ADVOCACY:

Market approach to fighting pollution produces results -- and compromises -- that set EDF apart

A glance at Environmental Defense Fund President Fred Krupp's environmental allies presents a strange picture: They include Wal-Mart CEO Mike Duke; former President George H.W. Bush counsel C. Boyden Gray; and executives from Anadarko Petroleum, Noble Energy and Encana.

Not exactly the typical Rolodex for the leader of one of the country's largest environmental groups.

But the ethos of EDF under Krupp's 29-year reign has been atypical: The group will work with anybody and everybody to find a workable solution to combat climate change and pollution. Under the right circumstances, even a coal company can be a worthy ally.

"If you're going to move America, you have to move American business," Krupp said in an interview. "Businesses are central to the economy, so where we can find folks that want to get things done, it's in our interest to work with them in a nonpartisan way."

It's netted results and has given industry interests an open ear in a movement not known for working with big business. But it's also placed EDF firmly on the right of the environmental spectrum and opened the group's leaders to criticism by hard-core greens.

A hydraulic fracturing study that gives one of the first realistic measurements of methane leakage? Tainted by industry involvement, the critics say. Corporate deals with Wal-Mart and McDonald's to increase sustainability? Greenwashing, they huff. A cap-and-trade bill that cleared the House and had majority support in the Senate? A shortsighted strategy that set the movement back, they insist.

You could say EDF is the Anne Hathaway of the environmental movement: It has racked up plenty of wins, but every one is accompanied by a flurry of naysayers and diminished by behind-the-back gossip.

Although the collapse in the Senate of the cap-and-trade bill from Reps. Ed Markey (D-Mass.) and Henry Waxman (D-Calif.) in 2010 was seen as a death knell for the entire environmental movement, it was EDF that had the most to lose from the failure.

EDF was the nongovernmental organization most responsible for bringing business interests together for the United States Climate Action Partnership. And the group's market-based approach was on display in the cap-and-trade debate, even when other groups were questioning whether the bill was strong enough.

"We were essentially swinging for the fences trying to get a comprehensive bill to solve this problem, at least the American portion of the problem," said EDF spokesman Keith Gaby. "That didn't happen. So now we're taking a hard look at how to make progress. We're looking at every way at every level to go after every ton of pollution that can be helped without Congress."

For a group that prides itself on being "pragmatic" -- a word used by several EDF officials -- a temporary retreat to smaller climate goals isn't seen internally as a step back, but rather as an opportunity to secure victories designed to rebuild the momentum needed to drive national and international action. It's also always had its hands in several issues and campaigns.

The group is targeting methane leakage from natural gas drilling, enlisting the help of academics and drillers themselves for a series of studies. It's working with utilities to increase renewable energy incentives and encourage a more sustainable grid. Promotion of carbon markets has now been focused on the state level and abroad.

"Politics is the art of the possible," said EDF Vice President of Strategy Eric Pooley. "There was a window for a federal bill, but it slammed shut. ... This is an exciting time, and I'm as optimistic as I've ever been to move ahead."

While other green groups are going through an overhaul -- whether it's Sierra Club rediscovering its radical base or the League of Conservation Voters stepping up campaign spending -- EDF has instead put its same strategies toward lower-level goals. And with 750,000 members and $120.5 million in spending this year, those inside the group say they're well-positioned to succeed.

[For a look at financial information for five major environmental groups, click here.]

"We know that political realities continue to grow and evolve. And we know that progress at the state level remains possible," Pooley said. "We see the magnitude of the problem, we understand the magnitude and we're confident of the solutions we're employing."

From 'sue the bastards' to deep pockets

But EDF in its early days would hardly be seen as a goal-oriented success story. In fact, former Executive Director Arlie Schardt recalled that when he came on in 1974, it was very nearly on its deathbed.

The group formed in the 1960s when scientists, concerned about the impact of the pesticide DDT on birds like ospreys, built a legal case for a ban. A court-imposed ban in New York's Suffolk County in 1966 beget a statewide ban, then a national one in 1972, bringing with it intense support and money. Working out of a farmhouse in Long Island, the scientists formally established EDF in 1967.

Seven years later, Schardt, who had cut his teeth as a journalist and doing campaign work at the American Civil Liberties Union, came on. But at just his first board meeting, an accountant pulled him aside and gave him a dire financial picture. The group was hundreds of thousands of dollars in debt, and its biggest funder, the Ford Foundation, was planning to shut down its environmental grant program, potentially eliminating a third of EDF's budget.

