Join experts and practitioners as they consider what it takes to gain and maintain a green advantage. New voices will weigh in as this roundtable progresses. And we want you to be part of the conversation.
Ray Anderson, Founder and Chairman, Interface, Inc.
Jeffrey Hollender, President & Chief Inspired Protagonist, Seventh Generation
Sheila Bowman, Senior Manager of Outreach and Education, Seafood Watch
Balu Balagopal, Senior Partner & Managing Director; Global Topic Leader, Sustainable Development; The Boston Consulting Group
Kathrin Winkler, Senior Director, Corporate Sustainabipty, EMC Corp.
Wilpam A. Swope, Vice President & General Manager, Corporate Sustainabipty Group, Intel Corp.
Mitch Jackson, Director of Environmental Affairs and Sustainabipty, FedEx
Francois Ajenstat, Director of Environmental Sustainabipty, Microsoft Corp.
Charles Kane, President & Chief Operating Officer, One Laptop per Child
Mark Stoler, Director, Environmental, Health and Safety Operations, General Electric Co.
Bob Langert, Vice President of Corporate Social Responsibipty, McDonald’s Corp.
Jimmy Guterman, Executive Editor, MIT Sloan Management Review
Ray Anderson was working toward sustainability before sustainability was cool. As founder and chairman of Interface, Inc., the world's largest manufacturer of modular carpet, Anderson has shown how a committed company can rethink a product previously notable for its noxious effects on the environment. Since 1995, the company has reduced its waste more than one-third; he says Interface is “on track” to be sustainable by 2020.
In the beginning we set out to become sustainable because it seemed like the right thing to do, and our customers were asking. We responded to our customers. The whole thing started with our customers asking what are you going to do for the environment, and we had no answers. When we heard what the customers were saying, it quickly became clear, hey, this is smart, too. Our customers care; we have to care.
As our waste elimination effort began, so did the savings. We got ahead of the cost curve and then it was really easy to take some of those savings and reinvest them into R&D. That is the other big piece when you moved toward sustainability. Once you've got your people aboard, you've got to figure out the technology challenge.
I speak 150 times a year, so there's interest in hearing the Interface story. But I honestly don't know to what extent our model has influenced other companies. CEOs don't call up and say, hey, thank you for the model. That just doesn't happen.
Businesses that are smart about sustainability know it cannot be the program of the month or even the program of the year. It's the program of a lifetime. It really has to be that long-term commitment, and it has to be more than nice words. There's got to be a commitment to action to doing this stuff. Greenwashing is the kiss of death. If you think that anyone might use that word to describe what you're doing, you've got a real problem. I know that's true in our marketplace.
We went through one recession earlier this decade. We came out of it in '04. It was very clear that we survived largely on the strength of the sustainability initiatives, what they had brought to our operations: the reduction in cost, the better products, the motivation of our people, the goodwill of the marketplace. All of those were working right through that recession. As the marketplace went down 36 percent, our sales went down only 17. We gained market share through that recession. We believe the same thing will happen this time.
Jeffrey Hollender, the President & Chief Inspired Protagonist of Seventh Generation, is the co-author of What Matters Most and How to Make the World a Better Place.
Catherine Roche correctly observes that many CEOs “are wrestling with the question of how much to communicate.” How bold should they be? I say: It depends on the circumstances.
When making green claims for a product, service, or the brand itself, CEOs should proceed cautiously, as do-good marketing campaigns rightly invite scrutiny and skepticism. A company that declares itself to be “sustainable” or “responsible” must first do the hard work of instilling those attributes at the very center of all its activities. The British retailer Marks & Spencer uses a giant electronic ticker in the lobby of its London headquarters to continually flash quick-hit progress reports on the company’s social and environmental initiatives. The scrolling data’s implicit message: M&S is genuinely committed to “doing good;” more importantly, it’s holding itself accountable for the results. An authentically green company does what it says it will do. If its actions fail to live up to its promises, consumers will quickly conclude that it’s just a poser.
On the other hand, when owning up to a misstep, a truly green company will jump to make its actions transparent. My company, Seventh Generation, strives to bare its less-than-admirable impacts on society and the environment, but we don’t always succeed. Last year, the Organic Consumers Association publicly disclosed that our dish liquid contained detectable levels of the contaminant 1, 4 dioxane. We had the least amount of dioxane of any dish liquid tested, and we are working with our supplier to eliminate the contaminant entirely. But no matter. The revelation challenged one of our most valuable assets—our reputation. It also taught us a valuable lesson: It doesn’t pay to be opaque. As painful as it would have been for us to disclose the problem, rest assured that it hurt far more when an outside agent did it for us.
