Rohrer College of Business @ Rowan University

Managing Sustainably at Petrobras

Believe it or not, oil companies can go green.

That was the message October 12 when a speaker from Brazilian energy giant Petrobras addressed a group in the Eynon Ballroom of the Chamberlain Student Center.

Government-owned Petrobras, which claims to be the world's eighth largest company, is making great strides in alternative energy development and its commitment to sustainable energy runs far deeper than changing public perception, spokeswoman Ana Paula Grether said.

Still, she said, public perception about whether or not big energy companies will do the right thing with our natural resources has become critical to the bottom line.

"(Sustainability) is as important as profitability," Grether told several dozen listeners, many of them students from the Rohrer College of Business.

"Organizations are becoming much more aware of socially responsible behavior," she said. "Society is critical and (its members) demand social and environmental actions by business."

According to its web site, Petrobras, which incorporated in 1953, produces more than two million barrels of oil and natural gas per day. Grether said despite the reputation of oil companies as filthy waste-mongers, Petrobras sees responsible behavior as integral to building its corporate brand.

Among the benefits for acting responsibly, she said, are opportunities to build relationships with governments, suppliers, customers and the media, to boost employee morale, to bolster the company's position in stock markets and to gain competitive advantage.

She said the company was prodded toward more sustainable practices in part by two accidents - a massive oil spill along a river in southern Brazil in 2000 and the sinking of the world's largest oil rig off the nation's coast in 2001.

The oil spill, Brazil's largest in decades, dumped more than one million gallons into the pristine Iguacu River.

When the towering 40-story oil rig was lost in the South Atlantic Ocean, 11 workers died and an estimated 400,000 gallons of crude oil and diesel spilled into the water. (By comparison, the Exxon Valdez oil spill, considered to be the world's worst, dumped roughly 11 million gallons of crude into Alaska's Prince William Sound in 1989.)

Clean oil? Really?

Grether said the two incidents spurred Petrobras to get serious about sustainable operations that not only minimize risks to the environment but can work to improve it.

She said the company invests heavily in biofuel and other alternative energy research and that online readers of the Global Reporting Initiative, an organization committed to sustainable manufacturing, recognized Petrobras for its plans in 2006-2007.

Still, some students who came to hear Grether were skeptical.

"Petrobras is investing like $2.8 billion - just 2% of their budget - in biofuels," said Courtney Stowman, 21, an environmental studies major from Blackwood. "I'd like to see them invest more than that, especially when 59% of their budget is going to exploring underseas oil reserves."

Grether did not dispute the student's statistics even as Stowman, dressed in a yellow Greenpeace t-shirt, said she doesn't believe the company is suddenly going green.

"They're still very much in the oil business," she said.

Reason for optimism

Kimble Byrd, a professor of management and entrepreneurship in the College of Business, said he sees student skepticism over claims by big business to be healthy - for themselves and the planet.

"I think students will continue to be concerned about both places where they work and products that they buy," Prof. Byrd said. "I think they're returning to 70s-style activism and for that I say thank goodness."

Dilip Mirchandani, another professor of management and entrepreneurship, said the curricula have long stressed ethical behavior and he believes more companies are doing what they can to lessen their impact on the environment.

"The conventional wisdom was the business decisions were (always) based on economic considerations," Prof. Mirchandani said. "That's changing but not because of regulations. It's because businesses are looking beyond the bottom line."

The lecture was sponsored by the Department of Management & Entrepreneurship and the student organization BOBA (the Bureau of Business Organizations).