New Bottom Line Volume 7.6 – When the best just isn't good enough

September 8, 1998

I’ve got good news, and I’ve got bad news.

The good news is that folks are getting it. The message is getting through. The rubber is meeting the road. The clouds are lifting over at least part of the corporate landscape. Increasingly, companies are beginning to connect dots between innovation, efficiency, climate change, competitive advantage and profitability.

A new report from the World Resources Institute <>;, “Taking a Byte Out of Carbon: Electronics Innovation for Climate Protection,” chronicles how one industry is actively developing products that improve energy efficiency, reduce greenhouse gas emissions, reduce costs for companies and their customers, and create new market opportunities–rather than waiting for the debate to resolve over how to forge an economically sound climate policy.

“We are convinced,” said Frances Irwin, a WRI fellow and report co-author, “that the industry that launched the information revolution can make a big difference in tackling greenhouse gas emissions.” Some of the opportunities cited by the report include:

  • Electric utilities, by using electronics to help homeowners control energy use more precisely, could help customers save $58 billion over the next 15 years.
  • Honeywell has cut its own energy use by 12 percent (saving $4.6 million a year) and has grown new business by applying its electronics expertise in sensors and building controls to managing energy more efficiently.
  • AT&T is using telework (or telecommuting) both for its direct impact–saving nearly half a million dollars annually at just one location, largely due to reduced real estate costs–and positioning to sell more communications services as its business customers turn to telework.

The bad news is that we’re still just beginning. United Technologies Corporation <>;, for example, one of the companies featured in the WRI report, recently unveiled a comprehensive global conservation program that sets aggressive goals for the next decade. “Under the plan,” according to a company press release, “UTC will reduce its energy and water consumption by 25 percent as a percent of sales by the year 2007.”

Opportunities for reductions over 10 years include co-generation, fuel switching, lighting improvements, the usage of compressed air in manufacturing processes, and employee conservation awareness training. Water conservation will also contribute to reduced energy requirements, since each gallon of water used may generate energy demands for pumping, heating, chilling and treatment.

It’s sensible, ambitious, and laudable. But it’s not good enough. If UTC continues its recent revenue growth of 5% per annum, in the same period of time it will increase revenues more than 64%, and will meet the “percent of sales” target with a 22% increase in total energy use (2% per annum). And UTC will increase greenhouse gas (GHG) output by a corresponding 22%, unless the company shifts its energy consumption portfolio heavily toward renewables. If revenue growth slows to 3% per annum, the target only can be met by holding energy use steady–certainly a improvement from business as usual, but hardly the scale of change needed to slow global climate change or even meet Kyoto commitments.

This is not to castigate UTC. The company is clearly moving in the right direction, and doing so in face of both ideological opposition and the practical challenges of shifting infrastructure and habit in a large, complex organization. In fact UTC may be an example of some of the best we have to offer.

But that’s exactly the problem. The best just isn’t good enough, if the best gives us 22% increases in energy use, when “factor four” (75%) or greater reductions are what we need–and are what is possible. [See Compromise or Breakthrough? Kyoto, Climate Change and Factor Four Efficiencies.] Granted, factor four improvements in specific technologies can’t transform an entire large company overnight, but setting sights too low never will. There’s a world of difference between incremental change as a way of systematically introducing large change, and incrementalism, as a “reasonable” and “pragmatic” way of never really looking the challenge in the face.

Oh, one more thing: there’s worse news. According to a recent article by Dr. Michael Oppenheimer in “Nature” (May 28), there is some possibility that projected greenhouse gas releases may, over the next century, lead to the disintegration of the West Antarctic Ice Sheet, which could cause a 13- to 20-foot (!) rise in sea level and major coastal flooding worldwide.

Now, perhaps these projections are wrong. They are certainly not certain. But we do have some choice about the risks we choose to take, as companies, societies, and individuals.

“We, along with many others, recognize the substantial ambiguities and open questions in research on global climate change,” said UTC’s Chairman and CEO George David. “But we believe also that the prudent course is to work to reduce greenhouse gas emissions.”

True enough. But real prudence–whether for climate change or business leadership–means real reductions, not just slowing the rate of increase. Slow and steady won’t win this race.

(c) 1998 Gil Friend. All rights reserved.

New Bottom Line is published periodically by Natural Logic, offering decision support software and strategic consulting that help companies and communities prosper by embedding the laws of nature at the heart of enterprise.

Gil Friend, systems ecologist and business strategist, is President and CEO of Natural Logic, Inc.

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