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Question:

Discuss about the Origin Energy and Ethics.

 

Answer:

Background and Ethical Question

For purposes of improving the productivity and resource development of a region, there is a need of involving all the stakeholders in the region. It is an ethical procedure for any business organization to involve all its stakeholders in the decision making process.Involving all these stakeholders in the decision making process will ensure that the organization develops policies that satisfies all people, while maximizing the objectives of the existence of the business organization (Peters 2015). Enactment of policies that ensures the existence of a balance between the attainment of the needs of the business organizations and catering for the interest of all the stakeholders of the organization satisfies the provisions of the utilitarian theory of ethics.

The Ethical Question

According to the principles of utilitarianism, an action is ethical, if it will result to a positive consequence to all the parties involved (Pojman et al 2015). Under this notion of utilitarianism, the consequence of an action is judged by whether the action under consideration produces a positive result, or a negative result (Dwivedi,  Choudrieand Gopal 2003). Therefore, it is possible to assert that if the difference in the consequences of the results of the act is negative, then, the action under consideration is not moral, and it is unethical.

Hence, the people engaging in such kind of an action should be prevented from implementing the unethical and immoral policies under consideration (Wild, Wild and Han 2014).   In the case of Origin Energy and land owners, it is unethical for the company to obtain the CSG without the permission of the farmers. Obtaining the CSG without the permission of farmer’s, results to negative effects on the emotional, physical and psychological health of farmers who are affected by the action of Origin Energy.

 For instance, George Bender, a farmer who was against obtaining CSG by Energy and similar companies died because of psychological pressure emanating from the pressure by these companies for Mr. Bender to sale his ancestral land. Furthermore, the activities of Origin Energy can be condemned when there is the use of consequentialism theory. Under this theoretical framework, the basis of judgment is dependent on whether the conduct is right or wrong (Dwivedi,  Choudrieand Gopal 2003). Therefore, the conduct of Origin Energy, to seek to reposes land belonging to farmers without their consent is wrong. On the other hand, the rights theory supports the involvement of the government in regulating the activities of a company. However, while enforcing the laws, the government does not have the power to infringe on the rights enjoyed by citizens (Pojman et al 2015).

In as much as minerals found in the land belongs to the government, the people have a right to a fair compensation and involvement in the decision making process, when their lands are to be taken. Furthermore, it is possible to assert that the actions of the government and Origin Energy have breached the principles of justice theory, which are fairness, equity and impartiality For instance, it is unfair to compensate land owners based on finance, considering the social investments they have made in their land. Additionally, the Petroleum and Gas Act the government relies on favors the government and mining companies, as opposed to the land owners.      

 

Stakeholders Analysis

For purposes of identifying the stakeholders of this organization, there is a need of categorizing the various stakeholders of the company. The categorization of these stakeholders will be based on whether they are general stakeholders or specific stakeholders. In this case, general stakeholders are the government, the suppliers of the company, shareholders and employees of the company. As a stakeholder of the company, the government is concerned on the manner the organization is managed. For instance, the CSG industry is governed by2004 Petroleum and Gas Act (Chevalier 2016). Under this law, the state government is the legal owner of all minerals that are beneath the land of an individual. Therefore, energy companies can apply for a license to explore private lands, without the consent of the owners of these lands.

Therefore, because of this law, the government can have a fundamental impact on the performance of the organization, by either refusing or allowing the company to mine the minerals that are found in Australia (Des Jardins 2012). Furthermore, the employees of the organization can fall under the category of providers. They are responsible for provision of services, and they constantly deal with the company; hence, they are important stakeholders within the organization. Land owners are the suppliers of the company, because they supply land for exploration purposes. In fact, without them, the company cannot carry out its operations. Finally, the board of directors and share holders are classified as general stakeholders because of their role in influencing the management of the company in enacting policies that are favorable to them.        

