In the first of a new series, Brittany Golob takes an in-depth look at the communications challenges faced by the extractive industry 

In the oil, gas and mining industry, the need to foster a positive corporate reputation is intensified by the heightened stakes characteristic to the industry. Both in oil exploration and in the mining industry, accidents can be both disastrous and costly in human and environmental terms. They also take a huge toll on a company’s reputation.

Such was the case for British Petroleum (BP) in the Gulf of Mexico in April 2010. Deepwater Horizon — an offshore drilling platform — exploded, burst into flames and sunk, causing the well below it to leak 4.9 million barrels, at a rate of 53,000 barrels per day, into the Gulf.

The environmental and economic impact on the area was appalling, as was the impact on BP’s corporate reputation. In the immediate aftermath, BP saw its reputation score drop 20 points to 43.46 out of a possible 100 in a RepTrak survey.

The spill seeped like a black cloud onto BP’s public relations efforts. The company attempted to use social media to its advantage. It created a Facebook site called ‘Deepwater Horizon Response’ and posted links to the U.S. government-run RestoretheGulf.gov with daily updates on the cleanup effort.

The spill had the potential to create havoc for BP’s reputation, but all seemed to be going well. However, problems arose from the corporation’s inability to use social media efficiently. It failed to engage its audience on Twitter, prompting an impostor, BPGlobalPR, to attract 181,000 followers. Greenpeace launched a campaign asking the public to participate in a ‘rebrand BP’ campaign. The redesigned logos were posted on Twitter and reached Greenpeace’s 500,000-strong Facebook contingent.

Chris Jones, a founding partner of Blue Rubicon and advisor to senior executives in the extractive industries including the chairman of

Shell UK and the managing director of British Gas, believes that BP underestimated the power of reputation in its industry.

“It’s a value creator in this sector,” he says. “This is a difficult, challenging, at times hazardous industry. If and when things do go wrong those with brittle reputations will take much longer to recover. You can’t manage your reputation on a reactive basis, you need to be building and managing that reputation all the time.”

BP purchased relevant Google search terms to take control of its own press, a strategy which Jones says backfired.

“The message it sent is that they were trying to use social media as a one-way broadcast channel, as opposed to a channel where conversation takes place,” Jones added.

But BP has managed to rebound remarkably well. In the United States, BrandIndex had BP’s ranking at -30 in 2010. In 2012, it is at -5.9 and is the number one ranked improved brand. In the United Kingdom, BP has improved by 6.5 points and is the third-highest improved brand in 2012.

Financially, however, things may not be looking as rosy for BP. An oil company’s maintenance of its corporate reputation contributes 51.2% to its market cap and in the immediate aftermath of the Deepwater spill BP’s share price plummeted from £658 to £256. It has since gone back up to about £500. That still accounts for an overall 25 per cent decrease in market value.

Typically, for the oil industry, social media is somewhat of an afterthought, making BP’s efforts post-spill moderately exemplary. Most mid-level and national oil exploration companies favour paying respect to environmental and social responsibility on their websites, either extensively or with just a passing nod.Few oil companies address the issue of corporate responsibility through the internet adequately.

One such is Saudi Aramco, Saudi Arabia’s national oil company, which owns the world’s largest oil field. The corporation releases an extensive report on CSR every year detailing its efforts in the community, its environmental efficiency status and its benefit to the local economy.

In the foreword to the 2011 report, President and CEO Khalid Al-Falih rationalised Saudi Aramco’s responsibility efforts. “In my mind, prosperity and responsibility coexist as central aspects of our business model,” he wrote.

The report delineates Saudi Aramco’s environmental efforts in depth, noting, among other endeavours, that it improved its carbon dioxide emissions by 1.1 million tons and built the first mobile carbon capture vehicle in the world. It then lists the 2012 campaign which includes further environmental improvements and a bolstered recycling programme.

Saudi Aramco’s detailed report is somewhat unique in its level of transparency and detail. Other oil companies include such nods to environmental efforts and efficiency programmes, but the Saudi company’s frank and clearly communicated reports are noteworthy.

Falkland Oil and Gas Limited, a UK-based company, provides extensive reports and documents regarding its exploration of the Falkland Islands. However, the information is technically-oriented, with little explanation or analysis. But, unlike many of its competitors, it also hosts a Twitter feed with around 160 followers. It has put in the raw material to be an effective corporate communicator, but falls short in its clarity with the public, particularly regarding environmental responsibility.

