Leaders with Lacqua: Bernard Looney, BP CEO

Leaders with Lacqua: Bernard Looney, BP CEO

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Bernard Looney took over as the chief executive of BP just weeks before Covid-19 locked down the world and sent shockwaves through the global economy. It has been a challenge but it's no less of a challenge for me to spend. For everyone in the world. Everyone has had to endure just some enormous challenges haven't they. He grew up on a farm in Ireland. He was the first person in his family to go to university. He joined BP as a graduate engineer. Twenty eight years later took charge. I think it's enormously important for people to work for a leader who is real who is authentic. I've got issues and challenges in my life. And and talking about them allows me to relate to people as activists and investors are increasingly challenging the industry to face up to the risks posed by climate change. He has overseen the biggest restructuring in the

company's history and an overhaul of BP targets. Time is of the essence for a company like ours to make its transformation. We've been an international oil company for one hundred twelve years. We want to transform ourselves into an integrated energy company. Bernard Lewis thank you so much for speaking to us. On leaders with lackluster you're really achieving a pandemic chief executive because he started February 20 20 before the world stops. Has it been an advantage or disadvantage. Well so thanks for having me on. It's great to meet you and great to be with

you in person. It has of course. I think I started on the 5th of February 2020 and I think it was about five weeks later that we were shutting our offices expecting to be coming back in a few weeks. And of course that didn't happen. And we've all been working remotely and virtually as you have over that time period. It has been a challenge but it's no less of a challenge for me than it has been for everyone in the world. Everyone has had to endure just some enormous challenges haven't they. But you've had a huge restructuring. We have. And we laid out I think on the 12th

of our in the 14th of February or the 12th of February 7 days later we actually did get the opportunity to lay out our new ambition for the company to become net zero by 2050. We laid out a new purpose and then about six months later we laid out a new strategy. And then the following year 2021 we went about restructuring the company so that we could deliver on that new strategy. And that's the largest restructuring that the company has done. And we're one hundred and twelve years old. So all of that was done by my fabulous organisation and team. It was all done virtually. It was all done remotely. It was very just make

it easier doing it was make it easier and actually make it worse. No I mean we had a real choice. Francine as to whether we would stop in the midst of a pandemic because I had a very human level. People were already dealing with a lot a lot. And children at home and aging parents a lot of issues that were normal life events that were suddenly becoming amplified. We were sort of throwing in our restructuring which was causing a lot of uncertainty in people's lives. And we had to decide whether to stop or actually progressed with that. And we decided to progress. And the one thing I can say is looking back that I'm glad we we did push forward in the midst. And the reason I say

that is because if we hadn't done that I'd be sitting here today with all of that ahead of us. And instead it's behind us. So it was hard. It was difficult on people. But I think it's better to try and get the uncertainty out of the way as quickly as possible. So I'm glad we pressed on. But is that because you were new chief executive. And so it's better to you know to do things that you're planning on doing straight away. Or is it just because time is of the essence for the client. Well I think time is of the essence for a company like ours to make its transformation. We've been an international oil company for 112 years. We want to transform ourselves into an integrated energy company. It's

what society wants and needs. It's what our staff and employees want and need. And ultimately we will prove that it's what our shareholders need. So we needed to crack on. We needed to press on. There is an emergency happening around us and in many ways we can wait. And that's why we decided to do it. And I feel it was the right decision. What do you say to the cynics that say look it's all nice and fine but a lot of it is greenwashing and you're not a good company you're just a less toxic company than some of the other oil majors. Well the first thing to say is that. You know I'm a big believer and

we need to put ourselves in another person's shoes in life in general. And so I understand that point of view and I get that people have that perspective. I don't agree with that obviously. But I understand where they're coming from. We have an enormous challenge as a society which is to provide the world with reliable affordable and clean energy. That's what society wants. That's what society needs. And I believe in my heart that a company like BP is actually one of the few companies in the world who can actually make that happen. We can talk about the things that we're going to grow and over the coming years. And I find it huge. The exciting and energizing for our organization.

