Week 9

Question 1

what happened with BP in mexico?

Answer 1

• it was responsible for an oilrig in the Gulf of Mexico, an explosion occurred there, which killed many people, the oil seeped out into the Gulf for many months causing environmental and local community damage
• they are example of greenwashing where what was happening in practice was different to what was being put forward, ie. BP said they were environmentally friendly but they weren’t

Question 2

who did BP cause damage to?

Answer 2

• The Marketplace (consumer relations; suppliers; oil
  companies and its shareholders relations)
• The Workplace (employees and their contractors safety)
• Community (the livelihood and recreation of citizens in
  the Gulf states)
• Environment (damage to wildlife and the local ecology)

Question 3

what is the background of BP?

Answer 3

• they had previous accidents in texas
• its culture from the 1990s was on shareholder value and reflected a move to subjugate other interests to maximise shareholder returns
• CEO was john browne, seen as great leader, he was instrumental in focusing on cost-cutting and increasing production, which he did by decentralising its activities and giving remuneration packages to senior staff
• lack of health and safety equipment showed his cost cutting

Question 4

who did BP merge with?

Answer 4

Amoco,
- BP’s culture changed to fit in with theirs, they had a tough integration process and performance related remuneration packages meant only focused, ambitious people felt at home at BP

Question 5

what did BP rebrand itself to?

Answer 5

it rebranded itself to identify its environmental concerns and responsible practice
- they invested in renewable energy and contributed to climate change research

Question 6

what was the environmental work BP did?

Answer 6

• coal was replaced by gas, which BP had a lot of
• it’s been argued that it kept government legislation at bay, consumers and regulators satisfied and helped graduate recruitment
• arguments for CSR say that if an organisation can be seen to be proactive then it can keep legislation at bay, governments won’t introduce more restrictive legislation therefore
• some people/ shareholders criticised this new green image as they couldn’t understand how it would work with their business plan, the board said that the ‘beyond petroleum’ message would make BP look dishonest

Question 7

what happened between 2000-2010 for BP?

Answer 7

• BP were failing to invest in infrastructure, training and technical expertise
• it began its reputation of oil spills in Alaska mostly through poor maintenance
• Tony Heyward then became CEO in 2007, in spite of assurances to focus on safety, the business model of cutting costs continued where they made rigs more productive and spent less on safety
• culture became more macho

Question 8

describe the disaster for BP?

Answer 8

• field was 5000 feet below which was difficult to do and costly
• external monitoring only happened 9-5, not 24/7
• equipment was chosen for speed not safety, overall control of rig was with BP
• proper risk assessments weren’t carried out in spite of company policy
• risk concerns by contractor were ignored, BP staff lacked technical expertise to interpret warning signs

Question 9

what was BP’s reaction to the disaster?

Answer 9

• it downplayed the loss of oil and failed to apply proper capping measures
• it blamed its contractors, BP wasn’t prepared for the disaster it was reported that the accident was caused by bad management and a culture of complacency regarding risk
• the board of BP didn’t challenge the business model, company wanted to be seen as responsible but was focused on short term profits -> shareholder profit
• BP maintained it took CSR seriously, much of the failure was down to a failure in strategy

Question 10

what are the five stages of CSR?

Answer 10

• Defensive (to deny responsibility)
• Compliance (to do the minimum required)
• Managerial (to begin integrating CSR into management practices)
• Strategic (to embed CSR within the strategy planning process)
• Civil (to promote CSR practices industry-wide)

Question 11

how do you develop a distinct CSR strategy?

Answer 11

1. Set goals for CSR strategy: identify key areas of improvement, eg environment, social and governance
2. Design CSR strategy: work out how to go from A to B
3. Implement CSR strategy: practicing stakeholder engagement
4. Assess the outcomes of CSR strategy: outcomes are audited by external individuals

Question 12

how do you integrate CSR into business strategy?

Answer 12

• The organization’s overall goals and mission
• The internal and external strategic issues that affect the organization’s ability to achieve its mission
• The decision about which markets an organization should operate in
• The choice of goods and services that will be offered to customers in those markets
• The development of the internal resources necessary to compete in those markets
• The development of a distinctive and enduring competitive advantage that enables the organization to outperform its rivals.

Question 13

what is a CSR position statement?

Answer 13

All stakeholders (internal and external) need to understand the firm’s CSR position and how that stance affects them.

