Environment As The Primary Stakeholder

This research report will examine a number of different perspectives that consider the importance of the environment as a stakeholder, and the consequences of both business and society ignoring it. The following report uses Bp Billiton as a case example, with evidence to prove of the consequences of disregarding the environment. The Bp oil spill was a major issue which affected the environment dramatically, but also caused business and society to focus more attention to the importance of the environment as a business stakeholder.

Introduction

In order for business to function in our society effectively, it must consider all the relevant stakeholders. A stakeholder can be defined any one that is affected both directly and indirectly by a business. Hence we ask why we consider a non-human stakeholder, the environment. Like humans, the environment is also affected by businesses. So what are the consequences of businesses ignoring it, and what affect does it have on society and other businesses? This report will examine these issues , focusing on Bp, a multinational organisation that has faced countless criticism in regards to its actions that have caused the most recent incident in regards to the Oil Spill in the Gulf of Mexico.

Presentation of views on the issue, taken from a review of literature (approx. 700 words);

There has been an evolution of perspectives about the environment as a business stakeholder and where it stands. Sometimes disregarding the environment does occur, largely due to the fact that the environment has no voice. Hence we see why it is all too often ignored in decision-making, both at the macroeconomic level and firms. (Jacobs, M. 1997). As said by Woodward. D (2002), where he states even those stakeholder theorists that give credibility to the natural environment as a stakeholder still have failed to address the obvious point that the biosphere, its flora and fauna, mountain ranges and the oceans cannot themselves give expression about corporate activity that are of concern that distress the environment in any way.

So what are the consequences of ignoring the environment for both business and society? Taking advantage of something that has no voice for itself can cause major damage, as seen by the 2010 Gulf of Mexico oil spill disaster. BP oil spill is a prime example of what may happen to the environment as a consequence to business activities.

So why is the environment is considered a business stakeholder? Branco and Rodrigues (2007) put emphasis on the significance of the environment, stating that “regardless of any stakeholders’ pressures, actions which lead to things such as the conservation of the earth’s natural resources or bio-diversity preservation are morally praiseworthy”. Therefore is businesses want to gain an upper hand, it is obvious they take into account environment as a major stakeholder.

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The modern concept of corporate social responsibility (CSR) involves the performance of companies in financial, social and environmental regards. As well as this, it also includes the impact of business activities on various stakeholders, with the immediate environment being one of these stakeholders. (Janet. S, Evans. N 2010)

Lagan (2010) highlights the irresponsible actions Bp were accused of doing as means of blocking any oil spill. He states that BP had attempted to seal the hole 16 times by forcing shredded rope, plastics, old tyres and even golf balls into the failed, four-storey high blow-out preventer. The ways in which they attempt to seal the hole is strangely out of times which modern technology and what they should be implementing.

He then asks readers:

“Who else suspects that the technologies to deal with the risks of deep-sea oil drilling have been far out-paced by Big Oil’s fury to extract oil wherever it can find it?”

This shows a perspective of BP focusing on the extraction of oil, rather than focussing on the technological developments that could have primarily prevented the Gulf of Mexico oil spill disaster, or if not preventing, then having effective measures of dealing with unexpected disasters that may occur. This shows Jacobs point of view about businesses disregarding environment as a major stakeholder as being relevant in terms of the BP oil spill disaster.

BP’s ceaseless efforts to promote itself as an environmentally responsible energy producer took a significant turn for the worst after a US congressional committee stated that the company’s cost-cutting on maintenance had led to a large oil spills occurring. Hence BP’s constant efforts and announcements of its actions about being environmentally friendly are then overturned and deemed insignificant with the occurrences of two major oil spills occurring within a few years of each other. These being the Alaskan oil spill of 2005 and the most recent 2010 Gulf of Mexico oil spill disaster.

They believe the Gulf of Mexico oil spill was an accident, and after the initial explosions, the blowout preventer’s emergency functions failed to seal the well, allowing the leak to occur. This could symbolise lagans previous question about the technologies BP has as out of date, and not good enough to keep up with their current actions and projects. As said in the article by physord (2010), Companies like BP must realise and take into account that they can no longer afford to ignore, neglect or postpone the proper monitoring and maintenance of their pipelines and technology.

