The basic platform

The basic platform was pretty straightforward: take – make – waste, and replicated in every part of the chain from raw materials to use and final disposal.  Much of what we know about ancient human habitations and ways of life we’ve learnt from their waste – where it is, what it’s made up of (e.g. bones, weapons, broken tools, pottery, etc.). As we manufactured we took the basic platform, and replicated it in each of multiple processes:  let’s take the example of a pretty simple sandal. Rubber sole, leather straps, and thread.  The rubber was tapped from trees, purified and dried, then formed or trimmed to make the soles.  Trim scrap was – well – scrapped.  Same with the leather.

The platform goes tippy…

But what worked well for a small population using basic materials, started to fail us as we developed more sophisticated materials more resistant to nature. And that brings risks to companies – risks that there are insufficient resources to “take”, that the processes for “making” are too costly or just threatened, and that “waste” is becoming unfeasibly expensive.  Read on to read the three steps that will ensure you are a winner in this new world.

So what happened to the waste?

The pretty neat thing was that the waste was more often than not immediately used as food by insects and molds, or dogs or pigs or… No matter what ended up consuming it, the scrap became part of another process, and so waste wasn’t effectively waste.  It was, as William McDonough is fond of saying, food.

We shall did overcome!

So the same things that made our products eco-groovy, waste = food, made them degrade fast.  After all, the same insects/molds/dogs that were getting rid of the waste, were just as interested in the product.  Our stuff was all food to them.

So we invented lye and vulcanisation and other processes that transformed humble ingredients into high tech, almost impervious-to-nature, materials.  And still our systems were based on take-make-waste.  But now, when we wasted, nature was having trouble digesting the by-products.  And instead of becoming food, they accumulated like litter, and we developed industries to “dispose” of them.  Which has largely meant sweeping them up and taking them “away”.

What’s wrong with dispose and away?

The Online Etymology Dictionary defines the origins of dispose as order:

mid-14c., from O.Fr. disposer (infl. by poser “to place”), from O.Fr. despondre, from L. disponere “put in order, arrange,” from dis- “apart” + ponere “to put, place”

And here’s a picture of a disposal site: 

In fairness, this is clearly a disposal site in a poorly regulated (or poorly enforced) area (in this case Haiti).  So let me insert a picture of a sanitary landfill in the United States (Pennsylvania) from this year:

In either case, while there may be some form of order established – there is indeed a concentration of rubbish, distinct from the non-rubbish areas – the materials and dirt are so mingled that materials are hardly salvageable.  As a consequence we have actually condemned them to being unuseful and therefore pure waste.

Is pollution just good stuff in the wrong place?

Physicists and chemists would say so.  Value comes from order.  So pure tends to have higher value than impure, and much more than contaminated.  Gold is an obvious example.  But purity can come from “designed-for-purpose” – for example metal alloys, or chemicals, or plastics.  What happens when the fine distinctions that enable a material to be used in a particularly efficient way are contaminated – is tat more of the material needs to be used, and the properties it had been chosen for are sullied.  Think of colour as a property, and consider the outcome when a black sock makes it’s way into a load of white laundry…

The shortages of “away”?

The fees for collecting and disposing of waste have been increasing at such a rate that in London, for example, they now account for 1/2 the city’s budget.  These trends are due to accelerate due to public unwillingness to support new disposal sites (including waste-to-energy plants); competition for scarce space; and increasing waste.  Population and demographics have a large role to play in this – in the past 50 years the population of the globe has more than doubled (from 3 to 6.8 billion); wealth and consumption have increased substantially, and the increase in smaller households and out-of-home consumption has further increased waste.

A different form of cost is imposed by extended producer responsibility requirements (EPR) – currently covering items as diverse as packaging materials, tires, white goods, hazardous and special wastes, and appliances in (among other countries) the EU, much of Canada, Turkey, Japan and parts of the US.  The cost of recovering and disposal is placed usually on the brand owner who in turn seeks to distribute it among suppliers until eventually it makes its way into the cost of a good.  Ultimately EPR regulation is seeking to ensure that products with least waste-impact (through highest and most economic levels of recovery and recycling) are rewarded by the market.

