Industry (Private Action and Initiatives)

Introduction

Global-warming climate initiatives by industry are changes to corporate practice that reduce greenhouse emissions and are voluntary rather than required by law. Such actions may be undertaken from a desire to mitigate (reduce the impact of) global climate change, to improve public image, to increase profits, to pre-empt the imposition by government of binding regulations by showing voluntary progress, or for all of the aforementioned reasons. In some cases, claims of such actions are exaggerated or fabricated in advertising.

By the early 2000s, almost all large corporations were systematically portraying themselves as “green,” that is, environmentally friendly. For example, in 2000 the oil giant British Petroleum (BP) changed its corporate logo to a stylized sunflower. Claims of greenness are more accurate in some cases than in others. Exaggerated or misleading claims of eco-friendliness are called green-washing, a combination of the terms green (eco-friendly) and whitewash (to cover up unpleasant truths with cheerful appearances). Corporate claims of climate action must be examined case by case to determine their truthfulness. In some cases, especially with very large corporations, authentic private initiatives may be taken by organizations that are at the same time, in other areas of their business, practicing greenwashing.

Historical Background and Scientific Foundations

The first corporate actions in response to environmental concerns were ad campaigns in the 1960s and 1970s. During those years, scientists had not yet identified human-caused climate change as a major concern, but many other environmental problems had been identified, including extinction, pollution, resource exhaustion, and overpopulation. In the United States, utility companies invested millions of dollars in anti-pollution research—but, in 1969, they spent more than eight times as much (over $300 million) on ad campaigns to publicize their research efforts. Polluting industries spent nearly $1 billion on ad campaigns in that one year to convince the public of their eco-friendliness. The same industries also lobbied politicians to prevent legal, mandatory limits on pollution, with mixed success.

Scientific concern about human-caused climate change increased in the late 1970s and 1980s and began to enter public awareness. Many corporations in the oil, coal, and automotive sectors viewed fears of global warming as a threat to profits, since warming was being attributed to the very products on which they made their money. Corporate responses were at first mostly ad campaigns, such as that conducted by the Information Council on the Environment (ICE) in 1991. ICE was created by coal companies and the Edison Electric Institute (EEI), the association of U.S. shareholder-owned electric utilities, which are among the coal industry's largest U.S. customers. The group ran ads mocking the idea that the world might be warming. In one, a cartoon horse wearing a scarf and earmuffs asked, “If the Earth is getting warmer, why is Minneapolis getting colder?” (It was not, however, and even if it were, local cooling is compatible with global warming.)

Public and scientific concern over climate change continued to build through the 1990s. After the creation of the United Nations Framework Convention on Climate Change (UNFCCC) in 1992, the threat of global, binding caps on emissions of greenhouse gases seemed increasingly real. While some large energy companies (e.g., ExxonMobil) continued to fund groups designed to encourage doubts about the reality of climate change, others began to publicly embrace the issue. BP, for example, originally one of several large oil companies behind the Global Climate Coalition, a group that encouraged doubt about climate change, withdrew its support in 1997. Several other companies withdrew over the next few years, leading to the group's eventual collapse.

In 1994, only three years after helping fund ICE's skeptical horse cartoon, the EEI did a public about-face on the reality of climate change and joined the Climate Challenge Program, a voluntary collaboration with the U.S. Department of Energy. On its Web site in 2007, the EEI stated that “the electric power industry is a world leader in taking voluntary actions to reduce, avoid, or sequester greenhouse gas emissions.” According to the EEI, 650 participating electric companies undertook a diverse portfolio of greenhouse mitigation projects, including “improvements to nuclear and fossil fuel plants; energy efficiency and demand-side management projects; methane recovery, forestry, and fly ash reuse projects; and renewable energy initiatives.” The actions taken by participants in the Climate Challenge Program, according to the institute, eliminated 237 million metric tons of carbon dioxide emissions in 2000 alone.

Some critics argued, however, that not all items in the EEI's portfolio of actions were equally convincing. Improvements to nuclear and fossil fuel plants, including efforts to re-open Unit 1 of the Browns Ferry nuclear plant and to keep nuclear plants online a higher percentage of the time, are profit-enhancing technological adjustments that the institute's member utilities would probably have sought regardless of climate-change concerns. These measures therefore do not meet the standard of additionality, which is the condition, in any greenhouse mitigation or offset action, that the action would not have been taken anyway. According to the IEE's figures, improvements to nuclear plants constituted 33% of greenhouse reductions under the Climate Challenge Program; “miscellaneous and uncategorized” actions, 22%; energy efficiency improvements, 18%; improvements to fossil plants, 14%; methane recovery, forestry, and fly ash re-use, 9%; and renewable energy, 4%. However, as of November 2007, the IEE's online materials offered no information about relative reductions, that is, comparison of the emissions reductions achieved under the voluntary program to total industry emissions. Readers were therefore unable to judge the significance of the claimed reductions.

