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Pondering the Sustainable Consumption Conundrum
I'm not sure whether it was strategic or serendipitous that the World Business Council on Sustainable Development released a report on sustainable consumption just a week before a recessionary Christmas — a time when countless millions were torn between the desire to shop and insufficient means to do so. Either way, it made for enhanced reading of what already was a pretty enlightening report.
The report's unimaginative title "Sustainable Consumption: Facts and Trends" (download - PDF), belies a bold premise: that companies need to start looking beyond "greening up" their products and services and begin embedding sustainability principles into their core business models — "delivering sustainable value to society and consumers, helping consumers to choose and use their goods and services sustainably, and promoting sustainable lifestyles that help to reduce overall consumption of materials and resources."
That's a tall order, one not easily achieved with the mindset of today's business leaders, or the incentives given most business leaders to grow at any cost. It's hard to imagine the preponderance of today's global companies shifting their business models to this degree, not to mention the preponderance of consumers deciding that maybe "having it all" doesn't necessarily refer merely to "stuff."
Or will the current economic meltdown change things? Is there a scenario in which global consumption patterns could change to embrace more sustainable products and levels of consumption? That's the trillion-dollar question.
Pondering the sustainable consumption conundrum is not new stuff for the WBCSD, a membership organization comprised of roughly 200 of the world's largest companies. For more than a decade, the group has brought together corporate giants like addidas, 3M, British Telecom, Henkel, Johnson & Johnson, Nokia, Procter & Gamble, and Sony to study the means by which companies can not only reduce the impacts of their products, but create new ones that meet the needs of those in both developed and emerging economies with little or no environmental and social impacts.
As far back as 1995, the group issued a policy statement noting that
Sustainable production and consumption involves business, government, communities, and households contributing to environmental quality through the efficient production and use of natural resources, the minimization of wastes, and the optimization of products and services. The WBCSD recognizes the need for business to take a leadership role in promoting sustainable patterns of production and consumption that meet societal needs within ecological limits. Business can best work towards these goals through responsible environmental management, enhanced competitiveness and profitable operations.
The response over the ensuing 13 years has been steady, albeit underwhelming, progress. Most manufacturers have made gradual efficiency improvements, reducing the waste, energy, water, materials, toxicity, and carbon embedded in their products and processes. Pollution prevention and "eco-efficiency" have been the watchwords, as companies found they could lower costs and reduce risks by cutting or eliminating emissions and other waste streams. Some companies have heralded their accomplishments through green marketing. Most don't bother, given that their successes amount to not much more than "doing less bad," a tough tale to spin.
But the WBCSD's newest report takes a notable turn. "This report signals a shift in the nature of the sustainable consumption agenda from the introduction of niche products and services to the embedding of sustainability principles into the core business model," it notes. In other words: "greening up" isn't good enough.
It's not that eco-efficiency isn't needed, says the WBCSD. It's necessary, but not sufficient. What's needed is a three-pronged approach:
Each of these three prongs strike me as an order of magnitude more difficult than the one before it. As I see it, Innovation — the growth of more sustainable products (a term, some would argue, that is oxymoronic: something either is, or isn't, sustainable) — is well underway. Each year, we see a steady parade of goods that are more energy efficient, less packaged, or require fewer resources in their manufacture, use, and disposal.
Choice Influencing — creating a market for next-gen green products that transform markets and engender radical innovation, new business models, and changes in customer behavior — is an ideal that never seems to become reality. Companies are inherently timid to disrupt consumers' routines, and consumers seem too comfy in their purchases and habits to make even smallish shifts in their behavior, even when it leads to better outcomes and experiences. It's up to disruptive technologies — the iPod and iTunes come to mind — to shift both market and individual behavior. Even then, the incumbents (e.g., record companies) will drag their feet for years in the name of preserving their dwindling market share.
The third prong, Choice Editing — "editing out" unsustainable products and processes — seems a pipe dream, a long slog of a journey that no one — corporate and political leaders alike — seem willing to undertake, let alone press others to do so, too.
