BP: Beyond Petroleum?

Report on British Petroleum: An Ethical and sustainable way

Submitted by:Pratik Bhagat Sandeep Kichloo Sai Abhishek Madhvaram Rauvri Bharathi Lucille Devrand

INTRODUCTION British Petroleum is a British multinational oil and gas company headquartered in

London, England. It is the sixth-largest energy company by market capitalization, the fifthlargest company in the world measured by 2012 revenues, and the sixth-largest oil and Gas Company measured by 2012 production. It is one of the six oil and gas "super majors". BP is vertically integrated and operates in all areas of the oil and has renewable and gas industry, marketing, energy activities

including exploration and production, refining, distribution petrochemicals, power generation and trading. It also

in biofuels and wind power. As of December 2013, BP had operations in approximately 80 countries,] produced around 3.2 million barrels per day (510,000 m3/d) of oil equivalent, had total proved reserves of 17.9 billion barrels (2.85109 m3) of oil equivalent, and had around 17,800 service stations. Its largest division is BP America, which is the second-largest producer of oil and gas in the United States. BP owns a 19.75% stake in the Russian oil major Rosneft, the world's largest publicly traded oil and gas company by hydrocarbon reserves and production. BP has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index; it had a market capitalization of 85.2 billion as of April 2013, the fourth-largest of any company listed on the exchange. It has secondary listings on the Frankfurt Stock Exchange and the New York Stock Exchange

OPERATION MODEL BRITISH PETROLEUM BPs OMS is a group-wide framework designed to provide a basis for managing our operations in a systematic way. Conformance to OMS is a dynamic process designed to help manage risk and drive performance improvements. OMS integrates BP requirements on health, safety, security, the environment, social responsibility and operational reliability, as well as related issues, such as maintenance, contractor relations and organizational learning, into a common management system. OMS addresses eight elements of operating, under the areas of people, plant, process and performance.

Elements People Leadership

Principles Our operating leaders are competent, exhibit visible, purposeful and systematic leadership and are respected by the organizations they lead

Organizatio n Plant Optimizatio n Assets

We have fit-for-purpose and agile organizations staffed with competent people and teams Our operations are continuously optimized to improve performance and delivery from our assets Our plants facilities, assets and floating systems are fit-for-purpose throughout the life cycle of the operation

Process

Risk

The workforce at all levels of our organization understands and manages operating risk to prevent accidents and harm to people, to reduce damage to the environment and to achieve competitive performance

Procedures

We document and rigorously follow procedures for safe, compliant and reliable operating

Performanc e

Results

We use measurement to understand and sustain performance

Privilege to We deliver what is promised and address issues raised by our key operate stakeholders

QUALITY ASSURENCE IN BP The Quality Assurance Lead plays a key role within the Global Wells Organization-Equipment Integrity Assurance organization (GWO-EIA). The QA Lead will ensure implementation of the GWO-EIA standards and processes by which the Regions will verify conformance of manufactured equipment to the qualified design as specified by Design Assurance Teams processes:

Assist in the development and management of the GWO-EIA and supporting documents Evaluate all aspects of a suppliers capability to reliably manufacture Well Equipment to the GWO-EIA standards Systematically manage Global Equipment Supplier QA requirements such as BP Global Quality Control Plans (QCP) and Supplier Audits Provide direct support to Region Equipment Quality Specialists (EQS) in deploying the GWO EIA standards and processes to the Region This position reports to the GWO-EIA Quality Assurance Team Leader.

FINANCIAL PERFORMANCE Sales and other operating revenues for 2013 were $70 billion (2012 $72 billion, 2011 $76 billion). The decrease in 2013, compared with 2012, primarily reflected lower volumes due to disposals and lower realizations, partially offset by higher gas marketing and trading revenues. The decrease in 2012, compared with 2011, primarily reflected lower production and persistently low Henry Hub gas prices. In 2013 replacement cost (RC) profit before interest and tax for the segment was $16.7 billion (2012 $22.5 billion, 2011 $26.4 billion). The 2013 result included a net non-operating charge of $1,364 million, primarily related to an $845-million write-off attributable to block BM-CAL-13 offshore Brazil as a result of the Pitanga exploration well not encountering commercial

