Green to Gold Archives

December 23, 2010

The Top 10 Green Business Stories of 2010

Here's my attempt to capture the most important stories that affected the greening of business in 2010. To keep this to blog length, it's going to be quick, so see the links for more on these stories.

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The first five are macro-level issues that affect the context for business:

1. The climate bill dies in the U.S. Senate. Any hope for a national approach to tackling the largest challenge facing humanity petered out pathetically this year (see the complete, sad tale in a Pulitzer-worthy New Yorker article). Unfortunately for every other country, this is a global story. When the U.S. can't get its act together, the world can't create global policies, and thus the Cancun meeting last week resulted in some nice agreements to raise funds for adaptation -- arranging the deck chairs on the Titanic, anyone? -- but no binding targets on carbon.

2. Nature strikes back/Climate change is real. Ironically, given the rising debate in the U.S. on the science, the world got hotter, a lot hotter, this decade and this year. Russia saw its worst drought in 1,000 years (video), and Pakistan was overcome by flooding (video). Scientists will always give the caveat that you cannot blame climate change for any single weather event, but let's get real - this is what devastating climate change looks like on the ground. These weather events also directly affect resource availability, bringing me to my next point...

3. Resources get very tight. The drought in Russia destroyed 40% of its wheat crop, so Putin pulled wheat -- 1/6 of the global trade in the crop -- off the global market, driving up wheat prices. The floods in Pakistan helped double the price of cotton. And I could write a book on the topic of rare earth metals, those precious elements that make nearly every green technology possible and go into every iPhone. China mines 95% of these metals, and it needs them all now, making the U.S. "vulnerable to rare earth shortages." We're also vulnerable on fossil fuels. We learned from the massive spill in the Gulf of Mexico that readily accessible oil is a thing of the past -- we don't dig one mile under the ocean for the heck of it. So most natural resources are getting more scarce, from oil to metals to crops. Smart companies like Hitachi are trying to find solutions, such as its new plan to develop rare earth recycling technologies.

4. China, China, China. Did I mention rare earth metals? Or the rise of the world's largest solar producer from a manufacturing base of nearly nothing a few years ago? Or how about China's unparalleled (and some would say illegal) support for its renewables companies, which has the World Trade Organization fretting about trade barriers? China is very serious about its green ambitions, with support from the very top, and the business community is taking note.

5. Renewables are for real and moving fast. Ok, there's some good news. The market for renewables is growing fast. About 45% of Portugal's electricity comes from renewables, and this is up from 18% in just five years. Germany, not really the sunniest country in the world, added 1% of its electric needs in solar in 2010 alone (it took 10 years to get the first 1% online, and just 8 months for the second 1%). No wonder HSBC says the market for clean tech and climate change solutions will top $2.2 trillion by 2020.

Now for the company-level stories:

6. Supply chain pressure continues to rise (a.k.a., Wal-Mart doesn't slow down). Even coming out of the recession, this was a big year for green supply chain announcements. In February, Wal-Mart said it would eliminate 20 million metric tons of GHG emissions from its supply chain. Then in October, the retail giant announced it would double the amount of locally-grown produce on its shelves (and former sustainability exec Matt Kistler indicated this year that products getting higher scores in its Sustainability Index would get more shelf space). We also saw big announcements from P&G and Kaiser Permanente on supplier scorecards, IBM greatly increasing its demands on suppliers, and Pepsi using detailed carbon lifecycle data to make suppliers rethink how they grow Tropicana oranges.

7. Zero is the new black. Companies seem to be tripping over themselves on the path to "zero waste." GM announced that 62 of its plants now send zero waste to landfill, and UK retailer Marks & Spencer reached a 92% diversion rate on the way to its zero goals. And Sony one-upped everyone by setting a goal of zero environmental impact across its operations by 2050.