But that's what the world needs. And you simply can't go against the grain of society. You can't defy gravity. And that's why we're making the change that we're making. The young kids would have said well we need this but we maybe should have started it five years ago. Well you know I was always told in my career you've got to pay the ball where it lies. We can look back and bemoan history. But I'm in the world of we see where we are. We know what we have to do. We need to give society what it wants.

And for our company it's an enormous opportunity. People think about the energy transition must be a threat to a company like BP. I don't think like that. I think it's an enormous opportunity. We're going to go into evey charging. We're going to go into biofuels. We're going to go into hydrogen. These are things that we can help solve. And instead of thinking of it as

a risk or a threat where you crouch down in a defensive position and you see darkness. It's actually a massive opportunity for us. But it's also tough. You probably have the toughest job of any business. It's a challenge. But equally we have this mantra inside the company which says we have got to perform while we transform. It sounds like a broken record. Coming from me. But we are performing well transforming. And our job is to give shareholders a good return

on their investment today which you are which we are doing while at the same time step by step day by day transition and transform this company to be the company of the future which I will be. How much tension is there. I mean the more you keep shareholders happy and so the more you get back the more they maybe don't want to transition. Shareholders want us ultimately to create value. And my job and our job is to prove to our shareholders which we are increasingly doing. And we had a great deal last Tuesday where we updated a market on our strategy. And it's beginning to really click. We can perform and deliver for those shareholders today. They are getting an incredible dividend. They're getting incredible share buybacks. At the same

time we're investing by 2025 over 40 percent of our capital into transitioning the company. We can generate great returns in doing that. And at the same time we can help solve this problem of how do we get all three together clean reliable and affordable energy. Up next the impact of the energy transition. Mooney discusses opportunities in electric vehicles and making a lasting transformation. If you look at what we've done in the last two years you wouldn't call this greenwashing. We didn't do the biggest restructuring in our history just for greenwashing.

Bernard Looney became chief executive of one of the UK's largest and most controversial companies blooming GBP just before independence. He's now looking ahead to a post fossil fuel future for business. He discussed problems in the industry and opportunities in the energy transition. Are there practices in the oil industry that are indefensible that you struggle. A lot of times to defend. I'm thinking about lobbyists something about other things. Climate change deniers

like how do you deal with those personalities in your industry. Well the first thing I would say Francine is that BP was actually the first oil and gas company to my knowledge that in the late 90s in 1998 I acknowledged that there was a link between human activity and climate change. And that was John Brown at a speech in Stanford in 1998. And I had the privilege of working with Joan in New York in the 2000s when he was chief executive. So that's the first thing I think we're very much on record as not being a climate denier. The second thing I would say is when you talk about lobbying we produce a report. Now I think it's every two years. And what we do is we work with trade associations some of whom who lobby. And we say we're gonna be

very transparent with you if we disagree with you. And if we disagree with you consistency we will leave these trade associations. And I think we've left two if not three organizations already. Then there is a group in the middle where we feel we have some mis alignment with and we will be transparent on that. And then there are those that we are aligned with. So the whole thing here is to be transparent is to be upfront. It's to you know there is no hiding today as you

know. So we have to be transparent. We want to be transparent. And we want to show people here's what our positions are. So when will you no longer have fossil fuel. And actually I mean you have to rebrand BP British Petroleum Jihye Lee be called something else. Well I happen to think BP is a fantastic brand and I know lots of people don't maybe but I certainly do. And

there's a lot of people that we work with in countries all around the world have sort of an enormous warmth towards the brand of BP. And we serve over 10 million customers a day. We're going to bring that up to 20 million customers very very soon. We don't need to rebrand BP. So we're not going to help British energy. We need to deliver. We need to deliver on the plans that we laid out. That's what we've got to do. Year 1 we set direction year to re restructured. Now it's about one thing one thing only delivery. And we can show those people who are skeptical about whether this is all greenwashing. And I can

assure you if you look at what we've done in the last two years you wouldn't call this greenwashing. We didn't do the biggest restructuring in our history just for greenwashing. That was a very painful experience. So there's an exciting new world of evil. And what's your biggest concern about this. What keeps you up at night when looking at meetings. Is it the charge where you charge how you charge how you power them. Well our business is in even charging and I'm super excited about the charging business. So if you think about it we have a physical network of gas stations today.