quantities of oil or gas, and impairment and other charges partly offset by fair value gains on embedded derivatives and disposal gains. In addition, fair value accounting effects had an unfavorable impact of $244 million relative to managements measure of performance. The 2012 result included net non-operating gains of $3,189 million, primarily as a result of gains on disposals being partly offset by impairment charges. In addition, fair value accounting effects had an unfavorable impact of $134 million. The 2011 result included net non-operating gains of $1,130 million, primarily as a result of gains on disposals being partly offset by impairments, a charge associated with the termination of our agreement to sell our 60% interest in Pan American Energy LLC (PAE) to Bridas Corporation and other non-operating items. In addition, fair value accounting effects had a favorable impact of $11 million. After adjusting for non-operating items and fair value accounting effects, underlying RC profit before interest and tax in 2013 was $18.3 billion (2012 $19.4 billion, 2011 $25.2 billion). Compared with 2012, the decrease in 2013 reflected lower production due to divestments, lower liquids realizations and higher costs, including exploration write-offs and higher depreciation, depletion and amortization, partly offset by an increase in underlying volumes, a benefit from stronger gas marketing and trading activities, a one-off benefit to production taxes as a result of fiscal relief allowing immediate deduction of past costs, a one-off benefit, mainly in respect of prior years, resulting from the US Federal Energy Regulatory Commission approval of cost pooling settlement agreements between the owners of the Trans-Alaska Pipeline System (TAPS) and higher gas realizations. Compared with 2011, the 2012 result reflected higher costs (primarily higher depreciation, depletion and amortization, as well as ongoing sector inflation), lower production and lower realizations. Total capital expenditure including acquisitions and asset exchanges in 2013 was $19.1 billion (2012 $18.5 billion, 2011 $25.8 billion). Provisions for decommissioning decreased from $17.4 billion at the end of 2012 to $17.2 billion at the end of 2013. The decrease reflects primarily a reduction due to the change in discount rate and utilization of provisions largely offset by updated estimates of the cost of future

decommissioning and additions. Decommissioning costs are initially capitalized within fixed assets and are subsequently depreciated as part of the assets.

We can see the effect on the stock and stock exchange after deep water horizon. A big dip in the stock. CRITICAL SUCCESS FACTORS Critical success factors are those major factors of a company such as reputation, brand, excellent Cost reduction Bp suspended its dividend quarterly payments made to shareholders, which is about 9.5pence per share amounting to $2.6billion as a result of the oil spill making all efforts to cut cost and maximize profit (BBC New2010). Bp laid off thousands of workers, about 20% by cutting down capital expenditure significantly as part of bps plan to reduce annual cost bp sold four oil and gas stakes in the gulf of Mexico to Marubien corporation at $650billion as a result to raise funds to pay part of the damages of oil spill which is as a result of cutting cost(Euro News 2010). BP agreed to sell part of its assets in North America and Egypt for $7 billion which is part of BP's plan to get money to pay out of the damages they caused in the Gulf of Mexico which is another process of cutting cost services, delivery, product range and innovation

Sales and Marketing British Petroleum is into all kinds of energy products such as wind, solar, bio fuel, carbon, hydrogen power, gas fired power and storage systems. British Petroleum invested $1.4billion in as part of the commitment of the company to spend $8billion in 10years by developing alternative energy such as wind, bio fuel, carbon and storage

Process Innovation British petroleum invented Bright Water with the use of polymer popcorn as a process of recovering oil from the deep shores of the sea which helps Bp to boost its oil out significantly, which is an advantage for British petroleum to improve its research and development and gain competitive advantage over rivals. Research and Development British petroleum commenced on a $500billion research in Illinois on farm bio-energy production (Tech 2010). Bp launched a major new personal development program which would give young people from different parts of the world the opportunity to have a better life and the positively influence local communities (London 2012). Bp has established a new research of $500million studying the impact of the deep water horizon (Bp2010). Bp is the leading player in the global bio fuel market, Bp and market bio Science Corporation entered a jointed agreement to prove microbial oil for bio-fuels (Bp press 2010). Bp in 2008 commenced on a project of exploration and extraction of crude oil and natural gas from wells of 8 different countries and also completed 9 major production projects which led to record profit of $37.9billion before tax approximately 39% higher than the previous year (Bp2008 pg13-14). Bp is the largest producer of oil and gas in the US Gulf of Mexico, producing about 400,000 barrels of oil every single day. It has also made progression on nine projects n the Gulf of Mexico such as Atlanta Phase2, Tubular Bells, Kodiak, Freedom, Kaskida, Isabela, Santa Cruz, Mad Dog Tie Backs and Great White.

