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May 20, 2010
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In my opinion, BP should be held liable for all the damage done by its spill….with absolutely no financial cap.   Further, Hayward should have a personal tab to pay, as should all of the BP directors.

It seems to me, that with those remote robots on the ocean floor, the broken pipe could have been crimped and tons of materials and sealant could have been dumped on the spot relatively quickly.  But then, BP would not have been able to suck up any of the oil from the pipe.

But no.   Probably because drilling at that depth is so expensive – it seems to me that BP looks like it has been trying to capture some of the oil for processing  –  for revenue purposes -rather than stopping the leak and capping the environmental damage.

BP CEO projects that “the environmental impact of this disaster is likely to have been very, very modest.”  With that attitude, why would he seek to stop the leak at all costs as soon as possible, and mitigate the effects in the least toxic, most effective way possible.  BP has been less than forthcoming about sharing videos or other flow meters that would enable a more accurate estimate of the leak; and those that have been released have been used by scientists to estimate a leak many times greater than what BP estimates.  I would believe the scientists over BP public pronouncements.

Any of the good works, positive PR achieved by Hayward’s predessor has been completely undone and will probably remain so for a very long time.

Further, Climate Progress has documented that BP not only chose more toxic dispersants to disperse the oil, but also dispersants that in tests are not as effective with this type of oil as other dispersants that are also less toxic.  Some of the formulations of the Nalco dispersants are banned in Britain, and they are very toxic to soft corals, which are under siege anyway.  The “good stuff” is probably more expensive, and not made by former Exxon and BP colleagues at Nalco (http://bit.ly/ddJHqT).  It is not known what the long term effects will be on the seafood industry – or on those who eat future seafood caught in the Gulf.

Thank goodness – especially given the quantities that are being used – the EPA has stepped in and informed BP officials that the company has 24 hours to choose a less toxic form of dispersant, and must apply the new form of dispersants within 72 hours of submitting the list of alternatives.  I hope there was a also cease and desist order on the use of the current dispersant.

What are the lessons from this?   For the government:  a critical need for more effective governmental regulations and greater distance between leasing and inspection/regulatory arms, more planning for worst case scenarios and more appropriate (to the risk) liability provisions.  For the dispersants, testing on quantity and higher standards for items to be on the list of approved dispersants, along  with a tightening of regulations regarding use and acceptable toxicity.

BP has greater challenges.  Where is their Board?  So much for any pretension for corporate responsibility.  Clearly – in my opinion – they have a CEO and a culture that is arrogant, reckless and insensitive to environmental issues, totally focused on their bottom line.  Further, their policies for assessing risks, having ready emergency response capabilities, and response plans truly created to mitigate – as much as possible – environmental impacts need major revision or perhaps initial development.

With this apparent attitude, BP should forfeit any “benefits of the doubt” that have ever been extended to them by permitting agencies in all endeavors.  They have more than proven – in my opinion – that they do not deserve any quarter.  They have shown none for the environment.  Their bottom line should suffer greatly and for a very long time.

BP has major re-invention work to do if it wants to be truly considered a socially responsible corporation.

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Will National Security Make a Difference?

April 29, 2010

Earlier this year, the Pentagon’s primary planning document noted that the threat of global warming will accelerate instability and conflict around the globe.  The Quadrennial Defense Review noted climate change affects the DOD “in two broad ways”:

One, climate change warming impacts and disasters will “act as an accelerant of instability or conflict; and two, military installations and forces will have to adapt to the physical effects of global warming.

To help mitigate the threat, the military is already acting to reduce its emissions and oil use.

Earlier this month, the military announced that widespread American obesity was a national security threat, as obesity is a major reason why recruits are turned down for service.

Today, 33 retired military generals and admirals announced they support comprehensive climate and energy legislation in a letter to Senators Reid and McConnell.  Specifically, the letter, which also ran as a full page ad, stated that “Climate change is threatening America’s security. ”  It is a “threat multiplier” – making  existing problems worse by decreasing stability, increasing conflict and creating the kinds of socio-economic conditions that increases youth susceptibility to terrorist recruitment.

The letter states “It is time to secure America with clean energy,” as our “billion-dollar-a-day dependence on oil makes us vulnerable to unstable and unfriendly regimes.”

Will the fact that the U.S. Military is willing to identify issues such as widespread obesity, climate change, and over-dependence on oil  make a difference in our country’s heated political and policy debates?  One can only hope!

Galbraith’s Affluent Society Revisited

April 26, 2010

It’s hard to believe that J.K. Galbraith’s Affluent Society was written over 50 years ago.  Yes, he has periodically re-issued it, with some updates.  His analyses and observations have largely remained the same, only becoming more prescient to observers who stop to reflect on his words in the context of the current economic situation.

