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BRAINTRUST

Thought Leaders of the Emerging Regenerative Economy

Bridge imagery is used across this website to show what we as an organization aspire to be — a conduit between the old and new economy. Let’s cross over the bridge to the Regenerative Economy together.
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SIMON RICH

Capital Institute Braintrust Series Simon Rich

Simon Rich sees “the evolution of culture” moving in a positive direction.

Over the course of his fifteen-year tenure as a senior executive with the Louis Dreyfus Group, Simon Rich had an opportunity to observe a troubling trend firsthand–the increasingly unsustainable dependence of the global agricultural sector on fossil fuels coupled with the inevitable depletion of global petroleum reserves. Louis Dreyfus holds a major position in global oil seeds, cereals, cotton and orange juice processing and merchandising, and is active in the global petroleum, natural gas, and electricity sectors as both a producer and merchant. As a matter of course, the company monitors global supply and demand for energy and foodstuffs on virtually a real-time basis.  Global food prices and the price of natural gas and oil have been ever more closely correlated in an era when petroleum products have become a critical component of food production and transport.  But in the late 1990s, that correlation became a heightened cause for concern as energy analysts throughout the world and within Louis Dreyfus began to warn of the phenomenon of peak oil.
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As a founding member of the board of the North Carolina Chapter of the Nature Conservancy in the 1970s most of Rich’s early efforts as an environmental advocate had focused on land conservancy. But beginning in the late 1990s, and after joining the board of advisors of Duke University’s Nicholas School of the Environment, he became aware of the unsustainable trends in every sector of the global economy as it expanded and stressed the ecosphere. In 2002 Rich left the Louis Dreyfus Group to pursue activities centered around his growing desire to participate in the shaping of a more sustainable economy.

In that year, The Nicholas School of the Environment approached Rich to teach a class on energy and the environment. To prepare himself, he traveled around the country, meeting with many of the leaders and thinkers of the sustainability movement. “I believe my access to these individuals was aided by their basic curiosity as to why someone with my background was asking to meet with them,” Rich maintains. “As I educated myself my thoughts and ideas started coming together, and the severity of our problems became more and more evident to me.” Rich notes that the preparation for teaching his first year of classes and “the continual demands of my students as they sought to understand the complexity of the problems we faced” motivated him and to pursue an even more vigorous quest for answers.

Rich’s environmental activism now extends in many directions beyond the academy, although primarily in his home state of North Carolina. He is a member and the past chairman of the North Carolina Environmental Defense Fund Board, and a member and past chairman of The Center for Environmental Farming Systems, the largest sustainable agriculture program in the United States.

Today much of his time is spent crafting a new Comprehensive Energy Plan for North Carolina, an initiative of Governor Beverly Perdue, which was enabled by an act of the North Carolina legislature. Rich reports that Governor Perdue’s receptivity to sustainability initiatives has provided fertile ground for progressive policymaking in the state at a time when the Obama administration’s environmental record has been for the most part disappointing. “Everything is happening at the state level now,” he observes.

The Governor’s Energy Policy Council (Rich was appointed a member of the council in 2009 and currently chairs its Energy Efficiency Committee) has been charged with creating the Comprehensive Energy Plan, taking into consideration energy reliability and cost, job creation, and carbon reduction. North Carolina is the first Southeastern state to legislate a renewable energy and efficiency portfolio standard. (The state’s REPS requires that by 2020, 12.5 percent of the its electric utilities’ retail sales must come from a combination of renewable energy and energy saving measures.) The effort to create an REPS in the state commenced in 2006 and culminated in the passage of legislation in 2007. The work of the newly created Energy Policy Council will build upon this groundbreaking legislation. “It was very progressive notion to begin to add carbon reduction to the whole energy program,” Simon notes.

The whole issue faded from our national consciousness and now our global economy is “overshooting” the capacity of the ecosphere in every possible area. We must find ways to live on this planet within the bounds of the natural laws that govern the biosphere. This will require a new economic model.”