Furthermore, in identifying the position of these stakeholders in the industry, there is a need of identifying the stakes of the stakeholders. For instance, the government has the power and the legitimacy to regulate the industry, because it is the owner of all minerals that are found in the country (Bryson 2004; Tricker 2015). This is through the Petroleum and Gas Act. Furthermore, the government regulates the manner which Origin Energy mines and the evacuation process of farmers and land owners.  Additionally, the government requires the company to fulfill all its tax obligations and then provisions contained in the 2001 cooperation act, which regulates then operations of corporate organizations in the country (Council 2003).

On the other hand, land owners do not have extensive powers and legitimacy over the company, because it is the government that owes the minerals found in those lands. However, they have a right to demand fair compensation from the government and the exploration company, in circumstances where the company seeks to explore the land (Graham 2004). The boards of directors and shareholders have extensive power over the operations of the company. This is because they influence the policies of the company through votes or managerial deliberations.

Moreover, the employees of the company do not have any significant power over the affairs and management of the company. This is because they are employed by the company, and they can be replaced, because of the existence of other people who are looking for work (Du Plessis, Hargovan and Bagaric 2010). Therefore, it is the government that has the responsibility of protecting the interests of employees in the company and within the industry. Furthermore, there are a number of challenges and opportunities that the stakeholders of the organization will present. For instance, the government can bring challenges and opportunities to the company. The government may seek to subsidize the operations of this company, to ensure that it meets its objectives.

Furthermore, through cooperation with the government, the company can come up with policies aimed at catering for the needs of the society, and these includes engaging in cooperate social responsibility programs. The challenge that may occur, lies on the implementation of  the Petroleum and Gas Act, regarding the evacuation of landowners whose lands have significant deposits of the energy (eon Rossouwand Van Vuuren 2010). The company has a number of opportunities that can enable it cooperate with land owners. This includes fair compensation of their lands, in case a significant amount of energy is discovered, and allowing them to be part of the decision making process, when it comes to the utilization of their lands (Denis 2016).

By coming up with such policy and implementing the policy, chances are high that the company will create a good working relationship with all its stakeholders, which will ensure that it meets its objectives (Carroll and Buchholtz 2014). However, there is a great potential for threat if the company does not consult land owners before coming up with a policy that will affect the use of their lands. Employees of the company are also important stakeholders who have the capability of cooperating or competing with the company (Gompers, Ishii and Metrick, 2001). For instance, with good motivational policies, employees of the organization will work hard, to ensure that they meet the objectives of the company.   

However, without these motivational policies, employees may fail to work hard; hence, frustrating the ability of the company to meet its objectives. Additionally, shareholders normally have different objectives with that of the management (Darwall 2003; La Porta et al., 2000). For instance, shareholders normally want the company to give them dividends, while the management of the company will seek to roll back the profit for business. These needs have the capability of either creating competition or cooperation between the shareholders and the management of the company (Denis 2016). Therefore, the management must come with a policy that will balance the need of giving out dividends and expanding its operations. 

 

Economic, Legal, Ethical and Philanthropic Responsibilities to Stakeholders

Furthermore, the company has a number of responsibilities to the government. The responsibilities are economic and legal. The company must operate under the guidance of the 2001 Corporations Act and the Petroleum and Gas Act. On an legal aspect, the company must pay its taxes to the government in an accurate and timely manner. The company has economic and ethical responsibilities to its shareholders and land owners. On an ethical aspect, the company must not provide unfair reporting to its shareholders, and it must also recognize the need of engaging land owners when coming up with a decision that will affect their lands.

Additionally, the company has a responsibility of paying dividends to the shareholders of the organization. Furthermore, the company has a philanthropic responsibility to the land owners. The company should adequately compensate these people for their land. The compensation should not only touch on money, but also on social and environmental aspects. To the employees, the responsibility is ethical and economic.

It is ethical because the company must develop employment policies that do not harm the interests of the employees. It is economic, because the company is required to provide good payment to these employees.   

