Monday, January 22, 2007

"Operating planet Earth like a business in liquidation"

Last month, Al Gore took his global warming roadshow to Harvard Business School, where he met with students and professors to discuss how "operating planet earth like a business in liquidation" is a bad business plan. Gore went so far as to call the stock market "functionally insane" and that new measurements - like externalities and sustainability - must be factors in order for 21st century investments to remain profitable.

Gore and former Goldman Sachs Asset Management CEO David Blood teamed up to create the investment firm Generation Investment Management. As Philip Coggan at the Financial Times put it,
"Generation will specialise in 'sustainable' investment management, but is keen to emphasise that this is not a touchy-feely, “new age” approach. The idea is that the long-term prospects for companies are affected by a host of intangible factors. Some of these will include social issues such as the environment. But they also feature subjects such as corporate governance, brand management, personnel relations and geopolitics. The idea is that the excessive focus on the short-term by traditional investors creates profitable opportunities for those who can take a longer perspective."
Barcelona's diary on Daily Kos today points out that Generation predicted the current business situations of General Motors and Toyota because of a unique measurement and analysis system called "carbon intensity of profits." For example, companies that adopt stricter environmental standards and market efficient technologies will move further and faster in today's business climate.

Global warming, the threat of carbon regulation, energy independence and consumer pressures have already propelled many businesses big and small to reexamine how they use energy, redefine their brands (with perhaps a bit of green washing in there), and impact the planet. Gore is right when he says the future will belong to those businesses that move us toward a sustainable, efficient, and innovative economy.

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