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Comparative Business Ethics Of BP

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Question:

Discuss about the Comparative Business Ethics Of British Petroleum.
 
 

Answer:

Introduction

British Petroleum (BP) operates as a multinational organisation operating in the oil and gas industry and is headquartered in London. The company runs based on the collaborated efforts of around 75,000 people that help in meeting the diversified energy needs of customers both along the domestic and corporate front. Some key facts about BP are generated as follows.

(British Petroluem , 2017)

The report ideally aims in understanding the historical emergence of ethical misconducts pertaining to BP. It also focuses on understanding and evaluating the sustainability practices and code of conduct of the organisation in the face of potential environmental issues.

History of BP and Questionable Conducts

British Petroleum is observed to bear a historical linkage with questionable conducts. The company has a long history of being associated with different types of hazards both environmental and also associated with that of failing to meet the rights and needs of workers. Similarly, the oil and gas company also face potential litigation issues concerning the generation of considerable amount of greenhouse gases in the atmosphere. History reflects that from 2005, British Petroleum is the centre of ethical controversies owing not only to the existence of different types of non-ethical conducts like fraud, generation environmental and social degradation and also in affecting the natural and wildlife habitats. The explosion of a refinery run by BP in Texas during 2005 killing around 15 individuals and injuring around 170 people was termed guilty by the regulatory authority of the Southern District in Texas for not complying with the Clean Air Act. The management of BP admitted in a press meet that the company had rightly not complied with different regulatory mechanisms concerning mechanical integrity and also generation of a safe start-up. BP thus faced prosecution charges under the Clean Air Act that led to the closure of the Texas Unit (Ferrell & Hartline, 2013).

In another case during the subsequent year during 2006, British Petroleum owing to its failure to rightly respond to red flags that led to the leaking of the oil pipelines in Alaska leading to the leaking of crude oil in the tundra region and the frozen lakes. The same required the organisation to render millions of amount of fines to the different regulatory authorities operating in the region. The leaking of the pipelines that led the company to pay large amount of fines could have been easily avoided with a strong focus of the company’s management to routinely check and clean the pipes. Again, the oil and gas company came into limelight owing to its management being involved in an act of fraud concerning both mail and wire fraud and also because of actively conspiring to violate the Commodity Exchange Act. British Petroleum being guilty of such charges was again required to pay millions of dollars in terms of fines to the regulatory authorities based in United States. The above facts potentially indicate that BP has had a long history of not taking proper care and attention of the needs and expectations of both the internal and external stakeholders (Ferrell et al., 2011).

BP in turn focused on Greenwashing its image through the generation of considerable amount of investment regarding the development of renewable energy resources and also in enhancing the level of sustainability through reduction of greenhouse gas emissions. Similarly, generation of effective stories to create a new reality than that reflected in terms of evidences were also carried out by the organisation to project its environmental and stakeholder friendly image before the public (Ferrell & Hartline, 2013).

 

Evaluation of BP’s Efforts regarding Sustainability

British Petroleum (BP) took its first step towards sustainability during 2005 with its initiative of ‘going green’. Initially the sustainability initiative was undertaken by the company in terms of generating a small investment of around $1.4 billion. It was however evaluated that over the years the sustainability initiative of the company would gain needed importance.

Wind Energy

BP had installed around 500 Mega Watts of wind energy systems where around 432MW is found to be operational. The Wind Energy came into operations from 2008 with collaboration of BP with other wind farms like the Cedar Creek based in Colorado. The wind capacity installed by BP is evaluated to meet the energy supply of around 6 million residences.

Solar Energy

BP focused on entering into agreements with large number of solar panel producing companies based along different Asian economies. In United States, BP generates only around 4MW of solar energy that helps in the running of Wal-Mart stores situated in California. A larger part of the solar business carried out by BP is associated with the European countries like development of two large solar power plants based in Spain that helps in meeting the energy needs of million residences. Solar Cities are also being planned by BP that helps in providing energy to around seven Australian cities. In terms of reducing emissions of greenhouse gases, BP has developed a pump system run on solar energy situated at Moxa Gas Field based in Wyoming. The running of the pumps reduces the chances of the employees and the local communities from getting affected by emissions of greenhouse gases (Ferrell & Hartline, 2013).

Biofuels

BP identifies Biofuels as a significant part of its renewable energy portfolio and thereby aims for its continual development and growth for around two full decades. BP in its bid to develop on its biofuel projects became one of the largest stakeholders in a bioethanol company based in Brazil, Tropical Energy S.A. The Brazilian company contributes in the development of bioethanol products from sugarcane and thereby generates around 115 million gallons of bioethanol. Further, BP is also focusing on the development of a Special Purpose Entity (SPE) in terms of teaming with a cellulosic ethanol company, Verenium Corporation (Ferrell & Hartline, 2013).  

