Building green and building profits

greenthinkphoto_credit-_revitaliza_consultores

 

                       “Face reality as it is, not as it was or as you wish it to be.” —Jack Welch

Not long ago, I was sitting in my office, talking with a reporter from one of the big newspapers. I watched him open his bag and remove the tools of his trade, lining them up on the table the way a surgeon arranges her scalpels.

Notebook, audio recorder, research documents, prewritten questions. It quickly became clear that he was intent on writing an “exposé” about the U.S. Green Building Council (USGBC), the organization I cofounded and now lead. He had prepared for a laborious extraction of our deep, dark secrets.

But it didn’t take very long — I cut right to the chase. “The way it works,” I began, “is that developers, owners and tenants see significant savings and environmental benefits from green buildings, while USGBC members see significant financial returns.”

He glanced at the audio recorder he’d put on my desk, presumably to make sure its red light was still on. Then he looked back at me, his face showing a mix of bewilderment and disappointment — like a cat that has just been handed its mouse.

“It sounds like you’re admitting,” he said, “that USGBC members use environmental sustainability as a way to make money.”

“That’s exactly what they do!” I replied.

Needless to say, it was a short interview. This reporter thought I was fessing up to a nefarious ploy — a greenwashing scheme of epic proportions.

In fact, I was pointing out a fundamental truth about enterprise and the environment in the 21st century: Sustainability has become an incredible business opportunity. The guy may have been a journalist, but this was news to him. And he’s not alone.

I’m constantly confronted by — and confronting — people who just don’t get who I am and what I do. You could say I stick out like a green thumb, thanks to my convention-bending belief that profit can (and hopefully will) save the planet.

Of course, by “save the planet,” I don’t mean the 4.5-billion-year-old space rock we call home. The rock will still be here even when people aren’t. What I mean by “save the planet” is save the world as we know it — a world in which modern civilization and civil society are able to thrive.

It has become abundantly clear at this point in human history that, if we want to continue to thrive, we must not exploit the natural world, but live and work in harmony with it. Over the past 20-plus years, I’ve worked hard to bring together a community of like-minded professionals who have the skills to turn the dream of a sustainable future into a profitable reality.

USGBC’s member organizations range from Fortune 500 companies to mom-and-pop design shops; our LEED professionals around the world include everyone from blue-collar contractors to red-state regulators. But no matter where they are or what they do, our members share a diehard belief that sustainability is a win-win for the economy and the environment.

 

Outside of the green building community, however, espousing this point of view is often met with a blank stare — if not fierce disagreement. After all, everyone knows the private sector and the environmental movement are mortal enemies, right?

We read about businesses fighting environmental regulation because it threatens their profits, or environmental protesters putting themselves between greedy loggers and the endangered owl. It’s an easy narrative to get your head around. Everyone has a clear, simple goal: making a buck by pillaging the Earth, or killing jobs to save some flora and fauna. It’s an “either/or” scenario in most everyone’s book.

The idea that it could be “both/and” is, to the vast majority, unfathomable. And that’s no surprise. After all, this is how we’ve seen the world for the past 50 years. Environmentalists and business leaders know their friends and foes. It’s clear who they need to “defeat” in order to “win.”

Sure, both sides have been cooperating a bit better as of late. Environmental groups monitor and verify businesses’ carbon emissions and other environmental impacts, for example. And almost every business aims to be perceived as green. But for the most part, environmentalists and the business community continue to wage the same battle they’ve been fighting for decades.

Here’s the thing about this adversarial worldview: For a long time, it pretty accurately described the facts on the ground. The environmental movement was absolutely right that the only way to get business to lessen its impact on the environment was through the time-tested method of agitation, legislation and regulation.

Without the force of law, no amount of pleading could get the private sector to clean up its act. Industry had no incentive — and no desire — to give up profit and growth (as they were used to accounting for it) for a cause that wasn’t their own.

And the environmental movement knew it, so they protested and lobbied to pass major pieces of environmental legislation that we revere to this day: the Clean Air Act signed by President Nixon in 1970; the DDT ban, which followed in 1972; the Clean Water Act, passed over President Nixon’s veto that same year; the Montreal Protocol on CFCs in 1987; the Oil Pollution Act, signed by President George H.W. Bush in 1990 in response to the Exxon Valdez spill; and many more.

Meanwhile, the business community was right, too. What environmentalists were demanding was, essentially, a shifting of priorities away from profit and growth, and toward environmental stewardship and public health. And for businesses, these shifts seemed as unnecessary as they were expensive.

