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HC2121 Comparative Business ethics and social responsibility

HC2121 Comparative Business

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HC2121 Comparative Business ethics and social responsibility

Executive Summary

The project aims at illustrating the sustainability challenges that are faced by the oil and gas industry. Oil and gas industry are in high demand and for meeting up the demand the companies are using various equipment and technologies that can be dangerous. Companies like Exxon and BP faced risk due to oil spills that have impact marine life and the ecosystem. The Gulf of Mexico was damaged due to the oil spills from BP and destroyed the lives of many species.  The fracking industries are also causing damage when chemicals are inserted into shale rock for rising natural gas. In order to prevent this effective measure were taken to protect the environment from further loss. Cloud technology is an effective approach that can predict the occurrence of an accident in advance. Moreover, the oil and gas industry failed in maintaining ethical leadership due to which the organization failed in maintaining safety and sustainability.

HC2121 Comparative Business ethics and social responsibility

Table of Contents

Section 1: Introduction. 4

Section 2: 4

Question 1: How does Managing Ethical Risk in the oil and gas industry relate to reducing accidents?  4

Question 2: Compare the risks that BP, Exxon, and the fracking industry continue to face in providing an adequate supply of energy ?. 6

Question 3: How can ethical leadership help the oil and gas industry to manage risk?. 7

Section 3: Conclusion. 10

Reference List: 12

HC2121 Comparative Business ethics and social responsibility

Section 1: Introduction

It is often found that the oil and gas industry posses high risk. High risk in accidents is found as the production of gas and oil is increasing day by day for these industries. Due to the pressure used for drilling the ocean in order to collect gas and oil, the industries are suffering from quick damages of equipment. It also causes lots of damage in the surroundings due to the drilling of an ocean. Besides, it is also found that the polar ice caps are melting rapidly due to the leakage of gas for which the temperature increases (Hoffman and Devereaux Jennings, 2011, p.100). Few accidents like Exxon Valdez and BP oil have caused lots of environmental damage affecting both human beings and the environment. Many types of research were conducted on industries showing the proportion of damage caused due to the lack of care taken for the environment. However, the damages can be controlled regarding oil spills if the companies use proper types of equipment and train their staffs effectively. In this present report, the use of technology for preventing and minimizing accidents are discussed. Moreover, the risks faced by three industries are also discussed. Lastly, the importance of ethical leadership is stated that helps the industry to maintain and minimize risks.

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Section 2:

Question 1: How does Managing Ethical Risk in the oil and gas industry relate to reducing accidents?

High risk is experienced mainly by the oil and gas industries causing high censured accidents. Kelland (2014, p.54) stated that the main risk found in these industries is the ecological danger. The process of drilling oil and gas releases toxic gases causing air pollution and water contamination. It also causes depletion of the ozone layer with the global heat caused by the emission of toxic gases from the drilling of the ocean. However, there is also a disbalance caused in polar ice melting which can be prevented if leakage of gas can be controlled. Thus, it will prevent the environment from flooding. Oil spills are dangerous for the ecosystem as the drilling of oil can disrupt the marine ecosystem disturbing and affecting the marine life. Thus, for minimizing the ethical risk, which is associated with oil spillage, the gas and oil industries have approved security plans. Kovats (2014, p.757) stated that one of the largest oil spill named “Exxon Valdez” has viewed the companies that do not take any initiatives for natural disasters. Due to lack of care, they are responsible for environmental disrupt and has spread oil slicks in coastline and sea over 2600 miles. Hence, this could have successfully prevented by the oil industries if they would have taken initiatives in investing more capital in their organization for types of equipment and giving training to the new staffs. Besides, the higher authority must have taken feedback from the employees every one week so that the areas of the gap could be detected.

On another hand, usage of the remote control system can be installed to close the wells automatically. Proper communication is essential for transferring information that can reduce the rate of accidents. Lloyd-Smith and Senjen (2011, p.15) added that the act takes for fracking can cause serious sickness and sometimes death to humans and animals. Hence, the government of every country should act to banned fracking all over the world. This is a serious and effective step to manage ethical risks as it can prevent from releasing methane, which results in trapping strong and harmful radiation than any other gas. McDermott-Levy et al. (2013, p.45) commented that avoiding misbehavior to the staffs need to be restricted as it can control from occurring any coincidence. By enforcing measuring gear in oil and gas, an industry can give safety work practice and it will secure for human beings from causing any danger.

The work undertaken for gathering oil and gas is taken in a distant place and mostly in the middle of the ocean, which is quite dangerous. It can cause damage to the equipment as it can freeze the pieces of equipment due to dangerous hot or cold water. This can affect the performance. Therefore, the staffs need to take action for monitoring possessions to avoid risk (Zoback et al.2010, p.15). It can also be performed with the use of cloud technology, which will be easier in performing dangerous task.

