The Great Debate UK

The added value of the MBA in promoting sustainability

-Lindsey Nefesh-Clarke is the founder of Women’s Worldwide Web – an online charitable organisation designed to help empower women with access to micro-finance loans, education, mentoring and networking. The opinions expressed are her own.-

“To reach a tipping point towards a new era of sustainability”: this is the urgent goal of the business, government and civil society leaders who convened in New York City for the recent U.N. Global Compact Leaders Summit.

In its effort to mobilize the global corporate community around the values and best practices of corporate responsibility, this gathering could not have been more timely.

The world is still suffering the fallout of the worst financial crisis since the Great Depression.  In addition to wreaking far-reaching damage in high-income countries, the financial crisis has had an egregious effect on child and maternal health, gender equality, access to clean water, disease control, and hunger levels worldwide.

The World Bank estimates that there will be 53 million more people in extreme poverty in 2015 than there would have been had the financial crisis not occurred.

Meanwhile, the U.S. is battling the worst environmental disaster in its history.  In the wake of BP’s Deepwater Horizon rig explosion in the Gulf of Mexico, U.N. Secretary General Ban Ki Moon managed to strike an upbeat chord in his summit address, observing that “the business community is coming to understand that principles and profits are two sides of the same coin”.

Steve Tappin on what makes a CEO tick

Being a CEO should be one of the best jobs in the world, argue the authors of a new book.

“It offers the chance to make a real difference,” Steve Tappin and Andrew Cave write in The New Secrets of CEOs: 200 Global Chief Executives on Leading.

“However, real life for most CEOs is tough and many are not enjoying it.”

The authors interviewed 200 CEOs for the book, which includes profiles of such leaders as Tesco’s Terry Leahy , Avon’s Andrea Jung, Xstrata’s Mick Davis, Kraft’s Irene Rosenfeld, Haier’s Zhang Ruimin and Cisco’s John Chambers.

CEOs are divided into five “distinct categories” characterised by similar leadership styles.

In the following video interview, Tappin, who heads up the CEO counselling firm Xinfu, discusses some major issues confronting top leaders at global firms since the financial crisis of 2007-2009, and shares his views with Reuters on how BP’s Tony Hayward should manage the the Gulf of Mexico oil spill crisis.

International crises and the value of Global System Dynamics

-Lord Julian Hunt is a Visiting Professor at Delft University of Technology. The opinions expressed are his own.-

In their different ways, the disruption and damage caused by the ongoing Icelandic Volcano eruption, and the major oil leak in the Gulf of Mexico, have underlined how low-probability events can wreak havoc locally and across the world.

Both events underline the continuing need for well-established crisis response by international bodies.  Risk assessments taking into account all the diverse scientific and social interactions should enable the public and private sector to prepare in advance.

•    Although international procedures by UN bodies for dealing simultaneously with volcanic eruptions, meteorology and aviation had been agreed and tested at a technical level since the 1990s, the disruption caused by the Icelandic volcano led EU Transport Ministers call for quicker and more coordinated reaction to such crisis situations.

•    In the Gulf of Mexico, the “unprecedented environmental disaster” from the oil spillage shows the need for environmental risk assessment as much as economic risks now being considered in the context of the volcano.

While the volcano and oil spills have causes and consequences that can be explained in terms of earth science, engineering, ecology and economics, other disruptive events with rapid global impacts can result simply from people’s actions — notably the fall of Lehman Brothers and the September 11, 2001, terrorist attacks.

BP Gulf of Mexico crisis will transform the oil industry

-Kees Willemse is professor of off-shore engineering, Delft University.  The opinions expressed are his own.-

The news that a huge metal cap has been successfully placed over several of the leaking oil vents at the Deepwater Horizon site marks a potential turning point in the Gulf of Mexico crisis.

It is already estimated that each day some 10-15,000 barrels of the oil that are spilling out into the ocean are being captured and diverted to ships on the sea surface.

