Environment Management for Sustainable Development - Case Study Example

Environment Management for Sustainable Development- Case study of Deepwaters Horizon Oil Spill, BP Company. Introduction Green Consultant is a non-governmental consultancy firm that deals with offering advice to firms and companies geared towards proper environmental planning and management activities. Its mandate is geared towards the coordination of environmental management activities with the aim of ensuring intergenerational equity and trans-boundary responsibility in environmental activities. Over the years the firm has taken deep interest in oil companies around the world with the intention of ensuring that these oil companies incorporate environmental management activities into their plans and programs. Of particular interest to the firm has been the BP oil company. This was brought about by the oil spill on the Gulf of Mexico that involved the company. The Deepwater Horizon Oil Spill occurred on April 20th 2010 at the Gulf of Mexico. This was as a result of gas release and consequent significant eruptions on the Horizon oil rig in the Macondo exploration well that belonged to BP Company. Considered as the worst and largest oil spill in marine history, the explosion caused the loss of life of eleven workers in the rig and about seventeen other workers suffering serious injuries. The fire explosion burned for hours before the rig sank causing the oil spill occurrence. The oil spill resulted to considerable economic, environmental and social losses some of which continue to be felt to date (Benoit P, 2011). This report aims to provides a substantial analysis of the BPs activities that BP has planned to undertake in relation to environmental management at present and in future. After the Deepwater Horizon Oil Spill, BP rolled out a sustainability review plan that sought to integrate environmental management activities with the company’s vision, mission, plans and programs(BP, 2010). This was to ensure that such an occurence does not appear again. In reviweing the plans that BP has sought to achieve, a detailed analysis of the effects that the oil spill had on the company, the environment and the stakeholders has been presented below. Effect of the Deepwater Horizon accident of 2010 Gulf of Mexico on BP After the occurence of the spill, BP lost quite an immense amount of public and government support based on integrity values. The company’s reputation was at an all time risk as reported by the media. Before the spill, the company was £122billion worth but as of late, the company has lost its market value to about two thirds that worth. The spill also resulted to the sacking of the company’s chief executive Tony Hayward and was replaced by Bob Dudley (Benoit, 2010). More particularly, the major environmental firm tasked with coordinating environmental activities; Environmental Protection Agency (EPA); imposed suspensions on all contracts with the company with the government. The agency claims that the company lacks business integrity. Blocking BP from ingoing into business agreements and contracts with the government is a harsh fine to the organization as it will lose an incredible amount of investment opportunities resulting to financial losses for the company (BP, 2010) In addition, once the company pleaded guilty to criminal charges after the occurrence of the spill, it paid a $4billion fine to the government. Some of the criminal charges they faced included manslaughter as well as environmental violations. The fines were to cover the damage costs on the environment and cater for compensation for the loss of employment activities and other economic losses to the residents of Louisiana. However, some activists claimed that the company should have been fined more arguing that the company made more profits than the $4 billion charged. The fine represented less money than the profits that the company earns in three months ($5.2billion) (BP, 2010). The effects of the disaster, apart from claiming the lives of 11 citizens, resulted to the disruption of fisheries, businesses The disaster, in addition to claiming 11 lives, caused disruption to countless residents and businesses. Most of these residents depended on the Gulf for their economic livelihoods (fishing grounds and fisheries, oil wells, tourist activities, among others.) all the above lost absolute faith in BP and the company spent billions of dollars toward their compensation (Scholastic Incorporation, 2010). Moreover, the governement also launched a civil trial against the company for civil damages that has its foundation on the Clean Water Act. This is because the spill caused a violation to the Act as it resulted to the pollution of the clean waters of the Gulf. This civil trial caused the company huge fines (Benoit, 2011). Furthermore, the US department of Justice threatened to fine the company with $25billion fine. This Department accused the company of negligence as well as corporate recklenssnes. This resulted to a decrease in shares of the company’s market value in general (Scholastic Incorporation, 2010). However, since 2010, the company has been working hand to hand with the US Environmental Agency and has since then proved and demonstrated responsibility towards environmental management and sustainability and has had the temporary suspension lifted as at 28th November 2012. In addition, the company also set apart compensation kitty of $7.8 billion towards the compensation of businesses and fishermen affected by the spill (Benoit, 2011). Effect of the Deepwater Horizon Accident of 2010 Gulf of Mexico on the Environment The spill caused approximately 5million barrels of crude oil to pollute the waters of the Gulf. The spill caused adverse effects on the environment; physical, biological, and social; but more so on the biologocal environment. This was not only because crude oil is a natural environmental pollutant but also because of the fact that a lot of dispersant chemicals were used (Hansen, 1985). Dispersant use has equally detrimental effects on marine life and physical geographic systems (Allen, 1984). However, most of the long term effects of the oil spill and resultant use of dispersants will not be established in years. The short term effects of the spill included birds and sea animals such as turtles being covered in oil. This resulted in a reduction and loss of buoyancy in the birds. The animals and birds were also unable