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Can Oil Companies Go Green?

3p Contributor | Monday November 7th, 2005 | 3 Comments

chevronlogo.jpgIs it possible for an oil company to change its brand image/essence? Can we be convinced of their sincerity as they try and convince us that they want to “go green”?
What is a brand? According to the AMA a brand is “A name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers”. Brands can include products, services, events etc. According to Lyn Upshaw, the true meaning of a brand is when trust is transformed into value. (Upshaw lecture 10/22/05)


Can marketers establish branding and maintain integrity at the same time? Marketing integrity involves establishing equitable partnerships with their targets through the use of honorable intention. It includes attempts to achieve/ attain the highest performance standards possible. Pricing should reflect value. Promotions need to be honest and promises should be met and/or exceeded.
Marketing integrity lends itself to green branding. It has been well recognized that “customers care about their environment and appear conscious of environmental issues in their life style and behavior.” (Ackerstein & Lemon, PG 263).
Chevron, with its “willyoujoinus” campaign, is trying to establish itself as a “green” company with integrity.
A recent advertisement found in the FT (9/26/05) states that Chevron is taking steps to consider future energy resources while finding better energy for today. We learn from this ad that although the demand for oil is increasing, by over 40% by 2025, the world has been finding less oil than it has been using for the past 20 yrs. Not only is it harder to find oil, the oil that we are finding is harder to refine. Chevron recommends that we get more oil from existing fields, search for new reserves, and convince automakers to improve fuel efficiency while perfecting hybrids. They tell us to support research that will allow wind, solar and hydrogen to become more viable parts of the energy equation. They urge government to create policies that will support us environmentally as well economically. They remind us that as consumers, we must be proactive. “Inaction is not an option” (FT 9/26/05). We all need to work together to solve the energy problem.
Chevron asserts that they are taking steps to help meet the world’s energy demands. They have committed over $100 million dollars yearly toward renewable energies, alternative fuels and improved efficiency. In addition, their contribution to meeting energy needs in the short run include record highs in exploration and the development of new techniques to utilize current oil supplies more efficiently.
So, is Chevron “greening” their brand? According to Ackerstien and Lemon greening a brand involves for the most part, improved environmental performance, knowledge of one’s target market, and knowledge of how customers perceive a product in relation to the environment. (Ackerstein and Lemon, PG 263).
Are we convinced that Chevron is successfully greening their brand? It will take more than a “flashy” ad in the FT to convince me.
References
Upshaw, Lyn Lecture 10/22/05
Financial Times 9/26/05
Ackerstein, Daniel, S. and Katherine A. Lemon (1999) Greening the Brand: Environmental Marketing Strategies and the American Consumer (chapter 15), in: Charter, M and Polonsky, M.J. (eds),
Greener Marketing: A Global Perspective on Greening Marketing Practice. Greenleaf Publishing, Sheffield, UK


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  • Anonymous

    Another program is in industries were the brand name has no association with the factories that make their products. That’s the excuse for post industry. Chevron OWNS all of its factories right?

  • Anonymous

    If you read Jared Diamond’s book “Collapse”, he actually talks about Chevron’s very good environmental practices (e.g. taking care of the land that contains their oil field so that it is doing even better than the lands around it that aren’t being cared for), which he studied. I actually found this blog post by googling looking for whether there were other oil companies that were known to have similar practices…if you have to buy the stuff, it’s best to buy it from someone you know is at least *trying*… Anyone know of other companies who may have green practices?