Despite this engineering success, a complete end to the oil leakage is unlikely until new relief oil wells are completed — a drilling process that could take most of the summer, and potentially into the autumn.  This is because the newly installed metal cap is unlikely, even in the best case scenario, to stop all of the oil spilling out.

In advance of the completion of the relief wells, a potentially major new complicating factor is the arrival of the hurricane season last week.

The National Oceanic and Atmospheric Administration is already predicting between 8 and 14 hurricanes this season, with perhaps a similar number of smaller storms, any of which could complicate (or indeed force a postponement) of the ongoing mitigation and clean-up activities in and around Deepwater Horizon.

from Breakingviews:

BP’s Gulf fiasco makes it vulnerable to a takeover

By Rob Cox and Christopher Swann

Eventually, BP will definitively stop the flow of oil from its deepwater mishap in the Gulf of Mexico. That's when the autopsy will begin in earnest. But if the information dribbling into the public domain proves correct, the British energy giant will be a weakened creature -- so weak it will be vulnerable to a takeover.

Royal Dutch Shell and Exxon Mobil are almost certainly running the numbers. Governments ought to be plotting their strategy, too.

The fiasco in the Gulf, which killed 11 workers, has shone a fresh light on BP's poor safety track record. The current fiasco is the company's third American offense in recent years -- coming shortly after the 2005 Texas City refinery explosion, which killed 15 workers, and the 2006 Prudhoe Bay spill, which leaked more than 200,000 gallons into Alaskan waters.

The rap sheet reflects poorly on management and furthers the impression of a corner-cutting culture that Chief Executive Tony Hayward had, until recently, been widely credited with improving. The BP board's response has equally been tepid, with little public support offered to management or guidance provided to shareholders.

Add these factors up, fold in the potential cost of clean-up, and it is little wonder that investors have wiped as much as $46 billion off the company's market value since mid-April. At $141 billion on Thursday, BP's capitalization is half Exxon's and less than the $165 billion value of Shell, which has traditionally traded at a discount to BP.

Even before BP's latest mishap, the arguments for a deal were compelling, largely because of the cost savings that could accrue. Hayward's predecessor John Browne wrote in his memoirs that BP had targeted $9 billion in annual synergies from a possible merger with Shell a few years ago. Those would in theory be worth some $60 billion to investors.

How much damage will the BP oil spill cause?

-Kees Willemse is professor of offshore engineering at Delft University. The opinions expressed are his own.-

Last month’s explosion at the Deepwater Horizon rig continues to result in the leakage of an estimated 200,000 gallons (910,000 litres) of oil into the Gulf of Mexico each day.

According to U.S. President Barack Obama, “we are dealing with a massive and potentially unprecedented environmental disaster”.

While the leak is extremely serious, and Obama’s words may ultimately ring true, the leak is (as yet) not one of the top 50 biggest oil spillages from either oil rigs or tankers in historical perspective:

•    Some 7-10,000 tonnes of oil are so far estimated to have leaked into the Gulf of Mexico from Deepwater Horizon. •    The Exxon Valdez leaked some 36,000 tonnes of crude oil on the shores of Alaska. •    The largest ever off-shore leakage of oil occurred in 1979 in the Ixtoc-1 spillage when an estimated 476,000 tonnes of oil polluted the Gulf of Mexico (Bay of Campeche). •    The biggest ever on-shore spillage occurred in the aftermath of the 1991 Iraq War when an estimated 1.4 to 1.5 million tonnes was released in Kuwait by Iraqi military forces.

Most at risk from the Deepwater Horizon spill are the coastlines of Texas, Florida, Mississippi, Alabama, and Louisiana, including the wetlands near New Orleans where millions of migratory birds are currently nesting, and fish spawning.

The oil spill could also be catastrophic for the Gulf Coast’s substantial seafood industry, including oysters and shrimp.