In the Shift

Hard to imagine after the environmental impact and the financial cost, but is there a sunny side to the Gulf oil spill that has implicated BP, Transocean and Haliburton?  Setting aside the beating dealt out to pension funds around the world by the collapsing share price, and the PR humiliations of BP executives (note to self, don’t spend Father’s Day cavorting round clear blue waters on a yacht when half way around the world an oil slick has your face on it; oh, and don’t let your chairman say you care about the ‘small people’): is it possible that BP’s oil disaster may end up benefiting climate change?

This thought sprang to mind reading a fascinating essay by one of my business school students.  The argument was that the gallons upon gallons of oil gushing into the Gulf of Mexico serve as a daily reminder to millions of people that the oil industry is extractive and polluting.  Like other acts of corporate irresponsibility, the plight of BP and the other firms’ is put on steroids by social media.  The blogosphere has been almost unanimous in its condemnation of BP – and this despite BP once having been a pioneer of old energy taking CO2 emissions seriously.   And as Nike or the chocolate industry, once a company stains its reputation in cyberspace, that can be an even harder type of spillage to clean up.  potential to keep bad news front of mind and available for many people.

So why my optimism?  BP’s share price plummeted by 40% between the discovery of the leak and mid-June, and has bounced around ever since on the news of any signs of a successful or failed attempt to stem the spill.  BP has had to put significant money into bail out funds for affected Gulf coast citizens on top of the money it is spending on ending the leak.  It hasn’t been helped by the fact that companies such as Haliburton whose technology seemes partly to blame for the problem, appear to have contractual get outs that make any liability BP’s alone.

But even with all of that going on, the cost of these problems are not equal to 40% of BP’s market capitalisation are they?  No: what has dragged BP’s share price down to the depths is investor and consumer sentiment.  Obama has leapt on BP’s woes to make the argument for energy security and green energy.  And by draping attacks on oil in the Stars and Stripes he and others are able to make tackling climate change almost like a patriotic duty.

If this opportunityis used with dexterity, it could prove a tipping point where not only activist investors point the finger at ‘dirty’ energy but the mainstream investment community goes into one of its herd mentality charges to change the Wall Street mindset.  In the UK, the BP case has caused business-friendly Conservative MPs such as Zac Goldsmith to call for tougher approaches to the material consequences of environmental issues for publicly listed companies.  How long will it be before big pension funds and endowments see this is an opportunity to get tougher on companies?

Of course, the trick is to use this crisis as a trigger to keep awareness of the dangers of pursuing conventional energy resources at the top of the agenda.  That could prove tricky because the BP/Gulf case has taken on an unhealthy nationalistic flavour, and could lead to people defending or attacking the oil industry simply because the B in BP once meant British.  But at a time when politicians seems to have foresaken any serious thinking about tackling climate change in order to focus on economic growth and recovery, it is nice to think that there is at least one disaster that could have a positive outcome.