CSR and Environmental Disasters: BP Oil and Exxon Mobile Disasters - Research Paper Example

?CSR and Environmental Disasters: BP Oil and Exxon Mobile Disasters 0. Introduction Corporate social responsibility (CSR) is considered as one of the most welcomed the development in the world of business. Through CSR, organizations have developed organizational activities that directly respond to the demands of most, if not all, the company’s stakeholders. As such, CSR has been considered as contributing to the success and growth of companies in the current period. CSR creates a respectable image and name for the brand, which contributes to the growth of the company (Porter and Kramer, 2002). However, some scholars have casts doubt regarding the motivation of organizations regarding the adoption of CSR programs or policies. Lin-Hi (2010) claims that the boundary between gaining a solid reputation that creates a media mileage, a reputable name and image for the company and CSR are blurred. Some scholars are saying that companies are doing the rhetoric of CSR, but in reality, a continued disregard of the ethical approach in doing business and a blatant disregard of the social, environmental, political and economic obligations of the corporations are observed (Banerjee, 2008). This scenario is especially true in critical cases wherein there is a blatant violation of CSR (Vaaland and Heide, 2008). Critical cases in CSR are those events where the social irresponsibility of the company has resulted into significant damage into the community or injury to the identified stakeholders of the organization (Vaaland and Heide, 2008). Unfortunately, critical cases in CSR are isolated cases. In the past 30 years, numerous cases of corporate irresponsible behavior have solidified the position that CSR seems to be valid only in the books but not in reality (Reis, Betton and Pena, 2004). This condition raises the issue regarding the continued significance of CSR in the current time (Lin-Hi, 2010; Reis et al., 2004). In this research, CSR will be evaluated vis-a-vis critical cases that have been observed in the oil industry. The study will focus on the case of Exxon and BP Oil. The study has selected to focus in these two cases because “accidents” resulting to environmental disasters such as oil spills, chemical leaks and other similar accidents have been consistently causing massive ecological and human destructions (Islam and Islam, 2011). In this regard, the study will look into the impact of critical cases like Exxon and BP Oil to CSR. It intends to determine the issues and problems that it gives rise in connection with CSR. Finally, it seeks to find some possible solutions to these concerns. The study is significant as it concerns with recent critical incidents, which have an increased risks of happening again because the cause is not merely technical, but also involve mismanagement (www.bbc.co). In addition, the study can provide a new insight to CSR. The researcher deems that this is crucial because, in the historical development of CSR, it is inferred that it developed as a response to clamor from people to put a rein on the apparent disregard of companies toward their responsibility to society who gave them the license to operate (Mirvis, 1994). In a similar condition, CSR is now being challenged by the exact same ethos that brought its inception – socially irresponsible acts of firms. The paper is organized in this way. The first part is the introduction where the focus of the study is given, the significance of the study and its structure are presented. The second part will deal with a brief discussion of the definition of CSR. This is essential as it provides the rationale for understanding the concept of CSR. The third segment is the presentation of the facts of the two cases under study, while the fourth section will show the impact and the issues that are raised by these critical events to CSR. The fifth section will be presenting some possible solutions to the identified problems. Finally, the conclusion will be provided. Hopefully, in the end a better understanding of the current predicament of CSR may be achieved. 