November 2010

Investments in genocide, hidden from view

November 30, 2010

Here’s what Eric Cohen, the chairperson of Investors Against Genocide, told a congressional hearing today:

It has been over 12 years since the U.S. imposed sanctions on Sudan and noted serious human rights abuses, seven years since the Darfur genocide began, six years since Congress declared it a genocide, and five years since the movement for targeted divestment from Sudan began Yet most financial institutions are still investing in the worst companies funding the genocide, and, through the fund offerings of these investment firms, millions of Americans are caught in the web of these problem investments, almost always unknowingly and without the possibility of choosing.

Tragically, he’s got a point. Better, he’s got a proposal–a requirement that mutual funds disclose whether they chose to be “genocide-free,” which is simpler than it sounds. Better yet, he had a receptive audience on Capitol Hill–Rep. Gregory Meeks of New York and Gary Miller of California, who are the chairman and ranking member of a subcommittee of the House Committee on Financial Services, as well as such interested legislators as Mike Capuano of Massachusetts, who has been active on Sudan issues. Congress could act to mandate fuller disclosure from the mutual fund industry next year.

Genocide in Darfur

Investors Against Genocide has been campaigning against money management firms that own stock in companies that do business in Sudan since 2006. (See Fidelity’s Sudan Problem at fortune.com and  Fidelity, Vanguard and the genocide in Darfur) The group has asked financial institutions to avoid investments in foreign firms that are known to substantially contribute to genocide or crimes against humanity, an approach it calls “genocide-free investing.” (U.S. companies can’t operate in Sudan) Socially responsible mutual fund families Calvert Investments and Domini Social Investments have also taken a leadership role, cleansing their portfolios of companies doing business in Sudan and asking others to do so. As Domini’s general counsel, Adam Kazner, told the submcommittee:

Investors are not simply passive actors in this system – they are playing a critical capital allocation role, and should be mindful of the implications of their investment decisions.

Congress has stepped up to the plate before. In 2007, it passed the Sudan Accountability and Divestment Act (SADA), which prohibits the government from contracting with companies doing business in Sudan and supports state and local divestment efforts. Thirty-five U.S. states have enacted legislation or adopted policies affecting investments related to Sudan, primarily in response to the Darfur crisis and Sudan’s designation by the U.S. government as a state sponsor of terrorism.

So what’s the problem? Essentially this–a small group of foreign companies continue to operate in Sudan. According to Cohen:

In Sudan, the CNPC group (including PetroChina), the Sinopec group, Petronas and ONGC are internationally recognized as providing the government of Sudan with the funding needed to support the genocide in Darfur. The government of Sudan has used 70% of its oil revenue to provide arms and funding for the genocide. Some of these same problem companies are also active in Burma and Iran.

Some U.S.-based mutual funds then invest in those companies. Fidelity, Vanguard and Franklin Templeton have been singled out by Investors Against Genocide for holding shares in Chinese oil companies.

No one from the  fund industry testified before Congress. Fidelity has said that stopping the genocide is a matter for government officials, not mutual fund managers, while Vanguard has said it has a human rights policy, while continuing to invest in companies doing business in Sudan.

Shareholder proposals calling for divestment were defeated at Vanguard and Fidelity funds, but that’s no surprise since most mutual funds investors automatically vote their proxies with managements. It’s safe to say that most investors would rather not see even a tiny fraction of their money supporting genocide in Sudan, or winding its way to Iran or Burma, with their terrible human rights records.

Investors Against Genocide has scored a couple of big victories. TIAA-CREF, to its great credit, first lobbied the Chinese oil firms to get out of Sudan and then sold its holdings. (Here’s the fund’s announcement.) The American Funds group also sold its stock in PetroChina, but did so without explanation.  Cohen told me: “I congratulate them even though they won’t say anything publicly.”

Some investors have taken note. Last May, the Unitarian Universalist Association’s Board of Trustees announced that it would end a 10 year relationship with Fidelity and move their $178 million retirement accounts to TIAA-CREF in order to be genocide-free.

You can read all the testimony, as well as a GAO report on the issue, here. Cohen’s testimony provides specifics on how genocide-free disclosure would work. Mutual funds would be required to disclose if they have a policy prohibiting investments in countries that have been subject to U.S. government sanctions for human rights violations. Right now, they report on their holdings only once a quarter, and their human rights policies, if any, can be hard to find.

Says Cohen: “Right now you need a doctorate in research to have a clue about who’s on what side.”

