BP’s latest reporting omits targets and data
BP’s 2010 report comprises a printed Sustainability Review, also available as a PDF, with additional information online including separate sustainability reviews for 10 countries in which BP operates.
The 50-page Sustainability Review is the first report from BP since the Deepwater Horizon rig exploded on April 20 2010. The six main chapters cover the usual oil company subjects but this special report begins with an eight-page section on the Gulf of Mexico incident.
The generally candid text is complemented by the choice of cover image of the oil slick being treated. The chapter covers the initial disaster, how BP contained the leak, the cleanup, and the company’s ongoing commitment to improve the environmental and economic state of the region.
Despite the prominence given to Deepwater Horizon the section is undermined by serious omissions in data. The decision not to try to estimate how much oil was spilled in the accident is a bad one. The explanation for not doing so – “no accurate determination can be made or reported until further information is collected” – is unconvincing and feels like a kick into the long grass. An estimate of 4.9m barrels is widely quoted elsewhere.
Consequently, BP’s stated oil spills for 2010 of 1.7m litres may be about two-thousandths of the realistic figure. Data tables and bar charts showing the number and volume of oil spills holding roughly steady from the previous year are pure fantasy.
It is left to a footnote (and some green shading) in the data table to disclose the omission of arguably the most material data to the entire report. How the assurers, Ernst & Young, signed off on this fiendish construct is beyond our comprehension. Ernst & Young does note the omission in its statement but this is a wholly inadequate method of flagging a fault that should never have been allowed to pass.
BP rightly identifies contractor management as a key issue – 60% of hours worked are by contractors. But the single page of text on this issue lacks detail on how the company oversees suppliers and how well it believes they are performing.
BP could learn lessons from the clothing and IT sectors. Companies such as Nike and HP have led this agenda, and by comparison appear to have greater influence, understanding and engagement with their supplier companies. At any rate they are more transparent about the relationships and the performance of their suppliers.
In the safety section BP acknowledges that performance is a serious concern, with fatalities in the Gulf of Mexico and earlier in the 2005 explosion at its Texas City refinery. BP’s strategic response is the establishment of a new independent safety and operational risk function and the move to include individual contributions to safety and risk management in employee performance assessment.
Although this is encouraging, the safety section is symptomatic of the report’s biggest failing – its absence of targets. What happened to BP’s “zero harm” target from earlier years? The report is entirely target-free, which, given that sustainability is primarily a discussion of a company’s future intentions, is a major flaw.
The section on energy future discusses the twin challenges of meeting energy demand and tackling climate change. The text articulates the challenges clearly but glosses over the impacts of tar sands and shale gas extraction, both of which BP is involved in. Worse still it offers no significant leadership on climate change or strategy for reducing fossil fuel emissions to the levels scientists have long advised.
Setbacks
BP’s current abrogation of responsibility for climate change is a far cry from former chief executive John Browne’s groundbreaking speech in 1997 as he withdrew from the Global Climate Coalition and positioned BP as the oil major that would work on solutions to climate change. In one of the few external views printed in the report, Karina Litvack of F&C Management says: “If BP does not lead, others will, calling into question the viability of its business model.”
BP’s lack of a strategy for tackling climate change and its phobia about targets in general give the impression of a company with no direction, increasingly being left behind by other companies with a clearer vision of corporate sustainability and plans for working towards it. BP’s reporting in the 1990s was better than this. The company should go back to the future.
As a footnote, the report apparently achieves a GRI A+ rating. This should tell you all you need to know about the challenges this standard faces.
Ellie Austin is a consultant at Context.
Snapshot
Follows GRI? Yes to GRI A+.
Assured? Yes
Materiality analysis? Yes
Goals? None
Targets? None
Stakeholder input? Limited
Seeks feedback? Yes
Key strengths? Candid coverage given to Gulf of Mexico oil spill.
Chief weakness? Absence of climate change strategy.
Pleasant surprise? Safety and risk management linked to employee performance assessment.