Al Gore's campaign against global warming, for which he just received the Nobel Peace Prize, has encouraged many corporations to "go green" and become environmentally friendly. But do these companies deserve to be praised? And can we rely on corporations to lead the way on global warming? The answer is: No and no.
Gore deserves kudos, but it's absurd to praise the corporations that are going green. 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 it 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, thereby helping the environment. 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 super-competitive capitalism -- what I've termed "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. And next time you hear a company boast about how environmentally friendly it is, hold the applause.
This column is adapted from Reich's weekly commentary on American Public Radio's Marketplace.