I must have done something wrong to someone today because I feel like I’m in some kind of surreal dream. The day started well with a great event hosted by Xerox in Dallas, talking sustainability with some leaders in the field. Then I ended up in two bizarre conversations during my travels home. This post is my personal therapy session to work it out.

First scene: In a car to the airport with a senior exec from IBM who basically leads the company’s very successful “Smarter Planet” projects with customers (helping companies and cities with traffic flow, water management, carbon reduction, etc, etc).

The car service had provided us Ford Excursion -- from a sustainability event -- so that should’ve been my first tip on something being awry in the universe. Anyway, my colleague and I are talking about green, climate, the inexplicable vitriol and anger of climate deniers, Al Gore, etc. And the driver looks in the rear-view mirror and intiaties this conversation.

Driver: (Laughing): You guys don’t believe this climate hoax do you?
Me: (Also laughing) Are you kidding? You’re kidding right?
Driver: No, you know, it's a hoax
Me: (Not laughing) Why do you think that?
Driver: There’s no evidence.
Me: Actually there’s massive evidence, decades of it in fact [see a cool video on the basics of the incontrovertible science and physics of it all here...]
Driver: (Arrogantly) What about those climate emails? Those didn’t happen?
Me: Yes, they happened, but they didn’t disprove the decades of science.
Driver: They falsified records
Me: Actually they didn’t. You should read some of the emails – they didn’t falsify records at all.

End scene.

I really had to wonder what kind of small, tiny bubble of friends and media consumption you have to live in to find it astonishing to meet people who believe the 95% of scientists that see climate change as a real problem. Disagreeing with that view is one thing, but laughing at people like they’re aliens is another and shows me just how divided we've become where we can surround ourselves with echo chambers...

On to conversation #2…

I’m minding my own business on my flight home and right when we’re getting ready to land (I almost made it), my seat-mate decides to strike up a conversation (it’s always dangerous when they make you turn off electronics – so much silence to fill). Here’s conversation #2.

Guy on Plane (I’ll shorten that to GOP): What do you do?
Me: Work with companies on environmental issues, speak, write, consult, helping them with green business strategy (ya da ya da)
GOP: You mean recycling? (my first clue this was not going to go well most likely)
Me: No, a whole range of things from product development and innovation to c-level strategy to executive education and training…what do you do?
GOP: I’m in the energy business. Private equity investments.
Me: Oh, what kind?
GOP: Oil, gas, coal – really diversified
Me: No renewables investments?
GOP: No, we don’t invest in things that need government subsidies. Wind and solar and such are so uneconomic. [here’s where I want to point to an article I just saw today about governments spending $500 billion on fossil fuel subsidies]
Me: Huh.
GOP: We do some work educating. We have a site, plantsneedCO2. We educate government people on what CO2 is. [It’s here where I discovered that at 10pm after a long day I didn’t even have the energy to ask, “oh, what does CO2 do?” – but check out the site. It’s real and informs us that we need MORE CO2 not less.]

The conversation went on, but that’s about all I can stomach to convey. I seem to have run out of steam to have a discussion with people who are this far gone. Bring on legitimate debate about what to do about the challenges we all face, or about the right policies and government action (or whether government or markets alone should do it). But people like this cannot have a real conversation. I just wonder what I did to deserve running into two in short order.

Thanks for listening. Deep breaths.
Onward...

There's a funny story in the New York Times today about Arizonans getting upset about the state shutting down highway rest stops. Arizona has a serious budget gap to fill, like most states.

This is what smaller government looks like on the ground. You can't fund anything that people have come to expect with no tax revenue. The Tea Party movement doesn't seem to understand this basic fact.

But my favorite part of this story is the woman who thinks there's something sinister going on.

Betty L. Roberts, who lives in Sun City, west of Phoenix, said the topic was a hot one among her friends. "I honestly think they are setting us up because they want to do a tax increase," Ms. Roberts said. "I think by shutting down things people want, they will give us one."

