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Comparative Business Ethics and Social Responsibility

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Introduction

In order for examination of a certain set of ethical principles along with moral issues that may come across in the business environment, are commonly referred to as business ethics (Brammer, Jackson and Matten, 2012). However, the social responsibility accounts to be an ethical theory under which different individuals perform their civic duties thereby benefiting the whole of their society. This way a proper balance is established between economic growth and the betterment of society along with environment.

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The report mainly throws light upon the Oil and Gas industry with major focus upon the challenging situations aroused due to the Exxon Valdez spill, Deepwater Horizon Oil rig. Major accidents occurred here leading to the worst oil spills ever in history. This incident put a question mark upon the social and ethical responsibility of the Aleyska and the BP who tried to manage the oil spill but led to further demise of the sea and coastal areas thereby affecting the health of many sea species and people residing near these areas (Carroll and Buchholtz, 2014). Furthermore another field has been focused that is the fracking which again is beneficial in terms of natural gas but implementation has many hazardous issues related to it.

1. Managing ethical risks in the oil and gas industry

With particular reference to the major oil spill incidents at the Exxon Valdez and Deepwater Horizon, the mismanagement by the BP and Exxon authorities have put their management and staff in a circle of doubts upon their ethical and social responsibility. This sort of mismanagement has led to doubts upon the new developments fracking industry too. This is basically related to the production of natural gas.

Based upon the present scenario, the demand for oil and gas has been increasing rapidly. This stupendously increasing demand has led to more depletion of available oil reserves. The amount of the available resources is not at all matching with the demands. This has further led to scarcity of resources. Moreover, the oil companies have failed to successfully carry out their ethical duties thereby leading to major environmental mishaps. So based upon the past experiences and hazardous occurrences, the authorities at these oil and gas companies need to lay their focus upon the different methods of managing their responsibilities.

So, in order to manage the risks associated with oil and gas industry, light needs to be thrown upon common factors that might lead to the major accidents or factors causing the same.

Safety culture imperfection

The decisions in many organizations are based upon the a certain set of norms and values as well (Crane and Matten, 2016). The safety culture accounts to be a subset of this overall culture which is a reflection upon the methodology of adopting approaches towards risk management. The leaders of particular organization set up some standard values that affect the decision to be take at time of hazardous situations. So any sort of flaws in this culture will lead to further depletion of available resources in oil and gas industry. For example the mismanagement by BP in relation to Deepwater Horizon shows that how their ignorance led to further demise of the sea and nearby coastal residing species along with people.

Nonexistent management of change procedures

As it becomes clear from the example of Fracking process that further digging for shale rocks led to further release of hazardous gases such as methane other than natural gas (Fassin, Van-Rossem and Buelens, 2011). Because of that methane, fracking has also been experiencing a doom but at lower level than the Deepwater Exxon incidents. However, changes in procedures have been implied by many other companies but it is well known that only a few are able to follow them.

Flawed communication and inadequate communication

From the Exxon incident it is quite clear that the miscommunication between Hazelwood and Coastal Guard led to further loss though if warnings had been taken seriously, this incident could have been managed successfully. This also involves lack of communication with the stakeholders for supply of raw materials. Lack of timing causes the mishandling of such disasters.

Not learning from prior events

If any sort of flaw exists in communication among safety authorities, such hazardous incidents are always taken lightly. Nobody learns from prior incidents because of which they are not able to prepare themselves from the sudden occurrence of future incidents (Godos-Díez, Fernández-Gago and Martínez-Campillo, 2011). This was clearly seen when despite of the Exxon Valdez spill, exactly after two decades the Deepwater Horizon incident occurred. The BP failed to manage the oil rig despite the demise of the Exxon Valdezz. This clearly shows the lack of ethical responsibility of the authorities.

As it becomes clear that Oil and Gas industry involves ample of hazardous and safety issues that need to be managed both ethically and socially as well in order to prevent any sort of future spills thereby having a less impact upon the inhabitants residing in nearby areas of oil refineries and natural gas mines. However, one thing needs to be kept in mind that in order for prevention of any such future occurrences detailed information should be provided in relation to decision making (Gond, Kang and Moon, 2011). This needs not to be focused entirely upon government regulators but to those who are operating the oil rigs as well.

There are some beneficial methods that could be followed by the oil and gas companies in order to manage any sort of future oil spill accidents.

Appropriate incentive allotment for introducing changes in safety culture

In order for effective management of business ethics in Oil and gas industry a proper relationship needs to be maintained among the safety & their future viability of profits. The methods utilized by BP failed to manage the oil rig that the Deepwater Horizon incident. So the authorities need to focus upon their methods of communication and instantaneous responsiveness to such incidents.

