Andrew Hoffman in Katmai National Park, Alaska, in August 2007. (Courtesy Andrew Hoffman)We may soon be living in a world where nearly everyone's carbon footprint is measured and carbon dioxide emissions are rationed.

And for businesses and corporations, it's a daunting enterprise. The language of climate change regulations alone — the GWPs of the ten GHGs, the RECs, the AAUs and the VERs — is enough to make anyone faced with implementing them want to duck and cover.

Andrew Hoffman and John Woody's new business book Climate Change: What's Your Business Strategy? (Harvard Business Press) tells corporations and businesses to get out from under the desk. It's time to start counting carbon.

It also tells them where to begin. And it tells them it's really about opportunity, not risk.

The book, a slender volume written as part of Harvard's Memo to the CEO series and based on a larger work for the Pew Center on Global Climate Change, assumes the United States will soon join international climate change negotiations. Regardless of what Canadian federal and provincial governments do, the authors say, the U.S. will set the agenda, and a complicated agenda you can bet it will be.

Hoffman, a professor of sustainable enterprise at the University of Michigan, told CBCnews.ca that smart businesses have discovered a surprising ally —environmentalists. Here are some excerpts from that interview:

  Andrew Hoffman: I think that one major factor here that … is counterintuitive for many people is that environmentalists are hugely powerful today in ways that are both a problem or a nuisance for companies and also in ways that are actually a help and a solution to companies.

Companies who sit out there and say all NGOs are rabble-rousing crazies who burn down chalets in Aspen, they are just flat-out wrong. Groups like Environmental Defense Fund, NRDC, World Resources Institute — I could go down the list — are major players in the policy realm, they are major players in the business realm, they are even affecting leadership of various churches to take on climate change as a moral issue. They are out there, they're turning levers, they're changing your markets. And you can either, you know, treat them as the enemy or recognize that some of them will actually work with your company to help you become more green. And so, you know, they're not your grandfather's NGOs anymore.

CBC News: A good example in Canada is the Pembina Institute. They are oil and gas experts and work with the industry.

AH: There are plenty of very pragmatic environmentalists who really are about the economy. They're not out there to turn us back into cavemen. They're not out there as religious zealots, as the right would like us to believe.

CBC News: There are also environmental purists who are against anything that has anything to do with market mechanisms. Maybe you should write a Memo to the CEO book for them.

'They're not out there to turn us back into cavemen. They're not out there as religious zealots, as the right would like us to believe.'— Andrew Hoffman

AH: If the market doesn't get us there, we're not going to get there. And I do get frustrated when I run into some of those purists who condemn the markets, when they're wearing that polar fleece jacket and driving that hybrid and living in that building, and I think, how in the world do you think you got those things? … I shouldn't say all environmentalists, but the kind that — we talk about "dark greens" and "bright greens" now. You know that terminology?

CBC News: I've never heard that.

AH: So the dark greens are the more purist: "The market is the problem." The bright greens are saying, "The market is our social structure. It is the source of any kind of social change. We have to embrace the market to get this done."

You know, you can motivate people in two ways: dissatisfaction with the status quo, or the desirability of the desired future. And they're moving to the second, saying, "We see a better world. And let's reach out and get it."

Faking it

CBC News: As a consumer myself, I get the impression there's an incredible amount of verbiage from companies around being green and not really that much action.

AH: You can't just say companies as an entire category. There are some companies that are doing some very honest and important steps in this way, and then there are people who are green-washing it. There is no question about it. I was watching TV the other night and I saw an ad for GM. And they were advertising one of their pickup trucks with "the most fuel-efficient big block V-8 in its class." I mean, that's exactly what the ad said, which is completely ridiculous. So buyer beware is all I would say in any area. Once a company sees a market opportunity, they are going to try to exploit it.

CBC News: Do you think the companies that are splashing the word green everywhere are doing it just for marketing, for PR, or are they actually committed - do they think it's a bottom-line issue?

AH: If the market shifts, some companies will shift ahead of the curve, some will shift with the curve, and some will recognize that shifting is too painful, so they'll try and fake it.

'So be very careful if you're a company. If you think you can pull this off, get ready 'cause you're going to get whacked.'— Andrew Hoffman

There are plenty of NGOs out there willing to call you out for green-washing. You can do it, but the penalties will be high. The higher you fly, the harder you are going to fall. So be very careful if you're a company. If you think you can pull this off, get ready 'cause you're going to get whacked.

CBC News: Some auto dealers have teamed up with a carbon offset marketer so their customers can drive "carbon free" for the first year. I read that and thought, that could just make people want to drive more to use up their "free" kilometres.

