There are defining moments in a corporation’s history just as there are defining moments in our personal lives. These moments shape our character and what we become in the future. BP is in such a moment now. How it responds to the social and environmental accountabilities arising from its oil operations will shape how people perceive it from here on in.
So far BP has got it right, but if the lawyers get their way we might expect to see some slippage back to the legal minimum in the weeks to come.
As desperate attempts are made to cap the well in the gulf of Mexico, the debate revolves around who is responsible and how such man-made catastrophes can be avoided in the future. The ethical issues are fourfold: Who was responsible for the deaths from the explosion and the resulting oil spill? Who is responsible for the cleanup of our global commons? Who is going to compensate the thousands of land based people whose livelihoods are likely to be destroyed? And what should be the overall responsibility of a corporation when it has significant negative externalities associated with its’ operations?
While BP rightly focused on who was in charge of the rig and who made the critical decisions that led to the explosion, they were also right to begin the emergency processes of capping the well and confining the slick before recriminations began. This is consistent with the industry’s policy in recent times, where the ethic of care demands that immediate action be taken to mitigate further damage irrespective of any legal liabilities that might arise from such actions.
It is also consistent with the principles of ‘product stewardship’ that we are seeing emerging in many industries – the belief that producers and manufacturers are responsible for the damage as well as the benefits that their products bring to consumers and society at large. The principle was no more graphically represented by the James Hardy Case here in Australia. If society gives business its license to operate, then surely society can demand that business takes responsibility for any significant negative consequences associates with its products.
The US Government has rightly asserted that the cost of the the clean up must be borne by BP, whether or not they can extend some responsibility to the sub-contractors they delegated control of drilling to. But who restores the eco-system that will be destroyed possibly forever? Is this one of the ‘externalities’ that also need to be factored in when assessing the true cost of the cleanup?
The last issue is one of compensation. When the consequences of business, intended or otherwise, cause people to lose their lives or livelihoods, then financial compensation is due to those affected. There is an added ethical dimension to this, as was played out the in the past, in how long it can take to pay that compensation. In the case of Exxon Valdez, the last similar oil spill catastrophe which happened back in 1989, the cost of the cleanup, fines and compensation was put at $3.5 billion, but the punitive damages were originally set at $5 billion to compensate the fishermen who lost their businesses in a $12 million a year herring industry which eventually collapsed. The case was dragged through the courts for 19 years until the US Supreme Court determined that the damages were excessive and reduced them by 50%. One of the considerations the court took into account was that no one was killed. Twenty years after the disaster, the money had still to be paid … Exxon remains one of the least trusted companies in the world.
BP needs to refer to its values now in choosing how it responds to the accountabilities being demanded of it around this oil spill. Organisational values are meant to set the behaviour standards required of all organisational members. Ethics – and values – are the depth dimension of organisations, only truly tested in times of crisis. BP has invested too much in its corporate citizenship credentials to change direction now. Its challenge is to put the interests of the victims of this catastrophe on par with its own. Whether it likes it or not, civil society believes it has a duty of care arising from its externalities. If Beyond Petroleum means Beyond Profit, let’s hope BP chooses the high ground and honours the spirit as well as the letter of the law.
