The Bp Gulf Of Mexico Oil Spill

The Beyond Petroleum campaign had many plusses and minuses. The major plus is that it generated some positive impacts to help build BP’s image as a responsible company. After BP initiated the campaign and published the advertisements, the public started to view them as the first corporation in the oil industry to take responsibility for their impact on the environment. The major minus is that BP’s actions were not aligning with its advertisements and campaign. The hypocrisy somewhat damaged its reputation and BP criticized for not acting as a truly responsible company.

The company was accused of greenwashing, meaning they falsely represented themselves as taking public responsibility and helping to make the world a better place, environmentally, by only showing some images and not through their actions. 

BP did not intend to change its business model by moving away from fossil fuels and focusing on renewable energy in next 30-50 years. The Beyond Petroleum campaign put the company in a very awkward situation.

BP went too far to position the company as a pioneer who cared environment and future when the company was still doing “Dirty” business. In this case, even BP had taken efforts to work on reducing carbon emission, the public attention would only focus on the areas that BP did not touch. The campaign just set a too high a bar for BP. It was very difficult for BP to catch up. It was fair enough for the charge that BP was guilty of greenwashing.From Zadek’s view, Browne had positioned the company at Civil level, however, he had also failed to follow his own words.

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He had acknowledged the public by admitting the existence of climate change, however, the only thing he did was attempt to reduce carbon emissions. BP did not spend more money on clean renewable energy. Browne still believed that hydrocarbon would be the main energy resource for the next 30-50 years.

Even with the risk of oil spills remaining high and the damage from spilling harmfully impacting the oil industry and environment, Browne did not pay more attention to safety and form a safety-first culture within the company. Friedman would think BP’s actions were only to meet the company’s profit goal and shareholder’s interests.In summary, Browne did not walk his talk. He took some good initiatives to rebuild the company’s reputation and changed the public impression of BP. However, he did not make real efforts to focus on the most important safety issues. He just liked to attract public attention by spending money on advertisements to rebrand the company. He did not try to invest in other renewable energy either.

That’s why his tenure at BP did not produce anything good for the company. The company culture was still the same. There were several key stakeholders in the BP Gulf of Mexico oil spill. BP (65%), Anadarko Petroleum (25%), and Mitsui Oil Exploration Company (10%) were all part owners of the well. Transocean was responsible for drilling the well for BP, Anadarko Petroleum, and Mitsui Oil Exploration Company. Halliburton was the owner of the Deepwater Horizon rig that exploded. The U.S. Government was also a stakeholder since the accident occurred in U.S. territory which promoted for a review of the laws and regulations regarding offshore drilling. The government’s involvement also made other oil companies that operated in the U.S. stakeholders because they would also be affected by the new laws and regulations.

Shareholders at BP were also stakeholders in the oil spill as their share prices were affected. Finally, residents living in the coastal Gulf areas were also stakeholders as their communities and tourism economies were impacted. During the oil spill, BP made several efforts to take ownership and stop the leak from continuing to pollute the Gulf of Mexico. BP boldly stated that it would be financially responsible for the damages and cleanup associated with the oil spill. This included covering the costs for fixing the leak, the costs associated with the cleanup in the Gulf and coastal areas, and civil and criminal penalties from the government. BP made several attempts to stop the leak from the well. BP began efforts for drilling a relief well but knew that this would take months to accomplish to they also began to explore short-term solutions.

Their first short term solution was to use underwater vehicles to activate the blowout but unfortunately this attempt failed. Next, BP attempted to install a containment dome, but this was also unsuccessful. Before attempting to use the containment done it was noted to only have a “medium to high” success rate and had not been tested before. On their third attempt, BP tried to fill the well with synthetic material to stop the leak. Hayward publicly stated he believed that this had a 60-70% success rate and that others within the organization did not think it was a good idea. The third attempt also failed. Four months after the leak had begun BP was able to successfully cap the blowout and stop the leak.

