Sustainable Management Features - Total Oil Company - Essay Example

Sustainable Management Features Contents Introduction 4 Theoretical Approaches and Analysis 6 De George six conditions 6 Explanation of theory 6 Relevance to the purpose 7 Any weakness in the model 7 The issue to be addressed 8 Application of the model 8 Carolls four part model of CSR 9 Explanation of theory 9 Relevance to the purpose 10 Any weakness in the model 10 The issue to be addressed 11 Application of the model 11 Discussion and conclusions 12 Do the findings contradict or complement 12 How is the analysis related to the purpose of the essay 13 Conclusion and recommendations 14 References 15 Appendix 17 Introduction The purpose of the report is to critically analyze the Total oil company on the basis of corporate social responsibility from the perspectives of two theories in this field that are De George six conditions and Caroll’s four part model of CSR. In recent years it is seen that oil and gas companies are increasingly becoming champions of corporate social responsibility. It is found that the oil companies of the world attach greater importance to social responsibilities and also an increase in interactions with the local community than was the case in the past. This change is evident from the increased use of social reporting and adhering to corporate codes of conduct. Oil companies in the world have embraced international CSR initiatives. Companies such as the SHELL and BP have become major players in the renewable energy industry in order to combat the fact the oil companies are the ones who are mainly held responsible for global warming. In addition to this the oil companies of the world have also taken initiatives that are aimed towards the development of community. It was estimated that back in 2001 the oil companies in the world had contributed $500 million towards community development initiatives (Frynas, 2005). Total Oil Company was formed after the First World War when the French Prime Minister rejected the idea of forming a partnership with Shell in favor of creating an entirely French oil company. Now with revenues of €189.5 Billion it is the 5th largest international oil company of the world as per 31st December 2013. The company produces about 2,299 kilo barrels of oil equivalent per day and with a network of 15,551 service stations serves about 3 million customers worldwide per day. If one analyses the stakeholders who are associated with the company then Total acknowledges the fact that due to the reason that the company operates in more than 130 countries across the globe the company has to face and live up to different expectations of different groups of stakeholders who are associated with the company. The company states that there is number of stakeholders of the company depending on the location in which the company operates and their expectations from the company also differ depending on the location. The company states that the key to its long term integration will depend on how well it can identify and address the expectations of these diverse groups of stakeholders. The company has both upstream and downstream operations that range from exploration of oil to its fractional distillation, trading and shipping and finally marketing those products to the masses. Due to this fact the company acknowledges that depending on the type of industry that the company serves and the locations in which the companies are located the activities of the company have different impacts on lives of the people. The fact that the impacts of the activities are variable and that the stakeholders have different expectations on the company is taken care of by the company. The stakeholders range from neighbors associations partners and public authorities. In this essay the purpose is to analyze the corporate social responsibility of the firm through the lens of two separate theories. The essay aims to proceed by applying each of the two separate theories on the context of the corporate social responsibility by Total Oil Company. While applying the two theories the focus will first start from de4scribing the theories and the relevance of the same, any identified weakness of the theory and then application of the theory to the case of Total Oil Company. After application of the two theories a critical analysis will be performed on the application of the theories to judge whether the two of them complement or contradict each other. Finally the essays will be concluded in terms of any recommendation that needs to be applied. Theoretical Approaches and Analysis De George six conditions Explanation of theory In 1981 De George offered some specific conditions which describe the factors when an engineer would be permitted to blow a whistle and secondly the conditions which made it obligatory for the engineer to blow the whistle. The conditions are described below An engineer is permitted to blow a whistle if the following conditions are met 1. The harm that the product of the company can do to the public is of serious nature to be taken into consideration (Hoffman and Schwartz, 2014.). 2. The engineer who is associated with the company has made the concern that they feel about the product to be known to all the superiors of the employee. 