Cracks in the Foundation: Green Business Encounters its Paradoxes

By Adam Brock

The last decade has seen the environmental movement shift from pointing fingers at the Man to seducing him instead. After thirty long years of trying to guilt-trip companies into improving their environmental performance, it’s now considered much more effective to meet business on its own terms by showing that cutting down on energy and other resources can be profitable.

But despite all the hubris, the alliance of business and environmentalism remains an uneasy one: for every unexploited opportunity for increasing efficiency through resource savings, there’s another instance where rescuing the planet and quarterly earnings just don’t jive. After all, there’s a pretty serious divergence in their fundamental assumptions; corporations need to grow or die, while environmentalists maintain that unchecked growth is what’s killing us.

Last week’s BusinessWeek took aim at this conflict of interest with a profile of Auden Schendler, the disgruntled sustainability advocate at Aspen Skiing Co. The story relates struggle after struggle between Schendler and his higher-ups to make improvements that, all told, barely made a dent in the company’s environmental impact. When he tried to install CFLs in one of the resort buildings, he was told that the quality of light put out by fluorescents would detract from the hotel’s five-star ambience; after a long hard struggle, he managed to get approval for a $1 million solar array to provide a fraction of a percent of Aspen’s energy needs.

One of Schendler’s most vocal criticisms is of renewable energy credits, a system currently used by hundreds of institutions (including Aspen and NYU) that purports to offset electricity emissions by paying to support development of renewables. After doing some digging, Schendler couldn’t find any renewable energy that had come online as a result of Aspen’s RECs, and was forced to conclude that, much like personal carbon credits, the whole setup was too dubious to support. The BusinessWeek article seems to agree, explaining that the current price of RECs offers little incentive for renewable producers to ramp up:

Even many wind-power developers that stand to profit from RECs concede that producers making $91 a megawatt hour aren’t going to expand production for another $2. “At this price, they’re not very meaningful for the developer,” says John Calaway, chief development officer for U.S. wind power at Babcock and Brown, an investment bank that funds new wind projects. “It doesn’t support building something that wouldn’t otherwise be built.”

The dubious economics of energy credits aside, Schendler faces a more serious challenge: trying to green a company whose very basis is an environmentally destructive luxury activity. No matter how much Aspen reduces its carbon emissions, its clients will release thousands of tons of greenhouse gases just in getting themselves there. No matter how many LEED points Aspen’s new buildings achieve, they’ll still be sitting vacant for much of the year.

If Aspen Skiing Co. is serious about sustainability, it needs to completely redefine its mission, figuring out how to profit from actively regenerating the Rocky Mountain ecosystem. Anything less is a profitable hyporcrisy. If Auden Schendler’s experience thus far is any indication, it doesn’t sound like the “natural capitalism” approach is cutting it – so how can the message get through before it’s too late? Legislation? Consumer rebellion? What are your thoughts?

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5 thoughts on “Cracks in the Foundation: Green Business Encounters its Paradoxes

  1. nelophone says:

    Hey Adam, great post. I think that your characterization of the relationship between corporations and the environmental movement in the first paragraph is right on, but we do want to remember that the enviros have done much more than just ‘guilt trip,’ in the past 30 years (I’m thinking of the Clean Air and Water Acts, the Endangered Species act, etc).

    I think it’s important to point out where business models simply conflict with sustainability, and you do that here. But you don’t mention what for me was the most revealing part of the business week article. The article describes how Fed Ex was considering replacing all their trucks with hybrids, an investment that would have taken about 10 years to pay for itself in fuel cost savings. The company decided against it because, to quote the article, “breaking even over a decade wasn’t the best use of company capital. “We do have a fiduciary responsibility to our shareholders,” says environmental director Mitch Jackson. “We can’t subsidize the development of this technology for our competitors.”

    His statement highlights two core problems with mainstream corporate thinking, where sustainability is concerned. First, strategy is short-term and driven by total dedication to shareholder profits. Second, competition rules in all cases. Forget taking the altrustic step of being the first to develop a technology, in order to make it widespread in the industry and benefit the environment.

