October 15, 2008
A veteran environmental expert looks at how U.S. companies have progressed in the field of sustainability and why it is now time to set challenging goals for the future.
Companies weren’t even thinking about eco-strategies thirty years ago. Coverage of environmental issues was so scarce that if there was an article in the newspaper, I would cut it out. Today, you can’t read the news, listen to the TV or scan a blog that doesn’t have a “green” story.
The environmental community and business leaders didn’t used talk to each other. There was debate among environmentalists about whether to work with business. As the years passed, the conversation started to include the need for environmentalists to get on corporate boards in order to influence corporate environmental practices.
Fast forward to last month when I attended the Corporate Eco Forum meeting where senior executive were elaborating on the details of their corporate sustainability programs, and many of those executive were former or current members of what is considered the “environmental community.” The lines are blurring in many cases, which is wonderful. And there is a lot of partnering going on, with environmental and business interests collaborating on solving problems. So a lot has changed.
Today, in fact, many companies have a more progressive attitude about executing eco-strategies than environmental groups do. Companies are not as afraid of change as environmental groups sometimes can be. There have been great improvements in awareness and implementation.
However, despite this progress, we are still basically tinkering around the edges. We have not seen the revolutionary shift that we need to curtail environmental and human harm.
We can neither entirely produce nor shop our way to true sustainability.
Still Room for Improvement
In the US and other industrialized countries, we have largely succeeded in cleaning up most traditional sources of pollution in the water and the air. But on every other front, we are moving backwards at a rapid clip. While corporate environmental practices have improved, they haven’t kept pace with the rate and scale at which humankind has changed the chemistry of the atmosphere, devastated habitats and decimated species.
Corporate sustainability in the US still does not embrace “the Precautionary Principle.” It is possible to though, and to do it profitably. The City of San Francisco, for example, codified it in its purchasing guidelines. We need it incorporated into commercial culture and accounting.
One ramification of ignoring the Precautionary Principle is that is that we haven’t paid sufficient attention to the human consequences of what we buy and sell, including in service companies. We continue to expose people to compounds harmful to our health. For example, we should not be making things that are known or highly suspected to be harmful to babies. As a new mother, I shouldn’t have to even think about the possibility of a baby bottle or toy containing lead or endocrine disruptors, yet I have to be constantly vigilant, including with products made in the US. Just about all of us have someone dear to us who is dying of cancer, and we say that we would do anything to help them. Yet we still make and buy unnecessary weed killers, air “fresheners,” and other products that contain known, synthetic carcinogens. It’s almost pointless to make these things in a slightly more environmentally-sound way, with renewable energy or in more “eco” packaging. We haven’t done enough to include people – worker safety and consumer safety – in the sustainability equation, and that will be an area of increased focus.
The Evolution of Success Factors
The definition of “eco-strategy success” is still a topic of debate. I take that to mean both measurable environmental improvements and the organizational strategies needed to achieve them. Yes, things have changed over the past 30 years. As I said before, despite the success we’ve had primarily in the waste/pollution/energy reduction arenas, and the tremendous changes with companies in incorporating environmental concerns into their operations, we are still causing tremendous harm to the environment on which all our commercial activity depends.
Early on, companies were driven almost exclusively by external pressure, from environmental groups and the public. Corporate responses mirrored this – environmental concerns were addressed, but largely with superficial tactics such as marketing.
As the years passed, companies realized it would be in their best interest financially to develop more eco-sensitive products and processes, for a variety of reasons, not just to please green customer demand. For example, companies like DuPont started engineering substitutes for ozone-depleting products — the company could help change the market and capture more of it. The condition of the environment has only increased in its potency as a driver, and the opportunity to profit from remediating environmental problems has as well.
Obviously certain drivers differ from company to company, but what constitutes risk has changed pretty much across the board. Today, companies that don’t take environmental and human consequences into account are taking on real financial risk.
Taking Sustainability to the Next Level
If you look at the individual company level, business has made tremendous strides in eco-strategies. We always used to hear, “You have to get the CEO engaged… You have to drive environmental awareness to business units… You have to change the corporate culture… You have to make eco-impact part of financial incentives for managers…” All of these mandates have become commonplace in many large companies.
