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Essay: For an organization of your choice, critically examine the commitments made in its online literature to sustainability and/or corporate social responsibility. What purpose do you think they serve? To what extend do you think the claims made resonate with corporate activity?

Sunderland University Philip Young MACM70 CW2 2746 Words

Sophie Bonnewijn Public Relations MACM70 CW2 2011-2012

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‘We must always base our commitment in the center of our own being, or else no

commitment will be ultimately authentic.’

Rollo May

‘A good company delivers excellent products and services, and a great company

does all that and strives to make the world a better place.’

William Ford Jr.


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Front Page Picture Source: http://fedcba.ning.com/group/corporate-social-

responsibility/forum/topics/corporate-social-responsibility-csr-and-social-capital-sc


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Table of Content 1. Introduction ................................................................................................................................................................ 4

a. Framing .................................................................................................................................................................... 4

b. Honest to god? ........................................................................................................................................................... 6

2. BP’s CSR and its actions ......................................................................................................................................... 8

a. Health and safety performance ...................................................................................................................... 8

b. Social performance .......................................................................................................................................... 10

c. Environmental and energy performance ............................................................................................... 15

3. Conclusion ................................................................................................................................................................ 19

4. Bibliography ............................................................................................................................................................ 21


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1. Introduction

a. Framing

Before one is able to analyze in dept what the purpose of sustainability and corporate

social responsibility is, it is important to first define these terms. Corporate social

responsibility (CSR) refers to the idea that organizations should not just make a

profit, but should also illustrate a range of social and environmental responsibilities

towards their employees, suppliers, customers and society in general. (Morris,

Goldsworthy, 2011, p.161). Furthermore, CSR is not solely concerned with the ways

in which an organization exceeds its minimum obligations to the mentioned

contractual stakeholders, who are specified trough regulation (Johnson, Scholes,

Whittington, 2008, p.146). CSR policies are also important to community

stakeholders such as pressure groups, consumers and communities. These socially

responsible attitudes are often referred to as “corporate ethics in action.”

In the United Kingdom, the majority of the CSR programs began in the 1980s

(Gregory, 1996, p.39). British Petroleum (BP), which consisted of BP Oil, BP

Exploration and BP Chemicals, began making policy changes around the 1990s. In

1992, BP included the new business streams of Gas and Power, and BP Solar in its

portfolio. During this same period, PR practitioners began sending an increasing

amount of messages related to the socially responsible intentions and behaviors of

their organizations towards their stakeholders (Moloney, 2006, p.106).


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In 1997 John Brown, CEO of BP at the time, made a notable speech, in which he

broke ranks with other big oil firms and set BP on a new course in terms of CSR

(Rowlands, 2000, p.339). Concretely, for BP this meant changing their then current

policy of secrecy to one of transparency, based on “genuine trust” (Gregory, 1996, p.

39-40). Since then, the BP Group has tried to enhance its reputation by using the

idea of transparency and by engaging in ethical obligations and corporate

responsibility. Because of this BP has been applauded for its “proactive stance” on

environmental issues. Furthermore BP changed its appearance in 2000 by launching

a new yellow, white and green sunburst logo along with the slogan ‘Beyond

Petroleum’ (Maclean, 2000, online). However, the question that arises is in what

degree BP really abides by its own commitments. Furthermore, does BP make these

commitments because they desire to act ethical or is it about making the organization

look good?

This paper will try to answer these questions by providing an objective evaluation of

the commitments made in BP’s online resources and the actions taken accordingly.

Some examples will provided, which will ultimately lead to some concluding remarks

in the final chapter about BP’s motivational drive.


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b. Honest to god?

BP is an organization that’s main function is the finding of oil, the refinement of it and

the sale of the resulting gas. However, at one point BP realized that if they wanted to

continue doing business, they would have to change from being in the business of

oil, to being in the business of energy (Beder, 2002, p.26). This idea might have been

triggered by the fact that in recent years, because of the availability of communication

technology, publics can pay more attention to organizations and their activities

(Gordon, 2011, p.305). Because of the possibility to rapidly transfer information,

people are now able to communicate with a wide audience and use this to engage in

online discussions, which they then use as platforms. Because this gives a voice to

an audience that before had no input or say in the actions of corporations, this

empowerment has resulted in a demand for transparency, openness and ethical

behavior. Furthermore, people expect organizations to give something back to the

community and invest in the future of all. People expect organizations to be

accountable.