3. If the engineer despite informing about the problem to the supervisor has not received any favorable response from supervisors (Serafini, 2000). He has also tried to approach the board of directors of the company and tried all the channels that were available to him in the company before him. Additionally De George states two additional conditions when the whistle blowing can be said to be mandatory for the employees. These conditions are: 4. There is documented evidence with the employees or the engineer which he can use to prove that the concern for public safety that is exhibited by the employee is correct and the action by the company is likely to cause serious harm upon the public (Tavani, 2011). 5. Evidence is there to support the fact that if this whistle blowing is made then a serious harm that was to happen to the public in general can be prevented. Relevance to the purpose The model is important to be considered in this case because in respect of the fact that the company is really ethical and socially responsible the company should encourage the act of whistle blowing by the employees of the organization. While whistle blowing is an important activity that can expose any fraud or wrong doings on the part of the company, the companies normally do not encourage whistle blowing activities. However a measure of how ethically responsible a company is given by the fact as to whether a company encourages the act of whistle blowing. In line of this fact this theory is applied to the company total to identify if the company qualifies as a socially responsible company. Any weakness in the model There have been several oppositions to the model by de George and the conditions that he has laid down. For example James states that De George is vey lenient. He is of the view that the fulfillment of the first three conditions should act as a moral obligation for the engineers to blow the whistle. James criticizes de George on the inclusion of the last two conditions and is of the view that the degree of moral obligation as referred by de George in the last two conditions depends on the individual’s ability to be able to foresee the future and make judgments (Arszulowicz and Gasparski, 2011). This makes it pretty subjective and the last two conditions cannot be universally applied. He also states that on certain issues such as sexual harassment, violation of privacy etc. the model given by De George does not provide any clues or guidance. James also is of the view that the word harm may actually be defined differently by different persons and so cannot be applied universally (Martin, 2000). Alpren also argued that the engineers should be taking more responsibility to blow whistle. He states that De George lets the engineers of an organization easily off from their whistle blowing responsibilities. According to Alpren engineers’ should be willing to make greater sacrifices as because they are the ones in an organization who are in a position to creating harms. The issue to be addressed The purpose of this essay is to analyze the corporate social responsibility of Total Oil Company. In addressing the issue of corporate social reso0nsibility of Total Oil Company and to access whether Total Oil Company is really a socially responsible company one of the dimensions that has to analyze is the extent to which the company allows and supports whistle blowing. It is important to analyze these facts as because it is found that out of the employees who internally report of misconduct within the organization 21% of them faced some form of misconduct within the organization. Therefore, In order to judge if Total Oil Company is really ethical De George’s conditions are applied to the case and the company is evaluated on its backdrop. Application of the model If one goes through Total Oil Company then it is found that as of 2003 the company did not have a clear whistle blowing practice in placed in the company. However as per the responsibilities of the company’s audit committee that is in place it is said that one of their responsibility is to implement and monitor a whistle blowing process that concerns accounting, internal control and issues with audit. The audit committee says that the process is tried to be made available to the employees’ shareholders and third parties within the organization (Total, 2015a). According to De George the engineers or other employees of the organization should resort to whistle blowing practices only if internal channels for reporting the fraud are closed. However it is found that the individuals who report fraud internally are often faced with many problems inside the organizations. So the employees are left with no options but to engage in whistle blowing. In fact SEC offers cash rewards to the employees who report instances of fraud committed to the SEC. It is found in case of TOTAL that the employees of the organization who engaged in whistle blowing revealed that the company paid Iranian officials $60 million in order to acquire oil and gas fields in Iran from which the company profited $150 million (US security and exchange commission., 2013). Carolls four part model of CSR Explanation of theory In order that the CSR should be accepted by a business person, it is required that it is framed in such a way that the entire range of business responsibilities are addressed by the organization. It is in this perspective that there are 4 different kinds of CSR activities that comprise in totality the total CSR activities of an organization. The 4 different categories are Economic, Legal, Ethical and philanthropic. The four different characteristics of the CSR are arranged in the form of a pyramid. The economic responsibilities are found at the bottom of the pyramid followed by legal