Introduction
Corporate Social Responsibility of BP will be analysed in this report, including the codes of conduct of BP and innovations of BP and Shell. Innovation plays a significant role in introducing radically developed new products or services and improving current products and services. Corporate Social Responsibility (CSR), corporate governance, and ethical business practices all together contribute to the sustainability of both the company and the community as a whole. BP is one of the world’s largest oil and gas manufacturing, marketing and selling companies through stores. The company has direct operations in 79 countries in Europe, North and South America, Australia, Asia, and Africa, with 18,900 retail stores managed by BP itself (BP plc., 2020). Apart from the direct operation, BP has a presence in the rest of the countries of the world through franchisees or through third parties presenting BP in their countries. BP employs more than 70,000 employees globally to manage its business. The company produced around 19,341 million barrels equivalent of oil in 2019 (BP plc., 2020). The global oil and gas industry is highly investment-oriented and the industry is dominated by a few players: BP, Total, Chevron, ExxonMobil, and Shell. In terms of revenue generation, Shell was the market leader with $352.1 billion in revenue in 2019, and BP stands in the second position with $282.6 billion in revenue in the same year (Craft, 2020).
BP adopts a comprehensive approach to innovation, and it believes that innovation plays a key role in making a distinctive brand image in the market. This philosophy has inspired BP immensely to take a wide range of initiatives to promote innovation across the company. BP also believes that sustainable and ethical business practices are strongly associated. Sustainable business practices and a sustainable philosophical attitude promote ethical business practices by encouraging the company to have a positive impact on human lives and the environment. The company follows highly ethical business practices and has established corporate governance in place.
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Comparing Innovations of BP and Shell
Ngo & O’cass (2013) have stated that innovation refers to a new idea or creative thought which is used to find out better solutions in order to fulfil unfulfilled or unique requirements of customers. BP’s $100 million research centre and leading external collaborations help the company to identify and understand the use of materials for different energy and industrial applications (bp p.l.c: 3, 2020). Therefore, BP has become capable of innovating unique products and services that differentiate their services and makes their competitive advantage stronger.
BP has the UK’s largest public charging network with 7000 charging points that power up 1.5 million electric miles in a week and this technology reduces 300 tonnes of CO2 emissions every week, which is one of the best innovations of BP (bp p.l.c: 4, 2020). Customers can charge their vehicles within less time through BP Charge points and go far away. furthermore, the charging cost is low; therefore revenue of the company is growing greatly, and the company is becoming highly profitable. Whilst, Shell generates the highest revenue with its 40,000 private electric charge points (Shell, 2020). It is seen that Shell has done great innovation that makes them capable of establishing a huge amount of charge centres.
BP has innovated technology for controlling energy consumption through utilizing AI technology (bp p.l.c: 5, 2020). The technology helps BP to control and optimize energy use, and by controlling energy consumption, the company have reduced CO2 emission to 30% in airports, shopping malls and other commercial buildings (bp p.l.c: 3, 2020). BP has controlled costs of building maintenance, which makes people satisfied because their expenses are reduced by the step; therefore, sales of BP’s services increase. On the other hand, Shell saves 60% of carbon emission through energy saving and have the highest sales (C40 Cities Climate Leadership Group, 2020). It can be noticed that Shell has reduced their CO2 emission drastically.
BP is the first company that expanded in Brazilian biofuels and one of the biggest players in the market with their bioenergy powerhouse of US agro-commodities giant Bunge (bp p.l.c: 5, 2020). It has introduced the role of bioethanol in reducing emissions in the transport sector, which has reduced air pollution because bioethanol adds little CO2 or no CO2 to the environment. It has increased BP’s demand in Brazil, and the company successfully increased their profit level through the project. Whilst, ExxonMobil is working to develop scalable biofuels (ExxonMobil Corporation, 2020). In this case, BP is doing well than the competitor.
BP has installed great solar capacity and working to move toward renewable power in 10 different countries, and it also reduces CO2 emissions (bp p.l.c: 5, 2020). This innovation is helping the company to face the challenges of higher cost natural gas and fuel prices by providing renewable energy to customers within reasonable prices. As a result, customers are purchasing renewable energy from BP, which is helping the company to grow fast in this sector. On the other hand, Chevron has collaborated with Pacific Ethanol, Waste Management and CalBio to get renewable fuels which shows their steps toward renewable power but it has not achieved the growth that BP has in this sector (Chevron Corporation, 2020).
BP reduced carbon emissions to 1.7 million tonnes in 2019 by reducing flaring, designing operations in new ways and improving energy (bp p.l.c: 5, 2020). The company have targeted 3.5 million tonnes of greenhouse gas per year by 2025 (bp p.l.c: 5, 2020). Whilst, Total also works on reducing greenhouse gas emissions and targets to reduce 5 million tons per year by 2030 (Total, 2020). It means that Total has adopted greater innovation than BP; therefore, they have targeted to reduce the huge amounts of greenhouse gas.
Sustainable and ethical business practices
Bansal & DesJardine (2014) revealed that business ethics is the underlying principle of a sustainable business. It refers to making business practices and ethical codes of conduct and behaviour of operating and leading the organization and its employees. Ethical business practices encourage the employees and management of a company to have a positive and fruitful impact on the stakeholders of the business. The Sustainability report published by BP plc. (2020) mentions that the company has a high level of ethical standards of doing business responsibly, with clearly established codes of conduct, values and behaviours, policies and procedures related to all aspects of business practices such as bribery and corruption, supply chain standards, and finally, revenue transparency.
