11:59pm SHARP on Sunday, July 18th (HOBART Time)
No late submissions will be accepted for ANY reason.
This examination consists of two sections, Section A and Section B.
Section A consists of a case study analysis. Candidates must answer all FIVE (5) compulsory questions. Section A is worth a total of 20 OR 30 marks – depending on how many essays are attempted in Section B.
Section B consists of FIVE (5) essay questions of which candidates must answer either TWO (2) OR THREE (3) questions. Each question is worth 10 marks for a total of 20 or 30 marks.
This examination counts for 50 per cent of the marks for this unit.
SECTION A¾CASE STUDY ANALYSIS (20 or 30 marks – depending on how many essays are attempted in Section B)
Candidates must read the following case study and answer ALL of Questions 1-5. Section A is worth either 20 or 30 marks in total.
(A) YOUR ENTIRE ANSWER IS LIMITED TO 2000 WORDS MAXIMUM
(B) ALL ANSWERS MUST BE FORMATTED IN TIMES NEW ROMAN, SIZE 12 FONT, 1.5/DOUBLE LINE SPACING WITH NORMAL MARGINS
(C) YOU ARE NOT REQUIRED TO DEFINE ANY THEORIES OR PROVIDE REFERENCES IN YOUR ANSWERS
(D) ALL ANSWERS SUBMITTED MUST BE YOUR OWN WRITTEN WORK. ANY SIGNIFICANT AMOUNTS OF COPIED TEXT WILL ATTRACT ZERO MARKS
Describe the facts you feel underpinned the ‘Shell, Greenpeace and Brent Spa’ case.
Who was the decision-maker in the case, and what conflicting demands did they have to accommodate?
What was the initial ethical dilemma faced by the decision-maker in this case?
Using the Utilitarian, Kantian, Rights, and Distributive Justice approaches to ethical decision-making, provide an analysis of the initial ethical dilemma you identified in the case.(NB: Use each of the theories separately in your analysis).
Present and justify the final recommendation you would have made to the decision-maker in this case had they asked you for advice on how to resolve their initial ethical dilemma.
The Shell, Greenpeace and Brent Spa Case
The North Sea and North East Atlantic have been the site of significant industrial activity since the 1960s. On 18 June 1975, UK North Sea oil was first extracted after six years of exploration and development. It was shipped from the small Argyll Field and brought ashore by tanker to BP’s Isle of Grain refinery in Kent. Since 1975, over 2 billion tons of oil and 1,381 billion cubic metres of gas have been extracted. In 2000, there were over 200 fields in production on the UK Continental Shelf – and production is at record levels. In 1998, 132.6 million tonnes of oil and 95 billion cubic metres of gas were produced.
In 1976, Shell built an offshore facility, the “Brent Spar”, which stood between the coasts of Scotland and Norway in the Brent field in the northern North Sea. Brent Spar was installed to allow early production from the Brent field in advance of the pipeline to the Shetland Islands, Scotland, being installed and commissioned. But even after the pipeline came into use, the Spar was retained as an alternative offloading facility and as back-up to the pipeline in times of shutdown. Brent Spar remained in full use for 15 years, finally ceasing operation in 1991. After the completion of an oil pipeline to the Shetland Islands in the late 1970s, and after three years of operation, Shell put the Spar storage buoy into standby status but maintained it in the event that problems developed with the pipeline. Over time, Shell (and the rest of the hydrocarbon industry) concluded that the costs of such precautions outweighed the benefits, although it had not yet resolved the best environmental and economical way of handling redundant platforms.
