Strategies Adopted by the Company to Combat Climate Change - Case Study Example

BP and Climate Change: A Report on the Strategies Adopted by the Company to Combat Climate Change Table of Contents 1.Introduction 1 2.Background Information 1 3.BP’s Climate Change Strategy 2 4.Conclusion 6 References 7 1. Introduction This report discusses how business organisations respond to issues related to climate change. It is a critical report of business organisations and climate change strategies discussed within the context of British Petroleum. For purposes of clarity, the report is divided into three sections which present different information. The first section presents background information on BP and climate change. An overview of the history of the company and its relationship to climate change issues is presented. In the second section, information about the specific issues of climate change which the company addresses is presented. This takes into consideration, the general trends in the oil industry about climate change and the strategies that have been adopted by BP as a way of addressing climate change issues. Lastly, the report concludes by examining the general importance of the strategies adopted by the company for its benefit as well as that of the entire oil industry. 2. Background Information There is a close relationship between climate change initiatives and oil corporations. This relationship arises not only from the fact that oil corporations, by virtue of their core activities, produce the highest amount of carbon emissions, but also as a result of the role of oil companies as multinational corporations in the climate change debate. According to Skjaerseth and Skodvin (2003, p. 49), the oil industry plays a key role in shaping the political, economic and corporate strategies of combating global climate change. This is because the strategies adopted by oil corporations are directly linked with the overall strategies adopted by governments and other stakeholders in the climate change debate. BP has had a long history in matters to do with climate change. Although the company’s corporate history dates back to early 1909 with the formation of the Anglo-Persian Oil Company following discovery of oil deposits in the former Persia region, its active involvement in matters of global climate change developed in the late 1990s (Christiansen 2002, p. 4). In 1998, the company merged with Amoco to form British Petroleum Amoco Plc, or simply BP, as it is currently known. This made the corporation to join Shell and ExxonMobil as the leading multinational oil corporations in the world in terms of discovered oil and gas reserves, market capitalisation, revenues and profitability (Hamilton 1998, p. 9). As a result of its size and position in the market, the role of BP in handling global climate change issues cannot be overemphasised. The fact that it operates in well over 23 countries in the world with an extensive network of other strategic resources gives it a capacity to participate in global climate change initiatives (Anderson 2005, p. 327). This means that the company’s key role in global climate change results from its role in being a key producer of greenhouse emissions as well as its position of being a leading multinational oil corporation in the world. 3. BP’s Climate Change Strategy There has been a fundamental shift in the strategy of BP towards climate change over the years. The early stance of the 1970s and 80s which questioned the scientific relationship between carbon emissions and global warming has been replaced by a much proactive strategic stance that advocates for the need to tackle climate change (Corporate Europe Observatory 2009, p. 8). The company’s change of strategy has corresponded with the overall growing scientific consensus on the role of human activities in causing global warming, which is a key aspect of climate change. Following the work of the Intergovernmental Panel on Climate Change, there has been a growing awareness that climate change is fundamentally caused by human-induced activities which increase the production of greenhouse gases into the atmosphere (Godrej 2001, p. 119). With these, there has been growing public and regulatory pressure on all corporations directly involved in carbon emission to participate in efforts to address this danger. According to Kolk and Levy (2001, p. 503), the official policy of BP towards climate change, prior to this realisation, was in opposition of the need to tackle climate change. This was demonstrated by its move to form the Global Climate Coalition (GCC), a corporate lobby group that was formed by leading oil corporations in the 1970s. Through the GCC, BP’s strategy towards climate charge sought to not only deny the existing scientific evidence regarding global warming and thus influence public opinion but also prevent governments from taking any kind of political action that would oblige multinational oil corporations to tackle the issue (Zehr 2009, p. 84). However, in 1996, BP changed its stance towards climate change by acknowledging the scientific evidence linking greenhouse gases to climate change (Wolf & Mejri 2013, p. 51). This followed its withdrawal from the GCC. As such, the