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Corporate social responsibilty

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ENTERPRISE AND SOCIAL RESPONSIABILITY

BP CASE STUDY

COURSEWORK

MODULE TUTOR

ROGER COOK

MODULE CODE

MS60021E

NOMAN AHSAN

ID: 9658008

Introduction

This report requires identifying the stakeholders, how they are affected and their harms and benefits based on the current situation. It requires forming a utilitarian perspective and using arguments based on the ‘maxims’ of duty. It also requires identifying what clashes of rights are involved in this situation and which other approaches to ethical analysis could help evaluate the current situation?

The second part of the report requires selecting a major energy industry and critically appraising its current approach to corporate Social Responsibility.

1.1

A stakeholder is any group or individual who can affect, or is affected by, the achievement of the organization’s objectives (Freemen 1984: 46). Freeman argues, corporations should be run in the interests of their shareholder but the management also needs to take the rights and interest of all legitimate stakeholders into account (Book).

The following table will show all the stakeholders affected by the situation mentioned above, their harms, benefits and their right.

Stakeholders

Harms

Benefits

Rights

Local Community

BP (Shareholders)

Consumers

Workers at oil fields

Employees

 Government

Fishersman/Farmers

Media  Advertisemnet

Homeless, Health and safety, bad environment

Reputation, Brand Image

Element of deception

Health

Loss of Jobs

Pollution and environmental damage. Race to the bottom

Water is polluted,

Oil Spill

Advertisement

Banning Issue

Reputation

Jobs, education

Oil, dividend

Good opportunities for Job

Income

Secure Employment

Share of the revenue, high employment, GDP

Good Income

Profit

2

1

1

3

1

2

3

5

The local community of Gulf of Mexico had more harms than benefits of BP producing oil in their region. Not only has Bp destroyed the environment in that area with their spill of  deep water horizon oil field but also the  destroy the Sea food industry of the  state of Louisiana. Before that about 70% of the seafood is coming form Louisiana to U.S.A . Workers at the Deep water horizon(jobs with low expertise required) have damaged their health  Fishers in that area have empty stomach due to empty nets. The water has been polluted and fisher can not find any fish in the water. The workers might have expected to have long term secure jobs and a compensation scheme offered by the BP. However The environment has been damaged and pollution has increased. The activities have harmed the government’s reputation and foreign companies think twice before entering this country.

1.2

 According to utilitarian Perspective an action is morally right if it results in the greatest amount of good for the greatest amount of people affected by the action. (Book) The disadvantage of the utilitarian perspective is that the minority (some people) will not benefit from this perspective. Rule utilitarianism should be taken into consideration, where it will be analysed if the continued oil extractions in Gulf of Mexico are beneficial for the majority in the long run. Continuing oil production in Gulf of Mexico would be the greatest good for the greatest number of people, to do so, several issue need to be taken into consideration.

The most import issue to be solved if producing oil again in the region, is working not only for increased revenue but also supporting the environment and local communities. People in Gulf of Mexico want to open a new chapter with the Bp . Not only has Gulf of Mexico huge oil reserves but they also have huge natural gas reserves. People living in Gulf of Mexico still have trust in Bp and want to give Bp another chance  to explore oil in Gulf of Mexico. They expect Bp to protect the environment this Time and to bring genuine development to the country. The continued oil production in Gulf of Mexico will be beneficial for the there economy and will increase the supply of oil globally. Taking the utilitarian perspective into consideration, oil production should be continued in  Gulf of Mexico but protecting the environment and developing the region is important and should be Bp first priority.

1.3  

According to the German philosopher Immanuel Kant (1724-1804), an action is to be morally right if it survives the following three maxims;

Maxim 1 (Consistency): This maxim checks if the action could be performed by      everyone and reflects the aspects of consistency, as in an action can only be right if everyone could follow the same underlying principle.

If every company would exploit the environment and people the way Bp did and if every company in the world would damage the environment to increase revenue, the world would soon not exist due to global warming. The environment needs to be protected and humans should not be exploited. Bp on the other hand would argue that if all companies have to pay compensation to the affected people, no company would invest in that region. A Kantian argument would be that if every company would devastate pollution, abuse human rights and persecution and pay a settlement as a compensation, the world would be corrupted and humans would be treated unfairly.

Maxim 2 (Human Dignity): This maxim says that human deserve respect as autonomous, rational actors, and that this human dignity should never be ignored.

A Kantian argument would be that Bp has not treated people living in Gulf of Mexico with respect and used their land to get revenue only. Bp would argue that despite the fact they are using Gulf of Mexico resources and people in State of Louisiana have to live in a polluted area, their business perspective on these people takes prevalence.  

