Environment

Not Quite Beyond Petroleum

For the past eight years, the oil giant formerly known as British Petroleum has tried to convince the world that its initials stand for “Beyond Petroleum.” An announcement just issued by the U.S. Environmental Protection Agency may suggest that the real meaning of BP is Brazen Polluter.

The EPA revealed that BP Products North America will pay nearly $180 million to settle charges that it has failed to comply with a 2001 consent decree under which it was supposed to implement strict controls on benzene and benzene-tainted waste generated by the company’s vast oil refining complex in Texas City, Texas, located south of Houston. Since the 1920s, benzene has been known to cause cancer.

Among BP’s self-proclaimed corporate values is to be “environmentally responsible with the aspiration of ‘no damage to the environment’” and to ensure that “no one is subject to unnecessary risk while working for the group.” Somehow, that message did not seem to make its way to BP’s operation in Texas City, which has a dismal performance record.

The benzene problem in Texas City was supposed to be addressed as part of the $650 million agreement BP reached in January 2001 with the EPA and the Justice Department covering eight refineries around the country. Yet environmental officials in Texas later found that benzene emissions at the plant remained high. BP refused to accept that finding and tried to stonewall the state, which later imposed a fine of $225,000.

In March 2005 a huge explosion (photo) at the refinery killed 15 workers and injured more than 170. The blast blew a hole in a benzene storage tank, contaminating the air so seriously that safety investigators could not enter the site for a week after the incident.

BP was later cited for egregious safety violations and paid a record fine of $21.4 million. Subsequently, a blue-ribbon panel chaired by former secretary of state James Baker III found that BP had failed to spend enough money on safety and failed to take other steps that could have prevented the disaster in Texas City. Still later, the company paid a $50 million fine as part of a plea agreement on related criminal charges.

In an apparent effort to repair its image, BP has tried to associate itself with positive environmental initiatives. The company was, for instance, one of the primary sponsors of the big Good Jobs/Green Jobs conference held in Washington earlier this month. Yet as long as BP operates dirty facilities such as the Texas City refinery, the company’s sunburst logo, its purported earth-friendly values and its claim of going beyond petroleum will be nothing more than blatant greenwashing.

Wanted: The Big Fish

In its waning days, the Bush Administration’s Environmental Protection Agency wants us to think that it is a serious crime-fighting organization. The agency’s enforcement division recently announced plans to “enlist the public in tracking down fugitives accused of violating environmental laws and evading arrest.” The innovation is a web page called EPA Fugitives, an online version of the wanted posters traditionally displayed in post offices.

There’s nothing wrong with such an initiative, but the two dozen culprits featured on the site are all decidedly small fish. Some are charged with serious offenses such as the dumping of hazardous wastes, while others are accused of less than monumental crimes such as illegally importing automobiles that don’t meet emissions standards or “aiding and abetting false entries into an Oil Record Book” of a ship.

Where is the agency’s zeal for highlighting the environmental crimes of large corporations? It’s been greatly diminished amid a general downplaying of enforcement activity. Last year the Environmental Integrity Project put out a report showing a sharp decline in enforcement efforts during the Bush Administration. “The bad news here is that it now costs less to pollute,” EIP Director Eric Schaeffer said at the time.

This is not to say that the EPA has let large corporations entirely off the hook. In fact, just this week the agency announced a settlement with Exxon Mobil under which the oil giant will pay $6.1 million in civil penalties for violating the terms of a 2005 consent decree concerning air pollution caused by the company’s refineries in Texas, California and Louisiana.

It apparently takes truly brazen actions such as those of Exxon to trigger real action by the EPA against a big company (though a $6 million fine is not much of a hardship for a company currently earning about $5 billion a month). If you look at the archive of the agency’s press releases on enforcement actions, the offending parties are most often small firms and individuals.

Perhaps the Obama Administration’s EPA should consider a new web page of its own: a rogue’s gallery of the large corporations that are doing the most to pollute the environment and exacerbate the climate crisis.

Shell’s Troubled Relationship with the Truth

Oil giant Royal Dutch Shell is facing accusations that it manipulated a supposedly independent environmental audit of a huge Russian oil and gas project in which it is involved. Nick Mathiason of the British newspaper The Observer reports that he obtained dozens of internal e-mails showing that Shell officials in London sought to influence the conclusions of a review of Sakhalin II being conducted by AEA Technology. The audit was used by financial institutions in making funding decisions about the $22 billion project.

