Hacker News Reader

Comment by bagacrap | Hacker News Reader

What does it even mean for a company to have consequences?

You could dissolve the corporation. The assets are sold off to competitors, including their claims to oil fields. The employees find new jobs. The shareholders (your retirement plan) might get screwed? But basically the same economic activities eventually continue under a different flag. I struggle to see what this actually accomplishes.

View on HN

You said it. The shareholders get screwed, as they should.

Financial risks should go with the benefits.

If damages and cause a bankruptcy, that also means the damaged party is getting paid.

But most shareholders are just owners of some index fund. Do they deserve to get screwed? And do they effectively get screwed? And does them getting screwed or not screwed somehow change the likelihood of this happening again?

Yes to all, absolutely. that's the risk they take investing in a company. They control it. That is the incentive for oversight of said company.

The company should be paying until the damage is made whole. The root cause of why it happened should be prevented industry wide, mechanically. If that's lax safety culture or profit motivations, remove them. Hold the executive team to account -- any board member or executive at the time of the incident should be indebted until the damage is repaired.

The assets and people will go elsewhere? Saddle them with the debt.

I think that there are some requirements to have these companies pay for insurance against ecological disasters. I think this has to be part of the solution. It looks like it exists in some form but 2011 was prior to ol’ small hands’ graft - https://www.ecfr.gov/current/title-30/chapter-V/subchapter-B... .

Kind of creates a moral hazard then? Meaning the company will not try as hard to avoid accidents. And the companies that do actually try are punished by being compelled to pay this insurance.

I think insurance solves this problem but the details would be important. If you speed a lot and drive drunk, your premium will and should increase to cover the increased risk you pose to others. A catastrophe shouldn’t be the first time a drilling operation’s premium is assessed. There would be audits by experts in the industry and noncompliance should increase premium along with risk. I’m skeptical as hell about the behavior of other humans, but in theory it could help.

The assets are sold off to pay debt. If the assets somehow have debt attached, that just reduces the upfront value that some entity pays for them.

> any board member or executive at the time of the incident should be indebted until the damage is repaired.

I do think personal culpability should play a role. Don't see how it's possible to remove profit motivations though. If people who didn't care about profit were capable of running an energy company, or any large company, how come we've never seen it happen?

Large government fines that represent a significant portion of that company's revenue would be a good place to start. The fine would need to be big enough to hit the share price hard as that seems to be the only thing that CEOs/boards notice. This should also cause investors to be more careful about which companies they invest in and avoid companies with lax standards and push companies towards better outcomes.

Show the board, major shareholders, and C-suite that accountability matters. If it’s a critical risk to key shareholders they are more likely to take it seriously. If not, good luck. Pretty simple, just add some skin in the game. Better yet, add in some criminal liability.

Reply on news.ycombinator.com