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AMY LARKIN: Thank you.
It's such a pleasure to be here.
I'm going to talk today about the rules of business and the
laws of nature.
They are in direct collision today.
We all know about the financial ledger--
profit and loss--
know that since we're kids.
But there's another piece of the financial ledger.
And that's cause and effect, which we never talk about.
Every financial transaction has an environmental impact.
And the environment is embedded in every financial
transaction.
The financial and environmental crises are
connected both in causes and solutions.
What do I mean by that?
Well, do you remember the floods in Thailand in 2011?
Yes?
Everyone?
It was a devastating effect for Thailand.
And there was a terrible typhoon.
But the real cause of the catastrophe was the fact that
15 to 20 years before, in the late '80s and '90s, there was
massive deforestation in Thailand.
And so there was no ground soil.
The topsoil had fallen down mountains so that when this
huge typhoon hit, there was no ground to hold the water.
So that would have been bad enough.
But in fact, in Thailand are factories
for Honda and Toyota.
And therefore factories that were shut down for four to six
months did not have the parts to supply to the other
factories for Honda and Toyota in Kentucky, Singapore, and
the Philippines.
So in fact, there was economic devastation in Kentucky,
Singapore, and the Philippines from logging that happened 15
to 20 years earlier.
Toyota lost 3 and 1/2% of its annual output.
And you and I paid unemployment insurance for
workers in Kentucky because of economic activity from 15 to
20 years earlier.
That's what I mean by the financial and environmental
crises are connected.
I'm going to talk today about three things.
The first is that environmental damages can
bankrupt environmental systems, ecosystems, as well
as financial systems.
The second is that multinationals are playing a
truly surprising role in the world.
I have been a Greenpeacer for over 30 years.
And in the past 10 years, the work that I have done with
multinationals has truly shocked me off my feet.
I'll be talking a little bit about that.
And then I'm going to talk about Google's role in the
energy business.
Energy is not Google's main business.
But Google is having a huge impact on the energy business.
And I'm going to talk about that.
So first thing is, I would like to state what I think is
the first rule of business--
no nature, no business.
There's a growing understanding of this in all
businesses.
This is the other change in the weather.
In multinational boardrooms and executive suites, I have
been drinking, dining, and kvetching with executives over
problems they have from extreme weather, from lost
commodities, from inability to figure out their profit and
loss statements, to what's going to happen with new
regulation.
There is a true growing understanding that financial
health is based on environmental health.
Governments not so much.
The corporations are surprisingly way ahead of the
governments.
But the governments, for the most part, are not connecting
Hurricanes Sandy, Katrina, and Irene with a lack of good mass
transit or renewable energy systems.
This is where the financial and environmental crises have
not been connected in the minds of government.
In many, many businesses, they have.
In many, many businesses, they haven't, especially those that
are in the fossil fuel industry.
But this is the cause and effect side of the ledger that
I was talking about.
But so here's what happens actually when
business looks to nature.
Makani Power--
some of you here probably know--
was recently bought by Google a few weeks ago.
It is the most advanced wind power technology.
It's in prototype now.
And it functions like a kite.
So it's tethered to the ground.
And high above the air, the wind turbines can move.
And high above the air, over offshore where there are no
Kennedys to tell you you cannot build an
offshore wind plant.
And it eliminates 90% of the material used in conventional
wind turbines.
It is also a new technology that would eliminate one of
the big problems with wind, which is the intermittency,
when the wind doesn't blow.
Because, as we all know from flying, when you're up there,
the wind is always blowing.
So in my mind, this is the kind of business that can
actually accrue environmental credit.
So I guess I should define environmental debt, the
opposite of environmental credit.
It's the polluting and damaging actions that cost
other people real money like those foresters, those
deforestation in Thailand from 20 years ago that cost Toyota
3 and 1/2% of its output in 2011.
We cannot separate the environmental system from the
financial system any more than we can separate our
mind and our body.
They go together.
And that's just that.
And today, in the current economy, these
connections are global.
So when the Mayans depleted their water sources--
well, if you were in Europe or China, you really didn't care.
It didn't affect your life.
It didn't affect your environment.
Although I'm sure there are some biologists and
environmentalists who will tell me it did.
But basically, it was not a felt problem.
