Shell, Greenpeace, and Brent Spar

Copyright © 2002 by David P. Baron. All rights reserved. Reprinted with permission.

Generation of

Alternatives

General framework

Elimination of alternatives contrary to:

- law- company policy

- ethical consensus

ScreeningInterests MotivationsNonmarket actionInstitutions

Predictions:market reactions nonmarket reactions

Evaluation of claimed rights

Application of normative principles

Choice and strategy formulation

ChoiceAnalysis

Implement-ation

Refinements, reconsideration,generation of new alternatives

Shell UK’s process – Compliance (case-by-case)

Neither alternative eliminated:

UK Law

IMO Shell policy X “ethical

consensus”

Screening• BPEO criteria*• Narrow

definition of interests and institutions**

• Closed process only official consultations

• Compliance: satisfying UK requirements is sufficient

Ignored claimed rights/views of interests (GP) and broader public.

Narrow strategy: secure approval through the official government channels.

ChoiceAnalysis

Implement- ation:

tow and sink

• Sink at Sea• Dismantle on Land

* Engineering complexity, risk to health & safety of workforce, environmental impact and cost, acceptability to government and to “officially designated parties,” which included government bodies and “legitimate users of the sea” as designated in 1987 Petroleum Act)

** UK Department of Energy

a UK issue; aShell UK issuecase-by-case alternatives

identifiedwithin Shell

X

Missing Components

• sensitivity to “ethical consensus”

• develop a company policy rather than case-by-case

• view it as an industry issue

ScreeningConsider broader range of interests and institutions -- Dept. of Environment.Shell is vulnerable to nonmarket action.

• Consider claims and interests of groups and their likely actions

• Revise strategy based on analysis (I.e., loop back)

ChoiceAnalysis

Implement- ation

Refinements, reconsideration,generation of new alternatives

Additional alternatives:

• reuse• solicit bids• consult

within Shell• consult greens• co-opt/bargain• disposal in

other countries

Susceptibility to public protests/boycotts products

– consumer products

– products with low switching costs

– a brand name that can be damaged

operating environment

– operations that produce negative externalities

– operating in an interest group-rich environment

– multinational/global operations -- issues can spill over to other units

and countries

– operating in developing countries

organization

– a decentralized organization, so that external effects, including

intracompany, are not naturally considered

Lessons Nonmarket issues can spill across borders – company borders;

country borders Global companies are especially vulnerable Government approval is necessary but not sufficient Closed processes on nonmarket issues can be risky Use a broad definition of interests--not just “official” or even

legitimate View interests as choosing strategies in nonmarket

competition; try to anticipate their strategy Attempt to predict nonmarket action

– media’s role in nonmarket action; have your messages ready – prospects for spill-over into the market environment and to

other political jurisdictions– have a crisis management plan in place

Activists can alert a company to practices and issues that will be of concern to the public and governments

Generated alternatives publicly by inviting bids

Shell’s Revised Process

Evaluated 30 proposals from 19 contractors; selected 7.

- law-OSPAR- company policy

- impact on environment

- cost

ScreeningConsultations with interest groups (Greenpeace)Consultations with governments

Determined what was acceptable

Selected BPEO based on environmental impact, risk, cost, and acceptability to interest groups, the public, and governments

ChoiceAnalysis

BPEO: dismantle at

sea and use for a quay in Norway

Brent Spar Update

Shell towed (vertically) Brent Spar to a fjord in Norway. OSPAR (13 European nations) voted a moratorium on deep sea

disposal in the North Atlantic. UK and Norway voted no. In 1998 Shell selected a plan to slice Brent Spar horizontally and

use the sections to extend a quay at Mekjarvik in Norway. The rest was disposed of on land. Cost was 23-26 million. (Did Shell UK initially consider disposal alternatives only in the UK?)

Shell consulted with Greenpeace and other groups throughout this process.

UK Environmental Minister announced that future disposal would be on land (Labour government).

Disposal was completed near the end of 1999. A second rig will be taken to Norway and disposed of similarly.

Interacting with Activists and Interest Groups

identify the relevant interest groups and activist organizations in your market and nonmarket environments.

understand their agenda, preferences, and capabilities

understand the broader public support for their agenda

consult with them on important issues -- a number of companies are setting up regular forums for exchanging information and views --Shell met with Amnestry International to discuss possible operations in Iran

cooperate when that is beneficial -- McDonald’s and Environmental Defense Fund

fight when you are right and can win -- but be careful

British Petroleum and Greenpeace BP strategy post-Brent Spar: going green. For

example, commitment to solar energy, addressing global warming through an aggressive voluntary CO2 reduction program.

Began to meet with Greenpeace late in 1995 In August 1997 two Greenpeace members

occupied the Stena Dee oil drilling platform under tow to a new BP exploration area in the North Atlantic

Greenpeace’s objective: stop oil exploration and production in the area

What should BP do?

Shell - BP Differences Shell was first. BP had learned a lesson. Greenpeace had lost some credibility as a result of

inaccurate Brent Spar estimates Greenpeace took journalists along--fog hindered filming and

rough seas made journalists seasick; Greenpeace refused to bring them home; BP brought them home

BP case did not involve disposal -- lower on societal-significance dimension and audience-interest dimension (stop oil exploration?)

BP had come out green. Did this help with the public? BP offered showers and not water canons. BP sued Greenpeace and Greenpeace leaders for damages;

i.e., the lease costs on the oil rig Greenpeace backed down and BP withdrew the lawsuit; an

uneasy truce BP had monitored Greenpeace’s ships and knew in advance

of the boarding and was prepared