Hunter Lovins Makes the Business Case for Climate Protection

At the LOHAS forum last week, Hunter Lovins of Natural Capitalism Solutions presented the business case for climate protection to a room full of corporations working in or moving into the sustainability space.

Lovins is a tough talking consultant, who, though she spent many years in California, seems quite at home in Colorado, wearing her trademark cowboy hat.

While she works with some of the worst corporate polluters, she pulls no punches when talking about the need for talk to meet action. She even admonished the LOHAS audience for choosing to meet in person as opposed to virtually, asking if anyone had calculated their carbon footprint for attending the conference.

During her presentation, Lovins covered some familiar territory for anyone who has been watching the global economic collapse: 15% unemployment, $50 trillion gone, 30 of 34 leading economies shrinking, plus our continuing $2 billion a day oil habit. She also talked about the global environmental collapse. Lovins is particularly concerned with the melting of the Himalayan glaciers, which provide fresh water for two-thirds of the people on Earth.

“We’re living on a razor’s edge,” she told the audience, “and time is running out. We have to transform everything.”

In order to transform the economy, Lovins believes that we should all be asking ourselves – businesses included – not what is possible but what is necessary.

In her mind, what is necessary is reducing greenhouse gas emissions to an atmospheric level of 350 parts per million, down from about 390 ppm right now. She doesn’t sugar coat that number, stating that if we can reduce our emissions, there is a 50% chance we can avoid climate catastrophe. Not great odds, but better than the alternative.

“The president of the Climate Action Project, Bill Becker, once said, ‘If we insist on ruining the planet, we have to stop claiming we’re a superior species’,” Lovins quoted to the room of executives.

To make the point for businesses to get on board, she repeated a question Ray Anderson of Interface Global, another LOHAS speaker, had asked the previous day: “What is the business case for destroying the planet?”

When I caught up with Lovins later at the Presidio School of Management booth, she added that it’s equally a non-starter to ask companies to go out of business for the benefit of the planet, emphasizing that sustainability and profitability must work in tandem.

When it comes to policy, Lovins is adamant that the Waxman-Markey climate bill must pass this year.

“Is it enough?” she asked the audience. ”Hell, no!” she shouted, and suggested that people start calling Congress to try to strengthen it.

“It’s not a good bill,” she said, “but it’s all we have.”

Lovins is also emphatic about coal, saying we don’t need and can’t afford the damage. I asked her about her thoughts on carbon capture and storage (CCS) technology, pitched by the coal industry and even U.S. Energy Secretary Steven Chu as a key to a lower-carbon energy future.

“Clean coal does not exist,” she told me.

“There’s nothing clean about digging up coal or mountaintop removal. It’s not clean. We can capture carbon and mercury … Dr. Malcolm Wilson at the University of Regina in Saskatchewan has shown how to do it, but it doubles the cost. If solar is near cost parity now, why double the cost of coal?”

Lovins makes a number of other bold assertions that might not sit so easily with climate activists.

She believes that the winners of today will be those organizations that are prepared to accept and “rigorously exploit” the current crises of climate, food, water, volatile energy prices, economy and ecosystem collapse that she calls the global drivers of change. Because of that, she says, the science of climate change doesn’t matter.

Her assertion is that companies will do the right thing to solve the climate crisis because they know how and they can make a profit while doing it.

“Profitability is the most successful point of entry," she told me. "We now have a really strong business case for sustainability; there are now 15 separate studies showing that sustainability enhances profitability.”

She cites multiple examples: DuPont cut emissions by 65% to 80% below its 1990 levels and saved $2.2 billion a year, the same amount as its profit margin. ST Micro set what Lovins calls a BHAG – a big, hairy, audacious goal – of reaching zero waste by 2010. In doing so, it went from being the #12 to the #6 chip maker and saved $1 billion. And then there is the big one:

“Wal-Mart is driving the green revolution,” she told the audience, which included at least one Wal-Mart executive, “and not out of the goodness of their hearts.”

I asked Lovins about her penchant for working with the Wal-Marts of the world.

“We like working with the dirtiest, nastiest, least sustainable companies if they express an interest,” she said. “I can do a great deal more good for the world helping an organization that’s part of the problem become part of the solution then taking on an organization that’s already sustainable and helping them become incrementally better.”

She’s not worried about Wal-Mart’s reticence to put dates to its BHAGs of zero waste, carbon neutrality and 100% green products on its shelves, telling me that Wal-Mart is the most dramatic example of sustainability meeting profitability.

“If Wal-Mart were a country, it would be the 20th largest in the world.” Lovins said, adding that when it comes to sustainability “what’s important is what they are doing about it, not dates. Can we look at Wal-Mart today versus a year ago and see a measurable difference?”

Lovins is no Wal-mart apologist, though. Smiling, she told me that she once chucked the book How Wal-Mart is Ruining the Planet at Lee Scott during a meeting, pointing out to him that there was nothing sustainable about roaming the planet and pillaging. She was heartened when the company actually hired a Presidio graduate after that to teach them about sustainability.

Companies that are focusing on sustainability are outperforming competitors, even in a sluggish economy, Lovins said. She points to Goldman-Sachs, the environmental leader among the large investment banks, having a 25% higher stock value than its competitors, and AT Kearney’s findings that companies heading toward sustainability out-performed their competitors by $650 million.

But it’s bigger than finances, she admits.

“Adam Smith said that markets allocate scarce resources efficiently in the short-term,” she told the audience. “We need to deal with the long-term.”

The long-term for her is transforming the worst polluters into sustainable, profitable businesses that are creating solutions to the climate crisis.

“We don’t go out approaching businesses,” she told me, “we go where we’re asked to go. We occasionally fire a client if we think they’re not serious."