Corporate Social Responsibility At British Petroleum Commerce Essay

According to Mohr (1996), corporate responsibility is supported by the concepts of multidimensional definitions and social marketing. In the multidimensional definitions concept, the focus is on the major responsibilities expected from companies. These major responsibilities include economic, legal, ethical and philanthropic dimensions (Carroll, 1991). These responsibilities must be performed in order to benefit not only the company operators but also their employees, customers, the community and the general public. Kotler (1991) notes that the social marketing concept of corporate responsibility stresses that companies should operate in a way that maintains or enhances the well-being of its customers as well as its society.

Petkus and Woodruff (1992) supported this concept further by stating that CSR is the avoidance of harm and the provision of good services. The definition given by the authors on corporate social responsibility may vary to a certain degree. However, the meanings of these definitions emphasize on one matter, and that is, a socially responsible organization must have priorities other that short-term profitability (Mohr, 1996). A study has been conducted with regards to the significance of corporate social responsibility to profitability (Mohr & Webb, 2001). Although, further studies are still necessary in order to analyze the correlation of these factors, the findings of Mohr and Webb showed that social responsibility plays a significant role in consumer appeal. The perceptions of consumers however, tends to vary with regards to this aspect. Nonetheless, this stresses the importance of corporate responsibility not only on benefiting the stakeholders but also in achieving the goals of the companies towards growth and profitability.

Primarily, the main goal of this report is to analyse the corporate social responsibility of British petroleum. Herein, the analysis will discuss how the company has been able to adhere to their responsibilities in the society which they operate. In addition, this paper will also discuss the comparison on the CSR approach of BP and The CO-OP.

Overview of the Company

British Petroleum known today as BP Amoco is a petroleum industry based in London. It is recognized as one of the top four oil and petroleum companies throughout the world. The company started in 1901when William Knox D’Arcy was given the permission by the Shah of Persia to explore the land for oil and founded one in May 1908. Because of this discovery, the Anglo-Persian Oil Company was established so as to expose these findings. The company has grown gradually because of this as World War I is happening; the British Government shows intense interest to the company which became the source of fuel oil of Royal Navy during WWI. In 1917, the war gives permission to the British Government to have full control of the company and named it British Petroleum. The company has continued to become one of the largest oil companies in Europe and because the company wanted to expand its market, BP merged wit the American Oil Company (AMOCO).

Today, the company operated in more than 100 states in 6 continents including China. The main goal of this company is to drill and find oil. The major activities of BP Amoco is exploration and production of natural gas and crude oil; refining or decontamination, marketing, supply and transportation and production and marketing or petrochemicals. In addition, the company also engaged itself in solar power. The strategic use technology and strategic management can be considered as a factor for this achievement. The company also acquires Burmah Castrol and Atlantic Richfield Corporation (Arco) and has been able to launch a combined global branding. The company offers products and services which are divided into three categories; on the roads which include fuels and stations, fuel cards, Liquified Petroleum Gas (LPG), lubricants, roadside assistance and route planners, for the home which consists of products like LPG, online store and solar and renewable; and for business which include air BP, Bitumen, BP Marine, BP open books, BP shipping, petrochemicals, power, natural gas, lubricants liquified natural gas (LNG) and LPG, fuels, fuel cards and solar and renewable. In order to easily reach their customers, BP also uses the internet through its website.

Corporate Social Responsibility of BP

A facet of corporate social responsibility is the company’s responsibility in the preservation and care of the environment. Oil companies, particularly the British Petroleum have battled issues coming out against them in relation to environmental issues. In fact, some environmental organisations have expressed dismay over the indiscriminate company performance of BP that resulted to harm in the environment. ‘In August 1991, based on its analysis of Environmental Protection Agency (EPA) toxic release inventory data for 1990 (the most recent available), the Washington, D.C.- based public interest group Citizen Action named BP among the top 10 polluters in the United States’ (‘BP: A Legacy of Apartheid, Pollution and Exploitation’ 2006). The findings brought out by environmental agencies and concerned environmentalist groups have caused the firm to take measures regarding the issue. Two years after Lord John Browne took over the BP administration, the firm rolled out a new marketing strategy that involved emphasis on environmental responsibility. In 1997, the British Petroleum supported the Kyoto Protocol, a worldwide agreement that seeks to prevent global warming by reducing greenhouse emissions. Subsequent efforts to minimise their business’ impact to the natural environment (providing cleaner burning fuels, reducing emissions, ending all facilitation payments (bribes) and political contributions) were also much publicised by the company, not only in observance of their corporate social responsibility, but also as a way of maintaining their stakeholders’ trust. These attempts on the part of the firm were questioned for their real intention, particularly the question will it lead the world in a sustainable energy revolution, truly moving beyond petroleum, or will it be content to profit from the exploitation of an increasingly taxed planet while draping itself in green?’ (Assadourian, 2004).

Having been able to realize their corporate social responsibilities, the British petroleum has been able to solve the issue and attempt to have an enormous reinvention in 2000. The main goal of this reinvention is to alter the perception the people regarding BP in terms of its business operation and its role in the society. This reinvention is also a part of the adherence of the company to their social responsibilities and which costs $200 million. British petroleum was the first oil industry which started to address the issue of global climate change. It can be said that the corporate social responsibility challenge for the British petroleum has been threefold. The first one is to the challenge of translating the social responsibility commitment into an efficient and consistent approach in the global market. The next is to be able to meld the BP its subsidiaries like Arco and Amoco to social investments and the last is to satisfy and meet the external expectations from the society. These CSR commitment has been strengthened through the changes or reinvention mentioned above which include their advertisement of the “Beyond Petroleum”.

In doing and meeting their organisational goal of being committed to social responsibilities, the company had been able to conduct rigorous planning with more than 130 fully functions Business Units. In this regard, each of the each of the Business Units has largely autonomous business operations with its own identity, history, imperatives and relationships.

The Corporate social responsibility strategy of BP has also been able to give importance to three performance measures which include the social, environmental and financial which are known as the triple bottom line. The commitment of the BP with their social responsibility ensures that wherever they operation, their activities should be able to establish economic benefits and opportunities by enhancing the quality of life of individually, specifically those who are directly influenced by the company. The CSR commitment of the British Petroleum focuses on five aspects which include the employee relationships, ethical conducts, health safety and environmental performance, financial aspect and control (British Petroleum, 2008). In order to ensure that they are able to get affiliated with different international and global organisations for Human rights such as the United Nations, US-UK Voluntary Principles and others, for the labour relationships they follow the standards of the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy and for environmental accountabilities they are linked with the GHG emissions reduction, ISO14000 and Clean Fuels Programs.

Just like British Petroleum, other organisations are also able to adhere to the concept of being socially responsible and THE CO-OP is never an exemption. The corporate social responsibility of this company works in various stakeholders such as individual members, employees, customers, corporate members, suppliers, the wider community, and the cooperative members. In doing so, the company has provide community investment of £7.3m, which is equal to 3.2% pre-tax profit, up from 2.5% in year 2003.