Unlikely Allies

Is there something that Wall Street and the Sierra Club can agree on?



The answer is yes when the subject  is longtime New Canaan resident Fred Krupp, twenty-year  president of the national nonprofit Environmental Defense

Whether getting McDonald’s to do away with plastic foam containers for its Big Macs or Wal-Mart to shut off the engines on idling trucks, Fred Krupp has demonstrated a green thumb for growing workable understandings between fellow environmentalists and some of America’s most powerful businesses. Now Krupp and Environmental Defense take on their toughest challenge yet: organizing a marketplace initiative to curb emissions that produce global warming.

It’s a task that Krupp, still only a youthful fifty-something after two decades at Environmental Defense’s helm, calls his most important ever.

“Environmentalists have been criticized for not having priorities,” he admits.

“Everything is important. But if we don’t solve global warming, it affects everything else.”

Krupp is not one for hyperbole. In part that is a reflection of the group he works for, with its founding focus on sober  scientific analysis and steadfast refusal to endorse enviro-friendly political candidates. Yet it also suits the man himself, with his deep-set, gentle brown eyes and low-key bank-executive mien.

“Slightly nerdy” is how Rolling Stone magazine described Krupp in a 1991 profile. Close up that may say more about the personality of the magazine than it does about Krupp. But the Yale grad with a law degree from the University of Michigan does seem a likely buyer if they ever came out with a version of PowerPoint you could sew into your jacket lapel. Motivated, yes; wonkish, definitely; but undeniably charismatic, too.

There’s none of the off-putting edginess of Al Gore in Krupp’s compelling if often wide-ranging account of what is going wrong with planet Earth, just amiable, dogged persistence that appeals to a listener’s better nature.

“Fred’s a very personable guy, not crazed by the issue,” says John Fialka, a longtime Wall Street Journal reporter who covers environmental issues for the newspaper.

“Others, if they sense you don’t believe what they believe, don’t trust you. For some of them, it’s like a religion. That attitude is great for fundraising and for setting a stage. But the way I see it, that stage is set for people like Fred’s group to cut the deal.”

Greenwich’s Susan Mandel, a member of Environmental Defense’s board of trustees, says don’t be fooled by Fred’s genteel surface. “He is cautious only in his demeanor. In fact, he is very bold in the targets he sets for himself and the organization, and while he listens to everyone’s opinion, he never loses sight of the ultimate goal.”

Susan is one of several lower Fairfield County residents serving on the board; others include actress Joanne Woodward of Westport and John H. T. Wilson, a senior Morgan Stanley executive who lives in Greenwich. Additional local talents are employed by Environmental Defense on  a salaried basis, including the director of its climate and air program Peter Goldmark, originally of New Canaan, and Carol Kinzler of Darien, who is director of major gifts.

W. Michael Brown, a six-year member  of the Environmental Defense board and former CEO of the Thomson Corporation, calls Krupp the man with the plan that unifies everyone around him. “He’s a quiet person, very understated, but when he takes a position, he sticks with it,” Brown says. “He doesn’t try to be a superstar. His approach just works.”

“He’s very practical,” Woodward concurs. “He doesn’t live with pipe dreams. When he talks about something working, it does work.”

Munching on cheese-covered crackers as he sat in the comfortable den of the backcountry home where he and wife Laurie Devitt have lived for more than twenty years and raised three sons, Krupp smiles ruefully as he ponders the question, What should be done about global warming if, as many environmentalist allies claim, it isn’t too late already? “You mean, Why not just go out and party?” he asks rhetorically.

As he continues, a propensity for optimism — which associates say is one of Krupp’s most distinguishing characteristics — shines through. It’s not just that he thinks there is still time to deal with what  a growing number of scientists classify as a veritable thermal Armageddon. He has seen firsthand how potentially irreversible situations have been salvaged once the business community has incentives, and not just
regulations, spurring them to innovate.

“We need power tools,” he says. “The most powerful thing I can think of in society is the quest for money. So change the rules of the game and make the quest one where profits come from inventing things the world needs.”

The initiative Krupp has in mind at the moment is USCAP — the United States Climate Action Partnership, announced in January. A coalition of major U.S. corporations including General Electric and Alcoa have signed on with environmental NGOs (nongovernmental organizations) like Krupp’s group and the Natural Resources Defense Council (NRDC), calling upon Washington to set a firm limit on carbon dioxide emissions (which cause greenhouse gases), reducing them by 10 to 30 percent over a span of fifteen years.

The plan is modeled on an earlier one Krupp helped shepherd in 1990, reducing sulfur emissions that cause acid rain. That plan called for long-term reduction of 50 percent, going from 20 million tons of sulfur produced annually to 10 million. Even then, when Democrats controlled both houses of Congress to a greater degree than now, such a plan was thought unreasonable.

