Politics

Wall Street’s costly reputation problem

November 3, 2011

Not since the Great Depression have Americans harbored so much ill-will against what were once called “the monied interests.”

This should worry Wall Street and the big banks.

The latest evidence: Bank of America’s decision this week to drop its plans to charge customers $5 a month for making purchases with their debit cards, in the wake of a customer revolt.

Jay Leno

On change.org, a 22-year-old Washington, D.C., activist named Molly Katchpole started a petition against the BofA fee that gathered 306,000 signatures in less than a month. Politicians chimed in (for better or worse) and even Jay Leno got into the act, saying on Halloween night:

One kid wanted to charge me five bucks to give him candy…I said, “Who are you supposed to be?” He said, “Bank of America!”

BofA reversed itself after rivals Wells Fargo, J.P. Morgan Chase, Sun Trust and Regions Financial said they’d drop customer tests of new debit fees. Analysts say this will cost the banking industry as much as $8 billion in foregone revenue.

In other words, the banks are giving up billions of dollars because people don’t trust them to do the right thing.

[click to continue…]

{ 2 comments }

Starbucks: We are indivisible

October 30, 2011

I’m not much for patriotic displays, but I’m proud to wear this red, white and blue wristband inscribed with the word INDIVISIBLE.

I hope you’ll wear one, too. They’re available, beginning Tuesday, at Starbucks, for a donation of $5 or more to a project called Let’s Create Jobs for USA.

The program aims to create thousands of jobs across the country, by investing community development financial institutions (CDFIs) — mostly credit unions and community banks — that will then lend to small businesses, nonprofits, housing and commercial developers, micro-enterprises and the like, all to spark the economy and create jobs.

I’m a fan of this project,  for several reasons.

First, there’s no more front-of-mind issue in America today than jobs. So this a great example of how a big company can help tackle an important  problem–while enhancing its reputation as a business that supports its communities.

Second, Let’s Create Jobs for USA underscores the fact that, despite the rhetoric from politicians, jobs are best created by the private sector.  If you’re anti-business, you’re anti-jobs.

Ben Packard

Third, although credit for the campaign ultimately belongs to Howard Schultz, Starbucks CEO, Let’s Create Jobs for USA unfolded as it did because of a connection between Ben Packard, vice president of global responsibility at Starbucks and Mark Pinsky, president and CEO of the Opportunity Finance Network, a national network of CDFIs. Ben, Mark and I serve together on the board of Net Impact, a great organization of students and young professionals whose purpose is to inspire and equip young people to use the power of business to make the world a better place.

Let’s Create Jobs for USA is very much in the spirit of Net Impact. [click to continue…]

{ 9 comments }

Big Sugar, free markets and Monica Lewinsky

October 25, 2011

Next time I unwrap a candy bar, I’ll think about sugar, free markets, the Florida Everglades and Monica Lewinsky.

Why? Because although the sugar in that candy bar may be natural, its price is entirely artificial–depending, as it does, on government trade barriers, price supports and subsidized water, as well as the fact that the sugar industry is paying only a fraction of the costs of cleaning up pollution in the Everglades.

Put simply, crony capitalism is alive and well in the sugar business.

“The sugar industry doesn’t make its money from agriculture,” declares David Guest, a lawyer with Earthjustice and an outspoken critic of Big Sugar. “They make it from government.”

That’s an exaggeration, of course. The Florida industry grows lots of sugar, invests hundreds of millions of dollars in new equipment and employs thousands of people, as I learned last week  during a day-long tour of the Lake Okeechobee region of south Florida, as part of the Society of Environmental Journalists conference in Miami. We met Guest from Earthjustice (“because the earth needs a good lawyer”), officials from Florida water agencies and the Army Corps of Engineers, an Audubon society biologist and, most interestingly, Judy Sanchez, senior director of public affairs for the U.S. Sugar Corp. [click to continue…]

{ 5 comments }

Sierra Club’s Brune: We’re stopping coal

October 23, 2011

Michael Brune

“We are starting to create the ecological U-turn that David Brower talked about, decades ago. On coal, it’s dramatic. We’ve seen a halt to the coal rush.”

