How Attitudes towards Social and Environmental Sustainability Have Changed in the US - Case Study Example

How attitudes towards Social and Environmental Sustainability have changed in the United States following the BP Deepwater Horizon Oil Spill The question of sustainability has dominated business management thought for a long time. Throughout my studies, I have come to regard the issue of sustainability as a central part of business management. Businesses do not operate in a vacuum; they operate in a real world that is characterised by so many forces that compete with each other. What this means is that a business is affected by the society in which it operates. It also means that the activities of a business organisation have a direct impact on the very society in which it operates. Clients, employees, regulatory bodies and the shareholders are individuals and institutions who are not just affected by the operations of a business but play a key role in influencing the direction in which a business goes. These are stakeholders of a business. It is the thinking of Sachs and Ruhli (2011, p. 14) that the primary business of a business is to balance the competing needs of its different stakeholders. Since the management is tasked with the duty of managing the day-to-day operations of the business, the task of balancing competing interests of the shareholders squarely rests on them. Different stakeholders have different needs. Whereas the primary interest of shareholders is increased profitability, regulatory bodies require businesses to operate within established legal regulations so that they serve the interests of the general public. On the other hand, the society in general, seeks to benefit from the business in many ways. These may be social, environmental or economic. It is in view of this situation that the question of social and environmental sustainability for businesses arises. It is when considering the issue of how businesses approach social and environmental sustainability issues in their operations that the incident of BP and the oil spill in the Gulf of Mexico comes to my mind. I think this is a classic example of how attitudes towards social and environmental sustainability have changed in the United States, particularly following the event. The oil spill was caused by an extensive explosion in one of BP’s offshore oil rigs in the Gulf of Mexico, killing eleven people on the spot (De Wolf & Mejri 2013, p. 50). What followed this incident that came to be known as the Deepwater Horizon oil spill was a large scale environmental, economic and social crisis. This led to destruction of the environment at the site of the spill, financial losses for the company as well losses to the general public as a result of destruction of tourist attraction sites. Initially, my thinking was that this is simply one of the many accidents that oil companies have learnt to cope with whenever they occur. But when I considered the fact that this was the biggest oil spill in the history of the United States and that the company faced considerable financial and reputational losses, I was made to rethink the significance of the crisis in light of social and environmental sustainability for business organizations, in general and oil companies, in particular. In my understanding, oil companies are at the centre of the debate about environmental and social sustainability. I think matters have been made worse for these companies following the growing scientific consensus that human beings are the main cause of global warming. It is now generally agreed that global temperatures are rising as a result of increased production of greenhouse gases. One major source of greenhouse gases is the processes that are used in oil extraction and since this is the core activity of oil companies, their activities and future survival rests upon environmental and social sustainability. I think this is the same concept that one gets from watching the movie ‘Story of Stuff’. Using the analogy from the movie, the concept here is that if oil companies cannot develop highly sustainable practices, then their future is in serious jeopardy. It is these assumptions that informed my thinking when the Deepwater Horizon oil spill occurred in the Gulf of Mexico. My thinking about the incident was influenced by both what I knew and the facts of the incident. This happened in several ways. First, I thought that the whole incident was a simple accident which could best be handled by effective crisis response systems. Secondly, since the company had spent a considerable amount of resources building sustainability in its operations and corporate brand over the course of time, I thought that regardless of the outcome of the accident, the reputation and progress made by the company with regard to social and environmental sustainability would remain intact. Both my assumptions were wrong. From the events that followed the initial explosion, the real impact of the explosion was exposed. This took the form of a long-lasting oil spill that damaged a great deal of the natural environment off the coast. This caused massive losses to the company in the form of finding a technical solution as well as in lost production. With the environmental damage came the damage to the reputation of the company. I think the confession that the whole incident was a culmination of a series of small-time failures in the entire operational system of the company brought to mind the question of whether the company has been practicing sustainable business as its marketing campaigns claim. I think BP took note of this position quite long ago. De Wolf and Mejri (2013, p. 53), think that the company was among the first in its peers to realise the need for environmental and social sustainability for oil companies. It is this knowledge that led the management of the company to adopt the ‘Beyond Petroleum’ slogan which emphasised the need to seek alternative sources of energy to feed the growing energy needs of the world. The essence of this thinking is that if business organisations – oil companies in particular – took the initiative of reducing global dependence on fossil fuels as well as encouraging efficient use of resources, their environmental and social sustainability would be guaranteed. Such an approach would balance the competing needs of different stakeholders of the business. This was the official thinking for social and environmental sustainability of oil companies in the United States. There are many things which can be concluded from this experience. What is important is how the whole oil spill affected the thinking about social and environmental sustainability of business organisations in the country. For example, there is no doubt that the company failed to act in the interest of the general public. The disaster was not caused by natural forces; it was caused by a series of technical errors within the company’s