Is BP an ethical company?

Using Ethical Theories, To What extent Does BP plc Act Ethically To All Of Its Stakeholders? And To What Extent Is Its Corporate Social Responsibility Image Consistent With Its Practises?

BP plc is one of the largest Oil and Alternative Energy companies in the world. It has set confident and meaningful targets with regard to reducing its CO2 emissions and development of alternative sources of energy such as solar power. However, in recent years BP’s environmental image has been tarnished. However, whether BP has acted unethically is certainly ambiguous, indeed, to define ‘ethics’ is itself problematical. Thus, to look at BP’s business practises from contrasting theoretical stand points allows for juxtaposing arguments over the ethics of its business practices. Within the normative ethical theories, the traditional theories of Consequentialist ‘Utilitarianism’ and the Non-Consequetialist ‘Ethics of Duties’ are exemplary theories to demonstrate the contrasting nature of business ethics and to identify whether BP acts as a an ethical MNC or a ethically vacant imposter.

British Petroleum plc developed their image considerably; altering the meaning of BP to mean ‘Beyond Petroleum’ and aiming to ‘reduce … greenhouse gas emissions by 10%’ (Bulkin, 2010) between 1990 and 2010, which they did successfully; signalling their intent to either aid the environment in their business practices or simply to cultivate a ‘greener’ image to ensure the ever more environmentally aware public will favour their products, and to capture the developing market for alternative energy. Using Friedman’s theory it can be argued that BP uses this image to maximise profit. Conversely, Freeman’s Stakeholder theory indicates how BP’s ethical stand point considers the broader responsibilities contributing to the businesses’ decisions and policies.  It is necessary to established whether ethical decisions and Corporate Social Responsibility (CSR) are based upon intentions, goals, outcomes; or, a mixture of each.

Carrol’s ‘Four part model of corporate social responsibility’ (Crane and Matten 2004 ref Carroll 1991) has indicated that CSR is comprised of four aspects of responsibility: Economic, Legal, Ethical, and Philanthropic. This model of CSR connects to Freeman’s theory, as each stakeholder has a vested interest in the apportionment at each of these stages of CSR. BP have adopted a ‘progressive approach to environmental protection’; setting targets and producing reports on their environmental development progress. The ‘Ethical Conduct Policy’ considers factors such as adhering to Human Rights regulations; ensuring that all operations are fair and legal, and dismissing those who act unlawfully as they did in 2006; zero tolerance of bribery or gifts as facilitation payments. These factors are demonstrated by the management in decisions, policies and actions. Moreover, pledging its name to the United Nations Global Compact (UNGC) and partnering the Red Cross’s appeal for financial support; all demonstrate BP’s commitment to being a ethically astute corporate citizen. These actions suitably satisfy the four stages in Carrol’s CSR pyramid. Therefore, can it be argued that BP is an ethical company? Or can it be seen that these actions are simply the mask of an organisation whose only responsibility is to its shareholders and top management?

Many of BP’s actions have, contrastingly, been regarded as extremely unethical. The Alaskan oil spills, Texas City refinery fire, treatment of Colombian farmers and the explosion in the Gulf of Mexico. Decisions were made, which ultimately lead to destructive consequences for many stakeholder groups. The complex ethical dilemmas facing BP are thus: it must be decided how to weight emphasis on different stakeholders and to what extent the immediate mistakes and unethical practices are allowable in pursuit of a better, more sustainable future; and, to what extent is it ethical to publicise the firm’s ethics and CSR for the predominant purposes of profit maximisation.

 

The traditional ethical theory of Utilitarianism provides an insightful perspective to BP’s practises from a Consequentialist viewpoint. Crane and Matten provide the definition: ‘Utilitarianism … is morally right if it results in the greatest amount of good for the greatest amount of people’.  Therefore, it could be argued that BP should: adopt riskier strategies that result in higher returns; cut safety costs; and exploit small minorities. The results could provide a benefit for a great number of people over time. Adopting this view, FDI host nations, customers and shareholders would benefit most, leading to greater levels of investment and higher revenues. Thus, more investment can be made by BP to developing alternative energy sources creating a more sustainable future. So exploitation of, and accidents regarding, small numbers of employees, the environment, and local communities can all be seen as blips, even calculated casualties, in the pursuit of a better world. Hence, Utilitarianism can be seen as a cost-benefit analysis to decision making. Arguably, some suffering is acceptable if the pursuit of a more sustainable environment is the intended aim of the organisation.

