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Green or greenwashing?

At one stage, Bajaj Auto was using captive wind power to generate 90% of its electricity from its own turbines and "banking" the rest. There are indeed businesses that are going green, but the majority of these claims are still greenwash, says Darryl D'Monte

The relationship between business and the environment has been tenuous at the best of times. This country still smarts from the Bhopal gas catastrophe, which demonstrated callous neglect by a multinational company, aided and abetted by a state government and central government headed by a pliant Prime Minister Rajiv Gandhi. Although Warren Anderson, head of Union Carbide in the US, and Keshub Mahindra, the Indian chairman of Union Carbide India Ltd, were detained at the company guest house in Delhi soon after Anderson arrived following the accident in December 1984, they were released -- apparently after severe admonition by the White House. The Indian government eventually settled out of court for $ 470 million -- a pittance, considering the thousands killed and several thousands more injured after toxic gas leaked from the pesticide plant.

Union Carbide has now been bought by the Dow Chemical Co. However, there is still the tricky issue of the clean-up of the site in Bhopal, where toxic chemicals are still lying around, quite apart from continuing efforts to revive the legal case on the ground that justice has not been done to the victims. Recently, at a media workshop on the eve of the B4E (Business for Environment) conference in Singapore, I asked E Adam Muellerweiss, Public Affairs Director, Sustainability, of Dow, what responsibility the company had for cleaning up the site.

He replied that Dow believed in "responsible care" and that Bhopal was an accident that "we can't afford to happen again". He added that "we didn't own or operate the plant: the facility is now in the hands of the Indian government".

This is by no means the first time that Dow has been accused of environmental wrong-doing. During the Vietnam War, its chemicals -- napalm and Agent Orange (a defoliant) -- were used extensively as a means of chemical warfare. At the time, when it was summoned by Congressional committees, the company took the view that it did not intend these to be used in warfare, which was obviously a case of being disingenuous. At any rate, as Muellerweiss explained, Dow has stopped the manufacture of these extremely toxic products.

Another major international accident involving a corporation took place two years later, soon after the disastrous Chernobyl nuclear disaster in the Ukraine. Insecticides stored in the Sandoz chemical company in the Swiss part of Basle caught fire in November 1986 and, after the fire was fought with water, these toxic wastes were released into the Rhine river, polluting Germany, France and even the Netherlands downstream. It sparked off a major row in Europe regarding liability for contaminating the environment, and led to agreements under which companies are now far more careful about storing their products and about the environment in general. Environmentalists dubbed it "Chernobasle".

Actually, there was a severe accident exactly a decade earlier, at the ICMESA plant at Seveso, near Milan in Italy. About 3,000 kg of chemicals were released into the air, according to some researchers. Among them was 2,4,5 trichlorophenol, used in the manufacture of herbicides, and anywhere from around 100 grams to 20 kg of dioxin, which is said to be about the most toxic chemical that has been developed till today. As was the case with Union Carbide and Sandoz, the company failed not only to alert the authorities regarding the hazards of the chemicals it was storing but also about the accident itself, let alone the remedies for these sorts of catastrophic leakages.

Asked about their experience in dealing with business, journalists from mainly Asian countries at the Singapore workshop mostly agreed that companies pay lip-service to being green - it's a PR exercise. If controls on emissions or other measures add to costs, they tend to find ways and means of avoiding these. At the same time, there are progressive companies that realise that sooner rather than later, corporates will have to become energy-efficient and seek ways to reduce their carbon footprint. The Geneva-based World Business Council for Sustainable Development (www.wbcsd.org) represents the best example of companies that have made a conscious commitment to becoming environment-friendly.

Even a multinational forestry company, APRIL -- Asia Pacific Resources International Holdings Ltd -- is trying to reinvent itself as a company that cares for the three Ps -- people, planet and profit, in that order. APRIL told journalists that as the second or third largest pulp and paper company in the world, it integrates sustainability principles in its operations. Basically, it believes that large-scale plantations can help reduce Indonesia's greenhouse gas emissions, which was "a much undersold idea". Indonesia accounts for the third largest greenhouse gas emissions in the world, due to extensive land-use changes.