The Observer quotes Doug Norlen of the group Pacific Environment as saying: “Shell stage-managed the whole process. They set the agenda, scheduled meetings and even participated in the editing of sections. I believe this to be a stark and vivid example of manipulation.” The Shell website contains a page on which it touts the favorable findings of the AEA report.

Pacific Environment, a non-profit advocacy organization based in San Francisco, has done pioneering environmental work on the Russian Far East and Siberia, collaborating with Russian activists who formed Sakhalin Environment Watch. The groups have been highly critical of the offshore Sakhalin II project because it threatens the survival of the world’s most endangered species of whales—Western Pacific Grays (photo). The campaign has pressured Shell and its partners to adopt stronger environmental protections or abandon the project.

The campaign became more complicated in late 2006, when Shell was forced by Russia to sell half of its holdings in the project at a bargain-basement price to Gazprom, which is publicly traded but controlled by the Russian government. This gave Gazprom a majority stake of 55 percent, with Shell’s interest reduced to 27.5 percent. The holdings of the other partners, Mitsui and Mitsubishi, were also slashed.

In its diminished position, Shell was even more vulnerable to attacks in the Russian and foreign press in mid-2007 after it was revealed that David Greer, the deputy chief executive of Sakhalin II, had sent out a motivational memo to his staff containing unattributed passages taken from a speech made by U.S. General George S. Patton on the eve of D-Day in 1944. Amid the ensuing furor over plagiarism, Greer resigned.

Shell’s integrity problems are not limited to Sakhalin II. In January 2004 the company admitted that had overstated its proven petroleum reserves by 20 percent. It later came out that that top executives at the company knew of the situation two years before it was publicly disclosed. Shell ended up paying penalties of about $150 million to U.S. and British authorities for the misreporting.

In his Observer article, Mathiason notes that environmental campaigners are worried that Shell’s behavior with the Sakhalin II report could be repeated in audits involving other projects such as its oil drilling leases in Alaska’s Chukchi Sea. Given the company’s troubled relationship with the truth, that concern is quite legitimate.

Giant Mining Firm’s Social Responsibility Claims: Rhetoric or Reality?

The recent decision by the U.S. Supreme Court to slash the damage award in the Exxon Valdez oil spill case and the indictment of Sen. Ted Stevens on corruption charges are not the only controversies roiling Alaska these days. The Last Frontier is also witnessing a dispute over a proposal to open a giant copper and gold mine by Bristol Bay, the headwaters of the world’s largest wild sockeye salmon fishery. Given the popularity of salmon among the health-conscious , even non-Alaskans may want to pay attention to the issue.

The Pebble mine project has been developed by Vancouver-based Northern Dynasty Ltd., but the real work would be carried out by its joint venture partner Anglo American PLC, one of the world’s largest mining companies. Concerned about the project and unfamiliar with Anglo American, two Alaska organizations—the Renewable Resources Coalition and Nunamta Aulukestai (Caretakers of the Land)—commissioned a background report on the company, which has just been released and is available for download on a website called Eye on Pebble Mine (or at this direct PDF link). I wrote the report as a freelance project.

Anglo American—which is best known as the company that long dominated gold mining in apartheid South Africa as well as diamond mining/marketing through its affiliate DeBeers—has assured Alaskans it will take care to protect the environment and otherwise act responsibly in the course of constructing and operating the Pebble mine. The purpose of the report is to put that promise in the context of the company’s track record in mining operations elsewhere in the world.

The report concludes that Alaskans have reason to be concerned about Anglo American. Reviewing the company’s own worldwide operations and those of its spinoff AngloGold in the sectors most relevant to the Pebble project—gold, base metals and platinum—the report find a troubling series of problems in three areas: adverse environmental impacts, allegations of human rights abuses and a high level of workplace accidents and fatalities.

The environmental problems include numerous spills and accidental discharges at Anglo American’s platinum operations in South Africa and AngloGold’s mines in Ghana. Waterway degradation occurred at Anglo American’s Lisheen lead and zinc mine in Ireland, while children living near the company’s Black Mountain zinc/lead/copper mine in South Africa were found to be struggling in school because of elevated levels of lead in their blood.

The main human rights controversies have taken place in Ghana, where subsistence farmers have been displaced by AngloGold’s operations and have not been given new land, and in the Limpopo area of South Africa, where villagers were similarly displaced by Anglo American’s platinum operations.

