Consequences of Oil Spills Informing Planning

Question: Describe about the Consequences of Oil Spills for Informing Planning. Answer: Introduction : The British Petroleum Limited was held responsible for the Deepwater oil spill . the accidental spills follows either from nature or manmade disasters. The damages resulting from such accidental spills and the cost required to perform the cleaning and restoring the ecosystem cannot be quantified because there is a loss of social wealth. The BP Limited in association of Transocean Limited was to drill the well and perform all the drilling activities. Though the US government held only BP responsible for the spills and was held accountable to bear all the cleanup costs , though BP was of the view that the Transocean also was to blame considerably. All the charges imposed by the government were deducted by the company from the taxable income. The company was blamed to not depict the fines or penalties imposed in its income statements except for those under which it has strict liability. And it argued that the reliable amount is difficult to estimate. The damages caused and the lost of e cosystem goods and services could not be assessed as there was no reliable method. The company did not make a clear disclosure of the social damages and the ecosystem details as a result of which the stakeholders of the company would not be able to get a clear picture of the companys performance and it s position and its seriousness when it comes to be a corporate environmental responsible. This calls for the urgency and requirement of stringent environmental accounting standards and reporting guidelines. For any company there would be nothing important that the trust of its shareholders which they have in the company they are investing, and for the company to be ecologically friendly, it needs to work in accordance with the accounting standard of the environment. The loss of social and ecological wealth is a serious matter of concern and it should be accounted for. Discussion : Oil spills poses a major threat to marine inhabitants and it occurs either due to human negligence or due to the random nature of disasters which can be said that it can be accidental as well as intentional. The deepwater oil spill has a severe impact on the environment , economy and the industry as a whole and has severe consequences on the life of marine habitats. The worst oil spill in the history of maritime hampered the biological system and the company BP Limited came up with limited effort in assessing the well being of the people which were harmed by the disastrous spill (Chang et al. 2014). The task of quantifying the damages and loss to social life was difficult as there was no proper methodology followed. I agree with the fact that the impact on economy and ecology was difficult to quantify in terms of time as well as space and money as there was no proper methodology of technically calculating the loss , the company did little for the humans who were directly affected by the spill. Though the industry also experience the losses which is caused to them directly , it is not ethical on their part to ignore the losses and sufferings of the living beings affected. The report has proposed the idea of using political path to resolve the scale of penalties rather technically. The company should be given to follow such regime which follows a process and which makes it mandatory to have a proper risk assessment procedure to determine the risks at its end and the efforts and the plan which could help in mitigating the risks. Marine liability damages needs to be assessed using some powerful tools which is to be used by the courts or plaintiffs is not completely acceptable because the first step toward assessing the risks of environmental damages is in the hand of the company operating. It would be better to follow the approach which is more process oriented rather than relying on the government and regulators. The information about the social damages and the ecosystem which have not been fully disclosed by the company is relevant in assessing the efforts which needs to be required to restore the ecological and social wealth and evaluate the biologica l damages. The multiple Gulf of Mexico states have been affected by BP oil spills and there have been sub tropical and tropical storms including epic which ultimately devastated the thousand of occupations and business (). The trustees and the government finds it difficult to measure and evaluate the loss of goods and services of the ecosystem as there is no proper methodology and rigorous method which can be followed. Apart from the monetary costs involved in negotiating the damages , there should be the efforts of restoring the lost ecosystem. So the proposal of quantifying the damages by way of monetary compensation and promoting the efforts to restore the lost biodiversity and ecosystem should be agreed upon. The process of assessing the risks should integrate the ecosystem services with the biodiversity. The disclosure of the integrated annual report by the company would provide a meaningful format and it would be more reliable(Prendergas and Gschwend 2014). The environmental accounting standards and the guidelines of the reporting should be made standardized : The appropriate disclosure of all the externalities whether social and ecological should be made by the entity being reported. The extent of dependency on the ecosystem and the impact of its operational activities on it should be fully disclosed in terms of monetary as well as non monetary metrics. The amount of water which needs to be consumed in carrying out activities and whether there would be any impact on climate should also be informed disclosed (). The methodology followed in calculating all the environmental transactions which are material and the summary of the table of all the liabilities and the assets and the amount of revenue accruing from environment should be systematically disclosed. The existence of potential gaps between the actual and estimated externalities should be accounted for and explained in detail. The reporting entity should disclose the updated status and the trend of the ecosystem in which it operates. This would form a reference point of ecology for the stakeholders prior to any accidents or any impact. The entity could collaborate with any public institution or any non government organization for the purpose of collection and processing of the data sets of the ecosystem. There should be a structural and disclosure of the ecological impact in a transparent manner(Flammer 2013). There should be some arrangements made by the entity itself to determine the impact of their activities and at the same time safeguarding the measures to reduce the impacts which are significant. The measures taken to mitigate the risks should be assessed in terms of their ecological efficacy (Chartered Accountants Australia And New Zealand - Education). According to the environmental impact assessment, there are some checklist which needs to be considered before engaging in any proposals. The aspects include determining the resilience of the environment when exposed to stresses, the functional relationship of the ecosystem that exists and estimating how much sensible is environment to stress. For the business to sustain it should pre assess some of the potential threats to which it is exposed and accordingly safeguard against it ("Search | IFAC"). The reporting entity should carry out its operations in accordance with the guidelines of the environmental accounting standards. The accounting standards for environment could be amended as per the requirements and it would be more standardized . The organization is liable to undertake the restoration projects and bear the costs of the same in order to enhance the marine inhabitants. Conclusion : The study conducted summarizes the measures and the approaches which the company needs to adopt and follow so as to assess the disasters impact and it calls for the need to address the problems which are brought about by the BP Oil Spills. The impact of the oil spill are influenced by the variety of factors and they are need to be accounted for. There should be mechanisms to assess the loss and damages and the company needs to be proactive in dealing with such accidents. Being The nature of BP oil spill was unusual , the company needs to built better mechanism. The consequences of the oil spill on the environment can be short term or long term and the well being of humans should not be ignored. The company does not make a systematic disclosure of the information regarding the ecological damages and the way of carrying out operations in the environment , so it needs to provide with the detailed information about its environment assessment to its stakeholders. The legitimacy theory cou ld be followed by the company but the disclosures of the corporations should be real and there should be congruency between activities and social values . The environmental reporting of the company should be according to the legislative theory but it has to be advanced in order to examine the variety of disclosures to be realized fully. The BP Ltd does not disclose the ecosystem damage details in its income statements and the amount of penalties imposed is also not clearly depicted , so it should make a systematic disclosure of all the integrated annual reports to its stakeholders .so the theory followed by the company needs to be more sophisticated so that it is bother to make a full disclosure. Though the maintaining of the legitimacy is not as easy as it appears, The disclosure policies of the company needs to be changed in order to gain the stakeholders trust. The problem does not lie with the theory but with the unwillingness of the organization to make a full disclosure of the actual picture of the environmental damages if incurred. The theory should be followed by the company on the occasion of being using it fairly. The legitimacy theory comes with the mechanisms of understanding the need to make environmental and social disclosure by the organization. Reference : "Search | IFAC".Ifac.org. 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