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Capitalism is the solution to climate change

Environmentalists around the world are pinning their hopes on the international climate talks happening now. But conference rooms in Paris are not where the action on climate change really is. Rather, it's in boardrooms around the world. Companies large and small are taking steps to protect the environment, while increasing their profits. They're motivated not by consensus or conservation, but by cold hard cash.

It's true that industry has contributed enormously to climate change and environmental degradation. Business interests have long opposed sustainable practices they believed would negatively impact profits. And the environmental community has held fast to this dynamic, holding up industry and capitalism as the enemy for decades. But the truth is that capitalism is the only force strong enough and capable of acting quickly enough to address climate change before the damage becomes irreversible.


An activist holds a sign as he participates in a protest outside the U.S. State Department August 12, 2013 in Washington.
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An activist holds a sign as he participates in a protest outside the U.S. State Department August 12, 2013 in Washington.

I've seen the kind of positive effect business can have on our environment when driven by profit and economic growth — and in one of the world's largest, dirtiest industries no less: real estate.

In 1993, I co-founded the U.S. Green Building Council (USGBC), a non-profit organization dedicated to sustainability in our built environment. USGBC created a voluntary rating system — Leadership in Energy and Environmental Design, or LEED — which allows buildings to earn credits for their sustainable features, including energy and water efficiency, indoor environmental quality, and recycled materials.

LEED has had a dramatic impact on profits and the planet. In just 15 short years, 14 billion square feet of real estate have been LEED registered and certified in more than 150 countries, including some of the most iconic buildings in the world, from the Chrysler Building in Manhattan, which reduced energy use by 21 percent, to Lincoln Financial Field, home of the Philadelphia Eagles, which has reduced its energy consumption by the equivalent of removing 41,000 cars per year from the road. Thanks to LEED, as legendary environmentalist Paul Hawken put it, "USGBC may have had a greater impact than any other single organization in the world on materials saved, toxins eliminated, greenhouse gases avoided, and human health enhanced."

But the benefits are more than just environmental — they're economic. From hospitals to schools to skyscrapers to factories, communities and companies that have invested in LEED see energy savings, cost savings, and a significant return on their investment. And green buildings haven't only been profitable for building owners, but also for the American economy at large. Green construction added $167.4 billion to the U.S. GDP from 2011 to 2014, according to a new 2015 Green Building Economic Impact Study. This year, the green building sector will employ more than 2.3 million Americans, and by 2018, it is expected to nearly double in size.


Of course, real estate isn't the only industry where economic and environmental benefits align. Today, the power of sustainability to drive profits is being quietly embraced throughout the global economy, and major companies are reaping the benefits.

Take United Technologies, the manufacturing powerhouse that ranks 45th on the Fortune 500 list. Between 2006 and 2014, UTC reduced its greenhouse gas emissions by 30 percent, and water use by 33 percent. Over those same eight years, its stock price more than doubled.

Unilever, one of the world's largest consumer-goods companies, has reduced emissions by 37 percent since 2008, and its efforts have saved the company more than 400 million euros (US$422 million).

GE's Ecomagination program has boosted its top line by $200 billion over the past decade, growing at four times the rate of the company at large. Last year, Siemens' Environmental Portfolio not only eliminated 428 million tons of CO2 emissions for its customers, but also brought in €33 billion. The list goes on and on. As Patagonia's CEO Yvon Chouinard says: "Every time we've made a decision that's right for the planet, it's made us more money."

The private sector has long been seen as the enemy of environmentalism, and for good reason. But times have changed. Today, a select number of enlightened corporations are wasting less, earning more, and proving just how profitable sustainability can be. There's no reason to keep waiting for an elusive climate agreement. Instead, let's take action to advance market-driven solutions that have the potential — and the ability — to save the planet.

It's time for environmentalists and business leaders to leverage the profit motive to achieve our common goal: a sustainable, profitable future.

Commentary by Rick Fedrizzi, CEO and founding chair, US Green Building Council. Follow him on Twitter @rickfedrizzi.