Sunday, May 26, 2013

Oil Sand Waste and Politics: Why Executive Values Matter

Cities sometimes have a hard time escaping their reputations. Take Detroit. Windsor, on the Canadian side of the river, has the riverside lined with Assumption Park, Ernest Atkinson Park, and Straith Park. Detroit has Riverside Park, a rail yard, and now a big mountain of petroleum coke, a byproduct of (Canadian) oil sands refining. One might say that a city isn’t a very good place for oil refining byproducts, and that the Canadians should not bring their waste to a major US city. But actually, the waste is owned by the US company Koch Carbon, and the residents of Windsor, as well as Detroit, would really like it to be somewhere else.

Why put it there? It is earmarked for export to places where lax environmental rules allow burning of petroleum coke that releases greenhouse gases and sulfur levels at levels that would be unacceptable in the US or Canada. Detroit happens to be a convenient intermediate storage point. Now, one could say that it takes exceptional levels of environmental disregard in order to create an eyesore in one place so that you can move a potential pollutant across the world and contribute to global warming. But the owners of Koch Carbon don't believe in global warming and have funded research trying to disprove it. They are the famous Koch brothers (one of them is also the CEO of Koch Carbon, as far as I can tell), who are best known for creating and funding free-market think tanks, and for having a very strong record of economic support to republican candidates for election.

Normally a paragraph above would be a standard rhetorical trick. It is juxtaposition of facts that gives the impression that conservatives are polluters, without any rigorous foundations. Even with the example of Koch Carbon, there may be lots of polluting liberal CEOs and lots of responsible conservative CEOs. But actually, recent research published in Administrative Science Quarterly by Chin, Hambrick, and Trevino suggests that the values of CEOs do have effects, at least on corporate social responsibility (CSR). They found that conservative CEOs showed less CSR advances in total than liberal ones, and moreover that conservative CEOs seemed to be more strategic about their use of CSR. They did more when their firm was doing well, and scaled it down when their firm did not, whereas liberal ones were not so selective.

So conservatives really are less responsible, at least as defined by the standards held up by the CSR movement. We don't actually know whether this means that companies run by conservatives pollute more. But, Koch Carbon is certainly not doing anything to avoid giving that impression.