This seems like a classic example of investors’ right to know. Transparency would shed some light on the values of the investment firm, and we can hope that markets would do the rest.

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Cancun can’t: Ten reasons why the climate talks will fail

November 29, 2010

For the next couple of weeks, thousands of government officials, NGOs, environmental activists and reporters will gather in Cancun, Mexico for international climate negotiations, officially known as the Sixteenth Conference of the Parties (COP-16) of the United Nations Framework Convention on Climate Change (UNFCCC). It’s fitting that the talks are being held in a vacation resort, where people go to escape–because only by ignoring what’s happening in the rest of the world is it possible to take these UN negotiations seriously.

Heading into the Cancun talks, expectations are low. They aren’t low enough. Here are 10 reasons why it will be hard, if not impossible, to bring about meaningful action to curb global warming through this UN process. Many are admittedly U.S.-centric, all of them matter and if you want to skip ahead through this unusually long post, No. 10 is the biggest reason why I doubt that these Cancun talks, or the successor negotiations–COP17 in South Africa, COP18 in South Korea, etc.–will get us the change we need.

So as not to be too gloomy, I’ll conclude with a thought or two on what might work instead…but first the discouraging news.

What's the climate equivalent of a river on fire?

1. Global warming pollutants are invisible. So it’s hard to get people to care about them. Winning broad public support to regulate soot or smog or soiled rivers or polluted beaches iseasier. A 1969  fire in the Cuyahoga River in Cleveland lasted just 30 minutes, but it helped fuel the environmental movement and  passage of the Clean Water Act in 1972.

2. The costs of curbing climate change are immediate and the benefits are in the future. Any effort to reduce emissions will cost money because low-carbon energy sources (solar, wind, nuclear) are more expensive than burning fossil fuels. Electric cars are pricier than gas-powered vehicles. But Americans don’t like to sacrifice today for a better tomorrow. We’re lousy at saving. Instead of  raising taxes or cutting government benefits, we run up huge deficits that will burden future generations. Government debt is close to 90% of GDP. Deferred gratification is not our strong suit.

3. Environmentalists have been disingenous about the climate issue. They’ve argued that regulation of carbon dioxide will create green jobs and grow the economy. Typical is this graphic from Environmental Defense. (“Get a step-by-step picture of how a carbon cap will spark new jobs, lift the economy and clean the air.”) Uh, no. Most economists agree that dealing with global warming will entail short term costs. (See Eric Pooley’s excellent analysis at Slate.) Their estimates of those costs are generally in the range of 0.5 to 1% of U.S. GDP (Harvard’s Robert Stavins) or 1 percent of global GDP (The Stern Review, PDF). The costs of inaction will eventually be much greater. But carbon regulation will likely slow economic growth in the short run by raising energy costs. It’s not a free lunch, and we should be honest about that. [click to continue…]

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Natural gas: friend or foe of sustainability?

November 28, 2010

Most environmentalists would cheer the discovery of cheaper ways to generate electricity from wind or solar power. They would lament the news that prices are dropping for dirty fuels like coal or oil. But what about natural gas? Are abundant supplies and low prices for natural gas good for the environment–or not? Is natural gas a “bridge” to a clean energy future? Or is it a detour?

That’s the topic of a free webinar that I will moderate on Tuesday, November 30, with natural-gas experts Geoff Styles and David Hone at The Energy Collective. To register, click here.

These aren’t hypothetical questions, of course. Natural gas supplies are growing and prices are down. As The Walt Street Journal reported last year:

A massive natural-gas discovery… in northern Louisiana heralds a big shift in the nation’s energy landscape. After an era of declining production, the U.S. is now swimming in natural gas.

…Huge new fields also have been found in Texas, Arkansas and Pennsylvania. One industry-backed study estimates the U.S. has more than 2,200 trillion cubic feet of gas waiting to be pumped, enough to satisfy nearly 100 years of current U.S. natural-gas demand.

Some people will tell you this flood of natural gas will displace coal, and thereby reduce carbon emissions. This was the theme of a recent [click to continue…]

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Why acai? Ask the Sambazon guys

November 23, 2010

Jeremy and Ryan Black, with acai

Sometimes, for an entrepreneur, not knowing what you are getting into is a blessing.

If brothers Jeremy and Ryan Black had known what they were up against back in 2000 when they started Sambazon, a company that makes juices, sorbet and smoothie packs from tiny purple berries that grow in the Amazon forests of Brazil, they might not have bothered.

