S w

9B05C010

bp AND CORPORATE GREENWASH1

Professor Michael Sider prepared this case solely to provide material for class discussion. The author does not
intend to illustrate either effective or ineffective handling of a managerial situation. The author may have
disguised certain names and other identifying information to protect confidentiality.

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Copyright © 2004, Ivey Management Services Version: (A) 2005-02-08

HOW BP BECAME bp

For close to a century (since 1917, when, during the First World War, the British
government took rights to the name from the British arm of the German
Europaische Union), bp was British Petroleum, a company synonymous with
British industry and imperialistic strength. It had its roots in Iran, where, in 1901,
the Shah of Persia granted a concession to the Englishman William Knox Darcy to
search for oil. His discovery of crude in 1908 was the first commercially
significant find of its kind in the Middle East, and led to the creation of British
Petroleum’s parent company, the Anglo-Persian Oil Company (APOC).

During the First World War, APOC was the British Royal Navy’s primary fuel
source. The company’s strategic importance led the British government to acquire
a controlling interest. After the war, the company expanded operations to Europe
and elsewhere, but its main source of oil was still Persia. The growth of Persian
nationalism, however, placed the company in a precarious situation. The Shah,
under pressure from nationalists, terminated the company’s concession in 1932,
but renegotiated it the next year, giving the Persian government a greater share in
company profits. Persia became Iran in 1936, and APOC, British Petroleum’s chief
source of oil, was renamed the Iranian Oil Company. In 1951, Prime Minister Ali
Razmara was assassinated, the Shah was forced to leave the country, and a bill was

1
This case has been written on the basis of published sources only. Consequently, the interpretation and
perspectives presented in this case are not necessarily those of bp or any of its employees.
Page 2 9B05C010

passed nationalizing the oil industry. British — and Western — pressure recalled
the Shah in 1953, and British Petroleum returned to its oil patches as part of a new
Western oil consortium in which the company had a 40 per cent share. The
company continued to operate in Iran until the Islamic Revolution in 1979.

By 1979, however, British Petroleum had heavy investments outside of Iran in

Alaska and the North Sea. The company acquired Britoil in 1987 and shares in
Standard Oil of Ohio. In 2000, British Petroleum acquired Atlantic Richfield
(Arco) and Burma Castrol. In 2001, the company merged with Amoco, becoming
BPAmoco. In 2002, it dropped Amoco from its name and called itself bp, with no
official meaning assigned to the letters. The renaming was seen by many to signal
the company’s growth from British imperial interest to multinational
conglomerate. For the company, the renaming would also announce a growth from
oil to energy, and a step toward a green future.

GREENWASH

The Concise Oxford English Dictionary defines “greenwash” as “disinformation

disseminated by an organization so as to present an environmentally responsible
public image.” When a business says it’s doing things for the environment but
does things that damage the environment, it is guilty of greenwash. For many
environmentalists, greenwash is beyond a lie: it is the attempt to do evil by
proclaiming good, to continue to rape the environment while using the
environment itself as a shield. In this sense, greenwash doubly victimizes our
ecosystem.

CNN founder Ted Turner, for example, has been accused of being “a greenwasher
non pareil.” According to Paul Driessen, Senior Fellow at the Atlas Economic
Research Foundation, Turner donates millions to environmental causes in an
attempt to curry favor with an environmentally conscious public. At the same time,
on his Montana ranch, “[Turner] sponsors elite bison hunts at US$10,500 per
hunter . . . cuts timber . . . drills for natural gas,” and “even bulldozed a hilltop to
give himself a better view of a mountain range.”2

Environmentalists accuse many businesses of greenwash, but especially those that

produce cars, energy, chemicals, wood products or genetically-modified seeds,
businesses the public often see as damaging to the environment. CorpWatch, an
Oakland, California-based non-governmental organization (NGO), points out that
one-quarter of the chemical industry’s new household products that came on the
market in 1990, the 20th anniversary of Earth Day (the day on which the United
Nations Peace Bell rings to herald the global importance of the environment),
“advertised themselves as ‘recyclable,’ ‘biodegradable,’ ‘ozone friendly,’ or

2
Paul K. Driessen, “BP — Beyond Petroleum or Beyond Probity?” www.cdfe.org/driessen.htm, accessed
August 20, 2004, p.25.
Page 3 9B05C010

‘compostable.’”3 Ten years later, for Earth Day 2000, Ford Motor Company
announced that all of its advertising would have an environmental theme, despite
its continued production of large, environmentally damaging SUVs and trucks.
The same year, Monsanto, Dow, Dupont, Novartis, Zeneca, BASF and Aventis
created the Council for Biotechnology Information, which spends millions each
year “to win public approval for genetically engineered foods under the [green]
slogan ‘Good Ideas Are Growing.’”4 And Shell, the world’s third-largest oil
company, ran ads at the same time promising commitment to renewable energy
sources, while spending a tiny 0.6 per cent of its annual investments on
renewables.

