Environmentalists Help Manage Corporate Reputations
Citation: Sharon Beder, ‘Environmentalists Help Manage Corporate Reputation: Changing Perceptions not Behaviour’, Ecopolitics 1(4), Spring 2002, pp. 60-72.
This is a final version submitted for publication.
Environmentalists have traditionally drawn attention to environmental problems by highlighting corporate misdeeds and thereby damaged the good reputation of those companies. However, nowadays those very corporations are drawing on environmentalists to help repair their reputations. Nike and BP are two examples of companies that have adopted some environmental reforms as part of their reputation management strategies and received the praise of environmental groups for doing so. Yet both continue with the practices that earned them poor reputations in the first place. Clearly the role of environmentalists in working with such companies is misguided and ineffective in terms of long-term environmental sustainability.
Since the late 1980s large numbers of people in affluent countries have been influenced by a company's reputation for social and environmental responsibility in their purchases, investments and choice of employers. A well-targeted activist campaign can impact severely on corporate reputations, and consequently on share value and profits.
Reputation management has therefore become an important part of doing business. But reputation management is often a public relations activity that has little to do with social responsibility. Instead, corporations spend much effort and money on creating the impression of responsibility. They gain credibility for their claims of responsibility through token reforms, codes of conduct and by aligning themselves with amenable environmental and human rights groups as well as specially created coalitions of such groups (Beder 2000, chapter 8).The Increasing Importance of Reputation Management
Reputation is increasingly important to the value of companies. In his book on Image Marketing, Joe Marconi (1996, p. xiv) notes that during the 1990s reputation took on such critical importance for large corporations in terms of their market share that it is now 'of as much concern to their banks as their marketing plans and their business plans'.
A survey by Interbrand and Citibank found that 70% of the value of the top 100 British companies was attributed to goodwill in 1998 compared with 40% in 1988. 'Reputation is now so important that the Turnbull Report, which forms part of the UK's corporate governance guidelines, advises companies to treat it in the same way as all other assets' (Brotzen 2000). Similarly the Chief Executive/Hill and Knowlton Corporate Watch survey of 1999 found that 94% of US CEOs in 10 industries agreed that a good reputation is 'very important' to achieving a company's strategic business objectives. CEOs claimed reputation had grown rapidly in importance over the previous 5 years and they expected that growth to continue (Haapaniemi 2000).
Individual companies, brands and whole industries have reputations. Whilst corporate image is 'what stakeholders perceive the organization to be', corporate reputation 'is the evaluation or esteem in which the organization's image is held' (Markwick and Fill 1997). Reputation incorporates elements of trust, credibility, responsibility and accountability. But it is essentially about perceptions, just as image is, as most people outside of a company's management do not have full information (Fombrun and Riel 1998; Washington 2000). People's perceptions of a company influence how they buy, sell, invest and who they work for.
Share price is an indicator of a company's 'reputational capital' (Fombrun 1996, p. 5). And those companies with the best corporate reputations are the ones that perform the best on regular economic measures such as shareholder return (Brotzen 2000). John Budd (1999) from Selz/Seabolt Communications argues that increasingly 'it is being recognized that financial performance correlates strongly with reputationÉ In this context investors are investing in tangibles (the corporate track record) buoyed by confidence in the company's prospects by their perception of the intangibles, (the so-called non-financial variables).'
Companies that have had crises of reputation, such as Exxon after the Valdez oil spill and Texaco after being accused of race discrimination, have seen the market value of their shares drop by billions of dollars (Zingales 1998). Accidents and crises usually cause an immediate drop in share value but the speed with which that value recovers depends very much on a company's reputation before the crisis and investor perceptions of its response to the crisis. Those companies that do not recover quickly suffer cumulative losses up to a year after the catastrophe. A company with a solid reputation is likely to recover within a couple of months (Knight and Pretty 2000).
Similarly, a company's reputation can affect the willingness of communities to forgive corporate misdemeanors. In his book on Corporate Community Relations Edmund Burke (1999, p. 15) suggests that when a company with a good reputation does make mistakes or have accidents it is more likely to be given the benefit of the doubt. Good reputation also helps build support for a company which is the subject of controversy (Greyser 1999). A good reputation means that a company can more easily set up hazardous facilities in new communities and the time needed to obtain approvals and licenses is shorter. Becoming a 'neighbour of choice' is necessary to maintaining a company's license to operate and 'it can serve as a competitive advantage in the marketplace' (Burke 1999, pp. xiv-xv).
