BP, just the same as all the other companies, reputation, is company’s future. This depends on a diverse range of BP employees around the world support the business operations of BP. Nevertheless they also take personal responsibility for ethical and compliant business conduct.

Code of conduct covers a huge number of issues from five key angles of group’s daily operations: health, safety, security and the environments; employees; business partners; governments and communities; and company assets and financial integrity.

Governments and Communities

Community Contribution

BP has a lot of impacts on many worldwide and local communities, governments and economies. Those communities are located in more than 80 countries world where BP operates its business.

Specific observation from Ernst & Young

BP previously reported anticipated community investment of at least $500 million every five years, most recently during the period ending 2008. Although spending has continued at a similar level, the majority is in developed countries, with almost half in the US. BP could report the criteria used for choosing projects and whether it has a long-term commitment to a specified level of spend. (Ernst & Young, 2009)

Five-year data, trends and interpretations for BP’s Contribution to Communities by Region

The community programmes at BP can be filled into three categories:

Building business skills: by developing local business capability and supply chains to enable BP benefits more from local economy.

Supporting education and other community needs: investing in local education and other areas that relate to local communities’ interest and needs to deploy BP’s skills and contacts.

Sharing technical expertise with local governments: In an ethical and responsible way to support governments in their efforts to achieve sustainable development by using BP’s influence, reach, and resources.

Case Study: Local government and community engagement in Trinidad & Tobago

Operator at the Atlantic LNG facility in Point Fortin, Trinidad

Since 2006, BP launched an engagement strategy in Trinidad & Tobago. This case is first of its kind in Trinidad & Tobago. The engagement strategy involves: local residents, non-government organisations (NGOs) and regulators.

How did BP do?

For local communities and NGOs, BP worked in partnership with United Nations (UN) Development Programme to provide NGOs technical training, hence enable them to challenge unsustainable development in the country.

For regulators, BP invited them to workshop and project evaluations hence help them to build understanding of oil and nature gas industry operations.

Outcomes

The communities and NGOs have raised more concerns on issues affecting the ecosystem surrounding them and been able to have some impact on government plans for development.

Regulators had a better understanding on how BP runs its business. Health and safety practice standard across the local industry have also been improved under the influence of BP

Employees

BP is committed to ensuring that it fulfils its obligations to operate fairly, justly and in accordance with the national laws. In particular, no employee or potential employee shall be discriminated against on grounds of gender, race or disability. BP also extends the concept of equal opportunity to include discrimination on grounds of religious or political beliefs or sexual orientation.

This policy is not hard to tell from figure of Diversity and inclusion on the left.

Diversity and Inclusion in Group Leadership

Encouraging Employee Initiative

As all the other major international companies, how many bonuses each group and individual received were based on their performance within the year. BP is always keeps trying to make sure that the benefits packages are fair and sustainable for ages. For instance, there is a new flexible benefits plan been introduced in the UK in 2010. It includes health screening benefits and private medical insurance, as well as some other pension plan.

Respecting Human Right

There is an independent and confidential helpline in BP – OpenTalk. Every employee can contact OpenTalk anytime, anywhere through multilingual telephone line or email, fax, letter etc. OpenTalk is open 24/7 to anyone who needs advice, raises concern or reports other issues. There is zero tolerance of retaliation against the people.

In 2009, there were 874 cases raised on OpenTalk, which are about 50 less than the previous year. According to official statistic "The most common issues raised in 2009 related to employment matters such as alleged failure to provide fair treatment, equal opportunity and a respectful, harassment-free workplace." (Ernst & Young, 2009)

Gulf of Mexico Oil Spill

Two months after oil spill, BP announced it would donate to restore, improve and protect the wildlife habitats along the area had already been polluted. Half month later, BP announced that it will donate its net revenue from sale of oil recovered from the Macondo to National Fish and Wildlife Foundation.

"The extent of the oil-spill catastrophe in the Gulf of Mexico and its foreseeable long-term effects on the environment and the local population – in addition to the economic effects and the long-term damage to the reputation of the company – were included in the analysis leading up to BP’s removal. The decision, which was taken by the Index Design Committee, was communicated to the company." (Dow Jones Sustainability Indexes, 2010)

As a result of damage the local environment, BP plc. was removed from the Dow Jones Sustainability Indexes (DJSI) From June 1, 2010. Three months late, in September 2010 BP was thrown out of FTSE4Good which is the main ethical investment index in Europe.

