Fortune Global Forum 2023: From Net Zero To Net Positive
William McDonough, Chief Executive, McDonough Innovation In conversation with: Matt Heimer, FORTUNE
Transcript
00:00 Well, now our next guest wants you to know that carbon is not the enemy.
00:06 He says it's a source of life and how we use it is key, adding that fugitive carbon is
00:12 the problem that needs to be dealt with.
00:15 William McDonough is a globally recognized leader in sustainable design and development.
00:22 He is an architect, author.
00:24 He pioneered the concepts of cradle-to-cradle design and the circular economy.
00:30 He's now taking the circular economy concept one step further, stressing the importance
00:36 of the circular carbon economy.
00:40 Through his work, he advises commercial and government leaders worldwide on this concept,
00:44 as well as the importance of keeping next use in mind when designing products and facilities.
00:52 He thinks this is important messaging for everyone to understand, especially the next
00:57 generation.
00:58 Please welcome William for a conversation with Fortune Executive Editor of Features,
01:04 Matt Hymer.
01:05 Hi, everybody.
01:06 I'm William.
01:07 Thanks for staking around.
01:23 Thanks for being with us.
01:25 So we're getting to the end of day two of Fortune Global Forum, and I've already been
01:28 to two other panels where Bill McDonough has been in the audience, and someone on stage
01:33 has stopped and said, "Oh, my gosh.
01:35 Bill McDonough's here."
01:37 So if I could just say to his face, "Oh, my gosh.
01:40 Bill McDonough's here."
01:42 And as Jeff made clear to us, there's good reason for that.
01:45 I mean, I don't want to flatter you too hard, but Bill has been a pioneer in sustainable
01:50 design, almost literally wrote the rules on green buildings by helping establish LEED
01:55 certifications.
01:57 So in a sense, Bill, you have shaped the way that we, as business journalists and business
02:01 leaders and the business community, talk about climate.
02:05 But the theme of this panel is changing the narrative.
02:08 You're essentially saying the choices we're making in the language we use to talk about
02:12 the climate don't fit.
02:13 They aren't the right solution.
02:15 What should we be doing better?
02:16 What are we doing wrong?
02:17 No pressure.
02:18 Hi, everybody.
02:19 I think there are two things.
02:26 One is we're confusing the next generation with our language.
02:31 I'll give you a quick touch.
02:34 Can you imagine going home and saying to your kids, "We're designing for the end of life."
02:43 We say that.
02:45 Life cycle assessment of inanimate objects.
02:49 Very confusing.
02:51 And then we also say things like, "Oh, let's be net zero."
02:53 What does that mean?
02:57 Let's be nothing.
02:58 Yes.
02:59 Yeah, net zero.
03:00 They want to know what to do, not what not to do.
03:02 You don't say, "Go out today and be less bad."
03:07 Net zero is a negative framing.
03:08 Is that what you're saying?
03:09 Yeah.
03:10 But at the same time, net zero is this concept that we've just coalesced around as a business
03:15 community.
03:16 Not really.
03:17 Not really.
03:18 Yeah, because we had eco-efficiency.
03:19 We had efficiency, which is about being zero waste.
03:28 So that's still less.
03:29 It's still less.
03:30 Less.
03:31 Less.
03:32 Okay.
03:33 But there's nothing wrong with that.
03:34 We should be less bad.
03:35 Yeah.
03:36 But we need something additional.
03:37 That's what you're saying.
03:38 Right.
03:39 So that sets us up to talk about what you call a net positive economic model.
03:44 Right.
03:45 So can you define for the room what does a net positive economy look like?
03:50 How would you define that?
03:51 I think we have a slide, too, that we can tee up.
03:53 Yeah, it should be appearing on your screens and behind us.
03:56 So I see green.
03:57 Green is good.
03:58 Red looks bad.
03:59 Green is less bad and more good.
04:02 But what does it mean to be net positive?
04:05 The notion, if we start with this idea of being less bad in front of business people,
04:11 is that you've got a chart.
04:12 Here's zero.
04:13 And here's 100.
04:17 And we say to everybody, "Okay, we're going to be net zero."
04:20 And the chart goes down to the right, and your goal is...
04:25 And I don't know anybody in business who likes charts that go like that.
04:30 We're not trained for that.
04:34 So what we really want is to think about, let's just not be less bad.
04:38 Please be less bad.
04:39 I'm not saying don't be less bad.
04:42 But we also can have a chart that says, "Here we are today, and we're going to go here,
04:47 and we're going to be 100% fabulous.
04:49 I'm a designer.
04:51 And I'm optimistic," which means optimism and optimistic and this idea of being optimized
05:01 is a positive idea.
05:03 So it's not just minimized, optimized.
05:06 It's not just maximized.
05:07 You may be doing the wrong thing.
05:10 So it's optimized.
05:11 And so then you have this chart that goes like this.
05:14 And young people like that chart.
05:16 I'm going to go be fabulous.
05:18 And you stop and think about what Kennedy did in 1962.
05:23 He gave a speech, and he said, "We choose to go to the moon."