High levels of fatalities in the mines of Anglo American and AngloGold—more than 200 in the last five years—have become a major scandal in South Africa, where miners staged a national strike over the issue late last year.

Overall, the report finds that Anglo American’s claims of social responsibility appear to be more rhetoric than reality. Salmon eaters beware.

“Green” Corporations Among the Toxic 100

The appearance of a new version of the Political Economy Research Institute’s Toxic 100 is a useful reminder that, for all their feel-good green ads, large corporations are still defiling the environment in a major way. This year’s list of the biggest corporate air polluters is led by DuPont and includes household names such as Dow Chemical, Eastman Kodak, General Electric and Exxon Mobil among the top ten. The companies are ranked by their “toxic score,” which the Institute calculates by multiplying the amount of toxic air releases reported to the EPA by the relative toxicity of the chemicals involved and the size of the population at risk of exposure.

What’s new this year is the inclusion of foreign corporations with facilities in the United States. There are three such listings in the top ten portion of the Toxic 100: Nissan Motor, Bayer Group and ArcelorMittal.

It’s interesting to see that foreign companies can be no less hypocritical than their U.S. counterparts when it comes to saying one thing about the environment and doing another. Nissan USA brags on its website about its Green Program, which uses as its catch phrase “seeking a symbiosis of people, vehicles and nature.” Bayer just announced it “will partner with the United Nations Environment Programme’s Regional Office in North America to help sponsor the 36^th annual World Environment Day celebration.”

Even more awkward is the appearance on the list of steel giant ArcelorMittal. Just last month, it was one of a handful of corporate sponsors of the green jobs conference put on in Pittsburgh by the Blue Green Alliance, led by the United Steelworkers and the Sierra Club. The conference program contained a full-page ad for the company saying: “At ArcelorMittal, Sustainability is one of the company’s core values.” Under the corporation’s name is the motto “Transforming tomorrow.” Perhaps ArcelorMittal should focus a bit more on transforming its air pollution problem today.

“Greenbackwashing”: Wal-Mart Admits It’s Not Green

Wal-Mart CEO Lee Scott has finally admitted what many of us suspected all along: the company’s widely celebrated embrace of environmental principles is bogus. Responding to a question as to why his company’s carbon footprint continues to grow, Scott told the Wall Street Journal ECO:nomics conference the other day: “We are not green.” At the same event, when asked why Wal-Mart continues to sell bottled water, despite its harmful environmental effects, Scott said: “We have to stay in business…If the customer wants bottled water, we are going to sell bottled water.” To top things off, he replied to a question as to when the company might reach its professed goals of generating zero waste and using 100% renewable energy by saying: “I haven’t a clue.”

While these comments were a far cry from the company’s usual green hype, the underlying point is one that Scott has actually been making all along. Wal-Mart’s environmental initiatives are in fact nothing more than an extension of its usual obsession with efficiency. Anyone who bothered to closely read Scott’s landmark “21st Century Leadership” speech in October 2005 saw that he framed the company’s efforts as waste reduction, which would reduce costs, which in turn would raise profits.

Scott reaffirmed this idea in a separate interview with the Journal’s Alan Murray at the ECO:nomics conference, video of which Wal-Mart has posted on its website. He reiterates the idea that what the company is doing is “driving waste out of the system” and thus reducing costs. When Murray asks about trade-offs, Scott amazingly denies there are any. “There don’t have to be trade-offs,” he asserts.

This is the heart of Wal-Mart’s philosophy not only about the environment but about its entire approach to business. The giant retailer can pretend there are no trade-offs because it is the master of cost shifting. It shifts employee healthcare costs to the public sector, it avoids what should be its full labor costs by fighting unionization—and it shifts the costs of environmental transformation (and other innovation) onto its suppliers. Having used its power to avoid cost burdens and difficult decisions, it is possible for Scott to dwell in a cloud-cuckoo-land where tackling problems such as global warming requires no sacrifice and is in fact a way to fatten the bottom line.

While for most economic players there is no free lunch, Wal-Mart can gorge itself at will. When other companies make misleading statements about their environmental record, that is greenwashing. What Wal-Mart has been doing might more accurately be called “greenbackwashing”—promoting the fallacious idea that a green transition can be costless.

