mark hertsgaard

Independent Journalist & Author

mark


Corporate Greenhouse

Cool Companies: How the Best Businesses 
      Boost Profits and Productivity 
      by Cutting Greenhouse Gas
   by Joseph J. Romm.
   277 pp. Washington DC: Island Press. $27.

This book is aimed at business executives, but political reporters may
have to read it too, now that Republican front-runner George W. Bush
has decided that global warming is real after all. After years of
endorsing the oil industry’s view that mankind’s greenhouse-gas
emissions have no effect on the world’s climate, the Texas governor
and former oil executive told a press conference on May 13, I believe
there is global warming.

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Bush’s statement amounts to an about-face on Al Gore’s signature
issue, and it shows that his advisers recognize how much the
environmental vote matters in presidential politics. When a majority
of even Republican voters tell pollsters they oppose their party’s
attempts to gut environmental laws, the environment has clearly become
a Mom-and-apple-pie issue. A presidential candidate simply cannot be
credible unless he or she leaves behind the Flat Earth Society
nonsense about global warming being a mere theory. At a time when
almost all climate scientists of stature agree that global warming has
already begun and even corporate giants like British Petroleum and
Royal Dutch/Shell have stopped denying the truth, a candidate cannot
continue asserting that the science is still out on global warming,
as Bush did just a few weeks before his mid-May press conference,
without sounding anti-environmental.

But a gloom-and-doom environmentalism isn’t the answer either. The
fact is, the environment can be a winner for any candidate with the
wit to link it to the issue that decides most presidential elections,
the economy. Americans tell pollsters they want environmental
protection even if it means less economic growth, but the happy truth
is that they needn’t choose between the two. As companies, workers and
governments around the world are proving every day, restoring our
planet’s ailing ecosystems could become the biggest economic
enterprise of the twenty-first century, a bountiful source of jobs,
profits and competitiveness.

Global warming is a perfect example of the opportunities available.
Corporate propaganda has been remarkably successful over the past
decade in convincing people, first, that global warming is merely a
distant possibility rather than an observable fact and, second, that
any attempt to stop it would sow economic disaster. The first claim is
now widely recognized as bogus, and the second—which has done so much
to delay progress on meeting the emissions targets the world’s nations
agreed to in Kyoto in 1997—may soon be as well, especially if books
like this one reach a wide enough audience.

In Cool Companies, Joseph Romm documents in convincing detail how such
big-name firms as Toyota, Royal Dutch/ Shell, Du Pont, 3M, Xerox and
Compaq are fattening their bottom lines while dramatically reducing
the amount of carbon dioxide their factories and office buildings are
unleashing into the atmosphere. The corporations are not motivated by
altruism; they simply recognize that environmentally friendly
innovations can make money for their stockholders. Of course,
capitalists with a conscience have long contended that they could do
good while doing well. Cool Companies, in effect, shows how to apply
that self-serving maxim to the urgent task of reducing greenhouse-gas
emissions.

The heroes of this book are the cool companies of its title, defined
as any firm that cuts its [greenhouse gas] emissions by 50 percent or
more while reducing its energy bill and increasing productivity. The
author served as an Assistant Secretary of Energy during the Clinton
Administration, directing the DOE’s Office of Energy Efficiency and
Renewable Energy, and in that capacity he was able to study and work
closely with many of the companies profiled in this book (which may
explain why he passes so lightly over certain aspects of global
warming policy, including the potential for an increase in US
automobile fuel efficiency—the single most powerful step against
global warming the federal government could take). In any case, Romm’s
hands-on experience with innovative firms enables him to provide the
specific cost and investment data craved by the business executives
who are his target audience, while also anticipating their skepticism
toward his recommendations. Some caution about the accuracy of the
data is warranted, since much of it was self-reported by the firms
profiled. But as success story follows success story in Cool
Companies, the accumulation of evidence should be enough to persuade
all but the most determined polluter to change his ways, and for his
own financial benefit.

Cool Companies begins with the story of Aaron Feuerstein, the
Massachusetts business executive who attracted national media
attention when his Malden Mills textile factory burned down in 1995.
Feuerstein famously refused to seize on the blaze as an excuse to
relocate to a low-wage zone overseas; even more remarkable, he also
continued to pay all 3,000 of his workers while rebuilding the plant.
Impressed by Feuerstein’s decency, Romm asked his DOE colleagues to
see how they might assist the company. Two years after the fire, Romm
was pleased to attend the groundbreaking ceremony for the rebuilt
Malden Mills factory, complete with a new, super-efficient natural-gas
turbine that would provide the plant with both electricity and steam,
a process known as co-generation. When Romm asked Feuerstein why he
had focused on making environmental improvements at the very time he
was trying to save his company from bankruptcy, the executive replied,
Over the long-term, it is more profitable to do the right thing for
the environment than to pollute it.

That philosophy is the central message of Cool Companies, and for most
of the firms the book describes, the extra profits come from improving
energy efficiency. The point of energy efficiency is not to do
without, but to do more with less. Toyota Auto Body of California, for
example, a facility in Long Beach that manufactures and paints the
rear deck of Toyota pickup trucks, was consuming 2.5 million
kilowatt-hours (kWh) of electricity in 1991. By 1996 the plant had
doubled its production volume while cutting its electricity
consumption by one-third, to 1.7 million kWh, thanks to a
comprehensive set of efficiency improvements, including better motors,
lighting and air compressors. Toyota implemented these changes to
improve product quality, not the environment, but Romm maintains that
such lean initiatives tend to have green consequences: Reducing
energy inefficiency reduces waste of all kinds, from defectively
painted trucks to unnecessarily high electricity bills. Greenhouse-gas
emissions and other forms of pollution, Romm suggests, are but
physical manifestations of inefficient production processes and should
be as abhorrent to corporate managers as they are to Greenpeace
militants.

