“It isn't what we don't know that gives us trouble, it's what we know that ain't so.” -- Will Rogers

This nation’s energy policy for the past forty years is not that hard to judge -- it’s disjointed, shortsighted and largely ineffective. We know it, we say it, but we continue to ignore it. It’s the “what we know that ain’t so.”

But, with turmoil in the world, and fuel prices on the rise -- again, it’s well past time to continue ignoring it. We can’t afford to do so, either in our pocketbooks or in our security. It’s an energy policy of the past, not that of a once-again growing world economy that has become increasingly interconnected. We cannot let yesterday’s approach hamper tomorrow’s reality. As Will Rogers also said, “Never let yesterday use up too much of today.”

So, we need to use solutions like practical environmentalism in our approach. We’ve got to focus on the following:

(1) Performance: We must improve our usage of energy through commonsensical, responsible approaches. For example, here are some of Environmental Defense Fund’s driving tips that make a great deal of sense:

• Lighten your load. Carrying around an extra 100 pounds in your car reduces your fuel economy by up to 2 percent.

• Keep it smooth. Rapid acceleration and braking reduces gas mileage and can burn an extra 125 gallons of gas per year.

• Mind speed limits. In highway travel, exceeding the speed limit by a mere five mph results in an average fuel economy loss of 6 percent.

(2) Transparency: We must do a better job in communicating why these issues are important. Sure, the planet’s long-term health is involved. But, that doesn’t motivate everyone, and we’re naive if we believe it to be so. We must address the near-term personal risks and benefits, as well.

The tips above do just that, by stressing both the environmental and financial savings. There is nothing wrong with this. It doesn’t make these actions any less legitimate -- in fact, it makes them even more valuable and worth taking.

Believe in climate change. Or don’t. It doesn’t matter.
 
But you’d better understand this: the best route to rebuilding our economy, our cities, and our job markets, as well as assuring national security, is doing precisely what you would do if you were scared to death about climate change. Whether you’re the head of a household or the CEO of a multinational corporation, embracing efficiency, innovation, renewables, carbon markets, and new technologies is the smartest decision you can make. It’s the most profitable, too. And, oh yes—you’ll help save the planet.
 
In Climate Capitalism, L. Hunter Lovins, coauthor of the bestselling Natural Capitalism, and the sustainability expert Boyd Cohen prove that the future of capitalism in a recession-riddled, carbon-constrained world will be built on innovations that cutting-edge leaders are bringing to the market today. These companies are creating jobs and driving innovation.
 
Climate Capitalism delivers hundreds of indepth case studies of international corporations, small businesses, NGOs, and municipalities to prove that energy efficiency and renewable resources are already driving prosperity. While highlighting business opportunities across a range of sectors—including energy, construction, transportation, and agriculture technologies—Lovins and Cohen also show why the ex–CIA director Jim Woolsey drives a solar-powered plugin hybrid vehicle. His bumper sticker says it all: “Osama bin Laden hates my car.”
 
Corporate executives, entrepreneurs, environmentalists, and concerned citizens alike will find profitable ideas within these pages. In ten information-packed chapters, Climate Capitalism gives tangible examples of early adopters across the globe who see that the low-carbon economy leads to increased profits and economic growth. It offers a clear and concise road map to the new energy economy and a cooler planet.
 
 
 

[Editor's note: This is the first in a series of excerpts from "Climate Capitalism: Capitalism in the Age of Climate Change," by L. Hunter Lovins and Boyd Cohen, just published by Hill and Wang.]

The CEOs of the companies implementing greater sustainability in their business practices may not recognize it, but they are following the principles set forth a decade ago in this book's predecessor, Natural Capitalism. These principles have proved to be some of the best guides a company can use as it embraces sustainability in its own operations. They also represent a roadmap to a sustainable economy.

The first principle, buying time by using all resources as efficiently as possible, is cost-effective today and is the best way to address many of the worst problems facing humankind while delivering premium returns on investments. There are many smart companies implementing this principle, from measuring and managing their carbon footprints with the Carbon Disclosure Project, to Mi Rancho Tortilla's saving $175,000 a year by implementing efficiency measures because it knows it has to do so to meet Walmart's Sustainability Scorecard. It and the other small businesses participating in Natural Capitalism Solutions' "Solutions at the Speed of Business" program are enjoying returns on investment ranging from 100 percent to more than 600 percent.

Perhaps the best example of the success of efficiency is GE's use of the Ecomagination campaign to regain the company's status as an innovation leader. This commitment, little more than greenwashing when CEO Jeffrey Immelt announced it (all that GE did was to rebrand as "green" some of the products it was already making), is now the engine driving the company's growth. Even in a down economy, Ecomagination revenues rose from $5 billion in 2005 to over $25 billion in 2010. It enabled GE to cut its emissions by 22 percent in 2009 compared to its initial goal of 1 percent in 2004. By 2015 GE reckons to cut the energy intensity of its operations by 50 percent.

In his annual letter to shareholders, Immelt confirmed that Climate Capitalism is good for the bottom line, reporting, "Ecomagination is one of our most successful cross-company business initiatives. If counted separately, 2009 Ecomagination revenues would equal that of a Fortune 130 company and Ecomagination revenue growth equals almost two times the company average."