Another corporate speaker at the ECO:nomics conference was a bit more honest. Duke Energy CEO Jim Rogers acknowledged that there will be substantial costs in moving to a system of carbon regulation. However, he went on to argue that companies such as his—which is one of the largest CO2 emitters in the country—should get their greenhouse gas permits for free. This, he solemnly stated, was solely for the sake of his ratepayers. “I make a commitment that every one of those allowances will go straight to my customers, and I will sign that commitment in blood,” he said.

Undoubtedly, there will be blood—a lot of it—unless major corporations such as Wal-Mart and Duke Energy acknowledge that environmental transition will entail costs and that corporate profits cannot be immune from those burdens.

The “Toxic Ten” – The Start of an Antidote to Greenwashing

Portfolio, the Condé Nast business magazine that debuted last year, started out looking as if it would be little more than a glossy celebration of the corporate world’s movers and shakers. It has, however, shown a willingness at times to address the seamier side of capitalism, such an October 2007 story on links between Chiquita Brands and death squads in Colombia.

The new (March) issue of the publication has another article that shows business at its worst. “The Toxic Ten” by Harry Hurt III is a welcome antidote to the endless stories published these days about the ways in which big business has supposedly gotten religion about the environment. Hurt shows that there are still large companies that are dumping toxic substances in rivers, spewing mercury out of power plants, using harmful materials in their products and contributing mightily to global warming. His list is not meant to be a ranking but instead an assortment of companies that “could be doing better, given their resources and position in their industry.”

The “Toxic Ten” consists of:

J.R. Simplot (the potato king generates lots of waste products)
Cargill (the $88 billion agribusiness giant contaminates air and water)
Ford Motor (has dragged its feet on producing truly fuel-efficient vehicles)
Boeing (has been evasive about its carbon footprint and has been involved in water pollution)
Apple (uses toxins such as polyvinyl chloride and brominated flame retardants)
Southern Co. (operates some of the dirtiest power plants in the country)
American Electric Power (operates some of the other dirtiest power plants)
Massey Energy (mines coal via mountaintop removal)
Chevron (is involved in more than 90 active Superfund sites)
Alcoa (operates power plants for its smelters that are heavy polluters)

The list could have gone on much longer. To begin with, how did Exxon Mobil not make the cut? Most of the top air polluters on a list assembled by the Political Economy Research Institute at the University of Massachusetts are also missing. In fact, several of the companies on the Institute’s list—including DuPont and General Electric—appear (along with the likes of Wal-Mart) in a sidebar to Hurt’s article called “The Green 11: Some of America’s Most Eco-Savvy Corporations.”

If by “eco-savvy” Portfolio means those companies that have been most successful in giving the appearance of environmental responsibility, then those slick purveyors of greenwashing do indeed deserve to be singled out.

Corporate America’s Crock of Inconsistency

Given all the extravagant environment claims being made by major corporations these days, it is strangely refreshing when a business chieftain puts aside the greenwash and speaks his Neanderthal mind. That was the case recently, when General Motors Vice Chairman Bob Lutz told a closed-door session with journalists that he considered global warming “a total crock of shit.” He also reportedly stated that hybrid automobiles “make no economic sense.”

When word of his candor got out, Lutz did a bit of a mea culpa on GM’s FastLane company blog. Yet his argument was bizarre: “My beliefs are mine and I have a right to them, just as you have a right to yours…My thoughts on what has or hasn’t been the cause of climate change have nothing to do with the decisions I make to advance the cause of General Motors. My opinions on the subject—like anyone’s—are immaterial.”

I’m not sure whether we should be relieved that Lutz apparently doesn’t let his retrograde thoughts get in the way of his job—or dismayed that GM is paying more than $8 million a year to someone who leaves his brain at home.

Corporate ideological inconsistency is not limited to GM’s executive suite. A recent survey of top executives published by the Boston Center for Corporate Citizenship and the Hitachi Foundation demonstrates the opposite problem from Lutz: embracing noble ideals but doing nothing to implement them. Nearly three-quarters of the respondents said that good “corporate citizenship” should be a priority for business, but only 39 percent said such considerations are part of their planning process.

An article distributed by Social Funds quoted the lead researcher for the survey as saying: “We think the gap between aspirations and actions is to be expected at this time because business is going through a significant transformation.” Or, to put it another way: Many corporate leaders apparently think that living up to their rhetoric is a crock.