External Environmental Analysis and Corporate Social Responsibility

INTRODUCTION

The oil and gas industry is always subjected to threat due to changing market scenario. The current section works on understanding the possible influence of external factors on the business. The chosen organization for this specific assignment is the British Pipeline Agency, dealing in natural gas and oil. The assignment works on analysing the external environmental factors and impact of the same on the chosen business organization. The assignment additionally works on analysing the possible ways that can be rightly implemented in ensuring right modes of CSR. The assignment works on analysing the possible CSR related implications implemented by British Pipeline Agency, while analysing the possible gaps if any.

Primary external influences

Political

The threat for the chosen business company, operating within the oil and gas industry are influenced by political factors, the mean of them are geo-political conflict and political instability. The majority government in the oil producing countries controls more than 90% of the oil reserve as per their national oil company’s control (Downie and Gosling, 2020). The presence of a vital amount of oil and gas reserves in a country can lead to civil war and increase in level of political corruption. Side effects or termed as resource person and may act as a barrier for foreign gas and oil companies to invest in these countries. The complex link between the value of oil price and US dollar makes it difficult for the chosen business to make a proper strategic planning. As the dollar is seen to strengthen against all the major currencies the price of commodities are likely to drop. Hence it can be conclusively stated that the decision carried out by the Central Bank of the USA can impact the value of Dollar and consequently oil prices making it difficult for British Pipeline Agency to conduct its business outside the European Union. As per sources crude oil is priced as per US dollars so that each down tick and uptick generator quick realignment between the Forex crosses (Ahiaga-Dagbui et al. 2017). These movements are less correlated in Nations without significant reserves of crude oil and gas are highly correlated in countries with large reserves such as the UK, Russia and Canada.

As per the official website of OPEC, the mission of organisation of the petroleum exporting countries it is important to unify and co-ordinate the prices of petroleum in the member countries for ensuring stabilization of oil prices resulting in economic and regular supply of oil to customers. A continuous income to the producer and fair return on capital of the chosen company within the oil industry can help in saving the business operations of British Pipeline Agency. OPEC political decision can severely influence the chosen company, for example this specific association cans (Witt, Whittonmand Rifkin, 2018):

Increase oil production resulting in decrease in oil prices to maintain existing global market share due to the uneconomical production from inexpensive oil producers

Decrease in the production of oil so that the prices are subjected to tremendous increase

Manipulation within the oil market

The members of OPEC are the Middle Eastern countries with few countries of Africa and Europe. These countries are in constant conflict of interest to gain maximum or minimum oil prices depending on their economic conditions, with the prime aim to protect their respective market share within the global platform.

A similar association as OPEC is the gas exporting countries forum, with members all over the world. This association can exercise control over 67% of natural gas reserve; the increasing level of natural gas in the global energy market gives this forum a possible future to resolve significant issues to the politics of the global natural gas market (Cordes et al. 2016).

The government can exercise the legal right to change the structure of taxes that are imposed on gas and oil industry profit. If the UK government plans to increase the specific taxes then the company can face problems such as poor profit margins and economic feasibility of expensive gas and oil projects coupled with significant implication in future corporate and economic strategic planning (Richardson et al. 2018). Finally it becomes important to mention the aspect of sustainability. The recent global development trends the decreasing carbon dioxide emission while reducing the use of fossil fuels and increasing the use of renewable sources of energy. The growing demand of people to switch to a greener and sustainable mode of energy can have an evident impact on the British Pipeline Agency and the global oil and gas industry as a whole.

The link between the global economy and oil industry is important and for that reason are heavily linked to another. Similarly it becomes important to note that oil prices are strictly connected with the supply and demand as every general commodity these days (Olajide, Kwak and He, 2018). Besides British Pipeline Agency needs to be concerned for the below mentioned economic factors that can influence global economy, such as:

Global economic crisis

Insolvency of large commercial banks due to their risky investment in products such as derivatives.

Shadow banking system in developing economies, such as in China.

The costs of oil and gas are essential factors in choosing whether the save is entirely practical. Essentially seaward and unpredictable gas and oil fields have significant expenses identified with extraction among the various stores. At long last notice that British Pipeline Agency has a progression of high measure of obligations that should be reimbursed until 2025, something which staff need to do given the present situation of lockdown and coronavirus outrage that has given the significant hit to the monetary turn of events (Olajide, Kwak and He, 2018). As indicated by investigators from the International Bank and vitality specialists of the UK the oil costs are probably going to stay underneath $80 until 2020 dependent on the openly accessible data of interest and gracefully of oil (Cordes et al. 2016).

