Whole Foods vs. Canadian Oil Sands: Proposed "Boycott" Fails in Just About Every Way

The great U.S. retailer anti-oil sands movement of 2010 is only a week old and already one of its soldiers -- Bed Bath & Beyond (BBBY) -- has retreated. This wouldn't mean much if retailers boycotting Canadian oil sands stood in the hundreds. But since there were only two to begin with, this means that only Whole Foods (WFMI) has decided to stay and fight another day. Go team.

To much fanfare last week, the environmental group Forest Ethics announced that both Bed Bath & Beyond and Whole Foods would stop buying transportation fuel linked to Canada's oil sands.

Canada has an estimated 178 billion barrels of proven oil reserves. Problem is extracting it from the oil sands -- a murky mix of 10 percent bitumen and 90 percent sand, clay and water -- is an environmentally messy endeavor. Heavily forested areas must be scraped clean just to get to the oil. And once it's mined and the bitumen is stripped from the sand, water used in the process is discharged into tailing ponds, which creates a whole other environmental problem.

Forest Ethics launched a U.S. Tar Sands campaign last July and sent letters to more than 100 Fortune 500 companies warning them that continued use of transportation and fuels linked to Canada's oil sands industry put their brands at risk.

Turns out, though, that boycotting oil sands also puts your brand at risk. Just one day after the big announcement BB&B distanced itself from the boycott. Alberta consumers and businesses called for a boycott of BB&B stores in the province in response to the attack on oil sands, the Globe and Mail reported.

Bed Bath & Beyond has not rejected or otherwise banned our third-party transportation providers from using fuels from Canadian tar sands, the company said in a release as it backed off of the "boycott."

However noble the Whole Foods effort is, it's not a boycott. Whole Foods will still use Alberta oil sands to fuel its trucks in the Rocky Mountain region because no alternative is available, a company spokeswoman told The Star.

Let's pretend they actually managed not to use any fuel derived from the oil sands. Does a one-retailer boycott even work in a country where our No. 1 source for crude is Canada?

It certainly works for Whole Foods' crunchy image even though the company will still technically use some of the problematic oil. And it did prompt Canada's federal environment minister Jim Prentice to call it "a wake-up call for oil sands producers." To do what exactly? Prentice added this little gem: Better communicate the environmental progress made by the strategically vital oil sands industry, of course.

So, the one-retailer boycott has improved Whole Foods' image without it actually having to forgo the use of oil sands and has sent a message to the industry to improve its public relations campaign. It has yet to come close to putting real pressure on the industry to actually clean up its environmental act.

The industry is already preparing for the possibility of a real threat from U.S. businesses and government policies that would reduce use of oil sands: They're looking east to China. PetroChina recently acquired a majority share in two oil sands projects -- an investment that required Canadian government approval. "There will definitely be more," Prime Minister Stephen Harper told the Guardian

Oil sands operations in Canada by Flickr user species snob, CC 2.0