Green Wombat

Citi, the financial services multinational formerly called Citigroup, has pledged to spend up to $50 billion over the next decade to invest in renewable energy and other green technologies. That pile of cash includes $10 billion Citi (C) previously promised expend on efforts to combat global warming. Upping the ante over Bank of America’s (BAC) $20 billion green lending program announced in March, Citi says it will spend $10 billion to cut greenhouse gas emissions from its global operations by 10 percent by 2011. But the bulk of the cash – $31 billion – will go for investments in geothermal, solar, wind and other renewable energy projects and technologies. (Citi, for example, is financing Portuguese utility EDP’s $2 billion takeover of Horizon Wind Energy, the largest wind farm company in the United States. Citi has also invested in Indian wind energy company Suzlon.) The willingness of banks to finance big renewable energy projects will be crucial to the success of current plans to build utility-scale solar power plants in California and the Southwest. California utilities, for instance of contracted for nearly 2 gigawatts of solar power, but financing the plants, which can cost hundreds of millions of dollars to build, remains a big hurdle.

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In another sign of Wal-Mart’s power to put the economy on a more sustainable path, the retail giant today said it is working with light bulb makers GE (GE), Royal Philips (PHG),  Osram Sylvania and Lights of America to slash the mercury content of high-efficiency compact fluorescent bulbs by an average 33 percent. Mercury is a toxic substance and its use in CFLs presents a conundrum for the widespread adoption of light bulbs that use 70 percent less electricity than traditional incandescent lighting: will using CFLs to lower greenhouse gases  create a hazardous waste nightmare? Others worry that consumers will be less likely to buy CFLs if they can’t just toss them in the rubbish bin when they burn out – though the bulbs’ lifespan is about 10 years. Wal-Mart (WMT) has committed to selling 100 million CFLs by 2008 and it also has launched a campaign to work with its suppliers to reduce the environmental impact of their manufacturing processes. The light bulb manufacturers will reduce the mercury content of their CFLs as much as 50 percent below the 5 milligram per bulb standard set by the National Electrical Manufacturers Association. “People concerned about the environment and their health can buy these CFLs with a clear conscience,” said Natural Resources Defense Council senior scientist  Noah Horowitz in a statement released by Wal-Mart. The retailer also cited U.S. EPA stats that found that a coal-fired power plant emits four times the mercury to power an incandescent bulb than a CFL.

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How green are Wal-Mart (WMT) shoppers? We’re about to find out. The world’s largest retailer is launching a Live Better Index to track customers’ purchases of five eco-friendly products: compact fluorescent light bulbs, organic milk, concentrated/reduced-packaging liquid laundry detergents, extended-life paper products and organic baby food. The idea is that the index will gauge Wal-Mart’s 180 million customers’ attitudes toward buying green by using those five products as proxies. "Wal-Mart recognizes that environmentally friendly products don’t do much for the environment when sitting on a shelf,” said Wal-Mart sustainability exec Andy Ruben in a statement. “Our role is continuing to drive accessibility and affordability for sustainable product to consumers who may have not thought about buying ‘green’ in the past.”  The Live Better Index site tracks purchases by state. Connecticut Wal-Mart shoppers, for instance, buy the most energy-efficient light bulbs while Californians spend the most on organic baby food. Overall, New Hampshire has the greenest Wal-Mart shoppers while Mississippi has the least. About 13 percent of the retailer’s customers nationwide have bought CFLs, and 1 percent are paying a premium for organic milk. Love Wal-Mart or hate it, there’s no denying the company’s market power or its ability to use the enormous amount of data it collects to drive environmental change.

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Go to eco-living sites like TreeHugger and Green Options – Green Wombat faves – and you’ll find a plethora of posts about green products. Trawl user-review sites like Yelp and you can tap the collective consciousness about your neighborhood restaurants or the local hair salon. Now San Francisco startup SustainLane has re-purposed the Web 2.0 features of a Yelp to create a user-generated review site and directory for green products and services to tap the growing interest in sustainable living. "We really saw some traction on Yelp, with people sharing experiences about dining and local businesses, and we said we want to create a space for people to share experiences about green products and businesses," SustainLane senior marketing director Haru Komuro told Green Wombat. The company seeded the site with reviews collected at a Washington, D.C., eco- festival in October and launched the service last week. SustainLane.com currently has about 3,000 reviews on everything from organic insect repellent to earth-friendly diapers. The site also sports some 10,000 green business listings from a directory the company previously compiled. Of course, evaluating the environmental attributes of a new household cleanser is a bit trickier than a rating a cappuccino at the corner cafe. Komuro says SustainLane will guard against greenwashing by companies making unsupportable claims. "People might submit McDonald’s organic salad and its up to users to decide," she says. "We hope to build ratings and communications tools and moderation tools so any greenwashing will become obvious."

