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July 28, 2010

BP's Corporate Social Irresponsibility

By

Under John Browne, BP’s CEO from 1995 until a scandal forced him to resign in 2007, BP ventured into the leftist world of Corporate Social Responsibility (CSR), that trendy manifestation of 21st Century crony capitalism and creeping state-corporatism. Lionized from Hollywood to Harvard Yard for their unorthodox conversion to CSR and smitten with their corporate rock star status, Browne and his team took their eyes off the prize. Tragedies ensued. And now, the White House is proposing tax increases which would give this foreign-owned company a substantial advantage over our own in the global sector.

CSR proponents argue that governments must enlist private businesses and their enormous financial resources into global “public-private partnerships” to alleviate poverty, improve health and protect the environment. CSR expands the responsibility of business beyond its traditional definition of obeying the law and making a profit for its shareholders—easily measured criterion—to subjective goals like social benefits and environmental sustainability.

For many of the world’s statist politicians and bureaucrats, though, CSR is just a Trojan Horse in their campaign to de facto nationalize all private sector corporations, thereby putting their assets and human capital completely at the disposal the state.

In the CSR pantheon there is no virtue more righteous than environmental purity. Thus a born-again BP—a ‘green’ oil company!—created a public relations sensation. Browne launched a BP advertising blitz to support the statists’ global warming agenda meant to stoke fears and build support for passage of huge new energy taxes.

BP’s ads resembled the pathology of a cancer—when a body’s cells turn against it and become malignant enemies. They fed the public’s irrational hysteria about hydrocarbons and seemed to apologize for even producing the evil fossil fuels. Its green “Beyond Petroleum” logo came to symbolize a childish yearning for a Pollyannaish future of completely pollutant free energy sources based on false promises that complete reliance on alternative energy sources was a possibility in the near-to-medium term. The ads failed to mention that alternative sources would need heavy government subsidies for as far as the eye could see into the future. Many of those subsidies, of course, would inevitably find their way to BP and into Browne’s large paycheck.

BP contributed heavily to Democratic Party candidates, including President Obama, and BP helped establish the U.S. Climate Action Partnership to push for the cap-and-trade bill. As recently as days before the Gulf spill Senator John Kerry (D, MA) was boasting to reporters that the BP of Browne’s successor would lend heavyweight corporate support to the Democrats’ planned push for that draconian legislation.

Behind the scenes Lord Browne and his team—busily cashing in CSR chips with their new best friends and cronies in government both to avoid anti-trust problems when they swallowed U.S. refiners Amoco and Arco as well as to seek lucrative government contracts and grants for alternative energy—became increasingly distracted from their primary responsibilities to manage properly the sacred trust given to them by BP’s shareholders, customers, and the American public.

In 2005 dozens of BP employees were killed or injured by a terrible explosion and fire at a refinery in Texas that an investigation concluded was caused in part by corporate negligence.  Management lapses were also cited in connection with a 200,000 barrel oil leak from a BP pipeline in Alaska the following year. Critics alleged the blunders were inevitable after Browne’s cost-cutting moves, again in pursuit of maximizing profits, when he fired long-time and knowledgeable Amoco and Arco managers. In the aftermath of the two accidents BP claimed it had reformed and was now “focusing like a laser” on safety, all the while continuing to shield itself from critics by boasting of its CSR-endowed rectitude. Then came the worst oil spill in world history.

And what of BP’s erstwhile CSR allies in Washington? While working to demonize the company and thereby try to deflect their own culpability for the spill, they are also taking advantage of the crisis to push for new tax burdens on BP’s U.S.-based competitors – a move which would give the foreign-owned firm a leg up on companies not responsible for the worst environmental catastrophe in America’s history.

Apparently there is no honor among thieves.

Meanwhile faceless, colorless executives at other major world oil companies continue the true legacy of petroleum pioneers such as BP’s Lord Cowdray as they meticulously and steadily do their jobs to produce petroleum products safely and efficiently. Stodgy old oil companies such as ExxonMobil and ChevronTexaco will never make it into the CSR Hall of Fame, but in learning and implementing safety reforms after the terrible Exxon Valdez accident decades ago, they also have avoided the headlines BP has earned lately.

Ironically BP’s fixation with CSR and its green drive to get “beyond petroleum” led it to give short shrift to crucial management responsibilities and to forget exactly why BP was in business in the first place. Tragically for us all, now it is petroleum that has been beyond the reach of BP.

James M. Roberts is Research Fellow for Economic Freedom and Growth in the Center for International Trade and Economics at The Heritage Foundation.

First appeared in The Daily Caller

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