Ethics in business means conducting a business in socially, economically, politically and environmentally friendly manner; it aims at developing good relations between business and its environs. Business ethics can also be defined as the philosophy of doing business. This is the knowledge of what need to be done and doing it right. Every business is responsible for it actions and all operations should be done according to the ethics of doing business. This means that every business should aim at maximizing the shareholders’ wealth at the time ensuring that all stakeholders are satisfied. This paper looks at the ethical issues implicated in the deepwater horizon disaster that occurred in April 2010. It looks at all the stakeholders that were affected by the disaster and gives an ethical analysis of the situation. The second part of the part looks at Total Company as one of the energy companies that has been able to appraise corporate social responsibility.
Stakeholders affected by the deepwater horizon
Different stakeholders were affected by the deepwater horizon disaster. They are discussed in the table below:
Other service providers such as technical providers, tanker and pipeline owners, and engineering companies have had major economic impacts as a result of the explosion. The Deepwater Horizon rig construction was almost half way when the explosion occurred and these service providers had already injected a lot of money as well as technical expert in its construction. They have incurred significant losses which will take a lot of time to recover.
Utilitarian perspective
According to Carroll & Buchholz (2003), utilitarian perspective focuses on the consequences that a certain action or policy has on the well-being of all entities involved or affect by the action. BP has already set aside over $40bn to cover claims and damages over the blowout. From a utilitarian point of view, this heavy financial penalty for BP was warranted because the explosion did not only have economic effects but also interfered with the environment and well-being of many species (Melanie, 2010). It was necessary for the company to ensure that the well-being of all parties involved was looked into as well as put measures to conserve the environment. According to BP CEO Bob Dudley, BP mobilized hundreds of people, vessels and protective boom to work on the spilt oil. Many people volunteered to help BP in its bid to clean up the mess caused by the oil and prevent further loss of marine life and other animals (Wong, 2010). BP has injected a lot of money in setting up investment to help the economies that were affected to recover. This money has gone to the tourism and fishing industries as these were hit the most by the disaster. It has held close relationships with the American community, fish and wildlife service, NOAA, the EPA among other agencies. Dudley notes that BP has already learnt from the deepwater horizon disaster and it is in the process of putting tighter security measures to ensure that such a tragedy does not happen again (Wong, 2010). This is not the only oil spill that the company has experienced. There have been other oil spills although the volume of spilt oil has been on the decline since 1999 before the big disaster occurred
Maxims of duty
According to Carroll & Buchholz (2003), maxims of duty are the principles manifested in action. Every action should be performed according to the principles manifested in it. Based on the maxims of duty, BP has not acted ethically in its drilling operations this is because it has not put strict security measures in these operations and it knows very well the dangers posed by petroleum products. The Gulf of Mexico region was known for production of quality oil which was preferred by many users both in America and abroad. More to that, the drilling of the rig was expected to increase its production and many oil companies were looking forward towards its completion. Despite all this, BP concentrated on measures to save its costs and ignored the security issues associated with the operation. Ethics concerns associated with BP’s drilling are the destruction of wildlife and the environment. These effects on the environment as well as on businesses may remain for many years. Several studies conducted on the deepwater horizon have shown that BP and its subcontractors took timesaving steps without considering the hazardous risks exposed by these steps. This was unethical because the company was only concentrated on saving money but did not ensure that its drilling process was safe. This resulted into the explosion that caused massive destruction to the environment and significantly affected businesses around that region.
It may seem that BP has acted ethically in setting up a compensation fund but the painful truth is that, no compensation plan can be able to recompense the damage caused by the explosion. For instance, how will be the operators who lost their lives are compensated, what about the marine species that were killed, not to mention the destruction to the environment and the ecosystem. BP fulfilled its obligation in setting funds for cleaning the mess and compensating some of the businesses which were hit the hardest, for instance fishermen but it can never be able to compensate all the losses incurred during the blowout.
Conflicts of rights
There is a legal battle between BP and Transocean over the insurance policies held by BP for the drilling of the rig. BP has been held fully liable for all the costs associated with the explosion. BP has filed a motion to dismiss a complaint filed by the owner of the rig. Transocean holds that, it has no obligation to advocate on behalf of the insurers. It does not even name the insurance companies where it held policies for the drilling operations. According to Transocean, BP is trying to decrease its rights as the owner. BP had leased the drilling operation from Transocean which operated the rig and therefore the blame should be shared appropriately. Despite the fact that, Transocean held two polices for the rig, it has refused to disclose these polices and BP is left to cater for all the costs on its own. The conflict in this situation is whether the insurance polices held by the owner covered pollution issues. The insurance companies claim that BP was an additional insured and were therefore not be responsible (Mouawad, 2010). Transocean maintains its rights as the owner of the deepwater horizon and believes that it has no responsibility whatsoever regarding the explosion. The two insurance companies also claim they are not responsible and all blame is left on BP.
Ethical analysis
To BP, the current situation caused by the deepwater horizon can be assessed using different approaches to ethical analysis. The situation is not only complex but also one that has resulted in diverse effects for the company including the destruction of its reputation. There were huge quantities of chemicals which were sprayed on the surface of the surrounding area. The problem with these chemicals is that oil is a toxic substance to all creatures and lead to depletion of oxygen in the Gulf. What is more worrying is that, if oxygen was suck by the microbes that consume oil, fish and other wildlife was affected making the situation even worse.
