csr - bp

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bp and CSR

BP:

BP BP is a global oil and gas company headquartered in London, United Kingdom. It is the third-largest energy company and fourth-largest company in the world measured by revenues and one of the six oil and gas "super majors". It is vertically-integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading. It also has major renewable energy activities, including in bio fuels, hydrogen, solar and wind power.

Stakeholder objectives -The potential benefits of CSR relative to the costs for businesses and stakeholders:

Stakeholder objectives -The potential benefits of CSR relative to the costs for businesses and stakeholders This is an extract from a speech made by BP Senior Advisor Charles Nicholson in 2002 at the CSR Europe General assembly meeting: “ The boundaries to corporate social responsibility are conceptual. A company’s primary responsibility is to its shareholders, to its owners. The boundaries are ideological. A company is not a government. It is not elected. It has no popular mandate. It mustn't confuse its role with the role of others. The boundaries are practical. A company has limited resources, limited expertise and limited reach. A company is not a panacea, a cure-all. The boundaries are influenced by self-interest. Business thrives if the society in which it operates thrives. To neglect this is to put at risk the interests of our shareholders. And however you look at it the boundaries are constantly changing. What was a boundary a few years ago is now a starting point. ”

Corporate Responsibility:

Corporate Responsibility Safety Safety, people and performance are BP’s top priorities. We constantly seek to improve our safety performance through the procedures, processes and training programmes that we implement in pursuit of our goal of ‘no accidents, no harm to people and no damage to the environment'. In 2009, a third-party-operated helicopter carrying contractors from BP’s Miller platform crashed in the North Sea resulting in the tragic loss of 16 lives. In addition, BP sustained two fatalities within our own operations, one, when a rig worker was lost overboard during drilling operations in Azerbaijan and a second, in a crush injury on a well pad in Alaska. We deeply regret the loss of these lives.

Contributing to communities:

Contributing to communities We seek to make a positive difference wherever we operate. To do this, we take action that is relevant to local circumstances, mutually beneficial and designed to create enduring, as opposed to short-term, solutions. Our investments in education and local enterprise development aim to build local capability as part of our business agenda, either through our local employees or through the provision of goods and services. As a global energy company, BP operates in a diverse range of countries and in a variety of environmental and social conditions. common feature of these operations is the lifespan of our projects– some BP projects might last as long as 30-40 years. This longevity requires that BP seeks to cultivate and maintain enduring relationships with the communities and governments in these areas. To do this, BP is committed to finding solutions that create mutual benefit: work with local communities, agencies and organizations on finding solutions to issues that can bring benefit to both the local operations as well as help to meet community development needs over a project’s lifespan.

Environment:

Environment Environmental management During 2009, we began integrating our environmental management systems into our operating management system (OMS) and piloted an integrated approach to identify potential environmental and social impacts in new projects. These are intended to improve our consistency and effectiveness in identifying and mitigating the environmental and social impacts of our operations. Our major operating sites are all certified under the international environmental management system standard ISO 14001, with the exception of the Texas City petrochemicals plant which is seeking certification in2010.None of our new projects entered a protected area in 2009.Ourprotected areas classification includes the International Union for the Conservation of Nature (IUCN) I-IV, Ramsar and World Heritage designations. We continue to strengthen our processes for managing compliance with environmental regulations in each of the countries in which we operate. In addition, each employee is required to comply with the health, safety and environmental requirements of the BP code of conduct. We expect our partners, suppliers and contractors to comply with legal requirements and operate consistently with the principles of our code of conduct. Information on the environmental impact of our operations and our efforts to manage resources responsibly are discussed in our annual BP.

