Sometimes it takes a Stick

With a 24/7 focus on “making sustainability irresistible,” you have to be an optimist to work at Saatchi & Saatchi S. One of the dangers of optimism, of course, is that it can be confused with naiveté, which would be a grave mistake in the long game we’re playing with climate change. So for those of us with Pollyanna-ish tendencies, it’s a harsh and necessary reminder that sometimes good can come in the form of an old fashioned stick, as well as a happy shiny carrot.

The stick in question? The Environmental Protection Agency (EPA). The EPA was established in 1970 under the leadership of President Nixon with a mission to “protect human health and the environment.” In many ways the EPA serves as the butt of the political joke; it’s become an easy place to slash budgets and stall meaningful work.  Most recently, in July House Republicans proposed a 34% slash to the EPA’s 2014 budget, along with plans to block federal rules to limit carbon emissions from power plants.

One of the key roles of the EPA, or at least one we hear about most frequently, is that of litigator against some of the world’s largest industries when they violate policy. The EPA serves as the stick that beats companies for their bad behavior. And it works – losing to the EPA often serves as a pivot point for meaningful positive change.

For example, last week Safeway agreed to pay $600,000 to the EPA for abuse of the Clean Air Act, which it violated by not addressing leaks of HCFC-22 from its refrigerators. As a result, Safeway also agreed to spend another $4m by 2015 to upgrade its equipment, which will further reduce its company-wide average leak from 25% to 18% or below. (Why an 18% leak rate is permissible is the subject of another blog.)

In another win by the EPA, Shell will pay more than $1m for its violation of the Clean Air Act, which was related to artic oil and gas exploration drilling in the Chukchi and Beaufort Seas. Between the violations and the 50+ environmental law suits Shell has fought over the last 20 years, it is no longer drilling in the Arctic.

In May Walmart agreed to pay more than $81m in fines for a decade’s worth of environmental crimes including violations of the Clean Water Act (CWA), the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) and the Resource Conservation and Recovery Act (RCRA). In the ten years since the EPA investigation of Walmart began, the company has drastically changed its policies related to the disposal of toxic wastes. And while the fine is less than one tenth of 1% of the giant’s annual revenue, presumably it’s not something shareholders want to see repeated.

The actual fine is just one of the thorns on the EPA stick - there’s also the negative public exposure, the additional investment required to right the wrong and the long term impact to brand to consider. This optimist's advice is to avoid it by implementing a thoughtful, positive strategy that not only aligns with, but goes well beyond, regulations. Now we're talking about carrots - and that's the higher return.