05:28 He said it twice.
05:29 We choose to go to the moon.
05:32 And I did NASA's space station on Earth.
05:35 So I got to know that the average age of the engineers putting Neil Armstrong on the moon
05:40 was 28.
05:41 And they did it in less than seven years after he had said, "We're going to do it in the
05:45 decade."
05:46 They did it in six years.
05:47 So if Kennedy had said, "Let's not not go to the moon," we probably would not have gotten
05:51 to the moon.
05:52 Right.
05:53 And let's take as long as it takes.
05:54 Right.
05:55 Right.
05:56 So this is a model that really sees this as building something as opposed to taking something
05:59 away.
06:00 Well, you start with inventory.
06:01 You say, "What are our choices?"
06:03 He chose to go to the moon.
06:05 Then you assess it, and you've either got good or bad.
06:08 But these are human values, good and bad.
06:12 These are not numbers.
06:14 It's not less and more.
06:16 It's good and bad.
06:17 These are just Plato values.
06:19 And then Aristotle, truth in science and number, is value creation.
06:25 And that's what business is like.
06:27 But we really have to start with our values.
06:31 What do we believe in?
06:32 And that's where the good and bad come in.
06:33 So you're first at inventory, then you sort it, and then you put it on the chart and you
06:38 go execute.
06:39 What's an example of a business right now, whether it's one you've worked with or one
06:42 you've observed, that is putting this into practice that's essentially, by being more
06:47 environmentally mindful, creating net positives, creating growth, creating something that brings
06:53 people in and feels optimistic?
06:55 Well, in our world, there's a regenerative biosphere where growth is good, and it's nature.
07:03 So regenerative biosphere.
07:06 Move toward that.
07:07 So healthy soils, ecosystems.
07:10 And then there's a circular technosphere, objects of human intention and use.
07:16 And so that's where, being more good, for example, Shaw Industries, which was bought
07:21 by Berkshire Hathaway.
07:24 So Shaw Industries, just to back up, they make household products?
07:27 They make, yeah, flooring.
07:30 And they're now the largest carpentry company in the world.
07:33 And I remember when Warren Buffett heard about what we're doing, which is designing the materials
07:37 for next use.
07:38 He said, oh, I see.
07:40 You're storing all our raw materials on the customer's floors.
07:45 Welcome to the circular economy.
07:47 So the future carpets that this company will make and sell are tied up in the carpets that
07:53 they're already putting out on the market.
07:55 And this is a business model good enough that Warren Buffett wanted to buy it and wanted
07:58 to invest in it.
07:59 And the company went from being fifth in the market to number one worldwide.
08:02 Fifth to number one.
08:03 That's really remarkable.
08:05 This chart, by the way, that we've moved to, there will not be a test on this, but it does
08:09 kind of create the idea that you, on the one hand, are reusing the products in the technosphere.
08:16 These are products that you've made that you've reused.
08:18 But there's also a biosphere element to it where you're ideally, if you're producing
08:23 waste in your production process, maybe some of that waste is becoming fertilizer or being
08:29 reused as opposed to being spewed up into the atmosphere.
08:34 What's an example of a business that's really nailing the biosphere side right?
08:38 Well, Ralph Lauren is now doing clothing based on cottons and other natural materials that
08:46 are designed with all their dyes, mordants, finishes, and so on, to be safe in the biosphere
08:51 because you are the biosphere and you're going to wear it.
08:55 And so they want you to be safe and healthy.
08:58 Think about that.
08:59 That's an example.
09:00 That makes a lot of sense.
09:02 Let's get to the carbon part of this, the circular carbon economy.
09:05 I mean, again, in the shorthand of green business, there's this sense that carbon is the thing
09:12 you want to get rid of.
09:13 I've heard a lot of people say zero carbon when they're talking about emissions reduction,
09:18 but circular carbon economy is recognizing something different about carbon, isn't it?
09:23 And that it can be the building blocks of something better.
09:28 I was encouraged to write the circular carbon economy while I was in Davos and encouraged
09:34 to meet with the energy minister of Saudi Arabia because he wanted to know where does
09:37 carbon fit in the circular economy.
09:41 And we wanted to make sure that we, you know, since China took it up and I work with them
09:45 and then took it up the World Economic Forum where I chaired it, we wanted to make sure
09:49 that they were all connected.
09:50 And it was really beautiful because if you look at those two diagrams in biosphere, technosphere,
09:57 you realize the thing in the middle was the energy that ran the system and that's carbon
10:03 today.
10:04 So where does carbon fit in the circular economy?
10:07 It's both the material and the fuel, which is amazing because we don't burn aluminum
10:13 to run the economy.
10:14 So carbon is both material and fuel.
10:17 And so if we tell our children that carbon is bad, there we go again.
10:22 So carbon is innocent.
10:25 It's beautiful.
10:26 It's part of life.
10:27 So how can you tell a child carbon is bad and then they go to school and find out everything
10:31 is carbon if it's alive.
10:33 These things don't make sense to young people.
