Going green is only good business

Marketplace Staff Oct 17, 2007
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Going green is only good business

Marketplace Staff Oct 17, 2007
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KAI RYSSDAL: Whether or not corporate America gets its way with the cap-and-trade bill Sarah Gardner was telling us about, lots of companies have already started to go green. They can’t wait to tell you about it in their ads and press releases.

But commentator Robert Reich says: Big whoop.


Robert Reich: Al Gore deserves kudos, but do all the corporations that are going green deserve praise as well? Consider British Petroleum, which a few years ago shortened its name to BP and has promoted itself with a $200-million ad campaign as the environmentally friendly oil company that will go “Beyond Petroleum.”

So far, though, it’s invested a tiny fraction of its oil profits in non-fossil-based fuels, and caused the worst oil spill in the history of Alaska’s fragile North Slope. Going green for public relations might help the bottom line, but doesn’t help the environment.

Other companies are going green because they can save money that way. By using new cleaner technologies, for example, Dow Chemical lowers its energy costs and reduces carbon emissions. By packaging its fresh produce in plastics made from corn sugar instead of petroleum, Wal-Mart also cuts costs. Alcoa saves some hundred million dollars a year by reducing its energy use.

I think it’s great these and other companies are cutting their costs and increasing profits. But this is what companies are supposed to do — it’s called good management.

Some investment banks and private-equity firms are going green because they anticipate regulations that will make green pay off and reduce returns from companies that don’t go green. Goldman Sachs recently pushed TXU, a big Texas power company, to cut the number of coal-fired plants it was going to build because Goldman anticipates stricter regulations of coal-fired plants. Goldman isn’t praiseworthy, it’s just watching its money.

Under “supercapitalism,” it’s naive to think corporations can or will sacrifice profits and shareholder returns in order to fight global warming. Firms that go green to improve their public relations, or cut their costs or anticipate regulations are being smart, not virtuous.

So don’t expect corporations to lead the charge on global warming — that’s government’s job. So the next time you hear a company boast about how environmentally friendly it is, hold the applause.

RYSSDAL: Robert Reich was secretary of labor for President Clinton. His latest book is called Supercapitalism.

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