Now we need to take “sustainability” to a whole new level. Though many companies, both those that have sustainability initiatives and those that have integrated sustainability throughout everything they do, can quantify the associated dollar savings and profits, we still have a ways to go in solidifying the business case. This is in large part because we haven’t addressed fundamental structural challenges that can’t be solved at the individual corporate level and must be addressed at the broader economic level.
We need to do to “continuous improvement” on our economic system. Like companies, it, too, has to shift to rewarding environmental and social benefit and penalizing harm. Capitalism remains the best game in town but it still needs tweaking (as it blatantly obvious right now in the fall of 2008). The fact that our economic system doesn’t account for “externalities” such as environmental and human health impacts, and doesn’t value the ecosystem services that nature provides, is catching up with us, and we are starting to have to come up with real money to compensate for that omission. “We need to put a price on carbon” has become a cliché, but we actually need to do it. It would be a significant step in the direction we need to go to changing market signals.
We also need to improve the activities of small and mid-sized businesses. Over 99 percent of businesses in the US are small, under 500 employees. The environmental impact of this sector and therefore the potential for improvement is huge. Large companies can help through their supply chain initiatives, by sharing information and encouraging or, if appropriate, requiring, sustainable business practices.
Local, state, and federal government also has a role to play in making a giant leap forward in sustainability, primarily by changing incentive structures that help “level the playing field”and enacting standards that clarify sustainability goals.
New Places to Start
Companies typically begin by eliminating waste. It isn’t a new story but it is surprising what a ripe area this remains – even if you think your company has already picked all the low-hanging fruit.
In Germany, an escalator does not run until a person steps on it. In a hotel corridor, the lights are off until a guest walks in. However, in this country, we tend to think that eliminating waste and conserving energy is old-fashioned, unsophisticated. But in Germany and other parts of Europe, we are talking about sleek, modern societies. We have barely scratched the surface here.
I recently rented a car in New Mexico from a major car rental company. The office was essentially glass box, sitting on black asphalt in the desert. Obviously the air conditioning was blasting. Think of money that company could have saved if it sited and designed a building appropriate to that hot climate! Just minimizing the south-facing windows and a adding few drought-tolerant shade trees would have made a huge difference.
But we cannot continue to think about environmental strategies in a piecemeal, company-by-company fashion. We need to entirely rethink commerce.
Producing zero-calorie soft drinks in virgin aluminum cans, transporting them vast distances and keeping them cold doesn’t make a lot of sense, even if the company is admirably reducing the amount of aluminum and taking other environmental protection measures.
Instead, we need to completely embrace “life cycle analysis” and ensure maximum “cradle to grave” integrity – on the environmental and human fronts, while mimicking nature to the greatest extent possible in everything we do, i.e., employ “biomimicry” concepts. And our economic system has to support that. It has to reward activities that enhance sustainability and penalize those that don’t. “Ecological economics” will allow business to profit from protecting, restoring and maintaining human and environmental health.
Yes, this may seem like radical thinking – but the same was true of calls for environmentally-sensitive business practices in the 1970s. What seemed “fringe” then is the status quo now, and, makes solid business sense.
We have to be honest with ourselves, not fool ourselves about what we are doing regarding sustainability. We have indeed made so much progress, yet the gap between what we are doing and what is needed is huge.
It is easy to see “the writing on the wall” now about the tremendous global financial turmoil we are in. What lay ahead was obvious, yet no one really wanted to pay attention, to put the brakes on and change course. The same is true for the environment and everything we are doing to it that is ultimately only hurting ourselves, as people are an integral part of it, not separate from it. The good news is that we have a choice. Companies can’t solve all the pieces of the problem, but they have done a lot, and they can do so much more.
Holly Kaufman is founder and president of Environment & Enterprise Strategies, a consultancy that specializes in the design and management of projects that integrate business, human and environmental needs. Representative clients include Procter & Gamble and the White House Council on Environmental Quality, where she developed President Clinton’s twenty-fifth anniversary report to Congress on environmental trends.