December 8,
2002
Last March,
Lord John Browne, the group
chief executive of the British
oil giant BP, gave a speech at
Stanford University. Had you
stumbled into the auditorium
partway through, you might be
forgiven for assuming the man
at the podium was not an oil
baron, an industrialist, an
extractor of fossil fuels from
the tender earth but an
environmentalist of the high
church calling for the
abolition of hydrocarbons, the
very substance that had made
his company and himself so
fabulously rich. His subject
was global climate change --
in particular, the process by
which humans, by burning oil
and gas, have been slowly,
perhaps irreversibly, warming
the earth's atmosphere. And
instead of hewing to the line
of industry, instead of
calling (as President Bush and
the head of Around the
time Browne was at Stanford,
sounding strikingly unlike an
oil executive, BP was trying
its own kind of identity
shift, sounding strikingly
unlike an oil company. Two
years earlier, at a cost of
$200 million, it began an
enormous corporate rebranding
exercise, shortening its name
from British Petroleum to BP,
coining the slogan ''Beyond
Petroleum'' and redesigning
its corporate insignia. Out
went the old British Petroleum
shield that had been a
familiar image in Britain for
more than 70 years, and in
came a green, yellow and white
sunburst that seemed to
suggest a warm and fuzzy
feeling about the earth. BP
press officers were careful
not to explain exactly what
''Beyond Petroleum'' meant,
but the slogan, coupled with
the cheerful sunburst, sent
the message that the company
was looking past oil and gas
toward a benign, eco-friendly
future of solar and renewable
energy. New Yorkers in
particular were the target of
a high-saturation ad campaign
that felt, at times, like an
overfriendly stranger putting
his arm around you in a bar.
In Times Square, a huge
billboard went up, reading IF
ONLY WE COULD HARNESS THE
ENERGY OF NEW YORK CITY. Then
the stranger, perhaps feeling
the need to explain his
intentions, went on: SOLAR,
NATURAL GAS, WIND, HYDROGEN.
AND OH YES, OIL. Finally, the
stranger took his arm away
with a bit of a shrug: IT'S A
START. BP's print
and TV ad campaign, which is
winding down this month,
represents one of the most
dazzlingly high-profile
corporate P.R. efforts in
recent years. Created by
Ogilvy & Mather Worldwide,
it aspires to a
conversational, almost
confidential voice that
suggests, You know what
oil companies do to the
environment, and we do, too,
but honestly, we're not like
that at all. ''People are
skeptical of oil companies --
go figure!'' says Jennifer
Ruys, director of external
affairs for BP. ''And the ad
campaign was designed to get
at that skepticism.'' As the
billboards announce: BP was
''the first oil company to
publicly recognize the risks
of global climate change.'' BP
''believes in alternative
energy. Like solar and
cappuccino.'' BP has joined
forces with New York's Urban
Park Rangers to, of all
things, release four bald
eagles into the wilds of Upper
Manhattan. At the end of each
ad was the same winking tag
line: ''It's a start.'' Based in
London, BP is the world's
second-largest oil company
(after Exxon Mobil), with
gross revenues of $174 billion
and 15,500 service stations in
the United States. It operates
in more than 100 countries and
produces almost 3.5 billion
barrels of oil and gas a year.
Largely, this has been the
handiwork of Lord Browne, who
became group chief executive
in 1995 (and was knighted 3
years later) and followed his
own ascension by quickly
expanding the once midsize
company into a huge
multinational. In 1999, BP
merged with Amoco in a deal
worth $140 billion; a year
later, it bought Atlantic
Richfield for $27 billion.
