Technology and the Environment DD's Eco Notes

As part of a LinkedIn discussion group run by the Association of Climate Change Officers, I responded to a question on green marketing that I thought would be worthwhile to copy here as well.

The question from Janet Smith: Is Green Advertising Overload Blocking Successful Value Propositions? She elaborated on her question in her blog.

And here's my response: I believe that green marketing related to product benefits which accrue directly to consumers (e.g. lower energy costs) will continue to be effective, while image-related green marketing will generally become ineffective for most companies. In fact, I think it is likely that we will get to a point where a generally good green image will be table stakes for being in the game. At that point positive differentiation will be very difficult, leaving only negative differentiation for those who stumble or don't get the basics right.

Two different news items recently led me into the same train of thought: we are all increasingly in the business of judging Goodness, and of being so judged. I purposefully capitalized Goodness here, because I mean it in the highest sense of the word. This probably sounds vague, so let me use the examples to explain.

The first item is from the NYTimes, and discusses the conundrum caused by a proposed solar plant in Nevada. While the plant will produce copious free energy, it will also require over a billion gallons of fresh water a year, or over 20% of the water supply for the valley in which it is to be cited.

This is a classic tradeoff that we're going to hear more and more about. What are we willing to give up in exchange for cleaner energy? Many types of solar power need water, as shown above. But how much water is too much? How many dead migratory birds are too many at a potential wind farm location? How much car safety should we sacrifice for better mileage? How much can the view from the shoreline be impacted by offshore wind farms before it crosses the line? There are tons of these questions, there are going to be more, and they are going to get more and more complex.

Presumably you can see why I described this as judging Goodness. We might try to reduce decisions such as these to financial terms, but its hard to put a price on scenic beauty or a single bird. And your answer may not be the same as someone else's. I'll react differently to a wind farm I can see from my deck than one that's a thousand miles away in a place I'll likely never visit. How we approach these decisions reflect our personal or group morals.

The second example isn't about tradeoffs, but about people trying to quantify the Goodness of others. You see this all of the time: green rankings of companies, ethical lists of schools, etc. For example, Sun was recently included in the Newsweek green ranking, coming in 14th out of 500. (Note: I'm not singling out the Newsweek ranking - there are dozens of examples I could have used and this just happened to be a recent, well publicized one.)

This, however, is even trickier than the task above. We're not talking about an either/or situation, we're talking about trying to capture all of the factors that make up the green-ness or ethical-ness of an organization in a single number. And to make matters worse, these the organizations being compared usually don't even do the same thing. How do you compare an airline to a consulting company? A manufacturer to a non-manufacturer? A small school in the north woods to big one in Manhattan?

But as we've seen, there's no shortage of people who feel they are up to the task. They're willing to put relative weights and scores on various sources of quantitative and qualitative data, deciding what the underlying components of "good", "green" or "ethical" should be. Sometimes we get to understand these weights and data sources, but usually we don't.

In the Newsweek case, one of the three major factors in the ranking was a "reputation survey" audit they did using unnamed CEOs and other "experts". Since Sun Microsystems is not a consumer brand and we don't advertise much, its not hard to predict that we may not score as high in that as organizations that are household names, or are use big ad budgets to tout their sustainability. Sure enough, Wal-Mart tops the list in that category followed by GE, Coke and Nike. (BTW, Wal-Mart is doing some outstanding sustainability work, but that doesn't validate the scoring methodology.)

Don't get me wrong - I'm not saying that Sun deserves to be scored or ranked higher. In fact, I'll go a step further and say that I have no moral grounds on which to judge the ethics or greenness of any organization, Sun included. I'm confident in telling you that we're using less fresh water and emitting less GHG than we were a year ago, but that's as far as I'm comfortable going. In short, who am I to judge?

So what's the alternative to rankings? I'm a huge proponent of measuring things and making the data public - that's what we've been trying to do at Sun through our CSR report, annual CDP response, OpenEco.org data and other avenues. I hope that companies, investors, and consumers are using that data to understand what we're up to, and are making better informed decisions.