I was struck by his observation on whether U.S. consumption would recover after a significant recession.  His point was that consumption in the U.S. is largely driven by marketing, rather than by need.  In the U.S., as closets in new homes have expanded to entire rooms – “walk-ins,” temporary storage has continued to proliferate as Americans accumulate more “stuff” than they have room for, and the new industry of storage consultants and clutter coaches is thriving, will consumer spending recover to its previous levels.  Add the need to reduce debt, un- and under-employment, a growing environmental consciousness, and the prospects are that spending will NOT recover to the levels recently experienced, at least not in the near term.  That may be just as well, as private over-consumption seems to be diminishing our quality of life, rather than improving it.

Galbraith questions our society’s unrelenting focus on private production as the only avenue to prosperity.  The actual production lost in the Great Depression wasn’t missed by society as much as the loss of spending power by millions of out-of-work Americans.  

Yet, as Galbraith observes, there are many public spending needs.  As a consequence to our public reluctance to invest in the public sector via our aversion to new taxes, we are increasingly experiencing a country rich in private goods, but poor in public ones:  “beautiful cars driving on poor roads, well-dressed kids in the crumbling public schools, neighborhoods with beautiful homes but polluted parks.” 

Galbraith introduces the idea of social balance, asserting that public spending should increase to match the increases in private spending.  This investment in public spending has generally lagged, as it involves regulations, bureaucracy and funding via new taxes.  One wonders if the recent trend of state and local governments leasing items such as toll bridges and roads, and parking facilities to private consortiums will improve the situation, although the funding will be disintermediated from the large pool of public taxation to the smaller pool of actual users.  Actual users may wind up paying more for previously public sector privileges than they paid through taxes, and non-users will pay less.

How widespread will this practice become?  What will it mean?  How may these trends play out?  What are your thoughts on patterns of private consumption and the value of private production?

What’s the Context for Extolling the Virtue of Markets?

April 2, 2010

I am continuing to reflect on Geoffrey Heal’s When Principles Pay. Heal clarifies “popular” belief in the efficiency of markets.  As Arthur Pigou, an early 20th Century economist, notes that when a firm’s private and social costs are the same, markets work well for society, and align corporate and social interests.  When these costs are not aligned, markets are not effective nor efficient.  Heal goes on to explain the First Theorem of Welfare Economics is that under certain conditions, among them no external costs, competitive markets do well in leading to economic efficiencies.  He notes that a precondition for the alignment of corporate and social interests is that no costs are externalized (all are paid for by the corporations).  We all know that’s not happening.

Normally government would address the issue of externalized costs would be to tax them.  In our current political environment, that is unattractive.  The public winds up shouldering the environmental external costs through expenditures such as Superfund to clean up sites of severe pollution, health impacts via particulates in the air, pollutants in the water, mercury in the soils, and so forth.  In addition to environmental costs, there can be significant related social costs as well.

Heal then argues that corporations gain by realigning corporate interests with social interests, as it reduces conflicts with society and government.  Certainly society gains.

For corporations to move in this direction takes vision, courage… and a push from the markets, regulatory agencies or influential NGOs and consumer groups generally helps.  Sometimes, it involves the courage and vision to collaborate, as happened when major global banks established The Equator Principles, a investment framework for all industry sectors that also built on existing environmental standards.

To a significant extent, the roles of market rating agencies act to increase the transparency of corporate risks and liabilities, especially such groups as Innovest and KLD.  Even UBS has noted that corporate balance sheets should carry warnings about environmental and biodiversity damage liabilities that valuation by analysts should take into account.  These risks become more important as more governments adopt the principle that the “polluter pays.”

Heal advocates the use of the stock market value to asset book value ratio, within individual industries, as a good indicator.  He also compliments the ratings from Innovest and KLD, and has completed a study that appears to correlate superior social and environmental performance improving a company’s stock market valuation.

Clearest are Heal’s conclusions:

– A company’s performance on social and environmental issues can affect its financial performance.

– Social and environmental policies are NOT philanthropy, public relations or marketing; they are focused responses to social and environmental issues that are directly related to a company’s operations.

–good policies encourage identification of the problems associated with operations

–they encourage devising ways to reduce the problems

– Doing well by NOT doing good is generally not sustainable.

– There are two “classes” of corporate social responsibility:

–internalizing the external costs associated with a company’s operations

–modifying the way in which a company’s activities would, if left to market forces, impact on its poorest employees or customers

– As a corporate strategy, aligning corporate and social interests reduces risk, reducing the possibility of lawsuits, brand damage, regulatory exposure and often improving operations and market valuation.

Heal is a good read.

