Thursday, November 1, 2007
Greenwashed again
Posted by Harold Henderson on 11.01.07 at 06:39 AM
Hat tip to Kitry for pointing out this long, dispiriting article by Ben Elgin in Business Week:
"Hailed as an environmental pioneer, FedEx says on its Web site that it is 'committed to the use of innovations and technologies to minimize greenhouse gases.' [I didn't find these exact words there, but plenty like them.] With 70,000 ground vehicles and 670 planes burning fuel, the world's largest shipper is a huge producer of heat-trapping gases. Back in 2003, FedEx announced that it would soon begin deploying clean-burning hybrid trucks at a rate of 3,000 a year, eventually sparing the atmosphere 250,000 tons of greenhouse gases annually from diesel-engine vehicles. 'This program has the potential to replace the company's 30,000 medium-duty trucks over the next 10 years,' FedEx announced at the time. The U.S. Environmental Protection Agency awarded the effort a Clean Air Excellence prize in 2004.
"Four years later, FedEx has purchased fewer than 100 hybrid trucks, or less than one-third of one percent of its fleet. At $70,000 and up, the hybrids cost at least 75% more than conventional trucks, although fuel savings should pay for the difference over the 10-year lifespan of the vehicles. FedEx, which reported record profits of $2 billion for the fiscal year that ended May 31, decided that breaking even over a decade wasn't the best use of company capital. 'We do have a fiduciary responsibility to our shareholders,' says environmental director Mitch Jackson. 'We can't subsidize the development of this technology for our competitors.'"
If capitalism depends on short-term returns over long-term, we're in real trouble. Read the whole thing for a quick critique of Renewable Energy Credits as well.
Comments (5)
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Capitalism discounts future returns at a market rate. It does not "depend" on short term over long term return, rather balances the differences over time. This has been going on since the beginning of time. If we are "in real trouble" it is certainly not a new phenomenon. JBP
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The "market rate" isn't necessarily the appropriate rate, since nature operates along different lines. Sometimes the "market rate" is obviously questionable, as when management is forced to operate on the basis of quarterly returns rather than longer-term objectives. And none of this has been going on since the beginning of time, as capitalism is a relatively recent development in human societies, much more recent than just buying and selling stuff.
Yes Harold, The nature thing is called "externalities". There are probably 10,000 people + studying this at any one time. But the market rate is what is is, and many companies have a defined Internal Rate of Return that projects must meet. Apparently this project did not meet that IRR. The quarterly returns story has always been pretty much nonsense. Companies that seem to plan ahead (Intel or Merck, for example) have better returns than those that don't (Sunbeam or Enron, for example). And yes, the ancients discounted future earnings just like the moderns. In Medieval Times, the Venetians had a very sophisticated insurance and investment market, comparable to the Board of Trade. Capitalism identifies and explains markets, but the market itself, including discounting of future earning has been with us since the dawn of mankind, even if no one was using the term "capitalism". JBP