Reputation management is also important for relations with regulators, who are less likely to apply rules and regulations and interfere with business operations, and more likely to negotiate guidelines and voluntary agreements, when a company has a good reputation (Shandwick International 2000). This aspect of reputation applies not only to individual companies but also across industry sectors. For example Responsible Care is a voluntary code set up by the chemical industry aimed at avoiding government regulations. It was originally a "response to the deepening crisis of public confidence, as well as to the slumping self-images and morale of many personnel in the industry itself after Bhopal" (Lewis and Henkels 1996).
Reputation is also important for attracting good employees and keeping them (Haapaniemi 2000). "[B]right, young, mobile, intelligent staffÉ do not want to work for a company with a poor social reputation, as Shell found out to its cost in the wake of the Brent Spar fiasco" (Leadbeater 1996). A survey of human resource executives found that a company's reputation in the community had a major impact on hiring employees (Burke 1999, p. 21). A good reputation also helps to promote employee loyalty (Fombrun 1996, p. 73). CEO John Browne says that BP promotes progressive environmental policy because surveys show that that is what BP's staff and customers want: 'You need the will and the minds of the people inside a company to achieve anything' (Quoted in Ghazi and Hargreaves 1997).
Reputation is especially important when a company's products are similar in quality and price to competing companies or where it is difficult for consumers to differentiate between products. Corporate reputation matters most when consumers are least able to assess a product's performance (Burke 1999, p. 40; Greyser 1999). For example, in the case of petrol, consumers are unable to differentiate between the quality of oil from various companies. So reputation has added significance.
The reputation of a brand also provides competitive advantage by enabling companies to avoid competition on the basis of price. If reputation ensures that a product 'is highly valued by its buyers' then consumers will be willing to pay a premium for it (Burke 1999, p. 33). It is the latter strategy that is used by companies like Nike and this strategy requires careful reputation management. Nike's reputation for quality and innovation and its association with sporting stars helps it to fend off rivals and copy-cat footwear manufacturers who offer similar products at much lower prices.
The value of a good reputation with a company's stakeholders is shown in the table below.
The public relations firm Shandwick International, which specializes in reputation management, says the best way to understand a company's reputation is 'as a dynamic concept, one that derives from the company's ability to define itself, to directly manage impressions, to build strong relationships with key constituents — moving them from targets to advocates' (Shandwick International 2000). Reputation management today involves encouraging environmentalists to become advocates of their company.The Role of Environmentalists
In the past companies have earned a good community reputation through corporate philanthropy and cause-related marketing. In recent years surveys show that community and environmental responsibility affect corporate reputation (Burke 1999, p. 39). It is no longer enough to just give money to charities. A company needs to demonstrate that its business activities are responsible.
Empty rhetoric and coats of green paint no longer suffice in the field of reputation management. Today a company needs to demonstrate its good intentions with codes of conduct audited by their accountants and endorsed by NGOs and by joining in coalitions with accredited environmental, labour and human rights groups to gain credibility.
One way for corporations to show they care about the environment, even if they don't care enough to make major changes to their business practices, is to donate money to an environmental group or to sponsor an environmental project. Companies which fund cash-starved environmental groups believe 'the imprimatur of activists will go a long way in improving their reputation among environmentally aware consumers' (Rauber 1994). However they do not necessarily support the aims of the groups they fund.
RTZ (now Rio Tinto) a mining multinational that operates polluting mines in third world countries donates money environmental groups all over the world (Jenkins 1990, p. 19). In Australia Rio Tinto has provided $1.2 million over four years to WWF Australia, for a frog conservation program (Steketee 2001).
Many environmental groups accept the money because they believe that 'private sector cash can increase an organisation's clout and bankroll membership building programs' (Rauber 1994, p. 48). However, such arrangements also enable corporations to get valuable information about environmental groups and how they work and think (Bleifuss 1995, p. 3) ; information that will help them oppose the goals of the environmental groups.
