business practices. Within the normative ethical theories, the traditional theories of Consequentialist Utilitarianism and the Non-Consequetialist Ethics of Duties are exemplary theories to demonstrate the contrasting nature of business ethics and to identify whether BP acts as a an ethical MNC or a ethically vacant imposter. British Petroleum plc developed their image considerably; altering the meaning of BP to mean Beyond Petroleum and aiming to reduce greenhouse gas emissions by 10% (Bulkin, 2010) between 1990 and 2010, which they did successfully; signalling their intent to either aid the environment in their business practices or simply to cultivate a greener image to ensure the ever more environmentally aware public will favour their products, and to capture the developing market for alternative energy. Using Friedmans theory it can be argued that BP uses this image to

maximise profit. Conversely, Freemans Stakeholder theory indicates how BPs ethical stand point considers the broader responsibilities contributing to the businesses decisions and policies. It is necessary to established whether ethical decisions and Corporate Social Responsibility (CSR) are based upon intentions, goals, outcomes; or, a mixture of each. Carrols Four part model of corporate social responsibility (Crane and Matten 2004 ref Carroll 1991) has indicated that CSR is comprised of four aspects of responsibility: Economic, Legal, Ethical, and Philanthropic. This model of CSR connects to Freemans theory, as each stakeholder has a vested interest in the apportionment at each of these stages of CSR. BP have adopted a progressive approach to environmental protection; setting targets and producing reports on their environmental development progress. The Ethical Conduct Policy considers factors such as adhering to Human Rights regulations; ensuring that all operations are fair and legal, and dismissing those who act unlawfully as they did in 2006; zero tolerance of bribery or gifts as facilitation payments. These factors are demonstrated by the management in decisions, policies and actions. Moreover, pledging its name to the United Nations Global Compact (UNGC) and partnering the Red Crosss appeal for financial support; all demonstrate BPs commitment to being a ethically astute corporate citizen. These actions suitably satisfy the four stages in Carrols CSR pyramid. Therefore, can it be argued that BP is an ethical company? Or can it be seen that these actions are simply the mask of an organisation whose only responsibility is to its shareholders and top management? Many of BPs actions have, contrastingly, been regarded as extremely unethical. The Alaskan oil spills, Texas City refinery fire, treatment of Colombian farmers and the explosion in the Gulf of Mexico. Decisions were made, which ultimately lead to destructive consequences for many stakeholder groups. The complex ethical dilemmas facing BP are thus: it must be decided how to weight emphasis on different stakeholders and to what extent the immediate mistakes and unethical practices are allowable in pursuit of a better, more sustainable future; and, to what extent is it ethical to publicise the firms ethics and CSR for the predominant purposes of profit maximisation.

The traditional ethical theory of Utilitarianism provides an insightful perspective to BPs practises from a Consequentialist viewpoint. Crane and Matten provide the definition: Utilitarianism is morally right if it results in the greatest amount of good for the greatest amount of people. Therefore, it could be argued that BP should: adopt riskier strategies that result in higher returns; cut safety costs; and exploit small minorities. The results could provide a benefit for a great number of people over time. Adopting this view, FDI host nations, customers and shareholders would benefit most, leading to greater levels of investment and higher revenues. Thus, more investment can be made by BP to developing alternative energy sources creating a more sustainable future. So exploitation of, and accidents regarding, small numbers of employees, the environment, and local communities can all be seen as blips, even calculated casualties, in

