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Good business

Richard Branson

Founder and Chairman, the Virgin Group

Protecting our natural resources is one of the biggest entrepreneurial opportunities of our lifetimes. We have the technology to realise it. We now need the right government policies to put the capital in place to build a new economy, one that puts people and the planet ahead of business as usual and creates a more equitable way of life in harmony with the planet.

So far business, or capitalism, for the most part, has been a means of making money. How it has been made has not been as important as the end result. One of the most devastating theories of the 1970s was that — no matter what it took to achieve it — the primary purpose of business was to maximise value for its shareholders. This led to a variety of social ills where businesses pollute, discard employees at the drop of a hat or create unsustainable short-term gains.

Capitalism has created economic growth and brought many benefits, but at a cost not reflected in the balance sheet. Business as usual is wrecking our planet. Resources are being used up. The air, the sea and the land are heavily polluted. The poor are getting poorer. Many are dying of starvation, or because they cannot afford life saving medicine. Nearly half of the world’s population lives on less than $2 a day and two out of three of these people have no access to drinking water.

The short-term focus on profit has driven most businesses to forget about their important long term role in taking care of people and the planet. All over the world people are demanding that this changes — as we’ve seen in the “occupy” movements.

My new book Screw Business as Usual (Virgin £12.99) tells the story of a seven year journey. When it began, I thought I was doing reasonably well as an entrepreneur and as a caring human being. My business life was running

smoothly and my personal life was very happy. But as I grew older it seemed that I was not making a big enough difference, particularly given my incredible good fortune, and I realised that I hadn’t even begun to scratch the surface of what needed to be done to help ensure the survival of the planet. I was also very aware that there was too much poverty in the world. I had always wanted Virgin to be a strong role model of social entrepreneurship, but now I knew we would have to do more to help drive change and get everyone across all our businesses to be part of it.

My journey started in earnest after Al Gore turned up at my house in London. He presented a bleak choice. Cut all carbon emissions and keep the world’s temperatures within a safe range and have a chance of averting a global catastrophe. Or do nothing and watch as the world warms up and sea levels rise. My first thought was to look for entrepreneurial ways to tackle the problem. Maybe I could make a grand gesture that could be both helpful in itself and stimulate others to follow. So I pledged that any dividends the Virgin Group took from our airlines or train businesses over the next ten years would be invested in renewable fuels — and particularly in trying to find an alternative to jet fuel.

I first checked out ethanol, only to learn it was not a good idea for planes as it freezes at 5,000 metres! So we have invested in scientists who have been developing fuels that do not freeze — fuels from algae, fuels from isobutonol, even fuels from mallee eucalyptus trees: Virgin Australia is working with a company to turn the trees’ woody biomass into biocrude oil, to be refined into aviation fuel, and biochar that can be ploughed into soil to improve its quality while sequestering carbon. And last October Virgin Atlantic unveiled an even more exciting breakthrough: turning waste gases from industrial steel production into jet fuel.

These investments are all looking really positive, but to balance the Earth’s temperature we need to cut 25 gigatons from the world’s annual carbon emissions. So our foundation, Virgin Unite, set up the Carbon War Room to create a new global approach in building market-based solutions for carbon reductions, bringing together a like-minded group of international entrepreneurs to blend the power of business with capital and technology to help break down market barriers and attract funds into successful solutions.

It has identified 25 sectors that it believes can do this — including shipping, aviation, I.T., and energy efficiency in buildings — and is setting about showing them how. In shipping — which emits about a billion tonnes of carbon dioxide a year — it has rated vessels for energy efficiency on an A to G index. This will allow buyers to pick the best ships and ports to favour the cleanest vessels, providing information to allow the market to work better.

Similarly it has developed an innovative financing system for improving the energy efficiency of buildings that gives lenders almost watertight security by having the loans for double glazing, solar panels etc repaid out of slightly increased property taxes. It tested the idea in Miami and Sacramento and quickly saw $650 million committed from private enterprise to retrofit buildings, slash energy consumption,and create thousands of jobs.

Business must recognise that longterm shareholder value is more likely to be created by companies that value their employees, act as good environmental stewards and think long term. Companies that consistently manage and measure their responsible business activities have consistently outperformed their FTSE 350 peers on total shareholder return.

Business should not just avoid polluting but undo the pollution of the last couple of centuries and restore harmony with nature. It should help the less fortunate to build a way of earning a living so that they can live with dignity. And it should reinvent how we live to create a far more balanced, healthy and peaceful world. Capitalism should operate in such a socially responsible way that it will give poor people economic freedom. Then new opportunities for entrepreneurship will arise.

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