WORDS TO KNOW

ADDITIONALITY: The property in a carbon offsetting project, especially as defined by the Kyoto Protocol, that the project would not have been undertaken in any case, regardless of offset goals. For example, a project to burn off landfill methane lacks additionality if the methane would have to be burned off anyway for safety reasons.

CAP AND TRADE: The practice, in pollution-control or climate-mitigation schemes, of mandating an upper limit or cap for the total amount of some substance to be emitted (e.g., CO₂) and then assigning allowances or credits to polluters that correspond to fixed shares of the total amount. These allowances or credits can then be bought and sold by polluters, in theory allowing emission cuts to be bought where they are most economically rational.

CARBON OFFSETS: Reductions in emissions of CO₂ (or other greenhouse gases) or enhanced removals of such gases from the atmosphere that are arranged by polluters in order to compensate for their releases of greenhouse gases. Carbon offsets may be purchased by individuals or groups.

GREENWASHING: Environmental whitewashing, or the practice of presenting information that makes the purveyor appear to be environmentally sensitive or to seem to be taking action toward sustainability in the absence of any substantive change.

KYOTO PROTOCOL: Extension in 1997 of the 1992 United Nations Framework Convention on Climate Change (UNFCCC), an international treaty signed by almost all countries with the goal of mitigating climate change. The United States, as of early 2008, was the only industrialized country to have not ratified the Kyoto Protocol, which is due to be replaced by an improved and updated agreement starting in 2012.

One motive for voluntary actions, such as participation in the Climate Challenge Program, is to forestall the imposition of binding cap-and-trade systems that restrict the total amount of greenhouse gases that industries can emit. Such a system is specified under the Kyoto Protocol (not ratified by the United States) and is now standard throughout Europe. “America's electric companies know that voluntary climate actions work,” the IEE stated on its Web site in 2007. “We've proven this.” It also emphasized that “the Climate Challenge accord demonstrates the benefits of voluntary climate change approaches …rather than mandatory targets and timetables, to reduce greenhouse gas emissions.” In 2006, EEI representatives testified before Congress in an attempt to forestall legislation to impose a mandatory cap-and-trade system in the United States. However, in January 2007, the EEI's directorial board of 50 utility CEOs voted to reverse the group's position and support mandatory national greenhouse caps.

Authentic v. Greenwashing

In general, authentic industrial or corporate greenhouse mitigation actions, as opposed to greenwash actions, will satisfy the following criteria:

• The mitigation action is in addition to any actions that would have been taken under business as usual.
• The budget for the mitigation action is greater than the advertising budget to publicize the action. If the advertising budget is greater than the budget for the action itself, the program is probably a greenwash— an inauthentic or token effort made for the sake of manipulating public opinion.
• Authentic actions produce significant changes in corporate behavior, not merely changes in the appearance of corporate behavior. For example, windmill or solar array on a company roof that does not generate a significant fraction of company energy usage is probably a greenwash. An action that reduces corporate emissions by a tiny percentage is not a serious one.
• Authentic actions are conducted in a transparent way, that is, in such a way that independent observers can verify that claimed savings have actually occurred.
• Public information (for example, advertisements and Web sites) about authentic actions do not manipulate figures or graphs so as to mislead, do not exaggerate uncertainties in climate science, and do not contradict the majority view of the global climate science community without admitting that this is being done.

An example of an industry initiative that meets these criteria is the Cement Sustainability Initiative, an effort by 18 cement producers that began in 2002. Cement manufacturing contributes about 5% of global anthropogenic (human-caused) carbon dioxide emissions. Participants in the initiative committed to using a carbon dioxide monitoring protocol developed by the World Resources Institute (an environmental think-tank), a standard set of worker health and safety metrics, and a standard measurement, monitoring, and reporting protocol for emissions. One member of the initiative, Lafarge, decreased CO₂ emissions for each ton of cement produced from 763 lb (346 kg) per short ton in 1990 to 655 lb (297 kg) per ton in 2006, and said in 2007 that it aimed to achieve 610 lb (277 kg) per ton by 2010. The initiative is not heavily advertised, raises no unfounded doubts about the science of global warming, and has produced significant changes in the emissions of its participants. However, because cement production is growing rapidly worldwide, cement industry emissions have increased overall even as efficiency has improved. Readers of the site were therefore unable to judge whether the voluntary reductions were significant with respect to total emissions.