For BP, this demand resulted in a cultural attitude change, aimed at providing the

very thing the public demanded: investing in a future by exploring alternative ways of

providing energy, and not just by burning fuels (Rice, 1999, Online). Thus it became

an economic necessity for BP to get into the solar-, hydro-, and wind-power business.

Furthermore, they used their communicative tools to make sure that openness and

ethical behavior were apparent in the new policy.


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A BP representative stated the following (BP, 2002, Online): “We believe that long-

term relationships founded on trust and mutual advantages are vital to BP’s business

success.” According to BP, this trust can be earned by building long-term

relationships on high standards, by delivering on promises (accountability), being

open (transparency) and by mutual interdependence.

In BP’s online sustainability review it is clear that their current policy consists of basic

ethical obligations which include ensuring a healthy and safe workplace, dealing

honestly with suppliers and customers, addressing energy, environmental and social

issues, abiding governmental and industrial laws and making an effort to build long-

term share value (BP, 2010, Online). In recent years, BP has received quite a lot of

positive assessments surrounding its CSR agenda. However, as the following

sections will illustrate, there have been some inconsistencies regarding BP’s outlines

and its actions.


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2. BP’s CSR and its actions

a. Health and safety performance

In BP’s online report it is claimed that BP aims to create a safer, risk aware business,

and generate progress and prosperity (BP, 2010, p. 1-19). They hope to accomplish

this by introducing a safety and operational risk function, by reviewing their risk

management and safety system, by reviewing their code of conduct, their individual

technology, the performance of their personnel, their political activity, their

subcontractor agreements and their general management. BP states that it is

concerned about human rights, security, safety, the workplace environment and the

treatment of employees. However, BP had to deal with a great amount of criticism

concerning discrepancies between BP’s actions and their safety and health policy.

In 2005 an explosion at BP’s Texas City Oil refinery killed 15 workers, where after BP

was given a 12 million dollars fine by the US Department of Labour for having 300

safety violations at the Texas City plant (Johnson, Scholes, Whittington, 2008,

p.149). BP was aware of these significant safety problems, and still had emphasised

on cost cutting over safety. After the event BP responded that it planned “significant

external recruitment... to increase underlying capability in operations and

engineering” and that modern process control systems would be installed at its

refineries (Brown, 2006, p.53-56).


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However, in April 2010 in the Gulf of Mexico, the Deepwater Horizon event occurred,

during which 11 workers were killed (Carrington, Hawkes, 2011, Online). An

investigation was sanctioned, where after a report was published which stated that

BP was “ultimately responsible” for the safety on the rig, and that BP had made “a

series of decisions that added in incremental risk...” Furthermore, the investigation

found that BP’s staff had failed to react until it was too late to heed the warning

signals that arose during performance tests. In conclusion, BP was found to have

violated seven federal regulations.

Considering the given examples, it is clear that BP’s actions stated in their online

sustainability report concerning safety and health performances, do not always align.

In their online sustainability report BP clearly states that their goals are: “no accidents

and no harm to people”, goals that BP has not been able to deliver on (BP, 2002,

p.11). Nevertheless, BP is still publicly recognised for being one of the first oil

companies that endorsed a human rights policy. It is also worth mentioning that BP

did appoint objective outsiders to verify changes in their policies after the incidents

occurred, as did they take appropriate action afterwards, based on the advised

recommendations. However, it is clear that BP first has to makes mistakes before it

learns from them. The question going forward is whether the standards and goals set

by BP are sustainable over the long haul. It seems doubtable that inconsistencies

between the objectives and the actions taken by BP have an improving result on the

trust- issues that the company faces, and so desperately wants to overcome.


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b. Social performance

Trust is, in itself, the basis of every relationship (L’Etang, Pieczka, 2006, p.94).