So that sneaky government is showing that it's out of money by, you know, not doing things that people need or want. So clever.

The Tea Party doesn't seem to get that "government" actually covers an amazing range of things that you want -- roads, police, firemen, hospitals, schools, consumer protections, environmental protection, and on and on. Oh, and libraries.

My favorite story in the last week or two was Glenn Beck at the CPAC conference talking about the evils of progressivism and how he educated himself at public libraries for free. He didn't seem to research the fact that public libraries were one of the main successes of the Progressive Movement over a hundred years ago. A great op-ed on this in my local paper here.

Nobody can say for sure what the right size of government is. Should government lead the charge on issues like health care and obesity, or is it just an issue of personal responsibility? Should government put a price on carbon to tackle pollution and climate change, or let the (somewhat) free market decide on its own? These are truly legitimate debates.

But it would help if we had a true understanding of what government actually does before we start screaming about shrinking it.

Every year, major sporting events get greener and the goals for renewable energy use, carbon-neutrality, or zero-waste get tougher. The Vancouver Olympics which just ended featured a large range of greening activities; the sustainability staff worked on them for years, producing sustainability reports as far back as 2007. In their bids for the 2016 Olympics, not only did Chicago describe its games as "low-carbon", but Tokyo actually claimed its event would be carbon-negative. As a special advisor to U.S. Soccer's bid for the FIFA World Cup in 2018 or 2022, I can tell you that there will be some tough goals in place for that event as well, should we win the bid.

In addition to the event committees themselves, what I find fascinating is how big, corporate-level sponsors are increasingly bringing their own sustainability agendas to the table as well.

It's smart, because if you're a sponsor, helping to green big events serves a number of purposes.

First, and most obviously, it's a great way to demonstrate your green bona fides, build your brand, and sell new products. There's no bigger or more passionate audience than live and TV-viewing sports fans. For a World Cup, for example, U.S. Soccer expects roughly five million fans through the gates, another ten million at fan "fests" nearby, and a cumulative audience of nearly 26 billion (multiple views for each of billions of fans, obviously) watching around the world. So of course companies fight to get these coveted spots and use them. For example, in 2008, GE leveraged the Beijing Olympics as a way to demonstrate its ecomagination portfolio.

But second, and perhaps more importantly, these events serve as a testing ground for new products, processes, and ways of doing business. Right before the games, Coke announced its aggressive targets for Vancouver — zero-waste and carbon-neutrality. The tactics behind these goals include employing new refrigerants to eliminate greenhouse gas emissions, deploying hybrid delivery fleets, the use of Coke's new "PlantBottle," and the purchase of carbon offsets as a matter of course.

It's not just the Olympics. At the PGA Phoenix Open (which also just ended), sponsor Waste Management is using the opportunity to try some new waste reduction and management techniques, including moving toward a zero-waste goal, introducing Solar Compactors, and installing "reverse" vending machines that collect recyclables. (Full disclosure: Waste Management hired me to speak at a dinner at this event -- more on that trip later.)

While cynics will say it's just grandstanding by these big brands, I actually do see real action and serious learning going on. Only with live tests like these can Coke learn, for example, how consumers react to a new bottle or whether low-GHG refrigerants perform as expected in the field. These events are pilot projects — they're circumscribed in time and space and allow new thinking and action on a controllable scale.

These efforts offer a great lesson for all companies. Any organization can try green initiatives out in a single office building or at a single corporate event (Earth Day events are the most obvious, but anything will do: a "fun run", fundraiser, etc.). Not all new ideas will work, so look for project opportunities of moderate scale — and sponsoring an external or internal event is a good place to start — and build from there.

(This post originally appeared in an earlier form on Harvard Business Online)

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Reality 1: Last year, the Toyota Prius was the bestselling car in Japan. On the back of innovations like the hybrid gas-electric engine, Toyota also became the largest car seller in the world by volume. Toyota is clearly the best, most forward-thinking auto company.