The Brent Spar was unlike most other installations in the North Sea. Under regulatory guidelines, all but the largest rigs were to be decommissioned by being brought to shore and dismantled for reuse or recycling. However, very large steel and concrete structures, such as the Brent Spar, are considered difficult or even dangerous to remove. Like an iceberg, most of the Spar’s bulk – six huge storage tanks – lay beneath the water’s surface. As a result, these are handled on an individual basis, although there remains a general presumption of total removal when possible (some 80 per cent of structures are completely removed). Disposing of a North Sea platform that was 40 stories high and weighed over 14,000 tons was not a simple problem. Shell perceived the challenge as getting Spar out of the water or even just raising it higher without posing undue risk to humans or the environment. As the Spar was originally designed, it was built on its side, and then floated over deep water where it was ballasted so that it turned upright. When this was done, some of the tanks, essential for its mechanical strength, were overstressed during installation, which could have made it unsafe to ‘reverse engineer’ the installation process to get the buoy out of the water. Then later, during operation, the tanks fractured. While this did not threaten its safety when it was floating vertically, it was feared that if the process were reversed it would fail structurally.
In seeking to decommission Spar, Shell invoked the 1958 Geneva Convention on the Continental Shelf, which includes within its geographic scope the North Sea. Article 5 (5) states that ‘any installations which are abandoned or disused must be entirely removed’. Consultative guidelines developed by the British government then in effect required Shell to prepare a formal plan for the dismantling and ultimate disposal that included the views of ‘those interested parties … who may be affected by the abandonment programme’. Shell commissioned an Impact Hypothesis document and a Best Practicable Environmental Option document produced by Rudall Blanchard Associates. Overall, it undertook some 30 studies to determine what to do with the giant buoy, eventually refining the options to:
Continue to maintain the rig at a cost of $9 million a year;
Refurbish and then reuse the buoy which would cost $135 million over three years;
Dispose of the rig in the oil field, which Shell had already ruled out;
Sink the rig in deep water for $18 million, the most economical choice;
Dismantle the rig vertically (which would require a deep-water dismantling area) and dispose of it on shore, or;
Dismantle the rig horizontally (which would require shallower water than the prior option) and dispose of it on shore for $69 million.
Shell was at least somewhat aware of the public-relations-related concerns that would accompany its decision to become the first company to decommission one of its rigs. Shell had long prided itself (and indeed was thought of by many environmentalists) as being among the most environmentally sensitive natural resource companies. After four years of thorough investigation, and in consultation with many scientists, Shell chose what it concluded was the most environmentally responsible and economical disposal option: tow the Spar from the North Sea to sink it in a deep-water channel in the North East Atlantic. Some scientists, such as Martin V. Angel at the Southampton Oceanography Centre (UK), believed that the criteria of evaluation did not address the right questions, since strong emphasis was placed on the structural integrity of the seabed rather than its direct environmental impact. This was an operating ‘ethic’ for hydrocarbon companies who were far more fearful of causing a geological disaster than an environmental one.
As it turned out, Shell and the government acted with almost no public consultation or disclosure and did not solicit the opinions of critical ‘public interest’ groups that had been monitoring the decommission debate for some years. Although Shell had historically demonstrated sensitivity to environmental issues, it rejected liberal stakeholder theory canon that the ‘natural environment’ held status as a stakeholder in company operations and fortunes. It also resisted the idea that public interest groups, who were publicly hostile to the natural resource industry as a matter of course, had a right to be involved in the review process. Greenpeace, the world’s largest environmental lobby, had been campaigning for years against ocean dumping of any kind. As a consequence, Shell did not consider Greenpeace and other ‘extreme’ environmental groups representative stakeholders and, therefore, did not include their (unsolicited) comments in the list of consultees, which was stipulated by the then UK government.
Shell asked the British government to approve its plans in September 1992. After scrutiny by government scientists and following extensive consultations, the UK’s Department of Trade and Industry (DTI), which clearly saw Brent Spar as a test run for future de-commissioning, endorsed the plans in December 1994. Shell was issued with a deep-sea licence to dispose the Brent Spar to a site 2,300 metres under the surface, about 240 kilometres north-west of the Hebrides on the North Feni Ridge. Meanwhile, under the Oslo Convention, all other appropriate European governments were notified and none objected. The UK government announced its approval on 17 February 1995.
