CSR Practices and Leadership Influence

This assignment delves into the crucial relationship between corporate social responsibility (CSR) practices and leadership, particularly focusing on CEOs. It examines how CEO actions and perspectives influence the implementation of CSR within organizations. The analysis considers mediating factors such as the perceived role of ethics and social responsibility, highlighting the importance of ethical values and institutional pressures in shaping CSR outcomes.

Comparative Business Ethics
and Social Responsibility
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TABLE OF CONTENTS
Executive summary..........................................................................................................................3
Introduction......................................................................................................................................4
1. Managing ethical risks in the oil and gas industry.......................................................................4
2. Comparing the risks in association with BP, Exxon and fracking industry.................................7
3. Managing the risks within oil and gas industry by aid of ethical leadership...............................8
Conclusion.....................................................................................................................................10
References......................................................................................................................................12
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EXECUTIVE SUMMARY
Oil and Gas industry involves many hazards and safety issues. A slight ignorance might
lead to the occurrence of unwanted disasters. Something similar happened as the Deepwater
Horizon and Exxon Valdezz where ignorance of the warnings given by other officials led to a
massive oil spills. In case of Deepwater Horizon the digging of further wells to relieve the
pressure of damaged holes led to further spread of the spilled oil across the sea. Also, the late
arrival of Alyeska to handle the situation at Exxon Valdezz clearly shown their unpreparedness
towards the disaster. Also, the natural gas extraction from shale rocks proved to be more
beneficial specially after introduction of EPA's methodologies to control methane emissions. The
report basically focuses upon the ethical risks involved within oil & gas industry and their
management as well. Furthermore, comparing of the risks associated with the BP, Exxon and
Fracking industry has been done in terms of providing adequate supply of energy. Also, the
importance hold by the ethical leadership in oil and gas industry has been focused that how
effective skills in this area could lead to proper management of risks in such disasters. So, the Oil
and Gas industry needs to imply the principles and ethical values of business in order to meet the
day-by-day increasing requirements of the energy.
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INTRODUCTION
In order for examination of a certain set of ethical principles along with moral issues that
may come across in the business environment, are commonly referred to as business ethics
(Brammer, Jackson and Matten, 2012). However, the social responsibility accounts to be an
ethical theory under which different individuals perform their civic duties thereby benefiting the
whole of their society. This way a proper balance is established between economic growth and
the betterment of society along with environment.
The report mainly throws light upon the Oil and Gas industry with major focus upon the
challenging situations aroused due to the Exxon Valdez spill, Deepwater Horizon Oil rig. Major
accidents occurred here leading to the worst oil spills ever in history. This incident put a question
mark upon the social and ethical responsibility of the Aleyska and the BP who tried to manage
the oil spill but led to further demise of the sea and coastal areas thereby affecting the health of
many sea species and people residing near these areas (Carroll and Buchholtz, 2014).
Furthermore another field has been focused that is the fracking which again is beneficial in terms
of natural gas but implementation has many hazardous issues related to it.
1. MANAGING ETHICAL RISKS IN THE OIL AND GAS INDUSTRY
With particular reference to the major oil spill incidents at the Exxon Valdez and
Deepwater Horizon, the mismanagement by the BP and Exxon authorities have put their
management and staff in a circle of doubts upon their ethical and social responsibility. This sort
of mismanagement has led to doubts upon the new developments fracking industry too. This is
basically related to the production of natural gas.
Based upon the present scenario, the demand for oil and gas has been increasing rapidly.
This stupendously increasing demand has led to more depletion of available oil reserves. The
amount of the available resources is not at all matching with the demands. This has further led to
scarcity of resources. Moreover, the oil companies have failed to successfully carry out their
ethical duties thereby leading to major environmental mishaps. So based upon the past
experiences and hazardous occurrences, the authorities at these oil and gas companies need to lay
their focus upon the different methods of managing their responsibilities.
