Environmental Aspects in Context of Australia
Discuss About The Management In Offshore Petroleum Engineering.
The article published on the online forum of ABC News by Malcolm Sutton on 10th April, 2018 highlights a key cause of worry for the businesses across the globe, which is the rising carbon footprint. The article begins by rephrasing the warnings given thirty years back regarding human activity creating enhanced greenhouse effect. Owing to such early on research, it was hoped by the scientists that a decisive action would be taken on lower fossil fuel emissions. However, this has not been true and there has been a continued rise, which has led to the findings by the scientists, that the increase emissions of fossil fuels have resulted in the changes in weather and have also intensified the storms. The way of dealing with this issue was by taking the Plan A, where the governments were expected to step up and for the social movements to be so powerful which would pressurize the government in doing so. However, Plan A failed and resulted in Plan B, which is to go to the courts. There has been a noticed rise in climate change litigations as the governments of both big and small nations, along with the big oil companies, failed to act in a proportionate manner for reducing emissions (Sutton, 2018).
One of such recent instances was of 21 teenagers of Oregon who had asserted that the US government had failed in taking meaningful action against climate change, which was claimed to be a contravention of their constitutional right to life, property and liberty. Despite the several layers of hearings, the government has made attempts to throw them out. The key aspect highlighted by this article was the wrongdoings of the big companies, from the oil and gas industry, like Chevron, Shell, and ExxonMobil. The companies in oil and gas industry have continued to lay waste to the environment. This is the reason for the number of lawsuits against the big oil and gas companies, which have been made to pay damages for rising seas, along with threats of litigations being made on the companies, in line with Paris Agreement. One of such litigations has resulted in the Netherlands government being forced to reduce their emissions by 2020 by 25% as a result of contravention of duty of care, and this order was made by Hague District Court in 2015 (Sutton, 2018).
Ethical Issues
In the view of Hague court, there was no denying the fact that the greenhouse gas emissions had been caused due to human activity, particularly the anthropogenic emissions, and this resulted in a contributory or cause based degree of climate change. The need of blaming the government and the big oil and gas companies was required as had been adopted in past in case of big tobacco companies. The government, and the fossil fuel companies, adopted similar approach by the big tobacco companies in stating that there was only a causal link between the work of company and what the people experienced, which resulted in counter arguments or delaying of the case, and the basis of this was attributed to science. The 2015 decision came at the complaint of 886 co-plaintiffs, and this case was warned to create major ripple effect by National International Law Association in context of establishing climate liability in Australia and across the globe. Even with variance in constitutional requirements of Australia and Netherlands, this continues to be a substantial issue (Sutton, 2018).
The article goes on to discuss the environmental aspects in context of Australia. It highlighted that the per capita carbon footprint of the nation was highest during 2014 across the globe, and stood at 15.4 tones. In other words, the citizens of the nation punch way over their weight even when the overall emissions of the nation were comparatively lower in comparison to nations like China, US and Russia. Palau, a pacific island nation, has sought advisory opinion from ICJ, i.e. International Court of Justice, regarding their ability of raising a case against the other nations for their failure in reducing, controlling or preventing the risk to other states of such environmental harm. Similar threats had been made in the past by Tuvalu in the year 2002, where it threatened to take US and Australia for their failure in acting against emissions. As per the Federal Environment Minister, the nation is working towards bringing down the emissions, and that the figures of emissions were at lowest level in last 28 years. The ratification of Paris Agreement has made the commitment of Australia stronger towards carbon emissions. The article also discusses the tarnished reputations of the big oil companies due to the rising number of climate change litigations (Sutton, 2018).
The key ethical issues which had been highlighted through the article were related to the ignorance of climate needs by the big oil and gas companies, and the ignorance of these needs by government. This was coupled by theme of concepts like sustainability and corporate social responsibility being ignored by the oil and gas industry. The history of oil and gas industry is full of instances where the needs of environment have been ignored. To make the matters worse, the work done by the oil and gas companies have deteriorated the environment. The incidents include the Deep Horizon oil spill and the acts undertaken by Exxon and BP continue to pose a threat on the environment (Ferrell, Fraedrich and Ferrell, 2016).
