BP Case Study Chintan Shah

2010B29
1. What are the main ethical issues and dilemma BP faces in this case?

A project which is on such a grand scale has numerous issues:

 Concerns of the coating of the pipelines and the risks of leakages, in particular in Georgia, where oil
spills might have ruined the country's strategic water resources and concerns that the pipeline ran
through earthquake zones where leakages could not be possibly avoided.
 Prospective relocation of atleast 30,000 civilians along the route of the route of the pipeline atleast
during the construction phase.
 With civil unrest and wars in the region, the pipeline passed only within a few miles by the war torn
area of Nagorno-Karabakh – there were considerable fears of terrorist attacks.
 Also the country’s through which the pipeline is supposed to pass had very high levels of bureaucracy
and corruption as indicated in the various indices.

2. How would you evaluate BP's approach to the social, environmental and economic impacts of the
project for local communities? Assess the approach from the perspective of utilitarianism and
deontology first. Will the assessment differ from the rights and justice based perspective?

BP has been a well known company with regards to renewable energy, climate change, human rights,
corruption prevention, and health and safety, among others. BP set up a "Regional Sustainability Development
Program (RSDP)" to proactively address critical social, ethical and environmental issues:

 Environmental Investment Programme which aimed at dealing with ecological issues.

 Community Investment Programme with a budget of about $20mn and mostly addressing social
issues during the construction phase.
 Regional Development Initiative with has a budget of about $25mn and designed to accompany the
project over a 10 year life span after its opening.

From a utilitarianism and Deontological perspective, BP took initiatives that led to fairly immediate impacts. It
proactively addressed social, ethical and environmental issues. From the perspective of Rights and Justice, the
company was alleged for violating human rights and indulging in corrupt practices.

3. This case raises questions about the scope of responsibility for a Western MNC operating in
environments with corruption and poor governance. What is your opinion on how far a company
such as BP in this case should go? Can they really be made responsible for the actions of local
officials and governments? Try to base your answer on arguments derived from one or more ethical
theories.

MNC’s like BP operate in a globalized world where there are different types and forms of government and
varying levels of inefficiency and corruption involved. It would be foolhardy to expect that they should be made
responsible for what officials and govt. does because it can never be completely in their control. If they do not
tap the potential then someone else would. Having said this, they can have significant influence on the policy
relating to their fields which they must try and work out in an ethical manner.

4. What is the appropriate way for BP to respond to its ongoing criticism? Base your answer on the
contemporary ethical theories, in particular virtue ethics, discourse ethics, and postmodern ethics.

BP can probably emphasize on the fact that it has been one of the most socially responsible company’s around,
thus implying that it would never go against the broader social good neither disturb the environmental balance.

It should also defend itself by pointing out that the BTC pipeline will generate income for the country,
employment opportunities and will help in meeting the increasing demand. Being a responsible organisation,
BP should let people know that it is taking all precautionary measures to avoid disasters like oil spillage,
water pollution.