 

Carbon Sequestration and Storage (CCS)

Regarding CCS, BP has focused on the development of the Salah Gas Field based in Algeria that contributed in capturing and storing around 1 million tonnes of carbon dioxide gas from the atmosphere. BO further aims in meeting its CCS objectives at Hydrogen Energy for developing low carbon emitting power plants in regions like Abu Dhabi and California. BP had also developed the BP Zhuhai Plant (BPZ) Plant that contributes in not only reducing Carbon Dioxide emissions but also in limiting the employment of Liquefied Petroleum Gas (LPG). From 2005, BPZ had contributed in reducing the carbon dioxide emission levels by around 35 percent and reduction of LPG use by around 48 percent (Ferrell & Hartline, 2013).

Recommendations to BP

 Despite the above sustainability activities undertaken by British Petroleum the oil and gas company has lot to learn from the grave misconduct during 2010 leading to the explosion of the oil well operating undersea and situated in the Mexican Gulf. The explosion led to the killing of 11 crew members while rendering considerable damage on aquatic life and also to other coast centred communities (Bredeson, 2012). The large scale spreading of oil on the ocean floor caused the deaths of large number of birds, fishes, dolphins, turtles and shrimps. The management of BP generated a large scale compensation fund of around $20 billion for countering the mishap but the same failed to meet the sustainability requirements. The explosion of the oil well caused the spilling of crude oil of over 134 million gallons that affected the marine and wild life in the region (Freudenburg & Gramling, 2011).

In the light of the above issue, BP is required to develop on its regulatory standards concerning that with protecting the regional environments from such emerging catastrophes. The management of BP is required to enhance on its transparency parameters for generating greater accountability towards its different stakeholders (Mauk & Metz, 2015). Similarly, contingency planning systems are required to be developed by BP for both the Coast Guard of United States and also the management of BP. British Petroleum is required to also develop on its spill response initiatives (Kramer & Pittinsky, 2012). BP is also required to develop on its technology parameters regarding oil drilling and also work for the generation of effective job training for the rig operators. The same would contribute in development of a safer work environment for BP staffs operating in such offshore projects (Barnett, 2016). BP as a potential client of Transocean situated in the Gulf of Mexico was required to effectively oversee for generating precautions in preventing the emergence of disaster. It was later observed that the disaster plan of BP contained a number of fallacies and was inadequate for handling such contingencies. Thus, BP is required to continually monitor and develop on its contingency and disaster framework to rightly handle such disastrous events like the Deepwater Horizon Spill (Ferrell & Hartline, 2013).

 

Potency of BP Code of Conduct and Ethics Initiatives

British Petroleum is observed to have suffered from a long period regarding the issue of ethical misconducts. The Ethics and Compliance Team in BP during 2005 potentially worked in creating, publishing and also distributing the code of conduct for the company. The Code of Conduct for BP is both available virtually and physically and can be effectively accessed by the employees and staffs operating in the oil and gas organisation. British Petroleum being a multinational firm has framed the Code of Conduct such that the same helps in uniting individuals emerging from diverse backgrounds and ethnicities under universal standards formulated by the organisation. The Code of Conduct was developed by the Ethical and Compliance team as a one stop platform for helping in guiding the behavioural conducts of employees. The code focused on addressing different issues ranging from health and safety to financial integrity parameters and was observed as one of the potential mass communication exercise undertaken by the organisation (Lustgarten, 2012).

The Code of Conduct in British Petroleum is evaluated to be inadequate in nature for reducing the chances of incidence of disastrous issues like the environmental disaster that happened during 2010 in the Gulf Coast.  Further, the ethical codes of conduct for the company to be effective in nature are firstly required to be comprehensive and integrated in nature and also to be required to reflect the compliance of the upper management on parameters associated to values, policies and also rules and regulations of the state and region. Similarly, the viability and of the code of conduct in assessing and monitoring the conducting of operations along risky areas is required to be carried out through the development and integration of a legal team. Regarding BP, the code of conduct for the company however failed to significantly highlight the areas concerning increased risk along the day-to-day operations of the company (Elkington et al., 2017).

Similarly, the code of conduct for BP also suffered for being not designed in an effective fashion to resolve the emergence of ethical and legal issues concerning the conducting of the daily operations of the firm. The Code of Conduct was also required to be developed for helping both the managers and the staffs in British Petroleum to ideally deal with the emergence of ethical issues. However, regarding BP no such evidence is gained where the code of conduct was ideally communicated to the staffs and managers pertaining to different departments for limiting the conducting of activities that would help in rightly reducing the incidence of ethical issues.  Again, the code of conduct generated at British Petroleum fails to encourage the growth of whistleblowing practices in the organisation and neither generates adequate measures for protecting the actions of the whistleblowers in identifying the emergence of ethical misconducts within the organisation (Chandler, 2014).

 


The Deepwater Horizon Crisis associated to British Petroleum further reflects the failure of the code of conduct of BP to make it ready for responding effectively to the crisis and also in acting in a sensitive fashion in addressing the needs of stakeholders. It also reflected the lack of transparency associated with both the internal and external communication practices of the organisation (Elkington et al., 2017).

The Code of Conduct at British Petroleum was investigated to have failed in reducing the incidence of decline of morality and ethics pertaining to the day-to-day operations of the firm. A large number of complaints were observed to have been filed under the code of conduct parameters of the organisation. The Code of Conduct is required to be effectively revised for enhancing the parameters associated to safety in the workplace, reduction of bribery and corruptive activities at the workplace and also for enhancing financial and moral integrity (Brown et al., 2014).

