Environmental Challenges Confronting the Oil Industry - Term Paper Example

Environmental Sustainability Introduction British Petroleum p.l.c. (BP) is the holding company of one of the world's leading petroleum and petrochemicals groups. The Company has key maneuvers in more than hundred nations within Europe, North and South America, Australasia along with some regions of Africa (Eggleston, p. 29, 2010). During the previous decade, British Petroleum has obtained a large amount of support as well as praise for its positive attitude on environmental issues, most outstandingly for its point on worldwide atmosphere variation and attempts to control discharge of greenhouse gases. The responsibility of British Petroleum is frequently emphasized in stark distinction to companies that have been indicted for lobbying rigorously against attempts to lessen the threat of global warming. Together with intense arguments concerning universal environmental issues along with corporate responsibilities in that regard, the previous decade has as well observed the materialization of a possibly much larger as well as widening social plan, often enclosed by the thoughts of corporate social responsibility (Wankel & Stoner, 24, 2008). Overview of British Petroleum and its Functions in Key Areas British Petroleum comes among the world’s top three-oil company after the merger with Amoco during 1998. British Petroleum was outshined just by the other main oil companies, ExxonMobil and the Shell Group, reviewed by qualities including market capitalization of approximately two hundred and three billion dollars, revenues of one hundred and forty billion dollars and earnings around nine billion dollars during the year 2005. British Petroleum as well positions at top three in terms of explored oil and gas reserves, totaling to around fifteen billion barrels of oil equivalents. British Petroleum’s manufactured goods are being sold in more or less hundred countries, and it has deep-rooted functions in six continents. Upstream, the business is on the go in twenty-nine countries with production functions in twenty-three countries. British Petroleum is the leading generator of oil and gas in the US, and the second major dealer of gasoline (Clark, p. 72, 1991). Table 1: British Petroleum upstream production – 2005 Data. (Source: www.bp.com) Oil Production * Gas Production ** Europe 624 1788 USA 729 3054 Rest of World 390 2504 Associated Undertakings 185 263 Total BP 1928 7609 ­­­­­­­­­­­­­­­­­­­­­­* thousand barrels per day together with natural gas liquids and condensate ** million standard cubic feet per day Most important downstream statistics take account of gas sales deals in twenty-five countries, processing plants in twenty-three countries, and over twenty eight thousand service stations. British Petroleum is as well a main competitor in chemicals having functions on fifty-eight locations internationally as well as in solar power with profits of two hundred million dollars during the year 2005. Table 2: British Petroleum downstream production – 2005 Data. (Source: www.bp.com) Petroleum Total fixed Refinery product sales assets throughputs ** ($ million) * ($ million) Europe 30010 22801 926 USA 34120 38170 1625 Rest of World 10109 14202 365 Trading / Supply sales *** 12 Total 74239 75173 2928 ­­­­­­­­­­­­­­­­­­­­­­* Product sales consist of aviation fuels, gasoline, middle concentrates, fuel oil along with other products. Proceeds leave out sales to other British Petroleum businesses, customs duties, as well as sales taxes ** Includes real crude oil along with other feedstock input both for British Petroleum as well as third parties *** The figures take account of the BP share of the BP / Mobil European joint venture. Global aviation along with marine businesses were not included in the joint venture In addition, probing the geographical allocation of British Petroleum’s exploration concerns discloses that considerably the largest percentage of emergent reserves is limited to regions in Africa, the Middle East, and the Former Soviet Union. Table 3: Oil and natural gas acreage (thousand acres – 2005 data) (Source: www.bp.com) Underdeveloped Developed Gross Net Gross Net UK 2712 1249 691 338 Rest of Europe 4088 1505 128 44 USA 10061 6225 11901 6523 South America & Canada 29694 13396 2398 1354 Middle East, Africa & Former Soviet Union 60776 22295 3286 605 Australia & Far East 30788 13771 612 209 British Petroleum and Environmental Sustainability British Petroleum is directing its peers in commercial sustainability and is devoted to shaping the oil and gas business within the public as well as environmental sides of industry. Above all, the company believes in continual progress as a beneficial business opening and it has incorporated environmental as well as social concerns into its development policy. Eco-effectiveness signs reveal that British Petroleum delivers fine on its lesser carbon intensification strategy by rising production at the same time as even out greenhouse gas discharges. In addition, British Petroleum is aggressively updating its portfolio with the intention of making the most from shift towards a lesser carbon world (Clark, p. 80, 1991). Above all, British Petroleum is building up a sturdy place within the rising marketplace for Liquefied Natural Gas (LNG) as well as renewable power. In the light of British Petroleum’s growth into areas with more political threat, performance on its business standards will be indispensable to uphold the permit to function. At the same time as the pipeline venture in the Caspian area shows successful organization of multifaceted non-scientific features of divisive ventures, British Petroleum’s Alaskan functions keep on to increase uncertainties regarding the successful execution of wellbeing, security and environment principles pursuing the acquirement of Arco. In addition, British Petroleum’s current contract in Russia places stress on the business to fill the gap speedily amid its principles and those of TNK, particularly when it is about