It’s early yet to begin writing the business obituary of long-standing BP CEO Lord John Browne, slated to retire in 2008. But the man once billed as the closest thing to a green Superman has had his cape singed recently.
Have we been duped? Could anyone reading BP’s annual sustainability reports the last few years have detected early warning signs of the sort of problems that have shaken this superhero of oil and gas — events like the Texas City disaster, the Alaskan pipeline mess, or the allegations that some BP employees crossed legal lines attempting to control pieces of the U.S. propane market?
Photo: Warner Bros. Entertainment Inc.
Such turns of fortune call to mind the plot twists that leave comic heroes at the mercy of villainous adversaries. Have Browne and others among the world’s erstwhile CEO supermen been exposed to something akin to kryptonite, or were we unrealistic to believe they could vanquish all foes, not least those inside their own organizations? Either way, it’s time to examine some myths and realities of CEO superhero-dom. (While we do this, we remind readers that the CEOs mentioned here have bravely done or said enough in the sustainability space for us to try to assess their efforts, while too many business leaders continue to view environmental and social issues as non-core, or something only governments and NGOs need to worry about.)
Two of the more striking things about Browne’s climb to rare heights of credibility and esteem have been his consistency and ability to think in multiple dimensions. One result: he has provided welcome counsel in high-level deliberations at other companies. Many moons ago, we found ourselves in the Ford boardroom with Bill Ford, then the newly christened chair, and Jacques Nasser, then CEO. (Full disclosure: SustainAbility has worked for Ford for many years.) Between the assembled top executives, a series of big screens carried a satellite feed of Browne, who was asked to explain how BP had managed, so early on, to stake out a coherent position on issues like climate change.
Like the faux-wizard of Oz, the man on screen was addressed with near-reverence. Unlike the wizard, however, he appeared to have nothing to hide, giving coherent, pragmatic replies. This memory came to mind when the news broke in mid-July that Ford will invest $1.8 billion in green car research and development in the U.K. over the next six years. While this may not result in a world swept by swarms of ultra-green mini-Fords, it’s one of the largest such investments ever, intended to accelerate Ford’s adoption of lightweight, hybrid, and diesel (including bio-fueled) technologies worldwide.
During the announcement, Richard Parry-Jones — Ford’s chief technical officer and group vice president of product development — admitted that folks may doubt these intentions, given that the company’s performance on previous high-profile environmental commitments relating to fuel economy and hybrids has fallen short. In light of this, The Financial Times reported “Ford’s record of reneging on environmental commitments, such as Mr. Ford’s promise to improve sport-utility fuel efficiency, made the company particularly careful in its analysis” of the potential of this latest program to generate real change. Thus Bill Ford, another corporate environmental superhero of recent years, is finding the reach of his powers questioned. Should we get rid of our collectible lunchboxes now?
It’s a Bird, It’s a Plane, It’s … One Step at a Time
Part of Ford’s problem is that, until recently, the U.S. market has been off-road in terms of environmental sensitivities and energy security. Given Ford’s profitability, could and should the company have bypassed consumer demand for SUVs to build and try to sell smaller — and smaller-margin — models, on which competition with the likes of Toyota is much more intense?
It’s hard even today, as the margins on SUVs and full-size pickups are still in the range of 10:1 versus what Detroit makes on most cars. But transitioning to the future takes foresight and courage — as The New York Times put it, “Had Mr. Ford produced more fuel-efficient vehicles like hybrids sooner, he not only would have found his company keeping pace with nimble competitors like Toyota when oil prices spiked, but he also would have been able to illustrate the bottom-line merit of his environmental values. Instead, Ford is again in the all-too-familiar spot of playing corporate catch-up.” Ford himself has said publicly that he wishes he’d pushed management harder, sooner, to adopt more of the environmental ethos to which he does seem to personally subscribe, but has struggled to embed in the automaker.
In comparison, John Browne’s problems, while painful, seem more manageable. Although once seen as a cultural outsider at BP, he has built a spectacular financial track record by any standards, and has the relative luxury of taking on crises and critics from a position of immense profitability.
While greens were thrilled by Browne’s early speeches on climate change at Stanford and in Berlin in 1997, his oil-industry peers were shocked. But he tempered his critics’ views by proving to be a consummate business leader. With his vision of a cleaner energy future and brave market forays, Browne has kept his competition off balance. He has transformed BP from a “two-pipeline company,” widely considered doomed, into a hugely energetic and profitable global player. When he took over as CEO in 1995, the company was generating annual revenues of around $30 billion, compared with $260 billion today. Under his guidance, BP — an early presence in areas like Alaska and the North Sea — has again got ahead of the pack in new markets like Russia and China. And, despite hiccups, the company’s “Beyond Petroleum” branding has helped to considerably soften its public image.
Part of the charm is that Browne and others at BP speak with considerable candor. Addressing a major conference in Istanbul recently, group vice president Nick Butler noted that “the 20th century is over, and the old oil industry — dirty, arrogant, and secretive — is becoming a thing of the past. The shift isn’t complete — we all have more to do — but the shift is well under way.” Ford has been similarly outspoken relative to industry peers: early on, it was the first automaker to leave the anti-Kyoto Global Climate Coalition, and recently became the first in its industry (and one of few globally) to produce a report exploring the impact of climate change on its business.
But candor gets you only so far. Whatever senior executives may say, recent disasters and controversies raise questions as to whether the BP miracle is starting to unravel — and no one is quite sure where Ford’s market share will settle, a question critical to determining what it really will be able to invest in cleaner technologies. Has BP’s push for growth and profitability been undertaken too quickly to allow even the most earnest CEO to maintain desired standards in the areas of ethics, safety, health, and environment, making some breakdowns inevitable? Can any hard-driving CEO — including recently anointed “Ecomagination Man” Jeffrey Immelt — deliver on wider promises consistently enough to continue to captivate the rapidly growing sustainability crowd, or will they be forced to hang up their capes?
We hope it’s not the latter. The world needs visionary leaders. And frankly, in spite of some glitches, Browne’s and Ford’s rhetoric may have been as important as their deeds. Against internal and external opposition, they’ve created room for others in their industries to join critical environmental and social debates. So we say to them: keep the capes, and may your companies and others become as green as you are.