Basing on these facts, there is a need of engaging the land owners directly, and accommodating their views and contributions. Furthermore, the company should engage the employees directly and negotiate with them the terms of their service. The company should also engage with the government directly, and accommodate the policies it has enacted in regulating the industry.

Corporate Governance Based on ASX

To improve its responsibilities to the shareholders, Origin Energy has a strong foundation for management and oversight. The company has a board of directors, who are responsible for managing the daily affairs of the organization, and their roles also involves coming up with strategies that can be used to carter for the needs of all the stakeholders of the organization (Shaw 2016). For instance, the company has an executive manager who is in charge of people and culture.

It is the responsibility of this manager to develop policies and implement the policies under consideration that will carter for the needs of all the stakeholders of the company. This includes the land owners, whose permission must be sought, before obtaining the CSG. The company also has an executive director who is in charge of energy markets(Payan et al 2015). It is the responsibility of this director to market the products of the company, and this includes looking for new markets for the organizations products (Ciulla 2013). Additionally, the company has an independent Executive General Manager, who is in charge of corporate affairs, and it is his responsibility to develop policies that will create a positive brand image for the company.

The company also safeguards its financial reporting system, making timely and balanced disclosures of its financial activities. It is important to note that Origin Energy has highly qualified and experienced members of staff, working in its financial department(Payan et al 2015). These people are responsible for providing accurate reports, regarding the financial position of the company. Shareholders normally rely on these reports while making decisions on whether to invest in the company or not.   

 

Corporate Social Responsibility and Corporate Social Performance

Furthermore, for purposes of promoting the interests of the community, and engaging in a corporate social responsibility programs, Origin Energy is actively involved in promoting the use of renewable energy (Payan et al2015). For instance, the company has spent a number of years coming up with purchase contracts that can be used to acquire and develop wind farms in Southern Australia and Victoria (Sha and Liu 2009).Furthermore, it is important to assert that the largest buyer of wind energy in Australia is Origin Energy. The company is also involved in producing solar panels for purposes of promoting the use of renewable energy.

Additionally, the company promotes the use of geothermal power in Australia. Origin Energy believes that by promoting the use of the renewable energy, it will be engaging in a corporate social responsibility program (Grant 2016). The world is now concerned with the need of promoting the use of renewable energy, as it will reduce the effects of greenhouse gases into the atmosphere. These greenhouse gases have the impact of destroying the ozone layer, and this result to the emergence of global warming(Payan et al2015).However, the company still engages in the exploration of fossil energy; hence,their initiative of promoting the use of renewable energy does not have a great impact in environmental conservation.

 

Ethical Analysis

From these information about the company, it is now possible to provide an ethical analysis of the actions of the company.One of the ethical principles that can be used to provide an analysis of the decision by Origin Energy to obtain CSG without the permission of the land owners is the utilitarian theory. Under this theoretical principle, an action is desirable, if it results to the positive outcome of allthe stakeholders of the organization carrying out the action (Cowan 2016). However,obtaining CSG without permission from land owners in Queensland was unethical, because it led to the death of one of the farmers, and the land owners in the region lost their ancestral land that had a rich history, that money alone could not compensate for the loss.

Therefore, in the view of utilitarian theory, obtaining CSG without the permission of land owners is unacceptable practice. Furthermore, by using the justice approach, it is unjust for any energy company to use legislations for purposes of buying land, without consulting the owners of those lands. However, on an economic perspective, the company would believe that the policy is beneficial to it (Ebert, Griffin, Starke and Dracopoulos 2014). This is because without consultations, the company will pay a small amount of money for the lands. The price that Origin Energy was paying for the lands in Queenslandwas one of the major reasons that Bender was unwilling to sale his lands to the company. For instance, the government was willing to pay Bender an upfront amount of $3183. Bender considered this amount of money to be too small; hence, he refused to sign the contract, authorizing the sale of his land. However, this policy was economical to the company.

