Meet the Oddball Entrepreneurs Who Invented Green Businesses

 
 
New Book: Historians have hardly noticed the fringe-of-society entrepreneurs who gave birth to the green business movement starting in the 19th century. In a new book, Profits and Sustainability: A History of Green Entrepreneurship, Geoffrey Jones chronicles the pioneers of healthy food, alternative energy, and alternative living.
  • Author Interview

The Pioneers Who Built Green Businesses

Interview by Sean Silverthorne

Innovators often arrive from the edges of society, where it is safe to focus on ideas that might seem odd to the mainstream. That is where Harvard Business School historian Geoffrey Jones found many of the subjects of a new book, Profits and Sustainability: A History of Green Entrepreneurship, about the pioneers of green businesses. Jones details the backgrounds of "extraordinary and often eccentric men and women" who created businesses around the idea of a sustainable planet, going back to almost the middle of the 19th century. We asked Jones, the Isidor Straus Professor of Business History, about the book, which was published yesterday.

Sean Silverthorne: For the most part, the stories in this book focus on individual entrepreneurs rather than corporate environmentalism. Why?

Geoffrey Jones: The story of corporate environmentalism in recent decades is one of large, polluting corporations trying to become more sustainable. It has either been praised as a source of hope, or condemned by writers like Naomi Klein as a sham. I wanted to look instead at an almost entirely neglected set of visionary entrepreneurs, who created businesses from the start which aimed at building a more sustainable world.

These green entrepreneurs struck me as remarkable examples of the power of entrepreneurial imagination to change the world, and as such more interesting than incremental clean-up acts. They stood apart from the norms of their eras. Most environmentalists have always seen capitalism as primarily a despoiler of the natural environment, which is historically largely true. Meanwhile, most businesses have cared little for their environmental impact, because there has been no way to incorporate environmental externalities in their bottom lines, at least until very recently.

The green entrepreneurs in this book broke with multiple conventions, then. Not surprisingly, they were often treated by contemporaries as crazy. It turns out that yesterday’s crazies are the historical origins of the sustainable world of the future.

Silverthorne: We think of green businesses as something of the present time, but your examples and research date back as far as 19th century. What were some of the environmental problems back then that entrepreneurs were trying to solve? And what role did they have in exposing problems to the public?

Jones: The environmental costs of industrialization and urbanization were already identified in the 19th century as pollution blanketed cities and whole species of animals, like the American buffalo, were hunted to extinction. These visible costs prompted the first conservationist movements, and the creation of national parks, beginning with Yellowstone in 1872. The early green entrepreneurs in this book identified less visible, but equally or even more pressing issues. Some were concerned about the cost to human health and the health of the soil, of chemical fertilizers and industrial farming. Their endeavors laid the basis for today’s organic food industry. Others were concerned about the sustainability of rural communities which lacked access to electricity. They laid the basis for today’s wind and solar energy industries before World War I.

Over the course of the following century, green entrepreneurs identified the mounting environmental challenges that the world faced: how to recycle the mountains of waste created by industrial societies, how to build buildings and cities which did not consume vast amounts of energy and emit fewer greenhouse gases, how to create a financial system which supported sustainability rather than functioned to undermine it. They found solutions in for-profit businesses which pioneered new technologies and ways of doing business.

Silverthorne: I’m interested in how you researched the book. Many of the entrepreneurs you write about operated at the margins of society. Were there particular difficulties in doing research in this area that you had to overcome?

Jones: Researching the book was not a straightforward matter. There were no datasets to explore from the comfort of my office, nor large corporate or government archives to consult. The research was more like a detective story as I uncovered the names of long-forgotten pioneers and innovators, and searched for patterns. I interviewed entrepreneurs around the world to uncover many of the details of what had happened in recent decades. It was inspirational to hear the untold stories of the men and women who created organic food businesses in Denmark and Turkey, pioneered waste recycling and socially responsible investing in Japan, social banking in Britain, eco-tourism in Costa Rica and the United States, sustainable architecture in Canada and New Zealand, and so on. For earlier periods, I used many memoirs and autobiographies which entrepreneurs had written, and other unconventional stories. I also engaged with materials written in other languages, particularly in German and Scandinavian languages, which were largely unknown to English-speakers.

Silverthorne: Is this a good time to be a green entrepreneur?

Jones: I think the answer is mixed. There is far greater awareness of environmental challenges than 30 years ago. There are subsidies and tax breaks, and a consumer base of people who want to install solar panels on their roofs, stay in eco-resorts, recycle their waste, and so on. Yet American consumers, at least, are still more value-driven than values-driven. The willingness to pay more to be green is not widespread.

There is also a lot of confusion about what sustainability really means. The growth of corporate environmentalism has spread the rhetoric of greenness throughout the business world, but this is not a wholly positive development. Today we are awash with what the environmentalist and green entrepreneur Paul Hawken has called “meaningless eco-speak.” The boundaries of the concept of sustainability have become so wide that any corporation can claim to be engaged in it. This development has added to the obstacles faced by authentic green entrepreneurs in trying to persuade consumers to pay more for sustainable goods and services.

