corporate Responsibility In Multinationals Essay
Background of the company:
British Petroleum is a London based multinational petroleum company which was founded in 1908. According to the history of the British Petroleum the oil was founded in rugged part of the Persia. The oil had been discovered after the very difficult and long research. Currently British Petroleum is operating its business in many of the countries of Europe, Asia Pacific, America, Africa and Middle East (BP, 2015a). The major job of the British Petroleum is to find and extract the oil and gas in order to produce fuels, lubricants and petrochemicals. Moreover, British Petroleum has a strong long term relationship with its suppliers, banks, customers, government, communities, universities and national and international oil companies (BP, 2014).
British Petroleum uses step by step process so that they can provide their best products to its suppliers and customers. The sophisticated technologies are being used by using the tried and true technique with the aim of finding the gas and oil under the surface of the earth. After finding the gas and oil, British Petroleum with the help of technologies extracts the gas and oil as much as possible. After the gas and oil is being extracted, British Petroleum then move the oil and gas through pipelines, large tankers and ships and then transport that gas and oil around the globe. From that gas and oil, British Petroleum then make products and fuel by refining the crude oil and transformed it into the serviceable products such as high quality gasoline and other chemicals which are being used by the customers in everyday things. After making the fuel product, the company then sells the fuels and other various products around the globe at the ports, service stations and airport and to the motor oil so that the world could be moving (BP, 2015b). During all this process British Petroleum try to manage its corporate sustainability in its every operation.
Material sustainability risks:
Materiality has become an important and significant aspect of the sustainable business. The focus of materiality is broader as compared to the traditional way of financial materiality (Foerstl et al., 2010). From the last many years the many question related to materiality is being risen by the social responsible investors. As the people who are associated with the social responsibilities they are mostly concern about the factors related to risks which organizations are facing while operating its business operations around the world (Epstein, & Buhovac, 2014). These risks might be associated with the availability of the water, energy and other resources which are being used by the organizations. In addition to this, sometimes there is shift in climate which directly or indirectly disturbs the raw materials’ availability and intimidates the employees and customers’ well being (Benn, & Dunphy, 2007).
It is very essential for the sustainability executives for understanding the materiality and risks which are associated with it especially in the large multinational organizations. The concept of materiality has been now highlighted and issues are identified related to it both internally and externally (Makower, 2012).
British Petroleum and Material sustainability risks:
When an organization operates its activities and operations in the market then it has a huge impact on the economy, environmental, sociality and the stakeholders. British Petroleum works with the strategy and selects their priority of managing a high quality portfolio and utilizing their unique capabilities. The priority of the British Petroleum is carry out the safe and complaint free operations with the aim of increasing the operational efficiency and performance by keeping in mind the safety of an employees and organization (BP, 2015c). However, during the process of finalizing the raw material into the final product, British Petroleum also faces some material sustainability risks. These sustainable materiality risks somehow impact the activities of the organization. British Petroleum has made a report related to the sustainability issues which has highest significant importance to their stakeholders and has a huge and greatest impact on the ability of the British Petroleum in terms of delivering the strategy which is made by it. As the stakeholders play a significant role in identifying the impact and some impacts are visible to them, they provided various feedbacks to the British Petroleum throughout the year which aided in approaching the issues and reporting them. These issues were being identified by using the tools which are illustrated below:
While considering the internal issues British petroleum set priorities by taking an input from the internal experts. The internal experts have different understanding of the situations and can also provide a future forecast which help in improving the quality and the quantity (Rohrbeck, Arnold, & Heuer, 2007). It also uses the process of risk register which helps in ensuring that the decisions have covered all the material risks (Asherleaf consulting Inc, 2011). Moreover, the external concerns through which the issues were identified are audience research, external; reporting trends, industry benchmarking and peer view and international media review. With the help of these tools and techniques of materiality matrix, some of the material sustainability risks are being identifies which are demonstrated below:
Environmental restoration: the natural resource has been injured after the accident of the deepwater Horizon which include the number if natural resource injuries. British petroleum is working with agencies in order to access and restore the environmental injuries (BP, 2015d).
