Ethical Decision Making Kimberly Gas Hub Essay

Ethical Decision Making Kimberly Gas Hub

ETHICAL DECISION MAKING IN KIMBERLEY GAS HUB

The Kimberley Gas Hub is a controversial project to set up an LNG refinery facility at James Price Point near the Kimberley coast of Western Australia. The company Woodside is interested in setting up the project and it claims that it will boost the mining industry in the region and will bring economic development for the local people. Critics doubt these claims and state that the project would not have a big impact on economic development but it will have severe negative environmental consequences (Weber August, 09 2012). The controversy has increased since the project has been given a conditional go-ahead by Western Australia's Environmental Protection Agency (Lawson July, 16 2012). The ethical implications for any decision on this issue can be analyzed by using three different ethical approaches: utilitarianism, moral rights approach and justice approach.

Utilitarian Approach to Ethical Decision Making

The utilitarian approach to ethical decision making is based on arriving at the optimum level of satisfaction for all stakeholders (Mandal 2010)

. It involves identifying all the stakeholders in the situation, defining their interests, and analyzing the positive and negative consequences for them in the case of each decision alternative in terms of utility and disutility. The decision should then be taken on the basis of the maximum utility for all instead of a particular group. Utilitarianism assumes that some people will benefit from a decision while others will suffer. However, the most ethical decision is that which ensures maximum satisfaction for the maximum number of people. The concept of utility or satisfaction is traditionally understood in economic terms, but recent work on the subject has allowed the inclusion of social and moral aspects of satisfaction in the interpretation of utility (Hinman 2012)

In the Kimberley Gas Hub project, the stakeholders include the mining companies, the Woodside developing company, the residents of the region, the environmental groups and the natural environment, the tourism industry, and the government. These stakeholders have particular interests as follows: the mining industry in the region needs energy resources for developing new fields and extracting valuable minerals; the Woodside company needs to derive economic profits from a large, successful project; the gas companies also need the growth in revenues; the local residents need economic development in the form of jobs, infrastructure, education and health, but they also want a healthy and clean environment; the environmental groups want the coasts, sea, air and forests to be reserved; and the tourism industry wants to grow in the region. These interests may be impacted by the project in several ways. The mining companies will grow rapidly if they have gas to power their operations, which will drive up jobs and incomes in the community, but if the project is not approved the industry will be unable to develop. The Woodside Company will experience growth if the project is approved but will be unable to do so if it is rejected. Residents may or may not benefit from increased employment opportunities and a better standard of living. The tourism industry may suffer as fewer tourists come in because of the destruction of the natural environment. Marine and forest wildlife may suffer from loss of habitat and environmental pollution as land is cleared. Finally, the government may face praise or criticism depending on the utility of their decision which would affect their position in the next elections.

These consequences need to assessed and weighed against one another. Accordingly, the decision alternative that provides the maximum positive consequences to the maximum number of stakeholders should be adopted.

Moral Rights Approach to Ethical Decision Making

The rights approach to decision making is based upon the ethical principles developed by the German philosopher Immanuel Kant and is therefore known as Kantianism. Earlier rights theories are based on the perception of certain universal moral rules that should be followed irrespective of their consequences (Hitt et al. 2006)

. Kant's categorical imperative that an action should be performed if the doer can also will for that action to become a universal law is an important principle in the moral rights approach. A second principle is that people should not be used as a means to an end but as an end in themselves. Hence, people should not be exploited or manipulated but should be appealed to on the basis of rationality. Modern rights theories emphasize rights rather than duties. Individuals have negative rights that give them certain freedoms that others have a duty not to interfere with, such as the right to privacy and the right to freedom of speech.Individuals also have positive rights that others need to discharge towards them, such as the right to receive a pension after retirement or the right to information (Weiss 2008)

. When these rights conflict, the stronger right prevails over the weaker one. The strength of each right may be a matter of debate.

For instance, the residents have positive rights against the government that entitle them to opportunities for economic development tin their communities in the form of increased jobs, education and health opportunities. They also have negative rights against mining companies and gas refineries that would forbid them from engaging in activities that pollute the local environment and natural resources. On the other hand, the mining and refinery companies have negative rights to pursue their economic profits without undue interference from the government and social groups. The local tourism industry also has negative rights that entitle it to pursue its own growth objectives and to seek protection of the local environment against destruction by other industries. The environmental groups and associations such as Australia International have negative rights of free speech. Therefore, they are entitled to voice their concerns and suspicions of the claims made by the project developers and major beneficiaries.

Under the moral right approach, the ethical decision would be one that is based on assessing the strength of each of these competing rights and weighing them against one another. As the weaker of the competing rights are overridden by the stronger ones, the ethical decision is likely to emerge from the stronger rights.

Justice Approach to Ethical Decision Making

According to the justice approach to ethical decision making, the rewards or consequences of an outcome must be distributed among the stakeholders fairly and equally. The justice approach is based on the principle that the interests of the weak must be protected to achieve fairness (Sims 2002)

. Aristotelian principle that "equals must be treated equally and unequals unequally." The justice approach prohibits favoritism because it rewards some people more than others without any justifiable cause. At the same time, the justice approach also prohibits discrimination because such an attitude tends to punish some people more than others. The justice approach may also be understood in terms of distributive justice and procedural justice. Distributive justice means that the rewards and consequences should be shared among all equally. Procedural justice requires that the rewards and consequences should be determined in ways that are impartial, fair and objective (Daft 2008)

Analyzing the case of the Kimberley Gas Hub project under the justice approach requires that the position of each of the stakeholders should be evaluated for determining equals and unequals. For instance, the developing company Woodside is a large corporation with vast economic and media resources. On the other hand, the local residents form a weak community with little organized ways of fighting for their rights. They are also heavily dependent on the local environment than the companies. Hence, the two should not be treated equally when negotiations are conducted to resolve the situation. In any decision that is reached, the companies should be required to bear a greater portion of the costs than the local community because of the greater resources available to them. Similarly, the government may require the mining and developing companies to contribute more towards the conservation and preservation of the natural environment than they may be willing to pay since the local community would be unable to bear the economic burden.

Selection of Ethical Decision Making Approach for Kimberley Gas Hub

Although all three approaches to ethical decision making are relevant, as a manager my choice of the ethical approach would be the justice approach. Compared to the moral rights and utilitarian approaches, it is more pragmatic and practicable and is based on modern ideas of fairness and justice. The utilitarian approach may create problems in the interpretation of utility and disutility for the different stakeholders on one hand, and may only rely on cold analysis of economic outcomes on the other. Similarly, the moral rights approach is also likely to cause problems in the determination of the strength of competing rights among the stakeholders.

The justice approach would be based on the determination of the interests of all the stakeholders and the administration of costs and benefits equally among them. It would ensure that a fair and justifiable outcome is reached at through….....