Answer

Ethics / Corporate Social Responsibility (CSR) activities at BP P.L.C, hereafter referred to only as “BP”, refers to activities that the corporation performs in its bid to treat its stakeholders in a responsible and ethical manner in the areas it operates in.  Corporate Social Responsibility (CSR) activities are aimed at promoting the general social and at times the economic good of a company’s stakeholders and the public in general. These activities usually go beyond the business interests and legal requirements of BP (BALMER, POWELL and GREYSER 2011, pp.10).

Brief overview of BP P.L.C

BP is a multinational oil and gas company whose headquarters are located in London in the United Kingdom. The corporation is one of the seven major oil and gas companies in the world. BP is the sixth-largest energy company by market capitalization and the twelfth largest by turnover in the world. The corporation operates in all areas of oil and gas industry including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading among others. BP is therefore fully vertically integrated in the oil and gas industry (MÔNICA and BARLOW 2013, pp.580).  The company produced 3.3 million barrels per day from its operations in over 72 countries spread across the world and had total proved reserves of 17.81 billion barrels of oil equivalent as at 31^st December, 2016. The company operated 18,000 service stations worldwide during the time with most of them in the United States of America where its largest division is located. BP owns 19.75% stake in Rosneft of Russia which is the largest publicly traded oil and gas company by production of hydrocarbons and reserves in the world. The corporation is a public company with listings on the London Stock Exchange, the New York Stock Exchange and in the Frankfurt Stock Exchange (MÔNICA and BARLOW 2013, pp.580).

The corporation has been involved in major environmental and safety incidents; some of which led to loss of life, destruction of property and harm to the ecosystem. The company paid huge court fines as a result of lawsuits instituted by aggrieved persons as a consequence of some of these incidents.  Some of the most notable incidents include the Texas City Refinery explosion in 2005, the Prudhoe Bay oil spill in 2006 and the Deepwater Horizon oil spill in 2010(MÔNICA and BARLOW 2013, pp.580). The Texas City Refinery explosion resulted in the death of 15 workers while in the Prudhoe Bay oil spill the corporation was forced to pay civil penalties of US$25 million which was the largest penalty per-barrel at the time(WIRL 2014, pp.230). 

The Deep Horizon oil spill is the largest accidental spill of crude oil in the ocean in the history of the world. As a consequence, the corporation spent 1.8 billion Corexit oil dispersant during cleanup of the affected ocean waters which was the largest application of such chemicals in the history of the United States of America.  The oil spill created the largest criminal resolution in US history which saw the company agreeing to pay fines and penalties of more than $4.5 billion. These fines eventually climbed to $18.5 billion in 2015. The company employed 74,500 persons as at 31^st December, 2016 in its installations worldwide (WIRL 2014, pp.230).

The key issues and how the issues impacted the firm’s international business operations

            Ethical /CSR issues impacted on BP’s international business operations in many ways. BP business of finding oil and gas, refining it, transporting it and selling it forces the company to come into contact with very many people. Ethical issues such as honesty, product safety, work place health and safety come to the fore in these instances.  The company’s social responsibilities on these issues are not always very clear (WIRL 2014, pp.230). The business of BP requires the company to interact with various stakeholders which directly and indirectly imposes ethical obligations on the company. Some of the main ethical issues that naturally arise due to the business of BP include providing quality products rather than adulterated products, dealing honestly with suppliers, ensuring reasonable levels of workplace health and safety, complying with environmental laws and regulations and enforcing best practices in the oil and gas industry among others(WIRL 2014, pp.230). These ethical obligations are identifiable to specific stakeholders such as customers, suppliers, employees, shareholders, the government and environmental pressure groups among others. The Deep Horizon oil spill in the Gulf of Mexico raised a lot of CSR questions.  BP approach to deontological ethics / rules based ethics was wanting. BP wass supposed to ensure that work place health and safety was upheld in its installations (WIRL 2014, pp.230).

The Deep water Horizon disaster in the Gulf of Mexico led to loss off 11 lives and the oil spill became the largest in the history of the world. BP was subjected to a torrent of criticism from the Obama administration officials, eminent journalists and political leaders. BP was accused of gross negligence and reckless conduct before and after this disaster (MÔNICA and BARLOW 2013, pp.580).  The company was held liable for the oil spill and consequently agreed to pay fines and penalties of more than $4.5 billion and which were eventually settled at $18.5 billion at the final settlement in 2015.  The company was forced to make changes of its management team and sell over $38.0 billion of some key assets to be able to settle these fines and penalties (WIRL 2014, pp.230). The gains that BP had made on the corporate responsibility front were effectively erased by the fury that arose from this disaster and during previous disasters. BP had been considered a trailblazer in CSR before these oil spills. BP had been a reference point by many corporate entities on greenhouse gas emission-reduction targets and a host of other social and environmental data.  After the oil spills the goodwill that the corporation enjoyed went into a free fall for many years thereafter. BP’s stations suffered declining sales after the Deep water Horizon oil spill in the Gulf of Mexico (WIRL 2014, pp.230).

BP’s oil spills imposed some risks on non-consenting third parties due to the pollution that ensued.  The cost of the oil spills was borne by third parties such as families of the employees whose loved ones died, the environmental groups who were now forced to start the work of cleaning the environment, the government in affected areas and the general public among others. BP business operations was greatly impacted by the various mishaps (VOGEL 2014, pp.70). The Texas City Refinery explosion in 2005, the Prudhoe Bay oil spill in 2006 and the Deep water Horizon oil spill in 2010 led to serious implications on the international business operations of BP. The Texas City Refinery explosion resulted in the death of 15 workers while in the Prudhoe Bay oil spill the corporation was forced to pay civil penalties of US$25 million which was the largest penalty per-barrel at the time. The consequences of the Deep water Horizon disaster in the Gulf of Mexico cannot be over emphasized as they are the most serious that BP has had to encounter in its long history. It included paying huge fines and penalties, environmental pollution of magnitudes never before witnessed and loss of lives among others (MÔNICA and BARLOW 2013, pp.580).

