Corporate Greenhouse

Corporate Greenhouse

This book is aimed at business executives, but political reporters may have to read it too, now that Republican front-runner George W. Bush has decided that global warming is real after all.


This book is aimed at business executives, but political reporters may have to read it too, now that Republican front-runner George W. Bush has decided that global warming is real after all. After years of endorsing the oil industry’s view that mankind’s greenhouse-gas emissions have no effect on the world’s climate, the Texas governor and former oil executive told a press conference on May 13, “I believe there is global warming.”

Bush’s statement amounts to an about-face on Al Gore’s signature issue, and it shows that his advisers recognize how much the environmental vote matters in presidential politics. When a majority of even Republican voters tell pollsters they oppose their party’s attempts to gut environmental laws, the environment has clearly become a Mom-and-apple-pie issue. A presidential candidate simply cannot be credible unless he or she leaves behind the Flat Earth Society nonsense about global warming being a mere theory. At a time when almost all climate scientists of stature agree that global warming has already begun and even corporate giants like British Petroleum and Royal Dutch/Shell have stopped denying the truth, a candidate cannot continue asserting that “the science is still out” on global warming, as Bush did just a few weeks before his mid-May press conference, without sounding anti-environmental.

But a gloom-and-doom environmentalism isn’t the answer either. The fact is, the environment can be a winner for any candidate with the wit to link it to the issue that decides most presidential elections, the economy. Americans tell pollsters they want environmental protection even if it means less economic growth, but the happy truth is that they needn’t choose between the two. As companies, workers and governments around the world are proving every day, restoring our planet’s ailing ecosystems could become the biggest economic enterprise of the twenty-first century, a bountiful source of jobs, profits and competitiveness.

Global warming is a perfect example of the opportunities available. Corporate propaganda has been remarkably successful over the past decade in convincing people, first, that global warming is merely a distant possibility rather than an observable fact and, second, that any attempt to stop it would sow economic disaster. The first claim is now widely recognized as bogus, and the second–which has done so much to delay progress on meeting the emissions targets the world’s nations agreed to in Kyoto in 1997–may soon be as well, especially if books like this one reach a wide enough audience.

In Cool Companies, Joseph Romm documents in convincing detail how such big-name firms as Toyota, Royal Dutch/ Shell, Du Pont, 3M, Xerox and Compaq are fattening their bottom lines while dramatically reducing the amount of carbon dioxide their factories and office buildings are unleashing into the atmosphere. The corporations are not motivated by altruism; they simply recognize that environmentally friendly innovations can make money for their stockholders. Of course, capitalists with a conscience have long contended that they could do good while doing well. Cool Companies, in effect, shows how to apply that self-serving maxim to the urgent task of reducing greenhouse-gas emissions.

The heroes of this book are the “cool” companies of its title, defined as any firm that “cuts its [greenhouse gas] emissions by 50 percent or more while reducing its energy bill and increasing productivity.” The author served as an Assistant Secretary of Energy during the Clinton Administration, directing the DOE’s Office of Energy Efficiency and Renewable Energy, and in that capacity he was able to study and work closely with many of the companies profiled in this book (which may explain why he passes so lightly over certain aspects of global warming policy, including the potential for an increase in US automobile fuel efficiency–the single most powerful step against global warming the federal government could take). In any case, Romm’s hands-on experience with innovative firms enables him to provide the specific cost and investment data craved by the business executives who are his target audience, while also anticipating their skepticism toward his recommendations. Some caution about the accuracy of the data is warranted, since much of it was self-reported by the firms profiled. But as success story follows success story in Cool Companies, the accumulation of evidence should be enough to persuade all but the most determined polluter to change his ways, and for his own financial benefit.

Cool Companies begins with the story of Aaron Feuerstein, the Massachusetts business executive who attracted national media attention when his Malden Mills textile factory burned down in 1995. Feuerstein famously refused to seize on the blaze as an excuse to relocate to a low-wage zone overseas; even more remarkable, he also continued to pay all 3,000 of his workers while rebuilding the plant. Impressed by Feuerstein’s decency, Romm asked his DOE colleagues to see how they might assist the company. Two years after the fire, Romm was pleased to attend the groundbreaking ceremony for the rebuilt Malden Mills factory, complete with a new, super-efficient natural-gas turbine that would provide the plant with both electricity and steam, a process known as co-generation. When Romm asked Feuerstein why he had focused on making environmental improvements at the very time he was trying to save his company from bankruptcy, the executive replied, “Over the long-term, it is more profitable to do the right thing for the environment than to pollute it.”

