The Fuzzy Math of Eco-Accolades
On Feb. 2 a panel of climate experts convened in a modern U.N. building in Paris to deliver the latest dire news about greenhouse gases. Across town the World Wildlife Fund held a press conference to praise three large corporations as "climate savers." Sony (SNE ), Nike (NKE ), and French cement maker Lafarge had demonstrated that business can make "reasonable and meaningful" changes to stem global warming, the WWF announced.
Strangely, though, the companies' own environmental reports undercut the more hopeful Paris event. Carbon emissions from all three companies have been rising: Lafarge's by 11% over two years, Sony's by 17% in a one-year span. While Nike trimmed emissions from a small piece of its business, overall releases from operations have increased by 50% since 1998.
The WWF is one of several major environmental groups that have befriended corporations claiming to have reduced their role in global warming. The groups argue that by lending expertise, they can change corporate behavior. But in some cases companies are gaining green cred while making only dubious progress.
Some companies provide the environmental groups with contributions or payments for services. Lafarge is paying the WWF about $6 million over three years to help fund environmental programs—not win the environmental group's support, the company says. The WWF stresses that the money hasn't influenced its view of the cement maker, which generates 94.4 million tons of greenhouse gases annually—more than Portugal. Lafarge says it has a "proactive and radical policy to reduce CO2 emissions."
Sony—one of the few companies to factor in the use of its products in calculating greenhouse gas emissions—says its steep rise over the past year is due mostly to robust sales of products like LCD TVs. A spokesman says Sony is committed to reducing CO2 emissions from its offices by 7% by 2010.
Nike announced in 2001 that it would cut by 13% its carbon emissions from a small subset of its operations: Nike-owned facilities and employee travel. Last year the company declared that it had beaten its goal, registering an 18% decline. The WWF, which has advised Nike, gave the company its top 2007 climate prize at the Paris press event. (Nike says it hasn't contributed to the WWF in recent years.)
Nike's climate claims deserve closer scrutiny, however. In making the 18% reduction claim, it excluded extensive outside manufacturing activities as well as the shipment of products around the globe. Emissions from company-owned buildings and employee travel actually rose, too.
Nike, based in Beaverton, Ore., says it offset some of its pollution by means of an Oregon Energy Dept. tax-credit program in which companies can pay schools and other public institutions to take energy-saving steps. Companies get this money back, plus about 30% extra, in tax breaks spread over five years.
Nike subtracted from its emissions the pollution the schools cut, a total of 89,933 tons over four years. The company says it deserves the offsets because the earnings from the program of a little more than 5% a year were less than what it could have made from other investments.
Nike, it's worth noting, does more than the majority of its competitors on the environmental front. Most companies don't even disclose emissions. Nike has also eliminated greenhouse gases it used in the cushions of its sneakers. But the WWF's accolades present a confusing picture of a green leader that in fact is generating more and more pollution.
Nike says its carbon cuts are real. "When we first started off, this was all very experimental," says Sarah Severn, director of sustainable development. "As a company, you experiment, you make mistakes, but you continue to try to find that spirit of innovation."
Defending its support for Nike, the WWF cites the lack of federal regulation of CO2 or official standards on how to offset emissions. "In the absence of better rules, the solutions our companies have taken on do make sense," says Matthew Banks, senior program manager at the WWF.
By Ben Elgin