LISSA’S: The Five Worst CEOs of 2007

The Five Worst CEOs of 2007

By OnTheWeb: Thomas J. Borelli

As the year comes to a close, it's time to announce the Five Worst CEOs of 2007. The CEOs shared a common theme: they allowed the liberal agenda embodied by Corporate Social Responsibility (CSR) to drive business decisions.

All of the "winners" are actively seeking federal regulation to address global warming despite the fact they failed to evaluate the economic cost of regulation – higher energy prices, slower economic growth and an increase in job loss – on consumers and future earnings. In addition, the CEOs also failed to anticipate the unintended consequences of promoting global warming fears on their businesses.

The desire for regulation is an outgrowth of CSR where companies are encouraged to assume responsibility for corporate activity beyond current legal requirements and to engage with stakeholders including critic groups seeking to change corporate behavior.

The five worst CEOs of 2007 are:

John Browne of BP. Browne resigned this year partly because his global warming strategy failed miserably. Under Browne's leadership, BP launched its "Beyond Petroleum" advertising campaign that embraced global warming alarmism as a way to re-brand the company as a responsible company.

The consequences were devastating: the cost and management time of Browne's environmental strategy led to maintenance and safety lapses,which caused a series of accidents including a deadly refinery explosion and a major oil pipeline leak in Alaska.

To address these issues, BP put aside $ 1.6 billion to settle lawsuits and it promised to invest $ 7 billion to upgrade its U.S.refineries and to repair and replace Alaskan pipelines.

Jeff Immelt of GE. "GE's Environment Push Hits Business Realities" – a front-page Wall Street Journal story – highlighted the downsides of its "ecomagination" marketing campaign that seeks to position the giant conglomerate as an eco-friendly company.

The story makes clear that Immelt's global warming strategy is causing a series of unintended consequences. For example, the incandescent light bulb – a GE product and invention of its founder Thomas Edison – will be phased out by federal law.

Over the past year, GE lobbyists had to fight hard to defeat outright bans of incandescent bulbs and buy time to restructure its lighting business that currently relies more on traditional bulbs.

GE's coal business is also feeling the heat from concerns over global warming. While it has invested heavily in Integrated Gasification Combined Cycle (IGCC), a technology that captures carbon dioxide from coal-fired electricity plants, environmentalists have another plan – just ban the use of coal.

This year, environmental activists have been successful in blocking the construction of a number of coal-fired power plants including 8 of 11 plants in Texas. The termination of the Texas power plants resulted in the cancellation of orders for GE's steam turbines worth hundreds of millions of dollars.

Lee Scott of Wal-Mart. Scott's global warming strategy is indicative of a classic mistake made by CEOs under social and political pressure: appeal to the liberal elite by adopting an aggressive"green strategy". By doing so, Scott is selling out its shareholders and low-income customers.

Higher energy prices – a result of global warming regulations – will add to the input costs of Wal-Mart's business while simultaneously reducing the disposable income of its consumers.

The adverse impact of high-energy prices on its consumers whose annual income is about $ 40,000 is not rocket science. Earlier this year, Scott noted a decline in sales was due to the fact that "many customers are running out of money at the end of the month."

Indra K. Nooyi of PepsiCo. Under Nooyi's leadership, PepsiCo is leading the beverage industry in global warming political correctness. The company sponsored Al Gore's LiveEarth concert to appear in sync with the "environmental generation."

However, Nooyi is finding out that what makes good public relations can be bad for PepsiCo's Aquafina – the leading brand of bottled water. The latest trend for activists and politicians is to discourage bottled water sales as a way to reduce carbon dioxide emissions. According to its critics, bottled water poses a planetary risk because of the energy it takes to make and transport the product.

In addition to banning the purchase of bottled water by some city governments, Chicago will become the first major U.S.city to add a 5-cent tax per bottle. That will drive the cost of a 24-bottlecase of water up about 30 percent.

With the ever-growing thirst for tax revenue, Nooyi has graciously put PepsiCo products on the political firing line.

James Owens of Caterpillar Inc. The construction and mining equipment company's global warming strategy is jeopardizing its future earnings by working against its customers in the coal industry.

A Congressional Budget Office (CBO) study on the economic impact of cap-and-trade regulation to reduce greenhouse gas emissions would reduce coal production – a key customer for Caterpillar products – up to 40 percent.

Amazingly, Owens' decision was not based on an analytical cost-benefit analysis estimating the impact of the regulations on his company. Rather, Owens' decision was based on his need to have "a seat at the table" with environmental activists.

By his actions, Owens demonstrated he places more interest in working with environmental special interest groups than conducting his fiduciary responsibility to shareholders.

Thomas J. Borelli, PhD. is the editor of FreeEnterpriser.com, a shareholder activist and a senior fellow at the National Center for Public Policy Research, a Townhall.com Gold partner. The opinions expressed are his own.