The Triple Bottom Line Blog

In this post, I want to deviate from my usual discussion about sustainability, corporations, and profits.

I want to discuss something that rarely gets discussed in the sustainability world but which I think is going to be a subject of increasing attention. It's the fact that sustainability is really a two-sided coin. On the one side is sustainable production, which is what all of us in business like to talk about--how companies can get leaner and greener. But on the other side is sustainable consumption, which is something that we don’t talk about much.

I want to frame this issues by talking about globalization--not in economic terms, but in environmental and social terms.

One of the most interesting and important aspects of climate change is that it is a global issue with global impacts. If China continues to burn coal at the rate it needs to sustain its economic growth, Manhattan, Boston, and Miami will be threatened by rising seas, and farmers in Kansas and Nebraska will have to switch crops or move. When farmers in Brazil cut down rainforests, the temperature in Boise goes up.

There is no place to run from climate change. Polar bears living at the North and South Poles are threatened.

Globalization has also produced social impacts that are worldwide. We've thrown out most of our toys that were made in China, even after China executed the official who was in charge of product safety. (And we complain about tough government regulations here!) We import so many products from China that their product safety issues affect us directly. To some extent, the same is true for child and slave labor. China's social issues are also our issues, whether we like it or not.

And resource issues have also become global. We are due to run out of oil and a number of metals that we need to feed the manufacturing infrastructure that supplies us with everything from building materials to cutlery.

Water is the most dramatic example of the coming resources crunch. The list of areas that are likely to run out of water in the next thirty to fifty years is scary, and it is already happening right here at home. Las Vegas, the fastest-growing city in the U.S., is built in the middle of a desert, and the lake that supplies it with its water is drying up from the top and silting up from the bottom. Similar things are happening in many large areas of the world.

Andy Liveris, the CEO of Dow, has said that "water is the oil of the 21st century." The Pentagon has conducted scenario planning around the idea that the world will be engulfed in a series of regional wars fought over water in the next century.

But in this globalized world, consumption has not yet become globalized. It's well known that the United States, with only five percent of the world’s population, consumes twenty-five percent of the world's fossil fuel. We have only one fifth of the population of China, but we account for more global warming than they do (although the gap is rapidly shrinking).

Jared Diamond recently observed that the average American consumes 32 times as many resources as the average Kenyan. When you consider that a billion people live on less than $1 a day, that my lunch cost probably $20 and I am already thinking about dinner, you'd think the ratio would be even higher.

Now put this in a global context. It has been calculated that if the rest of the world were to start living at the same standard of living as people in the U.S., it would take twelve planet Earths to support our collective lifestyle. When I think about how much stuff I throw out every week, that doesn't really surprise me either. But as far as we know, we only have the natural resources of one planet Earth at our disposal.

The papers are filled with articles about how people in the West are obese, but you don't read very much about the fact that the economies of the West are also obese.

And you certainly are not likely to hear this from corporations that are in the business of selling more stuff. To the extent they are focused on sustainability, they are focused on being more efficient in manufacturing and selling us more stuff. But if you look at the numbers, the kinds of efficiencies they can make are not going to reduce our consumption to a sustainable level, not by a long shot. We can all buy hybrid cars and low-impact fluorescent bulbs, but that only slows the growth of pollution.

The fact is that we need to practice sustainability on both sides of the coin: sustainable production and sustainable consumption.

It's rare to hear companies say, "Consume less," and rarer still to hear them say, "Consume less of our products." A few years ago, McDonald's in France ran some ads saying, "If you have a weight problem, don't eat here so much." The corporate PR guys on Oakbrook Illinois found the people who were responsible and sent them to the (corporate) guillotine.

There are a handful of industries that are just beginning to address the issue of sustainable consumption.

Twenty-five years ago, when I was just getting involved in environmental matters, Massachusetts passed a law that would pay electric utilities for getting their customers to use less energy. Under the new scheme, the utilities would get paid the same, and in some cases more, if they sold less energy by convincing customers to use less, or to use it during off-peak times.

This became a national program called Demand Side Management (DSM). It has the potential to revolutionize the consumption of electricity all over the world. We need to apply this model to other areas of consumption.

Reducing our level of consumption is going to be tough for us in the developed world to swallow, and I frankly don’t know how it is going to happen. We have the strongest military in the world, now unconstrained by any opposing force. And we have proved very willing to fight to maintain our life style, with the war in Iraq (motivated at least in part by the desire to guarantee access to that country's oil reserves) seemingly just the latest example.

I think sustainable consumption will come about--if it does--through a combination of five factors:

Market forces. If you've traveled recently, you know that our standard of living is down because of the weak dollar. Imported goods are also more expensive. At the same time, the prices of gas and other natural resource will continue to climb. All of this will tend to bring our standard of living down, closer to that of the developing countries.