AH: Ford has toyed with that idea of doing that across their fleet. Offsets is a really tricky area. I have a lot of problems with offsets. I think the analogy to indulgences in the Catholic Church is perfectly appropriate. Go ahead and sin, but just give us the money and all sins are forgiven.

The real solutions to this issue come from broader institutional change. It comes from changing that automobile that's in your driveway, changing the building you're sitting in, changing the efficiency of air or rail travel. It requires some radical changes in the institutions and the technologies and the systems of our society.

Market jitters

CBC News:Why did you think it was necessary to write the book?

AH: Well, there's a lot of concern out there in the business community. Climate change is an issue that is emerging as a policy issue and a market issue, and companies are nervous. What does it mean? How do we deal with this thing? How do we get attention inside the company and outside around this issue?

So we wanted to take the issue of climate change and bring it squarely into the area of business strategy to start to demystify it, help companies think carefully about what strategies they can develop to anticipate, be ready for, and possibly shape the form of the market shift that's about to take place.

CBC News: The examples you give [of companies reducing CO2 emissions] are of really big companies, Alcoa and Shell and so on. Can you bring it down to the level of the small business, unions and organizations?

AH: Absolutely.… What we've done here is, we've taken the lessons learned from the large companies — the companies that can take chances on new ideas, new innovations, new programs, and fail and learn from it, and optimize and get it better. And so the small companies can learn from that collective wisdom so they don't have to go through the trial and error and they can learn from it themselves. This does impact many sectors of the economy, not just corporations, and unions have been starting to think about this issue very seriously because it will change some of the issues around their constituents. For instance, in the construction industry, the area of green building is going to create opportunities for some trades, diminish them for others. New skills will need to be learned because new technologies will go into those buildings.

Left behind

CBC News: There are people who say climate change isn't real or isn't caused by humans or it's going to be good for us or why should we do anything when other countries aren't. How do you respond to them?

AH: I respond to them very simply, saying: Everything you say — I don't care. You can be completely agnostic about the science of climate change and still see it as a business issue.

The three presidential candidates that are still running have all said climate change is on their agenda. McCain just came out and said it yesterday. So you can say that the science is not conclusive, and you can sit on the sidelines with your arms crossed, and the regulations will get set without you.

'It can be a very exciting time if you're willing to jump on and try to roll up your sleeves and say 'OK, what can we do about this.' And the market will reward you.'— Andrew Hoffman

CBC News: It's not going to be easy. Reading the book, you use words like daunting and overwhelming and complicated and — it's pretty intimidating.

AH: It can be a very exciting time if you're willing to jump on and try to roll up your sleeves and say, 'OK, what can we do about this.' And the market will reward you. I mean, with the price [of oil] hitting $120 a barrel, people are talking about forms of energy that were never talked about before in very, very serious ways. This isn't Popular Mechanics. The market is shifting and it's a very exciting time. So if you're in a company and you're looking at this and saying 'OK, what can we do to reduce or minimize risk?' then you're asking the wrong question. The question should be, Where is the opportunity for my company? How can I adapt to this market and develop products and services that are going to be advantaged in a carbon-constrained world? And that's exciting.

CBC News: So the risk is not doing it?

AH: The risk is not doing it. I would add also that that risk is both economic but also environmental because the reality is, if we are going to develop any real solutions to climate change, companies have to be part of that solution. They have to drive it. If they're not, there will be no solution. So it has to be a market- driven response.

CBC News: I understand there is a risk that Canadian companies that export to the U.S. will have their carbon footprint reviewed.

AH: Well, this is an issue that crosses all borders.

And more importantly, the debate has already begun on what kind of treaty we will have post-Kyoto, post 2012. And the United States did not participate, it did not ratify Kyoto, but if the United States rolls over — and I firmly believe they will — and develops regulations on reducing greenhouse gas emissions, that's going to create a lot of momentum behind what kind of [international] treaties are set in the period of 2012 and going forward. And that will affect everybody.

'With the United States poised to get on board, I think people are going to take this a heck of a lot more seriously.'— Andrew Hoffman

CBC News: This is a fairly urgent issue in your mind?

AH: You are looking at a market shift. In reality that market shift has already begun.

The days are over of standing here and pointing out the problem. We know the problem. Now we have to roll up our sleeves and find a solution.

I think that also the fact that the United States did not participate, such a major player, I think took a lot of pressure off people because they recognized that this period was a trial run. And now with the United States poised to get on board, I think people are going to take this a heck of a lot more seriously.

The game is about to change.