The Triple Bottom Line Blog

Fascinating, isn't it, how boring, "mature," old-fashioned industries can become sexy growth businesses when new thinking is applied--as in this example (courtesy of Business Week) of a European-based water utility company that is being refashioned as a sustainability pioneer:

As the world's largest water company, Veolia is riding soaring demand for water supply and treatment in China. In the U.S. it's focusing on the fast-growing energy-services business—helping large industrial and commercial customers trim their heating and cooling bills with more-efficient generation and distribution. Even in relatively slow-growth Europe, which accounts for 70% of revenues, Veolia is powering ahead by taking stakes in government-owned water and waste-treatment businesses that are now being partially privatized.

It's an impressive story. But then you dig a little further and run across a story with a different slant on Veolia:

Once again an impoverished Texas neighborhood, in this case in the town of Port Arthur, has become the disposal point for hazardous waste, only this time the waste is potentially so lethal that a drop the size of a pinhead can kill.

A chemical-weapons facility in Indiana is destroying obsolete weapons containing VX nerve agent, producing caustic wastewater that the Army is shipping to Veolia Environmental Services for incineration. The Army has claimed the waste is no more dangerous than kitchen cleaners. But when environmental scientists began looking at the disposal process, they found scary scenarios. The "neutralized" waste still contains some VX, and the incinerators might not destroy all of it. There are no monitors on the incinerator smokestacks to sound the alert if it isn’t eliminated. And VX components in the water could reconstitute in shipping tanks under certain conditions, endangering lives along the transportation route.

The article in The Texas Observer seems to do a responsible job of citing opinions on both sides of the controversy, including the comment, "It's just wastewater," offered by Dan Duncan, who is in charge of safety at the Veolia incinerator at Port Arthur. Who is right? I don't know, and it will take time for the dispute to get sorted out.

Fortunately, it appears that the key issues--the safety and transparency of Veolia's processes, the accuracy of the monitoring techniques in use, and the integrity of the local officials overseeing it all--are on the table, thanks in part to media like the Observer. Hopefully, one way or another, the rights of all parties will be respected by the courts and regulators now addressing the case, and the proper resolution will be reached.

I don't have the expertise to adjudicate in this matter, and I wouldn't want to pass judgment on the folks at Veolia, who for all I know may be utterly blameless. But I can offer a few observations that business people may find relevant:

1. With sustainability issues now high on the agenda of communities, governments, activist groups, and the media, green business opportunities are (finally) becoming exciting, even sexy. But that same sex appeal makes them lightning rods for controversy. Don't expect to take advantage of the boom in green business unless you're ready to take seriously the life-and-death responsibilities that go with it.

2. Business Week notes that Veolia's attractiveness as an investment is due, in large part, to its current acquisition spree. Since being spun off by its former owner, the Vivendi conglomerate, Veolia has been shedding debt and using increased profits to buy environmentally-minded companies around the world. That's fine--but most business people know that acquiring companies and imbuing them with your corporate culture and values can be quite challenging, time-consuming, and at times perilous.

I would be nervous about engaging in a rapid-fire series of acquisitions in an area as sensitive as environmental remediation, where a single procedural misstep (or even a mere misunderstanding) can cause real harm, both to the environment and to your corporate reputation.

Is a strategy of rapid expansion an absolute no-no for an environmental company? I wouldn't go that far--but I would wave a yellow caution flag if I were a corporate manager or an investor.

3. A business involved in sensitive environmental issues can't afford to rely on government assurances or regulatory clearances to shield it from accountability. In the Texas case, Veolia is working under contract for the U.S. Army, and local government officials (including the mayor of Port Arthur) have pooh-poohed the concerns of community activists.

One might think that this would clear Veolia of any further responsibility, particularly in a conservative state like Texas, where respect for the military and for government authority is a strong tradition. But no. If green groups on the local, state, or national levels decide to press Veolia on this issue, all the government sign-offs in the world won't matter. The company's name can still be dragged effectively through the mud--with potentially serious effects on its future business prospects and stock price.

The moral: If you're a business executive and are lucky enough to get laudatory press coverage like that given to Veolia by Business Week, enjoy it--but don't let it go to your head. It's nice to be a leader in this quarter's "sexiest" business, but remember what your junior high school Phys Ed teacher told you: The fun of sex comes with plenty of risks and consequences.

Labels: Port Arthur, Reporting and Transparency, Role of Government, Veolia, Waste