Critical Evaluation of British Petroleum Oil and Gas CSR Strateg-United Kingdom
This study has been focussed on the critical evaluation of “British Petroleum oil & gas csr strategy. Case study:- united kingdom". The change in the CSR strategies are being notices by majority of the social experts and it is important to understand the significance of the CSR strategy especially in Oil and Gas sector. This study focuses on understanding the importance of the CSR strategy of this industry by evaluating the CSR strategy of BP which is one of the moot companies of this sector. Importance of CSR on the behaviour of the stakeholders and retaining the positive corporate image has also been discussed in details in this study. Based on the secondary data obtained from relevant newspaper articles and journals, the case study of BP has been evaluated in the light of Deepwater Horizon Oil Spill and the Prudhoe Oil Spill incident. Previous literature has helped in setting the objective of the study and this particular research attempts to shed light on the potential of CSR on several activities of a company.
I am immensely thankful to all individuals who have helped me to conclude this research study successfully. I have been able to develop my skills on the different aspects related to understanding the importance of CSR in Oil and Gas industry. I specially want to convey my deep gratitude to my professor who has guided me whenever I needed any help during the study. Finally, I would like to thank my friends and family who have been a constant source of support for me.
Chapter 1: Introduction
Based on the background study on British Petroleum and the audit of the organization’s actions, the ethical dilemmas are identified in order to bring forth the importance of CSR (Corporate Social Responsibility) in oil and gas industry. This chapter introduces and explains the topic of the dissertation. In order to fix the aims of the research it is important to conduct a background study and it has facilitated the process of identification of the objectives of the research. The ethical dilemmas of the BP have been analyzed from the perspectives of different stakeholders in order to understand the gravity of the chosen issue. This chapter brings forth the background study as a justification of the selection of the issue and identifies the aim, objectives, questions and significance of the research along with that a brief overview of the chosen methodology and the organization of the complete dissertation are provided in this chapter.
General background of the study
A major portion of the UK economy is dependent over the Oil and gas industry of the country. As far as the revenue is concerned oil and gas industry contributes approximately 35 billion pounds to the UK economy as per the reports of 2014 (Taylor, 2010). The significance of this particular industry can be understood from the fact that UK government acquires maximal measures regarding partnership duty which is 16.5% of the aggregate (Taylor, 2010). The operational techniques that are potently used in the industry are associated with extensive danger to the workers as well as the environment including humans, creatures and nature.
British Petroleum is reported as the third largest publicly traded energy company of the world and it employs over 79,000 people worldwide (Schwarts, 2012). Everyday BP produces almost four million barrels of crude oil and natural gas. The market capitalization of this organization is of 135 billion and it is currently operating in more than 100 countries (Schwarts, 2012).
CSR of an organization indicates at the commitment of the organization toward the reasonable advancement through conveyance of monetary, social and natural advantages for the stakeholders who are associated with the organization. CSR is defined through the exercises that a certain organization completes with respect to a specific goal in order to guarantee the improvement of the general public and least impact of the business operations over the environment. The ecological effect of the business operations have gained importance in the recent years because of devastating atmospheric deviation (Jahdi and Acikdilli, 2009). As far as BP is concerned the company is engaged in CSR initiatives intensively and it has eventually promoted several projects related to the renewable sources of energy and also investing in projects that aim at tackling the climate change issues and others.
Apart from the intensive ecological protection related projects BP on the contrary has caused a range of disasters and has been previously involved in several contradictions. The Deepwater horizon accident that spilled over estimated 35,000 to 60,000 barrels of oil per day in the Gulf of Mexico has been considered as one of the worst marine oil disaster in history (news.nationalgeographic.com, 2017).
The mentioned incidents have emerged the question of the responsibility of the Oil and Gas industry towards the natural environment.
The current study aims to evaluate the CSR system of oil and Gas industry of UK with the aid of investigation and increasing knowledge from the contextual investigation of BP as an organization in the UK Oil and Gas industry.
Objectives of the research
The chief objectives of the research are:
- To examine the business instance of CSR in the sector.
- To assess the approach that CSR has utilized in order to improve stakeholder’s administration in the Oil and Gas industry of UK.
- To examine the ecological CSR activities of BP in UK.
It is important to focus a research around the research questions. This particular research has been conducted in order to answer the primary question that arises from the evaluation of the background of the issue:
Primary research question
How effective and successful are the CSR systems of British Petroleum in terms of the Oil and Gas industry?
- What measures can be undertaken by BP in order avoid the environmental hazards that the company faced before?
- How can the effectiveness of the policies can be increased?
Significance of the research
As it is evident from the background study on the identified issue regarding the incidents, it has been noticed that Corporate Social Responsibility can not be ignored by any industry. As far as Oil and Gas sector is concerned, as it is one of the major industries of UK, the CSR activities of the companies that belong to the industry have greater implications. In reference to the mentioned environmental hazards and other PR disasters that took place in the previous years, significantly questions the function of CSR policies of the companies. The significance of the research lies in the fact it attempts to investigate the position, function and importance of CSR in the oil and gas industry. The research attempts to provide significant insight over the role and effectiveness of CSR in the mentioned industry and effectively cites the example of British petroleum.
Overview of the methodology
The study is based on the secondary data and therefore the selected methodology has been chosen in order to compliment the reading of the secondary data. Interpretivism has been selected as the appropriate research philosophy along with the deductive approach. For the analysis of the secondary data has been done by qualitative method for the thematic analysis of the case study strategy. The research design that has been followed is the descriptive design.
Organization of the dissertation
Figure 1 : Structure of the dissertation
Source: (developed by the researcher)
This chapter helps in focusing on the evoked issue through the background study and also identifies the aims and objectives of the study. The research questions and the significance of the research have been shaped in this chapter.
