Abigail Townsend: Rust in the pipes is corroding BP's shiny reputation

If it flaunts its green credentials, an oil company can't afford accidents
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The Independent Online

So, just how close were you to believing the hype? BP, so it would have us believe, is not a dirty polluter, peddling damaging amounts of fossil fuels and putting profits before all else. No, this was a company that had expanded, as the marketeers neatly pointed out, Beyond Petroleum. OK, so it still was largely about oil, but it cared. It cared about the planet, it cared about responsible corporate behaviour and it cared about renewable energy.

And I have no doubt that it still does. It is just that, with the file on Lord Browne's desk marked "Accidents" expanding, the marketing is starting to ring a little hollow.

It emerged last week that BP was shutting down half of its Alaskan oil production after discovering "unexpectedly severe" corrosion in the pipeline networks. Now, from a City point of view, it wasn't all doom and gloom. Most analysts believe that the stoppage will lead to only a minor hit on earnings. And anyway, crude prices rose on the news.

But from the point of view of reputation, it's a disaster, because this is not some one-off incident. Just days before the news emerged, Lord Browne was already in Alaska apologising for the leak in March of 200,000 gallons of crude, the biggest spill since production started in 1977. Nor is it the worst incident: 15 people died and many more were injured in last year's fire at a BP refinery in Texas.

Suddenly, the reserves scandal that rightly rocked BP's rival Shell seems small fry in comparison. That angered the City and forced major corporate structure changes. But it was not something that would ever catch the public imagination in the same way that death and oil leaks do.

Shell does not appear quite as vocal as BP in trumpeting its green credentials. Its latest advertising campaign seems targeted at petrol heads intent on getting the most out of their turbo-charged SUVs rather than proponents of wind farms. I think Shell has got this approach wrong, and I still applaud BP for pushing beyond this conventional image. But if you are going to hold your green credentials up for all to see, then you need to make sure you are not caught unawares by corroding pipes.

This is not an issue that's exclusive to the oil majors, though. Business is not stupid; it sees the way public opinion is going. People want environmentally aware, socially responsible companies. A billionaire is perfectly acceptable - just so long as he eventually gives it all away, à la Gates and Buffett. Fat cat polluters are just so last century.

So business adapts - or at least it almost does. Saying you agree is one thing; the real challenge is making radical changes to practices and strategies. Take carbon emissions. All kinds of great ideas are being explored to try to reduce them, such as offsetting, but how many companies are doing it? Are they doing as much as they can? And are the biggest polluters queuing up to do it? Sadly, on this last point, it appears not. The cynical whiff of spin is never far away.

But if you are looking for someone to blame, don't blame the companies. Politicians are the only ones who can bring about change. And when the G8 leaders can't even ensure that their own carbon-offsetting scheme gets off the ground, it doesn't bode well for the rest of us. So, spin or not, companies are to be applauded for at least moving in the right direction. What we need now is for the politicians to starting forcing change, before it's too late.

And BP? BP has been caught napping; it is inexcusable that it hadn't dealt with the corrosion in the Alaskan oil pipes sooner. Profits and revenues will, of course, hold up. But reputation is everything - just ask any politician. And as the company moves towards life under a new leader, all the while with an ever more demanding and socially aware public, it needs to make sure its lofty ideals hold up to scrutiny.

a.townsend@independent.co.uk

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