SOCIAL TOPICS (Archive): HUMAN RIGHTS

Published, March 1998

       United States Trust has historically found it difficult to find major international oil companies suitable for our clients. A recent quest to identify firms in the vanguard of this high environmental impact industry led us to consider British Petroleum.

       Life would certainly be different without petroleum. From our plastic encased alarm clocks to the fuel that powers our subways and cars, simply getting to work without the use of petroleum products is virtually impossible. We all benefit from oil. And yet, the oil industry is a powerful and dirty business. It is linked to stories of environmental degradation and cultural upset, summoning images of black slime covering rocks and wildlife, and choking emissions from auto tailpipes.

       As social investors, we have been reluctant to invest in the integrated petroleum industry. United States Trust has attempted to select what we consider the ‘best of the worst’ in this industry. But seldom have we been satisfied with our choices. Often, social investors are left to find smaller energy companies, those that perhaps aren’t yet big enough to attract attention or to do the type of damage that has become associated with ‘big oil’. Still, other solutions include seeking out companies involved primarily in natural gas or peripheral businesses linked to the financial success of oil.

       One of our several concerns about the petroleum industry is its powerful lobbying efforts. Much of the negative publicity surrounding the climate change talks in Kyoto, Japan last December was the product of an organization called the Global Climate Coalition (GCC). The GCC is made up of business trade associations and private companies dedicated to “active involvement of US business in the scientific and policy debates concerning global climate change issues.” However, behind this rather neutral mission statement is an aggressive public relations campaign funded mostly by the self-interested oil industry dedicated to confusing the global climate change debate.

       John Browne, Chief Executive of British Petroleum, announced at Stanford University last May that he believed there is a discernible human influence on the climate, and that to ignore the risk of global warming would be unwise and potentially dangerous. It was hard to believe. Our immediate reaction was to wonder what his ulterior motives might be. But this speech was the first of a series Browne made throughout 1997, outlining an environmental action plan that for the petroleum industry is truly exceptional.

       While Lee Raymond, chairman of Exxon, was in Beijing urging the Chinese not to support emissions reductions at the December talks in Kyoto, John Browne was announcing British Petroleum’s plans to better track and reduce its emissions. Browne has renewed BP’s commitment to solar energy, announcing plans to achieve $1 billion in sales in its solar energy business in the next decade, up from $1 million today. He has also recommended new taxation to curb energy waste and guard against climate change. BP is not a member of the Global Climate Coalition.

       BP is currently collaborating with the Environmental Defense Fund to develop its own internal emissions trading system to reduce emissions, a truly unique initiative. Through this program, the company hopes to drastically reduce its emissions of carbon dioxide — a leading greenhouse gas. BP has already taken several measures to reduce harmful emissions and plans to cut smog-inducing hydrocarbon emissions to air by 165,000 tonnes by 2001, a 50% reduction from 1995 levels.

       One of the most difficult things we encounter when researching a company in an international industry like integrated petroleum is trying to compare corporate emissions data and other environmental programs. Companies often use their environmental reports as a public relations medium, reporting only their successes, and paying lip service to work that needs to be done. There is no common environmental reporting standard, no way of easily discerning what is real progress, and what is merely greenwash.

       However, in several ways BP’s environmental report is commendable when compared to its peers. The company now has a clearly defined environmental management system, including a set of climate change principles. BP is unique in disclosing its air, water and land emissions at each of its operations and also breaks out data on hydrocarbons, nitrogen oxides, sulfur oxides, carbon monoxide and particle emissions on a company-wide basis. BP will begin to report its carbon dioxide emissions in its 1997 environmental report due out this spring.

       British Petroleum hasn’t always been a corporate role model. In the early 1990’s, the firm did not have a clearly defined environmental management system and thus lacked a coherent pollution prevention strategy. It was a laggard within its industry, not only by environmental standards, but also on safety issues.

       The most disturbing concern for us is BP’s current actions in Alaska. The company dominates Alaska’s oil fields and is using its considerable political influence to push for the opening of the Arctic National Wildlife Refuge to drilling. Opening the Refuge is vehemently opposed by environmentalists. BP has already lobbied for and recently won the rights to further explore Alaska’s North Slope.

       In 1994, the Colombian government fined BP $276,000 for damage to natural resources — the largest fine for environmental damage in the country’s history. The London-based Coalition Against BP in Colombia has accused BP of complicity in a government war against environmentalists and trade unionists opposed to its operations in Colombia. BP acknowledges it pays the Colombian military for security purposes, including protection from guerrilla attacks, but vigorously denies any illegal or unethical activity.

       BP has also recently sued Greenpeace for interrupting oil production by members chaining themselves to an offshore oil rig operated by the company. It later dropped the charges when Greenpeace agreed to stop interfering with that particular operation. However, even Greenpeace has stated that companies like BP will ultimately help solve our environmental problems.

       Clearly, there is a lot of progress to be made at BP, but we believe its future looks very encouraging. This belief stems from three important observations: BP has made tremendous progress in the last three years by strengthening its environmental management system; it is becoming an outspoken advocate for viable solutions to global climate change; and BP is providing a model for other corporations seeking greater ‘transparency’ in their operations with its comprehensive disclosure of emissions and other environmental data. The ‘best of the worse’ is indeed getting a little better.

       United States Trust has recently added BP to its buy list. We will lend our voice in support of BP’s recent initiatives but will also press for management to remedy controversy in Alaska and other areas.