The new industrial revolution: sustainability spurs innovation

You would be hardpressed to find better examples of companies which get this than Interface, the market leader in commercial floor coverings, shoe company Timberland and Stoneyfield Farm, the world's largest producer of organic yoghurt. Although they work in very different markets, the chief executives of these companies lead from the front when it comes to balancing commercial concerns with an environmental and ethical framework – and profit by doing so.

Interface founder Ray Anderson's conversion came in 1994, when he had what he calls a 'spear in the chest' epiphany after reading Paul Hawken's The Ecology of Commerce. He had been seeking inspiration for a speech to an Interface task force about the company's environmental vision. Fifteen years and a sea change later, Interface is over halfway towards its vision of 'Mission Zero'.

FALSE CHOICES – NO TRADE-OFF

The company's promise was to eliminate any negative impact it might have on the environment by the year 2020, through the redesign of processes and products and the pioneering of new technologies. This promise also encompassed its efforts to reduce or eliminate waste and harmful emissions while increasing the use of renewable materials and sources of energy.

As Anderson argues, 'In our experience the business case is crystal clear. Our costs are down, not up. We have to dispel the myth that there's a tradeoff – a choice. It's a false choice between the environment and the economy.

'Our products are the best they've ever been. When our product designers began to approach product design through the lens of sustainable design it opened up a whole new world. It's been a wellspring of innovation. Nobody could have anticipated it. It was a total surprise. Because of that, our products are innovative and they're the best in the world in our category. Our people are just galvanised around this shared higher purpose.'

To him, this is a new industrial revolution: 'It's the contrast between the technologies of the first industrial revolution, which, by the way is still going on today, and the technologies of the new industrial revolution. The contrast will be pretty dramatic. The first industrial revolution technologies are basically extractive and the new technology will have to be renewable. The technologies are basically linear today, and in the future they've got to be cyclical. Today, they are driven by fossil fuels; tomorrow they must be driven by renewables. Today they are wasteful and abusive; tomorrow they must be waste-free and benign and focused on resource-efficiency.'

Jeffrey Swartz, CEO of Timberland, and grandson of the founder, emphatically echoes this view: 'We operate our business around the notion that commerce and justice don't need to be antithetical notions. We think we can make high-quality products and delight our shareholders, we think we can make consumers think this is a great company with great products and create a context where people are proud to come to work and feel dignified in the work they do. And we can do that in a way that's accountable in terms of running a forprofit business environmentally, socially and in terms of human rights. As a steward of the third generation, I know that if there wasn't a mission at the heart of what we do it would be hard to sustain what we do.'

But you have to take it step by step: 'As a CEO I get to make a choice about and be accountable for how many palatably irrational choices I make. If the sum of my choices is not palatably irrational I get fired. Whereas if you make a palatably irrational choice about the solar array in California and then you make a palatably irrational choice to be less ecofriendly in another dimension, then you balance it out. So you can say: perfect we're not but good we are and better we will be. It's about transparency all along the way so no-one can think it's greenwashing. So we still have polyvinyl chloride – PVC – in some of our boots. It's a terrible chemical. Yes, there is a way to take it out. But we can't afford to do it right now.'

Gary Hirshberg has been a fervent evangelist of the key role business and the way it markets itself has to play in tackling climate change since he founded Stoneyfield Farm in 1983: 'I think that we're known for having been talking about sustainability and organics practically before anybody, at least in business. And for having proven that there really is no trade-off between a focus on sustainability and organics and profitability.'

There is simply no alternative, he claims: 'The way I describe it is that many, many, many things that used to make sense won't any longer. And many, many, many things that used to be completely nonsensical will now be thoroughly rational. There will be those who just shut it out and you know what? Their businesses are going to fail because, by not preparing, they're not going to be ready.'

'We have a planetary emergency here. And nobody has the discretion or choice to ignore, as we have for 100 years, the impact of our economics on the planet. So I have shifted fully and forcefully into talking about the fact that this has a profitable agenda. It is a way to make more money, not something that's discretionary or ethical or even moral. Rather, this is very sound business.'

PROFIT FROM CLIMATE CHANGE

Be open to new opportunities, urges Paul Dickinson, CEO of the Carbon Disclosure Project. He co-founded this in 2000, to encourage the investment and corporate communities to work together to tackle the issues of climate change. 'The financial downturn is proof that we need to change and action the next great phase in our technology and society. The best way out of the downturn is to reduce waste, and to sell the technology of tomorrow. Have fuel-efficient car sales suffered in the financial downturn? No, they sell better. That's the lesson.'

Make it a central part of the corporate strategy, he argues: 'Just as I wouldn't encourage anyone to go into a new financial year without a business plan or a budget, I wouldn't encourage them to go into the new year without paying very close attention to climate change.'

Professor Wangari Maathai, founder of the Green Belt Movement and recipient of the Nobel Peace Prize in 2004, is actively engaged in trying to persuade all businesses that tackling climate change is good business: 'What can businesses do? For example, I'm trying to appeal to businesses to create green technology, to embrace it, and to create green jobs. We can engage in massive reforestation programmes and massive protection of forests. We can engage in technologies that will make us more efficient in the way we use trees, the way that we use wood and this would create more jobs.'

