Report on The Oil Spill of BP Ltd

Question: Write a report on the oil spill of BP Ltd. What its adverse effects on the environment, biodiversity and the society. Answer: 1. Introduction The operations and regulations of every organization have direct or indirect effect on the environment, ecosystem and on the biodiversity of the earth (Freeman 2011). The provided case study is about the operation and regulation of a mining company named British Petroleum Ltd that is responsible for causing various direct damages to the environment and the ecosystem. Based on the case study, three issues have been identified that are caused by the particular company. These include firstly, the effect of the oil spill on the marine ecosystem, secondly, the lack of regulatory framework of the company hampers in the determination of the restoration cost and thirdly, the lack of integration of the services of ecosystems with the biodiversity in the process of the company for managing the risk. Therefore, this research has been performed for assessing the damages done by the firm to the ecosystem. 1.1 Purpose of the Report It has been found from the case study, that the particular firm British Petroleum Ltd is unable to determine the restoration cost, in turn they measure the damages caused to the environment and ecosystem in terms of monetary value. The lost of the social and ecological wealth is not considered as a matter of concern by the company. However, as oil spill is a non marketed product, large amount of attention is required for its valuation (Hoggett 2012). The government of the country made the firm British Petroleum Ltd accountable for bearing cleanup cost that results due to oil spill, though the firm has not depicted a clear picture of the damages caused by it to the social and ecological wealth. Thus, the purpose of this report is to make the firm concerned about the damages done by it due to oil spill to the social and ecological wealth. 1.2 Issues to be Discussed and their Significance Mainly three significant issues will be discussed in this report. These are: The effect of the oil spill of the company British Petroleum Ltd on the marine ecosystem. The lack of regulatory framework of the company BP Ltd hampers in the determination of the restoration cost. The lack of integration of the services of ecosystems with the biodiversity in the process of the company BP Ltd for managing the risk. 1.3 Research Methods There are mainly two types of research methods by implementing which the researcher can gather various data and information regarding the above stated issues. These are primary research and secondary research methods. In case of secondary research, the researcher will collect data from the secondary resources like published journals, articles, scientific research and company websites. On the other hand, in case of primary research the researcher can arrange for face-to-face or telephonic interview (qualitative analysis) and can also perform online or off-line questionnaire survey (quantitative analysis) to gather the data. 1.4 Limitations and Assumptions For collecting the data and information, the researcher has to gather the view of the residents of the area where the oil spill of BP Ltd took place that is in the region of Gulf and also have to gather the view point of the employees through the questionnaire survey. Here, the researcher might face limitation regarding collection of data as many of the respondents might not agree to fill the questionnaire. The employees of the firm might also suffer from dilemma before participating in the questionnaire survey. 2. Discussion 2.1 Literature Review 2.1.1 Effect of the oil spill of on the marine ecosystem Opined to Wolk, Dodd and Rozycki (2013), oil spill is considered as a type of pollution that is caused due to the human activity. The oil spill pollution can be of both types that are accidental and intentional. The accidental spills might cause due to various reasons but the oil spill that causes due to the negligence, ignorance and carelessness is considered as the intentional spill. According to Hoggett (2012), the adverse effect of the oil spill can be observed directly as it causes threat to the marine ecosystem. Therefore, Warren, Reeve and Duchac (2012) stated that the effect of oil spill is overwhelming and thus the management of the particular firm should bear the cleanup cost though they are unwilling to disclose the actual damages took place to the ecosystem due to their fault. As rightly stated by Horngren, Harrison and Oliver (2012), it is difficult to quantify the damages caused due to oil spill to the ecosystem and social wealth in terms of monetary value as well as ti me. The reason behind this is that till now no accurate measure has been identified for assessing the devastation of the services and goods. 2.1.2 Lack of regulatory framework in determining restoration cost Opined to Scott (2012), it has been found that most of the petroleum companies resolve the scale of penalties or fines for affecting or harming the social and ecological wealth by using the political bargaining, but it is not considered as the appropriate method. The method oriented system makes it compulsory for the organization to assess the associated risks and to plan properly for mitigating the hazards. Therefore, Glautier, Morris and Underdown (2011) stated that the particular approach should shift from regulators or government to the process. The main cause for the accidents like oil spill is the failure of the regulatory agency in providing the detailed account to the environment. According to Scott (2011), the disclosed information of the firm would be of vital importance for assessing the magnitude of effort for the process of restoration of the economic and ecological assets that are impaired temporarily. Thus, it can be said that the lack of regulatory framework hampers t he determination of the restoration cost and so a process oriented system is required to be implemented within every organization. 