Scam Artists Are Prepped to Fleece Green Industries as Soon as the Money Comes in
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Hard times are looming. And in their desperation to keep the American economy afloat, government and business will be tossing overboard any proposals for real environmental protection. No time for such romantic foolishness when there are investments to be protected. Get those tax refunds back into retailers' registers, quick!
Not that we won't be hearing about the environment; indeed, the next growth spurt, if it comes, is likely to be clothed in a green as green as the felt on a blackjack table.
Earlier this year, entrepreneur Eric Janszen declared in Harper's magazine that the next bubble -- alternative energy -- had already been "branded". His projection: the eventual creation of $20 trillion in fictitious, speculative wealth, "money that inevitably will be employed to increase share prices rather than to deliver 'energy security.'" and that "when the bubble finally bursts, we will be left to mop up after yet another devastated industry." After that next big bust, not only alternative energy but a host of other "green" industries will be left in ruin.
As long as an investing class is allowed to make all major environmental decisions, no new sources of energy will actually replace even one barrel or ton of fossil fuel; rather, they will go to further parasitizing the planet in the cause of growth. The boosters of "green" capitalism have never even bothered to argue otherwise in any effective way.
Typical is a book by Daniel Esty and Andrew Winston entitled Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage , which became an immediate hit among "green" tycoons when it was published in 2006. It was a how-to manual for business people wanting to run the kinds of companies that, in the authors' phrase, "get ahead of the Green Wave," whose "environmental strategies provide added degrees of freedom to operate, profit, and grow."
These are some of the helpful tips to be found in Green to Gold :
"Most successful green marketing starts with the traditional selling points -- price, quality, or performance -- and only then mentions environmental attributes. Almost always, green should not be the first button to push."
"Eco-labels can provide legitimate environmental information to a demanding public. But they can also be used as a trade barrier, disadvantaging competitors in the marketplace."
"Corporate strategy 101 tells us that a company can drive revenues by increasing price or volume. With green products, volume is a much safer route."
"Partnering gives a company a strong defense against NGO [nongovernmental (nonprofit) organization] attacks, but a large part of that defense is the demonstration of genuine progress. We call it brand inoculation ... " [their bold]
Right in the first chapter, Esty and Wilson rank companies they've designated as green "WaveRiders". Number One in their international ranking is petroleum giant BP. Their account of how BP reached the top of the green heap is little more than a description of a masterful public-relations campaign. "Despite being in a business with large environmental impacts, the company is now seen as green," they write, and "Here's the real proof: BP's brand value, as measured by experts in measuring intangibles, has jumped significantly."
But BP's primary mission is still to earn a profit by selling fossil fuels, so it was no big shock when the Independent reported in 2005 that the company had been lobbying against substantive proposals then before the U.S. Congress that would cap carbon dioxide emissions. Instead, BP supported a watered-down move that would have "companies only try to cut emissions with the promise of tax breaks."
Then, last year, the Environmental Protection Agency exempted BP from what the company regarded as a too-restrictive environmental law, allowing its Whiting, Indiana facility to discharge increased quantities of ammonia and other pollutants into Lake Michigan and to continue dumping mercury into the lake. This reportedly was done so that BP could refine heavy crude oil from Canadian tar sands.
Under a hail of criticism from local residents and environmentalists, BP promised, cross-its-heart, to stick to the old water-pollution limits, but its pending state permit for a $3.8 billion expansion of the Whiting facility has critics fuming over potential impacts on local air quality. The permit is expected to be approved by June 1. That is an important deadline, because it's then that some of BP's previously earned air-emission credits will expire. BP claims that by juggling credits, it will decrease the "net" carbon emissions from the new plant -- ecological virtue as thin as the paper the credits are printed on. And, according to reports, "particulate matter and sulfur dioxide emissions would increase."
Writing recently for In these Times , Michael Moreci described the ecological crimes that will be committed far to the northwest in the Alberta tar sands that are going to supply BP's refinery:
"The first step involves razing vast amounts of wilderness for open-pit mining -- meaning that small plants, trees and topsoil must be extracted by the ton. And because five barrels of water are typically needed to produce a single barrel of crude, surrounding rivers must be routed to the pits, then re-routed to man-made lakes of toxic sludge. ... Once the forest and wildlife are out of the way and the pits have been dug, the raw process of extraction requires substantial manpower, heavy machinery (some of which can be up to three stories tall and weigh as much as a jetliner) and an incredible amount of energy. And that's to produce only a single barrel of unrefined crude oil from two tons of tar sands. ... Over the next seven years, global warming pollutants released into the atmosphere from tar sands oil production are projected to quintuple to 126 megatons ... What's more, the tar sands industry consumes enough gas in a single day to heat approximately 4 million American homes."