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So, in order to manage the risks associated with oil and gas industry, light needs to be
thrown upon common factors that might lead to the major accidents or factors causing the same. Safety culture imperfection : The decisions in many organizations are based upon the a
certain set of norms and values as well (Crane and Matten, 2016). The safety culture
accounts to be a subset of this overall culture which is a reflection upon the methodology
of adopting approaches towards risk management. The leaders of particular organization
set up some standard values that affect the decision to be take at time of hazardous
situations. So any sort of flaws in this culture will lead to further depletion of available
resources in oil and gas industry. For example the mismanagement by BP in relation to
Deepwater Horizon shows that how their ignorance led to further demise of the sea and
nearby coastal residing species along with people. Nonexistent management of change procedures : As it becomes clear from the example
of Fracking process that further digging for shale rocks led to further release of hazardous
gases such as methane other than natural gas (Fassin, Van-Rossem and Buelens, 2011).
Because of that methane, fracking has also been experiencing a doom but at lower level
than the Deepwater Exxon incidents. However, changes in procedures have been implied
by many other companies but it is well known that only a few are able to follow them. Flawed communication and inadequate communication : From the Exxon incident it is
quite clear that the miscommunication between Hazelwood and Coastal Guard led to
further loss though if warnings had been taken seriously, this incident could have been
managed successfully. This also involves lack of communication with the stakeholders
for supply of raw materials. Lack of timing causes the mishandling of such disasters.
 Not learning from prior events : If any sort of flaw exists in communication among
safety authorities, such hazardous incidents are always taken lightly. Nobody learns from
prior incidents because of which they are not able to prepare themselves from the sudden
occurrence of future incidents (Godos-Díez, Fernández-Gago and Martínez-Campillo,
2011). This was clearly seen when despite of the Exxon Valdez spill, exactly after two
decades the Deepwater Horizon incident occurred. The BP failed to manage the oil rig
despite the demise of the Exxon Valdezz. This clearly shows the lack of ethical
responsibility of the authorities.
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As it becomes clear that Oil and Gas industry involves ample of hazardous and safety
issues that need to be managed both ethically and socially as well in order to prevent any sort of
future spills thereby having a less impact upon the inhabitants residing in nearby areas of oil
refineries and natural gas mines. However, one thing needs to be kept in mind that in order for
prevention of any such future occurrences detailed information should be provided in relation to
decision making (Gond, Kang and Moon, 2011). This needs not to be focused entirely upon
government regulators but to those who are operating the oil rigs as well. There are some
beneficial methods that could be followed by the oil and gas companies in order to manage any
sort of future oil spill accidents. Appropriate incentive allotment for introducing changes in safety culture : In order for
effective management of business ethics in Oil and gas industry a proper relationship
needs to be maintained among the safety & their future viability of profits. The methods
utilized by BP failed to manage the oil rig that the Deepwater Horizon incident. So the
authorities need to focus upon their methods of communication and instantaneous
responsiveness to such incidents. Self-policing in accordance with the industry : After the worst oil spills at Deepwater
Horizon and Exxon Valdezz the Oil and gas industry has become a doubtful one in terms
of safety and risk management. To prevent this further, the industry could follow INPO
which is a recommended model in the Presidential Oil Spill Commission Report. It
provides an extra amount of incentives (Groves and LaRocca, 2011). Integrating the safety engineers towards operational decision making: The main reason
behind the demise of the Deepwater Horizon emerged out to be the lacking of any sort of
operational safety group which led to inappropriate decisions leading to further loss.
Henceforth, ensuring a team of safety engineers will lead to real time decision making. Certified training : Detailed investigation of the Deepwater Horizon incident led to the
conclusion that the authorities were lacking proper training upon handling of such
hazardous and life threatening situations. So proper training needs to be provided from a
highly certified organization to the members associated with Oil and gas industry.
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 Managing changes : It was very clear from the Fracking procedure that the changes
introduced for shale rock extraction for natural gas led to further release of hazardous
methane which proved to be a threat for individuals residing near coastal areas.
