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

Perhaps you saw this week's story in The Wall Street Journal about how protesters are gearing up for the Olympic Games and what sponsoring companies are doing about it. Short version: Most companies are focusing on "going green":

Coke is playing up its water-conservation efforts on the Yangtze River and putting natural-refrigerant coolers and vending machines at all Olympic sites. Since March, Volkswagen has been planting thousands of trees in Inner Mongolia. GE is touting its role selling ecofriendly products such as solar-power and water-filtration systems for the Olympic venues.

By concentrating on the environment, companies can show they are acting responsibly and score points with the Chinese government while avoiding politically charged issues such as Taiwan or Darfur, PR executives say. Mr. [Richard] Edelman [of Edleman Public Relations] calls it a "win-win" situation.

A close reading of the article indicates that the most vehement and well-organized protests may actually be focused on human rights and other non-environmental issues. Which does mean that companies need to have that part of the sustainability agenda under control in terms of having appropriate policies, procedures, and programs in place.

But companies are right to focus on the environment for several reasons.

1. Dirty air will have an impact on the games themselves and on the athletes, whereas hman rights and other issues will be at one step removed. The human rights activists will be trying to draw connections to the games, but the athletes and spectators are most likely to be talking about the environment and will have every good reason to do so. They will not seem like agitators serving some other, unrelated interest.

2. The media will thus be talking about the environmental problems as part of the daily coverage of the overall "Olympic Story." Bad air is likely to affect the performances (think marathon), and it will be easy for the media to follow that angle and go deeper. Unlike human rights and even contaminated toys (the regime will make certain that there are no child laborers or contaminated toys within 1,000 miles of the Games!) there are easy, accessible visuals--smog, belching factories, traffic congestion--that will tell the story. It's the easiest story by far with no investigation and little explanation required. Also, bad air and possibly water (the foreign athletes may not be drinking from the taps) may well make this Olympics different from any other, and the media loves that.

3. Of course, all of this plays into the two biggest stories of the decade: China and climate change.
4. Then there is the political side of the environmental issue. Never having been to China, I have no real idea how big, strong and deep the environmental movement is there. (Elizabeth Economy's book on the subject, which my writing partner Karl Weber happened to work on, is probably a good place to start in learning about that topic.) But my guess is that the Olympics, and the presence of the international media, will give that movement plenty of cover, not to mention the international environmental activists who will be at the head of the parade. It will be hard for the government to arrest them all, if they do join hands. They would look really bad if they just arrested the locals, and even worse if they put the foreigners in the clink.

And if there are protests and arrests that just gives the media an even bigger story to cover.

5. Finally, I think the human rights activists may understand all of this, and may rally behind the environment as a wedge issue. That's what happened in Hungary--the democracy movement rallied and prevailed around environmental concerns related to the planned construction of a large hydroelectric dam. In so doing, they served their broader political goals--undermining the power and authority of an autocratic central government, and demonstrating to the public that they could affect change if they chose to do so.

For all these reasons, a green focus is a very reasonable strategy for sponsoring companies to use in dealing with the challenges of China 08.

Labels: Air, China, Communications and Marketing, Human Rights and Child Labor, Olympics, Water

As fate would have it, during 2007, my wife Mary-Jo and I visited two of the world's more unusual cities: Dhaka, the capital of Bangladesh, and Venice, Italy.

In some ways, the cities are as different as can be. Dhaka is terribly poor, a city of 13 million that has experienced out-of-control growth in recent decades as impoverished farmers flee the South Asian countryside in search of work, filling hastily-built tenement apartments and straining the city's already overtaxed infrastructure past the breaking point. (There are obvious analogies to Rio de Janeiro, Mumbai, Jakarta, and many other cities in the developing world.)

By contrast, Venice is a little jewel of a city, a tourist mecca steeped in history and filled with museums, churches, palaces, and other mementos from an era when the city was one of the richest and most powerful in Europe. Visitors flock to Venice's luxury hotels, its world-class restaurants, its famous arts festivals (such as the Biennale, which Mary-Jo and I attended), and its narrow cobblestone streets lined with designer shops--Fendi, Gucci, Armani, etc. etc.

Yet Dhaka and Venice have one big thing in common: Both are low-lying coastal cities that have long suffered from periodic flooding and are now threatened with massive destruction due to rising sea levels associated with climate change. As such, they represent the bleeding edge of a problem that will ultimately impact billions of people. With over 60 percent of the world's population living within 100 km of its seacoasts, the problems faced by these two cities will eventually threaten most of us.

And it is sobering to see how difficult those problems are to solve--not only for the people of Dhaka, who live in one of the poorest and least-cared-for nations of the world, but even for the relatively wealthy citizens of Venice, recognized the world over as one of civilization's great cultural treasures.

