Can Climate Capitalism Save the World?

For roughly three decades, L. Hunter Lovins has been a clear and provocative voice on business and sustainability -- first at the Rocky Mountain Institute, which she co-founded in 1982 with Amory Lovins, and later through her own organization, Natural Capital Solutions.

Along the way, she has been a prolific writer, speaker, educator and a globally recognized consultant on sustainability to companies, governments and others.  

On the occasion of the publication of her latest book, "Climate Capitalism: Capitalism in the Age of Climate Change," coauthored with Boyd Cohen, I recently sat down with Hunter to discuss her book (the first of several excerpts can be found here) and her vision of what's possible.

Joel Makower: It's been 11 years since "Natural Capitalism" came out. Why was it time to write another book?

Hunter Lovins: I hadn't intended to write another book. But a man named Boyd Cohen approached me and said that he wanted to be the co-author on the sequel to "Natural Capitalism." I chuckled politely and he said, "No, really."  Hunter Lovins

And Boyd was good to his word. He did a lot of the heavy lifting of the research. I did most of the writing. And, day before yesterday, a book arrived, an actual physical book called "Climate Capitalism," which in many ways is exactly the sequel to "Natural Capitalism." We knew that there was a business case for companies and communities and citizens behaving more sustainably, but all we had were occasional anecdotes, and that's what "Natural Capitalism" is -- a collection of anecdotes of ways that people can make more money by behaving more sustainably.

"Climate Capitalism" is, if you will, the conclusion to the argument. We now have overwhelming proof from those wild-eyed environmentalists at Goldman Sachs showing that the companies that are the leaders in environment, social, and good governance policy have 25 percent higher stock value than their less sustainable competitors. And we have research from A.T. Kearney showing that even in the economic collapse, since 2008, the sustainability leaders have the fastest-growing stock value, are well protected from value erosion, even in a down economy, and in 16 out of 18 industries studied, hundreds of companies, these more sustainable companies have an average market capitalization of $650 million more than their less-sustainable competitors. There's the new study out from Maplecroft showing that the top 350 companies in climate innovation and carbon-management programs have a positive correlation between financial performance and their ability to successfully implement disruptive market innovations related to climate change.

Assume climate change is a hoax. Don't go to Vegas on the odds of that being true, but if all you are is a profit-maximizing capitalist, you'll do the same thing you'd do if you were scared to death of climate change because we know how to solve this problem at a profit, and the smart companies are prospering by doing that. The book then walks through nine chapters of showing this in business in general, in energy efficiency, in renewable energy, in buildings, in vehicles and in transportation policy generally, in agriculture, in carbon markets, in adaptations to climate change.

The last chapter says, all kidding aside, climate change is real and it's a very serious problem, but it's only one of a suite of problems now facing us -- everything from record-high food prices and peak oil to the need to bring genuine development to half the world's people that live on less than $2 a day, to the fact that we're losing every major ecosystem on the planet.

And yet what we're doing to drive this is fundamentally uneconomic. So the last chapter asks what will it take to create an economy that meets the needs of all people on the planet while enhancing all forms of capital -- human capital, natural capital, as well as financial and manufactured capital -- and suggests how we might go forward to transform our economy toward prosperity and a system that will support all living things on the planet.

JM: So you're advocating a no-regrets strategy here, which a lot of us have been saying for a while is a good approach. But if it makes so much sense, why aren't more companies saying, "Well, great, let's do this?"

HL: They are doing this. If you look in the last couple years at the growth in the number of companies that are appointing chief sustainability officers, that are implementing significant improvements in the way in which they use energy and resources -- and, often, not for any particular marketing reason. They're doing it as part of ordinary good business. And so they're not really talking about it as green or environmental or sustainability.