Jacob Park Assistant Professor, Business & Public Policy

1. 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

2. 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

3. Business of Global Climate Change: Changing Context for the PI Industries • Kyoto Protocol, in force since February 2005, encourages the participation of private and non-governmental actors through its ‘flexible mechanisms’

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

5. 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)

6. 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 percentof 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 world carbon 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 Warmingand others

7. 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

8. 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])

9. BP: Public/Stakeholder Relations Approach 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 by over 4 million tonnes since 2001. It's a start.

10. 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 Trading Carbon Trading is the buying and selling of allowances for producing carbon dioxide emissions. Garth Edwards has seen how carbon trading encourages companies to reduce their emissions. Energise™ for lower emissions Energise is a programme for conserving energy and reducing emissions at our facilities worldwide.  Livio Accattatis advises us where and how energy efficiency can be improved. Preparing the way for hydrogen Hydrogen fuel can power vehicles, with the only emissions being heat and water vapour. It is widely tipped to be a fuel of the future. Rick Scott is already installing hydrogen pumps in Shell refuelling stations. Cleaner transport As China’s economy continues to grow, so does the demand for energy. Discover how Han Juan is working with the Shanghai Government to find cleaner energy solutions for China’s thriving cities.

11. Chevron: Public Relations/Outrage Management Approach

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

13. US-based Anti-Climate Action Advocacy Group’s “We Call It Life” Campaign Approach Source: Competitive Enterprise Institute (http://www.cei.org)

14. 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)?

15. Towards a New Strategy of CSR Communication and Outreach in an Age of Social Computing Current Communication & Outreach Strategy Communication & Outreach Strategy in the Age of Social Computing Info. Channels T actic s T echnolog y • TV/cable • Coupons • Personalization • Radio • Customer promos Info. Channels • Search • Magazine • T rade promos • Site merchandising • W eb sit e • Newspaper • Sales force • Customer database • Online ads • Outdoor • W eb analytic s • Email Metrics • Direct mail • Brand monitoring • Blogs • Reach • Content syndication • Interactive TV • Frequency • Podcasting Metrics • Mobile ads • Conversion rates SOURCE: Forrester Research, April 2006

16. CSR-focused Blogs and Social Computing Tools SOURCE: Forrester Research, April 2006

17. Key Social Computing Drivers Consumers’ trust in institutions is falling Only 42% of consumers say they even “somewhat” trust newspapers. Consumers are less brand loyal 52% of consumers say brand trumps price, down from 59% in 2000. Consumer-to-consumer activities are taking off C2C eCommerce, messaging, blogs, camera phones, video phones Consumers are customizing products and services 10%-40% of customers develop or modify products. SOURCE: Forrester Research, April 2006

18. “I trust” ___ Recommendations from friends/family Consumer opinions posted online Requested email updates Ads in newspapers Ads on TV Ads on radio Ads in magazines Branded Web sites Search engine ads Web banner ads Ads on mobile phones 0% 20% 40% 60% 80% 100% SOURCE: Forrester Research, April 2006

19. Demographics of Social Computing Users