Development Crossing

Corporate Social Responsibility (CSR) and Sustainability

U.S. Government It’s Time to Show Some Leadership

This blog was originally posted at http://www.realeadershipalliance.com/2010/03/u-s-government-it’s-time-to-show-some-leadership/.

It’s not a secret. We’ve seen it happen continuously for centuries. Innovation, the big, bold future changing innovation, is driven by limitation. Almost always. When Steve Jobs went maniac to create the ipod in about nine months, he insisted it fit easily in a pocket, it looked like nothing anyone had seen before and would have a user interface so simple a two legged moron could intuitively use it. Those are arbitrary limitations. At the time, outrageous ones. Those limitations combined with time urgency created the most successful consumer electronic product in history…220 million ipods have been sold to date. Wow.

The point is potent. Innovation thrives in the paradox that limitations inspire previously un-imagined solutions. If you want to generate creative energy, put an entrepreneur in a box. Now s/he has something to think outside of! That’s exactly what we need to accelerate our quest for clean renewable energy. Energy that won’t motivate wars, poison our environment or change our climate.

Have you noticed that the new big honkin’ SUVs now get 25 miles to the gallon while just a few years ago these same beasts were drinkin’ a gallon of gas every 14 miles? What happened? To be sure rising gas prices and a wallet robbing recession. But most importantly what’s driving gas mileage innovation is the U.S. government’s mandate of gas mileage to average 35.5 miles per gallon by 2016. Welcome to the amazing world of forward thinking government regulation.

There is a strong American myth that free enterprise thrives when government is toothless and regulation is scarce. Today that thinking is increasingly making us less competitive in the worldwide competition to revolutionize how we generate and consume energy.

I read an interesting post in Time Magazine today titled Is Corporate America Our Best Hope Against Climate Change? The article discusses the role of government and business in addressing today’s climate change crisis. It states, “To traditional greens, business was the enemy, polluting with impunity, and government was the hero, ready to restrain…. But when it comes to climate change, times have changed. Although industry is still the engine of all those carbon emissions…it is also the source of clean-energy solutions, which are emerging from every layer of the business world, from tiny startups to Fortune 500 behemoths.”

It continues, “Meanwhile Washington is paralyzed, seemingly incapable of coming to grips with global warming or the looming energy crisis. What we need is smart policy to deal with the biggest long-term challenge facing the country. What we get is vacuum.”

The article goes on to discuss how new technologies from solar farms to wind turbines on a large scale, the resurgence of nuclear power, and recycling of energy used are all within our reach but will never gain momentum without government policy in place. In the U.S. There is an overwhelming need for strong energy legislation, including a firm carbon price that could help renewable energy compete today. If we are going to compete in the race to reinvent energy generation, the U.S. needs to establish requirements for renewable energy and strategically increase the public research money spent on energy.

This seems to be on the mind of forward thinking sustainability leaders. In my recent interview with the VP of Corporate Citizenship and Corporate Affairs for IBM, Stanley Litow discussed how the next big step for sustainability is collaboration across cross sectors. He said, “Global companies, government, and non-profits must create collaborative strategies that allow people to make significantly greater progress…The job is too big for business alone.”

Francois Ajenstat, Director of Environmental Sustainability at Microsoft, also made reference to the lack of government leadership when I recently talked with him about Microsoft’s sustainability efforts. He said that Europe is ahead of the curve in regards to sustainability because their governments are creating a framework for businesses to act while in the U.S. companies are acting more or less randomly on their own accord.

So why is regulation so strategic to the progress of clean energy? When the government issues regulation, it creates a level playing field for the most innovative companies to succeed. But if there’s no regulation, what happens is competition degrades to the lowest common denominator. For instance, if the cheapest energy plant is the dirtiest coal plant that spews out a vast array of toxic chemicals, more responsible companies can’t compete. Imagine trying to play football with no rules. Only the most vicious and ruthless would survive. Well today U.S. companies are playing the energy game without rules and we are losing to foreign competition. This frustrates the progress of forward thinking enterprises because their efforts are simply cancelled out by backward thinking polluters and energy hogs.

The U.S. is not only lagging far behind Europe but also other countries like China. USA Today reports that China is now the world’s leading clean energy country in terms of producing wind and solar products. Their goal is to make 15 percent of their total energy consumption come from renewable sources by 2020. Here some other startling facts:

• From 2005 through 2009, China's clean-energy investment, including wind and solar, soared 148% vs. 103% for the USA.
• Clean-energy investment in Asia, mostly China, rose 37% last year to $39 billion. By contrast, investment declined 33% last year in the Americas as the economy slowed and credit markets tightened.
• Ten of the leading economies devoted a greater percentage of gross domestic product to clean energy than the U.S. in 2009.
• The U.S. has no national standard for expanded use of renewable energy. The American Wind Energy Association and others argue a national standard would do more to help manufacturers prepare for a big U.S. market for their products. The U.S. has also offered on-again, off-again financial incentives for renewable energy while other countries' support has been steady.

The goal of capitalism cannot be to produce the cheapest goods and services but rather those with the most value. The role of government in creating standards through wise regulation serves capitalism by creating a framework for innovation around values that benefit everyone rather than abandon the world to who can exploit it the most viciously. Think about it. Without regulation we’d have lead in our paint, cribs that strangle our kids, and cars without seatbelts.

While it is indeed commendable and demonstrates courage that some corporations are acting on their own accord, just imagine how much more could be accomplished if government and business worked together. It’s actually what got us to the moon and back. It’s time for the U.S. government to join the revolution to save our future. Create a hurdle so we can jump over it!

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Comment by Erle Frayne Argonza on April 13, 2010 at 5:21am
Nice piece. Indeed the USA and Europe--the West--are seemingly drifting, even in matters of green energy and the renewed revival of dirigist/interventionist policies...so much that before the Western peoples realize it, East Asia had already gone up ahead of the global pack, serving as teachers of balanced policy and governance to their erstwhile ex-colonizers.

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