Efficiency buys time, but unless that time is used to redesign how businesses are run and how products are made and delivered, no amount of efficiency will solve the climate crisis or enable us to create a truly sustainable economy.

Smart climate capitalists are also implementing the second principle of Natural Capitalism: redesign how we make and deliver all products and services using approaches such as cradle-to-cradle concepts, Biomimicry, the circular economy, Design for the Environment, and others. Nature makes a wide array of products and services that run on sunlight, producing neither waste nor toxics. The design of macroeconomic systems and microeconomic enterprises should mimic healthy, native ecosystems in diversity, adaptability, resilience, and local self-reliance.

As Biomimicry's founder, Janine Benyus, says, "After 3.8 billion years of research and development, failures are fossils, and what surrounds us is the secret to survival. The more our world looks and functions like this natural world, the more likely we are to be accepted on this home that is ours, but not ours alone."

The Calera company is using seawater and 92 percent of the carbon dioxide waste from the Moss Landing, California, power plant to create cement in the same way that sea creatures create their calcium silicate shells. Every ton of cement the process makes sequesters half a ton of CO2, in just the way that coral reefs are formed. Investors include Vinod Khosla and Peabody Coal.

Recognizing that green plants do not see CO2 as the biggest poison of our time but rather use it to create starches and glucose, the building blocks of life, Dr. Geof Coates at Cornell and other scientists are mimicking this process, using CO2 and catalysts to make polycarbonates, a biodegradable plastic that is almost 50 percent CO2 by weight. "It's highly abundant and really cheap," says Dr. Coates. He is using similar catalysts to create Styrofoam from orange peels. Existing companies have huge opportunities to "intrepreneur" sustainable solutions, as well. GE worked with Walmart to commercialize more cost-effective LED light-bulbs and other efficiency technologies. Because of such success, GE committed $10 billion more to Ecomagination research and development to grow its portfolio of environmentally sensitive products, services, and technologies. The fact that the Chinese 11th Party Congress passed the Circular Economy Initiative, now a guiding factor in China's massive investment in renewable energy and energy efficiency, should give all Western economies pause.

Achieving a truly sustainable economy will also mean managing institutions so they are not just efficient and innovative, but also restorative of human and natural capital, the third principle of Natural Capitalism.
 
Business as usual has degraded intact ecosystems and human communities around the world. To reverse this we will need to change how we define success. Ecosystem services such as a healthy climate, soil fertility, and the restorative capacity of an intact biosphere are not presently on any company or country's balance sheet. Yet they underpin the capacity of the planet to sustain life and thus the economy. So long as our economic and accounting system treats them as having a value of zero, it will be impossible to implement any sort of capitalism that can deliver enduring wealth and well-being.

Excerpted from "Climate Capitalism: Capitalism in the Age of Climate Change," by L. Hunter Lovins and Boyd Cohen, published in April 2011 by Hill and Wang, a division of Farrar, Straus and Giroux, LLC. Copyright © 2011 by L. Hunter Lovins and Boyd Cohen. All rights reserved.
 

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." 

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.

GlobeScan Incorporated and SustainAbility Ltd. surveyed 559 sustainability experts from corporations, government, non-government organizations, academia and entities that provide services, such as consultancies, for their research focusing on perceptions of sustainability leadership.

Participants were asked to name companies they consider sustainability leaders, why they think a firm is a leader in sustainable development and what types of leaders have done the most to advance sustainability in the past year.

The findings of the latest SustainAbility Survey are available at www.globescan.com.

News coverage of the report is available on GreenBiz.com along with a blog post on the results by SustainAbility Senior Vice President Jeff Erikson.

[Editor's Note: GlobeScan and SustainAbility release the findings today of the 2011 SustainAbility Survey. New coverage of the report is available on GreenBiz.com.]

Here is the good news for companies investing in integrating sustainability into their business: You are perceived much more favorably than government leaders and multilateral organizations in advancing the sustainability agenda.

But here is the bad news: Less than one fourth of experts and practitioners think that corporate leaders are doing a good job of it, placing them well behind social entrepreneurs, NGOs and scientists.

According to the latest GlobeScan/SustainAbility survey, social entrepreneurs garner the most confidence among those surveyed, with 57 percent rating their ability to advance the sustainability agenda as “excellent” or “good.” While less than half felt that NGO leaders performed well, this was better than leaders in the scientific community fared (40 percent). Corporate leaders and leaders of multilateral organizations both received a favorable rating of just under 25 percent. Meanwhile, sustainability performance of elected national leaders is seen as dismal, with only 6 percent rating them favorably.

Surprising? Not really. In recent years it has become more and more obvious that incremental improvement is not going to be adequate to overcome the severe challenges that we face as a society, including climate change, water scarcity, poverty, disease and biodiversity loss. The sustainability community is hungry for products and business models that don’t just do a little less harm, but have the potential to make radical improvements. And social entrepreneurs -- those little guys who are bucking the system -- are seen as the best hope by many for driving the dramatic change that is required.

The perception of NGOs' performance has slipped a bit over the last three years, dipping for the first time under 50 percent favorable rating. However, the ratio of favorable-to-unfavorable is better than 3:1 (one third of respondents were neutral), indicating a still-strong perception of performance. Perhaps the NGO community’s inability to drive public policy on issues such as climate change keeps them from being seen in a better light.