Brent Spar Case Analysis

This essay assesses the Statement “the actions undertaken by a corporation in pursuit of shareholder wealth are justified, as long as the actions are not illegal”. Most commentators in the world have agreed that one of the corporation’s primary objectives is to maximise shareholder wealth, regardless of a narrower approach of sole responsibility to shareholder interests or a wider approach of responsibility extending to stakeholders. In evaluating the validity of this Statement and developing an argument, I examine how various journal articles presented their views regarding the issue of whether corporations should be responsible for matters beyond acting within the law.

Carroll (1999) developed his four-part Corporate Responsibility

Although Shell had the support of the UK government regarding its deepwater disposal option through the issuance of the disposal licence, Shell ultimately decided not to sink the Brent Spar due to “its decline in sales along with the public pressures of its European consumers” (Zyglidopoulos 2002). This demonstrates that merely complying with the legal obligations is not enough to justify corporate actions which ignore the public concerns and damage the environment. As Mr Zyglidopoulos illustrated, corporations should comply with legal obligations as well as be responsible for its social and environmental

This specifies that despite the ambiguity of ethics, the law itself may not be the best justification for corporate actions as it creates public misconceptions about goodness. Mr Gellerman also proposed that “the most effective deterrent is not to increase the severity of punishment for those caught but to heighten the perceived probability of being caught in the first place” (Gellerman 1986). The gist of this is to highlight the fact that prevention is better than punishment. This implies that ethics is a better indicator of prevention than the law because ethics is flexible in the sense that it allows the public to impose new ethical values on corporations and to scrutinise corporate actions in order to prevent harm to the stakeholders, unlike the law which is hard to be altered and cannot effectively prevent all unethical corporate actions from taking place. Accordingly, corporate actions must be justified by ethical values instead of legal definitions so as to prohibit all unethical behaviours from impairing environmental and social