The even greater shortages of “take”

At the same time, we are facing pressures and even shortages of materials: not just the usual suspects (oil, water, fish…) but also many rare ones on which the industries considered particularly forward facing, are pinning their hopes: neodymium, terbium and dysprosium (key components in generators for wind turbines or electric cars); lanthanum – key to electric car batteries.  Not only are these materials in short supply, but China which has a very long term view, has secured many of the supplies, thus making it the future monopolist for materials.

Worldwide demand for rare earths, covering 15 entries on the periodic table of elements, is expected to exceed supply by some 40,000 tonnes annually in several years unless major new production sources are developed. — Reuters, 31/8/09

A worsening ratio of people to arable land will bring about greater dependence on chemical fertilizers and other agricultural chemicals and on plant breeding for higher yields. In regard to dependence on chemical pesticides, the study looks for an increase in pesticide-resistant insects, based on California’s experience where, of 25 species each causing crop losses in excess of $1 million per year, 17 are now resistant to one or more types of pesticides. — Global 2000 report

And of course localised energy shortages and associated cost increases.

3 key steps to being able to continue “make”

So the competitive products – and companies – are going to be those who:

1. Produce most efficiently:  lowest energy, mostly renewable, and locally determined.  For example, Dean dairies invested in a methane digester thus avoiding the cost of waste disposal and energy purchases, while creating enough energy that they can feed it to the utility and make money.  Dean now has income where their competitors have costs – which means they can play with pricing, invest in greater modernisation/efficiencies, market themselves as green, …  They’ve bought freedom, choice and a halo.
2. Those that can reclaim and reuse their products at the disposal stage.  For example, a battery manufacturer (or mobile phone, or iPod or…) depends on materials that are in limited supply, hazardous in their manufacture and hazardous in disposal.  Risk, risk risk.  Were they to lease, rather than sell, their electronics, they could recycle more efficiently, reclaim their precious metals, and – get the halo.  In fact, as first mover, they could not only be reducing the toxicity of their products – they could be detoxing the operation – a powerful first mover advantage.
3. Use renewable and renewed materials:  either renewed by nature (e.g. trees), or by humans (recycled content).  Coke has invested over a hundred million dollars in recycling plants that guarantee it a supply of recycled PET – PET whose life cycle impacts are as good as those of nature-based materials such as paper cartons.  And, they are launching a plant-based polymer that can be recycled along with PET – so that their product is fundamentally green:  renewable, renewed, recycled and reused by them.

Securing a profitable platform

Interface, the largest floor covering company in the world, dedicated themselves to becoming fully sustainable 15 years ago.  Today they have changed their operations dramatically – zero waste facilities, high levels of renewable energy, much greater energy efficiency.  Most interestingly, they have taken different approaches to desing and manufacturing, based on their observations of how nature works, and launched three bestselling lines of products as a consequence – products that are better for the environment, easier to lay and replace, more readily recycled, and cheaper to produce.  “We were operating on the wrong platform” says their founder and Chairman Ray Anderson.  They’ve changed that – and grown dramatically in the process.

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2. Can goats help your green initiatives succeed like this?
3. Women’s International Input for COP15 Meeting in Copenhagen

Those of you passionate about pond scum – or addicted to interest rates, or afflicted with pernicious diseases – understand that progress is described in DTs or doubling times: the time it takes the scum/money/disease to double in population. When it comes to pond scum we are largely indifferent; when it comes to money we want DT to be as short as possible, and when it comes to disease we would like to delay the day of reckoning by extending the DT as much as possible. But very few of us associate climate change with pond scum.

That, dear reader, is a mistake.

The first global experiment
We are currently embarked on a huge experiment on earth – the experiment of “how to manage a super-successful species with an impossibly short doubling rate on a quite small planet”. By which I mean, that we have quite a short doubling rate historically speaking and earth has no doubling capacity at all. So we are filling up every aspect of our planet with our presence, our waste, our demands, and the like. And the rest of the planet (meaning other mammals and fish and mushrooms and insects not to mention the water and the air and … you see where I’m going…) has no say about this at all.

