Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR) has been under intensified attack in the past several months. Some if not most of the underlying rationale against CSR is old, leaning on Milton Friedman’s piece published in The New York Times Magazine in 1970 or on even older works by Adam Smith. I spent some time reading a recent issue of The Economist devoted to the attack, publications from various conservative think tanks, and anything else that seemed relevant.

Adam Smith is still used as a kind of guru. Actually, reading Adam Smith yields pithy tidbits like “Disagreeableness and disgrace affect the profits of stock in the same manner as the wages of labour. The keeper of an inn or tavern, who is never master of his own house, and who is exposed to the brutality of every drunkard, exercises neither a very agreeable nor a very creditable business. But there is scarce any common trade in which a small stock yields so great a profit.” Adam was clearly introspective about his time – he wrote over 7,500 words on the issue of labour alone. But this was the late 1700’s. Lots happened since then.

Detractors of CSR are prone to overstatement and oversimplification. Writers sneer that corporate responsibility denigrates and discourages investment or works against capitalist enterprise or threatens the “liberty” of the free-market system. Detractors also idealize the capitalist system and assume checks and balances, ignoring the forces of consolidated power.

CSR is, fundamentally, all about long-term prosperity. Responsible corporate management should enhance, not detract from, the ability of a firm to yield a return to its shareholders. See the Winter, 2004, issue of Business Ethics for a summary of long-term studies and the most recent issue for “CSR in the Cross-Hairs”. As Philip Rudolph, Partner in Foley Hoag LLP (Trillium Asset Management Corporation’s law firm) said in a recent letter to the editor of The Wall Street Journal, “—conclusions are premised entirely upon the establishment of a false dichotomy between profit and responsible business conduct. Social responsibility is simply not such a zero-sum game.”

Cinergy President and Chair James Rogers writes eloquently in the company’s stunning annual report entitled“Global Warming: Can We Find Common Ground?”. This is the best language I’ve seen to describe CSR from the perspective of a corporate manager:

“What makes a good company? Certainly the products it makes and services it provides must be of high quality and affordable to consumers. It treats its employees fairly and, in turn, they are productive and engaged. It is profitable and innovative. What makes a great company? A great company thinks and plans for the future. It recognizes the need to use its resources wisely, to protect the environment and contribute to the quality of life in its communities. At Cinergy, sustainability is about providing for our customers today while protecting the ability of future generations to inherit a better, more productive society. Sustainability encourages us to look at our business through a kind of time machine and it proves what we’ve always known: That responsible actions lead to long-term success.”

Dear Reader(A)

In late 1999, Trillium Asset Management made a commitment to locate a branch in Boise, Idaho. In a pile of material I read before recommending Boise I found that it is “livable, fast-growing and energetic, has realistic real estate prices and an accessible airport as well as much outdoor recreation and a 40+ mile green belt, provides access to the Northwest, great weather and good food”. This has all proved to be true. But I have learned to love Boise because it is in many ways a microcosm of the whole country (or planet); no issue illustrates this like the issue of water.

Last week I participated in a conference in Boise sponsored by the Idaho Statesman and The Andrus Center for Public Policy called “Troubled Water: Exploring Solutions for the Western Water Crisis.” The conference, moderated by the wonderfully wise former Governor and Secretary of the Interior Cecil Andrus, opened with an overview of the world’s water crisis by Dr. Richard Meganck of the UNESCO Institute for Water based in the Netherlands. From that context the conference moved toward its Andrus Center Dialogue, with the topic “The West’s Worst Nightmares: Drought, Thieves in the Night, and Thirsty Lawyers.” The discussion among the 13-person panel was fascinating and vigorous, the facilitation skillful, and the problems discussed incredibly difficult.

Mired in a once-in-every-500-years drought, Idahoans struggle with antiquated state laws governing water rights and squabbles with neighboring states. Idaho is home to the watersheds of the Boise, Snake, Salmon and many other rivers and also plays host to the giant and coveted waters of the Columbia as it wends its way toward Washington and Oregon. But Idaho potatoes must compete for water with Washington potatoes as well as the trout industry, the technology industry and urban homeowners. Then there is the fact that for 100 years water has been delivered to residents by a private corporation now owned by the giant French company, Suez; this relationship serves as a proxy for the debate over global water privatization.

