Green is good

Eric W. Orts, director of the Wharton School’s Environmental Management ProgramPhoto credit: Candace diCarlo

Earth is dying slowly from the effects of global warming, water shortages, deforestation, desertification and other man-made killers.

Fortunately, there are those who are working diligently to educate the masses and find a cure. Former Vice President Al Gore is one. Eric W. Orts, director of the Wharton School’s Environmental Management Program, is another.

He has no Academy Award, but Orts, both a corporate and environmental lawyer, is certainly doing his part to spread knowledge of the topic: He has written numerous articles and chapters on environmental law, helped create innovative proposals for reforming environmental regulations, and co-edited the 2001 book, “Environmental Contracts: Comparative Approaches to Regulatory Innovation in the United States and Europe.”

In November, he accompanied Penn President Amy Gutmann to the Global Colloquium of University Presidents at New York University, serving as her faculty expert, and here at Penn, is the founding director of Penn’s recently launched Initiative for Global Environmental Leadership (IGEL). This Wharton-led, cross-disciplinary endeavor has been designed to sponsor research addressing some of the planet’s most pressing environmental ills.

Q. Have you always been interested in the environment?
A.
I guess the roots of my interest in the environment go back to early childhood experiences, going hiking, camping, that sort of thing. One of my early teachers at Oberlin College developed an early course in environmental political theory. I actually didn’t take that course but I was always interested in that topic. I then went into law school and was a corporate lawyer for a while. My main area is corporate law and corporate governance. Coming out of my interests in issues of corporate and social responsibility and corporate governance, I became interested in issues of how corporate law relates to environmental kinds of problems. Very few people were doing work that crossed those two areas. You pretty much were either an environmental lawyer and an administrative law type, or you were a corporate lawyer and a private law type. I started to have an interest in the environmental law side. The big turning point for me was that I heard about the Earth Summit that was coming up in Rio de Janeiro [in 1992]. Attending the Earth Summit was one point also where lots of business interests started to realize that this was an issue that the business sector had to take a leadership role in. And so seeing and meeting some folks who had that perspective helped to also convert me to the idea that this was something I was interested in.

Q. Do you view green initiatives as a passing fad or something people are genuinely concerned about?
A.
I would say that there has been some indication that interest in environmental issues has a cycle to it. It’s certainly true that if you are heading into a recessionary economic period, or even a depression, that it’s much more difficult for people to have the environment very high on the agenda. It’s also been a challenge if you look at developing countries and policies in developing countries. It’s very difficult to get traction on environmental issues in those countries where they’re really struggling day to day just to basically feed themselves and to develop. So I think there’s always been a challenge for environmentalists in that respect but my general feeling is that there is an increasing interest. And so even though they’ll be some ups and downs in the ability of the population, or the media, or the politicians to focus on environmental issues, the general trend is upward.

Q. Does any one environmental problem outweigh another in terms of severity?
A.
The most serious problem sometimes depends on who’s asking the question, and where you are. If I lived in a very heavily air polluted Chinese city and you would ask me, ‘From where you’re sitting right now, what’s the biggest environmental problem?’ I’d probably say, ‘The immense amount of air pollution right in this city.’ Probably climate change is something else that’s going to happen, but for those people right there, right now, this huge industrial air pollution is the biggest problem. I think it depends on what your perspective is and where you live and what you’re focusing on.

Q. Are there any environmental areas where we have made progress?
A.
I think there are some issues that look to be success stories, and probably the ozone layer depletion problem is one of them. You probably don’t hear about it so much because I think the common understanding right now is that the problem was recognized by scientific observation. The cause of the ozone layer depletion was identified. It was basically specific chemicals that were being produced by companies for refrigerants and other things. Basically, it’s a success because there was a ban on those chemicals. There seems to be some evidence that the depletion is slowing down and that we have avoided a catastrophe. I think there are some success stories out there. You can look at the Schuylkill River. Most people would still not want to swim in it but actually it’s a lot better than it used to be. So if you look at the general quality of water in the United States over the last hundred years or so, we’ve really had a huge success.