Possible Resolutions
There have been a number of instances like fracking and oil spills which have ruined the environment. Apart from the environment, these activities negatively impact the lives dependent on environment (Noland and Anderson, 2015). In April 2016, there was a major oil spill of 10,500 liter in Australia, which was kept under wraps by regulators; further, till date, the culprits have not been named. This raised allegations of protecting the breaching individuals owing to this secrecy (Slezak, 2017).
The application of ethical theories can further clarify on the wrong approach adopted by the government and the oil and gas industry. As per the utilitarianism theory, the acts are deemed as ethical when the result of such action causes unhappiness amongst the majority. So, the goal is to focus on maximizing the happiness for majority (Bykvist, 2010). The acts which the participants in the oil and gas industry undertake are not ethical as they are concentrated in undertaking such acts which suit them the most and ignore the best interest of the different stakeholders. This results in reduced happiness of the maximum. The conduct lacks the virtues given under the virtue ethics to make the actions ethical, in terms of lack of integrity, honesty and adoption of unfair approach (Winter, 2011).
The application of Kantian view also brings forth a similar approach (Corrigan and Farerell, 2010). The view given by Immanuel Kant provides that the people have to behave in such a manner as they want others to behave with them. Further, the course of actions undertaken by the individual is to be judged to decide on morality of action (Naaman-Zauderer, 2010). As per this view, the oil and gas industry, willfully indulges in ignoring the environment, and merely focuses on doing the work, irrespective of the results. This approach is entirely unethical as the focus is on self interest instead of on the needs of people and the environment.
The article touches upon the possible resolution of ethical issues highlighted under it. The most important one is the need for the oil and gas industry to adopt a proactive approach in taking care of the stakeholders, the prime one in which is the environment. This is followed by the need for the governments to take a proactive approach in safeguarding the environment, in place of siding with the wrongdoers. There is a need for the organizations to work towards the theme of safeguarding environment, and have to work towards reducing the carbon emissions, as per the promises made under the different environment related treaties, included the Paris Agreement. As these points are currently not working, there is a need to take an aggressive approach in pursuing the litigations raised by different individuals, and deciding the matter from an environment centric approach. There is still a rise in anthropogenic climate change, which needs to be immediately corrected through the union of governments, courts and the companies in the oil and gas industry. The courts cannot be singularly burdened with duty of protecting the environment; and this requires stricter norms to be brought in and the guilty to be punished, instead of making efforts at covering the wrongdoers, as was done in April 2016 spill.
As a result of the rampant disregard given to the environment by the oil and gas industry, the stakeholders have to bear the consequences of such actions. Just to earn profits, the oil and gas companies hurt the stakeholder groups and ignore their interests, let alone considering the best interest of the different stakeholder groups. As a result of these actions, different stakeholders are affected.
The first and the most substantial stakeholder of the misdeeds of the big oil and gas companies is the environment. The big oil and gas companies, in terms of sustainability, is damaging and polluting the environment, so much so that the environment would soon be unable to sustain life form. Included in this is the wildlife, fauna, flora, water bodies, the ones dependent on environment, and even us, as we rely on the air which the environment gives us (Anis, 2015). In terms of sustainability, the upcoming generation becomes a stakeholder group as well, as the damage caused to environment leaves them with a very bad climate to live in. This is a breach of their fundamental right of life, which resulted in the lawsuits covered under the quoted article. The next stakeholder group stems from the environment only, in terms of the people dependent on environment for their livelihood. The instances of fracking and carbon emissions deplete the marine life, which affects the life of people dependant on marine life for food, and livelihood (Chandrasekaran, 2016).
The next stakeholder group affected from the acts undertaken by big oil and gas companies is the investors. Upon indulging in mishaps like oil spillage and other environmental hazards, the big oil and gas companies are imposed with penalties. This is followed by a negative image of the company being formed, and damage to its overall reputation. The public relations also fail in helping much in such cases. As a result of such image, the investors lose their money due to lost faith in the company. This ultimately declines the stocks and also negatively impacts the big oil and gas companies (Morris, 2010). The people working in big oil and gas companies are also affected, as often they do not want to continue with an unethical company. There are also instances of employees turning towards unethical acts, as they see their company doing so, which may hurt such big oil and gas companies. The damage caused to the reputation also makes it difficult to attract talent and to retain them (Werner, Inkpen and Moffett, 2016).