Indeed, multinational business’s investment in green advertising, advertising

misleading enough to be termed “ecopornography” by one former Madison
Avenue advertising executive, is so widespread that, according to some, the world
is drowning in greenwash. Eco-activist Joshua Karliner points to the global spread
of eco-friendly ads in the late 1990s:

[A]cross the Pacific, nuclear giant Hitachi was billing itself in

advertisements as ‘a citizen of the earth.’ The brewery Suntory, a
member of the Sanwa keiretsu, produced a new beer, “The Earth.”
The company’s advertising tag line, “Suntory: Thinking About the
Earth,” was emblazoned on cans of beer. And a Mitsubishi
Corporation joint venture which clearcut vast swaths of one
hundred year old Aspen forests in Canada, producing between six
and eight million pair of disposable chopsticks a day, exported
them to Japan, where they were sold as ‘chopsticks that protect
nature.’ . . . In Malaysia . . ., ICI produced a blatantly deceptive full
color newspaper advertisement whose headline trumpeted
‘Paraquat and Nature Working in Perfect Harmony’ . . . [and] [t]he
Brazilian transnational Aracruz Celulosa advertised to a global
audience that its monocrop plantations, which make it the world’s
leading producer of chlorine bleached eucalyptus pulp, are a
‘partnership with Nature.’5

GREEN bp

bp’s green rebranding efforts began officially with the unveiling of its new bp
Helios mark, named after the Greek sun god. The new logo did away with 70 years
of corporate branding, replacing the bp shield, long associated in consumers’
minds with the strength of British imperialism. The Helios mark cost bp US$7
million to develop and was forecast to cost the company another US$100 million a
3
Anon. “Greenwash Fact Sheet,” corpwatch.radicaldesigns.org/article.php?id=242, August 23, 2004, p.1.
4
Ibid.
5
Joshua Karliner, “The Corporate Planet: Ecology and Politics in the Age of Globalization,” Sierra Club
Books, 1997.
Page 4 9B05C010

year to integrate into marketing and operations over the next two years. At the
logo’s unveiling, Sir John Browne, bp’s chief executive officer (CEO), directed
attention to the company’s recent purchase of the solar energy company Solarex,
an acquisition that made bp the world’s largest solar energy company. The
company, he pointed out, was growing at a rate of 20 per cent per annum. In this
sense, Browne suggested, consumers might well begin to read “bp” as “beyond
petroleum,” a moniker for an environmentally concerned oil company that
understood that its future lay in alternative energy rather than in oil. The unveiling
of the Helios logo was a formalization of a rebranding strategy that had begun to
emerge the year before with Browne’s announcement that 200 new bp sites around
the world would be powered in part by solar energy, through solar panels placed
on the roofs of gas pumps, and his commitment to reducing bp’s own carbon
dioxide emissions by 10 per cent by the year 2010.

As part of its rebranding, bp entered into a partnership with the National Wildlife
Federation (NWF), a large, mainstream environmental NGO, to sell small stuffed
animals — “endangered wildlife friends” — at bp stations, the proceeds from sales
and an initial corporate donation for the partnership to go to the NWF to support
conservation efforts. bp bedecked some of its stations’ gas pumps with posters of
endangered species: timber wolves, elephants, spotted leopards, panda bears and
golden frogs. Customers who purchased at least eight gallons of gas received these
toys for free, along with a message from the NWF stating that fossil fuel
consumption contributes to global climate change. In a complementary attempt to
leverage the public relations value of mainstream environmental groups, bp also
joined forces with New York’s Urban Park Rangers to release four bald eagles into
the “wilds” of Upper Manhattan.6

