As a person who has run companies in Silicon Valley, Canada, and Europe, I can say with confidence that Silicon Valley leads the world by a large margin in terms of venture capital, entrepreneurship, and innovation. By a very, very wide margin.
But that's not the only reason to build a company in a particular environment. It's time cities stop trying to compete with Silicon Valley by emulating it, and start taking themselves seriously. Silicon Roundabout ? Please. It's almost embarrassing for London - a city that certainly knows business and empire-building inside out and has access to huge amounts of capital - to try to emulate Silicon Valley.
Almost every city has something to offer entrepreneurs, and it doesn't need to be simply VC or the next big thing. VCs are now much more comfortable looking abroad for opportunities, and the recent spate of non-Silicon Valery leaders has demonstrated that well-funded innovation can come from almost anywhere (hello Rovio).
So why are cities trying to play a game that is almost impossible to win? The truth is that many cities are changing the game. Think about how Austin or New York has chosen to play their cards in this game. Look how Canada has supported technology innovation, if not its cities. Maybe not through VC alone, but though other, equally meaningful incentives like access to human capital, favorable tax rates, alternative funding/reinvestment structures, and many other incentives that can make or break your business, whether VC-backed or not.
These things can weigh more heavily on your company than being in proximity to the greatest startup engine that ever was. It's time cities across the globe realized this and stopped chasing the leader. Just because the game has a winner doesn't mean the game can't be changed.
Check out the excellent post below for a slightly different perspective-
Will Silicon Valley ever share the wealth? »
Cities are doing a lot to build and promote their own startup communities. But Silicon Valley is still king, and it's growing even more powerful in startup investments. How do we fix this?
At SXSW Eco in Austin last week, there was a common thread among many of the talks - an undercurrent in the conversations that we are losing our will to fight in the cleantech industry. Among the great topics from entrepreneurs and industry veterans, some felt that its time for the gloves to come off in sustainability (a position shared by many thought leaders in the space) while others lamented that we have become a data-focused group of teachers rather than doers. Annie Leonard suggested, quite rightly, that many of us have lost the ability to mobilize as a society on important issues like the environment. Jigar Shah may have said it best at SXSW Eco by noting that "it's time to get angry - you can't change the world by 'liking' something on Facebook".
So very true.
Over the past few years in cleantech, we have focused far too much time on convincing those who really can't be convinced. The far-right's stance in America on climate change is a great example. Regardless of how much research, data, and scientific consensus there is on climate change and causes, these people choose not to believe it, at least officially. Facts, like experts, have become a boring non-issue to these people, yet we still focus a considerable amount of effort on convincing them. My only question at this point is, why?
I've long stopped caring that my neighbor doesn't believe in recycling, or that Rush Limbaugh doesn't believe in global warming, or that my friend thinks carbon trading is just another tax from Obama (the fact that a carbon market was a republican idea falls under the "non-issue" category above). All are completely ridiculous notions and sure, it would be great to convince them otherwise. Those of us in cleantech have tried to do so for many years. We stacked study upon study, fact upon fact, data upon data to bolster our position - only to have the facts and expert analysis dismissed on par with laypersons' uninformed notions. This is the equivalent to a child plugging their ears and babbling over your voice so they can't hear you anymore. It's a fool's errand and we - as an industry - need to move forward and focus on what's important.
It's not about what they do. It's about what you do.
Just like the old joke - if it hurts when you do something, you should simply stop doing it. Do something else. Rather than trying to convince, mobilize to get your point across to the people who really matter. Don't waste your energy trying to convince the neighbor, the friend, or the radio personality. Chances are you'll fail anyway. Focus your energies on the big picture: the representatives, the business leaders, and the people who can actually effect change. The fact that three-quarters of the US population knows that climate change is a significant problem but at least one of our political parties completely dismisses the idea shows you that, as Annie Leonard said, we have lost the ability to mobilize.
