Is CoolPlanet Biofuels too good to be true?

Imagine a company that says it can produce virtually limitless amounts of cheap gasoline, create arable land for food production and solve the climate crisis–all at once.

That’s the promise of CoolPlanet BioFuels.

Mike Cheiky

Mike Cheiky, the company’s founder and CEO, spoke about CoolPlanet’s “negative emissions technology” at Brainstorm Green, FORTUNE’s conference about business and the environment. Yes, negative emissions.

Does that mean, I asked him, that the more you drive a car powered by CoolPlanet’s biofuels, the more CO2 will be pulled out of the air? Yes, he replied.

“The world doesn’t have too much carbon,” Cheiky explained. The problem’s is that the carbon’s in the wrong place. There’s too much in the atmosphere, causing global warming,  and not enough in the soil. Essentially, Cool Planet has a plan to use plants to remove it from the air and then restore it to the land.

Before you decide that this is too good to be true, you should know that Cheiky, a veteran entrepreneur, has persuaded Google, General Electric, BP, ConocoPhillips, NRG Energy, Exelon and venture capital firms Shea Ventures and North Bridge Venture Partners to invest millions of dollars–he won’t say how many millions–in CoolPlanet Biofuels.

“We have been poked and prodded so many ways by so many people,” Cheiky told me. “GE sent 17 people to do their due diligence at a time when we had only 15 employees.”

These investors wrote him checks, he added, because of his track record. “I’ve done six start-ups in my career,” he went on, “and I’ve never had a down round. They’ve all been very successful.” [click to continue…]

Elizabeth Grossman: Chronic polluters also put workers at risk

Elizabeth Grossman

Today’s guest post comes from Elizabeth Grossman, a gifted environmental journalist who is the author of Chasing Molecules: Poisonous Products, Human Health, and the Promise of Green Chemistry, High Tech Trash: Digital Devices, Hidden Toxics, and Human Health, and other books. Her work has appeared in Scientific American, YaleEnvironment360, The Washington Post, The Nation and Grist. I met Lizzie this past fall at the Society of Environmental Journalists (SEJ) conference; she’s been writing about science and the environment for more than a decade.

She reported this story by taking EPA data uncovered by the Center for Public Integrity, and checking it against publicly-available information from OSHA. Her story got my attention because it suggests (based on admittedly limited evidence) that companies that are careless or irresponsible about air pollution also have workplace-safety issues. I wasn’t surprised to see BP among them–my FORTUNE colleagues David Whitford and Peter Elkind did a great job dissecting its culture in BP: “An Accident Waiting to Happen.’  Seeing DuPont on the list did surprise me, since the company is known for its safety culture. This story first appeared at The Pump Handle, a website about public health and the environment.

We have learned from Environmental Protection Agency (EPA) documents obtained under a Freedom of Information Act request and released by the Center for Public Integrity earlier this month that there are currently about 465 United States industrial facilities on what the EPA calls its “watch list.” The list is made up of businesses EPA considers chronic violators of the Clean Air Act – but against which the agency has taken no formal enforcement action. An examination of these same companies’ occupational health and safety records reveals them also to be chronic violators of Occupational Health and Safety Administration (OSHA) standards.

These “watch list” facilities are located all over the country, but many are clustered in historical manufacturing hubs in the Midwest, Southeast, and along the Gulf Coast. Nearly all can be described as heavy industry. They include petroleum refineries and facilities making chemicals, cement, paper, paint, pharmaceuticals, and metal products, along with waste treatment (landfills, recycling, and incinerators) facilities, meat processing plants, mines, pipelines, a shipyard, and automotive plants. OSHA typically inspects about one percent of the United States’ 8 to 9 million workplaces annually, but more than 70 percent of the “watch list” companies have received OSHA inspections over the past ten years. Those without inspection records included US military facilities and mines that OSHA is not authorized to inspect, as well as a number of public facilities and utilities: municipal landfills, water treatment plants, and generating stations.