I was very taken with an historian named Patricia Nelson Limerick, who contextualized the whole mess in amusing stories of the state and the West. Her book, “The Legacy of Conquest: The Unbroken Past of the American West” is twenty years old but prescient in today’s world. Addressing scarce resources (from gold to water) she says, “If one pursues a valuable item and finds a crowd already assembled, one’s complicity in the situation is obvious. The crowd has, after all, resulted from a number of individual choices very much like one’s own. But frustration cuts off the reflection on this irony; in resource rushes in which the sum of the participants’ activities created the dilemma, each individual could feel himself the innocent victim of constricting opportunity.” “In one of the most widespread and serious versions, people moved to arid and semiarid regions, secure in the faith that water would somehow be made available, then found the prospect of water scarcity both surprising and unfair.”

As investors, we must by necessity focus on issues in which we can have an impact. Targeted community investments could empower local conservation and small businesses. And also, the power production, water, farming, recreation, timber and insurance industries will be right in the middle of the conflicts locally, regionally and internationally. As the planet and its resources become more stressed to support us, intelligent dialogues and agreements must be reached over and over again – without blaming.

What’s wrong with this picture?(A)

In early December of 2004, newly arrived in Sweden from the United States, my husband and I made our way through an airport terminal to the Arlanda Express commuter train, which carried us about twenty miles to Stockholm Central Station. In Central Station we hung out for over an hour, nervously checking the designated track for our departure. Right on time the train pulled in and pulled out, totally full of Sunday morning European travelers.

The web site of Arlanda (commuter) Express summarizes one of the reasons why any developed country should support its rail systems:

“Not only is the Arlanda Express the fastest way to travel between Stockholm and Arlanda, it is also by far the most environment-friendly way. Firstly, electric trains do not generate any environmentally hazardous emissions at all. Secondly, Arlanda Express trains have been powered by electricity from renewable sources since the spring of 2001. In 2003, more than 2.5 million passengers took the Arlanda Express. As a result, environmentally hazardous emissions of carbon dioxide (CO 2) and nitrogen oxides (NOX) were reduced by 4,900 tonnes and 1.4 tonnes, respectively, compared with the emissions that would have resulted from these passengers traveling by car.”

The European rail web site offers additional basic logic: “The major cities are linked by the extensive European rail network — a vast system stretching over 160,000 miles, as extensive in size and scope as the U.S. highway system. And train travel eliminates all the hassles that can play a part in a complex itinerary. This means travel city center to city center, no maneuvering through crowded airports located miles from the nearest city, no hailing taxis from airport to downtown, no traffic headaches driving in and out of big cities …”

Back in the U.S., it is heartbreaking to read that the White House is proposing to eliminate the $1.2 billion in subsidies for Amtrak, which could force the rail line into bankruptcy. Among comparisons that reflect sad national priorities is the fact that Amtrak’s current subsidy equals less than 1.5% of the $82 billion 2005 supplemental war budget. The income tax cuts of June 2001, which lowered the top rate from 39.6% to 35% for people with taxable income over $326,450 in 2005, will likely cost $74 billion through 2013, representing 7.7 times the annual Amtrak subsidy. A headline in the February 21, 2005, Barron’s blared “Crazy for Poker – online gambling is booming, with poker sites alone expected to take in $2 billion this year.” And finally, if temporary provisions in the corporate tax bill are made permanent, revenues could be decreased by almost $80 billion through 2014, or another annual revenue loss 7.7 times the Amtrak subsidy. What’s wrong with this picture?

Conquer The Grinch!(A)

Believing in an optimistic future is difficult for some as 2004 winds to an end and the results of the recent U.S. election begin to manifest. The Grinch is in grave danger of making off with all that’s good about this time of year. In keeping with the mood, I began to write the December “Dear Reader” about credit card issuers, and how they exploit the holidays and abuse their customers.

Our holiday message this year is one word: “Believe”, and that message stared at me from the cards on my desk as I added paragraphs of pessimism about consumer loans piling up. I decided to find something hopeful to write about. Once I tried, it wasn’t hard and it proved to be a great tonic. I have found that the fastest (if clichéd) way for me to pull myself out of despair is through counting my blessings and finding stories of success.

