AHC Group

Challenges in governance and innovation

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This article describes the evolution and complexity of BP's climate change strategies, including BP's own environmental footprint, a reinvention of its energy products to go beyond petroleum, and a recognition that their climate change strategies are both a business opportunity and a responsibility.


When BP exited the Global Climate Coalition in 1997, it marked the beginning of a journey for the company — a journey that took it into uncharted waters out of step with its direct competitors, faced with taking actions that might initially be viewed as being directly contrary to its best interests as an Energy company. By exploring the implications of what was implicitly a stand on principle, BP instead found itself sparking the creativity and the imagination of its staff who took that stand and made it into a profitable and innovative business proposition. This article will take you through the part of that journey that relates to company governance and the challenges that building an innovative approach within a mature industry can pose.


In 1996, the Second Report of the Inter-Governmental Panel on Climate Change was published. That report, and the discussion which has continued since its publication, showed that there was mounting concern about two stark facts:

  • the concentration of carbon dioxide in the atmosphere is rising; and
  • the temperature of the earth's surface is increasing.

Karl Popper once described all science as being provisional. What he meant by that was that all science is open to refutation, to amendment and to development. That view has certainly been confirmed by the debate around climate change.

We in BP reached the point in 1997, when Lord Browne spoke at Stanford University in May of that year and shared that we believed that the issue of climate change was inescapable. Our focus then changed from one of watching the unfolding debate and technical evidence, to 'what can' and 'what should' be done. The fact that that action was almost certainly going to be unilateral was of concern, but not felt to be sufficiently disturbing to stop us moving forward. If we are all to take responsibility for the future of our planet, then it falls to us all to begin to take precautionary action.

To date, developed countries have dominated emissions growth. In the future, emissions growth will also be driven both by developed and developing countries — so any solution must be just as global and diverse in its scope. The issue also triggers many concerns on access to energy and development opportunities; therefore, any approach which does not embrace the role of governments and international commodity and financial markets is unlikely to succeed.

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