Maxim 3 (Universality):  This maxim checks if the principles of our actions would be acceptable for every human being. In other context this point has been referred to as the New York Times test (Trevino and Nelson 2004: 99). This checks if someone would be uncomfortable if their actions would be reported to the press.

Would every company act like Bp did in State of Louisiana  and pay only £20.8 Billion in settlement? Bp has walked away from the trial with the settlement and might have been anxious about more evidence to be published. Pressure from Human Rights activists and public opinion might suggest that Bp has agreed to pay in order to avoid further damage to the brand. To conclude, Bp is not very happy about the fact, that they have been in Newspapers with negative headings and publication.

1.4

There are a number of rights involved in this case including:

  • The right of the local community (state of Louisiana) to live, right of life and health.
  • The right of Shareholders of Bp to get dividend on their investment.
  • The right of workers of the Oil fields and local fishers to work and to get Compensation.

Natural rights are certain basic, important, unalienable entitlements that should be respected and protected in every single action. The local community has the right to live and their right is the most important right as it is fundamental and basic. Theory of Justice says that every one should have an equal right to the most extensive total system of basic liberties compatible with a similar system of liberty for all and Social and economic inequality are to be arranged so that they are the greatest good for the least advantaged and everyone should be treated fair and equal.

1.5

Environmental ethics

The question in this theory arises is, what impact BP has on the environment. There are two approaches to answer this question.

Polluter Pays Principle

The Polluter Pays Principle (PPP) is an environmental policy principle which requires that the costs of pollution be borne by those who cause it. The price of a good or service should fully reflect its total cost of production, including the cost of all the resources used. Thus the use of air, water or land for the emission, discharge or storage of wastes is as much a use of resources as are other labour and material inputs.

BP has used the environment, not only have they used it, they also have damaged it. They have polluted the air, water and damaged the environment, especially in Gulf of Mexico and should be paying for the damage caused.

Biocentric view if the world

This approach refuses to consider economic activity from just an anthropomorphic vies and considers human beings as the most significant entity of the universe. It interprets or regards the world in terms of human values and experiences.

The world does not exist as a resource to be freely exploited by human, so Bp should not exploit the environment freely and their activities should not leave footprints.

The other approach to ethical analysis which can help to evaluate the current situation is Discourse Ethics.

Discourse ethics aims to solve ethical conflicts by providing a process of norm generation through rational reflection on the real-life experiences of all relevant participants. Bp could or should have solved the current issue peacefully and provide a solution which was expectable for all. For instance, Bp should actively involve in protecting the local environment and create a better life for the Gulf of Mexico people.

Question 2

Corporate Social Responsibility Critical Appraise

The term corporate socially responsibility (CRS) is a pervasive term in the business world; what exactly does it mean? CSR is an idea that corporations should consider the interest of the society and the environment, by taking responsibilities for the impacts they made in them. The practice of CSR has been a controversy debate within the corporate business world. I personally believe that corporations should only focus on their business and profit because the practice of CSR is such a problematic subject for corporations to deal with; corporations tend to create a lot of problems when they practice CSR.

Corporate hypocrisy is one of the problems which associated with CSR. BP, an oil company which claims to be an environmentally conscious oil company that promised to be “Beyond Petroleum” (Bakan, 2004). Unfortunately when it comes down to business and profit, BP is just an ordinary oil company, and has been very Inconsistent more than any other Oil  Company when it comes to CSR and CSR is just empty promises they made to deceive their consumers. Norma Kassi, a member of the Gwich’sin Nation, is an Arctic indigenous people whose villages were built thousands of years ago went to BP’s annual general meeting at London, trying to stop the drilling on the Arctic slope’s costal plain. She believes that the drilling would destroy the Porcupine Caribous and the Gwich’in Nation’s cultures (Bakan, 2004). What did our environmentally conscious oil company, BP do? They turned down Kassi’s request even though there were a lot of strong scientific evidences that indicated the drilling will wipe out the whole Gwich’in culture and the Porcupine Caribous.

Despite BP’s refusal to drill on the coastal plain, other BP programs such as developments in alternative energies, and cut down carbon dioxide emissions are relatively insincere. In between 2000 and 2005 BP had invested $500 million on alternative energies, yet BP sent $8.4 billion on exploring and producing nature gases within just a year in 2004 (Roberts, 2006). Comparing what BP put in to alternative energies and in petroleum, the money they spend in developing other energy resources is very trivial. It looks to me that BP has never had any concerns in the society and the environment because if BP is genuinely care about the society and the environment BP would have not opened the drilling of the coastal plain and would have spend more money in alternative energies rather putting money in developing petroleum. BP has failed to do both they did not stop the drilling nor put more money in developing alternative energies. This kind of corporate hypocrisy toleration has to be stopped before other corporations start to imitate this kind of practice. Therefore corporations should not be distracted from its core business and profits.

