Corporate ethics and responsibility: McDonald's, Nestle, and BP cases

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.)

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).

The Lack of Ethics and Responsibility

The three different cases that were examined highlight how the majority of corporations, have a lack of ethics when it comes to: their image, safety and the environment. This is because these different factors can have an adverse impact upon their overall bottom line. In the case of McDonalds, the possible negative publicity that they were receiving from Greenpeace, would hurt their image as a safe, family orientated restaurant. At which point, executives would engage in tactics to: protect this image and their overall bottom line (even though they were true). This avenue was pursued, because the company felt that they could use the legal system to achieve this objective (despite the fact that the defendants were not being allowed due process of the law). What this shows, is how inside the company itself, managers were willing to protect their own interests no matter what, highlighting the lack of ethics and morals about the actions of their organization.

The case of Nestle Hydration shows similar issues as the McDonalds situation. Where, the company would use a lack of ethics, when trying to build water bottling plants in small towns. This is problematic, because it underscores how executives are trying to increase their overall bottom line, while ignoring the demands of the community (by not giving them a chance to debate the issue). Then, they were seeking out the personal financial records of those individuals opposed to the project. This is highlighting, how the lack of ethics at Nestle was taken to another level, by violating privacy laws, to obtain personal information about their opponents. As a result, this lack of ethics would force the company to abandon plans, to build the plant in the community.

The Deepwater Horizon accident shows, how BP executives have a history of not engaging in ethical behavior. This is because the company was concerned: about increasing their overall bottom line, while reducing their costs as much as possible. When you put these different elements together, this means that BP was setting the stage for a host of incidents (that would underscore this lack of morals). In the past, executives embraced this atmosphere, as they would often blame a host of incidents on: employees and then drag their feet during investigations. This allowed, BP to continue with their focus of dramatically reducing costs (in an effort to maximize their profit margins). However, once the Deepwater Horizon accident occurred is when the company would no longer be able to embrace this philosophy (as their lack of morals and ethics was obvious).

Clearly, inside a variety of corporations around the world, the lack of ethics and responsibility has been contributing to a host of problems. This is because of the focus, on increasing the overall bottom line at all costs. At which point, many corporations will often engage in unethical behavior to achieve this objective. This is highlighting, how various negative events can have an adverse impact upon: the general public and environment. Where, the lack of ethics and responsibility is causing many managers to overlook these issues, in order to reach the objectives of the company. Once this takes place, is when the stage has been set for some kind of incident in the future. Therefore, the greater amount of ethics and morals that are practiced on a regular basis; means that the odds decrease of seeing any kind of adverse impact upon the organization. This is because taking these views will help to improve a company's image, while meeting their basic objectives.