The actions that BP took during the oil spill had negative impacts on many of their shareholders. BP shareholders were affected the most as their share prices dropped, and they were no longer receiving dividends. They were also paying the price for the cleanup efforts and failed attempts at stopping the leak. In the beginning of the crisis, BP attempted to shift some of the blame to Transocean and Halliburton since they were partly responsible. This caused a hit to their reputations and eventually they were found partly responsible for the spill and forced to pay some of the penalties and fines. Other oil companies were also negatively impacted because it brought more government oversight and regulations to their oil drilling efforts.

The oil spill caused residents of the coastal gulf and the government to become more aware of the dangers and indirect impacts of environmental damage from offshore drilling. BP should have taken action before and after the spill that would have helped the outcome of the situation. It was uncovered that BP had poor management oversight and communication. Engineers at BP were attempting to trigger the blowout during the early stages of the leak with repeated failed attempts lead to the realization that the “engineers had been using the wrong plans for the BOP for ten days due to a lack of communications regarding an undocumented retrofit executed by Transocean” (pg. 9). It was also discovered that corners were cut in the well drilling and blowout design that saved significant time and money which indicates that money was more important than safety to BP.

The way BP struggled to stop the leak demonstrates how ill prepared they were and did not have a disaster recovery plan prepared just in case they were faced with an issue like this. Instead they had several failed attempts on untested solutions they figured would solve the leak without knowing for sure. Finally, instead of letting Hayward be the face of the oil spill they should have hired a crisis communications team to help salvage their reputation. These actions would have decreased the impact of the oil spill and the effect it had on its stakeholders.3. Considering the Macondo incident and the ensuing PR disaster, which BP for the most part brought upon itself, the “Beyond Petroleum” message feels counterproductive. Whatever good PR BP had amassed through its policies of being environmentally friendly has been coated by the 60,000 bbl. of oil spilled into the gulf.

As BP is one the largest oil companies in the world, any exorbitant environmentally friendly logo or slogan it comes out with will understandably raise eyebrows and skepticism. To recuperate its image, BP need to first improve its safety policies and practices. In all three incidents mentioned in the case, the root cause was a lack of development and adherence to proper safety procedures. As the CEO of BP, Bob Dudley needs to change this culture of obliviousness and guarantee that the employees are empowered to report issues and the management is held responsible for implementing standard operating procedures. Additionally, the message to the public and the press should be that the BP will focus on ensuring that the impact of its operations on the environment is controlled. BP should outline the steps it will take in both upstream (exploration) and mid-stream (refineries) to avoid incidents like Purdue Bay and Macondo. 

Our recommendation to Bob Dudley is to have a two-pronged approach. First, BP should continue to be the champion of the environmentally friendly message in the Oil & Gas industry. As it continues to invest in renewable energy, BP should also look at expanding its natural gas play. As compared to oil, emissions from combusting natural gas result in 60% less carbon dioxide. A policy shift toward natural gas will be a positive PR move for BP.Second, BP needs to review its safety policy and procedures. BP must ensure that its safety policies are the most stringent in the industry. BP needs to be a leader in the drafting and implementing policies and procedures that reduce its impact on the environment. Examples of these could be safer drilling practices, multiple pressure tests to ensure the integrity of the well, or increasing the pipe inspection frequency from 3 months (industry standard) to monthly.

Managers and supervisors should be given powers to enforce safety procedures and held accountable when these procedures are violated. BP also needs to hire third-party auditors to help identify the problems in its safety policies. The marketing and public relations departments need to make sure that every step that BP takes reaches the press in a positive light. BP should arrange field visits for friendly journalists to the refineries and offshore platforms, as well as highlight the steps BP has taken to improve its processes. While these confidence-building measures are taking place, the “Beyond Petroleum” slogan should be kept on the back burner.4.1 The team was split between Fink and Racanelli’s opinions on how to best jump start societal change. On one hand, about 100 companies are responsible for 70% of greenhouse gas emissions since the late 80s, and they should take the majority of the blame and responsibility for improving the environment and promoting sustainability throughout society.

