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Sustainability Videos & Lecture Series

Natural Capitalism, Path to Sustainability in Education- And a Lot Else

October 6, 2006 | A world facing climate change and deteriorating natural systems is a challenging place to do business. Hunter Lovins argued that the best way to achieve true competitive advantage in today's world is exactly the sort of behavior that will solve the problems facing us. She described a new approach to business, Natural Capitalism, that enables communities, companies and universities to gain this competitive advantage, now and far into the future.

Presented at the first-ever conference of the Association for the Advancement of Sustainability in Higher Education, hosted by Arizona State University in 2006, this keynote presentation was given by Hunter Lovins, president of Natural Capitalism, Inc. and co-founder of the Rocky Mountain Institute. Introduction by Dave Newport of University of Colorado at Boulder.


Dave Newport:

Thank you. What a week. What a conference. My goodness. I'm honored and largely blown away to have accepted the very kind invitation to introduce Hunter Lovins, because I'm a huge fan of hers, as I know you are. She's a world class thinker and a wonderful friend, but being lazy, I accepted because I knew this was going be really easy. It's so easy to talk about Hunter.

She's a visionary leader, an accomplished author, an inspiring teacher, a continuous innovator, an insightful sociologist, an honest lawyer, a mentor, as Julie said, to many of us, and a friend to all good people on the planet. I told you this was easy.

The best part, though, for me is that she's such a distinctly quality human being. Equally at ease in the White House or my house, the classroom or the horse barn, she's never in a rush or too important or too much of a big shot to share her advice, a coffee, do you a favor, have you over, go for a horse ride. As you will see, and those of you who know her, her unblinking big blue eyes will capture you and hold you with intense kindness and sincerity and thoughtfully respond to you about whatever issues are in play.

She is among if not the most busy person I know. She has a travel schedule from hell. I have seen it. It is horrible. Yet she always has time to return your email, your phone call, or you request. I don't think I've ever seen her in a conversation look at her watch, look around the room while she's talking with you, unless it's time to go for a ride in which case it's time to get on your horse and go.

A lifelong horse advocate and enthusiast, Hunter and her mare, Pig, can be seen on the mountain trails of the Rockies, barrel racing, or roping in and around Colorado any time she's home. I've tried to keep up with her going up the Colorado Rockies, and she's a hard act to follow in every way. She wears her Western hat with pride and legitimacy everywhere she goes.

With Hunter, what you see is what you get, an honest, authentic, loving, brilliant, ethical, visionary, compassionate, cowgirl. Not bad for a sociologist turned lawyer, turned futurist, or maybe they all happened simultaneously. Hunter's the founder of Natural Capitalism Solutions Inc, her boulder based firm devoted to bringing sustainability to senior decision makers in business, government, and civil society. She is the co-founder of the Rocky Mountain Institute, which she led for 20 years.

She's a prodigious author having authored or coauthored nine books, hundreds of papers and articles, and countless e-mails, all of which bear the admonition, quote, "no trees were destroyed in the sending of this message, however a significant number of electrons were terribly inconvenienced." She's advised US presidents, pentagon generals, EPA secretaries, chancellors, deans, directors, and department heads for all us campus folks, foreign secretaries, prime ministers, ambassadors, CEOs from Shell to Interface, even the World Economic Forum.

She's given-- I don't know-- over 1,000 lectures, yeah, or in keynotes. And now for the shameless commerce moment, and we'll be keynoting the Rocky Mountain Sustainability Summit in Boulder on February 21st next year, and you all need to come to that. She was named the Time Magazine hero of the planet in the year 2000, and I know she's a hero of all of ours.

I have a badly battered copy of her book Natural Capitalism on my desk. I've found hope, information, inspiration, and perspective in that book many times. David Brower declared Natural Capitalism was nothing less than the most important book of the century. I and others have used it in countless courses, and in a world where new becomes old, even as it's written, Natural Capitalism is more true now than when it was written in 1999.

She has spent a good bit of time teaching at Dartmouth College and The University of Colorado at Boulder, and now she's the founding professor of business at the Presidio School of Management in San Francisco where the nation's first accredited MBA in sustainable management is offered. Lately she's helped some Presidio students launch the nonprofit Drive Neutral, vehicle and soon to be airline offsetting enterprise.

At my school, we partnered with her students and launched That initiative offsets vehicle emissions, same as many, but goes a step further. It helps to fund students working door to door in low income neighborhoods passing out compact fluorescent bulbs, water heater blankets, and caulking and whatever else we can get them to do for people who need a helping hand. And that's consistent, because Hunter's life is about offering people a helping hand.