But today, there are floods in Pakistan, heat waves in
Ukraine, or droughts in the Midwest United States.
And you are in business for cotton, wheat, or corn--
or anything that uses those commodities--
you're in big trouble.
This is, again, how the financial and environmental
crises work together.
This extreme weather has meant that the price of agricultural
commodities spike.
If you're trying to sell pizza or pasta or beef, you have
trouble figuring out your profit and loss.
If you're a business and you can't predict reasonably your
profit and loss, you have some big problems.
So in our own backyard, another multinational
corporation, Bloomberg, summed up Hurricane Sandy I think
rather nicely.
And this is, again, another multinational corporation
speaking up very clearly.
And the question is, would you rather invest in a renewable
grid and mass transit, or spend $100 billion on recovery
this year, and probably again in three years, and probably
again in seven years-- if not in New York, in Miami, in
Atlanta, in San Diego?
These storms will be more and more frequent.
And this money, it is good money going after bad unless
we spend our money wisely to prevent this kind of extreme
weather from being legacy for not only the next generation--
which it will be--
but prevent it from stopping one generation hence, we will
continue to bankrupt ourselves, both financially
and environmentally.
And as I said, I'm going to be talking about multinationals.
Here's another one, Puma.
Puma's CEO, Jochen Zeitz, decided he wanted to figure
out what was the real cost of Puma's business regarding
environmental damages.
And so he worked with PricewaterhouseCoopers and
Trucost, which is a small boutique firm, and developed
what they called an environmental profit and loss.
So what the hell is an environmental profit and loss?
You never heard of it because it's never been done before.
They measured water use, greenhouse gas, land use, air
pollution, waste.
And to their best estimates, it came to
$193 million for Puma.
So obviously, that's an estimate and quite an
imperfect number.
But it represents, in fact, 72% of Puma's 2010 profit.
So what does that mean?
It means that if Puma were to have spent money to either
prevent those damages or paid for those damages, every other
company in the sportswear sector would
have made more money.
The biggest polluter would make the biggest profit.
But Puma, God bless them, they didn't just wilt from this.
They doubled down.
And now they're doing another environmental profit and loss
trying to quantify the numbers better, again doing it with
PricewaterhouseCoopers, and taking the lesson learned from
the first one and doubling down.
The parent company, which owns Stella McCartney, Gucci, Yves
Saint Laurent, is going to do an environmental profit and
loss across the whole multinational.
There are other multinationals embarking on a
similar kind of metric.
And why are these metrics important?
Well, PepsiCo did something amazing.
They built a factory in Arizona a few years ago.
And in that factory, they created technical creative
engineering like almost no factory has seen.
It was near net zero energy, waste, and water--
really spectacular improvements.
And when the engineer who led this development was talking
to me about it, I was suitably admiring because it was pretty
extraordinary.
And I said, so now you're going to deploy these in all
your factories globally.
And then you're going to share this technology with others.
He said, well, actually, I think we'd be
happy to share this.
And we cannot deploy all of it because if we did, it would be
very expensive.
And it would jack up our short-term losses.
Within five years, we would have short-term gains from it
and short-term benefits--
medium term--
five years is medium term.
We would have medium-term benefits from it
on all of our expenses.
But in the short term, we would have to
spend too much money.
So we are going to pick and choose what we will deploy.
So the other thing he said is that when waste costs what it
should cost, we'll do everything.
When water costs what it should cost, we'll do
everything.
When energy costs what it should cost, we'll do
everything.
This is a case of a company wanting to do fantastic--
doing fantastic--
work, and because of the rules of business, being unable to
deploy their fantastic technologies globally.
These rules got to change.
Just a few more metrics.
In 2008, KPMG, another huge financial service firm,
measured the cost of environmental damage caused by
the 3,000 largest public companies--
$2.15 trillion.
Why is that important that they did this?
Well, they had the courage, number one, to antagonize a
lot of their clients, just as Pricewaterhouse developing
environmental profit and loss for Puma has clients who are
going, whoa, not sure we want to have this out in the world.
You think KPMG's clients are also happy that they have
measured the true cost of environmental damage?
This is a contributor to a public conversation on
changing the rules of business.
And it is a huge piece of global economic activity.
China measured the cost of its environmental damages at 3.5%
of its GDP.
So that's what they said it was.
