Liberty University Changing to Green at an Oil Company Case Study
You will read the assigned case discussion at the end of the chapter and use the questions as a guideline for each submission. All case studies should include an introductory and concluding paragraph, as well as headings. All Case Studies should include an introductory and concluding paragraph, as well as headings. All Case Studies should include a biblical perspective with scripture included relevant to the topics covered in the Case Study scenario.Case Study 4 will be comprehensive and will be in current APA format, 8–10 pages in length, not including the cover, abstract, or reference pages.
CAse Study Information
Read “Changing to Green at an Oil Company (?)” and prepare answers to the following questions:
- What triggered Gabrielli’s commitment to going green at Petrobras?
- How would you evaluate Petrobras’ sustainability effort? What have they done well and or not so well in the transformation?
- Do you agree with Gabrielli’s assessment of the success of green policies at Petrobras? Explain.
Going Green at an Oil Company(?)
For many people, the notion of environmental sustainability does not fit well—if at all—with a giant oil company. This is an industry, it would seem, that thrives on the ever‐increasing consumption of fossil fuels, not to mention environmental catastrophes such as oil spills. José Sergio Gabrielli de Azevedo, CEO of Brazil‐based oil giant Petrobras since 2005, says he is determined to change that image.48
Gabrielli describes his personal politics as progressive and leftist, pointing to his 1970 arrest by the Brazilian army as he was protesting his country’s then military dictatorship. After receiving a PhD in economics and joining the faculty of the London School of Economics, Gabrielli joined Petrobras in 2003 as Chief Financial Officer. His fast rise to the top was helped by his close personal and political ties with Brazil’s ruling Workers’ Party.
A State Company
Petrobras was founded by the government in 1953 under the nationalist slogan, “The petroleum is ours!” Petrobras held a monopoly until 1997, when thegovernment gave up its complete ownership (although it still controls a majority of voting stock) and allowed for competition. Since then, the company has compiled a troubling history of disasters. In January 2000, a poorly maintained pipeline spilled oil into Guanabara Bay for two hours before the leak was detected. Six months later, a Petrobras refinery spewed millions of gallons of oil into two nearby rivers. A BBC news report referred to “an embarrassing level of incompetence” on the part of Petrobras managers. Then, less than a year later, a Petrobras drilling platform—the world’s largest at the time—blew up, killing 11 employees and dumping 300,000 gallons of oil into the water.
Gabrielli saw that troubled history as a business problem to be solved as well as an environmental threat to be addressed. “From a purely financial perspective,” he said, “environmental mismanagement was just bad business. From an investor relations perspective, ignoring the growing demand for transparency and sustainability was also bad business.”49 Plus, added Gabrielli, his personal values and political beliefs led him to move Petrobras into a position of environmental leadership.
In pursuit of his goal, Gabrielli took a number of steps:
- Increasing the budget of the company’s health, safety, and environment programs
- Using the enormous market clout of Petrobras (which was the largest company in Latin America) to demand that all of its suppliers comply with best standards for environmental management
- Personally touring sites to check compliance with company standards
- Moving Petrobras’ new refineries away from gasoline and toward biofuels
- Joining the Dow Jones Sustainability Index in order to invite external monitoring of and reporting on Petrobras’ efforts
- Endorsing (and sitting on the board of) the United Nations Global Compact
- Personally blogging and tweeting in order to make the case for Petrobras’ efforts directly to the public.
As evidence that these activities were changing the culture and operations of Petrobras, Gabrielli pointed to two facts:
- The company had gone eight years without a “major” environmental accident.
- The private consulting firm, Management and Excellence, ranked Petrobras as number one among the world’s oil and gas companies for promoting sustainability.
Petrobras’ 5‐Year Strategic Plan, announced in 2010, called for additional investment in refining capacity. The company’s goal was to make Brazil fuel independent by 2014. That independence, it was hoped, would be supplied by Petrobras’ 2008 discovery of a major oil reserve coming from a vast deep water off‐shore region known as the subsalt. Later that same year, however, the Gulf of Mexico oil spill—a British Petroleum rig exploded, killing 11 workers and pouring nearly 185 million gallons of oil into the Gulf—raised questions about the viability and the costs of future deep water drilling.
How Green Is Petrobras?
In 2010, Newsweek conducted an audit of the top ranking “green” companies in the world.50 The highest ranking companies—IBM, Hewlett‐Packard, Novartis, and Panasonic among them—received an overall score in the 90s. The highest ranking oil and gas company, French‐based Total, received a score of 65. Petrobras’ score was 48, placing it sixth in the list of oil and gas companies and 84th overall in the top 100 companies. In fact, five of the bottom ten on that list were oil and gas companies.
