By Rona Fried, Ph.D.
Steel, often thought of as the symbol of the Industrial Revolution, now carries a recycling symbol. More than half the steel produced today is made from scrap. Paper mills are moving from the forest to the cities, as they hone in on the source of abundant feedstocks - scrap paper. In New Jersey, a state with little forest cover or iron ore, 13 paper mills run only on waste paper and eight steel mills manufacture steel largely from scrap. Why is this? Natural resources are increasingly scarce and thus more expensive; waste is plentiful and increasingly, abundant.
The blueprint for how business is conducted is shifting from Industrial Age operating assumptions of "take, make and throw away" to fit the situation society faces today. It makes sense to use scare natural resources sparingly, and keep them circulating in the system. Society, in its instinctual desire to survive, is tightening the screws on companies that refuse to play by the new rules. The authors of Interface Inc.'s 1997 Sustainability Report say, "We believe institutions that continuously violate these [natural] principles will suffer economically. The walls of the funnel will continue to impose themselves in the form of environmentally concerned customers, stricter legislation, higher costs and fees for resources and waste, and tougher competition from companies who anticipate the narrowing limits and adjust accordingly."
Companies, these days, find more freedom through adaptation and reinvention than by retaining the status quo, an indication that a profound transformation is underway. Leaders from many disciplines believe we are witnessing and participating in a societal transition on a scale comparable to the Agricultural and Industrial Revolutions - the Environmental Revolution .
Societal Operating Assumptions |
| Industrial Age | Environmental Age |
| Extractive | Renewable |
| Linear | Cyclical |
| Abusive | Benign |
| Wasteful | No Waste |
| Labor Productivity | Resource Productivity |
Presented by Ray Anderson at the 1999 CERES conference
|
What Lies Behind this Societal Transformation?
Ken Wilber, considered to be one of the great philosophers of our time, proposes that succeeding world orders transcend and include previous ones. The limiting factors of one Age cause its demise; it is subsumed by a world order that includes the best of the outgoing Age, but transcends it. The microscope of science allowed us to study nature down to its smallest parts and, during the Industrial Age, we discovered what the world is made of. This empirical investigation of nature resulted in wondrous inventions like plastic, televisions, and silicon chips. We have advanced tremendously through this period but the exclusive focus on the 'left-hand path' now causes more problems environmentally and socially than it solves. The worldview we are groping toward, according to Wilber, includes this 'left-hand path' and transcends it by integrating the equally important 'right-hand path' dimensions of subjectivity, quality, values and intuition.
Wilber also believes that society is evolving by widening and deepening its focus from the small group or tribe to a global worldview. Individuals can appreciate our environmental and social crisis, he says, and "more important, possess the moral vision and fortitude to proceed on a global basis," only when we reach this global level of consciousness. When this happens, for the first time in evolution, "we will look through eyes that see a global world, a world that is de-centered from me and mine, a world that demands care and concern and compassion and conviction."
How Do We Get There?
A 1997 survey of Canadian and American executives conducted by the Society of Management Accountants of Canada asked business leaders why their company considered sustainable business practices important. The most important reason given, after compliance with legal requirements, was "because it's the right thing to do."
In our global economy, many corporations post revenues and assets higher than the gross national product of many countries. Business is a more powerful institution than government. As global consciousness and social values come to the forefront, the private sector is increasingly called upon to go beyond compliance and participate in fundamental ways as leaders of society. The Industrial Age view that business' sole function is to produce products, services, and profit is less and less acceptable to society.
Carl Frankel sees it this way: "A handful of powerful forward-thinking decision-makers and policy-formers can really make a difference. We are battling for the hearts and minds of 50 people. That's why people like Ray Anderson of Interface are really important."