One of the most satisfying and successful investments that we facilitate on behalf of our clients are called “community investments”. In over twenty years of making loans and placing deposits targeted directly toward housing, job creation and other projects, our clients have a remarkable history of success and safety with these asset classes. The stories behind the investments are poignant and heartrending, but because they are true, they restore belief in human kindness and possibilities. Here are just two of them:

Shared Interest, South Africa:

10,000 rural borrowers—75 percent of who are women—are joining the bee-keeping business. Each new beekeeper will receive fifty hives stocked with African bees. Each new beekeeper will receive training and equipment for harvest honey. And each new beekeeper will receive an above market price for their honey from the Bee Foundation.

The Bee Foundation is a private business in a northern province of South Africa that is producing honey on a small scale. With the help of a Shared Interest guarantee, the Bee Foundation has designed a program to establish a vast network of emerging beekeepers that will do three things:

(1) provide jobs to 10,000 rural borrowers over five years(2) expand the Bee Foundation’s production of organic honey(3) improve the survival rates and productivity of the African bee

With the voluntary participation of the University of Pretoria, the project will also help to advance the protection of African bees. The bees will received a medicine required to protect them from a threatening mite through the water supply in their specially adapted hive. And the University will expand and share its research on other medicinal and cosmetic by-products made from honey.

Not only is the University involved, but one of South Africa’s largest mining conglomerates is also voluntarily participating in the project by allowing some of the new beekeepers to hang their hives on private land—where some of the best flowers are available for the bees honey production.

Institute for Community Economics , Albuquerque, New Mexico

Beginning in the 1980s, residents of Albuquerque’s Sawmill neighborhood created a community organization to fight pollution from a nearby particle-board factory. At the same time, on the other side of the neighborhood, historic Old Town was becoming a leading tourist attraction, with galleries, trendy shops, restaurants and museums. The resulting gentrification, pushed home prices upward, and the Sawmill residents started to worry about their families’ futures in a neighborhood where some had lived for generations. To expand affordable housing opportunities in this situation, the community organization negotiated with the City to gain the right to develop 27 acres of vacant land once occupied by the old sawmill operation. The existing organization then created the Sawmill CLT (Community Land Trust) to develop and hold the land.

On this site the CLT is now developing 99 housing units, including single-family homes, townhouses and senior apartments, together with a plaza, park, community center, and projected commercial space. To make sure that this development continues to serve lower income residents of the community, the land will be held permanently in trust by the CLT.

These are but two of hundreds of stories that could be told. Believe – and we will conquer the Grinch!

You’re a foul one, Mr. Grinch, You have termites in your smile, You have all the tender sweetness of a seasick crocodile, Mr. Grinch, Given a choice between the two of you I’d take the seasick crocodile!

In This Present Life(A)

Trillium Asset Management threw a surprise shower for two couples, four women, on May 17, 2004. There was the requisite white cake and two bouquets of beautiful roses, confetti and streamers. One of our employee partners was able to take time off to share the moment, and she was a little teary. By the time we had finished examining the bright orange licenses and posed for pictures, the rest of us were also choked up. One of the couples had already been together for 16 years – the other for an eye-popping 29 years. Yet, for the couple with almost three decades together, there was strong and clear love between them as they clutched the little piece of paper that legitimatized their commitment. A few weeks later, we were able to crowd around a monitor and view the wedding of the other couple as they were married by their minister, and once again the tears flowed.

On the same day, our friends Hillary and Julie Goodridge were married in Boston. Their marriage was one of the first for Massachusetts after gay marriage was declared constitutional. It was their court challenge, led by attorney Mary Bonauto, that was responsible for the landmark ruling.

Just a few weeks later on November 2, 2004 – the Presidential election – eleven states passed bans on gay marriage, eight of which threaten civil unions between heterosexual couples as well. Living in an era when few blink at thousands of innocent people killed in war in Iraq while our military budget escalates, when there are over 940,000 incidences of abuse per year in this country, or when over 1/3 of the women in this country report having been abused by a husband or boyfriend at some time in their lives, it is astounding to me that people can be afraid of something that in my experience is nothing but private love and fairness. As Hillary’s and Julie’s daughter, Annie, said, “(not allowing marriage) is like saying only people with yellow hair and blue eyes can go to the bathroom or something.”

