A Report on Sustainability Issues Facing BP and Measures Taken

1.0 Introduction

One of the most imperative industries in the world’s economy is the oil and gas industry. Although this is the case, sustainable issues remain a problem to many companies in this sector. This is because of the risk facing the quality of water, air, and soil as a result of energy companies’ operations. Thus, sustainability is the major concern of the various stakeholders, as many energy companies thrive to quench the high demand of oil, gas, and other related products. Just like other companies, BP oil is faced with the same issues of sustainability amidst rising oil and gas needs in the world. Because of this, the major question is whether BP has put in place strategic measures to deal with the issue of environmental sustainability. A look at the sustainable issues facing BP oil and a SWOT analysis of the company will help to determine the sustainability problems facing BP, strategies put in place, and the ability of the company to deal with those issues.

1.1 A Brief History of BP

BP Oil, known by its former name, as British Oil Petroleum, is a global oil and gas company based in the UK. BP is among the largest energy companies in the world, and boasts of its operations that are in more than 80 countries, globally. The company started back in 1908, after the discovery of oil in Persia, by a group of British geologist. The company started by the name Anglo-Persian Oil Company, but later adopted the name British Oil Petroleum in 1959. As the years progressed, BP oil increased its operations by venturing into the foreign markets, such as Germany, Canada, the United States, and other countries. Because of taking risky measures, such as deep-water horizon oil drilling, the company was able to earn huge profits. In addition, BP obtained other oil companies through merging and acquisition, which increased its ranking on the top lists of the biggest oil companies in the world. BP also partnered with other companies to increase its revenues, power, and operations (Ferrier & Bamberg, 1994).

2.0 Sustainability Issues Facing BP

The Deep Oil Spill

On April 20, 2010, there was an oil spill accident that took place in the Gulf of Mexico. The spill caused serious negative impacts on humanity and the ecosystem around this area. The spill also endangered marine life in this area. After an investigation, the US declared that BP was the one responsible for the accidental spill. Images from the spill showed birds, jellyfish, mammals, and other animals being soaked in oil. Some animal deaths were caused by the ingestion of the water soaked with oil (Norwegian Institute for Water Research, 2012). Coral colonies were also affected, with 90% of these colonies found dead, because of oil intoxication. The low levels of oxygen after the accident also lead to the deaths of zooplanktons, meaning that there would be little food for aquatic animals in the future. Moreover, after the accident, even people lost their lives while fishing. This way of providing for life was also affected to a great extent, as it was the major source of food and income in the region. While these were immediate effects, future effects from oil ingestion by people remain unknown, since the spilled oil had mercury fragments (Corn, 2010). The oil spill was a blow to the company, because of the high financial losses. The numerous researches done regarding that subject estimated that the company incurred a lot of money through clean-up, rescue, and sanctions. Apart from this, the spill attracted attention of the various stakeholders, such as environmental specialists and various governments, which increased BP oil inspection and regulation. Consequently, the company’s operations in the rest of the world were affected as well. For example, the company’s stock prices and marketing operations in all parts of the world were affected in a negative way (Freudenburg & Gramling, 2011).

3.0 SWOT Analysis of BP

Scholars argue that a business organization in a grave market situation needs tools that will help in analyzing the situation and finding the right strategy, which will lead to the successful development of the company. One of these tools is SWOT analysis, which refers to the exploration of a company’s internal and external strengths and weaknesses, and threats and opportunities facing the business entity, in order to come up with promising strategic options. Thus, the best tool that would help in analyzing the current situation facing BP and in evaluating whether it is capable of dealing with these issues is SWOT analysis.

3.1 Strengths

BP is already positioned in the local and international markets, and its activities are multinational. The huge market impact enjoyed by the company gives it a notable performance in all energy industry. Its subsidiaries, including retail brands across the world, also enjoy excellent performance, which leads to high returns. As a result, the company has created a brand image and customer loyalty in most parts of the world. The company is also able to take advantage of the risky situations that no other company in the energy industry is willing to take. For example, the company was the first to venture into deep-water horizon drilling before other companies could agree to take such risks. This makes BP achieve higher revenue growth than other companies in the same sector. The company has also adopted latest technologies to help in reaching higher heights of growth.

3.2 Weaknesses

Risky drilling has caused huge financial losses because of oil spilling. In particular, the deep-water horizon oil spill that occurred in the Mexican gulf caused huge losses to the company. The spill also destroyed the company’s reputation.