If BP is a "WaveRider", the wave is one of toxic sludge.
Greenwash your body
In a chapter section of Green to Gold headed, "Perfect is the Enemy of the Good" (that well-frayed motto of green capitalism), Esty and Wilson contrast what they see as an exemplary decision by McDonald's -- to give its McNuggets a package that was not environmentally offensive enough to drive away eco-conscious customers yet not so "flimsy" that it would annoy conventional customers -- with what they see as the too-radical approach of The Body Shop International, whose pursuit of its "environmental and social mission" was "inattentive to economic realities."
To cite the The Body Shop, a U.K.-based firm specializing in skin-and-hair-care products, as a company striving for the "Perfect" reveals the shallowness of Green to Gold 's analysis. For more than 30 years, The Body Shop and its CEO, self-styled anti-capitalist capitalist Anita Roddick, avidly cultivated a corporate image as pioneers of high business ethics. But The Body Shop has been dismissed by critics as no more than a world leader in pale-green consumerism.
A 1994 expose by John Entine charged the company with exploiting workers, franchisees, and indigenous peoples who supply ingredients; using artificial and sometimes harmful chemicals in products labeled as "all natural"; selling bacteria-contaminated products; flushing toxic chemicals into sewage systems; and promoting overconsumption of costly but Wal-Mart-quality products.
Others have blasted the company's much-publicized relationships with indigenous peoples who supply some of their ingredients. An anthropologist who worked for more than thirty years among Brazil's Kayapo people charged in 1995 that The Body Shop purchased much smaller quantities of products like brazil-nut oil than the Kayapo wanted to sell, and forbade them to sell to other companies. The company did that, he charged, because the real purpose of the project was to acquire not oil but rather the exclusive right to heartwarming photographs of the Kayapo that would appeal to the tastes of "Western ecoliberals."
The Body Shop was purchased in 2006 by L'Oreal, the world's largest cosmetics company. L'Oreal has refused to sign a proposed international Compact for Safe Cosmetics. The buyout prompted Ethical Consumer magazine to drop The Body Shop from a rating of 11 on the magazine's 1-to-20 "Ethiscore" scale all the way down to 2.5.6 (The company has since climbed to a still-wretched 5 out of 20).
Ethical or not, The Body Shop can't be considered an environmental leader, wrote Entine on the occasion of Roddick's death last year: "She sold cosmetics made mostly with water, colorings, fragrances and preservatives made from petrochemicals. Body Shop packages beauty notions in plastic bottles, an anathema to serious environmentalists, and ships them around the world in carbon-belching trucks and planes. From an environmental perspective, its business model is a train wreck."
But in having offered its healthy business and virtuous image for sale to a huge corporation, The Body Shop is far from alone. Noting that Ben & Jerry's ice cream has "melted into the Unilever empire," that "organic and fairtrade chocolate producer Green & Black's was snapped up by Cadbury Schweppes," and that Colgate-Palmolive was about to "clean up on the American ethical toothpaste brand Tom's of Maine," journalist Faith Glasgow looked into the reasons that well-intentioned companies sell out:
"The founders of small ethical firms face a challenging dilemma when it comes to bringing their products into the mainstream. Many of their supporters buy those products at least partly because they do care about the irresponsible behavior of big corporations: sell out, and a proportion will walk away. On the other hand, the quickest and easiest way to reach and maybe raise the awareness of a much wider audience is undoubtedly by accessing the superior marketing and distribution network of a multi-national. 'I think they genuinely want to reach wider audiences with their products, and they see a takeover as the best way of accessing that market," affirms [Ethical Consumer's Rob] Harrison. 'They believe that the knock to their reputation will be outweighed by the boost to sales.'"
In Green to Gold , Esty and Winston applaud two other companies, Wal-Mart and Whole Foods Market, for making environmental improvements and peddling green products. They quote with approval Wal-Mart CEO Lee Scott, who told his fellow executives "that their sustainability efforts would help protect the company's 'license to grow'."
One chapter of my own book Sick Planet recounts how those two Fortune 500 companies (Wal-Mart now at No. 1, Whole Foods at No. 411) are attempting, each through its own tried-and-true strategy, to expand the market for natural and organic food.
