Chevron Company Ethical Analysis

Words: 1729
Topic: Business & Economics
Updated:

Introduction

Business ethics is an aspect for consideration when determining the level of business success. Businesses implement codes of ethics in order to promote honesty, integrity, and organizational success (Lawrence & Weber, 2014). Despite the existence of codes of ethics, many businesses fail due to unethical business practices that violate business ethics and codes of conduct (Lawrence & Weber, 2014). An example of a company that has a code of conduct that guarantees success is Chevron. Chevron is an American corporation that deals with oil and gas. It offers different services and products in the energy sector and operates in more than 180 countries across the world.

Chevron is involved in all aspects of the energy industry, including oil, gas, and geothermal energy. Its main activities include exploration, refinery, production, storage, transport, and marketing of oil and gas products. It also manufactures and sells chemicals. Chevron is ranked as one of the six largest oil companies based on market capitalization and revenue. Chevron’s major competitors include Enron, Shell, BP, ExxonMobil, Royal Dutch Shell, and Total (Ferrell & Fraedrich, 2012). Each of these corporations has a code of conduct.

Chevron’s structure and three key issues necessary for success

The corporation’s structure includes upstream operations, downstream operations, and alternative energy. Downstream operations include the manufacture of lubricants, additives, fuels, and petrochemicals (Ferrell & Fraedrich, 2012). Other products include solar, biofuels, fuel cells, and geothermal power. Downstream operations include the manufacture, storage, transport, and marketing of oil and gas products. Alternative energy includes solar energy and geothermal energy. Three issues from Chevron’s code of conduct that are critical for success include diversity, environmental conservation, and the promotion of human rights.

Diversity is important because Chevron’s presence in different countries involves the employment of employees from different ethnicities, cultures, and origins. Environmental conservation is important because it is the most important aspect of operating in the energy sector (Ferrell & Fraedrich, 2012). Finally, human rights promotion is vital for success because it is imperative to treat employees, suppliers, and members of communities with respect and integrity.

Differences and similarities between the codes of conduct of ExxonMobil and Total

ExxonMobil and Total are two of the major companies that compete with Chevron in the energy industry. Their codes of conduct have various similarities and differences. They promote environmental conservation, human rights, and diversity. Both companies are aware of the fact that environmental conservation is the most important aspect of their businesses. On the other hand, they prioritize the health and safety of employees, as well as the safety of communities in which they operate. Both corporations operate in different countries. Therefore, they value diversity as an important aspect of their workforce.

They promote the cultures of the communities in which they work. Moreover, they create work environments that embrace employees from different cultures and ethnicities. The two corporations’ codes of conduct have certain differences. With regard to environmental conservation, ExxonMobil has a provision for the incorporation of technology into its operations. However, Total lacks such a provision. With regard to human rights, ExxonMobil’s code of ethics has provisions for both employees and communities. The Total has a provision for employees only. It aims to treat employees with respect and integrity.

The extent of addressing the aforementioned key issues

Total and ExxonMobil have addressed the aforementioned key issues but to different degrees. For instance, Total has an ethics committee that ensures that oversees the implementation of the company’s code of conduct (Jennings, 2011). In addition, it has developed and implemented several measures to conserve the environment in regions in which it operates. To improve environmental conservation, Total has developed measures to curtail emissions and offer eco-efficient products and services. For instance, Total Eco solutions is an initiative that ensures that the corporation offers eco-efficient products and services. Evolution is a petroleum product that has lower emissions compared to similar products offered by its competitors. The absence of cases of human rights violation is evidence that the corporation has addressed the issue of diversity and human rights adequately. ExxonMobil has not implemented its human rights policy adequately because cases of human rights violations have been reported in Indonesia (Jennings, 2011).

The corporation was accused of facilitating the rape, murder, and torture of civilians by the military. On the other hand, it has not fully addressed the issue of diversity in the workplace. Gay and lesbian employees do not enjoy employee benefits. This happened after shareholders voted to exclude them from the corporation’s Equal Employment Opportunity policy. Moreover, discrimination based on sexual orientation is a common occurrence. If Total addresses the issues, it will increase revenue and cooperation with communities in which it operates. ExxonMobil will increase revenue and employee retention. If Total does not address the issues, it will incur more expenses in fines due to environmental degradation. On the other hand, ExxonMobil risks losing support from communities and nations that support lesbian and gay people, as well as high fines due to court cases on human rights violations (Jennings, 2011).

How to maintain the relevance of Chevron’s code of conduct

Two techniques that Chevron can apply to ensure that its code of conduct retains its relevance include updating the code of conduct and establishing a committee to implement it. The code of conduct should be updated annually to ensure that important aspects such as new government policies and regulations are incorporated and implemented. It is also important to create a committee to implement the code of conduct and punish employees who violate its provisions and guidelines. Such a committee could include government representatives, shareholders, and company representatives. Two methods used by Chevron to manage environment issues include the use of an energy index to calculate energy consumption, and the Energy Reporting System. The Energy Reporting System is used to reduce greenhouse emissions (Chevron: Energy Efficiency, 2013).

