BP may well be on its way to halting the economic, political, environmental and social catastrophe that is the spill in the Gulf of Mexico, yet the most important question remains unanswered: what will other companies do in order to avoid similar catastrophes?
Tighter deep water drilling regulations are a strong possibility, along with more robust supervision of other industries susceptible to environmental disaster. This regulation must be applicable across national borders, as the subject of BP's nationality has proven to be a controversial aspect of the fall-out from the oil spill.
The more significant consequence of the incident will be in raising companies' awareness of the risks involved in neglecting their environmental and social responsibilities, giving more weight to corporate sustainability on CEO's agendas. Furthermore, the catastrophic effects of this oil spill should highlight the fact that simply meeting regulatory requirements is not always enough. Companies need to assess the potential environmental and social impacts of their actions, making it a key part of their decision-making, rather than a managerial afterthought. They must espouse a more responsible and moral form of conducting business, whilst genuinely adopting augmented corporate risk management.
BP's experience serves as a cautionary tale. Whilst the group has previously been involved in other safety and ecological disasters, including the Texas City refinery scandal in 2005 and the Prudhoe Bay oil spill in 2006, it has seemingly compromised risk management. This is illustrated by the fact that the company spends $39bn per annum to search for new oil and gas reserves, while its average annual investment in research and development for safety, prevention and spill response is a comparatively meagre $20m. These figures suggest that BP has continuously underestimated the risk of its operations and fallen short of setting in place the according response and prevention systems.
The corporate sustainability community and those responsible for driving change within their organisations should learn from BP's failure to entrench satisfactory disaster mitigation programmes. Whilst prevention is the ultimate goal, the provision of damage limitation systems - in case the worst does occur - also needs to be part of a responsible business strategy.