Aligning Corporations and Society

March 29, 2010

I’ve just finished reading Geoffrey Heal’s When Principles Pay, which presents a solid business case for improving the alignment between corporate interests and societal/governmental interests.  Basically that boils down to reducing the external costs, such as pollution caused by industries, which hadn’t been factored into product costs.  Solid social and environmental corporate policies are effective risk management tools, reducing the likelihood of lawsuits, brand damage, regulatory exposure, shareholder disruptions and lower stock prices due to pollution exposure.

Since our global societies have been less than effective in determining, assigning and enforcing appropriate costs for externalities, and are now slowly moving toward doing so, innovative products are springing up to help.

Distributed energy appliances are a major area for innovation such as these recently featured in CNET:

This year’s Building Energy conference of the Northeast Sustainable Energy Association featured solar hot-water storage tanks from Stiebel Eltron.  In these systems, solar panels/tubes heat a liquid that is pumped into a storage tank to heat water.

Velux has innovative skylight “Daylighting” systems that can pipe light through attics and into rooms below.  Some use lenses to magnify the daylight effect to reduce electrical lighting needs.

AllSun Trackers offers sun-tracker structures that include an inverter to convert from DC to AC, and which can flatten itself out and lock into place during high winds.

Aerovironment is one of a handful of companies that are making household charging stations for electric cars.

SolarOne and SOL both offer solar-powered street light options that are expanding and starting to be used.

LED Waves offers LED bulbs designed for downlighting applications and general purpose  use.  a 60 watt replacement bulb uses eight watts.

If you watch Holmes on Homes, you will already know about some of the advantages of sprayed-in foam insulation over fiberglass.  It not only insulates a wall cavity or attic, but also seals.   Sprayed-in insulation is becoming more common at green-building conferences.

Greenroofs are increasingly popular, not only for their insulating properties, but also because they can dramatically lower the storm-water run-off rates and quantities of commercial roof expanses.

From http://www.inhabitat.com, innovative companies are using wood that was once bug infested – especially blue-stained pine wood, a result of the increasing population of the Mountain Pine Beetle, due to global warming.  Straight Line Designs has a furniture series.

A couple of former MIT students are developing a new shock system for vehicles to retain the energy generated when a car bounces up and down (at last, a use for potholes).  The device – the GenShock – can give significant gas savings and provide some poser to on-board electronics.

Then there are major innovations such as Calera‘s approach to sequestering CO2 by capturing carbon dioxide emitted by coal or gas-fired power plants and converting it into calcium and magnesium carbonates for use in manufacturing products such as sand, aggregate, supplementary cementitious materials and cement, as well as fresh water.

Looming in the wings are governmental regulations, especially on carbon emissions, but also on a whole host of other “external costs” that have yet to be fully integrated into the price of products.  These should accelerate the rate of innovation, when they eventually arrive.

Leadership companies – large and small – aren’t waiting for regulations.  They are impacting markets with new products and farsighted environmental, social and employee policies.  Now.

Civil Discourse and Public Attention

March 22, 2010

As a long time advocate of public participation in the political process, including years of community forums and candidate forums with the League of Women Voters, I have noticed that our level of civil discourse has been in a downward spiral.   Even more troubling is the ascent of bullying… in corporate life, our schools, and toward scientific discourse.

Colleagues have commented on bullying in the corporate world, when overly aggressive executives have prevailed in meetings by what can only be called bullying tactics, often resulting in sub-par performance of less-than-best initiatives that do not truly have participant buy-in.

Those of us current with education have been aware of bullying and “cyber-bullying” as it has been labeled in schools.  While more and more administrators are aware of the phenomena and can take disciplinary steps to curtail it when a case surfaces, it exacts a considerable toll on its unfortunate targets.

Political bullying has long been around, and now it has expanded ‘way beyond candidate or office-holder targeting who expect it.  Now there are widespread reports of e-mail abuse and threats against those publishing studies and reports with facts and data aiming only to shed light on issues.

This is especially prevalent toward those documenting climate change.

On March 1, 2010, Scientific American ran an article describing how “researchers must purge e-mail in boxes daily of threatening correspondence…” (http://bit.ly/Sci-Am_Bullying).

Gavin Schmidt, a NASA scientist, gets a barrage of e-mails every time his name appears in the press.  He sees the spam as “simply part of the job of being a climate scientist.”

The leader of the Climate Analysis Section of the National Center for Atmospheric Research, Kevin Trenberth, has collected 19 pages of “extremely nasty, foul, abusive” emails received just since November.

Clive Hamilton, an Australian author and academic, believes there is a more sinister objective:  to intimidate and drive scientists from the public debate, and calls it cyber-bullying.

While many of the e-mails look to be the work of frustrated individuals, some appear to be the result of coordinated campaigns cued by influential anti-climate change advocates.

