June 26, 2011 / LESS IS MORE. MORE IS LESS
June 26, 2011
Nine Uncommon Sense steps every company should have taken by now for increased profitability
Do you know what it means? Do you practice it? Do you speak the complicated language? Do you think there’s a problem to solve, a need to fill or benefits to be had? Why has such an important subject been made so very complicated? That is the problem with sustainability, like most legacy-based systemic issues we’re facing today, there are more questions raised by the subject than answered. The subject of sustainability is so nebulous that people’s eyes glaze over when you bring it up, because they’re intimated to even talk about it.
I have been involved in a number of sustainability projects with major corporations and one of the biggest observations I have is that until sustainability gets framed correctly and is directly connected to financial performance, it will continue to be a misunderstood annoyance rather than a strategic imperative for corporations and their C-suites. It’s sad to say, but we need to position sustainability more in terms of money and efficiency rather than about saving the planet.
One may ask, “Who should be operating with a sustainability model?” This is like asking the question, “Which company should produce a quality product and which should not?” Who doesn’t want a quality product? What company is going to be in business long term if it creates low quality products? I think there are new business rules that are being verified. I don’t think sustainability is a choice anymore. What company would not want to reduce operating costs, and variation in their processes, lower overall company risk, provide innovation into their product line, and engage and retain loyal customers?
I thought I’d talk to my friend Catherine Greener, the CEO of Cleargreen Advisors to get an expert perspective on how to turn the conversation about sustainability from eco-efficient to re-inventive.
What does Sustainability mean?
Catherine: It will be 10 years next week that I left my very comfortable life in Detroit and the automotive industry and began my career in this field that folks call sustainability. The more I work in this field, the more I question whether there is even such a thing as sustainability or a Sustainable Business. Perhaps it is an illusion. What I do know, and know with certainty, is there is absolutely something that we can call “Un-Sustainaiblity”. We can call it externalities, or unintended consequences, or toxicity, or pollution or simply waste. It is the result of a take-make-use-waste model and a lack of owning the consequences of our impacts.
What we call sustainability is the beginning of the understanding of the unsustainable predicament we are in and how we are starting to correct it. We think about how to reduce our dependence on linear extractive models, how to use less natural resources, become innovative in our product designs and understand what happens when we throw “it” away. We learned from the Total Quality Movement that variation and waste are expensive. Planet Earth is a closed system where waste in any form is just that…waste. By focusing on eliminating waste, a company can become more sustainable, save money, increase profitability and thus performance.
Paul Hawken, among others, envisions a future in which companies “sidestep the commercial Tower of Babel that spills forth such irrelevant abundance, wastes so much and does so little” in favor of “products that cut through the clutter of our lives and allow us to perform the daily acts of living in a more satisfying way.” (The Ecology of Commerce, p. 154)
We cannot and will not find a sustainable path if we continue to bind ourselves to the same financial rules. This is why we have compiled nine Uncommon Sense steps every company should have taken by now:
1. Understand where the largest environmental and social risks are. Know what you need to know.
Today we have 7 billion people on the planet, and it’s said it can sustain 15 billion people if we consume food and resources like the people of Rwanda. In contrast, the planet can sustain only 1.2 billion people if we consume food and resources like the people of the US. Almost every natural system that supports life is in decline or fighting for survival. In this country, we consume only 50% of our food and the other 50% goes to waste. We are an overweight, bloated nation with a broken economic system. Our healthcare, financial infrastructure, education and food systems are broken due to waste and inefficiency. It’s obviously time to rethink and reinvent these vital backbone systems, and corporations should take careful notice of what is happening here. We all exist and depend on these systems, and to avoid the creation of “re-designed sustainable systems” and the consequence of our actions is to put our immediate future in jeopardy.
2. Conduct a baseline of your company’s water, solid waste, energy and carbon emission usage by unit (if possible). Set a reduction target. Go big.
In 2005, Walmart surprised the world by announcing three sustainability goals: to be supplied 100% by renewable energy, to create zero waste, and to sell products that sustain people and the environment. Over the last five years they have repeatedly demonstrated that being green does not mean spending green. In fact, Walmart has identified millions of dollars of savings, through their own operations and their supply chain. They are a big company with a big footprint. They have demonstrated to thousands of companies, retail and manufacturing, that waste is expensive and uncompetitive. Get rid of waste, improve your environmental performance, decrease risk and improve your bottom line.
3. Eliminate the use of bottled water and styrofoam in offices. Walk the talk.
Over 20 billion water bottles are thrown away every year along with over 20 billion Styrofoam cups a year. Have you ever had a REALLY good cup of coffee, tea or water from a Styrofoam cup? Get rid of them and remember you can put your logo on a mug and give it to a customer.