Chapter 2: Literature Review and Rationale
This chapter identifies the previous research works which have played an important role in setting the research rationale for this study. It is important to understand the significant aspects of the previous research works and identify the gaps in order to understand the scopes of the current research. This chapter attempts to shed light on the existing literature and the portrayal of the CSR strategies of Oil and Gas Industry via the policies of British Petroleum. Evaluating and analysing the significance of the CSR strategies, the effectiveness of the CSR strategies are analysed and reviewed in the chapter.
Previous research works
In order to understand the representation of the CSR strategies and the views of the experts three articles have been chosen for better understanding. The articles have analysed as follows.
The article titled as CSR Strategies in response to Competitive Pressures by Marion Dupire and Bouchra M’Zali highlights on the potential of CSR as a marketing tool for the competitive advantage of the companies belonging to Oil and Gas Industry. The authors in this article potently questions whether CSR is used as a tool for marketing positioning of the companies. After analysing the CSR strategies of the company and subsequent other companies this article talks about the scope of CSR as a result of the competitive pressures (Dupire and M’Zali, 2016). Because of the competitive pressures the firms sometimes tend to increase their positive social actions in order to strengthen their brand image. The positive impact of the CSR strategies potently have positive impact over their brand image and it also help in gaining positive response from the shareholders and te customers. This positive impact as identified by Dupire and M’Zali (2016) varies regarding few specific dimensions of the CSR strategies and the industry specifications. They identified three major aspects of CSR and that are
- Competition is important in improving the social performance toward the core and to some extent the peripheral stakeholders.
- These effects are found more prominently in the B2C industries than other industries.
- Such strong competition often leads the firms of such industries to ignore and neglect environmental initiatives and responsibility towards the human resource.
The second article entitled as The influence of green advertising during a corporate disaster written by Bodkin et al (2015) is another significant article that sheds light on the CSR strategies and the underlying motif of the companies behind these strategies. This paper potently explores the impact of green advertising and social activism during the worst public relations episodes and this paper seeks instance in the Deep Water Horizon Oil Spill. The study founded that the mean ratings for BP became lower during the oil spill for the respondents who were aware of an environmental advertisement in comparison with the respondents who viewed an advertisement that lacked in content. During the oil spill the study found the differences between the view of the respondents across four attitudinal scales towards BP.
The most important factor that this particular study reveals is the lack that existed between the CSR communications and the social responsibility performance rate that worked as a backlash for BP (Bodkin et al, 2015). This paper empirically analysed the attitudes towards the advertising and brand ad compared them to the life cycle of an adverse public relations events. The activists and the non-activist attitude of the companies are also evaluated in this paper. The potential attitude and subsequent effective CSR strategy is recommended for the high environmental risk industry in this particular paper.
Li et al (2014) in A Case Study in Strategic Sustainability: British Petroleum Company talked about the sustainability situation of the company in association with its CSR strategies. The article evaluates the sustainable position of the company and provided an interesting sustainability analysis of the company. In this regard, it is important to note that the author at the end of the article provides step by step recommendations that suggests the graveness that subsides the CSR strategies of the companies that belong to high environmental risk industries such as Oil and Gas industry. According to the authors based on the Deepwater Horizon accident this company needs to improvise their CSR strategies in order to appropriately achieve the ecological, economic and social sustainable goals (Li et al, 2014). Another important factor that this article brought forward was the lifelong impact of the oil spill over the ecological system of the gulf region. Operational efficiency and risk management were some of the significant factors that the authors shed light on. Programs related to new resources and extension of the programs were emphasized by the authors.
The potential of this article lies in the effective recommendations that it suggested. The change process that required the participation of the company itself (Li et al, 2014). Along with the revision of the CSR strategies of the organization it is suggested that the operating system, information system and the organizational structure required change due to the incident as it severely affected the company in levels.
Gaps find in previous research works
Along with the mentioned articles, there are also newspaper articles, interviews and audience response had been evaluated in order to understand the gap that exists in the literature. As it is evident in the existing literature most of the works and the articles analyse the situation from a perspective that without analysing the CSR strategies makes BP liable for the incident. Most of the literature only focuses on the massive harm caused to the industry and the shareholders along with the environment of the regions in which the oil spills took place. There are few articles that sheds light over the moral aspect of the company regarding the incident. There are few previous research works that considers the damage that the company itself faced during these disasters. Another important gap that is found in the existing literature is that it does not focus on the revised CSR strategy that is owned by the company after such disasters and also do not highlight the steps undertaken by Government and its role regarding implementing new legislation in order to restrict the rigs and building oil platforms.
Comparison between previous and present research
The current research work attempts to focus on the identified gaps. It also evaluates the CSR strategies of the organization in order to identify the necessary legal steps that the government requires to undertake in order to prevent such manmade calamities. Another important aspect that this research evaluates is the moral aspect of dilemma that is faced by the company. This study is based on the secondary data as compared to most of the previous research works which were based upon primary data. Apart from the CSR strategy this study aims at focusing and delving deep into the organizational position of the company along with the CSR issues that are faced by the company in the last few years.
Contextual investigation of British Petroleum
In order to understand the necessary changes that needs to be implemented in the CSR strategies of the Oil and Gas industry it is important to investigate one of the major companies of the industry that is British Petroleum.
BP is considered to be one of the major Oil and Gas companies of the world that operates in more than 80 countries all over the world. It operates under two widely classified segments and those are production and exploration and marketing and refining. As far as the human resource of the company is concerned it has more than 79,000 employees working globally in more than 22,000 retail sites (Balmer et al, 2011). This company has been widely engaged with CSR initiatives and has promoted several programs in support to renewable energy sources. Along with their CSR initiatives this company has also caused more than one massive disasters because of its negligence and lack of crisis management initiatives. The contradictions that are evident from the activities of the company are to be explored in this study.