Silverthorne: What are the lessons here not only for entrepreneurs who want to create green businesses, but also to existing businesses that want to get greener?

Jones: A primary lesson of history is that sustainability is costly. It has become fashionable to say that it can be profitable to be sustainable, but I see this as more of an aspiration than a reality in most cases. In every industry there are established conventional incumbents which deliver existing products and services at lower prices. Building a sustainable business, or greening an existing dirty one, involves explaining to consumers, clients and policy-makers why they should pay more for products and services which already exist.

Green entrepreneurs need to sell not only their brands and products, but also their ideas. This is time-intensive and costly, not least because the concept of sustainability is not straightforward. In many cases in the past, and this will be true also going forward, new technologies have to be developed to reduce the cost differential for conventional products. This is also a lengthy process, as breakthrough technologies are few and far between..

Yet the lessons from this study are not just about how difficult sustainability is. Many of the entrepreneurs discussed in this book may not have gotten very rich, but they made a positive difference to the world. Often dismissed as marginal and eccentric figures, they laid the basis of the renewable energy, organic food, eco-tourism, sustainable finance industries of today. They pioneered new ways of thinking about sustainability. There has never been a greater need for a new generation of such entrepreneurs.

Silverthorne: What was your take on America’s withdrawal from the Paris climate agreement? Will this have any effect on building green businesses?

Jones: Curiously, history provides some solace for those distressed about the Trump Administration’s withdrawal from the Paris climate agreement. As my book recounts, the global wind and solar industry came of age in California during the first half of the 1980s. Although legislation passed under President Jimmy Carter laid the basis for the new era, it was actions of Governor Jerry Brown in California, advised by the ecological architect Sim Van der Ryn and former Jesuit Tyrone Cashman, which enabled the scaling of the renewable energy industry. They collaborated with pioneering wind and solar energy entrepreneurs.

Today, individual states like California and New York, cities like Boston, and firms can help the United States meet its Paris targets, regardless of the exit from the Paris agreement. The Administration’s proposed cuts to the budgets of the Environmental Protection Agency and research on clean technologies are more damaging than leaving the Paris agreement, which in any case is just a voluntary set of guidelines. However, the symbolic damage is enormous. The government of the world’s largest economy, and second-largest carbon emitter, has now declared that the science behind human-induced climate change is probably false, and even if it isn’t false, it will be ignored in favor of promoting American wealth regardless of any environmental impact.

This ignorant and ethically-challenged position makes it so much harder for the leaders of other countries, especially emerging markets with many people still in poverty, to make the case for making environmental protection a strategic priority. Insofar as US-based businesses hold competitive positions in sustainable industries and technologies, they now face the handicap that their home country is globally perceived as, at best, a bad joke in environmental matters, and at worse a malign force. This will provide a welcome bonus to businesses based in countries including China and Germany, whose governments are now assuming leadership in global sustainability.

  • Book Excerpt

Motivations

from: Profits and Sustainability: A History of Green Entrepreneurship
by Geoffrey Jones

In terms of intent, there were two distinct types of entrepreneurs who became involved in green businesses: green entrepreneurs and conventional entrepreneurs. This distinction does not imply a value judgment, still less a judgment on outcomes. Nor does it imply that either category was homogeneous. In fact, both the green and conventional entrepreneurs were quite varied in their characteristics and motivations.

Both personal and institutional explanations shaped the green entrepreneurs who developed many of the industries discussed in this book. Among the former, personal life events were important factors in their motivation. Health concerns, often experienced very personally by being ill or seeing family ill, were very important as a motivation, especially for the entrepreneurs in organic food. John Harvey Kellogg was a doctor. Benedict Lust contracted tuberculosis on his first visit to the United States. Rudolf Steiner did his foundational work with Dr. Ita Wegman on the treatment of illness by natural methods. Jerome Rodale was very sick as a child, while Mo Siegel’s mother died when he was two. The young Ian McHarg’s illness at Harvard and his difficult recovery in the 1950s revealed to him the power of nature to heal. It was not only entrepreneurs for whom sickness seems to have been a formative influence. Rachel Carson emphasized the impact of DDT on human health, and she was terminally ill with cancer as she wrote Silent Spring.

Early encounters with nature proved important, too. John Elkington recalled the formative influence of a night time encounter with baby eels. Joan Bavaria grew up in rural Massachusetts, loved nature and animals, and was an avid gardener. Elper Wood’s walk along the Appalachian Trail motivated her interest in nature.

In a significant number of cases, religion provided an important influence in the motivation of green entrepreneurs. Religious belief was important in generating both a sense of responsibility for the planet and encouraging engagement in ventures which were not likely to yield enormous profits in the short run. The long list of Christians, of many denominations, among the entrepreneurs included John Harvey Kellogg, Wilhelm Barkhoff, Thomas Harttung, Claus Hipp, Hans Müller, and Mizue Tsukushi. There were also Muslims such as Ibrahim Abouleish, Jews such as Arnold Goldman, and Buddhists such as Kazuo Inamori. A number of other esoteric philosophies, as in the case of Mo Siegel and his Urantia book, were influential in individual cases.