BEFORE AND AFTER DEEP WATER OIL SPILL

Ethical Issues with BP In March 2005, a huge explosion occurred at a BP-owned oil refinery in Texas that killed

15 employees and injured another 170 people. The company was found guilty by the Southern District of Texas of violating the Clean Air Act and was ordered to pay $50 million in criminal fines. The explosion was the result of a leak of hydrocarbon liquid and vapour, which then ignited. BP admitted that it had ignored several procedures required by the Clean Air Act for ensuring mechanical integrity and a safe start-up between 1999 until the explosion in 2005.

The company was also charged with violating the Clean Water Act when Alaskan oil

pipelines leaked 200,000 gallons of crude oil onto the fragile tundra and a nearby frozen lake, the largest spill to ever occur on the North Slope in March and August of 2006. The fines resulting from this infraction included $12 million in criminal fines, $4 million in payments to the National Fish and Wildlife Foundation, and $4 million in criminal restitution to the state of Alaska. BP would later pay an additional $25 million for violating clean water and clean air laws. The leaks occurred after BP had failed to respond to numerous red flags.

In 2007 BP was charged with conspiring to violate the Commodity Exchange Act and also

to commit mail fraud and wire fraud. The fraud, which had taken place in 2004, involved purchasing more than the available supply of TET propane, and then selling it to other market participants at a price inflated well above market value. BP was forced to pay $100 million in criminal penalties, $25 million to the U.S. Postal Inspection Consumer Fraud Fund, and restitution of $53 million. Additionally, BP had to pay a civil penalty of $125 million to the Commodity Futures Trading Commission CHANGE THE IMAGE: Beyond Petroleum To adapt to a changing world, BP launched its Alternative Energy business in 2005. While still a small part of its overall company, BP sees going green as an increasingly important part of its business which it will expand as it becomes more profitable to do so.

Wind: BP has invested significantly in wind energy through the creation of wind farms across the nation. In the United States, BP-operated wind farms have a total capacity of 1,200 MW. In 2010 BP Wind Energy, in partnership with Ridgeline Energy LLC, launched the Goshen North Wind Farm in Idaho, the states largest wind farm to date. The farm can generate up to 124.5 MW of wind energy, enough to power 37,000 American homes. Other BP wind farms include the Cedar Creek Farm in Colorado, the Edom Hill Wind Farm in California, and the Fowler Ridge Wind Farm in Indiana. Solar: In order to affordably expand its solar capacity, BP signed agreements with numerous solar panel producers in Asia. BP has installed 4 MW of solar panels at Walmart stores and has reached an agreement to construct a 32 MW solar installation on eastern Long Island, enough to power approximately 5,000 homes. BP has also developed two of the largest solar power plants in the world in Spain, projects that will supply energy to up to a million homes. Biofuel: BP became the single largest foreign stockholder in a Brazilian bioethanol company when it purchased a 50 Percent stake in Tropical Energia S.A. The companys fac ility in Gois State, Brazil, has a capacity of 115 million gallons of sugarcane bioethanol. In 2011 BP acquired an 83 Percent stake in the Brazilian ethanol producer Companhia Nacional de Acar e lcool. This move increased BPs ethanol production capacity to 1.4 billion litres a year. Carbon Sequestration and Storage: Carbon sequestration and storage (CCS) involves capturing greenhouse gas emissions from smokestacks and other sources and pumping the gases deep underground to empty oil or gas fields or aquifers. BP has been researching CCS since 2000 and opened the Salah Gas Field in Algeria for experimentation in 2004. BP captures and stores up to 1 million tons of carbon dioxide per year at Salah, which is equivalent to removing 250,000 cars from the road. BP REACHES STAKEHOLDERS WITH ITS SUSTAINABILITY PROGRAMS In addition to its Alternative Energy program, BP also has implemented environmental awareness programs in Britain to help stakeholders understand the impacts of global warming and the importance of sustainability issues. BP Educational Service (BPES) initiated the distribution of the Carbon Footprint Toolkit, an award-winning program designed to help high

