Corporate Sponsorship & Carbon Divestment


Updated: 29/10/2015

 

 

Ethical Consumer explores the increasing controversy around accepting sponsorship from companies connected to climate change.  

 

On Saturday 13th of September 2015, over 250 artists, performers and campaigners took over the British Museum in a 'festival of protest' over BP's sponsorship of several of the UK's cultural institutions.

The protests included a spoken word performance by Children Against Global Warming.

In the performance Laurel, aged 13, and two friends spoke about their concerns for the future; she said: 

“BP want children like me who visit museums and art galleries to think they are responsible and care about our future. But I’ve seen the pictures of their oil spill and the Arctic melting and I know this isn’t true. I want to grow up in a world with a safe climate and without fossil fuels.”

The day followed a series of protests which had been organised against some of the UK's biggest cultural organisations, as BP's sponsorship deals come up for renewal in 2017.
 

Video - 250 take over British Museum in “festival of protest” against BP sponsorship.
 

 

Social License
 

The Art Not Oil Coalition – which includes groups such as Platform, BP or not BP, Rising Tide, and Shell out Sounds – states that by allowing oil companies to sponsor cultural institutions it helps to create a “social licence to operate”.  

'Social license to operate' is a term that applies to the process of generating support for a company's activities in the communities that live close to their operations. The concept also helps us to understand how corporations construct public support in states far away from those places of oil extraction – for example how BP builds support in London.

In 2011, in the shadow of one the world's greatest environmental disasters – the Gulf of Mexico oil spill – BP announced that it would continue to sponsor the British Museum, the National Portrait Gallery, the Royal Opera House and Tate Britain, pledging £10 million over the next five years.

Despite the fact that the company was found guilty of gross negligence and reckless conduct, which resulted in 11 people dying and the biggest marine oil spill ever, these four UK cultural icons continue to praise BP for its unwavering support.

Many argue that the money used by corporations to help fund charities, sporting events or art institutions is not philanthropy but is a marketing tool that allows some companies to keep operating in ways which are detrimental to the environment and people.
 

In May 2015, 50 performers recreated the Deepwater Horizon oil spill inside the British Museum in protest at BP’s sponsorship. 

 

 

The true cost of sponsorship
 

In 2017, BP's sponsorship of the four institutions will be up for renewal. All four institutions insist the money is needed and other corporations are not willing to provide the money, but is that really true?

Anna Galkina from Platform states it is not: “The story that cultural institutions cannot survive without oil money is precisely what makes sponsorship worth it for BP and Shell. We had to appeal against Tate in court for three years to find out that BP's sponsorship accounts for less than 0.5% of Tate's annual budget. It's not oil sponsorship but public investment that keeps the museums and galleries free for visitors.”

 

 

Changing public perceptions
 

For companies in need of private funding, it is important to take into account public perceptions of what is acceptable. In Platform's report ‘Culture Beyond Oil’, it states “Sponsorship shifts have occurred on numerous occasions according to changing social norms and contexts. Many... cultural institutions were receiving tobacco money… yet now tobacco logos are absent from the cultural sphere.”

Some argue that sponsorship “should be taken from any legally registered company”, however this sidesteps any ethical considerations and ignores public perceptions says Platform. “Arms manufacturers and tobacco companies, once proud sponsors of many a sporting and cultural event, lost this marketing opportunity due to public outcry. Both remain legal businesses but are no longer considered acceptable sponsorship partners”.

Following the recent loud calls for institutions to divest from oil companies, we hope that Big Oil will no longer be considered acceptable sponsorship partners in the same way.

Platform believes that “as we transition towards a low-carbon economy, it is inevitable that oil companies will find themselves increasingly marginalised in terms of partnership and sponsorship.”

 

 

Ranking the top corporate donors
 

To highlight the need for due diligence, Ethical Consumer has rated the UK's top ten corporate cash donors from 2013/14. The table below shows how each company scored on our rating system and we provide a brief profile of each company below the table.

