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From: Jack
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Subject: Big Green: Inside Nature Conservancy

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Jack
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BIG GREEN : Inside the Nature
Conservancy - Nonprofit Land Bank Amasses Billions - Charity Builds Assets on
Corporate Partnerships http://www.citizenreviewonline.org/may_2003/corporate.htm

By David B. Ottaway
and Joe Stephens

Washington Post Staff Writers

Sunday, May 4, 2003; Page A01

First of three articles

The Arlington-based Nature
Conservancy has blossomed into the world's richest environmental group,
amassing $3 billion in assets by pledging to save precious places. Known for
its advertisements decorated with forests, streams and the soothing voice of
actor Paul Newman, the 52-year-old charity preserves millions of acres across
the nation.

Yet the Conservancy has logged
forests, engineered a $64 million deal paving the way for opulent houses on
fragile grasslands and drilled for natural gas under the last breeding ground
of an endangered bird species.

The nonprofit Conservancy has
traveled far beyond its humble beginnings, when it relied on small donors and
acquired a few small plots at a time. Its governing board and advisory
council now include executives and directors from one or more oil companies,
chemical producers, auto manufacturers, mining concerns, logging operations
and coal-burning electric utilities.

Some of those corporations have
paid millions in environmental fines. Last year, they and other corporations
donated $225 million to the Conservancy -- an amount approaching that given
by individuals.

Today, the million-member
Conservancy itself is something of a corporate juggernaut, Big Green. It is
also the leading proponent of a brand of environmentalism that promotes
compromise between conservation and corporate America.

While the Conservancy has done
much to preserve green spaces, its strategy of combining conservation and
business, including its own pursuit of for-profit ventures, has led to some
costly misadventures and awkward positions:

• The drilling foray, on the
Texas Gulf Coast, turned into a fiasco. Not only did some endangered birds
die after the Conservancy started drilling, but the charity also sold natural
gas owned by someone else and kept the profits. The Conservancy and its
partners settled a resulting lawsuit last year for $10 million.

• In Virginia, the
Conservancy has invested in a number of for-profit businesses on the Eastern
Shore: a bed-and-breakfast, an oyster-and-clam farm, an "heirloom"
sweet-potato-chip operation, a seaside home development. The businesses
failed, leaving a $24 million debt.

• The Conservancy has
profited by selling its name and logo to companies, which use the image to
gain what one corporate executive calls "reputational value." A
Conservancy focus group study found that a few participants said accepting
corporate cash in certain cases would be "the equivalent of a
payoff."

• The charity engages in
numerous financial transactions with members of the Conservancy family --
governing board members and their companies, state and regional trustees,
longtime supporters. The nonprofit organization has bought land and services
from board members' companies, and it has declined to release property
appraisals from the deals. It has sold choice Conservancy land to past and
present trustees through its "conservation buyers" program, which
offers steep discounts in exchange for development restrictions. It has lent
cash to its executives, including $1.55 million to its president.

• The Conservancy's mission
makes it reluctant to take positions on some leading environmental issues,
including global warming and drilling in Alaska's Arctic National Wildlife
Refuge. Corporations represented on the Conservancy's board and advisory
council have lobbied nationally on the corporate side of the issues. A
Conservancy official said the group avoids criticizing the environmental
records of its corporate board members.

• Some of the charity's
scientists have complained that the organization has drifted from its stated
commitment to the "best available science." One scientist
complained in an internal 2001 Conservancy study: "Science is not
understood or supported by senior managers and state directors. [The] entire
focus is on land deals." Said another: "I am not convinced [the
Conservancy] is science-based, as we claim."

While Conservancy officials now
acknowledge that the charity made mistakes in Texas and Virginia, they
dismiss them as isolated incidents and stoutly defend their philosophy and
initiatives as a pragmatic strategy for conservation in the 21st century.

Conservancy officials say their
approach -- which falls under a larger environmental philosophy known as
"compatible development" -- allows them to leverage corporate
America's wealth to achieve conservation on a massive scale. Instead of
insisting in every case on the pristine preservation of land, the charity
practices the art of the possible, its officials said.

"There are trade-offs in
conservation," Conservancy President Steven J. McCormick said in an
interview. "We make a judgment that less than 100 percent is
acceptable."

Along the way, the Conservancy hopes
to entice companies into more environmentally friendly practices. Alliances
with logging companies, for example, have protected thousands of acres from
development, even though logging on the land often continues, McCormick said.