school students understand the effects of climate change and their own carbon footprint. Developed in conjunction with teachers and BP experts, the toolkit enables students to examine their schools carbon footprint and to help develop carbon reduction plans for their schools. The Carbon Footprint Toolkit was originally developed as a response to teachers requests arising out of a series of green workshops that BP held. Available free of charge to all British high school students and their teachers, the Carbon Footprint Toolkit has been a successful initiative for BP. The toolkit received a prestigious award for e-learning at the International Visual Communications Association (IVCA) awards in 2007. FAILURE TO MANAGE RISKS The main question on everyones mind after the disaster was how BP could have overlooked such a risk. Indeed, the ocean rig did have safety systems in place, but these systems were not as safe as they could have been. For instance, the rig did not have a remote control shut-off switch, which could have been used as a last resort in a major spill. At the same time, it must be noted that neither Transocean (the rigs owner) nor BP were breaking any laws by not having one; the Minerals Management Service (MMS), a federal agency charged with oversight of the nations offshore oil-and-gas industry, did not require such a device as long as the rig had a backup control system that could shut off the well in case of an emergency. Even more disturbing, one of the technicians on the Deepwater Horizon oil rig has accused BP of willful negligence. He claims that BP had knowledge that the rigs blowout preventer was leaking weeks before the explosion, but did not halt production. If true, this statement would contradict the one released by Transocean after the explosion claiming that engineers had detected no leaks hours before the explosion occurred. Regardless, it is apparent that the backup systems in place were not sufficient to handle such an emergency. Later investigations have also revealed that BPs contingency plan in case of disaster was vastly inadequate. The plan contained several important inaccuracies. For instance, one of the wildlife experts listed as an emergency responder had been dead since 2005. The contingency plan also estimated that should a spill occur, the company would be able to recover about 500,000 barrels of oil per day. In reality, it took BP months to contain the leak, at a spill rate of much less than that listed in the

contingency plan. The inaccuracies in BPs contingency plan highlight how unprepared the company was for a disaster like the Deepwater Horizon spill. WHAT CAUSED THE EXPLOSION? The primary event that caused the explosion is unknown. However, investigations have suggested that actions on BPs part made the well more vulnerable. One investigation implies that BP cut short procedures and quality testing of the pipe tests that are meant to detect gas in the well. Some experts hypothesize that one of the final steps in installing the pipe, which involved cementing the steel pipe in place, could have been the catalyst for the explosion. In addition, BP decided to use a less costly well design that some Congressional investigators have deemed risky. Installation of this design is easier and costs are lower. However, it also provides a better path for gas to rise outside of the pipe. While this did not cause the explosion, investigators believe it may have contributed to the wells vulnerability. Although BP did not break any laws by using such a design, it ignored safer alternatives that might have prevented, or at least hindered, the accident.

THE LONG ROAD TO RECOVERY It took nearly three months to contain the oil leaking into the Gulf. In the interim, thousands of marine animals died in the oily waters, oil soaked beaches black, and hundreds of people that depended upon the Gulf of Mexico lost part or all of their income. By the time the leak was finally sealed in August 2010, over 640 miles of shoreline across several states were tarred with oil. Fortunately, the oil began biodegrading quicker than expected due to bacteria, which

