Verdopilis: Could Big Business Be the Answer?

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Like many of the people we've come into contact with, TH believes that Design can save the world. At Verdopolis, that remains true, but even more so, people believe that big business can save the world. We know this sounds a bit bizarre, but they just might be right.

An overriding theme of yesterday's speeches and panels was the message that sustainability must start in the private sector. (Which may explain the suits and the high ticket price.) We'll leave alone for a moment the fact that this was passed down to us primarily by leaders of European corporations, and move on to what that means. If the ideas of sustainability are to gain steam, then they need capital behind them. And who's got the capital? The private sector...

Image courtesy of Tomas Loewy. Thank you Tomas!

Waiting around for the government (especially in America) to regulate to the degree necessary could really put us in a tight spot. If the private sector leads, however, then the ideas become increasingly available to the general public. This is as true for renewable energy sources like wind power as it is for low-VOC paint becoming available at Home Depot.

It's tricky, of course, because these ideas are slowly becoming embraced by the aforementioned Europeans, but could corporate social responsibility catch on in the U.S. where pure capitalism (some might even say greed) rules the day? Well, if the insurance companies catch wind of the long term effects of climate change, it just might. Here's why: Climate change is going to have a major effect on how companies do business because, for one thing, intense regulation is inevitable, meaning that greenhouse gas output will eventually come to bite corporations in the ass. If the insurance companies and the banks realize this, even if the regulations aren't in place yet, then they're going to seriously consider which companies have sustainable strategies and are most viable in the long term. Sustainability, they argue, is a business, or at least a major aspect of it.

Those with more sustainable plans in the long term—who will thus suffer less regulation, will be more profitable, and will create safer working environments and leave precious (and expensive) ecosystems intact—are a safer bet. And safer equals cheaper insurance and better loans. This is, of course, a highly simplified version on what goes on behind closed board room doors, but the point is there's a lot of money involved here, and companies like Swiss Re, an major European insurer who also happens to be a strong supporter of sustainable values for both moral and, yeah, financial reasons, are way ahead of the curve.

On a more plebian level, life insurance is another area that could be significantly and quickly impacted. Chris Walker, Director of Greenhouse Gas Risk Solutions at Swiss Re (an American, who Verdopolis director Leslie Hoffman calls "Mr. Global Climate Change") showed how morbidity rates can have an impact, by citing the heat wave that took the lives of so many in France in the summer of 2003, which raised flags about climate change. Likewise, changes in the environment or the environmental health of buildings or cities (think of downtown Manhattan for a second) could determine various life insurance risks and rates.

Unfortunately, at the consumer level, "insurance companies tend to be more reactionary than actionary," said Walker, meaning that concerning consumer market signals, we probably won't see things like using hybrid cars translating into reduced rates at Geico, but if everyone in your community used a hybrid, you might be in luck for cheaper health insurance, eventually. Energy efficient homes, on the other hand, could see a break soon.

In the U.K., where, according to Walker, about one quarter of all big business is part of the insurance industry, this trend is picking up speed. His company, in fact, just insured the first of several wind farms it will work with. But listening to these hopeful European leaders speak about sustainability as a business itself, one had to wonder, does the U.S. have a strategy? And will we ever understand this concept of corporate and social responsibility? The audience thought the idea seemed bleak—laughable even. Never thought we'd say this, but let's hope the insurance companies catch on. In the meantime, speak with your dollars—demanding from the consumer side of things sure can't hurt. ::Verdopolis [by MO]