"My knees just buckled," Schardt recalled. "I was brand new on the job. I didn't know any environmental grant makers. I figured I was going to be out in two weeks."

So Schardt went directly to the offices of the Ford Foundation -- the charitable arm of the Ford Motor Co. -- and pleaded with "a towering, Ivy League guy with Greek letters across his chest" for a one-year grace period. A week later, not only did EDF keep its funding, so did every other environmental group that Ford supported.

"I guess in a way, you could say I saved NRDC and Sierra Club, too," Schardt joked.

After getting EDF back in the black, Schardt took to expanding the group's mission, including establishing a communications presence to better engage with the media. He also added a wildlife program, which at the time was the group's biggest source of fundraising thanks to the support of birders and outdoors enthusiasts.

By the time he departed in 1977, Schardt said EDF was continuing to raise its national profile and was on solid footing. He was followed by Janet Welsh Brown and acting Executive Director William Brown, but by that point EDF's "sue the bastards" model was withering and other groups were taking up valuable grant money.

Enter Krupp -- a former intern under Schardt, who remembered him as "shy, but quite sharp" -- and a new, economic-focused agenda built on collaboration. Krupp pursued deep-pocketed board members, boosted membership and raised the group's profile while also changing its direction.

In a 2008 essay, Krupp wrote that most of the staff at the time didn't back his view that "setting tough performance standards while harnessing markets [was] a far more powerful way to inspire human ingenuity on behalf of the environment."

EDF in 1975 had already hired Zach Willey, the first Ph.D. economist to work at an environmental organization full time (he's still there). Krupp early on hired Dan Dudek, an agricultural economist who believed in a bottom-up approach to fighting pollution that would become cap and trade. Dudek recalled being "thrown from the chalkboard to the international politics boardroom" when he was placed on the U.S. delegation to negotiate the Montreal Protocol, where he established a rough trading mechanism for ozone-depleting substances.

It was a 1986 Wall Street Journal opinion piece that cemented Krupp's philosophy. He wrote that environmentalism was entering its "third wave," after the first phase focused on conserving land and wildlife and the second wave of stopping pollution. The third wave would involve cooperation between "our economic well-being and preserving our health and natural resources," built on bringing industry and environmentalism together.

That editorial captured the attention of Gray, Bush's personal attorney, which gave EDF an opening to engage with the White House when Bush was elected. In 1990, that gave EDF perhaps its biggest win of the Krupp era when it helped draft a cap-and-trade program for sulfur emissions from power plants to target acid rain.

In signing the 1990 Clean Air Act amendments that included the acid rain program, Bush praised Krupp for "bringing creativity to the table to end what could have been a hopeless stalemate."

Collaboration or confrontation?

Twenty-seven years into Krupp's third wave, it's safe to say it hasn't been the movement-shaking idea he likely envisioned. While EDF has found success engaging with businesses and recruiting market support, that has not been the agreed-on strategy across the board.

"At its root, they're about working with the parties that actually need to change," said Andy Hoffman, professor of sustainable enterprise at the University of Michigan. "This is a more pragmatic approach, but there are these more radical groups. ... For every EDF that wants to collaborate, you want another group that's more confrontational."

Hoffman added, "But there's a danger about losing your brand. At what point does EDF stop being seen as a serious environmental group?"

Indeed, while EDF may get hosannas from big money players -- The Economist called it "America's most economically literate green campaigners" -- there are some in the environmental movement who are equally vocal about what they see as a betrayal and dismiss Krupp as "Fred Corrupt."

Two recent examples show the promise and perils of EDF's goal-driven approach. Take the November announcement of new Colorado state rules requiring hydraulic fracturing companies to track leaks of methane and other volatile compounds, while expanding smog-prevention rules to oil and gas sites.

Working with EDF on the deal? Colorado state officials and executives from Anadarko Petroleum, Encana and Noble Energy, three major drillers. EDF oil and gas coordinator Matt Watson said the rules would set a "completely new bar and be a fundamental shift for the better in the regulatory framework for these emissions" (EnergyWire, Nov. 19). They may not be a total green sweep, and they came the same month that three cities in the state voted to ban fracking entirely, but analysts say the rules could set a model for cleaning up the practice.

But a similarly goal-focused strategy also led EDF away from Safer Chemicals, Healthy Families, a 450-member clean chemicals coalition that EDF had helped create. Group scientists have expressed some support, with reservations, for a bipartisan Senate bill, the "Chemical Safety Improvement Act," S. 1009, that would overhaul the 1976 Toxic Substances Control Act.

