John Elkington & Geoff Lye
Profound change is in the pipeline, not so much because of what such politicians feel impelled to promise, but because of the way powerful demographic, planetary and market forces are converging to drive real action.
Don’t fix what isn’t broke, we are often encouraged. But as the evidence pours in that something is truly awry with our climate, the appetite for real or imaginary climate fixes is likely to go through the roof. So one question we need to ask is how we might sort out real from imaginary – and potentially even dangerous – solutions. First, though, a few words about where we are in all of this.
On the face of it, the “Houston-we-have-a-greenhouse-problem” lobby seem to have been on a roll. Early in 2007, Al Gore walked off with his Oscars, Merkel and Chirac were vying to put Europe on a low carbon diet, President Hu Jintao had declared that global warming is not just an environmental issue but make-or-break for China’s future, California’s Governor had morphed from “Terminator” to “Germinator” on the strength of his muscular support for green technology, and even Wal-Mart was trying to sell sustainability. Who’d have imagined that things could have moved so far, so fast? Even if many of these declarations have been more form than substance, profound change is clearly in the pipeline, not so much because of what such politicians feel impelled to promise, but because of the way powerful demographic, planetary and market forces are converging to drive real action.
Market forces rarely come more powerful than Hurricane Katrina. Wal-Mart’s CEO Lee Scott explained his own change of heart as being driven by the wake of destruction that cut through his company’s economic heartland. He woke up to the fact that the eco-issues campaigners had been pushing him to tackle were, in effect, “Katrina in slow motion”. It may be hard to see Wal-Mart as any sort of model of a sustainable business, long-term, but some of its recent initiatives have defied at least some critics’ expectations. Certainly, the fact that they are now publicly committed to running 100% on renewable energy and to stocking sustainable fish (when they can find it) is several steps beyond industry-standard “greenwash”. And the key point to remember here is that when such market gatekeepers switch on, the impact can be huge. Wal-Mart, for example, plan to push their new priorities through their global supply chain of 61,000 companies.
But as climate increasingly becomes a systemic threat – and the linked opportunity spaces open out – the proposed fixes will proliferate like rabbits. Some will be old solutions competing for new roles, like the nuclear industry presenting itself as the only answer to climate disruption. And some will be new, ranging from folk suggesting space mirrors to cut incoming solar radiation through to the growing range of start-ups now pursuing such areas as ocean fertilization.
Companies like Climos, GreenSea Venture and Planktos are attracting investors with the promise of oceanic fixes. Among the ideas: sprinkle iron filings into the ocean, in industrial quantities, as a way to catalyze blooms of fast-growing plankton that, in turn, sponge up carbon dioxide. Then the hope is that when the algae decompose, they will sink deep into the ocean, sequestering the carbon in deep sediments.
Surprisingly, such ideas – despite their huge potential for unintended consequences – are likely to fall on increasingly fertile ground as the fourth societal pressure wave shapes markets around the world. Here’s why: a series of gigantic societal pressure waves have impacted politicians, regulators, business and, increasingly, the financial markets.
The first wave built from the early 1960s, in the wake of Rachel Carson’s epoch-making book Silent Spring, culminating in the first UN environmental conference in 1972. Through the subsequent downwave a raft of environment ministries surfaced worldwide, followed by a secondary wave of regulation. Industry, on the defensive, was forced to comply with a flood-tide of new laws. And that’s where many companies remain.
The second wave, peaking between 1988 and 1991, was very different. The Brundtland Commission published Our Common Future in 1987, introducing the concept of sustainable development. Having founded SustainAbility a month earlier, we launched The Green Consumer Guide in 1988. It caught the zeitgeist, selling a million copies. Spooked by issues like ozone depletion, growing numbers of ordinary citizens voted for change with their purses or wallets. New faces appeared in the Green spotlight, as political leaders like Thatcher, Bush the First and Gorbachev made their first green speeches – and Green parties surged in Germany and even, briefly around the 1989 EU elections, the UK. Industry, again, was off-balance, the challenges even tougher. Previously companies could lobby to slow down or gut new laws. Now retailers began changing their product specifications almost overnight – often leaving manufacturers and growers months or just weeks to change their product formulations. Lead went from petrol, mercury from batteries, phosphates from detergents, chlorine from paper. Companies scrambled to audit suppliers and, for a time, the game became competitive.
