Corporate Ethics / Responsibility Over

Corporate Ethics / Responsibility

Over the last several years, the issue of corporate ethics and responsibility has been increasingly brought to the forefront. Part of the reason for this is from: a host of different disasters and events that would have a major impact upon public policy. At which point, a backlash occurred against the corporation in question and their overall practices. Where, the company was trying to make it appear as if they were acting an ethical manner. Yet, beneath the surface, executives and employees were lacking these attributes, leading to an inevitable crisis. A good example of this can be seen with the Exxon Valdez oil spill. What happened was the company would knowingly overlook the supervision of the captain and crew on the ship (as the captain was drunk at the time of the accident). Exxon also failed to provide sufficient pilot and escort services through Prince William Sound, Alaska. These two factors would contribute to the accident, as they would highlight the overall lack of ethics and responsibility that existed at Exxon. (West, 2010) This is significant, because it shows an underlying trend has been occurring at numerous corporations around the world. Where, many have been putting the interests of increasing the overall bottom line ahead of safety and the protecting the environment. This has led to a series of different events that would underscore the lack of ethics and morals at most corporations. To fully understand how this has been taking place requires examining several different cases that changed corporate ethics and responsibility. This will be accomplished by looking at: the McDonald's McLibel case, the Nestle Hydration incident and the BP Deepwater Horizon accident. Together, these three different situations will highlight how the lack of: ethics and responsibility has contributed to a host of problems.

The McDonald's McLibel Case

This case began when Helen Steele and Dave Morris were handing out anti-McDonald's literature at number of their different stores in the United Kingdom. Steele (a gardener) and Morris (a postman) from London were long time Greenpeace activists, as the group was critical of McDonald's practices. What happened was, the two would distribute literature that was written by Greenpeace called, "What is Wrong with McDonalds." Inside the document they questioned the claims that the company was making about their foods being: healthy and their environmental practices in the past. In particular, the use of cattle supplied from deforested areas of Central and South America. This was problematic, because the publicity that the company was receiving was hurting their sales and it was damaging their reputation. ("McLibel Case," n.d.)

In response to what was occurring McDonalds would sue Steele and Morris under the UK libel laws. The idea was that since this was considered to be a civil action, the defendant does not have to be given the right to legal council. Where, they are only facing the possibility of financial penalties if they lose. At the same time, the case is decided by a Judge instead in front of a jury. From McDonalds' perspective, this was an ideal solution for going after activists, who are attempting to damage the image of the company. Where, they felt that the libel law should work in the favor, which is why they pursued the case so aggressively. However, contrary to the views of company executives, the trial would highlight the lack of: ethics and responsibility at McDonalds. ("McLibel Case," n.d.)

During the trial, McDonald's would win an initial victory against the defendants. Where, they were able to receive an award of £60,000 for the damages inflicted from these actions. However, given the fact that no jury was present and the defense was denied basic legal protections, means that the case would be appealed to the European Court of Human Rights. They found that the trail and law were: in violation of article 10 on the Convention of Human Rights. As a result, they would reverse the decision and forced the UK government to pay the defendants £57,000 in damages. This is important, because it shows how within a number of different corporations, there is a lack of ethics and responsibility. The reason why is because, they are more interested in protecting their reputation and bottom line. In the case of McDonald's, they knew what they were doing was unethical. However, executives wanted to prevent as much negative fallout as possible to their image. This would create a situation where they wanted to go after the defendants at all costs. At which point, they were seeking out different laws that they could use in their favor (because executives did not like this criticism). ("McLibel Case," n.d.)