responsibly, ethical responsibilities and philanthropic responsibilities that come up when going towards the top of the responsibility. Economic Responsibility The economic responsibility of a firm is in the fact that the firm is committed in order to make economic profits so that the company is able to sustain its operation. Legal responsibility Legal responsibility requires that the company should be law abiding (Nalband, and Al Kelabi, 2014). Ethical responsibility Ethical responsibility on part of the company required to be ethical. Philanthropic Responsibility Philanthropic responsibility requires that the company should be a good corporate citizen and should take care of the society. Relevance to the purpose The essay tries to analyze the corporate social responsibility with respect to Total Oil Company. In order to trying to identify the factors that are important in identifying the corporate social responsibility of the firm in question a model of corporate social responsibility namely the Caroll’s four part model of CSR is applied. Caroll’s model has found wide application and relevance in judging whether a firm is socially responsible. This is due to the fact that the model is simple and easy to understand. The model has also been tested successfully by several authors and from time to time carol has made necessary and relevant changes to the model in order to incorporate competing themes into the model. Any weakness in the model The weakness of the model lies in the fact that the model is primarily based on the experience of American people. According to Crane and Matten the model given by Caroll is not effective in addressing the manifestations of culture. They arrived at the conclusion after applying the model on the European perspective and found that the different levels of the model had different significance with respect to the perspective of the European context. Visser also applied the model with respect to Africa and found that the different layers of the model had different implications for the country (Huniche, and Pedersen, 2006). The main criticism has been in respect of the fact that the different philosophies followed in different countries have led to different interpretations of the model. The issue to be addressed In respect of Total the model is applied in order to judge whether the company is ethically responsible and follows the model of corporate social responsibility. That is the idea is to judge whether the company only cares about making profit or doe the company actually takes care of all the stakeholders and implements policies that makes the company socially responsible. In judging whether the company is socially responsible the Caroll’s model and the steps of the pyramid are applied to the Total Oil Company. The primary issue that is being tried to be addressed through the application of the model on the company is to judge whether the company is ethically responsible or not. Application of the model It was found while applying the theory that Total was an ethical organization par excellence. The ethics committee of the organization enforces code of conduct and conflict of interest guidelines that are issued by the company. Every year a chapter in the annual report of the company is devoted to CSR activities that are undertaken by the company. It is considered a corporate objective by the company to be responsible for the society and the community. As a company in the oil and gas sector to be committed to the corporate social responsibility perspective is exemplary (Cho, 2009). Total has an ethics committee in place at their company. The CSR responsibility on part of Total is focused to reduce the environmental footprint of the company as well as investing in renewable energy sources in order to ensure energy security of the future. The company’s commitment lies in respect of the fact that the company is committed to reduce green house gas emissions, reducing the release of carbon-di-oxide gases and also carefully managing the water cycle and also protection of the diversity (Hurst, 2004). The company was also rated by the Dow Jones Sustainability index in 2009 as the best company in terms of sustainable practices being followed in the gas and oil industry (Dow Jones sustainability indexes, 2009). It can also be found in figure 1 of Appendix. The company is also committed to meeting the expectations of the shareholders and the stakeholders that are associated with the company. The company acknowledges the fact that the different business that the company operates has different impacts on the stake holders of the company and the different stakeholders in different regions has accordingly different expectations about the company. The company makes it a point to listen to all the stake holders and answer their concerns (Total, 2015b). The company views ethics as an important part of their business (Total, 2013). This view is endorsed by the view point of the chairman of the company in the year 2013 as given in figure 2 of appendix. Discussion and conclusions Do the findings contradict or complement After application of the two models to the case of Total Oil Company, it is found that the two models focus on two dimensions of corporate social responsibility in order to judge whether the company is really socially responsible. The two important dimensions that are focused on by the models are whistle blowing aspect and the aspect of total CSR. The model by De George focuses on whistle blowing aspect and the model by Caroll focuses on