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Alternatively, there are reasons as to why environment at times has not been regarded as a stakeholder. There is an assumption that the non-human environment is not a political economic entity therefore suggests not only that it is not a stakeholder, but that indeed it cannot be a stakeholder. (Starik 1995). Here we are once again confronted with the problem of stakeholder identity. It is not incumbent upon the theorist or manager to come up with reasons to “exclude” or not exclude a particular group from stakeholder status.

The “voice” of the natural world is therefore heard by the organization through the obligations of fairness created when one is identified as a stakeholder. It is considered a stakeholder by BP as its actions consequently caused a nature disaster. The “voice” of nature can be heard through the individuals and groups that are ubiquitously counted among the organization’s legitimate stakeholders. (Philips et al 2000)

x Presentation of a case example (a selected corporation), to illustrate the actions taken by business in relation to the issue under investigation (approx. 250 words);

In 1997, BP became the first major oil company to publicly acknowledge the need to take steps against climate change, and in that year established a company-wide target to reduce its emissions of greenhouse gases. (London: the telegraph 2010). BP currently invests over $1 billion per year in the expansion of renewable energy sources, and has committed to spend $8 billion on renewables in the 2005 to 2015 period. (Reuters) These attempts to create an environmentally friendly business imagine was overthrown due to its past environmental disasters. Hence these actions emphasis BP’s attempt to consider Environment as a primary stakeholder, and how by them choosing to not put in the funds in order to maintain.

BP is one of the world’s leading international oil and gas companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items. The oil spill in 2010 was of catastrophic proportions.

After the oil spill, BP posted up all information about the spill, its actions, the effects it has caused towards the environment, and society on its website. They state that they (BP) have acted to take responsibility for the clean-up. The environment being the one mostly damaged by the disaster. They also are promising to respond swiftly to compensate people affected by the impact of the accident, and to look after the health, safety and welfare of the large number of residents and people who helped respond to the spill. As of 31 December 2010, BP had spent $17.7 billion for their response activities. BP has sought to work closely with government, local residents, our shareholders, employees, the wider industry and the media.

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x Critical discussion of the case, from your own perspective, that evaluates the B, S & G views and actions (approx. 700 words);

BP’s track record of corporate social responsibility has been varied. Looking back at its past, it can be established that the company has been involved in a number of major environmental and safety incidents. Bp has been accused of a number of actions that may have directly caused the oil spill catastrophe in the Gulf of Mexico.

BP has been greatly affected by the Gulf of Mexico oil spill.

This oil spill as a result of business actions directly affected government and society. For example as a result of the spill, there have been a number of government agencies in the Interagency Alternative Technology Assessment Program (IATAP). This is a process for citizens, manufacturers and vendors to submit possible technology solutions in five areas of response technology: Oil Sensing Improvements to Response and Detection, Oil Wellhead Control and Submerged Oil Response, Traditional Oil Spill Response Technologies, Alternative Oil Spill Response Technologies, and Oil Spill Damage Assessment and Restoration. The US Government held a great responsibility in pushing BP to correct its actions, and taking over where they could as a means of preventing any greater environmental damage.

Society views BP in a number of different lights. The actions by Bp over the years have caused it to have a varied track record amongst society. For instance in Britain, consumers had planned to boycott BP products after learning about the oil spill in the Gulf of Mexico. They believe they will not support a company which caused a disaster threatening local wildlife and habitat.(Marketing 2010) A survey carried out by Lightspeed Research showed that 15% of consumers intended to stop buying BP products in the aftermath of what US president Barack Obama called ‘a massive and unprecedented environmental disaster’.

Hence we can now look at the interaction of Business, society and Government in regards to the Gulf of Mexico oil spill disaster.

x Conclusion, comprising a synthesis of the main issues and a proposal for better managing the issues (approx 250 words);

The Gulf of Mexico Oil spill was an environmental disaster which allowed greater emphasis for businesses to consider environment as a primary stakeholder in their business actions. A proposal for better managing environmental issues, in regards to the Bp oil spill disaster, through the appointment of a non-executive “Environment Director” with specific responsibility.(Jacobs, M. 1997)

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