Crony Environmentalism: Report Challenges Integrity of Environmental
Defense Fund;
Do Conflicts of Interest Corrupt Global Warming Agenda of Leading U.S.
Eco-Group?
-- EDF Created and Affiliated Group Would Profit from Provisions of =
Senator Chafee's "Early Action" Global Warming Bill --
A new report based largely on leaked documents reveals that on the issue
of climate change the Environmental Defense Fund (EDF) is engaged in
self-dealing activities with conflict of interest written all over them. =
EDF is a leading supporter of Senator Chafee's Credit for Voluntary
Early Action bill (S. 547) which provides potentially lucrative credits
for activities alleged to mitigate global warming. Many other
environmental organizations oppose the bill, citing "critical flaws" and
"gaping loopholes" that favor large electric utilities and other big
corporations making "dubious" efforts to slow climate change. =
It turns out that an EDF-created, -insured and closely -affiliated
nonprofit -- the Environmental Resources Trust (ERT) -- plans to
validate and manage the "early action" credits that would be created
under the Chafee bill. ERT's seven person board also includes three
upper-level EDF staffers. Result: ERT would profit from the
controversial Chafee bill advocated by its parent organization, EDF. =
Furthermore, ERT is chaired by big-business lobbyist C. Boyden Gray, the
former chief counsel to President George Bush and a longtime opponent of
global warming treaties and of environmentalists. Gray also chairs
Citizens for a Sound Economy, which has lobbied Congress to oppose the
Kyoto Treaty =97 thus creating the deadlock that EDF is now trying to
break through the Chafee bill. Moreover, he lobbies for New England
Electric Systems which will financially benefit from the bill. Gray's
record and his close ties to the corporate sector raise questions about
ERT's credibility as an independent accrediting agency for greenhouse
credits created by the Chafee bill. =
The report also shows how leaked documents reveal other troubling
aspects of the EDF/ERT agenda, including: plans to market credits for
"carbon sequestration," i.e. planting trees or protecting forests -- a
nice sounding but questionably effective approach opposed by many
environmentalists; the intent to profit from extending greenhouse
reduction credit for nuclear power; negotiations for ERT to market
energy from an electric utility for which EDF has publicly supported a
multibillion dollar taxpayer bailout for the company's nuclear stranded
costs; plans to transfer "green energy" to Enron to bolster the
company's environmental record for purposes of relicensing a dam; and
concern that ERT may be violating laws governing nonprofits.
The report reveals that EDF trustees have financial ties to corporations
benefitting from the weak global warming policy of the Chafee bill,
raising another area of conflict of interest. For example, EDF trustee
Frank Taplin owns millions of dollars of stock in his family's coal
company, the North American Coal Company; EDF's chairman is with Morgan
Stanley which holds stock worth several hundred million dollars in the
electric utilities that will benefit from the billion-dollar windfall
for "dubious" emission reduction efforts.
The report also notes that there is a troubling revolving door between
EDF and U.S. administrations and that EDF is endorsed by the Global
Climate Coalition, a leading opponent of global warming activists.
Bernardo Issel of the NonProfit Accountability Project commented that
"EDF's motto used to be 'Sue the bastards.' The findings of this report
suggest that if EDF were to follow the motto today, it might very well
sue not only some of its own trustees, but itself as well." =
The report also discusses how conflict of interest issues also apply to
other matters such as utility deregulation and free trade where EDF has
a record of controversial policy stances. =
The NonProfit Accountability Project is an effort to explore issues of
accountability and conflict of interest in the nonprofit sector. The
report is available on the web or can be requested.
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CRONY ENVIRONMENTALISM: Executive Summary
The Environmental Defense Fund (EDF) is a leading supporter of Senator
Chafee's Credit for Voluntary Early Action bill (S. 547) which provides
potentially lucrative credits for activities alleged to mitigate global
warming. Many other environmental organizations as different as
Greenpeace and Natural Resources Defense Council oppose the bill; =
several groups including the National Environmental Trust, Ozone Action,
and Sierra Club have criticized the bill for "critical flaws" and
"gaping loopholes" that will favor large electric utilities and other
big corporations making "dubious" efforts to address climate change.
=
A new report from the NonProfit Accountability Project based to a great
extent on leaked documents reveals that in EDF's support for the "early
action" bill, EDF is engaged in self-dealing actions with conflict of
interest written all over them. EDF created the Environmental
Resources Trust (ERT) in 1997; three of ERT's seven board members are
top-level EDF staffers. Administrative documents of ERT reveal
negotiations for ERT to contract with the Edison Electric Institute and
affiliated electric utilities for validation and management of the
"early action" credits that would be created by the Chafee bill. =
Result: ERT profits from the controversial policies advanced by the
early action bill for which EDF is a leading supporter. =
ERT is chaired by C. Boyden Gray, a longtime opponent of global warming
treaties and of environmentalists. Additionally, Mr. Gray chairs
Citizens for a Sound Economy which has pressured Congress not to support
the Kyoto Treaty, leading to the deadlocked situation that ironically
EDF is trying to break with the "early action" bill. Considering Gray's
record and his close ties to the corporate sector, questions arise
regarding the integrity of ERT to act as an accrediting agency for
greenhouse emission credits given to corporations. Furthermore, Gray's
association with EDF's "early action" scheme suggests that the policy =
is but a "smoke and mirrors" effort to earn corporations "brownie
points" for the semblance of addressing global warming.
