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Regulations and Business Strategy

generalelectricwind.jpgDo motivations matter? Last week's BusinessWeek looks at the growing trend of large companies moving to cut their carbon footprints, not out of any concern for the environment or the planet's future, but out of fear of being caught flat-footed by regulations that they see as inevitable. Financial analysts and (in particular) insurers drive this, making it clear to corporate leaders that the more they work now to cut down on greenhouse emissions, the better off they'll be when governments begin to act.

We've covered this trend before, but it's clearly accelerating. And what's especially interesting is that some of the early-moving companies are beginning to find out that -- much as we've long contended -- working to reduce their carbon footprint doesn't hurt their bottom-line, but instead improves it.

Because carbon is basically a proxy for fossil energy, cutting carbon equals cutting costs, argues energy guru Amory B. Lovins, head of the Rocky Mountain Institute (RMI), a nonprofit energy and environment policy think tank: "Efficiency is cheaper than fuel."
That approach is what landed Geneva's STMicroelectronics, the world's No. 6 chipmaker, on the BusinessWeek/Climate Group ranking [of corporations working to cut CO2]. Lovins and the RMI helped cut the company's energy use by 5% per year. Many changes were surprisingly low-tech, such as putting in larger air-conditioner ducts. That enabled air-circulating fans to do their job at half speed, using just a seventh of the energy. Last year, with $40 million in improvements, the company saved $173 million.

Aside from the lead story, BusinessWeek also looks at carbon markets in Asia, efforts by Toyota to cut emissions, Cinergy's decision to cut carbon emissions ahead of regulations, and corporate innovators. They also offer several tables ranking various companies, governments and leaders. My favorite page, however, is their listing of "best management practices," as they are ample demonstration that the steps that can be taken by corporations are neither obscure nor complex -- they just need leadership commitment.

Back to our initial question, then. It's clear that few of the companies or business leaders profiled by BusinessWeek have embraced a green philosophy (bright or otherwise); their motivations are overwhelmingly financial. For now, this is sufficient to trigger significant changes in behavior by a growing number of companies. What we need to be watching for, then, are signs that the self-interest-based environmental decisions no longer correlate to planetary-interest-based environmental needs. At that point, we'll need our best memetic and framing engineers to help that generation of leaders understand why doing good for the planet is the best path to doing well for themselves.

Comments (14)


I just read this article today in the print verison of BW, and was intrigued. In the sense of wanting certain outcomes, motivation does not matter. If they're paying attention, great! The ends excuse the motivation, or something like that.

But it doesn't take much experience in life to realize that motivations do matter. If you haven't changed the fundamental way of relating to the world, the behavioral changes won't stick.

And another interesting question is the reponse of the environmental movement if we find ourselves no longer in the minority. What if everyone starts "getting green" for all kinds of diverse reasons? As an example, the BW article Jamais quotes from mentions that the Christian Right is getting interested in environmentalism because they claim God has asked Man to watch over His creation.

Some movements thrive on being the "outsider," minority, fringe group. They create an image of themselves as the morally superior Few against the ignorant Many. This leads to problems when they actually achieve success. Can the Greens change with the times if these ideas actually go fully mainstream?


"At that point, we'll need our best memetic and framing engineers to help that generation of leaders understand why doing good for the planet is the best path to doing well for themselves."


If it doesn't harm anyone, it shouldn't cost them anything. If it does harm someone, they need to pay for it.

What's good for people and good for the bottom line is ALWAYS the same thing.

If there's a disconnect, it's a market failure, not 'Mimetic framing' failure. Price pollution correctly and business will ALWAYS be on board. If business isn't on board, it's because the prices are wrong.

If you ever, ever, ever expect to change business culture long term you have GOT to get this through your head. I don't care how much it hurts. MBA's just don't give a CRAP about your 'bright green framing', they only care about the bottom line.

Look, for years people polluted because they got away with it. Now that they can't get away with it (financially), they're stopping. You do not have to get them to believe in your bright green future. You only have to convince governments to regulate/ price correctly. Once you do that, business folks will take care of themselves without you having to do a damn thing.

Dave Cutler:

Governments, particularly the shining example in Washington today, don't live in a different world from business leaders. Talking about changing the minds of the people in government without changing those of people in business ignores the immense influence the latter have over the former--in the case of Bush and Dick, they *are* business leaders in mindset and according to most of their resumes. I'm all for changing the electoral system to make it harder for corporations to buy politicians, but if we're electing guys like these I fear we're going to have to change the minds of many people outside government, because next week they could be running the government.


And yet, with Bush and Cheney in power, businesses are already making these changes. Believe it or not, corporations are doing this long before the government is making it necessary. They are doing it to compete.

Energy prices make businesses undergo lasting change. Touchy-feely green activists do not.
The Fortune 500 are only on board with going green because it is more profitable to be efficient than wasteful, and the people opening their eyes to this are not green activists. They are changing their minds about greener technologies and practices because they can save money doing so.

This isn't a bad thing. Why should it be? Because nobody gets to preach down to business leaders, "speak truth to power," and bitch about how wasteful multinational corporations are?

