Obama’s Carbon Emissions Plan is Good News for Business
As President Obama unveiled his plan to curb carbon emissions from America’s power plants this week, opposition ranged from West Virginia’s attorney general Patrick Morrisey who said the plan will “severely harm…the US economy” to Wisconsin Governor Scott Walker who labeled it “bad for business.”
The President anticipated these objections, and they are nothing new. The idea that sustainability and profit are opposing forces was introduced into business ideology in 1970 by economist Milton Friedman and has since hardened into fact in the minds of many business leaders and their policy peers, reinforced by the opinions of Wall Street analysts to whom they are beholden.
But as the President recognized, this thinking is “stale.” It has reached its sell-by date.
Those who oppose Obama’s carbon emissions plan will miss out on billions of dollars of profit that can be found in this opportunity. We’ve already seen countless companies profit from restricting their harm to the environment. In fact, nine companies—five of them American, now command a billion dollars or more in annual revenue from products or services with sustainability or social good at their core.
That’s billion with a B.
These are not alternative companies catering to the granola set. On the contrary, they include titans of American industry, past present and future. Consider:
- American icon brand General Electric, which generated $28bn from its Ecomagination line of products that save customers money and energy in 2013. For reference, Ecomagination would qualify as a Fortune 100 company if it were a standalone business, and its revenues are four times the size of Peabody Coal;
- US innovation juggernaut Nike, whose Flyknit shoe technology creates some of the brand’s highest-performing products with significantly lower carbon and waste impacts. It is estimated to be a billion dollar business line;
- Tesla, the California-based electric vehicle start-up that, against the odds, wrested control of the luxury auto market from Germany and whose 2014 sales topped $3 billion;
- America’s most successful restaurant chain in a generation, Chipotle, which sources its meat from farmers who commit to more responsible practices, uses its marketing dollars to advocate for ethical, sustainable farming. In 2014 it saw sales grow an astonishing 27.8% to top $4 billion, and
- Whole Foods, another home-grown US success story. 30% of sales are organic, and Whole Foods enjoyed 2014 sales of $14.2 Billion, as it expanded to new American cities, including Detroit.
The group of “green giants” is rounded out by Brazilian beauty brand Natura, Japanese Toyota with the Prius, Swedish home furnishing giant IKEA with its line of products for a more sustainable life at home, and consumer packaged goods multinational Unilever. They’ll be joined this year by another US retailer Target, whose Made to Matter line is set to hit a billion dollars in sales this year.
Together, the Green Giants generate over $100 billion in annual revenue from their sustainable business lines, and outperform their competitors in the stock market by 11%.
These companies represent the American ingenuity President Obama invoked. “Right now we are inventing whole new technologies, whole new industries. We’re not looking backwards, we’re looking forwards,” he said.
They recognize that many of the assumptions upon which modern business is built are being overturned. Things that conventional business relies upon to be free or cheap—water, labor, emitting carbon dioxide—are becoming more expensive. Things that today are still relatively abundant—food, land, natural resources—are becoming scarce, (and therefore also more expensive). Things people once considered weird—like sharing cars and bikes instead of owning them—are fast becoming normal and even aspirational.
As the rules of business are turned on their head, assumptions and instincts honed in the old era cannot be relied upon. Green Giants have had the prescience and courage to build their businesses on these new rules, rules like the Clean Power Plan. And any business can follow their example.
“The kinds of arguments you are going to hear….are not even good business sense,” the President said.
Not any more they’re not.
Let the luddites and naysayers oppose Obama’s carbon emissions plan while the rest of us reap profits from it.
This post originally appeared on Triple Pundit.