company adopted a policy that was premised on the consensus that the danger of climate change is real, taking into account the role of greenhouse gases in contributing to rising global temperatures. This means that the corporation acknowledged the need and urgency for action in combating greenhouse emissions (Corporate Europe Observatory 2009, p. 12). This shift represented the ethical dilemma that faces oil corporations. All corporations are faced with the choice of balancing their processes with the arising consequences. On one hand is the possibility of having unrestrained carbon emissions and a corresponding increase in profits. This contradicts with the need to curb carbon emissions, which leads to reduced corporate profits. According to the company’s official report on climate change, reducing carbon emissions has been the integral part of its corporate social responsibility since the early 1990s (British Petroleum 2012, p. 2). This corresponds with the realisation that multinational corporations can play a major role in combating climate change by reducing their amount of greenhouse gas emissions (British Petroleum 2012, p. 3). One key objective of greenhouse emission reductions adopted by the company was to reduce emissions in its global operations by 10% by 2010. This target was based on the production figures of 1990, which showed that greenhouse emissions from the three leading oil corporations surpassed that of Germany as a country (Christiansen 2002, p. 12). In order to achieve sustainable reductions in its emissions, the company has implemented actions that control emissions and adopted an internal trading scheme as an integral part of its normal business (Rakowski 2012, p. 1). Another key part of the company’s strategy towards reducing climate change entails making collaborations with other key players in the industry to develop energy-efficient technologies and alternative sources of energy (Kolk & Levy 2001, p. 506). By doing this, the company seeks to reduce global dependence on carbon fuels, thus reducing the overall amount of greenhouse emissions. Currently, the company focuses on developing solar energy as a viable source of alternative energy to meet the growing energy needs of the world (British Petroleum 2012, p. 4). It is important to note that the strategy of the company towards climate change depends on its successful implementation as part of the company’s core business. For instance, the strategy is integrated with strong leadership within the company’s practice. The company has put in place a long-term strategy that influences the decisions taken by the company’s leadership (Semans & de Fontaine 2009, p. 23). Also, the success of the company’s climate change strategies lies in their relationship with global strategies, policies and trends. All the carbon emission targets adopted by the company are in tandem with the global initiatives of tackling climate change developed under the Kyoto Protocol (Hamilton 1998, p. 22). The current strategy of the company towards climate change, which advocates direct action and involvement, is important for several reasons. First, the strategy builds the credibility and overall image of the company (Wolf & Mejri 2013, p. 13). By making climate change part of its corporate social responsibility initiatives, BP has presented itself as part of the solution to the general public. This augurs well with the growing public concern for corporate action against the possible effects of climate change (Godrej 2001, p. 203). Second, taking direct action against climate change enables the company to tackle all potential business risks that may arise from the effects of climate change (Christiansen 2002, p. 22). Since climate change is a key phenomenon that affects markets, products and other business phenomena, direct action against its effects is a sure way of ensuring that the company, together with other stakeholders in the oil industry, achieves sustainable growth in its operations. Third, an active approach in tackling matters to do with climate change enables the company to take a vantage position in influencing regulatory and policy matters that affect its operations (Skjaerseth & Skodvin 2003, p. 55). Since the world is becoming more dynamic and complex, active participation in matters to do with climate change has enabled the company to participate in policy formulation processes in areas that affect its key operations. 4. Conclusion This report has presented information on how BP tackles climate change. In essence, the company’s strategy towards climate change has shifted from a non-participatory stance experienced in the 1970s and 1980s to the current strategy that advocates active participation in reducing the effects of climate change. As a way tackling climate change, the corporation pursues several strategies that include: reducing carbon emissions, implementing a carbon trading scheme, developing energy-efficient technologies and lastly, seeking to develop alternative forms of energy. These actions are important for the corporation in that active participation in matters to do with climate change improves the public image of the corporation. 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