No Nature, No Business

Amy Larkin, the author of Environmental Debt: The Hidden Costs of a Changing Global Economy, was for 25 years a volunteer activist and sometimes board member of Greenpeace. With a background as an entrepreneur and producer she brings a unique experience to environmental action and shares it in this book. Larkin does not view business as an inherent obstacle to sustainability, unlike some in the environmental community, but rather as a potential partner in finding solutions to our most pressing problems. “My worldview connects an inherent love of nature with an abiding respect and admiration for the power and dynamism of business,” she explains. “I have always believed that robust commerce is a central ingredient to a stable and healthy world – and conversely, that commerce is inseparable from its impact on the world around it.”

Larkin’s activism took a new turn in 2005 when she became the director of Greenpeace Solutions (GS), which consists of the organization’s business and financial initiatives. GS was conceived and launched in the immediate aftermath of Hurricane Katrina and, according to her account in Environmental Debt, was the result of an Aha! moment. While watching an episode of CNN Money featuring several meteorologists, the host, Lou Dobbs, responded to the scientists’ consensus that the frequency of intense storms was likely to increase by saying, “I don’t want to pay for that.” It then hit Larkin: “new equations were being born as climate change risks to business were becoming more easily quantifiable.” From the self-obvious premise that “[a]ll business, all economies, all living and man-made systems depend on nature” she concludes that “[g]rowing an economy that destabilizes nature is just plain fool- hardy.” She summarizes this neatly with three pithy and memorable slogans:

  • No Nature, No Business
  • No Healthy Ecosystem, No Healthy Economic System
  • No Environmental Security, No National Security

Heretofore, business has operated as if there were no limits to resources that could be extracted from the ground and atmosphere and no limit to the capacity of the earth to absorb industrial wastes. As a consequence, business has benefited substantially, with positive financial spreadsheets and well-compensated corporate executives. But it has not recorded the cost of environmental debts—the overdrawing and fouling of water resources, the overconsumption of fossil fuels, and the buildup of carbon in the atmosphere, to name just a few.

At its root is a business-as-usual framework that has three central features:

  1. Pollution is largely free to the polluter.
  2. Earnings statements do not include long-term financial, economic, and social impacts.
  3. Governments subsidize business with no concern for environmental impact.

Displaying familiarity with both marketing and branding, Larkin calls her approach the Nature Means Business (NMB) framework. It is essentially the negation of the business-as-usual framework and consists of the following three pillars:

  1. Pollution can no longer be free and can no longer be subsidized.
  2. The long view must guide all decision making and accounting.
  3. Government plays a vital role in catalyzing clean technology and growth while preventing environmental destruction.

Larkin is upfront about the possible consequences of such a transformation, which is refreshing, but this only underscores the significant challenges to such change. She makes this concrete by using Apple Computer as an illustration. In 2009, Apple resigned its membership in the U.S. Chamber of Commerce because of the Chamber’s resistance to climate change legislation. At the very same time that Apple was taking this high road on climate change, the press was exposing the appalling work conditions at the company’s manufacturing facilities in China, from abusive treatment of laborers (including children) to exceedingly long work hours that involved exposure to toxic chemical exposure. The reasonable price (relative to their quality) of Apple products, which we as consumers benefit from, depends on these conditions. As Larkin says, “As Apple transforms its factories, its computers and phones will become more expensive to produce.”

More globally she expects that, “The era of cheap goods is over. Changing the rules of an economy is not for the faint of heart. Inflation, social unrest, changed expectations, lifestyle adjustments and food short- ages are all potential consequences of the re-pricing of goods.”

Each chapter of Environmental Debt is a mixture of warnings—clean water is scarce and becoming more so, burning fossil fuels are oversaturating the atmosphere with carbon, biodiversity is disappearing because of development in sensitive ecosystems—and of stories detailing collaborations between businesses and nongovernment organizations (NGOs), including Greenpeace, that respond to environmental problem. Each story also illustrates the sorts of things we need to do to get on a more sustainable path.

What then do we need to do? High on Larkin’s list of necessary reforms is changing the way business accounts for costs and profits, specifically advocating for unified financial reports that quantify and include externalities on the cost side. This has been proposed many times and has its origins in the work of the early twentieth century economist Arthur Pigou. Larkin, however, includes stories of companies that have undertaken this, if incompletely. She also shares an enlightening anecdote that underlies why government policy is so important in providing the necessary guidance for business: In response to a question posed by Larkin, the director of environmental sustainability at
Frito Lay, a division of PepsiCo, said, “If the financial system offered the incentives, PepsiCo would only build state-of-the-art facilities.”