fed on the methane in the crude. But the Gulf had suffered a massive loss of wildlife, and was left with a tremendous amount of oil lurking beneath the waters surface. Scientists are finding evidence that oil has settled across several thousand square miles of seafloor, posing a potential threat to coral reefs and other marine life. Louisiana was forced to divert water from the river into the ocean to keep the oil at bay. The fresh water wiped out Louisianas oyster beds, which will take at least two years to recover. Dolphins, red snapper, and blue crabs also appear to be at risk. In an attempt to compensate stakeholders that depend on the Gulf, BP set aside $20 billion in an escrow fund, and a government-appointed administrator is overseeing the claims. As always, though, compensating the right people for the right amounts is tricky. For example, how far from the coast should a claimant be in order to have an effective claim? What about the many workers without sufficient documentation to prove they worked in the Gulf? The company will also have to deal with rooting out fraudulent claims. Although the escrow fund will serve to compensate some individuals for their losses, others will likely receive little or no compensation. BP puts great emphasis on communicating to the public what it considers to be the key issues on the international CSR agenda, and how the company approaches such issues. This is evident most notably through the complete re-branding exercise set off in year 2000. Following the acquisitions of Amoco, Arco and Burmah Castrol, BP in July 2000 launched its new green, white and yellow sunburst (or sunflower) logo, together with the Beyond Petroleum slogan and advertising campaign. This bold, 135 million13 public-relations move should be seen firstly as an effort to extol BPs genuine concern for the environment. Moreover, it was most likely intended as a symbol of its readiness to assume the responsibilities of a progressive energy company in the fight for ethical business principles, and the rights of all people(s) beneath the sun. Another key element in BPs external communication is the set-up of a corporate website (www.bp.com) that gives extensive coverage of social issues, including detailed annual social performance reports, value and mission statements, speeches by key corporate officials, location studies, and detailed guidelines on ethical conduct. BP has also developed an Intranet system for the purpose of communicating corporate values to employees and business partners as well as guidelines and management control techniques to facilitate implementation of

corporate commitments. The latter involve internal mechanisms such as signing of codes by executive officers, establishment of compliance committees, internal monitoring and auditing functions, and whistle-blowing facilities (hotline numbers). In brief, BPs approach takes inspiration from a body of international declarations on issue areas where such is available (e.g., UN Universal Declaration of Human Rights), while trying to develop its own set of value statements and guidelines in areas where international consensus is more limited (e.g., bribery and corruption). Even though BP does not explicitly make claims to leadership on CSR issues, it recognizes that BP has changed its approach to social responsibilities, and that BP is praised as having been a catalyst for change in the oil industry as a whole (Social end environmental review, 2000). In order to support and qualify these observations, this section reviews business policies, commitments, value statements, codes of conduct and other policy statements found in annual and other reports as well as on BPs web-site. BEYOND RESPONSIBILITY? The notion of performance at the core of BPs external communication on CSR is the notion of performance. Performance Contracts cover all essential elements of BPs business, and each of BPs 150 Business Unit Leaders are accountable for the fulfillment of contracts that are negotiated with the relevant Executive Committee. The striking feature is of course not the concept as such a rather conventional buzzword. Rather, it is the way in which it permeates corporate language and rhetoric. For instance, at the corporate web-site (www.bp.com) Sir John Browne, Group CEO, makes his welcome by announcing that our watchword is performance. In BPs 2000 annual review on social and environmental issues, performance is posed as the

fundamental test for any company, and without superior performance and strong profitability companies cannot deliver the higher standards sought by society. In particular, we regard the greater transparency and accountability associated with sustainability as an opportunity for leadership and innovation. Performance is also at the core in relation to BPs communication on CSR, to the extent that BP has introduced the concept of (corporate) social performance, which is said to have developed from what is commonly called corporate responsibility or corporate social responsibility (Social Performance 1999, Performance data and evidence: 1). CSR is here posed as the idea that companies have broader responsibilities in society than simply the obligation to be profitable. By way of communicating that BP aims to go beyond merely recognizing the idea of social responsibility, its outspoken aspirations are to try to define these responsibilities, manage them proactively and measure the resultant performance. Social performance is defined as outcome, measured in terms of three dependent variables: Behavior, that is whether and how BP lives up to its policies and values Impact on people, and Our overall contribution to society What emerges from this re-conceptualization from social responsibility to performance - is a broader involvement of stakeholders, with shareholders sharing the stage with other primary stakeholders, such as employees, local communities, the environment, and society at large. This is an attempt to move the onus of CSR away from discretionary activities of philanthropy toward an understanding that CSR is integrally related to the daily operating practices of a firm, particularly with respect to those most affected by the activities of the firm, the primary stakeholders. BUSINESS POLICIES AND CSR The evolutionary nature of BPs approach to social performance should be seen in relation to the new business policies that were approved in January 1999, shortly after the merger with Amoco was completed. These policies were said to build upon the best practices and traditions

of both previous organizations (BP Amoco Environmental and social report 1998: As such, they should be viewed as an attempt to explicate its core values in terms of statements like what we stand for, along with a set of commitments regarding five key areas: Ethical conduct Employees Relationships Health, safety and environmental performance Control and finance.

