The Age of Corporate Environmentalism

Surprise--big business has learned that it's pretty easy being green.

Ask Bob Langert about the Environmental Protection Agency (EPA), and he starts to chuckle. "When we meet the regulators, it's kind of nice," says the senior director for social responsibility at the McDonald's Corporation. "We just got an award from the EPA. When we see the regulators, we always hope it's because they're giving us an award."

Such coziness between big business and big government might make readers nervous--but it's not what you think. McDonald's won this year's Climate Protection Award by cooperating with Greenpeace to build a prototype McDonald's restaurant with greener refrigerant technologies, which reduce problematic emissions from cooling units and cut energy costs by 17 percent. Cooperation between corporations and greens was done right, and everybody won.

Well, almost everyone won. It was a shame to lose a perfectly good bad guy.

The idea of the rich corporate villain gleefully dirtying Mother Earth is powerful and appealing. Children of the 1980s encountered this supervillain in comics, movies, public awareness videos, and science textbooks. Times were good for mandatory recycling, for mandatory emissions reductions, for anything mandatory aimed at restraining corporate polluters.

But in the late '90s, something peculiar started happening. The men in suits were still middle-aged, round, and white. They were still just as concerned with profit and golf. Very few of them sported tie-dyed attire, aside from the occasional whimsical Jerry Garcia tie. But the men in suits started caring. Or at least acting like they cared. Which, if you ask a spotted owl, is the same thing.

So environmental activists across the nation bought their own ties and started dealing with corporations as almost-equal partners in planet saving. Businesses in turn learned that it's pretty easy being green.

"What's hot right now are voluntary environmental programs," says Jorge Rivera, assistant professor at the George Washington University business school. Mandatory environmentalism is "effective, but expensive," Rivera says, and it often produces nothing but "greenwashing," where companies satisfy the letter of the law as quickly and as cheaply as they can rather than making a serous effort to innovate. (In some cases, this actually means an increase in environmental damage, as when harmful emissions are converted to less-regulated but more harmful forms.) And since "a lot of the big, obvious stuff has already been done," Rivera notes, it isn't really effective to mandate uniform change to bring about marginal gains. So to ward off excessive regulation, help the bottom line, and get brownie points at the same time, companies started playing nice with environmental groups.

Meanwhile, by the end of 2000, Greenpeace, Environmental Defense, et al. were realizing that the government wasn't a reliable ally anymore. Corporations started to look awfully appealing when the alternative was George W. Bush. Gwen Ruta, director of corporate partnerships at Environmental Defense, claims private initiatives are "the wave of the future," in part because "we're in a rather uncertain regulatory period. How aggressive will the government be in the next few years in creating regulations?

We don't know. And so we're looking to partner with companies to go beyond regulations." Unlike in the '80s, when an adversarial relationship with government simply sparked more grassroots enthusiasm, Bush's unwillingness to increase environmental regulation seemed contagious. The widespread excitement about saving the planet was spent, perhaps because the "a lot of the big obvious stuff" had already been done. And green activists weren't generating headlines the way they used to. The radicals broke away, with groups like Friends of the Earth and the Earth Liberation Front determined to continue in a pure anti-corporate vein, but well-established environmental groups decided their best option was to play nice.

As the environmental bureaucracy became an emasculated dispenser of the occasional award, many greens decided that they had no choice but to suck it up and try to figure out how to work with men who consider bowties a daring fashion statement. Ruta works with companies to help them "keep moving forward, aside from government regulation." Her project has brokered deals with McDonald's, Starbucks, UPS, Bristol-Myers Squibb, and Federal Express.

Oily P.R. Stunts

Environmental groups are (mostly) thrilled to have made so much progress--FedEx drivers in San Francisco use hybrid delivery trucks, Starbucks uses fewer disposable cups--but are still understandably wary of the corporations' motives. Perhaps you too suspect that companies are making nice with greens only for the good P.R. And perhaps you suspect that they only make changes when there's a profit to be made. If so, you are almost completely right.

