Companies want to look green, but old habits persist

Sunday, March 4, 2007

While Hungarian citizens are getting more conscious about environmental issues and more interested in companies’ environmental record, an environmentally responsible image often remains an empty PR exercise, said Greenpeace spokesperson Szabina Mózes. “It looks interesting when we see an advertisement in which the Paks Nuclear Plant Zrt is photographed in a beautiful green environment, saying that this is ‘The energy of the future,’ but it’s hardly believable that nuclear energy is a clean solution.” Paks Nuclear Power Plant Zrt has also sponsored radio programs dedicated to environmental issues; positive action to be sure, Mózes opined, but such activities do not make nuclear energy environmentally friendly, nor do people believe they do. Mózes went on to say that such PR efforts may even result in a growing skepticism of consumers who have already learned not to believe in advertising.

Of course, this problem also exists in other countries. “Greenwashing” refers to the production of misleading PR efforts to improve a company’s public image while simultaneously practicing the opposite. A prime example of the concept was provided by an activist with an international NGO who wished to remain anonymous: Oil company Esso regularly contributes to funds to save Asian tiger species while concurrently offering millions of dollars for studies which argue against the facts of global warming.
At the same time, the number of consumers who consider the environmental record or the fair trade issue when choosing product or service is growing in developed countries and at a slower pace in Hungary as well. And this is true despite the declining spending power CSR, for the children of Hungarian households, Mózes said. The number of private individuals financially supporting Greenpeace with their donations reached as high as 30,000 in the five years Greenpeace has operated in Budapest. Meanwhile, the number of energy companies who contacted green organizations to work out a long-term environmentally sustainable strategy totals exactly zero, a figure equal to that of food processing companies and food retailers who wished to ensure that no genetically modified raw materials are used in their products.

Truly environmentally-conscious consumers can find information about the environmental record of a corporation on the websites of Greenpeace, People for the Ethical Treatment of Animals, the World Wildlife Fund, Birdlife, Mining Watch or Bank Watch, but most consumers do not want to spend that much time on this issue, WWF spokesman Roland Csáki told BBJ. (Polls recently published by market research companies also show that Hungarians are more interested in buying organic products in order to protect their health than for broader environmental considerations.) Consumers can, however, look for the Biopont quality seal on food products, Csáki added.

Industrial groups with large lobbying power are rarely genuine champions of environmental causes anywhere, but the public can still differentiate among them based on their somewhat better or worse track record in environmental issues, Csáki said. Csáki went on to state that in Hungary there is still a long way to go before these companies make real efforts beyond lip service for sustainable development. For example, while no oil company sells pollutant-free fuel, consumers can choose those that have a serious program for producing renewable energy, such as Shell, Csáki advised. However, the environmentally-conscious consumer in Hungary might have to search for a long time.

In Austria, energy companies’ and government plans call for a doubling of the capacity of windmills from 800 megawatts to 1600 megawatts within 16 years. In Hungary, some windmills carry capacity as low as 20 megawatts, and energy companies argue that windmills are not economical enough. Csáki explained that this is partly because producing 1000 megawatts of energy in a nuclear plant requires 3000 workers and 5000-6000 in a coal plant, while on a wind farm 11,000-12,000 workers can produce 1000 megawatts of renewable energy. In Hungary employing more people was taken merely as higher cost, while in Austria this was seen as an opportunity to create jobs while producing energy in a sustainable fashion.

In some industries, questionable behavior of some companies can be difficult to control, in cases of startups with little prestige, public image and money to lose. In mining, for example, small companies or venture capital funds perform exploratory work. Typically registered in Australia or Canada, these firms are owned by venture capital funds or registered on the stock markets and managed by a few people with extensive experience in the mining industry. Such small companies are on a collision course with the local population when they want to open a new mine, which usually damages the environment. Csáki summed up his experiences from previous years when he worked as a campaigner for Greenpeace: “If the startup mining company proves to be successful, they are usually sold for a high price to a large mining conglomerate. If the raw material can not be mined profitably or the opposition from the public is too strong, these small companies, financed by venture capital go down, but large mining companies have to bear neither the full risk, nor the blame for possible backlash from the public opinion.”

Positive examples also can be given. The Amsterdam-based investment bank arm of ING Bank N.V. was an investor in Rosia Montana, Csáki said. Rosia Montana is a small Canadian-based gold mining company seeking to mine in Verespatak, Romania, using cyanide, a practice that endangers the water of the Tisza River. The Hungarian office of Greenpeace campaigned against the opening of the gold mine. When Greenpeace reported its opposition to the Equator Agreement to invest in or lend to Rosia Montana, ING sold its stake in the company. (Signed by international banks, the Equator Agreement forbids financially supporting enterprises with unethical practices.)

On the other hand, companies in sectors like retail, where competition is sharp and the opinion of consumers is a key issue, are ready to go further to achieve environmentally friendly status. DIY hypermarket OBI made an extensive environmental evaluation of its products and processes two years ago, says OBI Hungary Kft marketing director Gyöngyi Illés, and OBI does not sell wood products made from trees from rainforests.

OBI also cooperated with the WWF to reintroduce beavers into Hungarian waters. While the WWF provided the scientific background in working together with researchers in Germany – from which beavers were relocated to Hungary – OBI supported the project with more than Ft 100 million during the 10-year program. As a result, a species was successfully reintroduced in Hungary for the first time ever; today, more than 500 specimens inhabit the country.

OBI also invites school children to the stores for presentation, to introduce them to the beavers and to speak about environmental issues, Illés said. “We did not specifically evaluate the effect of the beaver campaign, but OBI has done more extensive public opinion polls among Hungarian retailers about the image of company, and the rate of those who formed a positive opinion about OBI has grown by 50% in the last five years.”

Mining continues
Start-up mining companies are exceptionally active in developing countries, including Hungary and its neighbors. Roşia Montană Gold Corporation SA (RMGC) intends to develop Europe’s largest open-cast gold mine project in Verespatak, Romania, using cyanide to extract ore. RMGC is majority-owned by small Canadian public company Gabriel Resources. The mining project has triggered protest in Hungary, as another Romanian gold mine owned by Australian company Aurul and using a similar technology near Baia Mare/Nagybánya in northwest Romania caused an environmental disaster, wiping out wildlife and causing serious financial losses along Hungary’s eastern waterways in 2000.

Australian energy investment company Wild Horse Energy Ltd. has been granted a license by the Hungarian government for a preparatory project to restart uranium mining in southern Hungary. Wild Horse is an international uranium development company, and its projects are located in countries that are pro-development with a positive regulatory environment for the development of mines.

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