Will the current economic turmoil change that dynamic? Will companies and consumers, chastened by their reversal of fortune, be more willing to consider new ways and means of production and consumption? For example, will citizens see virtue — for themselves and their communities — in community gardens, car-sharing, lending libraries for tools, local banks, and other co-operative and collaborative forms of conducting commerce? Will they open themselves to quality, not quantity, thereby changing the value propositions by which they shop?
Like I said, it seems a far-off vision, even on my more optimistic days.
The WBCSD is quick to point out the institutional barriers to this transformation. Among them:
There is currently no common understanding of what a sustainable product or lifestyle is. Business may determine the sustainability of a product based on a full life cycle analysis. Retailers, governments, and other actors may assess the "sustainability" or "un-sustainability" of a product based on varying disclosure criteria or societal pressure. As a result of this confusion over who determines the sustainability of a product, choices to edit the availability of certain products are often in conflict. Business, governments, and society (including consumers) must work together to define sustainable products and lifestyles.
Clearly, it won't be easy, but the opportunities seem limitless for those that get it right. As I wrote in my new book:
To a large extent, this is the ultimate green-economy strategy — enabling customers to reduce their impacts by doing business with your company. What is the opportunity to create products or services that become the green default — the no-brainer option that is better and greener? What is the opportunity to be disruptive — changing the economics, the business model, the market perception in a way that renders such barriers as the unaffordability and inconvenience of "going green" moot? What is the opportunity to create products that solve customers' problems — enabling them to fulfill their needs in a way that makes them genuinely part of the solution?
Any ideas?
December 27, 2008 in Business Practices, Green Marketing, State of the Art | Permalink | Comments (10)
Are Environmental Journalists an Endangered Species?
For all the media reports about a surge in "green jobs," one place we won't likely be seeing them is in the media itself.
The past few weeks and months have been devastating for environmental journalism. Just after Thanksgiving, Fortune magazine gave layoff notices to Marc Gunther, one of the leading business writers on corporate environmental practices (whose blogs also appear on GreenBiz.com), along with Todd Woody, whose coverage of clean technology has led the pack. (Gunther has been asked to stick around as a "contributing writer" and again chair next year's Brainstorm: Green event.) Over at CNN — which has been pushing hard its new Planet in Peril series — the network's entire seven-person environmental team, including stalwarts like veteran anchor Miles O'Brien and pioneering producer Peter Dykstra, was let go. Even the Weather Channel, which has been hyping its climate change program, Forecast Earth, extinguished the Environmental Unit that produced it. (It did this, by the way, while turning its normally blue logo green as part of NBC's Green Is Universal promotion.)
It goes on. In recent months some of the better journalists covering the environment have taken buy-out packages offered by their financially beleaguered employers: Claudia Deutsch at the New York Times, Marla Cone and Janet Wilson at the Los Angeles Times, Ilana Debare at the San Francisco Chronicle, and others.
What's going on here? For starters, the mainstream media business has been tanking along with the rest of the economy. With ad sales and consumer spending down, bloggers and other so-called "new media" providing low-priced competition, and general panic on Wall Street devaluing media stocks, business reporters are finding themselves a part of the same economic meltdown they're covering. Like so many industries, the media business is in the throes of a transformation, with yesterday's leaders becoming — well, fish wrap.
But it's more than that. Corporate environmental topics have long had a volatile existence within most mainstream media companies. For years, few newspapers, TV networks, and business magazines would touch stories about companies improving their environmental performance, or at best were ambivalent about them, even when such stories were substantive. And when these stories were covered, they often were positioned as precious, offbeat stories, novel corporate antics, or shallow efforts to ward off activist or consumer protests. While some of that may have been accurate — a lot of companies have done the minimum needed to "green up" their image — countless stories of companies' efforts to systematically wring out waste, pollution, and inefficiency, and improve business performance along the way, were dismissed as unworthy of coverage. When I launched a monthly newsletter, The Green Business Letter, in 1991, I was one of only a handful of writers covering these topics.
