Marketplace

Google is to Spider-Man as ... ?

Dennis Markatos-Soriano's take

In Spider-Man, Uncle Ben warns Peter Parker, "with great power comes great responsibility."

Google is one of the most profitable companies in the world with a market capitalization above $200 billion, and its founders and CEO are three of the richest people in the world. Add to that their leading position in the growing online ad and search markets, and they definitely qualify as having "great power." If Google follows through on its latest announcement to bring the price of renewables below that of coal then the spirit of Spider-Man will be alive and well.

Google.org, their philanthropic arm, plans to spend hundreds of millions of dollars to support research on solar thermal, wind, and other renewable technologies. And it doesn't look like greenwash to me because this act is consistent with other recent initiatives:

1. Google.org provided funding for a national student climate conference that brought more than 5,000 young people to D.C. in early November to strategize for clean energy revolutions on their campuses and push Congress to legislate an 80% cut in emissions by 2050.

2. Google is committed to be climate neutral by the end of the year, joining HSBC, Yahoo!, and others. Toward their goal, Google installed 1.6 MW of solar PV on their buildings this year, the largest corporate installation to date.

Is PR involved? Sure. But these moves can help steer energy markets in the right direction. Cheap, clean energy would be good for Google, and it's necessary for the health of the Earth.

Coal is arguably the key driver of global warming, as its carbon dioxide emissions per Btu of energy are 17% higher than those from oil and 44% higher than those from natural gas. And there are many other pollutants that hurt our air and water quality when we burn coal -- from the neurotoxin mercury to the sulfur dioxide that produces acid rain. Coal's abundance makes it the cheapest fossil fuel to rely on into the future, while the supply of oil is already at a plateau and natural gas may follow within a decade or two. This cheapness makes coal the fuel of choice for rapidly growing economies such as China, which probably passed the U.S. as the largest emitter nation of greenhouse gases this year. So, to prevent dangerous climate change, renewables have to not only be affordable to the richer countries of the world but also to developing countries.

Google picked a good time to focus on competing with coal. Its trading price is breaking records globally at more than $85 per metric ton and UBS predicted this week that continued demand growth in Asia will lift prices to further records above $100 in 2008 and 2009.

The twin challenges of skyrocketing energy prices and climate change can be tackled if Google's fell swoop is successful. But this is no easy task. Researchers have been developing wind turbines, solar panels, and biofuels for decades to achieve this goal, and while progress has been made, coal is still vastly cheaper. But if anyone can stand on the shoulders of millions of giants from the past and present, sort that information out, and produce a product that billions of people can enjoy — it's hard to argue that Google isn't a great candidate for the job.

I am hopeful that Google can help be like Spidey to achieve the sustainable energy transition our world needs.

PS: (I don't own Google stock, though I wish I did.)

Heidi Siegelbaum responds:

I can't think of one critical thing to say about Google's news - absolutely nothing!

Google is also stemming the tide against coal subsidies and may tip the balance in favor of renewable energy investments. On the policy side, lowering subsidies for coal would help: according to a recent GAO report, less than a fifth of federal energy R&D and tax expenditures go toward renewables, with the vast majority supporting fossil fuels and nuclear.

Google's detractors seem to believe that corporations operate in some vacuum... where have all the CSR flowers gone? There are more than 2,600 grantmaking (opens PDF) corporate foundations in the U.S., and inventive ones like Google are diversifying into new areas responsive to stakeholders' needs while wildly prospering. When did a corporation's foundation have to strictly mimic its lines of business?

A recently released report (opens PDF) on Corporate Design (or really, redesign) makes an interesting point that companies that have adaptive cultures and effectively serve the needs of their stakeholders outperform their peers on every count: growth in revenue, employment, stock price and net income. Google is serving its stakeholders by making this impressive investment in renewable energy. Who are a corporation's stakeholders? In this case, nearly every person attached to the fingers using a Google search function, the communities in which they operate their servers, Mountainview, CA, and all our children just to name a few. This is a solid piece of cerebral cortex with a soul, not solid image work.

Jim Nicolow responds:

This is a huge deal. If Google can successfully produce one gigawatt of renewable energy cheaper than coal it really will move the market. One gigawatt is equivalent to the output of a new coal power plant. To an architect accustomed to looking at renewable energy projects at the scale of individual buildings, measured in kilowatts (1/1,000,000 of a gigawatt), this is a significant undertaking by Google and worthy of praise.

Sure there's a PR angle to it. So what. With an informed populace, doing the right thing should make for good public relations. There is most certainly a business angle as well. The writing is on the wall. As Dennis points out, the price for fossil fuel energy continues to rise, while the price for renewable energy continues to fall. Those cost curves will cross. When a carbon tax or cap and trade system inevitably comes to the U.S., those cost curves could cross overnight, making renewable energy cheaper than coal from day one, as it should be.

