1. Shell, Greenpeace, and Brent Spar Copyright © 2002 by David P. Baron. All rights reserved. Reprinted with permission.

6. Generation of Alternatives General framework Elimination of alternatives contrary to: - law - company policy - ethical consensus Screening Interests Motivations Nonmarket action Institutions Predictions: market reactions nonmarket reactions Evaluation of claimed rights Application of normative principles Choice and strategy formulation Choic e Analysis Implement- ation Refinements, reconsideration, generation of new alternatives

7. Shell UK’s process – Compliance (case-by-case) Neither alternative eliminated: 4UK Law 4IMO 4Shell policy X “ethical consensus” Screening BPEO criteria * Narrow definition of interests and institutions** Closed process only official consultations Compliance: satisfying UK requirements is sufficient Ignored claimed rights/views of interests (GP) and broader public. Narrow strategy: secure approval through the official government channels. ChoiceAnalysis Implement- ation: tow and sink Sink at Sea Dismantle on Land * Engineering complexity, risk to health & safety of workforce, environmental impact and cost, acceptability to government and to “officially designated parties,” which included government bodies and “legitimate users of the sea” as designated in 1987 Petroleum Act) ** UK Department of Energy a UK issue; a Shell UK issue case-by-case alternatives identified within Shell X

8. Missing Components sensitivity to “ethical consensus” develop a company policy rather than case- by-case view it as an industry issue Screening Consider broader range of interests and institutions -- Dept. of Environment. Shell is vulnerable to nonmarket action. Consider claims and interests of groups and their likely actions Revise strategy based on analysis (I.e., loop back) ChoiceAnalysis Implement- ation Refinements, reconsideration, generation of new alternatives Additional alternatives: reuse solicit bids consult within Shell consult greens co-opt/bargain disposal in other countries

9. Susceptibility to public protests/boycotts u products –consumer products –products with low switching costs –a brand name that can be damaged u operating environment –operations that produce negative externalities –operating in an interest group-rich environment –multinational/global operations -- issues can spill over to other units and countries –operating in developing countries u organization –a decentralized organization, so that external effects, including intracompany, are not naturally considered

10. Lessons u Nonmarket issues can spill across borders – company borders; country borders u Global companies are especially vulnerable u Government approval is necessary but not sufficient u Closed processes on nonmarket issues can be risky u Use a broad definition of interests--not just “official” or even legitimate u View interests as choosing strategies in nonmarket competition; try to anticipate their strategy u Attempt to predict nonmarket action –media’s role in nonmarket action; have your messages ready –prospects for spill-over into the market environment and to other political jurisdictions –have a crisis management plan in place u Activists can alert a company to practices and issues that will be of concern to the public and governments

11. Generated alternatives publicly by inviting bids Shell’s Revised Process Evaluated 30 proposals from 19 contractors; selected 7. - law-OSPAR - company policy - impact on environment - cost Screening Consultations with interest groups (Greenpeace) Consultations with governments Determined what was acceptable Selected BPEO based on environmental impact, risk, cost, and acceptability to interest groups, the public, and governments Choic e Analysis BPEO: dismantle at sea and use for a quay in Norway

12. Brent Spar Update u Shell towed (vertically) Brent Spar to a fjord in Norway. u OSPAR (13 European nations) voted a moratorium on deep sea disposal in the North Atlantic. UK and Norway voted no. u In 1998 Shell selected a plan to slice Brent Spar horizontally and use the sections to extend a quay at Mekjarvik in Norway. The rest was disposed of on land. Cost was  23-26 million. (Did Shell UK initially consider disposal alternatives only in the UK?) u Shell consulted with Greenpeace and other groups throughout this process. u UK Environmental Minister announced that future disposal would be on land (Labour government). u Disposal was completed near the end of 1999. u A second rig will be taken to Norway and disposed of similarly.

13. Interacting with Activists and Interest Groups identify the relevant interest groups and activist organizations in your market and nonmarket environments. understand their agenda, preferences, and capabilities understand the broader public support for their agenda consult with them on important issues -- a number of companies are setting up regular forums for exchanging information and views --Shell met with Amnestry International to discuss possible operations in Iran cooperate when that is beneficial -- McDonald’s and Environmental Defense Fund fight when you are right and can win -- but be careful

14. British Petroleum and Greenpeace u BP strategy post-Brent Spar: going green. For example, commitment to solar energy, addressing global warming through an aggressive voluntary CO 2 reduction program. u Began to meet with Greenpeace late in 1995 u In August 1997 two Greenpeace members occupied the Stena Dee oil drilling platform under tow to a new BP exploration area in the North Atlantic u Greenpeace’s objective: stop oil exploration and production in the area u What should BP do?

15. Shell - BP Differences u Shell was first. BP had learned a lesson. u Greenpeace had lost some credibility as a result of inaccurate Brent Spar estimates u Greenpeace took journalists along--fog hindered filming and rough seas made journalists seasick; Greenpeace refused to bring them home; BP brought them home u BP case did not involve disposal -- lower on societal- significance dimension and audience-interest dimension (stop oil exploration?) u BP had come out green. Did this help with the public? u BP offered showers and not water canons. u BP sued Greenpeace and Greenpeace leaders for damages; i.e., the lease costs on the oil rig u Greenpeace backed down and BP withdrew the lawsuit; an uneasy truce u BP had monitored Greenpeace’s ships and knew in advance of the boarding and was prepared