Paul Hawken’s next big idea

98b56975-55f2-45d2-9e39-19578c3bbc70-620x372I’ve learned a lot over the years from Paul Hawken, and when our paths have crossed, I’ve always enjoyed the time we’ve spent together. He was an early supporter of FORTUNE’s Brainstorm Green, and I recall a delightful walk along the beach in Laguna Niguel where he told me about the work he’d been doing with Lee Scott, then the CEO of Walmart. Some years later, I spent an afternoon with him at his offices in Sausalito, talking about the shortcomings of the socially responsible investment industry. He also delivered a great talk about the high costs of cheap food a few years back at the Cooking for Solutions conference at the Monterey Bay Aquarium.

So when I first got wind of Project Drawdown, Paul’s latest project, I was eager to hear more. We talked by phone the other day, and the idea was unveiled last night at the big Greenbuild conference in New Orleans. I wrote about Project Drawdown for Guardian Sustainable Business.

Here’s how my story begins:

Ten years ago, in a landmark article in Science Magazine, Princeton professors Stephen Pacala and Robert Socolow wrote, “Humanity can solve the carbon and climate problem in the first half of this century simply by scaling up what we already know how to do.” They identified a series of so-called climate stabilization wedges – among them efficient cars and buildings, increasing solar, wind and nuclear power, and reducing deforestation – that if adopted would eventually maintain atmospheric concentrations of CO2 at about 500 parts per million (ppm), a level they said “would prevent most damaging climate change.” At the time, atmospheric concentrations stood at about 375 ppm.

A decade later, annual emissions continue to grow and atmospheric concentrations have topped 395 ppm – and they are rising steadily. The situation appears grim.

It is not, argues pioneering environmentalist, entrepreneur and author Paul Hawken. Climate solutions abound, he said, and today, at the opening plenary of the big Greenbuild conference in New Orleans, he will unveil Project Drawdown – a new compendium of climate solutions that are designed not just to stabilize, but to reduce the greenhouse gases in the atmosphere.

“Stabilization at 450, 500, 550 ppm is chaos,” Hawken said. “Our goal should be drawdown.”

Project Drawdown will begin as a lavishly illustrated book and online database, to be released late next year. Its purpose is to re-frame the climate debate, by showing that solving the climate crisis will bring, not sacrifice, but “more security, more prosperity, more jobs, more well-being and better health,” Hawken said.

I’m skeptical of what appears to be easy solutions to the climate crisis because, in my view, if it were easy to become radically more efficient and shift from fossil fuels to renewable energy, well, why haven’t we done it already? But some of the solutions in the book, which is still being researched, are growing fast–distributed solar power, LEDs, utility-scale wind farms. Others are creative. Educating girls in the developing world, which isn’t ordinarily regarded as a climate solution, would, it turns out, be of enormous benefit because girls who get more education have fewer children, and fewer children mean fewer emissions.

You can read the rest of my story here.

Elkington: Whispering radical ideas to CEOs

300px-John_Elkington_06“The time has come to tear down the old order and begin to create the new.”

John Elkington sounds like a Wall Street occupier, or a Bolshevik. He is neither. He is, instead, a 63-year-old consultant who has advised executives of global corporations, including Ford, Shell, BP, Toyota, HP, Nike, Nestle and Bayer, over the course of a long career at the crossroads of business and the environment. Along with such thinkers as Paul Hawken and Amory Lovins, Elkington all but invented the discipline of corporate sustainability. He’s got a new book out, called The Zeronauts, so I paid him a visit a week or so ago when I was in London.

The book’s very good. It celebrates a new breed of innovators, called Zeronauts, who set out to create wealth while driving negative outputs — greenhouse gas emissions, toxics, waste, pollution and poverty — to zero.

The idea of zero is intended to be a wake-up call. It’s a reminder, not that we should need one,  that incremental change won’t get us where we needs to go.

“It helps reframe things,” Elkington told me. “It’s a catalyst.”

Elkington has a knack for coming up with language that gets people’s attention. He called his consultancy SustainAbility in 1987 when the idea of a sustainable business was brand new. He wrote the first book about the “green consumer” in 1986. (My friend Joel Makower co-authored the US edition.) He coined the term “triple bottom line” (profits, people, planet) in 1994. His thinking has always been bold, but he has a gentle sense of humor and low-key manner that allows him to whisper radical ideas into the ears of CEOs without unsettling them. [click to continue…]

Instead of shopping, why not yerdle?