Lack of maintenance is also a major problem correlated with pursue of CSR. Corporations who practice CSR devoted themselves in creating good moral images for the public, fails to realize that at the same time they are neglecting the company’s most essential part, making sure that everything in the company is working properly. In 2006 one of the BP’s pipelines in Alaska broke (Roberts, 2006). No matter how many environmental programs BP supports, I believe that the damages made by the broken pipelines in Alaska can not ever be fully healed. Instead of pouring money in bragging how environmentally they are; BP should have put more money and focus on the company’s fundamental needs such as developments, productions, and the most vital part of all maintenance.

Don Shugak, a BP technician, was a victim of BP’s lack of maintenance on the company’s materials and mechanism. BP engineers knew that the Prudhoe Bay Oil field had problems and would operate unusually, yet they did not fix the problems. As a result Shugak ended up in a Seattle hospital with burns covering 15 percent of his body; miraculously he was able to survive. In addition, the state inspectors found that one-third of the pads at one of BP’s drilling platforms were defective and did not get fixed (Bakan, 2004). The Recent Oil Spill of Gulf Of Mexico Indicates that BP is not as socially and environmentally responsible as they claimed to be after all; in facts they are creating fatal impacts on the society and the environment. The pursuit of CSR results inefficient maintenance, which ultimately damages the society and the environment. It seems to me that when corporations do not practice CSR they do not tend to have problems with their maintenances. ExxonMobil, an oil company which did not focus on CSR has never been caught with corroded pipelines (Roberts, 2006). BP should have had focused more on the company’s indispensable supplies rather than putting a massive of attentions on CSR. Maybe the pipelines in Alaska and Gulf of Mexico would not have had broken  if BP had put more focus on their job, namely focus on profits; also Shugak would not have had suffered from all those burns. The practice of CSR does no goods to our society if corporations create fatal impacts during the processes of CSR. In order to avoid those major impacts, corporations should focus on their profession; one has to be able to take care of one’s self first, before they can take care of others. Corporate hypocrisy, lack of maintenance, and corporate scandal are some very common and dangerous problems that are associated with the practice of CSR. Each of these problems is associated with a very serious impact on our society and environment. Corporate hypocrisy is linked to our future image of corporations, the future corporations is based on our present images of corporations. Corporate hypocrisy has to be stopped before the whole business world gets influenced and started to practice this kind of behaviour. Lack of maintenance is related to fatal impacts on the society and the environment, our society and environment might have to suffer just because of a particular company fails to provide an adequate mechanism for its company. Corporate scandal is correlated to the ability of how corporations have the power to commit crimes without the acknowledgement of the public, which granted corporations the power to do unlimited damages on our society and environment. The practice of CSR is such a problematic belief, it is better that the practice of CSR should not be encouraged among corporations. The practice of CSR does no good to our society and environment when it brings up more vital impacts and problems to our society. I believe that if corporations are focusing on their main job and goal, they would have less impact on our society and environment. The truly and most effective practice of CSR for corporations is basically for them to focus on their core business and fix problems that are with in the company, instead of the obsequious practice of CSR.            

 Bibliography and References:

  • Arrow, K. (1973), "Social responsibility and economic efficiency", Public Policy, Vol.21, pp.303-317.
  • Welford, R. (2002), "Globalization, Corporate Social Responsibility and Human Rights", Corporate Social Responsibility and Environmental Management, Vol. 9, pp. 1-7.
  • Korhonen, J. (2003), "Should We Measure Corporate Social Responsibility?", Corporate Social Responsibility and Environmental Management, Vol. 10, pp. 25-39.
  • Business ethics second edition by Andrew crane, Dirk matten oxford university press. Chapter 2 P 42- 78

http://bp.concerts.com/gom/Communities_20082010.htm

http://www.bp.com/bodycopyarticle.do?categoryId=1&contentId=7052055

          http://www.bp.com/sectiongenericarticle.do?categoryId=9035726&contentId=7066197

www.greenpeace.org

http://www.corporatewatch.org/?lid=2701

http://motherjones.com/environment/2006/11/its-not-easy-being-green

http://today.msnbc.msn.com/id/38339709/ns/today/

http://www.anwr.org/features/players/gwichin.htm

http://www.msnbc.msn.com/id/38551864/ns/disaster_in_the_gulf/

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