Q. Among the business community, do you think green initiatives are sincere or just a marketing ploy?
A.
I think sometimes it’s difficult to tell. I’ve talked to a number of corporate leaders and I think that it is real at some companies. Companies are not in business if they don’t see that they’re going to be able to make profits, so the principle focus for companies today— and I think it’s a legitimate focus—is making money and making profits. But I think that there are companies out there that understand that [making money] is not the only objective. I think that many companies have seen that environmental issues are one of a set of other ethical issues that are out there that you have to care about to some extent. The other thing that is changing companies’ views is that there is a connection between profits and your environmental reputation. I think there are companies out there that are not serious, that are just doing it for the marketing or just doing it for the reputational benefit and it’s not real. I think, increasingly, companies had better be careful when they do that because [non-government organizations] are watching, their shareholders are more interested in this issue, employees care about these issues. I think, for those reasons, the number of companies that are [phony] are playing a dangerous game. And you see more serious players who are getting into this and really believe what they’re saying.

Q. Exxon Mobil earned a reported $40.6 billion last year, or $77,213 per minute. How would you persuade its investors that going green would benefit the company?
A.
Exxon Mobil is a case of a company that is making a lot of money in the petroleum business and, to some extent, the burning of petroleum is going to cause certain kinds of environmental problems. At the same time, you can’t really imagine our current economy running without oil, so the transition from a fossil fuel-based economy to an economy that is not producing greenhouse gases to that extent and also other kinds of air pollution problems is not a short term transition. You don’t look at these companies and say, ‘Well, you shouldn’t be making this kind of profit.’ That’s the nature of the world we’re in. I do think there’s a responsibility, though, for those companies to see that they’re a part of these overall general problems, and then taking a position about progressive policies of where they’re going to go. So with respect to oil companies, you could ask questions like, ‘What is Exxon Mobil’s strategy for diversifying its energy portfolio?’ It’s a huge company; it can make a huge impact if it decided to put significant resources into developing new alternative sources of energy. I think it is doing so already to some extent, but the question for them would be how far are you really going on that?

Q. Is solving these issues more of a problem of changing laws or changing personal behavior?
A.
I think it’s a combination. I’m a lawyer and so I tend to be skeptical of the view that the market will change everything. There are some academics and policymakers out there who think that the government should just get out of the way and there will be a green revolution and business will lead it and everybody will sign up. I disagree with that. I think that there are significant problems that, to solve them, will cost money and require sacrifices in maybe your lifestyle or other things. And for those kinds of problems, you do have to have legislation. Now, at the same time, I say both because I think there’s a lot of power in consumers and markets and that shareholders have to influence where the economy goes. I think you see that already with organic foods. It’s been a huge growth industry that I think surprised a lot of people.

Q. You mentioned that Europe has much tougher environmental laws than the United States. Why is the U.S. trailing in this area?
A.
I think that if you look at environmental law, the earliest mover was the United States in the 1970s. And I think the explanation was the Civil Rights Movement and the environmental movement of the 60s and 70s helped to propel the first major legislation at the federal level—the Clean Air Act, the Clean Water Act, and some of the other federal legislation. I’m not sure what happened. I think, to some extent, there’s probably a political explanation, that there was a cyclical fallback, that maybe there were a lot of regulations and the regulations pinched very deeply, and so you had a lot of businesses saying, ‘Wait. This is way too much.’ And they’re pushing back and so you had some political shifts against regulation. There are different explanations about why green issues came to be so dominant in Europe. One answer is that the green parties were much stronger in Europe, particularly in Germany. There were some major crises. There was what was called the death of the forest in Germany and some other political events. There was a stronger anti-nuclear movement in Europe than in the United States. So there were some political forces that were responsible.

Q. Are you confident that the next President will institute policies to tackle some of these issues?
A
. I think it’s likely. It always depends on who it would be. Right now, it looks like [Arizona Sen. John McCain] has a very good chance of being the Republican nominee. McCain has a bill that’s already sponsoring climate change regulation so he certainly has a much different view about this issue than George Bush has had. And all the Democrats basically are in favor of some sort of climate change regulation. I think right now, looking at the tea leaves, it looks like we’re going to have a President who’s in favor of some kind of legislation.