It’s Black Friday. Instead of shopping, why not yerdle?

Yerdle is a sharing and shopping website and mobile app being launched today by two stalwarts of corporate sustainability — Adam Werbach, the former Sierra Club leader and Saatch & Saatchi marketing guy, and Andy Ruben, Walmart’s first sustainability director.

Andy and Adam, who are both 39 and live in San Francisco (natch), have come up with a very cool idea. Yerdle is a way for people who have stuff to give away, or other stuff they want, to share with one another–before heading out to the store to buy something new. By today, after a beta test in the Bay Area, they expect that more than 10,000 items will be offered on Yerdle.

I took a sneak peek at the site the other day and found, among other things, a Ikea children’s table and chairs, a yoga DVD, Sesame Street DVDs, red Baby Gap sweats, a dustbuster, a radio alarm clock, a laptop sleeve, a pasta maker, kids books, a collection of little wooden dress-up dolls, and more–and that’s before inviting my friends to join. [click to continue…]

Reader faves: Best books about green business

Thanks for your emails and comments to my post last week, Best books in corporate sustainability? Not surprisingly, there was no consensus on what books are best–probably 200 books in were recommended–although many, many people suggested the writings of Paul Hawken and Bill McDonough. I don’t want to overwhelm you by listing all of the books that were recommended by email,  but here are some of my favorites as well as a few selections from last week’s comments, which can be found here.

From sustainability consultant Gil Friend, the ceo of Natural Logic:

My current picks:
> New: Climate Capitalism, Hunter Lovins & Boyd Cohen
> Venerable: Operating Manual for Spaceship Earth – R. Buckminster Fuller
> Practical: The Truth About Green Business – Gil Friend
> Inspiring: Confessions of a Radical Industrialist – Ray Anderson

There are many more good ones, so here’s TriplePundit.com’s [year-old] list of the “must read” sustainability books:
http://www.triplepundit.com/2010/02/sustainable-mba-crash-course/

A classic suggestion came from Keli Rae McMillen of Winter Park, CO, who send me a PDF of essays by Ralph Waldo Emerson, as well as this quote from Emerson’s History:

In old Rome the public roads beginning at the Forum proceeded north, south, east, west, to the centre of every province of the empire, making each market-town of Persia, Spain, and Britain pervious to the soldiers of the capital: so out of the human heart go, as it were, highways to the heart of every object in nature, to reduce it under the dominion of man. A man is a bundle of relations, a knot of roots, whose flower and fruitage is the world. His faculties refer to natures out of him, and predict the world he is to inhabit, as the fins of the fish foreshow that water exists, or the wings of an eagle in the egg presuppose air. He cannot live without a world.
(Coincidentally, I’ll have some news about Emerson later this month but I can’t say more now.)

Steve Schein, a longtime business exec who now teaches sustainability at Southern Oregon University, sent a Top 20 list: [click to continue…]

Best books on corporate sustainability?

Judging by the number of books about business and the environment piling up on my shelves, the corporate sustainability movement is alive and well.

One of the best is Business Lessons from a Radical Industrialist by Ray Anderson, the founder and chairman of the commercial carpet company Interface.

I’ve been provided with two signed copes of the paperback edition to give away. I’m expecting a signed copy of Howard Schultz’s book, which I’m also going to give to a blog reader. More on that, in a moment.

But first, a few thoughts about Ray and his book. Ray is a terrific guy who has had a great influence on business people across America, by tirelessly promoting the idea that a truly sustainable approach to business  is good for business. (See my 2009 interview, Ray Anderson, Radical Industrialist.) “Take nothing from the earth that cannot be replaced by the earth” is how he puts it. [click to continue…]

Can sustainable investing beat the markets?

This week, Newsweek released its second annual  Green Rankings of the largest companies in America, as well as a new analysis of big global corporations. These sorts of cross-industry comparisons of companies are difficult to do, but my sense is that Newsweek has done a credible job, with the help of partners MSCI ESG Research, Trucost and CorporateRegister.com. Given the attention that the list is getting,  it seems like a good time to return to a question I’ve thought about for years: Do companies committed to sustainability represent good investment opportunities?

The stock-market performance of Dell, which tops the 2010 list, is not encouraging: The firm’s shares have fallen by 55% during the last five years, while the NASDAQ is up by 18% during the same time period. Of course, one company’s performance over one time period doesn’t prove a thing. It turns out that over the past year, the top 100 companies on the 2009 Newsweek list outperformed the S&P500 by 6.8%.  While this data point doesn’t prove anything either, it’s interesting. So I arranged an email interview with Cary Krosinsky of Trucost to explore the issue further.