the aspect of total CSR. Caroll’s model tells that in order find out whether a company is socially responsible it is important to judge the company from a four dimensional perspective. The four dimensions as stated by Caroll are Economic, Ethical, Legal and Philanthropic responsibility. The pyramid looks like that of a Maslow’s hierarchy of needs where the individual tries to fulfill the upper needs after his basic needs are made. According to Caroll a company is ethically responsible if it fulfills the higher responsibilities of the pyramid and does not only exist to make profit. After applying the model to Total Oil company it is found that the company is social responsible. The company treats corporate social responsibility as an important part of the company. The company states and holds the view that an essential objective of the company is to care about environment and all the stakeholders of the company. The company is found to incorporate the highest standards of corporate social responsibility. Being among the top 6 oil gas companies in the world, the company does not exist only to make profit. The company on the other hand makes it a point to listen to the stakeholders and take care of the stakeholders in the form of engaging in something beneficial for the communities in which they operate. However the model given by Caroll does not cover the dimension of whistle blowing. However the dimension of whistle blowing is important to consider for recognition of Total Oil Company as a social responsible and ethical company. This is where de-George’s model is applied. De George’s model when applied to the perspective of the Total Oil Company tells that the company lacks in the application of whistle blowing practices. The result is that there has been a major whistle blowing activity by the employees of the organization uncovering the hefty bribe paid by Total Oil Company in order to secure stake in the Oil and gas fields of Iran. Thus it can be said that the two theories do not contradict each other but complement each other in order to give a complete picture. How is the analysis related to the purpose of the essay The two parts of the analysis cover two important dimensions of whistle blowing and corporate social responsibility in order to recommend firmly whether the company is a socially and ethically responsible company. The two parts of the essay together helps to complete the analysis by complementing each other and helping to paint a complete picture. Conclusion and recommendations It is concluded after the analysis that Total Oil Company is socially and ethically responsible company. However it is recommended that in order to be a socially and ethically responsible company, the company should incorporate within the company rules and committee to facilitate internal whistle blowing. References Arszulowicz, M., and Gasparski, W. W., 2011. Whistleblowing: In Defense of Proper Action. NJ: Transaction Publishers. Cho, C. H., 2009. Legitimation strategies used in response to environmental disaster: A French case study of Total SAs Erika and AZF incidents. European Accounting Review. 18(1).pp. 33-62. Dow Jones sustainability indexes, 2009. Annual review. [Online]. Available at < http://www.sustainability-indices.com/images/review-presentation-2009.pdf > [Accessed 29 April 2015]. Frynas, J. G. 2005. The false developmental promise of Corporate Social Responsibility: evidence from multinational oil companies. Journal of International affairs. 81(3). pp. 581-598. Hoffman, W. M., and Schwartz, M. S., 2014. The Morality of Whistle blowing: A Commentary on Richard T. De George. Journal of Business Ethics. 1(1). pp. 1-11. Huniche, M., and Pedersen, E. R., 2006. Corporate Citizenship in Developing Countries: New Partnership Perspectives. Copenhagen: Copenhagen Business School Press DK. Hurst, N. E., 2004. Corporate Ethics, Governance and Social Responsibility: Comparing European Business Practices to those in the United States. [Online]. Available at < http://www.scu.edu/ethics/publications/submitted/hurst/comparitive_study.pdf > [Accessed 29 April 2015]. Martin, M. W., 2000. Meaningful Work: Rethinking Professional Ethics. Oxford: Oxford University Press. Nalband, N. A., and Al Kelabi, S., 2014. Redesigning Carroll’s CSR Pyramid Model. Journal of Advanced Management Science. 2(3). pp. 236-239. Serafini, A., 2000. Ethics and Social Concern. NY: iUniverse. Tavani, H. T., 2011. Ethics and Technology: Controversies, Questions, and Strategies for Ethical Computing. MA: John Wiley and sons. Total, 2013. Doing Buisness responsibly: CSR report 2013. [Online]. Available at < http://www.total.com/sites/default/files/atoms/files/csr-report-2013.pdf > [Accessed 29 April 2015]. Total., 2015a. The Audit Committee. [Online]. Available at < http://www.total.com/en/about-total/corporate-governance/board-of-directors/audit-committee > [Accessed 28 April 2015]. Total., 2015b. Promoting Discussion and Consensus-Building. [Online]. Available at < http://www.total.com/en/society-environment/shared-development/our-process/promoting-discussion-and-consensus-building?%FFbw=kludge1%FF > [Accessed 29 April 2015]. US security and exchange commission, 2013. SEC Charges Total S.A. for Illegal Payments to Iranian Official. [Online]. Available at < http://www.sec.gov/News/PressRelease/Detail/PressRelease/1365171575006 > [Accessed 28 April 2015]. Appendix Figure 1 Dow Jones sustainability index- global superstar leaders of 2009 Figure 2 View of Chairman of Total in 2013 about CSR. Read More