Sustainability pays

Source: Exec Digital UK

Date :24/10/2007 11:19:56

ExecUK magazine speaks to L Hunter Lovins about the business case for going green

The business case for going green hardly needs to be rehearsed any more. One of the most eloquent advocates of sustainability is L Hunter Lovins.

Companies who embrace sustainable practices are gaining huge economic rewards and represent real 'drivers for change', a US champion of sustainable development argued in a lecture given at Cambridge University’s Institute for Manufacturing this month.

Hunter Lovins, Professor of Sustainable Management at the Presidio School of Management in the US, said that there is a real business case for sustainability which companies ignore at their peril.

The successful companies of the future will be those who recognise the need to protect the environment and seize the opportunities this offers their business.

Companies are already saving billions of dollars by reducing their energy consumption, improving their productivity and redesigning products along more sustainable lines, she said. Environmentally enlightened companies in a range of sectors, including oil and gas, US electric utilities, and forest and paper products have consistently outperformed 'environmental laggards' in terms of total return and growth in share price.

A passion for the environment

Hunter Lovins is a renowned author and champion of sustainable development for over 30 years, is the founder and President of Natural Capitalism Inc and Natural Capitalism Solutions, a non-profit company in Eldorado Springs, Colorado.

A professor at Presidio School of Management's MBA in Sustainable Management program, she has taught at major universities, consulted for citizens' groups, governments and corporations. She co-founded Rocky Mountain Institute and led it for 20 years. In great demand as an inspirational speaker and effective consultant, she has addressed the World Economic Forum, the US Congress, the World Summit on Sustainable Development, and hundreds of major conferences.

Named millennium Hero for the Planet by Time Magazine, she has received the Right Livelihood Award, the Leadership in Business Award and dozens of other honours. Hunter believes that citizens, communities and companies, working together within the market context, are the most dynamic problem-solving force on the planet. She has devoted herself to building teams that can create and implement practical and affordable solutions to the problems facing us in creating a sustainable future.

Hunter spent 2006 travelling the world. She keynoted conferences, taught MBA and high school students, and met with business and government leaders. She also took time to write a major paper, The Business Case for Climate Protection and to work with the NCS staff to produce the Climate Protection Manual for Cities. Often Hunter speaks about the forces that are driving companies and communities to innovate.

These drivers should not come as a surprise: they include global warming, the erosion of the major ecosystems on earth that underpin the capacity of the planet to sustain life, high and rising energy prices, the vulnerability of our large centralised infrastructure in a time of turmoil and finally what she is calling the ‘Sustainability Imperative’.

Green equals competitive

What is different now is this last driver. It is actually shifting the business world, forcing companies to compete to appear more ‘green’. Ultimately, it will lead them to become truly restorative of human and natural capital if they wish to remain competitive.

To help audiences understand how these changes are shaping our world, Hunter presents NCS’ concept of the ‘Integrated Bottom Line,’ in which outstanding financial performance is achieved through behaving more responsibly towards people and planet.

This contrasts significantly with the older formulation of the ‘Triple Bottom Line’ in which companies are asked to bolt the additional cost centres of environmental and social responsibility onto their traditional financial bottom line.

Using an Integrated Bottom Line, a company achieves durable competitive advantage by cutting its costs, enhancing worker productivity, reducing risks, differentiating its brand, creating customer loyalty and driving innovation and more. Communities can use this same approach to enable their governments to run more effectively.

Hunter describes how companies that are leading the sustainability revolution are achieving each of these core elements of enhanced shareholder value to become ‘first to the future.’

Distinguished backing

Last year Hunter was invited to be on the podium at the Clinton Global Initiative (CGI) with Bill Clinton and Sir Richard Branson as Branson announced the investment of the entire profits from the Virgin Group’s transportation interests for the next ten years (reckoned to be $3 billion) to carbon-neutral fuels. When the media hurried up to ask everyone why they thought he was doing this, Sir Richard said, “I run an airline. I'm going to need fuel that will not destroy the climate.” Hunter replied it was also because he was going to make a boatload of money.

It was at this meeting that Hunter buried her long-running feud with Al Gore, with whom she has not always seen eye to eye. She also took the opportunity to hand to President Karzai of Afghanistan her proposal for Green Afghanistan—switching from pouring ‘development’ money into the pockets of western contractors that deliver last century's technologies that don't really help the Afghan people, to enabling Afghans to gain the capacity to meet their own challenges using world best practice in sustainable ways to meet basic human needs.

Her message is that whenever an organization has the courage to go all out for a sustainable solution, it saves money directly, and achieves improvements in other measurable ways. When Sacramento California decided 15 years ago to shut down its 1,000MW power plant and invest firstly in energy efficiency measures and then in every kind of alternative power source (it wanted first hand experience of solar, wind and co-generation schemes) it was taking a huge risk.

That’s not how public authorities work. However it has increased regional income by $130 million, retained 2,000 jobs that would have been lost in the area, and created 880 more. Local rates, which would have risen by 80 percent over the period, have remained the same, and it has eliminated the utility’s debt.

More than money

Not all the benefits are immediately bankable, but consider the experiment, also in California, that showed that students who studied in daylight achieved higher test scores and reached them between 20-26 percent faster than using artificial light. ‘Daylighting’ classrooms improves the students’ environment and saves energy.

The Sacramento example relates directly to cost. But alternative generation sources cut emissions. The USA is belatedly joining the sustainability party following the Washington climate summit and Al Gore’s Nobel Prize, but many cities there have been world leaders, Hunter Lovins points out. Salt Lake City set out to reduce its emissions to 12 percent below the 2001 level by 2011 – and achieved it by 2005: Ottawa in Canada targets 20 percent below 1999 levels to a split deadline – 2007 for the commercial sector, 2012 for the community.

The citizens of these towns will live longer and save money, but local and government can only set an agenda. The challenge of sustainability is ultimately for individual companies and individual human beings, she argues.

Related Links

Cambridge University’s Institute for Manufacturing

Presidio School of Management