Santos Case Study

Topics: Natural gas, Investment, Pollution Pages: 6 (1764 words) Published: October 26, 2012
Business Report on Santos

Table of contents
Executive summary1
1 Introduction2
2 Evaluation of ethical performance3
2.1 Environmental issues3
3 Evaluation of financial performance5
3.1 Profitability5
4 Recommendation7
References 8

Executive summary
The purpose of this report is helping a client who wants to invest ethically to evaluate the Santos's performance in ethical and financial aspects. This report researches both ethical and financial activities of Santos what regards to its environmental and financial performance. There are two main aspects of the findings. In the term of ethical performance, Santos has caused water pollution due to the use of fracking procedure. Furthermore, human health may be harmed by toxic chemicals and water pollution, which are produced by the fracking process. In contrast, the financial performance of Santos is positive. The analysis of the margin profit of Santos reveals that its profitability increased consistently in recent years. Generally, this report suggests that investment in Santos is not recommended, because both the environmental pollution and health problems which are created by fracking belong to unethical activities. That means the ethical performance of Santos is not satisfactory. However, if client does not pay attention to ethical investing, Santo could be invested in. The reason for this is the increased profitability of Santos.

1 Introduction
This report aims to appraise the ethical and financial performance of Santos for the client who prefers an ethical investment. It will look at the environmental and financial behaviors. The definition of ethical investing is that some individuals decide to do a specific investment through considering ethical targets and financial standards of an entity (Schwartz 2003, p. 195). According to the official website of Santos (2012), Santos was established in 1954 and it is a leader in the mining industry in Australia. The main products of Santos are gas and oil. These products are not only offered to Australian domestic market, but also provided to international marketplace, particularly in Asia market. Also, Santos is the Australia's largest gas supplier and has largest exploration areas. Now, the total number of employees reaches 2800 approximately. The following part of this report will firstly provide an evaluation of ethical performance of Santos. Then it presents an evaluation of its financial performance. The last part presents a recommendation that is related to environmental issues and profitability specifically.

2 Evaluation of ethical performance
2.1 Environmental issues
The ethical performance of Santos with regards to the environment has some negative effects. Santos has been extracting gas by using the method called 'fracking'. Fracking, also known as hydraulic fracturing, is defined as a high-pressure process of exploiting gas which consists of digging a 2 kilometre deep hole, then mixing sand, special chemicals and abundant water, and making use of the high-pressure technology to pour the compound into the deep well (Engineer 2012, p. 7). Compared with previous mining techniques, fracking could simplify the mining process and decrease the cost of exploiting shale gas (Fracking for natural gas, the benefits and the risks 2012). However, fracking has been objected by environmental groups, such as 'Lock The Gate' (The Zeitgeist Movement 2012, para 1). Partial reasons for this are that fracking has resulted in water pollution as well as health issues. The fracking process could pollute water. Specifically speaking, water delivery could be polluted by toxic chemicals that are utilized in fracking, and drinking water also could be contaminated by extractive gases such as methane (Professional Engineering 2012, p. 5). Firstly, fracking has made water contain toxic chemicals. In...
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