Few Americans then had heard of acai, or knew how to pronounce it. (It’s ah-sigh-ee.) The little berries from tall skinny palm trees can be harvested only once a year, they must be frozen right away to retain freshness and then shipped to the U.S. It’s a cash business, so importers must pay farmers long before the products are sold. And who, for goodness sakes, would sell them?

Harvesting acai

Nor did Jeremy or Ryan know much about the food business. Jeremy, the older bro, who’s now 37, was a financial planner. Ryan, who’s 35, was pursuing a professional football career as a defensive back, hoping to get to the NFL, after a season in the European football league.

All they knew was one thing. “Acai is amazing,” says Jeremy. And they had an idea that if they could figure out how to turn acai into a real business, they could not only do well for themselves but do some good for farmers in the Amazon. Says Ryan: “If this berry became a household word, it could be a really strong force for sustainability in the Amazon.”

It’s taken the Sambazon guys a decade, but things are looking up these days for their company. The No. 1 producer of organic acai, Sambazon doesn’t disclose sales–they were reported at $25 million in 2008–but the company says it is profitable. It employs about 150 people, half of them based in Brazil. You can find its products not only at smoothie bars and Whole Foods, but at mainstream retailers like Safeway and Giant. And the investors in the privately-held company include savvy food guys like Steve Demos, who founded White Wave and put Silk soy milk on supermarket shelves, and Gary Hirshberg, the CE-Yo of Stonyfield Farms. They also secured investments from Root Capital, a nonprofit social investment fund that’s intended to support sustainable livelihoods in the developing world, and from the EcoEnterprises fund run by The Nature Conservancy. [click to continue…]

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Sustainable Excellence: Is it enough?

November 21, 2010

Last week was a terrific week for corporate sustainability. Unilever unveiled a bold plan to reduce its environmental impact and Chevrolet — Chevrolet! — announced $40 million of carbon reduction projects. Forestry giant Georgia Pacific–owned by the Koch brothers, of all people–signed an agreement to protect endangered forests in the southern U.S., winning praise from the Dogwood Alliance and NRDC. Greenbuild, the world’s largest convention on environmentally-friendly buildings, attracted 1,000 exhibitors and 27,000 people to Chicago. Wow.

None of this will surprise readers of  Sustainable Excellence: The Future of Business in a Fast-Changing World (Rodale, $25.99) by Aron Cramer and Zachary Karabell, a smart, readable and provocative book that argues that business success in the long run will be earned by companies that “integrate consideration of society and the environment into their DNA.”  As CEO of Business for Social Responsibility since 2004, Aron has had a front-row seat (actually, a place on the field) from which to track changes in how business is being done, while Zachary is an accomplished journalist and scholar who also did a stint as a Wall Street money manager. Together, they have provided a map of the ever-evolving  business landscape, along with valuable guidance to executives who must deal with a range of sometimes competing pressures on companies to do good and to do well.

What’s the business case for sustainable excellence? They write:

What has made sustainable excellence necessary is the simple imperative of maintaining profitability in a world altered by a trio of interlocking challenges: the financial crisis that hobbled the economy, the rise of the emerging world and the increased urgency to decouple economic growth from natural resource consumption.

In short, the drive to integrate sustainability into business is a function of thousands of companies recognizing that now and in the future, this is the only viable path forward.

Aron and Zachary tell stories about GE, Google, DuPont, Shell, Levi-Strauss, BP, PepsiCo, Starbucks and Coca-Cola, among others–companies that, to varying degrees, are redefining themselves to deal with the long-term trends they’ve identified, and to meet the rising expectations of business that come from their employees, their customers, communities and NGOs. [click to continue…]

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Amanda Little: Take me out to the (green) ballgame

November 19, 2010

Today’s guest column comes from Amanda Little (née Griscom), one of my favorite writers on energy and the environment, and it’s on a very timely topic–the greening of sports. Amanda is the  author of Power Trip: The Story of America’s Love Affair With Energy, and she was a long-time columnist for Grist.org and Salon.com. Amanda has also written for Outside, the New York Times Magazine, Vanity Fair, Rolling Stone, Wired, New York, InStyle, O Magazine and the Washington Post. She is the recipient of the Jane Bagley Lehman Award for excellence in environmental journalism. Amanda’s now blogging for Forbes.com, where this column originally appeared.

Why is it timely? Because just the other day, the Philadelphia Eagles unveiled plans to install solar panels, wind turbines and a co-generation plant at Lincoln Financial Field, making the stadium quite possibly the “greenest” in the sports. The gridiron goes off the grid, you could say. And if you think sports is a sandbox, with little impact on the “real world,” think again, about, say, Jackie Robinson’s influence on the civil rights movement. If you want to change the minds of people at the grass roots, about climate or energy or recycling, there’s no better place to start than with sports.