Organizational trust is the extent to which a company is thought to be honest,

dependable and sensitive to consumer needs. Subsequently, every company needs

to have a foundation of trust with its customers to build relationships on. These

customer relationships can be gained if the organization is truthful and portrays

realistic expectations (Fitzpatrick, Bronstein, 2006, p.92-93). BP wields this vision,

and furthermore it tries to balance the interests of all the different groups who have a

stake in the company (Teaker, 2001, p.112-113). Subsequently BP engages itself to

take account of its social responsibilities to society. However, some scholars claim

that businesses have only one social responsibility, and that is to maximise their

profits. In BP’s case, this might also be a motivational drive, especially since the

organization tends to develop an incoherent, reactive approach to its social

responsibility programmes without specifically defining its moral responsibilities in a

clear manner in its online statement (L’Etang, Pieczka, 2006, p.419).

On the other hand, wielding the truth defined as “the whole story with all its

innumerable justifications, explanations and excuses”, is not a realistic strategy for a

company (Cotterrell, 1999, p.423). For an organization such as BP, being truthful can

only extend as far as being accurate and factually correct (Bishop, 2003, p.22).


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This means that BP (or any other organization) cannot be misleading or tell a lie.

However, in regard to BP’s social performance statement, the case is not so straight

forward, as will be illustrated by the given examples.

In BP’s online social performance report it is stated that BP has regulations which

involve impact assessment, community disturbance, indigenous people, international

protected areas, the movement of communities, etc. In a notable speech, BP said

(Ernst, Young, 2010, p. 39): “We believe each BP project and each of our operations

has the potential to benefit local communities by creating jobs, tax revenues and

opportunities for local suppliers. A positive impact also means making sure that

human rights are respected, that we engage openly with people who could be

affected by our projects and that local cultural heritage is preserved. We look for

community investments that will create a meaningful and sustainable impact – one

that is relevant to local needs, aligned with BP’s business and undertaken in

partnership with local organizations. We aim to make these programmes contribute to

sustainable development, rather than end their beneficial impacts when BP funding

ceases or we leave a location.”


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However, BP does not always keep to its own codes of conducts nor does it keep to

its promises. An inconsistency between BP’s policy and its actions became apparent

when BP started developing oilfields in Columbia (HRW, 1998, p.1). Operations in

Columbia have long been aligned with danger and safety issues due to the presence

of, for instance, guerrillas. Because of these situations, BP signed a contract with the

Columbian military to protect its workforces. However, the military had a reputation

for human rights abuse.

The basis of the criticism raised against BP was that collaboration with the military

would undermine the credibility of their codes of conduct, and BP was accused of

“complicity by association”. BP was furthermore scrutinized by a follow-up

investigation report for the Human Rights Watch which stated that BP made serious

mistakes considering BP’s: “...insensitivity to local political realities and the situation

of the poor and powerless of the region, as well as their failure to investigate

seriously the role of the army” (Christiansen, 2002, p.14). Afterwards, BP spent 30

million dollars on social investment programmes and states that they “...will ensure

that any security arrangements protect human rights and are consistent with

international standards for law and enforcement” (Global Reporting Initiative, 2000,

p.13).


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A similar situation occurred in Angola, a country with a seemingly bad reputation in

regard to human rights violations, corruption, lawbreaking and lack of transparency

(HRW, 2001, p.6). Human Rights Watch claimed that the government used BP’s

revenues from oil for weapons procurement to pursue war. These weapons

procurements were characterised by a “marked lack of transparency and

accountability” (BP, 1998, Online). Subsequently BP commissioned an annual

independent Social Impact Assessment.

In the after match of the event, BP stated that (US State Department, 1998, p.2): “We

are determined that the wealth and opportunities created through our operations will

benefit the people and economy of Angola and that the BP Amoco group must play

its part in promoting and supporting the search for reconciliation, peace and

reconstruction”.

Considering this statement, it is not surprising that BP still decided to invest in

PetroChina, a company implicated in human rights violations in Sudan and Tibet

(PRNewswire, 2000, Web and Gordon, 2011, p. 312). The Sudanese government

was accused of using BP’s oil revenues to finance their war against the Sudan

People’s Liberation Army (SPLA), and of brutalities against civilians living nearby the

oilfields.