But there are better and worse ways to strike the balance between the demands of shareholders and the demands of Greenpeace. For an example of a company apparently trying to single-handedly save the planet through expensive public relations alone, one needn't look farther than the corporate darling of serious environmentalists and greenish consumers alike: BP

BP is first among many companies that have opted to do their environmental penance in the glare of the spotlight. British Petroleum (recently rechristened BP, following KFC's model in removing unsavory words from its brand name) has been much ballyhooed for its commitment to the environment. Most of the ballyhooing is being done by BP itself.

A gas and oil company with $225 billion in revenue, BP is part of an industry that will keep environmental advocacy groups in business for as long at it exists. Yet these days BP is styling itself "Beyond Petroleum" and declaring that it's "thinking outside the barrel." BP's Environmental Team has crafted an elaborate advertising campaign and rebranding effort, recently expanded to the Web. Its goal: to convince the world that a company that sucks dead dinosaurs out of the earth, turns them into gasoline, and delivers that gas to SUVs can also be environmentally friendly enough to use a green and yellow sunburst (or is it a flower?) as its logo.

On the company's Web site, casual visitors can select from the following tabs: "About BP," "Environment and Society," and "Products and Services." In that order. Never mind that BP's spending on green projects constitutes less than half of 1 percent of its revenue. It publicly supports stricter pollution regulations and the Kyoto Protocols, the international agreement calling for reductions in greenhouse gas emissions, and gives money to groups that lobby for both. BP is selling itself as the anti-ExxonMobil.

ExxonMobil has long been a favorite target of environmental activists, especially since the tanker Exxon Valdez sank off the coast of Alaska in 1989, covering all those adorable Arctic animals in oil. Unlike BP, the company publicly opposes the Kyoto Protocols and has done so for years. That isn't its biggest problem, though. According to Robert L. Bradley Jr., president of the Houston-based Institute for Energy Research, one major reason environmentalists go after ExxonMobil is the company's history of funding free market groups such as the Competitive Enterprise Institute and the Heartland Institute (and Bradley's own organization).

Ironically, Exxon is also one of the biggest investors in clean technology. Their recent safety record is also significantly better than BP's. Says George Washington's Rivera, "The surprising thing about Exxon is that their facilities are run very well." Better, in fact, than BP's: After a March explosion at a BP plant in Texas City that killed 15 people and injured 170, the EPA and other agencies concluded that the deaths were preventable and that they were primarily the result of carelessness by BP management. The Houston Chronicle editorialized that "BP's carefully nourished image as an environmentally sensitive, innovative company is at odds with its history, particularly in the Houston area."

The Azure-Winged Shaggy Dog Story

But while Exxon spends its money on free market think tanks, BP has chosen more picturesque causes. Delve into its Web site and you'll find that BP is funding the Conservation Programme, which, among other things, sends students to Colombia to study "a species of parrot threatened with extinction." After an "intensive search across the Andes for several of Colombia's threatened parrot species" in 2002, "the team was the first to discover nests of the azure-winged parrot, the rusty-faced parrot and other threatened bird species."

If the rusty-faced parrot and his fine feathered friends aren't your thing, there's always the Iberian lynx. BP is "trying to involve our customers in the campaign to save the species by awarding them loyalty points that can be used to purchase guided tours through the lynx preserve or other promotional materials including t-shirts and calendars." It is also "mobilizing Malaysians to take action on climate change." One might be forgiven for wondering how BP is managing to take in hundreds of billions in oil and gas revenue, apparently in its spare time.

By exceeding expectations a little--and then making a big deal out of it--BP avoids getting singled out as a bogeyman. If environmental groups are going to choose someone to target, why not encourage them to choose your competitor? And if shareholders question the money spent "mobilizing Malaysians," they'll be glad enough when the next protest against the oil industry is held outside Exxon's headquarters instead of BP's.