Anyone want to guess what it really was?
AUDIENCE: [? 30? ?]
AMY LARKIN: Maybe.
I don't know.
It wasn't 3.5% to be sure.
Pakistan measured it at 6%, Colombia 3.7%.
The World Bank has measured many countries in Africa.
These damages are real money paid by real people, real
businesses, real taxpayers, real families, real school
systems, real water systems.
This is real money.
So it just shows that all money is not created equal.
If 3 and 1/2% of your GDP is from environmental damages,
that's not money you want to be spending.
It's not good money.
Google and Facebook are actually working in this
realm, in the energy realm.
Obviously, Google, as I said before, is a
huge player in energy.
I'm sure most of you know this.
Facebook is now moving into the field, also.
And you have the option to open coal-fired energy data
centers everywhere you go.
But I think that your company has an understanding that
these short-term profits are not going to be as valuable as
the long-term value created by developing new renewable
energy systems.
Google, at this point, has over $1 billion invested in
renewable energy.
So how important is long-term value?
Who to say it better but Captain Kirk and Mr. Spock?
This quote is from the fourth "Star Trek" movie, the one
about the whales.
I presume you all saw it a few times on an airplane.
But I think one of the reasons that we love
"Star Trek" so much--
most of us do, at least--
is that within "Star Trek," their ambition, which is
extraordinary, is only as strong as their humility--
their humility towards the laws of nature, their humility
towards biodiversity, [? they're ?] even like the
biodiversity of aliens.
I think that our work is to connect the deepest ambition,
the most profound ambition, Google-size ambition, with
total humility towards the laws of nature.
Then we will have a good cohesion of the laws of nature
and the rules of business.
Sticking with the "Star Trek" analogy, I have chosen to
create what I would call the new prime directives.
So I call it "The Nature Means Business Framework."
The first one is pollution can no longer be free.
If pollution were no longer be free, Pepsi's factory would be
deployed by them everywhere and by everyone else.
The long view must guide all decision-making and
accounting.
If that were the case, the people who deforested Thailand
wouldn't do it because it would be too expensive.
And they would be on the hook for workers in factories and
corollary businesses in Kentucky, Singapore, and
Philippines, not only in Thailand.
And the last one is government plays a vital role in
catalyzing clean technology and growth.
In the 1970s and '80s in the US, Japan was clobbering the
new microchip industry.
And the US government put together
something called SEMATECH.
And it was a combination of money, R&D,
cohesion of the industry.
And this led to Silicon Valley as we know it.
And honestly, no SEMATECH, no Google.
And I think that this is how we need to think about what
government can do.
There are actually moments in history, perhaps not today,
that government has, in fact, done extraordinary things.
When the United States went into World War II, within
three months, the auto industry
became the war industry.
I am not recommending doing that today at all.
But when it is necessary and there are emergencies, there
are things that government can do that can change the world.
Our work is also to create the political will so that our
government actually imagines itself able to do what it has
to do again.
So these rules offer a new compass for what is possible.
And so for Google, I hope that--
I know that you are going to continue your aggressive,
intelligent, expansion into renewable energy.
Be bold, bold, bold.
Google uses 0.013% of total energy usage in the world.
100 searches use about a 60-watt bulb for a half hour.
I don't know about you, but 100 searches I could do in
seven minutes.
So I'm burning a lot of energy.
And here I am at your company, so how can I
not give you a challenge?
I suggest--
I challenge Google, actually--
to join with competitors, collaborators, clients,
schools, governments to lead a surge of energy conservation.
Use your platforms, your apps, your innovation and inspire
global citizenship.
We can blow out 10% of our energy use in two years.
You are possibly the only company in the world that
could lead this kind of effort.
All of us-- you are a verb, for god's sake--
we can add to the meaning of what it
means to google something.
To google something could mean to conserve energy, not just
to use energy.
I'm sure that there are technological whizzes and
engineers in this room, and artists that you work with,
and competitors who you probably don't work with, who
would want to do something like this.
And on your platforms, you could encourage the world to
eliminate 10% of our use.
I think that this is possible.
And you can do this.
Imagine that you are working for a company that has the
power to do this.
That's extraordinary.
So I challenge you to please do this.
I think that we know that we have to make a radical
transformation so that our environmental debt does not
become irreconcilable.
