CSR of BRITISH PETROLIUM

[CSR of BRITISH PETROLIUM]April 2, 2015

Executive SummaryBP is an international oil and gas company that operates in more than 80 countries under two segments: exploration and production, and refining and marketing. It is one of the world's leading oil companies on the basis of market capitalization and proven reserves. As an oil company, it is directly linked with the use of fossil fuels linked with major environmental challenges on a global scale. BP is engaged in CSR initiatives intensively, promoting the projects related to the renewable sources of energy, investing in projects aimed to tackle climate change issues, and others.The CSR commitment of the British Petroleum focuses on five aspects which include the employee relationships, ethical conducts, health safety and environmental performance, financial aspect and control (British Petroleum, 2008). In order to ensure that they are able to get affiliated with different international and global organizations for Human rights.BP shall partner with organizations, such ascleanenergy.orgwhich focuses on clean renewable energy and protecting the quality of life. BP shall invest in technologies which will help reduce its carbon foot print. Moreover BP shall partner and promote with organizations which fight against diseases such as lung cancer. They can organize walks to create awareness against lung cancer. This will help build an image for BP of being an environmentally sensitive company. BP is faced with a number of challenging obstacles to growing their upstream oil operations, but there are numerous actions that should be taken by the company in order to adapt and drive growth in these challenging times. BP needs to utilize new technology, enter into mergers with NOCs, establish a recognizable CSR program and stick to its bread and butter business of deep-well drilling.

Introduction BP is one of the worlds largest energy companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items. BP is a global oil and gas company headquartered in London, United Kingdom. It is the third-largest energy company and fourth-largest company in the world measured by revenues and one of the six oil and gas super majors. It is vertically-integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading. It also has major renewable energy activities, including in bio fuels, hydrogen, solar and wind power.

BP has operations in over 80 countries, produces around 3.8 million barrels of oil equivalent per day and has 22,400 service stations worldwide. Its largest division is BP America, which is the biggest producer of oil and gas in the United States and is headquartered in Houston, Texas. As at 31 December 2009 it had total proven commercial reserves of 18.3 billion barrels of oil equivalent. The name BP derives from the initials of one of the companys former legal names, British Petroleum.British Petroleum is one of the biggest companies in the field of oil and allied products whose market value is in hundreds of billions. But financial crises and unpredictable nature of business are the unavoidable aspects which are also among the highlights of the criticisms of the stakeholders. The companys authorized ordinary share capital remains at 36 billion shares of 25cents each, amounting to $9 billion. In addition the company has authorized preference share capital of 12,750,000 shares of 1 each ($ 21 million) (Annual Reports and Accounts, 2003. Today the BP group has more than 103000 people working over 100 countries within four main business segments. Having been able to realize their corporate social responsibilities by analyzing the views of their stakeholders, the British petroleum has been able to solve the issue and attempt to have an enormous reinvention in 2000. The main goal of this reinvention is to alter the perception the people regarding BP in terms of its business operation and its role in the society. This reinvention is also a part of the loyalty of the company to their social responsibilities and which costs $200 million. British petroleum was the first oil industry which started to address the issue of global climate change. It can be said that the corporate social responsibility challenge for the British petroleum has been threefold. The first one is to the challenge of translating the social responsibility commitment into an efficient and consistent approach in the global market. The next is to be able to meld the BP its subsidiaries like Arco and Amoco to social investments and the last is to satisfy and meet the external expectations from the society. These CSR commitment has been strengthened through the changes or reinvention mentioned above which include their advertisement of the Beyond Petroleum.For meeting their organizational goal of being committed to social responsibilities, the company had been able to conduct precise planning with more than 130 fully functions business units. In this view, each of the each of the business units has largely autonomous business operations with its own identity, history, imperatives and relationships. By the use of stakeholder models, it can be said that British petroleums corporate social responsibilities are trying to meet the needs of their stakeholders. In doing so, it can be said that the management of British Petroleum must be able to stick on to the following Stakeholders Dialogue model for CSR.Due to the environment and social concerns that have been distinguished by this corporate social responsibility commitment of British Petroleum, management of the company has decided to create a plan in relation to identifying what should be done to be successful with their commitment. Basically, the company wanted to remove the old mindset in regards to petroleum that is the idea in which oil companies are treated as dirty, secretive and supercilious.With this, it can be said that among the ethical theories of corporate social responsibility, the British Petroleum has been able to adhere to the context of virtue theory. Virtue theory is centered on ones ethical condition and the type of individual .the person himself and the type of person he intends to be. Thus, the virtue theory states that becoming a virtuous person is dependent on individual choice. In this theory, the characteristics of a virtuous person are taken into account. More specifically, if a person prefers to become virtuous, he will then live a good, happy and flourishing life. Basically, this theory explains that if a person chooses to be virtuous, he will also become happy for the rest of his life. As an ethical person, one will derive his happiness out of doing good deeds to other people.BPs track record of corporate social responsibility has been mixed. The company has been involved in a number of major environmental and safety incidents and received criticism for its political influence. However in 1997 it was the first major oil company to publicly acknowledge the need to take steps against climate change, and in that year established a company-wide target to reduce its emissions of greenhouse gases. BP currently invests over $1 billion per year in the development of renewable energy sources, and has committed to spend $8 billion on renewable in the 2005 to 2015 period.Concept of Corporate Social responsibilityWhile there is no universal definition of corporate social responsibility, it generally refers to transparent business practices that are based on ethical values, compliance with legal requirements, and respect for people, communities, and the environment. Thus, beyond making profits, companies are responsible for the totality of their impact on people and the planet.1 People constitute the companys stakeholders: its employees, customers, business partners, investors, suppliers and vendors, the government, and the community. Increasingly, stakeholders expect that companies should be more environmentally and socially responsible in conducting their business. In the business community, CSR is alternatively referred to as corporate citizenship, which essentially means that a company should be a good neighbor within its host community.

