Positive Power of Principled Profit
Volume 2, Number 4 - December, 2004

Positive Power Spotlight: BP

Why am I profiling a huge multinational oil company--the Number 1 global company in Fortune magazine's ranking, beating out even Wal-Mart? Don't oil companies get involved with solar because they want their fingers in consumers' pockets? Aren't their commitments to "green" initiatives based on the two-pronged fork of fear of regulation and the need to convince a deservedly skeptical public?

I think that's certainly true of a lot of petrochemical companies--and certainly, you won't see a profile of Exxon-Mobil or Chevron in this column any time soon.

But Christine Arena's profile of BP (from which all the statistics are taken; see Another Recommended Book, below) convinces me that BP (formerly called British Petroleum), at least, has seriously altruistic reasons for its involvement in green activities. Better still, the company's commitment has led to a huge positive bottom line impact, demonstrating a core principle of Principled Profit: that it's actually easier to do well economically by doing good environmentally and/or socially. The implications of Fortune 100 companies converting to social responsibility are going to be substantial, and felt throughout society--so why not take a moment to say thank you?

BP, until a few years ago, was a typical oil giant, cleaning up after itself only when forced to by government regulators, extracting irreplaceable resources with no thought to the long-term environmental consequences.

Lord John Browne became head of BP in 1995; in 1997, he made a speech at Stanford Business School acknowledging oil companies' role in the global warming crisis and pledging the massive resources of BP (a $179 billion company) to slash carbon dioxide emissions to 10 percent below its 1990 levels--and to make a corporate-wide pledge of genuine environmental responsibility.

Browne's goal was to achieve this by 2010--but it only took four years.

What kind of impact did this have on traditional measures of business success?

Reducing carbon dioxide emissions helped fuel revenue growth of over 70 percent, a 32-1/2 to 1 return on the environmental investment, and a tripling of stock prices. Additionally, the company has grown its solar business by an astonishing 20 percent per year, kept 16.9 million tons of carbon dioxide out of the air (and reduced emissions by 23 percent overall), knocked an impressive $650 million off its own energy bill, reduced oil and chemical spills by 30 percent and safety incidents by 94 percent.

A quick trip to http://www.bp.com bears out these commitments. In the main menu across the top, "Environment and Society" is the second choice, after "About BP" and ahead even of "Products and Services." Still on the home page, the first and third entries under publications are Lord Browne's ethics lecture and the company's 2003 sustainability report. And solar/renewables have a prominent place in both the business and residential products list.

Clicking on the environmental button, it's clear the company interprets its mandate broadly. In addition to the expected choices on sustainability, conservation, and climate change, this page offers choices for both workplace and consumer safety, human rights, even arts and culture--plus a feedback option if you want to give BP a piece of your mind.

Let's look a bit more closely at Browne's ethics lecture. It's less than a month old, delivered to Columbia's Business School in New York on November 19, 2004. and it says, among other things:

* "We must tell the truth, even when the facts are uncomfortable" (and puts this statement in the context of addressing global warming--through improving vehicle mileage, eliminating waste, shifting energy generation from coal to solar and natural gas, and sequestering carbon).

* "Ethics are not just about compliance...ethics are about purpose."

* "We create wealth not just for our shareholders but for society as a whole."

* "We have to be diverse and inclusive. Not all talent is concentrated in white Anglo Saxon males," even at the highest levels of company leadership.

* And, perhaps most telling, "We can't become a new colonial power, convinced that it knows best and ready to take every decision... There can't one standard for America and another for Angola...From Trinidad to Georgia; from South Africa to Vietnam. In every area, we want to make a contribution to sustainable development, which extends the benefits we produce to as many people as possible. In the end, that is probably the only climate in which we can secure and develop our business."

Lord Browne is the first to tell you that the company still has much farther to go to become completely green. But it's moved substantially forward, helping its own cause in the process. I, for one, will start buying my gasoline at BP stations when possible (there aren't many of them around here).

Another Recommended Book: "Cause for Success: 10 Companies that Put Profits Second and Came in First" by Christine Arena (New World Library, 2004)

Profiles 10 socially conscious "high-purpose" companies--and predicts that corporations ignoring these greater purposes will meet with failure in the marketplace.

And by paying attention to social criteria, these companies can actually move forward faster and more consistently: "Rather than approaching social responsibility, environmental stewardship, philanthropy, operational accountability, and ethics as separate interests, high-purpose companies align the goals of these activities with their business strategies, leading them to be remarkably effective on all fronts...in solving colossal world problems, they tap into unmet needs vital enough to sustain business perform ance over time." (p. xvii)

Arena identifies several traits these companies have in common: compassionate, heart-driven leaders; an ability to pick causes that are relevant to the company's core business--and to work on those problems in ways that play to the company's mission-critical key strengths; a willingness to imbue every aspect of operation with genuine attention to the wider social cause (they "walk their talk," in other words); a needs-based approach that gives primary attention to solving the social problem: "By allowing the problem to lead to the appropriate solution, these companies discovered financially self-sustaining philanthropic models, while making their cause-related programs essential to the communities they serve."

Finally, all the companies use a broad definition of success.

Most of the book is given over to profiles of the ten companies:

* Interface, a company that reinvented itself as green and sustainable, after 21 years of the traditional extractive, polluting approach--and since its conversion to a cyclical model, has grown to one of the largest flooring companies in the world. CEO Ray Anderson says, "The economy is a wholly-owned subsidiary of the environment." The company has pioneered such innovations as leasing its carpets to its major corporate customers, so instead of going to the landfill, the used carpet goes back to the plant for disassembly and reuse.

* Oil giant BP, whose groundbreaking effort to reduce carbon dioxide emissions has made the company vastly more profitable.

* Eziba (founded with the socially responsible mission of lifting 3rd-world artisans out of poverty and preserving their culture by making their craft items available to developed countries)

* Stonyfield Farm, which finds its commitment to organic, sustainable farming has not only keep a generation of local dairy farmers solvent and profitable, but has also influenced food giant Danone, which bought the company a few years back

* Avon (yes, the cosmetics company--which has a major corporate goal of curing breast cancer)

* Timberland, with a 15-year history of supporting the City Year program: an urban volunteer community improvement corps

* Green Mountain Coffee Roasters, which made a conscious choice to end rapacious industry practices that are actually driving coffee farmers off their land

* The Body Shop, whose stores are such points of social action that they've not only helped release political prisoners all over the world, but have been able to collaborate with such personages as the Dalai Lama and Bruce Springsteen (and of course, such partnerships certainly make marketing a good deal easier!)

* Grameen Bank, a well-known microlender that has lifted thousands of Bangladeshi women out of poverty

* Hewlett-Packard, which seeds technology to microentrepreneurs in developing countries (and whose social change efforts I cover in a profile of HP's Barbara Waugh, one of several profiles of individuals who are making in a difference--in my book, Principled Profit: Marketing That Puts People First)

It's important to note that Arena does not gloss over these companies' faults and problems; these are not models of perfection, but of continuous improvement. They've come a long way, either from their own histories as environmental and social abusers, or from proving, against society's expectations, that companies set up from the get-go as honorable, ethical, and socially committed can actually succeed in the marketplace. You can expect to see others of these ten companies profiled in future issues.

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