As the San Francisco Giants celebrate their 2010 World Series triumph, they’re quietly coveting another, humbler feat—one that’s perhaps no less historic in the long run. The Giants are one of the greenest teams in professional sports, and they’re proving that sustainable practices fatten the bottom line even as they ease the burdens on the planet.

Their stadium, AT&T Park, which accommodates about 45,000 fans, runs its scoreboard on solar power, recycles and composts nearly 50 percent of its waste, sources eco-friendly napkins, containers, utensils, toilet paper and the like, and has enough efficiency features to cut the stadium’s annual energy and water bills in half. That amounts to huge savings, given that stadiums can consume as much energy as small cities.

AT&T Park: Green in more ways than one

The Giants are on the front end of a trend that’s quickly gaining traction in major league baseball and throughout the NFL and NBA. Teams are stepping up recycling and efficiency in their facilities, attracting lucrative corporate sponsorships with green messaging, and raising consciousness among fans. If the trend continues to build in the next two years, we may find that games do more to push environmental progress in the U.S. than politics.

Especially now, given the acrimony in Washington, professional sports may have a broader and more profound influence than any other single entity on American mindsets, slicing through socioeconomic and political divides. “More than 150 million Americans – half our population – regularly follow professional sports,” Allen Hershkowitz, Senior Scientist at Natural Resources Defense Council, told me. Hershkowitz founded the NRDC project greensports.org, a pro-bono consultancy that advises teams and leagues on environmental strategies.

For nearly a century, professional sports have galvanized social movements and ginned up American patriotism. Baseball, for instance, desegregated a decade before the nation did, helping catalyze the civil rights movement. Women’s basketball and softball leagues were organized before women had the right to vote. [click to continue…]

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Climate leaders: Chevy, NRG Energy and the Eagles

November 18, 2010

While the new Congress appears likely to do nothing, or worse, to deal with climate change, and while expectations of the upcoming UN negotiations in Cancun are lower than low, GM’s Chevrolet, NRG Energy and the NFL’s Philadelphia Eagles today all announced climate actions — which suggests that business will keep moving towards sustainability, with or without prodding from the government.

Briefly, the most entertaining news of the day is about the Eagles. (After last week’s Monday Night Football game,  I was tempted to write a headline saying: Philadelphia beats Washington, again! ) The team is installing 80 wind turbines, 2,500 solar panels and a 7.6 megawatt on-site dual-fuel cogeneration plant (which can operate on bio-diesel or natural gas) at Lincoln Financial Field, which may well be, as the team boasts, the greenest sports stadium in the world. Here’s a mockup of the stadium provided by the Eagles.

“This is one of the most exciting things to take place in Philadelphia,” the city’s mayor, Michael Nutter, at ceremonies shown on the web. “Having partners like the Philadelphia Eagles makes going greener much easier.”  Jeffrey Lurie, the owner of the Eagles, and his wife Christina expressed their passion for the “Go Green” initiative, which includes recycling, composting, water conservation as well as renewable energy. (The Eagles even planted 4,000 trees in a Louisiana state park to offset team travel.) Said Christina Lurie: “The Eagles have embarked on a never-ending sustainability journey.” [click to continue…]

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Coal’s unknown (and unknowable) future

November 17, 2010

One reason why the energy business is so fascinating is that smart, thoughtful and well-meaning people can look at the same facts and come to dramatically different conclusions.

Two examples just came across my desk: the cover story in the new issue of The Atlantic and a report out today from DB Climate Change Advisors, both with a focus on coal.

In The Atlantic, James Fallows–one of my all-time favorite journalists, who’s worth reading on a wide range of topics–argues that clean coal offers the best hope of dealing with the threat of climate change:

To environmentalists, “clean coal” is an insulting oxymoron. But for now, the only way to meet the world’s energy needs, and to arrest climate change before it produces irreversible cataclysm, is to use coal—dirty, sooty, toxic coal—in more-sustainable ways. The good news is that new technologies are making this possible.

He reports in detail on China’s efforts to “decarbonize” coal by investing in carbon capture and sequestration (CCS). Duke Energy is engaged in a joint venture with a big Chinese energy firm, Huaneng, to research clean coal.