At their annual meeting on November 3, the day after the election, Wainwright Bank awarded attorney Mary Bonauto and her employer, Gay & Lesbian Advocates & Defenders (GLAD) their 16th annual Wainwright Bank Social Justice Award. “Mary Bonauto’s quest to provide these couples with the legal protection and security that accompanies a civil marriage is simply, when all is said and done, a recognition of our common humanity,” said Bob Glassman, Co-chairman of Wainwright Bank. Plaintiffs Hillary and Julie Goodridge, and their daughter Annie, assisted Mr. Glassman in presenting the award. A smiling Annie handed Mary Bonauto a huge bouquet of flowers- I found myself wiping my eyes again.

Two days after the election, Trillium Asset Management’s employees from our four branches attended an all-company retreat. New employees were introduced, skits were performed, awards were given, and Power Point use hit new highs as we were informed about new compliance rules, the strategic plan and how to service clients faster and better. A picture of the employees in attendance is on the Trillium Asset Management web site. We helped each other digest the election, and renewed our resolve to continue to fight for justice for all, peace and a healthy environment. Our toasts were made with those ever-present, bittersweet tears.

The partner of one of our employees (one of the women honored at the shower) sent us this poem. It says it all.

In This Present Life (original song lyrics by Jennifer Love Hewitt )Though my marrying you has caused this big divide,Doubters will have to come to see, we’ll no longer hide.It’s got nothing to do with them, it’s just who we are inside.In another life, in another placeI might have to hide, never know your grace.In another world, in another time,Could you be mine?So we’ll keep fighting to have our marriage recognized,Though power they seem to have right now, our union criticized.We won’t be invisible; we won’t travel back in time.In this present life, in this present place,I refuse to hide, because I know your grace.In this present world, in this present time,Will you be mine?In this present life, in this present placeI’ve heard wedding bells, this is truly graceIn this present world, in this present time,You are mine!

This fall, the presidential election dominates the news.(A)

This fall, the presidential election dominates the news. It is painful to watch character assassinations and ridiculously simplistic reductions of complex issues in a media designed for sound bites. But for a couple of weeks my husband and I are in the mountains of Vermont, hiking the hills, biking, and kayaking and blessedly isolated from the rage of the presidential campaign. Almost no chain stores interrupt the bucolic coziness of the small towns, the food is often local, organic and well prepared, the people are friendly and the hills green and lush. Amazingly, there are few political signs. One long-time resident theorized that the lack of signs reflects the fact that Vermonters simply live in their own world, run it as they see fit and will quietly vote for whom they want.

The current events of the larger world creep into daily life at the gas pumps, though, where the price of regular gasoline is about $1.89 a gallon, up over 40% from a year ago. Although still cheap by world standards, the magnitude of the price hike is hurting tourism and even the farmers’ market sales. In our interdependent world, vital elements like transportation, shelter (heating and cooling) and food are produced or controlled far from our homes. Vermont needs the tourists who drive or fly here to enjoy the outdoor recreation, the local culture and the feeling of escaping from the hassles of the rest of the world. Even Ben & Jerry’s, a company that has insured that black and white cows will not go unemployed, could not bring back the self-sufficient family farm of my grandfather’s day.

Any campaign discussion of the true cost of our petroleum addiction fades behind news of terrorist acts and the fears they provoke, but I have some old press clips with me. One is an article from Forbes magazine dated October 28, 2002, a few months before the U.S. attacked Iraq. In an interview, Fadhil Chalabi, who at that time directed the Centre for Global Energy Studies in London, predicted that Iraq’s oil reserves could exceed those of Saudi Arabia and that production of this oil could “take off quickly”, and if “a U.S.-led force succeeds in ousting Saddam these (American and British) oil companies will come in as soon as the fighting has died down”. He also predicted that “the price for West Texas Intermediate (would go) from $30 today to $15”. The last time I read a paper the price was $45. On June 30 of this year, the Wall Street Journal ran a front-page article on policing petroleum. According to this article, about 30 U.S. warships patrol the Persian Gulf and surrounding waters in an attempt to protect the 16 million barrels of oil that pass out of the Gulf daily – the military is spending an average of $4 to $5 per barrel for petroleum security.

