Pacific Gas and Electric Corporation Wildfire: Ethicaal Issues and Stakeholders

Business Ethics

Introduction

What is ethics? Ethics is differentiating between right and malicious in the world, between good and bad human actions, and between honest and dishonest characteristics of individuals. Ethics is the examination of basic concepts and essential principles of decent human behavior.  It consist of the study of universal values such as the crucial equality of all males and women, human or natural rights, compliance to the law of land, regard for health and safety, and, progressively, also for the natural atmosphere (UMGC, n.d., para. 3). Therefore, an ethical person who is in a position of leadership should possess the following characteristics: treat everyone equally and with respect, remain truthful and loyal, be kindhearted, concentrate on teamwork, leads by example, and values awareness.

A few years prior, a company called Pacific Gas and Electric Corporation (PG&E) located in California, was accused of a wildfire that took the lives of approximately 85 people and damaged several thousands of acres of land in a small town, Paradise. The company is currently facing several lawsuits from both the town of Paradise and its community members. This assignment will identify the ethical issues that are directly associated with the company and the stakeholders that were involved in the ordeal. Additionally, examples will be provided to explain how both Kantian and Utilitarian would view the actions of the gas and electric company. Lastly, this document will briefly explain the reasons PG&E had a moral responsibility to be fully transparent with its customers, regardless of the impact it would have on the organization.

Ethical Issue(s)

Ethical issues can typically be defined in one word, such as honesty, untruthfulness, trust, etc, or in short sentences, such as lack of full admission, lack of regard for others' well-being, respect for the needs of others (UMGC, n.d., para. 29). In this case scenario, there are several ethical issues that are related to Pacific Gas and Electric Corporation (PG&E), to include: replacement of aged steel towers, failed to implement a plan that could help avoid the camp fire, focused more on profits and compensation, and filing for bankruptcy protection. The organizations action of not prioritizing the safety of the community suggest the underlying ethical issues of lack of respect for the town of Paradise and lack of integrity. According to evidence that were acquired after an investigation, it was revealed that prior to the camp fire that killed 85 people; the leaders of PG&E’s were aware that 49 of the company’s steel towers needed to be replaced with new ones. However, the organization decided that there were no immediate urgency to replace the 49 steel towers along with another 2,451 steel towers that were installed over 100 years prior to the incident in question. It should be noted that the life expectancy of each steel tower is approximately 65 years. The company’s underlying ethical issues

Similarly to other utility companies, PG&E had the option of shutting down their power lines during windy and severe weather conditions, however, organizational profits and compensation was more important to the company. As a result, the community suffered from the loss of human lives due to the company’s poor maintenance, aged steel towers, and lack of concern for public safety. PG&E ignored signs of structural failures and ground fires, which resulted in a deadly campfire. Lastly, the company caused further damage and heartache to the family members of the deceased victims and the city of Paradise, California by filing for bankruptcy protection. Filing for bankruptcy protects the organization from having to pay the $30 billion in liability costs to the victims of Paradise. However, the utility company was able to reach an agreement to help restore the town of Paradise.

Stakeholders Implications

The primary and secondary stakeholders that are involved in the Pacific Gas and Electric Corporation ordeal are as follows: employees, financiers, community and customer, and government. Below is detailed explanation of the potential implications on the company’s actions on each of the stakeholders.

Employees: The employees of PG&E benefited from the company’s decision to not replace the old steel towers by receiving better compensation. However, it should be noted that the employees were working on a daily basis in an unsafe and hazardous work environment. It is required by law for employers to provide a safe workplace for each and every employee.

Financiers: The financiers of the Pacific Gas and Electric Corporation experienced a great loss due to the company’s ordeal. Furthermore, the financiers will not be able to move forward with any legal proceedings in terms of financial affairs due to bankruptcy protection that was filed by the company. As a result, the financiers who are involved with the organization will not be able to obtain any funds until further notice. The electricity and natural gas is facing a total of $30 billion in liability costs.

Community and Customer: PG&E chose to conduct business while knowing that poor maintenance exposed the entire community to danger. The company refused to replace old steel towers simply because increasing company profits was more important than the safety of the community and customers. As a result, the town of Paradise, California suffered from a deadly fire that took the lives of several members of the community and damaged over one thousand acres land. Furthermore, PG&E left approximately 16 million customers without electricity and natural gas.

