Why Being Green Can Be Good for Business

Can business save the planet? Champions of an environmental New Deal have often cast the corporation as the enemy in the struggle against global warming. But the more than 800 corporate leaders who've signed the -Copenhagen Communiqué on Climate Change argue the opposite line: the business community wants—and needs—an ambitious global agreement that will spur the creation of a low-carbon economy. Five of those leaders spoke with NEWSWEEK'S William Underhill: Ian Cheshire, CEO of Kingfisher, an international home-improvement retail chain; Noel Morrin, VP for sustainability and green construction at Skanska, an international construction company based in Sweden; James Smith, chairman of Shell U.K.; -Reinoldo -Poernbacher, CEO of Klabin S.A., Brazil's biggest paper producer, exporter, and recycler; and Jeffrey Swartz, CEO of Timberland. Excerpts:

Are you disappointed that it looks as if Copenhagen may not yield as much as previously hoped in terms of solid agreements?
CHESHIRE : One of the things about Copenhagen is that it's a highly symbolic moment. But there is a slight danger that everyone thinks everything has to be nailed down by the time the conference breaks up; that if it's not all in place, somehow it's a failure. I take a slightly more pragmatic view: if people make serious commitments, then there is going to be a lot of work after the event to turn them into nitty-gritty reality.

MORRIN: This is a milestone on a much longer journey. It would be an enormous surprise if we did get a solid agreement at such a symbolic event. A lot of the hard work gets done before and after. The important thing is that we have a lot of very powerful business leaders who are prepared to come, and hopefully they will give enough political signals to the people who actually have to get into the details of how solid agreements are drafted so the next conference delivers the final product.

SMITH: Copenhagen may not be the last word, but it can be a major step in the right direction. I would say that the news out of Beijing and Washington has been very encouraging. In the run-up to Copenhagen there has been more of a feeling that we are all in this together—and therefore we all have to do something about it.

POERNBACHER: I'm not disappointed, because we have made many, many steps forward already by just having business committed to this Copenhagen event. In the case of Brazil, business has offered our government suggestions on how to proceed, and we have seen tremendous movement from our government, which is now willing to take steps that would have been unthinkable only a few years ago.

SWARTZ: We may be a very small company, but we are a consumer-facing company, and our sense is that consumers in America are not as encouraged as the others here have suggested. A lot of what characterizes American discourse [on this subject] is not civil and is not progressive. There is a sense that this is another leadership failure in the U.S.

It's often said that what business really wants is policy certainty. Is it really uncertainty that is holding business back?
CHESHIRE: I would say there were a couple of major policy areas where it is very hard to actually think about investment, where you don't quite understand how the metrics will play out—say, about the price of carbon. But in the U.K., for example, we are looking at how to retrofit the housing stock: how do you take what are often quite old buildings and make them much more energy-efficient? If there were a price for carbon, I could probably [retro-fit the heating and lighting of] our 330 stores in the U.K. I can't realistically put my shareholders' money into that just on a guess of what the price of carbon is going to be.

SMITH: I avoid the word "certainty," because what is certain? I do talk about confidence, because we do have to have the confidence to invest. And you build confidence where you can see there is going to be concerted action. I think there is some good news here: there is a set of technologies that can actually solve our problem. What we have got to be now is economically viable so that industry can get them out of the laboratory and operating on an industrial scale, and that means putting a price on carbon and getting the carbon market working.

MORRIN: We don't see the lack of a price for carbon as an excuse for not driving up energy efficiency. We have just moved our people into the 32nd floor of the Empire State Building in New York. We made an investment out of our own pocket with a very attractive payback that cut the energy bill by 30 percent. The owner is now convinced that he's going to do it for the whole building. If you can do it for the Empire State Building, it's a fair assumption that you can do it for many others. What we would like is more regulatory certainty. That would mean that we saw an acceleration in market demand as improvements became compulsory rather than voluntary.

Isn't there an inherent contra-diction between the interests of business and the environment?
CHESHIRE: I don't agree with that at all. I actually think it's going the other way. Customers and employees are actually driving us to be more demonstrably sustainable than we have ever been in the past. Our customers and our teams are much more aware of what we do in the business in terms of how we conduct ourselves and how sustainable our entire business model is. And the price for not being sustainable is frankly going to get higher and higher.

POERNBACHER: It would be a contradiction if there aren't common rules for everybody. If we all play by the same rules, I don't see any contradiction. On the contrary, the way we see all this is as the biggest opportunity in the world, whether for scientists or for creating new jobs—for everything. The key point is that everyone should play by the same rules, and then we will have a big opportunity for business worldwide.

The changes you envision in the communiqué would be difficult and expensive in the best of times. Aren't they going to be particularly unwelcome at a time of economic crisis?
SWARTZ: To be honest, I think just the opposite. It is going to be good, smart business to be looking at your energy cost. We are a small retailer in the United States. We changed the lights to LEDs and reduced our energy consumption by 80 percent and paid [the costs of] the project back in less than 18 months. This is exactly the point to be looking at every economic opportunity that innovation brings forth. Here's a chance for every rational CFO to look down his or her list and find 10 or 12 different ways to reduce costs and improve the environment. It's not eco-luxury; it is eco-frugality.

SMITH: Climate change will be tackled sooner or later, but later would be very bad. And in a rush we might get hurried legislation that had not been properly thought through. Starting sooner gives us a bit more time to sort out the technologies, more time to get coherence internationally and sort out the policies.

MORRIN: I have been in this sort of role for 20 years, and my experience is that when everyone is fat and happy—as they were until about 18 months ago—a lot of this gets forgotten because everyone is too busy making money. While we are in an economic downturn, the business case for environmental responsibility for eco-efficiency or anything else you want to call it actually gets much stronger. With the biggest projects that we win—and for us that's $1 billion–plus—it's not about the price or our technical capability, it's about what is our sustainability agenda. These decisions are often taken in the boardroom, not anywhere else, and our CEO is quite often called in not to explain the price but our commitment to environmental responsibility, energy, and wider sustainability.

Do you see wide divergence across the world in attitudes among companies or consumers?
POERNBACHER: What we see from surveys in Brazil is that people want products that are environmentally friendly, but when it comes to paying more for them, it's difficult. But most of our customers are not the end users. And companies [that we supply] are becoming more aware. If we set a price for carbon emissions, it will set a trend for the way to go.

Are you afraid that your motives in signing the communiqué will be interpreted as greenwashing?
MORRIN: If you look at the different stakeholders in society, then those with the greatest ability to help are in the business sector, because we have the management skills and the ability to mobilize the resources. Governments can create the right environment for us to operate, make it more difficult or not, quicker or slower—but quite often the sort of solutions that are required will have to be delivered by the private sector. NGOs can act as our conscience or as a spur, but they don't have access to the human resources and the financial capital that many large businesses have.

POERNBACHER: In Brazil, in fact, it's business that is pushing the government to take a more positive position and commit to a limit on emissions. The rainforests of the Amazon won't survive if greenhouse-gas concentration continues as it is now. If we destroy our forests, it will be bad for global warming, but if nothing is done, our forests will be killed by the effects of global warming.

If there is one thing you would like to come out of Copenhagen, what would it be?
SWARTZ: A commitment to the notion that social change at this level will require the voice of the private sector at the table.

SMITH: A political agreement to a significant reduction in emissions starting soon.

MORRIN: Business must be seen as part of the solution, and we want to see some very powerful political commitments that are followed up quickly: something that the world will believe in.

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