Recommendations and Conclusion

To carter for the interests of the community, the government and Origin Energy must involve all the stakeholders in the decision making process. In as much as the law grants the government possession of all minerals in the ground, the same law allows people to own land. Therefore, the government must negotiate with these people when it comes to convincing them, to sale their land. Through this method, the company and the government will identify the needs of land owners, and develop a compensation package that carters for their needs.

Furthermore, the company and the government will be satisfying the principles of utilitarian theory, which states that the best action is one thatleads to the common good of the stakeholders or people affected by the decision.The decision and policy developed from this approach will ensure that the company and government provide a compensation plan that does not harm its interests, or one that will limit their operations. On the other hand, the compensation plan developed will be sufficient to the land owners. The compensation criteria will be based on the economic, physical and social loss experienced by the land owners. 

 

Bibliography

Bryson, J.M., 2004. What to do when stakeholders matter: stakeholder identification and analysis techniques. Public management review, 6(1), pp.21-53.

Chevalier, J.M., 2016. Stakeholder analysis and natural resource management.

Ciulla, J.B., 2013. Leadership ethics. Blackwell Publishing Ltd.

Council, A.C.G., 2003. Principles of good corporate governance and best practice recommendations. Australian Stock Exchange Limited.

Carroll, A.B. and Buchholtz, A.K., 2014. Business and society: Ethics, sustainability, and stakeholder  Management. Nelson Education.

Cowan, R., 2016. CD Broad on Moral Sense Theories in Ethics.

Darwall, S.L., 2003. Theories of ethics. A companion to applied ethics, pp.17-37.

Denis, D.K., 2016. Corporate Governance and the Goal of the Firm: In Defense of Shareholder Wealth Maximization. Forthcoming in the Financial Review.

Des Jardins, J.R., 2012. Environmental ethics.Nelson Education.

Du Plessis, J.J., Hargovan, A. and Bagaric, M., 2010. Principles of contemporary corporate governance.Cambridge University Press.

Dwivedi, Y.K., Choudrie, J. and Gopal, U., 2003, June. Broadband stakeholders analysis: ISPs perspective. In Proceedings of the ITS Asia-Australasian Regional Conference, Perth, Australia.

Ebert, R.J., Griffin, R.W., Starke, F.A. and Dracopoulos, G., 2014. Business essentials. Pearson Education Canada.

eonRossouw, D. and Van Vuuren, L., 2010. Business ethics.Oxford University Press, 2010. 

Gompers, P.A., Ishii, J.L. and Metrick, A., 2001. Corporate governance and equity prices (No. 8449)National bureau of economic research.

Graham, G., 2004. Eight theories of ethics.Psychology Press.

Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

La Porta, R., Lopez-de-Silanes, F., Shleifer, A. and Vishny, R., 2000. Investor protection and corporategovernance. Journal of financial economics, 58(1), pp.3-27.

Payan, J.M., Svensson, G., Wood, G., Singh, J. and Callaghan, M., 2015. Comparing Codes of Ethics  among the Top Companies in Australia, Canada and the USA. In Proceedings of the 2009 Academy of Marketing Science (AMS) Annual Conference (pp. 3-3).

Peters, R.S., 2015. Ethics and Education (Routledge Revivals).Routledge.

Pojman, L.P., Pojman, P. and McShane, K., 2015. Environmental ethics: Readings in theory and application. Nelson Education.

Shaw, W., 2016. Business ethics: A textbook with cases. Nelson Education.

SHA, Y.Z. and LIU, H.Q., 2009. Stakeholders Analysis Model of Public Crisis [J]. Science Economy Society, 1, p.015.

Tricker, B., 2015. Corporate governance: Principles, policies, and practices. Oxford University Press,USA.

Wild, J., Wild, K.L. and Han, J.C., 2014. International business. Pearson Education Limited.

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