BP in 2015: In 2015, BP was facing a serious public relations crisis. Robert Warren Dudley, the CEO since 2010, was grappling with the environmental legacy of his predecessors, Tony Hayward and Lord John Browne. Under Lord Brown, BP had launched a $200 million advertising campaign in 2000 that included a name change (from British Petroleum to BP), a new global brand ("Beyond Petroleum"), and a new logo (a sunburst of green, yellow, and white). BP committed to increasing investment in alternative energy and to reducing its own carbon footprint. However, by 2014, these promises were under serious scrutiny by the media, environmental groups, and BP itself. The Deepwater Horizon oil spill in 2010 had dumped more than 200 million gallons of oil into the Gulf Coast. BP had been charged with gross negligence and faced liabilities of more than $42 billion. In addition, the company had been systematically decreasing investment in alternative energy under Tony Hayward. In recent years, Robert Dudley had divested from the unprofitable solar and wind power businesses. Dudley was torn between supporting the environmental campaigns that Lord Browne had begun and staying honest to BP's decreased involvement in alternative power. As you dig deeper into this case, put yourself in Dudley's position as CEO of BP. How should BP frame itself and its purpose going forward? Are investments in renewable energy, though attractive from a PR perspective, too financially risky for BP? What goals benefiting society within its existing lines of business could BP commit to? How can it regain the trust and goodwill of shareholders, stakeholders, and shapeholders? BP in 2014: By 2014, BP was one of the largest oil and gas companies in the world. Revenue for 2013 reached $379 billion with operating income lifting to $16.5 million. The company was split into two main operating segments, Upstream and Downstream. Its Upstream segment ($70.3 billion in revenue) managed exploration, development, and production of oil and gas deposits. The Downstream segment ($351 billion in revenue) oversaw the transport and trading, refining, and marketing of fuels, lubricants, and petrochemicals. BP's stock had trailed its peer group for the past five years, dragged on partially by concerns about its spill liabilities. Environmental Commitments: Lord John Browne, CEO from 1995-2007, pioneered BP's commitments to the environment. In a pivotal speech to Stanford University students in 1997, Browne acknowledged the need for oil companies to recognize climate change and explained how BP intended to reduce its own emissions and to invest more in solar energy. He explained, "We've been in solar power for a number of years and we have a 10% share of the world market. The business operates across the world - with operations in 16 countries. Our aim now is to extend that reach ... [We want to transfer our distinctive technologies into production, to increase manufacturing capacity and to position the business to reach $1bn in sales over the next decade." In 2000, Browne implemented a comprehensive, $200 million advertising campaign to emphasize BP's environmental focus. This campaign included a name change that replaced British Petroleum with BP, a new global brand motto, "Beyond Petroleum," and a new logo, a sunburst of green, yellow, and white. The campaign was widely applauded by media and analysts. PRWeek awarded BP a "Campaign of the Year Award" and BP was chosen by the Financial Times in 2001 as the "company that does the most to protect the environment." In 2004, BP launched an ad campaign titled "BP on the Street, where it endorsed itself as launching clean fuels and advocating for a cleaner environment. In 2005, BP made a commitment to invest $8 billion more into alternative energy by 2015. Environmental Challenges: While Browne had originally promised and promoted a new future for BP, as the new millennium wore on, serious problems began emerging in BP's oil and alternative energy segments that contradicted its ad campaigns and public commitments. Deepwater Horizon: On April 20, 2010, an explosion on the Deepwater Horizon oil rig killed eleven crewmen, sank the rig, and caused the largest off-shore oil spill in U.S. History. More than 200 million gallons of crude oil was pumped into the Gulf of Mexico before a temporary cap sealed the well in mid- July. It took until mid-September for the well to be declared fully sealed. Untold damage was done to the marine, fishing, and tourism industries along the Gulf Coast. In 2014, a study by the National Wildlife Fund found that 14 species were still suffering from the direct fallout of the spill, including blue-fin tuna, bottlenose dolphins, and sperm whales. By 2015, BP's fallout from the oil spill was also far from over. Financially, the company's liabilities were still being estimated. Federal prosecutors were seeking $18 billion in pollution and clean-up penalties and a September 2014 federal ruling found that BP had acted with "gross negligence in the events preceding the disaster. This ruling could lead to liabilities of as much as $42 billion. BP's brand and image also suffered greatly after the Deepwater Horizon spill. The year of the spill, the company's brand was removed from the index of the world's 100 most valuable brands (a spot that it had held for the prior 11 years). Julian Dailly, director of valuation at Interbrand | London, described the ratings fall, "BP failed to execute on the level of standards they talked so proudly about in the press and the majority of the company's brand value has been destroyed as a result." Gardiner Morse, a senior editor at Harvard Business Review writing in the aftermath of the Deepwater spill, stated, "BP is a victim of a disingenuous ad campaign that worked too well, and you have to wonder if its reputation will ever fully recover. Declining Investment: At the same time as the spill, BP was going through a systemic divestment Declining Investment: At the same time as