Harnessing our Collective Best Selves: Why Conservatives and Progressives are both right, and how to get us singing off the same song sheet
by Bill Shireman, President and CEO of the Future 500
I am grateful and honored to speak with you at Sustainable Brands 2013 (www.sustainablebrands.com/events/ ). I am also humble and hopeful, because I so want to convey an opportunity that has emerged from, you might say, the fires of conflict between many brands in this room and activist groups fighting to protect global climate.
Future 500 resolves conflicts and builds alliances between two groups that love to hate and demonize each other: the world’s most valuable global brands and its most passionate NGO activist groups.
KoAnn asked me to present these remarks after reading a booklet we produced a few months back, called The Innovation Agenda. It presents a simple five-step agenda that can restore both prosperity and sustainability. But the distinctive characteristic of the five steps is that they can only be taken successfully if advanced by a coalition of traditional adversaries.
The Innovation Agenda can’t be advanced by corporations alone, or by NGOS, even though most support it. It can’t be advanced by conservatives or by liberals, even though leaders on both sides strongly support it.
Advanced by any one of those, it would be corrupted along the way, to satisfy the vested interests they would need to bring aboard to make it pass. Only with a left, right, corporate, and NGO alliance can it be done right.
That presents a challenging and appealing opportunity. To understand it, let’s look at the dynamics that divide these groups.
PURPOSE AND POWER
From one perspective, Future 500’s role is to advance the Purpose of the activists, by harnessing the Power of the companies. But that’s not exactly true, because power doesn’t only exist on the corporate side, and purpose doesn’t only exist on the NGO side. We know it first hand, because right now, we find ourselves enmeshed in battles between NGOs and major brands. The groups are demanding that the companies:
• Compensate workers in Bangladesh for the Rana Plaza factory disaster
• Detox their apparel lines
• Get Oil Sands and Coal out of their energy supply chain
• Get Fracked Gas out – or oppose the Keystone pipeline.
(Details at- http://350.org/en/stop-keystone-xl )
• Eliminate Conflict Minerals, and comply with new Dodd Frank disclosures
• Stop buying Indonesian timber
• Take Extended Producer Responsibility for all their packaging.
(Details at- www.calrecycle.ca.gov/epr )
And the companies are responding, often using their buying power to drive major change. So the NGOs do have power.
GREENPEACE AND WAL-MART EFFECT
The dynamic at play here is the combination of what we call the ‘Greenpeace Effect and the WalMart Effect’ [3].
The Greenpeace Effect refers to the fact that no global brand can afford to have an activist NGO with a major brand as its enemy. These brands are often worth between $10B and $100B – just the brand reputation, apart from all the other assets of the company. So a 1% cut in brand value equals $100M to $1B in real cost – and can pivot a brand from a positive to a negative direction of change.
The Wal-Mart Effect refers to the fact that no supplier anywhere in the world can afford to say “no” to a strong request by a major brand or retailer. Wal-Mart is the most powerful of these, but there are many who wield major power.
FEAR THE DEMON
To use the Greenpeace Effect to drive change, groups often demonize the companies. This pattern affects not just corporate and NGO stakeholders. Increasingly it applies to U.S. politics as a whole. Politicians and political strategies from both parties have learned: one way to win is to demonize the other. Progressives demonize conservatives – conservatives demonize progressives.
In reality, neither side is entirely right or wrong. Each side has a valid point. For example:
The Conservatives are right: as a nation, we are out of money and deep in debt.
The Progressives are also right: we cannot pay off our debt by extracting it from the poor, the middle class, or the environment.
But the solution each offers makes both problems worse.
The right’s solution is to drill baby drill – and liquidate our ecological capital. The left’s solution is to spend baby spend – and liquidate our financial capital.
That won’t work. As Bill McKibben or Bill Clinton might say, let’s do the math:
The total federal debt – including unfunded commitments to Social Security, Medicare, Veterans, and Government Employees – is over $51T.
• This equals nearly the entire net worth of all American households combined.
• It is impossible to cut spending enough for a single generation of Americans to pay it off.
• The only way our politicians see to pay it off: increase growth.
So – looking back at the last century, the Left and the Right’s prescriptions are both to do what worked before: the left says spend, the right says drill.
Problem is, thanks to drilling so far, global temperatures are already up 0.8 degrees C.
• A third of summer sea ice in the Arctic is gone, the oceans are 30 percent more acidic, and since our warmer air holds 5% more water vapor than cold, the climate dice are loaded for both devastating floods and drought.
• Scientists say we can burn less than 565 more gigatons of carbon dioxide and stay below 2°C of global warming.
• But we have 5 times that amount in our reserves. How do we avoid burning it all?
So we blame and shame – and demand that companies take action now.
And they try. They are faced with an array of demands – to drive down carbon in supply chain. They have dozens of products and processes to change.
Why? Because the politicians won’t do their job. They won’t make the simple, cheap changes necessary.
In fact, the solutions are cheap and effective – and that’s why politicians can’t make them.
I’m quite serious. Because the two requirements that need to be met for legislation to pass the U.S. Congress are these: first, the legislation must be extremely expensive, so there are enough funds to pay off the interest grouos whose support is needed for passage. Second, the legislation must be mostly ineffective, because it can’t change the fundamental power relationships or marketplace or regulatory advantages held by current interest groups.
For example, on February 2011, I picked up a report by McKinsey Global Institute called ‘Growth and Renewal in the United States’.
McKinsey is a name that always carries weight with corporate leaders, so I was eager to read it the moment it arrived. Their conclusion sounded right on target. If the U.S. cannot boost productivity growth rates by a third, the consequences will be painful and damaging.