And if your're curmudgeonous like me and the idea of "mobilizing" or "social" conjures up visions of Occupy Wall Street, then do what I do: build. Build and Build and Build Build the tools people need to understand how things can be better with less energy, how much money can be saved (or made) through various green policies, or how much return on investment can be made from doing the right thing vs the wrong thing. Build things that will solve real problems and enhance quality of life in the process. I do this through building companies, but you can also do it through building anything.
The key is to do something, rather than talking about doing something or trying to convince others they should do something. Ideas and innovation are great - they abound in cleantech. But you need to execute if you want to make it real. And that's where the industry is again finding it's feet. So yes, the fight is still alive, we just need to remember how to do it.
Positioning is one of the most important things a startup can do. Getting this right can mean the difference between success and failure, especially in new markets where the lines between segments are not always clear. Cleantech - specifically the energy and sustainability verticals - is certainly one of these markets, and I consistently see companies in this sector falling into what I call the Cleantech Bear Trap: focusing more about their cause rather than what value they are bringing to their customers. The result is a universe of solutions that are indistinguishable from one another.
It's an easy trap to fall into. Like startups in other sectors, cleantech companies are founded by entrepreneurial visionaries who want to make a significant impact on the world. Social media and Data Startups certainly have their share of visionaries, but what's different about sectors like sustainability or energy is that the stakes are so much higher. In cleantech, we're not talking about a new advertising model or a new way to engage millions (or now, billions) of people on the minutia of their daily lives. We're talking about the global impact of complex climate systems, energy dependency and availability, and other issues that will have impacts for billions of people for centuries to come. A tall order for any startup. So I would argue that cleantech has a certain flavor of entrepreneurial vision that is unique, and startups in this sector have to work harder than other sectors to avoid the Bear Trap because without laser-focused positioning, you will look no different than anyone else in the market, regardless of your solutions. But as I've talked about before, entrepreneurial vision does not make a business.
Take the "Energy Management" vertical for example. I once had a company that repositioned from Carbon Monitoring and Reporting into this nebulous sector, and it was a very difficult exercise. I recall several board conversations around this singular problem of moving out of our pond of small fish and wading into a deep, wide ocean full of much, much larger fish. It's not that you can't survive and succeed in that ocean, it's just that you need to choose your ecosystem very carefully. That's because the term "Energy Management" isn't really a market segment at all - it's a generic term for everything from business intelligence software to social applications to smart grid hardware and controls. If you sell "energy management software", you might as well say you sell "technology" because look like every other software vendor in this vast market, until you can convince potential customers to take a closer look. Coming up with three different words for "Measure, Manage, Reduce" doesn't make you different. So many companies in this space fall into the Bear Trap: building a higher soapbox on which to talk about their cause, rather than repositioning to show how the company's solutions will solve a real problem for their customers.
Now, there's nothing wrong with thought leadership, especially in the cleantech sector. It's an essential part of developing credibility for your startup. But don't mistake thought leadership for corporate PR, or your company's positioning in the market. They are separate disciplines. I've had this conversation with almost every PR firm and marketing group I've worked with in over a decade of running cleantech companies: focus on what your selling, how you solve a real problem. Avoid any semblance of hyperbole, and leave changing the world to the company's thought leaders and focus the company on specific, solvable problems.
Keys to avoiding the Cleantech Bear Trap are the same as in any market, so treat your cleantech startup like any other startup business. From a startup standpoint, you're not special; you're in the same race as everyone else. Start with the "Why" (why this problem exists, and ensure it identifies with your customer), then the "What" (what the problem actually is), then the "How" (how your solutions will solve this one problem). Nowhere is there any mention of the vision/BHAG/world-changing goal of the company. Keep your feelings out of it. Don't mention "changing the world", "our energy future", etc because you're preaching to the choir. Your customers are probably going to have the same opinion on pressing global issues as you do. Focus on business problems that your customers know and feel, then offer them a way out of those problems with your product. Put your focus in the right place and you'll be able to stand out from the the competitive landscape because you're offering real solutions to real problems.
