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green@work
: Magazine : Back
Issues : Spring 2005
: Eyes on the Horizon
EYES
ON THE HORIZON
What Corporate Sustainability Leaders See in the Years Ahead
As we begin 2005, some of the trends and events of
the past year are bound to shape the movement toward sustainability
in the near future. Russia ratified the Kyoto Treaty, bringing it
into force in February 2005. President Bush was re-elected, ensuring
the continuity of current U.S. environmental policy for the next
four years. Oil prices spiked to more than $50 per barrel and have
remained volatile, raising new interest in renewable energy technologies.
So what does all this mean for businesses and their pursuit of
sustainability? green@work asked several leaders in the corporate
sustainability movement to share their insights in response to the
following question:
In your view, what will be the key trends and developments
over the last half of the decade, with respect to the environment
and corporate sustainability, and how will the business community
respond?
Bill Malloch
General Manager, Environmental Business Opportunities for Nike
Global Footwear, Nike
I believe that we’ll see more collaboration between design and
engineering to address the challenges that an increasing number of
educated consumers are demanding, with new tools emerging as vehicles
for companies to develop better products and engage more deeply with
their supply chain.
Consumer interest in sustainability will also become clearer. A growing
community of consumers is already asking for products with fewer chemicals
and less waste that, at the same time, don’t compromise on performance,
style and value.
I also see product chemistry becoming a driving force in product design
and development. There are thousands of chemicals used in commerce
today, and surprisingly little is known about them, their interactions,
and their effect on human health and the environment. Forward-thinking
companies are addressing this issue by developing screening tools
to help identify chemicals of concern. These tools reach well beyond
regulations and require deep supply chain cooperation. Leading innovators
will develop sophisticated assessment tools and mechanisms to collaborate
around product chemistry.
The answers will be found within the thousands of excellent people
innovating for brands that believe that business can operate in favor
of the future.
Steve French
Managing Partner, The Natural Marketing Institute (NMI)
We are optimistic about the future of the environmental marketplace
and the influence that consumers have to affect corporate sustainability
practices. Based on three years of trends that NMI has been observing
within our LOHAS Consumer Trends Database™, we expect to see
continued increases in consumer usage of environmentally friendly
products, such as organic products, hybrid cars and green building
products, among others. Usage of these products is projected to increase
not just among core “green” consumers, but among more mainstream
consumers as well.
This anticipated growth is, in part, a function of manufacturers understanding
how to market eco-friendly products through various communications
strategies—emphasizing both conventional and green product benefits.
Organic foods are great-tasting and use no pesticides; hybrid cars
get higher gas mileage and create less pollution; green homes save
money on water/energy bills and are conserving the planet’s natural
resources. The markets for these products have all expanded well beyond
the early-adopter or niche consumer base, are growing at double-digit
rates, and show plenty of room for continued growth.
Consumers wield a tremendous amount of power to influence business
practices, and business needs to pay attention to that. Consumers
are attracted to environmental and sustainable products because they
not only satisfy consumers’ basic functional needs, but they
also fulfill an emotional need to “feel good” about the
products and companies they use. Early movers in sustainability and
corporate responsibility are benefiting from the foresight in their
image, equity and profit margins. Their successes attract more businesses
to the marketplace, thereby giving consumers additional choices and
options. All the while, the environment and society benefit. We look
for continued growth in this dynamic marketplace.
David Rinard
Director of Environmental Performance, Steelcase Inc.
Increased federal, state and local environmental regulation is a trend
that shows no sign of abating. Federal regulation alone has grown
from 500 pages in 1965 to over 60,000 pages today. Additionally, initiatives
like Greenguard Institute’s product certification and the U.S.
Green Building Council’s LEED program, to name two, have established
environmental standards and reflect the growing power of the consumer
to affect change. These developments have made sustainability a “cost
of entry” for business—pushing industry to accelerate and
exceed compliance.
A second trend is connecting an organization’s environmental
strategy to its business strategy—expanding beyond a values-based
driver to one that also secures business results. This moves the environment
from a “feel-good” conversation toward one that is about
producing better business value. And with that we engage all the business
people, greatly magnifying the impact.