O'Dwyer's PR Service Report explains how wealthy companies can coopt environmental groups with donations and job offers. Corporations can win approval from environmental organisations, or at the very least a blind eye, through donations to these organisations.
In Sydney Australia, a besieged water and sewerage authority with a reputation for secrecy and deception, attempted to improve its image through funding environmentalists to review its operations and plans. The funds were sufficient to employ a number of people, full time, and it even paid these groups to prepare a formal application for the funds. Four groups were funded, Friends of the Earth, the National Parks Association, the Nature Conservation Council of NSW, and the Total Environment Centre (Beder 2000, p. 131).
The groups involved were assured that they were free to say whatever they wanted in their reports and that they would have free access to Water Board documents. In October 1994, the groups under the umbrella name of The Sydney Water Project published a series of leaflets for comment by the public. These leaflets had a striking resemblance to Water Board fact sheets (produced in earlier years) in tone and style, albeit on recycled paper. They were bland and criticisms of the Board were weak and tentative (Beder 2000, p. 132).
Increasingly business people are seeing the advantages of working out deals with environmental groups. James Harris (1992) , a vice president of Hill and Knowlton and also a member of the Sierra Club's national Public Affairs Advisory Committee puts it this way:
Bruce Harrison (1993, p. 190) , in his book Going Green: How to Communicate your Company's Environmental Commitment, advises companies that 'choosing green partners at the community level is without doubt the best strategy to improve your standing.' Such relationships certainly pay off for industry. McDonalds now has one of the best environmental 'images' of any US corporation after forming a partnership with the Environmental Defense Fund.
Greenpeace has a Change of Heart
Public relations practitioners have observed that environmental groups are 'favoring cooperation rather than confrontation' more and more (Greenberg 1993). And there is clear evidence that environmental groups in Australia and overseas are learning to do just that. The Greenpeace Australia website proudly asserts this new philosophy: "We work with industry and government to find solutions." Like many large environmental organizations that depend on subscriptions and donations, Greenpeace became sensitive to media portrayals of it as being "too radical" and "too negative." So it reinvented itself as an organisation that offered solutions and worked with industry and government to get those solutions in place in the mistaken belief that this would bring in more subscriptions.
In the lead up to the Sydney Olympic Games Greenpeace wrote to Olympic sponsors, including BHP, Coca Cola, General Motors-Holden, McDonalds, and others, offering to help them earn the name of 'Green' in the same way as the Sydney Olympics had: 'As sponsors, you have the opportunity to play a key role in this success. One of the many benefits of being part of the Green Games is the chance to demonstrate your company's commitment to the environment and to future generations. The Sydney Olympics offer your staff the opportunity to take part in a long-term global initiative to protect the world's environment... Greenpeace would like to work with you to explore the areas in which you can make an environmental contribution during the Sydney 2000 Games.' (quoted in Beder 2000, p. 263)
So for example, although BHP was named one of the worst 10 corporations in 1995 by Multinational Monitor for polluting the Ok Tedi River in Papua New Guinea with a 'daily dose of more than 80,000 tons of toxic mining waste' and 'helping to draft legislation for the PNG parliament that would make it a criminal offense to sue BHP' (Mokhiber & Wheat 1995), Greenpeace offered to help BHP demonstrate its commitment to the environment by conserving energy or using environmentally-safe refrigerants. And when McDonald's offered to stop making PVC toys for its Australian 'Happy Meals' as a commitment to the 'green' Olympics, Greenpeace congratulated it saying it was 'an important precedent for industries and consumers around the world' (Greenpeace 2000).
The Australian Conservation Foundation (2002) also works with industry: 'ACF works with government and the business sector to ensure that the momentum of change in corporate behaviour continues and strengthens.' However it does not generally publicise its corporate partnerships, which include Southcorp, the National Australia Bank, Microsoft and Berri (Steketee 2001). And in 2000 Australia, the Australian Conservation Foundation (ACF) lined up with BP, Shell, Rio Tinto and BHP to launch its report Natural Advantage: A Blueprint for a Sustainable Australia.
