June 10 I listened to Dave O’Reilly, CEO of Chevron and Carl Pope, Executive Director of the Sierra Club in conversation with Alan Murray, Deputy Managing Editor, The Wall Street Journal at the Nikko Hotel in San Francisco sponsored by the Commonwealth Club. It was quite a circus, sold out, tv cameras and protestors to boot. The surprising thing was that it was actually a rather congenial conversation. Dave and Carl really agree on a great deal in terms of the end of fossil fuels, the need to transition energy supplies, and the need to do because of the impact of global warming. What was significant was their difference on the timing. Carl Pope emphasized the importance of transitioning quickly, in thirty years, whereas Dave saw this as a much longer term proposition, mostly because of the practicalities of doing it. This led to an interesting point. Right now Chevron makes 98% of its revenues from fossil fuels. The discussion about timing is crucial for Chevron, because it needs to replace its fossil fuel revenues with other revenues if it wants to continue to grow and prosper. If Dave’s timing is wrong, Chevron will find itself much like Kodak making a painful forced transition to a new revenue model, and possibly becoming a much smaller company in the process. Another interesting point that came up was a question about salaries and percentage of revenues. Carl Pope makes $200K on $40m. Dave’s total compensation is about $14m on $273b. You will notice that Carl’s salary is actually a much bigger proportion. This is something that sometimes gets lost in looking at oil companies. Their revenues are so large, that when you redo things as percentages they come across as rather stodgy, not that profitable, not fast growing entities.
What was very entertaining was when the two men discovered they both totally opposed the Cap and Trade proposals going through congress. They promised each other they would actually go to Washington together to lobby against this. Now that would get the average senator’s attention – Chevron AND the sierra club at once – few of them would turn that down.
All in all it was a pleasant and interesting evening. Yet somehow I can’t help but feeling that a lot more is hiding behind the difference in time table and urgency. The degree to which the required sense of urgency exists and is turned into action will massively affect the future of our environment as well as the future of business. I think it’s great that even CEO’s are understanding the importance of change, but the scope of what’s needed hasn’t fully sunken in. Or perhaps more to the point, it has sunken in, but people are shrinking back from it, saying it’s too hard to do quickly. But it’s not obvious that nature, or the growing resource needs of people around the world, will afford us that much time.
