Diablogue #2, Part 5: Microlending goes public. Let them eat stocks.

From Grameen Bank to the Kiva community, microlending is taking the world by storm. In Part 5 of our Diablogue on the topic of corporate responsibility, Jill Damatac investigates the fine line between the ethical heart of the Grameen philosophy - poverty eradication and human development - and the profit-making aspirations of financial institutions.  Can social gain be reward enough for microlenders?

Image courtesy of Bloomberg Businessweek

SKS Microfinance, India’s largest microlender, went public this past July, reaping over $350 million in its IPO.  This groundbreaking move has generated both record profits and a heated pro/con debate.  With recent turbulence at its helm—CEO Suresh Gurumani departed earlier this fall after apparent incompatibilities with founder Vikram Akula and SKS’s board—followed by accompanying turbulence in the Bombay Stock Exchange (due to investors nervous about the CEO’s firing), SKS’s IPO glow is fast fading, replaced by tough questions and, most prominently, the ever-nagging conflict presented by the opposing goals of an MFI (altruism) and its stockholders (profits).

Before SKS went public, Grameen Bank founder (and Nobel Peace Prize winner) Muhammad Yunus openly criticised the much-anticipated IPO,  emphasizing the main objective of microlending, which is to help eradicate poverty, versus the main objective of stockholders, which is to make profits.  Though this contrast is indisputably true, proponents of the IPO fairly underscored the difficulties faced by MFIs when it comes to fundraising.

>> Read on at The Owl’s Post

 

Diablogue #2, Part 4: Microfinance, macro difference for low income entrepreneurs

Part 4 of Diablogue #2 with The Owl’s Post builds on our thoughts about fair trade and social enterprise, by exploring a financial model that apparently represents the antithesis of traditional banking systems.  Microfinance schemes were pioneered in the 1970s by Professor Muhammad Yunus, in the midst of devastating famine in his home country of Bangladesh.  Yunus’ research programme at the University of Chittagong sought to determine the viability of a credit delivery system targeted at the poorest members of society.  He and his Grameen Bank subsequently won the Nobel Peace Prize in 2006 “for their efforts to create economic and social development from below”. This article considers the principles of microfinance, and the huge potential it offers to stimulate economic enterprise and raise vulnerable people out of poverty.

The Grameen Bank Project was founded upon Yunus’ objectives to:

• Extend banking facilities to men and women living in the most deprived conditions;
• Eliminate exploitation of the poorest members of the community by money lenders;
• Create opportunities for self-employment and economic enterprise;
• Bring disadvantaged people – largely women – into the structure of an organisation which they can understand and manage by themselves; and
• Transform the vicious cycle of “low income > low saving > low investment” into a virtuous one of “low income > injection of credit > investment > increased income and savings > increased investment > more income”.

Grameen borrowers weaving mats

The achievement of these goals requires recognition of some key flaws in traditional finance models.  Historically, banks have not provided financial services – and especially loans – to applicants with little or zero cash income or a verifiable credit history (i.e. those most in need of financial support), since the risk of non-repayment is too great to justify the cost of administration.  Furthermore, the majority of low income people have few possessions that may be secured by a bank as collateral.  In low income countries, uncertainty of land tenures can mean that even those people who “own” land may not ultimately have legal title to it.  This means that a bank has little recourse against defaulting borrowers.  In such cases the financial service sector is staunchly risk averse.

As a result, the poorest members of both industrialised and low income societies have frequently relied on relatives or local moneylenders for the cash injection needed to stimulate sustainable livelihoods.  But it has been widely recognised that moneylenders charge higher interest rates to the poorest borrowers, with rates of between 10-100 per cent incurred on informal loans.  Whilst their convenience and speed of service can be attractive, the services of moneylenders cannot be viewed as a sustainable means of revenue generation for low income communities.

Microcredit, offered by institutions such as the Grameen Bank, is the provision of very small loans (typically less than US $100 in low income countries) to those in poverty.  Available specifically to those people who are excluded from traditional banking services, the loans are designed to inspire entrepreneurship.  Moving away from the austerity of the stereotypical bank, micro transactions more regularly take place at the community level from a local hall or place of worship.  A borrower may use the loan to buy the tools and equipment needed to establish a business and generate a longer-term, self-supporting income.