Anderson presented the "Amoeba Process of Progress" at the 1999 CERES conference, depicted in Figure 2. It shows that people approach change along a bell curve. There are small numbers of Early Movers, a great mass of Mainstreamers, and a small number of Resisters. Since the precepts of sustainable business grind against business-as-usual most people view it as "over there, on the other side." It seems laughably impossible to all but the Early Movers who can sense the potential. As this pioneering small group probes further and further into the waters of sustainability and prove it is indeed possible, and profitable, the Mainstreamers follow. When the great mass dives in the very definition of what "mainstream" is changes to the "new sustainable mainstream". At this point, the few Resisters left are food for the regulators. Ghandi said, "First they ignore you, then they laugh at you, then they fight you, and then you win." Where is the business community at this juncture? In the 37 years since the publication of Silent Spring, the book that sparked the environmental movement, corporations have learned to accept "compliance" as business as usual. Many of the largest firms are well along the way toward reducing their footprint by embracing eco-efficiency. Of course, there are still many firms, especially small ones, who still view environmental concerns merely as a cost of doing business. But the number of firms that understand the transition to sustainability offers them a true business opportunity is on the rise. The argument of the 1980s, - that environment and economy are incompatible - is no longer the conversation. The "fight" seems to be over.
What does "winning" mean? It means people capturing the vision that our lives will indeed be richer when we bring "values," the stuff that makes us human, into the picture. It means seeing the limitless business potential in re-ordering clean water, air, trees, animals, and people as the first priorities. Like a World's Fair visitor observing future trends with awe, it is exhilarating to watch an "oil company" re-invent itself as an "energy" company; a company that expands its markets and prosperity by providing clean, renewable energy. Or a company that can look beyond "making cars" to see itself as providing clean, efficient transportation. Such changes require courage and a sea-change in consciousness. As Bill McDonough says, the thrill is not in "getting to zero waste," but in unleashing creativity through a new vision of abundance.
The list of corporate leaders with this vision is growing paving the way for others to follow. Most everyone in the field knows of Ray Anderson's epiphany and subsequent complete embrace of sustainability for Interface Inc. John Browne, CEO of British Petroleum, surprised the world when he announced a $1 billion investment in wind and solar energy, making it one of the world's largest manufacturers of solar equipment. BP Amoco is converting 200 service stations in 11 countries to run on solar power, making the company one of the world's largest users of solar power.
Royal Dutch Shell is running quickly behind, committing $500 million to renewable energy, and exiting the Global Climate Coalition. Shell aims to capture 20 percent of the international commercial market for rural solar electricity systems, worth an estimated $1.1 billion, over the next five years. The heads of two natural gas firms, Ken Lay of Enron, and George Verberg, of Gasunie in the Netherlands, see the natural gas industry as a bridge from the fossil-fuel-based energy economy to a renewable-fuel energy economy; the natural gas infrastructure can be used to carry hydrogen instead of gas. Enron purchased Zond, a wind company, and is a major investor in Kafus Environmental Industries. In fact, Early Movers are stepping forward in every industry sector. HOK, stands out in architecture and design, Herman Miller in office furniture, Scandic in the hospitality industry, IKEA in retail, Xerox in office equipment, Philips in Electronics, to name a few. Universities worldwide are streamlining operations and insisting on environmental construction of new buildings. Leading business schools such as Kellogg, University of Michigan, and Kenan-Flagler are integrating sustainability issues into the core curriculum.
In addition to eco-efficiency efforts in internal operations, the sustainable sector of most industries is where the action is. All that is lacking is a commitment from more of the largest corporate players to turn the economy around.
Agriculture/Natural Food Products
Although it still represents less than two percent of total food sales, the U.S. organic industry has been growing at 24 percent annually for the past 6 years. It is expected to jump from its current level of $4.2 billion to $6.6 billion by 2000. Organic farmers receive premium prices for their products and are expanding their acreage while conventional farmers tied to the chemical/pesticide cycle have been hanging by a thread for years. Similarly, traditional supermarkets grow by only 2-3 percent per year and operate on slim margins.