BP’ shareholders are also affected by the explosion since their dividends have been held up. BP was also not ethically responsible for its employees because it did not give them adequate training regarding safety of the operation or what to do incase such an explosion occurred. Most investors, contractors, and technical advisers are likely to lose their confidence in the government and the oil industry at large while as oil companies in the global market are likely to look for alternative oil supply in other nations and withdraw from the U.S. market. Even if Gulf oil comprised only 2% of the total oil produced globally, its collapse is deemed to lead to increased prices of oil in the global market (Mouawad, 2010). In the short-run, the global market will suffer from oil shortages although this will not last for long as other sources will be established At the moment, it is not clear whether there will be future drilling in Gulf of Mexico or other regions in America.
The Financial, insurance and legal organizations have had to deal with numerous cases regarding the explosion. Some cases are still pending in courts for example the compensation of workers who lost their lives as well as those who were permanently damaged. BP has been held responsible for all climes. This company will not only suffer from economic impacts, but also from a reduction in the number of future business partners.
Total company corporate social responsibility
Almost every organization affects the environment negatively; all raw materials are found in nature and when production occurs, there is utilization of natural resources and sometimes polluting the environment. A large number of social corporate responsibilities are on programs that restore nature. The benefit is felt by the larger society as it assists in developing a sustainable development production. The following characteristics are observed by Total Company as it develops sustainability in its operations.
- functional organization
- responsibility and accountability
- personal dedication
- measurements/documents
- sharing superlative practices
- markets
- technical expertise
- innovation-conceptual minds
- sharing responsibilities
- cultural perceptive
- consumer accountability
- policy frameworks (Cornelius, Todres, Janjuha-Jivraj, Woods and Wallace ,2008).
Total is an energy company that is not only committed to achieving the best financial performance but also is in the process of setting new benchmarks for its corporate social responsibility. It is an environmental responsible company that has realized that in order to succeed it has to be responsible for its actions. Among its priorities is health protection, operation safety, among other issues connected to safety of the environment. The company aims at being a “sincere eco-innovator”. It has been involved in vigorous activities all of them aimed at achieving a sustainable environment. Many innovations have been made by the company on ways of reducing the impacts caused by its operations on the environment. Three critical issues that are addressed are; reducing the emission of carbon dioxide, reducing other emissions that may contaminate with the air, soil or water bodies and last but definitely not least, recycling of resources (Total Company, 2011).
Sustainable conduct
The company can not develop sustainable development if the stakeholders do not participate in the process. For it to be successful, the following is put in place
- Open communication- stakeholder discourse
- Innovation- business expansion
- Sustainable conduct
Decisions are the driving force for the company. The quality of decision that stakeholders make give it direction and focus. The growth and competitiveness of the company is influenced by the quality as well as acceptability of decisions made by stakeholders especially the managers at all levels. These decisions are made by management at different levels of management. Efficient operational management is important in both profit making and non-profit making organizations. It involves itself with ensuring that all the areas of an organization are operating well (Crane, Matten & Spence, 2008).
Social responsibility
According to Crane, Matten, & Spence (2008), sustainable businesses not only deal with the standard economic issues affecting their businesses but the ecological and community factors as well. There is increasing proof that their economic performance is better to that of companies that do not sufficiently, accurately and optimally manage these important factors. The following is given first priority whenever the company is implementing its strategies.
The move made by Total towards sustainable development is a great achievement in addressing the challenges faced by the world today in regard to energy consumption and environmental safety. Total is a responsible energy producer that is doing all that is in its power to manage the challenges facing the world today.
These rules and regulations are in respect to social responsibility, integrity, and individual behavior. In order to implement ethical behavior in the company, noteworthy measures are deployed to hoist awareness among employees, and to train them on safety issues (Carroll and Buchholz, 2003).
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Strategy implementation
Implementation of a sustainable development strategy
- The leadership understands the concept of sustainability and corporate social responsibility and commit themselves to the principles of sustainability.
- Total Company has a clearly established vision and mission which has been translated into specific long-term improvements objectives
- The organization has a formalized process to help in identifying the environmental aspects and the impacts that some of its operations have.
- The workforce is trained in order to attain necessary awareness, skills and knowledge to be used in developing a sustainable culture within the organization.
- To achieve its objectives, performance is measured regularly (Albrecht, Thompson, Hoopes & Rodrigo, 2011)
References
Albrecht, C., Thompson, J., Hoopes, J. & Rodrigo, P. ,2010. Business Ethics Journal Rankings as Perceived by Business Ethics Scholars. Journal of Business Ethics, 95(2), pp. 227-237.
Beatty, A., 2010. BP readies war chest as spill costs mount. AFP. Web.
Carroll, A. B. & Buchholz. A. K., 2003 Business and Society: Ethics and Stakeholder Management. Mason, OH: Thompson South–Western.
Crane, A., Matten, D. & Spence, L.,2008. Corporate social responsibility. London: Routledge.
Cornelius, N., Todres, M., Janjuha-Jivraj, S., Woods, A. and Wallace, J. ,2008. Corporate Social Responsibility and the Social Enterprise. Journal of Business Ethics, 81(2), pp.355-370.
Melanie, D., 2010. Deepwater Horizon disaster and oil spill will impact people, communities, environment for decades. Web.
Mouawad, J., 2010. BP has a history of spills and safety lapses. Web.
Total company., 2011. Corporate social responsibility. Safety and health. Web.
Wong, A., 2010. Deepwater drilling will remain in Gulf, and everywhere, International business times. Web.