Of course, the single biggest cost facing most corporations is the
wages, salaries and other expenses associated with maintaining a
competent, productive work force. But here too, writes Romm, it pays
to do the right thing environmentally. Designing buildings so that
sunshine rather than electric light provides most of the illumination
obviously reduces energy use, but its real value lies in how much
labor productivity increases. In a typical building, energy costs
average $1.50-$2.50 per square foot, while salaries exceed $200 per
square foot, writes Romm. That’s why productivity savings dwarf
energy savings.

Consider the case of VeriFone, a Hewlett-Packard subsidiary that
manufactures credit-card-verification machines. When VeriFone
renovated a 76,000-square-foot facility in Costa Mesa, California, it
chose a natural-light design that helped reduce energy consumption 60
percent. But the natural light made the plant’s workers feel so much
better—no more end-of-the-day headaches and drowsiness—that
productivity also climbed 5 percent and the absentee rate dropped an
astonishing 45 percent. As a result, an investment that the company
expected to pay for itself in seven years was recouped in less than
twelve months.

Energy efficiency may not sound like much of a rallying cry for the
environmental revolution, but there is no denying that it packs an
impressive financial punch. On the basis of the more than fifty
real-world examples assembled in Cool Companies, Romm contends that
most individual firms can cut their greenhouse-gas emissions in half
while enjoying a return on investment that can exceed 50 percent and
in many cases 100 percent.

Romm argues that inadequate information is the main reason that
relatively few US companies have so far embraced a cool strategy;
most corporate managers are simply unaware of how much money they
could be saving. But if any significant fraction of U.S. companies
became cool, he suggests, the United States would be able to meet
the Kyoto [emissions] targets while lowering the nation’s annual
energy bill by tens of billions of dollars and accelerating economic
growth through productivity gains.

Sounds pretty good, doesn’t it? But if the great value of Romm’s book
lies in its can-do message, its weakness lies in his reluctance to
acknowledge the limits of the strategy he propounds. Promising to meet
the Kyoto targets is all very well, but it is woefully inadequate to
the real challenge facing us. The Kyoto treaty calls for
industrialized nations to reduce their greenhouse-gas emissions by
2012 by approximately 6 percent compared with 1990 levels; but the
Intergovernmental Panel on Climate Change of the UN has concluded that
emissions must decline by 50 to 70 percent if humanity is to avoid the
most severe effects of climate change, including a one-meter rise in
global sea levels by 2100, which would leave large parts of New York,
Amsterdam, Bombay and Shanghai underwater.

Like it or not, there is more to fighting global warming than
increasing corporate efficiency; what a given corporation produces in
the first place matters profoundly. Romm heaps page after page of
praise on Toyota and Royal Dutch/Shell for dramatically reducing the
amount of greenhouse gases released from their factories and office
buildings, but he says barely a word about the incomparably larger
amount of greenhouse gases released when the cars Toyota so
efficiently produces are filled with Shell’s gasoline and driven back
and forth across the American landscape.

Motor vehicles currently account for nearly 40 percent of America’s
greenhouse-gas emissions. As long as those vehicles continue to be
powered by gasoline and driven increasing numbers of passenger miles
every year, it matters little how energy-efficient the factories that
manufacture them are. Yes, it is welcome news that Shell has promised
to invest $500 million in renewable energy over the next five years
and that it has left the Global Climate Coalition, an industry front
group that has long delayed progress by claiming that global warming
is little more than environmental propaganda. It’s also nice to know
that Ford is working with DaimlerChrysler to produce a
fuel-cell-powered car whose only exhaust will be climate-friendly
water vapor. But the bulk of Shell’s immensely profitable global
operations remain dedicated to maximizing the production and eventual
combustion of fossil fuels, just as Ford continues to make most of its
profits by selling egregiously fuel-inefficient sport utility
vehicles.

Until we as a society break decisively from our addiction to fossil
fuels and the motor vehicles that consume them in such vast
quantities, our chances of avoiding severe climate change are slim. To
be sure, a cool-companies strategy of increasing individual firms’
energy and resource efficiency is a step forward. Such a strategy can
dissolve current corporate prejudices by showing that environmental
investments can indeed be profitable; it can also help buy time
necessary to navigate the tricky transition to a truly environmentally
sustainable society. But if companies like Toyota and Royal
Dutch/Shell are left in charge of that transition, it’s hard to
imagine that we’ll make the shift in time.

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About Mark

Independent journalist Mark Hertsgaard is the author of seven books that have been translated into sixteen languages, including Bravehearts: Whistle Blowing in the Age of Snowden; HOT: Living Through the Next Fifty Years on Earth; and A Day in the Life: The Music and Artistry of the Beatles. He has reported from twenty-five countries about politics, culture and the environment for leading outlets, including The Guardian, Der Spiegel, Vanity Fair, The New Yorker, Time, Mother Jones, NPR, the BBC and The Nation, where is the environment correspondent. He lives in San Francisco.

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