Cary Krosinsky

Cary is head of investor and corporate services for North America for Trucost, which is based in the UK. He’s also the author and co-editor, with Nick Robins of HSBC, of Sustainable Investing: The Art of Long Term Performance (Earthscan Publications, 2008), and he has taught classes on investing and sustainability at Columbia.

Marc: Cary, let’s start by defining “sustainable investing.” Is it different from socially responsible investing?

Cary: Socially responsible investing, or SRI, is too broad an investment category.  SRI encompasses very different things—alternative energy investing on the one hand, funds with a religious mandate on the other, as well as funds investing in a mainstream index such as the S&P 500, and subtracting out alcohol, tobacco and firearms.  We see many different styles of SRI.

Sustainable Investing is the more positive strand of SRI – one that is future-oriented, risk-adjusted and opportunity-directed. It looks at what companies can do to lessen risk, as well as capitalize on opportunities, in order to be ahead of the curve in their respective industries. It helps create long-term value, identifies “predictable surprises,” (as opposed to “black swans,”) such as climate change, diminishing water availability, human rights issues and others that influence investment outcomes.  Innovation emerges as a key driver of value through sustainability, as does the active management of environmental impacts.

Marc: It sounds like sustainable investing means identifying the smartest, most forward-thinking companies. In your book, you write that “sustainable investing funds have already outperformed consistently over the short, medium and long term.” How can you support that claim?

Cary: We found that for the 1, 3 and 5 years leading up to the end of 2007, when looking at SRI funds with this positive, opportunity-focused sustainable investing methodology, that they consistently outperformed their mainstream index equivalents.  When updating this study for a UN Principles of Responsible Investment academic paper in 2009, this still held true, both before, through and after the recent financial crisis of 2008 into 2009.

Further correlation of this has been demonstrated by diverse investors including Paul Hawken, who helps manage the Highwater Global Fund as well as Abby Joseph Cohen of Goldman Sachs.  Mark Fulton of Deutsche Bank spoke earlier this year regarding how the climate change sectors they are tracking have been outperforming their benchmarks since the recent market bottom. Matthew Kiernan, formerly of Innovest, now runs money and is also demonstrating outperformance from this more positive approach. The top 100 performers in the Newsweek Green Rankings which we actively participate in at Trucost, have outperformed the S&P 500, on an equally weighted basis, by 6.8% over the last year. [click to continue…]

The high cost of cheap food

hamburger-and-fries-l“We have very, very expensive food in this country.”

“It’s just that the prices are cheap.”

So said Paul Hawken, the environmentalist, entrepreneur and author, in a speech that began Cooking for Solutions, a conference on food and the environment, accompanied by lots of marvelous eating and drinking, this week at the Monterey Bay Aquarium in Monterey, CA.

The American industrial food system, he said, is bad for the planet, bad for farmworkers and bad for consumers.  “How did we make destroying our land, our children and our health a big business?” Hawken asked.

This was not an upbeat way to start the two-day event, but it’s hard to argue with his analysis. Big Ag produces lots of food–particularly grain and meat–at very cheap prices. According to USDA (cited by Bryan Walsh in this terrific article in TIME), Americans spend less than 10% of their incomes on food, down from 18% in 1966. Farm price supports, cheap fossil fuels and vast amounts of water all drive down the price of food.

And the true social and environmental costs? Let’s tally them. They include millions of tons of fertilizer that runs into rivers and the Gulf of Mexico, created an oxygen-starved dead zone that kills of sea life. Hog and chicken waste that contaminate waterways and the Chesapeake Bay. Overuse of antibiotics on animals that helps create antibiotic-resistant bacteria. If you care about animals, there’s the horror of confined animal feeding operations, or CAFOs. We’ve got food safety risks. Tons of global warming pollution. And, oh yeah, an epidemic of obesity, which, again according to TIME, adds $147 billion (that’s billion with a B) a year to our medical bills.

Ugh. And so, for the rest of day, scientists, activists, academics and a sprinkling of farmers and food company executives such as Gary Hirshberg of Stonyfield Farm and Margaret Wittenberg of Whole Foods Market talked about how to make our food system more sustainable.

