TCS Daily


Gaia and Greenbacks

By Nick Schulz - May 23, 2003 12:00 AM

Under the auspices of concern for the health of the planet and its inhabitants, environmental groups have for years lobbied governments to adopt environmentally friendly regulations and pressured businesses to change their practices. They've advocated limiting greenhouse gas emissions, prohibiting genetically modified foods, purchasing eco-friendly recycled products, protecting biodiversity and other initiatives.

Some of their efforts to enact policy and business practice changes have been successful, as evidenced by Europe's continued moratorium on the use of genetically modified organisms, or GMOs. But others - such as the Kyoto Protocol targeting global warming - have largely failed. These policy failures are usually attributable to the fact that the proposed regulations are prohibitively costly, based on unsound science, or both.

These days, greens aren't advocating change just for the good of the planet. They've figured out how it can be good business - big business - with big bucks involved. As it turns out, the profit motive so often derided by greens as leading to environmental destruction isn't in reality so bad: It just depends on who profits and what the motives are.

Consider CERES - Coalition for Environmentally Responsible Economies - which describes itself as a group of "environmental, investor, and advocacy groups working together for a sustainable future."

CERES is part of a growing "corporate social responsibility movement." As CERES sees the world, it is not enough for companies to provide jobs, create products consumers want and generate wealth. They must work to achieve the social ends CERES deems desirable. And if CERES members are successful, they stand to make a lot of money in the process.

To get a sense of how CERES works, consider its "Green Hotel Initiative." The group encourages hotel chains to complete a best practices survey that will help them achieve a solidly "green" reputation. The survey is designed to pressure them into behaving in what CERES believes are environmentally friendly ways, and they back up their efforts with an aggressive media campaign.

For example, the survey encourages hotel chains to purchase recycled paper products. Sounds harmless enough. Not coincidentally, Mother Earth isn't the only one who will benefit from this shift in corporate behavior. Recycled Paper Printing Inc. and other companies will reap a financial windfall from large purchases of recycled paper goods - and they are on the list of CERES' endorsing companies.

According to the group's literature, CERES includes "companies that have committed to continuous environmental improvement." It might add that they are committed to making money, too.

One of the CERES coalition members is Green Century Funds, a Boston-based group that invests in, among other companies, AstroPower, a supplier of solar electric power products. Companies such as AstroPower are poised to thrive should federal and state governments mandate that taxpayer dollars be redirected to subsidize renewable energy industries.

Mindy Lubber, the executive director of CERES, is senior advisor to Green Century Capital Management. Recently Lubber and other groups working with CERES released to the press a report they sponsored, called "Sleeping Tiger, Hidden Liabilities," criticizing ExxonMobil for not doing enough to change its policies to help combat climate change.

Many of the companies that Lubber's Green Century Capital Management invest in - such as AstroPower - will profit handsomely from regulatory changes that global warming alarmists are pushing. For example, enacting the Kyoto Protocol and other efforts to regulate greenhouse gas emissions would yield enormous taxpayer subsidies for solar electricity generating companies.

Green Century has also invested in Campbell's Soup Co. In doing so, Green Century was able to file a shareholder resolution with Campbell's to urge the company to reconsider its use of genetically modified ingredients in its foods.

No one should be surprised to find, then, that one of Green Century's largest holdings is United Natural Foods, which according to their website is the "largest publicly traded wholesale distributor to the natural and organic foods industry." In 2002 the company grew over 15 percent with sales of over $1 billion. And both Green Century and other "socially minded" investment groups are targeting additional companies with other shareholder resolutions.

Another CERES coalition member is The Calvert Group of Bethesda, Md. Calvert is a multi-billion dollar family of mutual funds and says it invests in "environmentally responsible companies."

The Calvert Social Index Fund invests in blue chips like the Gap, Heinz, Xerox and Dell. But its Calvert Social Investment Fund and World Values International Equity Fund invest in "socially responsible" companies such as H2Gen Innovations of Alexandria, Va. H2Gen makes hydrogen generators for, among other things, the emerging fuel cell vehicle and distributed fuel cell power generation markets. Calvert says H2Gen's long-term goal is to "assist in society's transition from a fossil fuel-based energy system to a renewable hydrogen-based energy system."

Harrington Investments, a Napa, Calif.,-based company is another CERES member. According to company literature, it is a "Registered Investment Advisor managing assets for institutional and individual investors concerned with social, as well as financial, return." The company invests "from $50,000 to $200,000 in the equity or debt of private companies that meet its investment criteria." What are those criteria? Among them is "utilization of renewable and alternative sources of energy." Of course, as a member of CERES, Harrington is part of an organization that, not coincidentally, is putting heavy pressure on governments and businesses to meet its very investment criteria - all very cleverly under a green banner.

All of this greenspeak and the assertions of social responsibility would be little more than cynical and opportunistic posturing if there wasn't so much at stake. For starters, consider the ban on GM foods in Europe - a ban promoted by groups affiliated with CERES that stand to profit from stopping GM technologies in their tracks. It's been amply documented, as President Bush argued this week, that this ban has been disastrous for poor Africans who have been denied food aid from the United States and elsewhere because it contains GM foods. Africans have been understandably worried that Europeans will close off their market to African goods should they accept the food. And as a result, many are starving.

Or consider the Kyoto Protocol and other greenhouse gas reduction policies favored by CERES. The Clinton administration's Energy Department estimated such regulations could cost the overall American economy $300 billion annually. Kyoto-style regulations will significantly drive up energy costs, a change that disproportionately harms the poor as they spend a larger percentage of their income on immediate energy needs than wealthy people do. Of course, many of the companies and investment firms such as Green Century Funds allied with CERES stand to profit directly from these mandates, so their support for greenhouse mitigation makes economic sense - to them.

All in all, CERES "Coalition Members collectively represent more than $300 billion in invested assets and tens of thousands of individual members." That's a lot of financial clout. But then, they don't call dollar bills "green"-backs for nothing.
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