You've probably heard about the so-called MOSE (Moses) system, an enormous series of mobile floodgates designed to protect Venice from the effects of higher-than-normal tides by sealing off the city's famous lagoon from the rising waters of the Adriatic Sea. (The system has been described and explained in a number of television documentaries that have been seen the world over.) One of history's most massive engineering projects, including 78 movable steel gates, each 65 feet wide, 60 to 90 feet long, and 15 feet thick, MOSE is actually under construction and is scheduled for completion in 2011.

Yet already, just four years after the launch of the costly, controversial project, many environmentalists--including the mayor of Venice, Massimo Cacciari--are saying that the plan may already have been rendered obsolete by the accelerating pace of global climate change:

Labels: Bangladesh, Climate and Carbon, Dhaka, MOSE, Venice, Water

Over at Treehugger, another website that is worth a regular visit (and which we hear tell is the most-visited sustainability site in the blogosphere), we read a Chicago Tribune story about an ongoing environmental controversy roiling the Windy City. At its heart is a plan by BP to increase dumping of ammonia and suspended solids into Lake Michigan as part of a big refinery expansion program.

Now Mayor Daley, the regional office of EPA, and a collection of activists have pressured/shamed BP into backing away from its plan and sitting down at the negotiating table to work out an alternative, hopefully using new technologies that reduce the pollutants more effectively.

Perhaps the most interesting--and certainly the most telling--quotation from the article is this one:

"The environment is a prominent part of BP's advertising," said Sadhu Johnston, Daley's deputy chief of staff for environmental initiatives. "We're sure they can make it a prominent part of their actions too."

Notice what is happening here: The press and the political powers-that-be are holding BP to a higher environmental standard precisely because of the company's past public professions of commitment to environmental stewardship. If the current debate involved, say, ExxonMobil, neither the mayor's chief of staff nor the Chicago Tribune could use the company's own words against them--because Exxon has never tried to promote itself as a "green" energy company. An accusation of hypocrisy, which could hit home against BP, would seem irrelevant when aimed at another company.

On the one hand, this might seem unfair, as if BP is being "punished" for its reputation as a relative "good guy" in the universe of Big Oil. But from a broader perspective, being held accountable for its environmental promises is probably a good thing for BP--provided they were sincere about those promises in the first place. What BP is now doing (admittedly under pressure) is the essence of stakeholder engagement: meeting with all the relevant, concerned parties to develop a program that will meet everyone's long-term needs, including those of BP and its stockholders.

Running ads like BP's declaring yourself the "beyond petroleum" company dedicated to eco-friendly energy solutions is a little like standing up at a holiday party and announcing your intention to go on a diet and lose forty pounds in front of all your family and friends. You'd better not say it unless you really mean it. Because if you don't mean it, you're going to feel mighty foolish a week later when your sister or your best friend catches you scarfing down a pint of Ben & Jerry's.

ADDENDUM: If you're interested in more detail on the BP/Lake Michigan saga, here is a good story from the online Columbia Journalism Review summarizing both the unfolding controversy and the well-crafted coverage it has received from the city's two main newspapers.

Labels: BP, Chicago, ExxonMobil, Role of Government, Waste, Water

One thing I learned when writing The Triple Bottom Line and speaking to audiences about its message is that you can't tell people something and expect it to stick. You have to show them. A gripping story is much more powerful than a lecture.

Sustainability is the worst of buzz-words, and I am always looking for ways to make it come alive. What does it really mean to meet the needs of today without hosing future generations?

Climate change seems the obvious example: Unless we take steps now, painful and expensive as they may be, our children and grandchildren will experience much greater pain and be forced to spend much more of their GDP dealing with the problem than we will.

But that's telling . . .

Here's showing: The town of Newtok, Alaska is in danger of being washed away due to rising sea levels and melting permafrost, according to the New York Times. Eventually the 315 residents will need to be evacuated at a cost of $130 million, or almost $413,000 per person, says the Army Corps of Engineers.

Thirty or fifty years from now, when our kids are in charge, if they have to move three million people away from the coasts, it will cost them a staggering $1.2 trillion, a number which could be much larger for two reasons. First, the costs per person could be higher when you consider the roads, sewers and the like that would have to be replaced (fully loaded Katrina-related costs are estimated at $200 billion). Second, because 150 million of us live within 50 miles of the coast today, including everyone in Manhattan and California, the number of people needing to be moved thirty years hence could be much, much higher.

No wonder insurance companies are lobbying Congress for relief and sponsoring boardroom seminars on how to deal with climate-related risk. But it will be my children and yours that will be left holding the bag, not AIG.

A billion spent on prevention today could save trillions tomorrow.

Labels: Alaska, Climate and Carbon, Newtok, Water