Sustainability: An Idea Whose Time Has Come
In 1987, the World Commission on Environment and Development issued the Brundtland Report, which added a new term to the environmental and business vernacular: "sustainability." Sustainability was a concept that encouraged companies to operate in a way that demonstrates parallel care for the ecosystem and the people within. As a result, environmentalists cautioned business executives worldwide that, in order to survive, each organization needed to find ways to encourage business development that "meets the needs of the present generation without compromising the ability of future generations to meet their needs."
In 1987, the World Commission on Environment and Development issued the Brundtland Report, which added a new term to the environmental and business vernacular: “sustainability.” Sustainability was a concept that encouraged companies to operate in a way that demonstrates parallel care for the ecosystem and the people within. As a result, environmentalists cautioned business executives worldwide that, in order to survive, each organization needed to find ways to encourage business development that “meets the needs of the present generation without compromising the ability of future generations to meet their needs.”
Fast forward 20 years, and shareholders, employees and customers alike are pushing companies to become “greener.” Businesses including Whole Foods, General Electric and Southwire Company are promoting efforts ranging from stocking shelves with organic foods and developing products that compete in a carbon-constrained world, to forming responsive advocacy groups that guarantee their companies remain sustainable — both economically and environmentally — well into the future.
“Up until about a year ago sustainability was a difficult sell,” says Bob Donaghue, Director of Georgia’s Pollution Prevention Assistance Division (“P2AD”). “But with the war, with rising gas prices and with global competition, companies are starting to embrace it.”
Ciannat Howett, Director of Sustainability Initiatives for Emory University, agrees.
“We are starting to see more institutions and businesses realize that it makes good business sense,” says Howett. “Let’s face it — energy is increasingly expensive, so if you put in place energy-efficient tools then that will have a cost savings.”
Gone are the days when mere compliance with federal and state regulations was enough. Now, in order to stay competitive, businesses are embracing sustainability — for the betterment of their companies, and the world. Sustainability is an idea whose time has come.
Importance of Sustainability
Although the 1987 Brundtland Report is credited with first defining the term, sustainability has been on the minds of the environmentally conscious for some time. In 1976, physicist Amory Lovins wrote an essay entitled Energy Strategy: The Road Not Taken?, in which he argued that the real environmental issue is how best to provide the energy’s “end use,” or service, at the least cost. He stated that because people are not going to give up their hot showers or comfortable homes, businesses needed to find methods to provide those services via an intelligent energy system at the lowest cost to the environment.
Decades later, in 2002, the World Summit on Sustainable Development articulated three overarching objectives of sustainable development: (1) to eradicate poverty; (2) to protect natural resources; and (3) to change unsustainable production and consumption patterns.
Although the trend toward sustainability is global, environmental economist Paul Hawken, author of The Ecology of Commerce and Natural Capitalism: Creating the Next Industrial Revolution, believes that American industry can easily modify its practices. Hawken estimates that industry in the United States tends to use as much as 100 times more material and energy than necessary to deliver consumer services. Consequently, he encourages businesses to factor in “natural capital” (renewable and nonrenewable resources used by business) when accounting for the total cost of doing business.
“Industrialism is extraordinarily inefficient,” writes Hawken. “Industry still operates by the same rules, using more resources to make fewer people more productive.”
Businesses must begin investigating their own usage because healthy living systems (such as clean air and water, healthy soil, stable climates) are integral to the economy and, as Hawken states, “there are no man-made substitutes for essential natural services.” Simple changes — such as using super-efficient windows and lights — combined with intelligent mechanical and building design, could reduce energy consumption in American buildings by up to 90 percent, according to Hawken’s research.
“There is a yin and a yang to the idea of sustainability,” says Andrew Jones, Project Director at the Sustainability Institute. “The yin is the part concerned with saving money and reducing costs. The yang is the enlightened self-interest idea — where more and more individuals are looking what their legacy will be and what legacy the company will leave.”
