The need for Corporate Responsibility
When any company initiates the production on a huge scale it is bound to be liable and accountable to its surroundings as well as keep a check on its activities which are not harmful in any way to its people involved, whether directly or indirectly. Therefore, it is the responsibility of such corporate giants to understand their responsibility towards the people and the society, at large. Considering the case of the oil spill in the Gulf of Mexico, being one of the most valuable territories and having numerous variety of marine life. ((Louisiana Department of Fisheries and Wildlife, 2010) It is considered to be one of the most economic development areas who supports majorly five of U.S. states for its employment and the richest source of oil and natural gas. In such scenario, the oil spill has damaged the ocean and the marine species to a great extent but the attitude of the BP towards this issue has all the more raised questions towards the liability and accountability of environment in general. The aftermath of the oil spill disaster lead to a big commitment from the Gulf Area and pertains to the environment and the economy. BP spent a huge sum in the cleanup process, compensation and restoration of the total economy. Going by the Sustainability Review 2010, BP kept $37.2 billion towards compensation for the disaster.
With respect to the theory of Public Interest which has been majorly conferred are in line with identifying the major drawbacks in the management of the risk occurred due to the oil spill in the ocean and also assessing the strategies that have been incorporated to manage this risk. However, the primary point of concern is the application of the public interest theory which has been totally smashed away in this issue (Upton, 2011). The motive behind the introduction of the Public Interest theory was to keep a check on the corporate entities inefficient practices and monitor them; the intervention of the government was inevitable (Booz & Hamilton, 2010). As such, such an implementation of regulation was very much in need for the benefit of the public. The regulation is brought into effect to do better of the society as whole rather than an individual’s interest.
Different authors have different views on the theory of public interest. The one who introduced this theory, Pigou (1932) (As cited in The Economics of Welfare, 1972) is of opinion that the regulations need to be brought into existence when the public demands for the correction of the malpractices. Whereas, another author named Stigler (1972) has the opinion that the theory comes into effect when the public is in favor of allocating the resources. He also mentioned that the regulations have become the mode for prohibiting the competitor’s entry in the market. In accordance with the theory of public interest it is a method of reasoning choice to present the enactment which commands for the corporate to uncover the effect of their exercises on the general public and condition and furthermore unveil the activities taken by them to shield the general public and the earth from the antagonistic effect of their exercises. (BP Gulf Update, 2012)
The BP Gulf of Mexico oil spill
If considering the point of view in favor of the public interest, the said theory is a must required regulations to safeguard the interest of the people and environment. It is very necessary for the government to maintain a balance amongst the economic development of its vicinity as well as provide a healthy atmosphere for its people (Jefferson & Bowling, 2011). Therefore, the concept of initiation of government agencies to regulate the industry and making its mandate to disclose the impact of corporate activities on society and environment will be serving the public interest. (Channel News Asia, 2013)
The said article is primarily dealing with the information related to the economic, environmental and financial accounting of the corporate giants. The corporate entities forget their accountability towards the society when they become selfish in achieving their heights of success. In the case of the oil spill in the Gulf of Mexico, there has been a sheer negligence on the part of the BP, who ignored the consequences of its event of the oil spill in the ocean and also did not undertake effective and immediate cleaning methods to reduce its impact. (BP Plc, 2014) Because of its negligence majorly around 20 species of the marine life was affected. The ecosystem as well as the social damage was under the umbrella of high alert due to this event and are still under its effect at the end of 7 years post implementation of the regulation. (National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, 2011)
Here, I would like to put forth my opinion in support of the regulation and effective implementation of the same for the benefit of the society. It is in the best interest of the public who will be duly pampered under this regulation and the government agencies would take care of the corporate giants who would not exercise their rights in accordance with the implemented regulation and put a stop to those activities. (Cleveland, 2010) The companies who do not have public interest on their agenda will have to incorporate it under this regulation and also be accountable for its activities. However, there are conflicts related to the people working in the government agencies and the industry as well. Though they are working for the government agencies, they are said to be working in favor of the industry, which ultimately helps them to secure their future as it gives them the opportunity to establish themselves in the related industry with their expertise. (CBS Chicago, 2013)
Still, if we consider the overall situation, where such agencies are working in favor of preserving the environment, it is still in the best of favor of the public interest and implementation of the theory of public interest is in its best nature to safeguard the interest of the society and the environment (Mason, 2010). The regulation will enable the people to survive in a healthy atmosphere and also have maximum economic development with such innovative and effective strategies being implemented for the development of the society (Broder, 2012).
