Warming to environmental concerns
KAI RYSSDAL: TXU is the ticker symbol you’re looking for. It’s a power company down in Texas. Word got out late Friday it was set to be sold in the biggest leveraged buyout deal ever.
And that part’s true. But there is a twist that makes this acquisition about more than just dollar signs. TXU and the groups doing the buying, KKR and Texas Pacific, sought and got the backing of some key environmental groups as a condition of the deal. They also said they’d scrap plans to build 8 of 11 controversial coal-fired power plants.
David Hawkins runs the climate center at the Natural Resources Defense Council, one of the environmental groups in negotiations. David Hawkins, good to have you with us.
DAVID HAWKINS: And it’s good to talk to you, Kai.
RYSSDAL: Do you think this deal, as big as it is and as high-profile as it is, augers sort of a new era for corporate deal making, in that there will be an element now of politics and awareness of maybe some other issues that people haven’t been willing to deal with before?
HAWKINS: I do. I think that all aspects of corporate decision-making are now being influenced by the corporate leaders’ perception of what’s happening with global warming. Both what’s happening with the problem in the real world and what’s happening with the politics of doing something about global warming. This has become something that smart business leaders understand they need to deal with, that ignoring it is a bad business strategy.
RYSSDAL: How do you feel about the NRDC and the Environmental Defense Fund being used in some degree as a bargaining chip?
HAWKINS: It’s not so much a bargaining chip as it is the company turning to organizations that one, they felt they could deal with on a confidential basis because they knew people. And second because they knew we were organizations that were deeply involved in these issues of power generation and in particular the TXU plans to build coal plants in Texas and elsewhere. So, you know, we were kind of the organizations that would be a good test bench for determining whether they had a strategy that would work or not. And we didn’t get everything we wanted in those negotiations. But we got enough to conclude that this support for this buyout made sense. Because the company under the new owners would have a radically better posture than the status-quo.
RYSSDAL: There have been promises made, assurances offered as part of this deal. How confident are you that TXU and the folks running the company now are going to stick to their word?
HAWKINS: We are confident. An advisory board is going to be set up that both NRDC and Environmental Defense will be represented on. We negotiated this with a man named Bill Reilly, who was the administrator of the Environmental Protection Agency in the first President Bush’s administration. I’ve known Bill for more than 20 years, I know that he is a person who cares deeply about environmental protection and I know that he’s a person who keeps his word. We had prolonged discussions with Bill and his colleagues and I am very confident that he is going to do his best to be sure that the company honors those commitments.
RYSSDAL: This deal came to you. Are you now emboldened to perhaps go out and contact some other companies and offer some guidance along environmental lines?
HAWKINS: Yeah. We will be looking at other companies where we think engaging with them will help speed the change that needs to happen. You know, we go where we can get results. And the business community is a place where we’re actually able to get more results these days than the White House.
RYSSDAL: And this deal has increased your leverage a good deal, I imagine.
HAWKINS: I hope so. You know, the people talk about leveraged buy-outs, but this is a leveraged environmental deal. A company that has been one of the biggest opponents of doing something about global warming is now a company that’s gonna publicly support federal laws to control global warming emissions. And a company that was one of the biggest proponents of building these old-fashioned coal-fire power plants is now turning away from that and is embracing efficiency and renewals as part of their core business strategy. Those are big changes and they’re gonna have ripple effects. As I said to somebody else, you know, this is a huge domino that’s fallen. And it fell in Texas, but the shock waves are gonna be felt in . . . from Washington to Wall Street.
RYSSDAL: David Hawkins is the director of the climate center at the Natural Resources Defense Council in Washington, D.C. Mr. Hawkins, thanks for your time.
RYSSDAL: Great Kai. It’s been nice to talk to you.
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