The Power of Nothing

Zero.

Nada.  Niente.  Nought.  Nil.  Nothing.

There’s astounding power in Zero, these days.  The latest mystifying aspiration on the post-industrial development path.  An aspiration towards… Nothing.

“Zero tolerance“
“Zero carbon“
“Zero fat“
“Size zero“
“Zero interest“

The list goes on. 

When did “zero” become the hallmark of innovation, progress and success? 

At what point did our pursuit of “something” become so monotonous that we shifted our goal to “nothing”?  And indeed, can “nothing” ever be reached?

Major global brands are now marketing themselves on the premise of Zero.  There must be money in nothing. 

But what kind of modernity is Zero? 

Maybe we’ve come full circle.  0.

Climate Change, and the mystery of the lost nations

Climate change.  It’s been a source of cogitation in the scientific world for some years now, spurring a cacophony of media hype and ongoing debate in global politics.  Though there is little unanimity about its causes and effects, the ‘greenhouse effect’ is broadly accepted to arise from human-induced greenhouse gas emissions, which over time have altered the chemical composition of our atmosphere.  The environmental, social and economic impacts have been widely researched, and are already manifesting themselves in some corners of the world; a reality that spawns intriguing questions about the implications of climate change in international law.  

 

Global climate change negotiations have endured for years, in the attempt to reach agreement on the need to act, and to resolve a plan by which to do so.  It was at the most recent talks in Cancun, Mexico, in December (CoP-16) that the plight of small island states was brought into stark relief.

Image courtesy of www.coastalcare.org

The islands of the Pacific Ocean, including the low-lying atolls of the Marshall Islands, Tuvalu and Kiribati among others, have begun to witness first-hand the signs of climate change-induced sea level rise.  All three island groups have experienced severe flooding by storms and high tides, and saltwater intrusion into wells and soils is threatening livelihoods and health.  Encroaching seas are eroding the atolls at faster rates than predicted.  In the state of Kiribati, two islands – Tebua Tarawa and Abanuea - have already disappeared beneath rising seas.  The South Pacific Regional Environment Programme confirms that others are at risk.  In the Indian Ocean, the beaches of the Maldives are also being swept away.

Sea level rise occurred at an average rate of 1.8mm per year during the past century.  Predictions for the current century anticipate a total rise between 90 and 880mm, the upper limits of which would overwhelm a large proportion of the coral atolls.  What will happen if entire populations are forced to abandon their homelands?  Where would they go, and who would they become?  Would they still be ‘nations’, albeit disenfranchised?  Would they still have a unified voice in international politics, and rights to their natural resources?

We’re facing a set of issues unique in the history of the system of nation-states.  We’re confronting existential issues associated with climate impacts that are not adequately addressed in the international legal framework.”   Dean Bialek, Adviser to the Republic of the Marshall Islands (in interview with The Associated Press)

While nations have declined through secession, conquest, or by ceding their territory to other countries, never in history has a country physically disappeared, and the law is not prepared to deal with such a scenario.  The 1951 United Nations’ Convention Relating to the Status of Refugees, which asserts that nations must shelter those fleeing from persecution, does not cover the situation of those whose homeland is lost to the sea.  Likewise, the continued recognition of a displaced state as a legal entity seems open to the interpretation and tolerance of the international community; most significantly, whether the United Nations General Assembly would opt to relinquish their seat at the table.

Economic rights are likewise in question.  Take, for example, the Marshall Islands’ 29 atolls, which give them an economic zone of 800,000 square miles of ocean, from which natural resources may be gathered exclusively by the Marshallese community or others to whom licenses are sold.  If the islands are submerged, what becomes of their rights to resources and fishing – the foundations of their national economy?

Small island states contribute only 0.6 per cent of all global warming pollution, but they are already suffering disproportionately the impacts of a changing climate.  In Cancun, representatives from the Marshall Islands sought international aid for climate change adaptation, to re-plant protective shoreline vegetation; construct a 3-mile sea wall to protect the capital city, Majuro; and to guard the causeway linking Jaluit island to its airport from continued inundation by the sea.  Without such measures, the islands may become uninhabitable long before they are submerged.  If financial and diplomatic tools are unsuccessful, there is speculation that some countries will move for legal measures, including appeals to the International Court of Justice for compensation from the world’s leading polluters.  But how to put a price on a lost homeland, devastated livelihoods, a diluted cultural identity, and an uncertain future?