Other public health and environmental groups, however, have said the language is unworkable and have come out firmly against it, leaving EDF as one of the sole environmental groups still willing to work with sponsors to promote and rewrite the bill. It was that work that was behind the dismissal, according to sources (E&E Daily, Nov. 21).

It's not the first time EDF has been let go from an environmental coalition. In 1996, a near-unanimous vote by the 20-member steering committee of the Endangered Species Coalition booted EDF from that group because it had negotiated a bill with logging interests, real estate developers, Western governors and others that critics said would weaken the Endangered Species Act (it was designed to be a compromise bill to soften the blow from more stringent ESA attacks).

In an article in Corporate Crime Reporter, the Center for Biological Diversity's Dave Hogan blasted EDF after that vote, calling it "more like a corporate front group."

And Bill McKibben, founder of 350.org, recalled that while Krupp signed on to his group's original civil disobedience letter opposing the Keystone XL pipeline, "as far as I know, that's the last work EDF has done on Keystone."

Pooley said that although EDF opposes the pipeline, it hasn't been a focus "because we try to not duplicate what is already being done effectively by others."

EDF officials point out that that group is more than willing to do battle with corporations. For example, EDF sued Duke Energy all the way to the Supreme Court -- and won 9-0 in 2007 -- compelling the utility to clean up some of its dirtiest coal-fired power plants. And EDF members picketed the headquarters of American Electric Power and the homes of AEP executives in 2011, to protest legislation the company had floated on Capitol Hill.

"We are very comfortable taking on corporations when necessary," Pooley said. "It is an important part of our toolkit."

While McKibben is open to collaboration across the movement, he said simply that EDF "is in a different category. We don't work with them."

Small strategies, big goals

After the cap-and-trade bill collapse of 2010, EDF officials say they're now focusing on lending support to President Obama's climate plan and redirecting their energies to other major projects. They've also been doing on-the-ground engagement to support California's year-old cap-and-trade program and helping out the nine Northeast states involved in the Regional Greenhouse Gas Initiative.

Derek Walker, who heads the California work, said EDF has been advising both the state and industry groups on how to follow the market there, which held its first carbon allowance auction this year. The group will also do a one-year report on the carbon market at the beginning of the year, an attempt to offer independent oversight.

Similarly, EDF has ramped up its international work. According to 2012 tax forms, EDF spent $1.3 million in South America, largely on a Brazil deforestation project, plus $2.3 million in East Asia and $179,000 in South Asia. The centerpiece is a multiyear partnership with China headed by Dudek.

EDF has launched seven municipal carbon trading pilot programs across several cities in China, which Dudek said could potentially be the groundwork for a national system in the world's largest carbon polluter. But, he added, even on their own they're a massive achievement that could change the climate picture and offer a viable model to other cities and countries. EDF is also working with the government to promote sustainable agriculture practices and make booming industry more sustainable, which plays off its domestic work.

"We've tried to capitalize on learning from our different programs," Dudek said. "Not everything is portable, but there's usually a core idea or a fundamental methodology common to all countries and programs."

Also on tap is a ramp-up of its Smart Power program, which aims to give utilities and state regulators advice on how to make the energy sector more supportive of renewable power.

In a move panned by some greens, EDF netted a $6 million grant from New York City Mayor Michael Bloomberg's foundation to explore enforcing rules on fracking. That's resulted in a massive series of 16 studies, with a group of more than 90 partners across industry, academia and government, to explore emissions from the practice. The first study landed in September and found that methane emissions from wells were lower than EPA had estimated, but also sought to quantify other emissions.

The conclusions were almost lost amid the political rancor around the report, with fracking opponents saying the involvement of industry tainted the results and showed it was nothing more than another piece of tacit support for a method of extraction greens have come to oppose.

Drew Nelson, who manages the research work for EDF, said those criticisms "were not fully understanding of the overall project." By getting industry involved, he said, researchers could get more accurate data. And a "mixture of methodologies" means that not every study will rely on industry -- for example, one will be based on flyovers using government equipment.

With fracking a reality, he said, environmental groups should be trying to make it as clean as possible, and they especially need to address the leakage of the greenhouse gas pollutant methane.

But other groups have fled what was once seen as a bridge fuel (Sierra Club's swift reversal on it sticks out) and blast EDF's refusal to move with them. Greenpeace USA Director Phil Radford, a longtime EDF critic, said in September, "At best this study will be considered an interesting outlier that calls for further research."