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Furthermore, BP’s involvement in a pipeline project in Tibet could have caused an

increase of Chinese workers into Tibet, where after the Tibetan people would have

become a minority in their own country. This would have consolidated China’s grip on

Tibet. However, in 2001 it was reported that BP had decided to pull out of the bidding

for a natural gas pipeline across China (The Independent, 2001, Online).

In conclusion, it seems that BP’s social performance sustainability goals have

created high expectations within the public and minority shareholding groups

(Gordon, 2011, p. 326-327). Hence, although many stakeholders have publicly

endorsed BP for its efforts and progress, the company obviously still faces criticism. It

is clear that CSR is a reputational issue as the social impact of an organization

affects business in the future and becoming a consideration in all its decisions, it

helps companies differentiate itself from its competitors as a responsible

organization, and helps publics identify with the organization. However, if the trust

between the organization and the stakeholders or publics is broken, and they feel

mislead, CSR policies can also backfire.


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c. Environmental and energy performance

The global energy company BP works, according to their own claims, to understand

and manage the sensitivities of the environments in which they operate (BP, 2010,

p.17-35). They do more than just preventing oil spills, they also: identify and manage

the impacts and risks integrated in their operating management systems, regulate

water and waste management and prevent soil and groundwater pollution.

Furthermore, BP tries to manage greenhouse gas, energy and ozone-depleting

substances and perform air quality research. They also conduct research concerning

marine mammals, physical and ecological impacts from BP’s actions and manage

drilling wastages and discharges. For this progressive stand, BP is publicly

acknowledged for its position on the global warming issue and for its exist from the

Global Climate Coalition (Christiansen, 2002, p.12). However, BP left the GCC at a

time during which the company received adverse publicity concerning its earlier

mentioned activities in Columbia. BP’s reputation was under attack, and the break

with the other oil companies provided a diversion and a brand new image. BP was

reported stating the following (BP, 2010, p. 35-36): “Our operating management

system lays out the steps and safeguards we believe are necessary to maintain

responsible operations, helping our businesses around the world to understand and

minimize their impacts, whether to land, air, water, flora or wildlife. The diversity of

environments in which we operate around the world means we face a variety of

environmental issues. To take account of these site-to-site differences, we manage

and report on our performances... where they are most relevant.”


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As some case studies such as their planting of trees in Brazil and Scotland and their

monitoring of marine life in the Caspian Sea illustrate, BP does indeed seem to abide

by their own sustainability and corporate social responsibility promises (BP, 2012,

Online). However, by looking at BP’s track record, it seems that the company is not

as different to other oil companies as it claims to be (BP, 2002, Online).

In 1991 BP was accused of being the most polluting company in the US, while in

1992 Greenpeace International named it one of Scotland's largest polluters (Manuel,

1996, p.7;12). In 1998, BP was responsible for 104 oil spills in America’s Artic. It was

also in the Artic that BP's Northstar project was launched which concerned the first

undersea pipeline in the region. BP requested government permission (through

lobbying) to explore the Arctic National Wildlife Refuge. Consequently, the

organization received criticism for its plans for oil exploration in this refuge, which

was an area that native Indians wanted to preserve as a sacred hunting ground.

In 1999, BP was charged with burning polluted gases at its Ohio refinery and agreed

to pay a 1,7 million dollar fine. In the same year, BP admitted dumping toxic waste at

its “environmentally friendly” oil field in Alaska and was fined for 500,000 dollar

(Gozan, 1992, p.27). By 1999 BP’s gas emissions were greater than those of Central

America or Britain, where after the company was fined for an other 10 million dollars

by the EPA.


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In July 2000 BP agreed to reduce air pollution coming from its US refineries by tens

of thousands of tons (Browne, 1998, p. 54-56; Bruno, 1999, Online). Furthermore BP

also decided to invest more in solar power. They were quoted saying the following:

“By our estimates, emerging renewable resources like bio fuels, wind and solar will

meet around 6% of total global energy demand by 2030. Since launching our

alternative energy business in 2005, we have invested more than 5 billion dollars in

our portfolio, including bio fuels, wind, solar and carbon capture and storage.” (BP,

2010, p.24; 28). However, BP has recently announced that it will shut down its solar

module business, 30 years after BP Solar was founded (Gosselin, 2011, Online).