As for the future, BP shall work in a closer partnership with local authorities and communities to help further restoring local environment back to what it was before the oil spill, this including wildlife habitats and fish farms.

In order to back to DJSI and FTSE4Good indices on 2012, BP will continue working close with local universities and NGOs on researching methods to improve fuel efficiency and new hence to further reduce its customer CO2 emission.

Health and Safety Management and Environmental LawBackground

HS&E Management is vital to social activities and business operation and ultimately aims to prevent harm to people and environment. Health and Safety Management promotes a safe and healthy working environment that allows organization to consistently identify and control its health and safety risks, reduce the potential for accidents, aid legislative compliance and improve overall performance. Environmental Law aims to reduce the impacts of human activity, both on the natural environment and humanity itself. It is normally regarded from two aspects: pollution control and remediation, and resource conservation and management. In addition to the standard HS&E system, such as the HSE Guidance Booklet HS(G)65 "Successful health and safety management", a number of companies process their own management operation, such as BP, employing the Operating Management System (OMS).

Introduction on BP’s OMS System

(http://www.cio.co.uk/news/3233516/bp-reveal-fears-for-main-safety-system/).

The core BP’s concept is that no accidents, no harm to people and no damage to the environment. However, the oil and gas business is inherently risky. BP’s former group chief executive Tony Hayward’s statement in BP’s annual report (2009) reflected the recognition of risk: "Risk remains a key issue for every business, but at BP it is fundamental to what we do. We operate at the frontiers of the energy industry, in an environment where attitude to risk is key. The countries we work in, the technical and physical challenges we take on and the investments we make – these all demand a sharp focus on how we manage risk."

After the large explosion in BP’s Texas City Refinery in 2005, OMS was introduced as a key safety step. OMS provides a framework of processes, standards and practices to help deliver consistent performance, progressing to excellence, in operations and safety. As described by Tony Hayward, the OMS "is the foundation for a safe, effective, and high-performing BP. It has two purposes: to further reduce HSE risks in our operations and to continuously improve the quality of those operations".

OMS Framework Elements

One of the frameworks of OMS applied prevalently as shown in Figure 1 is composed of eight dimensions associated with how people, plant, processes, and performance apply within BP. These include risk, procedures, assets, optimization, organization, leadership, results and privilege to operate.

Figure 1: OMS Framework of BP[1]

[1] http://www.bp.com/sectiongenericarticle.do?categoryId=9026487&contentId =7048817

BP’s Achievement

Moreover, BP operates six-point plan to improve process HS&E system and reduce risk at operations.

Figure 2: Path to a New Management System

The six-point plan is composed of three operators-plant, process and people and the potential major incidents and losses aims to be reduced through layers of protection.

Plant : is referred to engineering hardware, control systems, physical layouts;

Processes: includes identification of management systems control and mitigation of risks, and development of continuous OMS;

People: apply capability in terms of leadership skills, relevant knowledge and experience, and the organizational culture.

By applying OMS system and continuous in improvement described above, HS&E performance of BP in the past few years is illustrated through analyzing the data and figure extracted from BP official annual report.

Figure 3 below shows the safety performance in BP’s in the past five years and the corresponding records of BP within OMS framework are shown in Table 1 in Appendix.

Figure 3: Personal Safety of BP from 2005 to 2009

Safety metric shows that personal safety of BP is maintained at a certain level from 2005 and there is a large improvement in 2009. Their workforce injury rates for days away from work frequency, recordable injuries frequency and the number of oil spills were significantly reduced in 2009. Through analysis of the data, operation of BP under OMS system protects and develops personal safety and oil spills till 2009. Furthermore, Figure 2 in Appendix shows the BP days away from work frequency rate from 1987 to 2007 which obviously decreases.

Figure 4 shows the environment records for exploration and production, refining and petrochemicals of BP from 2001 to 2009 and the figure is corresponding the data in Table 2 in the Appendix.

Figure 4: Environmental Records of BP from 2001 to 2009

Figure 4 shows the refining and petrochemicals are reduced since 2001. However, exploration and production in the following years is increased, especially, the significant rise from 2007. The reason for the increase in exploration and production GHG intensity in 2009 is due to the start-up of our Tangguh LNG project which also resulted in increasing flaring. Although the exploration and production increases significantly, greenhouse gas emission (GHG) intensity is still improved due to decrease in refining and petrochemicals since 2001. However, from the data in Table 2 in the Appendix, even though GHG expanded concernedly in 2009, the environmental expenditure did not increase to ameliorate GHG.