Figure 3: New logo of BP
(Source: www.bp.com, 2017)
CSR issues faced by the company
The company has faced CSR related issues due to their public relations and also the disasters caused by them. It has affected the long-term growth of the company. The negative environmental effect that is faced by the company is evident in their damaged public image. The CSR practices were not given enough importance previously by the company and it has caused the company severe damage as well as the financial loses regarding the annual revenue (Miles et al, 2006). As per the reports of the Guardian the company had caused 6% more Carbon dioxide emissions, increased the waste in the host countries by 12% and increased the usage of water by 6% during 2009 (Martínez et al, 2014). Evidently in recent years this statistics have increased gradually.
In previous years the company did not pay much attention to such issues and did not take necessary steps in order to improve the condition. It had caused the company great losses and the annual revenue of the company was also affected because of their negligence towards these facts. It caused the company great losses both regarding the corporate image of the company and financial losses due to compensation payment.
The recent incidents that has further problematises the and emerged questions against the CSR policy of the company are the Deepwater Horizon Oil Spill of 2010 which lasted for almost three months and as a result of this massive disaster more than 10,000 local people became temporarily unemployed due to its impact over the industries of that area (Swaen et al, 2017). BP faced a compensation package of $20 million as per the demand of US president Barack Obama and it caused the company great loss.
This recent incident was not the only one and in 2006 Alaskan Oil Spill was another similar incident that put BP in questionable situation regarding their Corporate Social Responsibility (Wirl, 2014). This oil spill resulted as 260,000 gallons of oil spilled in the Prudhoe Bay area and BP’s operational right on that area was being ceased.
Another similar disaster was the Taxes City chemical leak in 2010, the issue of hazardous substance dumping in 1993-1995 in Alaska and other regions.
Figure 4: Penalty faced by BP
(Source: CNN, 2010)
Measures that can be implemented by the company
The mentioned disasters evidently point towards the company’s lack in crisis management. In time of the Gulf of Mexico disaster it was important to understand that CSR does not equal to crisis management and as social experts have mentioned CSR needs to be seen as a policy that is to identify environmental, social and governance risks and prevent disasters from happening at the very first place (Skjaersethet al, 2004).
The cases that the company faced in the previous years, led to the company’s attention to avoid further problems. CSR also implies towards identifying the possible environmental risks and take possible measures in order to prevent the disasters (Anderson, C.L. and Bieniaszewska, 2005). In spite of BP’s several environment friendly campaigns and other measures, it is evident that the company did not take necessary steps in order to undertake proper measures regarding the risk assessment and also neglected the upcoming possible risks due to the pipeline corrosion. In this regard the oil spill of 1979 needs mentioning as this disaster could have been a warning for the oil and gas industry. The technology that had been used in drilling oil, caused the massive danger. However, the technology did not change and it has been used in 2010 as well. This is one point that shows that CSR is not an optional thing for the companies of Oil and Gas industry. Rather it is important to pay serious attention towards the CSR policies and take effective steps in order to prevent future disasters.
Role of CSR
It is evident prom the PR report of recent years that, PR disasters followed one after another and the crisis management team of the companies and public relations teams are chiefly fighting in order to solve the short-term problems of the company (Jahdi and Acikdilli, 2009). But as noted by Jason Kirby these companies need to review the CSR policies of the company as well.
The question that arises is regarding the role of CSR as most of the companies including BP is using their CSR in order to improve their corporate image. CSR has become the tool that the companies use in order to solve their Public Relations issues for the benefit of their corporate image.
As per the reports BP plc spent up to US $125 million dollars every year on its Corporate Social Responsibility (Anderson and Bieniaszewska, 2005). But the millions of dollars that the company has spent on its CSR policy every year is considered merely as the tool that is used in order to enhance its image as a socially responsible company even in its transition from British Petroleum to Beyond Petroleum in 2000. BP plc had also made a large amount of investment in order to become the larger solar panel makers of the world. Their online website provides the shareholders to acquire information regarding their sustainability.
Actions that BP could have taken
There are several alternative actions that BP could have taken in order to better the situation. Primarily it was important for them to consider the concern of the employees regarding the corrosion of the pipelines and to take effective remedies in order to avoid this devastating circumstance. By taking appropriate measures leading to fix the defects in the pipelines, many serious problems could have been avoided by the company. In this case British Petroleum could avoid damaged corporate image, huge number of fines, unnecessary cleaning and other subsequent expenses and hurting the ecological system of Tundra region and also the oil and gas market of USA (www.bp.com, 2017). The only cost that they need t bear in this case is the expenditure for renewing the pipelines.
CSR strategies of Oil and Gas industry with reference to BP’s practices
As it can be evaluated from the mentioned case studies Oil and Gas industry is one of the industries that can affect the natural resource and the human resource of a country. It is important to understand the gravity of the disaster that can harm the environment. It is important for the companies belonging to this industry to have CSR practices and policies that can help reducing the chances of such manmade disasters and also complement the necessary safety required for the workers who work in this industry. In order to identify the CSR needs of this industry some of the best practices of British Petroleum are evaluated below.
- Alternative Energy Program
Aftermath of the severe disaster was BP’s attempt to recover its corporate image as it started to harm their business activities and their relation to the stakeholders greatly. BP understood the current concern of the stakeholders as the company found that the stakeholders are largely concerned regarding the toxic emissions, increasing prices of the gas and the pollution which creates a very unpleasant image of the Oil and Gas industry as a whole. Thus, several campaigning programs were chosen by BP in order to maintain a positive image in front of the stakeholders. BP started focusing more on Greenhouse emissions and global warming along with that it also focused over the social activities aimed at supporting the right of future generations to have a cleaner and greener environment. It also supported campaigning for saving the scarce natural resources for future use.
