Protecting the environment – or at least purporting or appearing to do so – seems all the rage these days. Recent events, such as BP’s Deepwater Horizon oil spill in the gulf, countless food scares, and reports on natural gas “fracking”, climate change, hypoxic dead-zones and huge fields of plastic floating in our oceans have created a level of awareness and concern not seen in decades among average citizens.
This new-found focus on sustainability has not been lost on business. One is hard pressed to find any organization not currently espousing their commitment to preserving our natural resources and protecting our environment. Nearly every Fortune-500 company has a sustainability department these days and many tout their “green” credentials in slick TV commercials, print ads and glossy sustainability reports.
And then there are the many initiatives undertaken across all levels of government as well as by non-profits and various non-governmental organizations (NGOs), many with global reach and sizable budgets. It seems from the White House down to the smallest city council, everyone has a sustainability plan and touts “going green” as a core part of their agenda. Communities are investing in renewable energy, embracing alternative fuels, fighting food deserts, and supporting local agriculture, with politicians proudly appearing at ribbon cuttings, conferences or grand openings. Provided the press is there as well to capture and cover the moment, of course.
Unfortunately, posturing, proclamations and press releases will not help us meet the environmental challenges we face, which are very real. Instead, we need original thinking, bold leadership, competence, and a commitment to innovation and effective, workable solutions. As far as publicly funded initiatives are concerned, all options must be understood, objectively analyzed and assessed based on effectiveness, not hype. Projects and solution proposals should be evaluated based on their overall impact and long-term cost-benefit ratio, not their PR value. And we must recognize that we will not tackle the problems of today with solutions of the past, or the romantic notion that if we could just return to doing things the way we did in the “good old days”, all would be well.
A growing population and strong economy will increasingly require more, not less, of just about everything. The challenge is to meet these additional needs using the same or, ideally, less resources and inputs. This will in some cases require a fundamental change in mindset and openness to radical innovation and change.
Luckily, we have a proven, effective framework and ecosystem for bringing about innovation and change: the open market place. This is not to say that government and NGOs do not have a role to play, for clearly they do. Both, however, should limit their primary focus to educating the public, fostering popular awareness and engagement, and supporting promising emerging technologies through their normal procurement activities and the inherent power-of-the-purse they wield given their unique ability to make long-term investments with time horizons that would not be feasible in the private sector. In selective – and very rare – cases it may make sense to provide early financial or in-kind support to foster an emerging sector that provides a real and tangible social benefit. The role should be that of a midwife, however, and not a parent or patron. Governments, NGOs and foundations should refrain from providing market-distorting long-term financial support, since this will do more harm than good. Sustainable, lasting change can only come from truly sustainable businesses and these must offer a desirable product and be able to compete in the open marketplace. Businesses that generate profits that can be reinvested in growth and provide an economic incentive for the principals and early-stage investors. This is true regardless of whether the focus is on solar, rainwater capture, natural foods, or urban farming.
The best support that government or anyone else can provide in fostering a viable “green” economy is to provide a truly level playing field free of market distortions while also fostering transparency, awareness and education around the relevant issues and their importance. If these two preconditions are met and the product or service is truly competitive – a necessary precondition for true sustainability – then market forces will take over and bring about lasting change and success. Examples include the Toyota Prius, Patagonia, Whole Foods, TOMS Shoes and, just recently, Annie’s Natural Foods, who had one of the most successful IPOs of this year. Without these preconditions, the effort will be a dependent on handouts indefinitely. In the best case it merely acts as a drag on the economy by mis-allocating scarce resources away from other, worthier ventures. At worst it can cause market distortions that keep other, truly sustainable players from entering the market, cause them to fail, or even discredit the entire sector. And surely no one would have an interest in that, would they?