Beware of "Green" Firms

by Jon Entine

Come January 1st [1998], forecasters are expecting a wave of hot air to sweep through California. No, it’s not another storm touched off by the ubiquitous El Niño. It’s green marketers ushering in a nationwide $300 billion experiment in electricity deregulation.

It’s also part of a larger and disturbing trend of companies using green "branding" techniques to sell commodity products and services –– electricity, telephone access, shampoo, ice cream, tea, and toothpaste, among others. This ‘shop for a better world’ mentality resonates with baby boomers, who have long since traded in their VW Beetles for BMW’s. Surprisingly, much of the blame for this cynical turn rests not with mainstream companies but with New Age entrepreneurs who use self-proclaimed good intentions for frequently reckless promotions. It's a story that many journalists are missing, perhaps because of their desire to see these advertised ‘socially responsible’ practices come to fruition.

Consider the power division of Working Assets, the green shell that has made a small fortune by selling long distance telephone access and credit card services, slapping on a green label, and celebrating itself for donating a tiny fraction of its inflated prices to liberal causes. Last year, it barreled into New England promising "NUCLEAR FREE ENERGY" for residents who dumped their local electric company. In the words of CEO Laura Scher, "We are offering people a chance to save money and save the environment at the same time." She even threw in a free pint of Ben & Jerry’s Rainforest Crunch ice cream.

Scher attacked her competitors by banging relentlessly on the social responsibility hot button. "Does the power come from a company owned by the developers and owners of Seabrook nuclear power plant?," she raged in a letter sent to prospective customers. "If you don't ask, they won't tell you."

Scher was apparently betting that no one would ask. Working Assets buys all of its power from New England Energy Systems (NEES), then part owner of Seabrook and the "dirtiest utility in New England," according to Rob Sargent of Massachusetts Public Interest Research Group.

It turned out to be a safe bet. This exercise in greenwashing eluded the news media who appeared to go out of their way to cheerlead for Working Assets and other green power marketers.

In a glowing article in the San Francisco Chronicle, Scher, whose company is based in San Francisco, bragged that "our customers have made a decision to buy a product that is better for the environment, for human rights, economic justice." Not to be outdone, the Examiner portrayed Scher as a New Age icon for wanting to offer customers "100 percent renewable energy" – sometime, maybe in the far, far distant future, the article didn’t add. The San Jose Mercury reported that some of the electricty supplied by Working Assets would come from "non-polluting power from sources like solar or wind generators."

Unfortunately, none of the reports was accurate. As it turns out, no New England power marketer offers wind and solar power – there isn’t any going into the regional grid. They all act as middlemen, making wholesale purchases of already-generated energy and selling it at retail.

The reality, according to MIT economist Paul Joskow, an expert on energy deregulation who sits on the board of Working Assets' supplier, NEES, "[Green marketers in New England] are basically reselling contracts that have been designated for hydroelectric facilities, for example, that have no short-run effect whatsoever on the dispatch of generation in the area, and have no positive effect on the environment in

the short run."

No power marketer in New England contracted for cleaner energy. The never-stated reality is that for every "green" slice of electricity going into the homes of idealistic consumers, an identically "browner" slice goes to the rest of the region's customers. Moreover, Working Assets and the other green marketers charged the highest prices in the pilot simply on the basis of misleading hype, according to an independent analysis. While some journalists effusively praised the "good guy" marketers, others were horrified. "We're trying to ensure that misleading claims never happen again," says Jonathan Raab, facilitator for the New England Disclosure Project, which was formed by regional utility commissioners. "People know that Working Assets is getting flamed [by energy professionals and activists]. Power marketers will no longer be able to get away with questionable and undocumented claims."

Why did most environmental groups hold their tongues in criticizing the green hype? Why did normally dogged reporters miss the story for more than a year?

The green power fiasco suggests that ideology can sometimes blind or even corrupt one's judgment. Apparently journalists failed to press for documentation of the extravagant green promises. No one interviewed state attorneys general who expressed outrage at the irresponsible hype at a spring meeting in Washington. The Federal Trade Commission has since taken notice and is weighing rules to limit excessive marketing hyperbole.

The best explanation, other than sloppiness, is the desire by most journalists to ‘make a difference. ’ Many of us became journalists to empower those without a voice and act as a gadfly to the privileged and powerful. That's why some journalists cut slack for campaigning organizations like Greenpeace which sometimes crosses well over the line of truth to make its case. It’s for a good cause, we rationalize.

I face this while reporting this story. "We do want to be more careful about attacking people or institutions who are supposed to be our "friends" than those who we assume are our enemies," wrote Marc Breslow, editor of the left economics publication Dollars and Sense, as he debated a story on power marketing. By "friends," he meant Working Assets, which skims from its idealistic customers to run full-page ads in Mother Jones, Utne Reader, Nation and E Magazine. "So, when our writers go after General Electric, or Exxon, or whoever among the Fortune 500, we don't necessarily demand that they prove all their assertions definitively, nor that they get Exxon's side of the story."

To their credit, Breslow and the team at Dollars and Sense did some hard fact-checking and concluded that Working Assets should be treated for what it is -- an extraordinarily profitable business. My piece, "Deregulation and Green Marketing: The Threat to Safe Energy," appeared in its October issue.

Unfortunately, the same cannot be said for E, the cash-strapped environmental monthly. Witness its July two-page spread purchased by Philip Morris. In March, the magazine ran the story, "Dialing for Dolphins: Activist Phone Companies Give to Cause and Reduce Rates" a thinly-disguised promotional piece starring Working Assets – one of its largest advertisers.