Although some of the ideas seem drastic, environmental agencies are not looking to alienate business with their mission — far from it. The Rocky Mountain Institute, a nonprofit organization established in 1982, takes a business-friendly approach to sustainability. Rocky Mountain attempts to formulate workable models of sustainability, which optimize production so that natural resources are used in an efficient manner that is better, not only for the environment, but also for the bottom line.
Rocky Mountain encourages businesses to incorporate into their business model the four principles of Natural Capitalism, which are:
1. Radically increase the productivity of resources used through “fundamental changes in production, design and technology,” which results in savings in operational costs, capital and time.
2. Shift industrial processes to biologically inspired production with closed loops, no waste and no toxicity.
3. Shift the business model away from the making and selling of “things” to providing the service that the “thing” delivers.
4. Reinvest in natural and human capital.
Skeptics argue that business executives will not be able to convince their investors that improved environmental or social performance equates with financial success. However, a 2002 PricewaterhouseCoopers survey revealed that, in many cases, the motivating factor for introducing sustainability practices into a company’s business model is public perception. In fact, approximately 90 percent of the corporations that reported adopting some sustainable practices indicated they did so primarily for reputation enhancement. And for those individuals concerned about making the hard sell to the boardroom, activist and author Bob Willard teaches concerned readers how to sell the idea as a viable business model, not as a lofty philanthropic ideal, in his book The NEXT Sustainability Wave: Building Boardroom Buy-In.
The Natural Step, headquartered in Oregon, is a scientifically based organization that works from a business perspective. According to its Web site, The Natural Step “enables corporations to intelligently, and profitably, integrate environmental considerations into strategic decisions and daily operations.” (ortns.org). Developed in 1989 by Swedish oncologist Dr. Karl-Henrik Robèrt, The Natural Step’s framework is based on four principles:
1. In order for a society to be sustainable, nature’s functions and diversity are not systematically subject to increasing concentrations of substances extracted from the earth’s crust.
2. In order for a society to be sustainable, nature’s functions and diversity are not systematically subject to increasing concentrations of substances produced by society.
3. In order for society to be sustainable, nature’s functions and diversity are not systematically impoverished by physical displacement, over-harvesting or other forms of ecosystem manipulation.
4. In a sustainable society, people are not subject to conditions that systematically undermine their capacity to meet their needs.
Susan Sokol Blosser, owner and president of Sokol Blosser Winery, serves on the board of directors of The Natural Step and has incorporated many of The Natural Step’s principles into her business — from organic farming in her fields to using post-consumer waste packaging. Much to her surprise, her efforts have created a significant draw to consumers, as “there are a lot of people who feel the pull of what we need to do with the environment.”
Sokol Blosser says that two of her sustainability efforts, while driven by a need to help the environment, have resulted in a major cost savings. Rather than throwing away plastic shrink wrap, the winery recycles the wrap and saves money on waste disposal. And when faced with a need to build a new barrel cellar, the winery placed it underground, resulting in less wine loss due to evaporation and eliminating air-conditioning costs.
“We can no longer do business as usual,” says Sokol Blosser. “If we always look at what it would cost, [sustainability] is not always cheaper; but we can’t be penny-wise and pound foolish; we can no longer look only to the bottom line.”
Although some sustainability practices can be costly at the front end, former Vice President of the United States and chairman of Generation Investment Management Al Gore wrote that the “interests of shareholders, over time, will be best served by companies that maximize their financial performance by strategically managing their economic, social, environmental and ethical performance.”
“It is a fact that the companies which are able to have less of an impact on the natural environment are more likely to thrive in a world with limited resources,” says Andrew Jones, who explains that the Sustainability Institute offers a plethora of case studies when explaining its philosophies to businesses. “There is a way to do it that makes business sense, where you don’t have to give away the farm.”
In addition to private organizations, states are forming agencies. P2AD was formed in Georgia in 1993 to promote sustainability. Although it was originally formed as an environmental organization, it quickly morphed into an economic development agency, offering financial and tax incentives to compliant businesses, says Director Donaghue.
