Smart businesses embrace sustainability

Evidence is clear that taking on sustainability is good for business, according to international expert Hunter Lovins, who recently toured New Zealand giving lectures.

President of Natural Capitalism Solutions, in Eldorado Springs, Colorado, Hunter Lovins presented her 13 lectures with much enthusiasm to attentive representatives from business, industry, government and community organisations in seven venues.

"Smart businesses," said Lovins, "are the ones that recognise the business case for sustainability. The biggest talking point in business globally is sustainability.

"Natural capital is the source of all our wealth and health," she said. Her favourite phrase is "the sustainability imperative".

"New Zealand businesses can copy the success of leading overseas firms who are now competing to be more 'green'," said Lovins. She gave many examples.

The Chicago Climate Exchange requires carbon emission reductions by its 200+ members including DuPont, Alcoa, American Electric Power and City of Chicago. Wallmart is 'greening' its supply chain of 60,000 businesses.

General Electric (US$135 billion annual revenue) chairman Jeffrey Immelt says, "We believe we can make money helping improve the environment." Joined by Boeing and other companies, GE will spend US$1.5 billion a year on sustainability issues.

Lockheed's new building in Sunnyvale, CA, saves US$0.5 million a year on energy costs. Higher productivity and lower absenteeism contributed to a 100% payback on investment in the first year.

Boeing retrofitted sustainable lighting in design and manufacturing areas. Cost payback came in under two years and worker error rate fell 30% improving on-time delivery and customer satisfaction.

Pacific Gas & Electric studied the benefits of natural daylight illumination. They found retail stores that were naturally lit sold 40% more. Students in daylit schools progressed 20-26% faster.

BP set goals and cut emissions, saving US$750 million in just two years. DuPont has saved US$2 billion over 12 years through sustainability initiatives while cutting greenhouse gas emissions and global energy use.

ST Micro Electronics used sustainability methods to achieve a 40-fold increase in production and climbed from #12 to #6 chipmaker. Its 2010 goal is to reduce conventional energy consumption to only 30% and save US$900 million.

Institutional investors with US$31 trillion assets are pushing the Financial Times top 1800 companies to disclose their investment-related emissions: their 'carbon footprint'.

A Sacramento, California utility switched its 1000 MW power plant to wind, solar and cogeneration. This increased regional income US$130 million, created 880 new jobs and eliminated the utility's debt.

Hunter Lovins explained how businesses in the 47-storey Conde Nast building, 4 Times Square, New York City, kept up and running during the city's recent blackout. The 150,000 square metre floorspace building has its own fuel cells and integral photovoltaics in spandrels on south and west elevations. These achieve energy savings of 50% per square metre despite doubled ventilation rates. Building materials are non-toxic and low-energy. Tenants pay premium rents though construction cost was market average.

"The business case for sustainability comes from boosting shareholder value through an integrated bottom line," said Lovins. She sees the enhanced profitability drivers as including reduced cost, reduced risk, attracting and retaining the best talent, enhanced innovation, higher labour productivity, enhanced brand equity and more product differentiation.

Lovins quoted a 2005 PricewaterhouseCoopers survey of CEOs from 43 countries. Eighty-seven percent believed that environmental sustainability is important to company profits.

She said 89% of Fortune 1000 companies think sustainability will be more significant still, in five years' time. Already 150 of the largest companies in the world have a sustainability officer at VP level or higher.

In the UK, Frost Electroplating, of Birmingham, applied a 'whole systems' waste minimisation program and saved £1.5 million in five years. Water use and effluent generation significantly reduced while customers enjoyed price cuts.

"It's no accident that companies in the Dow Jones Sustainability Index outperform the general market," said Lovins. "Or that the Domini Index of Socially Responsible Companies outperforms the S&P Index."

Lovins cited examples of sustainability initiatives underway in New Zealand. However, she saw this country as vulnerable to major electric power disruptions. She noted our opportunities to develop wind power generation - now the second-fastest growing energy supply technology in the world. Solar and bio fuel generation present exciting opportunities for New Zealand, she said.

Among Lovins' concluding remarks: "The New Zealand government should coherently identify and remove barriers to businesses adopting sustainability priorities."