But then things changed again. Capitalism went triumphalist. Through the 1990s, companies reverted to corporate citizenship. Globalization helped drive things along, with key controversies surrounding companies like Shell, Nike and Monsanto, although one unfortunate result was to position the agenda within corporate social responsibility departments rather than boards. From 1999, the rules of the game morphed further as the third wave peak kicked off in the streets of Seattle with the anti-WTO protests. This time, though, unless their jobs were being off-shored, the issues seemed more remote to most people.
The 9/11 attacks chopped back that third wave, savagely. Emerging concerns around environmental security were sluiced away in the race to win the misconceived war against terrorism. But a new wave is now building, with climate change a key driver of political responses. London Mayor Ken Livingstone and Tory leader David Cameron are UK examples, the mayors of Seattle, San Francisco and Chicago among their US counterparts – while Arnold Schwarzenegger’s market-shaping initiatives in California are the shape of things to come.
Raising our game
Business, however, is still where much of the action is likely to be found in future. Companies and NGOs are combining forces in groundbreaking alliances like the Climate Leaders Group and, in the US, the Climate Action Partnership, to lobby politicians for action. And there was an interesting cameo on 15 March 2007 when the chief executives of America’s biggest car companies withstood pressure during a Congressional hearing to belittle the significance of man-made carbon emissions. Bush the Second's McCarthy-like suppression of environmental science is weakening, but we continue to push to make corporate lobbying more transparent. Too many companies remain schizophrenic, spotlighting good deeds in annual reports, then lobbying furiously behind the scenes to stall government action in areas like climate change.
So where next? We’d like to know too, so we recently evolved a set of scenarios exploring both “Breakdown” and “Breakthrough” futures, which appear in the report Raising Our Game*. In terms of breakthrough technology and business models, the growing interest of venture capital outfits like Kleiner Perkins Caufield & Myers in the “cleantech” field – with billions of dollars pouring into biofuels, wind energy and solar photovoltaics – is encouraging. But even the Kleiner Perkins folk admit that if the Greenland ice-cap melts the ensuing sea-level rises will drown many of the world’s most populous cities.
Let‘s hope, among other things, that business embraces a new WWF initiative, “One Planet Business”, which for the first time will give companies a clear picture of their environmental footprints – and of the yawning gaps between where they are and where they would need to be to meet their growing number of sustainability pledges. The idea is to develop environmental budgets – including carbon budgets – for each major sector of industry, with the automobile industry first in WWF's headlights.
So let’s focus in for a moment on transport and mobility. If railways replaced horses, and cars replaced trains, what will be the next evolutionary step after the car? Like its counterparts in North America and Asia, the EU auto industry believes the answer is: the car. Some manufacturers in Detroit still hope – against the odds – that their beloved, highly profitable SUVs will long roam the freeways as the vast, lumbering buffalo herds once did the Great Plains. But the evidence suggests that they, too, are doomed.
The answer, again, is that no single fix can save us. Indeed even a bunch of them will likely only postpone the day when Peak Oil considerations mean that urban populations – particularly those in the world’s booming megacities – will have to switch to more sustainable transport, mobility and access solutions and behaviours. True, bringing hybrid technology to SUVs (as Ford did with its Escape) or developing fuel cell-based vehicles (as GM and others are doing) may improve things at the margins, for a while. But we seem to be on the verge of an era in which natural resource constraints predicted since the early 1970s take hold to a degree that would have been unimaginable a decade ago.
If you – or your board – still need convincing, try reading the recent Stern Review on the Economics of Climate Change or the latest reports of the Intergovernmental Panel on Climate Change (IPCC). One of Stern’s key conclusions is that the cost of inaction on climate change is likely to be dramatically greater than those associated with timely, effective action. On the other hand, if the costs of greenhouse gas emissions are properly internalized, the market opportunities will likely run to hundreds of billions of dollars annually.
No surprise, then, that some leading companies are beginning to break ranks – and even switch sides – as the evidence of climate stress builds. Timed to break just ahead of President Bush’s 2007 State of the Union address, the US Climate Action Partnership – an extraordinary coalition of leading companies and NGOs – called for US regulation to limit greenhouse gas emissions to deliver concentrations of CO2e (the CO2 equivalent of all greenhouse gases in the atmosphere) which will stabilize at 450–550ppm. Given the current concentration of up to 430ppm, their sense of urgency is understandable.
