Comparative Social Business Responsibility In Oil And Gas Industry

Concept of triple bottom line

Discuss About The Comparative Social Business Responsibility?

Ethics is regarded as the backbone of any institution weather it is a business or a non-profit seeking organization. Ethics and values does not merely state what is the right thing to do, but it also defines, doing things in a conscious, responsible and in a smart manner so that the company not only garners goodwill among the customers and the internal employees but also have a good name in the industry which will only turn out to be an asset in the long run of the operations of the business. Global ethics are universally accepted guidelines and rules of ethics and morals which should be adopted by the company and the management in the daily running of the operations. There are various aspects of ethics be it on the customer end or the employee end or for the society and the environment.

Traditional concepts of business module include sales maximization, growth, expansion and profit as the primary focus of the business. This is the model of business that was followed by all business organizations as they would focus on increasing the monetary value of the business and create a global footprint. This theory has been replaced by a contemporary model and perspective which is known as the concept of triple bottom line. In this concept the business model deals with a much broader aspect of responsibilities that business entities have in order to survive in the industry and the market. It includes three Ps: Price, People and Planet. Price would include all that was in the traditional model of business, i.e. expansion of the business, sales optimization and profit maximization etc. People, this an addition to the new version of the sustainability model of business, it includes the people who are associated with the business be it the interest of the customers or the employees of the company or the society at large. For example: cross-cultural management concept deals with people descending from diversified background to work as a team for the betterment of the organization. Lastly, the concept of Planet as this is one of the most important aspect in the business process that is often neglected by the organization. An organization like any other individual is entitled towards certain responsibilities towards the environment and nature as it has received a lot from the natural resources.

Overview of the Oil and Gas Industry

Oil and gas industry has been the pioneer of industrialization since the industrial revolution. The products and services are provided by this industry and significant and have special importance in running any other business around the world. Light, heat and mobility are just some of the aid that everyone enjoys form the produce of this industry. Though no one can deny the importance and the utility of the oil and gas industry, no one can also deny the fact that due to oil and gas drilling there is a lot of environmental depletion. Over the years there has also been a lot of disagreement around the economic and environmental issues surrounding this company. According to Ferrell and Fraedrich (1991), by 2017 the demand for oil and gas will reach up to 4 trillion cubic meters. To combat this great demand of oil and gas natural resource large reserves’ are being drilled and the industry has also faced a lot of controversies regarding the safety of the workers and the health hazards that are associated with working in the reservoirs and the site of the oil platforms.

As referred before sustainability is always has been an issue with this industry the drilling of the oil and gas causes serious water pollution from the remains of the drilling and also the procedure causes a large amount of air pollution. Apart from that the land is being drilled and depletion of natural resources is another factor of the industry that causes environmental threat. Oil spills are another problem in the world that are causing serious water pollution and are developing major concerns in the world. Most petroleum reserves are found beneath the ocean floor and drilling rigs are utilised to extract the materials any leak or any issue with the rigs have the potential to cause major environmental damages. Leaving behind the traditional concepts of profit maximization business organisations are taking over the mantel of sustainability and welfare. Hence, the oil and gas industry companies have slowly invested and opted for sustainable, improved so that it can decrease the environmental impact as well as avoid the potential of any kind of disasters. Not only oil and gas companies but corporate all around the world have recognised the importance of environmental sustainability and have adopted it as a part of the business model.

Understanding and analysing the risk associated with several stakeholders is the first step towards developing an ethical culture within the organisation. Working in an ethical environment may cause a lot of changes in the policies and the decision making procedure of the company and it may take a little getting used to the new affairs of the operation by the employees and the stakeholders. Risk management and reduction of accidents are a part of cause and effect concept. If companies take an account of the risks that they pose to the environment or ethically and work towards reduction of those risks and crisis situations simultaneously the accidents associated with the risks also reduces. Two of major oil spills that united States have ever experienced to date is the Exxon Valdez spill and the deepwater horizon oil spill. There are several reasons for oil sills it can be man-made or natural. Experts estimate that 30-50 percent of oil spills are caused by human error directly or indirectly. Moreover 20-40 percent times it is caused due to the failure of mechanism or equipment malfunction. If the management assess this problem and take precautions and employee skilled professionals to handle equipments, check and recheck the accounts and the records so that there is no place for human error then the plausible conditions for oil spills can be reduced and managed by the oil and gas industry (Michel and Fingas 2016). There are several mode of transportation involved in the transfer of petroleum from the oil, form the field to the server. Starting from tankers, pipelines, railcars, and tank trucks etc are few of the examples of the mode of transportation used. Hence there are high risks associated with the transportation of the products. Not only oil and gas industries governments also all the world has taken strict will measure and code of guideline sthat help reduce the risks of oil spills.