550 million people in the world live within 20 minutes of a BP petrol station or a BP gas station. So we've this enormous asset called our physical infrastructure. We're going to change that over time to ultrafast charging today every week in the fourth quarter. We're adding 150 in charge points per week. We sold four and a half times more power through those Chargers in 2021 than we did in 2020. It's an enormous opportunity for a company like ours. It is all about fast charging. That's where we're

focused 150 350 kilowatt chargers. People want to know there's going to be a place where they can get a charge and get a fast. Right. That's change. You can get a cup of coffee and a Marks and Spencer sandwich in the UK which is also very very important. So I'm very excited about this space. We're going to lean. We're accelerating our ambition. It used to be 70000 charge points. Now we're up to 100000. We're putting more capital into it. Very exciting. We're in Germany. We're in China. We're in the U.K. and we're just entering fleets in America. We're in early 2022. And we're going through a huge I mean we're seeing actually a huge energy crisis. And a lot of analysts say this is because politicians countries even

companies didn't plan for the transition. Well look there's a lot of reasons. As with many things in life there are a lot of reasons why we have an energy crisis today. Things from weather no hydro in Brazil no hydro in Norway maintenance. And so much of it is the transition. It's I think what you will see is what we've learned today is that unless we plan properly to handle both demand as well as supply then we will have a problem. Because if we take supply down and don't do anything with

demand. There's only one response which is prices go up and what I'm worried about. Francine and a lot of people are worried about is that that will somehow be connected to the transition and it will turn people off the transition when in fact we need to transition to accelerate. So what do we do now for the transition. There's also products that we need in making these renewables and also making the Chargers that we're not taking on the ground fast enough. We need to understand that it is a transition. It is not there. I said a light switch. We have to move from today's system to tomorrow's system. And we need to

remind ourselves I think you've had Mark CARNEY on your show here. We need to remind ourselves what Mark says. We need to start every meeting and say what's our objective. Our objective is to drive emissions down. Our objective is not to defend an idea ideological position about I don't want hydrocarbons. If we can move from coal to gas and that reduces emissions we should do that. We should do that because it's one step on the journey. If we can move from diesel to biodiesel we should do that. It's not the perfect answer but there is no perfect answer here. It is a transition as long as every day we're taking a step in the right direction on emissions then I think that's a good thing. But not everyone thinks like you. So should some of these things

be mandatory. Well some things are mandatory. So if you look in the UK one of the things that they have done here is to say that there will be a ban on internal combustion engines by 2030. Actually I was speaking to people in China a couple of weeks ago and Hainan Province in China has brought in the same thing. What that policy action does is it gives a degree of certainty so

that people like us can plan. And the good thing for a company like ours is you might say to me we supported that ban by the way. Now you might say to me that's a pretty odd thing for BP to do. You're in the you sell fuel and petrol. Why would you want to do that. Well we want to do that because yes we're in the petrol business today but we're growing this even charging business at pace. So it's an opportunity for ourselves in some ways. So that's why we support policies like that and they give certainty. The same is around sustainable aviation fuel. You know a 5 percent mandate. So it's blended by 2030. These are the

policy signals that are necessary for people like us to have the certainty to make investments. Coming up Bernard Mooney's life as a leader. He discussed his upbringing in Ireland and the role of empathy in the book. I think it's enormously important for people to work for a leader who is real who is authentic. I've got issues and challenges in

my life and and talking about them allows me to relate to people. Engineer chief executive Bernard now leads one of the world's largest oil companies. He discussed BP role in tackling the energy crisis and how his upbringing influenced his leadership style. Citizens all around the world in this country in the UK are struggling to pay their bills and energy prices will just go up. Should oil companies be taxed more. Well there is a great debate in the UK at the moment around a windfall tax. You know the first thing to say is you know I think when you do hear the stories and you and I are probably in a very privileged position but when you hear the stories about people having to have to choose you know it is it's it's a terrible situation right now.

