Introduction
Going green is a huge and momentous achievement for oil companies for they deal with fossil fuels, which are not only non-renewable sources of energy but also harmful to the environment. As one of the oil companies, Petrobras has made significant achievements by designing and adopting green activities that have reduced pollution and promoted the sustainability of the environment. The analysis of the case study indicates that Petrobras is a notorious oil company that has undergone significant transformation and become a famous green company. The significant transformation emanates from several steps that the chief executive officer (CEO), Jose Sergio Gabrielli, resolved to change the company by adopting green strategies. Essentially, the case study describes how Gabrielli has managed to transform Petrobras from troubled history of incompetence and environmental pollution to a sustainable company, which goes green and advocates for green activities that protect the environment and promote sustainability of the environmental resources. Therefore, the purpose of this paper is to describe transformational steps, examine evidence to prove the transformation, and demonstrate the sustenance of transformation. To achieve the purpose, the paper describes critical steps that Petrobras made in transforming itself into a green company that promotes and advocates for environmental sustainability. The paper also examines the evidence to support the impact of steps made by Gabrielli to transform Petrobras. Ultimately, the paper identifies a recent article supporting the sustenance of the transformation.
Steps Made to Transform Petrobras
Underwent through series of steps. The first step of transformation occurred when the government reduced its ownership by giving out 40% of its shares to the public and owning the remaining proportion of shares (Gabrielli, 2009). The consequences of giving out shares to the public are reduced monopoly in oil exploration and production, diminished political influence, improved management, and enhanced accountability to shareholders. Gabrielli (2009) explains that from 1999 to 2009, Petrobras increased the number of oil reserves by 75%, improved production by 200%, and extended its operations into 27 countries. The changes in ownership allowed the management and shareholders to make independent decisions regarding the course of the company.
The second step of transformation entailed increment of the programs involved in health, safety, and environmental (HSE) issues. Given that Petrobras became a notorious company due to frequent disasters caused by the oil spill and leakage, it aimed to transform its image into a reputable oil company that supports environmental protection and undertakes green activities. As the CEO, Gabrielli allocated $4 billion in the budget of HSE programs to reduce the number of disasters and present Petrobras as an environmentally conscious company (Gabrielli, 2009). The allocation of funds had a significant improvement in the health and safety of employees and populations as well as a considerable reduction in environmental pollution.
The third step of transformation comprised influencing suppliers to comply with the stipulated standards of environmental management. As Petrobras alone is unable to overcome the challenge of environmental pollution caused by poor management of oil, it demanded that all suppliers adhere to the best standards in the management of the environment (Spector, 2012). Since its inception in 1953 as a state-owned company, Petrobras has played a vital role in economic development and carried aspirations and values of Brazilians, and thus, has considerable influence on the course of environmental conservation. By demanding that all its suppliers adhere to the best standards in environmental management, Petrobras made a significant contribution to the conservation of the environment, advocacy for green activities, and reduction of pollution.
As the fourth step of transforming Petrobras, Gabrielli enhanced his supervision role as the CEO by visiting sites of production and exploration to check their compliance with the stipulated standards. Essentially, poor management was a major issue that contributed to the occurrence of disasters. According to Gabrielli (2009), poor management due to deprived emergency plans, inadequate staffing, and outdated leak-detection technology resulted in the loss of million of dollars and environmental pollution through the constant leakage of oil. For instance, in 2000, a serious leakage occurred at Guanabara Bay for two hours due to poor maintenance of pipes and incompetence among employees (Spector, 2012). In this view, the step of frequent supervision of sites to ensure compliance with the stipulated standards improved the management of sites, reduced laxity among employees and decreased the occurrence of disasters.
Shifting refineries to biofuel from gasoline is the fifth step that transformed Petrobras from non-renewable energy to renewable green energy. The history of Petrobras is replete with notorious incidents of pollution due to oil spills and leakages. It has been impossible for Petrobras to portray a corporate image of environmental consciousness because it has been dealing with non-renewable energy only. However, the expansion of the refineries to include the use of bio-fuel has enhanced the sustainability of the company and improved its image as a green company. Petrobras established refineries that produce ethanol from lignocellulose in agricultural waste materials (Santos, Borschiver, & Couto, 2010). The production of ethanol as bio-fuel depicted Petrobras as a green company that is sustainable for it deals with also renewable energy.
As the sixth step, Petrobras joined the Jow Dones Sustainability Index (DJSI) to improve its transparency in good governance. Taback and Ramanan (2013) explain that DJSI comprises sustainability indices and benchmarks, which measure the sustainability performance of diverse companies and rate them appropriately. Some of the indices of DJSI are economic, social, environmental, labor, corporate governance, industrial, and risk management performances. In this case, when Petrobras joined DJSI, it was open to review and scrutiny of its efforts to promote sustainability of the environment. Being aware of the continued appraisal, the management ensured that Petrobras complied with all the requirements and standards of sustainability. Gabrielli (2009) reports that Petrobras is one of the companies in the oil and gas industry, which attained a high rating in the aspects of DJSI, namely, social, environmental, and transparency. Thus, the external monitoring of Petrobras paved the way for compliance with standards and improvement of sustainability.