So at first gradually, and now pretty quickly, we are pushing other species out of our way, which means out of existence. You may be feeling triumphant about this: A sign of superior intelligence! A sign of greater strength! A demonstration of power! …and a sign that God is on our side!

Perhaps.

Or perhaps, this is a test we need to look straight in the face, and address.

Hardwired to behave like pond scum?
When I was born, the population of the earth was 3 billion people. You can thus assess to the year when I was born, or assume that I am wise beyond my years, or just an old crank. Each is, within measure, true. But it should be noted that fewer than 50 years later, the earth is ~6.8 billion people. That is to say that we are increasing at a very rapid rate. In fact, the rate of increase when I was born was roughly 2.2% year – a doubling rate of 31 years. We met that handily I’m afraid to say.

And when we double, we more than double our appetites. When I was born (let me come clean – we’re talking 1960 here, not the dark ages…) there were no mobile phones (replaced every 2-3 years); laptops (replaced every 3-4 years); fax machines (come and largely gone), or most of the other absolutely essentials most of us live with today with hardly a thought (though plenty of complaints… and even more waste).

Thus we have increased our per capita consumption of calories, meat, processed foods, packaging, fuel, electricity, batteries, furniture… pretty much everything. Which means that the rate at which we consume our planetary resources is even more rapid. So it is no wonder that WWF tells us that we have exceeded the earth’s capacity: that rather than live off the interest, we are living of earth’s capital.

We have now affected the global climate to a point that scientists consider detrimental to our prospects for survival as a species. And, like junkies hooked on drugs, we are so hooked on oil that even though we know that oil only makes things worse, we are exploring new sources that will take only slightly less energy extract than they will provide: oil sands.

Even though we are smart enough to see that we are heading in the wrong direction, we are hard-wired by millennia of evolution, to deal very well with immediate threats like a lion about to eat us, and very poorly with incremental threats – like climate change – even if they have equally detrimental consequences.

Pond scum, and . . . scum
Which brings us back to pond scum. If the doubling rate of pond scum is one day it can take weeks and months – even years – for the scum to cover half the pond. But the day the pond is utterly covered with pond scum – and undrinkable, unswimmable and ultimately unlivable, is just one day after that. Yet when the pond is half full, everybody thinks, “well, it’s not that full, we still have some time, it’s growing bit by bit…”.

And this is where scum come in. We are already hardwired not to really feel slow incremental change, even if our brains can see what is really happening. And some companies are playing on that: sowing doubt (where scientists have basically none). And others (who find it easier to do what they are doing today than change for the better) jump on the bandwagon, and suggest that any changes will bring down the system and create havoc… They are creating the urgent monster that inspire our brains to fight or flee: in this case, fighting people who attack the status quo in the name of climate change.

Here’s why that (scummy) strategy works:
Dan Gilbert, Harvard professor of behavioural biology has studied the human brain for decades, and determined that we are brilliantly designed to respond to evil predators who suddenly threaten our immediate well being. Long term climate change doesn’t meet our brain’s warning and fear needs. But the alarmists who threaten we’ll lose our way of life due to climate change – well they are the problem. Blame the messenger!

Beyond scumminess:
What you want to do is implement small changes, that can grow incrementally until, like pond scum, they are everywhere – without breeding resistance.

• At Yahoo they ran a competition to cut CO2 for each employee by 20% for one month. They provided power-saving-tips, carpooling, meatless lunches, etc. The prize if the company made it: see the CEO & COO fight wearing sumo-suits. Not only did this work, it so invigorated that organisation, that many other changes came to the fore, and while not all the initiatives lasted continuously, many did, and new ones had a chance to be evaluated and adopted.

• At IBM they said – “we want to make a business out of being green – so anything you think you can sell, we have to do internally. That will give us credibility in the market place.” Not only did that excite people who wanted to sell ideas; it excited people who were back-office and could invent a product that company could then sell.

• At Wal-Mart they said to employees and suppliers: Here are our super-ambitious goals. We want to improve year-on-year – but we won’t micro-manage – you tell us what’s best. We’ll work with you to get there, and we need you to work with us to get there.” And while they had areas of focus (such as packaging) the benefits came from new products (such as concentrated detergents and compact fluorescents); and new processes (such as cooler lighting in freezers that reduced airconditioning).

