A leaked marketing document shows how BP plans to once again push a new, eco-friendly brand. But this time around, the company has to deliver.
BP’s new chief Bernard Looney planned for climate heat when he took the reins of the energy giant in February. But a global pandemic, crashing oil prices, and an explosive social justice movement were far more than the new CEO had bargained for.
This perfect storm of environmental, social, and governance (or “ESG”) issues has caught almost everyone by surprise, but none more so than BP. This year’s events have plunged the giant integrated oil and gas company into an existential crisis over its future. Analysts and insiders alike increasingly believe that it’s now or never for BP to convince the world that it is finally taking climate change seriously – and to do something about it. That something must go way beyond its infamous greenwash history: BP must re-invent itself if it is to survive into the 21rst century.
Welcome to the new era of stranded assets
Over the past two months, the first elements of a changing BP are coming into focus. Last week, BP became the first energy major to admit what many investors and analysts have long suspected: Its most precious assets—oil and gas—are losing value. The company announced it would slash the written-down value of its fossil fuel assets by as much as $17.5 billion in the second quarter—some 20 percent of its market capitalization. The announcement was a clear signal to the world that the era of stranded assets has begun.
This is ‘hugely important,’ says Natasha Landell-Mills of Sarasin & Partners, which as worked with BP’s board audit committee. Energy companies will never meet the Paris Agreement goal of keeping temperature increases below 2 degrees centigrade unless they re-align business strategies and capital expenditures to the Paris goals. Restating oil and gas assets reduces the amount of money BP is able to re-invest in those assets, says Sarasin’s head of stewardship. “The lower the expected price, the less new capital will go towards oil and gas.” This, she says, gives the Paris agreement ‘teeth.’
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The reduced value of its energy assets is having a cascading effect across the company, affecting everything from future investments, to jobs, to the value of plant equipment and exploration assets. This week BP announced it would sell its petrochemical business to the London-based chemical giant Ineos for $5 billion. Earlier this month, BP announced it was streamlining its workforce by eliminating 10,000 jobs, 15% of its total global workforce. Still to be seen is just how far Looney will go to restating the value of other company positions. That, in turn, says Landelll-Mills, will impact the profits of any company that depends on fossil fuel to deliver future profits.
A first look at BP’s future image
Yet Looney is doing more than cutting jobs and reworking financial projections. A key to a post-carbon BP will be its global image. To maintain credibility with shareholders and build trust with a growing anti-fossil fuel movement, BP is determined to demonstrate that it is not the same company it was in 2000 when it changed its brand name to the greenwashy “Beyond Petroleum” only to then experience the worst marine oil spill in history in 2010.
The world is getting a sneak preview of how the company wants to position itself publically, courtesy of a leaked BP marketing presentation published by energy investigative journalist and Drilled News editor Amy Westervelt. It is a briefing document for a three-day offsite held in February with senior BP marketing and communications executives, Looney, and their advertising agency of record, WPP.
The presentation says that BP acknowledges that the climate crisis will be at the center of the largest and most profound change in its corporate culture since 1908 when it was founded to exploit Iranian oil fields. For the next 112 years, the company’s single focus was to sell oil and gas and provide a steady dividend to investors while paying lip service to ESG concerns among a narrow group of elite stakeholders.
Those days are over. From now on, BP acknowledges it must manage and (it hopes) lead an incredibly complex and growing group of stakeholders focused on its environmental, social, and financial footprint across the world. BP acknowledges that its traditional stakeholders – investors, regulators, policymakers, NGO’s, and journalists – have been joined by millions of mostly young, social media-connected activists who are fed up with the climate status quo.
To court public opinion in this new populist era, BP has decided to soften up and make itself more “relatable,” according to the leaked presentation.
And what person to best characterize this new image than Bernard Looney himself. With his tailored jeans and open-collared white shirt, Looney oozes empathy, humility, and relatability. For example, when he took a virtual tour of an American oil refinery earlier this year, he talked with workers, not about production goals, but their grandchildren’s climate hopes and dreams. To stay connected he has embraced social media with an Instagram account, where he talks openly about the energy transition.
It’s easy to dismiss this as a lot of corporate spin. But consider that Looney has no other choice. Shareholders and activists alike are speaking out and are doing so on a vast array of communication channels that makes the prospect of the company controlling its message (an already quaint idea in the social media age) all but impossible. Looney also understands that if BP wants any chance of retaining the tens of thousands of millennial employees who are now the backbone of its workforce, the company must prove it is part of the solution, not the problem.
For BP, this means grappling with tough, almost existential questions. Questions like, “What is meaningful empathy in a world where we’re seen as one of the bad guys?” to quote its leaked internal confab. In other words, BP is trying to signal that it “gets it.”
If BP wants any chance of retaining its tens of thousands of millennial employees, it must prove it is part of the solution, not the problem.
Skeptics scoff at BP’s kinder, gentler new-age approach. “We shouldn’t expect the folks who wrecked the climate to be the ones who save it,” veteran climate activist Bill McKibben told Climate&Capital. Look past the fresh coat of PR greenwash, say critics, and BP’s business strategy is still the same: Grow its oil and gas business, invest in petrochemicals, increase natural gas production and convince the world gas is a renewable source of energy.
Beyond “Beyond Petroleum”
Looney must also overcome an image issue that is unique to BP. Three decades ago his former boss and mentor John Browne stunned the world—and cracked a rift in the environmental community—when he broke ranks with other petroleum producers and acknowledged the science of climate change.
In 2000, the charismatic, avuncular boss then embarked on what might have been the most audacious rebranding campaign the industry had ever seen. With great fanfare, Browne said the initials “BP” would no longer stand for “British Petroleum,” but “Beyond Petroleum,” adding a cheerful bright green logo with a giant sunflower, and spending hundreds of millions more to promote the new image.
But ten years later, a massive offshore explosion on its Deep Sea Horizon drilling platform caused the largest marine oil spill ever, sending BP’s ambitious green rebranding effort to a watery grave.
For Looney, it is now a race against time
The reality facing Looney is that BP’s core business has barely budged since the day Browne promised at a 1997 Stanford University speech that “if we are to take responsibility for the future of our planet, then it falls to us to begin to take precautionary action now.”
As BP itself has admitted, C02 emissions have risen 47 percent since Browne’s speech.
Had the company lived up to Browne’s words, perhaps it would not find itself in the almost un-winnable situation it now faces. For Looney, it is now a race against time as BP urgently reduces its dependence on its oil and gas assets.
“Bullshit baffles brains”
Shortly after Browne made his Stanford speech, someone asked an old friend of his, a former soldier, what he thought. The man replied: “We had an expression in the army which was, ‘bullshit baffles brains.'”
This time around, PR bluffing is no longer an option. Unlike Browne, Looney must deliver on the need to dramatically reduce fossil fuel use and by doing so, help save the world. Whether he is up to the challenge is anyone’s guess.