Investigations and legal proceedings: the investigation related to the Deepwater Horizon accident has been carried out so that the causes will be identified and the deep water drilling should be done with the safety (BP, 2015e).
Climate Change: the consecutive change in the climate of the globe is a long term issue such as emission of the carbon dioxide (CO2) for the British Petroleum, which bring difficulty in performing its activities (BP, 2015f).
Personal Safety: in the year 2014, British Petroleum faced the issue of personal safety regarding to employees. For instance, in UK an employee fall from the height, another employee died because of the forklift incident which occurred in Indonesia, moreover; in Germany an incident occur when an employee was working in a process vessel (BP, 2015g).
Cyber Threats: British Petroleum has a threat related to the security of the information and IT system which is used in the business operations (BP, 2015h).
Unplanned Events: British petroleum analyzes the risks which are unplanned for instance security incidents, spills, terrorism etc. By analyzing the impact related to the safety, environmental, health and reputation. Moreover, in 2013 the terrorist attack in Algeria on Amenas gas plant in which British Petroleum has joint venture faced an attack by terrorist. This was an unprecedented event (BP, 2015i).
Stakeholders of British Petroleum:
For the success of any organization it is very essential to manage the groups of stakeholders. The company is required to manage a strong bond between the firm and the stakeholder (Ghauri, & Cateora, 2010). The term stakeholder is refer to as an individual or the group of people who are can effect or can be affected by the accomplishment of the objectives of the organization (Freeman, 2004). There are two types of the stakeholder namely primary and secondary. Primary stakeholders are those without which company is unable to survive such as customers, employees, shareholders etc. On the other hand, the secondary stakeholders are those who got effect and can affect the company but they are not basically engaged in the transactions of the company (Lindblom, and Ohlsson, 2011).
British Petroleum is engage with a wide variety of the stakeholders so that they could work according to the expectations of the society. The stakeholders of the British Petroleum are included those individual who somehow are affected by the activities of the company. British Petroleum stakeholders are affected by the activated either it is in terms of energy provider, employer or just a business who is generating the profit so that it can serve the local economies of the country. Following are the primary and secondary stakeholders of the British Petroleum:
Employees: the employees of the British Petroleum are being completely informed about the company in which they work. The top management team members held regular meetings with the employees of the British Petroleum and webcast around the globe. Moreover employees raise their concern throu8gh channels so that the top executives can maintain a communication link from different sites of the British Petroleum. In 2014, almost 38,000 employees of the British Petroleum from the 70 different countries participated in the survey of the employee engagement survey.
Shareholders and Analysts: the shareholders of the British Petroleum have received a more value. The shareholders and analyst of the British Petroleum have been engaged in the decision and other operation of the company through annual general meetings, road shows, one to one meetings and webcasts.
Governmental and Regulators: Government also work as a stakeholder of the British Petroleum in a way that company do dialogue with the all relevant and related government agencies, ministries and other regulatory department which are presented at the every stage of the regulations of the country. Moreover, the countries in which British Petroleum operate its business operation, the activity of lobbying are regulated strictly. In addition to this, the British Petroleum is linked with the government and other regulators with the purpose of engaging in the policy debates which are mostly concerned with the British Petroleum activities and with the communities in which it operates such as carbon, financial transparency and security and human rights.
Industry: the oil and gas industry is also a stakeholder of the British Petroleum. The British Petroleum work collaboratively with the other industry groups in order to build the standards and can deal with the complex and composite challenges which are related to the energy. British Petroleum is also a member of the global oil and gas association namely IPIECA, for resolving the social and environmental issues. In this group British Petroleum along with its industry’s peer, works on the various topics such as managing risks which are related with the human rights in the supply chain system. British Petroleum is also a member of the other various industry bodies including the International Association of Oil & Gas Producers and the American Petroleum Institute.