Some – especially anonymous e-mails – threaten possible physical harm; in Australia, recipients are asked to keep those emails in a separate folder, rather than deleting them, at times calling in the police  (http://www.abc.net.au/unleashed/stories/s2826189.htm).

Some are even “intimidating letters” from congressional members using their positions of power to threaten dire consequences, presumably to research or organization funding.

Those who host websites, such as Skeptical Science (http://www.skepticalscience.com/ – March 19), report being hacked, content being changed, and the possibility of user logins stolen.

Fortunately, the response by many responsible scientists is re-affirmed commitment to publish the facts and trends their research shows.   The fact that their response could be otherwise shows how vulnerable our marketplace of intellectual discourse could be…. this and Google’s difficulties with China.

Conclusion?  For me, I will continue to advocate to my colleagues and my government for open, public Internet forums;  I will encourage legal consequences for physically threatening correspondence; I will advocate more strongly for public funding for climate and other basic research and for professional, objective, non-partisan science agency management; and I will send e-mails of appreciation to the researchers I value.

Observations on Transparency and Greenwashing

March 9, 2010

Last week I attended a Chicago Sustainability Business Association meeting discussing the challenges of trustworthy and ongoing communications with customers and observers … how to avoid Greenwashing.   It is not easy.  The marketing firm Terrachoice has developed “The Seven Sins of Greenwashing” to help companies better understand what not to do.  http://bit.ly/Terrachoice_greenwashing

I was struck by Wal*mart’s successes:  they laid out objective targets and benchmarks for reducing carbon and reducing waste.  Recently they partnered with the Environmental Defense Fund and TreeHugger to publicly announce they, Walmart, are committing to eliminate 20 million metric tons of greenhouse gases from the life cycle of the products that they sell over the next 5 years.  Obviously, this means working with many of their suppliers.

Further, they are committing to the creation of a labeling system that can communicate to the consumer the  relative “greenness” of a product via an independent, third party consortium.  These folks have their work cut out for them.

The interesting element for me is that I have NOT heard anyone accuse Wal*mart of greenwashing.  Yes, they are hoping that the stands they are taking may attract people to their stores.  Yes, they are hoping that customers will choose more of their products in the belief they have gone through some scrutiny for sustainability, which many have.  At this point, only a Walmart line of jewelry makes a claim for greater earth friendliness – and has the transparent life cycle path to substantiate the claim.  Wal*mart is making an impact, and it is doing so with public, objectively measurable benchmarks.

Contrast that to Sara Lee and their “Eco-Grain(TM)” claims.   I live in the Chicago area,  home of Sara Lee, so of course I heard about this.  The Cornucopia Institute took Sara Lee to task in their 2/22/10 commentary:  http://bit.ly/cornucopia_Sara_Lee.  Cornucopia, a Wisconsin firm that supports organic and sustainable farms within their mission of “promoting economic justice for family scale farming” is justified in challenging marketing messages that serve to obscure the real attributes of a product. 

Sara Lee is upfront about the product on their website: only 20% of the flour in their line of natural breads are made from Eco-Grain(TM) wheat.  The rest comes from commercially raised wheat, on commercially farmed farms.  The grain has been developed to taste good and grow well, and probably has some favorable processing characteristics.  There is no claim on whether it’s a “natural” hybrid or strain, or whether more technological methods were used.  Sara Lee’s transparency about the current level of the “new” grain use is a good step.

The “eco” comes into play through farms that invest in Variable Rate Nutrition Technology VRN) – satellite mapping that allows farmers to map a field and reduce fertilizer use in the parts of the field that don’t need as much.  This technology appears to be largely independent of the actual grain, and can be tailored to accommodate other crops. 

So the story winds up being Sara Lee’s introducing a new strain of grain (again, no information on its breeding or derivation) that is grown on farms where farmers are investing in technology to reduce their use of fertilizers, certainly a laudable effort, but apparently independent of the grain or brand.  The linkage to the claim “Helping to Preserve the Earth, One Field at a Time” is tenuous at best. 

Sara Lee’s Eco-Grains would appear to be guilty of TerraChoice’s Sin of Vagueness or Sin of the hidden Trade-off.   I recommend TerraChoice include another sin which may be related to its Sin of Worshiping False Labels.  This would be the Sin of Falsely Reflected Glow, when a product attempts to be aligned with a positive but totally independent beneficial characteristic.  If Sara Lee were investing in spreading VRN technology, they could have made that claim.  There was no information on that.

Avoiding greenwashing can be done.  It takes a brutally honest mirror, a good third party – or critical friend – lens through which to examine the claims, a willingness to avoid the bandwagon until one really has something to say, and a commitment to preserving the credibility of the market.