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PRI's Environmental News Magazine

Green Investor Group Lands First Big Business

Air Date: Week of April 30, 1993

Living on Earth's Jan Nunley profiles the Coalition for Environmentally Responsible Economics, or CERES. The group of "green investors" is the author of an influential set of principles for corporate environmental responsibility. Sun Oil Company has recently become the first Fortune 500 firm to endorse the principles.

Transcript

CURWOOD: A few years ago a major poll found that most Americans blamed corporations for most of the country's environmental problems. But polls in recent years show the tendency to blame pollution on companies falling - sharply. One reason for this may be that people are taking more responsibility for their own actions. But it may also be that little by little, corporations are changing the way they do business. Living on Earth's Jan Nunley has the story of one group that's helping to foster that change. . . by forging common ground between environmentalists and corporations in the area of environmental ethics.

NUNLEY: Not all the investors of the Eighties were in it for the money - not entirely, anyway. While the Masters of Wall Street were wheeling and dealing, a small group of investors who called themselves "socially concerned" were looking for places to put their money where it would do more than just grow. They came together in 1988, to form a sort of think-tank on environmentally responsible investing, calling themselves the Coalition for Environmentally Responsible Economies - CERES - the name of the Roman goddess of grain. Joan Bavaria is president of the Boston-based socially-responsible investing firm Franklin Research and Development . . . and a founder of CERES.

BAVARIA: We were needing to provide service to our clients who were very concerned that their investments be environmentally positive. We didn't have a lot of information coming from the environmental community, from corporations themselves, or possible alternative investments targeted directly into the environment.

NUNLEY: To help make this kind of information more available, CERES members came up with a set of ten principles for operating environmentally responsible businesses. At first, they were called the Valdez Principles, in memory of the 1989 Exxon oil spill in Alaska's Prince William Sound.

BAVARIA: The first six principles which some have called 'apple pie and motherhood' principles, are basic and fundamental to sound environmental management.

NUNLEY: Companies would promise to conserve wilderness and natural resources, cut down on and dispose of waste safely, save energy, and make safe products, safely.

BAVARIA: The last four principles are the public accountability loop, the 9th, for instance, asks the companies or institution to commit on a very high level to environmental responsibility.

NUNLEY: . . . and these were stickier. In case of accidents, businesses would commit to correcting the problems they caused, and informing the public. They would put an environmentalist on their board of directors, and complete an annual environmental audit authored by CERES.

The first to sign were investors and small, "clean" businesses - "green-chip" companies, like herbal cosmetics manufacturer Aveda Corporation of Minneapolis, and Ben and Jerry's All-Natural Ice Cream in Vermont . . . even a hair salon in Georgia. But the Fortune 500 giants weren't responding. Was it something they'd said?

BAVARIA: Some corporate counsels felt the principles presented legal barriers, for which they could not recommend the principles to their board. We had no intention to providing any kind of legal problems to the companies, so we tried to amend the principles to accommodate that.

NUNLEY: That meant changing some key words in the principles, including the very title, "Valdez" - a moniker one oil executive compared to asking a shipping company to sign the Titanic Principles. The name was changed, to the CERES Principles. CERES investors bought stock in giant companies, and began lobbying them to sign the principles . . . companies such as DuPont, IBM, General Electric . . and Sun Oil Company.

(Sound of service station bell)

NUNLEY: Sun Oil, which sells gasoline on the East Coast under the names "Sunoco" and "Atlantic", is the 12th largest U.S. oil company - and in February it became the first Fortune 500 firm to endorse the principles. At first, Sun's stockholders turned down the CERES shareholder resolution by a more than 15-to-one margin. But Robert Campbell, president and CEO of Sun, was willing to talk with CERES, and he did - for almost a year.

CAMPBELL: We eventually concluded that we wouldn't be able to endorse some of the specific words because they were so generally stated that ultimately you could actually conclude that we'd be endorsing a principle that says we're getting out of business. The breakthrough came when it was suggested that what we might do is to draft a principle that mirrored what they were proposing but more adapted to our business in a practical sense.

NUNLEY: The new "Sun Principles" are almost identical to the CERES Principles. They commit the company to reduce waste and toxic emissions, use water and non-renewable resources more efficiently, conserve energy, and eliminate sanctions against environmental whistleblowers. They've also promised to be more accountable to the public and to shareholders on environmental concerns. Campbell says CEO's of other companies have questioned whether such measures as the annual environmental audit, to which Sun Oil has committed, go too far. Robert Campbell.

CAMPBELL: I fundamentally believe that annual environmental reporting will someday be as common as annual financial reporting for major corporations. And I think that, more than anything else, has been the stumbling block. To me it's just the wave of the future.

NUNLEY: Other companies have joined the CERES endorsers since Sun Oil, including cruelty-free cosmetics purveyor The Body Shop and, most recently, Timberland, the footwear and apparel manufacturer. Some companies have started to implement environmental reforms, and some have issued their own environmental codes. But most corporations may be reluctant to link up with an environmental group such as CERES . . . at least until they see a significant, and sustained, uptick in the economy. Dallas-based investment analyst David Johnson.

JOHNSON: You know, the real worry is, is that you have a commitment to spend, you know, a million dollars or something for some new scrubber, and then you look around and the very existence of the company is in jeopardy. And in tough times, you know, unfortunately, the environment is one of those things that gives.

NUNLEY: Johnson agrees with Robert Campbell of Sun Oil that it's the "public accountability" provisions of the CERES principles - things like opening up environmental practices to public scrutiny - that are the hardest for many corporate boards to swallow.

JOHNSON: Boards used to just sort of have people fly in, pick up honorariums, have a nice dinner, coupla drinks and they're off. Now boards are accountable, and they get sued.

NUNLEY: Yet Johnson thinks companies will come around - eventually - since, he says, more environmentally-friendly and -efficient businesses make more money.

There's other resistance to the CERES principles - some of it from environmentalists, who fear that making friends with corporate America - especially petrochemical, waste management and other "dirty" industries - will somehow "greenwash" these companies' shortcomings. But Joan Bavaria of CERES says these can be some of the most important companies with which to work.

BAVARIA: Some of those companies that have been historically thought of as the devil themselves have reasons to change. They've either assumed new management or they've been under so much public pressure that they're anxious to turn over a new leaf. Whatever their internal reasons, we need to be responsive to them and to take the opportunity to work with them to craft new policies.

NUNLEY: In twenty years, Joan Bavaria says, she'd like to see the CERES Principles so deeply a part of the bottom line that they disappear - having done the work of changing corporate culture, and the people in it, so that business as usual includes the business of considering the environment with every decision. For Living on Earth, I'm Jan Nunley.

 

 

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