The European organic food market, also at less than 2 percent of total food sales, is expected to expand to as much as 10 percent by 2006. With a population of 370 million, Europe has more potential than the U.S. The UK imports 70 percent of its food, and Germany - the largest organic food market there at $1.6 billion and growing at 30-40 percent annually - imports 50 percent. The Japanese market is similar to Germany's and will grow to $2.6 billion by 2000. Canada is also experiencing great demand for organic products.
Design & Construction
Thousands of green building pilot projects worldwide shows that sustainable design principles and environmental building materials work. Now these principles are being integrated into government policy. In the U.S., the GSA, DoD, U.S. Navy and Army, USPS among other agencies, are crafting contractor guidelines to ensure the billions of construction dollars they spend each year are deployed sustainably. The Naval Facilities Engineering Command's Whole Building Guide, for example, defines sustainability, details the principles involved, and lists 14 criteria to use when evaluating architectural and engineering firms, including energy-efficient design, life-cycle analysis, and indoor air quality.
The world's first green post office opened in late 1998 in Ft. Worth, Texas, made entirely with recycled-content materials and energy efficient systems. With more than 35,000 facilities nationwide, and about 700 new facilities constructed each year, sustainable design is now policy at USPS. The concept is spreading to all levels of government around the U.S. and New York is the first state to propose Green Buildings Tax Credit legislation.
The 48-story 4 Times Square building is the first skyscraper to incorporate sustainable design principles. The companies behind the project are majors in the industry - The Durst Organization, developers, Fox & Fowle Architects, and Tishman Construction Corporation. Conde Nast Publications and Skadden Arps law firm contracted for 75 percent of the building's space before the shovel hit the ground.
Over 750 buildings participate in the U.S. EPA's Energy Star Buildings Program including such notables as The World Trade Center, Empire State Building, Sears Tower, the Transamerica Pyramid, Time Life Building, and Mc-Graw-Hill Building. To qualify, a commercial building must be in the top 25 percent of comparable buildings for energy efficiency.
Then there are energy efficiency products such as high performance windows, passive solar design tools, solar water heating systems, transparent insulation, daylighting and building-integrated PV systems that offer avenues for growth. Research in France shows that simply using energy efficient windows with advanced glazing systems reduces annual energy needs by 45 percent in southern regions of the country.
Environmental Taxes
Even the intransigent tax system is showing signs of change. Public opinion polls on both sides of the Atlantic show 70 percent of the public support tax shifting away from income and toward environmentally destructive activities. The European Union has begun to offset income tax cuts with taxes on activities such as fossil fuel emissions, waste generation, and pesticides. A Japanese Transport Ministry advisory committee is looking at car taxes based on fuel efficiency.
In the UK, a proposed tax on energy use in the business, agriculture, and the public sectors would be returned as a 0.5 percent reduction in the employer's contribution to payroll taxes, and for energy efficiency and renewable energy programs. A surcharge would be applied for use of coal and gas, and for total energy consumption. Company cars would be taxed according to vehicle's carbon dioxide emissions. Other measures are being introduced to promote non-car commuting, such as a tax-free bicycling allowance for employee business travel. France, the world's second largest consumer of agrochemicals, is considering taxes on pesticides and fertilizers. Revenues would be used to fund pesticide and fertilizer reduction programs.
Transportation
Even as Americans are buying SUVs in droves, the automobile industry is spending billions to bring alternative fuel vehicles to market. In the U.S., Zero Emission Vehicle (ZEV) regulations become law in 2003 - a minimum of 10 percent (160,000) of new vehicles in California, New York and Massachusetts must produce zero emissions or earn ZEV credits from greatly increasing the proportion of ultra low emission or hybrid-vehicles on the road. Alternative fuel fleet requirements already affect 90 percent of utility vehicle purchases, and 25-75 percent of local, state and federal government purchases. Daimler-Chrysler announced plans to produce 100,000 fuel cell cars by 2005. GM and Toyota, among major car manufacturers, are forming partnerships to quickly commercialize renewable fuel vehicles. Auto executive surveys suggest that five to ten percent of the global vehicle market will use alternative fuel by 2010, and the fuel cell market may reach several billion dollars annually by that time.
