One of the problems with sustainability is that, as a concept to strive for, it doesn’t exactly excite the business imagination. As a visiting environmental chemist recently put it: “Sustainability – it’s so boring. It’s just doing the same thing over and over – it doesn’t really honour human creativity.”
When it comes to building business that is better fitted for a carbon-constrained world, Michael Braungart – German scientist, consultant and co-author of Cradle to Cradle: Remaking the Way We Make Things – advocates “eco-effectiveness” over “eco-efficiency”. And while that may sound like so much semantic quibbling, it really turns current notions of sustainability inside out – from a focus on minimising environmental harm to one of optimising environmental benefit.
“It is not about being less bad to nature,” says Braungart. “It’s about reinventing everything positively – so we choose stuff people want to use that can be beneficial for society, for the economy and for the environment at the same time. So it’s not about triple bottom line but triple top line.”
This is no pipe dream. The “cradle to cradle” philosophy (see box story) is already being adopted by companies and by countries that are discovering exciting new possibilities for products whose life cycle generates nutrients rather than toxic waste; for buildings that function like independent life-support systems rather than energy drains; and human environments that encourage species diversity rather than reducing it. Instead of damning human impact on the planet, such developments celebrate human cleverness. And in both a business and demographic sense, they also embrace the notion of growth.
It helps put a different spin on what a carbon-constrained world might look like, not a negative cramping of human and business potential but the sort of paradigm shift offered by the digital revolution – only bigger. Okay, it won’t be an easy adjustment to make but this is the new reality – and the upside is that it offers potential huge business opportunities that Kiwi companies could reap.
Which was pretty much what local business commentator Rod Oram had to say at the Better by Design CEO Summit that brought Braungart to New Zealand. There’s a new economic revolution under way that has sustainability at its core and it will “bring about radical change” in this country’s economy. But, he believes, it will also help push the shift from commodity exports to more sophisticated, higher value products and lead to greater engagement of our economy with the world’s.
“It’s a revolution that will be harder, deeper and longer than what we’ve had before but ultimately it will also be more beneficial and rewarding.”
How rewarding was the subject of another recent talk-fest held in Auckland – the Clean Billions Breakfast Symposium. Held as a curtain raiser to the 4th Australia-New Zealand Business and Climate Change Conference, it was designed to highlight the scale of opportunity available as the world shifts to a more carbon-constrained economy.
On the menu were people like David Williams – a Welshman who chairs major renewable energy investor Eco2, and David Milroy – CEO of Hong Kong-based Pure Power Global whose network of renewable energy businesses now includes investment in Kiwi company Aquaflow, which is pioneering technology to create clean biofuel using sludge pond algae.
Whether it’s generating power from cow pooh or designing energy management software, the message was that clean technology is not just about being nice to the planet – it also has the potential to earn – big time. And fleet-footed New Zealand entrepreneurs can and should get their share of the lucrative and rapidly moving clean-tech market.
Some already are.
VCU Technology, for instance, saw the first commercial installation of its vertical composting unit completed back in the mid-1990s and now has a base in the UK where its patented process for dealing with organic waste is in hot demand. The home-grown, world-patented technology achieved a breakthrough in dealing with the waste cost-effectively with none of the smells, toxic leachates or vermin normally associated with the process.
Another local company at the starting gate in the clean-tech stakes is also in the game of transforming waste into resource. LanzaTech has developed a proprietary platform that turns waste industrial gases into fuel ethanol and can be retrofitted to existing industrial facilities. Basically, it enables industries that produce high volumes of carbon monoxide containing flue gases to instead become low-cost, high producers of fuel.
That it has attracted the support of Khosla Ventures – one of the world’s biggest investors in clean technologies – is a good indication of its commercial potential. It also picked up a $9.5 million grant from the New Zealand Government’s FRST fund which will help fund a pilot plant – the precursor to a scaled-up demonstration facility scheduled to be built by 2013.
It’s a company that had already attracted the interest of local businessman Stephen Tindall, who has provided capital backing for several local clean-tech start-ups – including LanzaTech.
“It’s the one that excites me most because we think it is something that could put New Zealand very firmly on the [green tech] map. It was invented here, all the experimentation and R&D is being done here and it now has some great allies overseas. We see that as perhaps the biggest opportunity in this space at present.”