Self-policing in accordance with the industry

After the worst oil spills at Deepwater Horizon and Exxon Valdezz the Oil and gas industry has become a doubtful one in terms of safety and risk management. To prevent this further, the industry could follow INPO which is a recommended model in the Presidential Oil Spill Commission Report. It provides an extra amount of incentives (Groves and LaRocca, 2011).

Integrating the safety engineers towards operational decision making

The main reason behind the demise of the Deepwater Horizon emerged out to be the lacking of any sort of operational safety group which led to inappropriate decisions leading to further loss. Henceforth, ensuring a team of safety engineers will lead to real time decision making.

Certified training

Detailed investigation of the Deepwater Horizon incident led to the conclusion that the authorities were lacking proper training upon handling of such hazardous and life threatening situations. So proper training needs to be provided from a highly certified organization to the members associated with Oil and gas industry.

Managing changes

It was very clear from the Fracking procedure that the changes introduced for shale rock extraction for natural gas led to further release of hazardous methane which proved to be a threat for individuals residing near coastal areas.

2. Comparing the risks in association with BP, Exxon and fracking industry

Oil and Gas industry is one the most costly industry because of the rich refineries. Though, the incidents at the Deepwater horizon and Exxon Valdezz led to further demise of this industry. In order to manage the risks comparing of the three industries involved in this major drawback needs to be done.

The first point of comparison emerges out to be the instantaneous responsiveness towards the knowing of such occurrences of oil spill. In case of BP, it was already involved in many scandals, major one being the explosion at Texas refinery which led to further killing of nearly 15 employees. After handling of many such scandals, it was hired for managing the oil spill occurred at Deepwater horizon. It arrived at the sight of incident after the spill had spread across a major portion of the sea. Their late responsiveness led to oil spill spreading across a more vast portion of sea. However, in case of the Exxon, Alyeska Pipeline services immediately sent out containment requirements. However, they were late since already major spill had been occurred. Despite the warnings given by Coast guard of slowing of containment speed, the Alyeska officials tried to fill their containment (Jackson and Apostolakou, 2010). Even after 18 hours of the spill, they were not ready to test out the effectiveness of their dispersants to manage the vast oil spill. However, coming towards the fracking industry, it is nothing as compared to the hazardous situations of Exxon Valdezz and Deepwater. Natural gas production is not at all hazardous towards the health and safety of the living species.

The second point of comparison could be thought of the methodologies implied by the three industries (Mishra and Suar, 2010). The BP's methodologies used to manage the Deepwater horizon proved to be the cause of further demise of the sea. In order for releasing the pressure of already damaged wells they did further digging of holes which proved out to be a major loss. This was a clear indication that there was a major inaccuracy in their contingency plan to deal with the disaster. This sort of plan showcased their unpreparedness towards the Deepwater Horizon spill. Coming towards the Exxon the use of helicopters to disperse the chemicals led to further indication of inaccuracy because they gradually missed the targets. The team sent by Alyeska to provide assistance at Exxon also failed to mobilize the oil spill. The lack of efficiency in the combined efforts of the Exxon and Alyeska caused the oil spill to spread over an area of 2,600 miles over the coastline and the sea. Now, coming towards the fracking methodology, extraction of natural gas from the shale rocks was beneficial to some extent (Kim and Kim, 2010). But later methodologies when applied by other companies led to the release of methane gas which proved out to be very much hazardous for the environment. Also, detailed study and research led to the conclusion that fracking methods are also the cause for small scale seismic shifts in that particular area where the procedure is being carried out.

The most important point of comparison proves to be the supply of energy to meet the day-by-day increasing demands of today's world. With the advancement of technology, the demand for energy resources has led to further increase in the depletion of available resources. The reason being that the amount of available resources are not able to match the current demands of energy. So coming towards the availability of energy, the major demise of Deepwater Horizon and Exxon Valdezz by BP and Exxon's authorities was a clear indication of lack of risk management. That is the reason they proved out to be very much hazardous because of their inaccurate measures used for managing the major oil spills. This way oil industry proves out to be at a very hazardous one concerning the safety of the members working there as well as people residing near those oil refineries. Natural gas is the best source of energy (Kolk and Van-Tulder, 2010). Though the extraction from shale rocks is a bit of concern since they release the methane gas but this is at very low level risk compared to the other two occurrences. With the advancement of technology th EPA authorities have managed to reduce the methane emissions. They target to reduce the emissions from 40 to 45 percent by 2025.

3. Managing the risks within oil and gas industry by aid of ethical leadership

Ethical leadership gets fueled up by the respect shown towards the ethical beliefs & value. This respect shown is for the benefit of other individuals and their dignity. With effective ethical leadership skills, the risk management procedure can be carried out more efficiently (Peloza and Shang, 2011). This way the existing environmental risks and hazardous situations could be reduced to a much greater extent.