WWF Australia (2001) has long worked with industry. It says on its website that WWF enables companies to 'invest in the environment effectively' and 'increase their own social capital in the process.' It claims that by integrating WWF into its marketing activities a partnership between WWF and the company can:
All these benefits clearly accord with reputation enhancement gains outlined in the previous section. Apart from Rio Tinto, WWF Australia works with Alcoa, Accor, Origin Energy and Transgrid Energy.
One employee of Hill and Knowlton gives advice to corporations: 'Help them raise money... Offer to sit on their board of directors'. He also suggests hiring staff from environmental groups who are available 'at very reasonable rates' (Rauber 1994, p. 48). Top environmentalists may be more expensive. When notorious PR giant Burson-Marsteller hired the former chairman of Friends of the Earth in the UK, Des Wilson, as director of public affairs and crisis management he was 'reckoned to be one of the highest paid people in PR' (Anon. 1993).
When the Head of Greenpeace in the UK, Lord Peter Melchett, took a job with Burson-Marsteller, many people were surprised. Not so some Greenpeace (GP) insiders. An internal memo stated: 'our view is that since GP has been giving advice to business for years it is no surprise that Peter will be giving the same advice in a different capacity.' However following incredulous media coverage in the UK, Greenpeace International asked him to resign from their board.
PR consultant Philip Lesly (1992, p. 329) suggests that the best way to deal with activists is to give them a role:
Stauber and Rampton (1995/96, p. 20), who edit PR Watch, point out that hiring activists is a 'crude but effective way to derail potentially meddlesome activists'. There are numerous examples, in Australia, of environmentalists leaving their poorly paid activist jobs to join the more lucrative world of industry consultants, particularly in the field of reputation management.
Greenpeace Australia's work on the 'green' Olympics created several consultants including Karla Bell, Blair Palese and Michael Bland. But perhaps the best known environmentalist turned consultant was Paul Gilding, former head of Greenpeace Australia and then Greenpeace International. After he left Greenpeace Gilding started his own consultancy, now named Ecos Corporation. Ecos Corporation employs other former environmentalists including Palese, and Rick Humphries, a former Strategic Director of The Wilderness Society (TWS).
According to its literature, Ecos Corporation (2001) offers to help companies 'operationalise sustainability' by 'building brand and corporate reputation'; 'motivating and attracting employees'; identifying 'new product opportunities'; and helping companies to develop products 'for the roughly 4 billion people in the Developing World who have not been fully integrated into the market economy'. Its clients 'are primarily large corporations in the finance, energy, chemical and resource sectors.' Past and present clients of Ecos include Monsanto, DuPont, Placer Dome, BP Australia and WMC Ltd (formerly Western Mining Corporation).Nike Goes green
Companies with poor reputations in the area of human rights are particularly keen to gain a good environmental reputation to offset it. Nike is one example of such a company. Nike is a company that depends heavily on its brand image and corporate reputation. It spends more money on advertising and promoting the reputation of its products than most other companies in the world -- $1.13 billion in 1998. Celebrities are paid huge sums of money for their endorsement and association with Nike products. For example, Tiger Woods was paid $28 million and Michael Jordan was paid $45 million in 1998 by Nike (Jensen 2000); Haan and Schipper 1999).
Nike's reputation was valued at $3.9 billion in 1993 (Fombrun 1996, p. 5) However in recent years its reputation has been heavily tarnished by accusations that it takes advantage of sweatshop labor in the manufacture of its shoes. Nike does not manufacture its own products but designs and markets them. They are manufactured by contractors in countries where labor is cheap. About 550,000 workers are employed in 700 factories in 50 countries to make Nike products, the majority in Asia (Anon. 1997d) ; Jensen 2000).
Nike contractors tend to pay close to the minimum wage (Ballinger 1994; Community Aid Abroad Australia 2000; Haan and Schipper 1999). This cheap labor enables Nike to spend a great deal on design and marketing, pay large executive salaries, maintain large profits, and still keep the cost of the shoes affordable to the middle classes in affluent countries. Shoes that cost $16.75 to manufacture are sold for around $100 in the US (Jensen 2000).