Deepwater Horizon Oil Spill:

Deepwater Horizon Oil Spill The Deepwater Horizon oil spill is an oil spill in the Gulf of Mexico which flowed for three months in 2010. The impact of the spill continues even after the well has been capped. It is the largest accidental marine oil spill in the history of the petroleum industry. The spill stemmed from a sea-floor oil gusher that resulted from the April 20, 2010 explosion of Deepwater Horizon , which drilled on the BP-operated Macondo Prospect. The explosion killed 11 men working on the platform and injured 17 others. On July 15, 2010 the leak was stopped by capping the gushing wellhead, after it had released about 4,900,000 barrels of crude oil. It was estimated that 53,000 barrels per day were escaping from the well just before it was capped.

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The effects of the oil spill seem to contradict BP’s environmental and safety policy.

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Media Reaction This kind of negative media would influence BP to make them get more involved in CSR so that they don’t have a damaged reputation

Causes?:

Causes? An investigation found that the blowout preventer “had a dead battery in its control pod, leaks in its hydraulic system, a ‘useless’ test version of a key component and a cutting tool that wasn't strong enough to shear through steel joints in the well pipe and stop the flow of oil.” BP has been blamed for failing to address safety issues just to save them from having to spend on technology and repairs. Therefore it appears to be a case of profits prioritised over safety . Profit objectives come before social objectives.

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BP's response

Response:

Response They are committed to paying all legitimate claims for damages resulting from the incident They have introduced a more powerful safety and operational risk function deploying its representatives to operating businesses to guide and if needed intervene in technical activities. The function operates independently of the group’s businesses and is represented on BP’s most senior executive team. In 2010, BP undertook a variety of activities to further strengthen its oil spill prevention capability. These include: Blowout preventers used on BP-operated projects, along with other well control equipment, were checked to confirm that they had been properly maintained and are capable of shutting in the well in an emergency Remotely operated vehicles were confirmed to be capable of activating Blow-out preventers in emergency situations A new decision matrix, designed to aid key decisions on well design and operations, was developed and distributed to our operations globally Enhanced training and development programmes, particularly around the practical aspects of process safety techniques

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External Stakeholders BP’s response Gulf Coast fishers We are also working with officials in the region to design programmes to test and monitor the safety of seafood and to promote Gulf seafood along the coast and around the country. In Louisiana, for example, BP is providing $18 million over a three-year period for testing of oil, dispersants and other spill-related impacts on seafood, and is funding a three-year, $13-million fishery-resource monitoring plan to study the effects of the oil spill on the state’s fisheries resources. Tourism Industry Throughout the Gulf Coast, we are providing financial support for state tourism promotion efforts. Within weeks of the accident, we had announced block grants of $70 million to help promote tourism and mitigate the economic impact of the oil spill in Louisiana, Mississippi, Alabama and Florida. In the autumn of 2010, we further increased our support for tourism in the region by committing an additional $47 million in total to the four states affected. Each state is using the tourism funds to develop specific marketing programmes that promote their state’s key tourism selling points. Wildlife Experts from NOAA, the US Fish and Wildlife Service, the National Park Service, as well as state agencies, helped BP to identify the most sensitive wildlife habitats and prioritize appropriate spill countermeasures. These measures included booming wildlife refuges, state wildlife management areas and rookeries along the coast, as well as using methods to deter wildlife from entering oiled areas.

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These figures do not even include the Oil Spill incident, showing that BP were not really making a conscious effort to improve their sustainability, before the reaction to the spill.

BP’s new responsibilities:

BP’s new responsibilities

Costs of the oil spill to BP:

Costs of the oil spill to BP RESPONSE AND CLEAN-UP BP HAS ESTIMATED THAT THIS WILL COST $13.6BN, INCLUDING STOPPING THE LEAK FROM THE WELL AND CLEANING UP THE SPILT OIL GULF COAST CLAIMS FACILITY BP HAS PROMISED $20BN FOR THIS FUND TO COMPENSATE PEOPLE WHO LOST MONEY. KENNETH FEINBERG, WHO ADMINISTERS IT, EXPECTS TO MEET ALL THE CLAIMS WITH ABOUT HALF OF THAT AMOUNT CLEAN WATER ACT PENALTIES ARE LEVIED ON A BASIS OF $1,100 PER BARREL OF OIL SPILT, OR $4,300 PER BARREL IF THE SPILL WAS CAUSED BY GROSS NEGLIGENCE. BP HAS SET ASIDE ABOUT $3.5BN, BUT THE TOTAL COULD BE AS HIGH AS $17.6BN NATURAL RESOURCES THE COSTS OF MAKING GOOD THE ENVIRONMENTAL DAMAGE CAUSED BY THE SPILL. FOR THE EXXON VALDEZ SPILL IN 1989, THE FIGURE WAS $900M. BP SPILT ABOUT 15 TIMES AS MUCH OIL. CRIMINAL PENALTIES THE PENALTY FOR ENVIRONMENTAL DAMAGE IS UP TO TWICE THE COST OF THE DAMAGE DONE, AND THERE COULD BE FINES FOR DEATHS AND INJURIES CAUSED ON THE DEEPWATER HORIZON RIG OTHER ACTIONS VICTIMS OF THE DISASTER, INCLUDING THE FAMILIES OF THE 11 MEN WHO DIED, WORKERS WHO WERE INJURED AND LOCAL RESIDENTS WHO SUFFERED COULD ALL TAKE ACTION This shows that ignoring social responsibility can have great costs to a business, therefore CSR is very beneficial to a business.

Government regulations which force BP to be interested in CSR:

Government regulations which force BP to be interested in CSR The Kyoto Protocol currently commits 38 ratified parties to meet emissions targets in the commitment period 2008 to 2012. The European Union (EU) Climate Action and Renewable Energy Package which requires increased greenhouse gas reductions The Clean Air Act (CAA) regulates air emissions, permitting, fuel specifications and other aspects of production, The Energy Policy Act of 2005 and The Energy Independence and Security Act of 2007 affect US fuel markets by imposing renewable fuel mandate and imposing GHG emission thresholds for certain renewable fuels. The Clean Water Act (CWA) regulates wastewater The Resource Conservation and Recovery Act (RCRA) regulates the generation, handling, and disposal of wastes The Toxic Substances Control Act regulates BP’s import, export and sale of new chemical products. The Occupational Safety and Health Act (OSHA), imposes workplace safety and health requirements on our operations along with significant process safety management obligations The Emergency Planning and Community Right-to-Know Act, requires emergency planning and hazardous substance release notification as well as public disclosure of our chemical usage and emissions. The US Department of Transportation (DOT) regulates the transport of BP’s petroleum products such as crude oil, gasoline and petrochemicals. The Marine Transportation Security Act and the DOT Hazardous Materials (HAZMAT) and the Chemical Facility Anti-Terrorism Standard (CFATS) regulations impose security compliance regulations on BP and require security vulnerability assessments, security mitigation plans and require security upgrades that increase our cost of operations. If there weren’t so many regulations, arguably BP would not be interested in CSR

Human Rights:

Human Rights Apart from the environment there are human rights issues with BP. On human rights, BP has big interests in Colombia, a country that runs essentially as a ‘war economy’. Although the country is torn between rival factions, BP has lobbied the US Government for military grants to Colombia, not to stabilise the region or fight the rebels, but to protect its oil pipelines. This shows that BP don’t really care about human rights, just their own interests. It’s an example of integrating social and profitable objectives.

Conclusion:

Conclusion A combination of the government and media reaction influence just how important CSR is to BP. They need to follow government regulations whilst also avoiding lawsuits so that they continue making profit. They do seem to be improving their social responsibility as a result of the oil spill Ultimately, as the Deepwater Horizon incident showed, BP is more concerned with profit than CSR.

Links:

Links http://www.usatoday.com/news/nation/2011-04-17-bp-oil-spill-anniversary.htm -, Article showing the effect of the oil spill one year later http://www.bp.com/sectiongenericarticle800.do?categoryId=9036060&contentId=7066890&nicam=vanity&redirect=www.bp.com/sustainabilityreview2010- BP’s sustainability report 2010