Microfinance initiatives flourished in low income countries during the late 20th century, with the variety of providers expanding to encompass major development banks, financial cooperatives and credit unions, among others.  Women in poor communities have been some of the most significant beneficiaries, currently forming 97 per cent of the Grameen Bank’s 6.6 million borrowers.  Microfinance has given women the opportunity to forge their own path within societies where they are frequently viewed as second class citizens, and has been commended for reducing domestic violence by enabling women to reach previously unattainable levels of independence.

But microfinance is far from a phenomenon of only the poorest nations.  At the end of 2009, the Microfinance Information Exchange (MIX) was reportedly tracking 1,084 microfinance institutions serving 74 million borrowers worldwide.  The Grameen Bank commenced operations in New York in 2008, and currently serves the USA from offices in New York City, Omaha and Washington D.C.  MIX estimate that 37 million people in the USA live below the poverty line, providing a rich client base for microfinance initiatives.  A recent Newsweek report described Grameen America’s clientele of 3,500 borrowers, within the context of the organisation’s ongoing expansion as major banks nurse wounds inflicted by the financial crisis and keep credit tighter than ever.  Elsewhere, the microcredit model is gaining impetus in Israel, Russia, Ukraine and other industrialised countries, where loans are used to overcome cultural barriers in the mainstream “business” world.

Despite initial skepticism, large financial organisations are recognising the success of microfinance models and beginning to view micro- projects as a source of future growth.  In the US, Grameen Bank currently operates on grants and long-term loans from the likes of Wells Fargo and Capital One, who see support to small-scale borrowers as a mechanism to develop a community of more affluent people who will one day need larger and more sophisticated financial services.

Forty years ago, Muhammad Yunus had a vision of a more sustainable financial system.  Now, as the 21st century presents us with ever-increasing socio-economic challenges, his vision may prove to be more valuable than the corporate world ever thought possible.

Diablogue #2, Part 3: Drawing the Triple Bottom Line

In the latest contribution to Diablogue #2, Jill Damatac looks beyond traditional business models to explore the rapidly growing trend towards socially conscious business.  In Jill’s article, posted today at The Owl’s Post, the focus is on social enterprise.  Excerpted below, the full text can be found by clicking through to The Owl’s Post.

“The human capacity to innovate whilst stuck between a rock and a hard place prevails yet again.  With a seemingly prolonged global economic contraction that has already wreaked widespread havoc, fiscally conscious governments and businesses are increasingly cutting back on social and environmental expenditures as part of an attempt to regain more stable financial footing.  To the rescue?  Social enterprise.  Creating solutions for social issues and environmental issues through activities and innovations that generate sustained income (known as the ‘triple bottom line‘), these entities,  a supercharged version of traditional nonprofits whose activities don’t generate income (like a soup kitchen, or any other nonprofit which relies solely on charitable donations to operate), stand at the forefront of a more evolved and integrated strategy for social and environmental change.

The momentum gained in recent years by social entrepreneurship seems to have reached new heights…

>> Click here to see how the wave has spread…

As quickly as this new model for ‘good’ is growing, certain challenges remain, particularly in the world of more traditional non-profits, and especially as they seek to transition to the entrepreneurial model.  Once such challenges are better conquered (and in greater number) by the traditional nonprofit sector, social enterprise, especially when partnered with legislative and fiscal support from governments, can only continue to spread and flourish.  It is, after all, the latest evolution of business:  21st-century capitalism…only this time, with feeling.”

 

Diablogue #2, Part 2: Trade, how fair is “fair”?

Image courtesy of www.guardian.co.uk

Part 2 of Diablogue #2 kicks off our delve into all things CSR, by going back to basics on “Fair Trade”, that seeming panacea for ethical business.  In response to growing awareness about the failure of conventional trade mechanisms to deliver sustainable livelihoods and development to people in the poorest countries of the world, Fair Trade promises increased equity in global supply chains.

