individual assignment report subject business ethics case 4 sustainability challenges in the gas and oil industry

What environmental issues does the New Belgium Brewing work to address?. • What environmental issues does the New Belgium Brewing work to address?From the beginning years, New Belgium Br

NATIONAL ECONOMICS UNIVERSITY SCHOOL OF ADVANCED EDUCATION PROGRAM

INDIVIDUAL ASSIGNMENT REPORT SUBJECT: BUSINESS ETHICS

Case 4: Sustainability Challenges in the

Gas and Oil Industry.

Student’s name: Lưu Thảo Ngân - 11235374.

Class: International Business Management CLC 65C Lecturer: Dr Nguyễn Bích Ngọc

2024

TABLE OF CONTENTS

A CASE SUMMARY 2

I INTRODUCTION 2

II COMPANY BACKGROUND: 2

III MISSION STATEMENT AND CORES VALUES 3

IV LIVING ITS VALUE 4

1 Commitment to Customers 4

2 Commitment to Employees 4

3 Commitment to Stakeholders 5

4 Commitment to Sustainability 6

V Ethical Issues 6

1 Reaction toward Competitors 6

2 Veering Off-Course 7

3 Unions and Health Care 7

B ANSWERING QUESTIONS 8

1 How has a commitment to corporate values contributed to Whole Foods’ success? 8

2 Describe how Whole Foods' adoption of a stakeholder orientation has influenced the way it operates 9

3 What are some ways that Whole Foods might have neglected certain 12 Table of Contents A CASE SUMMARY 3

I.INTRODUCTION 3

II THE WRECK OF THE EXXON VALDEZ 4

1 Response to the Disaster……… 4

2 The aftermath………5

III DEEP WATER HORIZON OIL SPILL 5

1 What caused the explosion……….6

2 Repercussions of the Disaster………6

3 The Aftermath……….7

4 Fracking: More Beneficial or Harmful to the

Environment………7

IV CONCLUSION 8

B ANSWERING QUESTIONS 9

1 How does managing ethical risk in the oil and gas industry relate to reducing accidents?

2 Compare the risks that BP, Exxon, and the fracking industry continue to face in providing an adequate supply of energy?

3 How can ethical leadership help the oil and gas industry to manage risk?

What environmental issues does the New Belgium Brewing work to address? How has NBB taken a strategic approach to

addressing these issues? Why do you think the company has taken such a strong stance toward sustainability?

• What environmental issues does the New Belgium Brewing work

to address?

From the beginning years, New Belgium Brewing has worked to address a definite number of environmental problems One of NBB’s

main environmental concern is overusing energy in the process of manufacturing products Understandingly, several U.S companies operate on power derived from hydroelectric, nuclear, and coal

Of the total energy consumed in the United States, about 40%

is used to generate electricity However, generating electricity may waste a large amount of fuel and also release emissions into the

atmosphere As a result, overusing energy is a culprit of several

environmental issues The first one is the energy crisis Two kinds of sources of energy are renewable energy sources (water, wind, solar,…) and non-renewable energy sources (petroleum, natural gas, coal,

…) Nowadays, both of them are dealing with scarcity which may create a big barrier in daily life and particularly, in manufacturing

activities How can a brewery operate without energy? In the long term, this issue can lead to political issues among countries The

second environmental consequence of overusing energy is air

contamination There are 3 typical causes of this pollution including stationary sources (factories), mobile sources (cars, motorbikes,…), and natural sources The more energy factories utilize in production,

the more toxic gas they release This issue is also the origin of several problems leading to health such as short lifespans and respiratory

problems Due to industrialization, air pollution becomes more and more serious The other environmental concern of NBB is poor waste

What environmental issues does the New Belgium Brewing work to address? How has NBB taken a strategic approach to

addressing these issues? Why do you think the company has taken such a strong stance toward sustainability?

• What environmental issues does the New Belgium Brewing work

to address?

From the beginning years, New Belgium Brewing has worked to address a definite number of environmental problems One of NBB’s

main environmental concern is overusing energy in the process of manufacturing products Understandingly, several U.S companies operate on power derived from hydroelectric, nuclear, and coal

Of the total energy consumed in the United States, about 40%

is used to generate electricity However, generating electricity may waste a large amount of fuel and also release emissions into the

atmosphere As a result, overusing energy is a culprit of several

environmental issues The first one is the energy crisis Two kinds of sources of energy are renewable energy sources (water, wind, solar,…) and non-renewable energy sources (petroleum, natural gas, coal,

…) Nowadays, both of them are dealing with scarcity which may create a big barrier in daily life and particularly, in manufacturing

activities How can a brewery operate without energy? In the long term, this issue can lead to political issues among countries The

second environmental consequence of overusing energy is air

contamination There are 3 typical causes of this pollution including stationary sources (factories), mobile sources (cars, motorbikes,…), and natural sources The more energy factories utilize in production,

the more toxic gas they release This issue is also the origin of several problems leading to health such as short lifespans and respiratory

problems Due to industrialization, air pollution becomes more and more serious The other environmental concern of NBB is po

