By Paddy Briggs
When corporations act as dysfunctionally as all too many in the world of banking and finance have been doing over the past few years it gives the opponents of capitalism a field day. The charge, which is impossible to refute, is one of greed and incompetence and we have seen what happens when these twin venalities work together. The pursuit by directors of a level of personal wealth beyond the comprehension of most of us has been shown to have skewed their decision making and brought their businesses down.
Less in the public eye, but only marginally less venal, have been the multinational oil companies who whilst their behaviours may not have been as borderline fraudulent as some of the banks, have nevertheless been overtly deceiving us for years in a shameful way. Lets take Royal Dutch Shell for example. Shell was worried about the public perception of its behaviour and, in particular, was concerned that its reputation was damaged in the eyes of some of its key stakeholders. This damage was caused back in the 1990s by insensitive decision-making over such issues as Brent Spar and Nigeria and in the early years of the new century by its reserves scandal the revelation that senior Shell directors had been lying about the corporations hydrocarbon reserves. The internal analysis of this reputation problem led to the launch of a series of corporate communications initiatives – including extensive and expensive advertising. Much of this advertising was predicted on the premise that Shell was corporately responsible and the reasons to believe this claim was, they said, that they had some sort of unique understanding of the world of global energy.
The communications initiatives that Shell launched focused in particular on the need for energy diversity and claimed not only that renewable energies such as solar, wind and hydrogen had to be part of the mix but that Shell was committed to the Renewables sector for the long term. One day this may be our biggest business was the tag line of one of the TV commercials which lauded Shells involvement in this sector. But as we have seen recently all of this was a chimera. Those of us with personal experience of working for Shell over many years knew that Shell is the most risk averse of all the oil majors in both its diversification and its acquisition policy. In the main they stick to the knitting and the knitting is Upstream Oil and Gas with a bit of downstream thrown in (until, that is, they decide to walk away from marketing and refining which many us believe that they will before too long).
So why did Shell make a fool of itself and open itself up to criticism by getting involved in Renewables in the first place? Why did they get even tentatively involved in a business about which they knew nothing and into which they were clearly, from the start, not prepared to invest any serious money? The answer lies in the reputation management problem referred to earlier. If Shell wanted to be seen as Responsible than what better way to do this than to claim that they really cared about the global energy future to such an extent that they would be involved across the energy mix? So small scale and tentative investments were made and Renewables was even given its own status as a Core business for a time along with the real core businesses like the Upstream. But from the start it was always a lie the executives appointed to run the Renewables sector were far from being the most able around and the amount of time that the companys really senior executives spent on this sector was minimal. Shells heart was never really in it.
Shell had the vanity that it could run a series of self-promoting advertising campaigns that would portray them as energy responsible, innovative and forward thinking. In truth Shell was retreating more and more to the familiar world of dirty old hydrocarbons about which they had a genuine corporate memory. Does this story mean that you cant believe a thing that Shell tells us in its communications? Sadly I think that it does and that it will be a long time, if ever, before you can believe a word that they say again. Unless there is a proper feedback loop between behaviour and actions, on the one hand, and rhetoric, on the other Shell will not be in a position to do any credible corporate communications at all. It isnt complicated. Do the right things responsibly. Tell the truth about what you do. Dont claim that you are committed to things that you are not. Walk the talk and talk the walk. Too much to ask? We shall see