10:36 So I wrote this for Nature Journal, "Carbon is not the enemy."
10:41 So it's really us.
10:42 And so if we look at it, there's three kinds of carbon to help us function.
10:47 One would be living carbon, which is us, and nature and growing things.
10:53 We want to have growth in business, right?
10:55 Nature and food.
10:56 Food.
10:57 And then there's durable carbon, which is products and things that have utility over
11:02 time or just sit there innocently like a mountain quietly being carbon.
11:07 And then there's this other one, and that's fugitive carbon, the escapees.
11:13 It implies criminality, which is kind of fun.
11:16 Harrison Ford running away from.
11:18 Yeah.
11:19 But anyway, the idea of fugitive carbon, it doesn't make sense because we're letting it
11:24 escape to the atmosphere where we know it's damaging, or we're making plastics and they're
11:29 getting in the ocean.
11:30 That's durable carbon fugitive.
11:33 And so these aren't goods, they're bads.
11:35 And we talk about making goods in an economy.
11:37 What if we talked about making bads?
11:39 It doesn't make sense.
11:41 It's obvious, really.
11:43 And so carbon is fugitive.
11:45 It's essentially a toxin by definition.
11:47 We do a lot of chemistry with products.
11:50 And a toxin is defined as the wrong material, the wrong dose, the wrong duration, the wrong
11:54 duration.
11:55 Now think about carbon in the atmosphere today.
11:58 Think about water.
11:59 Is water toxic?
12:01 Highly toxic.
12:02 Wrong dose, surround yourself with it for six minutes.
12:07 Yes.
12:08 Right, right?
12:09 Wrong material, wrong duration.
12:11 Jump out of an airplane, land on the ocean at terminal velocity, very short duration,
12:16 very big dose.
12:17 So be careful.
12:19 Yes.
12:20 And so what happened with carbon, it goes to the atmosphere.
12:23 It's a toxin by definition.
12:25 So if you go home and say today we poisoned the planet.
12:31 We're sitting in the UAE, we're next door to Saudi Arabia.
12:35 We're really in a place where an enormous wealth has been created by an older carbon
12:40 model.
12:42 You've been working with some people in the region about different ways of approaching
12:46 carbon, about sort of a circular carbon cycle.
12:50 What are some examples of the direction that that's taking?
12:53 I think one of the most exciting ones is here in Abu Dhabi.
12:58 They have a device here now, it was invented by a professor at Cambridge who I got to know
13:03 very well, physicist from Poland.
13:06 And he found a way to make graphene, which is an exquisite material.
13:09 We'll be using a lot of it at some point once we figure it out.
13:13 But he found a way to make pure graphene.
13:16 So do you know graphene won a Nobel Prize for its discoveries?
13:21 Because they were using scotch tape, literally, on pieces of graphite going pfft.
13:25 And see how thin they could get it.
13:28 Graphene is so thin, it's one layer thick.
13:31 It's an hexagonal sheet and you can't get a knife through it.
13:36 It's like 20 times more conductive for electricity and heat.
13:40 I mean it's an astonishing material.
13:41 Anyway, they found a way to do it here with natural gas where they can extract the carbon
13:47 pure and then take the H4, right, CH4, and then you take two of the H's and use it to
13:54 power the system.
13:55 And the other two is H2, which is known as hydrogen, and we sell it.
14:00 So they're making durable carbon for future generations to be immensely valuable.
14:05 And then they're producing hydrogen as a fuel by using their natural gas.
14:10 And the other H2 turns into what?
14:13 Water.
14:14 So the hydrogen goes off to become energy that's safe and the carbon goes off to become
14:18 material that's immensely valuable.
14:20 And the amount of fugitive carbon is zero.
14:25 Climate action has been a major theme of the last couple of days.
14:28 The other major theme, as I'm sure you have seen, is AI.
14:32 What role, if any, we've got about a minute left, what role does generative AI, if any,
14:37 play in your thinking about the circular carbon economy?
14:41 In the early '70s, the anthropologist Gregory Bateson, Margaret Mead's husband, wrote about
14:48 cybernetics that had been brought up by Norbert Wiener at MIT.
14:52 And it was about a system that's full of synaptic space.
14:57 And he was writing to his daughter and he was describing a computer in the future.
15:02 And he says, "I'm in front of the computer," this would be 30, 50 years ago, "I'm sitting
15:08 in front of a computer and I ask the computer, 'Tell me, computer, when do you think computers
15:13 will begin to think like humans?'"
15:14 And there's a long pause and the computer says, "Hmm, that reminds me of a story."
15:25 So welcome to AI.
15:28 So the thing that, it's language-based.
15:31 It's telling each other stories.
15:33 But the stories need to be principled.
15:36 And I would love it if we could do regenerative natural intelligence.
15:41 That tells principled stories and stories rooted in our values and stories that could
15:44 be optimistic.
15:45 And the children would learn from.
15:48 Bill McDonough, we're so lucky to have you.
15:49 Thank you so much for joining us.
15:50 You're welcome.
15:51 And thank you all for being here.
15:51 Thank you.
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