wellbeing, security, and environmental sustainability (Clark, p. 99, 1991). The developing nature of British Petroleum’s approach to societal act should be observed with respect to the new industry strategies; soon following the merger with Amoco was done. These strategies were known to lay down with the excellent practices as well as customs of both previous organizations (Prokesch, p. 151, 1997). Industry Motivating Forces Top oil and gas companies are offering gradually more total force solutions as a reaction to marketplace claim along with an ever more carbon-hindered world. At the same time as natural gas provides a significant carbon dioxide resourceful fossil energy resource in the mid-term, long-standing policies of sustainability leaders reveal the increasing significance of attaining a sturdy position within the renewable energy business. Additionally, there is a strong focus on supply, as well as demand side-energy effectiveness as a way of dropping general environmental sustainability impacts. In addition, as oil and coal carries on to be a key energy resource for the expected future companies should sensibly deal with the life cycle of oil, oil connected as well as coal based products from both an environmental sustainability and social point of view. Environment, health, and safety quality attached with progressive concerns of social concerns, for instance, civil rights along with community issues, persists to offer the excellent security of energy companies' permit to work (Cross, Earl & Sampler, p. 419, 1997). Company Policies and Environmental Sustainability “At the basis of BP’s ethical conduct policy is a commitment to pursue our business integrity, respecting the different cultures and the dignity and rights of all individuals in all the countries that we operate” (Bamberg, p. 59, 2009). More particularly, the written terms of commitment states that British Petroleum human resources and spokespersons ought to follow the following main beliefs in their doings and dealings with others: “Respect the rule of law Promise only what we expect to deliver, make only commitments we intend to keep, not knowingly mislead others and not participate in or condone corrupt or unacceptable practices Fulfill our obligations and commitments; treat people according to merit and contribution, refrain from coercion and never deliberately do harm to anyone Act in god faith, use company assets only for furthering company business and not seek personal gain through abuse of position in the company” (Wankel & Stoner, 24, 2008). Management Strategies A huge number of research organizations have put efforts to analyze management techniques of the British Petroleum, and the results have indicated that the company has been involved enormously in enhancing its performance socially on global level by its different social initiatives and forums that has enabled it to prove itself as one of the globally-conscious companies around the world. For instance, during the last few decades, the British Petroleum put more than eighty million dollars on their various social initiatives that included funding for schools for poor, as well as developmental projects for poor communities in the developed, as well as developing countries (Cross, Earl, & Sampler, pp. 401-423, 1997). In specific, projects for community development enjoyed the biggest share in the social investments of the British Petroleum, followed by education and health. One of the significant attributes of British Petroleum’s management techniques is inclusion of environmental performance as one of the components of key performance indicators for its annual reports that is an evidence of its huge involvement in environmental issues on global level. In other words, the British Petroleum views success as more than financial gains, and thus, environmental improvements and enhancements have been an imperative part of its mission and objectives. Analysis (Cross, Earl, & Sampler, pp. 401-423, 1997) has indicated that various oil companies have been confronting oil protests against them since a long time; however, the British Petroleum has been successful in avoiding such protests due to their environmental endeavors. For instance, in the year 1998, the company published its first social report that focused primarily on non-financial, and specifically, environmental and social terms and principles that indicates its seriousness regarding the environmental responsibilities. Transparency Analysis has indicated that according to the executives of the British Petroleum, transparency has been one of the foremost factors that is essential for good control and authority, and subsequently, imperative for environmental sustainability of the company. In particular, British Petroleum believes that individual companies cannot bring a significant change on their own on global level, and thus, it is very imperative and essential for companies to focus on some of their own characteristics before putting efforts for collaborative contribution globally (Wankel & Stoner, pp. 50-53, 2008). In such attributes, transparency is the most essential feature of an organization that enables it to become environmentally and socially sustainable in the region. In specific, transparency is like a first step towards proving as a company ready for globalization, and global development. Criticism Besides constructive contributions of the British Petroleum, the company has confronted a number of criticisms due to its investments in a number of environmentally adverse companies or locations. For instance, the British Petroleum invested in Columbia that according to the critics was an attempt of acknowledging and encouraging poor performance of the companies in Columbia (Wankel & Stoner, pp. 81-88, 2008). In addition, the company invested in PetroChina that resulted in huge amount of disapproval from global experts and media. In response, the British Petroleum argued that withdrawal of oil companies from such devastated regions could not be an effective solution