In the mid 1990s, I had the opportunity to lead a panel at the annual conference of the Society of Environmental Journalists, a professional organization. At the panel — the group's first ever on business reporting — I posed a question couched in the classic terms of "Man bites dog." As Wikipedia explains: "The phrase Man bites dog and the related phrase Dog bites man are used to describe a phenomenon in journalism, in which an unusual, infrequent event is more likely to be reported as news than an ordinary, everyday occurrence."
So, I asked my SEJ colleagues, if the headline "Company Pollutes" represented the "Dog bites man" story — that is, an ordinary, everyday occurrence — shouldn't "Company Innovates, Reduces Risks and Improves Environment" be seen as its "Man bites dog" counterpart — in other words, News?
My panelists agreed that it should be, but the reality was that reporters weren't typically lauded for telling good-news corporate stories. Their reward system was based on slaying dragons — that is, bringing big, powerful entities to their knees.
Things have changed somewhat since then — stories of proactive corporate environmental initiatives are now regular media fare — but as I've noted earlier this year, mainstream business writers still seem ill-informed and overly cynical about company efforts to be greener. Like the preponderance of their readers, editors and reporters seem to start with the assumption that most environmental activities undertaken by companies, especially large companies, are done primarily for P.R. reasons. True, healthy skepticism is the currency of a good journalist, but undying cynicism is more the norm when it comes to environmental business reporting.
The recent spate of downsizings of writers, editors, and producers covering environmental issues will only exacerbate this, relegating green business coverage to reporters with less knowledge, context, and historical perspective on the transformation taking place in business. I hear from such reporters every week: general-assignment reporters from newspapers and broadcast stations around the U.S., niche trade magazines, and others seeking comment or context on a story they're covering. I can tell you unequivocally that the nature of their questions reveals a high degree of ignorance. I'm happy to bring them up to speed, but it's a slog.
The timing of the recent media layoffs is all the more troublesome given everything that's about to happen: a new administration and Congress with a big appetite for environmental regulation, green jobs, renewable energy, and carbon management — with the potential of countless billions of dollars, and millions more in lobbying, devoted to such efforts. The automotive industry — bailout or not — is undergoing a revolution, a phase-out of the hundred-year-old gas-powered internal combustion engine in favor of electricity-powered ones — creating the need for a new, smarter energy grid that will have vast ripple effects throughout the economy. Wal-Mart and other large players are driving their suppliers harder than ever before to reduce packaging, improve energy efficiency, and eliminate toxic ingredients in their products. The construction industry is undergoing a green revolution. Food growers and producers are seeing the beginning of an antiglobalization backlash, and a relocalization of some farming and food processing.
It goes on from there.
Who will be there to cover it all? Who will bring the deep knowledge and big-picture perspective necessary to create informed stories, not just sound-bite "content." Will the less-experienced reporters and editors be overly enthusiastic or hopelessly cynical?
Yes, of course, there are niche publications covering green business (including, of course, GreenBiz.com and its constellation of sites, of which I am executive editor). And there remain several strong (for now) environmental reporting teams at the New York Times, Wall Street Journal, BusinessWeek, Fast Company, and a handful of other mainstream media. But even on their best days, their combined reach includes only a small fraction of the audience — business people, activists, regulators, policymakers, investors, business students, and others — that need to understand the trends and developments in the greening of mainstream business.
As we enter a new year, a new political era, and, arguably, a new environmental ethic, we'll need a more informed society than ever before. We'll see how it goes.
December 13, 2008 in State of the Art, Trendwatching | Permalink | Comments (14)
Sustainable Business circa 2018: Will It Be Nasty or NICE?
What will the world of sustainability look like a decade from now? It's anyone's guess, of course, but most companies seem to be operating as if that world will look substantially like the one we encounter today. That's possible, but not probable. Things are happening too fast — politically, economically, environmentally, socially, technologically — to take the status quo for granted.
