TCS Daily

Corporate Malfeasance

By James K. Glassman - August 29, 2002 12:00 AM

JOHANNESBURG - Arrive at the airport here, get on the highway to the city, and the first sign that smacks you in the face comes courtesy of BMW - yes, the Bavarian manufacturer of expensive automobiles. It informs travelers, "Cape Town 1600 KM, Hydrogen 27 KM." Dutifully, I followed the latter trail to the Florentine courtyard of the Michelangelo Center in Sandton, hard by the conference center for the World Summit on Sustainable Development.

There it was: a whole festival of BMW sustainability, centered on an experimental hydrogen car and a massive Bucky-Fuller semi-geodesic dome called the Earth Lounge, complete with free latte and sustainable green apples. The motto: "Sustainability: It Can Be Done." The richly designed, circular brochure tells us, "It's time to give something back to nature.... " Give back, indeed. In fact, giving back - or, better, giving up - is a major corporate theme here.

Sandton, the site of the United Nations' World Summit on Sustainable Development, now in its fourth day (of 10), is a rich suburban enclave, shopping and dining center and corporate park, far from the madding Johannesburg crowds. It's festooned, not just with BMW paraphernalia, but also with banners from Hewlett-Packard, whose motto is "HP: Inventing a Sustainable Future, Together." Plus, Daimler-Chrysler, DeBeers ("Water is Forever"), BP, Shell, and on and on....

This is what makes the current Earth Summit different from all other environmental gatherings - corporations are out in force, trying to outdo each other in their greenliness.

Will this approach - trying to appease radical greens, attract soccer moms to your products, and benefit from the popular rent-seeking game - really work? Don't hold your breath.

The apotheosis of the corporate-pandering game came last night when the World Business Council for Sustainable Development held a joint press conference with Greenpeace International to urge governments to ratify and implement the Kyoto Protocol, whose aim is to cut greenhouse gases emitted by human activity.

Bjorn Stigson, president of the group of 160 multinational corporations (from AOL Time Warner to Zurich Financial), said that Kyoto "represents the seeds of an essential, long-term framework that can and should be built upon."

His sidekick, Remi Parmentier of Greenpeace, stated: "Given the urgent need for action, we are shelving our differences to call on governments to build an international framework to tackle climate change on the basis of the Framework Convention on Climate Change and the Kyoto Protocol. We both agree that this is an essential first step."

Notice Stigson's reference to "seeds" and Parmentier's to "first step." The most extreme advocates of the Kyoto Protocol concede that - although economists estimate its costs at $300 billion to $400 billion annually in the United States alone - the agreement would only delay global warming by six years over the next century.

In fact, if it weren't for the World Business Council, we would hardly have heard the term "climate change" mentioned here in Johannesburg - where the summit has concentrated on far more pressing matters for developing nations: providing clean drinking water, fighting disease and, most of all, boosting economic growth, in part by encouraging more free global trade.

Green activists have been whining since the conference began that global warming and equally trendy environmental issues had been shoved aside here. Thursday's edition of Eco Equity, a newsletter published by Greenpeace, World Wildlife Fund International, Oxfam International and similar groups, complains about the surprising transformation of the conference:

After seven hours of negotiations into the wee hours of Wednesday morning, five more hours on Wednesday, more than 100 references to the Doha Declaration and the Monterrey Consensus and two references to environment and sustainable development, Eco wondered as negotiators settled in for another late-night session: Are we still at a Summit about sustainable development?

Well, that depends on what sustainable development means. Doha and Monterrey, conferences that the United States backed wholeheartedly, had as their objectives improving the living standards of the world's poor. That's development, in my book.

"Sustainable" is a wimpy, vague word. Over the past two centuries, since the advent of the industrial revolution, development has not only been sustained; it has boomed. But the main beneficiaries, by far, have been liberal democracies with strong market economies.

Aspiring nations that seek prosperity must first establish the institutional foundation, as Paula Dobriansky, a top State Department official, told me in an interview last week. "When you have a commitment to good governance, when you have investments in health and education, and you have economic policies that encourage private-enterprise development - that is what is going to facilitate sustained development."

All of this breast-beating by business - along with its collusion with dangerous groups like Greenpeace - is counter-productive. What business has to offer the environment is simple: corporations, when they are innovative and efficient, enhance economic growth, and economic growth is what produces cleaner environments, as studies by academic experts have repeatedly shown.

If businesses want to move beyond the search for profits (and thus, economic growth) - their main responsibility - then they should promote, not some glitzy vision of greenness, with high production values, BMW-style. Instead, they should promote the values of free and open markets. The billboard I would like to see leaving the airport would say:

We build a better environment by making sustainable profits. Love ya, GlobalCorp, Inc.

So why do corporations pander? For one thing, they practice what economists call "rent-seeking." Many big companies want simply to control the environmental rules. Even if the rules are intrusive and the costs are high, larger companies can bear them more easily than their competitors. For another, businesses seem to believe that by cozying up to the greens and to government and United Nations bureaucrats, they will avoid the wrath of activists.

Think again.

One of the best ideas being discussed here in Johannesburg is to establish what are called "Type II partnerships" between public and private entities (Type I involves governments alone in less specific, lowest-common-denominator deals). As Jan Pronk, former Dutch environment minister and special envoy to the conference from UN Secretary General Kofi Annan, put it, "Type II is for the many countries which are willing to go further. It will let them set up networks with other countries, with business, and with non-governmental organizations."

One example, cited recently by Secretary of State Colin Powell, is the West Africa Water Initiative, a $40 million public-private partnership to provide drinkable water and sanitation to rural villages in Ghana, Mali and Niger - part of what Powell calls "a larger water initiative that the United States will bring to Johannesburg."

The West Africa Water Initiative involves the U.S. Agency for International Development, the Conrad Hilton Foundation, the Lions Club International Foundation, UNICEF and several others.

In addition, a Type II partnership among ExxonMobil, the Chlorine Chemistry Council, the U.S. Council for International Business and the Institute for Liberty and Democracy recently issued a "concept paper," which describes ways to promote better governance, sound science and economic development.

But many of the most visible activists here, including WWF and Greenpeace, and Oxfam began the summit by questioning the very legitimacy of Type I agreements.

"What is new, apart from a little bit of window-dressing?" asked Yolande Kakabasde, president of the International Union for the Conservation of Nature, yesterday in Johannesburg. A representative of the Sierra Club also joined in the criticism of Type II deals, as Kakabasde's group urged negotiators here to "evict the corporate fox from the global henhouse."

But what about BMW, Shell, BP, and all those wonderful companies that are doing so much for a greener world? The Johannesburg Summit Star reported this morning that Bobby Peek, representing a South African environmental group and Friends of the Earth, noted "that Shell and BP had not been held accountable by government or municipal authorities for a series of toxic fuel leaks in residential areas over the past two years."

There's gratitude.

Peek, along with Craig Bennett of Friends of the Earth and other green activists, is a member of the board of an organization called CorpWatch that selects winners of "greenwash" Academy Awards - that is, companies that pose as environmentally friendly but that really aren't.

First place this year, for "best greenwash," went to "BP for their Beyond Petroleum rebranding campaign."

Doesn't BP get it?

It's not hard to see what the radical greens are seeking - not a cleaner environment (in which case, they would embrace Type II agreements) but a world in which centralized global government makes the decisions. What possible justification do businesses like BP have pandering to them?



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