for environmental sustainability in such regions. On the other hand, withdrawal will be a way of encouraging violence, ignorance, poverty, etc in the region that will be adverse globally, and subsequently, against environmentally sustainable objectives and mission statements of the British Petroleum (Wankel & Stoner, pp. 81-88, 2008). In this regard, the British Petroleum believes that investments in such regions will be a helping hand in resolving the social and environmental issues of the developing countries, and will be a way of bringing peace on this planet. Therefore, the British Petroleum will continue to invest in such countries and companies to enhance levels of its contributions toward environmental sustainability. Conclusion During the early 1990s, British Petroleum was in profound catastrophe, being a middle size oil company with a huge debt, as well as small share price that concluded in the division of the dividend during the year 1992 (Shrivastava, p. 956, 1995). In opposition to this condition, the previous decade has observed a company undertaking significant and comprehensive alterations, concerning not just such key strides as the merger with Amoco during the year 1998, but as well the re-branding of British Petroleum during year the 2000. This rebranding enfolded the business in fresh colors, aimed to be a sign of a real concern for the environment and an unshakeable dedication towards human development (Bamberg, p. 59, 2009). British Petroleum places a strong emphasis on corresponding to the community what it recognizes as the main environmental sustainability issues that are pertinent to the business outline, and how British Petroleum intends to carry out its expression. British Petroleum’s rhetoric is broad and somewhat strong in comparison to other oil multinationals similar to ExxonMobil and TotalFinaElf. Certainly, this courageous approach is expected to generate anticipations both internally as well as externally concerning British Petroleum’s approach towards environmental sustainability issues (Eggleston, p. 50, 2010). For instance, according to Frank Vogl, the Member of the Board of Transparency International, “We are heading for an era of accountability and transparency where CEOs will seek to emulate the model of Sir John Browne, Chief Executive Officer of British Petroleum Amoco. He has redefined his corporation and wrapped it in colors and a logo that declare to all stakeholders an intense concern for the environment and sound corporate ethics. Sir John sees this approach, and the comprehensive integrity reporting that British Petroleum Amoco undertakes, as a force in building the company’s competitive edge” (Vogl, pp. 2, 2001). Signs of growing hopes from non-governmental organizations are already rising, together with criticism raised in opposition to British Petroleum for its ventures in China (Estrada, Tangen & Bergesen, p. 43, 1997). This procedure of strategic reorientation has as well been going together with an intensification of managing systems, trade strategies, as well as business coverage. Substantiation of adjustments is as well given in the expansion of fresh management systems as well as procedures, together with stakeholder appointment, principles official recognition procedures, public impact opinions, social ventures as well as comprehensive reporting on social performance (Prokesch, p. 160, 1997). In the end, it is obviously impulsive to create opinions of what the upcoming time might bring in view of the fact that the expansion of standards, modalities, as well as rules for business strategies and achievement on environmental sustainability issues is just in its decisive phase. In conclusion, the paper includes a comprehensive and critical discussion and analysis regarding the evaluation of British Petroleum as more than an energy provider from the aspect of environmental sustainability. It is an observation that British Petroleum is putting enormous efforts to portray itself as an environmentally sustainable organization through its different and various initiatives. As paper discussed, the company believes in continual progress as a beneficial business opening and it has incorporated environmental as well as social concerns into its development policy that has been evident in its respected portray as a sustainable organization in the marketplace. Finally, the researcher has endeavored to identify quality sources for this analysis and case study of the British Petroleum, and it is anticipation that future studies on the same issue will enable a more comprehensive analysis of the organization. To finish, it is an expectation that this critical paper will be beneficial for the students, professionals, as well as non-professionals in better understanding of the British Petroleum’s efforts toward environmental sustainability in the region. References Bamberg, J. H. (2009). The History of the British Petroleum Company. Cambridge University Press. Clark, John C. (1991). The Political Economy of World Energy: A Twentieth-Century Perspective. University of North Carolina Press. Cross, J., Earl, M. J., & Sampler, J. L. (1997). “Transformation of the IT Function at British Petroleum.” MIS Quarterly. Volume 21, Issue 4, pp. 401-423. Eggleston, Mervyn. (2010). Don't Go Near the Water. Publication Consultants. Estrada, J. Tangen K., & Bergesen H. O. (1997). Environmental Challenges Confronting the Oil Industry. John Wiley and Sons. Prokesch, Steven E. (1997). “Unleashing the Power of Learning. An Interview with British Petroleum's John Browne.” Harvard Business Review. Volume 75, Issue 5, pp. 146-168. Shrivastava, P. (1995). “The Role of Corporations in Achieving Ecological Sustainability”. The Academy of Management Review. Volume 20, Issue 4, pp. 936-960. Vogl, Frank. (2001). “Corporate Integrity and Globalization.” G. Albert Shoemaker Business Ethics Lecture. Penn. State University, pp. 1-26. Wankel, Charles & Stoner, James A. F. (2008). Innovative Approaches to Global Sustainability. Palgrave Macmillan. Read More