June 3, 2006
AND NEXT YEAR WE’LL BE DECLARING DRESS-DOWN EARTH DAY
The greenmailing of corporate Britain (Richard Northedge, The Spectator, June 3rd, 2006)
When business complains so much about red tape, why is it willingly binding itself in green ribbon? And who is this greenery for? Certainly not the shareholders — hence Signet’s decision not to waste paper telling investors about its environmental credentials. The goodness lobby regularly tries to argue that green companies produce better investment returns, but the facts tend to disagree: this year’s best performing shares are mining companies. Nor is it done for the customers’ benefit. We may tell market researchers we prefer ethically sound products, but we continue to buy on price and quality, not provenance. One FTSE chief executive whose own annual report has become a green fashion victim privately admits that it has neither sold an extra widget nor added a penny to the share price, but says, ‘It goes down well with the staff.’Fair enough. If the placebo works, keep taking it; a happy staff is an efficient staff. But that’s the point: using less water or energy is efficiency — and that’s what business should be aiming for. There’s no need to wrap it up as saving the planet — and no need to produce separate reports saying that management is doing what it is paid to do.
It certainly makes sense for oil companies to ensure that they avoid pollution, or mining companies to cover their tracks, because in damaging the environment they damage their reputation and thus their growth prospects. Shareholders should be worried if these companies have no policies to avert such calamities. But what are Diageo’s investors to make of the group’s 36-page Corporate Citizenship Report picturing its Earthwatch champions recording turtles in the Volga River delta or collecting data on invertebrates in South Africa? Diageo’s holistic performance report is as green as one of its (recycled) Gordon’s gin bottles.
The suspicion is that directors are being greenmailed into adopting environmentally friendly measures. There is a sub-industry of advisers eager to audit, benchmark and write glowing reports saying that their clients are getting better. No board dares say no, especially when it sees that its rivals have already bought a suit of these emperor’s green clothes.
This corporate emphasis on the environment is a new facet of what used to be called ethical investment. The fashion used to be to shun businesses that produced drink or cigarettes or armaments or whatever puritans were against at the time. And it was those blacklisted companies that led the way in adopting corporate responsibility to try to look greener-than-green. The indices of ‘good’ companies thus welcomed the very water companies that had contaminated our rivers and the oil groups that had polluted the seas on the basis that, despite their lapses, they had improvement programmes.
So this environmental bragging started as greenwash — a public relations strategy to improve a battered image. It became greenmail when the clean companies felt forced to follow. BAE Systems regularly failed the ethical test but now produces a 42-page corporate responsibility report while relegating its financial accounts to just four pages of its annual review. It formed a corporate responsibility committee last year — with Michael Portillo on it — to focus on improving safety, health and the environment. The chief executive Mike Turner, remorsefully reporting on an accident that killed one employee, states, ‘There is no acceptable number of fatalities’ — but hang on, this is a company that builds tanks, destroyers, jet fighters and nuclear submarines.
This is the secular religion of environmentalism borrowing a page from its Christian predecessors. Whereas Judaism puts the focus of reverence on the Sabbath and High Holidays and pretty much leaves the mundane chore of earning a living to be guided by baseline ethical and legal restrictions, fervent Christians have traditionally been fixated by the challenge of “living” their faith 24/7 wherever they happen to be and whatever they happen to be doing. The most systematic efforts to inject faith into economic life were made by the Catholic Church (the just wage, corporatism, Catholic unions, etc.) with ambiguous results at best, but anyone flipping through the product endorsements in 19th century mail-order catalogues will see that Protestants were no strangers to the idea that faith and profit are mutually supportive.
Although much of both the science and economics that supposedly underlies all this is nonsense, one shouldn’t be so cranky as to begrudge a file clerk’s pleasure at believing he is doing something for the Volga turtles. But it is awfully amusing to see all these sophisticated, supposedly rational types behave like intense old folks in church basements discussing how to “save” Africa.