CSR and Oil Companies: The Truth Dawns?

The environmental left is in some disarray following the Deepwater Horizon oil spill.  After all, BP had trumpeted for years the idea that it was ‘Beyond Petroleum.’  Shell and ChevronTexaco had mounted similar campaigns.  All had collected numerous awards for their commitment to sustainability and other objectives of the green lobby.  Yet here was BP responsible for worst environmental disaster many people had seen.  The hand-wringing is palpable among the Corporate Social Responsibility mavens.  Here’s the conclusion of one group, EthicalCorp:

Many in the CSR community have discussed the disaster in the context of the oil industry at large. BP, they reason, was certainly ahead of its competitors in discussing the responsibility of an energy company to address climate change and invest in alternative energy.

But it’s critical to remember that being “best in class” when your industry’s core products and services are fundamentally unsustainable, is a total misnomer. There is no such thing as an ‘eco-friendly’ oil company.

The remedy, it seems, is ideological purity:

Let’s start with the term ‘CSR’ itself. Like ‘sustainability’, it’s clearly lost a lot of its meaning and needs to be rethought—and possibly thrown out altogether. Continuing to frame corporate efforts on sustainable development as ‘CSR’ also keeps those efforts in the CSR department, instead of driving their integration into core business operations.

But what about ethical rankings and indices? If they actually worked well, they could have a significant impact on investment decisions. As Innovest concluded in its 2000 oil industry risk report—which ranked BP #2 out of the 13 oil companies on the S&P 500 for its “superior environmental management program”—investors could use the ranking as “a valuable indicator of future performance in the oil industry based on environmental criteria.”

Firstly, no oil company should be found on any of these ethical, CSR or sustainability-related lists.

And it shouldn’t require the biggest ecological disaster in American history, for example, to displace BP from the Dow Jones Sustainability Index.

Secondly, ranking and index criteria need to be made more visible and more robust. Yes, most tell us they are based on publicly available data. But most of them also rely on sourcing that data from corporate commitments—what companies say they are doing or plan to do.

Some are even based solely on information found in the CSR reports of those companies. All rankings and indices need to be driven by externally verified data from a solid variety of sources.

And what about marketing? The high-profile communications campaigns from the energy industry need to be automatically subject to greater scrutiny, and more robust regulation.

Shell’s new CSR campaign, “Let’s Go”, bears an uncanny resemblance to “Beyond Petroleum”, focusing on broad claims such as “Shell is helping to deliver cleaner-burning natural gas to more countries than any other energy company.”

The viewer of these ads is given no context for the claim—what other energy sources natural gas burns cleaner than, for example, or how delivering the gas to “more countries” is a relevant metric for sustainability leadership. This is unacceptable.

It seems that companies’ green marketing materials will no longer be enough for the CSR industry.  They will require much more to deliver their seal of approval – so much, it appears – that energy companies will no longer be able to achieve them without completely divesting themselves of their most profitable activities.

As it happens, the oil companies realized this a few years ago.  Tom Bower’s book Oil reveals how BP, Shell and others quietly shelved their environmentally-focused campaigns after the release of An Inconvenient Truth.  as bower characterizes the thoughts of Shell’s Chief Executive, Jeroen van der Veer, “Posturing for publicity purposes was harmless, but relying on the profitability of renewables was foolish.”

It’s taken several years for the CSR types to notice.  If they are now openly hostile to energy companies, then ‘posturing for publicity purposes’ is really no longer an option.  The cry of “hypocrite” is a powerful one.

So what is left?  We at CEI have been arguing for years that corporations need to do what they did en masse in the 1930s, the last time corporations came under as heavy attack as they are now, and legitimize their activities.  They need to point out the good that they are doing, how oil creates opportunities and wealth we would not have without it, for instance.  Apologetic advertising or pretending to be something they are not needs to be a thing of the past.

Truth in advertising, indeed.