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Harvard Business Review Article: BP as Environmental Role Model (Part III on global warming as the great environmental distraction)

[Editor note: Part I in this series reviewed the praise for BP and Enron from the Worldwatch Institute. Part II delved into the reasons that BP tried to rebrand itself as "beyond petroleum."]

“Such [progressive] leadership [on climate change] may give BP Amoco better access to government-controlled oil deposits and more operating flexibility.”

- Kimberly O’Neill Packard and Forest Reinhardt, “What Every Executive Needs to Know About Global Warming,” Harvard Business Review, July/August 2000.

The Worldwatch Institute sang the praises of BP’s it’s-a-problem, we-can-solve-it approach to climate change. Far Left environmentalist Joe Romm featured John Browne/BP in his book Cool Companies as a leading example of corporations going green for profits and virtue.

Both Worldwatch and Romm were wrong–dead wrong–about BP, just as they were also wrong about climate-alarmist Enron and Ken Lay.

It turns out that a lot of political profit-making and greenwashing was going on at both rogue companies. Remember what Jeff Skilling told one of Enron’s coal executives who complained that the company’s greenwashing was hurting his division:

“We are a green company, but the green stands for money.”

- Jeff Skilling, CEO, Enron Corp., quoted in Robert Bradley, Jr., Capitalism at Work: Business, Government, and Energy, p. 310.

Corporate altruism? A wise man’s suspicion in 1776 still applies. “I have never known much good done by those who affected to trade for the publick good,” wrote Adam Smith. “It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.” (Wealth of Nations, p. 456)

And Enron, as it turned out, had seven profit centers that stood to benefit from government-priced CO2. Altruism–or naked rent-seeking at the expense of broader society? Wake will Left environmentalists smell the skunk?!

“What Every Business Executive Needs to Know About Global Warming” (by Kimberly O’Neill Packard and Forest Reinhardt)

And in the pages of the esteemed Harvard Business Review, a trendy essay cajoling business executives to buy into climate alarmism as a new corporate ethic put BP and John Browne on a high pedestal.

The article begins by assuming the problem and the solution–two fatal flaws. “The [Kyoto] Protocol underscores the growing consensus among scientists that global climate change is a threat that must be taken seriously” (p. 130). The essay warned of “catastrophes” in-the-making were business to continue as usual. Corporations were urged to get on board or face even more punitive and disruptive regulation (such as the Kyoto Protocol).

Enter BP and John Browne–the Great Company and Great Man of the new era of social corporate responsibility. The essay states:

“BP Amoco [BP] has been a leader in supporting international efforts to slow climate change….

CEO John Browne and other BP Amoco executives … believe that taking a leadership position on climate change gives the company a distinctive identity in the eyes of government officials, scientists, and environmental groups. Such leadership may give BP Amoco better access to government-controlled oil deposits and more operating flexibility.

Furthermore, the company’s experiments with emissions trading are likely to give it clout at the negotiating table when international regulatory frameworks are being devised; company executives will be able to present hard data on how their system works.”

And still more benefits!

BP Amoco’s leaders also believe that by announcing the 10% cutback they’ll release the creativity of employees and increase their commitment to the company. ‘Do not underestimate the power of preemptive, aspirational target setting,’ says Chris Gibson-Smith, BP Amoco’s executive director for policy and technology. ‘The role of leadership is to invent actions that naturally have the consequence of transforming people’s thinking.’

In other words, confronting the climate challenge will stimulate the company’s employees—line workers and managers alike—to think more imaginatively. And to the extent that the employees see their values reflected in BP Amoco’s goals, they may become more committed to their jobs and to the company.”

- Kimberly O’Neill Packard and Forest Reinhardt, “What Every Executive Needs to Know About Global Warming,” Harvard Business Review, July/August 2000.

Favoritism for drilling on government land? Greater operational flexibility?  Thinking more imaginatively? Company values?

What if carbon dioxide (CO2) was/is the wrong target–the great distraction?

What if the same effort had been expended on clear-and-present environmental and safety dangers? Where would BP be today? And how much better would our environment and our safety be?

