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Wednesday, April 20, 2011

Strategic CSR - BP and Halliburton

Here are two articles (one year on from the Deepwater Horizon explosion and oil spill in the Gulf of Mexico) that gave me pause for thought.

The title of the article in the first url below speaks for itself:

A year after the Gulf disaster, BP is looking strong, hopes to resume drilling

The article details how BP has managed successfully to recover from the intense criticism and scrutiny it received in the weeks and months after the rig explosion and massive oil spill last year:

It's hard to tell that just a year ago BP was reeling from financial havoc and an American public out for blood. The oil giant at the center of one of the world's biggest environmental crises is making strong profits again, its stock has largely rebounded, and it is paying dividends to shareholders once more. It is also pursuing new ventures from the Arctic to India. It is even angling to explore again in the deep waters of the Gulf of Mexico, where it holds more leases than any competitor.

The article in the second url below explains how Halliburton, a central player in the Gulf disaster, “remains largely unscathed” in spite of its prominent role:

Aside from BP, the primary owner of the blown-out Macondo well, no company has faced more criticism for the deadly explosion and resulting oil spill than Halliburton. One of several service providers on the Deepwater Horizon drilling rig, it designed the failed cement seal that experts believe allowed explosive gas to flow into the well and reach the doomed rig. Halliburton doesn't deny the seal failed, but argues BP should have run tests that would have revealed the problem.

In other words, “Yes, we screwed up, but it is really BP’s fault for not catching our mistake”!! In 2010, Halliburton’s profit rose 60% to $1.8 billion and profits for the first three months of 2011 “more than doubled to $511 million from $206 million. Revenue rose 40% to $5.3 billion.

While any firm should be given the opportunity to recover from a major crisis and repair its reputation, what is striking about both BP and Halliburton is how many CSR transgressions they have been associated with over the last decade. With BP, it is the oil refinery explosion in Texas, the Arctic oil spill, and a generally horrendous environmental and safety record compared to its main competitors, such as Exxon. With Halliburton, it is allegations of bribery overseas, corruption at home, and very large payments to settle asbestos-related claims. In spite of all this, on top of both firms’ central role in causing the largest environmental disaster ever to occur in the U.S., they remain strong, successful companies that continue to operate with active stakeholder (investors, employees, customers, and government) support:

The first deep-water permit issued after the Obama administration lifted a post-spill drilling ban went to Noble Energy Inc. for work on a well off the coast of Louisiana. BP is not the operator but it has a 46 percent stake in the well. BP also bought out Shell's 25 percent interest in two Gulf fields in December, making BP the sole owner of both.

Remind me again of the business case for CSR??

Take care

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A year after the Gulf disaster, BP is looking strong, hopes to resume drilling
Associated Press
1357 words
18 April 2011

Halliburton Emerges From Gulf Disaster Unscathed
By Ben Casselman
1168 words
19 April 2011
The Wall Street Journal