Impact of ethical risk management of oil and gas industry in the reduction of accidents

Training the worker to develop skills, advanced use of technology to build equipments and modern ways to tackle the procedures of drilling, extraction and transportation process are some of the ways that can reduce the impact and the oil spills incidents. Recognizing and identifying danger and strategizing plans associated with risk analysis of the septic operation and practicing risk-mitigating actions are the most evident prevention tactics of prevention of oil spills. Research and development should be encouraged in the companies and innovations in the technologies should be implemented to understand the risk and manage them accordingly.  Understanding the reasons and the cause of oil spills in the past provide an insight of what went wrong and how could it be prevented is one of the ways in which companies can reduce the risk of oil spills (Yusuf et al. 2014). The technologies before implementation or installation should go through thorough checks and quality procedures to endure temperature and climatic changes so that it does not behave in different ways in different conditions. The technologies should be certified by the authorities and should in corporate leak detection and in-line monitoring procedures for pipelines (Ventikos and Sotiropoulos 2014).

Apart from oil spills there are also accidents with the employees who are working in the reserves and the platforms as well. The lives of the employees of any organization are one of the most important aspects that companies should take care of. Health issues from inhaling toxins exposed from drilling process, oil and gas and petroleum are all inflammable substances and hence there is a lot of risk associated with fire and explosions for the workers who are working in these reserves. Over the years of facing criticisms and controversies related to the occupational hazards that are associated with the oil and gas industry the wellbeing of the workers and safety precautions has been prioritized by my companies. Yet, there are several industrial hygiene concerns that are often ignored as they are not that prominent but cause a lot of impact. In order to determine the real risk to workers companies have to understand and analyze the risk in proper way and management has to take policies and decisions accordingly for the betterment and improvement of the working conditions of the workers. Accidents like falls and explosions and fires are some of the casualties that can be prevented with extra careful practices and proper risk management policies of the company (Ventikos and Sotiropoulos 2014). Apart from this, the workers are mostly exposed to hazaderous chemicals like drilling fluids, hydrogen sulfide, silica, diesel exhaust and mercury. A proper exposure control plan or EPA must be implemented by the company in order to reduce the risk that people are in due to chemicals that they are surrounded in the process. The plan should highlight and provide guidelines to protect the health and wellbeing of the workers against chemical exposures, it should also give out information and data relating to health hazards, equipment controls, safety procedures during the working hours, skill development and training to the workers and maintaining a check or record of the incidents and its cause and impact so that in the future such accidents may not occur.

Ethical risk management will reduce any accidents in the future and companies have encouraged the usage of sustainable technologies and ethical guidelines to ensure the reduction in the incidents in the past decade. Consistently increasing awareness and advancement of technologies by the oil and gas companies have decreased the possibilities of accidents it should be kept in mind that these guidelines are strictly followed. There are also several authorities and institutions that look after the companies in this matter as well.

The oil and gas industry is full of risks and hazards. Oil spills and accidents are bound to happen as it deals with inflammable substances, hence in order to avoid the accidents the companies should take mitigation measures and risk management policies. During the Exxon oil spill which occurred during 1989 the company recognized its mistake and had taken full responsibility in restoring the shores and the wildlife that was fiercely affected by the oil spill in the sound region (Whiffen 2013). The company has to pay millions of dollars in as fine and restoration process went on for more than a decade. But experts believe that there has been a permanent effect on the environment and the water life of that area and it cannot be restored back to normal any time soon. The significant damage that the spill has caused to the fishery and the water life in that area is of great extent (Berkowitz et al. 2017). The beaches in that area are also examined as toxic and are filled with oil remaining. The shoreline is still contaminated and there rare several pits of oil still found in that region. The oil and gas industry has leant a lot form this iconic infamous incident and has adopted a lot to ensure that such incidents do not take place in the future (Papavinasam 2013).