So I'm proud honored more than a little overwhelmed at being able to count Hunter Lovins among my friends. She's given me so many helping hands, and now it's time for us to give her one.


Hunter Lovins:

Wow. Thank you all. Thank you particularly for caring. We live in very interesting times. This is a time in which we get to reinvent every institution on the planet, companies, governments, civil society and particularly education.

We're facing a number of drivers of change. These are coming at us whether we like them or not, and they're going to make this a very different world. Our choice is how to respond to them. Dave Orr, the great environmental educator, said the crisis that we face is, first and foremost, one of the mind, perception, and values. And so it's a challenge to the institutions that presume to shape those.

Your organizations have a particular responsibility to lead us to a sustainable future. We claim to train the people who run the world. Universities frequently are a big part of the economy in the area where they exist. What are we teaching people?

We need to be sure that we're teaching them to think, because by the time you've conceived an idea, a widget, a program, a process, you have committed most of the lifetime environmental cost and economic cost of that whatever it is, widget. So learning to think in whole systems is critically important.

Academics in particular like to learn more and more about less and less and then cluster up with like-minded folk. So I challenge you tonight, you tell me what I am. What discipline am I speaking to you from? Because what I'm a professor of didn't exist as an academic discipline when I went to college. Now it does. Judy, thank you. Because this is great. There's now a program of what I am, I guess. And high time, because we're in trouble.

We're losing every major ecosystem on the planet. You don't have to take my word for it. The recent UN Millennium Ecosystem Assessment, a lot of the world's leading scientists for most of the world's countries pointed out that we've exploited or polluted 2/3 of the ecosystems on which life depends to the point that the ability of the planet's ecosystems to sustain future generations can no longer be taken for granted. What are we here for as a university if not future generations?

Kofi Annan said the very basis for life on Earth is declining at an alarming rate. Ray Anderson said it a little more simply. What's the business case for ending life on earth? Now you might say, who cares? We're humans. We're clever. We live in cities. We can build our way around this.

You might reflect that what we're losing gives to our economy, which we do count, about $30 trillion a year of worth, but none of this is on anybody's balance sheet. So we're treating it as if it has a value of zero. $30 trillion is about the same as the value per year of the economy we count. So this is a significant economic contribution, and we're not counting it.

Now the economists say, OK, cool. If we're not properly counting something, stick a price tag on it. We can do the math. The guys at Biosphere 2 spent $200 million, couldn't keep eight people in clean air for two years. What's the worth of clean air? Whatever it is, we're all a mite sentimental about it. Or the value of a stable climate, the insurance companies of late are becoming concerned about this.

Swiss Re, the big European reinsurer, recently said to its corporate customers, if your company doesn't take your carbon footprint seriously, maybe our company doesn't want to insure you or your officers and directors. Climate changes is for real. The scientists are now starting to talk about category 6 hurricanes. We heard last night the impact of a category 4. It had downgraded by the time it actually smacked New Orleans. I'm not sure that New Orleans or any other city can withstand a category 6.

Now no doubt the science is uncertain. There's a lot of uncertainty about the world. What is no longer uncertain is that climate change is real or that it's human caused and for better or for worse, better if you like scientific certainty, worse if you the rest of us. Jim Hansen last year figured out what some of that uncertainty was. The models show it should be hotter than the measurements are showing that it is. Where is it going? Well, it's in the oceans.

The bad news is what's now being released was probably put there 30 years ago or more. So what we're creating now has yet even to come to be felt. It may be-- Jim Lovelock says it is-- too late. We may already have committed the globe to runaway climate change. If you don't want to believe that, then you darned well better sign on to Eban Goodstein's Focus the Nation. And he's somewhere in the room with a clipboard where you can put down your email and become a part of this.

January, a year ago, Rejendra Pachauri is the man who the Bush administration and Exxon put into the position of head of the Intergovernmental Panel on Climate Change, the UN's climate agency, because they were reasonably certain that he wouldn't do anything. And I know Rejendra. For their intents, this was a good choice.

So it was an act of unusual leadership when he came out with this comment, the climate change is for real. We have just a small window of opportunity. It's closing rapidly. There's not a moment to lose. We're risking the ability of the human race to survive. OK, now I'm scared.

I stood about two weeks ago at the Clinton Global Initiative with Dr. Rosina Birnbaum, who's chief scientist of the US, and Tom Lovejoy, another one of the leading climate scientists, and I said to them is it too late? And Tom said, no. He said the thing we most need now is hope. We most need to tell the young people that there is hope. But he said that is what the science says as well.