The announced support by the British government of Shell’s application attracted little media interest until Greenpeace, accompanied by a number of German and UK journalists, boarded the Spar for the first time on 30 April 1995. The occupation fired an immediate public debate pitting Shell and the UK government against Greenpeace. The environmental group, which had first become involved in an ocean dumping issue when its ship Rainbow Warrior intercepted a radioactive waste dumping vessel in the Atlantic in the summer of 1978, was on record as being opposed to any ocean disposal as unethical.Greenpeace complained that its perspective had not been included in the decision-making process – indeed the DTI refused to accept its written protests. Shell defended its lack of consultation with Greenpeace on the grounds that Greenpeace had definitely admitted that its goal was to reverse the disposal choice, not to participate in risk-benefit environmental and economic analysis. Greenpeace escalated its allegations, charging that Spar was a ‘toxic time bomb’ of drilling mud, oil residues and radioactive waste that could seriously damage the marine environment – an allegation disputed by Shell and questioned by most independent scientists and oceanographers. Greenpeace also asserted that allowing the use of the ocean as a free repository would signal that it was acceptable for companies to pass on the externalities of its operations. Its proposed alternative: onshore dismantling of Brent Spar.
The occupation Greenpeace, noted for its confrontational tactics, sprang into action, helped along by a Shell misstep. Because of a narrow weather window, Shell chose to scuttle the Spar just before the Inter-ministerial meeting on the North Sea. This handed Greenpeace, whose membership had gone into decline, a golden opportunity for a high-profile campaign. Greenpeace invoked broad ethical principles as well as specific environmental objections in launching a vigorous international campaign against Shell and its plan. Just before midday on 30 April 1995 activists, accompanied by a number of journalists, occupied the rusting and deserted platform. The audacity of the occupation, carried out at sea, attracted immediate media attention. Greenpeace claimed an impending ecological disaster. Daily postings on a special Internet website were enhanced after the second week by satellite phone/fax/e-mail equipment that enabled the occupants to talk directly to journalists. However, the main story did not break until 22 May when, after a failed night-time attempt, police and security men began evicting the activists under injunctions granted by Scottish courts. Greenpeace began offering direct television feeds to broadcasters around the world.
Shell evicted the protestors and began blasting high-powered water cannons to fend off reoccupation by Greenpeace. Videotaped by Greenpeace vessels nearby, scenes of water cannons directed at Greenpeace helicopters were flashed around the world, making headline news. The drama was captured on video arranged by Greenpeace, and distributed by satellite. The confrontation incited public protests and Greenpeace initiated boycotts of Shell products in several European countries. In Germany, for example, where Shell’s sales fell by between 20 and 30 per cent in the area around Hamburg during the crisis, protestors threatened to damage 200 Shell sites. Fifty were subsequently damaged: two firebombed and one raked with bullets. In the next weeks, even as Shell began towing the Brent Spar out to sea, the media continued to cover the stand-off. BBC aired live interviews on board the Greenpeace ship Altair reporting on the ‘daring’ exploits of the protestors. Each report deepened the perception that Europe’s largest company was using highly aggressive tactics against a dedicated band of highly moral men and women.
Although it had historically placed a strong emphasis on the environment in its public relations strategy and was deeply concerned about the long-term impact on its reputation, Shell was unable to counter the negative made-for-TV images manufactured by Greenpeace. With feelings running high, Shell’s attempt to gain public support by arguing the scientific merits of its position largely through the print media, lost ground. The confrontation brought to the surface simmering tensions between environmental organisations and the mainstream science community, which had remained supportive of Shell’s plans throughout. In contrast, activist groups throughout Europe rallied by the German chapter of Greenpeace elicited the support of left-leaning European politicians and journalists. Worker representatives on Shell’s advisory board in Germany wrote to Greenpeace to express their ‘concern and outrage’ at Shell’s plans to ‘turn the sea into a trash pit’. The company’s situation was not helped by the fact that different country managers took a variety of stances. Under considerable local pressure, the head of Shell Germany said the first he knew about the disposal plans was from the media, while the head of Shell Austria pronounced the plan ‘intolerable’. The Danish environment minister was the first to support the Greenpeace stance. When the German Chancellor, Helmut Kohl, protested to the British prime minister at the June G7 Summit, it was evident that the issue was spiralling out of Shell’s control; Greenpeace was setting the public agenda on this issue.