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Companies that want to gain an advantage from sustainability need tools. Seafood Watch, a program developed by the Monterey Bay Aquarium, is one such tool. It began as a service to consumers but has proven useful to businesses, too. What started as a paper list to help individuals make sustainable choices when they ate fish – sustainable meaning the sources can exist over the long-term without compromising species survival or ecosystem health – is now available on everything from wallet card to iPhone application. Sheila Bowman is the senior manager of outreach and education for Seafood Watch.
We’ve distrbuted 27 million pocket guides over the past nine years, so we know we’re getting the word out. Consumers are where we started, and we want to keep pushing them, but we’re focused on helping companies make choices for healthy oceans, too. We have large companies coming to us, telling us that their customers want them to be more responsible. The message is filtering up from consumers to businesses. Among our 180 partners are Aramark and Compass Group North America, two of the country’s largest distributors of fish. These huge distribution houses know that sustainability is here to stay and they want information so they can start selling the right products.
When these companies go to prospective clients, they are often asked what their green practices are. Aramark, for example, works with many universities, where students want seafood to be seasonal, local, fresh, and organic. These companies are responding to market pressures to become more sustainable and more competitive. Once one company does it, the others look at sustainability more serious. And we’re helping them do that.
Balu Balagopal is Senior Partner and Managing Director as well as Global Topic Leader, Sustainable Development, for The Boston Consulting Group.
My first advice to companies trying to deliver a sustainability message is to not overextend and get ahead of themselves. Don’t try to communicate all your great actions and intents unless they are completely backed up by actions. Otherwise, it’s just greenwashing. Customers are generally skeptical and they’ll see through it. It’s essential that any communication come on the heels of a clear, observable track record. Some companies prefer not to communicate at all until they have that track record, in the belief that less is more. That’s a public relations strategy choice.
As it relates to communicating the sustainability of products and garnering price premiums from that, companies have to do it in a way that’s consistent with the needs, wants, and aspirations of the specific segment they’re targeting. And don’t forget design. Providing tangible good design benefits are as important as whether a particular product is green.
Education is a very powerful force, even though people don’t necessarily view it as purely education. There’s always an advertising/public relations angle to it and consumers know it. You cannot divorce the two just because a message is primarily educational in nature. BP, for example, goes out of its way in its ads to say that all energy sources are important. It’s a good example of their particular educational message, which also speaks to their strategy. But their strategy is not the primary focus of the message. Intent can always be communicated, but in a world where people have accused companies of greenwashing, my personal advice would be to be cautious in your communications. If your systems and processes and people are not all in sync, there is increased probability that there will be no sync between what you’re saying and what you’re doing. Don’t take that risk.
Senior Director, Corporate Sustainability, EMC Corp.
The most obvious way for us to gain advantage from sustainability is via our offerings to the market. If we look at our environmental impact as a company,a significant portion is our use of electricity. But for every kilowatt-hour of electricity we use in our operations, there are five or six kilowatt-hours used by our customers. A key way for us to differentiate is to reduce use in our products. Rather than have a green product line per se, we drive efficiency across our product portfolio. You can use an efficient product in an inefficient way if you don’t pay attention, so we give our customers ways to run their infrastructure efficiently.
Companies need to embed environmental and social sustainability into their day-to-day business rather than add it as a separate function if they are going to get an advantage out of it. That way, employees get deeply involved. Our employee engagement initiative has leveraged the passion and talent of our global employee base. Employees are the best ambassadors for showing who a company really is. And employee engagement is where innovation comes from: innovative products, processes, ways of thinking. Environmental issues create common ground, connections, networking, across division that might not have connected before. Tthats great for employees: it gives greater context for their work. And it’s obviously great for a company to inspire that kind of collaboration.
William A. Swope
Vice President and General Manager, Corporate Sustainability Group, Intel Corp.
Intel has set a goal to reduce its total worldwide greenhouse gas emissions by 30 percent per unit of production from 2004 through 2010. By the end of 2007, Intel was on its way towards this goal as it had reduced normalized global warming emissions 20 percent below 2004 levels.