He said time is not long. This is something we must deal with probably within 10 years. That's what Jim Hansen's science is showing. We have 10 years to turn this around. 10 years is a heartbeat in public policy. So what are you going to do when you wake up tomorrow morning about climate change?

Companies are starting to do something. This little outfit out of the UK for years has been sending out to the Financial Times 500, the 500 biggest companies in the, world a survey saying, what's your carbon footprint? And for years the companies have been ignoring it until '05 when 60% of the companies answered. This year 70% answered. Why the difference?

Well, for one thing the project now represents institutional investors with $31 trillion in assets. If you want to go to the capital marketplace, you might want to answer their question. For another under Sarbanes-Oxley, the new US corporate ethics law, if as a corporate manager you fail to disclose to shareholders information that can materially affect share price, you can be personally criminally liable. So what's your carbon footprint?

But we know how to protect the climate at a profit, and companies are starting. In 2000, BP announced it was going to reduce its emissions 10% below its 1990 levels by 2010. Now that may not sound like a lot, but it's more than this administration says we cannot afford to do under the Kyoto Protocol, and BP's a carbon intensive company. They thought this was a stretch. So it surprised them that it only took them two years to do it, and doing it is saving them $750 million, and they now say making them the kind of company the best talent wants to come work for.

DuPont's gone further. In the same frame, 65% reduction over their 1990 levels, and by 2010, getting 10% of their energy and a quarter of their feedstocks from renewables. Has DuPont joined Greenpeace? They made this announcement in the name of increasing shareholder value, and their metrics are pretty impressive. They've already beaten their target and saved $3 billion with a B dollars. They're not the edge of the envelope.

ST Micro-electronics, same time frame, zero net CO2 emissions with a 40-fold increase in production. And doing this, making this commitment and delivering on it is driving their corporate innovation. It's taken them from the number 12 chip maker the world to the number six. And their metrics are pretty good. They've announced even more ambitious renewables goals. They're winning awards. They reckon by the time they're carbon neutral, they will have saved about a billion.

What is your campus doing? Here's what a number of companies are doing. When we came back from Kyoto, we thought we got the job done. We had an international accord on reducing greenhouse gas emissions until the US Senate said no. We were going around with a long face. This man Richard Sanders said wait a minute. Governments don't make markets. Traders do. I'm a trader. Let's make a market.

So with 16 companies, DuPont, ST, my little company, city of Chicago, he opened Chicago Climate Exchange trading carbon in a country where there's no law that says you have to. There are now over 200 members, including a number of universities. So here's your homework. Go join Chicago Climate Exchange, or if you can't, as the University of Colorado did, work something out with Drive Neutral.

We purchased through Chicago Climate Exchange. This is externally third party verified carbon offsets and mostly carbon reductions through efficiency of the companies. They've mentioned Drive Neutral. Here's the homework for each one of you. You all drive a car. Go home, get on the web,, calculate your carbon emissions and offset them. It cost you about two full ups of gas. And this is something you can have every one of your students do. It's something you can do tonight when you get online, tomorrow.

Dave leads the CU Environmental Center. They've come out with a pretty nice blueprint for a green campus. They've set targets that they can measure to. And it's nice to say, oh, yeah, we're reducing our carbon emissions. How much by when? This is what we need to do if we're going to turn this thing around in 10 years. Tufts, retrofitting buildings, UBC won an award last night. Congratulations. They're funding their environmental center out of their energy savings and reducing a lot of carbon.

How about California? Who would have thought it? And a week later, your governor came out with an executive order. The governator we can protect our environment and leave California a better place without harming our economy. I hope this message heads east. Now how did we get in the mess we're in? Let's do a little history.

Go back to the first Industrial Revolution where we came up with the notion that if brute force doesn't work, try harder. We succeeded wildly. We increased labor productivity over 100-fold, because what the conditions we had then were relatively few skilled people and lots of nature. So like a profit maximizing capitalist, we economized on our scarce resource, substituted our plentiful resource, great success. We have the world we know today.

So if this is the design guide, the design conditions, here's what you do. You tax the use of people and subsidize the use of resources and increase prosperity. We succeeded. Well, we now live in a time in history where we get 10,000 more people on earth every hour and we're losing every major ecosystem. We need a new design guideline.

So some of us invented one. We call it Natural Capitalism. You can call it sustainability. I think it's got three basic principles, which are, first of all, use everything taken from the earth or borrowed from the future dramatically more productively. This solves most of the environmental problems facing us, some of the social ones, and buys time, perhaps, the most important. But it's only the first step.