These megadeals have more than
paid for themselves. At press
time, BP shares were trading
at $38, which is an 80 percent
increase since Browne's rise
to power seven years ago. If Browne,
54, has made a name for
himself as a high-stakes deal
maker, he has also shown that
he is alert to the dangers of
heading a colossal oil company
in a world that -- because of
climate change, murmurings of
war-for-oil and a host of
other global crises -- may
hate oil companies, no matter
how profitable they are. More
than that, he has shown the
ambition to redefine the very
nature of Big Oil: pushing BP
to confront global warming,
candidly acknowledge the
company's mistakes
(environmental penalties
against the company appear on
its Web site), enter into
dialogue with environmental
groups, hire people with
strong environmental ethics
and opinions. ''John Browne
would be the first to say,
'Even on our best day, we're
still a big dirty company,'''
says one person involved in
BP's rebranding effort. ''But
aren't there ways to do it
smarter, cleaner, in a more
surprising and
forward-thinking way?''' He
adds, ''This guy's swimming
upstream.'' BP's
multimillion-dollar campaign
is the public face of Browne's
convictions. At a time when
anxiety over dependence on
Middle Eastern oil has sent
other energy companies
scurrying for cover, BP is
rushing to center stage,
betting that, as Michael Kaye,
who worked on the campaign as
an associate creative director
at Ogilvy, puts it, ''BP can
be a friend -- listening to
consumers, speaking in a human
voice.'' BP is also betting
that this will gain them a
competitive advantage in the
marketplace, that it will
convince consumers that BP is,
in the words of Anna Catalano,
group vice president for
marketing, ''the company that
goes beyond what you expect
from an oil company -- frank,
open, honest and
unapologetic.'' BP is the only
oil company right now risking
a huge advertising presence in
this oil-wary culture. And
this may turn out to be the
richest deal of all. But to
persuade the public that BP is
no rapacious multinational,
that it is instead an
organization thinking first
and foremost of the public
good, may not come so easily
as long as BP remains an oil
company, deriving the vast
majority of its profits from
the black stuff that -- from
drilling rig to oil tanker to
refinery to gas station --
scars the earth, pollutes the
air and eventually warms the
planet. And once the company
tried to convey its new
identity in billboard form,
the contradiction only
deepened. How can an oil
company be ''Beyond
Petroleum'' without actively
distancing itself from its
core product, and how can a
company that digs big holes in
the ground possibly advertise
itself as a sensitive steward
of the environment? BP's
rebranding campaign caused
fits, not only in the
environmental movement, which
saw it as the highest form of
hypocrisy, but also within the
company itself, which embraced
and then disavowed its P.R.
message so many times that
people began to wonder if the
company was beyond petroleum
or merely beyond belief. The
Independent of London, a
vigilant BP-watcher, concluded
that the company was
''brimming with success,
gushing with money, and very
much wanting to be liked. Yet
its image is confused, and its
reputation is on the line as
never before.'' But its
biggest challenge may come
years, perhaps decades, from
now, when the world turns to
other forms of energy -- in
part because of dwindling oil
supplies but mainly because of
the mounting and unimpeachable
evidence that we have a
profound carbon problem on our
hands; that even if we
discover billions of new
barrels of oil in the ground,
we cannot keep burning them --
and pumping vast amounts of
carbon dioxide and other
so-called greenhouse gases
into the atmosphere -- without
potentially catastrophic
consequences. According to the
latest findings of the United
Nations Intergovernmental
Panel on Climate Change, in
order to stabilize greenhouse
gases in the atmosphere,
global emissions must be
reduced to at least 60 percent
below 1990 levels. That is a
radical change in the way the
world uses energy. And to
accomplish that, many people
feel, will require nothing
less than a new industrial
revolution, an overwhelming
retreat from society's mass
reliance on the carbon fuels
-- oil, gas and coal -- that
have powered the global
economy for more than a
hundred years. Browne is
uncomfortable speculating
about a future completely
without oil. ''My view is that
hydrocarbons will be the bulk
of the energy supply for the
next 30 to 50 years,'' he said
when I met him last spring.
But clearly Browne is trying
to prepare BP for the end of
the fossil-fuel game -- by
cutting the emissions of
carbon dioxide that it creates
while producing oil and gas,
by shifting to cleaner fuels
like natural gas, which emits
about half the volume of CO2
generated from coal and
ultimately by positioning
itself as a producer of
alternative and renewable
energy: hydrogen, wind, solar.
But whether
the company -- which made its
fortunes in the oil fields of
Iran and later on the North
Slope of Alaska -- can survive
the shift to a new energy
economy remains an open
question. ''That's a huge
level of wishful thinking,''
says one American scientist
who has advised BP's senior
management on climate change
and renewable energy. ''Of
course they say they see
themselves that way, and of
course they're going to try.
