BP among leaders in Environmental/Business Survey

By Alison Maitland Financial Times 2001.12.17

BP has evidently got its message across. The oil group, a leader in one of
the most potentially harmful industries, has been voted not only by chief
executives but also by activist groups and the media as the company that
does most to protect the environment.

This is the first time the annual survey has asked about companies'
environmental reputations, and unanimity on the top choice from such
divergent groups of interviewees comes as a surprise. After all, businesses
renowned for their environmental values, such as Body Shop and Ben &
Jerry's (now part of Unilever), figure prominently among the favourites picked
by environmentalists and journalists, while chief executives rate these far
less highly, or not at all.

In the case of BP, however, there appears to be near consensus that it has
made exceptional efforts to replenish environmental resources, develop
alternative fuels and communicate with stakeholders. As one chief
executive puts it: "They have got this 'beyond petroleum' tag these days,
but I think they do live up to it. They have invested heavily in alternative
energy. They are the leading supplier of solar energy panels . . . they have
done a lot of marine research and they are an environmentally friendly
company."

Comments from environmental pressure groups and the media back this up,
if less fulsomely. "Their business causes a lot of damage to the
environment," says one respondent. "However, over the years they have
accepted their responsibilities and are constantly making efforts to reduce
their impact on environmental resources. Although they have a long way to
go, they deserve credit for their effort." Another attributes these
developments to the leadership of Lord Browne, BP chief executive.

Comparisons are inevitably drawn with Royal Dutch/ Shell, regarded by
certain interviewees as the environmental pace-setter in the industry. The
chief executives make Shell their second choice, but environmental groups
and media commentators are more equivocal, rating it fifth behind The Body
Shop, Honda and Ford.

However, opinions diverge completely over another giant in the oil sector,
ExxonMobil. Environmentalists have attacked it for opposing the Kyoto
protocol on climate change. Yet it features in the CEOs' top 20
environmental favourites, particularly for having learned from the Valdez
supertanker disaster in Alaska.

Also striking is the fact that McDonald's, the fast food company that has
been a favourite target of anti-capitalists, features among the top
environmental performers chosen by pressure groups and the media. Yet it
does not appear on the chief executives' list.

The media and NGO commentators like its policies on recycling.
"McDonald's promotes its business at the same time as encouraging
people to recycle their packaging," says one respondent. "It has taken
great steps to reduce waste," comments another.

Effective public relations and marketing emerge in the survey as significant
influences on environmental reputation. One commentator nominates Ikea
"because their advertising speaks about caring about the environment and I
don't recall seeing any information in the international press contradicting
this image." Another chooses BP "because they're trying to convince
everybody that they're environmentally friendly, although I'm still not entirely
certain that's the case. Basically I've seen their advertising campaign."

Awareness of "green" issues has grown strongly in recent years, but it is
debatable whether the business world yet regards environmental
performance as crucial when evaluating corporate success and reputation.
Of the top 20 "most respected companies" companies in the world, 13 fail
to appear in the chief executives' list of most environmentally-friendly
businesses. They include Coca-Cola, Wal-Mart, General Motors, Nestle,
Southwest Airlines and Johnson & Johnson. There is far greater overlap
when it comes to shareholder value: 14 of the "most respected" companies
also feature in the top 20 list chosen by CEOs for creating the most value
for their investors.

The business community may give less weight to green issues than
environmental lobby groups do, but it appears to share their views of what
constitutes good environmental management. The most important criterion
of good performance for both chief executives and media/NGOs was
whether a company had developed or invested in cleaner, greener products
and processes.

The second most commonly cited criterion was whether a company had a
clearly defined environmental strategy or code. The third was how well
companies communicated with the outside world about their ethical
behaviour, services or products.

Automobile manufacturers feature high on the list for both groups of
interviewees, with Toyota placed third by chief executives, and Honda and
Ford taking the third and fourth places nominated by journalists and
activists. Toyota is praised for recycling car parts and developing cars
powered by alternative fuels. Honda scores for similar innovative
developments. Ford is described as having "an environmental conscience",
demonstrated by such initiatives as its support for national parks, its
Michigan factory roof garden and its recycling efforts.

Both groups of respondents pick more companies from the US than any
other country. But the chief executives choose more Japanese companies
and fewer UK ones than the NGOs and media commentators.

Half of the top 20 choices of each group do not appear in the other group's
list. Thus, chief executives give plaudits to Weyerhaeuser, the US timber
company, for the way it replants trees and pursues recycling, DuPont, the
chemicals group, for concern about safety and the environment, and
General Electric, for designing products for energy efficiency.

The media and NGOs choose less internationally known companies such
as Otto Versand, the German catalogue retailer, Patagonia, the US outdoor
clothing retailer, and Interface, the US commercial carpet manufacturer, for
their imaginative handling of environmental issues. Otto Versand, which has
won many environmental awards, is cited for using recycled paper in its
catalogues, its commitment to environmentally friendly cultivation of cotton
and distributing goods by rail and sea rather than by air.

GlaxoSmithKline is the only pharmaceuticals group to feature among the
top 20 companies for environmental management, coming joint 18th with
the UK's Co-operative Group, in the media and NGOs' list. "It's a
well-managed company with minimal environmental impact," says one
respondent.