“Primarily because of regulations (from)  the Obama administration, we can now project a future where our oil consumption will decline.”

“It’s not sufficient to address the problem, but it’s a positive trend.”

So says Michael Brune, executive director of the Sierra Club. [David Brower, who was made famous in John McPhee's Encounters with the Archdruid, was one of his predecessors.] Others fret that the environmental movement is on the defensive these days. Mike, an optimistic, sees progress.

Indeed, Mike argues that the effort by Republicans in the House to roll back a slew of environmental regulations as a sign that the enviros are winning.

“Republicans in Congress and their corporate benefactors are worried about the threat to the status quo in the energy industry,” he says. “That’s the reason this is happening. We’re making progress.” [click to continue…]

{ 8 comments }

Do green groups need to get religion?

October 18, 2011

Peter Lehner

“Americans actually do care about their health. They don’t want their kids have to be poisoned in order for them to get a job. They value their natural heritage.”

“One should not read what’s going on the House of Representatives as an indication of where America wants to be.”

That’s Peter Lehner talking. Peter, a 52-year-old environmental lawyer, is executive director of the Natural Resources Defense Council, one of America’s most important environmental groups. The NRDC has a $95 million budget, about 400 employees and about 1.3 million members. They’re big and they represent a lot of people.

And yet the NRDC and its allies are getting nowhere in Washington.

They’re struggling to protect the EPA against unrelenting Republican attacks.

And, as Elizabeth Rosenthal wrote the other day in the Times, climate change–arguably the biggest problem facing mankind–has devolved into a non-issue. The “fading of global warming from the political agenda is a mostly American phenomenon,” she wrote.

Why?

That was the question on my mind when I met recently with Peter, who is thoughtful and smart, to talk about the politics of climate. That’s not my  specialty, but I came with an idea: The green groups that try to persuade Americans that environmental protection is good for their jobs and pocketbooks–that is, that green is in our self-interest–have missed opportunities to frame the environment and especially climate as moral issues, in ways that would appeal to our higher and better selves. Put another way, the big NGOs that focus on policy are not as comfortable talking about culture and religion.

So I wondered what the NRDC had learned from the failure of cap-and-trade—the scheme to regulate greenhouse gas emissions that was rejected by Congress—and whether its leaders are rethinking their message.

[click to continue…]

{ 5 comments }

The business of cooling the planet

October 9, 2011

Global Thermostat's demonstration plant

The risk of disruptive climate change grows every day. John Holdren, the White House science advisor, said last year that we have three options: Mitigate, adapt, suffer. If we don’t mitigate (meaning reduce emissions), we’ll have to adapt (move to new places, develop new crops, build sea walls). If we do neither, we’ll suffer. But, as regular readers of this blog know, there’s a fourth option–geoengineering.

Geoengineering is term used to describe planetary-scale technologies that are designed to counteract the climate effects of past greenhouse gas emissions to the atmosphere. I’ve been fascinated with geoengineering for about two years, and this week FORTUNE will publish my story, The Business of Cooling the Planet, about three startup companies that want to save the planet by capturing carbon dioxide from the air.  This topic is so important that I’m planning to expand the story into a short e-book in the next couple of months.

The FORTUNE story begins by describing how Microsoft founder Bill Gates became an expert on climate and energy:

One of the cool things about being Bill gates is that if you are curious about something, you can find smart people who will teach you whatever it is that you want to know. About five years ago Gates decided that he wanted to learn about climate change, so he arranged for two of the world’s leading climate scientists, David Keith of the University of Calgary in Alberta, Canada, and Ken Caldeira of the Carnegie Institution, to organize a series of seminars. Since then, Keith and Caldeira have recruited scientists, energy experts, economists, and policy wonks to deliver about a dozen detailed presentations to Gates. He prepares by doing hundreds of pages of reading, some quite technical; the ensuing discussions, which last three or four hours, can be intense. “Bill has the intellectual curiosity of a very bright graduate student,” Caldeira says, “but a graduate student whose time you are not supposed to waste.”