Since Nike spends so much on marketing and so little on the product itself, it is clear that the reputation of its brand is all-important to Nike. So Nike was in trouble when it's contractors were accused of manufacturing Nike products in sweatshop conditions, using child labor, paying less than the minimum wage, enforcing overtime, subjecting employees to verbal abuse and sexual harassment and running factories like prison camps (Anon. 1997d; Herbert 1997, 13 A; Sonner 1997, p. B2). By 1997 Nike had become a symbol of sweatshop labor in the third world and was the target of many protests, outside store openings and by students against their universities' links with Nike.
So Nike has supplemented the endorsement of sporting heroes with that of environmental groups like Greenpeace in Australia and elsewhere. In 1998 Nike joined 20 other major US companies that committed themselves to no longer using or selling wood and paper products made from 'old growth' forests. The agreement was negotiated by a coalition of environmental groups including Greenpeace, the Natural Resources Defense Council, and the Rainforest Action Network (Knight 1998).
Also in 1998 Nike promised to phase out the use of polyvinyl chloride (PVC) from its shoes. It enrolled Greenpeace, which has a campaign against PVC worldwide, to publicize the promise. In its 1998 Olympic Report Greenpeace congratulated Nike for promising to eliminate the use of PVC in its products, making 'PVC free sportswear available to athletes and consumers'. There is a picture of Greenpeace presenting a cake in the shape of a green Nike shoe (complete with trademark swoosh) to Nike and the text reads. 'Greenpeace is calling on other sportswear manufacturers to follow suit and 'just do it!'' In fact, the only part of most Nike shoes made from PVC is the "swoosh," according to a Nike representative in Australia. Apparently Nike believed that if Greenpeace did the PR for them, the greenwashing label would not be used.
And Greenpeace Australia was willing enough to continue to promote the company's new environmental reputation. Nike was invited to a Greenpeace Business and the Environment conference in Sydney in July 2000 as a model of corporate environmental progress and responsibility. At the conference Nike director of corporate responsibility, Sarah Severn (2000) , proudly presented a paper on 'Nike's Journey to Sustainability'.
Yet whilst Nike receives acclaim for its environmental performance, its human rights record continues to be challenged. Recent surveys continue to find that workers making Nike products suffer inadequate wages, abusive treatment and excessive work hours as well as intimidation if they try to form unions. Obscene disparities remain between what the workers are paid and what Nike executives and celebrity endorsers are paid (Community Aid Abroad Australia 2000).
Community Aid Abroad (2000) in Australia points out, 'As the company with the largest profit margins Nike could more easily afford to ensure decent pay and conditions in its suppliers' factories'. Instead Vietnamese workers making Nike products earned less than half of what other foreign companies (apart from Reebok) pay their least skilled factory workers in Vietnam' (Schmit 1999).
The Nike case study demonstrates the shallowness of reputation management and its preoccupation with perception rather than substance.BP: Beyond Petroleum?
Another company that has been subject to criticism for human rights abuse is BP. However, unlike Nike, BP produces an inherently environmentally damaging product and continues to cause environmental problems around the world. It's ability to get environmentalists on side, including Greenpeace and the Australian Conservation Foundation, are therefore all the more remarkable.
In 1996 BP was accused of human rights violations in Colombia. Daniel Bland, a researcher with the group Human Rights Watch, says that local people have testified that if there is 'any kind of organised protest against BP in any way, the leaders of those protests are singled out for persecution for harassment and for death threats.' Such death threats are taken very seriously since six members of one group, the El Morro Association, have been murdered since they began their campaign about environmental damage being done by BP to their road and their water supply (World In Action 1997).
The deaths led to a government investigation that cleared BP of human rights abuses (Anon. 1998b). However Richard Howitt, a British member of the European parliament, obtained internal Colombian government documents that stated that BP had supplied to the Colombian military photographs, videos and information about peasant protestors concerned about the environmental damage caused by BP's operations. The information had allegedly 'led to intimidation, beatings, disappearances' as well as the peasant deaths (Anon. 1997a; Human Rights Committee 1997).
It is not only in Colombia that locals have been concerned about the impact of BP operations. BP's activities in Alaska, both existing and proposed, have been of concern to indigenous people and environmental groups. 'Between January 1997 and March 1998, BP Amoco was responsible for 104 oil spills in America's Arctic' (Manuel 1999, p. 11). In 1999 BP admitted illegally dumping hazardous waste at its 'environmentally friendly' oil field in Alaska and was fined $500,000 for failing to report it. It also paid $6.5 million in civil penalties to settle claims associated with the disposal of the hazardous waste (Mokhiber and Weissman 2000, p. 12).