SustainLane was founded in 2004 by James Elsen, a Netscape veteran, and funded by angel investors. The company initially focused on developing a database of government sustainability policies and practices but has more recently morphed into a media company, producing a cartoon series called The Unsustainables. "We decided with all the trends going on in the Web 2.0 space it really made sense to give people a voice so they could contribute," Komuro says. "We struggled with what this information should be – should it be about sustainable cities or what – and then we had an epiphany that since around the office we’re always talking about what green products to use it should be about that."  SustainLane plans to make money off the site through advertising and sponsorships and by connecting consumers to eco-friendly businesses. Komuro says the company has also been approached by green businesses that want to upload their inventories to the site. "Management believes this is the direction to go," she says. "It’s scalable and we’ve heard for years that this is what the community wants."

The site’s success, of course, will depend on attracting enough citizen-reviewers to create a critical – and credible – mass of information to make SustainLane useful to would-be green product purchasers. Komuro says the company plans to get the word out through grass roots marketing and via the ever-growing green blogosphere.

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Earth Day is April 22 and enviro
mania is in full swing. The magazine racks are chock-a-block with special "green issues" – Vanity Fair, Outside (the cover boy is California Governor Arnold Schwarzenegger), Newsweek (Arnie again) and Time. (Always looking ahead. Business 2.0, where Green Wombat is an editor, did its green thing in February.) Meanwhile down in Silicon Valley, Earth Day weekend kicks off April 20 with Applied Materials (AMAT) CEO Mike Splinter talking about "Unlocking the Potential of Solar Energy: Silicon Valley’s Next Big Opportunity to Change the Way People Live"  at Santa Clara University. The same day over in Palo Alto you can learn about "Options to Reduce C02 Emissions at the Electric Power Research Institute.

Yesterday, the Silicon Valley Leadership Group hosted an "Alternative Energy Solutions Summit" at Advanced Micro Devices (AMD)’s redwood-studded corporate campus in Sunnyvale. The event, which attracted some 300 tech execs, government officials,
California Senator Barbara Boxer and Stanford University president John Hennessy, showcased the speed and fervor with which the valley has embraced green tech and the fight against global warming. (It wasn’t all that long ago, after all, when the big environmental issue in Silicon Valley was toxic pollution from chip and hardware manufacturing plants, with tech companies facing off against green groups.) "Win not whine!" exhorted Carl Guardino, CEO of the Silicon Leadership Group, the main lobbying group for valley tech companies. PG&E (PCG) exec Bob Howard, who brought the utility’s plug-in hybrid Prius to the event to demonstrate how such cars can power the grid, captured the mood in the valley these days: "Addressing climate change can serve as an economic opportunity, not an economic burden," he said. "There’s no better region positioned to make a difference."

Companies like SunPower (SPWR) and Sun Microsystems (SUNW) obviously see a big opportunity to profit from the war on global warming as well as cut their own operating costs by going clean and green. Sun Labs executive director Mark Monroe said the computer company had saved $70 million in recent years as half its employees took advantage of its work-anywhere program that lets them telecommute from home or satellite offices near where they live. AMD senior strategist Larry Vertal said the chipmaker is building a new 2,500-person facility in Austin that will run completely on renewable energy. The valley’s embrace of solar energy was also on display. "Solar is really the only big solution out there," said Charlie Gay, general manager of Applied Materials, which is retooling its chipmaking equipment to manufacture solar cells. "If we lower the cost of solar by a factor of 2 or 3, solar will be competitive with coal. This doesn’t require any magical technological leap. We just need to scale up."

The valley’s alliance with giant utilities like PG&E and powerful politico’s like Boxer, the

chair of the Senate Environment and Public Works Committee, is creating a new political
dynamic to counter the influence of the oil, coal and auto industries. "This whole issue of global warming has taken on a life of its own," Boxer told the assembled tech execs, some of whom were to travel back with her to Washington, D.C., to lobby Republicans to enact a national cap on greenhouse gas emissions.