In the village not far from our temporary home, there is a Mobil station, one of the few “chains” allowed to penetrate the picturesque landscape. Exxon Mobil is not hurting. Last quarter alone, the company earned a stunning $5.79 billion in net earnings after taxes, up from $4.17 billion a year ago. The latest earnings of this oil company were 3.7 times the 2003 total tax revenues of the state of Vermont.

Human Rights(A)

Since April 30, my husband and I have driven over 5,000 miles around the United States, working and vacationing, up and down the East Coast including the Shenandoah Mountains, Durham, Washington DC and New York City and from San Francisco through Portland, Oregon to Yellowstone and back via Trillium Asset Management’s branch in Boise, Idaho. Along the way I have thought of at least five compelling topics for this newsletter, including wetland preservation in Georgia, snowmobiles in Yellowstone (and the “Snowmobilers for Bush” campaign), or the cutting of huge, live “fireproof” trees as part of the outrageous “Healthy Forest” initiative. But nowhere was I as moved as I was walking through the Idaho Anne Frank Human Rights Memorial.

Since we opened our Boise office in late 1999, I’ve received a quizzical look every time I say “we have four offices: Boston, San Francisco, Durham and Boise”. This livable, well-planned capital is like a microcosm of the best of the United States as it provides the transportation hub and watering hole for outdoor athletes, potato growers, cattlemen, and many others, as well as the artistic and culinary center for people living in the vast, breathtakingly beautiful land that surrounds the city. I’ve been there many times to visit Lisa and Debbie and talk to the warm, tight-knit community they’ve come to love. The fabled militia of Northern Idaho seem far away indeed.

This past week, against a backdrop of national headlines tracing culpability for the torture of Arab prisoners right to the top of the Pentagon, we found the Anne Frank Human Rights Memorial nestled in part of the wonderful Boise Greenbelt. The Memorial features fifty-four quotations from Anne Frank’s diary and others throughout history, the complete text of the Universal Declaration of Human Rights, a graceful statue of Anne Frank “peering from a window, with the narrow steps of Amsterdam behind her”, and amphitheater space for gatherings, readings and presentations on human rights.

Jesse and I walked slowly around the Memorial, reading the words of the famous and the not-so-famous. Confucius shared space with Chief Joseph, Eleanor Roosevelt, Moses, Helen Keller, Dick Gregory and the students from a fifth grade class in Zenica, Yugoslavia. The Declaration of Human Rights was the first stone exhibit, and it was there that tears began to stream down my face. The struggle to protect the rights of people all over the world is continuous and heartbreaking. The courage of those who have furthered the cause of justice under incredible adversity is awe-inspiring.

In the arcane but potent world of investments, there are few words that measure “performance” in terms of the furtherance of human rights, environmental protection, community building or fair and equal employment opportunities. The effort to create those metrics and that language is part of our struggle as socially responsible investors. In the world of human rights, though, diverse people from all parts of the globe and many ages in history have given us inspiration and hope with eloquence. Given the context, these words of Anne Frank are almost painful to read: “How lovely to think that no one need wait a moment, we can start now, start slowly changing the world!”

Corporate Reporting Grows and Gets Better(A)

In 1990, about a year after CERES went public with the Valdez Principles and its call for environmental reporting, I flew to Japan for a meeting with business people who wanted to know about CERES. Although they understood the concept of the principles, there was no corporate tradition of reporting anything to the general public in Japan. I was faced with very blank (although always scrupulously polite) faces when I talked about the concept of an environmental report. But they listened and asked questions for three hours.

Fast-forward to 1998, when I stood in the back of a huge, packed auditorium in London as the Global Reporting Initiative was launched, opening a new era in corporate transparency. For the first time, big transnational companies were collaborating with CERES, the U.N. and other stakeholders on the format of reports to the public about their citizenship.

Just over five years after the launch, corporate environmental and social reporting is spreading quickly around the world with over 400 organizations around the world using the GRI Guidelines. Japan is in the lead with an astounding 79 corporate reporters compared to 51 from the United States, 54 from the United Kingdom, 19 from Germany and 15 from the host country, the Netherlands. The GRI is translated into six languages. The quality of the reports is improving as companies compete for awards. For many of the reporting companies, the process of gathering information and constructing the reports has been useful as a management tool. What gets measured really does get managed! The GRI is a living document, as it evolves with more industry-specific guidelines, more sophisticated metrics around “soft” human rights and other issues, and more knowledge about actual environmental impact. Companies and their stakeholders are taking hard looks at their environmental and social impacts, discussing those impacts with stakeholders and publishing the results. There are many, many companies that have not taken this step, but the momentum we’ve gained is incredible for fifteen short years.

