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Turning green into gold

Scott Jagow Jan 29, 2007
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Shelf Life

Turning green into gold

Scott Jagow Jan 29, 2007
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TEXT OF INTERVIEW

SCOTT JAGOW: There’s little doubt Corporate America has climate change on its mind. Last week, 10 CEOs asked Congress to require limits on greenhouse gases. And global warming was the topic at the World Economic Forum in Switzerland. One of the speakers in Davos was a Yale professor named Daniel Esty. He used to work for the EPA. Now, he’s written a book about how companies can use environmental strategy to their advantage. Daniel, I found it interesting that one of the main themes in your book is how good intentions don’t always pan out.

DANIEL ESTY: Well we’ve seen companies that have tried to go environmental but haven’t done it in a thoughtful or strategic way. So Ford Motor Company, for example, which is at risk of becoming our first-ever environment-related bankruptcy, had a CEO, Bill Ford, who was a real environmentalist, but they didn’t really understand what the critical environmental issues were for the company. So when it came time to bear down on this, they redid their famous River Rouge factory with a green architect and brought in natural ventilation and light, even grass on the roof, but it turns out that the factory was not the critical issue for Ford Motor Company. It was the cars that they produced. And they were producing gas-guzzlers that the public has turned away from. So this is a company that’s now very much out of favor with the market and really paying a price for it.

JAGOW: What would you say is your favorite example of a company that has really succeeded, as your book says, turning green into gold?

ESTY: Well one of the stories that is most impressive is that of Wal-Mart. This is a company that’s been under a lot of attack, a lot of pressure, seen by many as an environmental despoiler of urban areas. But we see CEO Lee Scott really turning the company into an environmental leader. They’re pushing hard to reduce waste across the border. They’ve committed themselves to going to 100% alternative energy so they will not be producing greenhouse gas emissions. So this is a company that’s had a dramatic turnaround and is really leading the market now.

JAGOW: In your top 50 wave riders as you call them, companies that are riding the green wave, you have companies you’d expect to see — Starbucks, Toyota, Patagonia — but the top two international companies are BP and Shell Oil. Say what?

ESTY: Well of course this is an important point to make and that is that companies that are doing well in one thing may not do well in everything. Well Shell is an example of a company that got one thing complete wrong and then learned from it. You’ll remember the famous Brent Spar oil platform that they tried to sink in the North Sea, and they’d done all kinds of studies that proved that this was the environmentally best thing to do. but they hadn’t counted on the fact that Greenpeace would mount a protest and in terms of winning the hearts and minds of the people of Europe in particular, Shell failed and Greenpeace won. So one of the real lessons is that feelings are facts. You’ve gotta convince people on an emotional level that you’re doing the right thing from an environmental point of view.

JAGOW: Alright Dan, thanks so much.

ESTY: Thank you very much.

JAGOW: Daniel Esty is author of Green to Gold. He’s also the director of the Center for Business and the Environment at Yale.

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