Module Eight Case Study Analysis Module Eight Case Study Analysis: Ethical Decision-Making Processes Southern New Hampshire University Leadership and Ethics July 5, 2021 Module Eight Case Study Analysis 2 Introduction: A Brief History British Petroleum, BP, has a long history as one of the largest oil companies in the world. BP began when an English investor named William Knox D’Arcy was granted an oil concession by the Iranian government near the turn of the 20th century (Encyclopaedia Britannica, n.d.). In 1902, a drilling expedition funded by Mr. D’Arcy began, however, it wasn’t until 1908 that any oil was found and within a year the Anglo-Persian Oil Company, Lt., was founded (BP, n.d.-a). The company would undergo a series of name changes over the next one hundred+ years including the Anglo-Iranian Oil Company Ltd. (1935-1954), British Petroleum Company Limited (1954-1982), British Petroleum Company PLC (1982-1998), and BP Amoco (19982000) before settling on the current name of BP PLC (Encyclopaedia Britannica, n.d.). Today, BP has operations in 70 countries and on every continent except for Antarctica (BP, n.d.-b) and more than 70,000 employees worldwide (Garside, 2020). Needless to say, BP is a major player in the oil industry worldwide and as such, wields massive influence. The Problem: A Different Reaction Every for-profit company in the world exists primarily to make money. Perhaps one could debate about the primary reason that a company exists. Perhaps they operate out of concern for the greater good or a sense of some higher calling. However, if these companies are not profitable, chances are they will cease to exist. If nothing else, making money helps them to achieve their higher goals should those exist. Industries are developed because organizations believe that they can make money based on some thing around which that industry is built. The oil industry, then, makes money based on the finding, gathering, and refining of oil. This requires drilling for oil, extracting oil, transporting oil, and other operations that are not the best for the health of our planet and its inhabitants (Griffin, 2018). Indeed, there have been some Module Eight Case Study Analysis 3 major environmental disasters attributed directly to the oil industry (Rafferty, n.d.). Despite these, the oil industry had largely stayed the course and continued its work to locate, extract, and transport oil around the world for refinement and distribution. The oil industry even created a lobbying group that fought against claims of climate change and sought to any regulation upon their industry called the Global Climate Coalition (Revkin, 2009). Despite competing with one another, the major players in the oil industry were in lockstep agreement that their industry must be united against any regulation that would make extracting and transporting oil more difficult. Former BP CEO, John Browne, must have missed that memo when in May of 1997 he stood before an audience at Stanford University and gave a speech in which he made statements like, “…the time to consider the policy dimensions of climate change is not when the link between greenhouse gases and climate change is conclusively proven…” and “…we much not focus on what can and what should be done, not because we can be certain climate change is happening, but because the possibility can’t be ignored…” (Castillo, 1997). As you could imagine, this speech sent shockwaves throughout the oil industry as BP became the first major player to acknowledge climate change, and this while other major industry players were still actively working to discredit the science behind climate change (Frey, 2002). Yet, here is John Browne, CEO of BP, making a public statement concerning an ethical dilemma, the negative environmental impact of the oil industry, that stood in stark contrast to that of his industry peers. This would place BP in a unique position as an industry outsider. BP would go on to be the first major oil industry player to withdraw from the Global Climate Coalition, further ostracizing themselves, however, another large industry player, Shell would soon follow suit and ultimately, the Global Climate Coalition would cease to exist (Montague, 2018). Module Eight Case Study Analysis 4 Critique and Analysis: Sounds Good, but… Taking that stand was a huge risk. It could ostracize BP, or it could spur the industry to change with BP as the face of that change. It also opens BP up to more scrutiny. It certainly sounds good for one of the biggest