AIG summary

A Summary of the case “BP (Beyond Petroleum) Focuses on Sustainability”
Introduction
British Petroleum or Beyond Petroleum (BP) is the world’s one of the largest and leading petroleum product manufactures. It has headquarters in London. It operates from 29 countries. Though it has faced safety and environmental controversies in the history of its operations it could overcome all negative images through a concrete focus and consistent efforts towards sustainable developments.

BP operates throughout the world in locations, terrains and climates that are tremendously diverse and frequently challenging. However, BP aims to minimize its environmental impact by taking a systematic and disciplined approach to operations, using sophisticated risk assessment techniques that directly inform its business plans. Therefore, BP is incorporating its environmental management systems into the group-wide operating management system that helps BP to set priorities for operations based on assessment of the key risks, including those related to environmental and social performance.

Historical Background:

BP (NYSE:BP) is one of the world 's largest oil and gas companies in terms of production capacity. BP was founded more than a century ago by William D’Arcy, a wealthy British gentleman who had invested all his savings in the quest for oil in the Middle East. While experts and scientists had encouraged D’Arcy to pursue the venture, after more than six years of drilling, both his patience and finances were running low. Finally, in 1908, the drillers reached almost 1,200 feet and a fountain of oil spewed out. After long years filled with disappointment, pain, and despair, the Anglo-Persian Oil Company, what would become BP, was born. The company quickly opened trade on the stock market, and D’Arcy, who had lost nearly his entire net worth, became rich.

BP the biggest environmental crimes in history

BP aims to be the leading environmentally friendly producer and supplier with eco-friendly petrol and gas. BP has a strong CSR and sustainability policies and has become more ethically and socially aware with the realization of customers and stakeholders needs and expectations from the company.

However, a more in depth analysis indicates that BP advertisements and public relations within its marketing mixes are designed to make it look more environmentally friendly than it

actually is. The term is called “green washing “This phenomenon of making small environmental concessions while otherwise continuing business”. According to the Advertising Standards Agency; the raise of this phenomenon is becoming a very serious problem and have adopted new guideline to curve this new trend. The Advertising Standards Authority has seen a huge rise in the number of complaints about environmental claims in advertisements. Their consumer research has shown that awareness of green issues is high, but there is also confusion and a lack of basic understanding about environmental and ethical claims and what they really mean.

This is because profit and the interests of the shareholders always seen to come first before the environment. In comparison; BP’s sustainability report to its actions. In July 2000, BP launched a massive $200 million public relations and advertising campaign with the new slogan and name change "Beyond Petroleum". It changed its logo to a green and yellow sun and claimed to be a greener business.

In 2005, a fire and explosion occurred at BP Texas City Refinery, killing 15 workers and injuring more than 170 others, its claims to have safety as one of its highest priorities. BP was charged with criminal violations of federal environmental laws and has been subject to lawsuits from the victim 's families. BP had a £53 million fine from The Occupational Safety and Health Administration in the US for hundreds of safety violations, and subsequently imposed an even larger fine after claiming that BP had failed to implement safety improvements following the disaster

In March 2006, BP spilled 200,000 gallons of crude oil in Alaska. The spill happened because BP failed to perform routine maintenance on its pipeline. It claims to work sensitively around the environment and animals. In October 2007, BP was ordered to pay more than $60 million by the U.S. Department of Justice for breaking environmental laws in Texas and Alaska. According to the Environmental Protection Agency in the US, this was the largest fine ever handed out for breaking Clean Air regulations in the U.S.

In May 2010 BP was involved in an oil spill in the Gulf of Mexico which is now the biggest environmental disaster in American history blamed yet again on poor safety and maintenance. Yet in June 2010 BP decided to spend $50 million on green advertisement presenting a squeaky clean image which back fired adding to the growing tide of resentment by American consumers. Illustrating BP practices within the green marketing mixes; green products. BP produces and supplies a range of products and services. However, fossil fuels production and supply are their main source of profit which is environmentally damaging as its produces carbon emissions. Thus their core business is not environmentally friendly.

Consequently, a range of disasters caused by BP has emerged at alarming rates, intensity and adversity within recent years. The inability to follow through on their green brand with safer production procedures will invariably result in outraged by the public. Going green may affect the cost structures of a business with a knock-on effect on prices. However with the recent oil disaster in the Gulf of Mexico BP has spent £8 billion and rising on the cleanup operation. BP had to sell assets to fund this massive cleanup operation with the CEO making a few disastrous statements in public. With this negative publicity and unpopular public image especially in the US it will affect the business and particularly its green pricing for its products.