The explosion in the deep water horizon in the Gulf of Mexico highlights the fact that the oil and gas companies are yet to be fully responsible in recognizing the threat that they pose to the environment and the society. Companies are yet to understand the gravity of the risk that the operations possess. Beyond petroleum was already under the radar of criticism for the careless policies and decisions that the company showed towards handling safety and precaution of the works along with the sustainability of the operations (Ferrell and Fraedrich 1991). That the company had to rebrand itself, it adopted some extensive and some important measures in the daily operations of the business, code of conduct in the reservoirs and drilling areas as well as using alternative energy sources. As the company tried to reposition itself as sustainable and responsible it had drawn upon some obligations towards the society and environment (Lamendella et al. 2014). The explosion of the oil rig in the Gulf of Mexico made it evident, how obligated they were in their actions. The explosion did not only affect the environment by spilling gallons of crude oil into the water but also took the lives of 11 workers who were in the rig. All the efforts of the company to stop the oil from spilling failed and around 2.5million gallons of oil was pouring out of the rig on a daily basis. The costs of Louisiana, Texas, Florida, Mississippi and Alabama were washed with oil affecting the daily livelihood of thousand of fishermen and killing several aquatic animals. The explosion proved that the contingency plans of the company to control any disaster were inadequate and not full proof. There was no option of system shut down which could have been used as a last resort in any crisis situation. The after effect of this spill will be felt by both the company and the country for years as the government had ordered to shut down 33 rigs in that area which supplied around one-third of the supply in America (Acosta-González et al. 2015).

Hydraulic fracturing also known as fracking is a process of extracting natural gas by pumping water, sand and chemicals into shale rock to force out the gas. Fracking has been view by many as the revolutionary opportunity in the energy sector. Natural gas is comparatively cleaner than coal as it emits considerably less amount of sulfur dioxide, nitrogen oxide and mercury which is the known to be the harmful components in the burning coal. Furthermore the process requires only 0.5% of drilling liquid which is also hazardous. The recent discovery of the shale gas reserve in the United sates have given this process a boost and also a promotion to the energy supply for approximately 100 years as anticipated by experts (de Melo-Martín et al. 2014). Nevertheless, the risks yet remain it is comparatively lesser than others but it is still a inflammable substance and that itself has a lot of risk associated with it. It is being said that methane is being emitted by the process of fracking and also that it cases the seismic shift of the tectonic place in the area of drilling. There are other chemicals that are used by the process which are carcinogenic in nature like benzene, hydrochloric acid and diesel (Kelland 2014).

For an industry as old and as criticized like the oil and gas industry, it is very important to be ethical in nature, the three pillars of sustainability model must be considered by the oil and gas industry than any other as the risks associated with the industry is also significantly higher than any other industry. As stated by Ferrell and Fraedrich (1991), there are risk associated the production to the transportation to the storage of the product that the industry offers. In such cases ethics become the backbone of the company and just developing sustainable and health welfare products does not end the process for the industry. The policies and the decisions as well as the technologies that are innovated have to go through strict and stringent rules and regulations. The companies are in great need for leaders who are ethically driven and give more and more importance to the societal and the environmental welfare because those two factors form the majority of backup and support for the company (Varfolomeev et al. 2014).

Conclusion

The impact the oil and gas industry have on the economies, environment and society is unlike any other industry. The importance of energy is not unknown to any but the pressing issue at the current situation is the significant depletion of the environment and the effect it has on society. Oil and gas companies should understand the responsibility they have towards the welfare of the society along with the environmental responsibility they have. The aim should not be to prevent any accidents that are a prerequisite that comes with the business, the aim should be towards innovations and creativity so that the company can ensure the betterment of the environment and the improvement of the work life of the people associated with the industry.

Reference List:

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