Sustainable Business: Good News on the Environmental Front

Sustainable business practices that help protect the environment and reduce global warming are growing rapidly, as companies find it helps the bottom line. A 1995 Vanderbilt University analysis found that in 8 out of 10 cases, low-polluting companies financially outperformed their dirtier competitors. In recent years, over 300 multi-national corporations joined the UN Global Compact, pledging to support environmental protection, human rights, and higher labor standards.

Sustainable and “Green” Business is On the Rise

I’m one of those who’s been working on environmental issues forever–from political activism in the late ‘60s, to co-founding a small “eco-village” in the 70’s (Sirius Community in MA) with practical demonstrations of solar and wind energy and organic agriculture, to policy work for President Clinton’s Council on Sustainable Development in the ‘90s. More than 12 years ago, the Council was working with CEOs of major companies and directors of key environmental groups to create innovative approaches to stopping global warming and creating sustainable communities.

So I’m especially happy to see the environmental movement get a real boost from the popularity of Al Gore’s dramatic film, An Inconvenient Truth. The film has greatly raised the visibility of the global warming issue, as more and more people jump on the bandwagon and “green” practices become the latest cool style featured on the covers of Newsweek and Time magazines.

Many large multi-national corporations are now making major changes, following the lead of small innovative companies which have laid the foundations for years. More than 560 pioneering San Francisco Bay Area firms are certified as “green businesses” by the Alameda, California county government and the Sustainable Business Alliance. Here are a few examples of large and small companies:

Ray Anderson, founder of Interface Carpets, the world’s largest commercial carpeting manufacturer, trained 8,000 employees in environmental sustainability, with the dramatic goal of reducing pollution to zero percent in the next few years. Instead of buying a carpet, you now rent a carpet, and when it wears out, you bring it back to be recycled, and are given a new recycled one. Anderson estimates that his accompany has already saved $185 million on waste reduction efforts alone.

Starbucks Coffee has partnered with Conservation International to work with its farmer/suppliers in Mexico to promote water and soil conservation and reduction of chemical fertilizers and pesticides. Home Depot recently introduced a line of lumber products grown through sustainable forestry practices.

Responding to pressure from environmentalists, McDonald’s and Wendy’s have developed more ecologically friendly packaging. At Hewlett-Packard each product has a steward whose job is to minimize its ecological footprint by reducing packaging, reducing toxic materials in the product, increasing recycling, etc. By reducing, reusing and recycling, Fetzer Wine has reduced its garbage by 97%. It buys recycled paper, cans and glass for their products, has switched from petroleum to biodiesel fuel, and farms its own grapes organically.

Mistsubishi Electric American specified that their suppliers could not provide them with paper or timber from old growth forests. Once they set the example, almost 500 other companies followed their lead, and together they saved four million acres of forest.

Sales of Toyota’s popular energy-efficient hybrid car, the Prius, climbed to 250,000 by May 2006, and the company is advancing its research and development of plug-in hybrids which will have extended range capacity using only the electric drive. Toyota and Menicon Co., Ltd., Japan’s largest manufacturer of contact lenses, have jointly developed an efficient manure composting process which helps solve environmental problems caused by the storage of animal waste in agricultural areas, using thermophilic bacteria and a new enzymatic agent.

Organic Valley (the second largest producer of organic dairy products) saw 25% growth in past few years. 45% of its profits are shared with farmers; 45% with employees, 10% with the community. Seventh Generation, which commands 48% of the natural household products market, saw revenue growth of 40% in 2004.

Whole Foods, the world’s leading natural and organic foods supermarket recently made the largest renewable energy purchase anywhere to offset 100% of its electricity use in all 180 stores. It is purchasing more than 458,000 megawatt-hours of renewable energy credits from wind farms—the same environmental impact of taking 60,000 cars off the road or planting 90,000 acres of trees. Whole Foods was ranked for nine consecutive years by Fortune magazine as one of the “100 Best Companies to Work For,” and CEO John MacKey says shareholders’ interests take a back seat to customers’ and workers’ interests. Executive salaries are capped at 14 times the average worker’s pay. Co-President Walter Robb, says, “We’re not retailers who have a mission—we’re missionaries who retail.”

Recognizing the global importance of climate change, Coldwater Creek, one of the fastest growing women’s clothing retailers, made a decision recently to offset 100% of its energy consumption with renewable energy certificates in order to dramatically decrease its impact on the environment. Over the next three years, the company has committed to buy more than 217,000 megawatt-hours of wind-generated electricity. By supporting wind energy, Coldwater Creek is preventing more than 299 million pounds of CO2 – a key greenhouse gas – from entering the Earth’s atmosphere between now and 2009. This is the equivalent CO2 savings of taking nearly 30,000 cars off the road for one year. This is being accomplished through the purchase of an innovative product known as renewable energy certificates, which are independently audited by the non-profit Center for Resource Solutions. Renewable energy certificates provide a means for consumers to purchase and support wind power that is “injected” into the power grid by renewable energy producers.

Wal-Mart made a huge move in 2006 into organic foods, eliminating chemical fertilizers, antibiotics, etc. Amory Lovins, co-founder of The Rocky Mountain Institute and a world-respected pioneer in energy efficiency, is working closely with Wal-Mart to reduce green-house gases. Wal-Mart also pledged to run entirely on renewable energy and produce zero net waste. It committed to double the fuel efficiency of its huge truck fleet in 10 years – saving $300 million in fuel costs per year.

While Wal-Mart’s track record of concern for the welfare of its employees or the local communities where it builds is infamously dismal, its bottom-line calculation of the profitability of these moves will motivate other companies in similar directions. And its potential influence on its world-wide supply chain could be far greater than that of the U.S. government.

There are three signs that demonstrate a company’s authentic conversion to more enlightened practices: 1) publicly announced specific goals and timetables; 2) buy-in at every level of the company and 3) transparent reporting. So Wal-Mart will be closely watched.

The sustainable business movement is one of the hopeful signs that business, as the most powerful institution in world today, may be transforming from within. As World Business Academy cofounder Willis Harman remarked many years ago, “The dominant institution in any society needs to take responsibility for the whole, as the church did in the days of the Holy Roman Empire.” Each day, more and more businesses are helping create a better world by becoming more socially responsible–honoring “people, planet, profit”—the triple bottom line. And their financial success is very convincing!

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