Here are a just a few highlights: [click to continue…]

Paul Hawken’s winning investment strategy

If you believe that companies that are strongly committed to socially and environmentally sound practices will outperform their peers in the long run, then you would expect so-called socially responsible investment (SRI) funds to deliver superior returns to investors.

The trouble is, they don’t. Sure, some years the mutual funds run by the Calvert, Domini, Parnassus and the rest do very well—they excelled during the tech boom of the late 1990s because they tend to eschew heavy industry—but other years, they lag market indexes. Over time, most track the broader market.

paul-hawkenOver the three years ending December 31, 2009, for instance, among the big SRI funds, Calvert Social Investment is down by a cumulative 13.02%, Domini Social Equity is down by a total of 16.2% and Parnussus Equity Income is up by 0.14%. Only Parnussus performed significantly above the S&P500, which was down by 15.9%,

Why haven’t they done better. Some of us have long believed that the problem with conventional SRI funds is that their definition of “socially responsible” is not nearly as rigorous as it could or should be.

Paul Hawken has been vocal in his critique of the SRI establishment, and since 2005 he has put his money where his mouth is. In a partnership with Baldwin Brothers, a Massachusetts-based investment firm, Hawken has overseen the Highwater Global Fund, a fund for qualified investors (i.e., the rich) that invests in companies “that have a clear sense of current global trends and future societal needs.” His results have been impressive, to say the least.

Since inception in the fall of 2005, Highwater is up by a total of 52.55%. During the three years ended in December (the same period cited above), Highwater is up by a total of 19.75%.  This is, in part, because Hawken and the other fund managers are very picky about what stocks they hold. More than 90% of the FORTUNE 500 fail their screens.

[click to continue…]

Brainstorm Green’s all-star team

William Clay Ford Jr.

William Clay Ford Jr.

Before I head to Copenhagen this week for the global climate extravaganza, I want to bring you the latest news about Brainstorm Green, FORTUNE’s conference about business and the environment. I’m delighted by the caliber of leaders and thinkers who have agreed to speak at the event, which will be held April 12-14 in Laguna Beach, CA.

Bill Ford, the executive chairman of Ford Motor, who was a huge hit last year, will be back in 2010. Ford (the company) is one of the few bright spots in the U.S. auto industry, as you know, and while it took a long while coming, the firm seems committed to hybrids, electric cars and other environmentally-friendly technologies, including wheat-straw reinforced plastic and other bio-based materials. Hybrid sales are taking off, as the company recently reported:

  • Ford Motor Company’s year-to-date hybrid sales are 73 percent higher than the same period in 2008, fueled by the introduction of hybrid versions of the 2010 Ford Fusion and Mercury Milan
  • More than 60 percent of the sales of Fusion Hybrid are by non-Ford owners – with more than 52 percent of those customers coming from import brands.
SBjpg-filtered

Stewart Brand

One of the best books that I’ve read in a long time is Whole Earth Discipline: An Eco-Pragmatist Manifesto by Stewart Brand, so I’m thrilled to announce that Stewart will be featured at Brainstorm Green. In the book, he brings a fresh perspective to nuclear power (he’s for it), geo-engineering (he’s intrigued) and megacities (they are both green and engines of economic growth). You can be sure he will challenge conventional wisdom at the conference.

Three powerhouse leaders of the enviromental movement–Frances Beinecke of the Natural Resources Defense Council, Fred Krupp of Environmental Defense and Mark Tercek of the Nature Conservancy–are also planning to attend. Fred and Frances have ben at the event before, and they both plugged into the Washington scene, which will surely be a topic this spring, while Mark, formerly of Goldman Sachs, will be able [click to continue…]

Ray Anderson, radical industrialist

“Nature is the goose that lays all the golden eggs. We don’t want to squeeze her to death…If we don’t take care of nature, we won’t have a civilization someday.”

Does that sound like a tree-hugging environmentalist? Well, it is, but it’s also the founder and chairman of a $1-billion a year carpet company. His name is Ray Anderson, he calls himself a “radical industrialist” and he has led his company, Interface, on a remarkable 15-year journey to sustainability. He’s got a lot to teach the rest of us.

One of the best things about my work is that I  get to spend time with people like Ray. He’s got a new book out—it’s called Confessions of a Radical Industrialist—and so we got together last week when he was in Washington.anderson_ray

With his gentle Georgia drawl and genial manner, Ray, who is 75, does not look like a radical—but he believes that business as usual is the principal agent of global destruction, and that only new industrial revolution can [click to continue…]