We often think that climate change is something for the government to worry about – the news is packed full of debate around government response to global warming, whether it’s the climate bill, or how China is outpacing us yet again in carbon markets. But there’s a more immediate risk to companies in the US, something that is much closer to home and independent of whatever the public sentiment happens to be on climate change. For the first time in history, executives and their companies are being held liable for activities that contribute to global warming. It’s not a debate, it’s already happening.
It all started with the SEC Disclosure Requirements in early 2010. Under these new requirements, companies must weigh the impact of climate change when reporting risks to their investors. For the first time, companies need to track, analyze, and report such things as energy use and efficiency, GHG emissions, and other aspects of their business that have until now been a purely political exercise. Not surprisingly, this has far-reaching implications, but an interesting development is the changing nature of executive liability, and who is ultimately responsible for a company’s actions re global warming.
Directors & Officers (D&O) Insurance protects companies from the actions of it’s directors and officers.
Without it, entire corporations would be at risk from the actions of it’s executives. It’s a key part of the corporate structure, and has now entered a grey area due to climate change. Several cases have already been brought about to the Supreme Court as groups target executives and their corporations for their activities that contribute to global warming. What’s interesting is that there is a new issue emerging that is still playing out – when it comes to a company’s impact on climate change, does D&O Insurance cover executives? While companies say “yes”, the insurance industry is saying “no”. We’re talking millions – perhaps billions – in legal liability here, so someone will end up holding the bag. Hot potato.
At the center of this debate is a common inclusion in D&O that excludes “pollution” from coverage. The question is: “do greenhouse gases constitute pollution”? If it does, then executives are not covered by corporate insurance and the company may exposed to the risk of litigation. The EPA issues a recent ruling that GHG is a pollutant, and this sets a precedent that could adversely impact corporations on the wrong side of this debate.
As corporate officers it’s all about protecting the the company and shareholder value, which includes avoiding the risk of litigation at all costs. It appears that – even without any climate legislation in place – the question of executive liability is forcing the issue of climate change in the American corporation today.
This article was originally featured in Forbes Magazine. It has been reposted here with permission.
With the right moves, energy can even become a profit center.
In many organizations, the role of the chief information officer is becoming more strategic. Traditionally it has been restricted to IT strategy under the direction of a wider corporate mandate, a functional “manager of IT managers” position. But today’s CIO is a corporate leader and change agent focused on enhancing the return on investment of information technology, expanding the business impact of IT, and acquiring and managing innovation. This focus on innovation is leading CIOs to more closely manage energy and carbon in the enterprise.
Companies have been managing their energy consumption for years, but only recently has it become a corporate priority. Traditionally energy and its associated business risks, such as carbon emissions, have been an environmental problem, a cost of doing business with a hard link to compliance and regulation, and managed at the facility or site level. But innovative corporations today are starting to look at energy and carbon in a different way, focusing instead on how energy management can help their business and moving the energy discussion from the facility into the boardroom.
Energy management is no longer just a cost center. It can be a profit center if managed correctly, and there is no better executive to take advantage of this than the CIO. Companies around the world are finding that they can reduce energy use by investing in projects that can earn tax incentives, create new lines of business, and in many countries qualify as a tradable asset in financial markets. Examples in the technology sector are common, from server virtualization to building energy systems technologies.
To demonstrate how pervasive this has become, let’s take an example from a decidedly non-technology sector, as far from the lights of Silicon Valley as one can get–the timber sector. Companies in the timber business manage billions of dollars in assets and have, at times, been at odds with what one would call an “environmental mandate.” But many of these companies are transforming a traditional “environmental asset” (energy and carbon) from a cost into profit by turning a waste product into a key source of energy, reducing plant energy requirements by over 25% and saving millions of dollars per year in the process. In doing so, they not only reduce their energy costs but also their waste disposal costs (which are significant). Some even earn tax incentives and qualify for credits (both carbon and energy) worth millions of dollars a year. This creates a profit center where there were previously only costs and risk–all without a climate bill in the Senate, no debate on global warming, no politics–just good business.
The decline of expert opinion: who is really to blame for the state of energy and climate policy today?
