Environment: Capitalist Conservationists

ORIGINALLY PUBLISHED IN THE FINANCIAL TIMES

Environment: Capitalist conservationists

Businesses are taking the lead in proposing green strategies but they need government direction

By Pilita Clark, Financial Times, June 4, 2012

At first glance, a windswept plain in northern Oregon might not seem the most obvious spot for Google to be spending $100m.

But this is where one of the world’s biggest wind farms is taking shape and the money the internet group has put into it is just a slice of the $915m Google has invested in renewable energy projects over the past two years.

It is not alone: on the other side of the world, the parent of the Danish toy group, Lego, is spending around DKr3bn ($500m) on a wind farm off the German coast. Sweden’s Ikea has a collection of wind farms located from Scotland to France and Germany.

“We have no desire to become a power utility,” says Rick Needham, Google’s head of energy and sustainability. Neither do Ikea or Lego, but what all three do want is to promote the use of green electricity.

Observers might ask: so what? Companies have been brandishing their environmental credentials since at least the 1980s, the decade when Ed Woolard, then chief executive of the DuPont chemicals group, said CEO stood for “chief environmental officer” at his company (then under fire from critics who labelled it one of the world’s worst polluters).

But something different is happening now. A small but prominent group of companies has begun to adopt far grander green strategies requiring large outlays of money and a change to the way their businesses operate.

This more thrusting version of corporate sustainability may itself prove unsustainable. And it is easy to dismiss it as merely another public relations tactic in an age when the term “greenwash” – using green PR to whitewash corporate misdeeds – has entered everyday language.

While some companies certainly are parading their green credentials as a marketing strategy to court consumers who are ever more responsive to environmental issues, many businesses do appear to be moving well beyond greenwash. Some believe we are at the beginning of a fundamental shift in corporate behaviour that will intensify as companies face increasingly severe problems from soaring population and limited resources.

That will be the message in the Brazilian city of Rio de Janeiro later this month when more than 100 world leaders gather for the UN’s Rio+20 sustainability conference, named because it comes 20 years after the 1992 Rio earth summit.

Business leaders will play a greater role this year than in previous meetings, with many saying that companies are now at the vanguard of crafting initiatives, while governments repeatedly fail to agree effective or policeable policies for sustainable global growth.

Business involvement in the 1992 summit was trifling, says Rachel Kyte, vice-president of sustainable development at the World Bank. “It was a different era.”

Modest hopes pave way to Rio

It is supposed to be the biggest conference the UN has ever organised, a historic chance for world leaders to address a long list of global environmental and social woes.

But with only weeks to go before the UN conference on sustainable development gets under way in the Brazilian city of Rio de Janeiro, it is still far from clear what it will produce.

More than 100 leaders are expected to attend the Rio+20 conference.

But not Barack Obama, US president, who is in the middle of an election campaign. Germany’s chancellor, Angela Merkel, and Britain’s prime minister, David Cameron, will also be absent.

And some who had initially planned to come, including a European Parliament delegation, abandoned the idea when confronted with stratospheric hotel prices in a city with an estimated 33,000 beds for an anticipated 50,000 summit visitors.

It has not helped that some hotels insisted that guests book for at least a week even if they only wanted to come for a few days – hardly a heartening omen in a city due to host the 2014 World Cup and the 2016 Olympics.

Some problems have been beyond the organisers’ control. The original summit date had to be pushed back because it clashed with Queen Elizabeth’s diamond jubilee in Britain.

No one could have known that meant the conference would be held in the same week that Greece would hold an election critical to the fate of the eurozone.

But many are more concerned by the negotiations on the summit outcome itself. They have been so fractious that diplomats were still meeting in New York last week to try to turn a rambling final text into a more focused political document.

“There seems to be a lack of urgency, which is worrying,” says Peter Paul van de Wijs of the World Business Council for Sustainable Development.

“What’s on the table is completely inadequate for an earth summit,” adds Daniel Mittler, political director of Greenpeace International. “These kinds of events should be about making transformational changes.”

But some remain optimistic. “Things have moved on considerably in the last few days,” said Farooq Ullah of the Stakeholder Forum sustainability group. “I think we will get to a reasonably good point with the outcome document.”

By contrast, executives are this year expected to account for one of the largest non-government groups in Rio, and will meet for several days ahead of the formal summit. They will devise their own sustainability strategies and deliver them to officials.

“It’s designed to feed into governments on a quite large and ambitious scale and it’s the first time this has happened,” says Georg Kell, executive director of the UN Global Compact, a green business initiative behind the move.

What this will achieve is still unclear. But the gathering in Rio will nonetheless highlight that it is harder for a company to try to pass itself off as a green champion by planting a few trees in an Indonesian rainforest or publishing a sustainability report.

Today, some corporations are making far more radical changes. Walmart, the retail group, is driving thousands of suppliers to make greener goods. Puma, the sports goods maker, has introduced an environmental profit and loss account to prioritise which parts of the business to make greener. Under pressure from Greenpeace, McDonald’s has promised not to sell chicken fed on soy beans, a crop responsible for deforestation in the Amazon.

Many observers note the number of companies taking such steps remains small and doubt whether companies – whose ultimate objective is profit – can really steer the agenda without far more robust direction from governments. Dirty heavy industry and oil companies face particular criticism for peddling greenwash.

Still, many companies undoubtedly feel under more immediate pressure to overhaul their business models amid forecasts that the world’s population will jump from 7bn to 9bn by 2050, largely driven by emerging economies. The consequent strains on water, food and energy resources have encouraged many executives to imagine how their businesses might cope with – or exploit – a world of $150-a-barrel water, let alone oil.

Read the complete article online at http://www.ft.com/cms/s/0/efc1983e-ae5e-11e1-b842-00144feabdc0.html#ixzz1x7hXvDEi.