As organizations are trying to exhibit more social responsibility, there is a necessary increase in moral judgement in business decisions. In light of this, my advice is simple. First, recognize that you're using moral in your decisions. Second, figure out what's important to you (not Newsweek or anyone else) for the specific decisions you have to make. Finally, gather your own data.

There are lots of things that are OK to outsource - your moral standards aren't one of them.

Last week I was down in DC with a group of investors and business execs, many of whom were in the green space under the banner wecanlead.org, a collaboration between Ceres and the Clean Economy Network. John Doerr was the headliner of the group, but there were CEOs of some hot company like A123 and Seventh Generation. The motivation for us all to be there was to impress upon our legislators that well-constructed, comprehensive legislation could be good for business.

(Aside: one of the dangers of these events is that the "well-constructed" part of the message is ignored or left to be defined by the audience, so the message can be interpreted as "pass anything!". My experience with business folks who are savvy about climate policy is that they are fairly particular about what "well-constructed" means. Another risk is that the press and others will try to figure out what your profit motive is, and often zero in on one part of your group, such as happened here. So whenever agree to participate in one of these missions you have to think through risks like this.)

Overall we were well received, and the trip garnered good press attention. In particular, the executive branch pulled out all of the stops, allocating time from three Department Secretaries: Sec'y Salazar (Interior), Sec'y Chu (Energy) and Sec'y Locke (Commerce). We also heard from Carol Browner, Director of the White House Office of Energy and Climate Change Policy, and several other members of the administration.

With all of these meetings we were able to get a sense of the administration's overall mood and approach to climate change legislation. These impressions were probably slanted somewhat by the fact that the administration knew it had a favorable audience. The good news was that, overall these folks all knew their stuff. Obviously Sec'y Chu is deep into the science side of energy and Director Browner into policy, but Sec'ys Salazar and Locke both exhibited a deep knowledge and personal passion on environmental issues.

Compared to past trips to DC, the biggest change for me was a new focus on clean energy competition with China. Particularly Sec'y Locke and Director Browner emphasized China above all other reasons to get legislation done, and done soon. Personally I think this is a good change. I believe it can get more broad-based support, and will focus the discussion more on innovation. However, if China truly takes center stage as the driver for legislation, it can't help but change the focus on the individual elements of the package. In particular, is cap and trade a central mechanism in a competitive agenda as opposed to a climate change agenda? This will be interesting to watch.

Beyond the emergence of China as a motivator, there were some other notes of interest:

• The administration isn't waiting for climate legislation to get started. They discussed what they were doing with stimulus money and within the jurisdictions of their own departments. Earlier in the week the President had signed an executive order to drive the greening the federal government.
• The message on timing for climate legislation is "as soon as possible". But it was pretty clear that a climate bill is second fiddle to health care, and everyone was very careful to avoid making commitments about Copenhagen. Carol Browner was particularly careful with her words, and I was left with the sense was they're willing to let the timetable slide past December if the higher priorities aren't complete yet.
• Nuclear is back on the agenda. Sec'ys Locke and Chu both talked about an increase in US nuclear capability in a manner that assumes its a done deal. There was none of the hedging about the usual concerns, no hint of upcoming deliberation, etc. There will be more nukes.
• Public lands will be used for renewables. Similar to the discussion on nukes, Sec'y Salazar spoke with a confident certainty about opening up public lands for renewables, including solar in the southwest and wind farms on the continental shelf off of the Carolinas. Again, not even a nod to the expected concerns.

Finally, when one talks about "comprehensive climate policy", the scope of what we heard in DC and what's in the proposed legislation is certainly comprehensive in the sense that there are lots and lots of programs there. But listening to two days of discussions it is still very hard to see how the decarbonization math adds up in order to meet the goals that people are proposing. As someone commented "it's a mosaic, but there's no picture".

I remain particularly concerned about the lack of an R&D plan to support the innovation that is required to meet these goals. Lots of faith is being put into "the market" and the effects of a cap and trade system, but so far that faith eludes me.