An Oil Giant Exits the Stage (Pursued by Kids)

(Bloomberg Opinion) -- BP Plc’s embarrassing sacking from its role sponsoring cheap Shakespeare tickets exposes the complicated economics of corporate donations. For a cultural organization, taking money from an oil company today comes with costs that may end up exceeding the sums raised.

The Royal Shakespeare Company, based in Stratford-upon-Avon, said on Wednesday that it would “conclude” a partnership with the British oil giant that dates back to 2011 and the cultural celebrations around the London Olympics. BP has been subsidizing tickets at 5 pounds apiece for 16- to 25-year-olds, broadening access to theater beyond those who can afford the often painfully high prices.

The RSC explains its decision almost entirely in terms of the views of young people. “Amidst the climate emergency, which we recognize, young people are now saying clearly to us that the BP sponsorship is putting a barrier between them and their wish to engage with the RSC. We cannot ignore that message.”

The organization said there were “many fine balances and complex issues involved,” without saying whether it was right or wrong to take money from an oil company. But its decision on BP was driven by commercial, as well as moral, reasons. Schools and young people are a big part of the RSC audience. The company’s “Matilda the Musical” production is a major contributor to its success. It cannot afford adults, influenced by children, choosing to spend their cash elsewhere. Young people are its future full-price audience, and the campaigning against BP was getting noisy.

The RSC’s revenue was 86 million pounds ($106 million) last year. Sponsorship — including BP’s — was just 2.6 million pounds of that. Box office receipts accounted for 62% of the total, government funding 17%, with the balance coming mostly from licensing and royalties of RSC intellectual property. The economic power over this organisation is with the audience.

For BP and other listed companies, the episode raises questions about their pursuit of non-business goals. Companies have a duty to leave the communities where they operate better off. Two responsibilities matter above all: paying people well and not damaging the environment through what they do.

BP supports communities in several ways. It does pay its staff very well. It also gives employees time off to pursue local voluntary work, as it should. Yet its hard to see the imperative for corporate sponsorship beyond that. For starters, donations may prove counterproductive if they put off the recipient’s other sources of funds. Above all, there are other more useful ways BP might spend its cash to help society.

Its much bigger and more urgent responsibilities are to the global community. Energy demand is rising yet the world economy needs to shift as soon as it can to net zero greenhouse gas emissions, as the company acknowledges. That requires adapting BP’s business to giving consumers cleaner sources of energy.

The savings made from ending the Shakespeare sponsorship will be tiny. But hastening the energy transition is the single most important thing facing this company. There’s no better claim on its budget.

To contact the author of this story: Chris Hughes at chughes89@bloomberg.net

To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.

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