Sustainability is the Touchstone of Innovation: Talking with L. Hunter Lovins0

Ysabel Yates | Mon Jun 18 2012

L. Hunter Lovins is one of the foremost proponents of “natural capitalism,” an approach to business that says sustainability is not only compatible with growth, but a necessary part of it. Lovins, a speaker and author, says that we are on an unsustainable path, but we can turn it around and preserve our economy. Ysabel Yates spoke to Lovins recently about how sustainability can drive innovations and profits. This interview was edited and condensed.

Can you start by briefly describing natural capitalism?

Natural capitalism is based on observing what leading companies interested in sustainability are actually doing, and what it takes to move the corporate sector from being the problem to being the solution.

It has three principles:

The first is to use all resources more efficiently, because that staves off the more serious environmental and social challenges facing us. And, it’s profitable right now: companies are making and saving boatloads of money using resources more efficiently.

Ninety-two percent of young people today want to work for a company with a commitment to the environment

The second is to re-divine how we make and deliver everything using approaches like biomimicry and the circular economy.

In general when companies do it, they find it drives their innovation and enhances their profits. It’s just better business.

Which is why those “wild-eyed” environmentalists at places like Goldman Sachs are finding that the companies that are the leaders in environmental and social good governance policy have 25 percent higher stock values than their unsustainable competitors.

The third principle is for companies, communities, and countries, to manage all institutions to be restorative of human and natural capital. These are forms of capital that, at the moment, are not counted on anybody’s balance sheet, so we treat them as resources in liquidation. This is obviously not sustainable.

If we continue to behave in fundamentally unsustainable ways, sometime, like right about now, we start hitting collapse.

And that’s both an economic and environmental collapse?

And social! The recent Nature paper, on thresholds, says that our unsustainable behavior is pushing us up to the thresholds that we don’t even know where they are and we don’t know what the consequences are.

The tipping point, right?

Yes.  There are many tipping points. When you cause a threshold, you tip into a completely different state of being, probably not one you’re going to like, probably not one in which you have any experience.

How do we reconcile the drastic reduction in energy use needed to stave off the crisis, with our current cultural approach of “do what you can through small incremental steps”?

I frequently cite the Wangari Maathai story about the humming bird who, when confronted with the great forest fire, flew to the river and picked up a drop of water to put on the fire. All the other animals said “What are you doing? You’re too little.” But the humming bird kept flying back and forth, finally stopping enough to say “I’m doing the best that I can.”

The drastic reductions in the use of resources will come from all of us doing the best we can to implement ways of doing business that are more efficient, more sustainable, more profitable.

And there is this list (PDF) of the 40-plus studies all showing that the companies that are leading in these policies are financially outperforming their less sustainable peers.

The latest bit of information we have been working on is employee engagement around sustainability.

Sustainability means behaving in a way that we can go on doing indefinitely.

We’re finding now, for example, that an engaged workforce has almost four times the growth and earnings per share than a company in the same industry without an engaged workforce. It dramatically increased productivity and innovation. Engaged employees are your best salespeople, and across the board, this helps to drive better corporate performances.

So employees have to be engaged in the overriding philosophy of the company, which, in hopes, contains a sustainable agenda?

Yes. Ninety-two percent of young people today want to work for a company with a commitment to the environment. And Fortune had a piece that companies who can authenticate their sustainability credentials will have a much easier time attracting and retaining the best talent.

What’s clear, is that what engages the millennials and, even more so, “Generation G”, is the ability to do as part of their day job the implementation of the company’s mission around sustainability.

But if sustainability means consuming less, how do you reconcile that with making profits?

Sustainability means behaving in a way that we can go on doing indefinitely. It may or may not mean consuming less. In many developing countries, it means consuming more. Particularly more of things like energy and food. But it means doing it in a smarter way that all systems, environmental, social, financial, can sustain indefinitely.

If you had to pick one thing that companies should start doing right away to improve on sustainability, what would it be?

Carbon emissions. If you measure, manage, reduce your carbon emissions, one,  you are now compliant with the Wal-Mart scorecard. Two, you’re compliant with the carbon disclosure project, which is increasingly being used as a benchmark by the investment community. Three you’re going to be saving money, and you will be inspiring your workforce and driving your innovation.

There’s a Harvard study that says sustainability is not the burden on the bottom line, it’s the touchstone of innovation. And in the future only the companies that make sustainability a goal will achieve competitive advantage. It is increasingly coming to be the hallmark of good corporate management.

Top image: Hunter Lovins. Courtesy Wikimedia commons user Joi