But what does Fair Trade mean, and can it really guarantee the legitimacy of supply chains that consumers perceive?

The World Fair Trade Organisation (WFTO) cites the accepted definition of Fair Trade as

a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade.  It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalised producers and workers – especially in the South.”

The Fair Trade movement operates under the premise that, if trade is managed with greater transparency, it can be an essential driver of poverty reduction, economic and human development.  Supported by consumers, Fair Trade Organisations are actively engaged in supporting producers, raising awareness and campaigning for changes in the rules and practice of conventional trade, with the mission to drive justice and sustainable development to the heart of trade structures.

Fair Trade products are marked by a registered certification label, which verifies that the product meets recognised standards set by the international body, Fairtrade Labelling Organisations International (FLO).  The standards pursue a set of fundamental trade objectives, including:

• To ensure a guaranteed Fair Trade minimum price, which is agreed with producers and aims to enable market access for marginalised producers;
• To provide an additional Fair Trade premium which can be invested in projects that enhance social, economic and environmental development;
• To enable pre-financing for producers who require it;
• To emphasise the idea of collaboration between trade partners;
• To facilitate mutually beneficial, equitable and long-term trading relationships; and
• To set clear minimum and progressive criteria which ensure that the conditions for the production and trade of a product are socially and economically fair, and environmentally responsible.

The standards are developed through research with key players in the Fair Trade scheme, including traders, non-governmental organisations, academics and labelling organisations, and they apply to both producers and trading relationships.  FLO supports producers, processors and exporters to achieve the Fair Trade standards, and they are regularly inspected and certified by FLO’s certification arm, FLO-Cert.

Fair Trade also adheres to standards that have been widely adopted in national legal systems and through voluntary codes of conduct.  Particularly notable are the International Labour Organisation (ILO) conventions, which seek decent working conditions, freedom in the choice of employment, protection against discrimination, and respect for the rights of children.  Ensuring compliance with these standards is a major challenge in low income countries and emerging economies.  Whilst recognising the importance of legal requirements and respect for basic human rights, the Fair Trade movement notes that, alone, they are insufficient to reorient trade relations towards long-term development goals.  Fair Trade therefore implies progress beyond regulatory compliance, through deeper engagement with actors in the trading chain and realisation of the wider social and political context of their economic relationships and transactions.

The apparent rigour of the Fair Trade system provides a degree of confidence that ethics have had a part to play in bringing products to the consumer.  But researchers have suggested that even Fair Trade certification should be taken with caution.  A BBC Panorama broadcast in March 2010 called into question the legitimacy of Fair Trade labels applied to chocolate sold in the UK.  In an investigation into the chocolate supply chain, the BBC “found evidence of human trafficking and child slave labour”.  Panorama suggested that there is “no guarantee”, despite the safeguards associated with “Fair Trade” chocolate, that child labour has not been involved in the supply chain.  As cocoa passess through the chain of custody from farmer to buyer, wholesaler to exporters, importers and chocolate manufacturers, its source becomes harder and harder to trace.  Like so many products of the globalised marketplace, cocoa is frequently sold on the open market, where the commodity price ultimately takes precedence over all other considerations.

Fair Trade offers the best solution yet to securing supply chain responsibility, and has made remarkable progress to bring sustainability and equity on to the global business agenda.   But despite the best intentions of certification bodies and end producers, to what extent can anybody truly guarantee that “Fair Trade” is as fair as we perceive?

Diablogue #2, Part 1: The Age of Irresponsible?

This week we glide seamlessly from Diablogue #1 into our next topic for discussion with The Owl’s Post.  Dubious thanks go to global energy giants Chevron and Total for providing a convenient stepping stone to facilitate this very organic development in our diablogue.  As industry counterpart BP plays out its current wave of corporate irresponsibility in the Gulf of Mexico, Chevron and Total’s supply chain atrocities are pulled sharply into focus in Burma. 