We will survive…
With strong intentions we can rise above pond scum, use the brains we’ve built over millions of years of evolution, and grapple with the environmental problems we have actually created for ourselves.

Because the alternative is to grow like pond scum, choke our own home, and possibly choke our means for existence…

Image by Swampman on Flickr.

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McDonald’s could be doing smart, community-building work that builds brand value. But they’re not. Here’s what they’re doing – and what Wal-Mart’s doing better.

The story:
Nigel Haskel, a minimum wage, 21 year old employee, sees a man start beating a woman in the McDonald’s he works in. He intercedes on the woman’s behalf, gets the attacker to leave, and then blocks him from re-entering the restaurant. For his pains, the attacker shoots him multiple times, and Nigel has to have several abdominal operations to repair the damage and extract the bullets. He still has a bullet inside.

Six months and $300’000 later he is denied workers compensation benefits: McDonald’s refuses his claim as they say he should just have called the police.

What’s wrong with this position?
From a business point of view it is wrong because it tells customers that they may not be safe in a McDonald’s because McDonald’s will not protect them. That seems wrong-headed at a time when trust in business is at a low.

Secondly, it ignores fundamental human notions of protection, ‘doing the right thing’, standing up for decency and justice. This threatens their community standing.

Compromising your welcome in the community
When corporations forget the spirit of laws, and live for short term benefits based on the rule of law, they compromise their welcome in communities. That compromised welcome is what has driven Wal-Mart to embrace the environment and sustainability so powerfully and visibly: they needed to re-establish credibility with communities so that they could continue to expand. And in doing so, they have expanded among consumer classes who did not readily or happily shop at Wal-Mart before.

Wal-Mart seems to be learning that doing the right thing by community can build business [see next week's column on transparency]. McDonald’s, who made themselves the butt of 15 years of jokes and bad press when they pursued two activists through the UK and European courts in a case dubbed McLibel, seems to be struggling with learning.

Better to Do the Right Thing
Two thirds of McDonald’s revenue growth comes from upscale, healthy food*. This is exactly the kind of market that is most likely to be put off by insensitive behaviour and everything it implies. The public in general hasn’t taken kindly to the arrogance of bankers and car companies. Perhaps this is a time for McDonald’s to cede their “right” to do the wrong thing, and instead do the right thing- so that they continue to build brand value and affection.

*Dean Ornish, TED conference 2006

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A few years ago the UN assessed the value of the stuff nature gives us for free (clean air, humidity, water, resources, fertile soil, etc.), and it dwarfed all the economic activity at the time (and that was before the economy lost tens of trillions of dollars of value…). In the assessment was the notion that as we deplete resources, and degrade air, water and land, we will have to develop systems that clean up the environment, or that replicate its services. So the value of what nature gives us is described in terms of the cost of generating it (either by restoring nature or by replacing the function).

Nature does it cheaper
It was quickly clear that nature does it more cheaply. Much more cheaply. So much so that enlightened planners in companies and cities have figured out who to pay how much in order to get the service from nature rather than industry.

A case:
New York City’s water had historically come from the Catskill mountains to the North. Due to suburbanisation, changes in forestry and farming practices, and other generalised environmental impacts, the water quality was degrading. The City looked into the cost of building a filtration plant: roughly $6 billion to build the plant plus another $250 million per year for maintenance. (in 2003 dollars). Instead, the City worked out an arrangement with farmers whereby the farmers were paid to farm in such a way that their land served as a filter for water, and the water that arrived in New York was clean (dubbed the “champagne” of water). This cost the city $167 million/year – a fraction of the maintenance and depreciation costs of a filtration plant.

Now governments are wondering how to ensure you pay for your impact on the ecosystem and its servises.
The example above is of a stakeholder (the City of New York) seeking to conserve the quality of a particular ‘product’ (clean water). Similar programmes have been established by bottled water companies to guarantee the quality of the water they bottle. However now, governments are seeking to find ways to get a range of services/depletions to be paid for, including the following:

• Taxes and user fees for externalities – such as overfertilising leading to nutrients leaching into lakes and rivers, and fostering so much growth that effectively there is no oxygen and most animals and many plants die off.