2.0. Corporate Social Responsibility: Defined Scholars have created numerous definitions of CSR (Dahlsrud, 2008). Each definition is emphasizing a particular facet of CSR, which is considered as the central concern of the author. In this regard, it has been maintained that there is no universal definition for CSR (Dahlsrud, 2008). However, it can be contended that with each definition, though it results to ambiguity, helps in clarifying the particular aspect of CSR. In this sense, what is clear is that CSR focuses on five themes – environmental, social, voluntarism, economic and stakeholders – and responding appropriately to the ‘demands’ of each category helps determine the CSR parameters. Nonetheless, CSR can be viewed as the effort of the organization to balance its economic responsibilities and social responsibilities by identifying the legitimate stakeholders of the company and drawing appropriate environmental and socially responsible solution that responds to the actual demands of the identified stakeholders. This definition recognizes the inherent tension in CSR as it attempts to gain substantial profit while being socially responsible to its identified stakeholders. In addition, CSR works with indentified stakeholders. This is crucial in this definition as it presents the notion that CSR is not about media mileage, but it should be about authentically connecting with the identified stakeholders of the company by providing the appropriate response to stakeholders. In other words, CSR is continuing endeavor of corporations in coming up with concrete actions that lead to the satisfaction of all its stakeholders. It may be too broad, but it provides much room in accommodating the context of corporation – it straddles the good and the bad. 3.0. The Cases of Exxon and BP OIL The Exxon Valdez Case. On the night of March 24, 1989, the Exxon Valdez oil tanker ran aground on Bligh Reef in the pristine waters of Alaska's Prince William Sound. The first of what would turn out to be 10.8 million gal. of oil began to spew forth into the cold waters. It would eventually spread almost 500 miles from the original crash site and stain thousands of miles of coastline. Hundreds of thousands of birds, fish, seals, otters and other animals would perish as a result, despite the mobilization of more than 11,000 people and 1,000 boats as part of the cleanup. While the Exxon Valdez oil leak is considered to be the largest man-made environmental disaster in U.S. history, the Gulf of Mexico spill may eventually surpass it in severity (Cruz, 2010, ¶ 1). The BP Oil Case. This case is considered as the worst and most extensive man-made disaster. It happened on April 20, 2010 when the Deep Horizon rig exploded. Upon explosion, it killed 11 persons, released 8000 tons of oil upon to the sea and estimated 1000 tons every day until the problem was controlled. The extent of the damage has reached as far as Louisiana wetlands and it has killed and affected thousands of turtles and otters and other animal life in the area. Although BP Oil has taken responsibility for the accident, but it has also put the blame on the shoulders of its business partners Transocean and Hillsburton. In its 189 page regarding the event, aside from the highly technical jargon that has been used in describing the ensuing scenario, it highlights the idea that the disaster was a result of various lapses in management. This is maintained on the premise that the management was aware of the low quality of cement that was used to cover the tube. However, since the company was cost cutting and had to come up with an immediate decision even if there were mistakes on the specifications required to keep the rig safe, the management used less of what was necessary to hold the rig-tube together. They used only six even if they knew that 15 were necessary to hold it. In effect, it was a disaster waiting to happen. The lapses were due to lack of adequate leadership from the management at a time when a prompt but effective decision is necessary to solve the problem (www.bbc.co.uk). 4.0. The Cases of Exxon and BP Oil: Its Impact to CSR These critical cases have caught the attention of the media. Through their reporting, people were made aware of the extent of the damage and on how it destroyed the environment. This places CSR right at the heart of the problem because one of the key categories or focus of CSR is protection of environmental integrity. This is evidence by the fact that the idea of ‘“a cleaner environment”, “environmental stewardship” and “environmental concerns in business operations”’ (Dahlsrud, 2008, p. 4) are ways of defining and viewing CSR in the framework of the environment. Several issues affecting CSR have been observed. They are First, honest disclosure of what actually had happened. BP Oil came up with 189 pages for their report regarding the reason behind why the accident happened. In addition, they used technical jargons that can easily confuse ordinary layperson reading their report. This reality points to the fact that companies can do rudiments of the laws and follow it to the dot, but it does not imply that they are following the intent of the law and CSR. In this case, it is honesty, transparency and protection of the environment. This is claimed on the premise that if their real intent is to protect the environment where their business operations are being conducted (knowing the risks) they should not have opted for lesser rig screws or whatever it is called. The point being made is that companies can claim