3.3 Opportunities

Since the company is among the top companies in the energy sector, it has greater room for expanding its opportunities to other untapped nations. The company has also acquired the North Sea area in Russia, which gives it room for expansion. The huge profits earned by the company can aid in exploring alternative sources of energy, such as wind energy, solar energy, and geothermal energy. The increasing oil prices acts as an opportunity of earning higher revenues than it earned ever before, which helps in dealing with high operational costs.

3.4 Threats

The delicate environment issues, such as air and water pollution, remain to be the major threat facing the company. The company also faces threats of environmental activists, who are keen to follow every business strategy adopted by the business. Apart from this, government regulations in the area of oil production still remain to be among the major threats facing the company. The company also faces high competition from the companies like Total, Shell, and Exxon. Lastly, the increased costs of operations lead to the low revenue from levels and delays in major operations.

4.0 BP Measures of Dealing with the Sustainability Issues

For a long time even before the spill, BP used to concern itself with sustainability issues. The spill only acted as a way of fueling more sustainability measures to prevent such a tragedy in the future. In its annual sustainability reviews, the company outlines various measures that have been adopted. According to the company’s annual reviews, the company has adopted disciplined and efficient approaches, which are aimed at minimizing the effects of its various operations on humanity and the environment. The company has come up with the various measures of responding appropriately to the unexpected disasters, such as the gulf oil spill. This is because the company operates in the various terrains, climates, and locations, which are always risky. BP oil company has also identified the need for collaboration with others companies and organizations for the sake of environmental sustainability. For example, the company has collaborated with various government and community leaders from the different areas including local areas as a way of assisting the company in assessing the environment. This helps in noting dangerous environmental conditions and other risks that may hinder the company’s operations or that may cause disasters. The governments help companies with different advice on the environmental effects and ways of controlling environmental degradation by the oil company (BP, 2012).

4.1 Management Capacity

British Oil Company has an operating management system that helps in environmental sustainability. The management system carries wide operations for thorough and systematic approach to safety and risk control (BP, 2012). The company has adopted a local management system in all countries of its operations. The local management system ensures that activities in the local companies are in line with the company’s standards and other rules and regulations (BP, 2012).

4.2 Risk Management

As seen earlier, the company operates in the risky business and performs risky environmental operations, such as the deep-sea oil drilling. Because of this, BP has a comprehensive risk management structure that is in line with its sustainability goals. The system comprises of strategic tools, techniques, and procedures that help in risk determination, assessment, and control. The company keeps restructuring the risk management system to make sure that it is in line with the current standards and issues.

In particular, the system at the area of 2010 oil spill accident has been reinforced to avoid reoccurrence of the same disaster and also to provide maximum environment sustainability. The company’s safety and operational risk personnel travel across the globe to all the countries, where the company operates, in order to give technical advice and to intervene on the various technical tasks, if the need arises (BP, 2012). The safety and operational risk team also monitors the company’s operation to make certain that the branch/unit is in line with the safety goals of the company and other regulation agencies. The impartial safety and operational risk assessment team was introduced after the oil spill disaster, and its directives are not reliant on the company’s management directives. The main aim of this team is to provide an impartial picture on all operational threats facing the company for adoption of toughened and obligatory safety-linked procedures. On top of this, the team judges and improves BP employees’ aptitude in the matters related to safety and environmental sustainability.

5.0 Solution to the Sustainability Problem facing BP

Although the company has come up with its own measures of dealing with the issue, there is a need for adopting a comprehensive corporate social responsibility measure in dealing with all sustainability aspects. Corporate Social Responsibility encompasses various areas, such as legal, philanthropic, economic, and ethical ones. The main principle behind corporate social responsibility is that business organizations ought to emphasize on benefitting the society instead of simply providing the profits (Kluyver, 2013). BP’s risky operations are done in a way that they benefit the stakeholders. However, the company does not understand that the riskiness of these operations is dangerous to the society. Offering energy sustainability through the risky business does not justify the death of one or many people. Because of this, the best solution to the sustainability issue facing the company is to do away with the risky business, if the company knows that there will be loss of lives. By following these recommendations, the company can minimize its risks and weaknesses, which include threats of activists, strict rules, and the risky business operations.

6.0 Conclusion

In conclusion, BP Company, which is one of the largest energy businesses in the world, is faced with serious sustainability issues after the oil spill that happened in 2010. By conducting the SWOT analysis, various strengths, weaknesses, opportunities, and threats were revealed. This tool helps in determining the best approach to the issue at hand.

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