She encourages all companies not to be afraid of exploring seemingly radical options: 'I think they just need to explore and invest in research so that they can find other new areas of doing business. It doesn't have to always be oil or coal – we can change. People have changed all throughout history, so I think businesses just have to be brave and help us move into new areas.'

MAKE GREEN SEEM NORMAL

John Grant highlights the explosion of innovation that can come from incorporating sustainability into the core of your business: 'We are in a system which is in imminent danger of being hit by a number of these trucks. What we're recognising is that the way to work with this stuff is to focus on the truck first and everything else that you're doing second. Lots of people in business think you can incorporate it as a sub-issue but that never really works.

'Paradoxically, if you do put sustainability first you often come up with better business ideas, because while you have been looking for innovations that work for people and profit for 40 years, you hadn't looked seriously at the larger space for innovation marked out by people, profit and planet – which is one definition of sustainability. The practical result is that you find great new ideas that you never would have thought of otherwise.'

He believes that the challenge is not to make normal things look green, it's to make green things look normal: 'And that's where big household name brands can really help – they bring that sense of cosy familiarity; they really could make things like composting look normal, not weird.'

WASTE NOT, WANT NOT

Business leaders could be forgiven for feeling a bit overwhelmed and worried about where to start. Amory Lovins, cofounder of Rocky Mountain Institute and one of the Western world's most influential energy thinkers, offers this trenchant advice: go for radical resource efficiency: 'Just look for muda, that wonderful Japanese word that means waste, purposeless and futility. Look for any measurable input that produces no customer value, and set a goal of reducing it to zero.

'Don't benchmark how much muda you've got against how much your competitors have got. To hell with your competitors – go for zero muda. That's a tall star to steer by.'

As Swartz concludes, 'We're going to solve these problems and we're going to solve the next batch after that because we are this infinitely curious and deeply optimistic race called human beings. The sweep of time matters. There's no chance, none, zero, that my grandfather in all his imagination could have imagined today. And so I am decidedly and determinedly optimistic – not in an intellectual sense because I can always make the case that the sky is falling. But I've got to believe that's a fake assertion because it's in our hands.'

The Green Gurus

• Ray Anderson – founder and chairman of Interface Inc., one of TIME Magazine's 'Heroes of the Environment'.

• James Cameron – founder, executive director and vice-chairman of Climate Change Capital (CCC)

• Paul Dickinson – CEO of the Carbon Disclosure Project

• John Elkington – founding partner and director of Volans and cofounder of SustainAbility

• John Grant – author of The Green Marketing Manifesto

• Denis Hayes – President and CEO of The Bullitt Foundation, Chair of the International Earth Day Network

• Gary Hirshberg – president and chief executive officer of Stonyfield Farm

• Tony Juniper – former executive director of Friends of the Earth (FoE)

• Professor Sir David King – director of the Smith School of Enterprise and the Environment at the University of Oxford and former Chief Scientific Adviser to the UK Government

• Amory B. Lovins – chairman and chief scientist of Rocky Mountain Institute

• Professor Wangari Maathai – environmental and political activist, Nobel Peace Prize Winner

• Ricardo Navarro – founder and director of the Salvadoran Centre for Appropriate Technology  (CESTA)

• Dr Vandana Shiva – physicist, environmental activist and author

• Jeffrey Swartz – CEO of Timberland Worldwide

• Sir Crispin Tickell – diplomat, academic, environmentalist, author.

'As far as marketing is concerned, I think it's simply a matter of recognising that this is the way the world is going. Marketing is always a process of working faster than others in the direction the world is going. It's a bit like sailing in that respect: you still have a destination, but you have to work with the winds, tides and around the obstacles.'

'In future it will not be economic to produce goods and services which are harmful in any way. Your carbon emissions, to take one example, will fundamentally determine your costs, share price and ability to attract talent. The best position is prospective: to sense that this is a paradigm shift and there are new markets to be created.'

John Grant, Author of The Green Marketing Manifesto

THE PITFALLS OF GREEN-WASHING

Consumers are openly sceptical about a lot of environmental claims. So take care when boasting about your green credentials, assert the gurus. For example, at Interface, Anderson says, the company wouldn't talk about its vision for the first eight or nine years because he was wary of raising expectations too high.

But that has changed: 'In the last few years we have begun to put the marketing literature together to help the sales force present what we're doing. At the end of the day, people deal as often with the company behind the product as they do with a product. And so it's too valuable not to incorporate somehow into the marketing, and present that face of the company to the public.'

According to Professor Sir David King, the former UK government Chief Scientific Advisor and now director of Oxford University's Smith School of Enterprise and the Environment, green-washing is a real problem. 'In talking to companies, the real test for me is whether the whole issue of decarbonising and energy saving, and so on, is embedded in the company or whether it's just a marginalised operation intended for public relations and nothing else.'

'The PR side of a company's business is important, of course, because that's about companies being sensitive to consumers. But in order to take it to the next stage they then have to mainstream it.'

As Paul Dickinson notes, it could also backfire: 'There's more than one way something can be done and as things change, new customers are just sitting there waiting to be snapped up. You can even say that all this green-washing confusion creates opportunities for serious, honourable, authentic companies to come in and say, look, this is all a sham, but we are actually going to do the right thing and win customers on that basis.'

ABOUT THE AUTHOR

Laura Mazur business writer and partner in Writers 4 Management.

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Louella Miles business writer and partner in Writers 4 Management.

[email protected]