A couple of years after former Sierra Club President Adam Werbach founded ActNow, a sustainable business consultancy, he signed up Walmart as a client. This brought Werbach considerable notoriety in eco-activist circles. Walmart’s record of environmental responsibility had previously been spotty, to put it mildly. Werbach retorted to his critics that Walmart, with almost two million employees and 127 million customer visits per week, had the potential to do far more to save the world than the Sierra Club ever had.
I had the opportunity to visit Werbach’s company (now named Saatchi S) in San Francisco and attend a staff meeting. The participants sat on the floor and passed around a plate of organic banana bread. Yet despite the trappings of informality, the conversation had a focus, drive and ingenuity about it that I had rarely experienced in the non-profit world. The Saatchi staff certainly looked like the young, idealistic types whom I knew from environmental NGOs. But dropping a profit incentive into the motivational mix seemed to release a different level of creative zing.
Subsequent encounters with other leaders of cutting edge green companies strengthened this sense of the potency in marrying idealism with the scale and dynamism of the business world. Jonathan Rose, CEO of a large US sustainable urban development consultancy, Arnold Goldman founder of Brightsource Energy and Yosef Abramowitz of the Arava Power Company all combine strong ethical vision with a rigorous ambition to build successful businesses that will help solve large, real-world challenges.
Two valuable recent books have helped expand and sharpen my understanding of the potential for green business to do good while doing well, and also its limitations.
First, the Harvard Business Review on Green Business Strategy brings together the best articles on the subject from HBR’s archives over the past decade. They cover areas such as “What Every Executive Needs to Know About Global Warming,” through analyses of developments in green building and international sustainable business strategy, and “How to Maintain Competitive Advantage on a Warming Planet.”
The essays concisely survey the main areas of impact and opportunity with which climate change confronts business, including dealing with regulatory policies frameworks (e.g. cap and trade), developing climate friendly products and technologies, reputational factors, impacts on the company’s supply chain and liability to litigation or to direct physical damage.
Several of the authors confront the issue of greenwashing versus real change, coming down unanimously in favor of the business benefits of moving towards genuine, long term sustainability.
The book includes Amory Lovins, Hunter Lovins and Paul Hawken’s seminal 1999 essay “A Roadmap for Natural Capitalism,” and is worth buying for that article alone.
The authors lay out four guiding principles for transforming our modes of economic production that are both visionary and practical: dramatically improve the productivity of natural resources; shift to biologically inspired modes of production; move to a solutions based business model (as opposed to an product ownership based model, e.g. provide floor-covering services rather than sell carpets) and reinvest in natural capital.
They persuasively show the huge energy and resource saving potential in innovative design across large areas of today’s economy (“Only 1 percent of the energy consumed by today’s cars in actually used to move the driver: only 15 to 20 percent of the power generated by burning gasoline reaches the wheels and 95 percent of the resulting propulsion moves the car, not the driver.” Good morning Detroit.) The article is a powerful argument on grounds of ethics, aesthetics, efficiency and profitability for embedding industrial production into the naturally sustainable systems of the physical world.
The book International Business and Global Climate Change has a narrower focus.
Pinkse and Kolk, both professors at Amsterdam Business School, give an impressively detailed account of the dilemmas and opportunities that climate change poses for large companies.
They focus on two areas: compliance with national and international regulatory frameworks and developing innovative technologies and capabilities. On the way Pinkse and Kolk cover the economics of carbon mitigation, a comprehensive history of carbon emission regulation and an unsparing analysis of the strengths and failures of the frameworks currently in place.
They show, for example, how the European Union’s Emissions Trading Scheme over-allocated emissions permits which utilities then sold for huge profits. And they show how the United Nation’s Clean Development Mechanism’s credits ended up going overwhelmingly to projects reducing emissions from an obscure, but highly potent greenhouse gas called HFC-23 that could be mitigated using a cheap, readily available end-of-pipe technology. The scheme therefore did almost nothing to stimulate clean technology innovation as its creators had envisioned it would.
Pinske and Kokse’s book, though scholarly and comprehensive is written in the impeccable but lifeless English prose at which Northern European academics seem to excel.
If you are either a policy maker designing a greenhouse gas regulatory framework, or a senior business executive figuring out how to comply with (or exploit) such a system, the book is a must-read. If you are anyone else, you’ll probably find the style and density off-putting.
The Harvard Business Review work, though less detailed, is a much racier read, employing that business school’s trademark case-study approach to illustrate the messy real-world complexity of transitioning toward sustainable business methods.
A common message that emerges from both works is that business needs a coherent, credible, predictable and global framework for carbon emissions mitigation if it is going to go green on a large scale.
The current chaotic patchwork of voluntary and mandatory, short and medium term, local and international schemes inhibits many companies from making major long-range investments in clean technologies.
Business cannot create this framework; it is a task for governments and intergovernmental bodies, chivied along by civil society: NGO’s, the media, religious groups and businesses themselves. December’s climate summit in Copenhagen is expected to take a crucial step down this road.
As Arnold Goldman of Brightsource has written, green business is not a new invention. He points out that according to the Talmud, the first question each of us will each be asked on judgment day (before any enquiries about our “religious” life) is “Did you do business b’emunah” – faithfully or honestly (Shabbat, 31a.) Business b’emunah surely requires not raping the planet, not profiting from fleeting and destructive wants, but creating products that add real value to people’s life and to the life of the biosphere.