September 28, 2007
A Month of No Opinions
Posted by David Zaring
July 12, 2007
Lady Bird Johnson Passes Away at 94
Posted by Christine Hurt

Bluebonnets A Texas legend has died at the age of 94 -- Lady Bird Johnson.  Many tales of Lady Bird sound apocryphal, but have the ring of truth about them.  I was told by someone at Pennzoil that Lady Bird had extracted a promise from Hugh Liedtke never to put up Pennzoil billboards.  When Pennzoil acquired Jiffy Lube, he was gently reminded of this promise and many billboards had to come down.  I have also heard that this movie was loosely based on her keeping a secret service detail, even when it was quite clear that it was not strictly necessary!  (The statute providing for ongoing protection of former presidents and widows was amended in 1995 to limit the duration of secret service protection, but it did not apply retroactively.)  For those of you who don't regularly drive Texas highways, the wildflowers in the picture are Indian paint brush and bluebonnets, in memory of wildflowers' most powerful protector.

Permalink | Environment | Comments (0) | TrackBack (0) | Bookmark

June 03, 2007
The Wal-Mart Effect in Global Private Governance
Posted by Fred Tung

We like to follow Wal-Mart goings-on here at the Glom.  Usually it's about downward price pressure in specific geographic or product markets that Wal-Mart chooses to enter, whether it's good or bad, and community responses

Now an interesting new paper has come out describing another Wal-Mart effect, this time on global environmental governance.  The paper, by Michael Vandenbergh at Vanderbilt, describes how Wal-Mart and other large firms may plausibly be improving global environmental governance by imposing environmental requirements on their suppliers.  Responding to social, economic, and regulatory pressures, large importers are in effect exporting industrial country environmental standards to developing countries via private contract, a move that may help fill regulatory gaps that result from global trade.  An interesting read.

Here's the abstract:

This Article argues that networks of private contracts serve a public regulatory function in the global environmental arena. These networks fill the regulatory gaps created when global trade increases the exploitation of global commons resources and shifts production to exporting countries with lax environmental standards. As critics of trade liberalization have noted, public responses often are inadequate to address the attendant environmental harms. This Article uses empirical data to examine how private contracting regulates firm behavior, focusing on supply-chain contracting. The Article shows that more than half of the largest firms in eight retail and industrial sectors impose environmental requirements on their domestic and foreign suppliers. This contracting, which the Article terms "the new Wal-Mart effect," reduces externalities by translating a complex mix of social, economic, and legal incentives for environmental protection into private contractual requirements. After demonstrating that private environmental contracting is an important part of global environmental governance, the Article examines the efficacy and accountability of this regime. The Article concludes that the private contracting regime often is preferable to the alternatives: lax national and international regulation of firms in many exporting countries, and markets that lack private environmental contracting. Finding much promise in the private contracting regime, the Article concludes by suggesting new strategies for governments, nongovernmental organizations, and firms.

Permalink | Environment| Globalization/Trade| Transactional Law| Wal-Mart | Comments (2) | TrackBack (0) | Bookmark

May 08, 2007
Wal-Mart Goes Green: Our Tax Dollars at Work
Posted by Gordon Smith

Last summer Al Gore praised Wal-Mart's environmental initiatives, stating:

The message from Wal-Mart today to the rest of the business community is, there need not be any conflict between the environment and the economy. We will find the way not only to reconcile (those), but to find new profits and new opportunities as we do the right thing.

Today comes news of a plan to outfit 22 Wal-Mart stores in California and Hawaii with solar panels. (W$J) The panels will provide up to 30% of the energy for the stores. This is a pilot project designed to test the viability of solar energy in other Wal-Mart locations. And it is supported by tax incentives:

California and Hawaii have other appeals for solar panels beside abundant sunshine. Solar power typically costs more than conventional forms of energy based on fossil fuels, but those two states provide generous rebates because they are trying to get 20% of their energy from renewable resources by 2020.

Wal-Mart, Bentonville, Ark., declined to quantify its anticipated savings from the pilot program other than to say they will register "as soon as the first day of operation." What's more, Wal-Mart, not its solar providers, will retain the renewable-energy credits generated by the program. The credits recognize the value of producing energy from renewable resources like solar power that don't create greenhouse-gas emissions such as carbon dioxide. They could be valuable if the Democratic-controlled Congress introduces emission caps and such credits can be traded.

There are big subsidies for solar installations in some states, and these programs can cut the effective cost of a project by half. In the case of the 22 stores, Wal-Mart is buying the output of the solar panels sitting on its rooftops. But the vendors -- BP PLC subsidiary BP Solar, SunEdison LLC and SunPower Corp. subsidiary PowerLight -- said they are receiving a federal tax credit amounting to 30% of each installation's cost, plus ratepayer-funded rebates paid by utilities and other incentives. After all the subsidies, electricity produced by solar panels can end up cheaper than that from conventional sources.

As Conglomerate readers know, I am not inclined to bash Wal-Mart, so don't take it as a criticism of the company when I say that this is not "corporate social responsibility." This is good business. Cost savings + positive public relations = no brainer.

That said, Al Gore's feel-good notion that "there need not be any conflict between the environment and the economy" is dangerous because it leads many people to assume that clean air and clean water are costless. The obvious implication of Gore's reasoning is that corporate directors and officers are evil incarnate or wildly incompetent. How else could one understand environmental degradation in a world where the environment and the economy are not in conflict? In the case of Wal-Mart's new solar panels, the costs of moving away from fossil fuels will be borne, in part, by taxpayers. There is no free lunch.

These are the sorts of thoughts that prompted me to write The Dystopian Potential of Corporate Law, in which I respond to Kent Greenfield's call for corporate governance reforms that encourage greater corporate social responsibility:

The crucial point of departure for this section is the following incontrovertible fact: Professor Greenfield's vision of utopia would require boards of directors to make decisions that sacrifice potential shareholder value in favor of value for non-shareholder constituencies. When boards of directors are able to enhance employee welfare, make the environment cleaner, or improve human rights throughout the world without impairing shareholder value, they often do it. This is not "corporate social responsibility," but good management. And the failure to pursue such strategies would be a problem of managerial incompetence, not a problem of improper incentives.

Permalink | Environment| Taxation| Wal-Mart | Comments (7) | TrackBack (0) | Bookmark

May 07, 2007
Juxtaposition on Global Warming
Posted by Gordon Smith
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