The only point of concern is the people involved in the regulation of such government agencies which are in the dilemma whether they perform their duties in favor of the agency or the industry. The people employed by the industry, which is past or present employees, can be biased and also a matter of concern who would not work independently. As such, to keep a continuous check on the people of agencies is also a must and a rotation or tenure of such people involved will be an effective measure. (Broader & Krauss, 2011)
Conclusion
Any regulation which helps to evaluate the activities of the corporate and establishing a checking point keeps the giants in control and makes them accountable for their activities. An effective execution of the regulation will put the companies under a check and that would ultimately result in the benefit of the society as that would not allow them to function aimlessly. Hence, as the name suggests, the Public Interest theory is a must for the public and the society at large. The lessons to be learned from the said case exhibits the opportunity to other companies to get away with the negative results of the critical incidents and execute, develop, and sustain the compelling management practices in event of critical situations. As per the discussion, it can be commented that the financing activities were high however the incident lead to a drastic fall in the price of the share. BP should function in a manner and pay heed to the governance issues and corporate responsibility.
References
Booz, A & Hamilton, K 2010, The Offshore Oil and Gas Industry Market Response – Part Two, Department of Energy, National Energy Technology Laboratory
Broder, J. M 2012, Ruling Favours Owner of Rig in Gulf Spill, The New York Times, viewed 22 January 2016, https://www.nytimes.com/2012/01/27/business/energy-environment/transocean-not-liable-for-some-gulf-spill-claims-judge-rules.html.
Broder, J. M & Krauss, C 2011, Regulation of Offshore Rigs Is a Work in Progress, The New York Times, viewed 19 January 2016, https://www.nytimes.com/2011/04/17/us/politics/17regulate.html?pagewanted=all&_r=0.
Channel News Asia 2013, BP says oil spill compensation fund running out, viewed 16 May 2017, <https://www.channelnewsasia.com>.
Cleveland, C. J 2010, Deepwater Horizon Oil Spill, viewed 16 May 2017, https://www.eoearth.org/article/Deepwater_Horizon_oil_spill?topic=50364.
Jefferson, J & Bowling, N 2011, The Economic and Biological Impacts of The BP Oil Spill, NDS 372.01 Environmental Studies Capstone Seminar.
Pigou, A. C 1932, The Economics of Welfare. London: Macmillan and Co.
Stigler, G.J. 1972, ‘The Theory of Economic Regulation’, Bell Journal of Economics and Management Science vol. 11, pp. 3-21.
Mason, J.R 2010, The Economic Cost of a Moratorium on Offshore Oil and Gas Exploration to the Gulf Region, Working Paper :Louisiana State University.
Upton, H.F 2011, The Deepwater Horizon Oil Spill and the Gulf of Mexico Fishing Industry,
BP Plc 2014, Annual report and accounts 2014, viewed 16 May 2017, https://www.bp.com/content/dam/bp country/de_de/PDFs/brochures/BP_Annual_Report_and_Form_20F_2014.pdf
A look at Europe’s Financial Crisis, viewed 16 May 2017, https://hosted.ap.org/specials/interactives/_business/greece_imf/content.swf.
BP Gulf Update 2012, BP Protecting Wildlife, viewed 21 January 2016, https://www.bpgulfupdate.com/external/content/document/4699/1469631/1/WILDLIFE_Fact_Sheet_FINAL_2-23-12.PDF.
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