Individual utilities have not historically come high on the list of companies likely to be targeted by activists. This is changing. A perfect storm is building as different trends converge to expose electricity and water utilities to the kind of reputational risks normally suffered only by mass market consumer brands.
Since privatisation, utilities have invested a lot in “brand equity”. They have evolved into competing corporate brands, and are acutely sensitive to reputational attack. Many British utilities are also foreign-owned, which exposes them to the additional risk of outbursts at popular nationalism. Facing them, and after years of practice against consumer-facing companies, activists have become expert at undermining brands and embarrassing corporate managements.
Environmentalists in the meantime have broadened their hostility to fossil fuels. Until recently, mainstream environmentalists welcomed, or at least tolerated, gas as a “clean” fuel that could displace “dirty” carbon-intensive coal. This tolerance was always predicated on the belief that gas supplies would be both limited and expensive, that gas would be merely a bridge from fossil fuel to renewables.
However, the rapid emergence of large-scale shale gas production in the US and the fear that it will be replicated across Europe has terrified climate activists. They no longer see gas as a bridge but as a destination. Worse, as a low cost destination that will make further expansion of renewables deeply unattractive.
In the US, shale gas took off before activists really understood what was going on. In Europe, campaigners have seen the North American future and they don’t like it. Forewarned and forearmed with an armoury of anti-fracking propaganda and scare stories, they are mobilising to block shale gas projects before politicians and communities get a chance to be swayed by making some money from them.
This is exactly what happened with genetically modified organisms (GMOs) in Europe in 1998. In the US, and since in Canada, Australia and most of Latin America, GM crops took root before activists could stop farmers adopting them. In Europe, a much stronger and prepared environmental movement killed agricultural biotechnology at birth.
Activists in Europe aim to pull off a GM-type victory over shale gas. As with GMOs, they will focus on health and environmental scares, combining national campaigns aimed at bouncing governments into passing highly restrictive regulatory regimes or even moratoriums on exploration, with community protests to prevent fracking companies even conducting test drilling (this has already happened at sites in the UK and across continental Europe).
So where do utilities come in to it? One of the reasons activists were able to kill GMOs so quickly and decisively in the early 2000s was that they targeted major retailers, pressuring them into pre-emptive bans. A season of disruptive protests to damage trading and warehousing operations, combined with partisan tabloid media coverage, helped stores “see the light”.
With shale, power firms are in the same hot seat as retailers were over GMOs. Having cast doubt on the safety of shale gas extraction across Europe and successfully blocked local drilling, activists will challenge utilities to foreswear shale or be accused of treating the fears and health of communities with contempt. With GMOs,
it only took two retailers to loudly declare their bans on GMOs for all the others to follow suit within months.
Which power utility will be the first to fall over in the UK? It will be tempting to win friends and positive headlines over an issue that may not be tested in practice for several years. Meanwhile, the shale gas companies will find their financing drying up because their market has apparently rejected them – just as European farmers never tried to plant GM crops because they were told retailers would not buy them.
Shale will be the biggest fight for utilities in the coming months, but it will not be the only one. As our list of hottest issues shows (see box), nuclear power and biomass are still galvanising activists, and for consumer groups, pricing and regulation have never gone away. Meanwhile, for water utilities, we are seeing low but rising levels of activity on pharmaceutical and chemical micro-pollutants in drinking water.
A Greenpeace executive purportedly once said that when it started targeting brands in its campaigns, it was like discovering gun powder. We await the first explosion.
Robert Blood is managing director of Sigwatch, an international consultancy based in London that tracks NGO and activist campaigns
Prime targets: worst-hit utilities
Based on Sigwatch campaign activist tracking data, this ranking relates to criticism during the 12 months to April 2013. All the listed power companies were strongly criticised over their investments in gas-fired power (instead of more renewables) – with Centrica singled out by Greenpeace on this score. They were also blamed for exposing consumers to high gas prices.
EDF’s position at the top of the table is mainly due to being the target of the No Dash for Gas protest at West Burton, compounded by heavy criticism from the wider UK activist community for threatening to sue the protestors for civil damages, and for being the focus of anti-nuclear campaigning over Hinkley C. We suspect that it is also a target of choice for being French (some groups like to play the “foreign” card). EDF is also a long-standing target for Greenpeace .
United Utilities was the only water company to receive NGO criticism in the 12 month period and that was comparatively small – just complaints over deoxygenation in its Ennerdale Reservoir which allegedly killed its mussel population.
This article first appeared in Utility Week’s print edition of 14th June 2013.
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