There was a time, not so long ago, that if you needed an opinion on something important and complex you would ask and expert. Today, we are urged to second-guess everything, from the expert opinions of our doctor, our boss, mechanic, or our government. Of course, this is healthy – we are not mindless automatons; we are rational, considering various opinions before we create our own. Or so we like to think – I believe there is a value in expert opinion that is getting lost in the current social landscape. If you have a pain in your chest, you consult a doctor, someone who has spent years becoming an expert in matters of human health. If your car isn’t working properly you take it to a mechanic. However when presented with an issue that could alter life on our planet, we have moved away from this kind of reasoning, politicizing the issue to the point where those with direct experience, scientists, and uninformed laypersons are all treated as “experts” on the same plane. If we need answers to climate change, we need to consult experts, not opinions.
One of the things that I often encounter outside the US is a uniform disbelief in America’s highly politicized approach to climate change. In one corner, you have tens of thousands of scientists from around the world, and in the other you have various types of skeptics. Climate legislation is frustratingly slow, despite the clear urgency of the situation – both in environmental and economic terms. While pockets of resistance exist in many places, there now remains no scientific body or international body that maintains a dissenting opinion on human contributions of climate change. Let me say this another way: not one scientific body – anywhere in the world – supports the popular American notion that humans are not contributing to global warming – much less that it doesn’t exist at all. We all believe we are rational people, and rational people consult experts on issues that are large and complex, but we are seeing that rational thinking has little to do with we are approaching this issue. Today, a nobel prize winning PhD and a university dropout talk-show host are somehow treated by our society as intellectual equals. How did we get here?
A big part of the problem is how we communicate in new media. The Internet has been the great equalizer in many ways, but one of the most significant developments of the past twenty years is the lowered barriers to entry for publishing (e.g., the ability to provide your personal opinion to a large audience). Radio shows, talk TV, blogs (including this one) are evidence of this; like all bloggers I simply publish views I feel others are interested in reading. Anybody can. But therein lies the rub – does my ability to write suggest that I know more about any subject than someone else? Certainly not, because the responsibility lies with you – the reader – to determine what is valuable opinion and what is not. If I chose to write about auto mechanics, gardening, or some other subject I know nothing about, then I should not be considered an expert on those issues. However this is not how we treat expert opinion re global warming & climate change – we as a society often treat everyone as an expert. It’s not always easy, but one needs to consider the source before adopting any view through the new media.
We are living in an unprecedented age of content, both good and bad. It’s easy to dismiss views different from our own, just as it is too easy to take on views similar to our own. I make a concerted effort to read everything from the Huffington Post to CNN to Fox to MSNBC to get a rounded view of the news. I often watch and laugh at the Daily Show and Glenn Beck for entirely different reasons. But sometimes this isn’t laughable; lending credibility to those who are not experts can have very damaging consequences. For instance, it’s easy to dismiss the views of CO2isGreen.org, a group who actually purports to believe that if we breathe and exhale CO2, it can’t possibly be a pollutant (this group actually demands more CO2 needs to be emitted into the atmosphere as it is healthy for plants to green the earth). As ridiculous this logic may seem (perhaps they don’t believe in sewage treatment either), this group collects millions in support from the oil and coal industries and regularly lobbies in DC against climate change regulation and launches “educational” campaigns through their sister organization to cast doubt on hard climate science. Now this is serious business.
So who is really to blame for the state of climate change opinion today? Unfortunately it’s us – not the CO2isGreen’s of the world. Organizations like this exist because we as a society often lack diligence in forming our own opinions. This is what I am really asking for, the kind of diligence you would give a medical or technical opinion – you may need to test it (e.g., a second opinion) but you aren’t likely well-quipped to reject it without the appropriate consideration. When it comes to climate change I urge you to read a lot, do your homework, then form an educated opinion on things that matter. We will all be the better for it.
For years I’ve resisted the notion of entrepreneurial “vision”. I’ve never liked the term much, and I’ve found it to proliferate throughout my industry and others. Don’t get me wrong – this kind of vision exists – but it’s extremely rare. We often misattribute vision for hard work, creativity, and drive; key qualities for entrepreneurs, but they’re something short of vision.