The trouble is, there will always be someone who wants you to do more. Bradley has found allies against BP in an unlikely place: the far left. "They are very critical of BP because they know that 99.5 percent of their capital expenditures are related to fossil fuels, and a small increment is related to solar," he reports.

"ExxonMobil is still the bad guy, but we are getting increasingly frustrated with BP and Shell, which talk about climate change but put their money into" oil and gas, Roger Higman, an activist at Friends of the Earth, told The Guardian in 2003. "We are not going to be cozy with them because they are doing bad things."

The money BP spends to "partner" with environmental groups might look, from a certain angle, like a bribe to prevent protests. But the bribery goes both ways. Corporations are learning to respond to what Tom Murray of Environmental Defense says are "carrots in a system which is, in many ways, all sticks."

For the moment, the marriage of convenience between BP and environmental activists remains intact and fairly functional. But both sides recognize that they have struck a delicate balance.

Greening Home Depot

Home Depot offers another, perhaps more sustainable model of green-corporate cooperation. It decided to use its power in the lumber market to do some good--after a little gentle prodding from the Rainforest Action Network.

Ron Jarvis, now Home Depot's vice president of merchandising for lumber products, enjoys recounting the tizzy his career trajectory caused in environmental circles. In 1999 Jarvis' bosses asked him to leave his position as a regional merchandise manager and come to their Atlanta headquarters to serve as the environmental global product manager. A "shock wave went through some of the environmental groups," he says. They were aghast that "Home Depot had just taken one of their lumber guys and put [him] over the environment."

Politically speaking, the late '90s had been rough years for the company. The Rainforest Action Network (RAN) had targeted it for selling wood from illegally cut rainforests and old-growth forests. And when RAN targets you, expect more than a letter writing campaign. On May 25, 1999, the group announced a day of "ethical shoplifting" and encouraged its members to "borrow" timber from Home Depots across the country, which they later handed over to the FBI. A guy in a black bear costume affixed himself to one store's rafters and hollered through a bullhorn about Home Depot's failings. It wasn't clear that Home Depot, a national chain frequented by suburban men primarily interested in low prices and the horsepower available in competing models of riding lawnmowers, would have the will or the energy to transform itself.

In 2005 Home Depot sold more than $400 million in wood certified by the Forest Stewardship Council. It does not buy old-growth timber or wood from recently cleared rainforests. Its Web site boasts that "typical Team Depot activities include conservation projects, beautification efforts, and cleanups." Every Home Depot employee is required to keep an animal from an endangered species as a pet. (Just kidding about that last one.)

Four-hundred million dollars seems like a lot of wood, and Home Depot is the largest lumber buyer in the world. But its purchases account for only about 1 percent of the trees cut down worldwide. Still, says Jarvis, who has the authority to sever logging contracts with any supplier whose practices harm endangered forests or otherwise injure the environment, "Does that mean that we turn our back and walk away and say that we do not have a social responsibility, that the impact's not great enough? No."

Actually, as Jarvis recently reminded an audience at the Companies for Corporate Responsibility investor conference, Home Depot has been buying certified wood since 1994. The problem, it discovered, was that the supply of certified wood wasn't adequate; people still bought the cheaper, uncertified stuff if given the choice. After RAN's campaign grew more intense, Home Depot decided to use its market power to reduce the price of certified wood by selling it exclusively. The will, Jarvis says, was there all along. The company just needed a little reassurance that customers who wouldn't pay extra from conscience alone would still buy at Home Depot when asked to fork over a few more cents per two-by-four.

After creating a cruelty-to-endangered-species-and-old-tree-free lumber department, Jarvis and his team expanded their efforts to include the wood involved in manufactured products in other departments. They started in 10 major markets in the U.S. They "walked into a store, went to the far right-hand side, started with the first aisle," and worked their way across the entire store in four-foot segments, looking for merchandise containing wood, Jarvis recalls.

They weren't above a little creative destruction. "When you're standing in the ceiling fan aisle," and you think "there's no wood in there," don't be too hasty, warns Jarvis. "You grab something that looks like a plastic fan blade and you break it and splinters go everywhere…you say, OK, back to the drawing board."