Nestle Hydration

The Nestle hydration case involves the way Nestle would deal with the citizens and local government for host of small towns. These are the locations where the company would establish plants that are used to collect and bottle water (that is sold around the world). The problem began, when Nestle decided that they wanted to build a plant in McCloud, California. What happened was the company would use the standard approach, when building any plant in these communities. This involved working closely, with local government officials (behind the scenes), lacking transparency and public disclosure. In 2003, Nestle would follow a similar practice with the plant in McCloud. Where, they would have one public meeting, in which they decided to approve the plant. This essentially prevented public disclosure or transparency. At which point, the community would begin to protest the project and the approval process. This caused Nestle to begin engaging in unethical actions against community leaders. Where, the company would obtain financial information on those individuals, who were against the construction of the plant. This is because, they wanted to limit decent (from these individuals) and increase their overall profit margins, by having the plant operational. The end results were that Nestle was unable to build the facility, as the grass roots opposition to the project would reopen public debate. ("Top Six Reasons Why Communities Can't Handle Nestle Waters," 2010)

What this example shows is that there is a lack of: ethics and morals inside many corporations. In the case of Nestle, this began when the company would seek out smaller communities to: build water bottling plants and then streamline the approval process (with little to no transparency). Once the citizens of McCloud began to oppose the project, is when executives would seek out other ways to intimidate the citizens. This is significant, because it shows how the culture of unethical behavior would have an impact upon the way, the company handled the situation. As executives, began to engage in: more brazen and immoral behavior, as part of their desire to increase their overall profits at any cost. ("Top Six Reasons Why Communities Can't Handle Nestle Waters," 2010)

BP Deepwater Horizon

The BP Deepwater Horizon accident highlights, how the lack of ethics inside an organization can have devastating consequences for: public safety and the environment. In this particular situation, BP had been engaging in a policy of unethical behavior over the course of many years. The main reason for this is because the company was focused on cutting their costs dramatically, to increase their overall profit margins. What happened was managers were given a directive from headquarters to cut the cost of running various facilities as much as possible. To ensure that everyone was embracing these practices, the company would dramatically cut funding for a host of different activities. This would have ripple effects upon: the safety procedures and maintenance of different facilities. At the same time, executives were encouraged to cut corners, in an effort to maintain the company's profit objectives. These different elements would create a culture that would allow: unethical and immoral activities to take place (which would eventually lead to the Deepwater Horizon accident).

However, the events and unethical behavior leading to the disaster would go unnoticed (with BP being at center of host of: safety issues and environmental accidents). The lack of understanding how ethics and morals would contribute to the incident set the stage for future accidents. Where, the culture of immoral activities (at the expense of safety and the environment) would be continually embraced within the organization. A good example of this can be seen by looking no further than the incident at the Texas City refinery in 2005. This would kill 15 people and injury 170. What happened was an explosion would occur (when the facility was closed for maintenance). This was because there were: consistent environmental and safety problems that the staff was running into from the extreme budget cuts. As a result, managers would continually encourage everyone to engage in actions that would ignore key safety provisions. This is important, because during the process of restarting the facility (which led to the explosion), they were closed due to safety concerns. The desire to maintain the company's profit objectives would lead managers to push the staff, to restart the refinery. At which point, a leak would occur, leading to the explosion. This is highlighting the overall culture of unethical behavior inside BP. ("The Explosion at Texas City," 2006)

As the company, would engage in policy of denying their involvement of: responsibility and attribute the incident to employee error. This would tie up the proceedings for many years, allowing for them to maximize their profits (while being able to avoid the ethical challenges they were wrestling with). ("The Explosion at Texas City," 2006) as a result, these unethical views would have a dramatic impact upon the culture inside the organization itself. Where, mangers would often encourage employees to overlook safety and environmental regulations (in order to remain in line with the company's financial objectives). This meant that the odds increased dramatically, that the company would have an accident with: dire safety, economic and environmental consequences.