At the same time, bp began to shift its focus in hydrocarbons to natural gas —
lighter, cleaner and less carbon-intensive than oil — as a bridge to a hydrogen and
renewable energy future. The company forecasted a growth in natural gas
production of between eight per cent and 10 per cent a year, twice that of its annual
increase in oil production.7 It announced that, by 2003, gas was expected to
account for more than 40 per cent of the company’s daily hydrocarbon production.
bp tabled plans to use gas to create lighter energy technologies including dimethyl
ether, which uses gas to create a cleaner diesel. Indeed, an internal focus on the use
of gas rather than oil within its own operations allowed bp to meet its emission-
reduction target (10 per cent by the year 2010) six years early.

bp also began to explore windpower projects, dedicating space at one of its

refineries in the Netherlands to research into wind turbine technology, creating
what it called a “small, but significant, activity in hydrocarbon research.”8

6
Darcy Frey, “How Green Is BP?” New York Times, December 8, 2002.
7
Victoria Thomas, “An Oil Major Redefines Its Role,” Petroleum Economist, London, February 2001, Vol.
68, Iss. 2, p.3.
8
Ibid. p.2.
Page 5 9B05C010

No rebranding effort, however, is without its advertising campaign, and it was

these campaigns that drew most public attention. The initial “beyond petroleum”
ads that accompanied the unveiling of the new Helios logo were quickly
supplemented by a robust Ogilvy & Mather “bp on the street” campaign. A third-
party marketing and public relations campaign, “bp on the street” asked everyday
folk to offer their opinions on global warming and alternative energy. Following
the proffered opinions was information about what bp was doing to address
people’s concerns.

In one ad, independent film producer Steph Willen admits she would “rather have
a cleaner environment,” but “can’t imagine [herself] without her car.” The ad goes
on to tell Steph (and all of us) that bp’s low-sulphur fuels, available in over 40 U.S.
cities, offer Steph the chance to keep her car and contribute to a cleaner
environment. Another ad showed Frank Scotti with his wife and child. Frank wants
to figure out ways to make the oil “we all partake in” a “little more
environmentally safe.” bp’s filter technology, the ad states, is accomplishing this
goal by helping big-city busses emit fewer pollutants.

Of “on the street,” bp said: “We’re doing things differently, listening to the
concerns and criticisms of real people, letting them know what we as a company
are doing. It’s about openness, honesty, and a commitment to change.” Although
the company had, it admitted, a long way to go before it made a complete
transition from oil to alternative energy, its current investments in alternative
energy and its public and private concern for the environment were, in the central
theme of the “on the street” campaign, “a start.”

Within a year of the rebranding, bp found itself listed in many of the ethical
investment indexes that guide socially and environmentally concerned investors.

GREEN bp: THE NON-GOVERNMENTAL ORGANIZATION’S RESPONSE

From the start, however, environmental groups heaped scorn on bp’s green
rebranding. Greenpeace gave the company its Greenhouse Greenwash Award,
given to the largest “corporate climate culprit” on earth. bp, it very publicly
announced, beat out, among others, Exxon, for its “Save the Tiger Fund,” which
associates its logo with endangered tigers; Mobil, for its weekly, full-page op-eds
in the New York Times, which claimed the company had sensitively negotiated
with environmentalists to create plans to develop oil in the Peruvian rainforest; and
Shell, for a “Profits or Principles” campaign that argued the company could pursue
oil profits and, at the same time, rescue the environment.

None of the other oil companies, Greenpeace argued, had so strongly insisted that
big oil could be good for the environment. “bp,” said Greenpeace, should stand for
“burning the planet.”
Page 6 9B05C010

CorpWatch agreed, castigating bp for its blatant spin:

A week before the purchase of Solarex, BP Amoco showed its true

colors (closer to black than green) when it purchased ARCO for
US$26.5 billion. This made BP Amoco one of the two largest oil
companies in the world, and one of the largest companies of any
kind anywhere. The burning of fossil fuels — oil, gas and coal — is
at the heart of the most threatening environmental problem of all,
global climate change. And it’s production and marketing of fossil
fuels which remains at the heart of BP Amoco as well. Everything
else is window dressing.

Let’s take the 10 per cent emissions reduction target. It sounds like
quite a nice stride, until you consider that BP Amoco’s direct
emissions are almost irrelevant. Its main role in causing climate
change is not from company emissions, but from the oil and gas it
produces.

BP Amoco’s website features the catch phrase “I am only one.” But

when it comes to climate change, BP is not like you or me . . . The
burning of fossil fuels from BP Amoco (including ARCO) alone
leads to emissions greater than those of Central America, Canada,
or Britain . . . .

