What is Responsible Business

It is essential that businesses are profitable and ensuring this must be the first responsibility. But
profitability should not override all other considerations. "How" profits are made is extremely important
and therein lies the key to other areas of responsibility that should never be overlooked.
Business responsibility is often known as Corporate Social Responsibility (CSR). CSR is the
continuing commitment by business to behave ethically and contribute to economic development
while improving the quality of life of the workforce and their families as well as of the local community
and society at large.
Social responsibility is important to a business because it demonstrates to both consumers and the
media that the company takes an interest in wider social issues that have no direct impact on profit
margins. These issues may be local, national or global, but a concern for the health and wellness of
others that does not involve sales can be seen as commendable if done well.
For this reason, evidence of a healthy social responsibility policy This, in turn, can lead to greater
profits for a business. However, building a highly regarded and trustworthy reputation is more
valuable in this instance, and observers appreciate that social responsibility initiatives take time to
establish and manage.
Furthermore, being part of a scheme that helps disadvantaged people or those otherwise in need can
help boost morale for employees within the responsible company. Along with other methods of morale
boosting, this can lead to greater productivity among the workforce. Knowledge that a product and
service has a great influence on social causes can be a genuine delight to employees, customers and
business owners alike. Over time, the business contribution to a charity, cause or community can be
a significant amount of charitable funds, product donations or other ventures.
When the importance of social responsibility is recognized as part of a business's foundation, the
impact of such endeavors can have life-changing consequences for recipients of aid and, equally,
instill a sense of pride in the people who support and work toward its growth. A business can grow
with or without social responsibility, but doing good for others allows a business to reap rewards in
many ways.
The case describes the Exxon Valdez oil spill, one of the worst ever environmental damage caused
by an industrial disaster. In March 1989, the oil tanker Exxon Valdez, owned by Exxon, a leading oil
exploration and production company in the world, spilled 11 million gallons of crude oil in the Prince
William Sound in Alaskan region that caused major ecological and financial damage to the people of
the region. The case examines the response of Exxon to deal with the disaster and the compensation
paid by the company to the victims. Though Exxon claims that it had acted responsibly and had spent
around $3 bn to clean the region and as damages to the victims, the largest sum paid by any
corporate to mitigate the environmental damage, environmentalists believe that the company must
pay more.
The key issue presented in the Exxon Case Study is that Exxon communicated in an unethical
manner when its crisis contingency plan failed (McGill & Seeger, 2000, p.177). Inadequate
communication, along with the absence of an effective plan minimizes trust, which is what oil
companies need to avoid if they want to uphold a respectable company image. Analysis Companies
that work with highly toxic substances often have spills that can be seen as normal accidents

(Cleveland, 2008, par.1). However, if the company is ill-prepared to handle the situation, (Waddock,
2008, p.23) it becomes a considerable crisis. The crisis worsens when companies provide false
statements and do not take responsibility for their actions. When Exxons tanker Valdez spilled 10.9
million gallons of oil into Alaskas Prince Williams Sound, Exxon management blamed the Alaskan
Coast Guard and the captain of the tanker for the failure of the crisis contingency plan (Cleveland,
2008, par.1). The plan did not fail because of irresponsible stakeholders, it failed because Exxon
management had a disorganized plan. Exxon blamed others for the mistakes made by its
management and gave false statements stating the Coast Guard did not complete his part of the plan
and that the captain drove drunk, thus firing him (McGill & Seeger, 2000, p.180). Lying and
irresponsibility are two examples of unethical behavior, and these behaviors led to poor trust and
miscommunication between stakeholders. Incorrect and misleading statements is helpful to no one,
(McGill & Seeger, 2000, p. 180) and only makes Exxons management appear untrustworthy and
worsens the crisis.
Effect on Alaska

Fisheries for salmon, herring, crab, shrimp, rockfish and sablefish were closed, with some shrimp and
salmon commercial fisheries remaining closed through 1990. Herring and salmon species never fully
recovered, which means the commercial fishing industry that depends on them haven't either. Over
2,000 Alaskan Native Americans and 13,000 other subsistence permit holders lost the source of their
food. This continues today, as many are afraid of being poisoned by contaminated fish.
The tourism industry immediately lost over 26,000 jobs and more than $2.4 billion in sales. By 2003, it
had recovered somewhat.
Passive use cost the state $2.8 billion, and it too has never fully recovered since vacationers still think
of the area as contaminated. (Source: NOAA)
Economic Impact of Wildlife Loss

Wildlife value is measured by the cost to obtain or rehabilitate them. For example, zoos pay as much
as $50,000 dollars to capture an otter.
The cost of losing 2,800 of these endangered species is $140 million. Exxon paid between $40,000$90,000 to rehabilitate them, confirming the otter's value. Harbor seals go for $20,000, so losing 302
costs $604,000. Most seabirds cost $300 each, so losing 250,000 costs $75 million. Eagles cost
$22,000 to rehabilitate, so 140 are worth $3 million. Total cost for just these four species in the first
week was $218.6 million. (Source: Replacement Costs of Birds and Mammals)
Nearly 30 years after the spill, about 20 acres of Prince William Sound shoreline are still
contaminated with 21,000 gallons of oil. Surprisingly, the oil is just as toxic as it was right after the
spill. It is decomposing no more than 4.0% a year. It could take centuries to completely dissipate.
Four species have not recovered, including a 36-member pod of killer whales that lost 14 members.
Until all species recover, the economy that depends upon them cannot fully recover, either.
Clean-up Costs

Exxon spent over $3.8 billion to clean up the site, compensate the 11,000 residents and pay fines.
But it could have been $4.5 billion more. The Alaskan court ordered Exxon to pay $5 billion in punitive
damages in 1994. After 14 years of lawsuits and appeals, the U.S. Supreme Court ruled that Exxon
only owed $507.5 million. That was only about 12 hours of revenue for the giant oil company.
Conclusion The course of action that Exxon should follow is to adapt the philosophy of Deontology
and follow the Stakeholder Alignment model, so all communication is continuous and truthful. Exxon
should also work closer with NOAA to ensure its crisis plan runs efficiently. These solutions will allow
Exxon to maintain ethical behaviors, and be seen as a respectable company.