Reality 2: During the same period, a number of Toyota models developed (or exposed) a serious quality problem that has caused deaths and led to one of the largest recalls in product history. In its delayed response, Toyota has not won any prizes for openness and customer care. Furthermore its line of trucks took a huge hit when the auto industry collapsed. Toyota is clearly the worst, most slow-moving auto company.

F. Scott Fitzgerald once said that it takes "a first-rate intelligence...to hold two opposing ideas in the mind...and still retain the ability to function." But how can Toyota still be one of the best companies in the world and still make horrendous life-threatening mistakes?

In the green/sustainable business realm, this dichotomy is actually not so unusual. Wal-Mart is arguably the most important company in the greening realm, with its aggressive actions to reduce its own — and all its suppliers' — environmental impacts. But, according to a large segment of the population, it's also a force for thoughtless consumption and low-price-above-all. A consumer survey last year proved the point: Wal-Mart topped the list of most sustainable companies, and sat atop the list of the least sustainable as well.

Toyota itself has for years been prompting head-scratching about how green it really is. At the same time that the Prius was rising in popularity and winning the company accolades for a good chunk of the 2000s, Toyota was also embracing a big vehicle strategy and focusing sales efforts on its giant Tundra truck. Most pundits agree that Toyota's quality and revenue problems stem from trying to grow too fast — partially by putting a big push behind the Tundra. By pursuing truck sales, Toyota grew, but it also found itself in the same whirlpool of anti-big vehicle sentiment when oil prices peaked in 2008.

But it's not just that Toyota grew too fast. Comparing figures from the first eight months of 2008 vs. the previous year, it's clear that Detroit was already hemorrhaging sales before the economic collapse because they had missed the green wave. Meanwhile, Detroit's Japanese competitors, with their more energy-efficient, greener product portfolios, were selling more vehicles year over year. Toyota's results were right in the middle because it was trying to be all things. It was trying to be smart — to maintain two opposing strategies at once.

This kind of integrative thinking is a skill all modern leaders will need (see an interesting piece on this opposing-views idea and President Obama). Holding opposing views can lead to innovative ideas, and we desperately need radical innovation, or what I call "heretical" innovation, to solve our environmental ills.

For example, we can't forget that when Toyota asked why cars couldn't have solid power, good midsize interior space, nice design, and get better gas mileage, it was on to one of the most important innovations of our time — even if today the Prius is getting caught up in the quality concerns as well. As has been already argued, we shouldn't use the Toyota saga as a warning against innovative thinking. Instead we should look more closely at where their strategy worked, and where it failed.

What matters is holding the right kind of opposing views, because not all of them are safe or sustainable. As the wise Mr. Miyagi once told Daniel-san, "Walk on road, hm? Walk left side, safe. Walk right side, safe. Walk middle, sooner or later get squish just like grape." Pursuing leadership in lean manufacturing and design while at the same time trying to grow at all costs has badly damaged Toyota.

Sustainable growth, the kind that isn't going to get squished, is found by using the kind of integrative thinking that allows us to provide goods and services that are the same or better and also to use drastically less stuff: that's heretical, and involves the right kind of opposing views to try and hold in your mind. But where Toyota got in trouble with integrative thinking was when it combined sustainable growth in one part of its portfolio with uncontrolled, unsustainable growth in another, exposing it to the very risk its Prius strategy sought to mitigate.

No matter how green your company is elsewhere, that kind of unthinking growth is not a worthy or, it turns out, a profitable pursuit.

[This post appeared first on HBR]

What do you call a group that uses large snowstorms to deride the scientific evidence for climate change? Fox News I guess.

The absurdity of pointing out that there's snow in the winter -- in one part of the world mind you -- and using that to say that climate change is a hoax is breathtaking.

Especially when, at the same time, Vancouver is shipping in snow for the Olympics...you see, some places get more snow, some get less. That's weather, not climate.

Anyway, if you don't laugh, you cry. Only comedy can do justice to this insane line of logic.

The Daily Show points out that it's hot in Australia...