That philosophy is the central message of Cool Companies, and for most of the firms the book describes, the extra profits come from improving energy efficiency. The point of energy efficiency is not to do without, but to do more with less. Toyota Auto Body of California, for example, a facility in Long Beach that manufactures and paints the rear deck of Toyota pickup trucks, was consuming 2.5 million kilowatt-hours (kWh) of electricity in 1991. By 1996 the plant had doubled its production volume while cutting its electricity consumption by one-third, to 1.7 million kWh, thanks to a comprehensive set of efficiency improvements, including better motors, lighting and air compressors. Toyota implemented these changes to improve product quality, not the environment, but Romm maintains that such “lean” initiatives tend to have green consequences: Reducing energy inefficiency reduces waste of all kinds, from defectively painted trucks to unnecessarily high electricity bills. Greenhouse-gas emissions and other forms of pollution, Romm suggests, are but physical manifestations of inefficient production processes and should be as abhorrent to corporate managers as they are to Greenpeace militants.

Of course, the single biggest cost facing most corporations is the wages, salaries and other expenses associated with maintaining a competent, productive work force. But here too, writes Romm, it pays to do the right thing environmentally. Designing buildings so that sunshine rather than electric light provides most of the illumination obviously reduces energy use, but its real value lies in how much labor productivity increases. “In a typical building, energy costs average $1.50-$2.50 per square foot, while salaries exceed $200 per square foot,” writes Romm. “That’s why productivity savings dwarf energy savings.

Consider the case of VeriFone, a Hewlett-Packard subsidiary that manufactures credit-card-verification machines. When VeriFone renovated a 76,000-square-foot facility in Costa Mesa, California, it chose a natural-light design that helped reduce energy consumption 60 percent. But the natural light made the plant’s workers feel so much better–no more end-of-the-day headaches and drowsiness–that productivity also climbed 5 percent and the absentee rate dropped an astonishing 45 percent. As a result, an investment that the company expected to pay for itself in seven years was recouped in less than twelve months.

Energy efficiency may not sound like much of a rallying cry for the environmental revolution, but there is no denying that it packs an impressive financial punch. On the basis of the more than fifty real-world examples assembled in Cool Companies, Romm contends that most individual firms can cut their greenhouse-gas emissions in half while enjoying “a return on investment that can exceed 50 percent and in many cases 100 percent.”

Romm argues that inadequate information is the main reason that relatively few US companies have so far embraced a “cool” strategy; most corporate managers are simply unaware of how much money they could be saving. But if “any significant fraction of U.S. companies became cool,” he suggests, the United States “would be able to meet the Kyoto [emissions] targets while lowering the nation’s annual energy bill by tens of billions of dollars and accelerating economic growth through productivity gains.”

Sounds pretty good, doesn’t it? But if the great value of Romm’s book lies in its can-do message, its weakness lies in his reluctance to acknowledge the limits of the strategy he propounds. Promising to meet the Kyoto targets is all very well, but it is woefully inadequate to the real challenge facing us. The Kyoto treaty calls for industrialized nations to reduce their greenhouse-gas emissions by 2012 by approximately 6 percent compared with 1990 levels; but the Intergovernmental Panel on Climate Change of the UN has concluded that emissions must decline by 50 to 70 percent if humanity is to avoid the most severe effects of climate change, including a one-meter rise in global sea levels by 2100, which would leave large parts of New York, Amsterdam, Bombay and Shanghai underwater.

Like it or not, there is more to fighting global warming than increasing corporate efficiency; what a given corporation produces in the first place matters profoundly. Romm heaps page after page of praise on Toyota and Royal Dutch/Shell for dramatically reducing the amount of greenhouse gases released from their factories and office buildings, but he says barely a word about the incomparably larger amount of greenhouse gases released when the cars Toyota so efficiently produces are filled with Shell’s gasoline and driven back and forth across the American landscape.

Motor vehicles currently account for nearly 40 percent of America’s greenhouse-gas emissions. As long as those vehicles continue to be powered by gasoline and driven increasing numbers of passenger miles every year, it matters little how energy-efficient the factories that manufacture them are. Yes, it is welcome news that Shell has promised to invest $500 million in renewable energy over the next five years and that it has left the Global Climate Coalition, an industry front group that has long delayed progress by claiming that global warming is little more than environmental propaganda. It’s also nice to know that Ford is working with DaimlerChrysler to produce a fuel-cell-powered car whose only exhaust will be climate-friendly water vapor. But the bulk of Shell’s immensely profitable global operations remain dedicated to maximizing the production and eventual combustion of fossil fuels, just as Ford continues to make most of its profits by selling egregiously fuel-inefficient sport utility vehicles.

Until we as a society break decisively from our addiction to fossil fuels and the motor vehicles that consume them in such vast quantities, our chances of avoiding severe climate change are slim. To be sure, a cool-companies strategy of increasing individual firms’ energy and resource efficiency is a step forward. Such a strategy can dissolve current corporate prejudices by showing that environmental investments can indeed be profitable; it can also help buy time necessary to navigate the tricky transition to a truly environmentally sustainable society. But if companies like Toyota and Royal Dutch/Shell are left in charge of that transition, it’s hard to imagine that we’ll make the shift in time.

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