The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

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Wednesday, May 5, 2010

Strategic CSR - BP

The articles in the two urls below present interesting perspectives on the ecological disaster currently unfolding in the Gulf of Mexico. On a negative note (among many negatives in this story), the first article argues that the disaster undermines President Obama’s move to forge a bipartisan coalition in support of the climate change legislation currently working its way through Congress:

“Last month, Mr Obama sacrificed much of his support among environmental groups when he lifted the US ban on new offshore drilling in an attempt to win Republican support for a climate change bill. … Barring the already-declared support of Lindsey Graham, a senator from South Carolina, the move had little effect on a Republican party that sees any attempt to cap carbon as a new tax. The BP spill is likely only to crystallise that divide. But Mr Obama’s decision to lift the moratorium makes it much harder for him to exploit those divisions.”

On a slightly more positive note, the second article suggests the oil spill can help the environmental debate. In short, the pollution in the Gulf is pollution that the public finds harder to ignore because it is “highly visible”:

“Environmentalism began as a response to pollution that everyone could see. … It wasn't that hard, under the circumstances, to mobilize political support for action. The Environmental Protection Agency was founded, the Clean Water Act was enacted, and America began making headway against its most visible environmental problems. Air quality improved: smog alerts in Los Angeles, which used to have more than 100 a year, have become rare. Rivers stopped burning, and some became swimmable again. And Lake Erie has come back to life, in part thanks to a ban on laundry detergents containing phosphates.”

Yet, the author argues that the cost of this success was waning public support for the environmental movement and many of the legislative and regulatory restrictions that were initially introduced:

“For one thing, as visible pollution has diminished, so has public concern over environmental issues. According to a recent Gallup survey, ''Americans are now less worried about a series of environmental problems than at any time in the past 20 years.'' This decline in concern would be fine if visible pollution were all that mattered -- but it isn't, of course. In particular, greenhouse gases pose a greater threat than smog or burning rivers ever did. But it's hard to get the public focused on a form of pollution that's invisible, and whose effects unfold over decades rather than days.”

Nevertheless, at best, this optimistic perspective on a disaster that will likely be America’s worst since the Exxon Valdez in 1989, is only “a small silver lining to a very dark cloud.”

One reaction I have had to the crisis concerns the issue of where ‘blame’ ultimately lies. BP says “It wasn’t our accident” (see BP’s official response at: http://www.bp.com/productlanding.do?categoryId=40&contentId=7061696). The firm states that, although it will take responsibility for the clean-up, the rig that sank was owned and operated by its partner, Transocean. As such, BP claims it was Transocean’s systems and procedures that failed, rather than its own. The more I think about this, however, the more I see a parallel with the debate in the CSR community over the responsibility of a firm for its extended supply chain. When an Indian sub-sub-sub-contractor of GAP was found to be employing children in 2007, GAP was dragged over the coals, even though the guilty supplier was several degrees removed from the firm (http://www.nytimes.com/2007/11/16/business/worldbusiness/16gap.html):

“… the vendor that got the Gap order for the children's clothes had employed a rural community center to do the embroidery work but that this entity had subcontracted the work to a Delhi workshop where children were employed. While auditing in factories is relatively straightforward, checking conditions in the informal workshops where hand embroidery is done is harder because large contracts are often divided up among dozens of small workshops.”

If GAP can be held responsible for a transgression committed at such a distance, and given BP’s recent safety issues in Texas (2005) and oil spills in Alaska (2006), what conclusions can we draw about the quality control systems BP has in place for its partner firms that are extracting the oil that it ‘owns’?

Take care
David

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006

From tragedy can come a new direction for US energy
By Edward Luce
743 words
4 May 2010
Financial Times
London Ed1
08
http://www.ft.com/cms/s/0/19769bf6-56d8-11df-aa89-00144feab49a.html

Drilling, Disaster, Denial
By PAUL KRUGMAN
803 words
3 May 2010
The New York Times
Late Edition - Final
25
http://www.nytimes.com/2010/05/03/opinion/03krugman.html