Download the presentation on the Business of sustainability.
The traditional view of business holds that its responsibility is to simply to maximise returns to its shareholders within the limits of the law. Unfortunately, this has led to many socially undesirable consequences, such as unacceptable risk-taking at public expense, and a tendency to externalise social and environmental costs wherever possible. Things that were not priced, were not costed. The standard production model of resource extraction, production and distribution, and finally disposal comes at a high price.
Fortunately a growing number of companies are now recognising that it is neither in their own interests nor those of society to continue with this ‘take-make-waste’ model. As the World Business Council on Sustainable Development has argued, business cannot thrive in societies which fail. Externalising environmental costs is also unsustainable in a world where there are real biophysical limits, and thresholds which we risk crossing. The challenge then becomes how business can thrive in a world of limits. Growing pressure from civil society, changing consumer patterns, increasing environmental regulation, and investor concern about long-term value have all added weight to the argument that the only good business is a sustainable one.
An increasing number of companies are paying attention to the amount and type of resources they use (take), the emissions they generate in the production and distribution process (make), and the durability, re-usability and final destination of their products (waste). We have seen, for example, the emergence of increased attention to sustainability in supply chains, of commitment to use only sustainably-sourced wood products, of extended producer responsibility for products made, and of commitments to phase out toxic ingredients and components. We have also seen innovative companies developing new products, technologies and solutions, exploiting the many new business opportunities which have emerged.
The least ambitious companies aim to improve their resource efficiency, reduce their negative impacts and be ‘less bad’. They aim to do things differently, an important first step. The more farsighted companies aim to transform themselves and their activities into positive forces for social and environmental good. They aim not only to do things differently, but also to do different things.
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Download the presentation on the Business of sustainability.
There are too many writers on this topic to list. Esty & Winston have spoken of a green wave which companies can either choose to surf (converting Green to Gold) or be swamped by. Porritt has looked Beyond the Business Case. And CPSL has collected the views of a number of key thinkers thinking about business in Facing the Future.
Sustainable Business or Corporate Social Responsibility?
Download the presentation on Sustainable business or CSR?
Corporate social responsibility (CSR), whilst having many laudable objectives, is distinct from the idea of sustainable business. It has different roots and different goals, some of which are complementary and others not. Both share the view that 'business as usual' can be short-sighted and can ignore the fact that companies have can significant negative impacts on the societies within which they operate. Both agree that, unless guarded against, companies can be tempted to act in short-sighted, unethical and irresponsible ways.
At the risk of simplifying, the CSR approach – sometimes called corporate citizenship – is to balance the economic objectives of the company with social and environmental objectives, to develop what is sometimes called the ‘triple bottom line’. It also stresses the need not only to satisfy the shareholders, but also to engage with a range of other stakeholders. The aim is to balance the interests of people, planet and profit, and ideally to find the sweet spot where all are in harmony. In practice these objectives are often incompatible.
The sustainable business approach starts with the idea that the economy – and the businesses which form a part of it – are a subset of the society in which they operate, and that both are subsidiaries of the biosphere. The problem is that the resources we extract from the biosphere, and the waste we generate into it, currently exceeds the regenerative and absorptive capacities of the planet. Sustainable business tries to use renewable resources for inputs, to minimise or eliminate toxic emissions and non-reusable waste, and to focus on activities which are socially-useful, or at least not socially harmful.
CSR starts with the company and searches for ways to act more responsibly in a troubled and turbulent world. Sustainable business starts with the planet and looks for ways to thrive and innovate within the Earth’s natural limits.
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Eco-efficiency and De-materialisation
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Eco-efficiency is about creating more with less. It refers to the drive to use fewer inputs or to reduce waste and emissions (especially ecologically damaging ones), whilst maintaining a given or increased output. It is highly attractive to companies because it can result in reduced footprint and reduced costs. In one sense it is not really innovative and can be regarded as commonsense business practice. Over the past 15 years numerous companies have embarked on drives to reduce their footprint in this way.
