Executive Summary
Shell and BP are two of the global giants in the oil and gas industry, and they are compelled by their status to engage in the development of corporate social responsibility programs that portray them as corporate citizens. Shell has demonstrated a committed position to uphold this requirement of super large companies.
The companyâs corporate social responsibility program is deeply enshrined in the enhancement of safety for the employees and consumers. Most critics claim that BP has always claimed to be a corporate citizen looking to enhance safety and sustainability in its business processes.
It is apparent from its recent disasters that there is room for improvement in its CSR. Companies in the industry are faced with numerous challenges, especially in the past several decades, because of the awareness of the global society of their contribution to environmental degradation.
The companies have been forced to develop corporate social responsibility programs to influence sustainable developments and to demonstrate their commitment to bringing positive changes to the society. Shell and BP have clearly spelled out codes of ethics that their human assets and business entities must follow in every activity.
Introduction
Corporate social responsibility is a concept that has been adopted by many companies across the world in the wake of globalisation. By definition, the concept entails the attainment of sustainable growth in business entities, whereby the companies develop programs that look to eliminate the negative effects of their business activities.
Corporate social responsibilities may also be oriented toward the attainment of the requirements of the stakeholders, or they may be designed to meet the legal requirements for licensure purposes.
Most companies implement corporate social responsibility programs on utilitarian grounds, whereby they strive to give back to the society and to protect the ecosystem for the benefit of future generations. Shell and BP are two of the largest multinational companies in the world.
They operate in the oil industry, which is one of the most controversial business field in the contemporary world owing to its contribution to environmental degradation.
The two companies have developed unique corporate social responsibility programs that have impressed many, but their contribution to the emission of greenhouse gases and oil spills attract criticism from people across the world.
Working in the oil industry required BP and Shell to assume a strategic plan of developing corporate social responsibilities that primarily focus on environmental sustainability. The production of safe energy, and the elimination of environmental hazards is the main focus of Shell and BP.
This report compares the corporate social responsibility programs assumed by Shell and BP, with a close focus on the advantages and limitations of the strategies.
Brief Information about the Two Contrasted Organisations
Shell is an Anglo-Dutch company that established its oil and gas business in 1907. The company is headquartered in The Hague, Netherlands, and it operates in over 100 countries. Shell was founded after the Shell Transport & Trading company in the UK merged with the Royals Dutch Petroleum company.
The merger resulted in the development of one of the largest companies in the world in terms of the size of revenue. Shell engages in all business activities within the oil and gas industry, including refining, production, trading, and distribution among many other activities.
The company has over 40,000 service stations across the world, where it retails oil products and gas. Shell has several subsidiaries across the world, including the Shell Oil Company in the United States, which is a major contributor to Shellâs revenue.
Shellâs tremendous growth has been actualised by the development of a business plan that entails the differentiation of business activities. Being in every business process within the industry has also ensured that the company standardises the prices of its products; thus, harnessing a larger global market share.
The company has a corporate social responsibility program that is deeply rooted in utilitarian ethics. Shell gives back to the society through sponsorships, and it has also developed a program to ensure it reduces its carbon footprint every year.
BP plc is a British multinational company headquartered in London. It is one of the largest companies in the oil and gas industry, and it operated in all business processes in the industry, making it a close rival to Shell and other super-major companies in the business.
Since its establishment in 1908, BP has seen exponential growth in its business performance. Despite the company being one of the largest companies in the oil and gas business, BP has faced numerous challenges with relations to safety and environmental hazards.
The company has paid numerous heavy fines to the Occupational Safety and Health Administration (OSHA). It continues to fund efforts to reverse the effects of some of its recent oil spills in different parts of the world.
Safety is one of the weakest areas that BP has to improve in, despite the numerous efforts to develop sustainable business approaches. BP has a corporate social responsibility program that focuses on environmental and social sustainability.
The expansion of BP has been fuelled by its opportunistic business model, and it is expected to keep growing despite its environmental and safety challenges.
The Business Ethics
Most of the companies operating in the oil and gas industry recognise that observing the business ethics that apply to the industry is an integral part of building a good reputation. Observing business ethics is also a major factor in the development of future business opportunities for the companies.
