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Climate Action 2010-2011

Technology and Business

Technology and Business Earth, this little blue marble hung in space, is the only place in the universe we know of, where there is life. © Creative commons/flickr/NASA Goddard Photo and Video Natural capitalism – nature’s economy L. Hunter Lovins Founder of Natural Capitalism Solutions (NCS) The two biggest threats we face – climate change and economic meltdown – are linked in both cause and cure, says L. Hunter Lovins, expert in sustainability and founder of NCS. Unless nations, corporations, communities and homeowners move aggressively to implement energy efficiency measures and renewable energy, our economy cannot recover. The business case for climate protection is powerful and proven: cutting carbon delivers one of the highest returns on investment in the whole economy. Two words define our age: climate and capitalism. People raised on images of limitless possibilities, muscle cars, western superiority in world markets and a rising standard of living watched in shock as the iconic American business, General Motors, melted into bankruptcy in 2008. The economic collapse devastated communities and families in the US, throwing more than 15 million people out of work and sending the unemployment rate to over 25 per cent in cities like Detroit. Another meltdown, however, poses an even greater threat. In late 2009, the UN warned that even if nations delivered on existing promises to cut greenhouse gas (GHG) emissions, the globe would still warm beyond levels ever experienced by humankind by the end of the century, perhaps sooner. Critics argue that the science is uncertain. Absolutely. Scientists do not know how bad it may be, or how fast climate chaos will proceed. But, in a sense, the science is irrelevant. You do not have to believe in the problem to believe in the solution. Even if you are just a profit-maximising capitalist, you should do exactly the same thing as one who is scared to death of climate change because we know how to solve this problem at a profit. And smart companies are doing it. DuPont was one of the early leaders who ‘got it’, pledging about a decade ago to cut carbon emissions 65 per cent below their 1990 levels by 2010. Ambitious, given | 98 | that the US government had refused to ratify the Kyoto protocol that would have committed it to cutting emissions by just seven per cent in the same timeframe. The company made its announcement in the name of increasing shareholder value and delivered on that promise. The value of DuPont stock increased 340 per cent while the company reduced its global emissions by 67 per cent. DuPont’s programmes have now reduced emissions by 80 per cent below 1990 levels. This saved the company US$3 billion between 2000 and 2005. The company’s climate protection programme shows that it costs less to implement energy savings measures than it does to buy and burn fuel and emit other gasses. By 2007, DuPont’s efforts to squeeze out waste were saving the company US$2.2 billion a year. Company profits that year were also US$2.2 billion. Dupont is profitable because it is protecting the climate. Another company, ST Microelectronics has pledged to achieve zero net CO 2 emissions and become carbon neutral by 2010 while increasing production 40-fold. The company had no earthly idea how to achieve this, but figuring it out drove their corporate innovation, taking them from number 12 in the world’s chip maker rankings to number six. They estimate that, by the time they’re done, they will have saved about US$1 billion. NCS and other sustainability consultants help companies cut waste, transform how they make products, and implement more sustainable ways of doing business. One client left its 6,300 computers and monitors turned on 24/7, driven by urban myths about shortening the life of computers by turning them off. Simply publishing a policy requiring employees to turn computers off when not in use would save it US$700,000 in the first year. In the US, US$2.8 billion is wasted each year from leaving unused computers switched on. Such IT costs can represent a quarter of the cost of running a modern office building. Such savings are free – or better than free – and they exist throughout the economy. It will come as little surprise that American businesses use twice as much www.climateactionprogramme.org

