Fri, 23 Jul 1999 17:11:37 -0400

From: Lois Shellie@EDF on 07/23/99 05:11 PM

Subject: EDF Memo


Recently you received an email from NonProfit Accountability Project
(NPAP) containing attacks on the integrity and the credibility of the
Environmental Defense Fund. This memo does not attempt to respond to each
charge in that lengthy document. It does try to set the facts straight
about alleged conflicts of interest concerning EDF's advocacy policies, the
activities of the Environmental Resources Trust (ERT) and professional
activities of four of EDF's trustees.

EDF and the Environmental Resources Trust

Since its founding more than 30 years ago, EDF has advocated a variety
of approaches to achieve environmental progress. EDF has used many
approaches, including regulatory and legislative strategies, litigation,
and voluntary cooperative efforts with governments and the private sector,
to achieve environmental results. To reduce exposure to persistent toxic
chemicals, EDF sought and won the US ban of DDT and the phase-out of lead
from gasoline. To help address the problem of acid rain, EDF designed the
innovative, market-based 1990 Clean Air Act plan that will cut power-plant
emissions of sulfur dioxide in half. EDF has worked closely with
businesses on a variety of issues and has created widely praised waste
reduction programs for McDonalds, as well as ambitious greenhouse gas
reduction plans with British Petroleum. EDF's current activities continue
to involve a mix of litigation, new regulatory efforts and voluntary
cooperative efforts to address local, regional, national and international
environmental problems. Where appropriate EDF has favored strategies that
use the power of markets to improve the environmental performance of

The Environmental Resources Trust (ERT) is a 501(c)-(3) non-profit
organization, which was started in 1996 with assistance from EDF. ERT was
created as a separate organization to demonstrate, through specific
projects, ways in which the economic self-interest of businesses and
consumers can yield environmental improvements.

Although ERT is independent, EDF has stayed involved with the
organization. Three EDF staff members serve on ERT's seven-member board of
directors, which also includes the President of the National Audubon
Society. This involvement reflects EDF's commitment to stimulating
economically sound projects that yield clear environmental benefits and
create examples from which companies and the broader economy can learn.

The mission and policies of ERT require each project to achieve a
demonstrable net environmental benefit, independent of any income
potential. To date, ERT has received grants from traditional philanthropic
foundations as well as revenues from private companies. Since ERT is a
non-profit corporation it uses all of its funds to further its
environmental mission. Should ERT at any time generate income above its
then-current expenses, that income must be used to carry out ERT's mission
of environmental improvement. Again, each and every project and
transaction must achieve a demonstrable net environmental benefit.

No income passes from ERT to EDF at any time.

EDF, ERT and Credit for Early Action: A Conflict of Interest?

In its focus on EDF's advocacy of credit for early action policy on
greenhouse gas emissions, "Crony Environmentalism" raised a key issue.
ERT engages in projects and transactions with private companies and
receives fees and other income from those transactions. EDF advocates for
a variety of progressive environmental protection policies, including
market-based approaches that favor exactly the kind of transactions that
ERT engages in. EDF staff serve on ERT's board. Does this mean that EDF's
advocacy is compromised?

That is a legitimate question. We believe the answer is clearly,

EDF's advocacy of market-based environmental policies long pre-dates
the founding of ERT. Income from ERT's transactions goes neither to EDF
nor to corporate shareholders, but to advancing ERT's environmental
mission. That mission is ensured by ERT's policy requiring that each
project and transaction demonstrates a net environmental benefit.

The criticism's author clearly disapproves of market approaches to
environmental protection. That is his right. It is also his right to look
hard for conflicts of interest. In the case of EDF and ERT, however, his
claims to find those conflicts not only ignore evidence to the contrary,
but also, more importantly, they ignore the truth.

In fact, EDF's staunch advocacy of legislation to credit companies
that reduce greenhouse gas emissions voluntarily, and ERT's work with
companies to report their greenhouse gas emissions and reductions, offer
good examples of the real connection between EDF and ERT.

EDF's long-standing advocacy of market-based environmental protection
is firmly grounded in our belief that when market transactions drive
environmental improvement all parties ? especially the environment ?
benefit. For well over a decade EDF has advocated steep reductions of
conventional air pollutants and greenhouse gases ? and "emissions caps" so
pollution does not grow after it is reduced. EDF also advocates the use of
emissions trading to reduce compliance costs and produce outstanding
environmental results.

EDF has long believed the need to stabilize Earth's climate and reduce
greenhouse gases are the most urgent challenges facing the world. Because
we believe it is critical to begin those reductions immediately, EDF has
vigorously advocated for legislation that would award emissions reduction
credits to private companies when they voluntarily reduce and cap their
greenhouse gas emissions. In our view, this is the most politically
feasible way to start the process of cutting greenhouse gas emissions
quickly. Meanwhile, ERT has begun to provide private companies with a
system for independently reporting their greenhouse gas emissions. ERT has
received fees for this service. Should the legislation that EDF is
advocating pass, ERT is likely to increase this work substantially and
receive a corresponding increase in its income. Any fees in excess of
actual expenses will support future ERT projects to improve the

EDF and ERT believe that a reliable method of counting and recording
greenhouse gases is necessary for any reduction system to work. Indeed,
reliable counting and reporting of greenhouse gas emissions is absolutely
essential to the environmental success of the proposed credit for voluntary
action program. That is why we believe that EDF's advocacy is actually
strengthened by the efforts of ERT to ensure that companies which are
willing to reduce and cap greenhouse gas emissions voluntarily, develop
effective ways to track emissions and ensure that pollution reductions are

For some, the financial link between ERT and private companies taints
ERT's work, and, by extension, EDF's advocacy. Our view, in contrast, is
that the ultimate test is whether environmental protection is achieved
through the policies EDF advocates and the projects ERT undertakes.

EDF's Board of Trustees: A Conflict of Interest?

EDF Board of Trustees is comprised of a stellar group of scientists,
philanthropists, civic leaders and individuals from the private sector.
Each is a dedicated environmentalist with a demonstrated history in
support, not only of EDF, but also of other local, regional and national
environmental organizations. While a number of board members have direct
or indirect corporate affiliations, those are fully disclosed so that any
resulting conflicts of interest or appearance of conflict can be
scrupulously managed. Some may believe that holding investments in a
corporation, working for a law firm that represents any corporation, or
working for a non-profit organization that receives any support from a
corporation automatically taints an individual's concern for the
environment. EDF does not share that view. Each board member of the
Environmental Defense Fund has demonstrated a lifetime of commitment to
environmental issues, as well as the ability to function with integrity in
an unavoidably complex, pluralistic world. Their uncompensated service is
a tremendous contribution to our efforts to protect the natural world, even
from rapacious corporations, and we trust that their reputations, earned
through years of dedicated service to EDF and the environment, will survive
the strictest scrutiny.