Environmental Responsibility Vs Shareholder Value - The Tale of Two Masters

Matthew 6:24 "No man can serve two masters. Fororganic products (crops produced without harmful
either he will hate the one, and love the other, orpesticides and herbicides) offered nationwide.
else he will hold to the one and despise the other.Wal-Mart has also begun to build "green" stores to
You cannot serve both God and money." To whommeet their energy needs. You can view more
do we owe our affection? Do we bless theinformation on how Wal-Mart is attempting to,
shareholders without thought of anything more, or"provide cost effective merchandise while reducing
do we consider ethical and environmental obligations?their environmental footprint" on their web site. With
Is there a balance that can be struck between theG.M. now on the environmental cleansing bandwagon,
two?you can expect more companies to find ways to
The Wall Street Journal reported Rick Wagoner,compete to provide alternatives to fossil fuel,
General Motor's chairman and chief executive,energy, and other resources. Countries around the
announced on Sunday, January 13, 2008 that theworld are shifting their focus to filling the need for
company was purchasing an equity stake in Coskata.alternative fuel.
Coskata, a start-up company in Warrenville, Illinois,Published in the New York Times on the same day,
plans to make ethanol without the use of corn. G.M.was an article by James Kanter, Europe is considering
would not disclose how much it paid, nor the amountbanning the imports of certain biofuel crops that lack
of stake they took in the company. This is the firstsustainability. In countries such as Malaysia, and
time that a car company has gone on record toIndonesia mass deforestation is occurring in an effort
invest in alternative fuel sources. Was this an act ofto plant palm trees for the palm oil export. Palm oil is
environmental obligation? "I really don't see the logiccurrently one of many crops that are being produced
of it," Christopher Flavin is quoted as saying. Flavin isfor use as alternatives to fossil fuel. Although
the president of Worldwatch Institute, a WashingtonEurope's current ethanol consumption is only at 1%
environmental group. He believes that G.M. shouldas of 2005, they are thinking ahead to the impact of
concentrate on maximizing the fuel economy of theirusing food for fuel. "Farmers growing corn for ethanol
current line. Lee Schipper, from the University ofcould also be affected, because the European rules
California, Berkeley, has given a stamp of approvalcontain provisions on preserving grasslands, said Mr.
for the project. "Ethanol made from waste materialsDrinkwater." Matt Drinkwater is biofuels analyst at
could result in substantially less carbon per mile." HeNew Energy Finance in London.
goes on to say later in the article, "Why wait forWith all the efforts of reducing a global impact are
someone else to invest?"we really making any headway? "A flurry of studies
In a similar movement, Wal-Mart recently "helpedhas discredited some of the claims made by biofuel
reduce the package of a popular toy. As a result,producers that the fuels help reduce greenhouse
they were able to ship the product using 230 fewergasses by reducing fossil fuel and growing
containers, saving 356 barrels of oil, and 1300 trees."carbon-dioxide-consuming plants. Growing the crops
Constance E. Bagley writes in his book Managers andand turning them into fuel can result in considerable
the Legal Environment, "Issues of social responsibilityenvironmental harm." (New York Times, January 15,
arise in the areas of product safety, sweatshops,2008). So turning food into fuel is not a good idea
and underpaid foreign workers, advertising,after all.
campaigns, antitrust violations, client conflicts ofThe shareholders of General Motors may not have all
interest, managed earnings, and Internet companies."agreed on the financial choice of Mr. Wagoner, but
Most companies find a large gray area in the socialperhaps his announcement will help boost stocks as
responsibility angle. In the early 1990's, for example,perceptions of the company's standards "change."
Wal-Mart had made claims that products were madeThe goal of improving stocks could be as simple as
in America. In truth however, 12 year- old childrenshowing their care about the earth. While steering
were making the product in a Bangladesh sweataway from biofuel, Mr. Wagoner and G.M. stepped
shop. Now, Wal-Mart clearly labels their products ofinto the unknown world of ethanol made from waste.
origin, and has gone to the "Save Money, LiveG.M.'s equity stake purchase will most likely be
Better" slogan. They ease the conscience of theviewed as a very intelligent maneuver. There is a
consumer with the promise of living better bygrowing surge toward consumers demanding
spending less money. In recent years they [Wal-Mart]companies show their financial, and environmental
have adopted social and environmental standards. Inresponsibility. They are touted on commercials from
further efforts to clean-up their social policies,companies such as Subaru that have 0% waste
Wal-Mart has also begun to support local companies,plants. McDonalds that purchased $3 Billion in materials
such as Nectar of Life Coffee Company. Nectar ofmade from recycled products. Ford Motor Company
Life Coffee Company is a 100% organic and Fairhas even created a new "guilt-free" luxury vehicle,
Trade certified coffee roaster with roots in Spokane,made from recycled materials, and "chrome-free"
Washington, and Coeur d'Alene, Idaho. Wal-Martsleather. It would seem only logical for companies to
pushed to improve their image this decade, and it ishedge their pocketbooks where America is buying.
paying off. They have increased the amount ofClearly, America wants good to work.