The two Goliaths are slugging it out to capture that big stretch of socioeconomic territory that separates them. Wal-Mart, the shopping home of American families who live below the median income, made headlines in May 2006 by announcing a big increase in its marketing of organic food and cotton clothing. (Organic coffee has since been added to the menu.) By the end of 2006, probably not by complete coincidence, the 196-store chain Whole Foods, leader in the natural-food market and purveyor of edible wonders to the prosperous, announced that its long string of double-digit growth years was ending, with projected 2007 growth dipping to "only" 6 to 8 percent.
Whole Foods handled that problem last year by the time-honored method of buying out the competition: Wild Oats Marketplace, operator of more than 70 stores in the U.S. In August, with a Federal Trade Commission antitrust suit still standing in the way of the merger, Whole Foods CEO John Mackey unwittingly bolstered the government's case with an email to his board. He wrote that his target Wild Oats "is the only existing company that has the brand and number of stores to be a meaningful springboard for another player to get into this space ... Eliminating them means eliminating this threat forever, or almost forever."
Whole Foods has grown phenomenally by selling luxury goods to consumers in the upper income brackets. Mackey is frank about that. In 2005, he told the Independent, "You can't have it both ways. If you want the highest quality, it costs more. It is like complaining that a BMW is more expensive than a Hyundai. Yes, but you're getting a better car." And that's why you don't see rusty Fords and Plymouths parked outside a Whole Foods Market.
Of the pre-merger company's 170 U.S. stores in 2006, not a single one was located in a zip code with an average 2003 household income as low as $27,800 -- the most common Whole Foods hourly-job salary. More than 95 percent were in zip codes above the national median income, with more than 25 percent above $100,000. Lower-level Whole Foods employees could eat fairly well shopping at Wal-Mart, but supplying all their food needs at Whole Foods would be a stretch. Meanwhile, most Wal-Mart employees would have trouble affording their own employer's rock-bottom food, let alone its organic food, and could not afford to open the doors at Whole Foods.
Asked how virtuous food can be made more affordable, Mackey has shown a touchingly simple faith in economic progress: "I think [organic and natural food] can continue to penetrate, as the culture becomes wealthier." If that's what it takes, don't count on much progress in the economically fraught years that lie ahead.
Wal-Mart's announced goal was to sell organic food at only 10 percent over the price of conventional food. That hasn't happened. This week at the company's Supercenter in Salina, Kansas, organic food was available but not easy to find, tucked into small bins scattered here and there in the huge produce section. Organic versions were selling at the following premiums: spinach, 28% above its conventional counterpart; lettuce, 50%; onions, 56%; potatoes, 100% (i.e., double the price of conventional "NASCAR" brand Russets); milk, 105%; and tomatoes, 200% (and the organic ones were from Mexico).
One result of the corporate takeover of organic food retailing has been the industrialization of organic agriculture. Whole Foods and other big sellers are forced to seek out suppliers who can deliver massive loads of a relatively uniform product, even out of season. Those generally idealistic companies unintentionally paved the organic highway that Wal-Mart is now traveling, and, too late, fear is spreading. For one thing, everyone's afraid a big share of Wal-Mart's organic products will come from the company's favorite source for just about all other merchandise: China.
Michael Pollan has asked how Wal-Mart will manage to cut organic food's typical premium of 50 percent over conventional food to only 10 percent: "It may mean that they'll have to import food from China or other countries. They'll have to buy only from the biggest suppliers."
Critics charge that corporations are exploiting organic agriculture's feel-good image even when selling conventional products. At a Whole Foods store in Manhattan, writer Field Maloney spotted pictures and folksy profiles of neighborly food-growers (like "a sandy-haired organic leek farmer named Dave") positioned above non-organic onions from Oregon and Mexico. (Wal-Mart has been caught in similar deception). Maloney guessed that Whole Foods executives are feeling a little off-balance these days, amidst so much talk about the virtues of locally grown food: "After all, a multinational chain can't promote a 'buy local' philosophy without being self-defeating."
If you want to coax higher prices out of customers and keep employees happy at low pay, it helps for both groups to feel a connection to a movement that's making the world a better place. But the bigger Whole Foods and other retailers grow, the harder it will be to extract premium prices from consumers while convincing workers that they're part of an important cause.
Of all religions, the one to which Americans cling most tightly is the doctrine of the free market. No belief is more deeply held than the one that says markets will always satisfy people's needs in the best and most efficient way. That belief persists, unaffected by the market economy's repeated, spectacular failures to perform as advertised. If green energy and green consumption remain as they are -- as sects within the religion of the market -- they also are doomed to fail.