...and Colbert make the logical extension that when it's dark, the sun must have been destroyed.

The Superbowl ads this year were fairly mediocre, on top of often being oddly dated and consistently anti-women. But one ad is getting a lot of discussion/attention in the green world: The Audi ad about the Green Police.

If you didn't see it, it depicts a new police force arresting people for choosing plastic bags at the supermarket or setting their jacuzzis at too high a temperature. Then a driver of an Audi "clean diesel" is waved right through an eco road block.

Was it funny? Yes (it's hard not to laugh when the eco-police, on their Segway's, ask a real policeman to "step out of the car" for drinking out of a styrofoam cup).

But was it also cringe-worthy? Yes. The ad really plays on all the worst stereotypes about how going green is hard and how you'll be judged. The redeeming quality is that the person doing the 'right' thing, the driver, gets a free pass.

But in terms of promoting green consumer choices, does Audi help the movement (and its own product) or hurt it?

What do you think?

It's been a couple months since the global climate negotiations in Copenhagen. Whether you're a fan of a global cap on carbon emissions or not, it's important to think about what COP15's failure means (that a global agreement is going to be unlikely in the near term) and what it doesn't mean for business (that companies will be off the hook for tackling carbon emissions).

The climate negotiations brought together committed activists and world leaders, but led almost nowhere; instead, the gathering only highlighted and revealed some major structural hurdles getting in the way of a multinational agreement.

So it might seem that near-term regulatory or policy pressure on companies is unlikely. But actually there are some significant sub-national initiatives affecting business as usual that every company should know about. The pressure to measure, be transparent about, and reduce carbon is still on.

First, even without a global carbon trading system, other major multinational cap-and-trade systems are in place or in the works, including the EU's trading program, which has already been running for a few years. In North America, three separate carbon trading programs are in the process of setting regional caps covering states that include half the U.S. population (and provinces with three-quarters of Canada's). And city-level initiatives like the Mayors' Climate Protection Agreement are driving new local rules and fomenting competition among municipalities to cut emissions.

Second, within the U.S., the Environmental Protection Agency is not sitting idly by either. The series of climate-related rules that the powerful EPA has announced in the last year began with the National Climate Reporting Plan, which forces the largest 10,000 facilities in the country to measure and report their carbon emissions. This new system has much in common with the Toxics Release Inventory (TRI), a very public, and mandatory, database of toxic pollution by facility mandated by the federal government in the 1980s. TRI raised awareness within companies about their own footprints and drove aggressive efforts to reduce toxic pollution (along with cost and risk) that continue to this day. The same awakening about the carbon pollution companies cause -- and the financial costs of this form of waste -- even without an agreement from Copenhagen..

Going well beyond the regulated transparency of the reporting plan, the EPA recently declared greenhouse gases a public health threat. After a 2007 Supreme Court ruling that basically said CO2 could be regulated, the EPA's "endangerment finding" was no surprise. What's still unknown is what it will mean for business.

So far, virtually all the action -- from the regional trading schemes to new EPA rules -- has been aimed mainly at utilities and the biggest factories. What does all this activity mean for the average company?

The caps and efforts to reduce utility emissions could result in higher energy prices. Any business that, well, uses electricity will be affected. And the EPA's intentions for the longer term, while up in the air, are getting clearer. There is almost no chance that forced transparency for the big guys is the end of what the EPA will do. One glimmer of what will come: rules newly proposed in 2009 (in conjunction with the Department of Transportation) to reduce emissions from light-duty vehicles.

The bottom line is that business must still plan for rising restrictions on greenhouse gases by legislative means or by regulation. Despite the confounded state of international climate policy negotiations, companies will continue to face new mandates to measure, report, and reduce their carbon emissions.

[This post originally appeared on Harvard Business Review]

[A post from December from Harvard Business that i forgot to post here...but it's still timely!]