Tindall believes business response to sustainability is shifting from one of reluctant compliance to a recognition that there are business gains to be made in this space.
“That’s particularly true in other parts of the world – if you look at Europe, they’re a fair way ahead and international companies like GE realise there’s more money to be made in their sustainable divisions like wind generators than more traditional areas. Also the attendance we’re starting to get at conferences on the subject is a good bellwether. It suggests there is a huge amount of interest.”
That interest is also gaining rapid momentum.
“I started getting interested in this area back in the mid-’90s when it was really a pioneering type of thing but it’s now very sharply up the hockey stick curve – it’s really picking up,” says Tindall. According to the United Nations Environment Programme, wind, solar and biofuel companies received a record US$148 billion in new funding last year and overall investment in clean-energy and energy-efficiency industries has shot up 60 percent from 2006 levels.
As investment community speakers noted, the ROI on clean tech is also outstripping more traditional investment. It’s certainly helping to craft an attitude adjustment. As David Clarke, director of Cranleigh Merchant Bankers, puts it: “Clean tech is no longer the ugly duckling of the world economy – it has grown into a swan.”
Cranleigh recently launched the CE3 Fund, a private capital investment vehicle focused on the Australasian clean-energy and energy-efficiency sector (
www.ce3fund.co.nz) and Clarke says it’s an idea whose time has definitely arrived.
“When we first started, the reaction was – ‘this carbon thing, we don’t know about that’. In the past few months that has changed markedly to where people are saying ‘okay this is a given, what are the opportunities’.”
The introduction of New Zealand’s Emissions Trading Scheme and a similar one in Australia that is heading rapidly down the regulatory pipeline have certainly played a major part in the local attitude shift. But you don’t have to do too much internet trawling to dredge up evidence for what’s being described as the “green gold rush”.
Research in the US predicts the market for wind turbine components and systems will be worth US$60.9 billion by 2013 – a compound annual growth rate of 40 percent. And although wind is still ahead in the clean-tech stakes, solar power is the fastest growing – up 90 percent in the past year to US$28 billion. This despite general turmoil in the financial and credit markets.
And it’s happening all around the world. One estimate has China’s clean-tech market increasing to US$186 billion by next year and a massive US$555 billion by 2020. Japan is busy working on a solar-powered ship. The Netherlands is developing new neighbourhoods based on cradle-to-cradle concepts. There’s a whole industrial revolution happening and introduction of ETS here only helps underline what is already the new reality, suggests Tindall.
“I really do think this is a paradigm shift – in my lifetime I think it is one of the biggest changes the world will see and no doubt the whole world is deciding right now they have got to do it.”
So it would be foolish to resist?
“Well, I think if you resist, you go broke,” says Tindall.
Those who just take a negative approach to sustainability – that it’s going to cost more money and will turn everything upside down – are in danger of missing the opportunities, he suggests.
“We now know what the rules are. Let’s start really thinking differently and radically about how we can – by the time we have to start paying – change our businesses, even if it means a major shift in the way we do things.
“At the end of the day, it’s not actually the business that ends up paying for this because they’ll pass the cost on – it’s all of us. So what this does is pit competition in the marketplace so that if, of two companies doing the same thing, one chooses to adapt and reduce emissions, then they get a competitive advantage because they’re not having to pay as much for carbon. It changes the whole dynamic of the market.”
As LanzaTech’s founder, Sean Simpson, has suggested, New Zealand is a “wet dream” when it comes to clean tech. “We have wind, waves, tides, hydro, geothermal – there’s not a resource we don’t have that we can convert. We’ve also got ideas. What we don’t have is more risk capital.”
Whether deserved or not, New Zealand does have some street cred on the sustainability front that to some extent puts us on the front foot in the clean-tech space, says Tindall.
“I think we are better placed than other countries but we can’t afford to wait because that will be eroded really quickly if we don’t act fast. And our biggest disadvantage is that we are a long way from anywhere – so we have to develop smart, weightless ways of generating income. Therefore we have to have a fast electronic broadband infrastructure that makes us relevant to the rest of the world and have smart businesses that revolve around that rather than trying to rely on moving huge amounts of goods which will, I think, become more difficult. Those are the sorts of paradigm shifts I think we’ll see.
“The reality of this thing is on us and we have to start adapting to survive and to thrive.”