Corporate social responsibility is a form of corporate self-regulation integrated into a business model. CSR policy functions as a built-in, self-regulating mechanism whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the companys actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, CSR-focused businesses would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. CSR is the deliberate inclusion of public interest into corporate decision-making that is the core business of the company or firm, and the honoring of a triple bottom line: people, planet, profit. Corporate Social responsibility of BP At BP CSR journey by recognizing that the primary responsibility of the company and its management is to maximize the value of the firm over time, and to operate the company in a manner consistent with the norms and values of its shareholders.

BP products and services contribute directly and indirectly to a better quality of life. The products BP make that satisfy millions of customers every day; the quality of jobs we provide to over 100,000 people around the world; the support we give to societies through payment and even collection of taxes; the innovations we make in technology and management.

BP is in the business of finding oil, refining it, and selling the gas that results. In the course of doing business, BP interacts with a huge range of individuals and organizations, and those interactions bring with them ethical obligations. Basic ethical obligations in such a business would include things like:

a) Providing customers with the product theyre expecting (rather than one adulterated with water, for example),

b) Dealing honestly with suppliers,

c) Ensuring reasonable levels of workplace health and safety,

d) Making an honest effort to build long-term share value,

e) Complying with environmental laws and industry best practices, and so on.

British Petroleum (BP) CSR Issues:

BP is one of the largest multinational companies in the world. The company is operating its operation at a market oriented tradition, where the primary role of company is to obey by law to operate in the interest of shareholders. Four Prevailing Justifications for CSR:The Moral Obligation: Working for achieve commercial success in ways honors ethical values and natural environment

Sustainability: Company operates in the ways that secure long term economic or regulatory interests behavior that is socially detrimental or environmentally wasteful

License to Operate: Constructive dialogue with regulators, local citizen and advises.

Reputation: Concerns about reputation, like license to operate and focus on satisfying external audience like customers, suppliers.

Education & training: BP always trained their managers and workers to improve efficiency and cautiousness about safety.

Health care: The Company provides medical lounge and routine medical checkup for those workers who work at mine.

Equal opportunities: Always equally evaluated their workers all over the world according to gender, race and color.

Compensation policy: Company provides their workers many salary benefits, compensations and bonuses.

Ethics research practice: BP is one of the largest multinational company. The company is operating its business in many countries for this reason the company face many types of problems about values and norms. Sometimes companys strategy conflicted with local norms and values. So the company has a committee for work with strategic conflict and fixed that.