This is no academic exercise. Gates has been convinced that the risk of global warming is worse than most people think. He can see that the world’s governments have failed to curb the emissions caused by burning coal, oil, and natural gas. In June 2010 he put together a coalition of business leaders, including GE’s Jeff Immelt, to urge Congress to invest more in clean-energy research, but that’s not happening. So the Microsoft billionaire and philanthropist has stepped into the breach to become the world’s leading funder of research into geoengineering— deliberate, large-scale interventions in the earth’s climate system intended to prevent climate change and its repercussions.

Since 2007, Gates has given about $4.6 million of his money to Caldeira and Keith for geoengineering research. Intellectual Ventures, a private company funded in part by Gates, has explored such technologies as building an 18-mile-long hose, tethered by balloons, that would spray tiny particles into the stratosphere to block the sun’s rays. Gates has even attached his name to a patent application for ocean-churning technology designed to sap the strength of hurricanes, which appear to be getting fiercer because of global warming.

The story goes on focus on three startup companies that are working on

A straightforward, albeit audacious, way to cool an overheating planet: Build many thousands of big machines to remove carbon dioxide from the air.

The companies are Carbon Engineering (in which Gates is an investor), Global Thermostat and Kilimanjaro Energy. They are all a long way from making any money from carbon dioxide removal, and indeed there are many skeptics who say the costs of pulling CO2 from the air are so high that it will never make business sense. [click to continue…]

{ 1 comment }

Wall Street should heed OccupyWallStreet

October 7, 2011

Police protect a Wall Street icon in NYC, and SF protestors occupy a Chase bank. Photo by David Shankbone & Stephen Lam/Reuters

Corporate America should be paying attention to #OccupyWallStreet, which at breathtaking speed — less than three weeks –  has sparked protests across America, made the front pages of national newspapers and led to an explosion of creative and effective Web-based content. (Check out We are the 99%.) This unruly, chaotic series of leaderless demonstrations may or may not be the beginnings of a left-wing equivalent of the Tea Party–that is, a grass roots movement with the power to impact the national political conversation — but it’s not going to fade away anytime soon.

To be sure–lots of things now being said by and about these protestors are laughable. Manhattan’s financial district is not Tahrir Square.  Capitalism itself is not the problem. Taxing the richest 1%, even at confiscatory rates, won’t support the other 99%. One unofficial list of “proposed demands”  from the group includes a $20 minimum wage, free college tuition, a trillion dollars for infrastructure, another trillion for ecological restoration and across the board debt forgiveness for all. Whoopee! Like so much of what passes for political debate these days in America, the conversation here is all about benefits, and not at all about costs. Didn’t any of these kids take economics in college?

Nor is these protests “the most important thing in the world,” as Naomi Klein said the other day. Not yet, anyway.

But they are important, and here’s why. These nonviolent actions are built around a couple of fundamental arguments — grievances, really — that business leaders and fans of capitalism (like me) need to take seriously.

First, the American economy isn’t working for tens of millions of people–not just the unemployed, but many more who are living from paycheck to paycheck. People are scared, frustrated, discouraged, angry or all of the above. They no longer believe that working hard and playing by the rules will give them a better life. They’re probably right. Low-skilled workers  in particular are disconnected from the American dream of an ever-improving standard of living.

Second, the rich powerful people who are largely but not entirely responsible for the financial crisis and the global recession – the shorthand for this group is “Wall Street” – have, for the most part, neither apologized for their actions or nor paid a price. They created the mess (yes, with the help of reckless borrowers) but they’re doing fine. Come to think of it,  they’re doing fine because the rest of us bailed them out.

[click to continue…]

{ 9 comments }

What can we learn from Solyndra’s failure?

September 22, 2011

Our national conversation has become so politicized that it’s hard to talk about anything without setting off an argument.

