The court found that not only was BP not just negligent but grossly negligent. The judge apportioned 67% of the blame for the disaster to BP. The bigger bar of ‘gross negligence’ will have a much higher financial impact on BP as the cost of the penalty under the Clean Water Act will rise from $1,100 a barrel to $4,300 a barrel for gross negligence of wilful misconduct.
The price of being found ‘reckless‘ could mean that BP faces up to £11billion in further fines. They firm has already paid out $43 bn as a result of tahe accident under previous law suits.
The company has also seen a drop in its share price.
We realize that not all companies are in such a high risk sector, but there are some basic principles that all companies can learn from the BP oil spill disaster. They are:
- Ensure that proper health and safety systems are in place. This means not only having a health and safety policy, but ensuring that it is implemented and monitored. It also means that any sub-contractors standards should be rigorously assessed in sectors where health and safety accidents could expose a company.
- Understand the limitations of environmental insurance. Although insurance can be obtained for a number of issues, it is not always available for environmental incidents. Directors will also not be covered for negligence or criminal fines.
- Ensure that robust environmental management systems are in place. This also covers understanding what laws apply to a company ensuring compliance and developing systems to demonstrate compliance.
- Note that penalties under environmental laws are increasing.
- Transparency – reporting on environmental issues is growing. The failure of BP to properly report on its environmental risk in its sustainability report has had a legal and financial impact.
- Ensure that there are contingency funds for when things go wrong.
- Meet stringent health and safety and environmental standards even where local laws do not meet the same level.
- Understand that reputation, legal and operational risks are interlinked.