4. Eliminate unnecessary use of paper. Companies find that the real non-value added happens on what is printed on the reports that no one reads
Recycling 1 ton of paper is like saving 17 trees and keeping 3 cubic yards of paper out of a landfill. That’s about the size of a Volkswagen Bug. During Catherine’s work with Lean manufacturing companies, she considered the obvious, and often looked at all the paper reports still being generated that people didn’t really look at anymore. We have so much information at our fingertips, especially in the virtual realm. It’s important for a company to see what people are really reading on paper, and how often.
5. Engage and activate employees around sustainability and how small choices can have an impact. Empower and challenge the workforce around how your company can lead.
Stonyfield Farms is one of my favorite examples of a company that is doing well by doing good. They started out decades ago as a mission-focused for-profit company, and have not wavered from their values and their commitment to creating a new and sustainable business model. They have a delicious product that people love and they have wrapped ”joy” into every aspect of their brand. They have grown significantly, reshaped a category, have maintained their integrity through an acquisition and continue to be committed to a sustainable future. Check out Gary Hirschberg, CEO of Stonyfield Farms, on TedX for a full perspective.
6. Understand the sustainability risks and impacts of your company’s supply chains. For many companies this is the heavy lifting.
Our Industrial and consumer systems are fraught with waste. We take it for granted. The average American throws away almost 5 pounds of garbage every day. Those are some really good BTU’s (British Thermal Units) that we are entombing in landfills. Almost everything that we buy in a year ends up in a landfill within one year. We throw away enough aluminum to make almost 3 million aluminum four cylinder engines, picture dragging those out to the curb on garbage day.
Think about all the raw materials that we toss out. What could happen if we reclaimed all those great BTU’s? Will our grandchildren or our great grandchildren mine our landfills to recover all the good stuff we’re losing by putting them in this nonexistent place called “away”? Right now we’re in an endless loop whereby we pull materials from the earth, process them, use them for the blink of an eye, and then retire them to a dump. These materials still have utility, but we replace them with new materials, which often cost more because of their ever-increasing scarcity. Or can we save our grandchildren the trouble by imagining a new reality in which we close the loop?
Why can’t we recover these materials and start an endless virtuous cycle? This would keep prices constant or drive them even lower, reduce risk, increase competitiveness, and create jobs in the process. One of the untold stories about the electric car, Nissan Leaf, is how committed that company is to reducing waste around that product. There are numerous examples of recycled and reclaimed materials that are being used in that vehicle. And, the US plant, in Smyrna, TN has a small army of employees engaged and committed to driving out all kinds of wastes throughout the supply and manufacturing chains. Even better, they find that they save money along the way.
7. Support the health and wellness of employees.
When we think about sustainability, we often think of the big issues like climate change, deforestation, ocean acidification, etc. But, sustainability begins with you—your values and the consequences of your actions. We call this Behavior Based Sustainability. How can you save the world if your own home is not in order? Small actions can lead to big changes and ideas. Some of our clients have helped employees by supporting smoking cessation, healthy eating, exercise, gardening, and recycling programs.
8. Find uncommon partnerships to help solve problems that are bigger than you are. Innovate, Innovate then Innovate some more.
Eco-efficiency is such a great place to start. It is easy to demonstrate operational expenditure reductions before moving to innovation – which can take additional investment and which sometimes doesn’t produce quick wins. Innovation is critical but you have to plan it. Cleargreen Advisors helps clients plan and sequence these things – efficiency first, innovation next – so they make business sense and yield financial returns. One of our favorite win-win examples is the Pepsi-Waste Management Dream Machine Kiosks that are being installed at retailers around the country. People recycle and redeem points and PepsiCo donates funds to the Entrepreneurship Bootcamp for Veterans with Disabilities, a national program that offers free training in entrepreneurship and small business management for veterans with disabilities. There is an increased recycling rate as people recognize recycling as a routine behavior. It’s a win for people, planet and profits when a non-profit gets funding while more recycled content is used as a raw material rather than sitting in landfills.
9. Tell stories. Your stories. You will be surprised who is listening and whom you are inspiring.
You have an authentic and transparent story to tell, the keyword being authentic. These stories are really just great marketing. GE’s Ecomagination is a business initiative to help meet customers’ demands for more energy-efficient products that in turn help to drive reliable growth for GE in this growing category. It’s a great story that is dynamic, engaging and effective.
So what’s next for sustainability?
We are at an inflection point, but we have not yet “tipped” when it comes to sustainability. Companies have made amazing strides around packaging, transportation, energy use reduction and other things, but the message is being diluted at the shelf. Consumers are not fully engaged around sustainable consumption yet. If you wanted to bet that shoppers are going to be more or less interested in this issue in the future, where would you place your bet? Companies who have figured out how to delight the shopper with their products and sustainable innovations are demonstrating terrific market growth. We still have a land of confusion around messaging and certifications that shoppers have not figured out. We don’t really have a strong mandate to make the change–from shoppers, the government or even most retailers.
We believe there is a significant opportunity for every organization to develop an Eco-Efficiency plan, to explore increasing financial performance, developing innovation and building deeper relationships with employees and customers by putting Eco-Efficiency in the middle of the plan.