From the discussion above, the brief summary of BP’s HS&E system can be drawn as the HS&E performance of BP maintains at an outstanding level and develops continuously till 2009 within OMS operation. However, after the explosion that caused the huge oil spill in the Gulf of Mexico, deficiencies and drawbacks existing in BP’s OMS system are realized. BP said "there can be no assurance" that a major global deployment of its in-house OMS would identify all risks or provide information on the right actions to take when things go wrong.

As stated already, after the large explosion in BP’s Texas City Refinery in 2005, BP adapted management system and HS&E is set as their primary priority. However, the event of the Deepwater Horizon oil spill in the Gulf of Mexico in 2010 broke the guarantee that 11 people died in the explosion and the environment and ecosystem are damaged seriously. The consequence for BP itself is that a net loss of $16.97 billion during the second quarter of 2010, with the oil spill costing $32.2 billion up to that point On July 27, 2010.

Table 1 shows the progress of the oil spills till August, 2010.

SourceDateBarrels per dayGallons per dayBP estimate of hypothetical worst case scenario (assumes no blowout preventer)Permit162,0006,800,000United States Coast GuardApril 2300BP and United States Coast GuardApril 241,00042,000Official estimatesApril 291,000 to 5,00042,000 to 210,000Official estimatesMay 2712,000 to 19,000500,000 to 800,000Official estimatesJune 1025,000 to 30,0001,100,000 to 1,300,000Flow Rate Technical GroupJune 1935,000 to 60,0001,500,000 to 2,500,000Internal BP documents hypothetical worst case (assumes no blowout preventer)June 20up to 150,000up to 4,200,000Official estimatesAugust 262,0002,604,000

Table 1: the Progress of the Oil Spills

Table 1 obviously indicates that the level of oil spills reached the peak at the end of June two months after explosion. The spill is almost 20 times greater than Exxon Valdez oil spill. Such a worst environmental disaster ruins the ecosystem severely.

According to National Parks Conservation Association, eight national parks, natural environment, cultural treasures, and wildlife are at risk. More than 400 species that live in the Gulf islands and marshlands are threatened. Table 2 shows some records of the dead wildlife affected by spills oils of Gulf Mexico from November 2010.

SourceDateConsequenceU.S. Fish and Wildlife ServiceNovember 2, 20106,814 dead animals had been collected, including 6,104 birds, 609 sea turtles, 100 dolphins and other mammals, and 1 other reptileThe National Oceanic and Atmospheric AdministrationJanuary 1, 201167 dead dolphins have been found in the area affected by the oil spill, with 35 of them premature or newborn calves.the Institute for Marine Mammal Studies in GulfportFebruary, 2011Dead baby dolphins are washing up along the Mississippi and Alabama shorelines at about 10 times the normal number for the first two months of the year.

Table 2: Sample records of Ecosystem affected of Oil Spills

Not only the natural environment is damaged, but also are the human’s health along the East Coast threatened, because of the injured water quality of ocean and polluted seafood.

Discussion and Suggestion

Spills oil of Gulf Mexico cautions the deficiencies and drawbacks on BP’s HS&E system discussed as follows.

1. Improve the Ability to Indentify Risks

BP operates outstanding technologies and machines of oils exploration with an comprehensive OMS system with risks analysis. However, companies are not taking a holistic approach to assess and manage their risk exposures, and people sometimes skip the potential risks when they realize the reduction on risks must be invested a large number of expenditure. The failure of spills oil in the Gulf of Mexico is mainly due to the unanticipated difficulties that are encountered when drilling at depths that are relatively unfamiliar to the industry.

It is vital to improve the ability to identify and manage risks objectively. The greatest failure of most enterprise risk management programs is that they cannot de-center. That is, they cannot see the risk from different perspectives internally or externally, and cannot coexist with residual risks form the risk indentified elimination procedure. The risks management processes can be represented as,

Figure 5: Risk Management Process

Because of the imprecise risk identification, the process was in a wrong direction from the second steps. Risk identification sets out to identify an organization’s exposure to uncertainty which is related to the legal, social, political and cultural environment, as well as the development of a sound understanding of its strategic and operational objectives, including factors critical to its success and the threats and opportunities related to the achievement of these objectives. Risk identification should be approached in a methodical way to ensure that all significant activities within the organization have been identified and all the risks flowing from these activities defined. All associated volatility related to these activities should be identified and categorized.

2.

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