There’s a benefit to reporting companies that might often be overlooked, although it is potentially very significant. That benefit is increased trust. What people don’t know they often imagine. Although there are plenty of historical reasons why people do not trust corporations, in my experience there also exist myths that, were the truth known, could dissolve. In addition, few people truly understand what goes on in a steel company day to day, for instance, or the tension between safety, economy and environmental impact. I have been able to watch actual crash tests on the dummies (and will never go without a seat belt again!) but how many people have been able to do that? Transparency, painful as it can be, is usually a good policy, and companies are beginning to understand that.

Trillium Asset Management is posting its third CERES report on our web site. We use the short form of the CERES Report rather than the GRI guidelines. As with most companies, we find that we learn something every time we go through the exercise of collecting the data. Please check it out and feel free to comment. And if you’re interested in corporate reporting, come to the CERES conference in Boston in mid-April for the second annual GRI Sustainability Reporting Awards.

Who Benefits from Big Bank Mergers?(A)

A)At one point in my life, as a not-quite-starving artist in Boston, I needed to earn a real living, so I procured a job at the Bank of Boston simply because it was the biggest, most stable employer I could imagine. The bank was good and bad – still rooted in chauvinistic habits that hadn’t yet become illegal. Yet in the quintessential New England tradition, the bank was very proper and generous in its own way. I received good training there, for which I am grateful, and made many lifelong friends. I made my way into the management training tour, where I learned that the bank was larger than its next five competitors combined in New England, that the new building it was erecting was the tallest in town by a few feet, and that if you fly over the top of the building you can see the number “1” on the top.The bank was pioneering a new thing called “credit cards”, aimed at customers who would always keep large balances and always pay their bills on time. I actually learned quite a few useful things, although that last tidbit struck me as a bad idea for the customer

The Bank of Boston is gone now, subsumed by Fleet Bank, out of Rhode Island, which is now being subsumed by Bank of America, which was itself subsumed by Nations Bank out of Charlotte, North Carolina, which kept the name. Recently, JPMorgan Chase of New York announced that it was merging with Bank One, out of Chicago, and probably gave indigestion to Bank of America upper management as it moved to secure the second biggest bank spot in a bar graph on the front page of the Wall Street Journal. The bank will be headquartered in New York, so it looks like Chicago, too, will lose out on a mega bank presence. This is not trivial. Along with headquarters designation come tax revenues, upper management personnel, supporting law firms and other satellite businesses and of course jobs.

But perhaps the least understood and the most profound of all impacts is the cost borne by the consumer. Banks have figured out how to make money on the retail customer to the point where JPMorgan Chase’s purchase of Bank One is seen as a kind of hedge to offset the volatility of derivatives or trading. The Wall Street Journal said “Citigroup and a handful of competitors have proved that lending to consumers – via credit cards, mortgages or automobile financing – can turn a lumbering institution in to a growth business.” Banks will say that they need the scale to serve large corporate customers who like all their financial needs met in one place. But large customers can negotiate favorable rates on all services. Retail customers are forced to simply pack up and leave.

There are places to go, if you can find them. With my account at the Marblehead Savings Bank in Massachusetts I can actually talk to lending officers or support people who (I’m not making this up) know me. I was so moved by a particular wire transaction last summer that I wrote a letter of appreciation to the bank. A real friendly person had helped me, offered me suggestions, and faxed me confirmations. Boston’s Wainwright Bank customers have the same experience, as do customers of other community banks around the country.

We can’t begin to quantify the social cost or environmental burden of the huge consumer debt, where, at the very least, much too much interest is being paid by way too many people to purchase goods they always want but seldom need. The big banks’ ability to make money on the retail customer is testimony to the gullibility of people and to the banks’ marketing sophistication. Those huge multi-national companies are growing their towers around the world at the expense of the little guy in more ways than one.

In today’s world, it’s widely agreed that stealing is not only illegal but immoral. We are attacking the obvious cases of stealing in the corporate world with gusto, sending hapless perps up the river as an example that corruption doesn’t pay. But there’s a kind of subtle corruption in the way the big banks treat ordinary, middle class people who just want to achieve the American dream, but do not understand that they are being pushed to the edge of financial disaster on purpose.