It then leads us to asking how are we going to redesign everything? And ultimately to how are we going to manage all of our institutions so that they are restorative of human and natural capital, the forms of capital that are in short supply? There's a long way to go. We now waste at least $300 billion a year buying and burning energy we don't need to deliver the services we do want.

I'm not talking about conservation. I'm not talking about curtailment. That may be a good thing, and in dealing with climate change, it may come to that. But for the moment, let's just talk about technical efficiency. After the last run up in oil prices, we cut oil use in this country 15% at the same time that we grew the economy 16% just through vehicle efficiency standards. We can do that again.

And we better, because a typical community is bleeding to death trying to buy energy from outside. Spending 20% of its gross income, 80% of those dollars are gone. We're like somebody who's trying to take a bath and the hot water keeps running out, so various people tell us we need a bigger water heater, whether it be a nuclear one or a solar one. No we don't. We need a plug.

And this man invented one. And my computer is-- there we go. His name is Wes Birdsall, general manager of the Osage Iowa Municipal Utility. Now Osage Iowa is hardly the hotbed of industrial innovation in the United States, but he did an interesting thing. He stepped across the meter to his customers side to say I'm going to help you use less of my product. Odd thing for a business person to do.

He recognized that you don't want kilowatt hours. You wouldn't know what to do with one if it walked up and bit you. What you want are the services that energy delivers, cold beer, hot showers, industrial shaft power. If he can get you those services cheaper through efficiency than through any kind of new supply, in his case a coal plant, that's the business to be in. He cut energy use-- or he cut-- saved $1 million a year in the small rural community, cut energy bills to half that of the state average, unemployment to half that of the national average, because with the lower rates more factories came to town. So then he had to go back and do more efficiency.

This is something we need to believe is possible. We can save 3/4 of the energy we now use cost effective against today's prices. Most of us spend most of our time inside of things like this. And we know how to make any existing building three to four-fold more efficient, new ones 10 times as efficient.

Listen. That's waste. When you hear a building hum, those of dollars leaving. And that waste costs. It uses a lot of energy, more than half the electricity, responsible for a lot of the greenhouse gas emissions, a lot of materials used. And it delivers us a lousy quality of life.

The companies that are trying to deal with what you do inside a building, if I told you I was going to take your children and systematically poison them for their entire academic career, you'd string me up. But that's what we do when we use toxic cleaning materials inside of buildings. So this little company out of Chicago has-- is working to get its products Green Seal certified. That's enabling them to win contracts by packaging them in little portion control packets.

You're not shipping all that water around, and by color coding it, you enable people for whom English is not a first language to know which chemical goes into which container for which purpose. We know that if you have good green buildings, clean air, day lighting, you're going to get higher test scores.

There's a reason Walmart's going green. They ran an inadvertent experiment. They built half a green building. Cash registers in Walmart's are hardwired to Bentonville. They know what each cash register is selling. The green side had 40% higher retail sales. Boeing did a lighting retrofit, saved a lot of money. It enabled the workers to see better and cut their error rate 30%. For those of us who fly around on airplanes, this is very good news.

Lockheed did a building that was designed around good day lighting. Saved a lot of energy, which had a nice payback. But it reduced absenteeism 15% and increased labor productivity 15%. That enabled the company to win a contract, the profit of which paid for the building. What you spend on people is dramatically higher than anything that you spend on energy or other inputs to the building, but it's how you deal with that energy use in a building that enables you to get the increase in labor productivity.

We know what it takes. Being able to see what you're doing, being able to have natural light, control your own space, hear yourself think, and breathe decent air is not all that-- it's not rocket science. It's economics science. This article just out from Harvard Business Review that owners of standard buildings face massive obsolescence, that they are reviewing their portfolios to see how green their buildings are and what they need to do to meet the growing market demand.

If you have a building, anyone who has university, almost anyone who has a university has a building, if it's not a green building, you're risking obsolescence. The market demand is looking for this. It get better if you combine renewable energy with it. Out in Sacramento, the people voted to shut down the then operating but not very well nuke Rancho Seco. The utility lost 1000 megawatts all at once.

Rather than invest in any conventional energy, they invested in efficiency and then a diversity of renewable supply. It's now more than 15 years out. The numbers are in. The entire region is economically healthier than had they just run the plant. If they'd run the plant, rates were projected to go up 80%. They held them level for a decade. This kept in place a lot of jobs, 2000 jobs, that generated 880 new ones and the utility paid off its debt.

