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Ethics and Social Responsibility in Business and Society Essay

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Updated: Jul 9th, 2021

Ethical Standards for Business Abroad

To answer the question of whether it is possible or not to create a set of universal standards for businesses in different countries and cultures, one must remember that the term “culture” in itself is relative. Cultures have never been static and have progressively evolved throughout the course of human history. The ethics and standards of any culture today are vastly different from those they had a hundred or two hundred years ago.

With the rise of globalization and the invention of the Internet, the borders between cultures have started to vanish. People have become more tolerant of one another, based on values that transcend cultures. I think that it is possible to create a framework of business ethics just as it was possible to make the majority of the countries to sign the human rights convention. This framework should be based on simple universal truths that could be applied to the majority of the situations, such as (Donaldson, 1996):

  • Do not cheat the government;
  • Bring prosperity to the community;
  • Take care of your employees;
  • Bring value to your customers.

The proposed framework can be expanded to address specific situations, while placing everything outside of it in a morally free area.

I think that it is the duty of every individual on the planet to influence the ethics of their countries for the better. To act ethically and properly at all times is the intrinsic responsibility for everyone. The roots of the term “corporate social responsibility” can be found here. Businesses, arguably, have a greater responsibility in defining ethics and morals than individuals do (Ebert & Griffin, 2008). The objectively negative traits associated with different historical developments, such as corruption, exploitation, and discrimination are ought to be eliminated or severely reduced.

The Deepwater Horizon Well Blowout

Introduction

The Earth is what we all have in common. In business, the profitability is usually calculated while taking various resources into account, such as human resources, materials, instruments, transportation, and various associated tasks all put together to create a product or a service. However, the ecological damage caused by an enterprise is almost never a part of the equation, as it is very hard to estimate and standardize the effects of any particular actions on the surrounding environment. The debates about climate change are still hot in the USA, but nobody can deny that various industries have a negative impact on the environment.

The Deepwater Horizon well blowout is considered to be one of the most disastrous technogenic catastrophes of the century, comparable to the use of Agent Orange in Vietnam, the Chernobyl meltdown, and the bombings of Hiroshima and Nagasaki. The event is characterized by a massive spillage of more than 2 million barrels of oil into the basin of the Mexican Gulf, the death of various indigenous wildlife, the massive ecological and economic damage to the coasts of North and South Americas, and, finally, the effect on the world climate by the alteration of the speed of the Gulf Stream.

The following examination of the disaster, which caused the death of 11 and injury of 17 workers, as well as millions of deaths in the local marine life, flora, and fauna, showed that the platform was constructed improperly, with very little regard for environmental or worker safety, and was not properly maintained (Joye, 2015). The actions of the company affected numerous stakeholders, namely the coasts of Texas, Lousiana, Alabama, and Florida. The local businesses were also disproportionately affected by the disaster.

Although the company paid more than 18 billion dollars in fines, the underlying issue is not that of individual managers, engineers, and corporate executives making a series of wrong decisions that led to the catastrophe. The core cause behind the disaster is the lack of a solid ethical framework of operation that includes not only worker safety, but also the effects on families, communities, and the environment. The purpose of this paper is to analyze the issue through the prism of different ethical frameworks and estimate the effects of poor environmental practices on the community and country health.

Ethical Rationale

There is a multitude of ethical frameworks to be applied to the situation revolving around Deepwater Horizon and the question of ecological safety. The three ethical methods studied in the scope of this class are the utilitarian method, the rights method, and the justice method. Each of these methods has its own strengths and weaknesses, which make them more or less applicable to a particular situation.

Jeremy Bentham popularized the utilitarian method in the 19th century. It is one of the most familiar frameworks that involves calculating the good and the bad done by a particular action in order to determine whether it was ethical or not (Barrow, 2015). The major rule is that if an action produces positive consequences on a large scale, the negative consequences can be disregarded or overlooked. This type of approach is useful when it is possible to determine all the positive and negative outcomes of a particular action. In a situation where the variables are incomplete, the utilitarian approach might be inconclusive.

Critics of the utilitarian approach have always highlighted the method’s inability to grasp the intangible effects of various actions. One of the greatest weaknesses of utilitarian ethics is the scale, on which the needs of the many can be put above the needs of the few. A criticism of utilitarianism can be found in literature, where a utopian city was powered by the suffering of a single forsaken child.

The rights methodology is based around intrinsic human rights, such as the right for dignity, the right to live, and the right of self-expression. This type of ethical framework forms the basis for many constitutions and codes of law. This approach was popularized by John Locke in the 16th-17th century, and is based on Emmanuel Kant’s categorical imperative, which states that a rule, which could be universally applied for all situations, forms the basis for an intrinsic human right (Kagan, 2018).

The third methodology revolves around fairness and justice. This framework is typically used in the context of a justice system. The first example of a justice-based document would be the Code of Law of Hammurabi, which states that all free men must be treated equally (Moody-Stuart, 2017). The concept of equality is central to justice ethics, and its driving principle also borrows from Kantian deontological ethics. The model utilized for the formulation of a just course of action creates a hypothetical set of rules to be followed by everyone, but also universally agreed upon from an even and equal starting point.