2.1.3 Lack of integration of the services of ecosystems for managing the risk In the ethical standards and in the moral of the company, the trusts of the stakeholders are reflected. Thus every company should become responsible towards the conservation of the social and ecological wealth. In addition to this, environment reporting standards and accounting standards are required for making the companies for reliable. Opined to Feldmann and Rupert (2012), the environmental accounting standards should be standardized so that it can provide an imminent into the relationship between the corporate sector and the environment. According to Hoggett (2012), it has been found that every business operation has an effect on the environment, thus the preparation of the standards for environmental accounting have become an essential factor. As per Freeman (2011), the requirement of the environmental accounting for operation and regulation of a business should be introduced as per the standard. 2.2 Method 2.2.1 Procedures The researcher has implemented both the primary and secondary research methods. For primary research, the researcher distributed the questionnaire to the employees of BP Ltd and the residents of the Gulf online through social media sites. In case of secondary research, data were collected from books, journals and articles. 2.2.2 Sample Size For accurate and easier calculation, the researcher has randomly selected a fixed sample size of 150 residents of the Gulf Coast and 50 employees of BP Ltd. 2.2.3 Selection Criteria The researcher has undertaken simple and random sampling technique for analyzing the problem statements. It can also be said that the researcher has focused on the probability sampling technique for performing the research (Devine 2012). 2.3 Discussion and Analysis of Data 2.3.1 Effect of the oil spill of on the marine ecosystem As per the data collected from the employees of the organization BP Ltd, oil spills can be of various types. These include the following: The above pie chart indicates the percentage and the type of oil spills that take place. These percentages indicate that effect of oil spills in marine ecosystem. The following graph indicates the high mortality rate of the marine ecosystems (highlighting the birds in the below graph). 2.3.2 Lack of regulatory framework in determining restoration cost As per the information collected from the employees of BP Ltd and based on the demand of the oil, the following graph indicates the increase in the supply of oil with the passage of time. With the increase in the demand, the workforce, contractors and employees of the organization also increases. But as the occurrence of oil spill increased, the workforce also reduced, representing in the following graph: As per the information gathered from the employees of BP Ltd, the Deepwater Horizon Oil Budget has been estimated as below: Lastly, from the employees disclose how the company resolves the scale of penalties or fines for affecting or harming the social and ecological wealth by using the political bargaining. The following graph indicates the lack of regulatory framework in determining restoration cost. 2.3.3 Lack of integration of the services of ecosystems for managing the risk As there is lack of integration of the services of ecosystem for managing risk, several accidental oil spills took place in oceans. This can be better understood from following chart: As, per the data collected from the residents of the Gulf the oil spill mainly affect the deepwater moratorium. The ratings of the other effects of the oil spill are shown in the following graph: 2.2.4 Reliability and Accuracy of Data This research has been completed based on the accurate data collected from both primary and secondary researches (Boateng 2013). The researcher will not use the gathered data and information for other purposes and will not disclose them in future. The participants can also rely on the researcher as he will not disclose their personal opinion (Deegan and Unerman 2011). 3. Conclusion Therefore, it can be concluded that the all the companies of oil including BP Ltd should become more concern about the adverse affects on the social and ecological wealth that take place due to their negligence and incidental oil spills. Paying penalties to the government for cleaning up is not sufficient for fulfilling the loss that takes place in the environment. 4. Recommendations Thus, it can be concluded the oil companies including BP Ltd should be more alert and the risk and management team should take proper steps to save the ecosystem and biodiversity. Therefore, some environmental accounting standards should be implemented in order to save the social and ecological wealth. References Boateng, P. (2013).Principles of accounting theory. [Place of publication not identified]: Dog Ear Publishing, Llc. Deegan, C. and Unerman, J. (2011).Financial accounting theory. Maidenhead, Berkshire: McGraw Hill Education. Devine, C. (2012).Accounting theory. Routledge. 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