The basic paradigm, as most everyone saw it, was that each unit of pollution kept out of the air, water, and land meant a unit of profit kept out of someone’s pocket. And keep in mind, those pockets didn’t belong just to CEOs. They belonged to everyone from money managers to office workers, from individual shareholders to pension funds, from universities to labor unions — anyone attached in any way to the vast web of the global economy. In other words, the trade-offs weren’t imaginary; they were real.

The prevailing framework — economics vs. environmentalism — represented some very difficult choices. It’s no surprise that policy makers have found it so hard to balance these competing priorities over the years.

Today, this much hasn’t changed much: Environmentalism and industry are still pitted against each other, victims of a half century of groupthink. On any given measure, one side automatically argues that doing X will kill the economy, while the other side argues that not doing X will kill the environment. We’re all familiar with this murderous metaphor.

In fact, a study from the Institute for Policy Integrity found that the use of the term “job-killing regulations” has dramatically increased in newsprint, from only four instances in 2007 to 706 in 2011 — and as we enter the 2016 election cycle, it feels like 706 times a day. And sometimes it’s more than just rhetoric.

U.S. Sen. Joe Manchin famously said in a campaign ad that he would “take dead aim at the cap-and-trade bill” — and then he literally shot a bullet through it. This simplistic narrative is all around us, every day and practically everywhere you look. Sometimes you hear different versions.

On MSNBC, the environmental movement is the hero of the story. On Fox News, the CEO is the hero. In other words, the protagonists and antagonists differ, but the plotlines are fundamentally the same. Both are passionate, partisan, polarizing defenses of deeply ingrained points of view. Both reflexively assume that capitalism and environmentalism are forever at odds. Both cast the fight in terms of good and evil.

But the most important commonality is this: They are both wrong in believing the old narrative, that what’s bad for the environment is good for the economy, and vice versa.

But take a look around! Environmental disasters are severely impacting the private sector. For instance, 2012 saw the most extensive U.S. drought recorded since the 1930s, resulting in $17.3 billion in lost crops. And on a single night that same year, Hurricane Sandy caused an estimated $65 billion in damage, including at least $20 billion in lost business during the days that followed. Sure, Sandy was a “superstorm,” a supposedly once-in-a-lifetime event.

But who could fail to notice that severe weather is becoming more frequent and more costly with each passing year? According to the National Oceanic and Atmospheric Administration, in 2014 alone, eight weather and climate disasters in the United States cost more than $1 billion apiece. And whether you are living on the coast, working in insurance or just thinking like a concerned citizen, that number is pretty terrifying.

Even if you write off the increasing impact of severe weather as some sort of meteorological fluke, the impact of pollution is impossible to deny. In fact, the World Health Organization (WHO) estimates that air pollution contributed to around 7 million premature deaths globally in 2012, stating, “Air pollution is now the world’s largest single environmental health risk.”

What the WHO doesn’t say is that air pollution is also an economic health risk. Consider how entire economies are silently suffering the effects of environmental drag. The cost of pollution can be measured not only in lost years of life, but in trillions of dollars of lost economic activity. For example, China has seen incredible economic growth over the past several years — but what if I told you that growth could be even higher?

The World Bank estimates that the cost of environmental degradation and resource depletion in China was nearly 10 percent of its GDP in 2008. If China is any indication — and you can bet that it is — just imagine the economic impact of pollution across the entire planet.

It’s painfully clear to me that we’re in the midst of a global environmental depression. Tragically, few people understand this, because they’re trapped in a half-century-old worldview in which the private sector and the environmental community are independent actors in a zero-sum game.

This antiquated, adversarial outlook isn’t just dumb; it’s devastating — to the economy and the environment. Think about it this way: Because the environmental movement still considers business its sworn enemy instead of its natural partner, it has utterly failed at the decisive moment of the most important environmental battle in history.

There’s a better chance that you’ll get struck by lightning while reading this than that Congress will pass a carbon tax in my lifetime. Global climate conventions and negotiations have unraveled on so many occasions, I’ve lost count.

Why? Because generally speaking, environmentalists continue to antagonize industry instead of partner with it. As a result, business interests dig in their heels and stand in the way of agreements that could prevent catastrophic climate change. Meanwhile, the private sector is leaving trillions on the table — not to mention condemning our planet to a terrifying future — by failing to widely embrace the extraordinary power of sustainability to drive economic growth.

There are two key ways all businesses stand to gain from being environmentally conscious. First, by eliminating waste and doing things more efficiently, companies save money. Second, by using sustainability to drive innovation, new products become more effective, more desirable to customers, and thus more profitable.

Let me repeat that: More savings. More innovation. More customers. More money. What’s not to like here? Unfortunately, the tired, old narrative through which most people understand the world, and the groupthink within business and environmental circles that sustains it, are preventing a lot of money from being made and a lot of planet from being saved.