After a nine-day trip, on 19 June, as the Brent Spar reached its final destination, two further activists were dropped onto Brent Spar to disrupt the sinking. Greenpeace simultaneously released to the press the written pronouncement by a prominent scientist that the disposal of Brent Spar could bring about local damage to marine life. That afternoon, British Prime Minister John Major addressed the House of Commons: ‘ I understand that many people seem deeply upset about the decision to dispose of Brent Spar in deep water,’ he said. ‘I believe that it is the right way to dispose of it…. Shell has my full support to dispose of it in deep water.’ The Conservative government was firmly convinced that it was legally and scientifically on solid ground.
To Major’s dismay and embarrassment, within a few hours, Shell issued a terse press release rescinding its decision and began towing Brent Spar back towards the UK. Under siege, experiencing a public relations nightmare, and with eroding support from European governments, Shell believed it had no choice. The embarrassed UK government accepted this course of action and helped Shell obtain a licence from Norwegian authorities that allowed Spar to be anchored in the deep waters of Erfjord pending re-evaluation of all options. The UK government, perhaps as a display of pique, would not pay an increase in the subsidy of 75 per cent of the original decommissioning costs, as it had promised. Greenpeace claimed total victory.
The controversy Greenpeace’s decision to elevate its moral stance over scientific claims gave it an initial tactical advantage in the court of public opinion. The news media found the controversy difficult to manage. It did not yield to the customary technique of instant verification used in news journalism, where complex conflicts are frequently reduced to two opposing views with the ‘right answer’ arrived at by finding an ‘independent expert’. During much of the crisis, large segments of the media presented the controversy as a moral saga with Greenpeace environmentalists fighting Shell (who was being secretly aided by Britain’s government). Shell’s appeal to science and ‘rationality’ contrasted with Greenpeace’s moral arguments and the belief by many environmentalists that Shell had tried to engineer the most financially advantageous, not the most environmentally responsible disposal option.
That simplistic ethical paradigm held sway so long as the public believed Greenpeace’s analysis of the toxic potential of the sludge still on the rig. Greenpeace had dismissed Shell’s commissioned study which indicated that some 53 tonnes of oil remained onboard. It publicised tests from samples drawn by its occupiers that claimed there was more than one hundred times as much – 5,550 tonnes. According to newspaper accounts and Greenpeace press releases, it was further claimed that the rig contained ‘14,500 tonnes of toxic rubbish’ and ‘over 100 tonnes of toxic sludge’. Shell officials continued to insist that their figures were accurate, which sparked widespread and well-publicised ridicule by activists. But within a month of Shell’s surrender, public perceptions turned abruptly when it became clear that Greenpeace had wildly exaggerated the potential hazards of Shell’s disposal plans. The press first uncovered that Greenpeace’s claim that marine life was threatened referred to a disposal option in shallow waters which Shell had explicitly rejected. In the most damaging disclosure, several independent companies coordinated by Det Norske Veritas undertook a new inventory examination. This comprehensive study indicated that between 74 and 103 tonnes of oil remained on the buoy, most of which could now be easily removed. That was very close to the Shell estimate and far less than Greenpeace’s assertion that the buoy contained 5,000 tonnes. Only 30 tonnes were low-level radioactive waste, a level not considered dangerous and less than occurred naturally in areas where there are granite rocks. The radioactivity originated in the stored oil that was absorbed into the internal pipework.