A report published by the NGO EarthRights International last Sunday (04 July) exposes Chevron, Total and the Thai oil firm PTTEP for their role in a series of violations in Burma.  The report describes the $9 billion of revenue generated by the three firms via the Yadana Natural Gas Project, which has operated in military-ruled Burma (formerly Myanmar) since 1998.  It has been suggested that nearly $5 billion of this sum has been diverted directly into the pockets of the Burmese military leadership – the junta – during the last decade; that these funds have enabled the junta to maintain their power, and furthermore to develop a nuclear weapons programme supported by trade with North Korea.

Reportedly, the revenue accrued from the oil firms has been syphoned away by Burmese generals, kept out of the country’s budget (where it may have been allocated to much-needed poverty alleviation and social development) and instead stored overseas in private Singapore bank accounts.  From there, it is claimed, the money may have been used for many purposes, including the trade in arms.

EarthRights’ two-year research exercise goes on to reveal the ongoing human rights atrocities associated with the Yadana Project, claiming that soldiers guarding the natural gas pipeline have murdered local people and forced others to undertake punishing unpaid labour.  The report accuses the oil giants of ignoring these brutalities, as well as the associated high level corruption.

These allegations are no revelation in the headlines of corporate misdemeanours.  EarthRights International previously sued Chevron’s predecessor, Unocal Corporation, for complicity in murder, rape, torture and forced labour in the Yadana region.  The lawsuit led to Unocal’s payment of compensation to Burmese plaintiffs in 2005, prior to the firm’s acquisition by Chevron.  But this marked only the beginning of the story.  In 2009, EarthRights once again brought the subject to the world’s attention with the publication of interviews with Burmese citizens, describing how soldiers had coerced them into unpaid manual labour.

Total and Chevron have denied their involvement in the reported events, and assert their positive and constructive role in Burmese communities, providing development, health and education programmes.  Nevertheless, the exposé raises a number of questions and concerns about the nature of global supply chains and the ability of multinational companies to satisfactorily manage their environmental and social impacts in the regions where they operate.  For years, energy companies have argued that they cannot be held accountable for the nefarious behaviour of governments in their multitudinous host countries.  To the ethical consumer, however, this is unacceptable.

But in a globalised economy, how can we ensure the corporate responsibility of big business?  How can we guarantee that labour rights are being upheld down the supply chain, and that the day-to-day goods that we purchase have been ethically sourced and fairly traded?  These are the themes of this, our second diablogue.  Watch this space as we begin by investigating the concept of “fair trade”.

Please visit Time and BBC Online for further commentary on events in Burma.

Diablogue #1, Part 4: BP – impacts are rife, but what about opportunities?

In Part 3 of this, our first diablogue, Jill Damatac interpreted the responsibility apportioned to each stakeholder in the Deepwater Horizon disaster: for BP, the formidable environmental clean-up; for other major oil companies, their expertise and technical capacity to support the task; and for the Government, regulatory oversight and quality control.  A reasoned approach to the tangible impacts of the crisis, allocating to each party the duties that they (should) know best.  Now, we sit back and watch the generations pass before environmental conditions in the Gulf of Mexico are restored to their previous levels.  Sorted (she says, with skepticism).

My (other) concern with the agreed division of responsibility is its dismissal of the intangible implications of the spill, including the economic impacts on industries and communities surrounding the Gulf, not to mention the impacts on the energy industry itself (the long-term effects have been likened to those of Three Mile Island), the potential setbacks to US energy policy, and the possible damage to political relations between the USA and UK.  Who will take responsibility for managing these elements of the disaster, and how? 

But these are questions for another day.  This article is focused not on the impacts, but on the opportunities arising from BP’s blunder.  And yes, there are indeed opportunities.  Let us consider.

As the White House chief of staff, Rahm Emanuel, notoriously stated in the midst of the USA’s burgeoning financial downturn in November 2008,

You never want a serious crisis to go to waste.

