Learning the lessons of Brent Spar saga

Date: 02/11/1995

By Julian Oliver

A well-orchestrated consumer boycott can hurt companies. The response must be that an ounce of market research is worth a pound of scientific evidence.

THE victory of a David over a Goliath has a perennial appeal - even more so when David is a not-for-profit pygmy and Goliath is a huge multinational oil company. But who really won?

Recently, we discovered that Greenpeace overestimated the amount of oil on the Brent Spar platform by 100 times, has had to make a humble apology and is laying off staff. Shell is still reported to favour the deep-sea dumping option. Almost five months after Shell abandoned its plans to sink its 65,000 tonne North Sea oil storage platform, it is worth looking at some of the public affairs fall-out from this very visual story. Shell's volte-face in June must have given heart to many single issue lobbies and heartburn to many public affairs directors. What are the lessons to be learnt and by whom?

Lesson number one: “Today's public opinion is tomorrow's law.” The natural reaction of politicians to a crisis is to change the law. Thus we owe the so-called Montreal convention banning most CFCs to the fears of holes in the ozone layer identified in the 1970s (for which the Nobel prize for chemistry was recently awarded). Another example is the European Seveso Directive produced in reaction to the 1970s' chemical explosions at Flixborough and Seveso. It was later amended in reaction to the pollution of the Rhine after the Sandoz disaster. The directive is currently being reviewed again, but has now become a core part of European environmental protection.

Shell based its argument for sinking the Brent Spar on the Paris-Oslo convention which allowed, on a case-by-case basis, dumping in the North Sea. Shell persuaded the UK government that its case fell within that convention. The immediate and predictable reaction at the June EU environment ministers' meeting was to propose an update of the convention to reflect current public opinion that now opposes dumping.

Lesson number two: “Crises are compounded by geography.” In European competition law, a key factor is a definition of the relevant market. Shell and the UK government took the view that as the relevant market was British, it was only necessary to inform the other countries who share the North Sea. In pre-1914 maps, the water was shown as the German Ocean! Clearly, the relevant market affected by dumping includes all the countries bordering the North Sea. Shell badly underestimated the strong Scandinavian, German and Dutch concern for clean seas. Northern Europeans clearly feel that the North Sea is as much their sea as Britain's. In this respect, Greenpeace imposed an effective weighted majority vote by expanding the relevant market to include the whole of north-west Europe.

Lesson number three: “Crises are compounded by history.” An inevitable reaction to a major crisis is “has it happened before?” It is instructive that Exxon, who is the 50&percent; joint-venture partner in the Brent Spar, was obvious only by its absence in this affair. While Shell was keen to promote the idea that the proposed dumping was without precedent, but within the rules, it would have been a much harder sell for Exxon, whose very name is so closely associated with the Valdez oil spill in Alaska. It is only now that the long-established US practice of dumping 'Rigs for Reefs' has received any positive media attention.

Lesson number four: “Globalisation affects public affairs issues as well as marketing.” “Think global, act local” is espoused by almost all international companies. Greenpeace has exposed the key weakness of decentralised management - portraying one subsidiary as being insensitive to others and the company as divided against itself. Greenpeace was able to feed its own film direct to media in several countries, which quickly identified where public opinion was most sensitive. The boycott of Shell garages in Holland and Germany was reported as being more effective than during previous anti-apartheid boycotts.

Lesson number five: “Cultural differences are alive and well, even in the Single Market.” The clear differences in reaction by consumers and then politicians on either side of the North Sea suggest that cultural differences are still strong within Europe. One German politician noted accurately that while the British have almost obsessive concerns about animal welfare, most Germans feel as strongly about the protection of the environment. Therefore Greenpeace targeted its campaign in the three environmentally-sensitive markets of Germany, Denmark and the Netherlands.

Lesson number six: “Boycotts are back on the European consumer agenda.” Friends of the Earth has been quoted as saying about the successful boycott of Shell petrol stations: “It opens the doors for other campaigns like this.”

Certainly a well-orchestrated consumer boycott can hurt companies. What can companies do to anticipate or defuse such campaigns? In public affairs terms, the response must be that an ounce of market research is worth a pound of scientific evidence. Shell is reported as having spent several millions on researching the alternative options for the disposal of the Brent Spar platform; the company clearly underspent on researching environmental activists.

Lesson number seven: “One crisis leads to another.” Five years after the Perrier recall, one can see that the crisis led to a massive restructuring of the company, new management as well as new processes and procedures and new legislation. The Perrier case was similar to the Brent Spar in that no one was injured by the discovery of traces of benzene in the natural sparkling water and that the action was initiated by the company in response to adverse public opinion. Nevertheless, the consequences were severe for its image, employees, management and shareholders. Five months after Brent Spar, it is safe to predict that we have not yet heard of the end of this saga, despite its disappearance from the headlines.

Greenpeace ran a highly-emotional lobbying campaign - it was well targeted, used saturation state-of-the-art TV technology, advanced public relations techniques such as a 'home page' on the Internet and a budget of over $2 million. It started its public campaign in January. The coup de grâce, in the form of the boycott of petrol stations, only took off in the first couple of weeks of June. However, Greenpeace's almost monopoly of the visual images has now provoked television producers into questioning the ethics of taking all their material from one of the interested parties. Its recent climb-down over the statistics of how much oil was involved may also have damaged future membership appeals and long-term credibility.

As far as Shell is concerned, it has been a major public relations disaster. It will not easily or quickly restore its image as being environmentally friendly or as a reliable partner with government or consumers. Press comments indicate that it also had difficulties with its passive joint-venture partner, Exxon, as well as poor communications with its trade associations who, with one exception, left Shell to fight its own public affairs battle. Inevitably, Shell will have to reorganise its internal and external risk audit, issues management and communications skills.

We have not seen the last of the management, consumer or legislative consequences of the Shell/Greenpeace duel and the best single lesson must be to invest in public affairs before the next crisis.

Julian Oliver is managing director of Edelman Europe's Public Affairs Group and has considerable experience of working with both not-for-profit organisations as well as with the European corporate affairs world.