What is remarkable is the extent of the savings made in the process, as the ‘low-hanging fruit’ was tackled first. In regard to CO2 emissions alone, according to a survey by Chris Laszlo, 3M saved $200million and achieved a 35% reduction in CO2 emissions. WalMart reduced fleet fuel by 50% and saved $310m per annum in the process; DuPont cut by 72% (in part through disposals of subsidiaries) and estimated savings at $3billion; Polaroid cut by 25% – the examples are too numerous to mention. The lesson is that by paying attention to something not considered core to the business, remarkable cuts and savings have been achieved.
In reality optimisation cannot continue endlessly, and subsequent savings become harder to find. Some companies, such as Infosys in India, have nevertheless persisted and continue to reduce their emissions, in large part through redesigning their buildings, and their business processes. Eco-efficiency has been a first step on the road to sustainability for many companies. Critics have said that growth and increased net output can eat away the efficiency gains.
This has led to calls for a focus on radical de-materialisation, and rethinking product design, engineering process, and even the products themselves – do consumers want a car or personalised transport? Among the most notable proponents have been Ernst von Weizsäcker and the Factor Five movement with its call for an 80% improvement in resource productivity. This, of course, cannot be achieved by simple efficiency gains, but only by re-thinking, re-engineering and re-designing. It is also critical if one wants to make sustainability compatible with development.
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WBCSD’s 2000 document Eco-efficiency: creating more value with less impact.
Von Weizsäcker et al’s book Factor Five provides numerous examples of radical improvements in resource productivity.
Download the presentation on closed loop production
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Closed loop production is a key area of innovation, especially in the manufacturing sector. The traditional production process generates significant emissions and waste, and often waste that cannot easily be broken down in nature. The closed loop approach, by contrast, is inspired by nature and sees waste as food. The closed loop manufacturer aims for zero – aims to generate zero net emissions and waste. Indeed, in its best form, it aims to be positively re-generative. This is sometimes known as Cradle-to-Cradle, the expression having been popularised by Michael Braungart and Bill McDonough. Similar ideas have been developed by Paul Hawken and others.
Cradle-to-Cradle demands consideration of what goes into the product – are the raw materials used renewable and, if not, can they be re-used rather than discarded or down-cycled? Do they contain toxic chemicals which cannot easily be broken down? Have they been created from a simple palette of materials? Are they easy to dismantle or dis-assemble and have they been designed with their end-of-life in mind? Two commonly cited examples are Interface, a major global carpet and flooring company, and Herman Miller, a furniture manufacturer.
Interface aims to get all its inputs, including energy, from renewable sources (largely solar). It pays great attention to ensuring its products are compostable at the end of their life, or that the non-compostable elements can be returned to the supplier for reconversion into raw materials again. By focusing on modular carpets it enables the most worn parts to be replaced, rather than the entire carpet. It tries to see its customers as suppliers too, returning their unwanted products, and itself as a provider of carpeting services rather than simply the carpets.
Herman Miller’s products are seen in offices worldwide. Starting with a range of beautifully designed chairs, it has worked to eliminate toxic materials, and greatly reduced the number of components, making them easier to assemble, dis-assemble and reclaim the materials.
Closed loop production typically pays attention to design, chooses its raw materials carefully, works closely with suppliers, and uses life-cycle analysis when assessing the product. It also challenges traditional business models. Products often become services, customers can also be suppliers, and planned obsolescence is a requirement and no longer a dirty word. The increasing regulation of waste and hazardous chemicals, as well as the growing demands for producer responsibility, all contribute to the growing significance of closed-loop production.
Further Information
Download the presentation on closed loop production.
The documentary, Waste = Food, is viewable online.
A synopsis of the influential book Natural Capitalism, by Paul Hawken, Amory Lovins and Hunter Lovins.
Minimization or Optimization, an article by McDonough and Braungart.