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Green
Technology Interview:
Hunter Lovins
At the time of this
interview, Hunter Lovins had just returned from
Afghanistan, where she was helping bring solar power to communities.
Lovins is co-founder of the Rocky Mountain Institute, co-author of nine
books and the award-winning film, "Lovins on the Soft Path." Her
best-known book is Natural Capitalism, co-authored with Amory
Lovins and Paul Hawken; her most recent work, the
2006
Climate Protection Manual for Cities,
lays out a framework for cities looking for resources to initiate a
climate action plan.
Lovins is an
outspoken and unapologetic advocate for sustainability; an incomplete list
of her skills and proclivities includes being a lawyer, author, manager of
non-profit organizations, international economic development leader, local
community activist, volunteer firefighter, teacher and rodeo rider.
Mostly, she is a futurist who believes there is no better time to begin
the future than right now. She inspires by challenging us to think beyond
all preconceived notions, to come up with new ideas, and then to bring
those ideas into current reality.
[Editor's note: Hunter Lovins will be a keynote at the upcoming
Green California
Summit and Exposition.]
GT: How would you introduce yourself Green Technology readers?
HL: I am Hunter Lovins, president of
Natural Capitalism Solutions. I'm a professor of sustainable
management at
Presidio School of Management in San Francisco, and I travel the world
consulting for companies, communities, countries, helping them solve
problems in ways that don't create more problems, how to use resources
more efficiently in ways that are more profitable and how to achieve the
full system benefits of sustainability.
GT: Would you give us a snapshot of what you're doing these days?
HL: It varies. As I said, I teach. So once a month I fly to California
for about a week and work with MBA students. I teach principles of
sustainable management, another course called Implementation, which covers
the gritty work of actually putting all this theory into practice. I also
help teach a course on Government Business and Civil Society. I also help
the students create a business plan to implement their calling in life,
what it is that they want to do to make a mark in the world.
When I'm not doing that, I'm frequently consulting for a company or a
community. Last year I helped produce a manual called LASER (Local
Action for Sustainable Economic Renewal), and we're working with
several communities to implement that. That could be in this country, it
could be in New Zealand. In 2005, I worked with a Maori community deep in
the rainforest in New Zealand helping them think through what their
economic future might be. It might be in Afghanistan, where I've been
doing a lot of work. Last year I was at the Clinton Global Initiative
seeking support for the Afghan work and also what has become our
Climate Action Manual for Cities. In the event, no one wanted to help,
so we paid for the work ourselves.
The manual tells mayors and city council people and community groups what
to do to actually start implementing a climate protection program. We are
nearing completion of a manual for businesses that want to cut their
energy costs and carbon footprint, particularly focusing on small to
medium sized businesses. We show how they can derive competitive advantage
from getting out ahead of the climate change issue and using energy more
efficiently.
GT: From the Global Warming Solutions Act to his partnership with Tony
Blair, Governor Schwarzenegger worked at finding ways to deal with global
warming. What's your take on these efforts?
HL: Good on ‘im. It's high time a politician stepped up and had the guts
to acknowledge that we're about to lose life on earth. Global climate
change is the issue of our times, and if life survives on earth,
generations in the future will look back on us in the past and say, "what
did you do?" And I think the Governor and Tony Blair can say, "we started
the ball rolling." For California, which is the 12th largest
emitter of greenhouse gases in the world, to have stepped forth on this
was incredibly important. But of course, the Governor can't do this
alone.
The California Chamber of Commerce came before the legislature and the
Governor and said this will bankrupt California's economy, which is the
sixth or eighth largest, depending on whose numbers you listen to, in the
world. Another group, called the
New Voice of Business, run by the entrepreneur Elliott Hoffman – he
and his wife Gail founded, the company Just Desserts. Elliott – said there
are two kinds of businesses now: last century's companies and the
companies of the new century.
New Voice of Business pointed out that aggressive climate protection
programs may be bad for last century's businesses, but unleashing the new
energy economy is a huge opportunity for companies of the future. The
businesses that get it right will be the billionaires of tomorrow. The
Governor's legislation will jump start California's new economy, one based
on energy efficiency, renewable energy, green design, green building.
These technologies will underpin prosperity in coming decades. To cling to
companies and technologies that are failing the test of the marketplace
simply because they are the incumbent technologies, is wrong, and it's bad
business.
GT: How would you characterize the present growth of sustainability?
HL: Absolutely explosive, and revolutionary. We have passed the tipping
point. When General Electronic, a company that would have been on the
Fortune 500 in 1900, and is still on it today, announced
Eco-magination, the
environmentalists called it greenwashing. And indeed all that GE's CEO,
Jeff Immelt did was to badge as green the products he was already making.