In my opinion, utilitarian ethics would be the best for analyzing the situation surrounding Deepwater Horizon. It is a matter where all risks to the operation, the workers, and the surrounding environment are calculable and perceivable. Potential effects of the blowout could be evaluated using specialized software, financial gains and losses from prolonging or hastening the construction could be calculated, and the long-term environmental damage could be speculatively defined (Kagan, 2018).

The other frameworks are less suited for the task. The rights framework could propose the right for a clean and safe environment to be universal, but it does not provide the necessary margins for the right to be applicable. Nearly all industry causes damage to the environment. Oil is an important part of the world economy. Should ocean drilling be banned entirely, based on the results of a few accidents? It is hard to answer these questions.

The perspective of justice is similar in that regard. It is possible to say that all people, if placed under equal circumstances, would agree that the environment must be protected. However, at the same time, these people would agree that the world economy needs fuel. The amount of shoal fuel and ground-based fuel is very limited comparable to the prospective deposits found deep under the ocean floor (Beyer, Trannum, Bakke, Hodson, & Collier, 2016).

Both the rights and the justice framework are useful when it is hard to estimate the exact margins and consequences of a particular action or a policy. Utilitarian ethics, on the other hand, is about the numbers, which is why it is often used in business and industry (Ives & Bekessy, 2015). As the Deepwater Horizon case is connected to ecology and economics alike, which is why the utilitarian model would work the best for it.

Impact on the Family

The effects of Deepwater Horizon on my family were mostly indirect, as my home is not located near a coastal zone. These effects can be estimated and placed into several subcategories (Ebert & Griffin, 2008):

  • Economic;
  • Ecological;
  • Legislative.

The oil industry directly affects the prices for goods, gasoline, and transportation.

In the aftermath of the incident, oil prices started growing and continued to do so until the second half of 2012 (Joye, 2015). The reasons for such growth were obvious, as they were directly connected to the amount of oil produced as well as to the expenditures associated with it. After Deepwater Horizon, all companies had to review and improve the safety conditions of their oilrigs, meaning that the prices for gasoline, transportation, and commodities went up. My family’s expenses on virtually everything have risen. In that regard, my family was negatively affected by the Deepwater Horizon disaster.

Although my family does not live near the Gulf of Mexico we were still indirectly affected by the oil spill. The climate changes facilitated by the Gulf Stream in the aftermath of Deepwater Horizon. The slowdown of the underwater currents became associated with the alteration of weather patterns, provoking hurricanes. In addition, recent evidence suggests that the anomalous cold weather that struck the USA this winter could have been the long-term result of the Gulf Stream slowing down. This affected my family in a significant way, exposing us to diseases and traffic jams.

From a legislative side of things, my family was not affected in a significant measure. Since most of the laws promulgated by the ecological emergency were directed at the oil industry, they had nothing to do with lives of the average citizen. However, these laws have potentially decreased the possibility of the incident repeating itself, so my family was made safer. Overall, it could be concluded that the effect of the Deepwater Horizon oil spill on my family was negative, but mostly indirect. The majority of effects pertaining us were on the economic and ecological side.

Impact on the Community

The impact on the communities directly exposed to the fallout of the disaster was significant. The oil spill polluted the beaches across the shore line of south-western US, impacting the local economy and ecology. A thin layer of oil above the water prevented oxygen from entering, suffocating numerous species of fish. Birds and fish trying to swim through the oil were hopelessly stuck and poisoned, further damaging the ecosystem. Tourism and fishing in the Mexican gulf was paralyzed for at least a year. This resulted in a marked increase in poverty, migration, and the spreading of diseases.

Other communities distanced further away from the blowout did not suffer quite as much, as their economy was not directly linked to the affected regions. Nevertheless, the increase in oil prices and the impoverishment of coastal states reduced the degree of interstate trade. In addition, the change in climate, namely the hurricanes, affected the state of Florida severely in the past years. Lastly, the anomalous cold led to a crisis among the social shelters provided for the poor and the homeless. The overall impact on the communities was negative.

From the corporate perspective of BP, the disaster severely affected their operations in the region as well as decreased their reputation in other corners of the world. BP was found guilty of the Texas Refinery explosion in 2005, attracting government attention. After Deepwater horizon, the situation escalated, as the company lost all credibility. Lastly, the massive litigations to be paid to the US state and various other stakeholders delivered a major blow to the company’s operating cash funds.

Impact on the Country

The Deepwater Horizon incident had a massive repercussions throughout the country. It served as a major point in pushing various environmental laws. The litigation process itself promises to be the largest fine in the history of oil industry, with over 18 billion dollars already paid for the violation of the US Clear Water Act as well as 24 billion more awarded on a 20-year scale. The incident nearly brought ruin to British Petroleum’s public reputation and forced all other oil producers inside and outside the country to consider the engineering, construction, and maintenance processes of the ocean oil drilling in greater detail (Mann, 2016).

