Sustainable Business Advisory - Report Example

Introduction

For a long time, the oil and gas industry has bemoaned the public's negative view, leading to a lack of trust between them and the public. Although there have been several appeals for the industry to open up, with several initiatives developed to inform the public, the public still views the industry as marred with increased skepticism (Cross, 2017). In the current technological era, oil and gas companies are struggling to stay relevant even though production has increased and led to abundance that affords the public a great diversity of energy use choices.

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Public Perception

Several studies have been conducted concerning public perception and industry views on certain fundamental energy issues (Cross, 2017). On the one hand, the studies have established that the public recognizes the technological prowess and the expertise the industry employs. On the other hand, the public remains skeptical of the oil and Gas Company’s truthfulness regarding certain key issues such as protecting the environment. Hence, they recognize the industry's importance in the provision of the product they need but would easily prefer products from other sources.

The case against the industry is straightforward, emotional, and scientifically based: burning fossil fuels explicitly leads to increasing concentrations of greenhouse gases and global warming (Wilson, 2019). Moreover, both social and environmental harm has been caused by the well-known 'oil curse' in developing economies. In all of these cases, the sector is frequently viewed by the public as not being kept properly responsible, as is the case with global warming; however, there are few penalties or sanctions, and corporations tend to persist operating in the same way. The industry is at risk of losing its reputation amid immense pressure from public opinion and, despite rational claims to the contrary, may have its initiatives impeded (Wilson, 2019). Oil firms and their owners must also be seen to intervene. British Petroleum (BP), as a company in the oil and gas industry, has taken several steps as a step in portraying a better image of the company and the industry. This paper seeks to conduct BP's sustainability evaluation through various aspects of its circular economy, integrated reporting, and social risks that result from its operations.

Company Information

British Petroleum Plc, commonly referred to as BP, is a British global energy corporation with its chief office in London (Corporate Watch, 2005). Globally, BP is part of the seven major oil and gas corporations in over 80 nations. Its origins can be traced back to the Anglo-Persian Oil Company credited for the Iranian oil exploration (Corporate Watch, 2005). The company engages in every aspect of the energy industry, including exploration, production, refining, supply, marketing, transacting, and power production (BP Investors, 2020). The company has also ventured into renewable energy, interested in biofuels, wind energy, and solar energy (BP Investors, 2020).

BP is rated among the top three companies based on global oil reserves that stand at over 19 billion barrels, with an estimated 3.7 million oil barrels produced in a day (Corporate Watch, 2005). Although the company has operations worldwide in Africa, Asia, the Americas, and Europe, more than two-thirds of its profits generated are from its operations in Europe and the United States, with the United States subsidiary being the largest (BP Annual Report, 2019). The company is listed on the London Stock Exchange, with a 19 percent stake in the Russian Rosneft, which is the world's most publicly traded company in the industry (Overland & Godzimirski, 2013). The company has been tangled in quite a few environmental and welfare concerns, such as the world’s major inadvertent oil spillage in 2010. The deepwater horizon oil spill led to adverse health, environmental and economic impacts (Robertson & Krauss, 2010).

Circular Economy

Sometimes referred to as in a simpler term as ‘circularity,’ a circular economy refers to an economic system whereby wastes are eliminated by ensuring the continued use of resources (Geissdoerfer et al., 2017). The system encompasses several processes that include remanufacturing, reusing, repairing, recycling, refurbishment, and sharing. The circular economy entails a closed-circle structure that reduces the use of resource inputs, waste formation, pollution, and carbon emission (Geissdoerfer et al., 2017). The purpose of the circular economy system involves the use of products, machinery, equipment, and the general infrastructure for a longer period hence, increasing their productivity as the waste is used in other processes (Invernizzi et al., 2020).

Generally, in the energy industry, the adoption of the circular economy system has not been positive. There has not been a commitment to the reuse of equipment than when equipment is being decommissioned (Invernizzi et al., 2020). Most of the products usually brought to shore for recycling usually could be used for longer periods, which equates to disposing of the equipment. Luckily, several entities, including Zero Waste Scotland, have carried out experiments to establish the sectors with the resources that could be recycled or reused in the energy industry (Zero Waste Scotland, 2015).

