Enron looked profitable when it compartmentalized and hid its losses. Do you compartmentalize and hide your pollution?
I just had lunchÂ with a man who described himself as fanatical about theÂ environment–in particular, about water bottles. He illustrated by describingÂ how fastidiously he handled them.
As he started his story, I expected him to describe howÂ he never used water bottles. Americans have such clean and drinkable water thatÂ waterÂ madeÂ unclean makes front page news for weeks.Â Specifically, he lives near Manhattan, and our waterÂ winsÂ blind taste tests with consumers. TheÂ EPA finds it meets or exceeds all safety requirements.
IÂ figured he knew thatÂ 91% of plastic isn’t recycled, and that for the garbage you create,Â 70 times more was produced upstream.
So I presumed he would describe how he never used these harmful, useless, polluting things.
Instead, heÂ described how he made sure when he traveled, he would bring all the water bottles he bought back home with him. He said this ensured they would end up recycled, not thrown away.
He gets multiple bottles of water daily. He doesn’t need a single one of them.
He’s living in a dream world.
He certainly hasn’t watched theÂ Story of Bottled Water:
Moreover, heÂ travels by plane, monthly or more from the sound of it.
His idea of environmentalism is to compartmentalizeÂ plastic and flying,Â then removingÂ them from his awareness. Let’s look at Enron to see why I call this practiceÂ Enron Environmentalism.
How to be profitable, Enron style
Any company can appear profitable, Enron style. Here’s how:
- Divide your company into parts
- Put all your losses into some parts
- Don’t count those parts
- Tell the world only about your profits
For bigger effect, say your profitsÂ are bigger than they are.
How to be an Enron Environmentalist
This man’s environmentalism followed Enron’s tactics perfectly. He
- Divided his life into parts
- Put his pollution into some parts
- Didn’t count those parts
- Told the world about his efforts to recycle
He also said the recycling was more effective than it was.
The problem with Enron Environmentalism
Regulators and prosecutors found some of what Enron did, but not all.
You may think you have a good accountant. No one accounts like nature.
Nature never ever loses track of one molecule of pollution.
Not one calorie of wasted energy.
Not oneÂ species’ extinction.
You can twist your mind into any contortion to believe you don’t pollute, but nature reacts to yourÂ behavior, not yourÂ beliefs, no matter how much you want to believe.
Sadly, if you believe you don’t pollute, or somehow that by recycling waste that you create unnecessarily, you’re liable to pollute more. I wonder if he believes, “I”m so clean with these bottles, I can fly all I want and I’m still clean.”
From nature’s perspective–the one that matters for the air, land, and water we share–this man firstÂ pollutedÂ by buying the bottles (also creating demand for more with his cash), then inefficiently undidÂ 9% of the waste, telling himself he was undoing something like 100% of it, and likely pollutedÂ more elsewhere in life.
Enron Environmentalists feel about themselves howÂ Wikipedia described Enron:
Enron was named “America’s Most Innovative Company” by the magazineÂ FortuneÂ for six consecutive years, from 1996 to 2001.Â It was on theÂ Fortune‘s “100 Best Companies to Work for in America” list during 2000, and had offices that were stunning in their opulence. Enron was hailed by many, including labor and the workforce, as an overall great company, praised for its large long-term pensions, benefits for its workers and extremely effective management until the exposure of its corporate fraud.
Unfortunately for those grounded in reality:
Enron used a variety of deceptive, bewildering, and fraudulent accounting practices and tactics to cover its fraud in reporting Enron’s financial information. Special Purpose Entities were created to mask significant liabilities from Enron’s financial statements. These entities made Enron seem more profitable than it actually was.
What’s the problem? We don’t have to report pollution.
Enron broke accounting laws. Enron Environmentalists aren’t breaking laws. What’s the problem?
We in the Inc. community care about leadership. Business leaders don’t succeed through deluding themselves or others.
If you don’t care about your effects on others, maybe you only care about the law. For people who care about how they affect others, their actions matter. Enron Environmentalists care about how they affectÂ others, or claim to, so their values are relevant.
Ken Lay and his peers looked happy for a while. But Vince Lombardi’s words about winning apply to leadership and living well better than any other I know of:
Winning is not a sometime thing; it’s an all the time thing. You don’t win once in a while; you don’t do things right once in a while; you do them right all of the time. Winning is a habit. Unfortunately, so is losing.
Hiding your losses or pollutionÂ undermines your integrity. Even if no one else knows, no matter your mental gymnastics, knowing thatÂ you’re not livingÂ byÂ your values when you couldÂ eats away at you.
You have to do internally what Enron’s officers did to maintain your identity to yourself.
created a dangerous spiral in which, each quarter, corporate officers would have to perform more and more financial deception to create the illusion of billions of dollars in profit while the company was actually losing money.
That’s on a personal level, which is enough for me.
On a physical level, the world and all future generations have to live with your pollution, just as many Enron workers lost everything.
WhyÂ avoid being an Enron Environmentalist?
Knowing your values and living by them may sound challenging, but the result is glorious. Vince Lombardi again describes the results of living with integrity. He describes it in football terms, but you can translate it into your life:
I’ve never known a man worth his salt who in the long run, deep down in his heart, didn’t appreciate the grind, the discipline. There is something in good men that really yearns for discipline and the harsh reality of head to head combat.
I don’t say these things because I believe in the ‘brute’ nature of men or that men must be brutalized to be combative. I believe in God, and I believe in human decency. But I firmly believe that any man’s finest hour — his greatest fulfillment to all he holds dear — is that moment when he has worked his heart out in a good cause and lies exhausted on the field of battle – victorious.
How to avoid being an Enron Environmentalist
I’ll close with a link to my podcast,Â Leadership and the Environment, which features guests examining their environmental values, taking on personal challenges to act on them, and then returning for second visits to share their stories.
They share their struggles and triumphs. Most of them end by saying, “That challenge was hard but I’m glad I did it. I wish I had done it before,” then look for more ways to live by their values more.
They’re on their way to fulfilling what they hold dear, showing that we all can.