So, what will the world look like? And how should forward-thinking companies prepare?
That's the theme of an intriguing new report from the U.K.-based Forum for the Future and the consultancy Capgemini. The free report, Acting Now for a Positive 2018, Preparing for Radical Change: The Next Decade of Business and Sustainability, examines four scenarios of what the world might look like from a sustainability perspective and offers advice on how to be ready for any of them.
The years 1998-2008 have been dubbed the NICE decade — for "Non-Inflationary Constant Expansion" — marked by growing markets, consumption, population, and profits; fueled by relatively cheap debt, energy, food, labor, and raw materials; and supported by regulations geared toward globalization. But, as many of us are painfully aware, there has been a nasty side to all this NICEness: deteriorating ecosystems, burst asset bubbles, burdensome debt, infrastructure bottlenecks, and billions of people with unmet needs, or who were left behind during the growth years.
During NICE times, there's little reason to question the role of business. Its purpose, for most observers, remains little changed from Milton Friedman's observation that the purpose of business is to maximize shareholder value. To the extent companies have needed prodding to address environmental and social concerns, it has come in the form of piecemeal interventions — regulations, incentives, partnerships, etc. Being seen as green or sustainable has been mostly a matter of responsibility and reputation, not as a business imperative.
All that's changing, but exactly how isn't clear. The report offers four plausible scenarios, "created from our bank of hundreds of factors from previous 'futures' projects" and augmented with a series of joint workshops between Capgemini and Forum for the Future. They range from a better-than-expected scenario, a business-as-usual scenario, and two others that paint very different pictures from the status quo.
For example, in a scenario titled "The Global Interest," large businesses are "globally integrated enterprises with a sense of global citizenship, but limited ties to any particular place. They try to maximize shareholder value over years rather than quarters." In another scenario, "The National Interest," most global businesses are broken up into regional groups along geopolitical lines, creating national franchises that make them appear as local as possible, with every business primarily responsible to the sustainability of its nation or region. In "Patched-up Globalization," there are still large global companies, many protected by their home governments in return for contributing to priorities like poverty alleviation. And in "Me and Mine, Online," businesses are "coordinating hubs or delivery partners in ultra-flexible networks, not companies as we understand them today." These hubs coordinate profit-seeking activity by outsourcing everything except the coordination of the many different partners needed to get things done.
I've barely done justice to each of these scenarios, let alone their implications and the respective roles of government, shareholders, and NGOs in each. You'll have to pore through the document yourself, which I highly recommend.
What's implicit if not explicit from this report is that the business approach to sustainability is different in each scenario because the practical manifestation of sustainability itself is different. (Some will cavil that there is only one pure manifestation of sustainability, a complex topic beyond the scope of both this report and this column.)
One common theme is that companies will need to meet customers' and society's expectations with a supply chain that faces resource constraints and changing patterns of globalization. "This is a more important factor than consumer demand for sustainable products," write the authors, pointing out that "the supply chain pressures remain as we move into a recession, even if consumer demands for sustainable products declines."
So, should companies wait and see which scenario unfolds, or are there things that can be done now? Say the authors:
In an interconnected world, it is sometimes hard to see who should act first. The scenarios show it is in business's own interest to take the first step. Waiting for governments to regulate for all risks will be too late and too costly.
The key, they say, is to act now, embedding sustainability into decision-making and a company's key business functions, and by creating alliances and pursuing strategic opportunities.
No company in the world is currently prepared for the changes ahead. The four scenarios are plausible but very different. Whatever happens next, business-as-usual is not an option, even after an economic recovery. Our scenarios show that every aspect of business will change: the demand from customers; how goods or services are produced; the supply chain; the nature of competitive advantage; the way staff live their lives; and the regulatory context for business.
December 1, 2008 in Business Practices, Sustainability, Trendwatching | Permalink | Comments (3)