For a giant like BP, being the world’s largest solar company is not a
difficult accomplishment. The US$45 million spent on Solarex is
just a fraction of the US$400 million Stamp Duty Reserve Tax
associated with the purchase of ARCO. ARCO’s US$26.5 billion
price tag was 588 times more than what BP spent on Solarex. Even
with the planned ten-fold increase in expenditures on renewable
energy, those will amount to less than 2 per cent of expenditures on
oil.

Meanwhile, in Alaska alone, BP Amoco will spend US$5 billion in

the next five years on oil exploration and production… When
profits are at issue, the [sic] BP’s professed cooperation with the
world community, along with common sense, simply goes up in
smoke.

Indeed, provoked by what they saw as bp’s false assumption of the moral high
ground, environmental NGOs dug up everything they could find on bp’s
environmental record, uncovering facts that weren’t always consistent with the
tenor of its new campaign. The League of Conservation Voters discovered that the
company’s political contribution record contrasted sharply with its “squeaky-
green” image. Bp, it revealed, “contributed to the election campaigns of 22 of the
Page 7 9B05C010

36 [U.S.] senators and 37 of the 55 representatives who achieved a zero per cent
rating from the league . . . for voting against all the environmental legislation that
it monitored.”9 More troubling, they pointed out, was the fact that the company
supported the campaigns of over half of the senators who, in 1997, passed a
motion to reject any international agreement to fight global warming. When asked
to comment on the contradiction between its recent “green” claims and its political
contribution record by The Independent, a British left-leaning newspaper, a bp
spokesperson responded: “I have nothing to say about that. We are financing
according to American law, and we are happy with what we are doing.”10

Many environmental groups also pointed to bp’s plans to drill for oil in the
ecologically sensitive Arctic wildlife refuge, 19 million acres in northeast Alaska
that served as home for polar bears, grizzlies, wolves, musk oxen and caribou, as a
telling revelation of the company’s true colors. bp had been, for some time,
heavily invested in Alaskan oil, its North Slope fields peaking at two million
barrels a day in the mid-1980s. By the end of the ’90s, production in the North
Slope was down 50 per cent, and bp was looking elsewhere in the region for oil. In
the fall of 2000, Lord Browne said bp would drill for oil in the refuge if a new
Republican administration opened it to industry. Greenpeace responded that, given
these intentions, a logo that fit that company better than its new Helios symbol
would be “a miserable polar bear on an ice cap shrinking because of global
warming.”

Even conservative, largely pro-business commentators were skeptical of the new

campaign. Brandweek wrote:

For sheer chutzpah, it is hard to beat bp Amoco’s “Beyond

Petroleum” ad campaign. Sure, BP did invest more than US$200
million in solar power over the last six years, giving it an 18.5 per
cent market share. But compare that to the US$8.5 billion it spent
on oil exploration and fossil fuel manufacturing in 2001 alone and
it looks like BP will be beyond petroleum the day Anheuser-Busch
is beyond beer.”

And the Conservative Monitor agreed:

No one on earth today can even imagine life without the many
byproducts of oil. One starts with transportation. There is the family
car, the trucks that deliver everything we require to live, the planes
that take us mere hours to our business meetings and vacations.
Then there are the endless uses of plastic that have transformed our
lives for the better. There are drugs, cosmetics, and clothing . . . . So

9
Geoffrey Lean and Amy Anderson, “Does BP Mean Burning the Planet?” The Independent, September
2, 2000.
10
“The Independent,” http://millenium-debate.org/indsun3sept.htm, September 9, 2004.
Page 8 9B05C010

why is BP trying so hard to convince us that they are focusing a

company that will be involved in the provision of energy “Beyond
Petroleum”? This has to be among the most audacious “spins” ever
applied to the truth.