Thus, from the article analyzed in the previous segments, it can be conclude that environment concern is a major issue amongst the big oil and gas companies. The lose approach adopted by big oil and gas companies and the government has resulted in the individuals adopting a Plan B approach towards dealing with the damage being caused to the environment. The discussion carried on above furthered the matters presented in the quoted article, to show that the nation is gripped with environmental concerns, particularly in context of carbon emissions. The big oil and gas companies have failed in learning from the past instances and continue to lay waste to the environment. The concept of sustainability and corporate social responsibility have been blatantly ignored, and the ethical theories have highlighted the conduct of the big oil and gas companies as being highlight unethical. It is time that the solutions highlighted above are adapted in a proactive manner, to safeguard the environment for the future. Everything cannot be left at the shoulders of the courts and it is time action is taken. Otherwise, the different stakeholder groups highlighted in this discussion would continue to face adversities due to the unethical acts of the big oil and gas companies.
On 16th April, 2018, an article was published in ABC News, which had been penned by business reporter Andrew Robertson. The theme of this article was on the financial planning and the lack of financial professional standards. The article begins by analyzing the very objective for which the banking royal commission exists. This was attributed to the number of financial planning scandals, which have resulted in thousands of people losing their life savings. This article discussed on the collapse of Storm Financial, which resulted in attempts being made to make financial planning as a profession which could stand with the other professions like engineering medicine, accounting and law. Even with the ten years of reform in this industry, Bernie Ripoll, who led to the inquiry into aforementioned collapse, stated that the reform was not there where it meant to go (Robertson, 2018). The Storm Financial collapse was related to giving inappropriate financial advice to the investors which were vulnerable and cash strapped, and were banned by court, upon litigation being pursued by ASIC, from managing corporations for a period of seven years. Their acts left over 3,000 clients destitute. The situation left the clients in bad situation as they were unlikely to recover their funds (Hamilton-Smith, 2018).
This problem was attributed to the lack of professional standards, defined education standards, commitment to fiduciary type duty to customers, and a code of conduct which the other professions have. The acts in financial services sector has resulted in the lost of trust of people in the sector and system, as the perception is that the government fails in protecting them in a proper and full manner. The figures presented by ASIC make the matters worse, where the survey conducted by ASIC showed that there were still 79% financial advice which contravened the provisions of the Corporations Act, 2001 (Cth) (Robertson, 2018).
There is a disregard towards the best interest of the clients in the financial advice being given. The history of financial planning is no better, as ten years back, the industry was riddled with conflicts and was out of control. The present situation is no better, and there are a number of examples to prove that. The clients of Storm Financial lost nearly $3 billion, and the big bank, particularly AMP had been accused of charging the clients with money for the advice which was never given to such clients. There was clear evidence regarding failure, be it in case of Opes Prime or Storm Financial. 2009 saw steps being taken to fix the mess, which had cost thousands of people their lifesavings. The best interests’ duty was introduced and commissions on superannuation products were banned, which was seen as Future of Financial Advice. Even with a number of reforms, the scandals kept coming and this including the horror stories of financial planning undertaken by the Commonwealth Bank (Robertson, 2018).
The article further provides that the clients are not what they were ten years back and that they put in a lot of pressure on government for improving the working of the financial planning industry. The article also highlights the problem of financial planners refusing to part from conflicted payments, in terms of commissions and the so-called asset based fees. In other words, the financial advisers are not only paid for advice, but also for money which is invested and what they can sell to the customers. There is also reluctance in financial planning industry towards any kind of change. This can be inferred from strong recommendations of the Association of Financial Advisers against putting a life term ban on asset based fees or insurance commissions. And this is a matter of concern. The whole industry considers commissions as bane and the lack of it would leave the financial advisers in an unfavorable position. Even after 9 years of Ripoll inquiry, the code of conduct is yet to be finalized. The financial planning inquiry still has not resulted in fiduciary duty and professional standards as are present in legal world, which results in it being called as a profession. Yet, one cannot deny the rising number of genuinely independent and fee for service financial planners, who are steering the financial advisory industry towards an ethical path (Robertson, 2018).