If you need to work hard to convince people you have it, you probably don’t. I sat down with two founders recently to discuss their startup and it was clear – as is often the case in these situations – that one was the brains behind the operation, and one was just hanging around. Both were intelligent guys but one was clearly in control of the company and held the vision of what needed to happen. However it was the other one that talked of founder “vision”, what his vision for the company was, etc. This was at a busy coffee shop on Sand Hill Road, and it left me wondering how many times this exact conversation played out in the same location. It’s like so many other qualities in life – if you need to work hard to convince people you have it, you probably don’t.
It can set unrealistic expectations, both high and low. I strongly believe that everyone (entrepreneurs especially) need to be judged on their actions, abilities, and results. Relying too much on “vision” can hamper success in two ways: either letting people off the hook for doing a poor job, or attributing someone’s hard work and drive to it.Malcolm Gladwell wrote about how we misattribute genius in his book, Outliers, and we often extend the same kind of thinking to entrepreneurial vision. Either way, it can set unrealistic expectations on the part of co-workers and investors alike. It can also cause problems when companies need to adapt but can’t because the founder is too focused on his or her vision.
Vision is nothing without timing. It has been said that the iPad is the 18-year culmination of Apple’s vision of mobile computing. However the Newton was less than stellar despite then-Apple-CEO John Sculley’s fanfare when he introduced it in 1992 (Jobs killed the Newton when he returned to Apple). Jobs’ own performance didn’t really hit it’s stride (remember NeXT?) until he became CEO of Pixar prior to returning to Apple in 1996. Timing is everything – both the Newton (reborn as the iPad) and Job’s own abilities as CEO were industry-changing, but out of sync with their markets. Is Jobs a visionary CEO? Definitely. Is the iPad a visionary device? You bet. But nether was compelling in their first iterations. The difference between a bad idea and a visionary one can often be a simple matter of timing.
It can foster a sense of entitlement. This is one of the most destructive forces I’ve seen in startups – the sense of entitlement around “vision”. This doesn’t have to come from the founders, it can come from early architects or engineers who hold the product vision very tightly. So tightly, in fact, that efforts to change and grow the product or business is met with resistance. As the company grows, this can be fatal.
It is often defined after the fact. Think Steve Jobs returning to Apple in ’96. Many feel the the best way to define vision is proof – but it makes vision a priori very difficult to get a handle on. As Clay Shirky rightly points out in Cognitive Surplus, many of today’s successes in technology are due as much to timing and accidents to actual vision. Attributing every raging success to the vision of its architect doesn’t help us in coming to grips with the notion of entrepreneurial vision.
Again, there is such a thing as founder vision — but it takes experience to cultivate, time and context to identify, and entrepreneurial drive to make it real.
While the climate debate rages on, few areas of government oversight have been left untouched or uncriticized. The US climate bill has been beaten and battered and the EPA has taken up the torch. Political interests from Alaska to Massachusetts have expressed doubt on climate change altogether. Companies are making big gambles on carbon trading but the concept is possibly one of the most contentious political issues of our time, with the current administration’s future hinging how it handles the climate debate and how America’s tax dollars are put to use to fight climate change. So with all of this uproar and debate, how did carbon capture and storage – considered by many to be an untested and unfeasible technology - receive hundreds of millions in funding today, in addition to billions in past funding for such projects?
Now, I don’t come down hard on either side of the CCS debate – I believe strongly in innovation and that we should investigating (and investing in) any and all solutions that have a reasonable hope of solving our climate issues. As with most technology solutions, CCS is not without it’s issues. Many analysts have suggested that CCS is not unlike most large-scale projects in the energy sector and cannot exist without substantial subsidies. Others claim that it only tethers America to an outdated energy supply such as coal (it’s the clean in the oxymoronic clean coal marketing term), something we should be moving away from in the search for clean, renewable energy. But I believe that CCS – like all climate technologies – should at least be investigated and has a place in our arsenal of climate solutions. The issue with CCS is that it’s the cleantech equivalent of the ‘devil you know’ – it’s a relatively known technology (at least in theory) and utilizes existing storage capacity from existing heavily polluting industries. So while it’s not really all that clean, it may be a viable short-term solution, worthy of consideration along with many of the other carbon mitigation solutions.