"Some of our brethren say
we're dealing with the devil, but I say quite the contrary," said
Conservancy official Michael Horak. "Some of
the deals we're making are quite extraordinary."

Today, the organization says it
manages 7 million preserved acres through a variety of means and owns 2
million outright. Much of that land is held in 1,400 nature preserves, which
it describes as the world's largest private sanctuary system.

In late 2000, the nonprofit
purchased the Palmyra Atoll, 15,500 acres of coral reefs, islets and lagoons
1,000 miles south of Hawaii. Last year, Conservancy researchers on Borneo
discovered a large number of orangutans, which the organization said
increased the known population by 10 percent. Also that year, the Conservancy
acquired the 100,000-acre Baca Ranch, the final step toward creating the
Great Sand Dunes National Park in Colorado.

Supporters say that the
organization's enormous wealth has enhanced its influence, within the
environmental movement and with the government. Last year, the Conservancy
received $105 million in government consulting fees and other payments.

Respected naturalists praise the
Conservancy's programs. Along with the chief executive officers, the
Conservancy's board has included prominent scientists and academics. Even
some critics acknowledge that global environmental health would suffer
without the charity's resources devoted to land preservation. Still, some
former high-ranking Conservancy officials believe the organization has grown
too close to business.

"It was the wrong decision to
get so close to industry," said David Morine,
who headed the charity's land acquisition for 15 years and helped pioneer the
group's corporate ties. "Business got in under the tent, and we are the
ones who invited them in.

"These corporate executives
are carnivorous. You bring them in, and they just take over."

Morine now says letting them in was "the biggest mistake in
my life."

Becoming Big Green

The Nature Conservancy opened its doors in 1951 with a handful of staffers
laboring out of a Washington office shared with another environmental group.

Early on, the Conservancy settled
on buying land as its special niche in the environmental movement. In 1955,
the Conservancy chipped in to help buy 60 acres of river gorge in New York
and Connecticut. That simple strategy -- raising cash to buy raw land --
became known within the group as "bucks and acres."

Environmentalism bloomed with the
publication of Rachel Carson's "Silent Spring" in 1962 and the
sixties' activism that would result in the first "Earth Day" in
1970. In those days of turmoil, the Conservancy grew slowly but steadily and
kept to its quiet land-acquisition strategy.

In the 1980s, the Conservancy's nonconfrontational approach paid off. The numbers tell
the story. That decade, its revenue grew from $58 million to $222 million,
and its staff surged from 77 to 933 employees.

In the 1990s, the age of the
bubble economy and lavish corporate largess, astonishing growth occurred.
Corporate donations mushroomed from $1.8 million in 1993 to $225 million last
year. (The Washington Post Co. is a regular contributor, last year giving
$1,500.) By 2002, Conservancy revenue had reached $972 million, more than 10
times the size of Sierra Club revenue.

Today, the Conservancy oversees
3,200 employees in 528 offices scattered across every state and 30 countries.
The organization has many of the trappings of a Fortune 500 company: global
reach, consumer focus groups, meetings with world
leaders, sophisticated marketing and cost-benefit analysis applied to
conservation. The group's "worldwide" headquarters is in an
eight-story, $28 million building in Arlington.

"I really believe that in the
next century that the most influential institutions on the planet will be
nongovernmental organizations," McCormick said in a speech at the
Conservancy's 50th anniversary meeting in October 2001. "I believe the
Nature Conservancy will set that pattern."

The Conservancy now boasts 1,900
corporate sponsors. Eastman Kodak Co. vice president Hays Bell recently
described the Conservancy as a "natural choice" for partnerships
because there was "no conflict potential." The Conference Board, a
nonprofit that advises businesses, said in a report on partnerships with
environmental groups that the Conservancy is especially popular with
corporate executives because of its "dependability in joint
ventures."

McCormick said: "By working
with corporations, which control a lot of land, which are very influential,
we think we make a big difference."

The Conservancy's relationships
with Fortune 500 corporations have become institutionalized. Its unpaid
38-member Board of Governors has included past and present executives and
directors of major industrial corporations: John F. Smith Jr., chairman of
General Motors, the world's largest car manufacturer; E. Linn Draper Jr.,
chairman of American Electric Power Co., the nation's largest electricity
producer; A. D. "Pete" Correll, chairman
of Georgia-Pacific Corp., the country's second-biggest paper products
business; and A.W. "Bill" Dahlberg, former chairman of Southern
Co., another leading power producer.

Some of these companies face
pressure from more confrontational environmental groups and from government
regulators.