We do have the people who really benefit. As an example, there’s James Dimon, the current CEO and Chair of Bank One, who will become CEO of JPMorgan Chase after the merger. In 2002, Mr. Dimon, according to an AFL-CIO Executive PayWatch, “raked in $10,707,005 in total compensation including stock option grants from Bank One Corp”. And he has another $21,189,600 in unexercised stock options from previous years. Does anyone want to hazard a guess what Mr. Dimon gets out of this merger? Mr. Dimon had a falling out with Sanford Weill at Citigroup, thus pushing him out of the running to head the country’s biggest bank. The new combined bank will be positioned to challenge Citigroup at the top of the anthill, and it’s my bet that both Bank of America and JPMorgan will do just that. Look for more consolidation in the future. But hey, don’t despair. Our economy needs the consumer to keep spending, and your debit card will be at home in more and more ATM machines. What more could you ask?

The Challenge of Climate Change(A)

I definitely am not rooting for those who think that that global warming, through a change in ocean currents, will hasten the onset of a new ice age. Yesterday I succumbed (involuntarily) to a massive traffic jam in the Boston area– all due to about ¼” of snow and ice. After three hours of gridlock that took me about 8 miles – not even to the subway station – I turned around and headed home. One theory of climate change is called global warming and has weather in the Northeast approximating weather in Georgia. After yesterday, the specter of Georgia weather has its appeal.

Some sort of weather change is now seen as inevitable. And whereas there are multiple theories about the precise weather future in New England, there is a growing conviction among scientists that weather is already changing. On November 21, I attended an impressive “Institutional Summit on Climate Risk” convened by many treasurers and high level investment decision makers, CERES and United Nations Environmental Programme. Presentations about climate change were sobering and indisputable, the most comprehensive coming from Professor John P. Holdren of the Kennedy School at Harvard. The assembled eight State Treasurers and two major labor pension fund leaders issued a 10-point “call for action” demanding tough new steps by the U.S. Securities and Exchange Commission (SEC), corporate boards and Wall Street firms to increase corporate disclosure of the risks posed by climate change to investors.

Optimism, however, was muted by the knowledge that many important policy decisions in the U.S., totally ignore climate change as a threat. Larry Craig, one of the Idaho senators who helped defeat the McCain Lieberman bill to cut carbon dioxide and other greenhouse gases to 2000 levels by 2010, said there was no need for a “massive new regulatory process” for industrial carbon dioxide. A position piece on Senator Craig’s web site declares “….while fossil fuel use contributes to carbon dioxide emissions, the answer is not as some insist, to abolish fossil fuel use, returning to a rustic life of washing our clothes in streams, trading automobiles for horses, and burning candles for light.” The League of Conservation Voters gave Larry Craig an astoundingly low 4 and 6 for the two years of the 107th Congress.

While the powerful Larry Craig spouts atrocious fabrications, sophisticated companies are preparing to eat the lunches of American industrialists who cling to wishful thinking and fear tactics. In March of 2003, Royal Dutch Shell’s Chief joined Lord John Brown of British Petroleum in calling for action to solve the problem of global warming “before it is too late”. Honda Motors’ FCX is the first fuel-cell car to be certified for everyday use. Toyota’s Prius hybrid boasts a 55mpg combined fuel efficiency record and is the vehicle to drive in Beverly Hills. A handful of U.S. companies continue to invest in research and development on emissions-saving transportation technology in spite of retrograde policies. General Motors is delivering 235 hybrid buses to the King County Metro Transit and Sound Transit that the company estimates will save 750,000 gallons of diesel fuel annually

Sitting in traffic in the freezing cold yesterday with thousands of other residents, I was struck by how amazing it was that thousands of people all over greater Boston could be simultaneously sitting in idling motor vehicles, bumper to bumper, for all that time. We’re not as smart as we think we are. How we deal with climate change could be the ultimate test.

For further information about Climate Change, here’s a link to a good piece in The Guardian and one from Union of Concerned Scientists. CERES’ web site carries a summary of the Summit on Climate change. Professor Holdren’s work on climate change can be found at the Kennedy School web site. See the League of Conservation Voters’ site for data on political voting records.