But that’s not what is happening here – it is profoundly unfair that CCS continues to receive significant federal funding while other, more established and tested methodologies such as carbon finance (in all its forms), carbon reduction technologies, and carbon regulations still languish in highly politicized and heated debate. It’s unfair to the market, to the environment, and ultimately to the American taxpayer who is footing the bill not only for these investments, but also for the future performance (or lack thereof) of CCS as a principal climate solution.
Again, I’m not against carbon capture but I am all for tech innovation and the continued investment in CCS (largely unfettered by the climate debate that has paralyzed other carbon innovations) is not how you create a level playing field for Cleantech in America. We should demand more from our leaders to promote innovation in cleantech by evaluating and supporting a wider range of solutions rather than focus limited tax dollars on proposed solutions whose benefits are weighted heavily towards the interests of a small number of industry players.
It has been said that just as water will always flow downhill, economies flow toward abundance. Though we are accustomed to focus on scarcity, it is really abundance that has driven today’s global economy. Despite our focus on peak oil, food shortages, drought, and a host of other problems of scarcity (and they are acute problems), our economy at large has been driven by abundance, where everything becomes a commodity. The automobile industry was made possible by the abundance of labor, manufacturing, and petroleum. Perhaps one of the most abundant commodities - corn - is in one quarter of the items in the average supermarket; everything from cardboard to breakfast cereal to to glue to chicken to toothpaste. Our economic world revolves around abundance.
But despite this abundance, we tend focus on scarcity. Since the Club of Rome’s Limits to Growth in 1972, we have become increasingly alarmed at the notion of population growth and the limits of our ecosystems. Indeed, many forecasted the doom of the human race in a future of depleted resources, sky-high commodity prices, peak oil, and international conflict. It stands to reason that there is only so many places we can go on earth and once we use it up, we’re out of space. The tragedy of the commons dictates that, as resources deplete, things go terribly wrong. It’s common sense.
Only it hasn’t happened. Today, prices are lower on many staple commodities than they have ever been (as an overall function of income). Households in the developed world spend a lower percentage of their income on food than they did 30 years ago. Things are getting better, not worse, and there certainly has never been a period in human history of more abundance, as a population. Commodities that were once valuable (like salt) have become so cheap they are almost free, and our services economy (as opposed to manufactured goods, things we make) affords a virtually limitless opportunities.
And therein lies the problem for energy management: we’ve bet on the wrong horse.
It’s true that we live in an age of abundance, but we also live in an age of diminishing returns on energy. Oil is becoming more expensive and risky to extract. When a commodity gets scarce, we pay more – up to a point where we replace the commodity altogether. In my grandparents’ day, everything was made of metal. Today, these objects are made of plastic, often so cheap they’re disposable. We simply found a cheaper alternative of manufacture. What we need to do is bring this economic philosophy to the energy debate. Despite what we often think, energy is plentiful, a zero-cost resource that is in every ray of light, every movement of the waves, and in every convection within the earth. Indeed energy is, for our purposes, limitless.
So why are we hanging on to the old notions of scarcity? We’ve become a global society crippled by the tragedy of the commons, and it will only get worse – once we reach peak oil (unless of course we’ve reached it already), oil and all its derivatives will become increasingly and prohibitively expensive. We can defer this effect through subsidies, technology, and even international conflict, but in the end the increased cost of oil is an inevitable function of economics. This will reach a point where it can no longer be afforded by anyone and a shift to another energy source must happen. This is the primary reason why we will never actually run out of oil – it will simply become so costly to extract and consume that we will find more abundant alternatives – the natural progression of any commodity.