The company plants 100 million trees a year (and growing trees absorb more carbon dioxide than old standing forests). In Riau province on the Indonesian island of Sumatra, APRIL's subsidiary has now developed a pulp mill with a capacity of around 2 million tonnes per year, making it the largest pulp mill in the world.

APRIL claims that it listens to its various stakeholders and explores partnerships on shared grounds, as it consciously contributes to the overall quality of the natural and social environment. It is the only member of the World Business Council for Sustainable Development from Indonesia. Its plantations could absorb 15 million tonnes of carbon dioxide a year, and it is adopting a "cradle to gate" policy to reduce the carbon footprint, from harvesting trees till products leave the factory gates.

According to Neil Franklin, APRIL's sustainability director: "The company takes bold decisions addressing climate change without significantly jeopardising development efforts." It claims that its "mosaic" pattern of development, which enables communities to harvest part of the forest along with commercial production, enables Indonesia, as one of the countries with the largest tropical forests in the world, to protect its biodiversity. This appears to be a contradiction in terms. Any monoculture, as ecologists are only too well aware, reduces the biodiversity of an area; merely keeping small patches intact will hardly undo the damage wrought by large-scale commercial plantations. APRIL has mainly planted acacia.

In India too, tea companies in the highest ranges of the Western Ghats take pride in the fact that they have protected patches of shola forests amidst their plantations. However, these forests are themselves a botanical relic and by restricting them to small patches, surrounded by tea plantations (which, incidentally, are huge consumers of pesticide), rare tree species are prevented from proliferating, not to mention the fauna which inhabit these highly diverse forests. These issues came prominently to the fore during the furore over the Silent Valley hydroelectric project in Kerala in the early-1970s.

Franklin maintained that "plantations have a better carbon footprint than natural forests had earlier" and that "carbon-constrained does neither mean business-constrained nor development-constrained". These sound like self-serving statements. They ignore the key role that biodiversity plays in preserving this most diverse form of life on the planet, besides providing a range of products, foods, fibre and medicines.

At the workshop, activist Soumitra Ghosh of NESPON, the National Forum of Forest People and Forest Workers India, who is based in Siliguri, West Bengal, disagreed with APRIL's contentions. "No company can have sustainable forestry," he argued. "A natural forest, once destroyed, can't be created again. Even a degraded forest has more biodiversity than a monoculture plantation."

He asked whether local communities had been consulted when plantations had been imposed on them. "These communities depend on the forest; it is intrinsic to their living, often the main source of food, and forms part of their culture. By enclosing the commons, people can't be expected to choose." What they lost could not be balanced or offset. He believed that we were redefining sustainability: we were secondary consumers of those resources; what about the primary producers?

Indonesian journalists referred to how the local police had levelled cases against APRIL for felling timber in excess of permits. Franklin sought to deflect the accusations by claiming that it was the company's stand against illegal logging that had earned it the ire of the police and other officials.

He was asked about the company's position on the REDD (Reduction of Emissions from Deforestation and Degradation for Developing Countries) initiative discussed at the Bali conference on climate change last December. The proposal is that countries that preserve their natural forests, which act as carbon sinks, ought to be compensated by a UN system for providing this ecological service. Since such a measure militates against commercial forestry, APRIL is less than sanguine about it. Franklin cited how the national parks in Riau and Sumatra had not proved successful. He claimed that a "forest without management is a liability," which is controversial to say the least.

In response to a question that APRIL had been given licences for plantations without settling community rights, Franklin maintained that the company had taken up all land claims. There were "true indigenous land rights and opportunism" on the part of some local people. The company believed in "pre- and prior informed consent" of the people concerned: all claims were settled before plantations were established. "We create governance ourselves," he added. On whether APRIL was an ethical corporation, he replied that it was judged by external auditors. There were communities next door to their licensed areas that wanted the same partnership.