In order to manage the hazardous risks involved within the oil and gas industry, the trustworthiness of the organization can prove to be the much needed aid in managing the risks. In order for effective ethical leadership towards risk management, following characteristic traits could prove to be beneficial :

Justice

From the incidents of Deepwater Horizon and Exxon Valdezz lack of leadership traits was greatly observed. Hazelwood was not fair by ignoring the warnings given by Coastal guard. His one decision affected the whole association. Had someone taken the responsibility of ethical leader, the aftereffects of this major demise would have been reduced. Under the guidance of an ethical leader none of the workers have to feel biased about the decisions taken by higher authorities.

Respecting other individuals

In order to coordinate with other officials and workers, effective communication is needed. For this, each and every member needs to respect one another to ensure coordination (Shum and Yam, 2011). In oil and gas industry working in teams is often involved. To work in a team, showing respect to the leader is often a must. Also, the leader needs to show respect in return to his members working under him. Since the warnings of coastal guard was not paid any attention, this was a clear indication of lac of respect among one another.

Honesty

Oil and gas industry is a very hazardous one. So, being honest about each and every decision taken will ensure effective risk management thereby reducing risks. Furthermore, such leaders need to show transparency in their decision for benefiting all the associated staff ensuring their safety. It was clearly seen from the two cases of Deepwater and Exxon that the authorities assigned were not transparent about their decision of handling the massive oil spill thereby showing their inaccuracy in handling the situation further (Spence and Perrini, 2010).

Humane

In order for effective ethical leadership, the leader needs to be kind to each and every member associated within the industry. Here, giving particular reference to the oil and gas industry, the ignoring and unkind behavior shown towards the warnings given by the Coastal guard to Hazelwood and the further digging of wells by BP to relieve the pressure of damaged oil wells shown that the authorities were not at all paying attention to the perspectives of the other members.

Focusing upon team building

From the cases of Deepwater Horizon and Exxon Valdezz one thing was a clear indicative that there was lack of effective teams to handle the risks that aroused because of the oil spills. This lack of team led to further demise of the area in which they occurred.

Decision making being value-driven

The decisions that are taken in oil and gas industry, are very important because they overall affect each and every member associated with it (Tian, Wang and Yang, 2011). Furthermore, the decisions should stay abide by the values build up by the overall industry. So taking lessons from the major two accidents of oil spill, taking of decisions should be value driven thereby avoiding ample of risks associated.

Value awareness and not tolerating ethical violation

Lack of effective leaders was the main cause for inaccuracy in the decisions taken for handling the oil spill at Exxon and Deepwater. For effectively handling the risks involved on occurrence of such hazardous incidents, leader needs to discuss the values that have been bestowed upon him with other associated staff. Furthermore, in no possible way, violations of ethical and moral principles by any member should not be tolerated for the betterment of oil and gas industry.

Conclusion

From the two major accidents of Deepwater Horizon and Exxon Valdez, one thing was for sure and that was the lack of effective and ethical organizational culture which led to their further demise. Furthermore, lack of communication among the authorities and various associated members such as the stakeholders lead to improper and late supply of preventive measures by BP and Alyeska as well. Oil and gas industry involves many hazardous and safety measures that needs to be taken care of. However, the fracking procedures are quite beneficial after the introduction of EPA's methods to minimize methane emissions. Furthermore, employee safety is also essential to carry out further functioning of the broad industry. Proper training needs to be given to the members for handling of such massive disasters and reducing their impacts. So, the Oil and Gas industry needs to imply the business ethics and fulfill their social responsibility as well to meed the energy requirements as well.

Reference

  • Brammer, S., Jackson, G. and Matten, D., 2012. Corporate social responsibility and institutional theory: New perspectives on private governance. Socio-economic review, 10(1). pp.3-28.
  • Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and stakeholder management. Nelson Education.
  • Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
  • Fassin, Y., Van Rossem, A. and Buelens, M., 2011. Small-business owner-managers’ perceptions of business ethics and CSR-related concepts. Journal of Business ethics, 98(3). pp.425-453.
  • Godos-Díez, J. L., Fernández-Gago, R. and Martínez-Campillo, A., 2011. How important are CEOs to CSR practices? An analysis of the mediating effect of the perceived role of ethics and social responsibility. Journal of Business Ethics, 98(4). pp.531-548.
  • Gond, J. P., Kang, N. and Moon, J., 2011. The government of self-regulation: On the comparative dynamics of corporate social responsibility. Economy and Society, 40(4). pp.640-671.
  • Groves, K. S. and LaRocca, M. A., 2011. An empirical study of leader ethical values, transformational and transactional leadership, and follower attitudes toward corporate social responsibility. Journal of Business Ethics, 103(4). pp.511-528.
  • Jackson, G. and Apostolakou, A., 2010. Corporate social responsibility in Western Europe: an institutional mirror or substitute?. Journal of Business Ethics, 94(3). pp.371-394.
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