Instead, we should be bringing the notion of abundance into the energy debate. We justify billions of dollars every year on scarcity – easy oil is a thing of the past so we are going to greater lengths to find it, either 5,000 feet below the Gulf of Mexico or tearing up vast expanses of Alberta Oilsands. Costs are escalating on all fronts – we have passed the point where this becomes economically and environmentally unsound and its time we let go of our singular gaze on scarcity and move on.
As long as we are actively pursuing an energy economy based on on scarcity (e.g., the oil economy) our only advantage will be energy reductions and energy efficiency. With an energy economy based on abundance however, efficiency is no longer a necessary cost. The alternative energy sector has been seeking out abundant sources of energy for decades – it has been a central tenet of US Administrations for decades. But I’m talking about a more intrinsic shift than a market one – we need to be aware of the unerring truth that what is scarce will ultimately increase in cost and will be replaced by something abundant. We should use this fact as a bellwether for what is to come – sooner or later – to the energy debate.
When it comes to energy, change is an economic certainty as we move towards an economy of abundance. It’s just a question of when.
This week the EPA made a surprise move by discontinuing their well-respected climate leaders program. The program was considered by many to be a shining example of how a voluntary environmental reporting program could gain mainstream adoption in the US. In reality, however, the EPA Climate Leaders was likely not a long-term commitment. This is a good thing for Cleantech and Climate Regulation in the US, and here’s why.
The EPA’s role is to safeguard the environment and the health of all US citizens. This covers a wide range of issues, including climate change. When the Climate Leaders program was created, there was little movement on climate change in the US. There were few regulations, uncertainty around carbon in DC (which remains today), and few state or local initiatives to fight global warming. There were few, if any Chief Sustainability Officers at major corporations, and the concept of sustainability as a business driver was pretty much a foreign concept. The Climate Leaders program was created to help companies create strategies around climate change, and introduce them to the importance of sustainability – specifically climate change – as an important aspect of their business. In many respects it has been a great example of how governments and the private sector can work together on important issues.
But it’s a different world today, for the better. There are many state and local climate initiatives underway that affect business much more than the EPA’s voluntary reporting program. Regulatory climate change initiatives from the Western Climate Initiative (WCI), Regional Greenhouse Gas Initiative (RGGI), MidWestern GHG Reduction Accord, and others are well underway, with some of their participants already participating in carbon regulation.Over a thousand US cities have already committed to initiatives to reduce their impact on the climate, including many of the corporations that make those cities their place of business. When you consider that over 50% of the US population is impacted by these new climate mandates, it’s not hard to see why the EPA feels that there are enough alternatives for them to move on to more important things.
The EPA has bigger fish to fry regarding climate change. With the climate bill stalled in the senate, the EPA has become the sharp end of the stick for climate regulation, utilizing the Clean Air Act to introduce binding legislation. This is the real opportunity for the EPA, not the custodian of a non-binding program designed to raise sustainability awareness in corporations. Now that US Corporations see sustainability as a key business driver, it’s time for the EPA to move on to more important things.
For Cleantech, this is good news. For better or worse, there is a big difference for corporations between voluntary reporting and binding regulation. Many believe that voluntary reporting is simply not enough, and may even distract companies from making real changes to the way they run their businesses. With the EPA now focusing onstandards, additional climate regulations, and policy, supporters of climate change legislation in the US are now focusing on the EPA to do the heavy lifting, and so far it is working. For Cleantech, the EPAs change of focus from voluntary participation to more binding legislation means that sustainable technologies may become more of a “must-have” rather than a “nice to have”.
So when you look at how things have changed in the world of climate change and business, it really shouldn’t be a surprise that the EPA has discontinued the Climate Leaders Program, and those of us in Cleantech should be thanking the EPA. If companies want to continue to create voluntary reports for sustainability, there are many resources outside the federal government, including the CDP and GRI, and many proprietary reporting indices. But this may be the beginning of a more serious effort on the part of the EPA to get companies focused on real reductions, not voluntary programs. For the Cleantech business, that’s music to our ears
Michael is the former CEO of the Global Reporting Initiative, Carbonetworks, and other sustainability organizations. He has been an advisor and CEO in sustainability for almost 20 years, and writes about technology, sustainability, and social innovation.