No matter what happens in Copenhagen, or in the follow up meetings in Mexico and elsewhere, the world is warming. It's happening today, and even the majority of skeptics seem to agree on that point (often the debate is whether humans are behind it and how much money we should invest in "fixing" the problem). But the very real changes we're already seeing are prompting many in the climate-watching world to talk about not just reductions in emissions but "adaptation."

What used to be seen as a dirty and defeatist word is now a central discussion point, even in Copenhagen. The G77 (the developing world) is demanding significant aid from the rich countries not to help them combat climate change, but to help them adapt to it. Just a couple weeks ago, President Obama said he sensed some consensus around mobilizing "$10 billion a year by 2012 to support adaptation and mitigation in developing countries."

Given the cold reality of a warming planet, adaptation is now a strategic issue for countries and companies alike (whether or not they realize it). The changing climate can mean many things, but includes, according to an important report from the state of California, threats to ocean and coastal resources and land, water management challenges, major changes to agriculture, and stress on transportation and energy infrastructure. In California alone, $2.5 trillion of assets will be exposed to extreme weather and wildfires, costing many billions a year.

For companies the same basic issues apply. Specific industries, such as agriculture, face massive change. But all companies will find impacts up and down their value chains from weather, changing water availability, and temperature shifts. But just laying out doom scenarios and risks doesn't help much. So let's look at a couple of excellent (and short) reports on adaptation and business.

Some big institutional investors, with the guidance of the consultant Acclimatise, recently released "Managing the Unavoidable" (register for free to download it here or get the similar 2008 report on similar topic here). A few key findings struck me as dead on and important:

1. Climate change adaptation is starting to receive more management attention but management systems and processes are much less developed than those for climate change mitigation. Basically, most companies are not thinking about this, with a few exceptions — Coke comes to mind since it's been mapping water availability for years. But they are in the minority.

2. There appear to be significant weaknesses in companies' risk assessment processes. They say that "incremental changes are being under-emphasized" (we all focus on extreme weather events rather than 'creeping' changes) and "indirect impacts on business models are being neglected" (we focus on risks to our own fixed assets and haven't looked at supply chain disruptions). Meaning, even if you don't think you rely on water in an arid region, someone in your supply chain might.

3. Companies are more concerned about risks than opportunities. While it may seem cold to talk about how to profit from a warming planet, it's a reality that there will be winners in this. More importantly, we actually need companies to pursue solutions to greatly reduce human misery. And, yes, there will be profits.

And this brings me to the second report that's worth a look. "The New Adaptation Marketplace" from global NGO Oxfam lays out some helpful categories and sample companies that stand to profit from the changes to come. These include, water management (Pentair, Siemens), energy supply (GE), insurance (Swiss Re), climate change information and consulting services (ICF International), and of course agriculture projects (CH2M Hill).

On the last one, consider one of my clients, Bayer, which has a sizable crop sciences business. In its last annual report, Bayer identified drought-tolerant plants as a major investment opportunity. Clearly, the world needs to keep food volumes growing, even on a dryer, warmer planet. The companies that can solve this kind of problem will grow and win share.

Or think of the more extreme needs that might arise and the entrepreneurial opportunities. As some smart people have pointed out, cutting carbon won't be enough — we'll need to drag it out of the sky. Imagine what new technologies we'll need to do that.

From my conversations with Oxfam, clients, and other corporations, I can tell you that most organizations — including ones that already have products that will help with adaptation — are not yet thinking clearly about the risks and opportunities from climate change. Are you?

Happy New Year all (ok, I'm a bit delayed, but I entered the new year and promptly got really sick -- lost over a week in there). So let's start fresh now!

Anyway, I took a bit of time at the end of 2009 and early 2010, with a couple weeks' perspective, to think about the stories that really grabbed me in 2009. The top 10 is below, but see my brief write-ups and logic on each at my e-letter site here.