These are questions somewhat removed from the international negotiations on mitigation and emissions reductions, but equally as fundamental.  Even if the world were to curb its emissions of greenhouse gases overnight, the impacts of past excesses could not be entirely avoided and the fate of the small island nations would continue to hang in the balance.  This realisation must be the most real and urgent call to action on climate change adaptation yet?

Indicators of Wealth vs. Metrics of Progress

The tenth Conference of the Parties to the UN Convention on Biological Diversity (COP-10) met in Japan last week to debate the ongoing friction between declining global biodiversity and economic development.  Amongst an extensive list of (somewhat hazy) outcomes featured a compelling new challenge to recognised measurements of economic development, as the World Bank emerged as the latest contester of Gross Domestic Product (GDP) as a proxy for economic progress.

GDP measures a country’s annual economic output; the value of all goods and services made within national borders during a year.  This economic measure has long been adopted as an indicator of a nation’s quality of life, on the assumption that the benefits of high national output are shared equally among citizens, leading to increased personal incomes and improved standards of living.  But the flaws in this theory are increasingly recognised.  Not only does it overlook the fact that national economic activity and personal income can be completely decoupled (see individual earnings in the United States between 1990 and 2006, compared with GDP), it also fails to consider the negative externalities that arise alongside economic growth.  Externalities may include, among other things, environmental degradation, erosion of natural resources, social inequities and poor human development, which can threaten the quality of life within any context of economic growth.  By neglecting the ‘bads’ associated with higher production, GDP overstates the true economic wellbeing of a country and its citizens.  Indeed, Simon Kuznets, the architect of GDP, noted in his first report to Congress (1934) that

the welfare of a nation [can] scarcely be inferred from a measure of national income.”

Image courtesy of http://web.worldbank.org/

Theorists and critics the world over have put forward alternative indicators thought to better reflect a country’s prosperity.  Challenges have emanated from international organisations (the United Nations gave us the Human Development Index as a combined measure of GDP, life expectancy and education); the non-profit sector (see the World Wide Fund for Nature’s Living Planet Index, and the New Economics Foundation’s Happy Planet Index); as well as from national governments.  In 2008, the government of Bhutan adopted Gross National Happiness (GNH) as its mechanism for monitoring national progress in terms of human wellbeing.  In a more high profile attack on GDP prior to the 2009 G-20 Summit, President Sarkozy of France called for a “revolution” against financial statistics, to acknowledge the wider influences on a nation’s wellbeing.  Sarkozy’s Commission on the Measurement of Economic Performance and Social Progress is mandated to explore a more appropriate metric for ‘progress’, under the leadership of eminent economists Joseph Stiglitz, Amartya Sen and Jean-Paul Fitoussi.

It is against this commotion that the latest proposition emerged in Japan last week, as the World Bank stood up in agreement that “our failure to properly value ecosystems” has led to the alarming decline of global biodiversity.  Picking up the conclusions of a United Nations’ study on The Economics of Ecosystems and Biodiversity (TEEB), the Bank announced a new global partnership to integrate the economic benefits of ecosystems into national accounts.  “The natural wealth of nations should be a capital asset valued in combination with its financial capital, manufactured capital, and human capital”, said the Bank’s President, Robert Zoellick.  By factoring the cost of environmental degradation into economic calculations, it is anticipated that the development trajectory of nations would be set on a more sustainable course.

This is tantalising talk, and with the World Bank at its roots, perhaps this sapling initiative has the potential to bear fruit across a broader geography than others have achieved.  But how will governments really take to the notion of a new metric, which rebalances the books to revise the sum of national accounts downwards?  Call me a pessimist, but it seems to me that GDP is so engrained into the modern economic psyche, that no more holistic metric could possibly take precedence.  To do so would need a radical overhaul of accepted wisdom, and a whole host of more enlightened political leaders.  And what is more, even if the World Bank’s initiative does win political appeal, will we ever achieve a metric that accounts for all things and all people?  What place for the social indicators that others have espoused?  Is there any metric comprehensive enough to provide the full picture of truly sustainable development?

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

 

Jessica Jackley brings us… Microfinance with added TLC

It seems we’re not the only ones to be inspired by the magnificent potential of microlending.  But Jessica Jackley did more than just write about it.  In her incredible TED Talk, Jessica tells the story of Kiva; an online community that brings individuals together with low income entrepreneurs throughout the world, to add the ‘personal’ touch to microfinance.

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 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 #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 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.