As the year comes to a close, it’s time to announce the FiveWorst CEOs of 2007. The CEOs shared a common theme: they allowed the liberalagenda embodied by Corporate Social Responsibility (CSR) to drive businessdecisions. All of the “winners” are actively seeking federal regulationto address global warming despite the fact they failed to evaluate the economiccost of regulation – higher energy prices, slower economic growth and anincrease in job loss – on consumers and future earnings. In addition, the CEOs also failed toanticipate the unintended consequences of promoting global warming fears ontheir businesses. The desire for regulation is an outgrowth of CSR wherecompanies are encouraged to assume responsibility for corporate activity beyondcurrent legal requirements and to engage with stakeholders including criticgroups seeking to change corporate behavior. The five worst CEOs of 2007 are: John Browne of BP. Browne resigned this year partly because hisglobal warming strategy failed miserably. Under Browne’s leadership, BPlaunched its “Beyond Petroleum” advertising campaign that embraced globalwarming alarmism as a way to re-brand the company as a responsible company. The consequences were devastating: the cost and managementtime of Browne’s environmental strategy led to maintenance and safety lapses,which caused a series of accidents including a deadly refinery explosion and amajor oil pipeline leak in Alaska. To address these issues, BP put aside $ 1.6 billion tosettle lawsuits and it promised to invest $ 7 billion to upgrade its U.S.refineries and to repair and replace Alaskan pipelines. Jeff Immelt of GE. “GE's Environment Push Hits Business Realities” – a front-page Wall Street Journal story – highlighted the downsides of its “ecomagination” marketing campaign that seeks to position the giant conglomerate as an eco-friendly company. The story makes clear that Immelt’s globalwarming strategy is causing a series of unintended consequences. For example,the incandescent light bulb – a GE product and invention of its founder ThomasEdison – will be phased out by federal law. Over the past year, GE lobbyists had to fight hard to defeatoutright bans of incandescent bulbs and buy time to restructure its lightingbusiness that currently relies more on traditional bulbs. GE’s coal business is also feeling the heat from concernsover global warming. While it has invested heavily in Integrated Gasification Combined Cycle (IGCC), a technology thatcaptures carbon dioxide from coal-fired electricity plants, environmentalistshave another plan – just ban the use of coal. This year, environmental activists have been successful inblocking the construction of a number of coal-fired power plants including 8 of11 plants in Texas. Thetermination of the Texas powerplants resulted in the cancellation of orders for GE’s steam turbines worthhundreds of millions of dollars. Lee Scott ofWal-Mart. Scott’s global warmingstrategy is indicative of a classic mistake made by CEOs under social andpolitical pressure: appeal to the liberal elite by adopting an aggressive“green strategy”. By doing so, Scott isselling out its shareholders and low-income customers. Higher energy prices – a result of global warmingregulations – will add to the input costs of Wal-Mart’s business whilesimultaneously reducing the disposable income of its consumers. Continued... |