A recent study of utilities by the
Natural Resources Defense Council and others named American Electric the
largest U.S. air polluter. American Electric's operations in Cheshire, Ohio,
have turned that quaint river town into a ghost. Sulfur dioxide emissions
from one of the company's plants have at times enveloped Cheshire, prompting
the utility to buy out most of the 221 residents, who agreed not to sue. A
utility spokesman said the plant is clean, but its operations were
encroaching on the community.

Elsewhere, the utility is fighting
a lawsuit filed by the Environmental Protection Agency alleging Clean Air Act
violations.

American Electric has joined the
Conservancy in an $11 million forest preservation initiative in Bolivia. If
the concept were approved by federal regulators, the project one day would
supply the company with "pollution credits." That would lessen its
need to install costly emissions controls at its U.S. plants.

Opponents of the Conservancy's
approach argue that corporations have seized control of the charity from within.

"The Conservancy brings in
corporate board members who don't know much about conservation -- or even
care that much about it," said Huey Johnson, the former head of the
Conservancy's western U.S. operations and a founder of the Trust for Public
Land. Two years ago, he won the United Nations' top environmental award.

The Conservancy offers
corporations seats on its International Leadership Council for $25,000 and
up. Once there, executives can "meet individually with Nature
Conservancy staff to discuss environmental issues of specific importance to
the member company," Conservancy literature states.

Council members include Pacific
Gas and Electric Co., which paid $333 million to settle claims that its
plants polluted water and caused cancer among nearby residents, a legal
battle dramatized in the film "Erin Brockovich."

Another member is Dow Chemical
Co., owner of Union Carbide. Last year, the Conservancy's Louisiana chapter
gave Dow its conservation leadership award for expanding a greenbelt bird
sanctuary around its plant in Plaquemine, La. The plant also has drawn the
attention of a grand jury investigating vinyl chloride contamination of area
water, Dow officials recently confirmed.

Avoiding Controversy

Sometimes, the Conservancy's nonconfrontational approach
puts it on the sidelines of the major environmental issues of the day.

In Alaska, the Conservancy has
stood silent as environmentalists battle proposed
oil drilling in the Arctic National Wildlife Refuge. The decision to skirt
the fight followed intense debate in 2001 by the Conservancy's board, which
yielded in the end to the wishes of its Texas and Alaska chapters, senior
Conservancy officials said.

Two major oil companies that
support the Alaska drilling -- BP and Exxon Mobil -- hold Conservancy leadership
council seats. Exxon Mobil has donated $5 million to the Conservancy. Another
supporter of drilling, Phillips Alaska Inc., has given at least $1 million,
records show.

McCormick defended the
Conservancy's refusal to choose sides between what he called
"ideological factions" in the Alaska debate. He described the issue
as "not an argument for the Nature Conservancy." Getting involved,
he said, could "completely drain our credibility." He concluded:
"It's more courageous to stay on principle and get conservation through
some concessions from those who use the land."

The Conservancy also has been
among the last environmental groups to recognize global warming and the need
to reduce greenhouse gas emissions. Two of the Conservancy's strongest
corporate supporters, Exxon Mobil and GM, have opposed stiff emission-cutting
efforts.

Exxon Mobil for years led the
Global Climate Coalition, an industry group that debunked global warming.
Exxon Mobil has long been a leading lobbyist against the Kyoto accord to reduce
emissions.

One environmental group,
Environmental Defense, has dubbed GM "Global Warmer Number One"
because its vehicles are a major source of carbon-dioxide emissions. GM
Chairman Smith headed the Conservancy's $1 billion fundraising campaign, and over
the past decade the company has given the Conservancy cash and vehicles worth
$22 million.

"Twenty-two million dollars
is going to go a long way to help preserve biodiversity," said Terry
Pritchett, GM's director of global climate issues.

McCormick finally took up the
global warming issue in the Conservancy's bimonthly magazine in the fall of
2001.

"Typically, the Conservancy
has avoided the political debate over global warming," McCormick wrote.
"But we haven't buried our institutional head in the sand."

He said that climate change was
"real," and the Conservancy needed to figure out how to confront it
"with a cool temper and a vigilant eye for solutions."

Last year, the Conservancy
launched an initiative adopting the approach that would supply corporations
with pollution credits.

GM contributed $10 million to the
plan.