But a new narrative is emerging — a new way of thinking,

But a new narrative is emerging — a new way of thinking, even — that is deeply rooted in reality, not distorted by history. While the old narrative claims that the environment is the enemy of growth, the new narrative holds that the environment and the economy are deeply, fundamentally connected.

They share common enemies: waste, inefficiency, pollution, climate change, resource scarcity and environmental degradation. They also share a common ally: sustainability. And instead of intractable, insulated groupthink, they share a common outlook: greenthink. Greenthink occurs when businesses, nonprofits, governments and individuals marry environmental and economic principles for the benefits they can receive from both.

Troughout the global economy, a select number of enlightened companies are already engaged in greenthink by leveraging the power of sustainability to drive profits. These businesses aren’t using less energy and fewer resources in the name of self-denial or out of the goodness of their hearts; they’re consuming less in order to earn more.

The economic incentives are changing, and so are the business models. The result is a measurable reduction in the damage that many companies inflict on the environment and people, an increase in the quality and desirability of their products and services, and a reward in the form that business understands best: cold, hard cash.

In fact, preeminent management consulting firm McKinsey & Company says that “the choice for companies today is not if, but how they should manage their sustainability activities.”

Conventional wisdom tells us that sustainability is prohibitively expensive; that industry is, by definition, destructive; and that environmentalism and capitalism are diametrically opposed. But it’s time to toss that old way of thinking out a triple-glazed, energy-efficient window. Because even though the private sector and the environmental movement have long thought of themselves as adversaries — or, at best, as folks who just walk a different path — the truth is, they will share the same fate.

The future of the planet is at stake, and so is the future of the global economy. Environmental degradation and climate change are beginning to take an enormous economic toll that will grow by orders of magnitude in the coming years. Meanwhile, environmentally friendly business practices are creating an economic windfall for those smart enough to embrace them.

This is the new reality — and our historic opportunity. Profit-driven strategies can bring us together and help us dramatically reduce our carbon footprint, eliminate harmful pollution and build a better, greener world. In other words, profit can save the planet. Perhaps that sounds too good to be true. After all, if sustainability is so profitable that it can save the planet, why hasn’t it?

Why do we still see rampant pollution and cynical greenwashing from the vast majority of the private sector? The answer is simple: most companies aren’t yet taking stock of the environment’s impact on their bottom line. But this will change. How can I be so certain? Because I’ve watched it happen to one of the world’s largest, dirtiest industries: real estate.

In just over a decade, through the revolutionary, voluntary LEED certification program, USGBC and the private sector have channeled ingenuity, shared innovations and transformed real estate and the building trades — two of the economy’s largest sectors.

To date, LEED has certified 14 billion square feet of sustainable real estate worldwide. Another 9 billion square feet are in the development pipeline. That’s a lot of square feet. But how does this translate into dollars and cents?

Well, USGBC commissioned Booz Allen Hamilton (BAH) to find out. According to BAH’s 2015 Green Building Economic Impact Study, the green building sector (which includes LEED, ENERGY STAR and other green-certified construction) contributed $167.4 billion to U.S. GDP from 2011 to 2014.

By 2018, BAH projects that figure will nearly double, to $303.5 billion.

The green building movement has certainly made a lot of people a lot of money — something my reporter friend was fixated on, and rightly so. But let’s be clear: we’re not just talking about developers, manufacturers and contractors. BAH found that, in 2015, the green building sector accounted for 2.3 million jobs, putting more than $134.3 billion in the pockets of American workers.

Of course, the environmental benefits of green building are just as significant as the economic ones. According to Paul Hawken, a legendary environmentalist, “USGBC may have had a greater impact than any other single organization in the world on materials saved, toxins eliminated, greenhouse gases avoided, and human health enhanced.” Not bad for a little environmental nonprofit organization.

The success of the green building movement has taught me two things. First, there is only one force powerful enough, and capable of working quickly enough, to reverse the trends eroding the environmental security of our planet and the future of humanity: Capitalism.

Second, greenthink is, simply put, the biggest and most incredible business opportunity of the 21st century. That’s why there are two messages at the heart of this book.

If you’re an environmentalist, it’s time to face up to the limitations of the environmental movement, its strategies and its methods — and it’s time to start using private-sector forces to drive change instead.

If you’re a business leader, it’s time to sustainably transform your enterprise before environmental factors transform your marketplace. I’m writing this book for warmhearted conservationists and coldblooded capitalists, because profit can save the planet, and saving the planet will be great for business. Let me show you how.

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