But hypocrisy is the first step to real change. Less than a year later
those green badged products had doubled in sales volume, compared to a 20
percent increase for all the rest of GE's products. The company is now
serious about going green, achieving $12 billion in green sales in 2006
with $50 billion in back orders. It's an indication of what I'm calling
the "sustainability imperative."
Businesses that want to be around are going to embrace sustainability as
the basis of their profitability. Lee Scott, the CEO of the company that
if it were a country would be the 20th biggest in the world –
Wal-Mart– is rebranding itself as affordable sustainability. Wal-Mart
has announced that it will be 100 percent renewablely powered and is
installing solar panels on roofs. It is doubling the fuel efficiency of
its vehicle fleet, and pledging to be the biggest organic retailer in the
world. Wal-Mart has also begun to push sustainability up its supply chain
to its 61,000 suppliers. Think about it, 61,000 companies around the
world, many of whose business models depend on selling to Wal-Mart. And
Wal-Mart is saying to these suppliers, if you're not green, we may not to
stock your product on our shelves.
Yes, sustainability is now truly explosive.
GT: How does a company remain competitive in the emerging green
economy?
HL: A company that wishes to be competitive will take a leadership role in
this emerging economy. This is not simply whether you recycle your office
paper. It goes to your whole business model. Where do your resources come
from? What are you doing with them when you're done with them? And what
are you doing with them in the meantime? How do you treat your people?
What is your carbon footprint? How much energy do you use, and where does
it come from? How are your facilities built and managed? (At Natural
Capitalism) we're working with companies - from small manufacturers to
some of the biggest companies in the world - helping them understand what
sustainability means, what the opportunities are for them, how to begin
implementing them, how to take a leadership role in the economy of the
future. We are teaching companies how to become restorative, so that in
everything they do, they are giving back human and natural capital, the
forms of capital which are now in short supply. We do this using a tool
that we call the Helix of Managing a Sustainable Organization.
GT: What is the Helix?
HL: People talk about how to drive sustainability into the DNA of a
company. We asked, "What is the DNA of a company?" If you think about a
double helix, there are two rails. What holds the rails together are
crosshatching, chemical bonds. Think of this image as a company: one of
those rails represents the job of the CEO: the mission, vision, values and
purpose of the company. The other rail is the job of the chief financial
officer: the profitability, the accounting, the metrics, the indicators of
success of the company. What then holds the company together are the
business activity streams of operations, human relations, R&D, marketing
and communication, and relationships with external parties - whether with
vendors or a company's value chain - their customers, and the community
within which they operate.
We help a company examine each of these activity streams through four
stages: First a company asks what is sustainability? Second we help them
understand how we actually do it. Third we help an organization take a
leadership role. Finally we work with a business to enable it to become
truly restorative, at the same time that it increases its profitability.
Companies that begin to engage with sustainability find that they can't do
it all at once. The Helix helps them lay out a strategy and prioritize
their actions. It also helps them avoid greenwashing. Take General
Electric; they've jumped out, if you will, to a stage-three leadership
position in their marketing and communication, but they're back at stage
one in their operation. That's a good definition of greenwashing. They now
have the opportunity to implement sustainability throughout their activity
streams.
The companies that do this find that it enhances their profitability. It
cuts their costs, it cuts their risks, it motivates their workforce. What
are elements of shareholder value? What constitutes value in a company in
today's world? Clearly it is more than just next quarter's shareholder
price, which is typically what companies manage by. That is actually a bad
metric, and managing by it will drive a company into the ground. We help
companies increase what we call their "Integrated Bottom Line" and to
realize that a commitment to sustainability enhances every aspect of
shareholder value.
GT: Isn't that the opposite of what people have assumed?
HL: Many companies believe that behaving more responsibly will cost them
money. Actually the reverse is true. Goldman Sachs released a
study
in the summer of 2007 showing that the companies that are
the leaders in environmental, social and good governance policies have, on
average, 25 percent higher stock value than their competitors. Every one
of Wal-Mart's green policies have saved them money. Just eliminating waste
packaging in one product line saved them $2.4 million and over a million
barrels of oil.
Who said this? -
"There can't be
anything good about putting all these chemicals in the air. There can't be
anything good about the smog you see in cities. There can't be anything
good about putting chemicals in these rivers in Third World countries so
that somebody can buy an item for less money in a developed country. Those
things are just inherently wrong, whether you are an environmentalist or
not."
Sounds like a quote
from Dave Brower or the head of Greenpeace. It's not. It's a quote from
Wal-Mart CEO Lee Scott. He also observed that a corporate focus on
reducing greenhouse gases as quickly as possible was just a good business
strategy: "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."