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Investors controlling some $4 trillion in assets and their corporate
allies this week launched a campaign to get the U.S. Congress to pass
global warming legislation that would reduce greenhouse gas emissions
60 to 90 percent by 2050. Led by Ceres,
a Boston-based alliance of investors and environmentalists, the group
also called for the Securities and Exchange Commission to require
public companies to disclose climate change risks in their financial
reports. So-called green reporting has long been backed by
environmentalists but now mainstream corporations like aluminum maker
Alcoa (AA), oil giant BP (BP), Merrill Lynch (MER), utility PG&E
(PCG) and Sun Microsystem (SUNW) are backing such efforts along with
CalPERS, the world’s largest pension fund. "We are hopeful that growing
mainstream investor and corporate demand for SEC action will have an
impact," Chris Fox, Ceres’s director of investor programs, told Green
Wombat. "This is not just socially responsible investors asking for
this but mainstream fiduciaries asking for guidance."

The investors and companies backing the coalition’s Climate Call to Action
want the SEC to clarify just what public companies must disclose about
the risks and opportunities presented by global warming. Ceres is
pushing for the SEC to modify reporting regulations to require
corporations to disclose in their annual reports their current and
historical greenhouse gas emissions; the physical risk climate change
poses to their operations; the regulatory risk if greenhouse gas limits
are imposed; and their strategy for managing climate change risks. (A
growing list of companies have adopted "sustainability reporting" in
recent years, including Bank of America (BAC), General Motors (GM) and
Green Wombat’s employer, Time Warner (TWX).) Fox says Ceres is
continuing to meet with SEC officials about climate change disclosure
but the agency has remained non-committal. "We think protecting
American’s property and investments from climate risk is a winning
issue," he says.

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How green is that Game Boy? Wal-Mart (WMT) wants to know. Beginning next year the retail giant will require its consumer electronics suppliers to fill out a "sustainability scorecard" listing various environmental attributes of their products, including energy efficiency, use of toxic materials and packaging size. The company will use the scorecard to help it choose which
products appear on its shelves and will also make the information available to Wal-Mart shoppers. "The scorecard encourages improvements that are good for business as well as for the environment, reflecting Wal-Mart’s view that being a profitable and efficient business goes hand-in-hand with being a good steward to the environment," said Wal-Mart executive Ross Farnsworth in a statement. "Many electronics contain hazardous materials and are disposed of improperly. The scorecard issues a better score to those suppliers who build products with fewer hazardous materials and offer electronics recycling opportunities to customers."

That means consumer electronics companies from Sony (SNE) to Hewlett-Packard (HPQ) and Kodak (EK) will have to disclose how some of their eco-marketing campaigns translate into reality. Assuming consumer electronics companies cooperate – and few can afford not to play ball with Wal-Mart – you’ll be able to see if a Microsoft (MSFT)
Zune is better for the environment than a Creative Zen MP3 player. Alas, just how green the iPod is will remain a mystery as Apple (AAPL) does not sell to shoppers seeking everyday low prices.  Dangling a carrot to consumer electronic companies, Wal-Mart on Monday also announced a design contest to create a green gadget that will rate high on the sustainability scorecard. The winner will be sold in Wal-Mart’s U.S. stores.

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Bank of America’s (BAC) this week unveiled a ground-breaking $20 billion green lending initiative to finance companies creating low-emissions technology, underwrite loans for green building projects and create a carbon credit trading service for its customers.  

Bank of America also is changing its underwriting criteria for commercial loans to favor companies that provide "sustainable products, services and technologies. For consumers, BofA will offer, among other eco-friendly products a "green mortgage" with a reduced interest rate or a rebate if their new house meets energy efficiency standards.

Green Wombat talked yesterday with James Mahoney, BofA’s director of public policy, about why the U.S.’s second largest bank thinks fighting global warming is a huge business opportunity for the banking industry – and whether competitors like Citigroup (C), JPMorgan Chase (JPM), Wachovia (WB), Wells Fargo (WFC) will follow its lead.

Green Wombat: Bank of Amercia is not doing this just because it thinks it is the right thing to do. What is the business rationale behind the initiative?