"At worst," he added, "it will be used as PR by the natural gas industry to promote their pollution."

Industry engagement

Those same critiques have dogged EDF's assistance to major corporations for sustainability efforts. It's a model that started with a 1990 deal with McDonald's to reduce packaging waste. It has gotten FedEx to adopt hybrid trucks and seven major companies to set greenhouse gas reduction goals.

A high-profile project with Wal-Mart on a grand-scale sustainability plan has contributed to the world's largest retailer cutting greenhouse gases by 20 percent across its operations and keeping emissions low even while expanding. The retailer has installed solar power, adopted cleaner fertilizer and worked to purchase more sustainable products as part of that partnership and work with other NGOs.

"As we show what can be done with Wal-Mart, it can spread change throughout the industry and its supply chain," said Elizabeth Sturcken, EDF's managing director of corporate partnerships. "When Wal-Mart asks something of its suppliers, they respond. They have a lot of power."

But while EDF is working closely with Wal-Mart, even setting up an office near the company's headquarters in Bentonville, Ark., in 2006, other groups are casting stones. Last month, liberal groups on Twitter circulated a graphic with a quote attributed to the Sierra Club: "Walmart is failing on climate exactly like it is failing on workers' rights."

"Allowing Wal-Mart to define what sustainability means is a mistake because they'll do it in a way that works for them," said Stacy Mitchell of the Institute for Local Self-Reliance, who has written about Wal-Mart's climate impact. "The question is whether EDF's involvement is doing more to facilitate Wal-Mart's public relations push, or is it actually offering a hard-nosed outside critique of what the company is doing? From my vantage point, it's the former."

EDF leaders say they don't take money from the companies they work with and shy away from corporate donations, a bid to avoid the perception of a consulting relationship.

But several critics have pointed out that EDF does take money from the Walton Family Foundation, the charity arm of the family of Wal-Mart founder Sam Walton. EDF collected $13.2 million from the foundation in 2012, dwarfing the take of other groups (although Conservation International took in more than $22 million that year). Walton's grandson, also named Sam, sits on EDF's board, another tie that has some critics crying foul.

Also raising questions is the massive funding offered by board member Julian Robertson, founder of the hedge fund Tiger Management and a major financial backer to Mitt Romney's super PAC.

"We draw the line between corporate and private philanthropy," explained Pooley, who said EDF has a more restrictive policy than other NGOs. "There are people who don't see the distinction between Walton and Wal-Mart, but there is no connection to the executives who run Wal-Mart."

The Walton money was geared to fishing work ($7.8 million for catch shares) and freshwater conservation ($4.9 million), not any corporate work, and Pooley said the group is careful to keep its pools of money separate.

"It's important to point out those distinctions, but the work speaks for itself," he added.

To be sure, the corporate strategy has its benefits, especially in framing EDF as a more centrist collaborator that can engage in the corporate structure as it currently exists. The approach has also been welcomed by other groups: Even Wal-Mart has partnered with the Natural Resources Defense Council, Nature Conservancy and World Resources Institute, among others.

So while groups like 350.org push colleges to divest from fossil fuel companies and Greenpeace leads protests on whaling ships, EDF can step in as a willing partner on a deal that nets some benefits. After all, the groundbreaking McDonald's partnership came only after lengthy protests by more liberal groups.

But some critics have said that playing nice with everybody ignores the bigger problems at hand: the very nature of industry as a source of pollutants. Even Schardt said that while he applauds EDF's firm commitment to science and its overall mission, the corporate partnerships model wasn't aggressively going after the "absolute bottom line."

"It's OK to work with corporations, and EDF has certainly made some impacts and gains," said Schardt, now the board chairman for Friends of the Earth. "But in a bigger, grander scheme of things, I don't think those impacts are enough that they will bring about any meaningful change in the overall environmental damage being done by so many corporate practices."

But Krupp, ever the proud pragmatist, said he welcomes the criticism and isn't ready to bail on the third wave just yet.

"That's healthy, and as a movement, we value tremendously different contributions," Krupp said. "We're bringing people together to solve problems, and we're looking to bring a big enough coalition together to get things done. We need big breakthrough solutions, and there are different tactics to get those ambitious results, but I think we can all agree that we need ambitious results."

Tomorrow: A look at the League of Conservation Voters.

Reporter Elana Schor contributed.