operational procedures. This is the only valid explanation for the sequence of systematic failures that led to the accident itself and the crisis that followed (Botes & Samkin 2013, p. 8). I think this brought to question the matter of how best a business can handle a situation where its reputation has been damaged in the eyes of the public. When faced with such a crisis, a business can do different things to contain the situation and reclaim its reputation in the public as an organisation that values social and environmental sustainability. It is not uncommon to find many businesses denying responsibility or simply shifting the blame to third parties whenever such a corporate image crisis occurs. Others attempt to evade responsibility for the crisis while others attempt to downplay the whole event as a strategy to defend their reputation. My opinion is that in all this, the best response for organisations faced with similar situations is to take corrective action that solves the whole problem. Apart from the issue to do with corporate social responsibility image in times of crisis, another thing that can be concluded from this experience is the true meaning of environmental sustainability for oil companies. What is true is that there has been growing doubt among members of the public about how truly sustainable oil corporations are. These concerns are shared by other stakeholders of the business organisations including shareholders and government agencies. I think there has been much talk about environmental sustainability for both American businesses and other multinational corporations that operate in the United States. Much of this talk has been contained in official policies that regulate offshore oil drilling in the country. As a way of ensuring sustainability by preventing excessive environmental damage in the event of an oil spill, oil companies are required to have in place extensive emergency plans to contain such a situation (Botes & Samkin 2013, p. 15). Since the Deepwater Horizon oil spill went on for well over a month, one wonders whether these emergency plans are really as efficient as they are supposed to be. I think this is closely related to the question of whether the public should trust oil companies to be using business practices that ensure sustainability of the environment. My view is that environmental sustainability is not just about developing new strategies to reduce dependence on fossil fuel and playing a leading role in such campaigns as it has been the case of BP. Sustainability should also involve having in place the right measures to minimise the effects of oil spills and other environmental disasters which can occur. I think the measure of how environmentally sustainable a business is best reflected in the way the business handles environmental disasters when they occur. I must also add that there have been several factors that have hindered my learning in this course. The first one has been my many assumptions about the whole issue of business sustainability in the society. I have always believed that sustainability is a simple matter that can be settled by the management of business organisations. However, my research into the Deepwater Horizon oil spill and how this affected BP has changed my understanding. It has helped me understand that for the issue of sustainability, all the stakeholders of a business organisation play an active role. My experience in learning about social and environmental responsibilities will be of much help to me in the future. In general, I now understand that social and environmental sustainability is a complex issue for many business organisations. In the United States, the issue is more important considering that the debate about global warming and the need to reduce carbon emissions has raised many questions in the world. I have realised that in view of this, the debate about social and environmental responsibility is far from being over. Another thing that I have learned from my research on the Deepwater Horizon oil spill is about how best oil companies are positioned to maintain social and environmental sustainability in their operations. I think the nature of their operations places them at a strategic position in the whole issue of sustainability. What the public needs is to be convinced that the company is actually using practices that are sustainable for the entire environment. The greatest fear of the society is depletion of oil reserves to such an extent that drilling occurs in areas where the natural environment is damaged. I think that in reality, the public is yet to be fully convinced that oil companies are environmentally sustainable in their operations. This opinion is confirmed when an oil spill occurs and creates an environmental disaster. Such an occurrence seems to confirm the worst fears of the general public about environmental sustainability in the practices of oil companies. To me, this is important information that will guide my approach towards business sustainability strategies in the future. Also, I think that the government is doing a good job in ensuring that business organisations operate in the best interest of the general public. Although the regulation forbidding offshore oil drilling was overturned in court, this does not mean that the government has failed in its primary responsibility as a stakeholder in business organisations in the country. What is important is that the government actually promised to make BP take full responsibility for the disaster. To me, this decision means a lot. It means that as a business leader in the future, the task of ensuring that the business meets the competing needs of different stakeholders fully rests with the management team. It is the role of the management to ensure that the business remains stable during different times. And should anything go wrong, the blame rests with the management of the business. References Botes, V L & Samkin, G 2013, Restoring legitimacy in order to remain sustainable: The case of BP’. Accessed at: http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CCsQFjAA&url=http%3A%2F%2Fwww.utas.edu.au%2F__data%2Fassets%2Fpdf_file%2F0008%2F188405%2FBotes_Samkin.pdf&ei=uoe9Usn2MqG_ygO4qoKADw&usg=AFQjCNHUNSBxwALR4zNVB8YDqA1abI6aug&sig2=GrBwmJFSQhK77acNKHK4AA&bvm=bv.58187178,d.Yms (27 December 2013). De Wolf, D & Mejri, M 2013, ‘Crisis communication failures: The BP case study’, International Journal of Advances in Management and Economics, vol. 2, no. 2, pp. 48–56. Accessed at: http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CDAQFjAA&url=http%3A%2F%2Fwww.managementjournal.info%2Fdownload1.php%3Ff%3D07022013.pdf&ei=pou9UsWGIqiuyAPWuoDYCg&usg=AFQjCNEuRRyBYD_ShfEAKwRAy74FpgzMEA&sig2=TfC7kCh0-8J8LeuygUY52w&bvm=bv.58187178,d.Yms (27 November 2013). Sachs, S & Ruhli, E 2011, Stakeholders Matter: A New Paradigm for Strategy in Society, Cambridge University Press, Cambridge. Read More