Safe product: BP always tries to provide safe and quality product to consumers.

Recycling: BP recycles its 15% product and gradually tries to increase percentage.

Working environment: The Company always provides its worker safe working place.

Efficient utilization of resources: BP does their business with natural resources, so the company always tries to utilize these resources efficiently.

Transparent financial reporting: BP is crystal clear with financial report to the shareholders.

Environmental factors: BP is very cautious with environmental factors-

Emission & waste: BP already reduced its emission 10%.

Biodiversity & ecological impacts: BP is cautious about ecological impact and biodiversity.

Energy & water usage: BP is very efficiently used their energy and water.

Hazardous materials: BP doesnt use any types of material that hamper human health.

Corporate involvement in Society: The Company involved many types of social and philanthropic activities.

The BP Foundation:

The BP Foundation is a charitable organization working to benefit communities around the world. It prioritizes donations to charities that support science, technology, engineering and math education, economic development, practical approaches to environmental issues, and humanitarian relief. In 2014, the Foundation contributed $4 million to organizations and schools around the world that aligned with these focus areas.The BP Foundation provided $175,000 in 2014 to locally based relief organizations in India, the Balkans and the US. Organizations supported by the foundation in 2014 included the United Way of India, Pragya, International Federation of Red Cross and the American Red Cross.The foundation also matches the personal contributions that BP employees make to the eligible charities of their choice. In 2014, employees gave around $7 million, volunteered their time and raised funds to benefit charitable organizations worldwide, which was matched with grants of approximately $10 million.

Local communities:BPs relationships with communities are important for all our activities, but particularly for major new projects where our presence may bring about changes in the local areas, such asjobs and support for community development, as well as increased road traffic, changes in the landscape and increased demands for fresh water. They engage with local communities through public consultations and meetings with local representatives. For example, in planning the expansion of our LNG plant in Indonesia, they conducted public consultations involving communities from 62 villages.

Non-governmental organizations:

For new projects, they often consult with relevant local and international NGOs, who may provide specialized expertise on managing impacts. We also engage with NGOs on specific issues. In 2014, we discussed climate change, financial transparency, human rights and operating in sensitive areas, in these meetings.

Academic institutions:BP collaborates with research institutions and universities onspecific issues such as climate change, water stewardship and biodiversity. They also invest in the development of education and teaching programmers around the world, particularly in the areas of science, technology, engineering and mathematics.

Community engagement:BPs ability to operate safely and continuously can depend on obtaining the necessary official permits from the authorities and on the informal permission and support of the communities in the surrounding area. They consult with communities about potential environmental and socio-economic impacts throughout the life cycle of projects and operations and develop plans to manage these.

Community grievances:BP believe that open dialogue helps to build strong, mutually beneficial working relationships over the long term, and enables all sides to work through any disagreements in a constructive way. They provide guidance to projects on developing operational-level community grievance mechanisms, which help them to understand community concerns and seek to address them before they escalate.Understanding socio-economic implications of incidents: BP assesses the risk of unplanned events, such as spills and security incidents. This currently includes information on possible health, safety, environmental, reputational and business impacts. They have tested new socio-economic risk criteria with several businesses, including Australia, Brazil and the US. The criteria cover areas such as community stress and disruption, livelihoods, cultural heritage, workforce welfare and the availability and quality of fresh water. BP plans to incorporate these into our standard risk methodology in 2015.Customers and CommunitiesBP has more than one million shareholders worldwide. They have the opportunity to propose and vote on resolutions, and attend BPs annual general meeting (AGM) where they can pose questions to BPs directors. Information about BPs business activities, progress and prospects is made available to shareholders via their published corporate reports and on this website. BP also engage with them on the social and environmental aspects of BPs activities. Non-financial subjects covered in recent discussions include:

Status of the implementation of BP operating management system, as well as overall safety and integrity performanceThe evolution of BP internal process to manage environmental and social risks for new projectsDevelopments in our low-carbon business and technologies (particularly biofuels)BPs investment in the Canadian oil sandsUnder English law, shareholders can table resolutions at BPs AGM mandating action by the board, provided that they send a request to the company to table such a resolution that satisfies the relevant legislation. If a request which meets these requirements is received by the company by 21 January in a given year, BP will meet the costs entailed in circulating the resolution to members for the forthcoming AGM.