Combining efficiency with renewables has some other pretty important benefits. For Time Square in New York City uses half the energy of a normal building, gets its energy from a fuel cell in the basement and photovoltaics in the spandrels, the section between floors on the south and west side. You can-- the owners find this a high performance building. They lease space at premium rates, because if you want to run your computers 24/7, myself, I can't imagine why anybody would want to, but if you do, you can never be turned off.

And in the Northeast blackout of 2003, this was the only building in New York with light. People came from blocks around to camp out underneath it. This is Homeland Security. If you think that taking your shoes off going through an airport is going to make you more secure, you are definitely a fan of Disney's first law wishing will make it so.

We do live in dangerous times. There are folks out there who don't like us, and every bit of our infrastructure is vulnerable. This is the US at night, 10th of August 1996. This is 35 seconds later when a tree fell across a power line out in Oregon. Check it out, nine Western states and millions of people. As I said, our whole infrastructure is vulnerable.

We're told that the cornerstone of Homeland Security is opening the Arctic to drilling and running it through the Trans-Alaska pipeline. Well, this is taps when a drunk got after it with a deer rifle. He didn't mean any harm. If some of the more competent folk that are now out there were to blow one of the pumping stations lifting the oil over the Brooks Range and do it in winter, you'd have 800 miles of hot oil congealing into the world's largest chapstick, and that's going to make us more secure.

Here's another one of those drivers of change, as if we didn't have enough already. You've heard of the phrase peak oil. Well, this is the peak. Previously called Hubbert's Needle after M. King Hubbert, the Shell geologist who in the 1950s pointed out that when you have a finite resource-- and it is a corollary of the round earth theory that oil's finite-- when you have a rising demand and you have taken half the resource, you're going to fall off the production curve as steeply as you went up. Now all that efficiency out there.

So I was saying to the peak oil guys why isn't it a plateau? And they said, OK, call it the Mount Massive scenario after a mountain in Colorado. There's six peaks, but they're all above 14,000 feet. It's not an environment you want to try and live in. So are we there yet?

Also in the 1950s was the Paley Commission, which recommended an urgent transition to energy efficiency and renewable energy as a matter of national security. Might not be a bad idea. Beats all heck out of some of the other options that are being offered to us.

The current energy plan calls for building a power plant a week for the foreseeable future. It's not going to happen. Sooner or later, it don't matter whether you're blue or red or purple, sooner or later economic reality comes home to roost, and this plan would soak up all discretionary investment money in the society. It's not going to happen. And it's not going to happen, because we're smarter than that. We know how to meet our energy needs.

This is the only approach that makes sense for developing countries if we care at all about the rest of the world, and it will give us more livable communities. It's been done. In the southern city of Curitiba, Brazil, this is not a rich city. It's the size of Houston with a per capita budget of 115th that of one of our poorest cities, Detroit. They did a whole system plan in which they refused to do what we're told we have to do, make trade-offs.

You can have a healthy economy or you can protect the environment. You can have strong businesses or you can take care of your people. They said nonsense. We're too poor. Any solution that doesn't address all of our priorities is not a good solution. So they designed transportation not just as a way to move people, but as part of their land use planning and built the world's finest bus system.

They couldn't afford rapid transit in the traditional sense of fixed rail, so they made the bus system work like rapid transit with fixed bus ways. And buses are slow. A bus pulls up, door opens, you got to climb up the steps, pay your fair one at a time. Not in Curitiba. You enter a loading pod, pay your fair, and when the bus pulls up, big doors open, everybody goes on, bus is gone. One minute between buses at rush hour.

Curitiba has the highest car ownership in Brazil, the lowest car usership. We can produce liquid fuels, things like bio-diesel. You can do it in your garage or in industrial units like the rig on the bottom. CU's running the student buses on bio-diesel. This program led to the spin off of a bio-diesel company in Boulder.

It's important, though, that we make sure that we do it based on sustainable agriculture. Because the way we do agriculture now is not sustainable. And if we load a biofuels program onto that, we really will be sorry. Fortunately, the folks at Iowa State University have a very good bioeconomy program in which they are showing how you can do poly cultures of perennials as the feedstock and then efficiently co-produce ethanol and bio-diesel.

We know how to get electricity. Wind's the second fastest growing supply technology around the world in good sites coming on at $0.03 a kilowatt hour. Just running a coal plant is going to be $0.04 to $0.05 a kilowatt hour. And it's now bringing on more new capacity around the world than nuclear did back when we were building the things. Solar is now the first fastest growing electricity supply.