As a result, the Deepwater Horizon incident was the pinnacle of: the lack of investment and disregard surrounding the safety practices of their employees. At first, this well was considered to be an accomplishment of modern day engineering, with it reaching depths of 18 thousand feet (approximately 3 miles). However, during the process of drilling the well, the engineers from Transocean (the company responsible for the procedure) were placed under tremendous amounts of pressure from BP. What happened was, BP executives wanted to have the well operational as quickly as possible. This meant that they would encourage engineers to: push the safety limits and standards to the brink. At which point, inevitable delays would occur, as this caused the drilling bit to become jammed in the rock (forcing them to re drill the shaft of the well). This lead to: a delay and outrage at BP; as they felt that Transocean was not working productively. Once they were able to reach the oil reservoir is when BP continued with their focus on: making the well operational at any cost. This is problematic, because it meant that obvious safety devices and their underlying condition were overlooked. A good example of this can be seen with the blowout preventer. Simply put, the blowout preventer is designed to seal the well, in the event that methane gas is able to penetrate the drill pipe (leading to the surface). In the case of Deepwater Horizon, the blowout preventer was installed. Yet, during the test of the preventer, an employee flooded the shaft of pipe, causing the rubber seal (the annular) to be ruptured. Once this was discovered by the engineers of Transocean, BP executives would overlook this matter, as they felt that it was not a safety issue. Commenting about the situation the lead BP engineer on the project (Mike Williams) would say, "We discovered chunks of rubber in the drilling fluid. We thought it was important enough to gather this double handful of chunks of rubber and bring them into the driller shack. I recall asking the supervisor if this was out of the ordinary. And he says, 'Oh, it's no big deal. And I thought; how can it be not a big deal? There's chunks of our seal is now missing." ("Blowout," 2010) This is significant, because it shows how from the very beginning of this project, BP would seek to reduce their underlying costs as much as possible. Where, they would limit the total investment and time that is focused on adding to the expenses (such as: making sure that the blowout preventer functions properly). This culture of overlooking various ethical and moral issues would set the stage for a series of events that contributed to the accident. ("Blowout," 2010)

Once the well was operational, the lack of focus on safety would lead directly to the events on April 20th. As methane gas was quickly moving up the drill shaft to the platform. This had an impact upon the structure, as the volatile gas would build up and explode. At the same time, the lack of investment in back up communications, meant that engineers had trouble communicating with the blowout prevent and corporate executives. Commenting about the underlying causes of the accident Williams said, "The blowout preventer (BOP) that was supposed to protect us and keep us from the blowout obviously had failed. And now, the emergency disconnect to get us away from this fuel source has failed. We have no communications to the BOP." ("Blowout," 2010) This is significant, because it shows how the lack of ethics at BP, would mean that staff had no way of preventing the situation from becoming worse. Where, they could not control the blowout preventer and communicate with executives effectively. ("Blowout," 2010)

To make matters worse a number of the managers on the Deepwater Horizon were embracing the lack of ethics and morals inside the company itself. A good example of this can be seen with the calls to abandon the well from the captain. Where, he would place the lifeboats in the water and did not inform the rest of the crew about the order. Commenting about this situation Williams would say, "I saw one of the lifeboats in the water, and it's motoring away from the vessel. I looked at the captain and asked him. 'What's going on?' He said, 'I've given the order to abandon ship. They have left, without the captain and without knowing that they had everyone who survived all this onboard. I've been left now by two lifeboats. And I look at the captain and I said, 'What do we do now? By this time, the fire is not only on the derrick, it's starting to spread to the deck. At that point, there were several more, large, intense explosions." ("Blowout," 2010) This is troubling, because every Sunday the crew would practice procedures for abandoning the well (as required under the law). The fact that the captain and other managers were willing to leave people there is: an indication of the culture inside the organization itself. As a result, Williams was forced to jump 100 feet into the ocean (during the middle of the night). This is important, because it confirms how executives at BP, were only concerned about increasing their overall bottom line. ("Blowout," 2010)

When you step back and analyze these different events, it is clear that the lack of morals and ethics at BP had negative impact upon a host of incidents. At first, these events were often overlooked, as company executives would blame various accidents on: employee error and then drag their feet. Part of the reason for this, is because acknowledging any kind of blame or wrong doing could: open the company up to law suits and it would cost more money to make the required safety / environmental modifications. This forced executives to embrace a culture lacking in: ethics and moral responsibility (as they were only interested in increasing their bottom line at all costs). As result, this atmosphere would lead directly the incidents that occurred at the Deepwater Horizon on April 20th. At which point, the company could no longer ignore their ethical and moral responsibilities. This is because, the overall scope of the accident became so large, that there was no way that executives could engage in the tactics of the past (blaming others and delaying investigations).