Sustainability is Sound Strategy, be it Finance or Energy

Two common threads connected my conversations with friends and family across the world in recent weeks.  First, the fallout from the financial crisis, and the second, the future of cleantech.

Regarding the financial crisis, everyone expressed incredulity at the scale of the implosion, wondered how long before things get better, and almost everyone blamed the financial industry’s greed. But only a couple of friends, in my opinion, actually got the fundamental reason for this mess right: our collective myopia and tunnel vision.

There is nothing wrong with greed. After all, to be human is to be greedy. However, simply for self-preservation, we needed to consider our actions in the context of the larger ecosystem and in the longer term. Such a consideration of “sustainability” of their actions would have kept consumers from buying over-sized houses and banks from trading AAA-branded subprime mortgage bundles. But, alas, that was not to be.

The second common topic of discussion was the future of cleantech. The questions asked were varied: Will solar survive? Can developing countries like India afford cleantech in this economic downturn? With oil so cheap, why stress the industry with tighter energy efficiency standards?

The answer is simple: Sustainability is sound strategy, be it in finance or energy. If we ignore the long-term, ecosystem-wide consequences of how we generate and use energy today, we will be guilty of myopia and tunnel vision, not different from what precipitated this financial crisis. Only, the consequences will be far worse and our ability to correct almost none.

For we are faced with two undeniable trends (despite current economic hardships): 1. Growing energy demand driven by developing economies and urbanization; 2. Climate change as a consequence of green house gas emissions.

Hence, a “sustainable” approach to energy must incorporate two ideas: Energy Efficiency and Clean Energy. Many argue that we already have the know-how to do the former, and few dispute the necessity to continue innovating for the latter. In 2008, even the oil industry came on board with this reality.

So cleantech is here to stay. And nations and businesses that embrace it will be the ones that come out of this downturn stronger and ready to compete in the long-term.