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March 19, 2010
A Corporate CEO Speaks Out on Climate Change
    by Robert Kropp

Gary Hirshberg, CEO of Stonyfield Farm, talks with SocialFunds.com about the business case for climate change legislation and the competitive danger of not acting quickly enough. Second of a two-part series.


A key strategy of We Can Lead's recently completed Race for American Jobs & Clean Energy Leadership campaign was an emphasis on the economic benefits of effective climate change legislation. The scientific case for adaptation is indisputable, but the message that innovation in renewable energy is good for business has been obscured by the extremely well-funded opposition of the US Chamber of Commerce.

The Race for American Jobs campaign focused its efforts on the business case for climate change legislation, bringing in such major companies as Nike to illustrate that corporate support for legislation is increasingly widespread, despite the Chamber's expensive lobbying efforts against it. Not only will effective legislation lead to investment in clean energy that will in turn yield such economic benefits as the creation of up to two million jobs; the failure to act decisively will find the US once again reliant upon foreign sources for its energy, this time in a low-carbon economy in which such a scenario could have been avoided.

A long-time vocal advocate for the economic benefits of climate change adaptation is Gary Hirshberg, the CEO of Stonyfield Farm, a yogurt producer based in Londonderry, New Hampshire. Hirshberg studied climatology while in college, and told SocialFunds.com, "I come out of a science background, but nowadays I don't even talk about the science. I talk about the economics, because it's so patently obvious."

SocialFunds.com spoke with Hirshberg about the economic benefits of reducing his company's climate footprint, as well as the opposition of the Chamber to effective legislation and the danger to the US economy of a failure to act decisively.

"We have been able to save $7.4 million based on investment in reducing our climate footprint," Hirshberg said. "The number is probably bigger, but because the first order of business of adversaries and skeptics will be to try to challenge it, we only report savings that we can concretely and tangibly show."

He continued, "What it represents for us is forty jobs, or one-tenth of my payroll. This is not an ethical or moral discussion we're having, although I can talk about the moral imperative. It should suffice to say that I've saved and made money."

A third of those savings came from the reduction of greenhouse gas (GHG) emissions in the transport of the company's products, through such innovations as shipment by rail and elimination of less-than-truckload (LTL) shipments.

Hirshberg pointed to Stonyfield's partnership with Group Danone as another example of the business case for emissions reduction.

"Stonyfield created a carbon reduction tool back in the nineties, and Danone took our tool and made it more widely applicable," Hirshberg said. "Now they've made it mandatory that all their managers around the world demonstrate annual reductions."

"The point is, why would a $23 billion company do that?" he asked. "It's a global recession, milk prices are once again going through the roof, people's spending patterns have dropped, so why would they add to the burden of their general managers? The simple answer is that it's the right thing to do, but the fact is it's the profitable thing to do."

The conversation turned to the opposition of the Chamber to meaningful climate change legislation.

"The thing with the Chamber is something I've run into my whole business career," Hirshberg said. "When you look at its position on climate, you recognize that change is always scary. But what the Chamber is most fearful of is that there are going to have to be new practices; or worse yet, a tax."

"What we have here is a situation where they're just not thinking," he continued. "What Stonyfield has proven with our efficiency savings and our compounded annual growth rate is that consumers want to do the right thing. Our customers, like Walmart and Whole Foods, reward us for doing the right thing."

"I don't think the Chamber's position is a widely held view," Hirshberg said. Addressing the competitive stakes, he said, "The real crime of the Chamber's position is that the rest of the world is not questioning whether or not to move forward on climate. The US is home to only one of the top five wind turbine manufacturers, and one of the top ten solar panel producers."

"We're not only losing the race," he continued. "You don't have to fall too far behind before you never catch up."

Hirshberg cited studies that compared spending in the US on clean energy with that in China.

"This year, we're spending $2.5 billion on clean energy," he said. "China is spending $9 billion a month." According to Energy Secretary Steven Chu, China expects to gain 150,000 jobs from green energy within the next decade.

"Everyone's marveling at China's success, but we're not going to be marveling when we're a second-rate power and if you want a job you have to move over there," Hirshberg said. "There is such urgency here."

Given the urgent need for climate change legislation that puts a price on carbon and encourages innovation and investment, what does Hirshberg think such legislation should include?

"I'd love to see a carbon tax," Hirshberg said. "It would stimulate local development and incentivize a lot of investment.'

Acknowledging that passage of a carbon tax is unlikely, Hirshberg expressed reservations about a cap-and-trade program, comparing the potential loopholes in it to loopholes in financial laws that led to the economic downturn.

"What I know we need is a price on carbon," Hirshberg said. "I think a cap-and-dividend program is the most feasible solution."

A cap-and-dividend program puts a cap on carbon emissions as they enter the economy. The first sellers of oil, coal, and natural gas will be required to buy permits equal to the carbon content of their fuels. The money raised by the sale of the permits is divided into equal shares and distributed to all Americans. As the price of carbon rises, so do the dividends.

"Whatever we do has to be a bipartisan solution," Hirshberg said. "It's important for us to develop a strategy that fits our economic situation. But we better do it quickly."

 

 
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