- 1. Information on Nike is from Jeffrey Ballinger, “The New Free‐Trade Heel,” Harper’s Magazine (Aug. 1992), pp. 46–47; Simon Zadek, “The Path to Corporate Responsibility,” Harvard Business Review (Dec. 2004), pp. 125–132; Stanley Holmes, “Nike Goes for the Green,” Business Week (Sept. 25, 2006); Reena Jana and Burt Helm, “Nike Goes Green, Very Quietly,” Business Week (June 22, 2009), p. 56; Maurice Berns, Andrew Townend, Zayna Khayat, Balu Balagopal, Martin Reeves, Michael Hopkins, and Nina Kruchwitz, The Business of Sustainability: Imperatives, Advantages, and Actions (New York: Boston Consulting Group, 2009); Marc J. Epstein, Adriana Rejc Buhovac, and Kristi Yuthas, “Why Nike Kicks Butt in Sustainability,” Organizational Dynamics 39 (2010), pp. 353–356. The Newsweek rankings can be found at newsweek.com/feature/2010/green‐rankings.
- 2. Susan Albers Mohrman and Christopher G. Worley, “The Organizational Sustainability Journey: Introduction to the Special Issue,” Organizational Dynamics 39 (2009), p. 289.
- 3. Wallace B. Donham, “The Emerging Profession of Business,” Harvard Business Review 5 (July 1927), p. 401; Wallace B. Donham, “The Social Significance of Business,” Harvard Business Review 5 (July 1927), p. 406; Jeffrey L. Cruikshank, A Delicate Experiment: The Harvard Business School, 1908–1945 (Boston, MA: Harvard Business School Press, 1987).
- 4. Theodore Levitt, “The Dangers of Social Responsibility,” Harvard Business Review 36 (Sept.–Oct. 1958), p. 52; Milton Freidman, “The Social Responsibility of Business Is to Increase Profits,” New York Times Magazine (Sept. 13, 1970).
- 5. This history is traced in John Elkington. “Towards the Sustainable Corpporation: Win‐Win‐Win Business Strategiues for Siustanable Development,” California Management Review 36 (Winter 1994), pp. 90–100. Elkington is either the original source of the term “triple bottom line” or certainly the popularizer of the concept. See Elkington, Cannibals with Forks: The Triple Bottom Line of 21st Century Business (London: Capstone, 1997).
- 6. Paul Hawken, The Ecology of Commerce (New York: Harper Business, 1993), p. 3.
- 7. Some scientists argue that the Triple Bottom Line is inherently delusional and nonsustainable in that it assumes that growth and ecological concerns can be reconciled. Robinson’s “Squaring the Circle” has an excellent, brief overview of this and other definitional debates.
- 8. See Andrew Manikas and Michael Godfrey, “Enabling Triple Bottom Line Compliance via Principle‐Agent Incentive Mechanisms,” Global Journal of Business Research 5 (2011), pp. 105–114. I have written elsewhere about the extent to which the definition of a “good” and “just” society is deeply ideological. That is a matter far beyond the scope of this text. However, anyone interested in pursuing the topic can look at Bert Spector, “‘Business Responsibilities in a Divided World’: The Cold War Roots of the Corporate Social Responsibility Movement,” Enterprise and Society 9 (2008), pp. 314–336.
- 9. To review the Triple Bottom Line debate, you can go to Wayne Norman and Chris MacDonald, “Getting to the Bottom of the ‘Triple Bottom Line,’” Business Ethics Quarterly 14 (2004), pp. 243–262, and Moses L. Pava, “A Response to ‘Getting to the Bottom of the Triple Bottom Line,” Business Ethics Quarterly 17 (2007), pp. 105–110.
- 10. See Minda Zellin, “The Greening of Corporate America,” Management Review 79 (June 1990), pp. 10–18, and Harvey Meyer, “The Greening of Corporate America,” Journal of Business Strategy 21 (Jan./Feb. 2000), pp. 38–43.
- 11. Berns et al., The Business of Sustainability.
- 12. Zadek, “The Path to Corporate Responsibility.”
- 13. Berns, et al., The Business of Sustainability.
- 14. Quoted in Jennifer Robinson, “The Business of Sustainability,” Gallup Management Journal Online (Oct. 3, 2009).
- 15. Christopher Marquis, Daniel Beunza, Fabrizio Ferraro, and Bobbi Thomason, Driving Sustainability at Bloomberg L.L. (Boston, MA: Harvard Business School Publishing, 2010). See also Ram Nidumolu, C. K. Prahalad, and M. R. Rangaswami, “Why Sustainability Is Now the Key Driver of Innovation,” Harvard Business Review 87 (Sept. 2009), pp. 56–64.