Overall, the OSHA inspection reports for the EPA “watch list” companies reveal what for many of these companies appears to be a history of chronic OSHA violations. Some of these companies had dozens of violations over the past ten years; a few had more than 100. (To round out the picture of these companies’ operations, I included both the specific “watch list” facilities and the individual companies’ comparable operations in other locations.) Among the companies with the most recorded OSHA violations at their various facilities around the country was BP Products, with more than 400 at facilities nationwide – violations that included 314 in one inspection record following the 2005 explosion at BP’s Texas City refinery that killed 15 workers. (The Deepwater Horizon incident does not yet appear in BP’s OSHA inspection records.) International Paper was cited for more than 295 violations, while Republic Engineered Products (part of Republic Steel) had more than 170 violations, various divisions of DuPont nationwide received more than 130 citations for OSHA violations, and the Greif company, manufacturer of packaging materials, was cited for about 100 violations nationwide in the past decade. Wheeling Pittsburgh Steel exceeded 100 violations since 2001, and Weyerhaueser‘s various divisions around the country were cited for more than 300. [click to continue…]

Social funds: BP, the 1960s, and greed

Recently, after posting a column about BP and socially responsible mutual funds (See Social Funds and BP: How embarrassing!)  I heard from Adam Kanzer, who is managing director and general counsel at Domini Social Investments. While Domini has never owned shares of BP, Adam and I began a conversation about the role  of socially-responsible mutual funds. Adam, who has been in the fund business for twelve years, is a smart and committed executive, but we don’t always agree, so we decided to engage in a dialog about social funds.

Adam Kanzer
Adam Kanzer

Marc: Adam, let’s start with BP. Why did Domini exclude the company? Do you hold any other oil or coal companies?

Adam: Domini has consistently excluded BP from our portfolios because of our concerns about their safety record. Our initial review followed the Texas City explosion in 2005, but our decision was quickly reinforced by the Prudhoe Bay spill the following year.  We met with BP to discuss these and related issues with them. And each time we revisited BP, we found more violations.

We’re looking to identify the key sustainability challenges each company faces. For the oil and gas industries, worker safety and environmental compliance are among a handful of core issues we consider.  I should also note that we have consistently excluded Transocean and Halliburton, both of whom played a role in the Deepwater Horizon project. In addition we have also consistently excluded Massey Energy, the other current poster-child for disaster, as well as Toyota for substantial safety, employee relations and human rights concerns.  We discuss these decisions on our website. And yes, we do hold other oil and gas companies, although we set a high bar for entry. We do not invest in companies whose core business is coal mining.

Marc: Any thoughts on why BP was so widely held by other socially-responsible funds?

Adam: As CEO of BP, Lord Browne made very important statements about the reality of climate change at a time when others in his industry were denying its existence. That was important. In addition, BP has been committed to transparency on its social and environmental performance. I can’t speak for other firms, but I can see how those factors may have led some to hold BP. We felt that the safety and environmental issues outweighed these positives.

If a fund’s benchmark is heavily weighted towards oil, then an SRI manager will need to consider that. This tyranny of the benchmark certainly led many to hold BP and other oil companies that in a perfect world they would have preferred to avoid.

Which brings me to the important question that I have not heard – why did all of the so-called ‘mainstream’ investors buy BP? Why did investors allow this company to become one of the largest in the world by market capitalization? At least social investors weighed these issues and came to a decision. The rest of the market acted as if there was no problem.

Marc: That’s an excellent point, and it makes me wonder why people pay mutual fund managers such high fees. They missed the housing and Wall Street bubbles, and didn’t see or care about the safety issues at BP. Clearly most  funds aren’t very good at managing risk.

Turning to another topic, many SRI funds have their roots in the anti-war movement of the 1960s and 1970s as well as in faith-based investing. So funds like Domini exclude companies that make weapons, alcohol, tobacco and nuclear power. My question is, why? Let’s start with weapons. Don’t we need companies that make weapons in the post 9/11 era?

Adam:   First, it is important to understand that we divide those industries into two general categories – companies that provide addictive products and services, and companies whose products contribute to geopolitical instability. We place military weapons manufacturers and nuclear power in the latter category. We do not consider investments in addiction and global instability to be productive uses of capital.

National defense is too important to be placed in the hands of the same system that brought us the financial crisis. When Eisenhower issued his warnings about the growth of the military-industrial complex, he wasn’t questioning our need for a strong national defense. Yes, we need weapons, but do we need publicly traded companies manufacturing weapons? Are the capital markets an appropriate mechanism for providing these goods, or have the markets distorted our national priorities? That’s a critical debate our nation needs to have.

There are also categories of weapons that violate international humanitarian law because they cannot distinguish between military and civilian targets. These include landmines, clusterbombs and nuclear weapons. These ‘products’ make the world more dangerous, and landmines have caused incalculable misery to innocent civilians – including children – around the world. As investors, we have a responsibility to choose wisely. Our Funds’ shareholders choose not to profit from these violations, so we exclude these manufacturers and companies that manufacture nuclear weapons delivery systems.

Marc: What about nuclear power? Some environmentalists, notably Stewart Brand, say we need to seriously consider nukes in light of the climate crisis? [click to continue…]