BP was one of the companies in the forefront of efforts to allow oil exploration in the Arctic National Wildlife Refuge (ANWR), one of the last remaining pristine wilderness areas in Alaska (Gozan 1992). According to the US Department of the Interior, such activity would have a detrimental effect on the existence of a vast herd of caribou that calve there each spring (cited in SANE BP 2000).
In 1999, BP was charged with burning polluted gases at its Ohio refinery and agreed to pay a $1.7 million fine (Manuel 1999, p. 11). In July 2000 BP paid a $10 million fine to the US EPA and agreed to reduce the air pollution coming from its US refineries by tens of thousands of tons. The agreement, although voluntary, was taken to head off EPA enforcement action. In return for the agreement the EPA 'has offered a 'clean slate' for certain past violations' (Environmental Protection Agency 2000).
Despite its environmental negligence in several countries, BP has managed to earn a reputation for being environmentally progressive. The first step in this process was its decision to leave the Global Climate Coalition in 1997 and admit that global warming was a problem that had to be dealt with. The Global Climate Coalition was an industry front group that argued that global warming was not occurring. According to John Sawhill, President of The Nature Conservancy, who has known Browne for 20 years and has a seat on the BP America advisory board, 'Browne sees BP's position on climate change as a way to distinguish them from others in the industry.' (Quoted in Lowe and Harris 1998) The move came at the time BP was receiving adverse publicity for its activities in Colombia.
The defection of companies such as BP and Shell from the Global Climate Coalition (GCC) helped to protect their reputations and political standing in the lead up to the 1997 Kyoto conference (Music 1998). Since then so many companies have left the GCC because of its poor reputation and the increasing evidence of global warming that the GCC has had to restructure itself to be a coalition of trade associations that individual companies can't join. In this way companies can support the activities of the GCC through their trade associations without being associated with it themselves and thus losing credibility and environmental credentials (Worldwatch Institute 2000).
Opting out of the global warming denial camp has enabled these companies to take part in the policy debate about what rules would be introduced to meet reduction targets. BP was able to influence the policy responses to threatened climate change, a position it could not credibly take if it was denying the possibility of climate change. BP's attitude to climate change policy clearly demonstrates the company's priorities. It argues that there should be a gradual and 'measured approach that tackles the environmental threat without undermining economic growth' (Browne 2000).
In Australia, BP has joined with other industry leaders, including Rio Tinto and Alcoa, to lobby the government not to ratify the Kyoto Protocol unless the US does so first (Clennel 2000). The industry leaders also urged the government to guarantee that no jobs will be lost to greenhouse reduction measures (interesting given the massive job losses that resulted from BPs acquisitions (Browne 1998b) ) and to seek the most 'liberal' rules for meeting targets which include the use of carbon sinks (Clennel 2000).
BP's defection from the GCC, however, earned the praise of Greenpeace (Anon. 1997c) , which had a few weeks earlier been under threat of being sued by BP for damages for protesting against BP's operations at its Foinaven oilfield near the Shetland islands. BP had dropped its threat after Greenpeace promised not to continue its protests (Masood 1997). In 1998 Management Today magazine announced 'Sworn enemies BP and Greenpeace have done the unimaginable they've joined forces to develop solar power as a clean energy source' (Anon. 1998c).
BP's investment in solar power and an inhouse greenhouse reduction program seem to be aimed at reinforcing its green image. In 1998 BP announced a target of 10% reduction in its own greenhouse emissions from 1990 levels by 2010 (Anon. 1998a). But this does not include the emissions from the use of its products (oil and gas) which is of course a major contributor to global warming, approximately 3 percent of total worldwide greenhouse emissions according to the US group PIRG (Manuel 1999, p. 8).
