Communicating the Strategic Implications of Climate Change Action in Petroleum &

Energy Industries: Current Dilemmas, Future

Outlook

Jacob Park Assistant Professor, Business & Public

Policy Green Mountain College (Vermont, USA) E-mail: parkj@greenmtn.edu

Presentation @ 13th Annual Conference of the Greening of Industry Network Cardiff University, Wales/UK July 4, 2006

Presentation Outline

• Business of Global Climate Change: Changing Context for Petroleum & Energy (PI) Industries

• Communicating Climate Change Action in PI Industries: Assessing Current Approaches

• Public Communication and Outreach in an Age of Social Computing: Examining the

Strategic Implications for Firms and Industry

Business of Global Climate Change: Changing Context for the PI IndustriesKyoto Protocol, in force since February 2005, encourages the

participation of private and non-governmental actors through its ‘flexible mechanisms’

Increasing business awareness of and global public pressure for ‘beyond compliance’ climate change action

Companies in the PI industry are arguably the most ‘transparent’ in terms of

traditional environmental/sustainability reporting. But, environmental advocacy

groups regard PI companies, particularly ExxonMobil, as eco-unfriendly

‘carbon dinosaurs’

ExxonMobil: Case in point, check out: http://www.exxposeexxon.com/movie

BP (‘Beyond Petroleum or Beyond Preposterous?’ - CorpWatch, Dec. 2000)

Firms in PI industries still have NOT meaningfully engaged the public

in four key sector-related climate change dilemmas

1. Private sector is a leading source of international GHG emissions

• 22 percent of world’s carbon production can be traced to 20 companies, while nearly 47 percent of the global carbon emissions can be traced to 20 private and state owned energy enterprises

2. Many PI companies have a disproportionately large global carbon footprint

• The 1997 carbon footprint of BP would equal 3 percent of the worldcarbon emissions for that year

• Exxon Mobil’s 1997 carbon footprint would exceed the combined annual emissions of Indonesia, Malaysia, Thailand, and the Philippines

SOURCE: NRDC et al (1999) Kingpins of Carbon: How Fossil Fuel Producers Contribute to Global Warming and others

3. Although majority of Americans regard climate change to be an important

public concern, the American public (unlike most of Europe) is very divided

in terms of what constitutes the ‘appropriate’ climate change action

ABC News/Washington Post Survey (September 23-27, 2005)

“Do you think global warming is an urgent problem that requires immediate government

action, or a longer-term problem that requires more study before government action is taken?”

Urgent problem 41% Longer-term problem 47% Not a problem 6% No opinion 6%

4. Global energy consumption and GHG emissions (even with Kyoto Protocol)

between 2005-2030 are expected increase rapidly

Communicating Climate Action in PI Industries: Assessing Current Approaches

Four Types of Risk Communication Situations

• Public Relations: High Hazard, Low Outrage

A particular issue is of high risk to a firm or an industry, but the public awareness is low

and/or apathetic

• Stakeholder Relations: Moderate Hazard, Moderate Outrage

Unlike the public, stakeholders are an attentive audience, neither too apathetic nor too upset to listen.

• Outrage Management: Low Hazard, High Outrage

A group of individuals or the public at large is upset with your company and/or industry,

although this anger is not likely to be much consequence to the company

• Crisis Communication: High Hazard, High Outrage

There is no ‘public’ in a crisis situation; everyone is a stakeholder. Crisis communication is

very different from routine public relations, though it is often treated one and the same

(Adapted from Peter Sandman 2003 [http: www.psandman.com])

TV Ad: Do you believe in global climate change?

"I guess as I get older yes I am starting to worry about the environment now, the global warming." Cab driver, London

"We’re destroying the capability of the planet to heal itself." Man, Chicago

"It’s something we need to deal with and we need to deal with it today." Woman, London

Our action:

We were the first major energy company to publicly acknowledge the need to take steps against climate

change.Our energy efficiency projects have reduced emissions byover 4 million tonnes since 2001.

It's a start.

BP: Public/Stakeholder Relations Approach

Shell: Stakeholder/Public Relations Approach

According to Shell, the company ‘shares concern’ that carbon emissions from vehicles

and industrial activity are contributing to global climate change

Carbon TradingCarbon Trading is the buying and selling of allowances for producing carbondioxide emissions. Garth Edwards has seen how carbon trading encouragescompanies to reduce their emissions.

Energise™ for lower emissionsEnergise is a programme for conserving energy and reducing emissions at ourfacilities worldwide.  Livio Accattatis advises us where and how energy efficiency can be improved.

Preparing the way for hydrogenHydrogen fuel can power vehicles, with the only emissions being heat and watervapour. It is widely tipped to be a fuel of the future. Rick Scott is already installinghydrogen pumps in Shell refuelling stations.

Cleaner transportAs China’s economy continues to grow, so does the demand for energy. Discoverhow Han Juan is working with the Shanghai Government to find cleaner energysolutions for China’s thriving cities.

Chevron: Public Relations/Outrage Management Approach

Question posted on the company website: “Why won’t ExxonMobil recognize

that climate change is real and take actions to support the Kyoto Protocol?”

Opposition to the Kyoto Protocol does not equate to a lack of concern about the

environment or the issue of climate change. In fact, quite the contrary. ExxonMobil

recognizes the risk of climate change and its potential impact on societies and

ecosystems, and we continue to take actions and work with others to address that risk.

ExxonMobil: ‘Not my sole responsibility so no need for a firm-level communication’ Approach

Play.asx

US-based Anti-Climate Action Advocacy Group’s “We Call It Life” Campaign Approach

Source: Competitive Enterprise Institute (http://www.cei.org)

Public Communication and Outreach in an Age of Social Computing: Examining the Implications for Firms and Industry

Key Question: Will and to what degree is the current

situation (HIGH business hazard, LOW public outrage)

likely to move toward greater business salience and strategic involvement in climate change action

(HIGH business hazard, HIGH public outrage)?

Info. Channels

Technology

Metrics

• Web site• Online ads• Email• Blogs• Interactive TV• Podcasting• Mobile ads

• Personalization• Search• Site merchandising• Customer database• Web analytics• Brand monitoring• Content syndication

• Conversion rates

Info. Channels Tactics

Metrics

• TV/cable• Radio• Magazine• Newspaper• Outdoor• Direct mail

• Coupons• Customer promos• Trade promos• Sales force

• Reach• Frequency

Current Communication & Outreach Strategy

Communication & Outreach Strategy

in the Age of Social Computing

SOURCE: Forrester Research, April 2006

Towards a New Strategy of CSR Communication and Outreach in an Age of Social Computing

CSR-focused Blogs and Social Computing Tools

SOURCE: Forrester Research, April 2006

Key Social Computing Drivers

Consumers’ trust in institutions is fallingOnly 42% of consumers say they even “somewhat” trust

newspapers.

Consumers are less brand loyal52% of consumers say brand trumps price, down from 59%

in 2000.

Consumer-to-consumer activities are taking offC2C eCommerce, messaging, blogs, camera phones, video

phones

Consumers are customizing products and services10%-40% of customers develop or modify products.SOURCE: Forrester Research, April

2006

Ads on mobile phones

Web banner ads

Search engine ads

Branded Web sites

Ads in magazines

Ads on radio

Ads on TV

Ads in newspapers

Requested email updates

Consumer opinions posted online

0% 20% 40% 60% 80% 100%

“I trust” ___

Recommendations from friends/family

SOURCE: Forrester Research, April 2006

Demographics of Social Computing Users