You can see all the stories behind the ranking on our Corporate Critic database

(click image to enlarge)
 

 

Given the level of investment needed by oil and natural resource companies to operate, it is perhaps unsurprising that all of the financial institutions who appear in the top ten largest corporate donors also have investments in oil and natural resources companies. It was estimated by Move Your Money that between the UK's five largest banks, loans to companies engaged in oil and gas extraction have exceeded £66 billion. [1]

Our research shows that eight of the top ten corporate donors have some links to carbon and climate change.

 

 

Company Profiles

 

Group One – strong links to the carbon economy
 

Goldman Sachs is world's largest investment bank and it has been involved in some the biggest financial scandals of modern times. The company was heavily entangled in the sub-prime mortgage scandal which led to the 2008 financial crash; it created financial instruments which have left many investors out of pocket; and speculated on food prices leaving millions of people hungry. [2]

 

Goldman Sachs was one of the largest companies involved in driving up food prices in 2011 through financial speculation.

 

It even profited from the recent Greek financial crisis. [3] Unsurprisingly, Goldman, through its investments, has links to many controversial companies and markets. The company holds shares in many of the big oil companies such as Shell and ExxonMobil. [4]

In describing Goldman Sachs' behaviour during the financial crisis, Matt Taibbi, writing in Rolling Stone magazine, referred to it as a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”  Its 'culture of risk' has come to epitomise the recklessness of the financial world to make money wherever it is possible, whatever the consequences.

Currently, Goldman Sachs owns 8.1% of common units beneficially owned in Dominion Midstream Partners [5] – a company formed by Dominion Resources to manage and acquire natural gas assets. The company is behind the controversial building of a liquefied fracked gas export terminal in the residential community of Cove Point in Lusby, Maryland. Campaigners argue that the development will threaten the health of the residents and the marine environment.

 

HSBC is thought to be the biggest backer of the fossil fuel industry, investing £17 billion in loans, bonds and shares in 2012. [6] HSBC provides financial support to the three multinational companies (BHP Billiton, Anglo American and Xstrata) involved in Cerrejon coal mine in Colombia. The project has been described as one of the biggest and most destructive coal mines in the world and has led to the eviction of whole villages from their land and threatened the Rancheria River, the only reliable water supply in the La Guajira region. [7]

 

BHP Billiton is one of the world's largest mining companies. In 2013 it revealed that it had earned $67.83 billion in revenues. The company produces aluminium, coal, copper, iron ore, manganese, nickel, silver and uranium and has operations spreading from Australia to Algeria. BHP Billiton operates the world's biggest copper mine Escondida in Chile. [8] It also owns three of the world's ten biggest coal mines including the Cerrejon coal mine in Colombia. [9]

BHP Billiton's latest plans include building a series of coal mines in the Central and East Kalimantan region of Borneo. Campaigners argue that, if allowed, the plans would led to the destruction of primary rainforest, deprive indigenous peoples of their customary land and pollute water sources relied on by up to one million people. [10]

WWF reports that the area is home to six per cent of the world’s biodiversity with three new species, on average, discovered every month since 2005. [11] In July 2015, BHP Billiton announced that it plans to commence mining in the region within the next year.

 

In 2008, in an attempt to prevent the UK financial system collapsing, Lloyds TSB (as it was known then) was given £17 billion by the UK government in return for around 40% of shares. Since then the company has sold off parts of its TSB arm and reduced government shares in the company to below 14%. [12]  Move Your Money estimates that, in 2012, Lloyds had roughly £15 billion of assets in oil, gas and coal extraction. [13]

One of the companies is Alkane Energy, a company which produces electricity from coal-mine methane. According to its Annual Report in 2014, Lloyds Banking plc has provided the company with loans worth over £15 million. [14] The company currently has seven onshore Petroleum Exploration and Development Licences ('PEDLs') in the UK and is keen to start exploring for shale gas.

 

Barclays Natural Resource Investments’ (BNRI) Oil & Gas portfolio is a global private equity business focused exclusively on natural resources. BNRI is a division of Barclays Bank plc and boasts that it has committed “over $3 billion” to 28 oil and gas companies globally. [15] Current companies listed in its portfolio include those involved in the exploration and development of old and new oil streams. The company is not a signatory of the United Nations Principles for Responsible Investment (UNPRI).