Bizarre as this statement seemed, Emanuel explained his rationale that crises provide opportunities to realise and achieve things that may not have been achieved before.  I could not agree more.  Catastrophic as global disasters are, it is so frequently the grim realisation of actual risk that stimulates the type of action and innovation desperately needed, but ignored in the day to day context of ignorance and denial.  Take, for example, the scientific evidence gained in the 1980s that human activity was systematically destroying the ozone layer (see Farman et al., Nature Vol. 315, May 1985).  This shock finding led quickly to the adoption of the Montreal Protocol (1987), an international agreement which, if adhered to, should enable the full recovery of the ozone layer by 2050.  In similar vein, the incredible potential of nuclear fission to generate clean energy became apparent as a direct result of the development of the atomic bomb, in the face of mid-20th century global warfare.

So what opportunities can we realise from this current disaster?

Firstly, I suggest new environmental innovation and the development of the green technology market.  When the BBC website asked readers to submit their ideas on how the oil spill should have been stopped, the site was deluged with responses.  In capturing the attention of the global populace, Deepwater Horizon has also captured the imagination of innovators and would-be inventors worldwide.  And this is just the informal research and development sector.  The proximity of the disaster to the intellectual might of the USA could bring a stimulus for the growth of industries and venture capitalists focused on green technologies.  The United States has long been criticised for its slow acceptance of all things environmental, but recent events may bring home the need for pro-activity and preparedness to respond to environmental risk, and the economic opportunities in doing so.  BP’s inability to respond effectively to the causes and consequences of the spill has demonstrated the gap in the market.  The New York Times has evidenced the poor progress in developing clean-up technologies since the 1989 Exxon Valdez disaster.  Entrepreneurs are surely standing in the wings ready to pounce on the next technological breakthrough?

Offshore wind turbines

Secondly, the disaster places new impetus on the US Government to address its ailing environmental regulations.  As Zygmunt J.B. Plater, a law professor at Boston College, remarked in the New York Times, the spill in the Gulf may become a “wake-up call” for environmental causes across the board.  The United States has historically lagged behind many nations on environmental policy.  International treaties have been signed in abundance in a gesture of lip service, but rarely ratified.  See, for example, the United Nations Convention on Biological Diversity; the Stockholm Convention on Persistent Organic Pollutants; and the Kyoto Protocol, signed by President Clinton, but rejected by President George W. Bush in 2001.  We may now at last see the advancement of the US approach to environmental management.  Environmental groups are predicting a new awareness of wetlands, biodiversity and water quality, while President Obama’s Oval Office address last week stressed the need to end the US “addiction” to fossil fuels.  Obama called on the Senate to pass an Energy Bill that would diversify energy supplies towards cleaner generation.  Tightening of environmental regulations imposed on industry has also been cited.  We see here an opportunity not only to advance the baseline mechanisms for environmental protection in the USA, but also to take enormous steps forward for international environmental policy if the US lends its support.

Mr. Obama’s push to diversify energy supplies leads me to my final window of opportunity.  It has already been suggested that a shift towards new forms of energy may need an additional 500,000 engineers worldwide to satisfy its needs during the next two decades.  The events at Deepwater Horizon lend further importance to the necessity of encouraging the brightest talent into an industry characterised by risk.   The ongoing need to address energy security concerns in an environmentally acceptable way, acts as a metaphorical sponge soaking up skilled professionals into a dynamic and endlessly vibrant economic sector.  Investment is likely to be ploughed into complex facilities such as nuclear power stations, offshore wind farms, tidal power, and upgrading energy infrastructure on a vast scale.  This provides extensive opportunities for firms and individuals with advanced technical skills and the ability to work in highly regulated environments.  It is already anticipated that the oil and gas industry alone will increase its graduate recruitment by 50 per cent next year to cope with global demands for expert engineering services.  Here we see surefire evidence of an industry with a flourishing future, and the opportunity for skilling and re-skilling to meet rigorous professional criteria; an overwhelmingly positive story in the current economic climate, and one which incidents in the Gulf serve only to drive forwards.

Now all we need is an additional division of responsibility to ensure that the opportunities are pursued with similar rigour, and simultaneously with the management of impacts.  Over to you, Mr. Obama.

 

 

Diablogue #1, Part 3: BP Clean-up now on Spin Cycle

As the crisis continues to unfold in the Gulf of Mexico, Jill Damatac progresses our diablogue by asking “who’s responsible for what in the scramble to stem the havoc wreaked by the BP oil catastrophe”?  As politicians, oil companies, the media and the public cast about for someone to blame, Jill navigates us through the endless mud-slinging to determine with whom the accountability should ultimately lie.

