BP Struggles to Resolve Sustainability Disaster - Term Paper Example

? BP struggles to resolve sustainability disaster BP struggles to resolve sustainability disaster Introduction The backdrop of this case is the Deepwater Horizon oil spill which is the greatest oil disaster or oil spill that happened in the Gulf of Mexico. This disaster is also known as the BP oil disaster because BP was operating the Deepwater Horizon oil rig which was built by Halliburton and owned by Transocean which leased it to BP for its operations. There was an unabated flow of crude for about three months in the Gulf of Mexico and daily over 53,000 barrels of oil polluted the Gulf of Mexico affecting the estuaries, beaches, wetlands and the habitat of the adjoining areas. Over 200 sq km area near the Deepwater Horizon oil rig where the disaster took place was declared ‘kill zone’ by the experts because it has damaged the ecosystem of the region and the death rate of the living species of the region multiplied several times. This incidence has affected the company severely damaging its reputation, costing it heavy losses and declining its business and productivity. The Deepwater Horizon disaster has produced cleanup costs that may exceed $40 b. In addition, billions more ultimately will be spent as a consequence of criminal and civil penalties and lawsuits. It also has produced an inestimable loss of reputation and goodwill for BP, a huge company that is more than a century old. The company was also blamed for acting unethically and avoiding its corporate social responsibilities. The aim of this paper is to examine key questions concerned with corporate ethics. These questions include whether any corporations believe that they must give evidence of acting ethically, whether this insistence is just politically-correct window dressing in many instances, whether it represents genuine moral concern on the part of top managers at the companies which issue them, whether it is truly good business for a corporation to institute ethical practices or whether these practices simply purchase a tawdry respectability within the community for a company. The answers to these key questions will be discussed in this paper in the context of BP. The role and significance of ethical considerations in corporate management Contrary to the earlier business practices and beliefs the present day corporate management provides significant importance to ethics in business and recognizes the the role and significance of ethical considerations in corporate management. Traditionally, the ethical principles were used for defining business rules and regulations and a set of standards which corporations should follow but presently, there are considered as serious issues required for the success of the organization and the top level management consider them vital issues for the business as they have to be accountable to their stakeholders including their customers who are life and blood for them and the ethical issues are part of their social responsibility (Cavanagh, Moberg and Velasquez, 1981). The ethical considerations are still a dilemma for many corporations and they find it difficult in deciding about ethically acceptable or unacceptable behavior or situation. In the absence of clear and concrete definition of business ethics the corporations need the services of ethical consultants to resolve ethical issues. In the context of the Deepwater Horizon oil spill, BP has been alleged for many serious ethical problems that have occurred after the incidence, but a close investigation of the issues suggests, given the facts as presented in this case, that the company has acted quite ethically and genuinely to all its stakeholders. The most critical ethical dilemma before the company was whether the company was fair and honest enough in handling the issues after the disaster. There is no limit to the expectations of the people and they always seek more than what they get. The company is spending substantially for the clean up projects for the damage caused by the Deepwater Horizon disaster and the expenditure in these projects might exceed $ 40 b. Besides this the company has to spend billions as a consequence of criminal and civil penalties and lawsuits. This disaster has also produced an inestimable loss of reputation and goodwill for BP, a huge company that is more than a century old but the company is focusing on the clean up projects and other relevant projects to compensate the damages caused. There is no denying that the company realizes its ethical responsibilities and is committed to them. In this situation, to counter allegations, the company needs to let the people and its stakeholders know about the efforts done by the company and the measures taken by the company. The company ought to do what it is doing differently going forward, regardless of its ethical history, to answer to the allegations. It should start a campaign to know about the actions taken by the company in compensating the disaster. It has also been investigated that the company has been honest and fair enough in following the moral guidelines and principles in handling the situation without considering its profitability and legality factors which are normally the decisive factors for the businesses. Once the profitability and legality factors are taken into considerations the ethical issues become irrelevant, which is not the case in the case of BP in handling the disaster. Ethical considerations in business are a subjective issue and everybody has their reasons to justify their concept about ethics which creates the ethical dilemma (Cavanagh, Moberg and Velasquez, 1981). On he basis of the above investigation it can be recommended that the company should come out of its ethical dilemma and it must believe that in the prevailing circumstances the efforts made by the company in handling the disaster are quite genuine and ethical and the company only needs to let its stakeholders know about its efforts taken fairly and honestly. Now, the company will need to focus on its energy sustainability plans in the future. The company needs to be more careful in making its energy sustainability plans and it does not mean that the company should avoid projects like the Deepwater Horizon oil rig. It is well known that the most of the energy needs are fulfilled by the fossil fuels and underwater oil rigs are one of the prime sources of the fossil fuels and the company will find it difficult to compete in the market without such projects, it only needs to be careful in operating such projects. At the same time, the company should look for alternative options for its energy sustainability plans and these alternative options can be hydro – power projects or nuclear power projects. But, risk is involved in all the options and the only solution to this is to be careful and to implement risk management properly and accurately (Cavanagh, Moberg and Velasquez, 1981). Facts about ethical considerations Despite the fact that most of the big and small organizations have accepted the role and significance of ethical considerations in corporate management, it is quite true that many corporations believe that they must give evidence of acting ethically. They feel it necessary that people must know about the ethical practices of the corporation which is necessary for building a brand image of the organization. Here, in the case of the Deepwater Horizon disaster, BP has taken into consideration all the possible ethical issues but it has been alleged of neglecting them. Hence, it is required by the corporations that they must give evidence of acting ethically. This insistence cannot be considered as just politically-correct window dressing in many instances because it is necessary to let people know about the ethical considerations of the organization in order to avoid any confusion (Cavanagh, Moberg and Velasquez, 1981). Hence, it represents a genuine moral concern on the part of top managers at the companies which issue them. There is no denying that it is a truly good business for a corporation to institute ethical practices because these practices not only purchase a tawdry respectability within the community for a company but also it makes a strong brand image of the company which the company can harvest for a long period. Conclusion A company has ethical obligations not only to its shareholders but also to all its stakeholders. The stakeholders of a corporation can be its employees, suppliers, local communities, and a host of other stakeholders and they expect from the corporation that their concerns are valued by the corporation. They expect the corporation to be fair and honest in their operations and their practices must be guided by the moral principles. They also expect that the corporations like BP must execute their corporate social responsibility (CSR). BP is, no doubt, a for-profit corporation but it has to value the concerns of its stakeholders because it is needed for its success and sustenance. Therefore, the corporation should assign a value to the interests of non-owning stakeholders. The Deepwater Horizon oil rig was built by Halliburton, owned by Transocean, and leased and operated by BP. For the disastrous oil spill that occurred in April 2010 in the Gulf of Mexico, ethically, the blame and responsibility of the disaster should be distributed among all three companies because they all earned profits from the project and they all were involved in the project in a way or other, hence they all should share the blame and responsibility. Despite heavy monetary losses, BP is an old and reputed company which always followed ethical practices and its strengths will surely help to recover fully from these sorts of damages, both monetary and abstract. References Cavanagh, G. F., Moberg, D. J., and Velasquez, M. (1981) The ethics of organizational politics. Academy of Management Review vol. 6 no. (3). pp. 363–374. Read More