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BP

BP

OVERVIEW

Finding BP at the top of our HIP list may seem surprising, given its 2005 refinery explosion, oil spills, poor plant maintenance, and significant layoffs. But the company, which is included in the two major sustainability stock indices (the Dow Jones Sustainability Index and the London-based FTSE4Good), is one of the world’s largest solar-power players and invests an unusually large share of overall capital expenditures in low-emissions R&D. Its record on employee benefits and hiring women and minorities for top spots is also impressive.

MANAGEMENT SCORE: 14 out of 25

BP, formerly British Petroleum, stands out for sustainable advertising with its “BP: Beyond Petroleum” campaign. Unfortunately, the reality has yet to catch up with the slogan. BP declined to make executives available for interviews or provide information about management practices beyond what’s publicly available. That said, BP is at the forefront of investing in low-emissions energy sources (in 2005 it pledged $8 billion over 10 years for alternative energy), is working to accelerate “sustainable transport” through the World Resources Institute, and is pushing for increased carbon-risk management through the Carbon Disclosure Project.

IMPACT SCORE: 54 out of 100

Despite its advertising, BP is carbon-intensive. It produces 960 million barrels of oil, releasing 71 million tons of greenhouse gases into the environment. That puts it in the middle of the pack, despite the company's commitment to advancing renewable energy and solar power. BP reports investing $688 million in low-emissions R&D, some 4% of overall capital expenditures. Diversity BP’s 15-member board is the industry’s most diverse, with two women and two minorities. Among the top 600 managers, 20% are minorities and 17% are women. BP (with Chevron) got a perfect score on gay workplace rights from the nonprofit Human Rights Campaign. Compensation While petroleum engineers and retail managers earn much more than industry peers, the income gap in 2006 between a typical retail supervisor ($43,000) and the CEO ($4.7 million) was high among European oil companies. Benefits Employee benefits are very attractive, including a 100% match in its retirement plans, up to 7% of salary. BP also reports its employee-satisfaction rating as 66% favorable. Safety Following the Texas City refinery explosion in 2005 that killed 15 workers and injured more than 170, the U.S. Occupational Safety and Health Administration discovered 300 safety and health violations at the refinery. BP agreed to pay $21 million in penalties, nearly twice the size of the second largest fine in OSHA history. In 2006, BP had zero employee and seven contractor deaths, but there were 38 fatalities in 2004 and 2005, which critics linked to lagging maintenance at the company’s plants. BP was forced to shut down its Alaska pipeline in 2006 following spills of more than 200,000 gallons; the company subsequently pleaded guilty to a federal misdemeanor and agreed to pay $20 million in fines. BP’s “days away from work”—days plants are closed to address maintenance issues—occur twice as often as those of industry leader ExxonMobil. Overseas operations BP drills in 21 countries, 13 of which have “questionable governance,” according to Transparency International. Critics have blasted BP for investments in Myanmar, Colombia, Venezuela, and Tibet (it has since sold its Tibet stake). BP also leads a coalition of oil-and-gas firms building a pipeline across Azerbaijan, Georgia, and Turkey that has led to the widespread dislocation of locals and complaints of contaminated water and construction-triggered landslides.