8. Big goals were back. Recession-schmecession. Sony wasn't the only one setting aggressive targets. Panasonic said it wanted its GHG emissions to peak by 2018 and it would greatly increase sales of eco-products. Unilever has probably gone the furthest, announcing it would double sales by 2020, but halve total environmental impact (among other big goals). Unilever's leaders are serious about driving these plans into the operations of the whole company.

9. Electric vehicles storm the market. The Nissan LEAF was just named 2011 European Car of the Year, and GE announced it would buy 25,000 electric cars. Since the auto industry is one of the biggest in the world, there will be ripples from this movement. Enough said.

10. Small guys can do it too. It's easy to get caught up in the tales of giant companies. So one of my favorite stories of the year is a simple example of eco-efficiency and savings from 10-employee Bowman Design with just 2,000 square feet of office space in Southern California (where else?). See founder Tom Bowman's description of his company's path to a 65% reduction in GHG emissions and $9,000 savings annually (ok, I'll admit that I didn't mind that Tom name-checked my book Green to Gold in his article, but I don't know him).

11. (Bonus!) The Military gets serious about green. Honorable mention to the government and military, which is technically not "green business". But they're not kidding around, from plans to greatly reduce reliance on oil and diesel in Army operations, to Navy sustainability plans and test flights of planes running on biofuels. Go military green!

Looking Forward to 2011

No list would be complete without utterly over-confident predictions of the future. It's obvious that the pressures/themes above will continue to get stronger in the coming year. In particular, and in addition...

  • Supply chain pressure will evolve and get more sophisticated (such as retailers who said in August they would not buy fuel from Canadian oil sands). This shift will be partly driven by...
  • A data explosion around green is brewing. Companies will know more than ever about their impacts up and down the value chain.
  • Water will become a very big topic for business (it began this year, but there will be some great stories in my 2011 wrap up a year from now). My first couple of blogs of the New Year will look at water strategy.
  • Biomimicry, the design principle that suggests looking to nature for great ideas, will gain currency
  • Energy innovation will be the order of the day (e.g., the Paris metro station that captures body heat to warm a nearby building)
  • But here's my final, shocking prediction: climate change policy won't matter (much). Even though the failure of the bill was my #1 above, #2 through 10 tells me that for business, the logic of green does not depend on believing in climate change, or in having a law in place. The natural resource, supply chain, innovation, and profit drivers are just too strong.

    Business will be getting a lot greener in every sense of the word, no matter what political battles are waging. We're going to stop debating climate in the business community and just focus on the larger case for prosperity, for companies and countries alike.

    I'm sure I missed many, many great stories. Please share your favorites here, and have a merry green new year!

    (This post first appeared at Harvard Business Online.)

    (Sign up for Andrew Winston's blog, via RSS feed, or by email. Follow Andrew on Twitter @GreenAdvantage)

September 9, 2012

Politicians Who Deny Climate Change Cannot Be "Pro-Business"

It finally seems to be dawning on many Americans that there's something to this climate change thing. The historic drought has been hard to ignore. While belief in a long-term trend because it's hot out right now is a bit ridiculous, it's a start.

You can see a shift in how the media covers weather. The statement "because of climate change..." is often stated clearly without caveats such as, "what some scientists think may be a warming planet." You see it in the UN calling for action to help the hungry cope with rising food prices "in an age of increasing population, demand and climate change."

And you see it in the growing number of mega-corporations — including America's Alcoa, Coca-Cola, Cisco, HP, J&J, Nike, and P&G — signing on to the "2 Degree Challenge Communiqué," a call for the world's governments to take strong action to slow greenhouse gas emissions.

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Climate change is basically accepted as fact the world over. But you wouldn't know it watching our political conventions (or at least one of them). So while the world seems to be waking up to a fundamental, existential threat to our species (and not to "the planet," which will be fine with or without us), the US policy debate remains mostly deaf, dumb, and blind.

