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December 23, 1999
BP Amoco Leads the Industry into a Greener Future
by Phillip Johansson
Several recent steps taken by BP Amoco to improve environmental performance have highlighted its
leadership in the oil industry.
SocialFunds.com --
Many mutual funds and other investors are increasingly applying the "best of class" strategy for
screening corporations on social and environmental issues. In the oil industry, the international
giant BP Amoco often rises to the top of the pile for its relatively forward-thinking views on the
environment. While other oil companies keep their head in the sand, BP Amoco makes progress on
global warming, environmental monitoring, and alternative energy sources.
 A recent Wall Street Journal article noted that BP Amoco
is at the forefront of the movement by corporations to address the issue of climate change, and
that this year its managers are being evaluated for their efforts to cut emissions as well as for
their financial performance. The company is developing an environmental management system (EMS) for
all exploration, drilling, and production units in the U.S.
"I disagree with those in the
industry who say the only answer on issues such as climate change and global warming is to question
the science, to deny responsibility and try to ignore the reality," said Sir John Brown, CEO of BP
Amoco, at a recent speech at George Washington University.
Although BP Amoco has
repeatedly asserted that the scientific findings on global warming are provisional, they have
decided to take a proactive role in meeting the challenge. "Of course, there are many things we do
not know," said Brown. "But it is an undeniable truth that people link energy to pollution, that
they fear for the environmental future for themselves and their children, and that they believe
companies should raise their heads and their aspirations."
BP Amoco was one of the first
companies to announce its support for the Kyoto Protocol in 1997, a worldwide agreement that seeks
to prevent global warming by reducing greenhouse gas emissions. It has dropped all ties with the
Climate Change Coalition, an industry-funded lobbying group vigorously opposed to U.S. ratification
of the Treaty, which stood in they way of their more proactive environmental agenda.
Part
of the Kyoto treaty calls for the establishment of greenhouse gas credits, and a market for trading
them. A company that reduces its gas emissions below the mandated target will earn credits, which
it can sell to companies that can't meet the target. BP Amoco has taken the lead in piloting the
gas emission credit market, by conducting experiments in trading between its own world-wide
divisions which have proven very successful.
In the past three years since the Kyoto
Treaty, BP Amoco has compiled a portfolio of over 300 environmental initiatives, partly in response
to the challenge of climate change and partly in response to wider environmental concerns. Among
these, they have set the target to reduce emissions of carbon dioxide by 10 percent from a 1990
base by 2010, including future growth, so overall it's a nearly 40 percent reduction compared with
business as usual.
They have also launched initiatives on other emissions targets,
eliminating gas flaring at drill sites, instituting environmental auditing and transparency,
exploring alternative sources of energy, and producing cleaner fuels. They have introduced several
new fuels effective in reducing emissions, including BP Diesel Ecology, which cuts sulfur emissions
by 90 percent.
A division of BP Amoco, BP Solarex, is the world's largest manufacturer of
photo-voltaic panels, and over the last 5 years they've invested $150 million into research and
development of solar energy. Their "Plug in the Sun" program involves installing solar panels at
new gas stations, fulfilling the electrical requirements for the site with sustainable and
non-polluting solar energy. Pilot stations have been erected in Europe and Australia, and BP Amoco
plans to have 200 running by the year 2001.
The greening of BP Amoco has been driven by
a new perspective of corporate citizenship within the company. "Our approach is rooted in sound
business common sense," said Dr. Gary Dirks, Regional President of BP Amoco, Asia. "As we see it,
shareholder value and social responsibility support each other. We should view climate change,
pollution and all the related environmental issues industry faces as another form of opportunity."
One of these opportunities is employee relations. Polls conducted by BP Amoco found that
more than 60 percent of their own staff see the environment as the single most important issue in
defining the quality of the company they work for. "That's another key point about our stance on
climate change: It's tremendously motivating for employees," said Dirks. "It encourages
innovation."
Like any company, especially in an environmentally hazardous industry like
oil drilling and production, BP Amoco is not without its tribulations. A shareholder resolution
filed by Trillium Asset Management asks BP Amoco to halt drilling plans for the Arctic National
Wildlife Refuge, an environmentally sensitive and pristine wilderness. But in the evolving
tradition of "best of class" investing, BP Amoco deserves the reputation it has earned among
investors.
"What you're seeing now is heavy industry splitting into the leaders and the
ostriches," said Bob Massie of the Coalition of Environmentally Responsible Economies (CERES). "You
are seeing an increasing number of leaders who are willing to talk about global warming and think
about this as part of their strategy, and who understand that the science is not only overwhelming
but who don't want to fight that battle any more."
©
SRI World Group, Inc. All Rights Reserved.
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