However, environmental destruction and human deaths would widely be considered unethical. This ‘Rule Utilitarianism’ contradicts the human rights of the employees. Therefore, it’s more appropriate to adopt an ‘Act Utilitarianism’ perspective to understand the objectives of short-term operational decisions, such as ensuring that safety standards are appropriate for employees; rather than pursuing additional profits and hiding behind a mask of public relations. Viewed from this perspective, ‘calculated casualties’ don’t provide the greatest amount of good; it simply highlights an unethical and ruthless pursuit of profits. Chief scientist Bulkin argues that ‘good environmental policy [is] good business’. This sentiment is supported by Parker (1998), that the environment is ‘ a cost to be internalised’, marking ‘good citizenship’ as well as increasing ‘corporate efficiency and effectiveness’. However, small reductions in emissions cannot counteract the exploitation of key stakeholders. Thus, viewed from an act utilitarianism perspective BP’s employees can be seen to act unethically as the immediate results of some decisions induce suffering and detrimental effects to the environment, employees and local communities. The firm’s “green-washing” of its CSR to gain public approval of its practises and generate profits, is not only unethical, is it hollow.

The distinction between Rule and Act Utilitarianism provides a good foundation for an transition to an alternative view of BP’s ethical behaviour. The afore mentioned unethical issues can be seen from the Non-Consequentialist theory of ‘Ethics of Duties’. This theory contrasts the consequentialist view, providing a deeper analysis of the decision maker’s morals and principles. Thus, ethical decisions are analysed on motivation, not intended outcome. Kantian theory suggests that humans are rational, moral thinkers, with the propensity to act subjectively towards ethical dilemmas. Kant proposes the ‘Categorical imperative’ and provides three maxims to test; consistency, human dignity, and universality. Applying this to BP, suggests that those who are in charge of safety should ensure that their job has been completed thoroughly. BP should not view the employees or environment as factors of production used to maximise profits for shareholders; suggesting that any reduction of safety is acting unethically and irresponsibly. Using the ethics of duties view, BP acts unethically and contradicts the image that it promotes by not fully considering the employees, environment and local communities; portraying their CSR and sustainability image to be a marketing gimmick.

BP’s business ethics cannot be viewed from an ‘absolutist’ or ‘relativist’ (De George 1999 33-54)perspective as they are too extremist and not applicable to the real world. Hence, a ‘pluralist’ perspective can be used to mediate between business aims of morality and profits. As Kaler (1999b ref Crane and Matten) has proposed good business decisions consider a variety of perspectives and theoretical views and combine to attempt the best decision.

Thus, it can be seen that the Consequentialist Utilitarianism theory, specifically ‘Rule Utilitarianism’, arguably provides a fundamental moral standpoint for BP; looking to the future as it attempt to pioneer alternative energy sources; aiming to please the greatest number of people. However, the more immediate ‘Act utilitarianism’ demonstrates that BP acts selfishly to maximise profits quickly. Alternatively, the Non-Consequentialist ‘Ethics of Duties’ theory demonstrates how Kant’s ‘Categorical Imperative’ can be used to show that BP’s decisions makers employ unethical practise. They don’t just fail to consider all stakeholders, but consciously exploit many in order to increase efficiency and cut costs, often at the expense of safety.

BP simply ‘green-washes’ its sustainable image and publicises its CSR to cultivate a reputation for ethical behaviour. Stakeholder theory suggests that this is a hollow ethical policy; which is more appropriate to Friedman’s ethical theory of business with short sighted profits as the primary motivation. Normative theories further complicate the dilemma, providing contradicting views on the policy.

However, traditional ethical theories should not be viewed as completed ‘rules’, but as contributing to a wider ethical understanding for decision making. BP’s business actions are complex and have implications for all stakeholders. Senior management will often squeeze deadlines which force decision makers to ‘cut corners’. Hence, an variety of ethical perspectives are needed to conclude whether actions that lead to the Texas City Fire, the Gulf of Mexico explosion and other events, were a result of conscious unethical decision making or unexpected and unfortunate casualties of good business practise in the pursuit of future global improvements. However, it could conversely be argued, that viewed from a Consequentialist ‘Egoism’ perspective BP is simple a collection or human beings, of whom ultimately, have limited insight into the full consequences of their actions and thus, are justified in pursuing their own self-interests, regardless of other human’s demands. Therefore, Interpretation of BP’s CSR and ethical policy is ambiguously subjective and open to conflicting perspective.

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Posted on May 18, 2012, in Sustainable Development and tagged , , . Bookmark the permalink. 3 Comments.

  1. as a student of hnd business i found it helpful for my business ethics assignment

  2. like wise as above thank you

  3. good piece of work

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