2. COMPARING THE RISKS IN ASSOCIATION WITH BP, EXXON AND
FRACKING INDUSTRY
Oil and Gas industry is one the most costly industry because of the rich refineries.
Though, the incidents at the Deepwater horizon and Exxon Valdezz led to further demise of this
industry. In order to manage the risks comparing of the three industries involved in this major
drawback needs to be done.
The first point of comparison emerges out to be the instantaneous responsiveness towards
the knowing of such occurrences of oil spill. In case of BP, it was already involved in many
scandals, major one being the explosion at Texas refinery which led to further killing of nearly
15 employees. After handling of many such scandals, it was hired for managing the oil spill
occurred at Deepwater horizon. It arrived at the sight of incident after the spill had spread across
a major portion of the sea. Their late responsiveness led to oil spill spreading across a more vast
portion of sea. However, in case of the Exxon, Alyeska Pipeline services immediately sent out
containment requirements. However, they were late since already major spill had been occurred.
Despite the warnings given by Coast guard of slowing of containment speed, the Alyeska
officials tried to fill their containment (Jackson and Apostolakou, 2010). Even after 18 hours of
the spill, they were not ready to test out the effectiveness of their dispersants to manage the vast
oil spill. However, coming towards the fracking industry, it is nothing as compared to the
hazardous situations of Exxon Valdezz and Deepwater. Natural gas production is not at all
hazardous towards the health and safety of the living species.
The second point of comparison could be thought of the methodologies implied by the
three industries (Mishra and Suar, 2010). The BP's methodologies used to manage the Deepwater
horizon proved to be the cause of further demise of the sea. In order for releasing the pressure of
already damaged wells they did further digging of holes which proved out to be a major loss.
This was a clear indication that there was a major inaccuracy in their contingency plan to deal
with the disaster. This sort of plan showcased their unpreparedness towards the Deepwater
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Horizon spill. Coming towards the Exxon the use of helicopters to disperse the chemicals led to
further indication of inaccuracy because they gradually missed the targets. The team sent by
Alyeska to provide assistance at Exxon also failed to mobilize the oil spill. The lack of efficiency
in the combined efforts of the Exxon and Alyeska caused the oil spill to spread over an area of
2,600 miles over the coastline and the sea. Now, coming towards the fracking methodology,
extraction of natural gas from the shale rocks was beneficial to some extent (Kim and Kim,
2010). But later methodologies when applied by other companies led to the release of methane
gas which proved out to be very much hazardous for the environment. Also, detailed study and
research led to the conclusion that fracking methods are also the cause for small scale seismic
shifts in that particular area where the procedure is being carried out.
The most important point of comparison proves to be the supply of energy to meet the
day-by-day increasing demands of today's world. With the advancement of technology, the
demand for energy resources has led to further increase in the depletion of available resources.
The reason being that the amount of available resources are not able to match the current
demands of energy. So coming towards the availability of energy, the major demise of
Deepwater Horizon and Exxon Valdezz by BP and Exxon's authorities was a clear indication of
lack of risk management. That is the reason they proved out to be very much hazardous because
of their inaccurate measures used for managing the major oil spills. This way oil industry proves
out to be at a very hazardous one concerning the safety of the members working there as well as
people residing near those oil refineries. Natural gas is the best source of energy (Kolk and Van-
Tulder, 2010). Though the extraction from shale rocks is a bit of concern since they release the
methane gas but this is at very low level risk compared to the other two occurrences. With the
advancement of technology th EPA authorities have managed to reduce the methane emissions.
They target to reduce the emissions from 40 to 45 percent by 2025.
3. MANAGING THE RISKS WITHIN OIL AND GAS INDUSTRY BY AID
OF ETHICAL LEADERSHIP
Ethical leadership gets fueled up by the respect shown towards the ethical beliefs &
value. This respect shown is for the benefit of other individuals and their dignity. With effective
ethical leadership skills, the risk management procedure can be carried out more efficiently
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(Peloza and Shang, 2011). This way the existing environmental risks and hazardous situations
could be reduced to a much greater extent.