Government: In November of 2018, the government got involved and became a victim of the Pacific Gas and Electric Corporation dilemma when several thousands of acres were destroyed in the town of Paradise, California. The United States Federal Regulatory Agency, Environmental Protection Agency (EPA), also got involved in this ordeal. The regulatory agency conducted an investigation which revealed that PG&E were well aware that 49 of their steel towers needed to be replaced with new ones.

Kantian Viewpoint

Immanuel Kant believed that there is one moral obligation, a concept called categorical imperative. Kant claims that categorical imperative is the ultimate principle of morality and all other guidelines and principles can be presumed from it (Westacott, 2019, para. 17). In other words, Kant strongly believes that one must treat others the way they would want others to treat them. For instance, if the roles were reversed; would the leaders of PG&E be satisfied or content with the devastation that took place in Paradise, California? If the answer is no, Kant would say that PG&E’s actions were morally wrong. The significance to Kant’s philosophy concerning what makes people moral beings is the fact that people are free and logical beings. To treat a person as a means to one’s own ends or contentment is to not respect this fact about them (Westacott, 2019, para. 21). PG&E violated the public’s trust in an effort to increase the organizations profits. Kant would view the company’s action as manipulating and deceiving the community simply because they were interested in satisfying their own needs.

Utilitarianism Viewpoint

Utilitarianism is an ethical theory that concentrates on the outcomes, or consequences, of people’s actions, and handle intentions as insignificant (CrashCourse, 2016, 1:46). In other words, a person’s conduct or action is considered acceptable if the end results makes others happy, regardless if their actions were appropriate. In the case of PG&E, the company could argue that they were acting in good faith. The electric and gas company delayed upgrading the old steel towers on several different occasions in an effort to upgrade sub-stations, increase company profits, and provide better employee compensation. Therefore, one could argue that PG&E was operating and exposing the community to hazardous conditions simply to satisfy its clients and employees. For that reason, a utilitarian would view the actions of PG&E to be acceptable despite of the potential safety hazards. However, a utilitarian would not view the actions of the company as acceptable after the disaster that took place in November 2018 that took the lives of 85 people.

Moral Responsibility

Ethical issues can be deceitful, manipulative, and selfish; likewise, it can be honest, respectful, and respect for others' safety (UMGC, n.d., para. 30). Every organization around the world including Pacific Gas and Electric has a moral responsibility and duty to be honest with their customers regardless of the potential outcome. There are several reasons why PG&E may have decided to not be completely honest with their customers, such as promoting their brand, covering up their failures, assuming that the company could get away with the incident, and believing that they were acting in the customer’s best interest. Unfortunately, dishonesty does not last a very long time; for that reason, it is in a company’s best interest to be honest with their customers. Additionally, PG&E must understand that there are several advantages to being honest with customers. Being honest and transparent with customers enable companies to build trust and commitment, maintain positive reputation, and help generate long-term client relationship.

Conclusion

In conclusion, the gas and electric company utilized a utilitarian approach in an effort to continue providing exceptional service to their clients by opening several sub-stations. Unfortunately, the company’s decision to not replace and upgrade the old steel towers led to the devastation in Paradise, California that ended the lives of several individuals. The company has a moral responsibility to provide quality service to its clients and provide a safe working environment to its employees to include the environment. The environment collectively, the entire ecosystem including all wildlife and plant life around the globe; together with the air, H2O, and soil supporting existence have to be preserved (The Business Ethics Workshop, 2016, Ch. 14, p. 645)

References

• CrashCourse. (2016, November 21). Utilitarianism: Crash Course Philosophy #36 [Video file]. Retrieved from https://www.youtube.com/watch?v=-a739VjqdSI
• The Business Ethics Workshop. (2016). Chapter 14 The Green Office: Economics and the Environment, Washington, D.C.: The Saylor Foundation
• UMGC. (n.d.). Defining an “Ethical Dilemma;” distinguishing facts from ethical issues; legal issues from ethical issues. Retrieved January 15, 2020, from https://learn.umuc.edu/content/enforced/443149-001154-01-2202-OL1-6380/Ethical%20Issues%20Dilemmas%20Legal%20Issues1.pdf?_&d2lSessionVal=Gv53Q08tzb7TJdJy5bIjKYXUC
• UMGC. (n.d.). Week 1: Introduction to Business Ethics and Why Ethics Matters, Understanding Corporate Governance & Culture. Retrieved January 22, 2020, from https://learn.umuc.edu/d2l/le/content/443149/Home
• Westacott, E. (2019, August 31). Moral philosophy according to Immanuel Kant. Retrieved January 18, 2020, from https://www.thoughtco.com/kantian-ethics-moral-philosophy-immanuel-kant-4045398