the spill, BP was going through a systemic divestment of its alternative energy businesses. Many of these changes began when Tony Hayward replaced Lord Browne in 2007. Hayward noted that he wanted to "monetize BP's Alternative Energy Business." Toward this end, a number of changes were made to BP's corporate language and business investments. In 2009 BP's new brand positioning shifted from "Green' to 'Responsible." A company spokesperson noted, ""The new brand value, "Responsible', encompasses BP's original aspirations towards the environment, in addition to other key areas such as safety and social welfare. However, many activists saw this change as a shift away from being a truly environmentally responsible company. The same year, BP shut down its Alternative Energy headquarters in London and Vivienne Box, the director of solar and wind power, abruptly resigned. Although BP fulfilled its 2005 goal to spend $8 billion on alternative energy by 2015, the company declined to set a new investment goal. In 2012, the company announced that it would be exiting the solar business. Bob Dudly, BP Group CEO, noted, "We have thrown in the towel on solar. Not that solar energy isn't a viable energy source, but we worked at it for 35 years and we never really made money." In April 2013, BP announced that it planned to sell its $3.1 billion U.S. wind energy business, which consisted of 16 farms spread across nine states. A company spokesperson called the move "part of a continuing effort to become a more focused oil and gas company.* By 2014, the company was only active in "biofuels" and had divested all of its other alternative energy holdings. Alternative energies were no longer financially viable, especially considering the large Deepwater penalties hanging over BP's balance sheet. Continued Green Campaigns: Through these challenges, BP had continued to market itself as a green company. Even after announcing that it intended to divest its wind farms, BP ran television ads that featured wind turbines and a voice-over that declared, "We're working to fuel America for generations to come." Many environmental groups accused BP of "greenwashing its oil business and failing to adequately live up to its 2000 promises. Going Forward: As Robert Warren Dudley considered how to best position BP for future growth and success, he mulled over how best to advertise BP's environmental commitments. Alternative energies were no longer financially viable for BP, but the company had done significant work in solar, wind, and biofuel. With now a firmer grasp of the BP situation, put yourself in Dudley's position as the CEO of BP, Questions; 1. How can it regain the trust and goodwill of shareholders, stakeholders, and shapeholders? 2. How should BP frame itself and its purpose going forward? 3. Are investments in renewable energy, though attractive from a PR perspective, too financially risky for BP? 4. What goals benefiting society within its existing lines of business could BP commit to? BP in 2015: In 2015, BP was facing a serious public relations crisis. Robert Warren Dudley, the CEO since 2010, was grappling with the environmental legacy of his predecessors, Tony Hayward and Lord John Browne. Under Lord Brown, BP had launched a $200 million advertising campaign in 2000 that included a name change (from British Petroleum to BP), a new global brand ("Beyond Petroleum"), and a new logo (a sunburst of green, yellow, and white). BP committed to increasing investment in alternative energy and to reducing its own carbon footprint. However, by 2014, these promises were under serious scrutiny by the media, environmental groups, and BP itself. The Deepwater Horizon oil spill in 2010 had dumped more than 200 million gallons of oil into the Gulf Coast. BP had been charged with gross negligence and faced liabilities of more than $42 billion. In addition, the company had been systematically decreasing investment in alternative energy under Tony Hayward. In recent years, Robert Dudley had divested from the unprofitable solar and wind power businesses. Dudley was torn between supporting the environmental campaigns that Lord Browne had begun and staying honest to BP's decreased involvement in alternative power. As you dig deeper into this case, put yourself in Dudley's position as CEO of BP. How should BP frame itself and its purpose going forward? Are investments in renewable energy, though attractive from a PR perspective, too financially risky for BP? What goals benefiting society within its existing lines of business could BP commit to? How can it regain the trust and goodwill of shareholders, stakeholders, and shapeholders? BP in 2014: By 2014, BP was one of the largest oil and gas companies in the world. Revenue for 2013 reached $379 billion with operating income lifting to $16.5 million. The company was split into two main operating segments, Upstream and Downstream. Its Upstream segment ($70.3 billion in revenue) managed exploration, development, and production of oil and gas deposits. The Downstream segment ($351 billion in revenue) oversaw the transport and trading, refining, and marketing of fuels, lubricants, and petrochemicals. BP's stock had trailed its peer group for the past five years, dragged on partially by concerns about its spill liabilities. Environmental Commitments: Lord John Browne, CEO from 1995-2007, pioneered BP's commitments to the environment. In a pivotal speech to Stanford University students in 1997, Browne acknowledged the need for oil companies to recognize climate change and explained how BP intended to reduce its own emissions and to invest more in solar energy. He explained, "We've been in solar power for a number of years and we have a 10% share of the world market. The business operates across the world - with operations in 16 countries. Our aim now is to extend that reach ... [We want to transfer our distinctive technologies into production, to increase manufacturing capacity and to position the business to reach $1bn in sales over the next decade." In 2000, Browne implemented a comprehensive, $200 million advertising campaign to emphasize BP's environmental focus. This campaign included a name change that replaced British Petroleum with BP, a new global brand motto, "Beyond Petroleum," and a new logo, a sunburst of green, yellow, and white. The campaign was widely applauded by media and analysts. PRWeek awarded BP a "Campaign of the Year Award" and BP was chosen by the Financial Times in 2001 as the "company that does the most to protect the environment." In 2004, BP launched an ad campaign titled "BP on the Street, where it endorsed itself as launching clean fuels and advocating for a cleaner environment. In 2005, BP made a commitment to invest $8 billion more into alternative energy by 2015. Environmental Challenges: While Browne had originally promised and promoted a new future for BP, as the new millennium wore on, serious problems began emerging in BP's oil and alternative energy segments that contradicted its ad campaigns and public commitments. Deepwater Horizon: On April 20, 2010, an explosion on the Deepwater Horizon oil rig killed eleven crewmen, sank the rig, and caused the largest off-shore oil spill in U.S. History. More than 200 million gallons of crude oil was pumped into the Gulf of Mexico before a temporary cap sealed the well in mid- July. It took until mid-September for the well to be declared fully sealed. Untold damage was done to the marine, fishing, and tourism industries along the Gulf Coast. In 2014, a study by the National Wildlife Fund found that 14 species were still suffering from the direct fallout of the spill, including blue-fin tuna, bottlenose dolphins, and sperm whales. By 2015, BP's fallout from the oil spill was also far from over. Financially, the company's liabilities were still being estimated. Federal prosecutors were seeking $18 billion in pollution and clean-up penalties and a September 2014 federal ruling found that BP had acted with "gross negligence in the events preceding the disaster. This ruling could lead to liabilities of as much as $42 billion. BP's brand and image also suffered greatly after the Deepwater Horizon spill. The year of the spill, the company's brand was removed from the index of the world's 100 most valuable brands (a spot that it had held for the prior 11 years). Julian Dailly, director of valuation at Interbrand | London, described the ratings fall, "BP failed to execute on the level of standards they talked so proudly about in the press and the majority of the company's brand value has been destroyed as a result." Gardiner Morse, a senior editor at Harvard Business Review writing in the aftermath of the Deepwater spill, stated, "BP is a victim of a disingenuous ad campaign that worked too well, and you have to wonder if its reputation will ever fully recover. Declining Investment: At the same time as the spill, BP was going through a systemic divestment Declining Investment: At the same time as the spill, BP was going through a systemic divestment of its alternative energy businesses. Many of these changes began when Tony Hayward replaced Lord Browne in 2007. Hayward noted that he wanted to "monetize BP's Alternative Energy Business." Toward this end, a number of changes were made to BP's corporate language and business investments. In 2009 BP's new brand positioning shifted from "Green' to 'Responsible." A company spokesperson noted, ""The new brand value, "Responsible', encompasses BP's original aspirations towards the environment, in addition to other key areas such as safety and social welfare. However, many activists saw this change as a shift away from being a truly environmentally responsible company. The same year, BP shut down its Alternative Energy headquarters in London and Vivienne Box, the director of solar and wind power, abruptly resigned. Although BP fulfilled its 2005 goal to spend $8 billion on alternative energy by 2015, the company declined to set a new investment goal. In 2012, the company announced that it would be exiting the solar business. Bob Dudly, BP Group CEO, noted, "We have thrown in the towel on solar. Not that solar energy isn't a viable energy source, but we worked at it for 35 years and we never really made money." In April 2013, BP announced that it planned to sell its $3.1 billion U.S. wind energy business, which consisted of 16 farms spread across nine states. A company spokesperson called the move "part of a continuing effort to become a more focused oil and gas company.* By 2014, the company was only active in "biofuels" and had divested all of its other alternative energy holdings. Alternative energies were no longer financially viable, especially considering the large Deepwater penalties hanging over BP's balance sheet. Continued Green Campaigns: Through these challenges, BP had continued to market itself as a green company. Even after announcing that it intended to divest its wind farms, BP ran television ads that featured wind turbines and a voice-over that declared, "We're working to fuel America for generations to come." Many environmental groups accused BP of "greenwashing its oil business and failing to adequately live up to its 2000 promises. Going Forward: As Robert Warren Dudley considered how to best position BP for future growth and success, he mulled over how best to advertise BP's environmental commitments. Alternative energies were no longer financially viable for BP, but the company had done significant work in solar, wind, and biofuel. With now a firmer grasp of the BP situation, put yourself in Dudley's position as the CEO of BP, Questions; 1. How can it regain the trust and goodwill of shareholders, stakeholders, and shapeholders? 2. How should BP frame itself and its purpose going forward? 3. Are investments in renewable energy, though attractive from a PR perspective, too financially risky for BP? 4. What goals benefiting society within its existing lines of business could BP commit to