“More than ever, the United States needs productivity gains to drive growth and competitiveness,” the McKinsey team wrote.
Labor productivity gains alone are not enough, McKinsey wrote. The US needs higher resource productivity – efficiency gains (reducing inputs for given output) – and value gains (more value from less input).
That “create(s) jobs even as productivity was growing.”
In the next 20 years, today’s 1.8 billion middle class consumers will almost triple, to as many as 4.8 billion. If we fail to increase resource productivity, McKinsey concludes that America might face problems we thought we had overcome in the 20th century: genuine shortages of food to eat, water to drink, and energy to heat our homes and power our machines.
But here was good news from McKinsey. “There is an opportunity to achieve a resource productivity revolution comparable with the progress made on labor productivity during the 20th century,” its team wrote in their November, 2011 study, Resource Revolution.
Creative people, and the ideas and technologies they invent, can birth a second revolution in productivity in which we no longer need to trade ecological assets for economic ones.
The combination of the microchip, computers, the Internet, advanced materials, smarter recycling, renewable energy, clean technologies and other innovations on the horizon can increase the amount of wealth we create per unit of energy by more than tenfold by the end of this century.
How can we do it? That’s not a mystery. What’s a mystery is why we’re not doing it. The keys include:
First, stop taxing jobs and prosperity. Instead, tax pollution. Cut payroll and income taxes, for individuals and business. Make up the difference with a price on carbon.
Second, wind down resource subsidies. Rather than maintaining the illusion of low prices, and paying with waste, pollution, and war, we need to phase out about a trillion in subsidies for energy, water, and food. This won’t increase real prices – it will reduce them.
Third, promote R&D for radical energy efficiency gains. Government may often be wasteful, especially when it tries to choose technology winners or losers. But the basic research it supports through labs and universities has created enormous value.
Fourth, use border adjustments to cut taxes more. Apply the same price on pollution to imported goods – including oil imports – so the price on domestic pollution does not inadvertently subsidize China, Venezuela, or Iran. Use 100% of the proceeds to cut other taxes. As the dominant global buyer, a U.S. carbon tax with border adjustments would effectively establish a carbon tax in China, India, and other nations, delivering the parity that conservatives favor before the U.S. acts on climate.
Fifth, set a national innovation goal, as the framework for the above changes Make the political commitment to increase the productivity of energy and carbon by four per cent, every year, for 50 years, using the tools above and others.
Those five steps reflect the kind of actions McKinsey proposed, as well as steps from three leading multi-company initiatives – Ceres BICEP (www.ceres.org ), Business for Social Responsibility’s Future of Fuels program (https://www.bsr.org/en/collaboration/groups/future-of-fuels ) and Future 500’s U.S. Climate Task Force (www.climatetaskforce.org ).
THE BAD NEWS: COMMON PROBLEM
The bad news is that these ideas, despite broad support, face a common problem. They cost too little. Their chief attribute is that they tend to reduce costs, not increase them. This threatens vested interests, as well as politicians, who rely on legislation that provides dollars or guarantees to powerful groups across the spectrum.
The opposition doesn’t come from a tight-knit set of fossil fuel companies, despite popular assumptions. In fact, some major oil and gas companies support them. Instead, the opposition comes from 1000 narrow interests, often connected to fossil fuels, but in much more complex ways than assumed. They demand that they be allowed to keep the advantages that flow to them, through our current tax and spending priorities. To step aside and let this agenda pass, they want guarantees – in the form of money and regulations that protect or deepen their political or market power.
In other words, the problem isn’t that breaking our addiction to carbon costs too much. Politically, the problem is that it costs too little.
Basically, what it takes is cutting taxes on payroll and profits, replacing those revenues with taxes on carbon, and phasing out subsidies across the economy – not immediately, but gradually, over a generation.
With a $35/ton carbon tax, we can cut payroll taxes about 25%, about $200 million per year, and cut emissions at least 4% a year. In the process, we will increase average household income about $600.
Now – They say this can’t be done. But it can.
The political support is gathering. A strong potential coalition of conservatives, progressives, NGOs, and companies supports an effective price on carbon. But each group alone is unwilling or unable to drive the ideas forward. They need a combination of pressure and opportunity.
The Innovation Agenda provides an opportunity to meet fundamental principles across the political spectrum.
The Conservative Movement was founded on a purpose: to protect people from repression by a too big, too powerful government. The Progressive Movement was founded on as similar purpose: to protect people from repression by too big, too powerful corporations.
Today they are locked in a cycle of mutual demonization. Policy is in gridlock.
In gridlock, we perpetuate and deepen the problems we already have. We drill and we spend – without the discipline we need.
We resist the cheap, effective solutions – and instead battle for years or decades over half-measures that won’t get the job done.
It’s time that the left and the right, that corporate and NGO leaders, united, and approached the politicians together, with solutions that will actually work for us all.
The Innovation Agenda reduces the cost and increases the effectiveness of government. It shifts power from backward-looking companies, to those prepared to excel in a carbon-constrained world.
Speech and article by Bill Shireman, who has called a “master of environmental entrepreneurism,” Bill Shireman has over 20 years of experience developing and implementing programs that align the interests of major corporations and their stakeholders. He develops profitable business strategies that drive pollution down and profits up.
As President and CEO of the Future 500, he helps the world’s largest companies and most impassioned activists – from Coca-Cola, General Motors, Nike, Mitsubishi, and Weyerhaeuser, to Greenpeace, Rainforest Action Network, and the Sierra Club – work together to improve the profits and performance of business.
Article Reprinted with Permission from Future 500 (www.Future500.org )