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With the help of cloud technology, the industries can store and monitor data anywhere in the world. Thereby, it can be monitored technically by remaining in a safe place rather than monitoring physically on the sites. Ethical measures are also taken for those who will not be using the equipment correctly. The continuous emission monitoring system (CEMS) can be detected by the companies, through which the report data can be detected (McNutt et al. 2012, p.20222). This has stopped in managing the threat as the gas and oil-manufacturing industries are applying linked technologies. Moreover, for minimizing personnel and maintain types of equipment the companies are applying smart strategy where they are managing risk with the use of cloud technology. Hence, it has prevented the industries in managing risk within the workers and in the environment (Hall et al. 2012, p.8).

Question 2: Compare the risks that BP, Exxon, and the fracking industry continue to face in providing an adequate supply of energy?

Venn-Watson et al. (2015, p.12) stated that the activity of drilling oil and gas acts adversely by affecting the environmental and economic condition. Besides, influencing challenges has been faced by most of the countries as the demand for crude oil has increased to 90 million per day. Moreover, from the research, it has been found that the increased demand is with the outstripping supply (Incardona et al. 2013, p.303). Hence, as it is related to the oil and gas industry so risk remains as the main concern. It is evident that it also causes environmental risk by polluting air and water with harmful gases. It contaminates the water by affecting the marine ecosystem as oil spills are major disasters. This also results in global warming by damaging polar ice regions that disturb the wildlife habitats (Page et al. 2012, p.1438). Therefore, the risk carried out by the oil and gas industry is high, for which the strategies of safety policies are undertaken to reduce the negative impact.

The case occurred in Exxon Valdez in the year 19; March 24 was dangerous, as it has killed thousands of marine habitats due to rapid spillage. It has caused death to birds where more than 200 species were lost. Besides, it has also closed the fishing season where the annual sales came up to 100 million dollars (Meng and Ashby, 2014, p.124). It has been noted that Exxon was not ready with the situation of chemical dispersants. With the delay in disaster management, it has affected the sea and coastline areas with the oil spill for over 2600 miles.

The consequence caused due to the BP oil spill is huge. The accident took for three months and the oil leaking has spread over the Gulf for which it has turned the beaches into the black. The human habitats living in the Gulf of Mexico were also affected by this situation. Moreover, it has affected more than 640 miles all across the coastline by the time the heavy consequences of leakage were sealed. The environment was containing an enormous amount of oil beneath the water level (O’Rourke and Connolly, 2013, p.587). According to the scientists, the BP oil spills have caused enormous wildlife loss in the Gulf of Mexico that was a threat to coral reefs as well as another marine ecosystem.

In addition, the fracking process is applied which is another hazardous activity used to rise the natural gas to the surface of the ocean, where the chemicals are inserted into shale rock. The fracking process releases toxic chemical like methane that is highly hazardous. Kelland (2014, p.54) stated that the process of gas drilling has extended by 45% when the hydraulic fracking techniques were adopted. Besides, seismic shifts have been found when the fracking process takes place by releasing harmful substances such as hydrochloric acid, benzene, and other harmful elements. Based on the above findings, McDermott-Levy et al. (2013, p.45) stated that by adopting proper and effective environmental process can eliminate risk, especially for the communities that are present near fracking, can be saved.

Meng and Ashby (2014, p.1240 added that to lower down the risk of water contamination, sealing of well shafts can be done by resulting in an effective solution. The risk found in the fracking industry is high because many studies have found that hydraulic fracturing mud is harmful to those people who are involved in this practice as it releases toxins and radioactive. It has been claimed by the people who climb up in order to clean the vast had serious health injurious. They have suffered from inflammation, breathing trouble and migraine (O’Rourke and Connolly, 2013, p.587). As the activity is related to heights so many people had to suffer from serious accidents causing fracture and health issue. Apart from these, individuals, there are also others who had to suffer from fatigue, nosebleeds, cirrhosis of liver and headaches (Hoffman and Devereaux Jennings, 2011, p.100). Therefore, the government of every country where fracking industries are present should take initiative by passing new laws for creating a favorable environment by checking the strategies of risk management that are applied by these companies.

Question 3: How can ethical leadership help the oil and gas industry to manage risk?

A leader plays a vital role in managing the work and the employees in order to achieve the organization goal and fulfill the objectives. It helps in setting a suitable work culture within the organization (Lloyd-Smith and Senjen, 2011, p.15). The term ethical leadership is a leadership approach that is directed by organization ethical beliefs and values. It also ensures in respecting the rights and dignity of others. Therefore, it is mainly the trust, fairness, and consideration that an organization adopts while dealing with staffs and other individuals  (Venn-Watson et al. 2015, p.12). When an organization maintains proper ethics it motivates the employees to work for it and a leader is always available to enhance their moral development.