Technology and Business energy to produce a unit of Gross National Product (GNP) as do our competitors in parts of the world like Europe and Asia, where adherence to the Kyoto Protocol drives their competitiveness. In July 2009, Walmart rolled out its sustainability scorecard to several thousand large suppliers worldwide. The first question was do you measure your carbon footprint? The second question was do you report it to the Carbon Disclosure Project? Carbon footprinting: a business necessity Since 2002, the Carbon Disclosure Project (CDP), a UK nonprofit, has surveyed the Financial Times (FT) 500, the largest companies in the world. The CDP, which represents 315 global institutional investors with assets totalling US$64 trillion, almost a third of all institutional investor assets, now receives annual corporate carbon footprint reports from almost 80 per cent of the world’s biggest 1,800 companies as ranked by the FT. Institutional investors use the CDP database to make investment decisions based on a company’s GHG emissions, emission reduction goals and strategies to combat climate change. Companies that do not responsibly manage their carbon footprint are deemed unworthy of investment. In 2008, Walmart hired the CDP to survey their Chinese suppliers, asking them to report their carbon footprint if they wished to remain a supplier to the world’s largest retailer. Globally, Walmart has anywhere between 60,000 and 90,000 suppliers, all of whom are now on notice that meeting the scorecard will be the basis for supplier selection. When Walmart CEO, Lee Scott, announced the sustainability initiative, he observed that a corporate strategy on reducing GHGs as quickly as possible was simply good business, stating, “It will save money for our customers, make us a more efficient business, and help position us to compete effectively in a carbon-constrained world.” Walmart was one of only two companies in the Dow Jones Industrial Average whose stock price rose in 2008 by 18 per cent – its sustainability efforts were credited, in part, for this. Programmes to help buildings use less energy and encourage the use of efficient cars, appliances and machines stimulate new manufacturing ventures, increase incomes and generate increased community income. A local government commissioner from Portland, Oregon, stated, “We’ve found that our climate change policies have been the best economic development strategy we’ve ever had. Not only are we saving billions of dollars on energy, we are also generating hundreds of new sustainable enterprises as a result.” A 2003 study of the impact of energy efficiency and renewables in Oregon found that, on average, one megawatt saved increases: 1. Annual economic output in Oregon by US$2.2 million; 2. Wage income in Oregon by US$684,536 and; 3. Business income in Oregon by US$125,882. Each megawatt saved creates an average of 22 new jobs in Oregon. The study found that over 12 megawatts were saved as a result of Energy Trust programme activities in 2002, with the number growing to 125 average megawatts by 2006. Small businesses are the economic engine of the US and generate more than half of non-farm private GDP. They represent 99.7 per cent of all employer firms, employing nearly 60 million workers or about half of all private employees. Small businesses consume half the electricity in the US but only about a third have invested in energy efficiency. NCS’s web-based learning tool, ‘Solutions at the Speed of Business’, shows small businesses how they can benefit from programmes to reduce carbon emissions. For example, a RE/MAX real estate office in Florida implemented a weatherisation programme, caulking windows, and weatherstripping doors. These simple measures cut their need for air-conditioning and put US$7,900 of savings into their pocket the first year. As Business Week noted, such programmes not only cut direct energy but drive prosperity throughout the economy: “reducing energy waste in US homes, shops, offices, and other buildings must, of necessity, rely on tens of thousands of small concerns that design, make, sell, install, and service energy-efficient appliances, lighting products, heating, air-conditioning, and other equipment.” In California, the world’s eighth largest economy, a 2008 study by the University of California found that programmes to reduce energy dependence and increase energy productivity three decades ago directed a greater percentage of the state’s consumption to in-state, employment-intensive goods and services whose supply chains largely reside within the state. This created a strong ‘multiplier effect’ of job creation, generating 1.5 million full-time equivalent (FTE) jobs with a total payroll of over US$45 billion, saving California consumers over US$56 billion in energy costs. Similarly, a University of California study found that achieving 100 per cent of the GHG emission reduction targets mandated by AB 32, the legislation that Republican Governor Schwarzenegger championed to reduce carbon emissions 80 per cent by 2050, would increase the Gross State Product by US$76 billion, increase real household incomes by US$48 million, and create as many as 403,000 new efficiency and climate action jobs. These claims are borne out on the ground. Over a seven-month period in 2008, the City of San Francisco created 180 new jobs by enabling 640 residents and enterprises to install 2-megawatt rooftop solar electric systems. The City’s SF Energy Watch helped 1,500 businesses and multifamily properties save over US$5.7 million in energy bills, delivering six megawatts of energy efficiency savings. Twenty states, representing over two-thirds of the US economy and population, are implementing comprehensive, multi-sector GHG reduction plans. Such programmes will expand employment, income and investment, and contribute to national economic recovery, while achieving net savings of at least US$85 billion in 2020. The renewables gold rush The transition away from fossil fuels to the energy system of the future can happen rapidly. In 2008, the wind industry www.climateactionprogramme.org | 99 |