Contractor and Partners: just like the other members of the industry, the British Petroleum has hardly ever worked separately. For the safe, successful and responsible operations of the, the British Petroleum are depended on the performance of its partners, contractors and suppliers. To carry out the safe and responsible activities, British Petroleum set the operational standards by legally making and agreement with the suppliers and partners. Furthermore, the British Petroleum also provide value to its contractors by giving them training and making a dialogues with them in order to build their capabilities.
Local Communities: Local communities are considered as the most important stakeholder of the British Petroleum. The local communities are basically significant stakeholders in all business operations but they have given more value especially in the new projects where their activities can influence their local areas. British Petroleum is engaged with the local communities by meetings and public consultations.
Non Governmental Organizations: Nongovernmental organizations are the secondary stakeholders of the company. British Petroleum makes a contact with the NGOs, in order to get the expertise who can manage the sustainability impacts.
Management of risk:
The recognition of the material risk is being done by the British Petroleum and these risks are then assessed to manage such sort of risks. British Petroleum manages, organize and then report some main uncertainties and threats which have an influence on the ability and on the delivery of the strategies. British petroleum with the help of management system, structure, standards, process, behavior and processes build a system that how the risk can be managed and activities can be carried out easily. The risk management system is illustrated below:
The threat of security of the information of the company is increasing for which British Petroleum has increased its computer and network technology. Moreover, the cyber security standards help the company in managing this risk.
The security management system of the British Petroleum aimed to protect the human right and as a signatory of the Voluntary Principles on Security and Human Rights the company sustains the security and respects the human rights.
While operating in many different countries it is necessary for the company to follow the environmental regulations. The climate change programs, emission control and regulation of unconventional gas extraction all these steps to control the environmental impact has an important effect on the production of the company.
The stakeholders of the company including employees, NGOs, government, communities, stakeholders and analyst etc, the British Petroleum addressed with them. The conversation is done in one to one meeting. In the meeting the stakeholders show their interest in the environmental and social issues and some ask about the climate change and global issues. On the issue raised by stakeholders regarding climate change the company response that the low carbon policy and efficient operations and products will be made. When it was ask about the safe drilling then the company responded that with the help of innovative technologies and robust risk management the safe downstream activities will be carried out in the process. The spills and leakage will be prevented in the refineries.
Factors Impacting the Report:
Many companies in their sustainability report do not provide detail information and if they provided then the information is very limited. However, some stakeholders pressurize the company to mention some detail information which they thing is important to be considered. For instance, from the last many years it has been reported by the environmental activist that many companies and sectors has not reported the material issues especially sectors like forestry, mining, chemical, paper and food and beverage. Nowadays companies use the policies which are given by the Global Reporting Initiatives (GRI) regarding to the making of sustainability report in a effective way (Global Reporting Initiative, 2013). By comparing the GRI standards and British Petroleum annual and sustainability report, it has been identified that one of the important aspect of sustainability report is not be highlighted.
According to the claws of the CRI it is referred that it is necessary to mention the all the standards which company is using in its business activities. However, according to the annual report and sustainability report of the British Petroleum the standards are mention for the every policy and issue such as cyber security standards, human right standards etc; but these standards are not clearly explained that what are their claws and what are the strategies which are to be followed in those standards. Hence, this factor of mentioning the standards is need to be shown in the report.
The British petroleum is a multinational corporation and is working by keeping all the sustainability factors in mind. British Petroleum achieves its sustainable success by keeping the long-term interest of its shareholders, society and other partners. Further, British Petroleum takes care of the safety of its operations, workforce and communities. Moreover, British Petroleum is also concerned about avoiding and mitigating the environmental impacts in every country in which they operate its business. In addition to this, British Petroleum also emphasis on having a positive impact on the communities and society in which it works. By assessing the material risks with the help of its employees, British Petroleum take measures steps to deal with it. By demonstrating the way through which these issues were identified shows that they are accountable and concerned about the issues. The stakeholders’ information was also given in very detail and their related issues which they want to be answered were also being given in their sustainability report. The employees and communities who are their primary stakeholders are having much attention by the company and their problems are mostly being considered as the top priority.
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