Bp Oil Spill Case Study Ethics Education

Case Study: BP Oil Spill

Background

This lesson has addressed the key components of ethical principles in crisis communication, including the ethical principles of responsibility, accountability, and humanistic care. The case of BP oil spill in 2010 provides an important example for understanding how these principles are valued by public opinion in a crisis situation, and how the communication actions by a corporation in this type of circumstances might have long-term effect on the brand image of the organization.

On April 20, 2010, a BP’s Deepwater Horizon oil rig exploded, causing what has been called the worst environmental disaster in U.S. history and taking the lives of 11 rig workers. For 87 straight days, oil and methane gas spewed from an uncapped wellhead, 1 mile below the surface of the ocean. The federal government estimated 4.2 million barrels of oil spilled into the Gulf of Mexico.

Mistakes in Initial Response

According to NPR, BP’s action has become a textbook example of how not to do crisis management. BP executives declared it was not their accident, blamed their contractors and made the company look arrogant and callous. CEO Tony Hayward repeated insensitive comments in public, like this one: “There’s no one who wants this thing over more than I do. You know, I'd like my life back.” He also suggested that the environmental impact of the spill would be “very, very modest.” Images of Hayward attending a yacht race just 48 hours after a hostile interrogation by a US congressional committee on the oil spill, provoked sharp criticism on both sides of the Atlantic. Although the company, formerly British Petroleum, officially changed its name to BP in 2001, Americans consider it a foreign company even though it has just as many American shareholders as British ones, and its biggest operations are in the United States.

PR Actions

To sooth angry Americans, BP aired a multimillion-dollar national TV spot in June in which Hayward pledges: "We will make this right." Hayward also promised BP would clean up every drop of oil and “restore the shoreline to its original state.” President Barack Obama said the money spent on the ads should have gone to cleanup and compensating devastated fisherman and small business owners. The ad indicated that the company didn't even follow its own internal guidelines for damage control after a spill. Its own spill plan, filed the year before with the federal government, says of public relations: “No statement shall be made containing any of the following: promises that property, ecology or anything else will be restored to normal.”

BP also bought online ads that pop up when people search for information about the oil spill on Google and Yahoo. The ads, which link to BP's own oil-response sites, typically appear above or to the right of other search results. BP said the idea was to help people on the Gulf find the right forms to fill out quickly and effectively. However, many people suggest it's a move to steer searchers away from bad press for BP.

Crisis management experts stated the only reliable way to repair BP's badly tarnished image should be the obvious one — to plug the hole where oil was still leaking out. It would take nearly 3 months before the leak was stopped, and nearly 5 months before the well was declared effectively dead. Public relations experts pointed out that BP ran its crisis communications in the same “ham-fisted” manner they’ve run the clean-up operation in the Gulf.

"BP's handling of the spill from a crisis management perspective will go down in history as one of the great examples of how to make a situation worse by bad communications," said Michael Gordon, of New York-based crisis PR firm Group Gordon Strategic Communications. “It was a combination of a lack of transparency, a lack of straight talking and a lack of sensitivity to the victims. When you're managing an environmental disaster of this magnitude you not only have to manage the problem but also manage all the stakeholders.”

Consequences

BP attempts to convince people that it appears the Gulf of Mexico is healing itself after a while. In 2015, BP released PR materials that highlight the Gulf’s resilience, as well as a scientific report showing the area is making a rapid recovery. But evidence is mounting that five years after millions of gallons of oil spilled into the Gulf, wildlife there is still struggling to rebound.

In June 2016, BP issued its final estimate of the cost of the spill, the largest in U.S. history. The total amount for the cost of the 2010 oil spill in the Gulf of Mexico was $61.6 billion. Under the settlement with BP, five states in the Gulf area and local governments will receive payments over the next dozen years. The funds will enable them to ramp up vital restoration work along the coast. BP continues to settle claims from business owners and residents who say they were harmed.