 

 

Group Two – some links to the carbon economy

 

Santander's links with Big Oil may not be as obvious as some, however the company does not appear to exclude investment in companies whose business is based on fossil fuel extraction. A search of Santander's investment portfolios reveals it has holdings in the BG Group and Royal Dutch Shell. [16] A report in 2013 into the financing of an expansion of coal and gas projects along the Australian coast line stated that Santander had lent $156 million to the coal and gas ports there.[17]

 

Ecclesiastical Insurance Group is owned by AllChuches Trust, a charitable organisation which distributes profits from the company for the benefit of the Church of England and its community. While its subsidiary EdenTree Investments has some positive policies of not investing in companies based on ethical grounds, some of its unscreened funds have investments in Shell.

 

Tesco is one of the UK's largest supermarkets and is well known to Ethical Consumer readers for criticisms ranging from the factory farming of meat to poor workers' rights in it supply chains. Although it has no direct investments in oil production, it is one of the nation's biggest petrol retailers.

 

 

Group Three - no links to the carbon economy
 

Vodafone has long been a target for campaigners over its tax arrangements. While the company's Sustainability Report provides some details into the amount of tax it pays in the countries it operates in, it fails to include details on its operations in known tax havens: Luxembourg, Hong Kong and Singapore.

 

Diageo is one of the world's largest producers of wines, spirits and beers. It owns well-known brands such as Guinness and Smirnoff. The company has come under criticism from development organisations for its links with New Alliance over land grabs in Africa.

 

 

 

What can organisations do?
 

It is essential to develop a policy which can guide charities when they are choosing which companies to partner with, or accept funding or buy services from.

The Charity Commission states “Charities should consider establishing an ethical policy which clearly sets out the charity’s values...Against the framework of their ethical policy, charities need to carefully consider whether a proposed commercial partnership is appropriate and in the best interests of the charity.”

A free Ethical Sponsorship Policy framework for charities and not-for-profits is available from Ethical Consumer.

Once a decision has been reached over what the policy says, organisations then need to identify a consistent method to discover whether a potential partner is appropriate.

 

Ethical Consumer's screening service
 

Others may seek to use external providers to help them in this process. Ethical Consumer offers screening services for organisations wishing to check whether potential sponsors pose a reputational risk.

Other organisations, with limited resources, carry out this research themselves.

Corporate Watch have published a guide ‘Investigating Companies: A Do IT Yourself Handbook’, which contains advice on how to find information on a company. 

Ethical Consumer's Corporate Critic database is also a valuable source of information on companies.

 

 

 

What can consumers do?
 

Do your favourite charities have policies to exclude accepting money from companies linked to carbon and climate change?  

Why not contact them to find out?  

Just asking the question may spark an important discussion.  

Do let us know that they say but emailing us via our online contact form.

 

 

 

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References

1 Divest Move Your Money out of Fossil Fuels, Move Your Money 2014

2 Investment Banks' Revenue from food Speculation 2010-2012, Global Justice Now

3 Greek Debt Crisis: Goldman Sachs could be sued for helping hide debts when it joined euro, The Independent 11 July 2015

4 Goldman Sachs SEC Filing Form 13F 31 July 2015

5 Dominion Midstream Partners LP SEC Filing Form 10-K December 2014

6 Divestment campaign urges customers to boycott banks which support fracking and fossil-fuel industry, The Independent 20 October 2014

7 HSBC and Fossil Fuel Finance, World Development Movement October 2013

8/9 www.mining-technology.com/features/feature-the-10-biggest-copper-mines-in-the-world/

10 BHP Billiton's IndoMet Project: Digging Deep into the Heart of Borneo, Down To Earth Indonesia October 2014

11 Activists to Unfurl Giant Banner at BHP Billiton HQ calling on company to abandon Borneo coal mines, Global Justice Now 26 May 2015

12 UK Government Further Cuts Stake in Lloyds, The Guardian 3 August 2015

13 Divest Move Your Money out of Fossil Fuels, Move Your Money 2014

14 Alkane Energy plc Annual Report & Accounts 2014

15 www.bnri.com

16 Santander Asset Management Portfolio viewed September 2015

17 Financing Reef Destruction: How banks are using our money to destroy a natural icon, Market Forces 2013