23 June 2010 | The Owl’s Post

The figurative buck continues to be passed in a circle of irresponsibility as the BP oil disaster spreads and deepens.  While certain tasks and measures of oversight fall under the federal government’s jurisdiction, it would be a grave mistake for the press—and the public—to contract a sort of amnesia (however unintentionally) when it comes to pinpointing who is ultimately to blame.  In this instance, that blame falls squarely and clearly upon BP.

Who’s left to hold the bag:  BP, or the U.S. government?

Click here to explore this question at The Owl’s Post >>

At this stage, with the gusher projected to continue until August or so, the attempts at clean-up spin cycle—the blame game—can only exacerbate matters.  The oceanic depth at which the accident occurred guarantees that this is no regular spill (contrary to BP’s Tony Hayward, who insists that “Oil floats!”), since the tremendous pressure wielded by the ocean at such depths—1500 meters, or 5000 feet—essentially prevents the oil from rising by forcing its disintegration into microdroplets which are then carried and spread by ocean currents as underwater plumes.  Sharon Begley writes in Newsweek’s June 6 issue that the added dispersants—meant to break up slicks on the surface—cause the spill to further “undergo an ugly alchemy” whilst deep underwater, only serving to magnify and worsen the effect already created by the great depths and its consequential pressure.  This ‘plume effect’ is significant in that the spill will not only affect surface creatures and ecologies but also those at various underwater depths.

In short, we now know what’s happened, what’s happening, who’s responsible for what, who needs to do what when, and how it ought to be done.  As the situation stands currently, the environmental impacts multiply by the minute, and the disaster’s economic effects increase by the day.  Rather than more fully focus on solutions that will provide these two immensely affected sectors some relief and lessen further future effects, the spin cycle—fueled by useless media huffing-and-puffing over the emotional levels of the President’s response, say, or by Congressional hearings that only provide a circus-stage for corporate and political finger-pointing —oscillates onward, stubbornly concerning itself solely with what got us into this mess in the first place:  vacuous human self-centeredness.

Diablogue #1, Part 2 : BP – not drowning, but waving?

In the first instalment of our Diablogue with The Owl’s Post (06 June), Jill Damatac posed two pertinent questions for the future of BP: will the firm be properly punished and held accountable for their egregious record of irresponsibility and greed?  Or will they, as in their past “accidents”, skate by with a relative slap on the wrist? 

Here, we interrogate these questions further, asking whether the current political, social and financial rebound against BP can have any real or long-term impact on a seemingly impregnable economic powerhouse.

Source: www.timesonline.co.uk

45 days on from the explosion at BP’s Deepwater Horizon rig the devastation continues on an unprecedented scale, defined by White House Energy Advisor Carol Browner as the “worst US eco-disaster”.

As anger mounts around the world, President Obama has spoken publicly  in a television interview with NBC, vehemently criticising BP’s Chief Executive Tony Hayward for his ill-advised comments that “I want my life back” and that “the environmental impact of this disaster is likely to be very, very modest”.  Mr. Obama’s response: “He wouldn’t be working for me after any of those statements”.  Following a similar vein, a number of media commentators have called for Mr. Hayward’s resignation.

BP’s PR machine roars into action to mitigate the reputational damage threatening the company.  Their defences must be strengthened in every direction.  Through online and social media, the public has engaged with this crisis to a level rarely seen before.  A Facebook group dedicated to “Boycott BP” is gaining more than 30,000 subscribers each day and already boasts a membership of 350,000.   An underwater webcam beams images over the internet to hundreds of thousands of viewers worldwide, depicting the broken pipe spilling oil into the sea.  One Florida resident has launched a one-man campaign via YouTube to raise consumer pressure, on the premise that by boycotting the pumps customers can force down BP’s fuel prices and effect real damage to the firm’s bottom line.