A CASE STUDY SUMMARY

The world's dependence on oil and gas is a significant concern, with an estimated global demand for natural gas reaching over 4 trillion cubic meters by 2017 This dependence has led to concerns about the depletion

of oil reserves and the need for alternative energy sources The oil and gas industry faces numerous risks, including safety concerns and major accidents

One of the main environmental risks associated with drilling operations is water pollution and the release of air contaminants into the atmosphere These greenhouse gases contribute to the warming of the Earth's

atmosphere, leading to greater risks of polar ice cap melting, flooding, and other environmental damages Oil spills are particularly significant due to the fact that many oil reserves are located beneath the ocean floor, making them susceptible to severe damage

To mitigate these risks, the oil and gas industry has adopted safety procedures and processes to reduce their environmental impact However, ethical lapses have led to major environmental mishaps The Exxon-Valdez spill in the United States was the first to gain widespread attention, highlighting the environmental impact and increasing the liability and responsibility of oil companies for cleanup and restoration

The Deepwater Horizon oil spill in 2010 was the worst oil spill in U.S history, resulting from companies ignoring ethical risk areas and taking risks that directly led to the disasters This analysis highlights the

environmental risks of the oil industry by examining specific cases that have impacted stakeholder views on the industry's responsibility for sustainability Ethical leadership and ethical responsibility at all

management levels are needed to manage the risks of the industry

On March 24, 1989, the Exxon Valdez, under the command of Third Mate Gregory Cousins, ran aground on Bligh Reef in Prince William Sound, causing a massive oil spill Captain Joseph Hazelwood slept below deck and attempted to dodge floating ice in the sound, but the Coast Guard claims he ignored warnings about the spill The oil spill killed thousands

of sea birds, sea otters, and other wildlife, covered the coastline with oil, and closed the fishing season in the sound for several years The area was home to abundant wildlife, including over 200 species of birds, one-fifth

of the world's trumpeter swans, and the world's largest concentration of killer whales Captain Hazelwood had a blood-alcohol content of 0.061, violating Coast Guard regulations Exxon officials admitted that the captain went through an alcohol detoxification program, but still gave him command of the Exxon Valdez, Exxon's largest tanker The incident highlights the importance of proper vessel safety and the need for stricter regulations on ship operations

1 Response to the Disaster

The oil spill at the Exxon Valdez spill in Alaska was a major disaster, with Alyeska Pipeline Service Co and Exxon not arriving to help contain the spill Alyeska sent an observation tug to the scene and began to assemble its oil-spill containment equipment, but the Coast Guard decided the barge was too slow and needed lightering equipment more urgently The first Alyeska containment equipment arrived hours after the disaster, while the rest arrived the next morning

Neither Alyeska nor Exxon had enough containment booms and chemical dispersants to fight the spill Communication breakdowns between shore coordinators and crews at the scene due to technical problems and limited range further hampered cleanup efforts A fleet of private fishing boats stood by to assist with containment and cleanup, but Exxon and Alyeska

failed to mobilize them.

Some problems could have resulted from cutting safety corners, such as Alyeska convincing the Coast Guard that certain safety features were not needed on tankers, underestimating the time needed for containing the spill, and lacked necessary equipment Alyeska gave the impression that it was unprepared for a major disaster

Exxon also received blame for the spill, saving $22 million by not building the Exxon Valdez with a second hull Chairman Lawrence Rawl did not comment on the spill for nearly six days, and crisis-management experts say it is important for the chief executive to be present at the site of an emergency Exxon's insistence that it would stop all cleanup operations on September 15, 1989, regardless of the amount of shoreline remained to be cleaned was damaging

2 The aftermath

Exxon spent over $2.2 billion on cleanup and reimbursements during the Exxon Valdez oil spill, facing numerous lawsuits and a civil settlement with Alaska and the federal government Exxon agreed to make ten annual payments totaling $900 million for injuries to natural resources and services, restoration, and replacement of natural resources In a criminal plea agreement, Exxon was fined $150 million, with $125 million remitted

in recognition of cooperation in cleaning up the spill and paying private claims Exxon also agreed to pay restitution of $50 million to the United States and $50 million to the state of Alaska

Exxon, now called ExxonMobil, claims the area has completely recovered, but a study by the National Marine Fisheries Service found toxins leaching from Exxon Valdez oil remaining on the beaches continued to harm sea life over a decade after the disaster Most of the oil is now subsurface and hardened into a semi-solid layer underwater, which poses less threat to plants and animals than liquid oil Twenty acres of Prince William Sound shoreline are still contaminated, and several "pits" of oil and sludge remain

in the area

III Deepwater horizon oil spill

BP, the world's largest oil company, attempted to change its image after a series of scandals, including a Texas refinery explosion that killed 15

