CSR Goes Up in Smoke

Lord Browne, the pioneer of corporate social responsibility, is leaving his
job as chief executive of BP 18 months early after the publication of a
report into the fatal Texas City fire that leaves question marks over his,
and other companies’, real commitment to ethics. By David Benady

It was not meant to end this way. BP chief executive Lord Browne’s humiliating departure from his job 18 months early is a sad twilight to a career that has helped transform the way businesses define themselves.

The oil boss who astonished the world by accepting the claims of campaigners that oil companies contribute to global warming is bowing out after 12 years at the helm of BP, his reputation in tatters.

He single-handedly put the issue of social responsibility at the heart of corporate concerns but is himself accused of running a company that has failed to live up to its responsibilities.

His decision to quit early, announced last week, came with the publication of the inquiry into the fire at BP’s Texas City refinery in 2005. It killed 15 workers and injured 150 more and indicated a serious lapse in health and safety standards at the company. The devastating report into the disaster by former US secretary of state James Baker identifies significant management failures.

Just a Smokescreen? To some, the whole episode calls into question Browne’s leadership and the very idea that an oil company – or any other corporation – can claim to be socially responsible.

The Texas City fire came after a string of other, non-fatal, accidents at BP’s refinery at Grangemouth in Scotland. It was followed in 2006 by a pollution scandal in Alaska when BP had to suspend oil production at America’s largest oil field after leaks were discovered from ageing pipes.

These events suggest to critics that Browne’s conversion to environmental responsibility a decade ago was little more than public relations puff; the Beyond Petroleum advertising campaign proclaiming the company’s commitment to finding sustainable sources of energy is seen as misleading; and in reality, BP is just another careless polluter interested only in maximising profits but with a nice line in seductive patter, they argue.

To some of Browne’s supporters, the damning report reeks of a politically motivated attempt by large US oil companies, known as “Big Oil” (where Texan Republican Baker is an influential player), to smear the man who called the future of the oil industry into question.

In short, Browne is getting it in the neck from both left and right. He put his head above the parapet to proclaim corporate social responsibility and came under fire from climate change deniers and environmentalists alike.

Browne’s extraordinary May 1997 speech at Stanford University, California – his old alma mater – admitting the oil industry’s responsibility for global warming was a decisive break with the industry line.

Following Shell’s conversion to the cause a few months earlier he vowed to make BP a socially responsible company that would find sustainable alternatives to petroleum and develop cleaner fuels. He pledged to increase BP’s sales of solar energy equipment to $1bn (£510m) from $100m (£50.6m) and the company says it is on target to reach this goal.

Turning Black Gold Green
The ensuing brand relaunch created by WPP Group agencies included the Helios logo and a $200m (£100m) ad campaign. It portrayed the company as a tireless environmental campaigner, constantly seeking out new forms of sustainable energy, and its approach has been widely imitated by other corporate giants.

But the Stanford speech – written by former ad executive and Labour pollster Philip Gould – outraged US oil executives. Who was this pinko, limey upstart upsetting the apple cart? Big Oil certainly got its own back last week. The Baker report identifies the failure of BP’s management to address safety processes as a contributory factor in the Texas City fire. Browne humbly accepted the criticism, saying last week/ “BP gets it and I get it too. This has happened on my watch. I recognise the need for improvement.”

The report ridicules Browne’s dedication to environmental causes. It says: “Browne’s passion and commitment for [addressing] climate change is particularly apparent. In hindsight, the panel believes that if Browne had demonstrated comparable leadership on and commitment to process safety, that leadership and commitment would likely have resulted in a higher level of process safety performance in BP’s US refineries.”

Friends of the Earth (FoE) campaigner Craig Bennett agrees with the sentiment, adding: “Health and safety and environmental issues are wrapped up together. He should have put more attention into the ageing infrastructure and bringing the refinery up to modern standards instead of worrying about the PR machine.”

Bennett says FoE initially applauded Browne’s conversion to the environmental cause. “He showed himself as a genuine leader and created a lot of distance with US companies,” says Bennett, adding that Exxon, which has long shied away from accepting a human contribution to climate change, was “shown up” by Browne.

But he believes the Beyond Petroleum campaign to have a strong element of spin. He calculates that some 75% of BP’s advertising budget goes into making claims about finding sources of sustainable energy. Meanwhile, only 5% of capital expenditure is spent on this quest, while 75% goes on traditional oil exploration.

A BP spokesman says the company’s capital expenditure this year is $16.5bn (£8.3bn). It will invest $8bn (£4bn) over ten years in BP Alternative Energy. “This is in itself a challenge given the small scale of the commercially viable alternatives industry globally,” he says.

He adds that corporate responsibility is part of the way BP does business, not a bolt-on. And he says: “Lord Browne’s impact has been transformational, growing the company three-fold to make it a true top two or three company from a long way behind at the top of the second division.”

The History Men
All of this will be taken into account when Browne’s legacy is assessed. He is a close associate of Prime Minister Tony Blair (hence jibes about BP standing for Blair Petroleum or British Prime Minister), and both men will be considering how history judges their periods of office.

“I think that ultimately, Browne will be remembered for the positive things,” says Mallen Baker, development director of Business in the Community. But he accepts that the Texas City fire and Alaskan oil spill have cast a dark shadow over his legacy.

A BP insider thinks that for Browne, corporate responsibility is a gut issue as it concerns the long-term future – and the standing – of the company that is effectively his kith and kin. “You can’t over-estimate how deep an effect the Baker report will have on him emotionally,” he says.

The single 59-year-old comes from a BP family – his father worked for the business and the young John grew up with the company. “He absolutely loves BP, it is his life,” adds the insider. “He wants to hand it on to the next generation in a better state. His argument is that they will thank him in the long term for what he has done in putting sustainability at the heart of the business. The alternative is ending up in that part of the moral spectrum occupied by tobacco companies – not a place many people would want to be.”

Browne denies his early departure in July is related to the Baker report and says that the company is remedying the problems identified.

But it is a graceless exit for a man who has British Petroleum coursing through his veins. It is also a setback for those promoting corporate social responsibility.

That one of CSR’s foremost exponents should leave under a cloud hardly helps business combat accusations that corporate responsibility is all about “greenwash” and spin.

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