A recent Steelcase Workplace Index Survey demonstrates that while
61 percent of Americans say they will buy an environmentally friendly
product even if it costs more than another product, the majority also
believe that increased costs are the primary barriers keeping companies
from minimizing their environmental impact. Meeting business-to-business
and business-to-consumer demands will continue to drive environmentally
friendly activities, but that trend will flourish only as the costs
for doing so remain static or decrease.
Another trend is cradle-to-cradle thinking. As our environmental intelligence
has grown, recyclability and percent of recycled materials used are
no longer the only measures of a product’s sustainable performance.
This trend will drive businesses to utilize tools like life-cycle
assessments to make sustainable decisions throughout product development
and to give their customers a transparent method of product evaluation.
Overall, our environmental efforts will continue to evolve as we collectively
seek the knowledge and insight we need to make wise decisions about
our businesses and the environment, act on what we learn and share
it with others.
Katie Fry Hester
Advisor, SustainAbility
Meeting the challenges of the next decade (and beyond) will require
system-level changes focused on global governance and markets. While
recent corporate responsibility efforts have been impressive, these
new demands will force companies to shift up a gear or two.
In this light, the most pressing issue is the worrying vacuum in terms
of global governance. For example, environmental issues have moved
from local to global, from the periphery to the mainstream. While
Kyoto and carbon trading are potentially elements of a solution, we
still lack credible, effective global environmental regulatory bodies.
Nature abhors vacuums, so something will evolve to fill the gap.
In parallel, the complex triple bottom line agenda has grown in significance
with social and economic issues such as HIV/AIDS, access to pharmaceuticals,
human rights and civil liberties, and the anti-corruption drive. This
has forced corporate responses to become more strategic. In addition
to implications for corporate balance sheets, increasingly effects
will impact board-level priorities and brand management. Eventually
they will be felt at the level of business models.
Once viewed as the enemy, or at least as a handy set of scapegoats,
corporations are now seen as key agents of change. A growing range
of progressive alliances are forming to address many of the issues
listed above. In the process, we expect the focus will shift from
environmental, corporate responsibility and investor relations staff
to chief financial officers, research and development units, investment
bankers, venture capitalists and social entrepreneurs.
Mark Ryan
Manager, Environmental Initiatives, Antron“ Carpet Fibers, INVISTA
Inc.
Environmental trends over the last 10 years have evolved from simple
recycling and pollution prevention to more complex efforts to measure
and lower the total environmental impact and health effects of products
and services over their entire life cycle. Standards have been developed
for many environmentally preferable products (EPP) in categories such
as wood, power, paints, adhesives, carpet, carpet face fiber and even
maintenance. In the United States, presidential executive orders encourage
federal procurement of EPPs, and other countries and private sector
organizations are also adopting “green” procurement policies.
Further advancing this trend, the California Division of State Architect
is creating EPP screening criteria for a minimum of 20 product categories.
These standards are driving many manufacturers to evaluate more broadly
the sustainability of their products and services. Life-cycle inventory
and analysis is becoming an integrated part of doing business, and
better support tools are becoming available. These developments are
important: Some EPP programs have been controversial because of their
failure to incorporate broad life-cycle considerations. The International
Design Center for the Environment (IDCE), in Chapel Hill, N.C., is
developing industry-specific tools to make basic life-cycle analysis
(LCA) simple. They are also providing large end-users with access
to the data through an easy-to-use online user interface called “eLCie‘
Building a Sustainable World,” to be launched this summer. Additionally,
the U.S. Green Building Council has established a committee to incorporate
more LCA-based criteria into the LEED rating system.
Over the next 10 years, manufacturers and their suppliers can use
these new tools to better understand and evaluate the environmental
issues associated with their products and services. That will enable
many companies to significantly reduce impacts. Manufacturers and
suppliers who lead their industries may reap substantial rewards from
environmentally conscious customers for their efforts.
James A. Fava
Managing Director, Five Winds International
There will be a fundamental shift in sustainability strategy from
an operations focus to a proactive product life-cycle focus. This
shift will redirect corporate, government and other stakeholder resources
to understand, identify and manage risks, opportunities and trade-offs
associated with products, technologies and services over their whole
life cycle—a "cradle-to-grave" or “cradle-to-cradle”
perspective. Benchmarking of corporate sustainability performance
has revealed that significant gaps often exist in the way that companies
manage the risks associated with their products over the entire life
cycle, from material acquisition, manufacturing and use, to end-of-life
management. Businesses continue to take actions to fill these gaps.
