Can BP Keep NGOs Talking?

Can BP Keep NGOs Talking?

Source: STRATOR

20 February 2004

Summary

The Baku-Tbilisi-Ceyhan (BTC) pipeline is presenting a novel problem for BP. The pipeline's geopolitical importance to the British and U.S. governments makes it a crucial investment for BP, yet threatens another major corporate interest: building ties to non-governmental organizations (NGOs). BP's "civil society" partners are increasingly open to attack from within the NGO community. It is an open question whether BP can balance the need to be in on major projects such as BTC against its desire to set itself apart from other oil majors by engaging its critics from the environmental and human rights realms.

Analysis

BP was the first of the oil supermajors to embrace the idea of social and environmental responsibility. A 1997 speech on climate change by CEO Sir John Browne signaled a new strategy: BP's goal of outdistancing competitors by convincing NGOs and the public that it is genuinely concerned with "sustainability" and human rights. BP (and lately its Anglo-Dutch rival, Shell) has pursued this strategy with determination, despite mixed successes.

BP's strategy of engaging NGOs has come under intense pressure, due to the company's central role in projects that campaigners oppose. BP will face yet another test next week: London Rising Tide, a small environmental protest group that has campaigned against the BTC pipeline, is calling for NGOs to boycott a Feb. 24 meeting in London that BP is organizing. The purpose of the meeting is to discuss human rights and environmental issues surrounding the pipeline.

The boycott call by Rising Tide -- which, like Friends of the Earth, was not invited to the meeting -- is unlikely on its own to impact BP's engagement strategy, nor will Rising Tide's planned protest outside the London hotel where the meeting is to take place. However, Rising Tide has attacked several NGOs that are working with BP on pipeline-related issues, and these public criticisms of BP's partners could yet cause some damage.

Rising Tide points to three major

humanitarian-relief NGOs -- Mercy Corps and the U.S. offices of Save the Children and Care International -- that it says have signed "lucrative deals to monitor the pipeline, thus dispensing with any credibility they may have had in the NGO community."

Environmental and human rights campaigns against the $3.2 billion pipeline have kept up pressure on nearly all the entities involved. These range from the British government's Export Credit Guarantee Department -- whose offices Rising Tide briefly occupied last summer -- to the European Bank for Reconstruction and Development and private banks such as Citigroup and the Royal Bank of Scotland. In early February, Friends of the Earth criticized the Royal Bank of Scotland over its role in financing the pipeline, saying the deal violates the Equator Principles -- a voluntary code of conduct for the banking sector that RBS has adopted. A day later, World Wildlife Fund, the global conservation group, called the pipeline "a disaster in waiting" and criticized Citigroup for helping to finance it. WWF said Citigroup's involvement in BTC undermines the company's "professed commitment S to protecting the environment" -- a commitment for which Citigroup had been publicly lauded by Rainforest Action Network, a U.S. environmental group, only a few weeks earlier.

BP is in a difficult position. The corporation's problems are partly due to U.S. and British desires to route the project in such a way that it brings Caspian oil to the Mediterranean, while bypassing both Iran and Russia. Thus, the pipeline route reflects geostrategic interests -- and throws a spotlight on BP's closeness to Downing Street in particular -- rather than on the engineering and cost rationale that BP would apply if it were not an instrument of state policy. London's support is essential to maintaining operations in difficult business environments such as Russia and also helps to insulate BP -- and the BTC pipeline -- from campaigners' demands.

But state sponsorship comes with costs: The pipeline will follow a longer, more costly and technically challenging route via the unstable former Soviet state of Georgia. In addition to economic and political complexities, such routing also places BP on a collision course with the wider NGO community -- and threatens the company's ongoing efforts to find peace with it. Now BP's "civil society" interlocutors, which the company needs to support its environmental and human rights policies, are under attack from their NGO peers. Moreover, BP's engagement with NGOs has done little to insulate the company from attacks by intransigent groups such as Rising Tide. Nor is BP alone in this experience:

Citigroup, the U.S. financial services giant, has no doubt noticed that an agreement it reached in January with the pressure group Rainforest Action Network failed to give it immunity from attacks by WWF and other environmentalists -- coincidentally, over the same pipeline that is causing trouble for BP.

Rising Tide said this week that "collaborations between NGOs and corporations result in the manipulation of those NGOs as pawns, disguising those corporations' [interests] and thus giving them unwarranted credibility" with the public. As BP struggles to balance the strategic goals of London and Washington against the demands of the global energy business and its desire for entente with campaigners, Rising Tide's rhetoric may begin to take on an air of truth for NGOs such as Mercy Corps and Save the Children.

Copyright 2004 Strategic Forecasting Inc. All rights reserved.

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Action - Barclays pull out of Baku funding: urge others to follow

Barclays Bank has refused to provide a loan for the Baku-Ceyhan pipeline following campaigning over the last month – the first major private bank to say no to the project. The largest portion of the pipeline's funding will come from private banks like HSBC and Royal Bank of Scotland (which owns NatWest), despite the fact that it should be excluded by environmental rules they have signed up to, called the Equator Principles. What you can do: email the banks urgently to tell them not to finance the pipeline: investor.relations@rbs.co.uk and customer.relations@hsbc.com If you bank at HSBC, RBS, or Natwest, then phone your branch, and tell them about your concerns

For more information, and suggested text you can use when emailing the banks: www.baku.org.uk