Actions that BP has done to address the issues

            For the long term, BP has taken various measures to address the various ethical/CSR issues.  The company has launched various investments in renewable energy. BP has established a low carbon energy business which is set to invest $8 billion over a 10 year period. The investments are set to target renewable energy sources which include solar, wind and biofuels among others. The renewable energy business is housed within the company’s other business and corporate unit and employed 5,000 people as at 2013 (KRAMER and KANIA 2006, pp.25). These investments have borne some fruits as the company generated wind power in 2017 from thirteen wind farms spread across seven states in the United States of America.  In Brazil, BP owns three ethanol mills and two ethanol producers and in the United Kingdom the corporation has a stake in a bioethanol producer known as Vivergo (KIRBY 2010, pp.40).

            Other measures that the corporation has undertaken include encouraging its businesses scattered across the world to publish sustainability reports to try and recapture the lost public good will.  The company operates a sustainability website which is a large archive for case studies which show that the company is ensuring that it abides by ethical and CSR best practices (MÔNICA and BARLOW 2013, pp.580). The case studies show that the company ensures labor rights in the sugar ethanol industry in Brazil and encourages students to do sciences among other CSR activities. BP occasionally covers costs of carbon credits for various stakeholders in a bid to cultivate good will for its CSR activities (FRYNAS 2010).  The corporation has taken sides for renewable energy in major disputes like during the quest for reversal of the U.S. Energy Fuel Standard where the company broke convention and sided against major oil companies.  BP has increased screening of its projects environmental and social impacts and localized supply chains in a bid to be a good global corporate citizen and regain its waning good will from stakeholders.  The company has also attempted to minimize the effects of its oil spills especially the Deep water Horizon water spill in the Gulf of Mexico in major news prints which has however not gone down well in some quarters.  The company has taken measures to ensure it abides by occupational safety and health administration guidelines at its oil installations worldwide (MOBUS 2012, pp.40).

            The actions were successful because the corporation was the twelfth largest company by revenue in the world and the sixth-largest energy company by market capitalization as at 31^st December, 2016. The corporation operates in 72 countries spread across the world with some 74,500 employees. Revenues as at 2016 stood at US $183.0 billion and the company made profits of US $115 million. The company had assets of US$263.3 billion and total equity of USW$96.84 billion as at 31^st December, 2016. The company has clearly rebounded from its ethical and CSR issues that affected it in 2010 and also during previous years (KIM 2014, pp.140).

Additional or alternative actions that could be undertaken to address the issues

            To further ensure the company abides by ethical/ CSR best practices, as a good chief executive officer, I would ensure that all oil rigs are manned by qualified and experienced engineers. This would reduce the number of incidences of oil spillage.  I would ensure safety and health codes of conduct are prepared, revised occasionally in light of recent trends and findings and placed in strategic places so that staff can easily see and read. I would enforce training and testing on safety and health standards and procedures and develop a curriculum for it. Only staff who pass the safety and health tests would be allowed to work in oil rigs (MÔNICA and BARLOW 2013, pp.580). Penalties among staff for violating safety and health regulations and guidelines would be very stiff to enforce compliance.  In addition, I would set up a research and development division to provide guidelines of safety and health at the company and research on how to improve on the existing guidelines and measures.  These internal changes would enforce the notion that the company is taking environmental safety very seriously. The company would then publish the changes for all to see (HICKS 2010, pp.8).

            In addition as the chief executive officer, I would continue investing in renewable energy projects with a goal of reducing reliance on fossil oil and gas. I would also ensure all oil and gas installations use green buildings where possible and green technology. I would continue publishing sustainability reports and posting them in the company website to ensure stakeholders can access them. I would also create forums for engaging with stakeholders to get their views and suggestions on how to improve on CSR and become a better corporate citizen (GARCIA 2011). I would also create a division to handle safety and health issues and also Ethical/CSR issues. I would avoid minimizing the impact of the recent oil spills but instead invest in reversing any lasting negative effects. The company would set aside a budget to address environmental concerns that arose or are arising from oil spillage in the past. This would go a long way in addressing fears among stakeholders that the company is only interested in making profits.  Engaging stakeholders would go a long way in reducing opposition to BP’s activities worldwide. By continuing to invest in environmental cleanup the company would be reassuring the public that it is concerned with the negative effects of the oil spills to the environment (DU and VIEIRA 2012, pp.415). 

Conclusion

            BP faced serious ethical and CSR issues that impacted on its operations worldwide mainly in the periods between 2005 and 2010.  Some of the catastrophic incidents that occurred led to destruction of the ecosystem in the affected areas and loss of life. The company faced numerous law suits as a consequence and was forced to pay huge fines and penalties. The corporation also faced a barrage of criticism during the period as a consequence. The corporation took various measures which included paying huge fines and penalties, cleaning the environment and preparing sustainability reports to try and reverse the situation among others. The company has clearly rebound and is now profitable. However a lot needs to be done to avoid recurrence of such issues in future such as ensuring safety and health regulations are not only enforced but there are systems to ensure continual growth, development and enforcement.