Besides, leadership ethics makes ethical decisions on behalf of the organization for safeguarding its stakeholders and making the effective commitment for the rest of the company. The policies and procedures are set by the organization to give safety to the individuals associated with the industry. The entire firm also follows it and all the members adhere it. Leadership ethics ensures the staff members of the gas and oil industry to redesign and look into the machines that are with high risk (Meng and Ashby, 2014, p.124). Thus, it causes less risk for the people who are in this field. Hence, with the help of proper leadership ethics, the oil and gas industry can benefit themselves by protecting the stakeholders from serious health hazards or accidents. It also protects the ecosystem by ensuring a safe environment for the wildlife habitats.

According to McNutt et al. (2012, p.20222), an ethical leader is composed of various essential values which is essential while working with a large group of people. These include care, respect, and integrity. From the case studies of the companies such as Exxon Valdez and BP Oil Company, various risk disasters were noted. The deepwater oil spills were quite dangerous, for which the ecosystem has lots many habitats. Here, safety is the main aspects that are to be considered first as the risk possessed here is too high (Incardona et al. 2013, p.303). Therefore, for implementing ethical leadership within an organization, they need to adopt a few effective strategies, which is suitable for both humans and the environment. These include safety management, environmental risk management, the culture of transparency and quality management.

Adopting ethical leadership within the oil and gas industry, it can set up transparency and cultural responsibility that is quite beneficial. Exxon missed these essential features, due to which they had to face such disasters affecting human and marine life (Hall et al. 2012, p.8). If the management would have taken a better approach by focusing on ethical leadership, the company could have saved themselves from such loss of oil spills. The case study 4 of sustainability challenges in the gas and oil industry shows that Joseph Hazelwood who was ship’s captain select below the deck (Hoffman and Devereaux Jennings, 2011, p.100). For the disaster incident, the captain was responsible. The captain was with high with the level of alcohol consumption. Such issue with the captain was also faced before and the officials of Exxon have warned the captain with his alcohol-related behavior. He was once charged for such behavior. However, such circumstances could have been avoided if the management would have taken initiatives in showing responsibilities and being transparent in the work (Zoback et al. 2010, p.15). Here, the approaches of ethical leadership could be effective in preventing such irresponsible and unethical behavior.

Apart from that, the oil and gas industry can adopt environmental risk management. Such a management system is adopted when environmental risk is analyzed and explained to the staffs along with the possible consequences. Venn-Watson et al. (2015, p.12) added that environmental factors are one of the immense concern for the oil and gas industries. The human, as well as wildlife, are dependent on the environment. Hence, it is our responsibility to take care of the environment and work upon the sustainability challenges. If the ecosystem is damaged and the environment is polluted with toxic gases, it may lead to serious health hazards. There are companies who are less concerned about the environment (Meng and Ashby, 2014, p.124). They do their work without taking proper strategies to manage the pollution causing the diverse effect to the ecosystem. Moreover, companies like gas and oil, sometimes neglect to invest capital in the areas where risk can be controlled.

Due to the negligence shown from their side, there is a large amount of greenhouse gas emission. The release of greenhouse gas into the environment disbalances the ozone layer and affects the atmosphere (Incardona et al. 2013, p.303). Apart from that, the oil and gas industries are also accused of contaminating water and marine ecosystem. Henceforth, ethical leadership is quite worthy in such stage to take serious measures in managing environmental risk. Therefore, ethical leadership can be implemented when the organization will use technologies that will release less toxic gas. The staffs should take initiatives in checking the gas by eliminating all the hazardous toxic before leading it into the atmosphere (McDermott-Levy et al. 2013, p.45). This will at least save some portion of the environmental risk.

Ensuring safety within the work area is another major concern that needs to be looked after. Safety for the staffs is important in order to avoid accidental risk. Quality management is also an equally important part of a booming ethical leadership (McDermott-Levy et al. 2013, p.45). In such a case, oil spills from the deepwater horizon is a suitable example of quality management. As per the industry standards, the oil and gas industry failed in meeting up proper quality management. The safety system, which was positioned on the rig of the ocean, was safe and this has caused death to many people. The rig that was placed in the ocean was having inaccessibility of remote control shut off bottom due to which a major oil spill has occurred (Zoback et al. 2010, p.15). As per the investigation of British Petroleum’s oil spills disasters, it has been found that the plan was not properly accused and was having many inaccuracies.

