Financial Services’ Carbon Emissions
Regular readers of my articles know that I have sought to focus financial services industry leaders on the importance of using Internet based communications strategies to help financial advisors both better interact with and meet the expectations of web-savvy consumers. The goal is to realize the positive impact that will result through the combination of compliant content (story-telling) and the ability to deliver it at nearly zero cost to a huge audience of consumers.
With that in mind I metion today’s excellent column from one of my favorite writers, the New York Times’ Thomas L. Friedman. If you ever wanted to learn about an example of how an Internet communications strategy can impact a major business, this is it.
Friedman writes about two grass-roots environmental groups, Environmental Defense and the Natural Resources Defense Council (NDRC), which were able to transform the $45 Billion acquisition (the biggest leveraged buyout ever) of the giant, Texas-based power company, TXU, by buyout firms Kohlberg Kravis Roberts (KKR) and Texas Pacific Group.
As Friedman relates the story it began last year when TXU announced that it would build 11 coal-fired power plants. These plants would have raisedCO2 levels causing concern among environmentalists.
When the plans for the new power plants were announced, the president of a local environmental group, Fred Krupp, wrote to TXU’s Chairman, John Wilder, asking for a meeting to discuss TXU’s plans but was brushed aside. Friedman cites this refusal to meet as an example of, “Talk about not knowing what world you’re living in.”
After being denied the meeting the environmentalists turned to the Internet and created the web site www.Stoptxu.com. This low budget, grass-roots Internet strategy created a “national constituency” opposed to the new power plants.
In February of this year KKR and Texas Pacific joined forces to purchase TXU for $45 Billion. However, the buyout firms did not wish to purchase a company in conflict with environmentalists. As a result KKR and Texas Pacific began negotiating with the environmental groups. As Mr. Krupp describes it, “… so they came to us and said we only want to go forward if you and NRDC will praise what we are trying to do here.”
This led to negotiations over making the deal more “climate-friendly.” After 10 days of negotiations it was agreed that the number of new plants to be built would be reduced to 3. In addition TXU committed to invest $400 Million into energy efficient programs as well as agreeing to double its purchases of wind power.
Mr. Krupp describes why this result was possible by saying, “Going online we shifted this from a local debate over generating electricity to a national debate over capping and reducing carbon emissions. The reputations of companies are going to be less determined by the quality of their P.R. people and more but their actual actions- and that empowers more of an honest debate on the merits.”
The Internet’s unprecedented ability to “connect” people is having and will continue to have a profound impact on all aspects of life, globally. One aspect of life is money- meaning investments, insurance, retirement and all that these areas imply. I’ve often cited the slow pace of financial services to adopt contemporary consumer-facing communications strategies as one of the most serious threats to its future success. There’s a lesson in Friedman’s article about how something that would have been impossible if not unthinkable just a few years ago is now entirely achievable. The ability for the financial services industry to “achieve” in the future will be based to a great extent on its uncertain capacity to meld the communications of its value and its distribution into the Internet age.
©Copyright 2007 David A. Macchia. All rights reserved.