I’m not sure sustainability would ever be part of our marketing. Our historical customers—HP, Dell, Lenovo, Acer, the OEMs—they care a lot about our doing the right thing, but I don’t think there’s any price premium associated with it. Today, it’s just part of being a quality supplier. Our customers are demanding that we do it better in the future and we will.
Employee engagement is a big part of why this is working for years. We’ve spent more than $20 million on sustainability initiatives that came directly from employment suggestions. We try to empower employees so we can all live more sustainable lives.
We’ve been publishing an environmental report since 1994. We’ve been pretty consistent in paying attention to this before the current buzz.
Mitch Jackson is the Director of Environmental Affairs and Sustainability with FedEx.
The transportation delivery industry is highly competitive, which makes differentiation extremely important, and a focus on sustainability gives us a competitive edge in a number of ways. First, FedEx has a long history of innovation, which we extend into our sustainability efforts. For example, through collaboration with the Environmental Defense Fund, FedEx was the first company to have developed and put commercial hybrid-electric delivery trucks into service. Since that time, we've led our industry in working with EDF, suppliers and policymakers to help grow the cleaner truck market. Today more than 50 companies have purchased hybrid trucks, including our competitors, which we applaud. Another way that our sustainability programs help differentiate us from the competition is through our culture of efficiency. Customers are well aware of our time efficiencies, but what might not be as well known is how we achieve resource efficiencies that have benefits for the customer and consumer.
In the FedEx Global Citizenship Report (pdf) that was released in October, we outlined our goals to reduce greenhouse gas emissions 20 percent and increase vehicle fuel efficiency 20 percent by 2020. We're making progress against these goals, including the construction of a solar facility at our Oakland airport hub that when built in 2005 was the largest rooftop solar power installation in California. Today, we source 1.5 MW of power from solar-electric systems with another 1.4 MW installation expected to be activated in Cologne, Germany, in 2010.
Some argue that for a company to be considered socially responsible it must make environmental investments. Period. Even if there is no long-term value for the investment. In my opinion, this is just another form of greenwashing. For environmental programs to be sustainable, the effort must create benefit for the bottom line and the planet. Without meeting both of those requirements, the environmental program or product likely won't survive. The reverse is also true. If FedEx's business decisions don't make sense for the environment, that likely means we’re not being as efficient as we can be.
Francois Ajenstat is the Director of Environmental Sustainability with Microsoft Corp.
There are three ways a company can become more sustainable: implement sustainability into the way it runs its business, implementing it as part of an existing product offering, or implement it as part of a new offering.
The first of those three is traditional corporate social responsibility work. It shows you’re a leader, it might help your brand, it helps employee and stakeholder satisfaction, and it’s more symbolic than a business opportunity. We installed a private bus system that transports employees from neighborhoods to campus. We did it to ease congestion and drive employee satisfaction, but it removes over 30,000 car miles each week from the Seattle region. For employee recruitment, that’s a big deal. Future candidates look as sustainability as a key way to pick their companies.
As for implementing it as part of an existing product offering, we added power management features to Vista. Using them, customers can save $50 per PC per year. So rather than sell Windows based on features or extra widgets, now we can sell it based on reduced emissions and costs.
Our new product around sustainability is an environmental sustainability dashboard that midmarket companies can use to track energy and carbon emissions directly from supply chain. The power management functions in Vista will have bigger impact, but as far as communications goes you get a bigger bang with a new product. People know that the motivator behind the product is sustainability, and the whole story doesn’t get muddied with other things.
When your company tells its sustainability story, be sincere, be conservative, be fact-based. Don’t hide things. Be completely transparent. Don’t oversell.
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Charles Kane is the President & Chief Operating Officer with One Laptop per Child. The organization that puts out the famed “$100 laptop” isn’t in the computer business to make money, but it does influence the commercial laptop market. One Laptop per Child is a prime example of a nonprofit entity that is having an enormous influence on the business and sustainability initiatives of its for-profit competitors.
We’re very proud of creating the “netbook” market segment. The rest of the market didn’t think laptops could exist at this low price, but we drove them that way. These companies still don’t want there to be a low-price notebook PC in this space. It offers a very low margin compared to other machines. A year ago, a $900 notebook was unheard of, but now you can get machines for $250-300. And our technology is still very differentiated from what the commercial markets are producing. Our laptops are water resistant, drop resistant, very focused on power management and mesh [low-power networking] capability. None of those are present in the current set of commercial laptops. We didn’t want to get into the laptop business when we started, but no one would build the laptop we wanted. It might be different if we started today. But we want to continue to influence the commercial market, in part by continuing to push the price down.
