Sustainable Enterprises: Crisis Management and Culture Transformation for BP

This paper will examine sustainability as applied to BP. It will look at BP’s past practices and likely future practices based on concerns of responsibility and organizational longevity. The primary question is how sustainable is BP. The paper will initially examine issues of trust and the treatment of stakeholders. Next it will consider if BP is a broken organization in light of the oil spill in the Gulf of Mexico and previous BP accidents. Finally, efforts by BP to manage crisis and organizational transformation towards a more sustainable organization will be considered. The value of this paper is in applying the question of sustainability to a case study. BP has not had just one accident but many and yet the organization survives and thrives. As such one must ask how sustainability is viewed and implemented.

A corporation best pursues its moral purposes, when all its stakeholders are well served and well treated (Karakowsky, Archie & Buchholtz, 2005). Like Sen, we believe that the basis of this treatment is a matter of trust. Stakeholders relate to the company through mutual trust, in the belief that each will be treated fairly, decently and honestly – in essence the good treatment of all stakeholders (Sen, 2004). This is a tenuous concept of trust, easily granted and easily shattered (Putnam, 2000).

This good treatment of stakeholders includes, but is not limited to, moral management and moral contracts, focus on a triple bottom line, work-life balance within the company, effective and proactive risk management, transparency in all decision-making and policy guidance, shared risks and benefits, good leadership including fulfilled fiduciary responsibilities and shared decision-making, avoiding moral hazard, and protection – financial and physical – of all the vulnerable and powerless stakeholders. Executives recognize the importance of such corporate activities. In 2005, a study by the Economist Intelligence Unit reported that 88 per cent of executives believe consideration of Corporate Social Responsibility (CSR) is central and important in business decisions and are linked to better financial results for an organization. CSR is a management approach that is built on trust and stakeholder respect.

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(Author: Diane Huberman Arnold, Ruth McKay. Published by Sciedu Press)