Corporate ecology gets seriously green
Since the first Earth Day almost 37 years ago, U.S. companies have been eager to trumpet their environmental good deeds, even when they were more about public relations than clean air or water.
But increasingly, corporate America is going green in new, serious and costly ways. After years of being prodded -- and in some cases punished -- by protesters, lawmakers, regulators and, now, even Wall Street, businesses are looking beyond the bottom line.
“You see a growing awareness that these issues are significant and evolving, a sense that the public has expectations of responsible corporate citizenship and that increasingly extends to the environment,” said Tom Jacob, a Western regional executive for DuPont Co., a chemical company with a history of being criticized by environmental activists and regulators.
And it’s not happening just in California, the Northwest and other ecologically minded areas. In Texas, a group of private investors last week agreed to pay about $32 billion for the largest utility in the state. The private equity firms pledged to back U.S. legislation on global warming and to build no more than three of 11 planned coal-fired power plants.
Environmental concerns are spreading quickly, said Carl Pope, executive director of the Sierra Club. “Other states now think that California is onto something that is good for business,” he said. They “are talking about the fact that since 1970, California’s economy has grown faster per capita than their states.”
Although some activists and business executives are skeptical that a change in attitudes is at hand, business is increasingly paying closer attention to the environment -- including the environment’s effect on the financial bottom line.
Amy Domini, manager for Domini Social Investments, which manages $1.6 billion in investments intended to be socially responsible, calls corporate environmentalism “the big hot topic on Wall Street these days.”
Just how hot became evident Monday after private equity investors led by Texas Pacific Group and Kohlberg Kravis Roberts & Co. announced that they were buying Texas’ TXU Corp. in a deal that included commitments to scrap most of the coal-fired power plants planned by TXU.
Environmentalists, who sat at the table during part of the negotiations, also won a promise from investors to double investments in wind power and other sources of alternative energy.
The agreement is the latest sign that corporations and environmentalists can do business together, said Denis Hayes, the coordinator of the first Earth Day in 1970.
“There is the beginnings of a new corporate ethic driven in some large measure by responsiveness to consumers and by the infiltration of a new generation of people into management,” he said.
The emerging environmental ethic is starting to influence corporate decision-making across the country.
Chevron Corp., BP and other oil companies are spending billions of dollars to develop alternatives to petroleum-based fuels. Farmers are turning fields of corn into ethanol used to run cars and trucks.
Auto companies, led by Toyota Motor Corp., are selling tens of thousands of almost emission-free hybrid vehicles and are moving toward developing so-called plug-in hybrids that can take commuters to and from work on a single charge.
Wal-Mart Stores Inc., the nation’s largest retailer, has embarked on a $500-million-a-year campaign to save energy in all of its U.S. stores and distribution centers.
And even Hollywood is adding a touch of green to its color palette. The organizers of last week’s Oscar ceremony boasted that they hosted a “carbon neutral” event by using recycled paper, ferrying people in hybrid vehicles and serving organic food.
The entertainment industry has been instrumental in raising public consciousness about climate change. Hollywood producers Laurie David and Lawrence Bender, for example, made “An Inconvenient Truth,” former Vice President Al Gore’s Oscar-winning, top-grossing documentary about global warming.
Environmental investments by venture capitalists are soaring. This week, Cleantech Venture Network, a green-business clearinghouse, reported that North American and European investments in alternative energy and eco-friendly technology reached a record $3.6 billion last year, up 45% from 2005.
Much of that investment came out of Silicon Valley and elsewhere in California, where business executives have decades of experience dealing with tough laws to control pollution, clean up toxic waste and protect the public from cancer-causing chemicals.
California and, increasingly, its neighbors are continuing that kind of environmental leadership. This week, governors from five Western states pledged to cooperate in enlisting government agencies and the private sector in the fight to curb global warming. The governors of Arizona, California, New Mexico, Oregon and Washington said they were taking action because of a lack of leadership from President Bush and Congress.
“We are working on every angle to fight global warming,” California Gov. Arnold Schwarzenegger said.
The TXU deal and the governors’ agreement are two signs that environmental concerns are forcing business to move beyond the public relations campaigns that critics denounce as so-called green-washing.
No longer is it enough for Chevron to brag about how it protects the endangered El Segundo Blue butterflies living near a refinery. Now, it’s about making major investments in technologies that will calm public fears about rising ocean levels, an effect of global warming.
“There has been an evolution here in our approach,” Chevron spokesman Donald Campbell said. “The cost savings, the impact on the environment, the public’s concern about emissions and the business opportunities were all starting to come together in different parts of the company within the last few years.”
Chevron, based in San Ramon, Calif., has invested in researching the use of biodiesel and next-generation ethanol fuels. It has reduced its own energy use and runs a subsidiary that sells energy-saving projects to governments and companies.
“We’ve gotten beyond green-washing,” said David G. Hawkins, head of the climate program for the Natural Resources Defense Council, who helped negotiate the TXU sale. “Businesses are realizing that global-warming solutions have to be a core element of a business strategy.”
Companies like TXU that have followed a traditional investment model in which the environment isn’t a high priority are seeing their plans dashed by “public opinion, legal challenges and jitters in the financial community,” Hawkins said.
Building all 11 coal plants could have become a financial disaster if the federal government eventually began to tax and regulate greenhouse gas emissions, he said.
Now, industry is “becoming increasingly aware of the opportunities with getting on this bandwagon -- that it could be good for business,” said Dorothy Rothrock, vice president of the California Manufacturers & Technology Assn.
abigail.goldman@latimes.com
janet.wilson@latimes.com
Times staff writer Elizabeth Douglass contributed to this report.
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Carbon-based concessions
TXU Corp., the largest utility company in Texas, agreed last weekend to be acquired by private investors for $32 billion. As part of the deal, which must be approved by stockholders and regulators, the utility would:
STOP efforts to obtain permits to build eight coal-fuel power plants in Texas.
STOP expansion of coal operations to other states.
REDUCE carbon dioxide emissions to 1990 levels by 2020.
ENDORSE a call for a federal law putting a mandatory cap on carbon emissions.
Sources: TXU Corp., Environmental Defense