Fog city San Francisco has a solar rube's program. Now all of California has the million solar roofs program. Chicago invested in a solar company to get the jobs and to get access to the cells. It's not uncommon now to have net zero buildings, university buildings, houses. Alameda County, Earth Day a year ago, commissioned to 2.3 megawatt power plant on roofs throughout the county. It'll save the county $700,000 a year, and the utility paid for half of it.

And check out China, a megawatt grid integrated on a roof in China, and a good thing too. Les Brown points out that China has surpassed us as the world's biggest pig. If China continues to grow at the rate it's growing and use resources as inefficiently as we do, by 2030 it will need more oil than the world now lifts or probably can ever lift. OK, the future's not possible. That's one of those-- that's one of those drivers of change.

The reason we're looking at higher energy prices, gas oil prices right now is that China has entered the world oil market with India right behind them. What this says to us is we get to do some really fundamental redesign of how we do industry, how we do business, how we run our society. Fortunately, we have some help.

Janine Benyus wrote the brilliant book Biomimicry. If you haven't read it, that's your assigned reading. Asking the simple question how does nature do business? Nature makes a wide array of products and services very differently than we do. Nature doesn't use big energy flows. It runs on sunlight. With no persistent toxins, makes some very dangerous things. Anybody who's ever been in the proximity of a rattlesnake knows that. But they don't hang around like nuclear waste for hundreds of thousands of years.

Nature makes everything near to something alive at room temperature with no waste. Nature shops locally. Does your university? Take these little guys. They're no doubt some up here. They eat flies and crickets at room temperature and spin a fabric stronger than steel tougher than Kevlar. Best we know how to make Kevlar is boiling vats of sulfuric acid in high pressure extruders. How do these little guys do that?

Or the abalone sets off the Pacific coast in seawater and makes an interlining right next to the creature's body. So the guys at Sandia Lab said, wait a minute. We've got to be at least as smart as an abalone. How is it doing it? And they found out that the abalone excretes a protein that creates an electrically charged framework on to which sea water deposits out at the molecular level this very beautiful inner shell. Nature's also beautiful.

So they took an electrically charged silicon substrate and dipped it in alternating batches of calcium carbonate and a polymer, which is what seashell is, and the stuff self-assembled at the molecular level just the way it does for the abalone. This is the future of industry. This is industry that's clean by design. So they're making glass that you can't break and even a coating for the nose cone of the space shuttle. Sort of a pity they didn't get that one done sooner.

Homeland Security tells us that perhaps the next terrorist target will be break point chlorination sewage treatment plants, because of the chlorine inventory. Charming. This is the Burlington, Vermont sewage treatment plant built by John Todd. Looks like a greenhouse, because that's what it is. Vats of organisms selected to do what they do in nature detoxifying some part of the waste stream.

Oberlin stuck one in the new Adam Lewis Environmental Studies Center. There was one in the body shop up in Toronto. Nature creates conditions conducive to life. Here's what we do. These are the synthetic compounds now found in mother's milk, and for those of you who are fans of breastfeeding and all other forms of milk, aldehydes, ketones, phenols, furfural. People, what are we doing to ourselves? We ought to answer that question.

Nature runs a very rigorous testing laboratory in which products that don't work get recalled by the manufacturer. 99% of all species that have ever been on earth are fossils. So we asked nature, what do you think of how we're doing? Ray Anderson endowed a chair at Georgia Tech to help engineers think like a forest. It's not easy. It's not easy for any of us. But engineers seem to be particularly challenged.

A group of engineers asked Janine Benyus to come with them on a boat ride to the Galapagos Island to help them learn how to do biomimicry. And Janine thought this was-- for a biologist, the chance to go to the Galapagos, chance of a lifetime. So on the boat going over, she talked with them and expressed what biomimicry was all about. They were engineers.

And by the time they got there, Janine went to the organizers and she said, I'm sorry. I appear to have failed. I'm not getting through to them. And she said, now that we're here can I go and explore the island. And the organizers said, yeah, thanks for trying. So she was out in a tide pool on her hands and knees, and this big old engineer came and stood over and said, what are you doing.

And she said, look, this little creature, I know as a biologist this creature requires fresh water to live, but it lives in seawater. How is it getting the fresh water? And the guy said, if I can figure that out, I'd solve a problem I've got back in the lab. And so he got down on his hands and knees, and pretty soon another couple drifted over. And pretty soon the whole boatload were on their hands and knees looking at this little creature.