While there is no denying that multinationals like APRIL are often more sensitive about their image than smaller national companies, their claims about plantations being ecologically superior to natural forests are difficult to swallow. However, an important engine of change, as the B4E conference participants heard, are the employees in companies who tend to take a greener view of life than their superiors. At Singapore, Doug Miller, president of Globescan, which conducts international opinion polls on environmental issues, detailed recent findings from 22,000 respondents in 21 countries where 77% of the people polled said they were personally prepared to make lifestyle changes to reduce their carbon footprint. "There is supportive public opinion on action," he reported.

The conference also revealed how it makes business sense for some companies to make green products. Lighting accounts for nearly one-fifth of the consumption of electricity, which is the equivalent of all the power used by India and China. It was possible to reduce the consumption of electricity by one-third, with existing technologies. Osram, for example, cited how the EU plans to phase out old, incandescent bulbs and replace them with compact fluorescent lamps (CFLs) within a decade. These bulbs save 80% of power by comparison. There are still 15 billion old lamps in the world and the total capacity of all manufacturers of CFLs is only 2 billion at present.

Osram has initiated "energy hubs" in villages in India, Kenya and Uganda, where inefficient kerosene lamps, which account globally for 77 billion litres of this fossil fuel being consumed each year, will be replaced by solar lanterns and battery boxes to store alternative energy. It has also converted 2 million old bulbs to CFLs in developing countries and, in doing so, is claiming carbon credits for reducing the footprint. Many environmentalists, however, believe that carbon credits amount to business as usual and only perpetuate the problem instead of cutting emissions. A carbon tax, they believe, would do the trick.

The Indian wind energy device manufacturer Suzlon was one of the smaller sponsors of B4E. India, with 7,500 MW, now has the fourth largest capacity in installed wind generating capacity, after the US, Germany and Spain. Vivek Kher, who heads corporate communications out of its Netherlands office, denied that wind energy was being promoted in India due to the enormous tax breaks that this sector received. He claimed that this was true in the late-1980s and 1990s, where windmills were installed and then forgotten about. A company could write off 80% of the cost in a year; 20% of the remaining was subsidised. This meant that it was virtually free of cost. However by the mid-1990s, the subsidies were withdrawn.

The biggest problem that this sector faces is infrastructure. Typically, windy sites are in remote elevated locations or coastal areas such as Kutch or Tamil Nadu. These are far away from the electricity grid, making access difficult. There is also red tape involved in getting land. For a viable large-scale wind farm, a company needs "a few thousand square kilometres" to generate 1,000 MW. Dhule, in Maharashtra, which has 5,000 sq km, will eventually have a capacity of 1,200 MW -- the world's biggest farm. The land between the windmills can be tilled. In Dhule, developing a wind farm is like real estate development.

The Indian market is driven by two forces. One is a captive source of power. Bajaj Auto used captive wind power in Satara and Supa, near its manufacturing plants in interior Maharashtra. At one stage, it was generating 90% of its electricity from its own turbines and "banking" the rest. The other driving force is "merchant" power plants that sell the electricity they generate to the grid, with a return of 14%-20% on investment.

While there are certainly companies that resort to "greenwashing" for their image, or are plainly making extravagant claims, like APRIL, there are others that realise that turning green can generate greenbacks. Perhaps the most savvy in this regard are the biggest offenders in the climate change debate. Oil companies are rapidly changing their image and going in for renewable technologies. British Petroleum has even renamed itself Beyond Petroleum, mindful of the fact that there will not be plentiful supplies of fossil fuel once oil begins to run out by 2050. At the end of the day, however, the verdict will still be that corporates do more harm than good to the environment.

InfoChange News & Features, May 2008