The growth of oil prices reduced the standards of living, as people were forced to spend more on products and transportation, but at the same time, it also affected the tax rates received by the US government from the oil industry. As a result, the rich got richer, while the poor got poorer (Ebert & Griffin, 2008). The US also had to deal with the ecological aftermath of the blowout. Millions of dollars were spent to reduce the effects of the blowout, close the shaft, and clean the ocean and the shores from oil. The US government also had to contend with the changing climate patterns by providing relief efforts to Florida and increase spending on shelters.

To summarize, the impact on the country was severely negative in terms of both economy and ecology. The only positive effect out the ordeal was the increased support for environmental laws. Many young individuals became increasingly aware of the gripes between the ecologists and the industrialists, and stood with the former in an effort to save the planet. However, the cost for such an awakening may have been too high, as the speed of the Gulf Stream may have changed irreversibly.

As Canada is one of the major trading partners with the US, it too was affected by the issues listed above. The unethical behavior of British Petroleum resulted in the crisis behind Deepwater Horizon. Their inability and unwillingness to accurately judge the potential positive and negative effects of their actions in the construction and maintenance of the oilrig resulted in a blowout of over 2 million barrels (Beyer et al., 2016). If we apply the chosen utilitarian ethics framework to the decision-making process of BP, their folly becomes clear (Mann, 2016):

  • Negative effects to the business. Prolonged construction would result in additional expenses and short-term loss of profit. Complying with the rules and regulations of maintenance for deep-sea oilrigs also results in the loss of short-term profit.
  • Critical failure of the oil rig will result in a massive loss of long-term profit, critical damage to the reputation, and crippling damage to the region’s ecology. Successful subordination to the industry standards provides a solid foundation for long-term mining operations.

As it is possible to see, the positive short-term profits are significantly outmatched by massive risks in the long-term perspective. At the same time, following the rules would have prevented a major loss of lives, finances, equipment, as well as ecological damage. Therefore, a lack of ethical guidelines and corporate social responsibility were the forerunners of the disaster of Deepwater Horizon. The incident had a massive effect on the shaping of corporate policies of major corporations. Many companies in Canada as well as in the US have retrofired their brands to support various ecological goals, in order to make themselves more attractive to customers.

Conclusions

The disaster of Deepwater Horizon had massive implications for the economy, ecology, and law for many countries in North and South America. The spillage of over 2 million barrels of oil effectively eradicated all marine life underneath the cloud and caused massive changes to the ecosystem and the environment of the region. The economy suffered profusely, with fishing ventures and tourism taking the harshest blow.

The increase in oil prices managed to save the petroleum companies and cover the additional expenses, but it came at a cost of impoverishment of the base of the socio-economic pyramid. The public opinion regarding oil drilling in the ocean was changed forever as well. However, the issue came to be not simply because of a series of constructional and maintenance issues, but because of BP’s lack of ethical guidelines. Without utilitarian ethics, the company overvalued the short-term profit and suffered in the long run.

Canada, which is connected to the US by a series of economic ties, was affected as well. Many major companies were forced to acknowledge the requirements for corporate social responsibility, ecological responsibility, and ethical business conduct. In addition, the society worldwide was alarmed about the potential consequences of deep-sea oil spills. The additional safety requirements and approvals for such operations effectively reduced the number of potential operations worldwide. The provided analysis evidenced how ethical frameworks can be used in analyzing the causes and effects of various ecological events as well as their economic and social implications within various societal units.

References

Barrow, R. (2015). Injustice, inequality, and ethics: A philosophical introduction to moral problems. London, UK: Routledge.

Beyer, J., Trannum, H. C., Bakke, T., Hodson, P. V., & Collier, T. K. (2016). Environmental effects of the Deepwater Horizon oil spill: A review. Marine Pollution Bulletin, 110(1), 28-51. Web.

Donaldson, T. (1996). . Web.

Ebert, R. J., & Griffin, R. W. (2008). Business essentials (7th ed.). Upper Saddle River, NJ: Prentice Hall.

Joye, S. B. (2015). Deepwater Horizon, 5 years on. Science, 349(6248), 592-593.

Ives, C. D., & Bekessy, S. A. (2015). The ethics of offsetting nature. Frontiers in Ecology and the Environment, 13(10), 568-573.

Kagan, S. (2018). Normative ethics. New York, NY: Routledge.

Mann, E. (2016). Environmentalism in the corporate climate. Tikkun, 31(3), 26-37.

Moody-Stuart, M. (2017). Responsible leadership: Lessons from the front line of sustainability and ethics. London, UK: Routledge.

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IvyPanda. 2021. "Ethics and Social Responsibility in Business and Society." July 9, 2021. https://ivypanda.com/essays/ethics-and-social-responsibility-in-business-and-society/.

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IvyPanda. (2021) 'Ethics and Social Responsibility in Business and Society'. 9 July.

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