Corporate America Can’t Keep Up with All the Sustainability Demands

score cardThe competition in corporate America to show who is “Greenest” or “most sustainable” has spun out of control, with the Alinskyite effect that drives corporations to spend vast amounts of time and money trying to address the whims and requests of every Leftist niche group that waves some kind of scorecard in their faces.

Meanwhile customers pay for the lunacy in higher prices, and shareholders (those not in the Corporate Social Responsibility movement) bear the burden in diminished returns on their investments. 

A Businessweek report from Thanksgiving Eve illustrated how unwieldy the demands of eco-graders and CSR activists have become, as “companies are buried in requests for data as groups jockey to be the arbiters of sustainability.” And you thought IRS and other government regulatory compliance was a headache.

The article explains how companies like Intel and Walmart are inundated by organizations who seek to rank their performances on dozens – if not hundreds – of criteria, whether it’s water usage, toxic waste disposal, recycling, or acceptable levels of transparency about their “sustainability” disclosures.

“There are many, many ratings out there,” said Suzanne Fallender of Intel’s corporate responsibility office. “More every year.”

In April NLPC reported how inconsistent environmental organizations are in their grades, with the basis for evaluation acceptable in one group’s eyes, but not in another’s. One example showed the differences in how two groups – Greenpeace and Climate Counts – evaluated the “sustainability” performance of technology companies, especially with regard to the amount of electricity they use at massive computer server “farms.” The two groups’ ratings were shown to be worthless when Greenpeace placed Yahoo!, Google and Amazon at the top in energy efficiency, while Climate Counts ranked those three technology giants as the three worst offenders in energy usage.

And in March NLPC noted how environmental pressure group Ceres demands that corporations report their greenhouse gas emissions and “climate risk” in their Securities and Exchange Commission filings, which requires more layers of bureaucracy within companies to address an artificial global warming “problem” that Climategate has revealed has been a hoax all along

Meanwhile, Businessweek reported, “scores of data analysis and rating outfits have sprung up, vying to be the arbiter of who’s really green.” In response many – perhaps most – major corporations issue an annual “Corporate Sustainability” or “Corporate Responsibility” report to try and address the wide-ranging concerns of various watchdogs. Undoubtedly some companies do so in an attempt to fend off threats from the eco-mafia. As Environmental Defense Fund president Fred Krupp wrote one year ago: “We will look for ways to hold them accountable through every reasonable lever at our disposal. We will learn to be as tough with them as they have been with us.” 

Businessweek also detailed last week, “Companies that take the lead in (sustainability), the thinking goes, are likely to continue churning out profits in an era of growing global competition, climate change, and diminishing resources.” But where’s the proof? As NLPC has reported, American Airlines in the past has boasted about its “long-term goal is to improve our fuel efficiency by 30 percent within 20 years,” and about its “sustainable” Admirals Club at San Francisco International Airport. That laser-like focus on Green initiatives helped the carrier to losses so great that it filed for Chapter 11 bankruptcy earlier this week.

And General Motors’ pandering to the Obama administration’s “Green jobs” agenda led to the production of the failed (in sales) Chevy Volt, a financial dependency on taxpayers, and tanking of its stock price. Then there is Walmart, perhaps the king of corporate sustainability, whose merry prance down the path of renewable energy initiatives and support for Obamacare helped it suffer nine straight quarters of same-store sales declines. All the lip service paid to environmental conscientiousness has not forestalled accusations of “Greenwashing” against the retailer.

Corporations would serve their customers, shareholders, and the public interest better if they paid more attention to free market principles rather than attempting to appease wildly divergent Left-wing interest groups. John Locke Foundation economist (and my former colleague) Dr. Roy Cordato wrote in a report on sustainable growth, “The standard view of sustainable development is not rooted in any coherent set of philosophical principles. Advocates for sustainability tend not to focus their arguments on the basis of liberty, equality, or economic efficiency. Instead they push a collection of anti-free market ideas that have made up the core agenda of the major environmental advocacy groups since the 1970s.” 

As has been shown repeatedly throughout history, the collectivism and central planning by government is always an economy-killer. And as Cordato wrote, there is no evidence that overuse of resources by previous generations has had a harmful effect or eliminated vital goods or needs for following generations:

Resources used as part of the profit-generating market process are economized in such a way that their ‘sustainable’ use is guaranteed. When a resource becomes more scarce, prices increase. Suppliers will look for new ways to provide the resource or new alternatives to the existing resource.

On the demand side, higher prices encourage efficient levels of conservation. This is conservation that’s consistent with people’s individually determined goals in life, not the vision of sustainability advocates or government central planners. Plus, supply and demand are linked. It is the desire of consumers for less costly ways of achieving their wants and goals that stimulates entrepreneurial action on the supply side.

Imagine that – giving customers what they want, in the most efficient manner, in the most affordable way, actually leads to conservation. How do so many major corporate executives totally miss such a simple concept?

Paul Chesser is an associate fellow for the National Legal and Policy Center.