The article highlights various ethical issues from the conduct being presently undertaken by the financial advisors. The key ethical issue is the focus on personal interest and person benefit, in place of the overall best interest of the customers, which take such financial advice, and who have to bear the brunt in cases of such financial advice turning out to be wrong. The prime example of this can be seen through the case of Storm Financial, where thousands of customers lost their lifesavings, just because of the wrong advice given by the Cassimatis. Even though this case saw the guilty directors being made liable by the ASIC and the court penalizing them for their conduct, the final penalties for breaching the director duties by the directors of Storm Financial is still pending. More concerning is the fact that clients would never get the money which they lost due to the wrong advice given by the Cassimatis (Hamilton-Smith, 2018).
The other ethical issue stems from the previous ethical issue only, which is placement of personal interest before the best interests of customers, which was solely motivated by greed. When the banks like AMP and Commonwealth Bank charged money from their customers, for the financial advice which was never provided to the clients, they breached their basic ethics, as they indulged in wrongdoing (Janda, 2018). Where the banks start charging customers for the services which were never provided to them, it is a breach of trust and of the faith put in by such customers in the banks. This is a highly unethical behavior as it puts the entire financial and banking sector in jeopardy, due to lost faith and bad brand reputation amongst the customers.
From the ethical theory perspective, the acts undertaken by the banks, in terms of being motivated by personal interest, are against the good of majority. When thousands of customers are wrongly charged money from, or were the approach of resisting ethical changes are demonstrated by financial advisors, they work towards unhappiness of majority. As per the utilitarian view, this is an unethical thing to do. The financial advisors are required to work towards best interests of the customers to maximize their happiness, instead of duping them. There is a need to do such acts which ensure that the customers continue to have faith in the financial advisors and in the advice given by them, along with towards the financial industry overall. The virtue ethics require the applicability of certain virtues, which clearly lack when the aforementioned conduct is undertaken by the financial advisors. Lastly, the actions undertaken by the wrongdoers from this industry are based on unethical actions, like wrongful charging of money, which further make their undertaken actions as being unethical.
The article by Robertson (2018) highlighted the key cause of such scandals as being the lack of proper education in this industry. The basic levels of present education are very low in comparison to other industries. The article also highlights the solution to such problems, as have been in the pipeline. This includes the creation of Financial Advisor Standards and Ethics Authority, which would give a degree for financial planning with minimum standards being set and is set to start functioning from 2024. Another substantial solution in pipeline is the creation of Australian Financial Complaints Authority, which is set to start working from November this year, and is aimed at streamlining disputes handling. The terms like financial adviser and financial planner are being enshrined in legislation.
It is high time that major steps are undertaken by the government to actually regulate the financial advisors, and to increase the liability in cases wrong financial advice is given. However, in doing so, care has to be deployed, so as to avoid making the financial advice service as such a task which would only make the practitioners of this profession liable for any and all acts. In other words, there is a need to attain a proper balance, which would work towards the interests of the customers and at the same time would ensure that the drawn provisions are not unfairly biased against the financial advisors. Apart from this, there is a need to inculcate a sense of working towards the best interests of the customers with the financial sectors, which requires the resistance towards the proposed changes to go away.
The key stakeholder group, which is affected due to the discussion undertaken in the article published in ABC News, is the customers of the financial sector, particularly of the financial advisory services. This is in context of the wrongfully charged money by big banks like Commonwealth Ban and AMP. This is also in context of those individuals who lost their life savings due to the wrongful advice given under the financial advisory sector. The biggest example of this is Storm Financial which proved costly for thousands of customers. There have been a range of financial scams like this in the part, which have highlighted that every time it is the customer who losses their money. Even though at times the wrongdoers are made liable, but this liability is affixed after a huge damage is already caused. The customers thus cannot be made to bear all the liability associated with wrongdoings of financial advisory services, opening the need for strict measures to be adopted in this context.
The next stakeholder group affected due to such acts of financial planners is the few handful number of financial advisors, who provide genuine, independent and fee for service based approach. Due to the wrongful acts of the leaders, these handful good doers have to bear the consequences of lost faith of customers and a constant blot on their reputation. This makes it difficult for them to conduct their business in a smooth manner, as they are maligned by the history of this sector. There have been back to back instances which have resulted in inquires and reports being made on this sector, and have also resulted in changes being put in pipeline, to correct the shortfalls. Despite this, the continuation of such instances, make it difficult for the good financial planners to do their work without being analyzed through magnifying glass and for blaming even a good financial advice as unethical act.