1) Copenhagen fails…or does it?
2) The debate over climate science rages on (in the U.S. at least)
3) The EPA steps in
4) Wal-Mart keeps the pressure up (and saves the rainforest?)
5) Domino's employees deliver a new kind of openness.
6) IBM starts building a "smarter planet"
7) GM goes bankrupt
8) Some of our biggest capitalists get serious about carbon
9) China emerges as a green tech leader…and the world's biggest emitter
10) The bottom of the pyramid becomes a source of innovation

And the bonus, theater of the absurd, wacky story...
10 1/2) Forbes names Exxon green company of the year

The big global meeting wrapping up today in Copenhagen (called COP15) is all about reducing carbon emissions in order to combat climate change. But is climate change the only reason your business should reduce energy use and carbon emissions? Hardly.

But first, let's get out of the way the "scandal" about hacked emails from climate scientists, a story which threatens to overshadow the conference in the media.

I'll be clear and say that many of the most respected scientific communities in the world have come out with strong statements that say the following: nothing in the emails truly undermines the vast, overwhelming evidence from a huge range of sources that the Earth is warming and humans are causing it. See the American Association for the Advancement of Science (AAAS), the American Meteorological Society, the Intergovernmental Panel on Climate Change, NASA, and Nature magazine.

But for business, the science of climate change doesn't matter as much as many want you to believe. Because while climate change and the outcome of Copenhagen are vitally important to society and may change business as usual dramatically, there are actually many non-climate-change reasons why your company should seek to reduce carbon emissions. In other words, you should be doing this stuff already — Copenhagen treaty, email scandals, or no. Because by reducing carbon emissions, you can:

1. Save money now. Energy costs money. Leaner, more efficient companies and countries are more profitable. Companies are finding amazing, head-slappingly easy ways to cut back in areas like facilities (heating/cooling, lighting), fleet, and IT...all with paybacks in terms of months not years (there's more on this in my book Green Recovery).

2. Save money later. One of the beefs with "going green" is that some of the high profile actions, particularly using renewable energy, cost more money (not the initiatives I mentioned above — those save money fast). But on the macro level, consider this...renewable energy is a business model with effectively zero variable cost — your feedstock is free. While the payback periods in some regions seem long, they do pay back, and then your operating costs are permanently lower.

3. Reduce risk. The availability of resources such as water and oil is a serious concern. As demand grows in the developing world, supply will not easily keep pace. Expect expensive, unpredictable, oil prices in particular. So why have your value chain depend on volatilely-priced resources?

4. Answer pressing customer questions. If anyone thinks the "greening of the supply chain" movement is slowing down, they're kidding themselves. Wal-Mart is the lead dog, but many other big companies in other value chains are asking tough questions as well, in particular about carbon. And the best answer wins — more shelf space, more mind space, more money.

5. Attract and retain the best people. Even though unemployment is high right now, over the long term, the battle for good talent is still waging and will get worse. The next generation of workers cares about green and sees no trade-off between financial success and corporate social responsibility.

6. Drive innovation. Constraints are the mother of invention. Need to deliver your product or service with drastically less energy, toxicity, water, and other resource use? Then you better get thinking.

In addition, at the macro level, decoupling our economy and growth from carbon, and particularly oil, will...

7. Keep us safe. The U.S. sends over half a trillion dollars annually to parts of the world that fund extremism and terror. We put our troops at risk defending oil, and more will be at risk as climate change destabilizes regions and creates climate refugees. (Okay, so this point does have something to do with climate change.) See the American Security Project reports — from a group of distinguished former admirals and generals — which describe how climate change is a "threat multiplier."

8. Make the U.S. more competitive. We're losing the race to the clean energy future to China, Germany, and others. The pursuit of new technologies, a new grid, massive installations of new energy will create new jobs and invigorate the country.

These reasons have little to do with the science of climate change. Unfortunately, the focus on eliminating CO2 as being solely about battling climate change has been misplaced, both from the environmental community and from the contrarian/skeptical community (such as the authors of Superfreakonomics). The business logic, instead, is compelling and unavoidable: all businesses must get much leaner on energy and carbon — for their own competitive advantage and survival. Get started now to be more profitable no matter what happens in the policy world.

[This appeared first on Harvard Business online]

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