"I have been a Working Assets customer for several years," confessed editor Jim Motavalli, who acknowledged that he had never scrutinized its claims. "I genuinely thought they were the best and cheapest phone service out there." He never checked.

Perhaps some journalists fail to recognize how much the environmental playing field has changed in the Nineties. Corporate America is learning, perhaps with excruciating slowness, that self-policing on environmental issues can keep a hostile press and regulators at bay. Every multi-national is not the embodiment of evil.

On the other hand, social activism is now being driven by self-promoting ‘socially responsible’ companies selling coffee, sneakers, hair rinse and ice cream. They have come to the profitable realization that they can get away charging eye-popping prices for commodity products simply by campaigning on distant and complex issues. It can be a low-risk, high-return strategy -- as long as sympathetic journalists provide the marketing fuel.

Case in point is the celebrated "rainforest harvest," the neo-liberal idea that ex-Hippie entrepreneurs could save the rainforest by selling Brazil nut ice cream and hair conditioner. In the late 1980s, natives wearing ceremonial dress and rubbing exotic ingredients on their breasts promoted the charming story of capitalism-on-the-Amazon. Sting and the Grateful Dead held fund-raisers. It all proved a public relations windfall for its best known promoters, Body Shop and Ben & Jerry's. Working Assets, tasting a marketing bonanza, joined in by giving out free pints of free Rainforest Crunch ice cream, which sent its sales into hyperspace. It was, these green marketers assured us, a "win-win" situation.

Unfortunately, there was only one winner, and it wasn’t the rainforest or Amazon natives. It's been an ecological and financial disaster, and defrauded consumers to boot. While Ben & Jerry’s bragged about sourcing nuts from indigenous natives, 95 percent were purchased from the commercial markets stocked by Latin America agri-businesses, primarily the notorious Mutran family accused of killing labor organizers. Community Products Inc., Ben & Jerry’s nut supplier which CEO Ben Cohen founded in 1989 "with the exclusive mission of being a force for progressive social change," and which was chartered to give 60% of its profits to charity, generated year-after-year of red ink. It filed for bankruptcy earlier this year and was sold at auction in October. While Amazon co-ops are out in the cold, majority owner Cohen walked away with $278,000. Working Assets, which had invested $300,000 in debentures when CPI started up escaped with a profit of more than $500,000.

Terrence Turner, an anthropologist at the University of Chicago, dubs the rainforest fiasco "Aid Not Trade," a sad twist on the Body Shop’s Trade Not Aid slogan. "These projects are tiny and provide little extra income," he says. "But the Brazilian and Bolivian governments have used the cover of the publicity they've generated to justify cutting back financial support of native communities. The result is that these projects supply free aid to companies like Ben & Jerry's and Body Shop while the communities get almost no trade in return."

Even more disturbing than the sloppy reporting is the possibility that some magazines and environmental organizations are increasingly beholden to green shell companies that dangle money or advertise heavily.

"We made some inquiries about sponsorships to a bunch of companies like Working Assets, Body Shop, etc.," wrote Don Hazen, director of the Institute for Alternative Journalism, as he was putting together the alternative media national conference in New York in October. "[Body Shop CEO Anita] Roddick got interested and wanted to speak." According to the IAJ, at Body Shop’s request, and in exchange for a donation, Roddick was placed on a panel. It was a coup. Body Shop is notorious for threatening libel against any and all critics, has retained the services of the late Robert Maxwell’s anti-journalist legal swat team, Lovell, White, Durrant (UK), and uses Hill and Knowlton as its PR company.

Previously, Roddick had been "invited" onto the board of Mother Jones after a similarly well-timed donation. As a result, the "crusading" magazine has rejected numerous offers of exposés on the ethically-challenged company, including one by former publisher and editor Mark Dowie, author of the Pulitzer-nominated Losing Ground: American Environmentalism at the Close of the Twentieth Century. Body Shop is one of its premier advertisers "The publisher wouldn’t touch it," says Dowie..

There is a lesson here, though it's not the mantra that green business and environmentalists are transforming society. In the case of energy deregulation, the reckless foray into green energy by Working Assets and friends, if boosted by an uncritical press and the support of some environmental groups, risks the future of the fragile renewable energy market, which seeks to develop long-term alternatives to dirty fossil fuels and nuclear energy.

It also costs a pound of flesh. Some environmental groups like the Natural Resources Defense Council have tacitly agreed not to oppose write-offs of billions of dollars in money-losing investments in nuclear plants in exchange for support for their high-risk gamble on green marketing. And the Environmental Defense Fund has now set up a shell company called Environmental Resources Trust to market "environmentally beneficial" energy. As it turns out, it is offering electricity produced as a side effect of extra water moved through hydropower dams to aid fish migration -- the energy was already being generated. Now that it’s offered through the EDF, however, consumers get the privilege of paying higher prices for the same electrons -- because they are now labeled "green."

Equally disconcerting, an EDF official is orchestrating a scheme in California to sell a so-called "Green-e" label to marketers that pledge to "use at least 50 percent renewable resources." Caveat emptor. We’re talking paper shuffling again, not new renewables, and there is no independent certification. Beneath the green veneer, "clean" energy looks both browner and a lot more expensive.

Dilbert, middle-management's comic strip revenge on the corporatizing of America, sums up the green business myth best: "Remember, what we do here might seem like criminal fraud," he says about his company's promotions, "but it's not. It's marketing." Journalists who jump on large corporations for playing loose with the truth --as they should -- must remember to cast the same skeptical eye toward fluffy, high-decibel ‘socially responsible’ marketing claims. Otherwise, Dilbert is right: in our image-dominated society, maybe perceptions are enough.