Signs of investor uncertainty are also evident as BP’s shares slumped by 13 per cent last week, plummeting from the previous week’s close of 495 British pence to 430 pence on Thursday (03 June).  In total, the shares have collapsed by 35 per cent  over the past six weeks.

But is political criticism, consumer activism or investor lapse in confidence really going to punish BP in any meaningful way?

BP has so far been cagey about how the oil spill has affected sales, with little indication of any significant shortfall to date.  Analysts have suggested that customer boycotts following events such as this are frequently mild, short-lived and symbolic at most, as convenience, habit and price offer stronger influences over consumer behaviour.  It has furthermore been noted that in states bordering the Gulf of Mexico, public disapproval is being stifled due to economic dependence on BP for employment and investment, next to concerns that activism may present an additional unwelcome deterrent to tourists.

While BP must pay the price of an effective solution to the spill, support clean-up operations in surrounding geographies and respond to any fine imposed by Government, it seems unlikely that such payouts will touch the extraordinary profit margins realised by the firm over many years.  Take, for example, the $360 million cost to construct six sand barriers off the US state of Louisiana, to protect fragile wetlands from the spreading oil slick.  Compared with BP’s cashflow of $30 billion accrued during the last four quarters alone (and difficult quarters they were too), the relative cost of mitigation seems meagre.

Meanwhile decreasing share prices may signal an overall lapse in confidence in BP corporate, but, as prices fall, trading in the stock markets doubled last week, with 80 per cent of transactions being buys.  Before the oil spill, BP accounted for around nine per cent of the UK FTSE 100‘s value – the list representing the UK’s biggest firms.  It is also one of relatively few stocks to pay a usually high dividend, and consequently accounts for around eight per cent of income flowing into the UK’s pension funds.  Despite immediate risks to dividend payouts, with share prices predicted to bounce back to former glorious heights speculators are snapping up cut price offers at remarkable speed.

Returning to our starting point, the evidence suggests that BP may indeed rise from this disaster relatively unscathed, but for another blot on their corporate copybook which may be forgotten in the public psyche until their next blunder.  The environmental effects of the Deepwater Horizon spill will persist for generations.  The political reverberations may continue for years.  But for BP, it seems their slapped wrist may cease to sting within a much shorter space of time.

[The title of this piece is adapted from the 1957 poem 'Not Waving but Drowning' by Stevie Smith.  The poem describes a man in distress at sea, who is mistakenly thought by onlookers to be waving.]

Diablogue #1, Part 1 : To BP, or not to BP?

As Eco Logical embarks on a new blogging adventure with fellow wordsmith Jill Damatac (The Owl’s Post), Jill begins our Diablogue by exploring the speckled history and murky present of one of the world’s largest oil companies.  The excerpt below sparks the start of our conversation.  Watch this space for part two…

06 Jun 2010 | The Owl’s Post

It has been a little over one month since BP’s still-hemorrhaging Deepwater Horizon oil rig accident.  After yet another spill ten days ago, on May 26, in Alaska’s North Shore region,  two questions arise:  with a checkered history—and present—embroiled in irresponsibility, oversights, and consequential “accidents”, what lays ahead for BP?  And will that future include more than the usual indifference and scorn for regulation on BP’s part and the typical slap-on-the-wrist complacency from government agencies?

As the old baseball rule goes:  three strikes, and you’re out.  May 26’s Alaskan spill, numbering in the thousands of gallons, adds another mark to BP’s already spotty safety record.   As of this week, the beleaguered oil giant—third behind Exxon Mobil and Shell in production—has had four such major “strikes” in nearly as many years.

Click here to read the details at The Owl’s Post >>

Aside from currently tumbling stock prices, will BP really be properly punished and held accountable for their egregious record of irresponsibility and greed?  Or will they, as in their past “accidents”, skate by with a relative slap on the wrist—in the form a fine amounting to a drop in the bucket compared to their enormous profits—and lax government oversight?  There is a case for free enterprise, yes.  However, when that freedom comes to increasingly encroach upon the public good, as BP’s regular forays into environmental and human disaster do, it is time to rein back that freedom for the sake of preserving the liberties of the greater populace.