Impacts and Issues

In 2002, President George W. Bush challenged U.S. industry to undertake voluntary greenhouse-gas reductions, with specific (industry-designated) reduction goals, that would reduce the energy intensity of the U.S. economy by 18% by 2012. Energy intensity is the amount of raw energy consumed for each dollar of total economic activity (gross domestic product). U.S. energy intensity declined by 42% from 1970 to 1999. Although energy intensity was largely stagnant from 1987 through 1996, declining only 8% over that time, it declined steeply by a further 10% from 1997 to 2000.

In 2007, the marketing firm Blue Practice collaborated with the Switzer Foundation to survey a number of U.S. scientists and ask them what corporate initiatives are most effective, how corporate leaders can use their position to help reduce climate change, and what segment of industry could do the most for climate protection through better leadership. Eighty-four percent of the scientists agreed that improving energy efficiency was the most effective action that businesses could take. Other measures included improving manufacturing and distribution, engaging in federal or international policy discussions, hiring and empowering an environmental officer, and shifting investments to climate-neutral funds and securities. Buying carbon offsets was not ranked in the top three corporate priorities. Reducing energy consumption was not listed as a survey choice, but was the number one write-in suggestion. One scientist wrote, in response to the Blue Practice survey, “Seek first to reduce energy demand (i.e., consumption) and then improve efficiency in areas where demand cannot be eliminated.” Scientists also recommended setting specific reduction goals with timelines, and identified the automotive and electric utility industries as the two sectors that could do most to improve their climate behavior.

Emission reductions produced by money-saving (profitable) actions, such as increased energy efficiency, are real but may not reflect the full potential for reduction in an industrial sector or be large enough to meet long-term global mitigation needs.

Primary Source Connection

In this article Michael Dell, the Chairman and CEO of Dell, Inc., describes how companies can work together with their customers to provide solutions to environmental issues. Dell argues that companies and customers can work together to conserve energy, recycle, and reduce carbon emissions. Dell asserts that companies must be creative and reach out to customers with easy to use solutions in order to have the greatest positive effect on the environment.

EVERYONE HAS A CHOICE

The global information technology industry has been a catalyst for innovation and opportunity since the days of the first microcomputer. Information technology transformed global commerce by making it much easier to manage information, communicate, research, play and shop.

The ever-accelerating pace of innovation also created the need for manufacturers to look at—and deal with—the entire lifecycle of the technology they created.

Today's customer—armed with a wealth of knowledge and research on what is and is not beneficial for the world's natural resources—fully expects us to do a better job forecasting and managing our companies' impact.

Nowhere is this more evident than in international efforts to reduce energy demand and greenhouse gas emissions. The days when businesses could send a product into the marketplace without first considering how it might affect the environment are over.

And for good reason. According to the most recent estimates from the Energy Information Administration, a branch of the US government, world energy consumption is projected to rise 71 per cent from 2003 to 2030. At the same time, carbon dioxide emissions are expected to grow at an average rate of 2.1 per cent a year.

My company was founded with the vision that customers could be best served through direct relationships. Twenty-three years later, the direct relationship—now a cornerstone of many companies—can be one of our most valuable tools in collective efforts to reduce energy consumption and protect the environment.

Our success will depend on our ability to empower customers to join us in making a difference. From energy-efficiency to offsetting carbon emissions to reuse and recycling, we must work together to generate immediate and long-term results. Taking steps now to remove any remaining barriers—such as expanding no-charge recycling to consumers all over the world, as Dell has done—will help us get these results. When a programme is simple and the customer is part of the solution, good things happen.

As we continue to improve the efficiencies of IT products, reduce the harmful materials used in them and cooperate to dispose of old products properly through recycling programmes, we should focus on three key areas.

First, we can make protecting the environment easier. Initiatives that are time-consuming, hidden and expensive only discourage participation. Creating easy and low-cost opportunities for businesses—where businesses take ownership of what they make and sell—will strengthen commitment to protecting the environment.

Dell, for example, offers global recycling and product recovery programmes for customers, with participation requiring little effort on their part. As a result, we are ahead of our goal of recovering 275m pounds of used computer equipment from customers worldwide by 2009.