Decline in the level of moral standards at BP’s workplace was also observed owing to the growth in the number of employee complaints associated to the Open Talk program. The increase in the number of employee complaints along the Open Talk platform rightly indicated the failure in generating and maintaining effective risk control initiatives. It was also observed that the code of conduct in BP was also not rightly followed in that the rates of dismissals for violations of the code of conduct policies in the organisation were declining.  The employees were also observed to fail to respond in an effective fashion to the survey conducted regarding employee engagement to the code of conduct rules of the organisation (Kossovsky et al., 2013).

The Code of Conduct in BP commits in generating protection to the environment and also promoting workplace safety and enhancement of health standards of the employees while also in generating a zero tolerance policy for emergence of any accidents at the workplace and also at overseas research and drilling centres. The management of British Petroleum is however criticized for creating stories such that the same helps in attaining public legitimisation of the activities and incidents at workplace. Stories concerning the operations in BP are identified to be increasingly associated with Greenwashing the image of the organisation in the eyes of the public (Appleton, 2013). Large numbers of storytellers are employed that contribute in the generation of different antenarratives that contribute in generating an interpretive reality of the different incidents happening at the workplace of BP. This practice is observed relating to the generation of counter story telling in case of the oil spill disaster along the North Slope of Alaska. Each of the different counter stories rendered by the BP staffs tends to conceal the reality of the event concerning the scandal associated with the inspection of pipeline and also the delaying activities of the organisation. It thus helps in concealing the failure of BP’s efforts in protecting the natural environment as stated in the code of conducts (Appleton, 2013).

Conclusions

The analysis carried out in the report potentially reflects that despite the existence of a number of sustainability initiatives conducted and maintained by British Petroleum, the oil and gas company however accounted for a large scale disaster along the Gulf Coast of Mexico. The disaster was caused primarily owing to the absence of effective monitoring and reporting mechanisms in place and also the failure of British Petroleum in potentially responding to the crisis. Further, absence of effective communication carried out by the company with both its internal and external stakeholders were found to be lacking that in turn accounted for loss of lives and also affecting marine and wild life on a wider scale. The Deepwater Horizon Crisis of British Petroleum also reflected its leniency in aptly complying with the regulatory standards both associated to the industry and also along the different regions. The analysis also reflected that the codes of conduct designed by British Petroleum were not rightly followed by the management and the staff communities in the organisation. The same accounted for the emergence of such large scale destruction affecting both life and property. Existence of proper whistleblowing policies were observed along with the practice of the company in not removing staffs that were found guilty in not following the codes of conduct. The same reflects the need for the codes of the conduct to be aptly revised such that they meet the needs of the industry.

 

References

Appleton, J., 2013. Values in Sustainable Development. New York : Routledge.

Barnett, S., 2016. Rhetorical Realism: Rhetoric, Ethics, and the Ontology of Things. New York : Routlledge.

Bredeson, D., 2012. Applied Business Ethics: A Skills-Based Approach. United States : Cengage Learning.

British Petroluem , 2017. About Us. [Online] Available at: https://www.bp.com/en/global/corporate/about-bp/bp-at-a-glance.html [Accessed 11 September 2017].

Brown, A.J., Lewis, D., Moberly, R. & Vandekerckhove, W., 2014. International Handbook on Whistleblowing Research. United Kingdom : Edward Elgar Publishing.

Chandler, R.C., 2014. Business and Corporate Integrity: Sustaining Organizational Compliance, Ethics, and Trust [2 volumes]: Sustaining Organizational Compliance, Ethics, and Trust. United Kingdom : ABC CLIO.

Elkington, R., Steege, M.v.d.G.-S.J. & Breen, J.M., 2017. Visionary Leadership in a Turbulent World: Thriving in the New VUCA Context. United Kingdom: Emerald Group Publishing.

Ferrell, O.C., Fraedrich, J. & Ferrell, L., 2011. Business Ethics. 8th ed. United States: South-Western Cengage Learning.

Ferrell, O.C. & Hartline, M., 2013. Marketing Strategy, Text and Cases. United States : Cengage Learning.

Freudenburg, W.R. & Gramling, R., 2011. Blowout in the Gulf: The BP Oil Spill Disaster and the Future of Energy in America. United States : MIT Press.

Kossovsky, N., Greenberg, M.D. & Brandegee, R.C., 2013. Reputation, Stock Price, and You: Why the Market Rewards Some Companies and Punishes Others. United States : Apress.

Kramer, R.M. & Pittinsky, T.L., 2012. Restoring Trust in Organizations and Leaders: Enduring Challenges and Emerging Answers. United Kingdom: OUP, Oxford.

Lustgarten, A., 2012. Run to Failure: BP and the Making of the Deepwater Horizon Disaster. United States : W. W. Norton & Company.

Mauk, J. & Metz, J., 2015. Inventing Arguments. United States : Cengage Learning.

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