Here's a hint to the green crowd: when you win, don't complain about it.
In fact, take a lesson from your victories, and change your strategy to match that. The strategy should be to get as many polluters on board with profitable greening as you possibly can, and promote the development of new technologies and practices that can be used in this way. The strategy sells itself.

You know, in a way I can understand these criticisms, but mostly I believe they are the most tired of clich├ęs. People advocating for a green future do care about the bottom line, or to be more accurate the ONLY bottom line that really matters, and it's all based on a really simple bit of logic:

We depend upon the environment to survive. If we destroy the environment, we destroy the very thing we need in order to live.

So THE bottom line, is that we need the environment to survive, and thus it is wise to participate in practices that do not affect the environment adversely. The alternative to this (which is what we've been doing since the Industrial Revolution), is a relatively gradual mass suicide.

The more business-minded people who criticize green ideals might think I'm being somewhat melodramatic. But perhaps the Cree can put this idea in a way they can identify with:

"When all the trees have been cut down,
when all the animals have been hunted,
when all the waters are polluted,
when all the air is unsafe to breathe,
only then will you discover you cannot eat money."

The problem with pollution taxes is that they are not uniform; a factory which has to spend to clean up an operation in the USA will lose business to its Brazilian, Chinese, Vietnamese, or other competitor which does not.

If you can't equalize things between nations, the alternative is to equalize them when goods cross borders.  Unfortunately, the WTO and other treaties don't allow tariffs for pollution.  This is going to have to change.

Although I can see how the minority fringe groups do indeed tend to enjoy that status-I totally and wholeheartedly agree..I really hope that the tree-hugging kids can enjoy their triumphs. Even if they only triumphed because of money.


No what has happened is the cost of these devices has come down and in SOME cases methods to make it make bussiness sense have been developed.

But it cost a buttload of money before it got that far and by waiting just long enough american companies saved ALOT of money.

Its basicaly a reverse of what europe and others wanted america to do. Pay the money for the dev of all this stuff pay the huge costs of getting it all worked out and buying the early units and then they would come in and buy the finished products at vastly lower cost and much more bottom line friendly terms.

But america didnt need to be first and so didnt need to pay the cost.

That is what toasts so many peoples buns. That america doesnt need to be in front and chooses to follow where its cheap and easy for a change.

All we have to do is buy the tecks that work and ignore the ones that dont.

Sounds like reasonable compensation for taking on the burden of defending those countries for free.

David Foley:

Of course motivations matter - people act according to the difference between how they perceive things to be and what they want things to be. If that difference is small, or obscured, or denied, then our actions will be meagre, incremental, often half-assed.

Martin Luther King did not say, "I have a dream: that one day the 'Colored Only' drinking fountains will be just about as good as the 'Whites Only' ones."

Thank god.

I think we should expect more of ourselves when we engaged in commerce and markets, whether as entrepreneurs or consumers. Running a business merely for a quick return on the balance sheet is uninteresting, uninspired - frankly boring.

I co-own a small business. My partner and I want much more from it than merely making money.

I'm writing from the South Island of New Zealand. People here work hard, dedicate themselves to their work, but it's clear that it's very, very important here to be thought of as a good person - to have a standing within the community. Perhaps the notion that business is always amoral is not universal.


Bussiness isnt always amoral but just because your about the bottom line doesnt make you amoral you can be about the bottom line so that the bussiness stays afloat and keeps the community afloat.

Nothing will sink a town faster then its main biss going under.

Fossilized Flower:

"Sounds like reasonable compensation for taking on the burden of defending those countries for free".

Huh?!? EP you couldn't possibly believe that modern US international politics are entirely and selflessly altruistic, so you're clearly rehearsing your use of irony. Glad I got it!! Phew.


He didn't say "altruistic." We have a navy with more combat power than the rest of the world combined. We don't do this because we feel all warm and fuzzy about providing security for the defenseless. That navy secures global free trade, provides us with incredible powers of force projection, and altogether will be very much responsible for keeping us a superpower so long as we can afford it.

Now, incidentally, the existence of a massive US navy means that many countries which are our allies do not need to maintain a large, modern navy of their own. They are "free riders" taking advantage of an ungodly-expensive security investment by the United States.

Would we have it any other way? Probably not. We like our security, and not having dozens of huge navies competing to provide security certainly simplifies our situation. Unquestioned dominance has its benefits.

But are other nations, like our fortunate European and Canadian allies, are definitely taking advantage of naturally subsidized security. Not only do we provide security to every corner of the globe, we research and develop a great deal of the technology that goes into the hardware they do have. And our universities, which attract people from around the globe, train a lot of the engineers and scientists who do that research.

So Engineer-Poet is quite right that we provide a great deal of security for free -- the classic free rider problem. But in fact, Europe's spending on green tech comes nowhere near the United States' spending on global security, so it's not really just compensation in full.

Fossilized Flower:

Pre-dating the US is a long human history of aligning military might with vested interests in commerce and ideology.

The primary motivation is to preserve a financially and politically dominant world model - from which the US extracts the greatest financial benefit. Achieving and maintaining that status quo (with the so-called free-riders buying US goods and supporting the US model) is the (more than adequate) compensation that the US seeks and gains.


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