    Current corporate structures and assumptions are not set up to be sustainable. In the current system, that’s where government comes in. But I’m doubtful we can meet our challenges without changing fundamental assumptions.

  2. Jeremy says:

    I agree with you, Nelson, on both counts.

    To further break down the past 45+ years of the modern environmental movement into segments less grainy than “guilting” the corporate mainstream, I would note VERY approximate periods of direct activism (1960s), legislation (1970s), litigation (1980s), and market incentivization (1990s).

    At present, we are seeing a fusion of tactics, characterized first by a pragmatic (some would say “dishonest”) lack of commitment to specific means or strategies like those above; and characterized second by an emphasis on the hopeful language of “sustainability.” All the previous mini-periods focused, in contrast, on more doctrine (this is the approach that’s gonna save the earth!) and on the problems, not the solutions.

    I think there are reasons to question the current approach, for certain, but one thing I like about environmentalism right now (Nelson – environmentalism a la Michael Shellenberger and Ted Nordhaus) is that it appears to be the first wave that isn’t completely REACTIVE to the previous one.

    I don’t think we’ve figured everything out yet, by any means, but I think there’s an awareness among the broad coalition of folks actively working for the environment, that everything we’ve tried before hasn’t gotten us where we want to go – and that new strategies have to be either better-executed (as with building more long-term genuine, not just tactical, relationships with other progressive groups) – or that they have to be fundamentally NEW.

    What do you think?

  3. lamarguerite says:

    Jeremy,

    I like your nuanced response. What’s encouraging to me is to see more and more companies genuinely trying to make a positive environmental contribution. These are pioneers, and need to be supported. There needs to be both, some whistleblowing at the polluters, and some praise for those pioneers. There also needs to be a whole policy in place, with heavy penalties for the polluters, and incentives for the good guys. Finally, there needs to be ongoing dialogs all over the country, between environmentalists, and business people, in the search for creative marketing, production, and distribution solutions. Writing a post like this one, and this ensuing discussion is a good example of productive conversation. I think it is really important to not polarize too much, but rather to come from a point of view of building a new paradigm together. My good friend Christian Forthomme’s company, Real Change specializes in helping CEOs and executives visualize sustainable pathways for their businesses. His work is very very effective. Much of it has to do with personal conviction at the top.

    marguerite
    http://lamarguerite.wordpress.com

  4. Jeremy Friedman says:

    Hi marguerite,

    I’m really of two minds about the broad set of changes we’re seeing in terms of sustainability-business collaborations and coalitions. On one hand, the changes are indubitably starting to add up – we are meaningfully reducing environmental harm, and changing hearts and minds, working with business groups, enlightened corporations, etc. Leaders like William McDonough have articulately laid out the “Next Industrial Revolution” as a green one, and it does sound pretty nice.

    But I find that folks who defend this vision are almost universally underestimating
    1) the power of certain business elements that have essential vested interests in changing image but not substance, and
    2) the underlying structural problems with our social, political, and maybe most important ECONOMIC (business) systems that prevent meaningful changes to our relationship with the environment.

    That last point is huge – I don’t think most folks in the business community have realized the meaning of what Adam calls forest green – even if they reduce their environmental impacts (heck, even if we collectively “solve” global warming) we could come out of this current crisis having learned very little from our mistakes – and the next heretofore unpredicted ecological catastrophe will be right around the corner.

    Capitalism as currently formulated believes in growth for its own sake, believes that its possible to externalize wastes [into the environment], and believes that technology and greater resource consumption can, in a basic sense, make people more happy. All of these precepts fly in the face of successful ecological systems, and are anathema to the sort of ethic being proposed by Forest Green types – I think we have to polarize, because there’s real polarity here!

    I don’t have all the answers, but minimizing these distinctions won’t help us get to the heart of the problem.

    Sincerely,

    Jeremy

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