But whether they will have any
chance of successfully
outcompeting newcomers in
renewable energy is a very big
question. Because
historically, once those
transformations have happened,
the existing companies have
not held the edge. These
companies, some of which have
existed for a hundred years,
are essentially about
extracting petroleum. And in a
world where you don't extract
petroleum anymore, the first
order of expectation is that
you're dead.''
Browne had
overseen the company's Alaska
division for many years, and
when he became group chief
executive in 1995, he revealed
himself to be one oil man who
did not believe that the oil
business could -- or should --
go on as it had before.
Soft-spoken and slightly
built, with a manner more
befitting a university lecture
hall than an offshore oil rig,
Browne consulted with dozens
of scientists and took what he
describes as a ''deep dive''
into the confusing, sometimes
contradictory science of
global warming. Back then, BP
(along with Exxon Mobil, In the
continuing, ever-changing
study of global warming, five
years is an ice age, so it is
hard to remember exactly how
revolutionary this was, coming
from the C.E.O. of a major oil
company in 1997. But at the
time, the American Petroleum
Institute, of which BP had
been a longstanding member,
announced that Browne had, as
he recalls, ''left the
church.'' ''BP was the
first to say that climate
change was a problem, the
first to take responsibility
and the first to have an
internal target'' for reducing
their emissions, says Eileen
Claussen, the president of the
Pew Center on Global Climate
Change. ''They were pretty
brave.'' In some
respects, it was an act of
corporate bravery for BP and,
later, Royal Dutch/Shell and a
handful of other companies, to
buck their own industry.
Unlike the tobacco companies,
which for years denied that
their products were causing
harm -- or Exxon Mobil, which
ran ads trying to discredit
global-warming science -- BP
and the others have been
willing to confront the
unpleasant truth that not only
their business practices but
also their core products are
probable causes of global
warming. In 1996, BP resigned
from the Global Climate
Coalition, then offered its
support of the Kyoto Protocol
and joined Claussen's Business
Environmental Leadership
Council, a program set up by
the Pew Center to encourage
private-sector involvement. In
1998, Browne publicly
committed BP to cutting its
carbon-dioxide emissions by 10
percent below 1990 levels by
the year 2010, which was a 40
percent cut from business as
usual and a target far more
ambitious than the Kyoto
Protocol itself. But it is
not just altruism that has
convinced Browne and these
other C.E.O.'s to seize the
moral high ground. Despite the
Bush administration's stubborn
refusal to deal with the
issue, Browne says that he
thinks there will soon be
government regulation of
greenhouse gases. And
companies that have
anticipated regulation will
not only know how to use it to
their advantage; they will
also, as Browne puts it,
''gain a seat at the table, a
chance to influence future
rules.'' And so, in
order to meet its target for
reducing its greenhouse-gas
emissions, BP sought the
advice of NGO's like the Pew
Center and Environmental
Defense and set up a system in
which each of its 150 business
units, spread across more than
100 countries, would be
assigned a quota of emissions
permits and encouraged to
trade with one another. The
company gave each business
unit the choice of bringing
itself into compliance by
cutting its own emissions,
buying emissions credits from
other units or making enough
greenhouse-gas reductions to
have leftover permits that
could be sold to other
business units that violate
their emissions ceilings. The
motivation was simple enough:
business units that reduced
their emissions or cut their
fuel consumption would have
those savings count toward
their bottom line, which, in
turn, would be reflected in
pay scales and bonuses at
year's end. Many
environmentalists are
skeptical of such market-based
solutions to global warming.
For one thing, with such a
vast number of different
emissions sources and no
single method for measuring
emissions, enforcing
compliance becomes hard,
tempting companies to fudge
the numbers. Then there's the
matter of mitigation: why
should polluters be allowed to
trade emissions instead of
being forced to solve the
problem at its root? And will
trading programs merely slow
the growth rate of emissions
when society's goal should be
to engineer a fundamental
shift away from fossil fuels? But
emissions trading, which is
part of the compliance
mechanism of the Kyoto
Protocol, is supported by the
vast majority of economists,
who believe that market-based
mechanisms may be the most
cost-effective -- and
therefore most viable --
method of cutting greenhouse
gases. And though it doesn't
shift the energy basis of the
economy, it does cut down on
carbon emissions in absolute
terms. When Browne stood up at
Stanford this past spring, he
was there to report hard
numbers: BP had not just met
its target -- to reduce its
emissions of greenhouse gases
by 10 percent below 1990
levels -- it had exceeded it,
done so eight years ahead of
schedule and with no net
economic cost. In fact,
because of energy efficiency
measures, the emissions
reductions amounted to a net
gain of $600 million. ''And we
are not,'' he told me later,
''an inefficient company.'' BP's
achievement complicates
matters for Bush,
who has pronounced the Kyoto
Protocol ''fatally flawed''
because regulating
carbon-dioxide emissions
''does not make economic sense
for America.'' That line of
argument does not persuade
Browne. ''If you say to
people, 'Do you want to
develop the world and have a
good living standard, or do
you want a safer environment?'
