Background the environment and the local community as oil

Background

The BP oil spill happened in 2010. The key event of the disaster is that “more than 200 million gallons of crude oil was pumped into the Gulf of Mexico for a total of 87 days” (Dosomething.org, 2017) this shows that a lot of damage created as a lot of oil was flooding out as BP struggled to stop the “oil flooding. The location surrounding the Gulf of Mexico who was directly affected were the coastlines “Texas, Louisiana, Mississippi, Alabama, and Florida” (Doi.gov, 2017). The key consequence of oil rig explosion killed 11 people” (Goldenberg, 2017) and injured 17 others. The oil spill had created both long-term and short-term problems for both the environment and the local community as oil can still be found in those areas. “President Obama announced that his administration would create a $20 billion spill response fund” (Dosomething.org, 2017). These funds were used to stop the oil from spreading as well as cleaning up the sea before any more damage is sustained by burning oil that is skimming on top of the sea. “Over 8,000 animals were reported dead just 6 months” showing how this event had a larger effect on the sea life. BP is responsible for approximately $44 billion in fines which includes costs of the explosion and oil spill aftermath as well as paying the settlement fees (USA TODAY, 2017). Over “30,000 people responded to the spill in the Gulf Coast” (Dosomething.org, 2017), showing how society will work together towards a common goal against a universal problem.

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Ethical dilemma

The ethical dilemmas following the BP oil spill focus on environmental issues and their moral obligations. The environmental issues are that oil was polluting the sea which caused changes in the ecosystem due to the animals’ and plants’ sensitivity to their environment causing them to die or fall sick. The moral obligations are the duties of BP to rectify their mistakes by meeting the needs of the stakeholders after the disaster. However, does BP have a moral obligation to all stakeholders?

 

Ethical Framework

The ethical frameworks that will be discussed in this case study are shareholder theory (Friedman), stakeholder theory (Freeman), shared value theory (Porter), virtue theory (Aristotle), deontology theory (Kant), utilitarianism theory (Bentham & Mills) and theory of care (Gilligan).

Shareholder theory

The shareholder theory is one that focuses on the business’s needs to meet the needs of the shareholders by maximising their profit through the activities that can lead to this goal. It can be argued that BP used this theory to push for higher profits for shareholders and to do this they cut costs elsewhere by not following safety regulations. They cut costs by not making important improvements to machinery on the oil rig to ensure that the workplace was safe (Bloomberg.com, 2017).

 

Stakeholder theoryThe Stakeholder theory should be applied to BP especially during the period of the oil spill as the impact on the stakeholder had to be considered. This theory states that businesses should “create as much value as possible for stakeholders to succeed and be sustainable over time” (Lexicon.ft.com, 2017). Creating value to their stakeholders keeps them loyal and therefore, the willingness to stay and support the company. The stakeholders of BP are their employees, worldwide customers, the communities surrounding the oil spill area, the US government, shareholders and pressure groups. The oil spill affected their employees in terms of their health as BP did not provide the oil rig with equipment with a good standard. Consequently 11 employees died due to the incident. For customers, the value BP created for itself was one of responsibility, innovation and to “promoting sustainable business practices and more sustainable energy development” (Forbes.com, 2017). However, after the disaster consumers believed that BP did not fulfill their obligation to the environment as they stated, due to the slow response time after the spillage occurred. Oil flooded out for days leading to the damages made to marine life and livelihood.    

 

Social Value

The social value theory is “not social responsibility, philanthropy, or sustainability, but a new way for companies to achieve economic success” (Sharedvalue.org, 2017). Looking at Porter’s theory of shared value can correspond to BP by to improve how they conduct their business. BP can consider “reconceiving product and markets, redefining the value chain and enabling local clusters to develop” (Whitman &rarr, 2017). In terms of product and market, the market fell after the oil spill where they made losses

 

Deontology theory

Kant’s stated that “an action is based on the way intentions are expressed” (Philosophy.lander.edu, 2017).  BP is a company that had invested money in research for the development of renewable and alternative sources other than oil. By doing this, it allows the firm to create an image of becoming more environmentally friendly. However, prior to the oil spill disaster, Health and Safety had given reports to BP implying that their employees could be at risk if improvements are not made. Despite this, BP did not take this advice on board and try to solve these problems, however, BP was focused on profit maximisation for their shareholders which lead to the cost-cutting. This shows that even though an explosion and the oil spill was not the intention of the firm, the actions of not fixing or replacing the equipment on the oil lead to what occurred.  

