Case study – Ethics After an Oil Spill

Corporate Governance, Ethics, and Responsibility. Case# 3, Ethics After an Oil Spill
Case# 3, Ethics After an Oil Spill
Ethics After an Oil Spill
In 2011, an oil pipeline owned by the energy company Enbridge sprung a leak near the town of Wrigley in the Canadian Northwest Territory. The citizens of Wrigley maintain a traditional style of life that depends on the health of local forests and waterways. Environmental protection isn’t just a question of principle for the people of Wrigley; it’s a matter of survival. Enbridge devised a detailed clean-up plan – a complex technical document 600 pages long. When the company offered $5,000 so that the community could hire its own experts to evaluate the plan, locals were offended by such a tiny payment. This was a significant blow to Enbridge’s image, coming shortly after another Enbridge pipeline ruptured in Michigan. And at the same time, Enbridge was in the midst of trying to win approval for a new project in the face of opposition from environmental groups.
The company faced a number of difficult issues in the wake of the Wrigley spill. First, Enbridge had to clean up the spilled oil. Then, they had to consider the issue of remediation – the restoration the polluted land back to something like its original state. Further, there was the question of compensation to the local community for the pollution and loss of use of some of their traditional hunting grounds. All of this was set against a backdrop of controversy surrounding the impact that oil pipelines have on the lands and communities through which they run.
1. What do you think motivated the company’s decision to offer the community $5,000 to hire its own expert? Why do you think the community was insulted? If you were the company’s local manager, what would you have done?
Objective: exploring with the students the source/origins of our values or strongly held beliefs, what encourages us to make the decisions that we make, the “whys” behind our choices.
2. What options are available to Enbridge? How would it decide? What factors are relevant to the decision? What is a rational decision? Answer while taking various points of view—Enbridge, its financial advisor, the city’s mayor, Wrigley’s citizens—and contrast likely alternative decisions.
Objective: Thinking of means for discussing decision-making:
3. What is the difference between doing something ethically required and doing something heroic or charitable? On what grounds do you reach your own opinion about Enbridge? What type of company is it, and what is its corporate character?
Objective: introduce various perspectives on ethics.
Corporate Governance, Ethics, and Responsibility. Case# 3, Ethics After an Oil Spill
4. What responsibilities does a company have to the community in which it is located? For
whose benefit ought a company be operated? Enbridge is a publicly traded corporation.
How might the factors considered in its decision-making change if it were privately
controlled?
Objective: introducing the basic debate about corporate social responsibility:
5. What facts would be helpful to you, as an outsider, in evaluating the company’s behaviour
after the spill?
Objectives: Thinking of factors influencing the company e.g. Financial, strategy, mission… etc.
6. What values are involved in this situation? How would Enbridge answer that question,
internally? How would the people of Wrigley answer that question, if asked?
Objective: Thinking of different values and social structures influencing the company.
7. Did Enbridge have obligations that went beyond cleaning up the area directly affected by
the spill from the company’s pipeline? Were they obligated to offer the $5,000? Consider
the suggestion made by a member of the community, that Enbridge should donate money
to build a swimming pool or hockey arena for local kids. Would a donation of this kind help
to satisfy the company’s obligations to the community?
Objective: allowing students to hypothesize about the reasons for the community’s dissatisfaction,
and to brainstorm about actions the company might have taken to satisfy these concerns. If they were
Enbridge managers faced with the task of recommending such actions to the company’s board, how
would they make their case?