Most of them have embarked on plans to embrace the many regulations placed by individual governments, NGOs, and international organisations. Business ethics in the oil and gas industry encapsulate three major areas, including corruption, environmental sustainability, and social sustainability.
Companies in the industry are faced with numerous challenges, especially in the past several decades, because of the awareness of the global society about their contribution to environmental degradation.
The companies have been forced to develop corporate social responsibility programs to influence sustainable developments and to demonstrate their commitment to bringing positive changes to the society. Shell and BP have clearly spelled out codes of ethics that their human assets and business entities must follow in every activity.
For companies the size of Shell and BP, behaving like corporate citizens is an indispensable requirement. The business ethics that apply to these companies revolve around the environmental impacts of their activities.
The ethical requirements of the companies are not only tied to the production and distribution of oil and gas, but also the climatic effects that emanate from the use of oil at the consumer level.
Scientific findings indicate that companies in the oil and gas industry must consider their impact on the environment in relation to the sustainability matters of burning hydrocarbons. The companies are actively involved in business processes within the developing nations.
They are obliged to take an active role in protecting human rights and ensuring their activities attain parallelism with the business ethics that are protected by the regional governments (Aguilera, Rupp, Williams & Ganapathi 2007).
BP and Shell have great impacts on the lives of the local communities living around their business entities because they offer employment opportunities, and the nature of their operations presents numerous hazards to the society.
The companies are obliged to focus on reducing the negative impacts of their activities in the respective communities. They are also obliged to invest heavily in helping the people around their production entities.
The companies have the power to lead national and international developments; hence, they should take the responsibility to pilot positive social developments.
BPâs code of ethics applies to all business activities. It is not explicitly defined, but it is enshrined in the companyâs values. The organisational values of the company encompass safety, respect, courage, excellence, and one team (Ethics and Compliance 2013).
BP demonstrates its desire to improve safety for its employees, the environment, and the society by improving safety standards. This strategy is attained through the provision of training programs for the employees and developing safety precautions in the business processes.
The company has embedded operations management systems to ensure safety is prioritised in every process. The company has three lines of defence that support safety in every operation. The company is actively engaged in research to identify risks associated with water scarcity in different areas of operations.
BP has also collaborated with governments to plan responses to any oil spills in the future. Oil spills are the biggest challenges that BP has faced in recent times, and the BP Deepwater Horizon oil spill is the largest oil spill that has ever been witnessed in the world.
The effects of the spill continue to be witnessed in different ecological areas if the region and BP has collaborated with various organisations to resolve the environmental issues. BP is also committed to assuming ethical energy use through the development of energy efficient production processes that lower its carbon footprint.
BPâs future ethical considerations with reference to environmental sustainability involve the enhancement of water conservation in its production zones. It also includes better predictions of the effects of oil spills on land and water, and sharing its findings on energy efficiency with other refineries (Environment 2013).
In terms of social issues in the business ethics of the company, BP has ensured that it focuses on improving its employeesâ welfare. The company is also actively involved in the provision of fresh water to the communities living around its business entities in different parts of the world.
BP has spent over $70 million in community projects across the world to demonstrate the desire of the company to operate ethically. The company is also among the few companies in the oil and gas industry that have stood out with their projects to support the protection of different human rights (Society 2013).
The advantages of BPâs commitment to making the society a better place is that it has gained the support of governments, and NGOs amid its crisis in oil spills. BP is responsible for the worldâs largest oil spills, and it has a great responsibility of reclaiming its lost glory among critics.
The environmental and safety crisis at BP has influenced the development of various government regulators to ensure companies in the oil and gas industry uphold the ethics associated with their different business processes.
Shell has seen its fair share of negative criticism over the past several decades owing to several disasters that forced the company to review its business ethics. The companyâs code of ethics focuses on environmental and social sustainability.
The most important codes of ethics of the company are followed by the executives of the different subsidiaries. The values of the company compel the executives to uphold transparency in reporting and exclusiveness in making the business processes safer for the employees and the community.