“Even some of our best friends in Congress said basically in hushed tones, ‘C’mon, guys, 50 percent, that’s too ambitious. Why not 30 percent?’ We in the environmental community knew that even 50 percent wasn’t going to solve the problem, but that it was the minimum that could be done.”

Assistance came from an unlikely quarter: the administration of George H. W. Bush. Back in 1988, while running in the New Hampshire primary, Bush 41 promised to do something about acid rain. Two years earlier Krupp had written a Wall Street Journal article about how market incentives might encourage businesses to comply more quickly with regulations, rewarding them with credits to trade with other businesses if they did more than the law required. Bush’s people liked the idea, as did the moderate wings of both parties in Congress. With the support of Environmental Defense and other NGOs — and despite much grousing from the private sector — Krupp’s market idea became federal law.

The resulting plan encouraged sulfur producers like factories and power plants to reduce their emissions 50 percent in whatever way they could, whether it be installing scrubbers in smokestacks, switching from high-sulfur coal to low-sulfur coal and natural gas, or, perhaps most controversially, working out deals with other companies whereby, if both produced the same amount of sulfur — one reduced by 40 percent, the other by 60 percent — the cleaner partner in the deal was paid for the difference.

“We gave business an incentive to do more than the law required,” Krupp notes.

Within ten years, the new law had achieved its 50 percent goal. “Sulfur came out of the air quicker than the laws mandated, because people got credit for doing things early,” Krupp says. “While some companies said it would cost $2,000 to remove a ton of sulfur dioxide from the smokestacks, it ended up costing, because of those reduction credits and because it was spread out over many years, one-tenthof that, $200 a ton.”

Two years ago the federal government mandated another sulfur reduction, this time a cut of 70 percent, to around 3 million tons of annual emissions. Krupp recalled a conversation on the subject with a sympathetic Michael Leavitt, then Environmental Protection Agency director and someone who had been an ally of Environmental Defense on air-pollution issues years before.

“He liked the idea and was preparing to do it, when our current President Bush called him into the office and said, ‘Mike, I want you to move over to Health and Human Services,’” Krupp recalls. “But he said he told the president what he was up to with air pollution, and the president agreed that even after he went to HHS, he, President Bush, would approve this change. And believe it or not, because the president has not been good on climate change, on this issue he approved the tightening.”

Clean Air Interstate Rules (CAIR) were passed in March 2005. “This is very, very significant, and it all starts from this idea that it’s not necessary for the government to order exactly how something gets done,” Krupp explains. “Get a performance standard, allow some flexibility, even trading.”

If USCAP, consciously built along the same lines of what Krupp calls a"cap-and-trade” system, is to succeed, it will need similar buy-in from Bush 43 and Congressional Republicans. The mention of global warming in Bush’s most recent State of the Union address is cause for some hope in Environmental Defense ranks, as is the fact he was looking out that evening on many new faces, mostly Democrats. Goldmark, a point person on the climate issue, sees a sea change at work.

“The debate has shifted from whether to do something to what to do,” he says. “However strong the bill that passes, it will have to be bipartisan. That puts more of a spotlight on environmental organizations that are bipartisan, which is what Fred has.”

How bipartisan is Fred Krupp and his organization? According to Brown, Environmental Defense’s board of trustees contains both Democrats and Republicans. Krupp was appointed to various oversight panels by both a Republican president (Bush 41) and a Democratic one (Bill Clinton). That latter posting, to the President’s Advisory Committee on Trade Policy and Negotiations, was allowed to lapse under Bush 43. Yet at the same time, Krupp has visited the Bush White House as recently as last year, to mark the designation of roughly 140,000 square miles of Hawaiian coastline and nearby waters as the world’s largest federally protected marine area. A framed photograph of Fred and Laurie with George and Laura sits in a prominent location in his living room.

Not that it’s all sunshine and lollipops.

“Fred has a workmanlike, professional relationship with the White House,” Goldmark says. “No one there sends valentines our way.”

Krupp says the cause of environmental protection is too great to risk writing anyone off. If they could work with one Bush White House on acid rain, why not work with another Bush White House on global
warming?

“We don’t burn bridges,” he notes. “We don’t attack people personally. We may publicly disagree on ideas, but we are not going to engage in ad hominem attacks.”

It’s a philosophy rooted in Krupp’s student days at Yale, back in the early 1970s. An engineering professor of his named Charles Walker advanced a theory about student radicalism and social unrest. “He would say, ‘If people would just lower their voices, a lot of these problems would be solvable,’” Krupp recalls, adding that he found the idea compelling and appealing.