GT: How does a government entity implement these concepts?
HL: Governments have a different purpose than businesses. Humans created
government to serve the greater human wellbeing, not just shareholder
profit.
Market mechanisms are very, very powerful tools, but remember that
increased profits will not, by themselves, buy happiness. Go back and read
Adam Smith. Markets allocate scarce resources efficiently in the short
term. That is all they do, all they were ever intended to do. The were
never intended to be fair, they were never intended to take care of
grandchildren. That's our job, the job of a free people coming together
and saying what kind of a world do we want to leave, what do we want the
future to look like 50 years from now.
Obviously government should be run in an efficient, businesslike fashion,
but governments should also embody the greater values of their citizens.
The role of the government is to steer not row. Market economics is the
best system ever devised by humans for the creation of wealth. Government
has a very important role in enabling markets to function, in ensuring a
level playing field, and in setting the rules. If you believe that
businesses don't need rules, go try to do business in Somalia. That's a
functional "chaoacricy." It's also a lousy place to do business.
GT: How can governments best provide the services we require?
HL: Free markets are based on a number of assumptions that rarely occur in
real life. The more that governments can ensure the conditions of a true
market, the better the market can do its job of increasing wealth. For
example market theory assumes that all of us have perfect information. It
assumes that we have equitable access to capital. That's simply not true.
So if we want a market to work, government can provide information, access
to capital, the absence of monopoly, the proper functioning of laws, etc.
If you look at the lighting in most rooms you will see light bulbs that
are not the most efficient or cost effective. But if people don't know
where to get better bulbs, they won't put them in. If you pay MasterCard
interest rates to put solar (panels) on your house, whereas and, at the
same time, a utility can build a power plant they using government
subsidized cheap money and pay it back over forty years, guess how many
power plants will get built compared to solar installations. That's
inequitable access to capital. Government should level the playing field.
Around the world, the incumbent fossil fuel energy technologies get
something like $240 billion a year in subsidies. In the U.S. nuclear has
received over $500 billion in taxpayer subsidies for a technology that now
delivers about as much energy as wood. Given all this, it's amazing that
the renewable technologies are doing as well as they are, swimming
upstream against that. Wind and solar are now bringing on at least three
times as much new energy each year as nuclear did back when we were
building the reactors. Imagine how fast the new energy economy would
emerge if governments just eliminated all the perverse subsidies.
If we're not going to do that, let's at least give compensatory subsidies.
Germany is on its way to being 100% renewably powered because it pays
owners of solar and wind installations more for their renewably produced
power than it does for power from coal or nuclear facilities. Surprise,
renewable power is springing up all over Germany.
There are at least eight categories of market barriers that keep the
market from working efficiently, like obsolete building codes. I recently
toured a building site here where a guy is trying to use a green
technology, but the local codes wouldn't let him use it. That's a market
barrier to the entry of a better technology. I sit now on the Boulder
County, Colorado,
Energy Taskforce, and one of the things that we're doing is looking at
the building codes with an eye to changing them from being prescriptive
codes that tell you to do this in this way, usually using last century's
technologies, to setting the goals we want to achieve, and enabling
builders to tell us how they're going to do it, so that they can beat the
code. The code should be a floor, not a ceiling.
There are so many ways in which government can enable the market to work
better and cut costs as we make this transition from a fossil fuel-based
economy to an economy that runs on the solar energy we get for free every
day. Transitions like this are wrenching. People's jobs are tied up in
incumbent industries that are soaking up capital. You need to enable these
companies and these individuals to make the transition gently without it
being destructive of the economy. That's another role for government,
helping in this sort of an industrial conversion.
The Governor of California, The Chicago Climate Exchange, the New England
states (ultimately what the federal government will do as well) are
implementing trading regimes within which companies that can cost
effectively reduce their emissions can sell their extra reductions to the
companies that find it harder to reduce in a short period of time. Over
750 mayors have pledged to cut their city carbon emissions in accord with
the Kyoto Protocol. These sorts of programs are government at its best.
They are serving the wellbeing of all people in our society.
We have allowed ourselves to be turned into consumers, not citizens
We have of late lost sight of what it is that we really want. We have
allowed ourselves to be turned into consumers, not citizens. We need to
reclaim that public space and reclaim the conversation about what kind of
a future we want for ourselves, for our kids, for our grandkids. Then we
need to lay out a strategy for getting there. That's what business does.
Business sets a goal and a strategy and then implements it. There's
nothing wrong with government doing the same thing, but it should be done
in a democratic fashion in which all voices can be heard.