But you don't need to be Google to support the transition to renewable energy. For instance, our practice partnered with Carbonfund.org this year to offset 100% of our electricity use and travel emissions.

Janne K. Flisrand responds:

Google's an old hand with green initiatives, and they aren't limited to giant PR activities.

On the corporate side, Google walks the sustainability talk as only a huge company can. They provide commuter buses to employees working in their Silicon Valley headquarters — with nearly one quarter of their workforce using them. Google builds its own energy-efficient servers. They installed the "largest single corporate solar installation in the world" to power their campus. Their campus food service serves healthy, organic food, and the chef at Cafe 150, one of their cafeterias, is a "passionate proponent of local, organic and sustainable food" using exclusively ingredients from within 150 miles. The Google Store stocks eco-gear. The list goes on.

Google employees are encouraged to work on their own projects, which often turn into public applications. A number of them have a green bent. There is Google Transit, which integrates the schedules and maps of different regional transit services. There's also a green map mash-up for vacation planners.

This culture pervades the company. Reading more about it, now I want to work for Google. Oh wait... maybe Google's HR has a hand in this...

• December 3, 2007 by Dennis Markatos
• 4 comments

Can CSR be taken at face value?

Heidi Siegelbaum's take:

I have nothing against Jack Daniels, though I favor wine myself. Corporate social responsibility represents a range of complex, intersecting influences: the need and desire to support the communities in which companies have a presence, supporting pride, motivation and participation in a demonstrably positive side of corporate life, a desire to improve performance and good will, enhance shareholder value, and yes, sometimes -- it is defensive.

But defensive strategies can lead to long term, positively fabulous results as in the case of Nike which initially got into the corporate responsibility game due to pressure related to its overseas manufacturing processes and conditions.

We could approach corporate responsibility and its corollary in Corporate Social Responsibility (CSR) reporting through the whole enchilada lens. "What is the weighted balance of the evidence between what a given company is doing and reporting" and:

• whether the company is making credible investments in environmental, social and long term sustainability programs;
• whether it is spending a disproportionate amount of its money in fighting policy and legal efforts to improve wages, working conditions, and environmental protections;
• how it discloses and performs with respect to addressing climate change;
• whether the company, through its actions, Board directives and reports, is focused exclusively on wealth creation and little else, besides window dressing -- or whether it is moving towards a newly adopted restorative stance (opens PDF);
• the company's intangible investment risk, as evidenced by the investment patterns of socially responsible investors, including a large cache of institutional investors;
• the transparency with which good news is balanced with the bad. Previous Interface reports on CSR included the emblazoned fold-out "the good, the bad and the ugly" as an example;
• the magnitude of inconsistency - "where's the beef" in performance metrics and actions verified by third party audits versus what's on paper; and
• what non-vested interests have to say about the company, including www.recalls.gov, Responsible Shopper from Co-op America, and the goody bag of corporate research.

An interesting example is Dole. In a news feed that ended up on CSR Wire, the
venerable clearing house of all things CSR, Dole Food Company was recognized for its corporate social responsibility programs in Costa Rica and Thailand. However, a few weeks earlier, a California jury awarded Nicaraguan farm workers $3.3 million because they were sterilized by chemicals Dole used in its banana plantations. The pesticide, DBCP (1,2-Dibromo-3-Chloropropane) had been banned by EPA since 1985, and according to court documents, Dole had known since the 1960s and 1970s that DBCP was strongly linked to infertility based on epidemiological studies.

So what's a mother to do? We need not argue against the value of corporate responsibility because any positive action surely is better than its absence, but as in product claims generally, the critical analyst is going to have to spend a goodly amount of time researching the balance of words against action, integrity, money flow and intent... and this is where light will shine upon the thrones of corporate responsibility.

Janne K. Flisrand responds:

I read Heidi's post with fascination.

I'm a practical investor - I invest money for retirement. And I want to invest in companies that reflect my values.

But honestly, I only hope to invest in companies who oppose my values less often than others, because I don't have the money or patience or knowledge to invest in individual companies.

My personal experience is one of frustration. I keep hearing about ethical investing, which I imagine means investing in socially responsible companies.

When it's time for me to write the check, I sit down at my laptop with a cup of coffee to do some research. Over the course of about 90 minutes, I get more and more frustrated. Maybe I find a company that sounds great... but I'm an index fund investor, pretty committed to my low-fee investment firm. I find little relevant to my choices.

Heidi's resources are great. As December ends, I'm likely to go through my semi-annual ritual of frustration again soon. Maybe with her links, it will be easier... but my expectations haven't changed. For the moderate-income investor (mantra: reduce fees), the options are pretty limited.

Dennis Markatos-Soriano responds:

Good call, Heidi!

Business is more about verification than trust. When I go to a used car lot, I don’t trust that the car works before I buy it -- so I turn the ignition. And when the product is less tangible like the carbon offsets market (I don't directly see the product of lower global emissions), they have to certify their product via an independent third party. Corporate responsibility is a similar sort of product for investors and consumers.