• Creating markets like the EU cap & trade system For example, limit the amount of nutrients that can be “released” through fertilization to encourage more judicious use of fertilisers and cleverer means of application that did not result in run-off.

• Payment for ecosystem services A government could set a price for each service – and you pay according to the degree of your impact.

• Certification schemes: Today current certification schemes for sustainable fisheries (e.g. Marine Stewardship Council) and forest practices (e.g. Forest Stewardship Council) provide people, retailers amd branded goods companies, with the opportunity to promote sustainability through their consumption choices.

A working system is already in place in Costa Rica and, for cap & trade and offsets, in the EU.
In 1996 Costa Rica established a nationwide system of conservation payments as inducement to landowners to provide ecosystem services. Costa Rica brokers contracts between buyers and sellers of sequestered carbon, biodiversity, watershed services, and scenic beauty. There is also talk of “biodiversity offsets,” whereby developers would pay for conservation activities as compensation for the harm that their projects cause to biodiversity.

With a new President, a new attitude and even greater pressures, the likelihood that some of these elements will be put into practice is increased. The question for you is, how can you estimate today the extent of your impacts, and how to reduce them so that those kinds of fees just wouldn’t apply to you? After all, it will be cheaper for you to drive your agenda on your own scale today, then wait for the rules to fall and herd with your competitors to the payment lines.

ren-new can help you determine the scale of your impacts, and work through scenarios on the implications to your business. We can also take a look at how you could use those resources to your advantage instead – meeting future requirements in a way that brings benefits today.

Resources of interest:

• http://ecosystemmarketplace.com
• http://speciesbanking.com/

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Currently Trust in institutions, corporations, and industry is at low ebb.

The low general level of trust means trust is applied not in a general way, but on a case by case basis (e.g. product by product and brand by brand). In this context, slips can have a disproportionately broad impact and be less readily forgiven by a bruised public. For example: consumption of all milk in China went down 50% even though only powdered milk was implicated; Consumption of milk chocolate in Europe decreased when some contaminated milk was found in a couple of European candy bars; dioxin in Buffalo milk mozzarella forced an immediate 50% decrease in Neapolitan mozzarella consumption, and a further decrease on the purchase of all mozzarella from Italy.

A long string of very public trust failures has increasingly demonstrated that the systems set in place to protect society’s interests, are themselves not trustworthy: the Savings & Loan crisis suggesting poor regulation and oversight; then Enron/Arthur Andersen which suggested that the broader system was untrustworthy, not just individual companies; now our current financial crisis is demonstrating complicity throughout the “trust” chain – including auditors, ratings agencies and government. In fact government failure to keep watch and protect its citizenry culminated in Iceland going bankrupt and in the rest of us bailing out the very banks that lost our money, and even poorly run but very large companies.

Now Edelman’s trust survey shows that trust in Government, Business and Media is low and falling. The most trusted ‘institution’ is NGOs globally: “54% of 25-to-64-year-olds trust them to do what is right”.

What does this do to your Brand?
Brands and brand values depend upon people identifying with them- such identification being fully dependent upon trust. Lose that, and you’ve wasted your brand building. This is no insignificant – Robert Goizueta famously said that if all of his factories burnt down one night, the ‘goodwill’ he had built up around the Coca-Cola brand would ensure that investors would provide the cash for him to rebuild at once.

Consumers depend on trust to decide where and which products to buy. When trust in business is diminishing (62% trust business less this year than last) consumers need to find other ways to (re)establish trust. But that is a daunting exercise (where do you get the information? how can you trust it? and for how many transactions…), so consumers need short-hand to provide trust.

Enter the arbiters of trust: the NGOs.

A Power Shift
As noted above, the NGOs are believed to stand for the right thing. Interestingly, they are not expected to solve the problem – just alert people to the problem. So the power of the stamp of approval comes from NGOs. And the requirement to act, on you.

At the same time, NGOs are facing a difficult financial time: as consumers hold back on spending, NGOs are receiving less money then they need to meet their own agendas. And consequently they need to fight hard for relevance. So they need brands: either as a friend, or as a target.

