Category: Environment

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.

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.

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.