The first important factor that needs to be noted that British petroleum changed its name to BP and John Browne who is the ex CEO of the company proclaimed that as citizens of one integrated world it is our responsibility to pay attention towards the sustainable development for the future generation (www.bp.com, 2017). He also emphasized over shared responsibility of every industry in order to stop subsequent climate change and global warming. As a result, BP became the first global energy company who mentioned and acknowledged the grave issue of climate change.
The second factor is that in 2005 an alternative energy program was launched by BP as an attempt of “Going Green” and this attempt was undertaken in order to expand their business beyond oil and gas in order to become more profitable and investing a huge amount of money in bio fuels, solar production sectors and wind energy sectors. For instance, as per the reports in bio fuels BP produces ethanol by using the feedstock of sugarcane from Brazil. Another important factor is that it has developed and currently focusing towards further development of technologies so that they can make good use of the energy that is derived from grasses which is a source of lignocellulose ethanol. This program costs BP an investment of around $8 billion until 2015 among which $5 billion has been already invested for acquiring a Brazilian biofuel company along with another Brazilian producer of sugar and ethanol which have the capacity to produce 480 million liters of ethanol in every average of a year (www.bp.com, 2017).
Apart from the mentioned investments, the company had also invested over $500 million for the past 10 years in the Energy Biosciences Institute (www.bp.com, 2017). This institute provides great opportunity to the leading scientists to find innovative and more efficient methods of producing bio fuels. Such investments paved the path for BP to become leading producers of biofuels.
Regarding their investment in the wind power sector, it has been reported that BP has successfully embraced wind power that has played a potent role in recovering the corporate and social image that it had. As wind power is cleaner, renewable and safer and has the capacity of removing one billions tons of carbon dioxide each year, it has proved to be beneficial for the company as well. As per the current scenario, BP owns eight wind farms that generate more than 1,200 megawatts and are able to generate enough electricity to run a city of 700 thousand people (www.bp.com, 2017).
- Emission reduction program
Evidently every year the consumption of oil and natural gas increases and it has shown an average growth rate of 2.7% every year and the production of Carbon dioxide has increased to 34 billion tons from 23 billion in 2000 (www.bp.com, 2017). Therefore, the strategy that BP chose in 1998 seemed to be beneficial and complementary to the current needs. The company chose a strategy to reduce the amount of greenhouse gases from emitting to the atmosphere from the operations that were to be coming in the next ten years. BP’s stance of tackling the problem of global warming helped BP to gain the advantage of becoming more ethical towards the society and it also strengthened the CSR policy of the company as it represented the moral duties of the company to protect environment from the emission of the harmful gases produced by the company (www.bp.com, 2017).
Furthermore, BP supported the policies that compliments the production and use of alternative energy sources because of the amount of energy that can prevent the effect on the total emission of the carbon dioxide. The company has significantly concentrated over supporting high-potential and lower carbon energy methods like wind energy and solar energy. In order to improve the technological support to the pipeline corrosions the company has also invested a huge amount of money in the technological research and further innovation. BP has also considered into investing in a technological research that can reduce the emission of harmful gases and can create lower carbon options for future generations.
In the year 2012 the company had significantly invested around $3.4 million in the Clean Air Agency projects which aimed at emission reduction in the island counties of the Washington state in the U.S. (www.bp.com, 2017). In 2011 BP took part in a debate in Australia that concerned about the changing climate of the world by cooperating with several government and non-government organizations in order to understand the required potential policies that can be applied for the betterment of the industry. This actions and initiatives undertaken by the organization led towards the creation of a clean legislative package which can be shared by the companies of this industry by analyzing the world energy projections and business impacts on different countries.
Rationale of the research
What is the issue?
It is evident from the media and the public reaction that regarding the oil spills and manmade disasters they have a negative reaction regarding the CSR strategies of the companies and the major issue is the effectiveness of these CSR strategies in preventing possible environmental disasters.
Why is it an issue?
Oil and gas industry is one of the most high risk industries. The workers who work in the rigs and are associated with the oil drilling works with major life risk. Therefore, it is important for the employer as their legal liability to ensure sound risk management and employee protection. Secondly, this industry directly affects the environment of their operating region. Therefore it needs to be of great importance whether they are taking enough measure so that their operational methods do not harm the eco system.
Why is it an issue now?
The three major oil spills and other similar incident have affected the public relations of oil and gas companies. Therefore, it is significant to analyse the effectiveness of their CSR policies for future improvement and further prevention of such incidents.
What does the research shed light on?
The current study sheds light on the current CSR strategy of BP and its effectiveness. Along with that this study attempts to analyse the gravity of the role of CSR in this industry and whether it is used as a mere tool in order to maintain a positive corporate image.
Changes in the policy:
The massive environmental catastrophe did not have immediate effect on the implementation of new policies in order to restrict the activities of such companies. In US after six years of the oil spills new policies were introduced in order to prevent further disasters. The new rules are chiefly centred on the safety equipment that is known as the blowout preventer. However the report that was presented by US Chemical Safety board illustrated that neither the regulations nor the industry practices have improved since 2010.
This chapter describes the previous research works and attempts to analyse the same. Evaluating and analysing the research works it has effectively identified the underlying gap of the previous researches. Considering the gaps, the study has set the rationale of the research based on the analysis of the available literature in order to gather appropriate data for developing the study further.
Figure 5: Conceptual framework
Source: (developed by the researcher)
Chapter 3: Research methodology and Methods
This chapter sheds light on different tools and techniques which have been used in the process of the research. The importance of the selected method lies in the fact that it helps in the successful development of the study and also facilitates the path of concluding the study in a right manner. With the aid of the methodological tools a proper framework f the research has been successfully formulated. This chapter explores different philosophical levels which have been used in the study and delve deep into the significance of incorporating specific methods.
Experts have widely considered the appropriateness of the research onion as a significant methodological tool. It potently provides a compact framework of the methods that are used in the course of work. Research onion is based upon a layered philosophical approach and it is consisted of three different layers (Silverman, 2016). The three levels are widely known as axiology, ontology and epistemology.