Individual initiative plays an important role in Larkin’s narrative, with a long and informative chapter, “Courage: High Risk, High Reward,” devoted to the positive actions of executives from a number of highly visible international corporations. For example, she details how Bob Langert, McDonald’s vice president of corporate social responsibility, worked collaboratively with Greenpeace over allegations that Cargill, a McDonald’s supplier, was encouraging clear-cutting of the Amazon rain forest for planting of soybean farms. As a result McDonald’s extended its beef policy (no purchases from suppliers who destroy rain forest) to its soy supply chain. Subsequently, faced with pressure from McDonald’s, Cargill and all other major soy producers, including Archer Daniels Midland and Bunge, agreed to adhere to the same policy.

A second inspiring story of individuals taking a chance describes how Mike Kowalski, the CEO of Tiffany’s, reached out to Steve D’Esposito, at the time director of NGO Earthworks, seeking his help to change the company’s gold supply chain. Not content simply with new sources, but interested as well in reforming the industry, Kowalski and D’Esposito prevailed on mining executives to spend money on adopting best practices in the industry. Other case studies highlight Walmart’s phase-out of incandescent light bulbs, General Electric’s “green” refrigerator, and McKinsey’s advocacy of “capitalism for the long term.”

Larkin also makes the more systemic case for moving beyond fossil fuels. Her book is filled with the usual statistics on the growth of solar energy production and other renewables: in 2012, for instance, wind power supplied 3.25 percent of all electricity in the USA. Larkin is optimistic about the possibility of renewables achieving sufficiency—that is, fulfilling our genuine energy needs—in the foresee- able future. Part of the way to getting there, she quite correctly asserts, has to come from reduced consumption by households, twenty percent by her estimation. She refers to the contributions that each person or family can make as the individual energy sector.

On the other hand, and importantly, Larkin is realistic about costs. As she puts it, “Cheap energy sounds very appealing, but at the moment it does not exist. Happily, a handful of pioneers in technology, business and policy have finally demonstrated enough success in bringing renewable energy to scale that a path forward is emerging. If we can build a strong infrastructure (including a smart grid and new storage capacity technology), these ‘free’ fuels (wind, sun, geothermal, wave) may become quite cheap in the future. But don’t let anyone tell you that getting there will be cheap. It will not.” As she usefully points out, trillions of dollars will be spent in the public, private, and individual sectors on energy. Thus, the choice is not whether to spend money on energy, but how to spend it.

Larkin also spends time exploring innovations that emerge from the labs of corporations and universities as well as novel business practices and governmental policies. These range from applications of biomimicry (copying the ways of nature) in the carpet industry to new approaches for meeting infrastructure needs. (Unfortunately the company she focuses on by way of illustration, Betterplace, in the electric car space, has since gone bankrupt.). Larkin discusses material recapture and waste reduction and the possibility for government policies that would allow several companies to jointly develop new products and services and then share patents.

It is clear from her story about the origin of Greenpeace Solutions that she understands how business can work constructively with environmentalists when sustainability initiatives coincide with good business practice and profit- ability. But it would have been helpful if she had regularly spiraled back to this insight. In this regard, the book should be read in tandem with Robert Reich’s Super Capitalism. There, Reich makes the point that corporations are not people, that there is no such thing as corporate social responsibility, and that the sole responsibility of corporations is to maximize value for its shareholders within the laws enacted by government. On the other hand, it is our responsibility as citizens to establish those rules and regulations and decide how much of the wealth created by corporations might be taxed away.

On the whole, Environmental Debt is filled with inspiring and encouraging stories. But how do we get from business-as-usual to the nature-means-business framework? Larkin’s ultimate chapter makes explicit that government is where the action has to be, laying out a transition agenda: “Only when more of us better understand the role of government in the food/water/energy nexus will governments offer incentives and support for green innovation instead of antiquated subsidies that increase environmental debt.”

But ultimately, getting government to enact the sorts of things that need to be done—carbon taxes, accounting rules that incorporate externalities, massive subsidies to renewable energy—would probably appear, to even a casual observer of U.S. politics to be a Sisyphean task. Perhaps to offer some degree of hope, in her chapter on courageous individuals Larkin tells the story of how Ed Muskie, Democratic Senator from Maine and chair of the Energy and Commerce Committee, worked collaboratively with Republican Howard Baker, both risking their political futures, to sponsor the Clean Air Act of 1970. In the face of enormous opposition from oil producers, the major auto companies, paper manufacturers, and many industries, they nonetheless prevailed. However, inspiring as this story is, it has little relevance to the present situation.

The final chapter is devoted to creating a transition agenda through a crowdsourcing process. The process is to be facilitated by RESOLVE, an organization that “specializes in bringing together people, business, and civil society organizations that seriously disagree with each other into a solution-building mode.” Described in some detail is how this process will unfold and, if it is implemented as described, how it will result in many excellent reports with worthwhile suggestions for individual action and policy proposals. However, there is already no shortage of desirable proposals for a sustainable world. The main problem is how to translate good ideas into governmental action, and that will have to await another book.