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MAY 1, 2003

SPECIAL REPORT: ENVIROTECH

Earth's Best Friend: Corporate America?
With Uncle Sam too strapped to foot the bill for environmental R&D, it's falling to business, which is more often finding the effort worthwhile



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David Leith, an environmental researcher at the University of North Carolina, has noticed a pronounced changing of the guard in the effort to protect the nation's air, water, and natural resources. Some 20 years ago, when he first began working on ways to reduce air pollution, most of his funding came from the federal government. Now, all of it, $1 million-plus over the past eight years, has come from the corporate world -- places such as Ford Motor (F ) and the United Auto Workers union. The focus of Leith's research has changed as well, from reducing factory emissions to cutting pollution inside plants.


In microcosm, Leith's experience describes what's happening across the country. Because of the weak economy, corporate spending on environmental research and development has moderated. Yet experts say it's most likely holding up better than similar federal spending, which has fallen 1% in the current fiscal year.

While both trends may sound alarming, given the stress a rising world population puts on the earth's resources, here's a silver lining: Corporations have found that environmentally friendly technologies often allow them to eliminate waste and lower manufacturing costs, thus improving their financial performance. Wider use of envirotech can even avoid future liabilities for workers' health problems, says Bill McDonough, who has helped design environmentally friendly manufacturing facilities for the likes of Ford and shoe maker Nike (NKE ).

FURTHER TO GO.  Clearly, Corporate America is taking on a more active role in protecting the environment, even as the public sector's involvement fades. And as might be expected, that's leading to increased innovation in technologies used to protect and repair the environment.

In the three decades since the first Earth Day, much has been done to improve the environment in the U.S. And yet, much remains to be done. From 2000 to 2002, the number of days with unhealthy ozone levels in the U.S. jumped 18.5%, according to the American Lung Assn. And according to the Environmental Protection Agency's 2000 water quality survey -- the most recent available -- some 40% of U.S. streams and lakes aren't clean enough for fishing and swimming. That's hardly different than in 1998, when 35% of rivers and 45% of lakes weren't clean enough.

At the same time, the cleanup pace for the nation's most toxic sites slowed by half from 2001 to 2003, according to the environmental advocacy group U.S. Public Interest Research Group in Washington, D.C.

LEEWAY TO DIAL BACK.  Worse, apathy over the environment seems to be spreading, perhaps as Americans focus more on the weak economy for now. In a March Gallup poll of 1,003 adults, some 51% -- down from 58% in 2000 -- said they think the government isn't doing enough to protect the environment. And only 14% identified themselves as active participants in the environmental movement, down from 19% a year ago.

That has given the Bush Administration leeway to dial back on environmental programs. The Office of Management & Budget, the President's budgeting arm, estimated that the federal government would have had to spend $31.15 billion in fiscal 2003, which began last October, to keep existing EPA programs in place. Congress approved only $30.8 billion, however -- which was $1.4 billion more than the Administration originally requested.

By 2008, a $2.8 billion budget shortfall could exist between congressional funding and the $36.9 billion needed to maintain status quo, according to the OMB. "Suddenly, we're fighting [to keep] programs that have been successful," says Greg Wetstone, director of programs at the environmental advocacy group National Resources Defense Council in New York.

Continued on next page>>  | 1 | 2 | 3




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