By late August, interviews with scientists and evidence uncovered during the independent inspection revealed that the scuttling of the platform was far less environmentally problematic than Greenpeace had falsely claimed. It turned out that Greenpeace deliberately took its sludge samples through the top of the vent pipes on the uppermost deck, and not from the storage tanks proper. These samples were deliberately sought by Greenpeace as they contained predominantly oil that had floated to the top of these pipes. The media turned, particularly the more conservative press. ‘Minor Mistake Which Tipped the Balance’, headlined the Daily Mail (6 September 1995). The Express ran a story entitled ‘Dark side of Greenpeace do-gooders’ under the heading ‘DAILY EXPRESS – Asking the Straight Questions’ (6 September 1995). Even the Guardian, which positioned itself as an ally of Greenpeace throughout the controversy, noted almost apologetically that:
… almost all independent experts contacted by reporters regarded the proposed burial at sea as the best – or least bad – solution for the Brent Spar. It was not going to be sunk in shallow water but towed 150 miles out to West of the Hebrides. There, according to the majority of marine experts, the floating tank could be sunk without anything like the damage which would be caused by dismantling the structure disposed of on land.
In a dramatic turnaround, and just a few days before the results of an independent inventory assessment would have made their error public, Greenpeace officials issued a public apology to Shell. Greenpeace, which had been aware of the embarrassing findings for weeks, asserted it had mistakenly, yet innocently, exaggerated oil levels and toxic dangers. A few stalwarts praised Greenpeace for its confession, but the damage was done. Some critics (including some environmentalists and former Greenpeace officers) emerged to argue that Greenpeace’s tactics had less to do with protecting the environment and more to do with invigorating financial support and reversing membership declines. According to detractors, Greenpeace and its supporters were casting around for a cause celebre when the Brent Spar issue came to a head and Shell provided a near-perfect target. In response to these stories, the BBC publicly flagellated itself for being manipulated. The New York Times and Wall Street Journal, among others, raised questions as to whether Greenpeace officials might have massaged the story for less than honourable reasons.
SECTION B¾ESSAY QUESTIONS (20 or 30 marks)
Candidates must answer either TWO (2) OR THREE (3) of the following FIVE (5) questions. Each question in Section B is worth 10 marks for a total of 20 or 30 marks.
(A) EACH ANSWER IS LIMITED TO 1000 WORDS MAXIMUM
(B) ALL ANSWERS SHOULD BE FORMATTED IN TIMES NEW ROMAN, SIZE 12 FONT, 1.5/DOUBLE LINE SPACING WITH NORMAL MARGINS
(C) YOU ARE NOT REQUIRED TO PROVIDE REFERENCES IN YOUR ANSWERS
(D) ALL ANSWERS SUBMITTED MUST BE YOUR OWN WRITTEN WORK. ANY SIGNIFICANT AMOUNTS OF COPIED TEXT WILL ATTRACT ZERO MARKS
Describe Friedman’s and Freeman’s perspectives on Corporate Social Responsibility (CSR). Using examples published in online news sources, demonstrate how the Moral Minimum perspective offers a more useful guide to the effective management of CSR.
Define what is meant by the term “Insider Trading”.Using examples published in online news sources, describe TWO (2) potential problems that arise from insider trading. Describe TWO (2) strategies that managers could employ to prevent insider trading occurring in their organisation.
Define the concept of ‘acceptable risk’ in terms of the production and marketing of goods and services. Using examples published in online news sources, discuss how the doctrine of ‘Do No Avoidable Harm’ has informed the way in which hazardous goods and services are produced and marketed ethically.
Define the term ‘whistle-blowing’. Using an example, discuss when external whistle-blowing is an ethically justified course of action. Using an example, discuss when whistle-blowing is an ethically obligated course of action. What strategies would you put in place to maximise internal whistle-blowing in the workplace?
Using the four ethics theories covered in the unit, describe the differences between ‘functional’ and ‘dysfunctional’ discrimination.Using examples published in online news sources in 2021, describe the strategies that specific organisations have used to minimise dysfunctional discrimination in their workplace.
[10 marks]ction B 2000 words