Where this has been done, you get some remarkable outcomes. The Swedes,
among the most democratic people on earth, have announced they are going
to get off oil entirely by 2020, at the same time that they phase out coal
and nuclear power. That's pretty remarkable. The Japanese have announced
that over the same timeframe they are going to reduce oil to 40 percent of
their energy usage. The Japanese are not as energy rich as the Swedes are,
so it's going to be a major achievement for them, but doing it will
unleash the creativity of their industries, making them more, not less
competitive. Countries in Europe are announcing that they are going to
increase their resource productivity by ten fold. The European Commission
unveiled "20
20 by 2020"
an action plan to tackle climate change, reducing carbon emissions by 20
percent and getting 20 percent of all energy from renewable sources by
2020. Those are examples government taking a leadership role, setting a
goal, and bringing citizen groups together to talk about how are we going
to achieve it, then laying out the strategy to get it done.
GT: Can you think of an example here in the States?
HL: The New England states have implemented the Regional Greenhouse Gas
Initiative (RGGI),
a mandatory carbon cap and trading strategy. States like New Jersey have
very aggressive solar rebate programs. In Colorado, citizens passed
Amendment 37, a state renewables portfolio standard, mandating that
the utilities get 20 percent of their energy from renewable power. The
Governor of Arizona announced a program of carbon reduction and energy
efficiency. We're starting to see government officials coming forth. And
smart businesses are supporting this, calling for a national carbon
standard. GE, Walmart, Duke Power, and about five other major businesses
went before the Senate and called for mandatory cap and trade in carbon.
They said, "We can't deal with all these competing local standards. Let's
get coherence in government, and that means a national standard." Now all
the presidential candidates are also calling for such a cap and trade
system. It's coming.
GT: What about those who say that reducing the amount of fossil fuels
we use will bankrupt the economy?
HL: The folks who say that are simply wrong. Look at the what the best
companies are doing. One of the first was British Petroleum. In 2000 they
rebranded themselves as
Beyond Petroleum, and announced they were going to reduce their
emissions of greenhouse gases 10 percent below their 1990 numbers by 2010.
Now, 10 percent may not seem like a lot, and indeed the scientists say
that by 2050 we have to reduce it by about 80 percent, but 10 percent is
more than this country says it can't do under Kyoto. And remember, BP is a
rather carbon-intensive company. They thought this was a stretch. What
surprised them was that it only took them two years to do it, and doing it
immediately saved them $750 million. And they now say, even if it costs
them money, it would be worth it because it makes them the kind of company
the best talent wants to work for.
DuPont went even further. They announced a 65 percent reduction by
2010, over their 1990 levels. And they announced that by 2010 they were
going to get 10 percent of their energy and a quarter of their feed stocks
from renewables. Did DuPont join Greenpeace? They made this announcement
in the name of increasing shareholder value. They've already saved $3
billion, and they have already achieved their target worldwide. And
they're not the edge of the envelope.
Government buildings should be showcases of the best technologies.
It's time that government at least joins the effort. Government buildings
should be showcases of the best technologies. They should enable people to
see what's possible, to experience it. When you live within a green
building, you're healthier. You feel better, you're more productive. Good
green buildings increase labor productivity by 6 to 16 percent. Doing that
nationally would be worth $200 billion a year. Boeing did a lighting
retrofit. They saved a lot of money and saved energy, cut their energy
bill somewhere around 90 percent. They reduced their error rate 20
percent. For those of us who fly around on airplanes, this is very good
news.
GT: One last question. There are thousands and thousands of
people in
California
government
with purchasing power.
What would you say to them?
HL: You have the chance to make California the leader of the new energy
economy. My old boss Dave Brower use to say, "What do you want the future
to be like fifty years from now? Let's do a little dreaming. Aim high.
Navigators have aimed at the stars for centuries. We haven't hit one yet,
but because they aimed high, they found their way."
Every decision you make is influencing the future. Every time you spend a
dollar, you're choosing to reward the policies of a company. Are you
rewarding companies that are making the commitment to derive their
materials sustainably, to sustainably produce their goods and services,
and then responsibly deal with the consequences that the product will put
out in the environment, the waste that they've generated? Are they
responsibly taking care of their people? Is this a company that is
honorably doing business? If it's not, why are you rewarding it? People do
what you incentivize them to do.
With your own staff, are you giving them a share of the savings that come
from doing things right? Or are you subtly encouraging them to do things
in the old way, to not take risks? How we live our lives as individuals is
enormously important.
The kind of leadership that we need in today's world is for every one of
us, however little we may think we are, to take on the responsibility of
saving the world.
GT: Thank you very much.
HL: You're welcome.
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