It is important to choose an appropriate philosophy in order to conduct a research successfully. Selecting a particular research philosophy helps in the development of the analysis and it also formulates the path of the study (Neuman and Robson, 2014). Researchers through the ages have relied upon different research philosophies in accordance with the issue of the research. Some of the widely known research philosophies are positivism, post positivism, interpretivism, pragmatism and realism.
As this particular research is focused over a case study and attempts to evaluate the research objectives with special reference to the case study, the philosophy that has been selected in order to conduct the study successfully is interpretivism.
Justification for taking interpretivism
Interpretivism is a philosophy that in relation to ontology and epistemology focuses on the possibilities of multiple realities that can be relative. This philosophy helps in avoiding the rigid structural framework and concentrate on the logical explanation of facts. The chief motif of this philosophy is to interpret the meaning of the available facts rather than to generalize and predict causes and effects. This study attempts to identify the effectiveness of the CSR policies applies in the Oil and Gas industry of UK (Panneerselvam, 2014). These policies are evaluated on the basis of the environmental hazards and the process of dealing with the consequences by British Petroleum. Therefore, the selected philosophy can be justified as it has helped in the interpretation of the facts because this study is a fact based study.
The design of the research helps in presenting the layout of the complete study. as per Burns (2014) there are three types of research designs that are used worldwide. These research designs are explanatory research design, exploratory research design and descriptive research design. In order to conduct this study successfully descriptive design has been undertaken as an appropriate research design.
Justification for taking descriptive research design
Descriptive design helps in the study that is based upon the secondary data. As this study focuses on already available data available on the issue and attempts to evaluate the issue, descriptive design has helped in proper analysis of the secondary material.
Research approach is considered or defined widely as a plan that is successfully implemented in order to properly formulate the methodology of the research. Correct application of the research approach helps in the development of the study and helps in successfully concluding the study. appropriate research approach helps in focusing and evaluating different theories and concepts that can effectively underpin the study forward (Saunders and Tosey, 2013). Appropriate research approach also helps in delving deep into the topic and understand the variables in a detailed manner. The major distinction of the research approaches are of two types and they are inductive approach and deductive approach. For this particular study deductive approach has been selected as the appropriate one.
Justification for considering deductive approach
The study starts from a generalized view or notion of Corporate Social Responsibility of the companies and then delve deep into the CSR of a particular industry that is the Oil and Gas industry of UK. Along with that it also delves into the CSR performance and analyses the CSR activities of British Petroleum in order to understand the effectiveness and implications of their activities. Therefore, from a generalized setting the study turns gradually towards reaching a conclusion. Deductive approach has proved to be appropriate in order to culminate at a specific point.
Data collection methods
One of the most important actions of any research is to collect relevant data. The objectives of the study are developed with the help of analysing the previous data that is available on the issue. It helps in the identification of the areas of study. As per Roger (2011) there are two different ways through which data can be collected and they are primary and secondary. Primary data that is also known as the new data because it has been obtained recently. Secondary data is already existing data. This study is a secondary data oriented study and the data has been obtained from the relevant and reliable internet sources. Along with that several research works that are relevant with the issue of the current study has also been analysed. Several relevant website articles and newspaper articles have been considered as informative data for the analysis of the CSR responsibilities of the company. In order to understand and identify different environmental hazards caused in the operational process of the Oil and Gas industry, several books have been followed along with that the CSR report of the British Petroleum and the company website has been studied acutely for better understanding of their CSR strategies.
In order to understand the overall stance of the CSR in the Oil and Gas industry of UK, the case study of British Petroleum and the Deepwater Horizon spill along with that Prudhoe Bay oil spill have been thoroughly analyzed and evaluated.
Data analysis technique
In order to successfully analyzed the collected or the gathered data it is important to select an effective data analysis technique. In order to get results of a study it is important to analyze the gathered data. As per the comments of the experts data analysis technique can be classified into three groups and they are qualitative approach, quantitative approach and mix method of data collection. In this research qualitative approach has been chosen as an appropriate one.
This research is majorly based upon the secondary data and no surveys or interviews have been conducted during the course of the research. Therefore, this study demands thematic analysis of the cases and focuses on the qualitative analysis of the gathered data.
It is important to be compliant with the ethical considerations that are associated with any research. During the course of the study all ethical norms have been maintained. The copyright has been checked before incorporating any secondary data in the study along with that every idea or information which has been cited from any other source, has been acknowledged along with correct referencing of the information. The data that has been collected has been protected under the Data Collection Act 1998. The data has been collected by maintain all the copyright acts and other academic ethics. The data used in the research has not been manipulated or used in any kind of commercial use.
Every research has some of the limitations regarding the process of the research. The major limitation faced during the course of the work was because of constraint time frame. Another challenge that has been faced was selecting the relevant data as there are many sources that has provided contrary data and it has created confusion while choosing the correct data. Because of unavailability of enough capital, primary research could not been conducted or any business personnel associated with the subsequent industry could not been interviewed. These have proved to be the major limitations of the research.
|Activities during research||1st week of phase 1 ||2nd Week of phase 1||3rd Week |
|5th Week |
|6th Week |
Phase 5 and phase 6
|Selection of research topic|
| Composition of the literature review|
|Methodology followed in the research|
|Collection of primary data for the research|
|Data analysis and interpretation|
|Introduction and Conclusion for the research study|
Final submission of the research report
Figure 6: research timeline
Source: (developed by the researcher)
This chapter concentrates on the proper selection of the methodology. It also highlights the fact that how proper selection of the methodology has helped in completing the research successfully. The research design, research philosophy, research approach along with the data collection method and the data analysis technique have been discussed in the chapter. Proper development of this chapter has resulted effectively in successfully obtaining the outcome of the complete procedure.