Companies will also be taking action to identify opportunities for
value creation along the product life cycle. There are major social
needs (access to food, fresh water, health, for example) that if not
met will severely effect companies’ abilities to maintain sustainable
growth. While companies will continue to work to manage environmental
and social risks associated with their products, they will also increasingly
take action to identify and deliver new products and technologies
that contribute to enhancing the quality of life for consumers around
the world.
The fundamental shift to life-cycle-based product strategies requires
changes in well-established business practices that are not easily
modified. Systematic planning and actions are required to maintain
competitiveness and identify a competitive edge in today’s global
environment.
Scott Seydel
President, EvCo Research
Management continues to measure and trim internally controllable environmental
impacts: enhancing water use and energy efficiencies while reducing
solid, liquid and gaseous wastes. However, until recently, producer
responsibility for downstream or "down-chain" wastes was
a studiously avoided issue.
The early shifts by fast-food companies from polystyrene clamshells
to more compostable wraps and microflute cartons was less a matter
of stewardship than a reaction to public insistence; however, this
shift did succeed in drawing focus on the recyclability and compostability
of both consumer and commercial transfer packaging. Other milestones
include Coca-Cola's decision to incorporate 10 percent-recycled PET
plastic in its bottles, Starbucks' introduction of coffee cups with
10 percent-recycled content (developed with Solo and MeadWestvaco),
and Albertson's insistence that perishable food suppliers seek recyclable
corrugated boxes for retail store shipments.
Enter the Sustainable Packaging Coalition (SPC), a project of GreenBlue,
where representatives from the packaging, manufacturing, distribution
and retailing industries study the "value chains" through
which product and packaging pass. From the forest, the mine, the wellhead,
the rivers and sea, to the landfill, SPC members are working on how
to best assure that the end products of their commerce are cradle-to-cradle
compatible.
SPC and several similar groups are swiftly redefining sustainability
and environmental stewardship in MBA terms. They are determining how
to make or influence stewardship profitably by studying who within
the value chain stands to profit from impact-reducing change, and
how this profit can be passed up the chain as incentive to make those
changes.
The effect of value chain assessment of new and traditional manufactured
products and packaging will undoubtedly accelerate the trend toward
nonrenewable resource preservation and environmental stewardship during
the next half decade.
Hank Cauley
Partner, Ecos Corporation
The retreat of national governments, particularly in the United States,
for policy and regulatory leadership in most sectors will lead to
three overall trends. First, the distance between leading and lagging
nations in regard to sustainability will continue to widen.
Many European nations and Australia are examples of countries where
civil society is demanding and getting improved real performances
on sustainability issues by corporations. Conversely, the United States
lags in promoting sustainability. While civil society in the United
States is beginning to stir on the issues, catalyzed by concerns like
energy security, a discontinuous market shift in a demand for more
sustainable products in climate-impact-intensive industries like the
automotive sector is still years away. Leading global companies within
the business community are ignoring these differences across nations
and complying with society’s expectations at the highest level.
Many corporations have adopted corporate sustainability reporting
and increased transparency as policy, but emerging skepticism and
“green spin” will lead to demands for increased accountability
for stated claims. This will be particularly true for environmental
claims that have direct social impacts in local communities, such
as air or water pollution that have health consequences like asthma
or increased rates of cancer. Leading corporations will treat environmental
and social sustainability issues as linked and be able to point to
real results on the ground that have been independently verified.
In reaction to the above, the business community along with non-governmental
organizations will drive the third trend, which will be the acceleration
of creating groups that act as conveners for discussing contentious
issues, setting voluntary benchmarks and measuring progress upon request.
These consortium organizations will draw their memberships from diverse
stakeholder groups, outside of government, and be a safe ground for
businesses and civil society groups to engage constructively. While
a few market campaign groups and corporations may not participate,
competitive advantage in both non-profit and for-profit worlds will
accrue to those groups that have the public’s trust. |