In order to manage the hazardous risks involved within the oil and gas industry, the
trustworthiness of the organization can prove to be the much needed aid in managing the risks. In
order for effective ethical leadership towards risk management, following characteristic traits
could prove to be beneficial : Justice : From the incidents of Deepwater Horizon and Exxon Valdezz lack of leadership
traits was greatly observed. Hazelwood was not fair by ignoring the warnings given by
Coastal guard. His one decision affected the whole association. Had someone taken the
responsibility of ethical leader, the aftereffects of this major demise would have been
reduced. Under the guidance of an ethical leader none of the workers have to feel biased
about the decisions taken by higher authorities. Respecting other individuals : In order to coordinate with other officials and workers,
effective communication is needed. For this, each and every member needs to respect one
another to ensure coordination (Shum and Yam, 2011). In oil and gas industry working in
teams is often involved. To work in a team, showing respect to the leader is often a must.
Also, the leader needs to show respect in return to his members working under him. Since
the warnings of coastal guard was not paid any attention, this was a clear indication of lac
of respect among one another. Honesty : Oil and gas industry is a very hazardous one. So, being honest about each and
every decision taken will ensure effective risk management thereby reducing risks.
Furthermore, such leaders need to show transparency in their decision for benefiting all
the associated staff ensuring their safety. It was clearly seen from the two cases of
Deepwater and Exxon that the authorities assigned were not transparent about their
decision of handling the massive oil spill thereby showing their inaccuracy in handling
the situation further (Spence and Perrini, 2010). Humane : In order for effective ethical leadership, the leader needs to be kind to each
and every member associated within the industry. Here, giving particular reference to the
oil and gas industry, the ignoring and unkind behavior shown towards the warnings given
by the Coastal guard to Hazelwood and the further digging of wells by BP to relieve the
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pressure of damaged oil wells shown that the authorities were not at all paying attention
to the perspectives of the other members. Focusing upon team building : From the cases of Deepwater Horizon and Exxon
Valdezz one thing was a clear indicative that there was lack of effective teams to handle
the risks that aroused because of the oil spills. This lack of team led to further demise of
the area in which they occurred. Decision making being value-driven : The decisions that are taken in oil and gas
industry, are very important because they overall affect each and every member
associated with it (Tian, Wang and Yang, 2011). Furthermore, the decisions should stay
abide by the values build up by the overall industry. So taking lessons from the major two
accidents of oil spill, taking of decisions should be value driven thereby avoiding ample
of risks associated.
 Value awareness and not tolerating ethical violation : Lack of effective leaders was the
main cause for inaccuracy in the decisions taken for handling the oil spill at Exxon and
Deepwater. For effectively handling the risks involved on occurrence of such hazardous
incidents, leader needs to discuss the values that have been bestowed upon him with other
associated staff. Furthermore, in no possible way, violations of ethical and moral
principles by any member should not be tolerated for the betterment of oil and gas
industry.
CONCLUSION
From the two major accidents of Deepwater Horizon and Exxon Valdez, one thing was
for sure and that was the lack of effective and ethical organizational culture which led to their
further demise. Furthermore, lack of communication among the authorities and various
associated members such as the stakeholders lead to improper and late supply of preventive
measures by BP and Alyeska as well. Oil and gas industry involves many hazardous and safety
measures that needs to be taken care of. However, the fracking procedures are quite beneficial
after the introduction of EPA's methods to minimize methane emissions. Furthermore, employee
safety is also essential to carry out further functioning of the broad industry. Proper training
needs to be given to the members for handling of such massive disasters and reducing their
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impacts. So, the Oil and Gas industry needs to imply the business ethics and fulfill their social
responsibility as well to meed the energy requirements as well.
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REFERENCES
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