You say well what's your role in that and what can you do to help that. I feel that our job is to make sure that the energy is there as best as possible as much of it as possible. So what we would say is you need two things. You need more natural gas production in the UK because one of the reasons we have an issue is because

there isn't there is an imbalance. So we should be incentivizing the investment in natural gas not dis incentivizing. And the second thing that we should be doing is trying to accelerate the transition. And that's why we said this week that actually this decade in Britain for every pound that we make we're going to invest two pounds. And that two pounds is going to go into the accelerating the transition in wind and hydrogen and even charging a lot of analysts and especially against you and say look BP is best in class when it comes to this. So it may be a dodgy neighborhood because of the nature of what you do. But best in class. Are you confident that we'll get to the targets set out. But by COP 26 can we if not reverse at least stay and stop climate change. Well I think we have to be optimistic. We have to have confidence. What I would say is I come back to

something Francine Lacqua to talk about which is greening companies and what is a greening company. A greening company is a company that is carbon intensive today. You might call it a heavy polluter today. And what we need to do is to back and encourage those companies to get to net zero. We need green companies of course. We need solar companies. We need wind companies. We need battery companies. But the reality is we won't be able to build enough of them and scale them fast enough. What we need to do is take companies like BP and get them to transition to net zero. And that's what we're doing.

Carbon intensive today net zero tomorrow. A greening company. And I think the conversation has become very simplistic. Your black or white. If you're in fossil fuels that must mean you're bad. And if you're not. That must mean you're good. Unfortunately life isn't as simple as that is it. What we have to do is say these companies are bringing about change and actually they need to be backed. Of course they need to be challenged. They need to be held to account. They need to be

transferred but they need to be backed. And that's how we'll get Mark CARNEY says I quote him twice. He says go where the emissions are. So many people are trying to run away from the emissions. We need to go to the emissions. We need to engage with the emissions and we need to get them transitions. And that's what we're trying to do. What kind of leader are you. You seem very engaged to people's person. I hope that's what people would say about me. I. I try to be a good person. I think someone once described me. It's it's a combination of of empathy with Edge. And and at some level it sounds like a contradiction. But it's not. I think it's enormously important for people to work for a leader who is real

who is authentic. I've got issues and challenges in my life. And and talking about them allows me to relate to people. We've all got issues right. We do a lot of work on mental health inside the company. I'm a huge champion of this. So I think an empathetic environment is a hugely important environment where our leaders are interested and our teams want to know about their lives and understand them. And at the same time there's an edge because we have a responsibility to our owners to deliver.

And that does not mean I can't have difficult conversations about performance and so on and so forth. So to me it's this combination of empathy and edge that sort of sums up at least who I would like to be seen as. Does empathy get you better results. I believe it does connect more with people because you understand more people will share the truth with you more. They will want to go further for you. It is absolutely at the core of I used to tell people it was a different way. Forty or three pieces of advice. The third thing was always treat people well. It's the most important thing that we can do. I don't run the company our people run the company. They do the

work. But you set the tone. I do set the tone. But at the end of the day they're the ones doing it. And my job is to help them. I remember. You grew up in Ireland. And one of the first interviews actually that I saw of you during the pandemic had a little tractor. Yes I think. How is that important thinking about your roots. Yes it is. I grew up in a small farm in the west of Ireland. My mother was a wonderful woman. I was the youngest of five was able to go to university because she wanted me to go to university. And by the time I was born there were grants available not a scholarship. I would add grants available to get me to university.

And we love farm machinery. We love tractors. And it is a little bit of you know with my brothers today we have a WhatsApp chat and it's all about tractors. My Instagram account is following tractors. So it sounds a bit silly. But you know it's what gave us a bit of fun in life and that's how we made a bit of extra money on the side. So that's a little bit of a reminder of don't forget where you come from. Do you think it would your mother be proud of what you're trying to

do. I high. I hope she'd be proud. Yeah I hope she'd be proud. Thank you so much for your time. Great. Thank you very much. Appreciate it.

2022-02-26 04:05

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