Greenwashing of BP Partly to Blame for Oil Laundering the Gulf

06/15/2010 07:24 pm ET | Updated May 25, 2011

Right now, there's considerable public outrage directed against BP for causing environmental damage. But there's arguably more because BP talks about being green, even accepting and giving out environmental awards, yet is clearly deeply un-green. Nobody likes a hypocrite.

BP has been recognized by the U.S. federal government, the Queen, the Interstate Oil and Gas Commission, and other prestigious organizations. And clearly those certificates are looking a little oil-soaked.

But here's something that will be even less popular. Though those charities, government agencies and non-profits that have given BP awards for corporate social responsibility and environmental stewardship do very good work, and have good intentions, we have to hold them somewhat responsible for BP's fake green halo, and the understandable public disappointment over it.

Here's an example from the traditional charity world. Charities have known for a long time that you have to do due diligence when it comes to accepting a big donation. If you're a university, and you accept $10 million from an individual or corporation, and in return put that donor corporation's name on a building, you're giving them something just as valuable back -- you're giving them the credibility of trading on your good image, of being associated with and approved by a place dedicated to learning, research, altruism and the betterment of society.

The people in the many donor corporations I've worked with, as a charity lawyer, also have good intentions and feel good about the donation. But when it comes down to it, when their corporation makes a donation, it's a bottom line decision.

Companies don't get tax receipts for making donations for the same reasons as private donors might. For a corporation, it's a marketing expense. In short, companies spend money on donations because they expect to earn a return on that expense.

No person or company is perfect, and that shouldn't be the test. But there's a scale. And that's why even though universities might be tempted to accept every cash from every donor that offers, sometimes it costs too much. The university's image would be tarnished for one thing. And also, the university knows that boosting the image of a corporation that doesn't deserve that boost will hurt society.

But corporate social responsibility organizations -- charities, non-profits and government agencies -- aren't always applying this test. In fact, many unethical companies get awards for improvement, even though they continue to do unethical and irresponsible things. And while there might be psychological rationale for this, there's also a public cost -- and a financial cost.

We have to applaud corporate social responsibility organizations for their work in rewarding and encouraging ethical behavior. When a group gives a high-profile CSR award to a company for any kind of responsible behavior -- social, environmental, etc - that award not only encourages and rewards that company, but it also inspires other companies to behave better, so that they too might enjoy the improved profile and profits that come from being an award recipient.

But when a company, say BP, gets an award, say for sustainability (i.e. for making some improvements, or for being slightly better than some other competitors), the award can lead to the public misperception that the company is, in fact, sustainable. And that false public perception means that company starts to be treated better than they actually deserve. The company might get more investors as a result, their share prices might go up, they might get more liberal treatment by government and regulators, or many other things -- all of which can have social, environmental and financial costs.

Then, when the truth comes out, there's even more public outrage. If a kindergarten teacher and a mob boss committed the same crime, there would be more public anger directed at the teacher. And for good reason: the teacher has benefited from false public perception.

The public is angry at BP. It's because of environmental damage that's beyond calculation. And it's because that damage is caused by BP -- a corporation which we considered to be more green and responsible than many of its competitors.

So while we need to support and encourage the work of CSR organizations, we need to be careful that their awards and the public recognition resulting in the greening of corporations aren't in fact the worst form of greenwashing.