CSR is a necessary portion of any oil company’s website, but most include the section only out of necessity. Few are able to effectively communicate their efforts to the public through such reports. Engaging with the local community is also becoming a key device for building reputation as the geography of mining becomes more difficult and increasingly infiltrates into communities.

“For a midsize FTSE 100 company, strong effective communication and good reputation increase to the order of seven to eight per cent,” Jones says. “With some of these guys you’re talking about 100s of millions of pounds.”

Royal Dutch Shell was responsible for a mid-size oil spill in the North Sea in August 2011 that had a drastic effect on the company’s reputation. Greenpeace parodied Shell’s advertisements and, like BP a year earlier, it was unable to put social media to work effectively. In recent years, Jones says Shell has succeeded in communicating its relationship to relevant global issues.

The oil giant has rebounded since last summer, improving by 2.3 points in BrandIndex and ranking as the fourth-most improving company.

The Plains Midstream Canada (PMC) oil company operating in central Canada experienced two oil spills into Alberta’s rivers in June 2012. While these were drastically smaller than the BP catastrophe, PMC provided a fairly effective response campaign. The company created a dedicated site and posted daily updates from the day after the initial leak. The site contained quotations from the CEO, provided informative photos and assuaged environmental concerns.

Most of the criticism toward the Plains Midstream spills was directed toward calling for better government oversight and the attempt to maintain Alberta’s tourism and oil drilling reputations. The response to PMC’s own efforts was largely positive.

Jones believes that the speed at which social media can frame a narrative has affected the way oil and mining companies respond to a crisis.

“One of the dangers in a crisis is that the companies feel they need to wait until they know all the answers before they communicate,” he says. “By then the narrative will already be framed. You have to engage as early and as regularly as possible to try and influence how that happens.”

The oil industry is not alone in its efforts to be environmentally sustainable and present such a corporate facade to the public: the mining industry is also conscious of CSR.

Mining accidents make the front pages less often then do catastrophic oil spills but incidents like the Chilean miners’ saga and the Beaconsfield mining accident in Australia require companies to actively maintain their reputations.

The recent strikes in South African platinum mines may have a severe impact on the individual corporations involved as well as the country’s mining industry in general. Lonmin, the company bearing the brunt of the strikes, has already experienced a share price depletion in the FTSE 250 and has announced its desire to maintain a dialogue with its shareholders in response. By ensuring a consistent and pervasive narrative, Lonmin is following standard crisis procedure.

Crisis prevention though, begins with a cohesive narrative and CSR outlook from the outset.

Rio Tinto, one of the world’s top-five producers of minerals and metals, releases annual sustainable development reports and documents its taxes and earnings. In a report on energy and climate change, the mining giant not only explains its emissions reduction efforts, but points out that the materials for which it mines are environmentally responsible in and of themselves. It includes several case studies and graphic representations of Rio Tinto’s environmental successes.

In the company’s code of practice, Chairman Jan de Plessis and CEO Tom Albanese wrote, “Rio Tinto’s reputation for acting responsibly plays a critical role in our success as a business and our ability to generate shareholder value.”

Simone Niven, global practice leader of corporate communications, believes that the company’s sustainable development and maintenance of a positive reputation among shareholders and communities allows it to maintain access to resources.

“Responsible mining presents the opportunity to bring long-lasting positive change to the communities, regions and countries where we work,” she said. “Given the visibility of mining activity, we often say that we know we’re doing our job well if no one is aware of it.”

In addition to commenting on environmental issues and priorities for the future, the mining company outlines its communications strategy for the public. “The way we work” promotes transparency as a key communications strategy.

Niven echoed that and said that building relationships is key to both crisis prevention and reputation management. The company also instituted a Reporting Centre in 2011 to streamline its communication efforts.

“Our communications strategy is simple: to make sure we get the right messages to the right people at the right time, and that the dialogue is two-way,” Niven said. “It is important for us to listen as we realise our actions on the ground affect how we will be judged.”

Clear corporate communications strategies are essential if a company is to maintain a positive reputation in the public arena. The rise of social media and prevalence of digital communications makes aggressive, integrated technique a necessary means of doing business on a global, or even local, scale in the oil, gas and mining industries.

Companies must have a clear and globally-aligned narrative in the press and in their own marketing campaigns; as Jones says, “narratives are the bedrock of communications.” Forming strong narratives allows corporations to control their own reputations and thus results in a stronger investment return.