In the energy industry, companies are in a rush to find innovative ways to recycle petroleum-based products. BP is no exception as it has become the latest oil giant to announce a joint venture with other firms to speed up finding innovative recycling methods (Kanotey-Ahulu, 2019). BP has established a partnership with manufacturers and packing users to promote the commercialization of techniques that enable the recycling of plastics that pose a challenge to recycle into elements that are easy to use again. The company recognizes that it cannot create circularity on its own and hence the need to develop and form multi-cross industry cooperation to create a sustainable circularity (Kanotey-Ahulu, 2019).

To meet its downstream strategy of 2020, BP has ventured in partnership with other firms for its ventures in solar energy and polyethylene terephthalate (PET) recycling program. The PET recycling technology is named the BP Infinia and includes a $25 million pilot plant currently under development (BP United States, 2019). The program seeks to convert the dense and often hard to recycle the discarded PET plastic into easy materials that can be bio-degradable each time it is recycled using traditional recycling methods (BP United States, 2019). The partnership involves companies with experience in the packaging and recycling, such as ALPLA; food, drink, and consumer goods manufacturers such as Britvic, Danone, and Unilever; and BP, which produces energy and petrochemicals products (BP United States, 2019). The collaboration will ensure that BP achieves circularity with the new technique in dealing with PET plastic wastes (BP United States, 2019).

Social Risks

In the current business industry, risk management in the supply chain has gained traction and amassed attention. Concurrently, the need to consider social issues in the world's supply chain has also emerged (Zimmer et al., 2017). The social issues have emerged since their manifestation can cause antagonistic stakeholder reactions such as reputational losses (Zimmer et al., 2017). The globalization of supply chains has enabled firms and markets to increase their volumes, speed, and profitability in extraordinary magnitudes. However, the global supply chain of companies encompasses crucial social and environmental impacts that could, in the end, affect the organization's image, perception, and opinion both in the eyes of the public and the civil society.

The globalization of supply chains could prove to be the key in social progress if the international and production supply chains are developed while taking into consideration the principles of actions as described by the international labor laws that as prescribed by the International Labor Organization (ILO) (Gwilliam et al., 2016). Additionally, the supply chain should also consider human rights and the environmental laws set by the local and international authorities (Gwilliam et al., 2016).

BP currently provides its services in over 70 countries, working with estimated suppliers amounting to over 50,000 (BP, 2020). The suppliers range from contractors, vendors, service providers, and the contingent workforce. Additionally, the suppliers also have other suppliers, thus having a wide network of a supply chain that coats BP a yearly procurement expenditure of about $59 billion (BP, 2020). Given the size and sophistication of BP's supply chain, it results in a wide range of risks that require the need to be actively and responsibly managed. BP's suppliers play an important and huge role in their operations as they are crucial in realizing the company's role in the implementation of the company's strategy that aims to become a market leader with a strong social citizen responsibility (BP, 2020).

In its supply chain, BP ensures that its suppliers and vendors meet the company's set standards to improve their ethics in operations and maintain a sustainable performance; this is usually communicated to its suppliers and vendors through contracts (BP, 2020). For instance, BP ensures that all its contractors achieve and maintain local labor laws by meeting the workforce requirements and supporting the local initiatives (BP, 2020). Additionally, BP sets to work with only the suppliers who aim to achieve sustainability and excellence in their supply chains while incorporating BP's code of conduct, human rights policies, and other suppliers' requirements while delivering their products. BP has also developed new labor laws, rights, and modern slavery codes to guide the company's partners in achieving and checking the set standards (BP, 2020).

Conclusion

BP’s procurement contracts encompass a requirement for its suppliers to strictly adhere to the international set labor laws that respect human rights (BP, 2020). The contracts require BP’s partners to not engage in prohibited labor practices that include hiring forced labor, trafficked labor, and child labor that exploits individuals. In coming up with its labor laws, BP conducts a due diligence process that aids the company identify the potential risks and adverse impacts that may occur, affect and contravene the rights of its employees in the supply chain (BP, 2020). The due diligence employed by the company is used to evaluate its suppliers based on risks. The company's system ensures that it evaluates the risks posed by modern slavery and hence develops an evaluation platform incorporated in the management systems, processes, and procedures (BP, 2020).