Health and Safety Standards in Chemical and Petroleum Industries

During the recent years the world community was shocked by numerous great disasters connected with improper operational management and the exposure of such disasters on the environment and people’s lives led to the logical strengthening of safety and health regulations imposed to multinational chemical and petroleum corporations. Accidents that have taken place in these sectors are potentially more harmful and their consequences can be observed in decades forcing the management of such companies to take a sharper look at their operational facilities, conditions and workplaces. With the pace of globalization some multinational companies have begun to implement their home countries’ safety and health standards to all their subsidiaries worldwide; others still apply different standards that vary from country to country and are adopted to specific rules and conditions inherent to each place where business is held. 

The main tendencies that prevail in the nowadays world is the combination of the increasing use of health and safety management systems unified and identical at all subsidiaries of multinational corporations driven by the increased social pressure and economic globalization on the one hand, and increasing integration of health and safety standards in the business planning and their adaptation to local conditions on the other hand. However, the core question remains the extent of which the home country’s health and safety standards should be adapted to the rules and regulations of the host country and the associated differences in language, perception, cultural difficulties, regulatory policies, acceptable levels of risk relationships and the necessity to take these facets into consideration.

Identical Health and Safety Standards

The unified principles and standards of safety and health in all operations introduced by multinationals in chemical sector and potentially in petroleum one carry a lot of benefits, that are among others the reduced risk of accidents and harmful exposures especially in developing countries, reliance on proved and tested norms that in the long-run mitigate operational risk dramatically, minimized risk to human lives and environment. The usage of identical standards increases the quality of each plant’s operations in several times, avoiding the trap of double standards and contributing to the good reputation of the ethical business conduct. 

Additionally, safety and health standards that are approved in developed countries and implemented in developing ones are supported by strong company’s hierarchy, where the question who bears the responsibility of safety issues is clear and the unified plan of emergency reporting and response drastically reduces lead-time of decision making and delivering information to those who can deal with it in the case of emergency that can eventually prevent the negative consequences. Top-down implication of safety and health rules from headquarters to all local operations limits the risk of applying lax safety standards of host countries and reduces excessive risk of violating home country standards locally and provides adequate protection from the industrial hazards in either petroleum or chemical industry. 

In contrast to numerous benefits the unified safety and health standards can themselves be a subject of risk. The primary risk is associated with the ignorance or violation of the identical rules at places based on the local management decision and their assurance of these rules uselessness rested on the belief that complex home standards can be simplified if afforded by the law. The other risk arises from the poor local infrastructure where some of the standards can’t be applied and supported. But merely the central question is the risk of misunderstanding of these concepts limited by the host country’s people ability to perceive the information and psychological differences.

These features are needed to be considered wisely before single system of standards in health and safety in chemical/petroleum multinationals is used, as the questions of culture, politics and safety laws, even lax and poor, can affect the initiative of identical standards implication. The example is the Union Carbide manuals written in English for its Indian subsidiary, or the necessity to provide additional training for local employees for them to understand the norms correctly otherwise the operational risk of dealing with more sophisticated equipment is not reduced but enhanced. 

From the economic perspective, the implication of identical standards can significantly reduce transaction and installation costs if the system is well-designed and was previously introduced by the company in other subsidiaries but only under the conditions that the subsidiary in question enjoys the same infrastructure to support and maintain new technical safety which is highly doubtful in developing countries otherwise necessary supplementary equipment or plant modifications will increase the capital costs that is negative for companies which transfer their operations to countries with lower economic development to gain the cost advantage.

Adaptation of Health and Safety Standards

Adapted to the conditions, rules and regulations standards conceal far greater operational risk as the costs of people or process losses and the physical damage to assets as the result of the lowered safety exceed the costs of additional expenses in the case of unified standards. Obviously, lower standards of workers and environmental protection provide only short-term savings, higher sickness rates, increased employee turnover, risk of defects and higher overall operational risk due to the abdicated norms, such as storage time, workers training and inadequate personnel safety gear. A great diversity of risks is faced by the management of a petroleum company that is running its operations based on the poor safety conditions dealing with ultra-hazardous and toxic materials, pollutants, fuel and other dangerous chemicals: risk of system failure, risk of accidents and higher rate of capital at risk. Simultaneously, such a company with lax safety issues if affected by the accident will suffer more from lawsuits and compensations, blamed for discrimination that can negatively influence the overall reputation. 

However, sometimes it’s difficult to conduct business in a particular country with your own standards for safety and protection because of the natural limitations. So when adapting these standards to each operational environment a company receives advantages of a more responsive system designed to operate in local circumstances and adapted to cultural and political differences, cost savings due to reduced environmental taxes and minimal requirements for occupational safety, local management responsibility for operational safety that requires the headquarters to provide only general corporate strategy and less people in subordination chain.

Chemical and petroleum companies in this case reduce the installation and operational costs but in the long run carry higher risk of incidents, environmental pollution, fines (if provided by legislation) and a higher rate of conducted repairs and equipment testing. 

Summarizing, after looking at the tragic experience of chemical companies that have ignored high safety and health standards of their home nations and were operating under lax and minimized requirements, suffered losses and the need of business termination as a result of accidents during the last decades petroleum multinational companies are, firstly, aware of the probable consequences of each approach, and, secondly, bear the moral responsibility to the society and environment. Evidently, higher safety and health standards will reduce operational risk and in the long run contribute to the profitability – the main aim of any organization.

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