Krupp studied law while simultaneously cofounding a statewide advocacy group, Connecticut Fund for the Environment. Meanwhile, Environmental Defense, then called Environmental Defense Fund, was starting its second decade. Founded by four scientists, the organization had already enjoyed such early successes as getting a national ban on DDT. Its focus was mounting legal challenges, its informal motto being “sue the bastards,” according to Krupp. Yet there was also a budding sensitivity to market forces at EDF, unusually so, according to Frank Loy, who first joined the trustees in 1981.

“Everyone cared passionately about the environment, but they were Wall Street tree-huggers rather than California tree-huggers,” Loy remembers. “Very Main Street, which made it distinct from Greenpeace, Sierra Club, Friends of the Earth, even NRDC. Back then a very large fraction of the environmental movement was hostile to business. Environmental Defense, even before Fred, was not.”

Loy was chairman of the EDF board of trustees when Krupp was hired to be its president in 1984, following a grueling executive search in which Loy recalls Krupp being introduced by a headhunter after the board had already settled on another candidate. “He could have said fine, closed the case and picked up his commission. Instead he said, ‘I just ran across this fellow who meets your criteria better than the guy you selected,’” Loy remembers.

Krupp, not yet thirty, was more than ten years younger than any other candidate. He remembers facing a great deal of skepticism, including from Loy, the last of twenty-two people to interview him. “I told him, ‘If you give me the job, I promise to do something about my age every day I’m on the job.’”

By all accounts Krupp has done more than that. In 1987 EDF successfully campaigned to phase out CFCs, chemicals it argued were destroying Earth’s ozone layer. In 1990 came the acid rain initiative, followed a year later by an agreement with McDonald’s that saw the burger giant replace its polystyrene clamshell containers, thus eliminating more than 150,000 tons of packaging waste.

And the hits kept coming. Catalog retailers, FedEx, New York State, all have signed onto behavior-changing agreements with Environmental Defense. Just this past February, Krupp negotiated a settlement with prospective buyers of energy-making TXU Corporation, including the legendary buyout baron Henry Kravis, whereby the buyers agreed to scale back on TXU plans to build more power plants and adhere to stricter emissions standards. In exchange, Environmental Defense and other groups would stop pointing to TXU as a poster child for industry excess, which was dragging down its market value.

Carl Pope, executive director of the Sierra Club, calls Environmental Defense “definitely very much a partner and an ally,” despite some running disagreements over the years, such as over the trading of sulfur emission credits on the acid rain initiative, which Pope calls an unreliable model to follow on climate control.

“They are disagreements not of philosophy, but of political strategy,” Pope says. “We are clearly working toward the same goals.” Pope notes that under Krupp,

Environmental Defense found its niche, “which is to focus on the economic incentive, to make the market work for the environment.”

Some in the private sector agree that Krupp’s ideas work for them, too.

“Environmental Defense is one of the groups that is clearly willing to work in a thoughtful way with business, if business is willing to work thoughtfully with them,” says Steve Ramsey, vice president overseeing environmental issues with General Electric, a key partner in the USCAP initiative. “Fred provides a balance between protecting the environment, which he is absolutely committed to first and foremost, and a pragmatic approach to solving problems.”

Laura Fisher, chief sustainability officer at another USCAP corporate partner, DuPont, perceives a shift among many environmental NGOs and points to Krupp as a leader. “As an individual, Fred is not afraid to think about issues differently,” she says. “That takes a lot of imagination, and a lot of courage.”

Among those who work in Environmental Defense’s Manhattan office, Krupp scores points with his work ethic and thoughtfulness.

“I think for me it’s his passion,” says Kinzler. “He believes in what he’s doing with all his heart and soul, and works harder than the rest of us, which inspires me.”

Krupp also plays hard. On his own time, one of his favorite activities is rowing, an avocation he shares with Laurie and their three sons. “I get up a few minutes after five, go down to Long Island Sound and hop into a boat,” he says. When the weather’s too cold, Krupp hits the exercise machines in his basement instead.

He and Laurie also enjoy quiet walks at Waveny Park and the New Canaan Nature Center, where long ago the three Krupp boys attended preschool. Today, oldest son Alex studies business at Cornell, while Zach is an undergraduate at the University of Wisconsin and the youngest, Jackson, is still in high school.

Much of the success of Environmental Defense comes from its own backyard. Contributions from Darien, New Canaan, Greenwich and Westport total 8 percent of all contributions. Total operating revenue and support for Environmental Defense in fiscal year 2006 was $71.8 million, up nearly half from just five years before and up from $18.6 million in 1991.

Krupp says money is needed if Environmental Defense is to take on its ambitious agenda, comprising not only global warming but also the sustainability of the oceans; land, water and wildlife issues; and human health questions raised by such matters as the use of antibiotics. If that message plays well in Fairfield County, it plays well on Wall Street, a key component.

“If we are going to move America, we are going to have to move corporate America,” he says. “We need American businesses to create products that will be good for the American economy and good for the environment.”

 

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