Here is my challenge to Kimberly O’Neill Packard (formerly with McKinsey), Forest Reinhardt (the John D. Black Professor of Business Administration at Harvard Business School), and Harvard Business Review: do you care to revisit this article and issue and provide all of us with an update? Start with climate science, and bring us all the way to BP and Enron. And on the physical science, start with Gerald North, a mainstreamer who has privately spilled some beans on the climate alarmists. You will find this to be very interesting–and perhaps even psychologically therapeutic.

7 comments

1 Jon Boone { 07.01.10 at 9:59 am }

In 2004, another Harvard economist, John Kenneth Galbraith, wrote “The Economics of Innocent Fraud: Truth for our Time.” In it, he highlighted the little remarked but obvious phenomenon of private corporate takeover of legitimate public function. The issue Rob presents here seems a case study for the way BP and Enron worked to manipulate, indeed, commandeered, the public sector for its own corporate ends. Such activity is now a veritable monsoon, with GE, Siemens, Bill Gates, T. Boone Pickens, and, alas, even the Chamber of Commerce, cross-dressing as corporate white knights in service to the realm, charged with slaying the dragon of climate change. With no sense of shame or sham….

Here’s a prescient quote from Galbraith’s book: ” No feature of the modern economy is more remarkable than the volume of corporate or personal revenue that comes from the marketing of the unknown. A reputation for persuasive nonknowledge and the diverse nontalent that is brought to bear is a less than innocent aspect of modern economic life.”

Just so.

2 Tom Tanton { 07.01.10 at 10:44 am }

Well, Jon, I agree that the private takeover of “public function” is fraught with problems, but no more so than the public takeover of private functions. In this instance, the “public” has created a faux market and subsidized and mandated the he** out of it to the point where the private sector cannot behave rationally, nor in some cases even honestly. Keep in mind that “government” is often at odds with “public.”

3 Jon Boone { 07.01.10 at 11:52 am }

Yes, Tom. But I inserted this bomblet carefully into this forum. What we so euphemistically and casually call untoward “lobbying” or rent seeking seems much more pervasive and sinister to me. Language is a slippery medium, fraught with ambiguity. Ideally, one should be able to think of government as the “public sector,” since it would, in the world we seek, have no parochial dog in any fight that would bias its arbitration of truth. This should not be a naive expectation. Rather, it should be one we insist upon.

However, the evidence presented here is that it is the private sector that has taken over this public sector role, then perverted it so that government can’t behave rationally or, in some cases, honestly–which then spills back reciprocally on the private sector, perverting its behavior even more. The identities of both sectors become so blurred in this hellish feedback loop that it’s hard to tell who from whom. It seems no accident in this scenario that the reputations of various “independent”accounting agencies, ranging from AIG to the Congressional Budget Office, are in tatters, for good empirical reasons.

In recent years, this situation has become much worse, and more difficult to manage, with the infusion of so much blustered nonsense–”climate change,” “global warming,” “effective renewables”–into the policy debate. What better examples of what Galbraith had labeled marketable “nonknowledge? And then there is the parade of nontalent almost ritually involved, from Congress to the Executive Branch, and from the likes of Ken Lay and Jeff Skilling to John Browne and Joe Romm–to mention only a few.

4 Steve C. { 07.01.10 at 1:08 pm }

Privatize profits and socialize losses. The end result of ever larger and larger government.

5 Jon Boone { 07.01.10 at 3:34 pm }

And, Steve C, corporations too big to–uh– fail….

6 f.Swoboda { 07.02.10 at 7:09 am }

Big Business, Big Government, Big money, Power Power Power. Who cares if it is government power or cooperate power? Both take freedoms from the individual and from the family.

7 rbradley { 07.02.10 at 7:39 pm }

To f.Swoboda

Government initiates force; corporations cannot. And even the biggest, most powerful corporations fail when they fail to serve consumers and other crucial constituencies.

Heroic entrepreneurship and principled entrepreneurship practicing free-market capitalism are the good guys–the rent-seeking political capitalists the bad guys.

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