Green CEOs and good business just don’t mix. Witness this past week’s embarrassing examples of Ford Motor Co.’s Bill Ford and BP’s Lord John Browne – with General Electric’s Jeff Immelt warming up in the bull pen.
Bill Ford just announced that he would step down as CEO after a disastrous 5-year reign during which company shares lost two-thirds of their market value. While Ford Motor’s woes can’t entirely be blamed on Ford, you have to wonder what Ford Motor’s board was thinking when it selected him as CEO.
Ford appears to have had two major qualifications that impressed the board – he was the great-grandson of company founder Henry Ford and he chaired the company’s Environmental and Public Policy Committee. While Ford’s genetics didn’t necessarily doom his leadership, his fancying himself as an environmentalist most likely did.
Ford always appeared more concerned about being green than being profitable. In May 2000, he declared that SUVs – his company’s most profitable product – harmed the environment. He lectured a Greenpeace audience that something needed to be done about global warming. Ford focused on turning the company’s massive Rouge plant into an “icon of lean, green manufacturing” and issued reports about vehicle exhaust contributing to global warming.
As the SUV-dependent company headed for a rough and certain reckoning with high gas prices, Ford announced in 2004 his support for higher gas taxes to reduce fuel consumption. While higher gas taxes didn’t happen, higher gas prices did, due to foreseeable supply-and-demand forces. Now the public reduces fuel consumption by not buying Ford SUVs.
Adding insult to injury is the fact that Bill Ford’s green sheen has bought him no peace from environmentalists who, as pointed out previously in this column, ridicule him publicly.
The good news for Ford’s shareholders is that he no longer runs the company on a day-to-day basis. The bad news is that he’s still chairman of the board. Shareholders ought to hope that’s only a face-saving move before he transitions to a green activist group where he belongs.
BP CEO Lord John Browne also wants to be hailed as an “enlightened” CEO-environmentalist. Under Browne, BP spends more than $100 million annually on its “Beyond Petroleum” campaign – an effort to convince the public that BP is no more an oil company than Greenpeace.
BP not only advocates for global warming regulation – including announcing this week that it will help Gov. Arnold Schwarzenegger implement California’s new global warming law – but the company also calls its primary profit-producing product (gasoline) a “necessary evil” in television commercials. (Earth to Lord Browne: Gasoline is a miracle product upon which our civilization depends.)
While Lord Browne has distracted himself and BP management with the “Beyond Petroleum” mindset, BP has come under pressure from a series of negligent and possibly criminal actions.
A March 2005 explosion at BP’s Texas City, Texas, refinery complex killed 15 workers and injured many more. Poor maintenance at BP’s Alaskan oil pipeline caused the largest-ever oil spill on the North Slope in March 2006. A BP oil rig damaged by Hurricane Katrina still leaks one year later. BP traders are under investigation for possibly illegal manipulation of the propane, crude oil and unleaded gasoline markets.
Lord Browne has tried to paint BP green, but his distraction from core business needs has given the company a black-eye.
General Electric’s shareholders ought to learn the lessons taught by Ford and Browne.
GE’s stock price has gone nowhere since Immelt took over from Jack Welch a few years ago, and he apparently sees being green as GE’s path forward. He’s re-branded GE’s products with the gimmicky name, “Ecomagination,” and is lobbying for greenhouse gas regulation, apparently in hopes of passing laws that force customers to buy Ecomagination products.
Just this week, Immelt announced an Ecomagination “advisory council” that includes the likes of Eileen Claussen (whose Pew Center on Global Climate Change lobbies for global warming regulation), Dan Reicher (a former activist with the anti-nuclear, pro-Kyoto Protocol Natural Resources Defense Council); Jonathan Lash (president of the ultra-green World Resources Institute) and James Cameron (chairman of the Ted Turner-funded, global warming regulation-pushing Carbon Disclosure Project).
Immelt describes these and other like-minded folks on the Ecomagination advisory council as “thought leaders on matters of energy, science and the environment.” But they seem more like hard-line green activists whose agendas probably have little in common with that of the typical GE shareholder.
Immelt and his green friends may very well succeed in pressuring politicians to encumber the U.S. economy with greenhouse gas regulation – there is, after all, little if any debate that such regulation will increase the cost, and reduce the availability, of energy for consumers and businesses.
But since GE’s business fortunes tend to move with the general economy, it’s difficult to see how hampering the economy won’t also hamper GE’s already lethargic stock price.
Suffering the consequences, of course, will be GE shareholders – not the well-paid Immelt or the Ecomagination advisory council members whose green mission will have been accomplished.
GE’s shareholders don’t have to suffer the same fate as Ford Motor’s or BP’s – but they will need to take action before it’s too late.
Milloy holds a B.A. in Natural Sciences from the Johns Hopkins University, a Master of Health Sciences in Biostatistics from the Johns Hopkins University School of Hygiene and Public Health, a Juris Doctorate from the University of Baltimore, and a Master of Laws from the Georgetown University Law Center.
Steven Milloy's most recent book is Scare Pollution: Why and How to Fix the EPA.
His prior offering is Green Hell: How Environmentalists Plan to Control Your Life and What You Can Do to Stop Them.
Before that, Steven Milloy wrote the much talked-about book, JunkScience Judo: Self-Defense Against Health Scares & Scams.
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