As the fight gets nastier, it was no surprise to see the US Administration leaking a key IPCC report – presumably to give climate sceptics time to get their defences in order. Indeed, with the Bush team’s days numbered, climate specialists are increasingly outspoken about the ways in which it has suppressed, doctored or distorted research on climate change and its implications. But however nasty the political endgame may become, endgame it is. The IPCC’s predicted conclusion is that the scientific case for urgent action is hardening, suggesting that the auto and fuel industries – among many others – will face a growing barrage of criticism and, more importantly, increasingly powerful regulatory and market drivers for fundamental change. The answer to at least some of tomorrow’s mobility needs may well be a car, but it may well be Chinese rather than European, a diesel-hybrid rather than petrol-powered, and owned by someone other than the driver.
There are also those who believe that one answer will be to develop new generations of electric car, like the TH!NK or the 0–60mph-in-about-4-seconds Tesla Roadster, but for the moment the big push is towards biofuels. It was no accident that President Bush visited DuPont the day after his State of the Union Address, given that the chemical giant is partnering with BP to develop new generations of biofuel. And on this side of the water, the EU is now vigorously pushing new legislation to force oil companies to blend expensive biofuel into petrol supplies.
Unfortunately, a shift to growing our fuels is not going to be any sort of magic wand. For one thing, biofuel production will compete for food crops. While the US Department of Agriculture (USDA) has predicted that bioethanol distilleries will require 60 million tons of corn from the 2008 harvest; the Earth Policy Institute (EPI) estimates that distilleries will need 139 million tons – more than twice as much. If the EPI estimate is at all close to the mark, the Institute itself concludes, “the emerging competition between cars and people for grain will likely drive world grain prices to levels never seen before. The key questions here are: How high will grain prices rise? When will the crunch come? And what will be the worldwide effect of rising food prices?” Europeans probably won’t much like horizon-to-horizon crops of genetically-modified fuel plants either, while anyone who grows these crops will face an array of challenges linked to fertilizers, pesticides and water.
How do you like your fix?
Back to our starting question. At a time when the demand for solutions is likely to soar, how do we ensure that the technical fixes adopted are the right ones? There are many elements to the story, ranging from strategic impact assessments through to citizen juries, but it is already clear that some fixes are likely to be true fixes – while others will turn out to be false fixes. Let’s start with the latter:
False (short term, at best) fixes
Market fixes. We should be very careful of assuming that we can turn all climate issues into economic opportunity without the need to incentivize fundamental changes in behaviour and lifestyles.
Biofuels. Yes, they have their place in any sensible fuels portfolio, but they will also trigger an array of economic, social and environmental impacts and concerns.
Fertilizing the oceans. This may make sense at the test-tube level. But having already destabilized the atmosphere, are we really happy to risk doing the same with the oceans?
Give the planet an umbrella. If bioethanol is a boondoggle for corn growers, this one is likely to be the equivalent for the aerospace industry. The US government has called for the IPCC to recognize the potential role of advanced technologies, including the positioning of giant solar shields in place to cut down the amount of incoming solar radiation. How about tightening fuel efficiency standards as a first step?
True (longer term) fixes
Conservation. This has to be our number one priority. Simply changing the energy mix and attempting to find technical fixes to reducing carbon emissions is always likely be a second-best option.
Regulation. Voluntary measures may help spur early experimentation by business, but the ultimate key to effective, sustained action will be regulation – and enforcement. This message is core to the US Climate Action Partnership agenda.
Incentives. In the mobility sector, for example, auto manufacturers need to be incentivized to redirect technological advance into improving fuel economy rather than performance. If congestion taxes and other forms of road charging were widely adopted, our consumption of energy – and with it our CO2 emissions –would fall more dramatically and more quickly than by chasing new technologies.
Politics. The biggest challenge is a political challenge, requiring political will, leadership and action. We need to see more US Climate Action Partnerships, working for smarter, more effective incentives for change. Luckily, as Al Gore famously put it, political will is a renewable resource.
Hard Rain 2nd edition, 2007
* Raising Our Game: Can We Sustain Globalization? Published by SustainAbility, May 2007