“The first step for us in North Carolina and nationally is to push energy efficiency to its maximum,” says Rich. “Most of the studies say that we can reduce energy usage by 20 to 25 percent by efficiency measures alone.” But even with that reduction we will still be too dependent on fossil fuels, he reports. “From a climate change perspective we need to replace coal completely as a source of fuel,” he elaborates. “So the question is what is the lowest cost alternative and can we make the changes necessary in an economic depression? Right now it doesn’t seem that we will be able to muster the political wherewithal on a national level. Fortunately on a state level lawmakers are not as influenced by special interest money. And here in North Carolina people are concerned about climate change related issues like sea level rise so the motivation is high.”

Simon now also serves by appointment of the Governor to the North Carolina Economic Development Board, chairing its Innovation, Technology and Workforce Committee and the North Carolina Innovation Council. “We are trying to make North Carolina a place that attracts and retains creativity,” he reports. “We have a phenomenal university system and we want to encourage graduates to stay in the state.”

Rich is concerned that the United States may never regain its cutting-edge position as a clean technology innovator, suffering as it does from a leadership vacuum that originated with the Bush administration and has continued under Obama’s. Still, he insists, he is fundamentally optimist about the country’s future. Although he agrees with Fareed Zakaria’s premise, articulated in The Post-American World, that the United States is destined to cede its position as global economic leader to China, he notes that he is not so sure this is such a bad thing. Indeed he is witnessing a shift in values and priorities among his students and the young adult workforce. “I see this generation as being more ‘highly developed’ than those that came before them,” Rich reports. “If you think of Maslow’s ‘hierarchy of needs,’ this generation is closer to the pinnacle of that hierarchy in terms of its sense of social justice, and its attunement to environmental and health care issues. I see the evolution of culture going on in this positive direction, so I am hopeful.”

As he speaks to various audiences on the challenges facing the global economy, Rich tends to focus on four basic areas where be believes transformative change will be critical. The first shift required will be in the perspectives of our governmental, academic and environmental leaders. Campaign finance reform will be a priority to enable a separation of policymaking from special interests, he maintains. Educational leaders must also break their ties with “big money” and become more supportive of the technological research required to free our economy from fossil fuel dependency. Referencing “The Death of Environmentalism,” a report by Michael Shellenberger and Ted Nordhaus that calls on the current generation of environmentalists to communicate a bolder, strategic vision and forge more effective political alliances, Rich notes that today’s environmental leaders need to return to their movement’s roots.

The second required shift must be a “contextual” one, says Rich. Classical economic theory needs to be more broadly challenged; GAAP accounting must be reformed to internalize what are now the external costs of doing business; and the “commons” of air, ground water and oceans must be fairly valued. The term “ecosystem services,” he claims, “must become a line item on every company’s balance sheet and income statement.” A broader appreciation of regulation and taxation as critical tools for redirecting our financial and economic systems onto more sustainable pathways will also be key. The third challenge will be to transform our “linear,” “use it and dump it” industrial processes into more “circular,” “design for reuse” systems, Rich maintains.

The fourth prerequisite is what he calls “an authorizing focus.” “It is only going to be through nationally focused policies that we can move forward,” says Rich. “Properly functioning markets allocate resources efficiently but they cannot determine sustainable scale and they must be intelligently regulated. That can be achieved only through effective public policy.”

Rich nonetheless acknowledges, that “no matter how much we innovate,” we are going to bump up against “the limits to growth.” “In the 1970s the Club of Rome warned we were reaching the limits to our growth as the planet could not sustain the extraction and dumping which were endemic to our culture,” he relates. “Unfortunately the warning seemed without basis in the 1970s and the western economies experienced unprecedented growth over the next 40 years. The whole issue faded from our national consciousness and now our global economy is “overshooting” the capacity of the ecosphere in every possible area. We must find ways to live on this planet within the bounds of the natural laws that govern the biosphere. This will require a new economic model.”—Susan Arterian Chang is Director of Capital Institute’s Field Guide to Investing in a Regenerative Economy Project.