They had rediscovered why they became engineers in the first place, which is the wonder of how does it work? And Janine came back and said, I've learned something very important about education. I've talked a lot about what companies can do, and they play a very important role. But it's also important to remember there's a very important role for government.

We are under a campaign now, a very concerted campaign to de-legitimize government. Markets-- it's like a bad light bulb joke. How many economists does it take to screw in a light bulb? None, the free market will do it. Markets make a very good servant. They're not such a good master. They're a lousy religion. All markets were ever intended to do was allocate scarce resources efficiently in the short term. They were never intended to look after grandchildren.

But in a sense, that's what universities do. And more importantly, it's what we do as a free people coming together to set policy to ask what kind of world do we want for ourselves, for our grandchildren? Being here at this conference and a couple of weeks ago being at the Clinton Global Initiative where over 1,000 people, the richest people in the world, the most powerful people in the world were talking about sustainability, you know what? The organizers were hoping to maybe get 400 of you. There are over 700.

The only thing that has been getting to me is I wish Dana were here. Dana was the first person to use the word sustainability in the book Limits to Growth. And shortly before she died she said it seems to me a powerful message worth repeating and repeating that people want peace, simplicity, beauty, nature, respect, the ability to contribute and create. These things are much cheaper and easier to achieve than war, luxury, ugliness, waste, hate, oppression, manipulation. Someday when everyone understands that nearly all of us truly want the same kind of world, it will take surprisingly little time or effort to have it.

So a group of us-- thanks-- a group of us got together to create a new institution in which business can have a conversation about love. And in which-- as I said this morning, it's very, very important to have metrics to be able to prove the business case, but it's also important to talk about why are we here? What's your calling in life? So we asked this of our incoming students. What's your calling? What is it that you can't not do?

A job is what somebody else gives you. A career is what you think you want to do. Your calling is what you must do. So what's your calling? Why are you in business? You may have heard this phrase. Don't take a risk. Let somebody else jump out there. We can't afford that. We've got to be like this little guy and strap a helmet on and go for it. And when we do, we will find there is a real first mover advantage.

You've heard the phrase the triple bottom line, people, planet, profit. Well businesses manages to profit. Sorry, that's what they are. Their profit making entities. But in today's world, what is the way to achieve outstanding financial performance. It's what we're calling an integrated bottom line in which people and planet aren't both on cost centers. They are how you achieve profit, whether it be through reduced risk. The auto companies getting sued by the state of California for their carbon emissions are facing a risk. That's an unbooked liability.

The companies that are announcing a commitment to sustainability are getting and keeping the best people. They're driving their innovation. Companies pay billions to get creativity, just an ounce of BHAG, a big, hairy, audacious goal, as Jim Collins calls it. Getting increased labor productivity and increased worker health or market share as ST found, the ability to differentiate your brand.

Managing your supply chain, Walmart has 61,000 suppliers, and they're saying to them now go green or you're losing shelf space. We're talking about how do you be first of the future? The companies that get this right will be the billionaires of tomorrow.

Because think about it. Go back to the first Industrial Revolution. What were the technologies that underpinned prosperity? Textiles and water power, iron and then steel and trains and then electricity and chemicals and cars and then petrochemicals and the space race. Remember, the space race is what was going to give us prosperity.

The last wave of innovation was the IT revolution gave us iPods and PowerPoints. What's next? We're all going to be burger flippers. Is that what you're training students to be? I think what's next, the basis of prosperity for those that grasp it are the ways to meet basic human needs sustainably through green chemistry and biomimicry and energy efficiency and renewable energy, all of the green technologies, all of the sustainable technologies.

And two weeks ago, I stood on the platform with Clinton and Richard Branson, as he announced that he's putting the entire profits of the Virgin Group into non-carbon fuel, $3 billion over the next 10 years. And the press came running up and said, why is he doing this? And I said, because he's going to make a boatload of money. This is not philanthropy. This is business.

The companies that are the more responsible are outperforming those that aren't. The Dow Jones Sustainability Index has been outperforming the general market. The Domini Socially Responsible Index has been outperforming the S&P for over 10 years. It's-- what is it? 7:00, 7:30. Do you know where your money is?

Every college has investment money. What's it doing? Is it working on behalf of the future of your students, or is it going into last centuries companies and technologies? Students at Williams College said to the board you start putting money into social responsibility or we're going to go to the alums, to the donors, and we're going to create a fund and take that money away from you, because we can give them a better rate of return.

Inavest has shown that in entire industrial sectors, the environmental leaders outperform the environmental laggards. PricewaterthouseCooper's last year asked a lot of CEOs from 43 countries. 87% said that environmental sustainability is important to their profits, and that number has been growing each year. Almost 90% said this is going to be more important five years from now even than it is now.