We’re a nonprofit, but we have to be able to sustain ourselves. There are ways to self-sustain a business by putting a margin into it. That’s what we’re doing in Latin America. About 85 percent of our machines worldwide are in Latin America. We’ve taken a decision to spin out an OLPC Latin America that will be self-sustained by some very minor margins. They will be minor but they will be enough to sustain our model.
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Mark Stoler is Director, Environmental, Health and Safety Operations at General Electric Co.
Across our industrial businesses, we now have a wide variety of environmental products. It started much narrower but expanded. We don’t see sustainability as just tied to our energy and water businesses. Our aviation customers are looking for less noise pollution and more efficiency. So are our locomotive customers. Our health care customers are looking for energy efficiency and are paying close attention to lifecycle cost. These are trends we’re seeing across the board. The customers are asking for more efficient and less polluting products. Some of our customers are going that way on their own, some are going to be driven that way. But that is where everyone is going.
We always ask: Where can we spend effort to get the most cost return? We have to tie the environmental aspect to business trends. In 2000, GE was not in the wind business, but we saw the trends and thought we could improve existing technologies. Now we’re a big player. In 2000, we were not in the water business, but we’ve built the largest desalination plant in Africa. We have a huge business around technologies that reduce water use.
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Bob Langert is the Vice President of Corporate Social Responsibility, McDonald’s Corp.
We don’t think about sustainability from a competitive advantage viewpoint. We do things that make us a better company with better people, better able to make better decisions based on our values. We don’t think of sustainability as a program or initiative. Sustainability thinking is a mindset. From a governance viewpoint, for sustainability to be part of the decision-making process, we have to have a seat at the table. That gives us a huge leg up. Sustainability is not the sole lens, but it is an important lens to have. Our supply chain represents 80-to-90 percent of our impact on the world, so sustainability has to be a pillar of our supply chain.
We’re not bashful about saying that things need to be economically viable. You can always come up with a flash-in-the-pan sustainability initiative that takes care of things for a year or two, but the initiatives have to be deeply rooted in economics as well to last.
I can’t overestimate the power of working with outside experts. It’s a tremendous model of success and progress: match the right expert with the team, make progress based on science, and don’t be pressured to do it all by tomorrow.Join the conversation
Jimmy Guterman is Executive Editor of MIT Sloan Management Review.
We’ve had a diverse group of participants in this roundtable: different types of businesses, different positions, different goals. While following the roundtable over the past week and a half, it was fascinating to see how the perspectives diverged—and how much they had in common, whether they were representing a multibillion-dollar conglomerate or a spunky startup.
Two of the CEOs in the roundtable, Interface’s Ray Anderson and Seventh Generation’s Jeffrey Hollender, both run sustainable companies because, as Anderson says, it’s “the right thing to do,” but they both know that their high-profile commitment to sustainability is a source of competitive advantage. For Anderson, it’s a way to pick up market share in a downturn; for Hollender, it’s the benefits that come with following through on what you say you’re going to do—and being transparent about it. The Boston Consulting Group’s Balu Balogopal puts it even more bluntly: often it’s best not to talk publicly about what your company is doing regarding sustainability until you’re actually doing it.
Those in the trenches recognize that there are many ways to bring this conceptual approach into action. Kathrin Winkler at EMC and William Swope at Intel seek to engage employees for new sustainability ideas, Francois Ajenstat at Microsoft showed how a company can reposition a venerable product based on its sustainability offerings, and Mitch Jackson at FedEx and Bob Langert at McDonald’s talked about the value of working with outside experts.
Some of those outside experts are from nonprofits. Sheila Bowman from the Monterey Bay Aquarium discussed how her institute is working with large companies to make better sustainability choices, and Charles Kane of One Laptop per Child showed how his nonprofit, almost inadvertently, created a whole new market for sustainable PCs.
Mark Stoler from General Electric has one particular insight that it’s worth dwelling on for companies deciding whether to focus on becoming more sustainable. GE is in many, many businesses, but it’s not only the energy businesses that have to pay attention to sustainability. “That is where everyone is going.” Which means we know what will happen to those that don’t.
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