Shell has demonstrated its willingness to promote sustainable use of the energy resources. Unlike other companies that are only profit-oriented, Shell has developed a business strategy that looks to ensure that the growing need for energy across the world will be met in the future (Society 2013).
As oil deposits in different areas continue to reduce, Shell is looking into developing research institutes to develop viable alternative sources of energy. The company is particularly focused on developing cleaner sources of energy.
Business ethics in the oil and gas industry call for the associated companies to develop safety precautions that limit the chances of the employees being injured at work. Shell is one of the companies that have actively held safety as their top priority. Unlike BP, Shell has not been faced by serious oil spills and workstation accidents.
Based on the size of the company, it is apparent that the top management has put in place the relevant safety measures to safeguard the lives of the employees.
Shell has a comprehensive focus on safety that includes the development of safety precautions for the employees involved in the transportation of oil and gas products (Society 2013). The company is also concerned with the safety of the end consumers of its products.
As Shell looks to develop sustainable growth, it has ensured that it allocates funds to benefit the communities living around its business entities. Since the Nigerian crisis that Shell faced, the company has ensured that there are safety measures applied to the mining zones.
This approach is applied to ensure there are minimal negative impacts on the communities (Boele, Fabig & Wheeler 2001).
Shell has embraced its ethical responsibility to foster positive growth in the global society by becoming among the first oil and gas companies to develop a project focusing on formulating low-carbon fuels. A part of the companyâs goal in relation to ethics is to continually develop low-carbon energy sources.
The new sources of energy will see the global society appreciating the potential of oil and natural gas sustaining the worldâs demand for energy with minimal effects on the environment. Shell is committed to upholding its ethical task of ensuring it lowers the impact of the global over-reliance on oil as the main source of energy.
Shellâs concern with the safety of the environment and consumers has led to its popularity and preference among motorists across the world. Shell has embarked on a business plan to develop customer-focused products that eliminate the companyâs carbon footprint (Society 2013).
The cost of developing low-carbon fuels is directly absorbed by the company, and Shell does not pass the cost to the consumers. The company has maintained a lead in the business because of the quality and affordability of its products.
While other companies continue increasing the prices of their respective products, Shell has maintained reasonable prices as an ethical approach to doing business.
Shell has also embraced its business ethics requirements to become a global leader in developing alternative energy sources for the future. While other companies in the industry are complaining about the reducing availability of oil and gas, Shell focuses on developing innovative energy sources for the future generations (Future Analysis 2015).
The company has incorporated technology at a high level in research projects aimed at helping future generations to solve the inevitable energy crisis. The company compels other players in the business to become a part of the problem-solvers for the sake of the future generations.
The consumption of energy across the world has been on an increasing trend over the past century. The diminishing trend in sources of non-renewable energy sources means that the world will have to develop alternative ways to acquire energy.
Governments in the developing nations have limited abilities to finance research projects to develop alternative sources of energy (Future Analysis 2015). Shell has taken its ethical responsibility to conduct research for the benefit of the global society.
This is one of the business ethics that companies with such high revenue must embrace. Helping the global society develop surety for the future is an ethical approach to doing business, and it adds value to the products and services that Shell provides to the international market.
Shell is fixing todayâs problems of unsustainable use of non-renewable energy by incorporating technology and innovation to develop cleaner fuels from oil. The efforts demonstrated by Shell in making the world a better place gives the company a leading position in observing the business ethics that govern the oil and gas industry.
Comparison of Management Techniques
Governance for Sustainability
In the oil and gas industry, there is a tendency of people confusing CSR and disaster management. The main difference between Shell and BP is that BPâs corporate social responsibility programs have been adopted as a strategic move to manage the numerous disasters that the company has witnessed over the past several decades.
Shell has also faced several disasters, but its CSR programs are strictly based on business ethics rather than restoring the damages. BPâs governance for sustainability is driven by the need for the company to develop new safety measures.
After the oil spill in the Gulf of Mexico, BP was compelled by international regulators to look into developing a restoration plan for the affected ecosystems in the region. While this may be viewed as an ethical approach to business, it is just damage control, which is a requirement for companies to be accountable for their negligence.