to regulate body temperature and as a result death of many marine species was witnessed (Boyd, 2010). Oil stains on fish and marine species also causes behavioural changes to occur in these marine organisms. In addditon, sea mammals such as whales ingested the oil into their blood systems and as a result causing ulcers and internal bleeding that resulted to their death (Landau, 2011). The oil spill also caused a considerable death toll in deep sea corals. After a few months, some dead, dying and decaying corals were found in the Gulf. Furthermore, oil spills result to the loss of sensitive ecosystems and biodiversity including mangrove ecosystems, sea grass weeds and beds and coral planktons (King, 2010). This is because of the detrimental effect that oil has on the survival of such ecosystems in nature. In addition, the spill also caused an incredible amount of contamination of the shorelines and beaches that resulted in high economic losses in the tourism sector (Davidson, Lee and Cogswell, 2008). The long term effects of the oil spill would be felt on the wetlands, beaches and the Gulf in years to come. Some of these long term effects include an increased imbalance in the natural marine food web. Since the spill occurred at a time when fish breeding was at a peak, the oil may have cut oxygen supply into the waters, and its toxicity damaging the large classes of egg and larveal forms of fish. Without the egg and larva of the fish, there is an imbalance in the food web and as a result fish populatin decreases may be evident in future in the Gulf. The spill would also cause a general decline in fishing grounds in the area. Fish have a tendency to migrate and hibernate into areas that are less contaminated. The area around the Gulf being covered with oil slicks would result to fish migration and as a result decline in fishing opportunities in the area (National Research Council, 2003; King, 2010). Effect of the Deepwater Horizon accident of 2010 Gulf of Mexico on the Stakeholders Stakeholders in this case would mean the company’s shareholders and other companies involved with the company’s operations as well as all those people affected by the spill on various economic fronts (Weiss, 2008). First, the spill resulted to the disruption of tourism, business and fishing activities on the coast of Louisiana. Most seafood and fish related businesses were closed as they anticipated contamination on marine life. This also caused a complete interruption on the coming of visitors into the region as well as intense economic destitutions (Clark, Frid, and Attrill, 2001; King, 2010). In addition, the spill had an immense effect on shareholders who had a stake in the company’s profits and gains. Since the company’s reputation was at a risk, the market value of the company decreased and the profit margins dwindled by close to two thirds. This meant that the benefit and profit sharing ratios would go down for investors in the company (Weiss, 2008). The oil spill disaster also on BP also meant that other firms in the oil industry would suffer extreme losses. This happened because of the fluctuations in stock prices as well as changes in the assessment by investors. This would result to high regulatory costs and increased governmental regulations. Increased governmental regulations caused increases in operating costs of related firms in the oil industry. (Landau, 2011) Other companies that were affected by this spill included other oil companies that were working on the Gulf of Mexico for oil related purposes. The spill heightened the government’s need to establish new rules and regulations that would govern oil companies in the area in their operations. Companies such as Anadarko Petroleum Corporation, Noble Energy Company and ATP Oil & Gas Corporation filed complaints regarding the new regulations and permits that the government had established. The new regulations would call for government agencies and officials to offer increased inspections in drilling activities in the Gulf. Another company, the Hercules Offshore Corporation claimed that the spill would cause significant damages to their vessels and in the long run their overall operations would be delayed (Weiss, 2008) Parties involved with environmental management activities in BP Having established, analysed and comprehended the effects on the environment, stakeholders and the organization at that the Deepwater Horizon Oil Spill had caused, a brief explanation of the parties involved with BP’s environmental management activities would be appropriate. Media are the streams for environmental communication. They relay information on how the firm is upholding environmental policies and programs.they also relay information on how the firm is increasing knowledge to the concerned stakeholders about the environment. The media has also enhanced the firm’s ability and helped it’s access to environmental information, knowledge and experiences. In addition, it has enabled the company get feedback from the government, general public and stakeholders about their environmental management activities (Hansen, 2010). Banks, on the other hand, have been involved in environmental management activities with the BP through monetary aid. They provide access to funds, loans and credits that the company uses in availing tools for oil spill preparedness such as dispersants, skimmers, booms and storage tanks. They have also been involved in providing monetary advice on fund management in the company and budgettary allocations towards environmental management activities (Weiss, 2008). The general public is viewed as the greatest party that is involved in environmental management. They are involved through corporate social responsibility initiated by the company. The corporate social responsibility that BP has been involved in include compensation activities towards the fishing entities and businesses affected during the spill (Mailin, 2009). The company involved the public through public participation in formulation of the environmental management plans and sustainability review of the company. Involving the public is important because it enhances public participation in owning environmental related projects, enhances resource mobilixation and incorporation of ideas into plans and programs that will enhance environmental sustainability at the Gulf (Depoe, Delicath and Elsenbeer, 2004). The employees of the company have also had a great role to play towards