- 16. Schroeder and Robinson, “Green Is Free,” pp. 348–349.
- 17. Quoted in Jennifer Robinson, “The Business of Sustainability,” Gallup Management Journal Online (Oct. 3, 2009).
- 18. For background on Interface, see “The Green 50: The Industrialist,” Inc. Magazine 28 (Nov. 2006), pp. 80–81; Tom Andel, “Interface’s Green Epiphany,” Logistics Management 46 (June 2007), pp. 36–37; Lauren Hilgers, “Interface Sets the Pace for Going Green,” Plastics News 20 (Oct. 6, 2008), p. 23; Wendy Stubbs and Chris Cocklin, “An Ecological Modernist Interpretation of Sustainability: The Case of Interface Inc.,” Business Strategy and the Environment 17 (2008), pp. 512–523; Bruce C. Posner, “One CEO’s Trip from Dismissive to Convinced,” MIT Sloan Management Review 51 (Fall 2009), pp. 47–51; Kristy J. O’Hara, “About Face,” Smart Business Atlanta (Jan. 2009), pp. 1518.
- 19. Quoted in Jennifer Lynes, Scandinavian Airlines: The Green Engine Decision (Ontario: Ivey Publishing, 2009), p. 3.
- 20. Philip Mirvis, Bradley Googins, and Sylvia Kinnicutt, “Vision, Mission, Values: Guideposts to Sustainability,” Organizational Dynamics 39 (2010), pp. 316–324. Immelt is quoted from pp. 317–318.
- 21. Anderson quoted in “The Green 50: The Industrialist,” Inc. Magazine 28 (Nov. 2006),p. 80. Information on Subaru is from Dean M. Schroeder and Alan G. Robinson, “Green Is Free: Creating Sustainable Competitive Advantage Through Green Excellence,” Organizational Dynamics 39 (2010), pp. 345–352.
- 22. This point is made in Mirvis et al., “Vision, Mission, Values: Guideposts to Sustainability.” The quotes concerning unaligned programs as well as the Coke example are from that article.
- 23. Michael E. Porter and Mark R. Kramer, “Strategy and Society,” Harvard Business Review 12 (Dec. 2006), pp. 78–92. The issue of the South African mining company and AIDs is directly addressed in Margie Sutherland and Verity Hawarden, Goedehoop: When Social Issues Become Strategic (Ontario: Ivey Publishing, 2008). The Porter and Kramer quote is from p. 88.
- 24. Michael E. Porter and Mark R. Kramer, “Strategy and Society,” Harvard Business Review 12 (Dec. 2006), pp. 78–92. The issue of the South African mining company and AIDs is directly addressed in Margie Sutherland and Verity Hawarden, Goedehoop: When Social Issues Become Strategic (Ontario: Ivey Publishing, 2008). The Porter and Kramer quote is from p. 88.
- 25. Information in Wal‐Mart is from Erica L. Plambeck, “The Greening of Wal‐Mart’s Supply Chain,” Supply Chain Management Review 11 (July–Aug. 2007), pp. 18–25, and Erica L. Plambeck and Lyn Denend, Wal‐Mart’s Sustainability Strategy (Stanford, CA: Stanford Graduate School of Business, 2008).
- 26. Walmart: The High Cost of Low Price (2004). Written and directed by Robert Greenwald. DVD. Weades Moines Video, 2004.
- 27. Plambeck and Denend, Wal‐Mart’s Sustainability Strategy, p. 4.
- 28. Information on McDonald’s comes from Ray A. Goldberg and Jessica Droste Yagan, McDonald’s Corpporation: Managing a Sustainable Supply Chain (Boston, MA: Harvard Business School Publishing, 2007).
- 29. Ibid., p. 1.
- 30. Hillary Bradbury‐Huang, “Sustainability by Collaboration: The SEER Case,” Organizational Dynamics 39 (2010), pp. 335–344.
- 31. Per‐Anders Enkvist and Hela Vanthourmout, “How Companies Think About Climate Change: A McKinsey Global Survey,” McKinsey Quarterly (Feb. 2008); Marc J. Epstein, Adriana Rejc Buhovac, and Kristi Yuthas, “Implementing Sustainability: The Role of Leadership and Organizational Culture,” Strategic Finance 91 (Apr. 2010), pp. 41–47; Rosa Maria Dangelico and Devashish Pujari, “Mainstreaming Green Product Innovation: Why and How Companies Integrate Environmental Sustainability,” Journal of Business Ethics 95 (2010), pp. 471–486.