BPâs CSR is based on an egotistical philosophy. The company is more concerned about the welfare of the shareholders and the profits it makes owing to the efforts it makes to attain sustainable business processes.
The company claims that its primary objective in developing a CSR program is to create value for the shareholders and to improve safety in the delivery of products and services (Our Strategy and Sustainability 2015).
Shell, on the other hand, has a governance approach that has traditionally focused on making the world a better place. Shell is more of a corporate citizen than BP when comparing their approaches to governance for sustainability.
While BP focuses on short-term benefits for the stakeholders and building a positive reputation with the consumers, Shell focuses on long-term goals of being a problem-solver. Shellâs CSR is more plausible because it is deeply rooted in incorporating the latest technology.
This approach is applied to enhance safety and to increase its ability to provide the global society with sustainable energy (Sustainability and our business strategy 2015).
While BP is still struggling to improve its engineering expertise to eliminate the risks of oil spills, Shell has advanced its capabilities to uphold environmental sustainability.
Structured Decision-Making
BP has a general code of ethics that applies to the entire human asset base, including the executive members. Decision-making in the organisation is based on the values of the company.
The values of the company uphold safety as the top priority, but it is possible for the decision-makers of the company to make poor decisions because accountability is not held strictly enforced by the espoused values. Shell, on the other hand, has a clearly spelled-out set of guidelines that influence decision-making at every level of management.
The code of ethics used by the organisation indicates that the decision-makers are ultimately responsible for the decisions they make with reference to sustainable developments. The company has traditionally focused on making decisions that enhance safety for the employees and the communities living around their business entities.
The management and leadership function of the company is answerable to the shareholders; hence, their decisions are influenced by the requirements of the shareholders. Shell has developed a strategic plan to develop CSR programs based on the emerging issues of energy and social issues.
Both BP and Shell are actively engaged in promoting community development programs in their operating regions, but Shell has demonstrated more commitment to solving global issues. Shell has been involved in donations to different communities as it looks to develop a better world, especially in the developing nations.
The donations are specifically aimed at helping people recover from natural disasters (What we do: Partners 2015). For instance, in 2013, Shell was among the companies that donated funds to help the victims of the Alberta Floods (Shell Canada Donates More Than $550,000 to Alberta Flood Relief Effort 2013).
Human Resource for Sustainability
The vision of a company and the involvement of the human resource in sustainability is an integral part of promoting effective CSR programs. Shell and BP are global giant companies; hence, they are compelled by their respective organisational values to look into developing workforces that embrace business ethics.
BP is one of the companies in the oil and gas industry that have continuously claimed that it upholds a CSR policy that us enshrined in the values of progress, responsibility, performance enhancement and innovation. This means that the company claims to fully incorporate the human resources in the development of sustainable goals.
Over the past two decades, BP has faced three major disasters that have forced the company to emphasise its commitment to upholding the CSR policies it has preached over the past half century.
BP sees itself as a company whose CSR program focuses on improving safety for the human resources and the community, but the recent crises in the company reveal that this has not been the case.
There is evidence that the company has failed to enhance safety for its employees and the community by failing to invest in the latest safety technology.
Even in the management of the Deepwater Horizon disaster, critics claimed that BP was using the easy and ineffective way to deal with the spill before international regulators stepped in to help (BP Company Assessment 2015).
Shell, on the other hand, has faced two major crises over the past several decades. The first was an oil spill that was managed quite effectively, and the second was the genocide in Nigeria, which was blamed on Shellâs negligence in operating safely in the community.
The legal issues were resolved, and Shell took responsibility of restoring the safety to the community. Shell is yet to be accused of failing to take care of the safety needs of its employees.
It is also apparent that the company has developed a code of ethics for every employee in the company; thus, responsibilities are clearly highlighted for the individual human assets.
Sustainability is held paramount by the executive function of the company, and it has ensured that employee and community safety is upheld in all business activities (Van der Wiele, Kok, McKenna & Brown 2001).