If I see an ad that says BP is Beyond Petroleum, it makes me feel good. But then when I look at the amount of money it invests in renewables versus producing polluting fossil fuels such as the tar sands of western Canada I realize that they have plenty of room for progress. Actors in the nonprofit sector from Greenpeace to Environmental Defense help to give us information and signals when certain companies commit abuses or go the extra mile to support the Earth and its people. We need such information that cuts through the glitz.

It's a sign of progress that social and environmental responsibility is hip and a desired marketing tool for corporations throughout the US. But we all have to make sure that the institutional commitment to sustainability is more than a small side office that writes press releases and has little power within the company. Nonprofit allies can help us determine that because, again – quality products are attained through verification mechanisms and not by blind faith in advertisement campaigns.

• December 12, 2007 by Heidi Siegelbaum
• 3 comments

Iowa: Smart Energy Policy or Ethanol?

Janne K. Flisrand:

Five days to the Iowa caucuses, and while I live north of the border, I'm still in ethanol central and my caucus comes February 5th. It's time to do my review of candidate global warming positions.

I admit I've tended politically left since I spent a year living in Norway where, "Even the most conservative of our seven major parties is more liberal than American Democrats!" Thinking of readers here, though, I wanted to see how both major parties are talking about impending climate chaos.

I found a couple of places that compare all the candidate positions. Grist has an accessible set of charts, interviews, and summaries. Popular Mechanics uses quotes from candidates' websites.

So, a short summary of positions.

All of the Democratic candidates have serious, detailed climate/energy policies. Some got there earlier (Edwards), some are more aggressive (Dodd), some set more detailed targets (Richardson), one is somewhat lacking (Biden), but the plans are on the right track with limited pandering to the ethanol audience -- and even then, "cellulosic" keeps coming up, as it should.

The Republicans, on the other hand, don't seem to acknowledge there is an issue, except for McCain -- and his Climate Stewardship Act of 2003 is nowhere near as aggressive as even the weakest of the Democratic plans.

The Republicans certainly aren't greenwashing - that's hard to do when they don't mention green to begin with. (I am amazed at the disconnect between my world and the Republicans' world, but political polarization isn't news.) The Democratic candidates seem to have signed on to a soundly written treaty agreeing on strategies and targets.

But, until one of them is elected, how to know whether the platform is a priority to be implemented, or simply pandering to me and my peers?

• December 28, 2007 by Janne K. Flisrand
• 1 comments

• tags: Election 2008 ethanol

LEED - Green or a Game?

I've been doing a little early preparation for my New Year's resolution - to take the USGBC's LEED Accredited Professional test (passing not resolved.) Never one to take the traditional path, I've been struggling to convince myself the AP designation is worth memorizing percentages and standards that can be easily looked up in a book (plus the several hundred dollars for study guides and the test itself.)

I finally buckled down this week, but in the midst of being distracted from studying I came across Daniel Brook's article at Slate where he shows how a dubiously green Indian high-rise is gaming the USGBC LEED rating system.

Conversation about the United States Green Building Council's (USGBC) LEED rating system always seems to turn into a debate. The Greenwash Brigade took on a LEED project in an unsustainable location a few weeks ago. Recent research shows the uneven success and sometimes failure of LEED buildings to achieve energy efficiency.

While Brook's criticisms are valid, he more importantly notes that LEED critics are are no longer limited to architectural and environmental circles.

Here is the real value of the USGBC: they created a common definition of the components of green building and educated enough people that it's no longer trapped in a corner of architects and environmentalists. With that definition, many people can debate the merits of a specific project. For the first time, policy makers have a tangible, widely vetted standard that they can use to encourage green building.

LEED also challenges projects to meet baseline goals. Is it silly that if a project succeeds in daylighting only 74% of commonly used spaces that it won't get the point that would have been achieved at the 75% benchmark? Of course. But without that framework, it wouldn't have occurred to some designers that daylighting was something to work towards.

I suspect we can thank the LEED credit for monitoring and verifying building energy use compared to what the designer said it would use use for the data Owens, Frankel and Turner used to assess whether LEED buildings are using less energy that standard buildings or not.

In my experience, almost any system allows for gaming. Grades. (Ever take an easy class to pump up your GPA?) Taxes. (We all have a way to keep a little more in our pockets.)

Gamed or not, LEED is a practical tool. It helps architects, developers and contractors newly interested in sustainability to learn greener tactics - and have a measure of their success. It provides consumers (including policy makers) with a way to request the buildings they want and feedback through LEED points and certification to know whether they got what they asked for.

Those deeply into green building will continue to do it right for the same reasons they always have, even if they don't earn USGBC approval.

And, for the rest of us, now that we have a vocabulary to talk about green building, how do we make LEED better?

• December 31, 2007 by Janne K. Flisrand
• 1 comments

• tags: green building LEED