The Monitor pointed out that the 16 billion barrels of oil waiting in the Arctic
refuge represented about 30 year’s worth of oil the West would not need to import
from the Middle East. The natural gas in the area could power California — the
entire state — for several decades. bp’s rebranding, the Monitor argued,
represented a huge step in the wrong direction for the oil industry and the world
economy it supports.11

bp’S GREEN ANSWER

At the company’s first annual meeting following the “beyond petroleum”

campaign, several green groups holding shares in the company demanded that bp
chart a precise timetable for reducing or eliminating the fossil fuel production it
claimed to want to “go beyond.”12 Peter Sutherland, bp chairman, responded that
the words “beyond petroleum” represented a broad, rather than narrow, vision for
the company: “When we use the words beyond petroleum, it does not mean we are
pulling out of oil, merely that we are taking a broad vision — not a tunnel vision
— of the energy business.” Lord Browne also responded: rather than meaning
giving up oil, “beyond petroleum just means we are giving up the old mindset, the
old thinking that oil companies had to be dirty, secretive and arrogant.”13

For a year, the company debated dropping the slogan altogether. Paula Banks,
senior vice-president for social strategy and policy, an African-American who
joined bp because of what she saw as its commitment to social responsibility — to
supporting diversity and the environment — admitted that, in some parts, the
campaign “backfired horribly,” causing confusion inside and outside the company.
However, she said, although in 2002, the company was quiet on the rebranding as
it attempted to understand just what it meant strategically, 2003 and 2004 would
see a return to the campaign because “we are now committed [to it] and clear
about what it means.”14

11
Alex Caruba, “Beyond Petroleum, Beyond the Truth,” Conservative Monitor, January 6, 2003.
12
Minority shareholder protest against the “beyond petroleum” campaign continued at the company’s
annual general meetings over the next three years. In 2003, for example, a consortium of activists
distributed 40,000 leaflets critical of bp’s environmental and human rights record prior to the annual
general meeting. The activists also launched an anti-bp travelling road show that, through a combination
of videos, speakers and discussions, attacked the same record. At the annual general meeting, the
activists introduced a spoof annual report to shareholders and the press, one that parodied the
company’s promises. Several shareholders mistook the spoof for the real report and quoted from it
during the meeting.
13
David Buchan, “BP driven to the back of beyond,” The Financial Times, April 20, 2001.
14
Terry Macalister, “Big oil’s green evangelist,” The Guardian, April 27, 2002.
Page 9 9B05C010

Central to this new clarity was what the company was to advertise on its web site
in 2004 as “the energy paradox”:

There is now a consensus that rising [greenhouse gas]

concentrations can be attributed to human activities such as
deforestation, new forms of agriculture, and the use of hydrocarbon
fuels. This highlights the so-called ‘energy paradox’: the fact that
increases in human consumption — vital to raise living standards in
the developing world, improve health and support human
innovation — currently rely on fossil fuel supplies, which increase
[greenhouse gas] emissions. The challenge is not just to understand
climate change: it is to do something about it; to find a viable
solution to the energy paradox.”15

bp would commit to decreasing greenhouse gas emissions in all areas of its

business so that, by 2012, its net emissions would show no increase over 2001
levels despite any business growth. It would also help to decrease greenhouse
gases by creating technologically advanced fuels that would help its 13 million
customers use energy products more efficiently. And it promised to use its
influence to help governments and international bodies to create clean energy in
the developing world.

Furthermore, to address the concerns of environmental NGOs, ethical investors

and the public about the company’s plans to drill for oil in ecologically sensitive
areas, bp produced a policy stating that “whether such areas are open for
development or not is a matter for governments to decide.”16 When governments
put an area off limits to development, the company would not challenge the
decision. If bp decided to drill in an area opened by the government for
development, the company promised to publish all details of all the environmental
risk assessments it carried out, assessments that would themselves carefully
consider the views and values of local communities and stakeholders.

However, paradoxically, bp would also increase its search for new oil. As far as
this strategy was concerned, the new bp was much like the old:

Since 1989, our strategy has been to deliver superior returns by

having a greater share of large, low cost oil and gas fields. This
strategy remains unchanged today. We have one of the best
exploration records in the industry. While industry average
‘wildcat’ exploration has a one in four success rate, we have
achieved seven out of ten in the last several years. In the last six

15
Anon, “bp global/environment and society/the issue,” http://www.bp.com, September 8, 2004.
16
Anon, “bp global/environment and society/working in sensitive areas,” http://www.bp.com, September 9,
2004.
Page 10 9B05C010

years, we have participated in more giant field discoveries than any

of our major competitors.

We are making a significant change in the scale of our business. Having achieved
leadership positions in Alaska, the North Sea and in North American gas
production, we are now developing new fields in the deep water of the Gulf of
Mexico, in Angola, in Azerbaijan, in Trinidad, and in the liquefied natural gas
business in Asia Pacific. We are also making an investment of over US$6bn in
Russia through our joint venture company TNK-BP, covering oil and gas fields,
refineries and service stations.