The former three are the ones that relate most directly to the CSR agenda in terms of social performance and progress. ETHICAL CONDUCT POLICY An important element in corporate responses to macro-CSR issues and development of management control techniques is the establishment and adherence to codes of corporate ethical conduct. These codes commonly consist of written, voluntary statements of commitment to abide by certain standards of business behavior. BPs policy on ethical conduct has evolved from a mostly rule-based policy to one that is perceived as better suited to reflect expectations and aspirations. Running alongside BPs set of commitments, expectations describe the boundaries for what the company could achieve within policy limitations and what is and what not acceptable practice is. Aspirations, on the other hand, are seen as reflecting the underlying values reflected in business policies and branding: performance-driven, innovative, green, progressive, and a force for good. Commitments At the basis of BPs ethical conduct policy is a commitment to pursue our business integrity, respecting the different cultures and the dignity and rights of all individuals in all the countries that we operate. More specifically, the written expressions of commitment states that BP employees and representatives should abide by the following principles in their actions and dealings with others:

Respect the rule of law Promise only what we expect to deliver, make only commitments we intend to keep, not knowingly mislead others and not participate in or condone corrupt or unacceptable practices

Fulfill our obligations and commitments, treat people according to merit and contribution, refrain from coercion and never deliberately do harm to anyone Act in god faith, use company assets only for furthering company business and not seek personal gain through abuse of position in the company.

Expectations In order to describe in more detail what these commitments mean in practice, the codes of conduct also elaborate on what should be expected from BP employees and representatives. For instance, with respect to HR, corporate language takes inspiration from key international declarations. BP supports the principles set forth in the UN Universal Declaration of Human Rights and will respect the 1977 International Labor Organization Tripartite declaration of Principles Concerning Multinational Enterprises and Social Policy and the 1976 OECD Guidelines for Multinational Enterprises. Moreover, BP agrees that the promotion and protection of human rights is a legitimate concern for business. As regards the other macroCSR-issues of corruption and transparency, however, there are no equivalent, formal expressions of international consensus. The most clear-cut language is on briberies, which is rendered prohibitive and unacceptable: We will never offer, solicit or accept a bribe in any form. As regards payments into offshore escrow accounts or similar, the statement is equally clear: We will hold no secret or unrecorded funds of money or assets. On the issue of facilitation payments, the ethical conduct policy is somewhat more lax: BPs preference is not to make facilitation payments. Any such payment must be modest and recorded properly with the accounts.

However, in February 2002, BP introduced a new policy that makes it clear that BP staff anywhere in the world should not make facilitation payments from now on the code of conduct is also clear on gifts and entertainment and political contributions: We will only give or accept gifts and entertainment that are for business purposes and are not material or frequent. We will never accept gifts or entertainment during the process of a competitive bid or tender exercise. BP will make political contributions only when they are lawful, of modest size and properly recorded. BP does not make political contributions in the United Kingdom. Before we make major investments in a new area, we will evaluate the likely impact of our presence and activities. These assessments will consider the likely impact of major developments on local communities and indigenous peoples, local infrastructures and the potential for conflicts and its implications for security.

Guidelines on ethical conduct In order to transform the corporate policy (commitments, expectations) on ethical conduct into practical guidance for corporate officials and employees, BP revised during 1998 its

Guidelines on Business Conduct During 2000 the Guidelines was updated and presented as a booklet, Finding your way through the maze. Herein, BP aims to give practical advice and guidance on a range of ethical issues, such as: Human rights Legality (the rule of law) Political contributions Bribery and corruption