Climate change has become a political "third rail," harder to talk about than changing Social Security or Medicare. We didn't hear any mention of it at the GOP convention, except as a punchline, and we didn't hear much at the DNC convention...except for one quick, but important, remark from President Obama. Former President Clinton mentioned energy efficiency and Vice President Biden said the words "clean energy" once. But then President Obama, after duly noting the chance to create more natural gas jobs, spoke about building wind turbines and reducing dependence on foreign oil. Finally, he stepped firmly on the third rail: "Climate change is not a hoax. More droughts and floods and wildfires are not a joke; they are a threat to our children's future."

This is great, but let's not get too excited. One line does not a policy make.

Still, Obama's admission that climate change is real (a low bar for showing leadership these days) is light years from Governor Romney's dismissive attitude. His convention speech mocked President Obama for his earlier promise to "begin to slow the rise of the oceans." Romney offered instead to "help you and your family" — as if the health and state of our entire planet has nothing to do with the health of our families.

Here's what makes the general silence on climate and the mocking from the self-identified pro-business party so absurd: tackling climate change is the smartest thing we can do for both our public health and our private sector. Reducing carbon emissions from our power plants, cars, and factories cleans the air and saves a lot of money. At the macro level, the burning of coal alone costs the U.S. about $350 billion per year in health (asthma, heart attacks, and so on) and pollution costs. At the micro level, from companies down to households, the opportunities to get lean and save money are vast.

But more strategically, tackling carbon is an immense economic opportunity. Here's billionaire and entrepreneur Richard Branson on the upside potential:

"I've described increasing levels of greenhouse gases in the atmosphere as one of the greatest threats to the ongoing prosperity and sustainability of life on the planet. The good news is that creating businesses that will power our growth, and reduce our carbon output while protecting resources, is also the greatest wealth-generating opportunity of our generation. [There is no] choice between growth and reducing our carbon output."

This quest will drive innovation and create millions of jobs for some lucky companies and countries. Is this multi-trillion-dollar opportunity something we really want to miss out on? The other major economies are not sitting this one out. Germany is quickly moving its electric grid to renewables. China is committing hundreds of billions of dollars to energy efficiency and much more to the clean economy in general.

But let's say you don't buy the argument that fighting climate change keeps us competitive globally, saves trillions of dollars, and generates new wealth. Then how about the overwhelming national security rationale? Using less oil, for example, reduces funding to petro-dictators around the world. The former head of the CIA, James Woolsey, puts is very bluntly: "Your gas money funds terrorism."

On this score the difference between the parties is stark. The DNC's platform includes the words "climate change" at least 18 times and lists it as an "Emerging Threat" along with cybersecurity, biological weapons, and transnational crime. While "emerging" may not be the word I'd choose, it's leaps and bounds beyond the GOP' s party platform, which mentions climate change just once...and again, only to mock it. Their platform complains that the Obama administration has elevated "climate change" (with the sarcastic quotation marks) to the level of a severe threat to our security.

But let's be clear: it's not the Democrats or even President Obama specifically that declared climate change a national security threat. That would be the Pentagon in its Quadrennial Defense Reviewtwo years ago.

A strong plan to tackle climate change through government policy, business innovation, and citizen action is not just something that's not optional; it's preferable. Moving away from carbon to a cleaner economy makes us healthier, more profitable, and more secure.

My work is not political — I try to help companies create business value from sustainability and green thinking, so I normally avoid these kinds of discussions. But the discrepancy in party positions on this most critical issue has become too extreme to ignore.

There's blame on both sides, but let's not pretend the two parties neglect climate change equally. Yes, it's a shame that most Democrats will not stand up and proudly stand behind many of the positions in their own platform. But the GOP's denial of climate science, and all the risks and opportunities it presents, is surreal.

Their views and policies on climate won't help our businesses deal with, and profit from, the largest market shift we've ever seen. And they won't help prepare our country for the hard realities of life in the 21st century.

(This post first appeared at Harvard Business Online and on Bloomberg - see the active commentary on either.)

(Sign up for Andrew Winston's blog, via RSS feed, or by email. Follow Andrew on Twitter@GreenAdvantage)