Social inclusion meets environmental sustainability – summary of Cornell event on “The Great Convergence”

In early June, under the leadership of Prof. Stuart Hart,one of the world’s leading thinkers on the implications of sustainable development and environmentalism for business strategy, the Cornell Global Forum on Sustainable Enterprise brought together some 100 people from institutions engaged in innovative approaches to clean technology and inclusive business. The topic of the event was “The Great Convergence”, i.e., the intersection of clean technology and business development at the base of the economic pyramid, with the aim of fuelling economic growth through the incubation and rapid commercialization of new, sustainable technologies.

Prof. Hart’s argumentation boils down to the following (see his 2 issue briefs The Great Convergence and Taking the Green Leap for more details):

• There is a need to facilitate a new private-sector-based approach to development, focused on creating profitable businesses that simultaneously raise the quality of life for the world's poor, respect cultural diversity, and conserve the ecological integrity of the planet for future generations. In short: social inclusion needs to converge with environmental sustainability.
• Poorer nations provide an ideal incubator for clean-energy technologies that struggle to come in at the level of mainstream markets, where incumbents often stand in the way of innovation – “it's easier for companies to enter markets where people get the worst stuff for the highest cost.” Why? It's difficult for many companies to bring these next-generation clean technologies forward on a commercial basis in established marketplaces – incumbent firms have a vested interest in protecting the status quo. Hart feels that underserved markets, where the infrastructure has not been built out, offer a clean slate and ideal testing ground for companies to develop "disruptive" clean technologies. A new solar infrastructure, for instance, would disrupt the coal mining industry and coal-fired power plants.
• On his list of emerging and disruptive technologies that could succeed in emerging markets: renewable energy, distributed generation, point-of-use water treatment, biomimicry, biomaterials, sustainable agriculture, ICT - especially wireless technologies, and nanotechnology. By driving innovation from the underserved spaces at the base of the economic pyramid, companies can avoid the inertia, stranded assets, and customer un-learning problems they face in developed markets.

On the issue of the intersection of clean technology and business development, Hart argues that there are 2 ways to implement clean technology initiatives:

• Top down (“green giant”) – solar farms, nuclear energy, and clean coal technology
  • Regulation dependent (incumbent bias, require enormous capital investment, incentives required, subject to reversal)   
  • Scale drive (get costs down, high volume, potential for big mistakes)

• Bottom-up (little green) – microturbines, point-of-use water, decentralized solar
  • Policy independent (robust as to politics, accelerated by incentives, not subject to reversal) 
  • Small is beautiful (exploit the poverty penalty, small-scale experiments, precautionary principle)
  • Starts small, grows organically, learn and adapt principle - "fail small and learn big."

The Cornell Forum also benefited from a very high-level participation in the closing roundtable discussion, which was attended by former US Vice President Al Gore, H. Fisk Johnson, chairman and CEO of S.C. Johnson (household products manufacturer), and Ratan N. Tata, the chairman of the Indian carmaker Tata Group. Some interesting remarks by the speakers:

• Mr. Gore: “The world has got to get past the long-standing division between rich countries and poor countries” Mr. Gore said, referring to the fact that little progress can be made in addressing the global climate crisis unless common cause is found between rich countries, who created the problem in becoming so, and poorer countries, which understandably resent the idea that they ought not pursue a similar, CO2-intensive path to prosperity.
• Mr. Johnson: “Incremental solutions—doing a little more of what we do already or doing it a little better—will not work before the human population uses up the earth's resources. What's required are disruptive solutions and disruptive leadership, by three different groups: businesses, consumers, and government.” He also argued that "unless the government steps in to create a national agenda around a few priorities, we won't be able to engage consumers to move quickly enough to make a difference. Setting up a greening plan is not leadership, it is getting people to act upon it.”
• Mr. Tata: "The application of these technologies at the base of the pyramid means broader markets", giving companies possibilities to commercialize at a much larger than scale than in developed countries.

More information on the Cornell Forum:

- Developing a greener third world – New York Times of 8 June 2009

- 4-minute video wrapping up the event