Cradle to cradle Why can’t a building be as eco-friendly as a tree? Instead of focusing on waste reduction, why not take a lead from nature and think biological nutrient stream?
The concept of cradle-to-cradle design is that everything humanity needs can be made from environmentally friendly, 100 percent sustainable materials. This is not a matter of ethics, says German chemist and founder of the Environmental Protection Encouragement Agency, Michael Braungart, it’s a question of quality, of good design, of being “less stupid” in what we choose to optimise.
“There is no doubt we have been optimising the wrong things. But I can use my creativity and intelligence to design a way of life that is good for the other species instead of just trying to be less bad. Because, if we just try to be less bad then already we have too many people on the planet and I want to look at a child and say ‘hey, nice you’re here’, not to think it would be better if they were not here.”
The appealing aspect of this approach for business is that it repudiates the rather dour face of “eco-efficiency” and removes the tension between sustainability and growth.
Growth is good, says Braungart. We just need to be clear about what we’re growing – cancers and species extinction or healthy children and clean water.
“You don’t have to minimise the business or the human footprint – just ensure that footprint is a beneficial one.”
Sustainability, he says, is not enough – it’s just guilt management. We’ve given nature a beating so now we’re prone to romanticising it.
“We can use endless wisdom from nature – but we don’t need to romanticise it, then we don’t learn as well to celebrate our spirit and knowledge as part of nature.”
Cradle to cradle basically defines two nutrient cycles: “biological” – the stuff you can use then return to nature; and “technical” which applies to the materials like metals or polymers that can circulate in closed-loop industrial cycles. So instead of buying a TV or a car, say, you buy a service consisting of components that, when you’ve finished with them, are fed back into the creation of either a similar, upgraded product – or a different one. Components that are too toxic to be either consumed or recycled need to be discontinued or substituted as soon as possible.
As Janine Benyus, co-founder of the Biomimicry Guild and another keynote speaker at the recent Better by Design CEO Summit, points out: we already have 3.8 billion years of R&D to draw on when it comes to designing products that fit the cradle-to-cradle brief.
“The organisms that surround us now have managed to do everything we want to do without guzzling fossil fuels, polluting the planet or mortgaging their future. What better models could there be?”
How about splitting water the way a leaf does – a team from MIT is already claiming they’ve come up with the answer to the dark side of solar energy with a fuel cell based on the process of photosynthesis. Australian firm BioPower Systems has developed an ocean power system that harnesses energy by mimicking the motion of underwater plants to generate electricity. There are already “gecko” carpet tiles that took their cue from the way lizards cling to walls, to avoid toxic glueing; buildings with ventilation based on termite mounds; and paints using the “lotus leaf effect” to repel dirt and moisture. The strength of spiders’ silk has been unravelled to form the basis of new materials stronger than Kevlar, and instead of condensing C02 and shoving it underground, why not transform it, as molluscs do, into building material.
Biologists, says Benyus, need to be brought to the industrial design table and life needs to be put at the centre of decision making.
Leading the new revolution At 63 and on the verge of retirement, Interface CEO Ray Anderson found a whole new purpose – demonstrating how business can take a lead in “climbing Mount Sustainability” – and proving that it is very possible to do well by doing good.
In New Zealand this week to share his story with a packed room of delegates at the oversubscribed Better By Design CEO Summit in Auckland, US-based Anderson made it clear that his shift to embrace sustainable practice also made good economic sense. In 14 years, Interface has hugely reduced its carbon footprint, knocking US$372 million off its costs while doubling profits and cornering a 42 percent share of the US carpet market. Along the way, it has also pioneered new patented technologies that have helped make the company’s products “the best they’ve ever been”.
In its ecometric report for the past financial year, Interface reported its net greenhouse gas emissions are down 82 percent from the 1996 baseline while total energy intensity is down 45 percent. And the Interface journey is not just about redesigning industrial processes but the model of commerce, says Anderson. “What we’re selling is not a product but a service – we retain ownership of the materials and sell intangibles like functionality, fashion, colour.”
The business case, he says, “is crystal clear – it is a much better business model”. And the lesson is that it’s entirely possible to do. “The entire industrial system must travel this road – if we can do it, anybody can.”
Vicki Jayne is 3media Group’s editor at large.