Recently, BP’s credibility plummeted even further when the Deepwater event in the

Gulf of Mexico occurred. This event, referred to as “the worst offshore oil spill in US

history” led to 5 million barrels of oil being spilt in the ocean (Guardian, 2012, Online).

BP was blamed as the ‘great evil polluter’, and it was rumoured that they had been

grossly negligent. An investigation was ordered, and BP was considered ‘ultimately

responsible’, as the report stated.

As a reaction to these unfortunate events, BP changed its strategy and aimed its

sustainability and corporate responsibility statements mainly at earning back trust

and building a sustainable BP for the future (BP, 2010, p.23). Subsequently BP

poured 20 billion dollars into the Horizon Oil Spill Trust, which would be used for

economical, health and environmental purposes.


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In reality this meant that BP would implement recommendations made by the

investigation report and that they would work with experts to manage future risks (BP,

2010, p.10-11). BP’s aims for the environment incorporated investing in the clean up

off on and off shore beaches and marshes, testing the seafood, the air and the water,

and studying the potential physical and mental health consequences that might occur

and so on.

Specifically BP stated that they would start a 10 year programme of 500 million

dollars to monitor and understand the long term effects of the Deepwater event. In

itself, these numbers and statements might appear very deem worthy and

impressive. However, it seems that BP is investing more in image then

in environment. Taking in account that BP has already spent millions just on its

rebranding, and will spend another minimum of 600 million on advertising and

branding in the next years (Noor-Drugan, 2000 p.16).

It is clear that on one hand BP spends a very small percentage of its money on

developing renewable resources or executing its corporate social responsibility

program. On the other hand, a great deal of BP’s marketing campaign consists of

messages and images related to that area, which can clearly be seen as misleading

(Johnson, Scholes, Whittington, 2008, p. 148). BP also demonstrates a lack of truth

and transparency, as is illustrated by the examples previously given.


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3. Conclusion

Over the last decades, concerns about the threat of global climate change and the

state of the natural, economic and social environment, have brought an increasing

amount of attention to social problems such as human rights violations, pollution,

corruption, and transparency (Kitchen 1997 p131-132; Heath, Lan Ni, 2008, Online).

Furthermore, because of the increasing communications capabilities, demands for

openness and transparency have resulted in an adaption of CSR programs by many

organizations, such as BP. BP’s CSR transformation and rebranding was initially a

success, which created a positive reputation for the company. BP also gained the

respect of its customers based on their sustainable social and environmental

message. BP itself received other benefits out of this changed attitude. In certain

countries with poor governance and human resource records, BP was still allowed to

operate. Because of BP’s green reputation, the company was able to get access to

oil reserves in sensitive areas and expand its markets, while beating the competition.

BP’s reputation also helped the company to send of government intervention at

times, and helped prevent boycotts and conflicts. BP was also able to get a positive

response from publics and investors because of its CSR behaviour outline. From this

point of view, CSR is important for an organization’s success because it enhances

the company’s reputation as being morally bound to rectitude, which brings in

economic benefits (Werther, Chandler, 2006, Online), a means for boosting brand

equity and sales. On the other hand, CSR advances the organization’s credibility and

character in public policy battles and helps minimize a crisis.

http://www.amazon.com/Strategic-Corporate-Social-Responsibility-Stakeholders/dp/141291373X/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1221752782&sr=1-1&tag=instiforpubli-20&tag=instiforpubli-20&tag=instiforpubli-20


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However, after examining the previous examples, it has become apparent that BP’s

operations and management culture do not align its identity with its sustainable

strategy. BP is unable to deliver on its promises, and is repeatedly inconsistent,

which results in the loss of goodwill (Kotler, 2009, p.262). But, even if BP had been

able to abide by its own regulations, it is doubtful that it would have been able to

deliver, since its product is known to be harmful (Bean, 2010, p.8). This cannot be

hidden from the public or stakeholders. The brand may be able to recover in time and

may even regain the trust of customers and stakeholders, but this trust will be fragile

until BP can actually align its operations, management, and internal philosophy with

the brand’s promises and goals.


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BP and CSR

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