UPFRONT : Teetering at the tipping point

Hunter Lovins has lot of statistics at her fingertips – some are heartening, others just plain scary. The woman declared “hero of the planet” by Time magazine for her 30-year commitment to the promotion of sustainable living reckons we’re at tipping point – or possibly two converging ones.
The first is hopeful. She believes the business world’s moves to embrace practices that both shrink their environmental bootprint and increase their bottom line are finally turning from trickle to tsunami.
“I think the tipping point came last year when General Electric announced its ‘ecomagination’ initiative [to ramp up clean technology development and reduce its environmental impacts].”
The high profile launch apparently annoyed Du Pont’s boss Chad Holiday who wondered why GE was “getting all this ink for announcing plans to do less than we’ve been doing every day for the past 10 years”, Lovins recalls.
“I said, well if you’re following Jack Welch – the man reputed to have saved GE – how do you stake out legacy? You announce you are going to save the world. So now we have these big companies competing to be the greenest.”
The second tipping point is the scary one – because it suggests this sustainability reformation was too slow in coming. As the UN Millennium Ecosystem Assessment discovered, we’ve already managed to pollute or over-exploit two thirds of the ecosystems on which life depends. Then there’s climate change.
“Recent science out of the United Kingdom says we may have as little as seven years to turn around climate change before we’re looking at runaway effect where the various changes interact and compound the problem. So you get the Greenland iceshelf melting and the resulting run-off lubricating the ice so it slides into the ocean faster – or the impact on coastal cities of rising water levels.
“We may be looking at rise of several metres in around 100 years or 20-metre rise as soon as 2030 or 2050 which pretty much takes care of most of the world’s major cities.
“Indeed, if recent science is right it may be that we need to change most of the way we do business very rapidly – and that’s big challenge.”
In New Zealand to meet local government officials and talk to range of community and business groups about opportunities for sustainable development – and sporting pounamu pendant that features in her presentations – Lovins draws on wealth of experience. She is co-founder (with her ex, Amory Lovins) of the renowned sustainable research centre Rocky Mountain Institute, co-creator of the ‘Natural Capitalism’ concept, president and founder of Natural Capitalism Inc, consultant, author, and currently professor of business at San Francisco’s Presidio School of Management which runs America’s first accredited MBA programme in Sustainable Management.
Her basic message is that contrary to conventional wisdom, businesses can achieve better profits by protecting and enhancing nature, culture and community than by harming them. These days she has bunch of high-profile case studies to support the thesis.
Early embracers of the sustainability ethos such as Interface’s Ray Anderson have notched up 10 years’ experience – he is convinced that it enhances every aspect of shareholder value, says Lovins. While Anderson’s epiphany was originally prompted by employee concerns, others are pushed by impacts on public or personal image. CityBank led global banking’s embrace of the Equator Principles (a benchmark for the financial industry to manage social and environmental issues in project financing) in part because of activist-led negative publicity that included ads naming its CEO as being No 3 worst person on the planet for the environment.
“He didn’t know how he could explain that to his grandkids,” says Lovins. The outcome is that some 30 banks around the world now pledge to adhere to those principles when it comes to deciding which projects merit financial support.
In the face of what Lovins describes as “bipartisan abdication of responsibility” by US political leaders on Kyoto and emission reductions, business people are taking the initiative. One example is Chicago trader Richard Sandor who, late in 2003, created his own carbon trading market, the Chicago Climate Exchange, which now boasts more than 200 members.
Companies like SP Microelectronic and Du Pont have set their own carbon reduction targets that will be met at no business expense – but alongside enhanced productivity and profitability. Even heavy emitters like BP, which announced 10 percent reduction over its 1990 levels by 2010, found the task easier than expected.
“It might not sound lot but 10 percent is more than my country said it could not afford to do under Kyoto and BP is carbon intensive so thought it was stretch. What surprised them was it took just two years to do it and is saving them $750 million in present value,” says Lovins.
She reels off the positives most companies have discovered after starting their sustainability journey.
“It drives their innovation, cuts costs, motivates their workforce – and that could be the most important business case reason – and it reduces their risk. You have leading reinsurer like Swiss Re now saying if you as company don’t take your carbon footprint seriously then perhaps we as company don’t want to insure you or your officers and directors.”
A sign of changing times is the Carbon Disclosure Project, UK-based NGO which for years has been sending out survey asking top companies to disclose their carbon footprint. Last year, says Lovins, it got 60 percent response rate in part because it represents institutional investors who have very deep pockets.
“If you’re going to the marketplace, then it’s worth answering their questionnaire. So we’re starting to get the socially responsible investment movement coming together with the sustainable companies movement and the activist movement.
“Actually I think things are moving incredibly rapidly. I’ve been doing this for the best part of 30 years and now, as at no time previously, I can see things happening everywhere. We don’t need to push – we’re running to catch up. This train is leaving the station and companies ignore it at their peril.”