Leadership v. Legislation

In a 1997 speech he gave at Stanford University, John Browne, then CEO of British Petroleum, broke ranks with the entire oil industry by admitting publicly that global warming is real. ("Breaking Ranks: An Oil Executive Serves Notice On His Industry", Stanford Business, September 1997) He only said what science had been telling us for years, “the concentration of carbon dioxide in the atmosphere is rising. And the temperature of the earth's surface is increasing,” but it wasn’t what he said, it was who said it.

This announcement got a lot of press, of course, but there was something else in the speech that was so commonplace it got no mention at all. He said, simply, “No company can be really successful unless it is sustainable… Of course, that requires a competitive financial performance.”

Everyone thought of John Browne, like they still do of CEO’s and company presidents generally, as being enormously powerful. And it’s not like he didn’t have an influence; BP was beginning to seriously invest in solar power and in 2000 the company rebranded itself with a green sunflower. But the need for a competitive financial performance trumps all the good intention in the world, even if you’re the CEO. Even if he decided to invest all the money at his disposal in solar power instead of oil exploration he would have to be fired by his Board of Directors if it didn’t turn out to be profitable.

There are structural reasons that prevent even the most powerful among us from acting alone. If we want to create an economy aligned with natural systems, a sustainable economy, we’re going to have to have structures that make it more profitable to do the right thing than the wrong thing.

Corporations are often described as blind to everything but profit, as the soul-less destroyers of the common good, or greedy institutions that are uniquely responsible for the problems of the world. But actually, the exact same structural problem applies in the public sector. Non-profit organizations too. There are rules that apply to everyone, and one of them is: If you invest too much of your resources in something that isn't valuable enough, you'll run out of money.