Moral of the Story

In conclusion, this is a classic case example of why organizational decision making in crisis situations should be based on ethical principles such as accountability and responsibility. Public criticism and outrage following the incident not only focused on the oil spill, but on the lack of remorse and sincerity from the top management in crisis response, particularly the lack of sympathy to the victims of the disaster. The failure by BP’s leadership to respond to the disaster with sufficient speed and attention demonstrates that crisis preparedness and ethical guidelines should become part of the organization culture.

Next Page: Lesson 1 Assessment

WASHINGTON — Religious leaders and scholars are clamoring for more corporate accountability in the wake of what they call the destruction of God's creation in the Gulf of Mexico, and they may have found a partner in their battle cry: the American business school.

"Look at the Gulf disaster — no one has questioned the core value system that BP used to cut corners with that rig out in the Gulf; namely, the race to maximize profits at all costs," said Mark Wallace, a professor of religious studies at Swarthmore College. "That's the religion of our time . . . the fundamental worldview that animates our common life together."

Eco-religious scholars such as Wallace aren't calling for the erosion of capitalism. Rather, they envision a nuanced form in which businesses also consider the well-being of communities and the environment in computing the bottom line. It's a system known as triple bottom line economics.

Business educators say they see no conflict in the approach — and expect the BP spill will soon be part of their curriculums as well.

"Without a doubt, it's feasible for companies to incorporate those values. Anyone who looks at this particular situation in hindsight is going to recognize that prudence is the best option," said Bruce Bullock, the director of the Maguire Energy Institute at Southern Methodist University's Cox School of Business. "Good business and good environmental sense need not conflict."

David Garvin, professor of business administration at Harvard Business School, said that research indicates the triple bottom line approach typically doesn't hurt a business's financial results. For that reason, more and more businesses are willing to use it.

"It is indeed a growing phenomenon, largely because society is holding business leaders accountable in multiple arenas, far more so today than they did in past," Garvin said.

The Deepwater Horizon oil spill has offered a moment for reflection for leaders in the religious community about their most basic beliefs.

"It's an opportunity to raise these larger questions as a society: What constitutes the good life?" said Walt Grazer, a former director of the Environmental Justice Program for the United States Conference of Catholic Bishops.

That question has spurred deeper thinking about the economy by religious scholars, who've turned to the Bible for answers.

"A general theme from the Hebrew Scriptures that may be relevant to Deepwater is one that runs through the Prophets: When the people have become arrogant and obsessed with wealth, the poor suffer and the land suffers," said Willis Jenkins, professor of social ethics at Yale Divinity School. "Says the prophet Hosea: 'Even the birds of the air and fish of the sea are perishing.'"

The imagery of the trees, water and land that pervades the Psalms suggests that "the song of Creation is meant to be respected and revered," noted Mary Evelyn Tucker, coordinator of the Forum on Religion and Ecology at Yale.

Instead, Tucker lamented, disasters like the spill in the Gulf illustrate the "endless appetite of the octopus of market capitalism."

For business instructors such as Garvin, the BP spill has brought home the idea that future corporate leaders must develop personal standards for making decisions that go beyond just a financial calculation.

He predicts that a BP case study where students act out the same choices BP officials faced will soon enter the curriculum.

One priority for business schools and corporations as a result of the spill will be "getting students and executives to understand the power of situational pressures," Garvin said.

Many of the factors thought to have led to the April 20 explosion of the Deepwater Horizon offshore drilling rig were the result of bad decisions in which a less expensive option — whether to run a test or use a particular kind casing pipe, for example — was consistently chosen over one that would have cost more money.

The task for business instructors, Garvin added, will be to teach students how to remove themselves from those pressures and also build in mechanisms for dissent that were absent at BP.

As with business leaders, religious scholars place the onus for change on the individual.

"What happened in the Gulf — that's me," Wallace said. "It's not about BP or the Bush or the Obama administration — it's about every day people in the West who insist on cheap coal, cheap oil and cheap gas to power their lifestyles."

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