people are terrified by the
choice,'' Browne said to me
last spring. ''That is a
failure of leadership.''
Speaking of leadership, I
asked, what did he think about
Bush's position on the issue
-- that caps on emissions
would be too costly for
American businesses? Browne
paused, then answered, careful
not to mention any names in
particular: ''Well, it's
unfair to the world to say
that none of this is possible
when it is.''
In the fall
of 2000, Browne made it clear
that if the Arctic refuge --
an iconic 19-million-acre
tract of land in northeast
Alaska that is home to polar
bears and grizzlies, wolves,
musk oxen and a 125,000-strong
herd of caribou -- was opened
up under a Republican
administration, BP would be
interested in exploring there.
After all, the United States
Geological Survey estimates
that the refuge contains
anywhere from 3 billion to 16
billion barrels of recoverable
oil. Again on Feb. 13, 2001,
three weeks after Bush took
office, Browne acknowledged
that BP openly supported
efforts to drill. BP's stated
intentions for the refuge
happened to coincide with its
''Beyond Petroleum'' campaign,
and environmentalists had a
field day pointing out the
inconsistencies. Greenpeace
announced that until BP
started seriously investing in
renewables, a more fitting
corporate logo would be, in
the words of one spokeswoman,
''a miserable polar bear on an
icecap shrinking because of
global warming.'' John Browne
himself was honored by
Greenpeace for giving the
''Best Impression of an
Environmentalist.'' And
referring to the company's
interest in the Arctic refuge,
The Independent wrote that it
was ''strange that a company
boss with prominent green
pretensions should advocate --
openly -- what many people
would see as the industrial
rape of an unspoiled
wilderness.'' The protests
over BP's position on the
Arctic refuge could not have
come at a worse time. Just a
few months earlier, the
company's new advertising
campaign was met in some
corners with howls of derision
and even demonstrations
outside its London offices.
Stung by the controversy, the
company tried to pull several
TV spots, and where that time
was locked in by contract, BP
lost ''several million
dollars,'' according to two
people involved in the ad
campaign. In cases where ads
could not be pulled, the
company removed the words
''Beyond Petroleum.'' ''It's
funny,'' says one of them, ''I
never doubted that they were
the most progressive oil
company around, but they
didn't think through what it
would require from a P.R.
point of view. By pulling the
ads, they showed weakness
rather than having the courage
of their convictions, which is
what the whole rebranding
effort was all about.'' Later, when
the time came to prepare for
the campaign's second phase,
BP once again waffled over
whether to use the phrase
''Beyond Petroleum.'' ''I was
in so many meetings when the
answer was no, yes, no, yes,''
says one member of the ad
team. And the company's
concern over how its P.R.