The consequence - you can expect more NGO campaigns: NGOs have a strong drive to question trustworthiness of corporate claims and to campaign rather than engage.

This is the powershift: the general environment has led to a general sense of distrust, and the NGOs need little to focus distrust on products and companies. They have a very strong hand.

What to do? Engage with the NGOs you are most afraid of so that you gain trust through association adn perhaps even the stamp of approval. And do so with neutral facilitators to help manage the engagement. Everybody at the table is feeling at risk, so the situation is delicate and the stakes surprisingly high.

To engage effectively, you must be able to persuade the NGOs to take you seriously. And therefore you must be ready to:

• send senior people to the discussions
• commit to action(s)
• commit to transparency (at a minimum with the NGO)
• commit to goals and measures

In return, you need to request that they:

• not campaign against you or your general product line while working together
• that they not have a campaign against somebody else whose product’s could be readily confused in the public eye, with yours
• and that they be themselves trustworthy partners, and partners that work to keep other NGOs off your back.

In this way, you can make a virtue out of necessity – “even in this difficult economic climate we determined to partner with the NGO community to improve …. “.

Nietzsche may have summarised the problem best: “I’m not upset that you lied to me, I’m upset that from now on I can’t believe you.” Far better to build trust and maintain it, than lose it and seek to rebuild. The public’s willingness to re-trust has worn thin.

Contact us – we’ll help you find the NGO partner(s) to work with to ensure that you and your brand are not only protected, but the favorite for years to come.

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Most companies are wasting their environmental investment – at least as far as reputation goes: while they may be doing, and saying, a lot – the public doesn’t buy their story. Except, that is, Toyota’s.

click on picture to enlarge

source: MapChange 2008

What’s going on?
Let’s look at GM and Toyota. GM is seen as a laggard, almost as bad as Esso. Toyota, on the other hand, has the highest perceived environmental value, with quite a good relationship between perception and actions.

How can this be? Well, for one thing, Toyota has gone public for years with a clear vision understandable to all: “Our goal: zero emissions” which they then backed up with a car that was clearly a step change towards that goal. So, a clear goal, and clear movement toward that goal. In fact, they quickly came out with a hybrid Lexus, and have a commitment to having a hybrid option for each car model they have on the market today.

And GM? Well, leaving aside that there was a terrific film called “Who killed the electric car” blaming GM for withdrawing electric cars from California, GM has had no such clear and consistent positioning in the environment. As a consequence the actions they take, and by all accounts they are undertaking quite a few, have little resonance.

And this is where most companies lose value through their environmental activities: rather than give a clear, understandable (and preferably inspiring) vision against which they measure performance, they speak to how they are reducing negative impacts. The frame is already negative (“we may be doing a bit less bad than our competitors”) and it requires a great deal of work on the consumer side to understand whether the information is relevant and significant.

Should companies care? A 5% change in a company’s reputation is equivalent to 1-5% change in their market value according to the Research Institute at New York University’s Stern School of Business.

So, do it right, and you build good will and increase sales. Do it wrong, and you strip value from your brand. So far, there’s only one company doing it right.

ren-new works with you to increase the value you get from the environment – better for your profits, better for the planet. Contact us to find out how!

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So, they get a triple win: consumers switch to HP, enhance their good feelings towards HP, and HP gets a ready source of high cost materials such as gold in the process.

What they have cleverly done is take the learnings from their required participation in recycling systems (the EU’s Waste Electrical and Electronic Equipment programme – the ‘Weee!’ of the title) and turned them into competitive advantage in the US.

Cleverly, they do not stop at the promise of “take back” – but are working on programmes to ensure they know where the products are going and how they are treated – while linking that to social benefits. And rather than do this alone, they are working with competitors and NGOs to ensure that the results are credible and the standards shared.

So we’re seeing alchemy in action: turning dross into gold…

video source: Business Week

To see how to use the environment to steal a march on your competitors, contact ren-new.

* Stealing a March definition: to spoil someone’s plans and get an advantage over them by doing something sooner or better than them. Source: the Free Dictionary

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