players in the oil industry to acknowledge climate change, but then what? What happens after acknowledgment? What is the plan for how BP will become a better steward of the environment? How will BP mitigate disasters? Will BP follow-through? Unfortunately, it wouldn’t be long before there were answers. BP did try to change its image by rebranding itself as “beyond petroleum” in the early 2000s reflecting their commitment to exploring alternate and renewable energy sources (Carpenter, 2020). However, it wasn’t long after this when a BP pipeline leaked and became responsible for the largest oil spill on Alaska’s North Slope in 2006 (Frontline, 2010). Just prior to this, in 2005, 15 died and 170 were injured in an explosion at BP’s Texas City, TX refinery (Frontline, 2010). What makes this even more tragic is the finding of an investigation commissioned by BP that found that “BP has not adequately embraced safety as a core value” (Frontline, 2010). This, of course, is well after the John Browne speech. Perhaps the most damaging of the disasters that BP is responsible for is the Deepwater Horizon oil spill in which an estimated 4.9 million-plus barrels of oil leaked into the Gulf of Mexico in 2010 (Pallardy, n.d.). This would go down in history as the largest oil spill ever and would render everything that John Browne said as moot. All three of these disasters mentioned were the result of negligence on BP’s part (Frontline, 2010). Recommendations: Following Through When an ethical decision is made by leaders in an organization, they must be prepared to follow through. BP missed some very important opportunities to follow through on its commitment to stewardship by neglecting safety and failing to maintain and monitor its Module Eight Case Study Analysis 5 operations (Frontline, 2010). Had this not been the case, then BP would have been in a much strong ethical position and would still be seen as a leader in that regard. The solution, then, is to move beyond making a verbal commitment and put a plan in place that can be easily understood to govern the actions of employees. This plan should outline expectations and provide guidance on how not meeting those expectations would positively impact the organization and the individual(s) that comply. It should also detail how noncompliance will negatively impact the organization as well as the individual(s) not in compliance. This will provide greater insurance that the organization is able to follow through on its commitment to be a better steward of the planet and its resources. Module Eight Case Study Analysis 6 References BP. (n.d.-a). First Oil. https://www.bp.com/en/global/corporate/who-we-are/our-history/firstoil.html BP. (n.d.-b). BP Worldwide. https://www.bp.com/en_gb/united-kingdom/home/bpworldwide.html Carpenter, S. (2020). After Abandoned ‘Beyond Petroleum’ Re-brand, BP’s New Renewables Push Has Teeth. Forbes. https://www.forbes.com/sites/scottcarpenter/2020/08/04/bpsnew-renewables-push-redolent-of-abandoned-beyond-petroleumrebrand/?sh=8e6df221ceb3 Castillo, C. (1997). British Petroleum CEO Browne says firm will respond on global warming. Stanford Report. https://news.stanford.edu/news/1997/may21/bp.html Encyclopaedia Britannica. (n.d.). BP PLC. In Encyclopaedia Britannica. Retrieved December 17, 2020, from https://www.britannica.com/topic/BP-PLC Frey, D. (2002). How Green Is BP? The New York Times Magazine. https://www.nytimes.com/2002/12/08/magazine/how-green-is-bp.html Frontline. (2010). BP's Troubled Past. PBS. https://www.pbs.org/wgbh/pages/frontline/thespill/bp-troubled-past/ Garside, M. (2020) BP’s number of employees 2011-2019. https://www.statista.com/statistics/302510/bp-group-employee-number/ Griffin, L. (2018). Environmental Impacts of Oil Extraction. Sciencing. https://sciencing.com/list-7459738-environmental-impacts-oil-extraction.html Module Eight Case Study Analysis Montague, B. (2018). When a BP Boss Finally Called for Action on Climate Change. The Ecologist. https://theecologist.org/2018/sep/28/what-happened-whenlord-browne-bpboss-called-action-climate-change Pallardy, R. (n.d.). Deepwater Horizon Oil Spill. Encyclopaedia Britannica. https://www.britannica.com/event/Deepwater-Horizon-oil-spill Rafferty, J.P. (n.d.). 9 of the Biggest Oil Spills in History. Encyclopaedia Brittanica. https://www.britannica.com/list/9-of-the-biggest-oil-spills-in-history Revkin, A.C. (2009). Industry Ignored Its Scientists on Climate. The New York Times. https://www.nytimes.com/2009/04/24/science/earth/24deny.html 7