James Mahoney: This goes beyond philanthropy and actually incorporates environmental considerations into the way we do business. It’s an initiative that cuts across our three major lines of business: Corporate and investment banking, consumer banking, and wealth management.   What we see, with the growing concerns about climate change, is that there is going to be an increased demand for both products and services that produce and use energy more efficiently. As efforts emerge to reduce greenhouse gas emissions, there will be new technologies to both produce and use energy. We see business opportunities arising as a result of climate change. This initiative is intended to support customers that want to take advantage of those opportunities. We definitely see this as a growth area in the years ahead.

Green Wombat: What type of commercial customers will be the biggest beneficiaries of the program?

Mahoney: I think technology companies with innovative products, utilities that are investing in green technology and green energy sources will benefit. I think for that matter, so will coal companies that are looking to introduce new ways to reduce greenhouse gas emissions in the years ahead. We think no matter what kind of business you have there are opportunities to produce and use energy more efficiently. As a bank we’re finding there are multiple opportunities to produce green business opportunities in commercial lending, investment banking, and carbon credit trading as that market develops.

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Has the carbon offset craze jumped the shark? Dell (DELL) earlier this year began letting customers pay a small carbon offset fee when they order their computers. The money is used to plant trees, which absorb carbon and thus theoretically cancel out the planet-warming greenhouse gases emitted by the production and use of individual customers’ laptops and desktops. Today Dell expanded its "Plant a Tree for Me" program to all customers – past and present – as well as, well, anyone who wants to go to the computer maker’s site and donate $99 to offset a year’s worth of their carbon emissions. Planting trees, of course, has environmental benefits beyond forests’ role in reducing global warming – though just how effective they are has been in dispute, as have carbon offset programs themselves. And Dell, along with Hewlett Packard (HPQ), certainly has made significant progress in ameliorating the environmental impact of its products through recycling programs. But absolving the sin of one’s personal greenhouse gas emissions via Visa or MasterCard is starting to become the environmental equivalent of slapping a bumper sticker on your car. Sure, it raises awareness and may be doing some real good but it does not require anyone to actually do anything to reduce their own contribution to global warming – like trading in the SUV, replacing light bulbs with CFLs or just saying no to paper and plastic. We’ll know things have really gone too far when you see Apple (AAPL) launch a "Plant a Tree for Steve" campaign.

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In what could be a big boost for green tech entrepreneurs,
Bank of America (BAC) this morning launched a $20 billion program to fight global warming over the next decade by financing companies creating low-emissions technology, lending money for green building projects and creating the ability for customers to trade carbon credits. The bank will spend $18 billion on commercial green lending and finance while another $2 billion will be spent on consumer programs and efforts to reduce the greenhouse gas emissions and environmental impact of its own operations. Green Wombat is waiting on a reply from BofA whether it will use its pot of green cash to finance solar power plants, wind farms and other utility-scale renewable energy projects. But the fact that the U.S.’s second-largest bank has decided there is money to be made off green lending is, potentially, a huge boon for startups that have found it tough going obtaining financing for capital-intensive renewable energy technologies. While Silicon Valley venture capitalists have pumped billions into green startups over the past couple years, they traditionally do not finance factories or 250-megawatt solar power plants. The bank’s move also could create opportunities for green companies without access to Sand Hill Road VCs. "Today, we have a tremendous opportunity to support our customer’s efforts to build an environmentally sustainable economy – through innovative home and office construction, new manufacturing technology, changes in transportation, and new ways to supply our energy," said Bank of America CEO Kenneth D. Lewis in a statement.

BofA will change its underwriting criteria for commercial loans to include environmental factors, such as whether a business creates "sustainable products, services and technologies." In other words, a company that makes less carbon-intensive widgets will score higher on a loan application than one whose production process consumes more fossil fuels. If other banks adopt green underwriting, the impact could be significant.

For consumers, Bank of America later this year will offer an "eco-friendly" credit card – a percentage of each purchase will be donated to an environmental organization to invest in greenhouse gas reduction projects. Home buyers can apply for a "green mortgage" with a reduced interest rate or a rebate if their new house meets energy efficiency standards. "Bank of America intends to commit its own capital to promote "green" investment solutions for its clients," the company said, referring to investments that promote reforestation, wildlife management, "responsible development" and carbon sequestration.

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