Introduction
The disastrous oil spill caused by an explosion on the Deepwater Horizon in 2010 had fatal consequences of environmental damage, community loss, and a number of deaths and injuries. Moreover, the tragedy has forced governments and companies to rethink the burden of corporate responsibility, environmental ethics, and industry regulation. An improper cement mix, a failed blowout mechanism, and a lack of rid operator diligence and care resulted in an estimated 5 million barrels of oil spill 152 days after the incident.
Disaster Details
The situation, however, was vastly complicated by the inadequate response measures taken by BP. Using a highly toxic agent to absorb spilled oil has done even more harm than the oil itself. As a result, the coral reefs, their inhabitants, and the health of the company’s 12,000 employees were affected. BP tried to ignore the scale of the problem by buying off the public with press releases claiming that the bay was recovering quickly. The spill estimate provided by the company also turned out to be inaccurate and underestimated by five times. Moreover, even after the conviction, BP made attempts to shift responsibility to contractors. The company immediately blamed the rig’s owner Transocean for the inability of rig employees to identify and resolve problems. Subsequently, BP was bombarded with accusations for denial of responsibility and attempts to cut corners.
Problem Statement
Driven and blinded by the pursuit of short-term profits, BP itself fell into the trap of irresponsibility and unethicality. In the end, billions of dollars were spent on incomplete leveling of the effects of the disaster, which could have been prevented by timely attention to the equipment condition and risks weighing. BP executives failed to demonstrate commitment to environmental business ethics, both before and after the incident. Such an attitude can be attributed to the already outdated attitude to natural resources as something unlimited, free, and hence unnecessary to consider. After all, as Milton Friedman bequeathed, “moral responsibility of a corporate executive is to do whatever is permissible within the confines of the law and local ethical customs in order to maximize profits for the stockholders” (Alhoff et al., 2016, 63). However, the public and the court considered otherwise, and the actions of the BP were recognized as deliberate disregard of environmental ethics.
Industry’s Self-Regulation
Returning to the Friedman position, corporations presumably should not be held responsible for fixing problems and regulating industries to avoid disasters since this is the duty of governmental institutions and voters. However, the self-regulatory nature of standards adopted in the oil industry is widely accepted and certainly benefits companies such as BP. Traditionally, the petroleum industry is prone to accidents, with more minor spills occurring regularly. At the same time, the lobbying power of national companies is excellent and retains the right to set safety standards, maintain and replace equipment, and conduct inspections. This situation allows oil producers to maximize profits but jeopardizes human health and the environment. Therefore, the responsibility of the BP cannot be limited to paying taxes but should be expressed in proactive actions.
Analysis of Ethical Issues
Having established the importance of corporate responsibility, it is worth understanding what ethics is. For example, according to Kant, ethics lies where an individual or an organization respects people, “providing them with the best information that you have” (Alhoff et al., 2016, 29). This is reflected in the transparency of equipment inspections and post-emergency communication with victims and affected counterparties in an oil spill situation. Thus, BP should have been honest in assessing and reporting its operations, keeping the public informed. After all, as you know, the ocean and its bowels are common goods. From this point of view, what happened can be regarded as a negative externality, a “tragedy of commons.” Hence transparent estimations and press releases are compulsory when speaking about business ethics.
There is also a Buddhist ethical theory according to which “understanding interdependence brings with it respect for nature and all living things” (Alhoff et al., 2016, 42). Interdependence is expressed in the understanding of the relationship between an organization, people, and government. In this sense, business ethics can be understood in terms of stakeholder theory. In other words, an enterprise is considered as a nexus of contracts rather than a sole unit. Therefore, the whole attitude of BP towards natural resources as something external and neglectable raises questions to the company’s ethics.
A similar approach is held by Aristotle, according to whom to be ethical, an organization has to “maintain trusting and mutually beneficial relationships among the parties involved” (Alhoff et al., 2016, 52). Thus, BP using highly toxic chemicals to absorb spilled oil certainly undermines ethical concepts. Permissive legislation does not justify a deliberate lack of interest in the corporate actions’ consequences for people and their health.
Finally, guided by the principles of utilitarianism, the moral intent of an enterprise should include maximizing the “greatest good… for the greatest number of … ethical compatriots” (Alhoff et al., 2016, 53). Therefore, the company’s ethical duty is to compensate for the community loss caused by the disaster. Critics may argue that it is difficult to assess these losses reliably. Perhaps this is true, however, complete ignorance of casualties is not an ethical option.
Analysis of Potential Solutions
As we managed to investigate, the leading cause of the accident was neglect and lack of attention to looming forewarnings. Furthermore, BP has demonstrated the same behavior tendency when dealing with disastrous consequences. In general, the company had several potential strategies it could adopt to address the situation. In pursuit of profit-maximization and swift reputation recovery, BP could choose to cover up traces and hush up the incident as quietly and quickly as possible by any available means. In this scenario, the company accepts the Friedman rules of the game, defining its role in society solely as selfish-economic. The strategy could include challenging allegations, denying involvement, fake reports, and press releases, and diverting victims’ attention to the company’s good performance. This is very similar to what BP essentially did initially, and many companies do manage to buy off the public in this way.
A less bold option, but still characterized by a low ethical level, is to pretend to be a responsible company. Such a strategy can even involve a public apology, an admission of guilt, and even monetary compensation. Such a strategy can even apply a public apology, an admission of guilt, and even financial compensation. News articles and favorable reports with such a company policy often do not correspond to the truth, and most importantly, they do not solve the existing problem. This is a far more common corporate tactic, especially in the oil and gas industry, where spending on sustainability and decarbonization looks ridiculous compared to the marketing budget. After losing the court and a flurry of accusations, BP switched to something similar.
In the end, the guilty company may choose a different path and, along with compensation for its damage, start revising its corporate standards and culture that led to the accident. This tactic seems costly only at first glance; in fact, it is a long-term-oriented strategy. Being based on ethical principles and maximizing stakeholder’s welfare, such perspective benefits both company’s long-term profits and communities.
Implementation Plan Based on the Most Ethical Option
In order to implement the latter solution, which is rooted in business ethics, it is worth starting with taking responsibility for the oil spill. The further implementation plan could incorporate the following actions:
- Careful and accurate estimation of ecosystem, human and financial community losses.
- Transparent reporting on what is happening, including daily oil spills.
- Assessment of most effective and least hazardous methods to absorb or collect petroleum from the water and coastal areas.
- Rapid and safe response and weighting of other potential risks and consequences.
- Collecting and considering feedback from damaged communities.
- Budget allocation for compensation and demonstrating commitment to assist affected industries with long-term support.
- Revision and update of safety and inspection protocols at all sites.
- Public demonstration of organizational change in culture and climate made through new hiring and working standards.
This outlined plan is schematic and reflects the principles of ethics previously analyzed.
Conclusion
The analysis shows what the fatal mistake of BP was and proves the need for moral and ethical standards in the business. The corporate world does not exist separately from society and ecosystem but is one of the constituent elements. That is why, like any other element, it is obliged to behave consciously. The main lesson to learn from the BP case is that pursuing short-term profits can prevent a company from discerning and mitigating implicit risks, especially in such a dangerous business as oil production. Therefore, it is critical to maintain an ethical corporate culture that fosters a conducive climate for addressing potential challenges and disasters.
Reference
Alhoff, F., Sager, A. and Vaidya, A. J. (2016). Business in ethical focus: An anthology (2nd ed.). ISBN: 9781554812516