Optimistic about corporate sustainability

Big companies and 'green' start-ups are taking impressive steps toward sustainability

I am participating in Fortune's Brainstormgreen Conference. I woke up this morning at the beach side hotel and watched surfers paddle out into the Pacific Ocean. Listening to the panels and talking to individuals about their for profit firm's sustainability efforts, I am optimistic. There are a large number of initiatives being pursued in the name of devising new products and to lower corporate costs. To provide just one example, consider Kohls. This department store is in deep thought about how to control its electricity bills. I was quite impressed with how they are using basic statistical analysis and keeping up in real time about the operating cost performance for each of their stores scattered across the country. The Corporate Headquarters knows when a store has high bills and in fact HQ controls the heating and cooling for the individual stores. Individual stores do not have discretion over how the thermostat is set.

I've also met entrepreneurs creating alternative fuels to compete with conventional gasoline. As California rolls out AB32 (that sharply reduces the state's GHG emissions), these fuels will be able to compete with gasoline if they are certified to be "low carbon fuels". Since AB32 will introduce carbon cap and trade, a fuel that is "low carbon" will require fewer permits to cover its use. This example highlights the synergy between government policy and "green" start ups.

My "Green China" session will start soon and I will play the "bad boy". China's investments in the green economy are a good thing for California and the United States. Ideas are public goods and such public goods are usually under supplied in a competitive market as everyone tries to free ride. If China is willing to finance these knowledge investments, then we should thank them and from a self interested U.S perspective, we should think about complementary investments we can make.

Here is my NY Times blog post on this issue.

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