Other internal documents raise more questions regarding the agenda and
integrity of EDF and ERT. These include:
-- Plans to profit from "carbon sequestration" marketing, a
controversial and questionably effective =97 but business friendly
response to the climate crisis.
-- Negotiations to give potentially valuable greenhouse credits to a
nuclear utility fell through in part because of the unreliability of the
company's nuclear generating capacity. This lends credence to many
environmentalists' view that the Chafee bill is geared to "throw a
lifeline to the nuclear industry."
-- EDF's support for a multibillion dollar taxpayer bailout of
so-called "stranded costs" of Edison International's nuclear reactors,
while EDF's affiliate ERT simultaneously pursued a closed-door deal to
benefit financially from marketing Edison's "green energy."
-- A plan to market "green energy" to global natural gas company Enron
to help it beat out Native American tribes competing to license a dam. =
Enron has a close tie to a vice-chair of EDF and has funded EDF's global
warming exhibit. Also, EDF's board chair is an advisory director at
Morgan Stanley which has substantial investments in Enron. =
=
-- A failed EDF/ERT effort to legitimize a self-chilling beverage can
that released a potent greenhouse aerosol. The use of just one can
would have been comparable to the emissions from driving 200 miles by
automobile.
-- In regard to ERT's intentions to market electricity, the group has
received legal counsel from a law firm that represents major
corporations in matters of utility restructuring and promotes its
practice of litigating against environmentalists.
-- A carbon trading partnership with Cantor Fitzgerald, a firm with a
history of securities law violations.
-- The possibility that EDF/ERT's activities may circumvent laws
governing nonprofits, evident from the stated concern that their
activities might draw critical attention from state attorneys general.
-- The intent of ERT to hide from public and media scrutiny its
contract with Niagara Mohawk.
-- A coziness with the White House climate policy director who
previously had given a climate reduction award to an Indonesian timber
tycoon accused of rapacious logging, forest arson, and misappropriating
funds meant for conservation.
In EDF's advocacy of the "early action" bill, there are also conflict of
interest issues in relation to EDF's elite trustees. EDF's board
abounds with super-rich people with massive stock portfolios, top
executives of financial services firms, corporate lawyers, and public
interest figures themselves beholden to special interests =97 all with a
financial interest in limiting the cost incurred by the corporate sector
to address global warming. This report examines four EDF trustees who
exemplify the above archetypes. =
=97 John H.T. Wilson, EDF's chair, is advisory director of Morgan Stanley=
,
a firm that provides financial services for and holds major investments
in oil and electric utilities, including the companies for which the
Chafee bill will be a financial windfall.
=97 James W.B. Benkard is a partner with the global corporate law firm
Davis, Polk & Wardwell. He and his firm represent polluting
corporations such as Exxon which would be interested in a global warming
bill full of "critical flaws" and "gaping loopholes." =
=97 Frank E. Taplin Jr. is a major stockholder and former director of the=
North American Coal Company, founded and predominantly directed and
owned by his family, vesting him with a strong interest in watered-down
global warming policy. =
=97 EDF Trustee Gene Likens, a scientist known as "the father of acid
rain," heads a group the Institute of Ecosystem Studies that is funded
by an electric utility that will benefit from the Chafee bill. The
President of the utility also acts as a trustee of the Institute.
Further casting doubt upon EDF's independence, the report also notes
that there exists a revolving door between EDF and the U.S. presidential
administrations, both current and past. Also, recently the U.S.
Environmental Protection Agency granted EDF $175,000 to promote to the
public the controversial strategy of greenhouse gas emissions trading, a
strategy from which EDF's affiliate ERT will profit and by which
politicians and corporations may appease environmental pressure to act
on global warming. =
Symbolic of the overall questionable nature of EDF's global warming
advocacy, it is noted that EDF is endorsed by the Global Climate
Coalition, a leading lobby opposed to addressing global warming.
Finally, the market-based components of the Clean Air Act of 1990 =97
which EDF crafted and supported =97 provide the basis for the carbon
trading program of the Chafee bill. Yet the 1990 Clean Air Act has
proven quite inadequate in addressing air pollution and EDF's market
mechanisms have had problems. The public should be skeptical of EDF's
advice on climate change, especially in light of extensive opposition
from environmentalists and the plethora of conflict of interest issues
as detailed by this report.
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Bernardo Issel
NonProfit Accountability Project
PO Box 53238, Washington D.C. 20009
www.erols.com/npap
npap@erols.com
202 333 1855