A few years ago, British Petroleum officially changed its name to the simpler BP, a point that seems to have been lost on many officials in the Obama Administration, much to the chagrin of the British tabloids, which seem to be taking the whole matter personally. These days the two letters could just as easily stand for “big problem.”
The economic and environmental costs resulting from the Deepwater Horizon disaster in the Gulf of Mexico are still being tallied, but the number seems to shift upward on a daily basis. What will ultimately happen with BP, whose stock price has plummeted, has lost almost half its market value as this issue went to press, and is now the subject of bankruptcy and takeover rumors, remains to be seen.
In addition to the horrific scenes of oil-soaked pelicans, and other wildlife, and the heartbreaking tales of fishermen and others whose livelihoods are endangered, for the readers of this magazine there’s the added burden borne by those who had invested in the company both financially and psychologically. That seems to be especially apparent in the SRI community, where opinions of BP had been pretty high.
“It is a fascinating dilemma,” says John LaPann, president and chief investment officer of Federal Street Advisors, a Boston-based investment consultant to institutional-sized families and individuals and mid-sized foundations, of the conundrum facing SRI investors. “The trend in social investing, in environmental investing, has been to not automatically screen out any company that’s doing something that you don’t 100% approve of but instead try to look at the balance between what they’re doing well and the other aspects of their business,” he says.
Steve Schueth is president of First Affirmative Financial Network, headquartered in Colorado Springs and a veteran of more than 20 years in the SRI space. Schueth points to BP’s “Beyond Petroleum” campaign, a reported $200 million public relations effort launched at the time the corporation stopped calling itself British Petroleum. “And we–meaning the SRI community–believed that then-CEO John Browne was serious about this,” he recalls, adding that since Browne was replaced by Tony Hayward three years ago the company’s move toward alternative energy has been moved to the back burner. “There was a period of time where the SRI community was looking for an oil company for portfolio diversification,” Schueth says. “There was sort of wishful thinking–’We need one; who’s the best one out there?’ was the question. The best one out there by virtue of a couple of different metrics was BP.”
Why BP Looked Good
From an SRI standpoint BP looked a lot better than its industry peers (see sidebar). Schueth says the company scored high marks for transparency, and even though its safety record was spotty, BP’s management was more open about it than its competitors. In the area of solar, wind, and biofuel development BP was way out in front of the others.