They repeated such experiments throughout the store, then went to the supplier for every product that incorporated wood and said: "OK, we know who you are, we know what your product is, we know now how much we buy and sell of this product, we need to know from you exactly where this product is coming from." This applied "to levels, to hammers, to wood gates--everything."

After a year and a half of this, Jarvis was promoted to his current position: Officially he is the "merchandising vice president of wood products and building materials." Once again, the peanut gallery started to chatter. This time, Jarvis says, it was a "shock wave that went through the business community that Home Depot has just [taken] an environmentalist and put [him] over [on] their business side."

To call Jarvis an environmentalist is just as inaccurate as calling him a "lumber guy." He doesn't fit the stereotype of either. The problem, he says, is that environmentalists and their corporate counterparts "couldn't speak the same language for years."

The Poster Clown for Corporate Waste

Which brings us back to Bob Langert, the man who won an EPA award for McDonald's. He talks like a Midwestern businessman, which, of course, he is. He discusses the problems of "monitoring the supply chain," declaims on McDonald's "holistic approach," and often refers to his area of expertise as "waste management." It's easy to imagine how this kind of talk would make "speaking the same language" a near-literal as well as figurative problem in pow-wows with greens. "At McDonald's," Langert says, "we like to roll up our sleeves and get things done." Naked tree sitters have no sleeves.

Langert lacks the traditional trappings of a global environmental mover-and-shaker. He does not appear to own any clothing made of hemp. He has never chained himself to anything or picketed outside the gates of an industrial polluter--or at least didn't admit to doing such things in a phone interview.

But the first thing that Langert wants to make clear is that he was present when corporate environmentalism was conceived. "I was working on packaging issues back in the late '80s," he remembers. Back then, a garbage barge was making headlines looking for a place to dump trash that no longer fit into existing landfills, recycling was taking off, and Ronald McDonald was the poster clown for corporate waste. As a defensive measure, says Langert, McDonald's became "one of the first companies to partner with an NGO" (nongovernmental organization). At the time, the group was known as the Environmental Defense Fund. (Following the examples of BP and KFC, it recently dropped the last word, perhaps averse to a moniker that suggested too much of an interest in lucre.)

BP's extravagant rebranding, and Jarvis' bold optimism about the impact that Home Depot can make on its market (corporate policy, he says, goes "much further than the 1 percent that you actually buy"), contrast with Langert's more staid approach at McDonald's. "At the end of the day we're a restaurant company, we're a retailer," says Langert. "We influence our suppliers, but we're not in agriculture….We only have so much influence."

The Greenpeace-Big Mac Ceasefire

But Langert's provincial r?sum? contains some very ambitious, cosmopolitan projects. Employing another pat boardroom phrase, Langert notes that he "led the charge" to create the first HFC-free McDonald's restaurant, the one that eventually won recognition from the EPA, which opened in Denmark in 2003. HFCs (hydrofluorocarbons), which are produced by conventional refrigerants, have been fingered as a major cause for concern on climate change--Greenpeace calls them "one of the most potent global warming gasses ever invented."

In the run-up to the 2000 Olympic Games in Sydney, Greenpeace threatened a campaign against companies (at the time sponsoring a "green" Olympic village) that failed to invest in new refrigerant technology. Greenpeace advocated propane as an alternative coolant, but "we didn't agree with their solution," says Langert, mostly because propane is "flammable, explosive. And we're not taking any safety risks." McDonald's partnered with Coca-Cola and other suppliers to develop a carbon dioxide?based cooling system. Then it built its prototype in Denmark.

As it turns out, the Denmark store uses a lot less energy--17 percent less--than a regular McDonald's. The hardware costs are higher, since McDonald's had to design many units from scratch, but the energy savings are incentive enough to keep working on the technology because of the long-term savings it provides. "We just had another refrigeration summit meeting," says Langert. He thinks it is important to encourage voluntary cooperation with other players, because "we need others demanding industry standards. We can't do it alone."