Greenwashing

Scientists rate the conversion of land to human habitat -- urban sprawl -- as
Earth's greatest menace. "Sprawl is without a doubt the most pervasive
threat," an unidentified Conservancy scientist wrote in response to a
survey in 2001, obtained by The Post. "Failure to recognize and address
this threat on all levels, not just buying land, will result in a
mission-critical policy failure."

Despite such assessments, the
Conservancy has forged a close partnership with Centex Corp., one of the
nation's largest residential construction firms. Centex and its subsidiaries
have built almost 400,000 houses, many at 28 sites ringing the District of
Columbia.

Centex and its divisions have
given and pledged $3 million to the Conservancy. Centex sits on the
Conservancy's leadership council, and the chairman of Centex Homes served on
a Conservancy advisory board. Two years ago, a Conservancy chapter in Texas
gave Centex Homes its Conservation Leadership Award for "corporations
that have shown leadership in and dedication to conserving natural
resources."

Centex also has helped the
Conservancy retain its claim of having 1 million members. The charity handed
out more than 40,000 free memberships to Centex employees and customers, a
November 2001 Conservancy memo said. Other corporations, including Enron,
also have given away memberships.

Although its advertisements
feature photographs of dense forests, the Conservancy is allied with two of
the nation's biggest tree consumers, Georgia-Pacific Corp. and International
Paper Co.

The Conservancy defends its
partnerships with loggers by arguing that it has persuaded them to adopt more
conservation-friendly methods -- reduced clear-cutting, fewer access roads
and wider buffer zones along rivers and streams. The Conservancy says it has
also made loggers more sensitive to endangered species, such as the red
cockaded woodpecker. Company spokespersons agree.

The Dogwood Alliance, a coalition
of 70 grass-roots environmental groups, says the change in methods is
superficial and the damage remains considerable. Further, the partnership
gives loggers a public relations boost from "greenwashing,"
Dogwood and other environmental groups charge.

Georgia-Pacific and International
Paper have used the Conservancy "to pull the wool over the public's
eyes," said Trevor Fitzgibbon, Dogwood's former spokesman. "It
makes it seem they are doing great things for the environment when what they're
doing is destroying the South's natural heritage."

For nearly a decade, the
Conservancy helped Georgia-Pacific manage environmental risks arising from
its logging along North Carolina's Lower Roanoke River.

"It has absolutely changed
GP's image," said Georgia-Pacific Chairman Correll,
a Conservancy board member.

For its part, Georgia-Pacific has
been generous to the Conservancy, donating $3 million in 2000 alone.

International Paper is on the
Conservancy's leadership council. In 1998, the company sold 185,000 acres of
Maine forest to the Conservancy for $35 million. The Conservancy then
contracted with a Maine company to log 136,000 acres of the land to help
offset costs.

McCormick sits with International
Paper on the American Forest and Paper Association's Sustainable Forestry
Board, a panel set up by the industry to certify that loggers are being
eco-friendly.

Such ties create a
"commonality of interest" between the Conservancy and International
Paper, said Tom Jorling, a company vice president.
"This enables us to get more legitimacy because the Conservancy has the
kind of reputation it does."

Board Conflicts

The Internal Revenue Service requires charities to disclose all business
deals they do with board members or their corporations. At the Conservancy,
the list of such conflicts of interest is long.

Millions have gone toward property
deals with such companies, including $7.88 million in transactions with
Georgia-Pacific. In 1999, the Conservancy paid a Georgia-Pacific subsidiary
$380,000 for 1,100 acres in Maine. In 2000, the Conservancy paid $7.5 million
to the same subsidiary for 9,500 acres in Louisiana, much of it stripped of
trees by clear-cutting, Conservancy documents show. The charity got a $1
million discount, according to an internal document.

Conservancy officials said the
land purchases were guided by "the best available science" and
based on an independent appraisal and scientific review, which they declined
to make public. They said Correll recused himself from voting on the purchases.

The Conservancy's business with
board members and their companies also extends to purchases of products,
legal assistance and even development rights.

The Conservancy paid Orvis
Services Co. $649,000 in 1998 for placing some development restrictions on
its private, 1,600-acre Florida hunting preserve, records show. The chief
executive of the closely associated Orvis sat on the Conservancy's board.

The Conservancy also allowed S.C.
Johnson & Sons Inc. to use the Conservancy logo in ads for toilet cleaner
and other products, receiving $100,000 in return. The corporation's chairman
sat on the nonprofit's board.

The Conservancy told the IRS that
the board members in those instances recused
themselves from voting on the transactions. Since July 1, 1998, the
Conservancy has reported that 11 of its board members or their companies have
engaged in one or more financial transactions with the charity.