The system is applied in the management of Chevron’s greenhouse gas footprint (Jennings, 2011). Chevron improves and updates the system regularly to ensure that it adheres to various environmental standards. It has been very successful in aiding Chevron to reduce emissions that pollute the environment. The energy index is used to reduce energy consumption in its operations. Studies have shown that the energy index has reduced energy consumption by 34 percent since 1992 (Jennings, 2011).

Approaches to embrace technological advancements

Chevron uses two main approaches to incorporate technology into its downstream and upstream operations. Technology facilitates innovation, which improves business operations and processes that are vital for organizational success. These two approaches include Chevron Technology Ventures and Technology Marketing (Chevron: Technology, Applying Innovation to Real-World Challenges, 2013). Chevron Technology Ventures’ main role is to develop and sell technologies that improve energy consumption and production using various techniques (Chevron: Technology, Applying Innovation to Real-World Challenges, 2013).

For instance, this includes emerging energy applications and biofuels. On the other hand, Technology Marketing commercializes the technologies identified by Chevron Technology Ventures in order to help refineries deal with various production challenges. Three technological challenges that Chevron could face include the high cost of technology, the economic viability of developed technologies, and the health implications of different technologies. In order to minimize these challenges, Chevron could develop its own technologies and test them before using or commercializing them.

Strategy to influence national or government support

In order to influence national or local government support, Chevron used government officials to gain support. It uses its political influence through partnerships with senators and military groups. Chevron has been in court since 1993 for a case against them involving oil contamination in Ecuador. In order to win the case, Chevron has tried several times to use political influence to its advantage. In 2006, the corporation approached President Alfredo Palacio for help in order to withdraw the case (Jennings, 2011). Chevron also hired a former senator in order to lobby for government support. On the other hand, Chevron urged the U.S. Trade Representative to deny certain privileges to Ecuador until they dropped the oil contamination case. The lobbying was unsuccessful and did not attain the intended goals.

In 2012, Chevron received a $19 billion pollution lawsuit that undermined their corporate responsibility efforts (Jennings, 2011). President Obama and several senators criticized the corporation’s lobbying efforts. They argued that the lobbying efforts were inappropriate because they promoted corruption and injustice.

Global corporate citizenship efforts

Major global corporate citizenship efforts by Chevron include the promotion of human rights and environmental conservation. Chevron partners with governments of countries in which they operate in order to support their human rights initiatives. The corporation respects laws that govern human rights in countries where they operate. On the other hand, it promotes environmental conservation by reducing pollution (Ferrell & Fraedrich, 2012).

Chevron reduces emissions and energy consumption in its operations. In addition, it has implemented several measures to conserve freshwater and biological diversity (Chevron: Climate Change, 2013). The corporation conserves energy by incorporating new technologies into its operations. The aforementioned citizenship efforts support Chevron’s efforts for success in two major ways. First, the efforts conserve the environment and prevent climate change. The company’s sustainability goal is to conserve the environment and prevent adverse climate change (Chevron: Climate Change, 2013). Second, incorporating technology in its operations conserves energy and reduces emissions that are the major cause of environmental pollution.

Conclusion

The main cause of business failure in contemporary business environments is unethical business practices. Unethical business practices occur despite the fact that all businesses have codes of conduct. Chevron is an energy company that operates in more than 180 countries in the world. It is involved in all aspects of the energy industry, including oil, gas, and geothermal energy. Its main activities include exploration, refinery, production, storage, transport, and marketing of oil and gas products. It also manufactures and sells chemical as well as the generation of power. Tow All of its competitors include Total and ExxonMobil.

Their codes of conduct promote diversity, environmental conservation, and human rights. Chevron uses an energy index and the Energy Reporting System to manage environmental issues. Major global corporate citizenship efforts by Chevron include the promotion of human rights and environmental conservation. Chevron forms partnerships with governments in countries where they operate in order to support their human rights initiatives. In order to ensure that its code of conduct remains relevant, it is important for Chevron to create a committee to implement, review, and update its code of conduct.

References

Chevron: Climate Change. (2013). Web.

Chevron: Energy Efficiency. (2013). Web.

Chevron: Technology, Applying Innovation to Real World Challenges. (2013). Web.

Ferrell, O.C., & Fraedrich, J. (2012). Business Ethics: Ethical Decision-Making and Cases. New York: Cengage Learning. Web.

Jennings, M. (2011). Business Ethics: Case Studies and Selected Readings. New York: Cengage Learning. Web.

Lawrence, A. T., & Weber, J. (2014). Business & Society: Stakeholders, Ethics, Public Policy (14th ed.). New York, NY: McGraw-Hill Irwin. Web.