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]