A huge challenge for multinational oil companies is the widespread perception that they cannot be trusted.
In an Apr. 3 speech at the Harvard University School of Business, John Browne, Group Chief Executive of BP PLC, said there is a climate of distrust surrounding international trade and investment in general and the role of big business in particular.
Globalization
But Browne dismissed the view that globalization is a zero sum game in which the rich get richer and the poor get poorer. He argued that history shows that liberalizing trade laws, although sometimes painful at first, has far-reaching, long-term benefits.
Browne said that in the first 50 years of the 20th Century, when the world was "characterized by distrust and by protectionism," world living standards as measured by per capita gross domestic product (GDP) rose by just 1%/year, with the population growing by around 1 billion. But when trade barriers slowly started lifting in the second half of the century, per capita GDP rose more than twice as fast, despite a population growth of 3.5 billion people. Browne said it is no coincidence that during this time world trade grew by 1,700%.
Avoiding 'Enronitis'
The word "Enron" wasn't in Browne's prepared remarks. Nevertheless, it was still clear BP and other energy multinationals fear that Enron Corp.'s legal and financial problems have created a public relations nightmare that could create worrisome public policy implications later.
Companies need to gain the public's trust, Browne said, and as the global marketplace changes, companies need to show they can operate in complex areas. An important step forward is the recent effort by the United Nations to promote a "global compact" with multinationals, human rights groups, and unions to promote good business practices.
"The challenge now is to move from the general to the specific-and that's why we are trying to integrate the thinking behind the words of the compact into the way we work," Browne said.
One place to start is corruption.
"Governments and international institutions have enormous potential leverage," Browne said. "Corruption isn't inevitable. If we can combine the leverage of government with a firm and effective refusal by the private sector to tolerate corruption, including the petty but corrosive corruption of facilitation payments, we can begin to renew trust not just in corporate activity but in the whole development process. "
The world is watching the corporate sector, Browne said.
"This is a moment of great challenge, but also of great opportunity, because if we can demonstrate we are agents of progress, I believe we can remove the doubts and renew the trust that is essential for both prosperity and security.
"Those who argue against globalization now are effectively denying the world's poor the chance to improve their standard of living and to share in the prosperity they themselves enjoy.
"They are denying the 1.5 billion people who live in absolute poverty the means of escape. That is morally unacceptable."