Question 13

what is a CSR position statement?

Answer 13

All stakeholders (internal and external) need to understand the firm’s CSR position and how that stance affects them.

Question 14

how do you develop an effective CSR position statement?

Answer 14

• Engages organisations key stakeholders
• Helps map out a conflict resolution process that seeks mutually beneficial solutions
• Involves CEO support
• Reinforces the importance of CSR through rewards and sanctions
• Provides policies on how CSR should be implemented on day to day basis

Question 15

what is the vision?

Answer 15

• The vision answers why the organization exists. It identifies the needs the firm aspires to solve for others.
• understanding the need in society, this forms the basis of its aspirations or vision, which is an ennobling, articulated statement of what it seeks to be and become.

Question 16

what is the mission?

Answer 16

• The mission states what the organization is going to do to achieve its vision. It addresses the types of activities performed for others.

Question 17

what is the strategy?

Answer 17

• The strategy determines how the organization is going to undertake its mission. It sets forth the ways it will negotiate its competitive environment.
• explains how the organization is going to go about
  achieving its vision and mission. It defines the organization’s response to its competitive environment.

Question 18

what are the three key areas the application of strategic CSR can be put into?

Answer 18

• supply chain: raw materials, extraction, supply, manufacturing
• operations: logistics, design, transportation
• consumption: recycling

Question 19

what are the different ways to integrate CSR?

Answer 19

• Leadership
• CSR officer
• CSR vision and values
• Culture/Ethical values
• Governance
• CSR audit and report

Question 20

how do firms implement a plan of action for CSR (short to medium term)?

Answer 20

Top-management support must translate into tangible action.
- To be effective, however, CSR needs both visibility and sponsorship within the organization.

Question 21

how do firms implement a plan of action for CSR (medium to long term)?

Answer 21

• organisations should seek feedback from stakeholder groups so as to both inform and involve them
• two way avenue of communication with shareholders should be expanded to include a firm’s broader set of stakeholders, goal should be to develop relationships with all stakeholders

Question 22

how do firms manage the message for strategic CSR?

Answer 22

• Strategic CSR that is genuine and substantive needs to be communicated to the firm’s stakeholders. As such, a firm’s PR department is an important medium through which the firm
  can communicate its CSR progress.
• In particular, firms need to develop a strategy to deal with the rising importance of social media, which increasingly will be an important means by which stakeholders experience and evaluate
  the firm.

Question 23

what are the four essential components that are key to defining strategic CSR?

Answer 23

1. First, that firms incorporate a CSR perspective within their strategic planning process;
2. Second, that any actions they take are directly related to core operations;
3. Third, that they incorporate a stakeholder perspective
4. Fourth, that they shift from a short term perspective to managing the firm’s resources and relations with key stakeholders over the medium- to long term.

Question 24

what are ethical codes?

Answer 24

• record expectations and the boundaries of acceptable behaviour in an Ethics Code and reinforce those rules and norms via regular ethics training. Both establishing the rules and then reinforcing
  them via training are essential to establishing a consistent culture throughout the organization
• CSR policies should have an anonymous feedback, complaint or whistle-blowing procedure to keep its CSR policy effective

Question 25

describe governance?

Answer 25

• its central to a firm’s activities. It is the primary interface between the firm and its shareholders. The Board of Directors advises the CEO on strategy and ensures the owners’ interests are protected
• ensuring procedures are transparent, managers are accountable to external stakeholders

Question 26

what is the manifestation of strategic CSR?

Answer 26

• Triple Bottom Line/ESG (Environment/Social/Governance Reporting)
• Cause related marketing
• Charitable donations
• Community action
• Managing a balanced workforce
• Health & Safety
• Environmental management
• Sustainable trade

Question 27

describe reporting practices?

Answer 27

• CSR reporting and auditing
• annual report targeted at shareholders whereas a CSR report targeted at broad range of stakeholders
• rise in non-financial reporting

Question 28

what are the reasons for reporting?

Answer 28

1. Instrumental / economic: social and environmental issues might pose a threat to company’s financial situation
2. Political: increase in corporate power greater cause for more transparency and accountability to the public
3. Integrating stakeholder demands: involving them in CSR reporting
4. Ethical reasons (Responding to pressure): CSR reporting is a tool to communicate ethical values

Question 29

what is the standardisation of CSR reporting to enhance credibility?

Answer 29

assurance, regulation and integrated reporting.