Last week I spent a couple of days at the RMI 25th anniversary gala, celebrating a quarter century of cutting-edge thinking from Amory Lovins (and many others who have passed through his halls). I was honored to speak on a panel (I spoke a bit about the seeming oxymoron of corporate environmentalism -- see previous post here), and I was thrilled to hang out with a veritable who’s who of green business and sustainable development – Interface founder and eco-evangelist Ray Anderson, reluctant capitalist and founder of Patagonia (and “alpinist” as James Murdoch called him) Yvon Chouinard, Segway inventor Dean Kamen – as well as politicos from former New York Governor Pataki and President Clinton. It was really something.

But more interesting than the sustainability star wattage was the in-depth conversation, led by master of ceremonies, famed columnist, author, and thinker, Thomas Friedman, who gave one of the best talks I've ever seen about the green imperative, roughly titled “green is the new red, white, & blue" (his next book). My favorite quote: “It’s not about the whales anymore…every time you look in the mirror, you’re looking at an endangered species.”

Anyway, I’ll probably do a few posts on some themes and interesting conversations I had or heard. First up, the key question of hurdles to going green. Friedman continually asked the basic question, If this is all so great and being more efficient makes so much sense, why doesn’t it happen more? This is one of the undercurrent themes of Green to Gold of course – the fact that there are real hurdles.

There was some good discussion on this core question. Some great quotes from Ray Anderson. “Why aren’t companies doing more? I’ll give you two words: Milton Friedman.” Ray pointed out that Friedman’s "the business of business is business" thesis is still driving a lot of resistance to a broader corporate social agenda. “But,” Ray continued, “I don’t know a single CEO who will stand in front of his maker and talk about shareholder value or market share.”

Dean Kamen added that it’s not just about the overwhelming logic of sustainability. “Don’t make the irrational assumption that people are rational…we don’t make the right decisions and we all make short-term decisions to give us what we want.”

These are great perspectives, but clearly the problem goes beyond these important issues. It’s not just a philosophical Friedman-esque problem (although that’s powerful), and it’s not only about short-term thinking (which is rampant). Companies face real hurdles and there are real trade-offs. The “Middle-Management Squeeze” from Green to Gold is a critical problem. For managers charged with really executing on corporate strategy, green goals often conflict, at least over the short-term, with other goals like throughput, cost, and quality. Managers face tight resources – both human and financial capital – and have to make tough choices. Yes, taking into account longer term considerations helps break this decision barrier, but it’s a real challenge. On top of the organizational challenges, we all face the problem of unintended consequences. Thinking about full value chain impacts is tough, and reducing impact in one way in one part of the chain can cause rebound effects elsewhere.

None of this is easy, but I will say this: the brains in the room at the RMI gala certainly have a shot at fixing our collective problems if anyone does.

Contrary to the popular misconception that going green is expensive, in a very large range of cases, environmental initiatives don't raise costs, they lower them — and fast. In operational areas such as facilities (heating, cooling, lighting), fleet, IT, and waste, leading companies continue to find large savings in shockingly simple actions, such as changing lighting or using outside air to cool a data center.

But even for the most head-slappingly obvious changes with super-fast paybacks, companies still need to find the capital to buy the new bulbs, optimize the HVAC system, or add auxiliary power units (APUs) to trucks. And even if one sees these initiatives as investments, not costs (which is the right way to look at it), there will still be competition for dollars. During a recession — heck, at any time — it's normal to struggle to get funds for even worthy projects. So what to do?

A few leading companies have hit on one incredibly simple solution to this problem — set aside funds for green priorities. I don't mean coming up with a new pool of money; just assign a percentage of the existing capital expenditure budget to green priorities.

In 2008, to find hidden gems of savings, DuPont set aside 1% of capital expenditures solely for energy-saving ideas. With $50MM of spending, the company found $50MM of savings per year — a one-year payback that keeps on giving. All projects still met the corporate hurdle rate, so there was no special dispensation besides making the money available for worthy initiatives managers had overlooked. Building products maker Owens Corning goes even further, dedicating 10% of capex to energy projects. This is a tool nearly anyone can use. Set aside the funds for green and you'll unleash a wave of creativity and short paybacks.

So if there are so many quick, high-ROI projects sitting around, why aren't companies jumping on them? Two big reasons. First, energy efficiency just hasn't seemed sexy. Dawn Rittenhouse, DuPont's director of sustainable development, told me, "If business units can invest in growth or energy efficiency projects, it's more glamorous to go after growth." But in tight times, saving money starts to feel a lot more exciting, doesn't it?

The second reason is the classic problem of the urgent versus the important. Most capital expenditures go to fix things that are already broken. But as Frank O'Brien-Bernini, Owens Corning's chief sustainability officer, puts it, "It's really about redefining what 'broken' means." Think about it: a process that wastes energy may not feel broken with oil at $40, or even $80, a barrel. But it may look like a money-eating disaster at $200 a barrel. In essence, when it comes to energy and resource efficiency, all companies are broken.

Of course reserving some funds could meet resistance. One of my clients pointed out that their capex budget is not one pool, but really a bunch of sub-budgets for different groups. A green set-aside would have to draw money from somebody's hard-fought budget. But DuPont only allocated 1% to great effect. So it doesn't necessarily take a giant land grab to make this operational and cultural shift happen.

So when people say you don't have the money to invest in green, show them that you do. The reality is that unless you're in liquidation, you have a capex budget, even if it shrank this year. You're spending money on things all the time; it's simply an issue of where you place your bets.

Take a piece of what you're already spending, point it in the right direction, and you will find enormous green savings to help survive these (still) hard times — and invest in the future.

[This post first appeared on Andrew's blog on Harvard Business Online]