Chapter 4: Data analysis and Results
The chapter attempts to focus on the two important case studies that questioned the CSR strategies of Oil and Gas industry. Both of the cases are instances of manmade disasters that happened because of the negligence on the part of BP. Prior to these case studies this chapter brings forth the CSR practices of the company and analyses the effectiveness of the practices.
Figure 7: market share index of Oil and Gas industry of UK
(Source: www.cbsnews.com, 2017)
Deepwater Horizon oil spill
The deepwater horizon is considered one of the major drilling platform of BP in the gulf Mexico. It encountered a horrible explosion on April 20th of 2010 which is considered to be the largest oil spill catastrophe in the history of Petroleum industry (abclocal.go.com, 2017). The catastrophe included killing of 11 workers who were working in the rig and seventeen other men suffered from serious injuries. This incident resulted gushing of more than 150 thousand barrels of crude oil in the sea daily for almost one month.
Including the environmental factors there were many problems that contributed to the explosion of the rig. During the investigation of the oil spill by several governmental and non governmental organizations it was found that there are many issues behind the catastrophe. Majority of the media stated that the moot reason behind the massive disaster was the unethical behaviour of British Petroleum (edition.cnn.com, 2006).However, the chief reason as commented by the experts were the installation of the oil platforms which BP continued in future despite of the recommended decision of Hallliburton, which is one of the largest multinational corporations that provides oilfield services. Even after the disaster, the organization did not revise their policies and continued to install oil platforms. Installation of such drilling rigs using the cheaper well design has been considered risky by the investigators.
Figure 8: Deepwater Horizon Spill covered area
(Source: www.cbsnews.com, 2017)
This environmental disaster was potent enough to affect several parties associated with the organization directly or indirectly. It is true that the affect n the parties proved to be negative and especially the workers of the seafood and tourism industry (abclocal.go.com, 2017). This manmade disaster hugely affected the environment because of the massive pollution and the emerging mutilating pollutants not only violated the water, it also hugely affected the underwater creatures. Environmental experts have identified that the pollution potentially mutated and killing of the fish along with that in indirectly affected the birds that sustain their living by preying on the fish.
Figure 9: Crisis of the birds due to oil spill
(Source: www.cbsnews.com, 2017)
As far as the human resource is concerned, this hazard gravely affected the workers of that rig along with workers of the other industry of that location. Because of the disaster the environment of the place was violated and it resulted as an adverse effect over the tourism industry and the sea food industry (edition.cnn.com, 2017). The disaster left the beaches covered with oil and people refused to select the place as a tourist destination and the workers of the subsequent industry were at the verge of losing their jobs. Therefore, the adverse effect prominently hampered the revenue of the hotel industry, tour operators, restaurants, boat renting companies and water sports providers along with the disappointing profit figures that failed to 35% because of the increased expenditures and obligations because of the individual compensation and penalties (www.newschannel5.com, 2017).
The company as a result of the disaster not only started losing the faith of the investors but they also started to lose customers. An evident response was found in the boycott campaign hat emerged in the social media. The Facebook society effectively gathered more than 75 thousand users who had negative response to the operational management of the organization. The negative impulse of the consumer was not limited to social media. It also had negative impact over the gasoline stations which were affiliated to the company. An important instance can be drawn from the boycott activity of the clients from the stations in middle Tennessee (www.cbsnews.com, 2017). The major reason behind the such boycotts was the continuous spill. Another owner of one of the BP stations in Chicago faced 20% fall in sales because of the disaster.
Figure 10: Market performance of the companies affected by Deepwater Oil Spill
(Source: www.cbsnews.com, 2017)
The contemporary CEO of BP at the time of the disaster Tony Hayward did not behave professionally enough in order to deal effectively with the situation. He prejudiced over the ethical behaviour of BP’s social responsibility. During the crisis he was found enjoying holiday and it further worsen the rage of the public towards the negative branding of his image.
From the practices it is evident that the CSR strategy of British Petroleum suffered from an ethical dilemma due to the shortcomings of the oil catastrophe. It was evident as the organizational dilemma arises between saving costs which includes taking unnecessary risks and employee security and meeting the required safety criteria. Corporate Social Responsibility indicates the morality of an organization towards the society. Taking under consideration the Utilitarian justification that defines the morality of an individual’s action and also considers the benefit of the larger group of society. By applying the Utilitarian philosophy, it is evident that the oil spill that caused by BP minimized the benefits of others who were affected by the catastrophe (edgar.jrc.ec.europa.eu, 2017). The accident had adverse effect over the heath of a large number of people and also hampered the business of million dollars. Apart from the coastal beaches and the environmental pollution, it affected the sea animals and the birds. The consequence worsen the economy of the area as it hampered the tourism industry (voices.washingtonpost.com, 2017). The scientists commented that the chemicals caused the genetic mutation of the animals that resulted as increased mortality. Because of the oil that covered the sea and the coastal area the complete eco system went topsy-turvy and the impact on the marine system requires decades in order to recover from the current condition.
Though it is true that BP attempted for effective cleaning processes, it also effected the eco system intensively. Because of the chemicals that were used in the cleaning process and the burning of oil resulted as massive pollution. In spite of these attempts the damage had already done to people and the new CSR policy and planning played as the cover up in order to save their corporate image. Their attempt of securing the place even caused negative impact on the eco system. BP because of their negligence has been fined (www.enn.com, 2017).
The only positive outcome from this disaster was that people understood the importance of using alternative energy sources because of the negative consequences from the oil spill were seen and changed their opinion drastically. The cleaning up activity reduced the devastation of the wildlife and the fishing and tourism sector could recover faster.