environmental management activities. They have been involved in taking courses and drills that has enhanced capacity buillding among thes staff. Drills and exercises have been done to enhance knowledge within the staff and ensure they are able to deal with oil spills in the event that they occur. The company also launcnhed a code of conduct that was synchronised with the values and management plans of the firm. It enhances the employees’ activities towards ensuring better environmental management activities within the firm. It also explains how the values of the company guide the decision making process toward better environmental management (Scholastic Incorporated, 2010). Investors have been involved in monitoring and evaluating activities that the company is involved in. This is done with the aim to ensure that the company operates according to the set standards and objectives of the Sustainability Review Report. In doing this, it ensures that events of April 20th 2010 are not repeated (Weiss, 2008). Measures put in place by BP towards environmental management Since the occurrence of the spill in 2010, BP has been involved in a number of activities that have shown their concern towards environmental management and sustainability. The company first established a Sustainability Review Report that has sought to act as a benchmark and ensure that all activities of the company are geared toward safety, health and environment (Benoit, 2011). The company has also embarked on shore line cleanup activities. The decision to embark on this exercises depended on the impact of stranded oil on beaches, marshy wetlands and rocky shores. The company has worked under the direction and command of Unified Command to clean the Gulf of Mexico coast. The shoreline cleanup plan was approved as near completion by the US Coast Guard. Maintenance of the coasts is still in progress so that the company is able to achieve the approved cleanup standards acceptable by the government (Ornitz† and Champ, 2002; Cheremisinoff, and Davletshin, 2010). The Company has also resulted to identify and establish the extent of the damage to natural resources that the spill had. It did this under the able guidance of Natural Resource Damages. It has also embarked on the various response activities to counter these problems caused (Ryding, 1994). In addition, the company has enhanced safety management structures to earn back the trust of the public, the government and its investors. To this effect, the company is working toward consolidating their risk management systems. It has employed able staff from high risk areas such as nuclear technologies and military exposure to expand the proficiency and capability of safety operations. In addition to these, it has also enhanced its approach to oil spill response and management (Fingas, 2010). Furthermore, the company has also embarked on capacity building and awareness creation to the public, its staff, its competitors and its investors on the importance of environmental sustainability. It has facilitated training of the public and its staff to ensure they are involved in environmental management programs and projects. This has also enhanced the activities of the company towards sustainability. (Beierle, and Cayford, 2002) In dealing with climate change, the company has embedded policies that underline the effectiveness in the use of energy. This is done with an aim to reduce the material effects of greenhouse gas emissions. In their operational activities, the company has also supported the use of lower carbon and high potential technologies such as wind, solar and biogas to reduce greenhouse emissions. In addition, they have accelerated and facilitated the use of technology, innovation and research that will provide low use of carbon options in the future (Benoit, 2011) The company has also sought to encourage an ecosystem service approach and engagement with indigenous knowledge. Ecosystems in general are the basic providers of many services to human beings. Apart from water and food provision, they provide more elaborate and complex services such as waste management, pollination, among others. The company adopted the ecosystem service approach to environmental management through a paradigm shift that has enabled them integrate environmental issues into management plans and actions. It has also resorted to use of indigenous knowledge in environmental management of the Arctic. Use of indigenous knowledge enabled them understand the concerns of the people and aid them toward environmental management (Hester and Harrison, 2010). Conclusion In summary, in providing a critical analysis in relation to BPs chosen and planned activities which show concern towards that of environmental management and sustainability on a continuous basis, Green Consultant have suggested several proposals towards mainstreaming environmental management into the company’s activities. These include the establishment of a corporate environmental policy that will give direction on how environmental management activities will be carried out (Johnstone, 2007); establishment of organogram that will provide responsibility structures for environmental management; creation of data bank that will ensure provision of environmental information systems; creation of eco-industrial parks; ensuring budgetary allocations for environmental projects and programs (Lyon and Maxwell, 2004). In doing this, the company will ensure that the events of the Deepwater Horizon Oil Spill at the Gulf of Mexico will not happen again in other wells managed by the company and other oil companies. The effects of the spill on the environment, the organization and the stakeholders have adverse effects on the economy of any country and thus suitable approaches have to be established to prevent such spill effects. Bibliography 1. Allen, T. 1984. Oil Spill Chemical Dispersants: Research, Experience and Recommendations. West Conshohocken: ASTM International. 2. Beierle, T. and Cayford, J. 2002. Democracy in Practice: Public Participation in Environmental Decision. Washington: Resources for the Future. 3. Benoit, P. 2011. The BP Oil Spill. New York: Scholastic Library Publishers. 4. Boyd, J., 2010. Lost ecosystem goods and services as a measure of marine oil pollution damages. Resources for the Future DP 10-31, 25p 5. BP p.l.c., 2010. Group results Second quarter and half year 2010. 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