In the seventh step, Petrobras endorsed and participated as a board member of the United Nations Global Compact (UNGC). As an endorser and a member of UNGC, Petrobras advocated for the adoption and implementation of programs that support HSE standards (Gabrielli, 2009). UNGC has ten principles derived from global bodies dealing with human rights, labor, environment, and good governance. These ten principles are the promotion of freedom of association, elimination of forced labor, the abolition of forced labor, the eradication of discrimination, protection of the environment, promotion of environmental responsibility, application of friendly technologies, and fight against all forms of corruption (Ryder, M., & Eggertsson, 2015). In effect, Petrobras strived to adhere to these principles, and thus, gained recognition as a compliant oil company.
In the eightieth step, the CEO decided to undertake personal tweeting and blogging to reach out to the public and change the image of Petrobras (Spector, 2012). Given that environmentalists had protested and ruined the image of Petrobras, the CEO used social media in updating the public on the efforts and progresses made to protect the environment and prevent incidents of disasters. Tweeting and blogging are powerful platforms that can transform perceptions of people about Petrobras.
Evidence of the Transformations Made by Efforts
The absence of significant environmental disasters in the preceding eight years after Gabrielli assumed his position as the CEO is substantial evidence that the efforts made had a significant impact. When compared to the previous years before Gabrielli assumed the position, cases of disasters were common due to poor management, underfunding HSE programs, and poor maintenance of pipes. Nevertheless, the series of steps taken by Gabrielli brought significant changes to Petrobras for its improved management and compliance with diverse standards in the oil and energy industries. Ryder and Eggertsson (2015) note that compliance with standards and principles of UNGC is critical for companies to make marked transformations. In this case, the series of steps contributed to the absence of major disasters in Petrobras.
The leading sustainability rating of Petrobras is also substantial evidence showing the impact of the efforts on sustainability performance. As Petrobras joined DJSI and became a member of UNGC, its appraisal after the adoption and implementation of a series of steps revealed that it attained a high rating among companies in the oil and gas industry. Management and Excellence, which is a consulting firm, rated Petrobras as the first in sustainability among oil and gas companies and 84th position among all companies (Gabrielli, 2009; Spector, 2012). Therefore, the evidence shows that Petrobras is a green company for it has scored the highest among other oil and gas companies.
Sustainability of Change Implementation
A recent article titled Sustainability Report by Petrobras indicates that it has sustained its sustainability efforts. According to the current CEO, Padro Parente, the strategic plan of 2017-2021 aims to reduce the proportion of accidents by 36% and sustain sustainability goals by respecting life, humans, and the environment (Petrobras, 2016). The article shows that the current CEO is on course steering Petrobras on the path of sustainability. Moreover, Petrobras aims to commence a new phase of the company from 2018 driven by ethics and sustainable growth (Petrobras, 2016). Hence, the sustainability efforts would enable Petrobras to perform well in environmental sustainability as well as other aspects such as economic, social, and governance.
Conclusion
The history of Petrobras depicts it as a notorious oil company that has made great transformations and become a famous oil company that is not only sustainable but protects the environment. Petrobras made a series of steps including privatization of ownership, increasing the budget of HSE, demanding compliance with best standards, constant supervision, diversification to bio-fuel, joining DJSI, endorsing UNGC, and improving an image via social media. The absence of significant environmental disasters and improved DJSI ratings constitute the evidence of transformations brought by these steps. The recent report by Petrobras indicates that the transformations are still sustainable. Lessons learned from the case study are CEOs of companies determine the course of reforms and oil and gas companies can turn around their image and go green by adopting a series of activities. Therefore, this research paper recommends oil and gas companies adopt and implement green activities to conserve the environment and protect humanity.
References
Gabrielli, J. (2009). The greening of Petrobras. Harvard Business Review, 87(3), 43-47.
Petrobras. (2016). Sustainability report. Web.
Ryder, M., & Eggertsson, M. (2015). Compliance and enforcement of the United Nations Global Compact. Journal of International Management Studies, 15(3), 13-18.
Santos, M., Borschiver, S., & Couto, M. (2010). Biorefinery in Brazil: New technological trends adopted by domestic companies. Journal of Technology Management & Innovation, 5(2), 84-90.
Spector, B. (2012). Implementing organizational change: Theory into practice. New Jersey, NJ: Pearson.
Taback, H., & Ramanan, R. (2013). Environmental ethics and sustainability: A casebook for environmental professionals. New York, NY: CRC Press.