The World Economic Forum at Davos a couple of years ago did a survey of the world's leading CEOs. Most of them saw a good business case reason for going beyond mere compliance. And last year, they asked what are the two biggest problems facing business in today's world? What do you think they said? Getting government off our backs, reducing taxes. The world's leading CEOs said reducing poverty and dealing with climate change.

Who said this? There can't be anything good about putting all those chemicals in the air, smog you see in the cities. Putting chemicals in these rivers in third world countries so that someone can buy an item for less money in a developed country, those things are just inherently wrong whether you're an environmentalist or not. Who said that? Yeah, Walmart. Lee Scott, CEO of the company, that if it were a country would be the 20th biggest in the world.

Yes, this is the falling of the Berlin Wall. Walmart is making some fairly impressive pledges. Why? Is-- again, is this philanthropy? Is this greenwashing? Lee Scott's doing it to make money. If we throw it away, we had to buy it first. So we pay twice, once to get it, once to have it taken away. What if we reverse that? What if our suppliers send us less, and everything, everything, eventually everything they send us has value as a recycled product. No waste, and we get paid instead.

This is why this is what I call the sustainability imperative. Their stock fell, 30%, their stock value since he took over. In the 90s, they were doing tremendously, and then Costco and Target started going green and saving money and taking market share. Walmart doesn't have a choice. Again, this is not philanthropy.

Walmart's in a fight for its life. They are-- they have a number of critics after them that are having an effect. Communities are starting to ban Walmarts. They are looking at their franchise to operate. And a good thing too, good thing for the activists to be putting this question to companies of this size.

So we now have the opportunity to have the conversation of what would a truly sustainable Walmart be. Just building the odd green building isn't it. Not if they maintain this rapacious business model. They don't know. They're trying to figure it out.

When they hired Adam Wareback, I decided they really were serious. This is the youngest ever president of the Sierra Club. I know Adam. He's like me a Dave Brower alum. He is a man of integrity. And if he's working with them, they're serious. So what would it be? We don't have the answer, but I think it's time to start engaging it. Is it local ownership, local purchasing?

Companies around the world are wrestling with this. There's a new sustainability report out almost every day. I get a little service on my crackberry. And about every day, I get a new issuance, including dancing elephants. One of the things that we're doing is working with some of the world's big companies helping them figure out how do you drive sustainability into the DNA of a company? What is the DNA of a company?

So we went to a DNA diagram. If the two rails are perhaps the job of the CEO, mission, vision, values, purpose, the job of the CFO, profit, accounting, metrics, then the intervening fibers would be the business activity streams. Now let's lay it out the way an engineer might.

You've got the two rails top and bottom, and then the various activities streams through four stages of what is sustainability all the way to becoming a truly restorative company. Take a GE, an ecomagination, they've jumped out here to a leadership position in marketing and communications. There way back here in their operations and facilities management. This is not a bad definition of greenwashing.

But hypocrisy is the first step to real change. They have the opportunity to see ways to enhance their business model throughout each one of their activity streams through each of these stages of becoming a truly restorative company. Even Michael Porter, the guru of competitiveness at Harvard Business, managers must start to recognize environmental improvement as an economic and competitive opportunity. It's time to build on the underlying economic logic that links the environment resource productivity, innovation, and competitiveness.

My mentor, Dave Brower, said, what do we want the earth to be like 50 years from now. Let's do a little dreaming. Aim high. Navigators have aimed at the stars for centuries. They haven't hit one yet, but because they aimed high, they found their way. We need a new kind of leadership. And I rather like this one from Lord of the Rings.

Gandalf said the rule of no realm is mine, but all worthy things that are in peril as the world now stands, those are my care. And for my part, I shall not wholly fail if anything passes through this night that can still grow fair and bear fruit and flower again in the days to come. For I too am a Steward, did you not know?

You don't have to be the CEO of Walmart. We are all stewards. Particularly, those of us in colleges and universities. We are stewards of the future. But remember the story. It was these two fun loving unassuming hobbits who took on their shoulders the job of saving the world. I'm reminded of Billy Parish.

They were scared. They didn't know where they were going. They didn't know how they were going to get there. But in the end, all the kings and warriors and wizards could only stand by as the little people got the job done. Real leadership is extraordinary courage by ordinary people. Real leadership is up to you. This is the only place in all the universe we know of where there is life. Thank you so much for caring enough to try to save it.