BP’s recent environment and safety record calls into question whether corporate responsibility as currently practiced isn’t working, suggests Simon Propper
The corporate responsibility and sustainability community has been pretty quiet about the terrible incident continuing in the Gulf of Mexico. Nobody wants to rush to judge a situation that is complex and highly specific to the oil exploration sector.
This is patently sensible. But the ongoing disaster should make everyone involved in the corporate responsibility field reflect on the effectiveness of CR as currently practiced.
Many commentators attributed the global credit crunch and subsequent banking collapse to a failure of corporate responsibility. And indeed a number of institutions obviously did behave irresponsibly.
But the banking crisis was not a failure of CR in the sense that ethics systems and governance were in place and failed to ensure responsible behaviour. The banks were essentially non-participants in corporate responsibility.
Yes they greened their offices and invested generously in communities, but their core business, particularly investment banking were – and still are – outside the scope of their responsible business programmes. So the banks failed but CR was untested.
BP is entirely different. There is much creative speculation about what the initials “BP” stand for. Greenpeace is running a ‘competition’ to design the company a new logo.
Some suggestions such as “Big Pickle” exhibit dark humour and others like “Blatant Polluter” and “Bought Politicians” express rage. But in the CR world BP stood for “Best Practice”.
Rarely has a company so quickly and enthusiastically adopted all the tools and techniques recommended to it by experts, business organisations and assorted vocal stakeholders.
After John Browne took BP out of the machiavellian Global Climate Coalition in 1997 and began his address to the Greenpeace Business conference with the words “it makes a change for me to be occupying one of your platforms…”, the company became increasingly confident of its relationship with NGOs and its place in society.
While the current CEO Tony Hayward has diluted the company’s bigger vision for combating climate change and moving “beyond petroleum”, his focus on operational integrity was supposed to be even stronger.
This is a company with all the CR scouting badges: ISO14001 at major operating sites; an advanced operating management system; thorough materiality and risk assessment procedures; comprehensive stakeholder engagement processes; reporting to GRI A+ standard; and assurance by Ernst & Young to AA100AS principles of inclusivity, materiality and responsiveness.
Best practice?
How then is it possible that a much admired company fully implementing best practice can suffer a series of major, even catastrophic incidents? Not in areas outside the main thrust of CR management, like the banks, but in the core objectives of protecting people and the planet.
Three major incidents appear to be more than coincidence or bad luck. In 2005 an explosion at the Texas City Refinery killed 15 people and injured 180. In 2006, leaks of oil were discovered at the Prudhoe Bay operations in the environmentally sensitive Alaska North Slope. And now of course they have the big one.
This calls into question whether CR as currently practised is doing its job properly. A possible explanation for the apparent failure of CR is that the bar is set too low in most of the approved processes and standards.
In other words it’s too easy to have an A+ report and a certified environmental management system. One corporate executive told me recently that his company does not certify to ISO14001 because the independent certifiers are less rigorous than its own auditors.
Of course not all companies have the potential to cause destruction on the same scale as BP, but all large companies can have a significant impact if they make mistakes and they risk their own reputations when they do so.
It appears entirely likely that we have developed quite a good understanding of how to identify sustainability risks, but still do not really give that information the weight it deserves when it comes up against commercial pressures – like the need to do things quickly, to cut costs and to minimise regulatory hurdles.
Have we been too accommodating in our efforts to ingratiate CR to business, seeing lip-service as preferable to rejection? By “we”, I mean the CR industry itself. Consultants, auditors and in-house professionals are not in the best position to stand up to really serious pressure from senior executives.
Also the marginalisation of CR in company decision making mostly takes place in private. The really difficult decisions that take a risk over a cautious approach are rarely debated in public or even discussed with corporate responsibility and sustainability teams.
Investors, for all their genuine engagement in CR, continue to be part of the problem. When viewing a successful company with a good reputation they should be probing how this is being protected not pushing to shave another percent off operating costs.
Perhaps the BP accident in the Gulf of Mexico marks the end of CR-lite and the beginning of a new era where CR risks are fully reflected in company strategy.
Simon Propper is managing director of sustainability strategy consultancy, Context www.econtext.co.uk