Business leaders often recognize the value of engaging in key social or environmental issues, but they need new strategies, according to Lord John Browne, former chief executive officer of BP.
Browne was famously the first CEO of an oil and gas who acknowledged climate change and said that his company and the industry at large needed to do something about it. It was far from a popular position in 1997.
That speech ushered in an era at the company that proponents termed “Beyond Petroleum,” and critics accused of greenwashing. Browne set policies to control carbon dioxide emissions, improve efficiency and harness technology to curb the company's impact on climate. He also invested more resources and elevated the importance of the solar business.
After his departure, shifting priorities saw BP place less of an emphasis on climate-change related policies. But Browne has continued to work in the clean energy space, currently as the executive chairman of L1 Energy, a company that invests in alternative energy and energy infrastructure.
Devex sat down with Browne recently to talk about leadership and the role of business in development. Here is an excerpt from that conversation, edited for length and clarity.
Some corporate leaders stand out in addressing critical development challenges, but what does it take to encourage more of those types of leaders? How do you spread that ideology and momentum?
First of all, it’s really important that people internalize the purpose of business and why this is important for the purpose of business. It’s about the fact that business is a great motor for human development, but unless it demonstrates that it’s part of society, it will be damaged by a society who will not like it. Therefore [business] has to integrate itself. We really have to understand that and internalize it.
Then, if I can skip many steps, leaders need to keep making the point about the purpose — that’s important. They need to make sure that their leaders below them have enough time on their agenda — and this is always the big test I think in whether something is going to work or not — to spend time with stakeholders to understand what they are doing, to go around and work with people to be inclusive. They need to be measured on that. And most importantly, they need to be educated about it, and I don’t see enough of that taking place: The master class to say … now that you’re here, business is not just about driving operational excellence. Of course it is, but in order to get permission to drive operational excellence, you have to think about society widely. I think it’s about education, a lot of it, and determination.
Your experience at Stanford as a business school student had a big impact on your philosophy and management style. What is the role for business schools in providing some of that training to future leaders on issues of social or environmental importance?
I think it’s very important, but business school isn’t the only place this can happen. It has to happen internally; it has to happen on the job. … And maybe it can happen with what I love to see: people swapping careers so they can go in and out of government, for example, and you learn a lot.
Many people criticize government, but to solve problems in government you’re constantly aligning people — constantly. You don’t have the right to determine, the right to order. … The bulk of government is about alignment, and it makes problem solving much different, much more human, and therefore it teaches you about engagement.
Many would say that following your departure, some of the progress you’d made on environmental issues at BP was lost. Looking back, what do you think needs to be done to ingrain changes within an organization so that when a leader leaves, a company doesn’t backslide?
I think about it a lot but also — [there is a] phrase people use often: don’t watch the moves, watch the game. I think that what I’ve seen today, for example, in the oil and gas industry, these companies have committed to methane emission reductions which is actually a bigger greenhouse gas than CO2. [They will do that by] working on alternative energies, and I think that’s a very good thing. I think it it’s taken 10 years to get there. It’s a bit slow, but it’s better than nothing. I think some of this just takes time to get fully embedded, and you will have two steps forward, one step back and the usual sorts of clichés applied to progress apply here.
Do you wish you would have gotten more buy-in at BP?
Yes, but there’s a great conundrum, which we almost got right: How do you on the one hand produce carbon and on the other hand reduce carbon. I believe that is soluble, because the great servant and master of everything is technology, and you can do both.
What do you see as the role of traditional development actors — bilateral aid agencies, NGOS, multilaterals — in working with businesses to move some of these social or environmental issues forward?
There are a lot of different actors involved here, and they all have a role. I used to believe, and this was in the 2000s, that actually business had an exclusive role. One of the things that business does is deliver. If you give it a task, it will deliver, maybe not perfectly, but it will deliver. And that’s because it understands incentives, objectives, things like that. I thought that more of that needs to happen in the development space, and it is happening because of these mixed organizations where there is both private and state funding going into one vehicle. I think that’s very good, because it changes the way in which problems are approached and people are determined to deliver to objectives. But there’s a role for everybody here, the problem is huge. It is about improving a lot of humanity. That’s what we’re in the business of doing.
As for the private sector’s role in tackling climate change, there are certainly companies that are leaders, but what about those who are lagging or left out of the conversation? How do you include them and go beyond the typical names that are often discussed?
If you believe that reducing carbon or methane in the atmosphere is an existential threat [to your business], and you really do believe its existential, it’s very difficult to get you on board. For example, the coal industry — I think most people would say this is an existential threat to the coal industry, but they would [reply], oh but people will burn coal. That is true, people will burn coal for a very long time. The question is how much and where.
There are some people who are very difficult to get on board. Other people may not realize they have a role or are not prepared to take a role because [they think] another part of the problem doesn’t have a role. For example, the auto manufacturers clearly have a role, but they only have a role as long as the oil and gas companies work with them and they work with the oil and gas companies, and they work with the electricity companies.
These are difficult negotiations, I mean they’ve been around forever and they’re beginning to land in a place — I would say, in a good place. The auto manufacturers don’t think electric motors are a threat anymore for example. And the oil and gas industry recognize that it’s in their benefit if cars, automobiles, become really efficient and use less fuel — use better fuel.
There seems to be a clear business case for climate, but what about private sector engagement on other issues, like sanitation or health, where it might harder to see the business case?
It’s different depending on where you are, it really is. Climate’s in the same bucket. ... There’s obviously benefit in having people who are healthier, more educated, more stable, safer around, because they will be part of the future, and you need a future in business. From that, if you’ve got a future, you can make money and invest that money in an even bigger future.
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