Prudhoe Bay oil spill
Apart from the Deep Water Horizon oil spell another similar incident took place in late February of 2006. An massive explosion and subsequent oil spill occurred in Prudhoe Bay, Alaska. 267 thousand gallons or approximately 1 million liters of crude oil was released in the Tundra region of the Alaska’s North Slope (www.enn.com, 2017). Only after 5 days of the explosion it was evaluated as one of the massive oil spills in the history of the region. The major reason behind the disaster was caused because of a rupture and leaking of oil. The corroded pipeline had been identified two years previous to the incident. According to reports, the London headquarters have been informed of the corrupted pipeline, however, still it was not resolved by necessary technical support.
Figure 11: Oil covered area of Prudhoe Bay
(Source: www.cbsnews.com, 2017)
This oil spill had influenced several large groups that were directly and indirectly associated with the company.
The consumers of the gasoline were majorly affected by the situation. The cleaning cost was paid by BP and it has adverse effect over the price of oil as they increased the price of oil. The petroleum companies jumped their prices to $2.22 and closed at US$76.98 for each barrel (www.thenewstribune.com, 2017). Such high pricing strategy emerged because of the budget of the clean up expenditure and subsequent costs. Because of the accident a shortage has been faced by the Alaskan gasoline market as they closed the Prudehoe Bay oil facility. The demand for petroleum increased to approximately 2.6% and which gradually adversely affected the oil-product users negatively (voices.yahoo.com, 2017).
The oil spill caused by one particular company the other companies as well. As a part of the oil and gas industry limitations were imposed upon the other companies as well. It is important to note that the limitations were imposed regarding limiting the areas that can be used for drilling by the oil and gas companies and evidently it reduced the total amount of demanded oil. Because of the spill additional extraction of oil from other places was required. Several new restrictions also imposed over the industry and it gave birth to effective legislations such as Clean Water Act, Clean Air Act and Pipeline Safety Act (www.thenewstribune.com, 2017).
The corporate image of British Petroleum was hampered by because of the Spill and i tremendously impacted the shareholders, technologists and employees who were associated with the company. The shares f British Petroleum decreased price by almost 2% (Taylor, 2010). Employees working in the organization and other community people reported health issues and symptoms like strong headache and nausea. According to the medical experts such physical hazards were resultants of the clean up and the released chemicals in the atmosphere of that area. Another important fact that worth mentioning is that the clean up procedures that were followed by the organization were not effective enough and BP technologists were criticized for not dealing with the problem effectively and they were given incentives in order to find faster and better ways of fixing the problem of leaking that was noticed in the pipelines.
As a result to the spill society became more restrictive towards the limitations of the mining and carbon tax charges. The scientists were subjected of greater motivation because of the incident in order to discover new ways of cleaning the oil spills and renewable energy sources as substitute to the oil based energy suppliants.
It is a well known fact that North Slope Region of Alaska is the home of thousands migratory birds and because of the enormous effect over the environment the birds have been affected as the oil spill covered approximately over two acres of tundra region that was initially under the snow along with the hard frozen lake. The cold condition of that area was the only advantage in the cleaning process of that area.
The Alaskan Oil Spill also emerged the issue of negligence on the part of the company’s directors. Their stance evidently pointed at saving money from taking ‘unnecessary’ security measures. Because of their money saving policy unnecessary risk severely affected the environment and the animal life as well. Considering the utilitarian theory, the morality of the stance can be evaluated.
As evident from the results of the incident this incident did not provide any utilities to BP nor to the society.
To begin with because of the negligence the company itself faced a large sum of loss as their business itself was hampered because of the incident. This oil spill caused BP a fine of $20 million dollars (www.slate.com, 2017).
Secondly as far as the ecology of Alaska is concerned, the environment was affected to a great extent. As this region is considered as the habitat of numerous birds and animals that belong to a certain ecological system, the complete ecology lost its essence (www.slate.com, 2017). As per the biologists the oil spill has a long term effect over the ecology as the living species of that area can be extinct in future because of the climate change and the subsequent pollution.
Considering the result of the oil spill over BP itself, it caused BP a large sum of money. They accepted their negligence and suffered the damages caused by losing the revenue. BP was charged for their negligence along with a large amount of oil wasting. Together the expenses of cleaning up and the wasted oil cost BP a large amount of money and it led towards the subsequent price hike of oil and petroleum products. Increased oil prices proved harmful for the society and the country’s economy as well.
Figure 12: Decrease in crude oil production after the oil spill
(Source: www.cbsnews.com, 2017)
The long term benefits were indirect and it had a scope to serve the goodwill of the society. Firstly, people became more concern of the consumption of oil and the attention shifted towards the effectiveness and utility of the substitute energy sources (www.slate.com, 2017). This incident prompted the scientists to pay more attention to the research needs regarding the utility of the alternative energy sources and also allowed them to pay more attention and motivated the technologists to find better ways and methods to determine and stop pipeline leakages and it play a significant role in the long run in prevention of future oil spills.
Because of the oil spill the government and the society became more aware towards the negligence that BP showed and it helped the development of the restrictions and other necessary policies that were required in order to stop such occurrences (www.slate.com, 2017). This oil spill caused several important implementations, new policies and legal restrictions in opening rigs and oil platforms. BP’s negligence towards environmental, natural assets, employees and their security caused this industry several rules in order to prevent such future circumstances. It also questioned the CSR strategy of the oil and gas industry once again and how it could be implemented effectively in order to prevent such massive spills.
The safety issues of BP and other companies of this industry became a matter of grave concern for the governments and the implemented policies aimed at improving the safety performance of BP and other significant companies of Oil and Gas industry.
Evaluation of CSR
Because of the major criticism from media and public forums, BP and its CSR strategy have faced a massive downfall regarding the success of the CSR strategy of the company. After the incident of the Gulf Oil Spill BP had been removed from the sustainability index of Dow Jones. This index serves as the benchmark of stock measurement for those companies that are considered excellent regarding their CSR.