“Sustainability has three legs: the environment, the people and the profits,” says Donaghue. “Our goal is to have sustainability become a way of life — to increase awareness to get to zero waste in Georgia.” A profitable goal, considering that a Georgia Department of Community Affairs study found that approximately $250 million a year of recoverable, recyclable materials are simply dumped into the state’s landfills as waste. Thus, with such a dramatic impact to the bottom line, and decades after the buzzword came into existence, businesses are starting to listen.
Benefiting the Bottom Line and the Community
In 1994, Ray Anderson, the founder and CEO of Interface, Inc., took a radical position: he wanted to usher in the next industrial revolution and his Georgia-based carpet company would start it by becoming the first fully sustainable industrial enterprise. To achieve his goal, Anderson announced changes such as requiring that the company’s offices would only use power from renewable sources and that all carpeting waste would be recycled.
Interface is not alone. IKEA, the Swedish home furnishing retailer, began moving toward sustainability in the early 1990s when it adopted an Environmental Action Plan, which included such measures as requiring fluorescent lighting for all stores and choosing transportation companies that meet European Union standards on emissions and noise. Nike, Inc. began rewriting its environmental policy in 1997 to reflect the company’s focus on sustainability. As part of the program, Nike implemented initiatives such as reducing the use of petrochemical-based solvents and using 100 percent post-consumer recycled material in the manufacturing of all shoe boxes.
“Business is not in business to put itself out of business,” says Stanley Tate, Executive Vice President and Chief Environmental Officer for Southwire Company, the Georgia-based company that is the leading copper-wire manufacturer in North America. “Conservation is a good thing. There are things that you can do with sustainable manufacturing that, just because you are trying to be as environmentally friendly as you can be, do not mean you are also a higher-cost producer.”
Following the likes of The Coca-Cola Company, Tate says that Southwire has put together an advisory group to evaluate case studies from other companies to measure the company’s environmental impact and to formulate sustainability guidelines that will guide the greening process of Southwire. No stranger to environmentally conscious manufacturing operations, Southwire’s Machinery Division received the Excellence Award in 1996 from P2AD for its outstanding achievement in pollution prevention.
“Heavy industries are always going to have some sort of environmental problems,” Tate says. “But you can mitigate those problems by being out there, looking at the problem from the perspective of outsiders, and operating as efficiently as you can.”
Many sustainability initiatives in the human resources area alone can have a dramatic impact on employee loyalty and retention rates for companies.
“Johnson & Johnson has seen reduced absenteeism and reduced workplace injury because they have incorporated health and wellness programs into their business plans,” says Emory’s Howett. “Marginalized do-gooder concepts are really coming mainstream and it all translates into dollars and cents savings for the business or institution.”
Emory University is in the process of implementing a strategic plan that will take the institution through the year 2015 and that will integrate sustainability from a day-in/day-out perspective, says Howett. Emory’s efforts include ensuring that local organic foods are available on campus, weaning commuters off single-occupancy vehicles and greenspace protection for the waters and forests on university land.
“The goal is to make Emory a model in the South, and in the world, for sustainability,” says Howett. “It’s a powerful example to show how a major institution, virtually a small city itself, can be the model of stewardship.”
Looking Into the Future
Although there are costs associated with achieving sustainability, Daniel Botkin, a professor of biology at the University of California at Santa Barbara, states that there are sustainable solutions to energy problems that will not bankrupt businesses.
“Few human societies have ever restrained their use of resources if they had the technology to overexploit them,” says Botkin in an interview with The New York Times. “If Americans want trophy houses and big cars, you have to talk to them about energy policy. There are sustainable solutions.”
The basic premise remains: to stay competitive, and to ensure dividends remain at a level comfortable with shareholders, companies need to modernize their business practices and find more economical and sustainable ways to provide their services. In sum, companies need to embrace sustainability to survive, both literally and figuratively.
In the end, Paul Hawken likens the solution to the Golden Rule:
“Leave the world better than you found it; take no more than you need; try not to harm the environment; make amends if you do.”