In a written response to Post
questions, the Conservancy said that each deal was "entirely
appropriate" and that most included discounts or donations. Such deals
are permissible under IRS rules if the charity documents that its board
members and their companies have not profited unduly.

Conservancy Board Chairman Anthony
P. Grassi, retired chief financial officer of
Credit Suisse First Boston Inc., said he sees nothing unethical in the
Conservancy's doing business with board members.

Still, such financial transactions
are discouraged in the nonprofit world. Known as "self-dealing,"
the arrangements can lead to revocation of an organization's tax-free status
if the charities cannot show that they have guarded against potential abuse.

Guidelines established by the
nonprofit advisory group BoardSource say:
"Good judgment is affected if [a] board member's personal or
professional concerns conflict with the best interest of the organization. .
. . Even the appearance of a conflict of interest can damage the
organization's reputation."

Credibility and Trust

While publicly enthusiastic about working with industry, Conservancy
officials remain privately concerned about image. Recently, the Conservancy
contracted with Worldwide, a consultant on consumer tastes, to conduct focus
groups on the issue.

A June 2001 Wirthlin
report, obtained by The Post, reassured Conservancy executives that the participants
considered corporate partnerships "generally good." But it
cautioned about the potential downside of selling a nonprofit's credibility
and trust.

"There was a general feeling
that some partnerships are created to fool or manipulate," the report said.
Some of those polled worried the Conservancy might be helping the companies
present a "false image to the public."

The participants were tested on
their reactions to the Conservancy's hypothetical relationships with various
companies: Bristol-Myers Squibb Co., Anheuser-Busch Cos., Wal-Mart Stores
Inc., BP Amoco, Intel Corp. and Cadillac.

Among the results: most
participants expressed negative feelings about partnerships with
Anheuser-Busch ("bad"), Wal-Mart ("absurd") and BP
("inappropriate"). There is no indication that they were told BP
sits on the Conservancy's leadership council.

"Many feel a relationship
between [the Conservancy] and an oil company is inherently
incompatible," the report said.

The study focused in part on
industries with which the Conservancy had what researchers described as an
"inherent conflict of interest." Not only oil, but logging, mining,
and power generation. Some participants considered taking cash from such
industries unethical.

"There is a minority who feel
that by accepting a financial contribution, [the Conservancy] would be
sending out a message that they condone the business practices of that
company," the report said. "To this minority, accepting financial contributions
from these types of companies is the equivalent of a payoff."

Logo for Sale

Toilet cleaner is not the only product associated with the Conservancy.

The Conservancy has rented its
name and logo for use on neckties, breakfast cereal, coffee and credit cards.
Companies pay six-figure fees to stamp the Conservancy's oak leaf on their
packaging. Conservancy vice president Michael Coda, who developed the
program, describes logo sales as a "very good deal" for the
nonprofit.

"A partnership with the
Nature Conservancy is good business!" Conservancy literature says,
stressing that its members are "upscale, urban, and have annual incomes
averaging $50,000."

The practice offends some consumer
activists. When affixed on a raisin bran box, the logo does not guarantee the
product inside is more environmentally friendly than the next brand on the
supermarket shelf, activists say.

"That's misleading -- a
consumer is going to think that that breakfast cereal was produced with some
kind of sustainable agriculture," said Urvashi
Rangan of Consumers Union, a watchdog group that
tracks logo usage and publishes Consumer Reports magazine.

General Mills' Nature Valley
granola bars have displayed the Conservancy logo since 1998. "There is
nothing more environmentally friendly" about the product, Rangan said. "We have a big problem with that."

There is also no disclosure on the
snacks that, until last fall, a General Mills Inc. corporate director sat on
the Conservancy's board. "That's a huge conflict of interest," Rangan said. Senior Conservancy officials said they were
unaware of Nature Valley's ties to their former board member.

Staff researchers Alice Crites and
Lucy Shackelford contributed to this article.

Nature Conservancy gas drilling
placed endangered birds at risk

http://www.citizenreviewonline.org/may_2003/nature.htm

Tax
Favortism for Nature Conservancy

http://www.citizenreviewonline.org/may_2003/tax_favoritism.htm

Nature Conservancy gas drilling
placed endangered birds at risk

http://www.citizenreviewonline.org/may_2003/nature.htm

Further
Links To Nature Conservancy Destruction of Freedom For Environmental
Extremism

http://citizenreviewonline.org.master.com/texis/master/search/mysite.html?q=nature+conservancy

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