The organisational culture of the company has espoused values that influence the employees to regularly consider their safety and that of the community. Unlike the legal CSR policy held by BP, Shell has a mix of benevolent and ethical CSR. The company goes beyond its legal requirements to make the world a better place.
Unlike BP, Shell follows the operational standards that it claims to the public.
Purchasing for Sustainability
Shell has demonstrated its commitment to engaging in business practices that leverage social and environmental benefits for the global society. The company has invested heavily in developing research projects that will change the societyâs view of using oil and gas as the primary source of energy.
The company has also spent millions of dollars in protecting the rights of people in the developing nations. Shell finances the education of people in developing nations in a bid to produce leaders that will fight for their governments to continue upholding human rights (Aguilera, Rupp, Williams & Ganapathi 2007).
Shell has purchased the latest technology in a quest to experiment with the development of environmentally friendly fuels. The project is in its initial stages, but it is a clear indication that Shell is committed to reducing its carbon footprint.
BP on the other hand, has claimed that it is also looking to reduce its carbon footprint, but its resources are currently focused on financing the restoration of the Deepwater Horizon region.
Studies on the ecology in this region indicate that the oil spill has resulted in the extensive killing of animal and plant species, and the oil spill has spread out to vast regions that need cleaning-up. Critics still believe that BP is profit oriented, and it is not committed to make any purchases for sustainability (Mobus 2012).
Marketing for Sustainability
Shell is directly involved in the promotion of different sports events in different parts of the world. The company is particularly active in the promotion of motor racing events in different events across the world. The organisation holds its advertisement and promotions together to ensure there is cost reduction in the marketing department.
Shell is actively involved in cross-promotion with its various partners. The cross-promotion efforts are known to help local investors develop higher sales for their products through partnerships with Shell.
The cross-promotional activities are held in the numerous retail stations owned by Shell, where their partners have developed retail stores for different products. Similarly, BP is actively engaged in cross-promotion. BP has numerous partners that engage in combined promotions for services and products at the BP stations across the world.
The company is profit-oriented; hence, it has also developed free services like free car washing and free fuel for its loyal customers to keep them coming back (Promotions and Rewards 2015). BP is also a major promoter of motor racing championship in partnership with other global companies.
Customer Right
Shell and BP are involved in various business activities within the oil and gas industry, and both companies have exhibited their commitment to treating customers as the most important entities in the business. For the two companies to attain their current status in revenue returns, they must have impressed their loyal customers.
Both companies observe customer rights by ensuring they offer quality services and products. Shell and BP are among the most efficient companies in honouring contracts with consumers, and they take responsibility for any mistakes in the various deals.
The code of ethics held by Shell is a particular strength of the company in relation to the commitment of the leaders to protect customer rights.
Conclusion
BP and Shell are close rivals in the oil and gas industry, and they have an obligation to uphold sustainable growth. A comparison between their CSR approaches indicates that Shell is more efficient and willing to promote sustainability.
Shell has practically proved that is a corporate citizen, but BP is still stuck in giving claims about its plans to implement different standards of operations.
BP needs to prove to the global society that it is a corporate citizen by assuming a sustainable CSR program rather than claiming its current disaster management and restoration programs are part of its CSR.
List of References
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Boele, R, Fabig, H & Wheeler, D 2001, âShell, Nigeria and the Ogoni. A study in unsustainable development: II. Corporate social responsibility and âstakeholder managementâ versus a rightsâbased approach to sustainable developmentâ, Sustainable Development, vol. 9, no. 3, pp. 121-135.
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Mobus, J. L. 2012, âCorporate social responsibility (CSR) reporting by BP: revealing or obscuring risks?â, Journal of Legal, Ethical and Regulatory Issues, vol. 15, no. 2, pp. 35.
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Shell Canada Donates More Than $550,000 to Alberta Flood Relief Effort. 2013. Web.
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Van der Wiele, T., Kok, P., McKenna, R., & Brown, A. 2001, âA corporate social responsibility audit within a quality management frameworkâ, Journal of Business Ethics, vol. 31, no. 4, pp. 285-297.
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