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Climate Action 2010-2011

Technology and Business

Technology and Business added 17 gigawatts of new wind capacity around the world. In 2009, the number jumped to 37 gigawatts. A gigawatt is roughly a nuclear plant sized chunk of electricity. Solar electricity is nearing competitiveness with new coal plants and is already cheaper than nuclear power. Southern California’s independent power producers were building a megawatt a week prior to the economic collapse. Southern California Edison built a 250-megawatt power plant on roofs spread around the county at a price point US$875 million – uncannily close to the cost of a coal plant recently cancelled in Montana, which would have cost US$800 million. In 2007, the US renewable energy and energy efficiency industries generated over US$1 trillion in sales and created over 9 million jobs, representing substantially more than the 2007 sales of the three largest US corporations combined – Walmart, ExxonMobil and General Motors (US$905 billion). While the US debates whether to require power companies and others to generate more electricity from renewable sources, China already has already done so. The China Greentech Initiative reported in September 2009 that China’s market for energy efficiency, renewable energy and other green technology could become US$1 trillion market by 2013. Calling climate change “one of the most pressing global challenges,” venture capitalist John Doerr predicted that the resulting demand for innovation would create the “mother of all markets.” The UN described it as “[a] gold rush of new investment into renewable power,” concluding that clean energy could provide almost a quarter of the world’s electricity by 2030. The European Renewable Energy Council (EREC) was even more optimistic, claiming that half of the world’s energy supply could come from renewable energy sources by 2040. The business case for environmental excellence Acting to protect the climate can unleash a new energy economy creating the greatest prosperity ever in history. As Sir Nicholas Stern stated, “If we fail to act, it will represent the greatest market failure ever in history.” Businesses and governments can either drive change in ways that allow companies and economies to flourish or they will be forced to respond to resultant crises and hope for the best. Even in the economic collapse, companies that made a serious commitment to behave in more sustainable ways fared better than their peers in the same industry. A 2007 report from Goldman Sachs, showed that companies that are leaders in environmental, social and good governance policies outperformed the MSCI world index of stocks by 25 per cent since 2005. 72 per cent of these companies outperformed industry peers, were financially healthier, and achieved enduring value. The Economist Intelligence Unit repeated these findings and further showed that the worst performing companies in the economy were most likely to have nobody in charge of sustainability. In 2009, A.T. Kearney released the findings of their report, Green Winners, comparing the economic performance of companies with a commitment to sustainability to companies in the same industry without | 100 | such a commitment. In 16 out of the 18 industries evaluated, businesses deemed ‘sustainability focused’ outperformed industry peers over three- and six-month periods with differentials of 10 and 15 per cent respectively. Companies will implement more sustainable processes and procedures or they will risk losing competitiveness in a world that can no longer tolerate unsustainable behaviour. A 2009 article in Harvard Business Review concluded, “Sustainability isn’t the burden on bottom lines that many executives believe it to be. In fact, becoming environment-friendly can lower your costs and increase your revenues...In the future, only companies that make sustainability a goal will achieve competitive advantage.” As the corporate world grasps that sustainability is the route to greater profitability, it will drive changes unimaginable by yesterdays activists. There remains a very important role for government, however. As powerful as markets are, they have real limitations. Markets make good servants, but they’re not such good masters, and they’re a lousy religion. There’s also a very important role for communities of faith in asking whether humans are here to serve as good consumers or whether we have a higher calling. Because, remember, all that markets can do is allocate scarce resources efficiently in the short term. Markets were never intended to take care of grandchildren. That’s our job. That is the job of free people coming together and saying, what kind of a world do we want? Earth, this little blue marble hung in space, is the only place in all the universe we know of where there is life. We are the only ones who can take care of it. L. Hunter Lovins is President and Founder of Natural NCS, a sustainability consultancy that works with senior decision-makers in business, government and civil society. Her forthcoming book, ‘Climate Capitalism’ details the business case for climate protection. She has consulted for corporations such as Royal Dutch Shell and WalMart while governmental clients include heads of state. She has coauthored nine books and hundreds of papers on natural capitalism and sustainability. She is a founding Professor of Business at Presidio Graduate School, one of the first accredited programmes offering an MBA in Sustainable Management. NCS, is a nonprofit that helps companies, communities and countries implement sustainable practices profitably. NCS educates senior decision-makers in business, government and civil society in the principles of sustainability. In partnership with leading thinkers and groups, NCS creates innovative, practical tools and implementation strategies to increase efficiency, environmental practices as well as economic sustainability. Natural Capitalism Solutions 11823 N. 75th Street, Longmont, CO 80503 USA Tel: +1 (720) 684 6580 Email: info@natcapsolutions.org Website: www.natcapsolutions.org www.climateactionprogramme.org

Technology and Business Energy figures show that bioenergy is now larger than the oil sector in supplying energy to Swedish society. © Creative commons/flickr/dhruvarji Kaj Embrén Co-founder of Respect Respect: businesses can lead on sustainability In a world fighting its way through a deep financial depression and facing an oil crisis, water shortages and climate threats, active leadership on sustainability is required in all types of organisations, writes Kaj Embrén, co-founder of Respect, a business sustainability consultancy based in Sweden. Investment and proactive incentives in energy efficiency and green technology are now top of the agenda in many countries. Energy figures show that bioenergy is now larger than the oil sector in supplying energy to Swedish society – a positive sign that should spur other nations to minimise their dependency on fossil fuel. Since 2000 I have had the opportunity of developing ideas and strategies for leadership within the area of sustainable development. It has been a time of inspiration and knowledge seeking. For me, it is about laying the foundations for an increased understanding of the game rules and principles for long-term and systematic work towards sustainability in enterprise. However, the complexity of the sustainability issue is such that, without a scientific approach to principles and goals, the journey will be exceedingly difficult. Business leaders who genuinely understand and can define the term ‘sustainability’ and set concrete goals around it are those that will be able to develop the correct tools for monitoring their progress. Strong and clear corporate and political governance are prerequisites in meeting the new challenges now facing society. The dependency on fossil fuels is a complex issue that influences both political and business leaders in their daily work. Investment and incentives for achieving greater energy efficiency and implementing green technology are increasingly national priorities. Here in Sweden we are already seeing promising results from such investment. We may also see new cost-saving opportunities in the current economic downturn that make compelling financial and environmental sense. Data is emerging from the International Energy Agency (IEA) which spells out the economic case for ending fossil fuel subsidies as governments seek to cut their deficits. In developing countries, these subsidies amounted to US$557 billion in 2008. By comparison, governments worldwide provided a feeble US$43-46 billion last year for the development of all renewable energy sources (including biofuels) www.climateactionprogramme.org | 101 |