Question

Writer and investigative journalist Peter Maass has pointed out the devastation caused by the pursuit of oil reserves in the developing world. In Nigeria, throughout some 30 years of oil extraction, the government was “a carnival of corruption,” with a series of military dictators siphoning off the oil wealth into foreign bank accounts. Meanwhile, hundreds of spills ruined farmland and fisheries. Social inequalities grew, as did tribal violence. For years the Niger Delta, the heart of the oil-producing region, has been the scene of terrible pollution and of an undeclared and brutal civil war.

How should companies respond to such a situation? Should they try to improve infrastructure (education, environment)? Should they try to influence government policies? Should they consider not operating within a failed state?

This is Legal Ethical Class (Class related to law)

Answer 1

Companies should pro-actively respond to such situation to ensure that pursuit of oil reserves is done in a systematic manner and that this pursuit does not lead towards any unwanted and negative consequences for the stakeholders.

Yes, the companies should certainly try to improve the infrastructure as well as try and influence government politics. Doing the above will ensure that the chances of negative outcomes like rampant corruption, occurrence of oil spills and growing social inequalities are controlled. Here the companies have an ethical responsibility towards the environment, towards the society and towards the people who are getting affected both directly as well as indirectly. Here the company will have to think and act not as a consequentialist by trying to focus on consequences and outcomes but will have to rather focus on its responsibilities, its intention and its duty along with individual character of its decisions and actions. Thus the company will have to act as per the Deontological theory of ethics and try and ensure that interest of all those involved are properly balanced and that no single party is being hurt or put in a situation of disadvantage.

While considering not operating within a failed state is a correct option as per the virtue theory of ethics it is not a practical option for the companies. In fact they should try and take steps and actions to ensure the revival of the failed state and put in place all the necessary resources to ensure that state is optimally propped up to support ethical development of the oil industry in future.