Shareholder Responsibility – BP

At the risk of sounding like a certain credit card commercial, I thought it useful to paint a quantitative picture of what the financial analysts and industry commentators have made of the Deepwater Horizon/BP oil spill so far:

No doubt the economic costs are staggering, and coupled with the disastrous environmental aftermath it is easy to pillory BP and its CEO Tony Hayward for their actions and conduct. 

One would also find the irony of the video below from 2009 in which Mr Hayward is being quoted as saying :“We had too many people who wanted to save the world…..we lost sight of the fact that our primary purpose is to create value for our shareholders”.  

Whilst the quote may well have been taken out of context, it serves as a timely reminder that a corporation’s actions through its executive directors is ultimately motivated by their original purpose of existing – for the shareholders. 

Indeed some of BP’s institutional shareholders feel they are also victims of the disaster and are seeking to form a class action against the company. Lawyers will allege that BP’s management, led by CEO Tony Hayward, misrepresented the company’s true safety record thereby artificially inflating its share price. 

To me this example epitomises an illogical divide in the responsibility and culpability of shareholders and their demand for financial returns. George Monbiot of The Guardian has been critical of the wider economic ramifications being debated in relation to the financial costs to BP of the spill “(pension) fund holders now attacking it (BP) for deploying the dangerous strategies they endorsed….they should be suing themselves” 

So what can be done?

Shareholders should be recognising the responsibility and power they hold in being able to table and vote on certain motions though their investment as company boards are ultimately accountable to the equity owners.

Two main forms of action that can be undertaken by shareholders to send a message to the company’s managers are:

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Posted in community, corporate sustainability, sustainable development
One comment on “Shareholder Responsibility – BP
  1. jeremy says:

    Great post Billie-Jean. I would add that, with the burgeoning social media these days, it is so much easier for shareholders to make their views known and coordinate their actions.

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