that they are CSR compliant because of their reporting performance. However, it is a different story when they claim that their report has created an understanding of the issue of Exxon and BP Oil. This shows the Janus face of these oil companies as they resolve the environmental destruction that happened. They circumvent the policies and laws to the extent that it benefits them. This scenario casts doubts to the sincerity of companies in following CSR. In this case, BP Oil can still claim that they are compliant because they performed the reporting. However, it is not the case that they were there on the site, but it is more on trying to grasp the connection between what is being said from what is being done. On the other hand, the minimal disclosure in the Exxon case has lead to ideas of covering up and non-action. As such, raising the query when and what is honest disclosure that is required under CSR? Second prominent issue is the idea of ‘passing the buck’. Karnani (2010) claims that CSR has become the instrument of the government as it continues in its non-action over substantial issues such as environmental degradation. Karnani (2010) asserts that ,through CSR, the government has passed the ‘responsibility of taking care’ for the society to the private sector, hence, ‘passing the buck’. Analogously, both Exxon and BP have been in a position where in the responsibility of the taking care of the environment has been shouldered by the companies involved, rather than the government proactively acting on the issue. This leaves the question, ‘what is the function of the government when there is CSR?’ (see to it that the companies get charged?). In effect, CSR is being used as an escape goat both by the government and by companies as they try to avoid their authentic and primary responsibilities. The third observable issue is the question of responsibility. Both the Exxon and BP have assumed responsibility on what had happened. Regardless of the extent and motivation behind their taking the full brunt of the event, both companies have taken the initiative of cleaning the seas, conducting research on how oil spills may be avoided in the future, coming up with sustainable programs that help protect the environment and coming up with environmentally friendly business operations. Are these actions CSR in the face of the critical events of which these two companies have been involved? The solution to the question cannot be addressed by a straightforward yes or no answer. The researcher holds that it is not CSR. Research, cleaning up the spill and protecting the environment is necessary if the company intends to remain in business. This means that it is the response of the company as it faces the critical event. This is claim on the premise that CSR does not happen overnight – suddenly the company has become socially responsible. The point being made is that CSR is not supposed to be a response after a devastating accident happened. Instead, it should be integrated in the company, both as a policy and as a strategy, even without any accidents or increase risks of accidents. CSR is already part of the nature of the global business society. They cannot thrive in the global economic market if they do not respond to CSR demands. In this scenario, the challenge is not turned CSR as one of the profit-making schemes of corporations, but that CSR remains true to its ethos – social responsibility of organizations. 5.0. Some Potential Solutions In the face of these issues and challenges to CSR brought by the cases of Exxon and BP Oil, the possible resolution include 1. Redefinition of CSR. The researcher holds that t scholars must set clearer boundaries as they try to define CSR in the face of the numerous violations committed by the irresponsible behavior of organizations. It is no longer enough that they focus on the connection between firms’ performance and CSR or focus on the various elements of CSR. They must be able to come up with a paradigm that will delineate media mileage form CSR and vice versa. 2. In the cases of Exxon and BP, responding to the destructive accidents that happened is not CSR. Their response is necessary because their operations have caused the destruction of the environment. There is a direct causal relationship between their negligence and the disaster. Although others may argue that, there are other extenuating circumstances that have occurred which altered the response of the management; nonetheless, the oil spill would not have happened if there were no carelessness on their part. Oil spill is part of the risks in the oil industry. More than anybody else, these companies should be prepared in addressing it. 3. Acceptance of the fact that CSR is open to the risk of being used by companies as they try to cover their mismanagement or underhanded activities. The outstanding