From the evidence collected, it is noted that the Deepwater Horizon rig is referred to as an organization, which is highly reliable. Due to lack of ethical leadership for the particular situation, the British Petroleum had to cost for 15 human lives along with the damage caused to the environment (Hoffman and Devereaux Jennings, 2011, p.100). The BP also failed in incorporating necessary safeguard policies, which may have saved the environment from such disasters. However, it is most important to stop such risk for the oil and gas industry in order to hold the goodwill that they have earned in the marketplace. O’Rourke and Connolly (2013, p.587) added that for the above case the organization must take initiatives in implementing effective programs of ethics and compliances for the employees. The employees need to be warned and make them learn that for such disasters they are responsible for which life of many people could be at risk. The firms need to develop contingency plans and improve safety measures to stop such disasters (McNutt et al. (2012, p.20222). Besides, it is very essential to train the employees before they are placed to handle difficult situations. Taking weekly feedback from the staffs is also an effective strategy, which could help the oil and gas industry in keeping records of the daily occurrence.

Section 3: Conclusion

From the above discussion, it can be inferred that various oil companies failed in taking necessary steps regarding the safety measures for protecting the environment and the employees. Due to the mishaps with companies like BP, Exxon and Fracking industry, they had to suffer a lot in the competitive market place. The disaster that took place in Exxon was associated with offshore drilling which has left a great impact on wildlife, communities and marine life. It is the responsibility of the industries to take necessary actions, which could save them from such loss.

Besides, the oil and gas industries are towards the practice of corporate culture where they are taking approaches to keep the risk behind in order to maintain their market reputation. The organization needs to adopt ethical leadership where the employees need to be aware of the compliance programs. Although, it is true that the oil and gas industry posses certain risk, yet they need to maintain safety measures along with strategic planning in order to avoid long-term impact. Implementing cloud technology can help the organizations to monitor the types of equipment and reduce risk in accidents. The government needs to ban fracking for saving the environment from further degradation. Hence, with the social responsibility, the oil and gas industry can regain their reputation.

Reference List:

Hall, Z., Kice, B. and Choi, J., 2012. Damage control: rhetoric and New media technologies in the aftermath of the BP Oil spill. Poroi8(1), p.8.

Hoffman, A. and Devereaux Jennings, P., 2011. The BP oil spill as a cultural anomaly? Institutional context, conflict, and change. Journal of Management Inquiry, 20(2), pp. 100-112.

Incardona, J.P., Swarts, T.L., Edmunds, R.C., Linbo, T.L., Aquilina-Beck, A., Sloan, C.A., Gardner, L.D., Block, B.A. and Scholz, N.L., 2013. Exxon Valdez to Deepwater Horizon: Comparable toxicity of both crude oils to fish early life stages. Aquatic Toxicology142, pp.303-316.

Kelland, M., 2014. Production chemicals for the oil and gas industry. s.l. CRC press.

Kovats, S. 2014. The health implications of fracking. The Lancet, 383(9919), p. 757.

Lloyd-Smith, M. and Senjen, R., 2011. Hydraulic fracturing in coal seam gas mining: the risks to our health, communities, environment, and climate. The briefing paper, National Toxics Network.

McDermott-Levy, R., Kaktins, N. and Sattler, B., 2013. Fracking, the environment, and health. AJN The American Journal of Nursing, 113(6), pp. 45-51.

McNutt, M.K., Chu, S., Lubchenco, J., Hunter, T., Dreyfus, G., Murawski, S.A. and Kennedy, D.M., 2012. Applications of science and engineering to quantify and control the Deepwater Horizon oil spill. Proceedings of the National Academy of Sciences109(50), pp.20222-20228.

Meng, Q. and Ashby, S., 2014. Distance: A critical aspect for environmental impact assessment of hydraulic fracking. The Extractive Industries and Society1(2), pp.124-126.

O’Rourke, D. and Connolly, S., 2013. Just oil? The distribution of environmental and social impacts of oil production and consumption. Annual Review of Environment and Resources28(1), pp.587-617.

Page, D.S., Boehm, P.D., Stubblefield, W.A., Parker, K.R., Gilfillan, E.S., Neff, J.M. and Maki, A.W., 2012. Hydrocarbon composition and toxicity of sediments following the Exxon Valdez oil spill in Prince William Sound, Alaska, USA. Environmental toxicology and chemistry21(7), pp.1438-1450.

Venn-Watson, S., Colegrove, K.M., Litz, J., Kinsel, M., Terio, K., Saliki, J., Fire, S., Carmichael, R., Chevis, C., Hatchett, W. and Pitchford, J., 2015. Adrenal gland and lung lesions in Gulf of Mexico common bottlenose dolphins (Tursiops truncatus) found dead following the Deepwater Horizon oil spill. PLoS One10(5), p.12.

Zoback, M., Kitasei, S. and Copthorne, B., 2010. Addressing the environmental risks from shale gas development. Washington: DC: Worldwatch Institute…

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