Regulation. China legislated only one child per family, and although I don't think we will ever go that far, I do envision more consumption taxes and possibly the rationing of various commodities. We are already going down that road with water use.

Technical innovation. Science may help alleviate the resources crunch. I'm thinking about things like genetically-modified organisms, clean hydrogen or nuclear fusion, and cost-effective water desalinization. But technology will not solve the problem. We're not quite as smart as we like to believe, and there is no technological genie waiting to grant our every wish.

International conflict. The next century will see a lot of battles over resources, and the West is destined to fight a number of wars like the war in Iraq--wars we realistically cannot win. These military defeats may be a necessary evil to wake us up to the need for sustainable consumption.

Redefinition of consumer preferences. This is the hardest one of all. It requires redefining quality of life by understanding that "Less is more." The simplicity movement needs to go from a cult to a mass movement.

I think you can see now why this topic doesn't get discussed much in business circles.

I had the pleasure of being a keynote speaker with Yvon Chouinard of Patagonia at a "net impact" event late last year. He has done as much as any CEO to make sure that his company is respectful and protective of the environment. Yet in front of 100 net impacters, he said (I am paraphrasing), "I have talked to some serious scientists, and most of them believe we have passed the point of no return. We have no hope left to save the Earth."

We all want to think we can go on living this way forever, and that our children should have more than we did. But deep down we recognize that this can't be the case except for a smaller and smaller percentage of us. Not only are there billions of people who want to escape from grinding poverty--and obviously deserve a chance to do so--but in addition the world's population is still growing. By 2050, it is projected to increase from the current six billion to nine billion, and three-quarters of this growth will be in the developing world. So we are going to have a lot more mouths to feed, hands to wash, and people without homes or hope.

I apologize if this message seems like a downer. Maybe I need to find my Prozac. But the issue of sustainable consumption isn't going to vanish just because we prefer to ignore it. I think we're grown-up enough to start talking about it. What do you think?

Labels: China, Climate and Carbon, Jared Diamond, Las Vegas, McDonalds, Patagonia, Personal Musings, Sustainable Consumption, Water, Yvon Chouinard

As the debate over what is or is not greenwashing continues (our contribution to the discussion can be found here), Scot Case of TerraChoice points out this thought-provoking post by Bob Langert on the McDonalds corporate blog:

I agree there are dangers associated with environmental marketing, but I actually think many companies are reluctant to talk about their environmental efforts because they are concerned they will only be met with criticism. After all, true progress is hard to define, and achieving perfection on the environmental front is impossible, because there will always be ways to improve.

But not talking about environmental efforts, or "greenmuting", can be a sin as well.

Langert goes on to provide his own list of the "Six Sins of Greenmuting," which basically involve companies' reluctance to publicly engage environmental issues at all out of fears they will get burned. As Langert, in effect, points out, as pressures to be socially and environmentally responsible continue to mount, you are likely to get burned sooner or later, one way or another; but if you get out in front of the issue and communicate freely about your honest efforts to do the right thing, the burns you suffer will almost surely be less severe and faster-healing (to push the "burning" metaphor perhaps one step too far).

An interesting case in point comes from the blog of hotelier Bill Marriott, which I discovered while writing this post. Marriott recently wrote about his company's efforts to make their corporate headquarters greener, involving recycling, energy conservation, and other initiatives.

What's interesting is that Marriott's post has drawn a few dozen comments--some of them thanking Marriott for his company's environmental efforts, but others offering criticisms from every possible direction. Some complain that the headquarters building is just the tip of the corporate iceberg ("How about the thousands of hotel rooms that leave lights on! As a Platinum client (over 100 nights a year . . . mostly Toronto Airport) I found out that all lights and music in your suites are put on at 2pm!!"); others say that customers ought to receive some of the financial benefits from environmental cost-saving ("Please put your money where your mouth is--if you want your customers to save water, than show them some green!"); others worry that worthy issues such as comfort may be getting short shrift ("Look at the way the poor soul in the picture is sitting. Can someone please find him a keyboard tray, with a proper mouse surface. Why not green and healthy--that's the ticket!"); and still others disdain the whole concept ("the efforts to reduce greenhouse gases is misguided and ill informed. The latest research does not point to man as the cause of a changing climate, the Intergovernmental Panel for Climate Change and Mr. Gore's film notwithstanding").

If I were Bill Marriott, my reaction to this barrage of often-contradictory advice might well be to throw up my hands and wonder, "If this is what I get for trying to do the right thing, why do I bother?"

But of course that would be a short-sighted and counter-productive reaction--though perfectly human and understandable. And to Marriott's credit, I see no sign that he or his company are in fact responding that way.

I think they recognize this as one of the perennial truths of business (and of life): Anything good you do quickly gets taken for granted, and the conversation is always about "What's the next good thing you are going to do for us?" The only way to avoid criticism--well-founded or not--is to do nothing at all. And where's the fun in that?