If the oceans fail, which they might, this debt becomes
irreconcilable.
As I hope that I've shown you, nothing except for nature can
transform the world as swiftly as can business, for
better or for worse.
Business must act audaciously to cohere the rules of
business with the laws of nature.
Thank you.
[APPLAUSE]
AMY LARKIN: Yes?
AUDIENCE: What you call the environmental debt
[? is what they called ?] externality in economics.
AMY LARKIN: Yes, it still is.
AUDIENCE: And they've been talking about taxing pollution
for all this time.
And as far as I can tell, it's not happening except for a
little bit on the stuff for acid rain.
Why not?
And why do you think it could happen now?
I mean, has Congress gotten any better?
AMY LARKIN: No.
I think it can happen now largely because there is a
fissure in the business world.
Do you remember in 2009 when the US Congress was debating
cap and trade?
Yes?
Remember that?
So the US Chamber of Commerce acted--
lobbied very hard against it at the behest of, largely, the
fossil fuel companies.
So then what happened?
Apple quit.
Nike, Johnson & Johnson.
A lot of companies stepped forward and said, you do not
speak for us on this.
You do not speak for us.
And that has not happened before, where business has
stepped up and said, whoa, we think there
should be cap and trade.
I have done work with a lot of multinationals and have been
part of I can't even say how many conversations where CEOs
and senior management and board members are, how do we
get this to change?
How do we get the rules to change so that we are not at a
disadvantage if we do what we want to do?
Some companies, like Google--
I mean, Google, your company, is, in fact, investing in
renewable energy.
You don't need to do that.
I mean, I think you do need to do that.
But you are one of those companies that has enough
money, enough power, enough market share, you can do it.
But other companies that are also big, iconic companies do
not have that freedom.
So I think that the first reason why I think it's
possible is that there are big companies ready to step up and
say, we're ready to pay.
We're ready to change.
This cannot continue.
Because we're not going to have access to water or energy
as we need.
That's the most optimistic thing that I have seen.
And in the president's climate change speech a few weeks ago,
he said, we want to start measuring the
social cost of carbon.
And I hope that he's not talking about a 10-year, blue
ribbon commission because you don't have to go very far.
Go to Hurricane Sandy in our backyard.
That's a social cost of carbon.
So yes, it is the same as externalities, except
externalities is a big old concept.
And environmental debt, I hope, will become part of
public conversation about our debt.
I don't want to pay $100 billion of taxpayer money to
clean up extreme weather, or another $100 billion to clean
up flood insurance and crop insurance.
The more people understand how our debt and our very
fool-hardy environmental actions are connected, the
faster and stronger we have the possibility
of making this change.
So that's why I'm optimistic.
AUDIENCE: He's at the mic, so [INAUDIBLE].
AUDIENCE: How do you feel about working with developing
nations who said, oh sure, you got develop polluting.
And now it's our turn to develop and
you're telling us no.
And that's also often where the most cost-effective
interventions are.
AMY LARKIN: Well, I think something very interesting
happened recently.
I was working for many, many years with Greenpeace on
refrigerants.
And HFCs, which are the most common refrigerants, are also
thousands of times more potent than CO2 and a growing
terrible wedge in the greenhouse gas emission
[? load ?] over the world.
And China was always fighting against the changes to the
rules regarding those chemicals.
And about six weeks ago or two months ago, China and the
United States agreed for the first time in climate talks
that China will join the US in trying to
eliminate these chemicals.
So I'm, of course, working with 400 corporations who have
committed to eliminate these chemicals.
But as I have said, the corporations have led, and now
the governments feel that it's safe to move in.
I think that it is a hugely difficult situation where if
everyone in this room never bought anything again, we'd
probably be fine.
But if people in Brazil or Ghana or China or India want
to buy a hair dryer or a house or a refrigerator for the
first time, or whatever it might be, who are we to say,
well, really, don't?
It is not appropriate for us to say.
So again, if we create this connection where things cost
what they should, and where companies get tax incentives
for doing the right thing--
accelerated depreciation for green energy investments, for
example; accelerated depreciation for
state-of-the-art technology like that Pepsi plant--
there are a variety of ways to alter--
imagine if our foreign aid were connected with good clean
technology.