More broadly anthroposophy became a surprisingly resilient inspiration for green entrepreneurship. This was most evident in organic agriculture and food retailing, and natural medicine, where biodynamic concepts exercised a world- wide influence. Followers supplied data to help Rachel Carson write Silent Spring, made deserts bloom in Egypt, delivered food baskets to households in Copenhagen, and much more. However, the impact of Steiner was uniquely broad, inspiring over the decades architects, bankers, and educators. Biodynamists pioneered the idea of certification and its rigorous auditing. They founded a distinct set of firms, among them Sekem, Triodis, and Weleda, which proved durable manifestations of alternative means of conducting business.

A distinct subset of green entrepreneurs were engineers, or even tinkerers, who believed in the potential of technical innovation either to achieve goals they had set for religious or social reasons, or simply because they were fascinated or obsessed by machines. They were prominent among the early wind and solar entrepreneurs, such as Paul la Cour and Frank Shuman onwards. Their later incarnations included Elliot Berman and Ishaq Shahryar, who perceived solar energy as a way to tackle poverty in the developing world. Recycling and composting were another category where figures such as Raoul Heinrich and Annie Francé, Kurt Gerson, Kai Petersen, and Arthur Schurig, were among those infuriated by waste and who sought to capture greater value from it through machines.

Both geographical and temporal context also mattered in shaping entrepreneurial consciousness. Although the importance of individual agency has been emphasized here, this does not mean that entrepreneurs should be seen as lone heroes acting in a vacuum. They perceived opportunities within distinct institutional and geographical contexts.

Environmental commitments and green entrepreneurship arose from concerns about the impact of industrialization on the health of people and the planet. It was not surprising, as a result, that until recently green entrepreneurship was concentrated in the industrialized regions of northwest Europe and the United States. It was here that the environmental problems caused by early urbanization and pollution first arose, and where chemical fertilizers were employed to feed urban populations. This was where consumers lived who had sufficient income to be able to think beyond how to survive the next day. Germany and the United States appear particularly well-represented in the history of green entrepreneurship told in this book, but this may be primarily because it was slightly easier to grow businesses in those countries. Certainly we have seen significant entrepreneurial stories from elsewhere, including Britain, Denmark, and France in Europe, and Egypt and Japan beyond the West. From the 1980s onward, values-driven green entrepreneurs arose far more widely around the world than in the past, as the environmental costs of economic growth and prosperity became evident, as they had earlier in the West. They included entrepreneurs in beauty in Brazil, eco-tourism in Costa Rica, ecological architecture in Malaysia, and renewable energy in China.

Chronology mattered also as a formative influence on green entrepreneur- ship. The 1930s and the years following the end of World War II were not an auspicious moment for green businesses. They remained wholly at the mar- gins of societies. The countercultural and social movements seen in the 1960s were a different matter. Many new businesses emerged out of these settings, even if the businesses initially remained small. However, the relationship between engagement in social movements and green business was not always straightforward. A number of the influential figures in the emergence of Costa Rican eco-tourism, for example, had countercultural and environmentalist backgrounds in California. Insofar as the pioneering Danish wind start-ups of the 1970s were influenced by social movements in Denmark, it was in California that they achieved scale.

The intention of the conventional entrepreneurs who were preeminent in early natural tourism, as well as waste collection and disposal, was more straightforward than that of the green entrepreneurs in that making profits and reducing environmental impact were broadly aligned. This was the case for the owners and managers of railroad companies and hotels who opened up the western United States for nature tourism in the nineteenth century, although the desire for profitability did not rule out some explicit conservation motives. Indeed, it is evident that individuals sometimes traveled along a spectrum from conventional to greener. This was true of foreign hunters in East Africa, such as Frederick Selous and Edward North Buxton, who transitioned from killing animals to photographing them.

The growth of corporate environmentalism after 1980 greatly expanded the role of conventional firms in sustainability far beyond waste and tourism. Large global corporations issued sustainability reports. Chief executives assumed the mantle of visionary. The context had again changed with the rise in the priority of environmental concerns in societies and their governments, resulting in both the growth in the number of green consumers and the advent of government policies to support greener businesses as well as to regulate bad practices. NGOs now both scrutinized large corporations and sought alliances with them. The broadening of the concept of sustainability beginning with the Brundtland Commission in 1987 was important in shaping this new context, as it made it more plausible that large corporations could be seen as environmentally friendly. The growth of certification and other schemes provided metrics which enabled corporations to demonstrate their environmental credentials ... it was now profitable to be seen as sustainable.

Excerpted with permission from Profits and Sustainability: A History of Green Entrepreneurship by Geoffrey Jones, published by Oxford University press. Copyright © 2017 All rights reserved.

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