In March 1999 BP launched its 'Plug in the Sun' program based on its investment in solar energy and the installation of solar panels on 200 petrol stations around the world. In its advertisements it said, 'We can fill you up by sunshine' as if this would distract people from noticing it was still petrol they were putting in their cars. For this program it was awarded a Greenwash award by Corporate Watch which stated that "the company hopes that by spending just .01% of its portfolio on solar as it explores for more oil and sells more gasoline, it can convince itself and others of its own slogan: BP knows, BP cares, BP is our leader" (Bruno 1999). Corporate Watch noted that even if this level of investment was increase ten times, as promised by BP, it would still be less than 2 percent of what BP spends on oil. BP's purchase of the solar firm Solarex at $45 million compared to $400 million just for Stamp duty on its purchase of the oil company ARCO (Bruno 1999).
The Earth Day Network 2000, which includes organisations such as the World Watch Institute and the World Conservation Union (IUCN) gave BP a 1999 Earth Day award for its progressive approach to global warming (Knight 1999). And ACF's Michael Krockenberger told ABC's 7.30 Report in October 2000 that an environmental turn around was 'about leadership and I think that companies like BP are on the cusp of providing that sort of leadership.'
In 2000 BP Amoco was rebranded as bp, Beyond Petroleum. The research and preparation for the rebranding cost $7 million and BP is spending hundreds of millions to advertise and promote the new image (Noor-Drugan 2000). This puts its investment in solar energy into perspective and shows that such an investment in solar could easily be done solely for reputational purposes. BP remains committed to ever increasing production and usage of oil and gas (Browne 1997; Ghazi and Hargreaves 1997).
Brown told The Oil Daily that 'The world needs oil and gas in growing volumes. But the people of the world have to be convinced that their needs can be met without destructive consequences' (Quoted in Music 1997). BP's Director of Policy, David Rice (1999) told the Global Public Affairs Institute: 'After all, we make no secret of our intention to grow our core exploration and production business, and to continue our search for new sources of oil and gas.'Conclusion
Reputation management has been a common corporate response to activist efforts to ensure people consider corporate responsibility when it comes to goods, investments and employment. Clearly it will take more than directed market choices to enforce genuine corporate accountability. If they are willing to spend millions on advertising, public relations and promotion, these companies will not shy away from spending millions on environmental improvements if there is reputational capital in it, without changing their most damaging practices or core business, no matter how environmentally damaging that is.
Some environmentalists may not see issues such as the alleged human rights abuses of companies like Nike and BP as relevant to their environmental performance and argue that so long as these companies are decreasing their environmental impact they deserve encouragement. They will claim that the praise offered by environmental groups serves to nudge them in the right direction, at least with respect to environmental issues. They might add that no company is perfect and environmental commitment is an evolutionary process.
However, a company that is undertaking environmental measures in order to distract attention from more socially damaging aspects of its operations, is clearly not embarking on the road to social responsibility, but rather engaging in a form of greenwashing. It is only a very narrow interpretation of environmentalism and a faith in the broader socio-economic structures of our society that enables mainstream environmental groups to interpret such actions as indicators of a sea change in corporate culture. It is, however, an interpretation that facilitates corporate cash flows into NGO accounts and avoids alienating large numbers of conservative supporters.
Environmental sustainability incorporates social considerations, including human rights, and long-term economic and environmental considerations. It clearly requires more than tweaking production processes. It calls for a broader reconsideration of the role and power of corporations in society, and the priority accorded to profits and economic growth. In the end, despite the rhetoric about triple bottom lines and enlightened self-interest, it is profits that count in any corporation. An oil company may invest in solar energy and admit that global warming should be prevented but it will do all it can to ensure that it can go on drilling for fossil fuels and expanding its markets.
The real issue is the power that corporations have to determine what is produced in our society and how it is produced; to persuade the youngest and most vulnerable members of our community to be hyperconsumers; and to undermine democratic processes through their deceptive public relations and lobbying strategies (Beder 2000). Giving them a pat on the back for token gestures just doesn't address these larger and more important issues.
Real environmental change can only come from political and social change that takes the choice of irresponsible behaviour away from corporations. This means that environmentalists are most effective when they are focussed on raising grassroots consciousness of the more fundamental problems of capitalist culture, consumption and production. Helping companies to publicise small reforms and polish their reputations only diverts attention from the larger picture.
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Professor Sharon Beder is a visiting professorial fellow at the University of Wollongong.
Sharon Beder's Publications can be found at http://www.uow.edu.au/~sharonb