Relationships policy

BPs relationship policy is also founded on a set of commitments and expectations. Our commitment is to create mutual advantage in all our relationships so that others will always prefer to do business with BP. This is in part BPs way of communicating that successful brand promotion depends on its involvement with and dependence on stakeholders, be that employees, customers, partners, communities, governments and media. In order to build trust in external relationships, BP stresses the need for long-term relationships to build on high standards (influence by example), delivery on promises (accountability), openness (transparency) and mutual interdependence. As regards relationships with governments in particular, BPs policy dictates that the company will seek, working in partnerships with others, to resolve any tensions or conflicts arising between international expectations and national or local practices in a sensitive manner. With regard to communities, BPs key ambitions are that countries and communities in which we operate should benefit directly from our presence *+ so that we create sustainable human progress. In its relationships with contractors and business partners BP will seek partners whose policies are consistent with our own and make our contractors and suppliers aware of our own commitments and expectations, and of their responsibilities in implementing them The relationships commitment has not been designed as a blueprint for a management system. Rather, the intentions are to formulate value statements and promote management techniques that in turn provide support and guidance for sound business conduct. In order to measure and monitor progress in its relationships BP uses a combination of customer surveys, opinion polls as well as consultation and dialogue. CSR Management In terms of developing a corporate compliance program and management system on CSR issues, BP seeks to achieve a balance between two generic approaches; an approach based on rules and compliance, and a value-based approach that is consistent with the overall management ethos. To some extent one could argue that the rules and compliance approach is also valuebased, in terms that goals also include aspirations that go beyond compliance17. This is an approach that puts strong emphasis on the personal responsibility and autonomy for exercising

judgment in a manner that is consistent with core values. Schematic of BPs implementation model for CSR issues. A schematic presentation of BPs management system for raising awareness about ethical and social issues and ensuring compliance is given. This implementation model is established to reflect the diversity of the BP organization, and the emphasis put on individual responsibilities and autonomy. Hence, each of BPs 140 Business Units (Line Activity) has been assigned performance targets, but a large degree of freedom in delivering upon these targets. The process of decentralization was largely born out of the poor corporate results in the early 1990s, culminating in the halving of the dividend in 1992. One of the outcomes of this internal crisis was an enhanced emphasis on partnering and strategic alliances, and the transfer of decision-making power and autonomy to the level of the Business Unit. As regards new tools and management systems, BP is also taking new steps by way of establishing self-imposed constraints and guidelines on ethical behavior, which in principle applies to relationships with employees and corrupt governments alike. An interesting development in this regard is the increasing regional focus, including the set-up of regional ethics committees, reflecting the understanding that key issues pose different challenges in different regions. The consequences and impacts of new standards and tools are of course difficult to measure. Developing specific and measurable targets and metrics for performance on macro-CSR issues is clearly a prime challenge. This far, measurement of BPs social performance has largely focused on quantifying inputs - the resources (financial, human, time, etc.) that have been invested, for which the perhaps most clear-cut indicator in public reporting being the Global Social Investment (GSI) program. BP also recognizes that developing appropriate metrics for the measurement of outputs the relative difference (positive or negative) that business has made to the development of the community in which it operates, continues to be a challenge. Against this background, taking also into account salient characteristics such as BPs exposure in sensitive regions and rather moderate negative attention, there is in general rather high degree of consistency between statements and actions on macro-CSR issues. However, that does not mean that BP is left totally unscathed by accusations of wrongdoings in the past. Moreover, there are pending issues that threaten to cast shadows on BPs recent attempts to recast itself

as an environmentally friendly and socially proactive company. Potential threats to BPs reputation are its investments in Petro-China, accused of being implicated in gross human rights violations in Sudan, and BPs possible involvement in drilling into the environmentally sensitive region of the National Arctic Wildlife Refuge. CONCLUSION BP went from near bankruptcy to being one of the largest energy companies worldwide. After experiencing a range of ethical problems, the company worked to overcome its negative image through launching sustainability initiatives and social responsibility. However, BPs claims of environmental responsibility were undermined by the Deep water Horizon disaster. Developing an ethical organizational culture requires an examination of the risks to various stakeholders. In the case of BP, the company failed to put in the safeguards necessary to protect employees, local communities, suppliers, and the viability of many industries including fishing, tourism, and the sustainability of the offshore drilling industry. After the Exxon-Valdez disaster, there should have been a heightened awareness of the risks of offshore drilling and a mandate to implement every safeguard necessary to protect the environment. BPs outsourcing of its offshore drilling did not eliminate its responsibility for the outcome of any drilling accident. As a global corporation, BP now has the responsibility to engage in the complete recovery and restoration of the environmental damage it wrought as well as repairing the economic damage done to various stakeholders. This process is going to take a very long time, and the ramifications of the damage may not be completely clear for years to come. In the future, there will be no room for BP to take shortcuts or try to cut costs in its production operations. BP has a new responsibility to provide leadership in safety and sustainability. The future survival of BP is dependent upon its ability to commit to a socially responsible approach and stakeholder engagement