Conclusion
Thus, from the article analyzed in the previous segments, it can be conclude that the financial advisory business at present is filled with reputational damage, due to the number of scams taking place in this industry, across the years. Even with a number of inquires and changes being introduced in the financial advisory sector, the instances like Storm Financial, AMP and Commonwealth Bank continue to take place. This has affected the customers mostly, where they have lost thousands and even their lifesavings in certain cases. This includes such customers who were vulnerable and who put in faith at the financial advice given to them by the “professionals” who lacked the necessary education, resulting in their money being lost. This is particularly as such customers had no scope of getting back their money. The article used in this study highlighted the apathetic condition which the customers are put in due to such acts. The article also presented with the cause of these problems, and covered the initiatives undertaken by the government in correcting such misdeeds. This primary resolves around the problem of proper education as is present in other professions, and this is set to be corrected through introduction of degree based on minimum standards and an authority being established for streamlining disputes handling. To conclude, this discussion highlighted the unethical business practices present in financial advisory segment and how the different stakeholders are negatively affected by such unethical acts. The application of ethical theories further proved the manner in which such acts of financial advisors are wrong. The magnitude of loss, and the figures presented to support the presence of breach of statutory provisions, was evidence of this apathetic situation.
References
Anis, M.D. (2015) Issues Impacting Sustainability in the Oil and Gas Industry. Journal of Management and Sustainability, 5(4).
Bykvist, K. (2010) Utilitarianism: A Guide for the Perplexed. London: Bloomsbury Academic.
Chandrasekaran, S. (2016) Health, Safety, and Environmental Management in Offshore and Petroleum Engineering. West Sussex: John Wiley & Sons.
Corrigan, R.H., and Farrell, M.E. (2010) Ethics: A University Guide. Gloucester: Progressive Frontiers press.
Ferrell, O.C., Fraedrich, J., and Ferrell, L. (2016) Business Ethics: Ethical Decision Making & Cases. 11th ed. Boston, MA: Cengage Learning.
Hamilton-Smith, L. (2018) Storm Financial clients slam $140k fine after 3,000 investors left destitute. [online] Available from: https://www.abc.net.au/news/2018-03-22/storm-financial-founders-fined-140k-over-800m-company-collapse/9576418 [Accessed 18/04/18]
Janda, M. (2018) Banking royal commission: AMP says it misled ASIC over fee-for-no-service financial advice. [online] Available from: https://www.abc.net.au/news/2018-04-16/banking-royal-commission-financial-planners/9662166 [Accessed 18/04/18]
Morris, K.M. (2010) Guide To Direct Investing In Oil & Gas. New York: Lightbulb Press, Inc.
Naaman-Zauderer, N. (2010) Descartes’ Deontological Turn: Reason, Will, and Virtue in the Later Writings. Cambridge: Cambridge University Press.
Noland, D.P., and Anderson, E.T. (2015) Applied Operational Excellence for the Oil, Gas, and Process Industries. Oxford: Elsevier.
Robertson, A. (2018) Financial planning ‘doesn’t have professional standards’, resisting reform. [online] Available from: https://www.abc.net.au/news/2018-04-16/financial-planning-lacks-professional-standards/9664134 [Accessed 18/04/18]
Slezak, M. (2017) Australian oil well leaked into ocean for months – but spill kept secret. [online] Available from: https://www.theguardian.com/environment/2017/may/18/australian-oil-well-leaked-into-ocean-for-months-but-incident-kept-secret [Accessed 18/04/18]
Sutton, M. (2018) Climate change litigation rising with the seas as victims revert to ‘Plan B’. [online] Available from: https://www.abc.net.au/news/2018-04-10/climate-change-litigation-rising-with-the-seas-plan-b/9627870 [Accessed 18/04/18]
Werner, S., Inkpen, A., and Moffett, M. H. (2016) Managing Human Resources in the Oil & Gas Industry. Oklahoma: PennWell Books.
Winter, M. (2011) Rethinking Virtue Ethics. New York: Springer.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