  • Green Star

    HAVE PETROLUEM COMPANIES GONE GREEN?
    By Jay Hitz
    There are a small number of petroleum producers that are beginning to look at renewable energy/biofuels as a way of both committing to environmentalism but also as a hedge against a changing economic and political landscape. The company that is most visible in this regard has been BP [Ticker: BP]. BP has built quite a profile for themselves as a greener, if not totally green company. While some have called what is being done by the company as “greenwashing” most analysts paint a different picture.
    Shell [Ticker: RDS] has also made an equally large investment into biofuels, along with BP, the companies have each committed $1 Billion. Shell’s Chief, Jeroen van der Veer, told Reuters in a March 19 interview that Shell was building the green energy businesses for the long term, and dismissed concerns about the short-term value of the operations to share prices.”It’s more basic than that … 50 years from now, we think about one third (of total energy use) will be from renewables,” he said. “You only build big businesses if you expect the profitability there.”
    With Shell’s purely R&D cost/benefit focus and the amount of both companies’ investments it certainly gives lie to the idea that BP is simply indulging in a publicity stunt. In a 2006 interview with German newsmagazine Der Spiegel, BP Chief Lord Browne addressed this assertion directly,
    SPIEGEL: BP earns its money primarily from the sale of fossil fuels, which are then burned and pollute the environment. But your advertising refers to BP almost exclusively as “Beyond Petroleum” — to cleaner energy sources beyond petroleum. How can such a company portray itself as an environmentally conscious business?
    Browne: Because we simply are. This is a fact, not a ploy. We have put a great deal of store in being environmentally conscious for some time now. We have managed to reduce our internal CO2 consumption, we are investing in alternative energy sources like solar and wind, and we are very active in the development of biofuels.
    SPIEGEL: Some see this public emphasis on the green side of BP as a way of diverting attention from a dirty reality.
    Browne: I vehemently disagree! You can’t say that you either want oil and gas or a clean environment. There has to be a balance between both sides. Fossil fuels will continue to be a large part of the energy mix in the future, that’s the reality. It will take some time before technologies are available that reduce the importance of oil and gas. This is why the question we must ask is: Can we find an energy mix that affects the environment in a positive way while at the same time guaranteeing a reliable supply? I think we’re doing a great deal to make this happen.
    Both companies have shown that their investments are more a pragmatic strategy than a public relations ploy. For many though biofuels and renewable power investment has been thought to be a long-term and speculative with few short-term profitable applications. Small firms that have moved into this sector are often seen as experimental startups that might not move into the black for a decade or more. With oil and gas becoming ever more scarce, a few smaller firms are looking at a greener approach to energy that can find profits in the current market.
    One of these companies is Titan Oil and Gas, Inc. [Ticker: TNOG]. The company’s President, Brandon Toth has been looking at alternative energy sources as a way of offsetting a portion of the company’s carbon footprint as well as building in a bulwark for inevitable changes of energy supply and demand. In a phone interview he had some provocative perspectives on the topic. “I think that the narrow-minded way of thinking in regard to energy is getting in the way of innovation. Previous management were following a plan that had worked for companies for years, go and drill a hole and pray that you hit oil. Well in a few instances they hit so much water at the same time that the cost to extract was just prohibitive.
    “We took a page out of the Budweiser playbook, in the eighties as aluminum prices were beginning to creep up they started one of the largest recycling companies in the world. BUD was not only saving money on their aluminum bill but also contributing to a cleaner environment. What is it that is on the bumper sticker, Recycle, Reuse and Reduce? We see our way of recovering oil and gas in the same way, in a way we step in others footprints to reduce Titan’s. We see reworking and recompletion as the oil and gas version of those original three R’s. Sure we looked at the BP approach and it looks great for a company of their size. From our point of view though, a small company with no research and development budget, we need something with cash value now, that will can also grow with each year. That’s how we have to approach environmentalism as a country too. I think, theories and a dime won’t buy you a cup of coffee.”
    Toth continued, ”I see some advantages in getting involved in leasing not only the mineral rights under the land for energy production but the air above it too. Wouldn’t it be a good thing to put a wind turbine above every pumpjack in the country? If they are on producing food crop farms then they have to be plowed around right now anyway. Why not leverage that for higher profits? Put the turbine right next to the pumpjack and let the thing offset the wells carbon footprint and generate power to be sold into the grid as well.”
    “We have leases in Kern County, California; the land in that area is desolate right now but for the pumpjacks. Kern does have sun and wind though, so why not throw solar and wind into the mix, Forbes magazine just named Kern County the number 1 place in the country to build solar. There is money to be made in building a greener company. You know the first 100% wind powered community in the country is in Missouri, not a place thought of as teaming with treehuggers. You think the good folks of Rock Port, Missouri moved to wind power because it was an economic loser?”
    The Titan President went on to describe how BP has been using jatropha and camelina, plants that cultivate in poor soil conditions, because of their high oil content and their ability to be grown in arid climates. “These two crops can be grown in places that you just couldn’t grow food crops so the concern about biofuels spiking food prices is not an issue with them. What if we were to put these in on our Kern properties, right now we don’t have the rights to do this, but what if? The land is just sitting there now but it could be used to get us off of foreign oil as well. America needs to be thinking like this.”
    Regarding some of the news about T. Boone Pickens’ Plan, “It is good to see someone like T. Boone Pickens say this because it will open people’s eyes a lot more than if I say it. His plan to redirect natural gas for transportation use and making up the difference with wind and solar is a good one. You put that together with using non petroleum fertilizers like biosolids that can grow biofuel crops like camelina or even corn with a much smaller carbon footprint than we are currently doing and you start to see some light at the end of the tunnel. We could use the biosolids in areas like Kern to grow these crops at the same time we are pumping oil and/or gas and generating electricity with wind, solar or both. The crops may not be as profitable as the oil, gas, wind or solar but it makes some money and that contributes to the bottom line. Then as the margins get better we are there first with the supply chain and the sales outlets.”
    “Don’t get me wrong we want to make some money off of oil and gas and we will for a long time to come, but we don’t want to be holding the bag when demand drops significantly in a couple decades. Its like this, Nike is the most successful active wear company in the world but as their brand matured they understood that it was important to branch out. Now they own Cole Haan [a high end dress and leisure shoe brand] and Bauer [a hockey equipment company] and they are selling golf clubs too, it’s all the same business in a way and it gives their stockholders value. That is all we are doing is looking at giving our stockholders more for their hard earned money.”
    For more information about BP Global log into http://www.bp.com and for more information about Titan Oil and Gas, Inc. log into http://www.titanoilandgas.com and for more information about Shell Global log into http://www.shell.com.