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October 09, 2009

Defections from US Chamber Over Climate Change Continue
    by Robert Kropp

Apple resigns from Chamber effective immediately, and Nike resigns from Chamber Board of Directors while continuing to evaluate its membership. --

In his 2000 book, Malcolm Gladwell defined a tipping point as the "one dramatic moment in an epidemic when everything can change all at once." Appropriating a term from the medical vocabulary, he applied it to ideas which, when they have gained a certain momentum, can spread throughout a culture and lead to a lasting evolution in theory and practice.

Three years after Al Gore shared the Nobel Peace Prize with the Intergovernmental Panel on Climate Change (IPCC), has corporate America finally come around to acknowledging the realities of climate change that, according to the IPCC's Fourth Assessment Report (AR4), are more dire than earlier predictions? The report, published in 2007, concluded that greenhouse gas (GHG) emissions must be reduced by 80-95% by 2050 if the most dangerous effects of climate change climate change are to be avoided.

There are signs that as the world prepares to turn its attention to the United Nations Climate Change Conference (COP15) in December, many corporations headquartered in the US are beginning to adopt more public stances in favor of climate change regulation. Positions on climate change that have been publicly advocated by shareowner activists for years, which many corporations have too often dismissed as extra-financial considerations, have finally reached the tipping point at which some of those same corporations now embrace the necessity of mitigating climate change.

The shift in corporate priorities can be clearly seen in the recent very public disagreements between many powerful companies and the influential trade associations that purport to represent them. Defections from the American Coalition for Clean Coal Electricity (ACCCE), the National Association of Manufacturers (NAM), and the US Chamber of Commerce are growing in number, as companies advocating for effective climate change legislation increasingly find themselves at odds with the opposition to such legislation from the trade associations.

The Chamber has been especially vocal in its opposition to the regulatory actions on climate change proposed by the Environmental Protection Agency (EPA). Bill Kovacs, its senior vice president for environment, technology and regulatory affairs, called for "the Scopes monkey trial of the 21st century," in which the science of climate change could be debated. Although Kovacs eventually retreated from his analogy, the Chamber did petition the EPA to hold public hearings on the validity of climate science.

In the aftermath of the widely disseminated remarks on climate change by Chamber executives, Green Century Capital Management, an investment advisory firm focused on environmentally responsible investing, sent a letter to Nike. Observing that Nike is a member of Business for Innovative Climate and Energy Policy (BICEP), a coalition of companies that supports climate change legislation, Kristina Curtis, President of the Green Century Equity Fund, wrote, "The time for action on climate change is now. We hope Nike can step up to the plate and be a hero in leading companies on the climate issue by terminating its membership in the US Chamber of Commerce." spoke with Emily Stone, Shareholder Advocate at Green Century, who said, "Nike helped to found BICEP, and is such an important brand in this country. Its continuing membership in the Chamber is a question of brand risk as well as doing the right thing."

On September 30, Nike resigned from its position on the Board of Directors of the Chamber, stating that it "fundamentally disagrees with the US Chamber of Commerce on the issue of climate change and their recent action challenging the EPA is inconsistent with our view that climate change is an issue in need of urgent action."

Before Nike's resignation from the Board, the latter claimed 122 corporate members. Interestingly, given the Chamber's outspoken opposition to regulatory action on climate change, only four Board members publicly agree with the Chamber's position, according to the Natural Resources Defense Council (NRDC). Of the 23 Board members that have made public their positions on climate changes, 19 support such regulations as those proposed by the EPA.

Following Nike's resignation from the Chamber Board, Green Century sent another letter, commending Nike for its "efforts to distance your company known for its environmental leadership from the Chamberís efforts to undermine effective climate legislation." However, the letter continued, "We are disappointed that Nike has not taken a stronger, more proactive response to address the clear misalignment between its positions and those of the Chamber on climate change." The letter concluded, "We continue to encourage the company to 'Just Do It' and fully withdraw from the Chamber of Commerce."