- 32. Marquis, et al., Driving Sustainability at Bloomberg L.L.
- 33. Quoted in Jennifer Robinson, “The Business of Sustainability,” Gallup Management Journal Online (Oct. 3, 2009).
- 34. Robert S. Kaplan and Ricardo Reisen De Pinho, Amanco: Developing the Sustainability Scorecard (Boston, MA: Harvard Business School Publishing, 2008), p. 5.
- 35. Robert S. Kaplan and David P. Norton, “Transforming the Balanced Scorecard from Performance Measurement to Strategic Management: Part I,” Accounting Horizons 15 (Mar. 2001), p. 87.
- 36. Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review (Jan.–Feb. 1996), p. 3.
- 37. See Frank Figge, Tobias Hahn, Stefan Schaltegger, and Marcus Wagner, “The Sustainability Balanced Scorecard—Linking Sustainability Management to Business Strategy,” Business Strategy and the Environment 11 (2002), pp. 269–284; Idalina Dias‐Sardinha, Lucas Reijinders, and Paula Antunes, “Developing Sustainability Balanced Scorecards for Environmental Services: A Study of Three Large Portuguese Companies,” Environmental Quality Management (Summer 2007), pp. 13–34; W.‐H. Tsia, W.‐C. Chou, and W. Hsu, “The Sustainability Balanced Scorecard as a Framework for Selecting Socially Responsible Investment: An Effective MCDM Model,” Journal of the Organizational Research Society 60 (2009), pp. 1396–1410.
- 38. Marc J. Epstein and Priscilla S. Wisner, “Using a Balanced Scorecard to Implement Sustainability,” Environmental Quality Management (Winter 2001), pp. 1–10.
- 39. Based on Wendy Stubbs and Chris Cocklin, “An Ecological Modernist Interpretation of Sustainability: The Case of Interface, Inc.,” Business Strategy and the Environment 17 (2008), p. 519.
- 40. For a discussion of the problems inherent in the rating systems, see Aaron Chatterji and David Levine, “Breaking Down the Walls of Codes: Evaluating Non‐Financial Performance Measurement,” California Management Review 48 (Winter 2008), pp. 29–51.
- 41. Terrence E. Deal and Allan A. Kennedy, Corporate Cultures: The Rites and Rituals of Corporate Life (Reading, MA: Addison‐Wesley, 1982), p. 4.
- 42. Marrevijk and Were, “Multiple Levels of Corporate Sustainability,” p. 113.
- 43. This chart is based on a more detailed elaboration in Marrevijk and Were, “Multiple Levels of Corporate Sustainability,” p. 113.
- 44. Ibid., pp. 97–99.
- 45. Ibid., p. 98.
- 46. Laura Quinn and Maxine Dalton, “Leading for Sustainability: Implementing the Tasks of Leadership,” Corporate Governance 9 (2009), pp. 21–38; Patricia Hind, Andrew Wilson, and Gilbert Lenssen, “Developing Leaders for Sustainable Business,” Corporate Governance 9 (2009), pp. 7–20; Nada K. Kalabadse, Andrew P. Kalabadse, and Linda Lee‐Davies, “CSR Leaders Road Map,” Corporate Governance 9 (2009), pp. 50–57; Anthony Middlebrooks, Lauren Miltenberger, James Tweedy, Grant Newman, and Joanna Follman, “Developing a Sustainability Ethic in Leaders,” Journal of Leadership Studies 3 (Nov. 2009), pp. 31–43; Derek E. Crews, “Strategies for Implementing Sustainability: Five Leadership Challenges,” SAM Advanced Management Journal 75 (Spring 2010), pp. 15–21.
- 47. Chris Argyris and Donald A. Schön, Organizational Learning II: Theory, Method, Practice (Reading, MA: Addison‐Wesley, 1996), p. 13.
- 48. Information on Petrobras is from John Barham, “Brazil’s Big Oil Man,” Latin Finance, October 2005, pp. 18–20; “An Interview with José Sergio Gabrielli de Azevedo,” Oil and Gas Investor (Oct. 2008), p. B4; José Sergio Gabrielli de Azevedo, “The Greening of Petrobras,” Harvard Business Review (Mar. 2009), pp. 43–47; Peter Haldis, “Future Petrobras Refineries Will Produce Biofuels, Diesel, Not Gasoline,” Ethanol and Biodiesel News (June 9, 2009); Geri Smith, “Petrobras Brandishes Its Corporate Blog,” Business Week (Aug. 31, 2009).
- 49. Gabrielli, “The Greening of Petrobras,” p. 44.
- 50. The Newsweek rankings can be found at newsweek.com/feature/2010/green‐rankings.