Because of their subsequent CSR failures BP has faced challenging time in spite of being engaged in several social and environmental campaigns (Swaen et al, 2017). But the negligence on the part of the company that caused such massive oil spills made the effort look dubious and inefficient. The crisis management of the company has proved to be a failure as long as the gulf incident is concerned. It took the company almost 45 days to choose a policy that can prove to be helpful for the victims of that regions. All these instances point directly at the CSR failure of the company.
The situation worsens due to the remark of the company as the CEO of the company at that time refused the responsibility of Gulf of Mexico oil spill as the drilling of the rig is operated by another company. As mentioned by him the other two companies involved in the drilling of the rig process did not accept their responsibility either. This portrayed a negative corporate image of the organizations putting blame on each other in order to avoid the consequences of the disaster.
Taking a glance at the CSR policies of the companies and its attempts of improving its image in front of society and the stakeholders after almost ten years BP managed to reduce the emission of carbon dioxide by 10%. Looking at the practices of the company it is evident that for oil and gas industry it is important to have a sound CSR policy as the industry itself causes harm to the natural environment because of the energy needs. Therefore, keeping in mind the risk factors associated with this industry in reference to BP it can be stated that the restriction of rules and implementing policies are potent enough in order to decrease the possible future disasters.
Chapter 5: Conclusion and Recommendation
This is the concluding chapter of the study that summarises the complete work along with future scope of study on this pertinent issue. This chapter also provides a scope to evaluate the possible recommendations in order to improve the CSR strategies of oil and gas industries. In order to understand the utility of the current study this study sheds light on how the mentioned objectives are obtained in the course of the study.
Linking with the objectives
Linking with objective one: to examine the business instance of CSR in the sector
The first objective of the study has been focussed in the literature review that focuses on the CSR strategies implemented by BP in order to improve their business. The company outline and the evaluation of the CSR strategies potently highlights on the importance of CSR in successful business in this sector. The study also seeks instances of the customer behaviour and the public reaction against the CSR implemented by the company and it helps the study to link and evaluate the primary objective of the research.
Linking with objective two: to assess the approach that CSR as utilized in order to improve stakeholder’s administration in the oil and Gas industry in UK
The study brings out the attitude of the stakeholders in regard to the CSR strategies of the company. How CSR failure had affected and had a negative impact on the acquiring the trust of the stakeholders have been analysed in the course of the study. Along with that the data analysis provides evidence that evidently portrays the negative corporate image and its effect over the attitude of the stakeholders towards BP. How the negative corporate image affected the public relationships of the company and damaged the annual revenue of the company have also been discussed prior to achieving the second objective of the study.
Linking with objective three: To examine the ecological activities of BP
In data analysis chapter the CSR strategy analysis of the Oil and Gas industry with reference to BP focuses on the CSR activities and also evaluates the same. The ecological activities of the company an the campaigns and other activities regarding their support towards the environment have been evaluated in the section. Along with detailed description of their ecological activities the study has also evaluated the effectiveness of the mentioned activities in order to successfully draw a conclusion prior to achieving the third objective of the study.
In the course of the study it has been shown that the environmental hazards caused by BP in UK and other host countries can result grave consequences for the company at several levels. The recommendation for BP in this case can be majorly regarding the strategic management in order to diminish further possibility of such incidents.
- BP needs to adopt a productive and proactive approach in order to dealing with the environmental issues that might occur in the host countries as it affects its business in the parent country as well. It is better to determine the future risks and prepare appropriate strategic planning accordingly in order to avoid future problems.
- The management of the company needs to introduce effective measures regarding the environmental health and safety and other standards along with enforce those measures effectively.
- It is important for the company to cooperate intensively with eternal stakeholders in order to minimize the possibility of environmental disasters. It is important for the company to consult local government officials in order to eliminate the possibility of the environmental disasters.
- Keeping in mind the severe effect of the oil spills over the eco system and the other industries, government needs to undertake necessary steps in restricting the operating area of the companies belonging to oil and gas industry and along with that effectively implement policies related to environmental safety that are to be strictly followed by the companies of Oil and Gas industry.
- Another important recommendation for the company is to engage themselves in future knowledge sharing programs that facilitate the way of identifying technological processes that can be used in mitigating the environmental risk and employee related risk factors as well. For instance, a better drilling process that is less risky that can improve the efficiency of the company in various levels.
Future scope of research
This particular study does not delve deep into the use of better technology and how that can be used in the betterment of the CSR strategy of the company. There is ample scope of research in this topic as there are several aspects that are yet to be explored. Apart from the oil spills and the subsequent case studies future research works can highlight the effectiveness of the current CSR strategy or it can also shed light on the moot question whether or not CSR pf this company is used as a tool in order to maintain a positive corporate image in front of the pubic.
There are several measures that the experts have mentioned in order to improve the CSR activities of the industry. However, it is important to understand the underlying gaps and challenges associated with this particular industry. The mentioned measures are nor completely free of risk and in order to increase the efficiency of the operational management there are several risk factors as well. It is important to understand that there are no specific tools or methods that are suggested by the experts that can be available for BP to adopt in order to decrease the environmental risks being pro active is challenging for the company as well. It is possible for the senior management level to violate the health and safety measures that are introduced by the company.
In order to have a significant, solid and potent plan for effective crisis management BP needs to have better infrastructure built around the deep sea oil wells that can be used in order to absorb potential oil leaks and minimize the chances of such hazards.
The company can also invest in order to create an emergency response team in order to decrease the delay that the victims of the Deepwater Horizon Oil spills incident faced. It also needs to improve its communication towards the public and maintain a positive public image. This can only be done once the company realizes that public watches every activity of an organization and it is not easy to maintain a positive corporate image through a CSR plan and “ Go Green” campaign.
The chapter summarizes the complete study in a nutshell along with that it also provides a glance at the future scope of research on this issue. Possible recommendation in order to improve the CSR activities of the company are also mentioned based n the evaluation of the literature and the obtained data.