Not the weather. And certainly not the failure of Solyndra, the solar company that went bankrupt after getting a $535 million loan from the Obama administration.

Today’s hearing of the  Republican-led House Committee on Oversight and Government Reform, focusing in part on Solyndra, was more like an inquisition than a fact-finding exercise.

It was titled “How Obama’s Green Energy Agenda is Killing Jobs.” That was before the testimony began.

No matter that chief inquisitor Darrell Issa, who now denounces clean energy subsidies, once sought a loan guarantee for Aptera, an electric car maker that wanted to set up shop in his district. Dan Burton, the No. 2 Republican on the panel, supported a federal guarantee for Abound Solar, a company in his district.

What hypocrisy.

Democrats are little better, particularly as they blather on about green jobs. Sure,  when Washington subsidizes clean energy, jobs may be created. The thing is, when the government subsidize anything (oil exploration, ethanol, high fructose corn syrup, home ownership), you get more of it, and more jobs. Does this mean that market-distorting subsidies are an efficient way to create jobs? The question answers itself.

[By the way, there was some amusing back-and-forth at the hearing about what constitutes a green job. It turns out that bus drivers, whether driving they are driving hybrid buses  or not, are doing "green jobs" because mass transport is greener than driving,  my friend Matthew Wald reports in The Times.]

So what, if anything, can we learn from Solyndra’s failure? Should the government stop financing clean energy, as some Republicans say? Or preserve today’s subsidies, as the industry would like? [click to continue…]

{ 6 comments }

Attack of the mutant rice

September 11, 2011

Rice growing in Arkansas

Genetically-engineered crops may help feed the world. But people who choose not to consume what alarmists call Frankenfoods should not be forced to eat them. So the ability of the government to regulate and industry to manage genetically-modified crops matters. It matters a lot.

Unhappily, there’s reason to believe that neither the government nor the industry is up to the job.

If you doubt it, consider the strange saga of an experimental strain of genetically-engineered rice that somehow escaped from a test plot and found its way into the food supply before it was approved for human consumption. Settling the subsequent lawsuits will  cost agricultural giant Bayer CropScience a whopping $750 million, the company said in July. The rice, meanwhile, has been withdrawn from the market and has not produced a dime of revenue for the company. It hasn’t fed anyone except battalions of lawyers.

I  first came across the rice story in 2007, and wrote a story for FORTUNE headlined Attack of the Mutant Rice. I had a great time reporting the story, visiting rice farmers in Stuttgart, Arkansas (“The Rice and Duck Capital of the World”) where the nation’s two biggest rice mills are located and learning what I could about the regulation of GMOs. [click to continue…]

{ 3 comments }

Aron Cramer: Business needs to step up

September 7, 2011

Aron Cramer

Today, I’m pleased to publish the first in a series of guest posts from Aron Cramer, the president and CEO of BSR. BSR (formerly Business for Social Responsibility) works with its 250 member companies to promote a more just and sustainable world, through research, consulting and industry collaborations. Aron, who’s a longtime colleague and friend, has worked all over the world on business issues ranging from labor rights in global supply chains to Internet freedoms in China to the meaning of “sustainable consumption.” Here, looking ahead to BSR’s 2011 conference in San Francisco, he writes about the need for business leaders to step outside the boundaries of their companies to re-energize the sustainability agenda.

Most years, people are reluctant to see summer fade into fall. But the summer of 2011 was a bit of a bummer, bringing hurricanes and earthquakes in the American Northeast; ongoing political stagnation in the United States, Europe, and Japan; and signs that the world’s mature economies are stuck in neutral—and may remain that way for some time. Leaving this summer behind feels like a relief.

It’s up to business to turn things around. That’s why BSR has made redefining leadership as the theme of the BSR Conference 2011.

We view this opportunity as having four dimensions, which we outlined in our most recent annual report. In this series of blog posts, I want to elaborate on each one, beginning with the need for business leaders to invest in the infrastructure required for sustainability. [click to continue…]

{ 0 comments }

← Previous Entries

Next Entries →