Essentially, Fallows argues that we need an “all-of-the-above” approach to reduce greenhouse gas emissions–one that encompasses renewable energy, nuclear power, efficiency and especially coal, which is abundant in the U.S. and China. Fallows quotes Duke’s chief technology officer, David Mohler:

“Emotionally, we would all like to think that wind, solar, and conservation will solve the problem for us,” David Mohler of Duke Energy told me. “Nothing will change, our comfort and convenience will be the same, and we can avoid that nasty coal. Unfortunately, the math doesn’t work that way.”

Fallows goes on to say:

Precisely because coal already plays such a major role in world power supplies, basic math means that it will inescapably do so for a very long time.

But can we forecast the energy future using “basic math”? Perhaps. As Fallows notes, technological process in the energy arena has been painfully slow, not just in recent years, but for decades. The energy business is not like infotech or telecom; it’s slow to change and hugely capital intensive, as Silicon Valley venture capitalists are learning, to their dismay. “Energy production is essentially what it was in the time of James Watt,” Fallows writes, citing nuclear power as the most important exception. [click to continue…]

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Saving a laptop, saving a life

November 16, 2010

Inside every Hewlett Packard laptop, and perhaps others as well, I’m told, is a tiny device–a sensor–known as an accelerometer. It’s just what it sounds like, a way to measure acceleration. Should you accidentally drop your laptop, the sensor’s job is to protect the hard drive from damage by sending a signal to park the read/write head away from the drive. Amazing, no? (Please do not test this out at home.)

Jeff Wacker

I learned this today from Jeff Wacker, an HP Fellow, a researcher and a futurist,  who came to Washington to talk to policy-makers and reporters about HP’s work on sensors, and how they will change the way we interact with the world.  Sensors will, he argued, help conserve energy, improve traffic congestion, track food-borne illnesses, even save lives. HP is working on a project called CeNSE — the letters stand for Central Nervous System for the Earth — which is about communicating with all the stuff around us, as well as with the planet itself.

CeNSE, the company says, will “revolutionize human interaction with the earth as profoundly as the Internet has revolutionized personal and business interactions.” The idea behind CeNSE is also known as “the Internet of things.” (See The Internet of parking spaces.) IBM with its Smarter Planet efforts and Cisco, which has its own futurist who’s thinking about this interconnected world, both see the opportunity to develop the Internet of things as potentially huge. [click to continue…]

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Unilever’s big, broad, bold sustainability plan

November 15, 2010

Unilever unveiled its 2020 sustainability plan today, and no one can accuse the company of playing small ball.

The global consumer products giant ($57 billion in revenues in 2009) intends to improve the health of 1 billion people, to buy 100% of its agricultural raw materials from sustainable sources, and to reduce the environmental impact of everything it sells by one-half, while doubling its revenues.

Those are big hairy audacious goals (to borrow a phrase from Jim Collins), befitting a company that touches 2 billion consumers a day. Unilever’s brands include Lipton, Dove, All, Hellman’s and Ben & Jerry’s.

The biggest idea here–and the one that will probably prove hardest to achieve–is that a company can grow its sales without growing its environmental footprint. As Dave Lewis, president of Unilever Americas, put it:  “We cannot choose between growth and sustainability. We have to do both.”

This is what U.S. consumer-products giant Procter & Gamble implicitly said it could not do when it announced its sustainability goals back in September. (See P&G: A bold green vision but…) Unilever is also hedging its bets some–it is promising a 50% reduction “per consumer use”–and it acknowledges that it can only grow sustainably by changing consumer behavior. That’s no small matter and one that is largely beyond its control.

Still, Unilever’s Sustainable Living Plan, as it’s called, breaks new ground for a number of reasons.

It is comprehensive, setting more than 50 social, economic and environmental targets.

It is rigorous; the company says its has measured the carbon, water and waste footprints of 1,600 products, representing 70% of its volume.

It’s far-reaching, taking into account the full lifecyle impact of its product–from “seed to disposal,” as one executive put it.

It builds on an impressive past history when it comes to sustainability.

And it goes well beyond green, including efforts to improve nutrition–

By 2020 we will double the proportion of our portfolio that meets the highest nutritional standards, based on globally recognized dietary guidelines.

and global health–

By 2020, we will help more than a billion people to improve their hygiene habits and we will bring safe drinking water to 500 million people.

and poverty–

Our goal is to link 500.000 smallholder farmers into our supply network. We will help to improve their agricultural practices and thus enable them to supply into global markets at competitive prices. By doing so we will improve the quality of their livelihoods. [click to continue…]

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