 

Theory of Virtue

One of Aristotle’s theory is based on an individual’s virtue which can “manifests itself in action” (Iep.utm.edu, 2017). Before, the oil spill incident, BP should have acted on the issues associated with the mechanical problems on the oil rig. These were dangerous problems and as the firms didn’t make these changes, this led to the disaster even though this disastrous event was not the intention. However, after the oil spill, the duty of BP was to ensure that they cleaned up the mess created on both sea and land as citizens depend on the both for their livelihood and recreational desires. There was a “$44 billion” (USA TODAY, 2017) settlement fee to compensate for the losses made for stakeholders as well as legal fees over this incident, implying that BP was taking some responsibility for the damages created. 

 

Utilitarian theory

The theory of utilitarianism looks at the consequence of a person or firm’s intention and action. According to Bentham “the principle of morality is to maximise happiness, the overall balance of pleasure over pain and the right thing to do is maximise utility” (Sandel, 2010). Bentham believed that humans look at the overall happiness in the outcome that is provided. The outcome, if the oil spill did not occur or another oil spill doesn’t happen in the future, would lead to a higher level of happiness as the environment influences society regarding the damages created from both the oil rig explosion and the oil leaking into the sea. As society is not keen on animal cruelty and the landscape damage caused by the spill the overall happiness for people depleted.   

 

During and after the oil spill occurred, the extent of the damage to marine life was to a high degree. The oil tainted the skins of animals preventing adequate movement, it also causes the illness and suffering of these creatures as they would have ingested the oil lead to mutations or defects in the animal whether it fish or turtles. The defect can potentially alter the animal’s DNA which could subsequently be inherited for future generations causing a cycle of unfortunate events. The impact on consumers is also profound as if they had ingested contaminated seafood it can make them feel unwell and cause them pain. This also creates a big effect on the ecosystem in the sea where predators eat the contaminate prey causing a spread of disease (Sites.google.com, 2017).    

 

Theory of care

In continuation, looking from the perspective of society, the ideals of an individual are to live a healthy and sustainable lifestyle and for a healthy lifestyle diet is essential. If contaminated fish enter the supply chain and reach local supermarkets or independent sellers, the product has not undergone through effective checking procedure. This can lead to illnesses and disease transferring into the human body causing a pandemic. When looking at self-interest, an individual would want the products they consume should be from a clean environment so they can establish a healthy lifestyle.     

 

Gilligan’s theory of Care can be associated with the local community where families with children living in the area. The oil spill disrupts family or creational activities where coastlines are damaged. Parents/ Guardians would not want to take their children to the beaches as they could witness animals that had died and other environmental damages. This takes away a sense of a child development where other generations in the area have been able to experience.

 

Liberal Theory

The oil spill disaster has caused many issues within different communities in close proximity to the seaside front. This led to a reduction in tourism because visitors would not want to visit a beach covered in oil and dead animal, which is both aesthetically unpleasing and nay upset individuals. Subsequently, businesses had to close as they could not keep afloat due to the decline is consumers. Locals started to earn less revenue compared to prior of the oil spill, leading to a reduction in staff minimising cost, as a last result, businesses had to close their business as it was no longer profitable anymore. This also applied to the fishing industry, where fishermen also lost their livelihood due to the extent of damage made to the marina (Sites.google.com, 2017). Rawls theory looks from the perspective of the least well in the occurrence of an event, on the basis liberty and opportunity, income and wealth, and the basis of self-respect and whether they benefit. In the perspective of the individuals who are worst off, BP should off consider the dangers of cost-cutting their processes and machinery into account as well as looking at the bigger picture instead of focusing on profit maximisation in the interest of the firm and their shareholders.

 

Conclusion

Through analysing the BP case, retrospectively there are positive and negative effects on how BP reacted during the oil spill incidence where different theories can be implemented. A downside to BP’s was how loosely they disregarded their moral and ethical obligations towards society, therefore improvements should be made by having stricter regulations regarding safety on behalf of staff and society. All companies including BP, have the intentions of providing a safer working environment which is done through rules and regulations put in place to reduce the risk of others and another disaster. Another improvement BP should make is to improve transparency for all stakeholders to ensure that they are well informed about the current situations and it also allows the stakeholders to make a well-informed decision whether it’s working for the company or working with a pressure group. Regarding solving the last ethical issue concerning how the oil spill occurred, BP should spend their money on research and development. They should also invest in new and innovative technology by utilizing their capital allowing the firm to provide a more corporate socially responsible business by creating a better environment which is sustainable for a long over time (Ebinger, 2017).

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