reputation that is entailed in CSR is truly lucrative. Memery et al (2005) have found out in a study that ethical consumers are more than willing to pay a higher price for the commodities or services that they purchase as long as it supports their cause. This segment of the market is increasing in number. At the same time, there is now also, the ‘socially responsible investors’ (SRI) who are increasing in numbers (Umlas, 2008). SRIs are investors who are putting their money on companies that are known to be socially responsible. Companies must find the appropriate strategy that will attract these investors. In this context, it becomes imperative that both the scholars and the practitioners must come up with a risk management plan that will guard against possible miss use of CSR. The abuse of CSR is now part of the reality of CSR, and the continued non-response to the abuses committed by companies under the guise of CSR has the potential of destroying the inherent good in CSR. 4. CSR is not the panacea for all the ills in the business world, but it can counter the principle of self-interest that drives many corporations. In this regard, CSR can be made more responsive to the stakeholders if the relationship between the company and the stakeholder is partnership rather than ‘watchdog (ship)’. These possible solutions can only be turned into reality if there is an active involvement of all the stakeholders of CSR. The corporation alone or the civil society along cannot push the changes necessary for CSR to adapt the challenges brought by socially irresponsible acts of firms. Fig. 1 The CSR Relationship Source: Researcher The cases of Exxon and BP have shown that CSR relationship ought to be a combined effort that stems from the interconnected and contiguous realities of the government, the corporation and the stakeholders. In this way, rise or fall of CSR does not depend on one shoulder alone, but on the concerted effort of all. Conclusion Corporate social responsibility is ready for reform. The cases of Exxon and BP manifests that current understanding of CSR is insufficient to accommodate not only the socially irresponsible behavior of organizations, but also the underhanded manner in which CSR has been used by self-serving organizations. As such, the re-definition of CSR in the light of the socially irresponsible acts must be incorporated in the current understanding of CSR. CSR’s definition should no longer be just about the themes or categories that served as the focus of the definition. It should include the increase risk of misuse. In addition being good does not happen overnight. Just like being bad, it takes quite a time to develop and enhance. In this context, CSR should not be equated with the company’s response to risk or inherent danger in the sector. CSR is a response to the need or demands of the identified stakeholders of the company. References: Banarjee, S.B. (2008). Corporate Social Responsibility: The Good, The Bad and The Ugly. Critical Sociology, 34(1), 51 – 79. Cruz, G. (2010). Exxon. Retrieved at http://www.time.com/time/specials/packages/article/0,28804,1986457_1986501_1986446,00.html #ixzz1vh2gYLtF Accessed on 21May 2012. Dahlsrud, A. (2008), How CSR is defined: An analysis of 37 definitions, CSR and Environmental Management, 15, 1 – 13. Hemingway, C.A. (2002), An exploratory analysis of CSR: definitions, motives and values, Research Memorandum 24, CMOL.UK: Hull - University Business School. Islam, M. A., and Islam, M. A. (2011),"Environmental incidents in a developing country and corporate environmental disclosures: A study of a multinational gas company", Society and Business Review, 6(3), 229 – 248. Kaarnani, A. (2010). The Case against Corprorate Social Responsibility, Retreived at www.wsj.com Accessed on 22 May 2012. Lin-Hi, N. (2010), ‘The problem with a narrow-minded interpretation of CSR: Why CSR has nothing to do with philanthropy’, Journal of Applied Ethics, pp. 80- 98 Memery, J., Megicks, P., and Williams, J. (2005), ‘Ethical and social responsibility issues in grocery shopping: a preliminary typology’, Qualitative Market Research: An International Journal, 8 (4), 399 – 412. Porter, M.E. & Kramer, M.R. (2002). Strategy & society: the link between competitive advantage and CSR. Harvard Business Review, pp. 1 – 16. Retrieved from www.hbr.org. Accessed on 21 May 2012. Reis, D., Betton, J., and Pena, L. (2004). Corporate Social Responsibility: Is It High Noon for a New Paradigm? Journal of Human Values, 10, 1 – 11. Umlas, E. (2008). The Global Expansion of SRI: Facing Challenges, Meeting Potential, Development and Change 39(6), 1019–1036. Vaaland, T. I. and Heide, M. (2008). Managing corporate social responsibility: lessons from the oil industry, Corporate Communications: An International Journal, 13 (2), 212 – 225. Websites www.bbc.co.uk www.time.com Read More