As expected, my column on the mistaken role of government in using taxpayer money to create “millions of green jobs” provoked some protest, but this recent item from Barron’s shows that government has a long history of failure in the business of funding technology ventures.
But there’s another way of approaching the challenge of addressing the resource constraints, and environmental and social problems that are the impetus for all the current noise about creating a new, green economy. “Sustainability-based thinking” holds out the genuine promise that we can reduce our exposure to escalating energy and commodity prices, reverse the declining competitiveness of the American economy, and at the same time reduce environmental degradation and create a better world for future generations.
In the past decade, many of the world’s largest corporations have discovered that sustainability-based thinking can be a powerful driver of innovation, competitive advantage and – to the astonishment many old-school business leaders – improved financial results. In fact, there’s brand new evidence that those companies that have made sustainability a core element of their strategy have outperformed financially those that haven’t.
A recent white paper by Davide Vassallo, practice leader, DuPont Sustainable Solutions, shows how sustainable business practices have generated billions of dollars for his company in energy savings. David Steiner, CEO of Waste Management, the garbage hauler, says, “Picking up and disposing of people’s waste is not going to be the way this company survives long term. Our opportunities all arise from the sustainability movement.” WM is investing millions of dollars in new technologies to mine the estimated $10 billion of materials value contained in the stream of “waste” disposed of annually in its landfills.
Unfortunately, most smaller and mid-sized companies – which account for most of our GDP, comprise the bulk of employment in the US economy, and supposedly are its primary source of innovation – don’t “get” sustainability. There’s a number of reasons for the disconnect between the way large corporations are embracing sustainability as a key element of corporate strategy and the lack of interest on the part of most smaller organizations. That’s the subject of another article. The purpose of this one is to use some examples to show how sustainability-based thinking drives innovation, competitive advantage, improved financial results and…yes, jobs…… in smaller companies just as effectively as it does in the corporate giants.
CaridianBCT, a large supplier of blood solutions and other medical products to hospitals and clinics, has a longstanding commitment to sustainability which led it in 2007 to examine the high costs of sending to landfill large volumes of waste vinyl and other plastics. Searching for a solution, it found a small, local recycling company that was able to find a market, not only for these waste plastics but for a wide variety of packaging and other materials that CaridianBCT had also been landfilling. Over the next 2 years, CaridianBCT contracted out its entire waste management operation to the local recycler, saving itself about $75,000 annually in hauling fees and internal waste-handling labor costs. The recycler installed about $100,000 of equipment at Caridian’s site where he stationed a person 24/7/52 to collect and sort the various plastics and other recyclables. The recycler receives no fee from CaridianBCT. Rather, it makes its money on the sale of the “waste” materials to companies that reprocess it into various types of plastic and other products. Besides the three on-site FTEs, he has 8 more back in his yard packaging the material and shipping it out to these reprocessors. CaridianBCT saves money, the recycler makes a good living off their former waste, 11 new jobs are created, the planet benefits from the reuse of the material. What’s not to like? Full Story.
Since 2009, Boyer’s Coffee, one of Denver’s oldest coffee roasters, devised a sustainability-based strategy that has reduced the costs of its cardboard delivery cartons by over 50% or $50,000 a year, taken nearly 30% out of the cost of its coffee packaging operation, reduced its inventory carrying costs by over $200,000, and cut its waste stream by over one third. In progress is an investment in multiple reuse, plastic delivery cartons that will save the company about $500,000 over their 5 year life against an up-front investment of $50,000. And they will eliminate 5.8 billion BTUs of energy consumption and 400 tons of CO2 emissions.
What can we conclude from these examples?
1. As a driver of innovation, competitive advantage and improved financial performance, sustainability-based thinking is as effective for the SmallMarts as it is for the WalMarts.
2. The initiatives described here were all driven by market considerations: not a nickel of taxpayer money was required to make them happen.
What if we could get every small and mid-sized company to think and act sustainably? What impact would THAT have on our consumption of energy and other resources? How much more competitive would our economy be? And wouldn’t we all have a better sense that our business community was doing something for the planet and the ability of future generations to enjoy the same quality of life that we enjoy?
Lessons for government? Get out of the business of shoveling billions of taxpayer dollars into questionable technologies and companies; dial down the rhetoric on “millions of green jobs”; get into the business of helping the millions of smaller companies in our economy understand how sustainability-based strategies will make them more competitive, drive innovation and create jobs; then watch the market make it happen!
Graham Russell is Founder & Principal at Trupoint Advisors, which helps companies achieve strategic success through sustainable business initiatives. www.trupointadvisors.com. Russell writes and speaks on the subject of sustainable business and teaches sustainability in the University of Colorado Denver MBA program.