Social elements

The social variables recommends religion relocation demography salary and ideological perspectives can altogether affect the British Pipeline Agency, as follows:

Expanding mindfulness towards the utilization of ecological agreeable fills

Increment in worldwide oil and gas utilization because of the expanding level of populace on the worldwide stage

Flammable gas is named as cleanest fuel among the other non-renewable energy sources

Social discussion among non-renewable energy source rich nations will mix the disarray between benefits from extraction of oil and gas assets and security of the Earth.

Technological factors

The demand for fossil fuels is always more than the supply. Hence it becomes important to implement the much-needed technology which can meet the ever increasing demands of oil and gas. However the implementation of technology is subjected to several variables within the British Pipeline Agency, such as follows:

Lack of skillInsufficient funding couple with shortage of cost related to developmentUncertainty in gas and oil prices

Uncertainty in gas and oil prices

Strict rules and regulation

Furthermore modern technology suggests subsea robotics and the water equipment coupled with hydraulic fracturing and laser drilling needs an immense rate of funding. Finally it is important to mention that major technology plays an important role in shaping the future of British Pipeline Agency until 2030 (Cordes et al. 2016). The development of new technologies is profoundly linked with oil prices because it is not cheap and demands a lot of money for research and development. Leading countries a UK can make use of such technologies which can further helped British Pipeline Agency to gain competitive advantage

The possible way CSR and sustainability influences decision of the company

The idea of industry works in deciding the conceivable CSR concern. The CSR worries for the impact of the nation in which the business is found. The oil and gas part has been among the main associations supporting in the race of CSR because of the profoundly noticeable negative effect, for example, oil slick and carbon dioxide outflow. English Pipeline Agency gives off an impression of being under Great misery to deal with its relationship with a more extensive society. Nishitsuji et al. (2018), contended, geography has not constrained the appropriation of hydrocarbons in two territories represented as pluralistic majority rule governments. Despite the potential thought processes of oil organizations, spend more in improving their CSR while drawing in with nearby networks. This mediation makes a noteworthy development of corporate implicit rules and social announcing.

The British Pipeline Agency (BPA) has initiated, created and simultaneously implemented a significant amount of community growth scope. For example the British Pipeline Agency perceives human trafficking as an offence and plans to work against it. British Pipeline Agency or BPA, consider the modern slavery comprises of the following (Pipeline Agency Limited, 2020):

forced work by giving the employees physical or mental threat

human trafficking

being controlled by the employer through series a physical or mental abuse

being human eyes for being treated as a property which can be bought or sold

BPA acknowledges its responsibilities in relation to the taking of modern slavery issues and commits to implement the provision of Modern Slavery Act 2015. The business understands that this demands ongoing review in the internal practices in regards to the labour force and additionally within the supply chain (Turk et al. 2018). The business refrains from entering into any sort of professional act with organisation in the host country or abroad which deliberately supports human slavery or forced labour (Pipeline Agency Limited, 2020). No labour provided to British Pipeline Agency is obtained from human trafficking of slavery. The company strictly maintains the nominal standards needed in relation to its responsibilities under the relevant employment act in the UK.

Supply chain

In order to fulfill its activities the prime support of British Pipeline Agency is to include those related to the supply of goods and raw materials principally related to the provision of maintaining an operating oil pipelines and storage. In domains of due diligence British Pipeline Agency plans to execute suitable process to make sure that human trafficking or slavery do not take place within the organisation or supply chain (Turk et al. 2018). The British Pipeline Agency has not with knowledge conducted any professional transaction with organisation that is involved with modern incidents of slavery. To make their mark stronger British Pipeline Agency has implemented few steps to ensure that modern slavery is abolished (Pipeline Agency Limited, 2020):

review the contracts of supplier and include termination of powers in case the supplier is suspected to be involved in act of modern slavery

bill clear relationship with the suppliers and customers and clear expectations of the business

provide training to staff on modern slavery

brief the managers and directors on the issues of modern slavery

use system to encourage reporting of concern related to modern slavery

carry out possible audits and inspection to make sure that the company standards are being implemented throughout the organisation and legislations are compared with policies

Further defining BPA turns on modern slavery business conduct policy sets the employee as per the expected to maintain highest standards of ethical conduct, while carrying out the business operations. In regards to fulfilling business mission to conduct growing a profitable business across pipeline transportation is storage activities in the UK and on a global platform, BPA conducts affairs in regards to a series of principles providing framework of policies and standards which carries out the much-needed responsibilities and duties (Pipeline Agency Limited, 2020). These statements are made in persuasion section 54(1), of the modern slavery act and needs to be reviewed in each financial year. The British Pipeline Agency limited received a prestigious safety award and internationally recognised achievement for demonstrating high standards of health and safety. This award provides a clear understanding the chosen company is socially aware and needs to understand impact of its action on the society (Pipeline Agency Limited, 2020).