Stone told, "We do commend Nike for its resignation from the Chamber Board, but we do continue to pressure them to protect their sustainability reputation by resigning from the Chamber completely."

Then, on October 5, Apple did Nike one better by leaving the Chamber immediately, a decision that it said was effective immediately. In the letter to the Chamber, Catherine Novelli, Apple's Vice President of Worldwide Government Affairs, wrote, "We strongly object to the Chamber's recent comments opposing the EPA's efforts to limit greenhouse gases."

The letter continued, "Apple supports regulating greenhouse gas emissions, and it is frustrating to find the Chamber at odds with us in this effort."

In the past, Apple has had well-publicized differences with environmentalists over the quality of its reporting of greenhouse gas (GHG) emissions. In a June conversation with that followed the 2009 proxy voting season, Conrad MacKerron, the Director of the Corporate Social Responsibility (CSR) Program at As You Sow, described a shareowner resolution filed with Apple, asking the company to improve its reporting to the Carbon Disclosure Project (CDP) on GHG emissions by measuring aggregate levels, instead of reporting on a product-by-product basis.

"Apple's emissions data is very poor," MacKerron said in June. "Even with Al Gore sitting on its Board of Directors, Apple is not doing world-class reporting on GHG emissions, while its peers seem to have no trouble doing so." The first-year resolution won 8% of shareowners' votes.

Recently, As You Sow commended Apple for responding to the resolution by markedly improving its GHG emissions reporting.

The Chamber quickly struck back at Apple's highly publicized departure. Chamber President Thomas Donohue said in a letter to Apple, "It is unfortunate that your company didn't take the time to understand the chamber's position on climate and forfeited the opportunity to advance a 21st century approach to climate change." Donohue went on to say that Senate passage of legislation similar to the Waxman-Markey climate change bill, which passed the US House of Representatives in June, "will cause Americans to lose their jobs and shift greenhouse-gas emissions overseas, negating potential climate benefits."

But without a significant reversal in the Chamber's position on climate change, it is likely that defections will continue, as influential organizations continue to press companies whose publicly stated positions on climate change are misaligned with those of such associations as the Chamber, NAM, and ACCCE.

In May, the Center for Political Accountability (CPA) identified 25 companies that sit on the board of the Chamber and/ or NAM but also belong toCeres, BICEP, the United States Climate Action Partnership (USCAP), or the Pew Center's Business Environmental Leadership Council (BELC). In a letter that noted Duke Energy's resignation from NAM in May (the company left the ACCCE is September, but remains on the Board of the Chamber), the CPA told the 25 companies, "Alignment of values and positions between companies and the associations they support can positively impact a companyís reputation and avoid serious questions about managementís business judgment."

"We are writing to urge your company to respond to the risks by bringing your companyís political spending into alignment with its values and publicly stated policies and positions on climate change," the letter said.

Bruce Freed, President of the CPA, describes it as "an organization that focuses on corporate political spending, including lobbying and payments for trade association memberships. We are working on handbook describing best practices for corporate disclosure of political spending activities and the risk associated with misalignment between a company's policies and the polices of trade associations of which it is a member."

In a followup letter sent in June, the CPA wrote that it is "essential to assure that the company is not funding its opponents and undermining its interests through its trade association payments."

In addition to Nike and Duke Energy, the companies contacted by the CPA included IBM, PepsiCo, Dow Chemical, and Johnson & Johnson.

Freed told, "We wrote to 25 companies, heard back from 18, and entered into discussions with 10. We asked companies to request that trade groups refund the amount of corporate membership dues used for lobbying against climate change legislation."

"There are very practical reasons why companies are supporting climate change legislation," Freed continued, "And the lobbying efforts by trade associations against climate change legislation present a dilemma for these companies."

According to the Center for Responsive Politics, a research group that tracks the influence of money on elections and public policy, the Chamber spent more than $26 million on lobbying efforts in the first seven months of 2009, far more than any other organization.

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