I think that the only way to realistically deal with this
is for those of us who are wealthy like we are step up
and say, OK, I get that I've lived like the king of Egypt
for a long time for really cheaply and have caused huge
problems globally.
I get that I have to pay.
And I think that this is also, though, where a Google
platform that shows we can save--
because in addition to paying new costs, I think there are
savings to be had.
And I think that we don't think about them yet.
And when we do that, the entire course of what things
cost is going to change.
And that should happen over the next 10 years, not so that
the world goes into total cataclysmic economic shock,
but so that the world moves into an economy where the laws
of nature and the rules of business live together.
That's the only way to solve this.
AUDIENCE: Hey.
AMY LARKIN: Hi.
AUDIENCE: So love the premise, love the solutions.
And I think that this is like a larger systemic issue that
requires lots of leverage points into the system, one
being changing the rules, changing policy from the
governmental side and larger international bodies.
But also a lot of this reminds me of a larger movement in
triple bottom line businesses--
certified B Corporations, green business for America,
things like that.
And I'm wondering if you could comment on that and how that
might play a larger role.
It seems to be something that's happening for the last
20 years and only now starting to get a larger acceleration.
AMY LARKIN: I think that--
AUDIENCE: Can you start by defining some of those terms?
AUDIENCE: Oh, yeah.
Sorry.
AMY LARKIN: Did you want to do it?
Or you want me to?
AUDIENCE: I'll give it a quick shot.
So the one that I'm most familiar with because I'm
working with B Lab, which is in Philadelphia--
they certify businesses just like you would for a
fair-trade label or organic label.
But these businesses hit certain criteria for
environmental stewardship, governance, structure, how
they treat their employees, things like that.
And as a result, it's mainly intended as a market
identifier to say, hey, this is not greenwashing.
This is a company that's actually putting its money and
actions where its mouth is, and so consumers
can react to that.
But they're also looking at legislation so that instead of
becoming an LLC or an incorporation, you can become
a benefit corporation, which has in its legal charter, hey,
we're going to stick to these environmental and social
constraints.
AMY LARKIN: And triple bottom line is the three bottom lines
are people, planet, profits.
And there is a movement similar to B Corp-- in fact,
probably many of the B Corps are ascribed to the triple
bottom line.
I think that this is a movement like the organic food
movement, which has now become a mainstream movement and is a
large piece--
it's not a large piece, but it is a growing
and significant piece--
in the world's food supply.
I've had a lot of conversations like this,
especially with my Greenpeace colleagues where I'm off
working with multinationals and come back to meetings.
And you can imagine the conversations.
So I think that this is fantastic.
It's a fantastic movement.
And it is the roots of change.
And I think one of the things I have in my book is a list of
companies that started like that that are now owned by
large multinationals.
So Ben & Jerry's is owned by Unilever.
Naked Juice is owned by Pepsi.
Odwalla is owned by Coca-Cola, Kashi is by Kellogg's.
I could have gotten some of those wrong.
I apologize if I did.
But it's essentially exactly those kinds of companies are
being bought by large multinationals.
So in some cases, I'm sure you can ascribe motives that are
very tough to why these companies bought them.
But on the other hand, my experience is that, in some
cases, the knowledge of these on-the-ground, longtime,
organic, healthy businesses is actually flowing up into the
big parent company.
Not all the time, but more than you would think.
And I think one of the examples of why this is a--
I think it's great.
And Walmart has committed to--
Walmart--
has got this huge environmental initiative and
has committed to buying $1 billion from small- and
medium-size farming, and is now the largest seller of
organic milk and cotton and other commodities in the US.
Maybe in the world, actually.
Walmart has committed $1 billion to these farms.
Now, whatever you want to say about Walmart, if I'm a small
farmer, I'm really happy about that.
Because that allows me to invest in my business in a way
that I couldn't necessarily do when a small organic brand
was, in fact, my major purchaser.
So I think that we need it all.
I mean, we have so many issues to address, as you said, from
every kind of entry point.
I love those companies.
They're all my friends.
And I think that the big multinationals, which can
alter markets more quickly, need rules so that they can
make money the old-fashioned way, cleanly.
So that's what I would say about that.
Anyone else?
OK.
Well, thank you very much.
I really appreciate the chance to talk to you.
[APPLAUSE]