message was being perceived
delayed the campaign for more
than a year. Eventually,
the company once again
embraced the phrase ''Beyond
Petroleum.'' But according to
one member of the ad team, BP,
fearful of exaggerating its
claims and opening itself to
further criticism, worried the
ad copy to death. ''All the
definitive points they were
making in the ads got slightly
watered down,'' the ad-team
member says. Finally, the
company decided to use the tag
line ''It's a start'' -- which
can sound frank and refreshing
or, depending on your point of
view, hedging and defensive. Meanwhile,
the issue of whether or not to
drill in the Arctic refuge, at
a time when BP's Alaska oil
reserves are dwindling, still
has the company tied up in
knots. On the one hand, Browne
no longer openly advocates
drilling in the refuge, as he
did in 2000 and 2001. On the
other hand, when asked after
his Stanford speech last
spring what the company's
position was, he disappointed
environmentalists by refusing
to rule out drilling
altogether, saying, ''I
believe we should have no part
in that debate.'' A BP
consultant on environmental
policy says of Browne, ''The
impression he wants to leave
is that it's all a process --
first Congress has to vote for
drilling, then the company
needs to assess its value,
etc., but that even if it's
opened, the company probably
won't drill.'' But others who
work with the company have
privately heard just the
opposite. ''One of their vice
presidents told me flat out,''
another consultant says, ''
'If it's opened, we'll
drill.''' BP's
position on the refuge is
''evolving,'' according to
Ronald Chappell, who was head
of press relations for BP
Alaska and who now works in
its London headquarters. In
the early to mid-90's, BP was
engaged in lobbying to open
the refuge. ''But,'' Chappell
says, ''I think that the
company has sort of decided
that the role of corporations
in public life is one of
standing back and letting
governments make decisions,
trying to inform public policy
but not making political
contributions.'' But, in
fact, the company did make
political contributions --
$560,000 through its employee
political action committee in
2000, according to a BP
spokeswoman. Moreover, at the
time that Chappell and I
spoke, the company was a
member and contributor to
Arctic Power, a prodevelopment
lobbying group whose Internet
site highlights ''top 10
reasons to support development
in A.N.W.R.,'' and had a
representative on the Arctic
Power board. When I pointed
this out to Chappell, he
demurred, then sought me out a
few minutes later, when I
happened to be standing with
Eileen Claussen of the Pew
Center, one of John Browne's
closest environmental
advisers. ''I misspoke,''
Chappell said to us. ''It's
true, we give to Arctic Power.
We gave $50,000 last year but
none so far this year. We also
give to the American Petroleum
Institute.'' Claussen,
looking at him, said what
others - including many within
the company -- think but will
not say out loud: ''Shame on
you.'' (Last month, BP
withdrew from the group.)
It may seem
unfair that BP is the target
of environmental and
social-responsibility
movements. Shouldn't
Greenpeace et al. be going
after Exxon Mobil, which still
tries to sow public skepticism
toward global warming theories
and has reportedly worked
behind the scenes to remove a
prominent scientist from the
United Nations climate change
panel and still refuses to pay
$5 billion in punitive damages
ordered by an Alaska court
after the 1989 Valdez oil
spill? But BP has, by virtue
of its slogans and its
actions, tried to seize the
moral high ground and so is
judged by a different
standard. Browne seems
to understand this, and at
Stanford last spring he
outlined his next set of
goals, ambitious by any
standard: to reduce
global-warming gases from BP's
own operations as well as from
the products it makes, to
maintain CO2 emissions at
current levels even as the
company doubles its production
of oil and gas, to make 50
percent of the company's pump
sales worldwide come from
clean fuels. Anticipating the
future, BP bought Solarex in
1999 for $45 million, making
it one of the largest solar
companies in the world. It is
also participating in
fuel-cell technology research
efforts with auto and engine
manufacturers. And it is
testing the viability of other
energy sources like wind and
hydrogen. Few question
the idea that BP is now the
most conscientious oil company
around, or that Browne is
deeply committed to cleaning
up BP's act. One of Browne's
closest colleagues suggests
that he may go into the
climate-change field after he
retires from the oil business.
Meanwhile, its competitors,
according to a Royal
Dutch/Shell executive, feel
pressed by BP into taking
ever-greener positions -- even
Exxon Mobil has recently given
a grant to Stanford University
to study global warming. But
while Browne and BP may show
greater sensitivity to
environmental concerns than
any other company in its
industry, it may also be
impossible for any company
that derives well over 90
percent of its revenue from
fossil fuels to claim to be
part of the solution. Despite
its new sunburst logo and
''Beyond Petroleum'' slogan,
BP still invests $12 billion,
or 25 times more, on oil and
gas than on its wind and solar
division for the simple fact
that, right now, there's a
huge market for oil and almost
none for solar panels. And
that's not just BP's problem;
that's ours. Ronald Chappell,
the BP spokesman, says as much
when he points out that all
those environmentalists flying
into the Arctic National
Wildlife Refuge to save the
planet are using up a lot of
airplane fuel to do it.
''That,'' he says, ''is the
devil's bargain we all have
made.'' Darcy
Frey is a contributing writer
to the magazine. His last
article was about the debate
over oil drilling in
ecologically sensitive
regions.
|