Even Greenpeace likes the results. "It's good," it announced in a press release about the EPA's Climate Protection Award, "to see Coca-Cola, McDonald's and Unilever stepping up with solutions. We look forward to continued work with these companies to reduce global warming emissions." Don't get too happy, though: "As always, Greenpeace approaches our relationships with these corporations very deliberately and seriously. While we are proud of our continuing work with Coca-Cola, McDonald's, and Unilever on green refrigeration technology, it is obviously not a Greenpeace stamp of approval on the overall environmental and social footprints of these companies."

As that last sentence implies, relations aren't always easy between the two groups. Corporations don't trust the environmentalists because they are forever being undermined by statements like the one above. And environmentalists don't trust corporations because they know that companies are exploiting their relationships with environmental groups for the good P.R., and still really care more about the bottom line than anything else. Both parties are right to be suspicious. In fact, both parties are pretty much correct about their opposites.

Even those green-collar workers who hop back and forth between activism and industry don't get along perfectly with the environmental movement. When activist and corporate types first started to mix, they reported back to their respective HQs that the other guys weren't so bad. "We have met the enemy," they said, "and they are us--almost." Bob Langert works with a mix of business school and environmental science grads at McDonald's. This mix is crucial, says Langert, because "if you're strictly a business person you might not have the vision and the passion to change the world." But if you are only a green you might not be able to work with "partners and suppliers" by "using rational arguments that our business partners believe in." For a man with Bob Langert's history, rational is a key word. It's telling, then, that even while trying to praise his green partners Langert manages to gently suggest they're a bit loony.

On the flip side, Environmental Defense's Tom Murray is eager to sing the praises of his corporate partners--up to a point. "My impression of the people that I have worked with is that they are very passionate about the environment," he says. "But I am an advocate for the environment. They have to answer to shareholders." Don't get him wrong, he pleads, generously offering that corporate environmental officers are "in many ways just as passionate about the environment" as he is (emphasis added).

"We Deserve a Break Today!"

Langert, who is 49, says he knows he predates Murray's generation, which takes corporate cooperation on environmental initiatives for granted. He's sanguine about the future of the alliance, even as he looks with a jaundiced eye at some of his greener colleagues. He notes that he has had a career trajectory that they could do worse than to imitate. He says he has "managed to do the right thing, somehow, fairly often." He pauses, then sums up corporate environmentalism in a single tidy sentence: "We were willing to invest money into something, but if is really going to be sustainable, it has to be economical as well."

Home Depot's Jarvis conveys the same sentiment in another way. He recounts a warm and fuzzy tale of an encounter with an official from the U.S. Forestry Service, who said the service's conservationists had been trying to "get things going in Cameroon or Brazil," mostly to no avail. But once Home Depot "used the power of the purchase order," Jarvis say, suddenly "those forestry ministers started coming to us, [saying], 'How can we make our forests more sustainable? We cannot afford to lose the dollars of commerce that came from the Home Depot into our forest.'?"

McDonald's executive Mats Lederhausen puts it more colorfully. Lederhausen was instrumental in instituting green-friendly policies when he ran McDonald's Sweden. Swedish McDonald's, not to be outdone by its Danish neighbors and their fancy HFC-free prototype, buys all of its energy from renewable sources and serves organic food. Lederhausen has long argued that "doing good is good business" and apparently can get quite upset at the environmental movement's residual anti-corporatism. When he was asked, by author Marc Gunther, to respond to the criticism that McDonald's could be truly socially responsible only by shutting down, he fired out this reply: "That really pisses me off, quite frankly. You don't attract 46 million customers daily by happenstance. You do it because you fill a need that is pretty strong and because your products are pretty damn good. I'm not saying there aren't a lot of things we can do better. But, I mean, give us a break. We deserve a break today!"

It's nice to get back a little bit of that mean old corporate bogeyman that we used to love to hate, isn't it??