Suppliers of BP BP engages with suppliers in a variety of ways, including review meetings to identify mutual improvements in performance. BPs ability to fulfill BP corporate responsibility aspirations depends in part on the conduct of our suppliers.

BPs processes are designed to choose suppliers carefully, on merit, avoiding conflicts of interest and inappropriate gifts and entertainment.

BP expect suppliers to comply with all legal requirements and BP seek to do business with suppliers who act in line with BPs commitments to compliance and ethics, as outlined in BPs code of conduct.

BPs mechanisms for managing relationships with suppliers are focused on strategy, building common ground, delivery and performance management. BP engages with suppliers in a variety of ways, including review meetings to identify mutual improvements in performance.

Supporting communities, preserving the environmentIn other words, BP has a long-term commitment to the communities BP work within. As such, BP recognizes a responsibility to create more than quick revenues from their investments. Whatever BP do, wherever BP do it, BP always strive to preserve and improve the surrounding environment, support enterprising businesspeople and encourage energy-related education.

This is why, for example, BP planned the construction schedule for the BTC pipeline around the breeding season of a rare local grouse. And why BP funded satellite transmitters to help experts track endangered sea turtles in the nearby seas.

Its why BP has started programmers to share their business knowledge with entrepreneurs in Angola, South Africa, Trinidad and Tobago and elsewhere. Its why BP sponsor university programmers and send BPs employees into schools around the world, to help children learn how energy works and to inspire tomorrows energy experts.BP states that it recognizes the significant environmental and social challenges faced by the world in the 21st century. It believes it can, and should, play a part in addressing and resolving many of the issues associated with sustainable development. It also accepts that while the company can be part of the solution, it cannot and should not be the whole solution. Governments, companies and civil society must fins effective ways of working together.Alongside the standard financial figures, BP reports its own greenhouse gas and other emissions, oil spillages, employee satisfaction, days lost through injury at work, and community investment across the world.BP's policy statement commits the company to ambitious and wide-ranging business principles. The company's reporting seeks to illustrate how the company is meeting these commitments in a manner that supports the profitability of the business.In his final introduction to a BP social responsibility report, Lord Browne said: "The past two years have been difficult for BP. In March 2005, at the Texas City refinery, we suffered a tragedy in which 15 people died and many more were seriously injured. We have also experienced operational difficulties in Alaska and the potentially destabilizing effects of intense and at times unbalanced media scrutiny and criticism."Given that context, the achievements recorded in this document, our sixteenth annual report on non-financial performance, are remarkable and a great testimony to the BP team across the world: an improvement in personal safety, with reported recordable injury frequency the lowest in our recorded history ongoing improvements in our environmental impact across a series of measures an improvement in the development of people, including an increase in the number of women in leadership since 2000 and, of course, a strong financial performance allowing us to invest for the future and to reward those who trust us with their savings"

ConclusionAbove all the circumstances we know that BP is one of the world largest energy companies. They are providing their customers with fuel for transportation, energy for heat and light. Our everyday item made by petro chemicals which we can obtain from BP.Among all the petroleum company BP is the first who takes major steps against climate change. In environmental safety issue BP is expended $701 million in 2009. They are also established a company wide target to reduce its emissions of green house gases.They have different types of corporate social Responsibilities (CSR) activities. At first we know that CSR Is a form of corporate self regulation integrated into a business model. They are donating education sector, health sector, world safety issue etc.

Bibliography1) http://www.rhcatalyst.org/site/DocServer/CSRQ_A.pdf?docID=103

2) http://en.wikipedia.org

3) http://businessethicsblog.com/2010/09/01/bp-and-csr/

4) http://www.bp.com/subsection.do?categoryId=4&contentId=2006741

5) http://www.bp.com/iframe.do?categoryId=9030814&contentId=7056943BP tackles climate change threat with 200m boost for energy efficiency. The Telegraph. 25 October 2005. Retrieved 9 February 2011BP to invest $1 bln plus in alt energy this year. Reuters. 13 April 2010. Retrieved 9 February 2011 D Wood, Corporate Social Performance Revisited (1991) 16(4) The Academy of Management Review

19 | Page