Q. What role can colleges and universities play in addressing global environmental issues?
A.
It’s a place where you get creative ideas about how to approach a problem. Understanding environmental problems requires science and those who do science are based in the universities, so the universities are basically the place where you can best identify what the problems are and what the various dimensions of the problems are. Climate change, for example, is a very complicated problem. We don’t know all of the answers to how the climate works. And the solutions aren’t simple either. But I think that those are the main reasons why universities are one of the principle places. That’s where new ideas come from, that’s where the science is basically produced, and also, that’s where the future generations are being educated.

Q. What sorts of environmental programs exist at Penn?
A.
We have an Environmental Management Program at the Wharton School. That’s designed for students who are already certain that they’re going to go into this field in some business capacity. The new program that we’re very excited about is IGEL, the Initiative for Global Environmental Leadership. It’s also involved with students but it’s not directly curriculum. This is more of looking outward to sponsorship from corporations. We have 10 leading companies who have agreed to sponsor this for a three-year period. The idea is to identify some very good research topics and conference topics that are really important for businesses, but that they want to engage with other stakeholders—NGOs, the government, etc.—to try to address these issues. I think that’s our most exciting current project, to try to sponsor some research and have some conferences on those kinds of issues.

Q. Who are some of the sponsors?
A.
BASF, International Paper, Exelon, Merck, GE, United Water, Goldman Sachs, Xerox, Interface, Rohm & Haas.

Q. What Penn schools will be involved with the initiative?
A.
We’re trying to involve as many as possible. It’s definitely aimed to include faculty from any of the schools who have an interest in the topics that we identify. Any faculty member who is interested in this really should feel free to contact me.

Q. What studies do you hope to undertake?
A.
There’s a couple of different possibilities. One likely candidate is to look at carbon markets. I think that’s one topic that we seem to be lining up on. We’re also looking at this general question of how do businesses really make decisions about environmental issues internally? One other one is environmental performance measurements and reporting. That has to do with the fact that it’s becoming more frequent for companies to have annual reports about their environmental performance. If a company is saying, ‘We’re a good environmental company and here’s our report,’ how does a consumer know that’s true or accurate?

Q. How do you envision Penn living up to the sustainability pledge signed by President Gutmann?
A.
One problem is to look at what this is going to mean. Who is included in the footprint of greenhouse gas emissions when you say ‘the University?’ I think that’s a very important and interesting problem. Do you include jet air travel that the students take during spring break? Do you include jet air travel by professors if they’re going to a conference? Or should we really look more narrowly at only the plant and equipment at Penn?
One interesting question is to look at how is the definition of that problem going to be accomplished. And I think that, at the very least, that’s going to be very interesting because it helps to educate. One of the things I really like about the pledge is that it will educate people to have a better understanding of, ‘How does your daily activity affect the wider environment?’ So I think there’s a very strong educational component to following through with this pledge.

Q. You made some eye-opening statements in your comments at the NYU forum, saying, for instance, that “it is not alarmist to point out the increasing probability of a collapse of the environmental prerequisites for human survival as a species.” If we do not correct these environmental problems, is the survival of humanity at stake?
A.
I think that when you start to look at these issues, one of the things that you realize is that the number of people on this planet is so huge and the amount of resources that we use are massive and they have a geophysical influence on the rest of the natural environment. Just one indication is the loss of biodiversity. So the idea that we’re living through the extinction of so many other plants and animals at this moment is, I think, a cause for concern because you realize this is really a huge impact that you’re having and you’re wiping out entire species.
It used to be, from almost our entire history, that nature was always more powerful than the human species. We’ve kind of tipped the balance now so we’re actually a threat to nature. We’re a threat to the natural balance and that comes in lots of places. I don’t think it’s just climate change. Climate change is one thing. People are realizing that we’re putting all this stuff into the atmosphere and we don’t really know the full effects of that. These are not minor problems.
I think what you’ve seen, though, is warning signs. It’s not that it’s a doom and gloom, we’re about to go over the cliff for sure, but there are enough indications of significant warning signs that call us to pay more attention to what effects we have.

Originally published Feb. 21, 2008

Originally published on February 21, 2008