Critically evaluate the effectiveness of response by the organization

Given the essential job of CSR related exercises, the oil and gas area rises as an enlightening model for breaking down the degree of CSR development and can change rehearses in the business (Turk et al. 2018). The picked association has actualized volunteer enhancements to its social and natural exhibition. Occasions, for example, oil slick, land leeway and gaseous petrol emanation are hardly any episodes that improve the degree of natural hazard. The utilization of terms, for example, maintainability and CSR is generally new (Turner and Johnson, 2019).

Oil companies are voluntarily prepared to introduce pollution related initiatives which can further have the British Pipeline Agency to reduce marine pollution. CSR is seen to have an immense influence on the decision of the British Pipeline Agency. The prime sign of environmental engagement, British pipeline agencies provide extensive environmental reports. The nature of foreign gas operation includes interaction between companies and local communities which results in the development of local communities at the cost of the investment made by British Pipeline Agency. British Pipeline Agency is making an important contribution to community development schemes and other financial donations.

Notwithstanding, while there is a plenitude of network venture there is a reasonable hole in current announcing. As such British pipeline offices give data on the amount they have spent on social exercises for what number of neighborhood partners partook inside the task; anyway there remains proof based verification to bear witness to the adequacy of the cash spent (Ahiaga-Dagbui et al. 2017). Unnecessary to express the network related speculation is exceptionally useful for partners, if there is a nonattendance of outside e-checked proportions of achievement. The activity of British Pipeline Agency to control human dealing or constrained work frequently have no elective wellsprings of help uniquely while managing supplies in creating an economy where the administration has bombed in controlling such criminal operations. Subsequently it turns out to be convincingly imperative to express that the choice of British Pipeline Agency is fundamentally impacted by the CSR exercises (Ahiaga-Dagbui et al. 2017). For instance CSR harbors the massive potential for tending to ecological issues. Corporate giving an account of ecological issues is step by step improving with the approach of new conditions for amicable innovation. Ecological difficulties profit by the particular ability that the organization acts like specialized and administrative aptitudes significantly help in making the natural improvement (Acquier, Valiorgue and Daudigeos, 2017). The most significant natural activity seemed to increase a Win-Win result: the ecological effect of British Pipeline Agency altogether decreased while the business profited by lower working expense and better paces of development.

On the other hand evidence suggests that CSR has limited potential for answering the issues related to governance and community development. British pipeline agencies can obtain better benefits from enhanced community relations with fewer operational losses as a result of community dissatisfaction and limited levels of corruption. On the other hand evidence states that corporate social responsibility has limited liability in addressing problems related to governance and community development (Acquier, Valiorgue and Daudigeos, 2017). The chosen company can obtain better benefits through a series of improved corporate reputational activities. The host country's good additional league gains benefit from improvements in human development and governance while simultaneously enhancing increase in private investment and limiting financial transactions with business organisations that resort to unethical means. However companies such as British pipeline agencies are reluctant to address the issue pertaining to governance while their approaches to community development are not much effective on the wider population. A study conducted by Graafland and Smid (2019), suggests underlying issues so as to the reason the chosen oil and gas company fails to address the governance and developmental concerns. Firstly the business case associated with corporate social responsibility limit on what such initiatives can work on achieving within the broader social construct.

While the business case has the capability for addressing environmental issues, tackling government related failures of poverty is much more difficult to address. Unlike the other developmental agencies British Pipeline Agency do not work on prioritising the overall development goals, such as the motto to reduce the overall poverty. There is no doubt that motives of profit maximizing are incompatible with the perspective of good practice. Secondly multinational company’s field acknowledges the full potential of their interaction with politics and society and hence fails to acknowledge the responsibility for greater issues concerning the wide impact of their industry on the social construct (Schneider and Scherer, 2019). All companies suggest British pipeline agencies can clearly implement political influence; they can't ignore the notion that they would create a constructive role in helping to address failures in governance. In general CSR debates emerged to have marginalised issues and governance to a complex social construct. However CSR initiatives will not be able to manage a few environmental and social challenges in the industrial sector and specifically in British Pipeline Agency without addressing governance (Apospori, 2018).

Underline the possible areas of improvement

The Companies Act 2006 expects larger oil and gas companies in the UK to spend more than 2% of the net profits on addressing corporate social responsibility projects (Apospori, 2018). Companies have executed sentences regarding the rationalisation of CSR law as it enlists genres, such as reducing oil prices to meet demands of the customers from all economic and social backgrounds. However it becomes important to point out the fact that this area demands active participation from the British Pipeline Agency as well as the experts. Following are the ways that was suggested by experts and implemented by the business organisation to improve CSR:

Board committees must embrace CSR seriously. Acquier, Valiorgue and Daudigeos (2017), pointed out the fact that CSR involves a lot of money. The challenge is to move beyond issuing checks and creating possible physical assets. The need of the hour is to innovate and explore new scalable initiatives that can work on addressing corporate and social issues while enhancing the level of governance. Secondly, the internal strength of being creative and doing what has never been done before can promote better understanding. It needs to be found out the possible ways social enterprises such as British Pipeline Agency can play a role. However in both the cases the top management needs to be responsible enough for promising better results. Acquier, Valiorgue and Daudigeos (2017), point of the fact that CSR has become a new buzzword and organisations irrespective of the size are exploring the possible ways that can be implemented to give back to the communities in a proper way. There remain a series of issues in the corporate social responsibility of the British Pipeline Agency. However these issues can be rightly addressed through the implementation of dynamic recommendations which are as follows:

A robust strategy for addressing CSR needs to be done in consultation with the existing staff and management on the ground level by carrying out their communication about the possible charitable areas. The employees need to be vocal about their ideas on the partnership team and need to look for ways to engage with the local community (Acquier, Valiorgue and Daudigeos, 2017). The volunteers need to be skilled in a fantastic way for engaging the staff into the CSR related activities of the organisation. Employees in the British Pipeline Agency understand the importance of charitable mission and hence it is important for them to volunteer in action. An opportunity to volunteer can help the employees understand and evaluate the difference about the existing environmental and social issues. An easily recommended implementation of a staff voluntary program is a good way of encouraging the employees to do more for their community. Sustainable purchasing is another way of establishing the name of business on the positive side. British Pipeline Agency has a list of suppliers that they used for obtaining the raw materials and the important supplies (Apospori, 2018). However the company has taken a great step in abolishing all the financial and professionals transactions with business that supports human trafficking for forced labour thereby improving the company's CSR. However there remains a wider concern of environmental issues at hand suggesting planning to reduce carbon dioxide emission or frequent oil spills in the ocean or sea. Graafland and Smid (2019), argued the fact that oil and gas companies are always under the negative impression of causing water and air pollution. Thus, it is important to understand that the company needs to switch to a better alternative that can reduce unfortunate incidence of carbon emission and oil spills. However it becomes important to note that at the reduction incidence of oil spills and carbon emission is a long journey to be covered. Until then, British Pipeline Agency can take action.

CONCLUSION

The aspect of oil and gas industry gained immense attention in the recent decades. Based on the above assignment, it can be conclusively stated that the company is performing well. It is for the same reason; British Pipeline Agency is enjoying a fair deal of shares within the monopolistic oil market. The aspect of CSR is adequately answered through series of strategies. However CSR initiatives will not be able to manage a few environmental and social challenges in the industrial sector and specifically in British Pipeline Agency without addressing governance.

Reference list

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Ahiaga-Dagbui, D.D., Love, P.E., Whyte, A. and Boateng, P., 2017. Costing and technological challenges of offshore oil and gas decommissioning in the UK North Sea. Journal of Construction Engineering and Management, 143(7), p.05017008.

Apospori, E., 2018. Regional CSR Policies and SMEs’ CSR Actions: Mind the Gap—The Case of the Tourism SMEs in Crete. Sustainability, 10(7), p.2197.

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Appendix 1: Company profile

British Pipeline Agency Limited (BPA) is the UK's leading provider of engineering and operational services to the onshore oil and gas pipeline sector. BPA was established in 1969 by two of the world's largest integrated energy companies to develop, engineer and operate refined product pipelines and storage systems in the UK. To this day we manage over 1000km of high pressure pipelines and associated tankage, terminal and pumping facilities, and provide engineering design and project management services in the UK and worldwide. BPA customers benefit from our unique ability to demonstrate an integrated approach to operating and engineering challenges. We are one of very few businesses able to offer an engineering consultancy service based on a real experience as an operator of such systems. We can physcially show clients pipeline and terminals that we have designed, procured, constructed, operated and even decommissioned at end of life.

Predominantly UK based, BPA delivers consultancy projects for clients worldwide. This covers both engineering and operations, in a broad range of sectors including multi-product white oils, aviation, black oil, high pressure gas transmission, gas condensate, and carbon capture. Facilities include pipelines (cross-country, jetties, hydrants, spur lines and extensions), pump stations, terminals (road, rail, marine) and tank farms together with associated control and management systems (SCADA / scheduling / leak detection / stock accounting / etc.).

The BPA team offers a unique combination of qualification and experience, generally having a broad exposure to a wide range of operating and engineering projects. With the staff sitting on many industry bodies and taking a lead in the setting of industry standards, BPA focuses strongly on continuous training and professional development.

From project concept, through project execution and operations, BPA is dedicated to delivering the highest standards of quality and our safety management systems have been award winning for 18 years. If you have a technical challenge in the development of a new facility or in the operation of existing plant, talk to us - it is likely that someone here will have the experience you need!

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