In addition, we estimate that use of recycled paper in our catalogues avoids the consumption of nearly 35,000 tons of virgin fibre and saves 250,000 trees.

Second, we should tap every creative approach to lessen the environmental impact throughout a product's life-cycle. This starts with design and ends when the product is no longer wanted.

Consumers of the digital age have the luxury of picking and choosing like never before. This freedom of choice means that consumers look beyond basic features of products or services to other important factors, such as buying from companies with energy-efficient products and utilising new IT capabilities to achieve greater efficiency and output from fewer products.

A recent study funded by the UK government found that office equipment is projected to account for 30 per cent of total energy use in the country by 2020, with PC monitors and system units accounting for about 65 per cent of that. We should always help our customers take advantage of the latest in energy-saving technology, including easy-to-use online digital calculators that help them estimate their power needs.

In many companies, the worst offenders in consuming a large amount of electricity are legacy systems.

Upgrading hardware often makes sense, as newer products are generally more energy-efficient as well as easier to maintain and more productive. Dell's latest servers, for example, consume up to 25 per cent less energy than previous generations, saving hundreds of dollars a year on each system in energy costs. And our new desktop computers use up to 70 per cent less power than previous models.

In addition, there are benefits to investing in techniques such as server consolidation and virtualisation (the hosting of multiple independent operating systems on a single server). These are more energy-efficient and make better use of existing hardware.

Virtualisation allows the data centre to run as efficiently as possible by ensuring that each asset is better utilised, thereby doing more with less power. Fewer servers are needed, making distinct savings in power, space, cooling and administration.

Third, we will only benefit by embracing governments as partners. Legislatures need only look at the success of the marketplace in developing fresh ideas to promote environmental stewardship.

Legislative or regulatory mandates that threaten to undermine the progress made to date should simply be dropped. Meanwhile, businesses and consumers are in a unique position to find common solutions on the environment and global climate change.

One of many examples of unregulated leadership is Dell's “Plant a Tree for Me Program” announced this year and being launched soon in the UK and continental Europe. It reduces the impact of carbon dioxide emissions from computers by offering customers the opportunity to offset the emissions associated with the generation of electricity used to power their machines by making a contribution to buying a tree when they buy their PC.

Within the company, we are also finding ways to enhance operational efficiencies, while reducing our carbon footprint through the use of renewable energy.

American anthropologist Margaret Mead once said: “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it's the only thing that ever has.”

The same entrepreneurial spirit and innovation that led to automobiles and the personal computer can bring new environmental-friendly ventures. Every consumer can participate. Every company can make a difference. Our work is only just starting.

Michael Dell

dell, michael. “everyonehas achoice.” financial times. april 18, 2007.

See Also Energy Industry Activism; Hurricanes; Lifestyle Changes; Offsetting.

BIBLIOGRAPHY

Books

Weart, Spencer. The Discovery of Global Warming. Cambridge, MA: Harvard University Press, 2004.

Periodicals

Dell, Michael. “Everyone Has a Choice.” Financial Times (April 18, 2007).

Fialka, John J. “Carbon Curbs Gain Backers.” The Wall Street Journal (February 27, 2007).

Rosenthal, Elisabeth. “Cement Industry Is at Center of Climate Change Debate.” The New York Times (October 26, 2007).

Web Sites

“Environment.” HSBC Bank. <http://www.hsbc.com/1/2/corporate-social-responsibility/environment> (accessed November 13, 2007).

“The Executive's Daily Green Briefing.” Environmental Leader. <http://www.environmentalleader.com> (accessed November 13, 2007).

Karliner, Joshua. “A Brief History of Greenwash.” CorpWatch, March 22, 2001. <http://www.corpwatch.org/article.php?id=243> (accessed November 13, 2007).

Kim, Eun-Hee, and Thomas P. Lyon. “Greenhouse Gas Reductions or Greenwash?: The DOE's 1605b Program,” February 2007. Frederick A. and Barbara M. Erb Institute for Sustainable Enterprise, University of Michigan. <http://www.erb.umich.edu/News-and-Events/colloquium_papers/Eun-HeeKim.pdf> (accessed November 28, 2007).

“Voluntary Efforts.” Edison Electric Institute. <http://www.eei.org/industry_issues/environment/voluntary_efforts/index.htm> (accessed November 27, 2007).

“What the Scientists Know: How Business Can Help Solve Global Climate Change.” Blue Practice and the Switzer Foundation, October 2007. <http://www.bluepractice.com/files/SSES%20FINAL.pdf> (accessed November 13, 2007).

Larry Gilman