Business Sustainability                Karen Greig

                

1.        Introduction

Oil is an integral part of a country’s economy. Countries that have reserves in oil have a growing economy, look at the Middle East “The  state that the Middle East has two-thirds of all the world's oil reserves”.   As the economy continues to grow, the demand for oil therefore increases. This leaves major oil companies like Shell and BP trying to stay ahead of the demand to earn substantial profit.  

As countries reap the benefits from oil, there is also a prominent risk to our environment. The adverse environmental and social consequences of oil have been well documented: climate change caused by the production and the use of oil and gas, local air and water quality impacts around petroleum refineries, the “resource curse” that has afflicted many countries with significant oil and gas resources, allegations of complicity in human rights abuse perpetrated by state or private security, the failure to use the revenues from oil to provide lasting benefits in public health and education.

Furthermore, “oil and gas exploration and production has the potential to cause severe environmental degradation, not only to the physical environment, but also to the health, culture, and economic and social structure of local and indigenous communities”.

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The use of ethical and ecological values can help lessen the effect of the oil industry’s impact on the environment through the use of codes of conduct, stakeholders’ influence and opportunities such as oil recycling.

This leaves the oil industry in UK in a difficult situation having to satisfy not only the shareholders, but the government and the general public alike. Causing a three cornered challenge as illustrated in diagram 1.1

Diagram 1.1 illustrates the demand from the oil industry

 This report focuses on the UK oil industry and its sustainable development. I have use a wide variety of resources by using Michael E Porters SLEPTEE analysis. Moreover I have reviewed the current and prospective drivers in the UK business environment that might encourage the oil industry to improve its ecological, ethical and social performances.  

2.        The SLEPTEE Framework.

The SLEPTEE framework consists of seven main environmental influences.

These are as follows:

Social, Legal, Economic, Political and Technological as well Ecological and Ethical.. As each of the SLEPTEE factors in the framework change, a direct or indirect affect on the UK oil industry’s competitive environment is made.

2.1         Social

The social environment is increasingly important to organisations like BP as it has a direct affect on their external performances on dealing with public voices. Not only does it address the attitude and opinions that are being formed, but also looks at the implications that may apply to the industry’s growth and development. Since the oil industry significantly increases the problem of environmental pollution and the energy usage problem, it has become a controversial topic in many ways.

There are many forms of environmental pollution that may be caused by the oil business, for instance, emissions from combustion of fuels and materials by road transport, London introduced a congestion charge whereby if you drive your car within the congestion charge zone you pay £8, this scheme was introduced to reduce the number of cars coming into the city that were causing major traffic problems and increasing carbon emissions from pollution, people in London were encouraged to use public transport as this is a environmentally friendly way of travelling, so far the scheme has been successful and other city’s like Manchester and Birmingham are thinking of implementing it in the future. Another main cause of air pollution is from the use of oil from industries. Many businessmen frequently fly on a weekly basis for meetings in there company’s offices in European countries, it is made easier for them to go because of the cheap fares from Ryan air and Easy Jet. This not only causes air traffic but more pollution, increasing the effect of global warming which causes climate change. Suggestions that oil consumption will grow to up to 120m bpd by 2020 and that automobile and airline traffic will increase at extraordinary rates are futile and damaging” -  Dr Michael Smith, Energy Files

 

In UK, there are a variety of systems and controls at national and local levels that control and reduce emissions of pollution from the main sources. Emissions from road transport contribute around 70 per cent of the air pollution in towns and cities. Significant reductions have been made through the introduction of progressively tighter regulations for vehicle emissions and fuel standards. Therefore, the oil industry must respond accordingly to these fuel standards and regulations.

Table 2.1.1 shows figures for each factor that contribute in environmental pollutions,

  (social trends)

As the social opinions continue to develop, the government introduces newer laws to regulate vehicle emission so they can reduce the level of air pollutions.  The oil industry has never been popular in the public eye, facing the need and pressure of producing high standard fuel with less pollution. Some oil companies are changing their brand image into a ‘green’ one in order to improve public understanding and corporate social responsibility. This use of advertising is a form of attracting ‘green investors’, which was recently reflected in the re-branding of BP.  Investments in new green products and technology have provided more openness and co-operation between the industry and the public. Issues such as Operators of petrol station installations must apply for an authorisation from the Regulator who set controls to prevent releases of harmful pollutants.

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2.2        Legal

The UK law reflects the political and social attitudes of its country.  It is quite common to talk about the society becoming more controversial and business organisations can afford to ignore the legal implications of their actions.  The law also recognises that business organisations owe a duty of care to society as a whole.  Organisations must obey, applying all current laws while trading and managing their operations, therefore legal environments are essentially important for all industries and organisations.  

The oil industry has many more regulations and polices to follow due to its sensitive connection with ...

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