Corporations have the means and power to illicit change, but they are not highly motivated to do so. On the other hand, these companies won’t change unless money is involved, and the best way to hurt a company’s wallet is to have the masses boycott their products and services until a true effort has been shown to improve society. The compromise our team proposed included a grassroots movement started by societal masses to show companies that the public cares more about sustainability and improving life rather than stock prices. Once companies understand the impact they can have, it will be their responsibility to lead by example and show the world that there is more to life than shareholder dollar value.

By improving other parts of society, companies will create value through improved reputation, sales, and by finding new ways to squeeze dollars out of more sustainable practices.4.2 Patagonia is by far the most socially responsible company studied in the course. They clearly meet Fink’s criteria to set a strong tone at the top to promote sustainability and to push their customers to do the same, despite losing sales in the short term. Their supply chain, sales promotions, and range of goods all focus on sustainability, recycling, reusing, and being completely open about the impact on the environment.4.3 Wells Fargo was voted as the worst company for trying to reach Fink’s CSR hurdle. Although they were not the worst company for environmental impact, their tone at the top and throughout the company always has been, and always will be money first, society last.

They care only about share price, profits, and hitting bonus metrics. If they are caught doing something immoral, fraudulent, or taking advantage of the public for monetary gains, their business leaders shrug their shoulders and say, ‘fine us, we can afford it.’ Wells Fargo may not be the worst financial company today, but they clearly don’t set a positive example for the rest of the industry to induce societal improvements. 4.4 As individual investors, the team members are in favor of holding the managements of the companies to Fink’s new criterion. As discussed in the class the involvement in social responsibility improves a company’s public image and the relationship with consumers and other stakeholders.

Moreover, the companies that demonstrate commitment to various causes are perceived as more philanthropic than the companies whose corporate social responsibility endeavors are nonexistent. The company’s image is directly correlated to its social responsibility programs and how aware consumers are of these programs. Consumers feel good to shop and want to stay connected to institutions that help the community. Corporations can always improve their public image by supporting local nonprofits through monetary donations, volunteerism, and strong partnerships. By publicizing such efforts and letting the public know about their philanthropy, companies can increase their chances of becoming favorable in the eyes of consumers. This image will help them maintain a sustainable business model.

Secondly, creating a strong CSR program that takes care of company’s employees and local community can increase the chances that a company gets favorable news coverage and improves its public awareness in positive manner. Companies should make sure to form a strong social media presence and a good relationship with local media outlets so their stories are seen in a more favorable light. How much good a company can do in its local communities, or even beyond that, is corporate social responsibility; this can be exemplified through better the social benefits and better media coverage. On the other hand, if a corporation participates in production or activities that bring upon negative community impacts, the media will also pick this up and unfortunately, bad news spreads quicker than good news.

Media visibility is only so useful in that it sheds a positive light on an organizationCorporate social responsibility helps attract and retain engaged and productive employees. Employees would like to work for a company that has a good public image and positive media image. Happy employees have a high chance of delivering high performance. When companies show that they are dedicated to improving their communities through corporate social responsibility programs such as employee appreciation dinners and local environment clean-ups, they are more likely to attract and retain valuable, hardworking, and engaged employees. Job-hunting individuals apply for interviews for available jobs in a company that is philanthropic minded. Once hired, employees who are engaged will stay with a company longer, be more productive daily, and will be more creative than disengaged workers.

Finally, in the current corporate world, where the public is highly aware of and social media is major source of information, investors care more about corporate social responsibility and so should companies. Investors who are putting their money into companies want to know that their funds are being used properly, and at the same time ready to invest more to create a positive brand name. Not only does this mean that corporations must have sound business plans and budgets, but it also means that companies should have a strong sense of corporate social responsibility. When companies donate money to local nonprofit organizations and encourage their employees to volunteer their time, they demonstrate to investors that they don’t just care about profits but also their brand image.

They also show that they have an interest in the local and global community. Investors are more likely to be attracted to and continue to support companies that demonstrate a commitment not only to employees and customers, but also to causes and organizations that impact the lives of others.Involving in corporate social responsibility, a company can have a strong and sustainable business model that can be beneficial for the company for a long time to come, also a positive image will, if not directly, increase the profits of the company.