The Code of conduct of BP clearly outlines the expectations of business from employees and the members of the board. BP has an effective training system on codes of conduct in place, and it has trained 39,000 employees on how to respect others and discourage and remove harassment in the workplace (BP Plc., 2020). Such initiatives has helped the company to ensure a friendly and cooperative work environment which is a prerequisite to attaining corporate goals. The report also reveals that BP has a strong stance against bribery and corruption. The employees are strictly prohibited not to engage in corruption or bribery in any form with any suppliers or business partners. To make employees aware of the situation, BP initiated anti-bribery and anti-corruption training every year. It trained 11,000 employees on the subject to make aware leaders who will further aware other employees not engage in such situations (BP plc., 2020).
BP has established transparent communication with vendors, service providers and other stakeholders by allowing them to make complaints of any kind (BP plc., 2020). The intention of doing so is to explore any irregularities in the code of conduct by any employees to stakeholders who can talk to the company confidentially about their complaints to BP. The company received 18,000 concerns through the system in 2019. Such sources of knowing the problems will significantly help the company to improvise the code of conduct, and behaviours with stakeholders.
BP believes that keeping transparent transactional relationships with local governments, not involving in any political opinions in respective countries, and obeying the local laws are the keys to sustainable business (BP plc., 2020). The company strictly maintain to provide the right amount of revenues to the local government of countries in a transparent manner. The company also makes sure not to donate any money for political purposes; however, it lets its employees participate in political campaigns following the respective laws of countries of operations.
BP has well-established governance policies related to employee governance, managing different types of risks etc. It believes that business strategies should be sustainable and positive for the environment, risks should be properly assessed to reduce chances of work-related accidents, adopting strategies to ensure low carbon emission etc. BP has formed a committee named The Safety, environment, and security assurance committee (SESAC) to assess the likelihood of risks and to reduce the negative impact on the business on the environment (BP plc., 2020).
The human rights governance of BP allows the company to critically review the performance of employees and take initiatives for further improvement among them. It also assesses the likelihood of professional risks through properly conducting a risk assessment. BP faces severe risks in the workplace because it is about gas and oil extraction and processing the materials. Therefore, it involves a number of risky movements. To avoid such risks, BP critically evaluates risks from a range of dimensions.
Corporate Social Responsibilities of BP
Dyllick & Muff (2016) argued that a business has a severe impact on the environment, people, society, nature and on all other stakeholders. Therefore, businesses also have some responsibility to have a less negative impact on the environment. BP strongly believes, and it exerts its best efforts to have a less negative impact on the environment. The most important CSR attitude of BP is its attitude towards the environment and the local community. The company believes that its business operations might have a significant impact on the local community and ecosystem (BP plc., 2020). To avoid any harm to the local community, BP conducts detailed environmental and social assessments before starting any major projects. The company states that 100% of its major projects are certified by ISO14001. This strategy will significantly help the company to have a positive impact on the local community as well as on the environment.
BP strongly believes that biodiversity and natural heritage should be properly protected and maintained and should not be affected by BP’s operations. To implement this plan, BP conducts in-depth research on the impact of its major projects on such diversity and natural heritage. BP has strong principles not to harm any heritage. For example, none of the major projects by BP are located inside or near world heritage sites declared by UNESCO; BP has also encouraged other companies to follow a similar fashion while establishing new production facilities in new areas.
Conclusion
Recent business is dominated by innovative capabilities, which creates a competitive advantage for a company. The need for innovation is even more expected for research-backed companies such as BP. The company has made a large volume of investment in R&D and has links with globally reputed research institutes to bring new technologies having a positive impact both for the company and for the community. Charging points across the UK is BP’s excellence in innovation, with over 700 electric charging points which can reduce 300 tonnes of carbon. As part of the business, BP has made a huge investment in Artificial Intelligence (AI) to reduce the consumption of energy in shopping malls and airports by properly controlling the consumption of light and air conditioning. This has significantly led to carbon emissions. BP has also installed great solar capacity and working to move toward renewable power in 10 different countries, and it also reduces CO2 emissions. Apart from innovations and technologies, BP has strong and valid standing on governance, ethics, and CSR. The company has a set of codes of conduct, values and behaviours which all the employees and board members are encouraged to follow. The company has encouraged all the vendors and any stakeholders to make complaints about anything of BP. BP also has stringent and conservative policies of not establishing any major operational sites that could hamper nature and the local community.
References
BP plc., (2020). Sustainability. [Online] Retrieved from: https://www.bp.com/en/global/corporate/sustainability.html [Assessed on 14 August 2020]
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bp p.l.c: 3, (2020). Research and partnerships. [Online] Retrieved from: https://www.bp.com/en/global/corporate/what-we-do/technology-at-bp/research-and-partnerships.html [Assessed on 15 August 2020]
bp p.l.c: 4, (2020). BP Chargemaster public charging points powering up to 1.5 million electric miles a week. [Online] Retrieved from: https://www.bp.com/en/global/corporate/news-and-insights/press-releases/bp-chargemaster-public-charging-points-powering-up-to-one-and-a-half-million-electric-miles-a-week.html [Assessed on 15 August 2020]
bp p.l.c: 5, (2020). At BP, we’re innovating for a growing world. [Online] Retrieved from: https://www.bp.com/en/global/corporate/news-and-insights/bp-magazine/innovation.html [Assessed on 15 August 2020]
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