Labels: Bob Langert, Communications and Marketing, Greenwashing, Marriott, McDonalds, Reporting and Transparency, Scot Case, TerraChoice

When I'm asked, during a speech or an interview, to name some companies that are leading or lagging on sustainability, I invariably start talking about global corporations--companies like DuPont, General Electric, Unilever, Citibank, or PepsiCo who are racing to get to the top of the Dow Jones Sustainability Index, or companies like Exxon who appear either to not get it or to not care.

I often forget to mention small business, which is a serious mistake. Small business is the engine that drives economic growth, creates jobs, and provides many people with their initial view of how companies operate. Unless sustainability takes hold in businesses of three, twenty, or one hundred employees, it will not take hold at all.

If you help to run a small business, you need to be thinking about sustainability issues--and especially if one of the following five descriptions applies to you:

1. You provide goods or services to a large business. More and more large companies are “greening their supply chains” by making environmental and/or social performance a condition of sale. Wal-Mart, for example, has just imposed packaging reduction requirements on its 60,000 suppliers, many of whom are small businesses. McDonald’s has a strict supplier code of conduct that encompasses everything from the treatment of animals to the use of pesticides to child labor. You should look at some of the codes and requirements now being applied by big companies to the small firms they do business with; similar requirements may be coming your way in the near future.

2. You can benefit by being seen as part of your local economy. Many consumers are now making a conscious effort to “buy local” as a way of supporting the communities in which they reside. Locally-grown produce has long been considered fresher and of higher quality than food shipped in from parts unknown. Now concern over climate change is making people more aware of the environmental consequences of shipping food and bottled water long distances. Lots of people are shopping at local, independent stores rather than chain outlets because they feel there is more accountability. As a small business manager, you can look for ways to participate in--and benefit from--the buy-local movement.

3. You see a way to increase your profits by helping to solve environmental or social problems. Many companies whose business mission is to help solve environmental or social problems are booming. In my home state of Massachusetts, the clean-tech sector, composed primarily of small businesses, is growing at a strong clip, from solar power to biotech. Small companies like Waltham, MA-based Recycline are making successful businesses out of helping consumers and society reduce waste.

4. You see a way to reduce your costs by being more environmentally or socially conscious. Of course, small busineses, like large ones, can save money and help the planet by reducing waste and by saving water or energy, especially with the cost of fuel and waste disposal rising in many places. And because your business is relatively small and simple (compared to a global giant like GE), identifying and implementing opportunities to "green" your processes is likely to be easier for you than for a Fortune 500 company.

5. You see a way to build your business by linking it to a social or environmental cause. Many consumers like to do business with companies that share their values and are putting their money where their mouth is by supporting causes they believe in. There are all kinds of examples, involving businesses both large and small--for example, The Dancing Deer Bakery in Boston's Roxbury district donates a percentage of profits to local environmental and social causes, especially to helping the homeless.

Small businesses have many built-in advantages in the pursuit of sustainability. There are far fewer internal barriers (read: bureaucracy) to creating triple bottom line initiatives and tracking their progress in a small organization, and spreading the word among managers and employees is also easier when workers are numbered in the teens rather than the thousands.

Finding the time and the resources to get going may be the biggest challenge, but if you start by identifying a solid business case--that is, a clear and compelling argument for the profit-boosting potential of an environmental or social project--the resources can usually be found.

Labels: Dancing Deer, McDonalds, Recycline, Small Business, Supply Chain, Wal-Mart

Some housekeeping notes:

Just did a quick update on our blogroll. We've deleted a couple of sites that appear to have gone dormant. Also added a new one, My Green Element, which casts a wide net in tracking interesting developments from around the world regarding the interface between business and the environment--well worth a visit.

On another front, we've been following some official corporate blogs that focus on sustainability issues--specifically, topics related to environmental and social responsibility. We'll be reporting on corporate blogs we consider interesting and revealing (even if unintentionally so), and are considering adding a blogroll section to list them.

Among the companies whose sustainability blogs we've so far discovered are Intel, GE, HP, Johnson & Johnson, and McDonalds. If you're familiar with others, whether good or bad, please let us know, either in the comment section or by sending us an email via the link at upper right.

One last point, regarding commenting on this blog. It is easy to do and does not require any special registration. If you happen to have a Blogger or Google account, you can log in using that name and password, but it's not necessary. Others can click on the "Other" button and comment to their heart's content, giving as much or as little identifying data as they choose.

Of course we reserve the right to moderate comments and may do so if trolling or spamming rear their ugly heads, but so far there have been no problems. Let's face it, we in the sustainability community are a bunch of sweethearts!

Labels: Communications and Marketing, Germany, HP, intellectual property, Johnson and Johnson, McDonalds