the pursuit of a better world. Hence, Utilitarianism can be seen as a cost-benefit analysis to decision making. Arguably, some suffering is acceptable if the pursuit of a more sustainable environment is the intended aim of the organisation. However, environmental destruction and human deaths would widely be considered unethical. This Rule Utilitarianism contradicts the human rights of the employees. Therefore, its more appropriate to adopt an Act Utilitarianism perspective to understand the objectives of shortterm operational decisions, such as ensuring that safety standards are appropriate for employees; rather than pursuing additional profits and hiding behind a mask of public relations. Viewed from this perspective, calculated casualties dont provide the greatest amount of good; it simply highlights an unethical and ruthless pursuit of profits. Chief scientist Bulkin argues that good environmental policy [is] good business. This sentiment is supported by Parker (1998), that the environment is a cost to be internalised, marking good citizenship as well as increasing corporate efficiency and effectiveness. However, small reductions in emissions cannot counteract the exploitation of key stakeholders. Thus, viewed from an act utilitarianism perspective BPs employees can be seen to act unethically as the immediate results of some decisions induce suffering and detrimental effects to the environment, employees and local communities. The firms green-washing of its CSR to gain public approval of its practises and generate profits, is not only unethical, is it hollow. The distinction between Rule and Act Utilitarianism provides a good foundation for an transition to an alternative view of BPs ethical behaviour. The afore mentioned unethical issues can be seen from the Non-Consequentialist theory of Ethics of Duties. This theory contrasts the consequentialist view, providing a deeper analysis of the decision makers morals and principles. Thus, ethical decisions are analysed on motivation, not intended outcome. Kantian theory suggests that humans are rational, moral thinkers, with the propensity to act subjectively towards ethical dilemmas. Kant proposes the Categorical imperative and provides three maxims to test; consistency, human dignity, and universality. Applying this to BP, suggests that those who are in charge of safety should ensure that their job has been completed thoroughly. BP should not view the employees or environment as factors of production used to maximise profits for shareholders; suggesting that any reduction of safety is acting unethically and irresponsibly. Using the ethics of duties view, BP acts unethically and contradicts the image that it promotes by not fully considering the employees, environment and local communities; portraying their CSR and sustainability image to be a marketing gimmick. BPs business ethics cannot be viewed from an absolutist or relativist (De George 1999 3354)perspective as they are too extremist and not applicable to the real world. Hence, a pluralist perspective can be used to mediate between business aims of morality and profits. As Kaler (1999b ref Crane and Matten) has proposed good business decisions consider a variety of perspectives and theoretical views and combine to attempt the best decision.

Thus, it can be seen that the Consequentialist Utilitarianism theory, specifically Rule Utilitarianism, arguably provides a fundamental moral standpoint for BP; looking to the future as it attempt to pioneer alternative energy sources; aiming to please the greatest number of people. However, the more immediate Act utilitarianism demonstrates that BP acts selfishly to maximise profits quickly. Alternatively, the Non-Consequentialist Ethics of Duties theory demonstrates how Kants Categorical Imperative can be used to show that BPs decisions makers employ unethical practise. They dont just fail to consider all stakeholders, but consciously exploit many in order to increase efficiency and cut costs, often at the expense of safety.

BP simply green-washes its sustainable image and publicises its CSR to cultivate a reputation for ethical behaviour. Stakeholder theory suggests that this is a hollow ethical policy; which is more appropriate to Friedmans ethical theory of business with short sighted profits as the primary motivation. Normative theories further complicate the dilemma, providing contradicting views on the policy. However, traditional ethical theories should not be viewed as completed rules, but as contributing to a wider ethical understanding for decision making. BPs business actions are complex and have implications for all stakeholders. Senior management will often squeeze deadlines which force decision makers to cut corners. Hence, an variety of ethical perspectives are needed to conclude whether actions that lead to the Texas City Fire, the Gulf of Mexico explosion and other events, were a result of conscious unethical decision making or unexpected and unfortunate casualties of good business practise in the pursuit of future global improvements. However, it could conversely be argued, that viewed from a Consequentialist Egoism perspective BP is simple a collection or human beings, of whom ultimately, have limited insight into the full consequences of their actions and thus, are justified in pursuing their own self-interests, regardless of other humans demands. Therefore, Interpretation of BPs CSR and ethical policy is ambiguously subjective and open to conflicting perspective.