BP’s improvement on Sustainability:

BP operates responsibly with better corporate governance and management systems.
BP strives to deliver secure and affordable energy while addressing the global issues and climate change.
Efforts are made to develop large scale business towards the production of alternative energy sources with low carbon emissions.
BP has given utmost importance to safety & reliability of operations. But the accidents and fatalities have not been on reducing trend, which can have a major impact on it sustainable growth.
BP focused on low carbon or greenhouse gas emissions, biofuels, and operations that can emit fewer pollutants.
People Management: There is clear focus on training & development of the workforce and reward and recognition system but there is no clear evidence of integration of people development with its diversified business requirements.
Community Initiatives: BP has made efforts to build a strong mutually beneficial relation with society wherein they work.
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Strategies of BP

Today BP has a sound platform on which to achieve their commitment to combine growth with the discipline of performance and strategies. So the concept of sustainability is already part of business today. But it also demands a deeper, broader, more creative level of engagement than conventional environmentalism.

In the drive for efficiency, BP will collaborate with the vehicle manufacturers on advanced engine technology and lubricants and provide better and cleaner transport fuels through less energy intensive processes and increase the energy efficiency of their facilities and equipment. BP was the first energy company to be widely recognized as accepting the obligation to act on climate change. They have invested nearly $4bn in low carbon business since 2005 and

commitment to invest $8bn in alternative energy in coming years. BP is creating long-term options for the future in new energy technology and low-carbon energy businesses. They will be also enhancing capabilities in natural gas, which is likely to be a vital source of relatively clean energy during the transition to a lower-carbon economy and beyond.

BP’s focus is on four key businesses: biofuels, wind, solar and carbon capture and storage. Their goals are ‘no accidents, no harm to people and no damage to the environment’. Company will work to achieve this through consistent management processes, ongoing training programs, rigorous risk management and a culture of continuous improvement. BP continues to access new business opportunities, with new agreements in other countries.

Conclusion

BP is trying to integrate policies that will promote greater efficiency and consistency across the business. It has formulated a set procedure to conduct, at least annually, a formal process to identify and assess risks and emerging issues, including environmental and social issues. Main aim of BP is to manage environmental and social risk during every phase of its operations viz. launching new projects, carrying out day-to-day operations and bringing a project to a close.

BP strives to minimize the impact on the environment by identifying risks during the project set-up and using technology to reduce or remedy any impacts. The firm is investing in a broad portfolio of alternative energy businesses and R&D, while advocating a carbon price and public funding to support such new technologies. BP has experienced a range of ethical issues, the most well-known stemming from the company’s own negligence and misconduct. Yet, although BP has had a spotty past when it comes to integrity, the company has worked hard to overcome its negative image. It is not only investing in cleaner energy but also is trying to repair its image by reducing its environmental impact and cleaning up areas after it has used them. Some question whether BP’s new socially responsible initiatives are a public relations ploy or a genuine attempt toward change. However, there is no question that BP’s emphasis on environmental responsibility is having a positive impact to some extent.The company realizes that being environmentally sustainable and ethically responsible not only is the right thing to do, but is also profitable. Good publicity and stakeholder goodwill can be powerful forces in helping companies maintain a competitive edge and thrive.

References
Ferrell, O.C Fraedrich, John and Ferrell, Linda. “Business Ethics: Ethical Decision Making and Cases”, 8th Edition, Houghton Mifflin: Boston, MA

“Google Search”; www.google.com

“Sustainability at BP”; http://www.bp.com/sectionbodycopy.do?categoryId=3411&contentId=7081516 http://www.guardian.co.uk/business/2009/oct/30/bp-texas-city-safety-fine

http://www.digitaljournal.com/article/293020#ixzz0zsryzPBl

References: Ferrell, O.C Fraedrich, John and Ferrell, Linda. “Business Ethics: Ethical Decision Making and Cases”, 8th Edition, Houghton Mifflin: Boston, MA “Google Search”; www.google.com “Sustainability at BP”; http://www.bp.com/sectionbodycopy.do?categoryId=3411&contentId=7081516 http://www.guardian.co.uk/business/2009/oct/30/bp-texas-city-safety-fine  http://www.digitaljournal.com/article/293020#ixzz0zsryzPBl