employees The company changed its name to BP and rebranded as Beyond Petroleum, signaling a focus on sustainability and moving beyond nonrenewable energy sources BP adopted an extensive code of conduct and invested heavily in alternative energy sources However, BP's failures became tragically clear when the Deepwater Horizon oil rig exploded in the Gulf of Mexico in 2010 BP had subcontracted an oil rig from Transocean, Ltd to tap into a new, profitable oil reservoir in the Gulf of Mexico The rig exploded, killing 11 employees and causing thousands of gallons of crude oil to leak into the Gulf of Mexico BP attempted to relieve pressure on the damaged well but failed, causing 2.5 million gallons of oil to pour daily into the Gulf of Mexico, wreaking havoc on the livelihoods of fishermen and others dependent on the Gulf for income The rig's safety systems were not as safe as they could have been, and investigations revealed BP's contingency plan was inadequate and contained many inaccuracies One of the wildlife experts listed as an emergency responder had been dead since 2005 The contingency plan estimated that if a spill occurred, the company could recover about 500,000 barrels of oil per day However, it took BP months to contain the leak, at a spill rate much less than that listed in the plan

1 What caused the explosion?

The explosion at BP's Deepwater Horizon was likely caused by several factors Investigations suggest that BP's actions made the well more vulnerable, including cutting short procedures and quality testing of the pipe Experts believe that cementing the steel pipe in place could have been the catalyst for the explosion, as the cement could not hold back the surging oil and gas BP also chose a less costly well design, which some deemed "risky" due to its ease and lower costs, but ignored safer

alternatives that might have prevented or hindered the accident Another reason for the spill's wide-scale disaster is likely due to a faulty blowout preventer, which left oil leaks BP filed lawsuits against Cameron International Corp, the manufacturer of the blowout preventer There is also speculation that BP engineers ignored warning signs from safety tests conducted on the rig hours before the explosion Two BP engineers recorded confusing results, but after consulting others, one of the

engineers gave the go-ahead

2 Repercussions of the Disaster

The BP oil spill has had significant consequences for the industry, including the resignation of CEO Tony Hayward, who became the face of the worst oil spill in U.S history The company spent or will spend $36.5 billion on cleanup costs, and was ordered to pay $4.5 billion in fines and face 14 counts of criminal acts, including felony manslaughter Drilling contractors and oil service companies also suffered due to plummeting stock values The Obama administration issued a six-month moratorium

on deepwater and oil gas drilling in the Gulf of Mexico, shutting down 33 rigs

3 The aftermath

The oil leak into the Gulf of Mexico took nearly three months to contain, causing thousands of marine animals to die, beaches to turn black, and hundreds of people losing income By August 2010, over 640 miles of shoreline across several states were "tarred" with oil, leaving a massive loss of wildlife and a significant amount of oil beneath the water's surface Scientists are finding evidence that oil has settled across several thousand square miles of seafloor, posing a potential threat to coral reefs and marine life BP set aside $20 billion in an escrow fund to compensate

stakeholders, while a government-appointed administrator oversees the claims Concerns about the safety of consuming seafood along the Gulf coast remain, as it is unknown whether the oil and chemicals will have long-term effects on seafood quality BP has taken over operations, hiring former Federal Emergency Management Agency chief James Lee Witt and his public safety and crisis management consulting firm to manage the incident and establish long-term recovery plans A safety organization has been created to stop operations whenever danger is detected

4 Fracking: More Beneficial or Harmful to the Environment?

Hydraulic fracturing, or fracking, is a process where water, sand, or chemicals are pumped into shale rock to force natural gas to rise to the surface It has been around for approximately 60 years and has recently gained wide-scale media attention due to the discovery of large shale gas reserves in the United States, which could last for more than 100 years New hydraulic fracking techniques have increased the amount of gas drilling, creating an energy boom that could lead the United States to energy independence and create more jobs in areas where wells are located

Fracking is considered a revolutionary opportunity to reduce emissions and import natural gas to other countries However, it also carries significant risks, such as releasing chemicals and methane into water near the drilling sites, causing small seismic shifts, and requiring large amounts

of water, from two to five million gallons per well Critics argue that hydraulic fracking is exempt from certain federal regulations that normally apply to drilling activities

Proponents of fracking argue that proper procedures can greatly reduce environmental risk, such as sealing well-shafts, recycling or reusing water, and ensuring the Environmental Protection Agency (EPA) determines that methane contaminating ground water might not be as serious as it appears However, the environmental risks of fracking are not taken lightly, with New York and Vermont banning fracking activities, as well as certain countries such as France

Health and safety concerns remain, with workers like Randy Moyer, who was allegedly not told about the toxic and radioactive drilling mud, suffering from inflammation, migraines, trouble breathing, and frequent trips to the emergency room Fracking has also lowered the values of homes, with many people with fracking on their land unable to sell their houses

Concerns also remain over the methane gas released from fracking activities, which has an estimated 20 times greater effect on trapping radiation than carbon emissions To combat these emissions, the EPA mandated that wells have pollution-control equipment to catch methane and other volatile gases such as benzene by 2015 New rules will limit the amount of methane emissions from fracking, and leaders of fracking organizations have committed to increasing the safety and sustainability of their activities

While the benefits of fracking seem promising, natural gas companies must carefully analyze the environmental and safety impacts of their operations to avoid the risks of environmental degradation

5 Conclusion