This week on Nature of Business, I spoke with Andrew Hutson, Director of Global Value Chain Initiatives at the Environmental Defense Fund (EDF). We spoke of his work in EDF’s corporate partnerships program and its continued efforts to shatter the myth that there is a tradeoff between environmental protection and economic prosperity.
EDF has pioneered the approach of working with companies beginning in 1990, when its work with McDonalds resulted in the elimination of 150,000 tons of packaging waste over 10 years. Now, EDF boasts numerous alliances with companies, including Walmart, which, in 2009, established new environmental standards for the company and its multitude of suppliers.
In fact, Hutson himself helped open an EDF office near the Walmart headquarters in Bentonville, Arkansas. EDF is the only environmental group to do so. With Walmart’s 110,000 suppliers and 200 million weekly customers, the positive impact that EDF has been able to have on Walmart’s environmental goals has been significant. As Hutson puts it, “You have to be there if you want to have the influence that you want to have.”
Hutson also points out some sobering facts. “We have declining natural resources at a time when we are facing massive consumption. By 2050, 9 to 11 billion people will be on the planet. Each year until 2030, at least 150 million people are going to be entering the middle class. Three billion people will be consuming or wanting to consume in the developing world. And by 2050, commodities such as cereal grains must increase by 940 million tons, oil crops/seeds 133 million tons, and meat production by 96 million tons [to meet the demand]. If we are expecting to do that, we are going to need three planet earths to eat be entertained, fed, and clothed. ”
Certainly not the most optimistic outlook, but as Hutson also points out, there is an unprecedented opportunity here to create transformational change particularly with private sector leadership. And the companies that operate within these constraints are going to be the victors. Those who don’t, may not be around mid century.
EDF’s Green Returns is particularly interesting in that private equity firms such as KKR, Carlyle Group, and Oak Hill Capital Partners are helping to improve environmental performance of the companies that they manage. Private-equity firms control assets worth about 8 percent of U.S. GDP, so the opportunity here for transformational and expeditious change is immense. Hutson points out that through the program so far, companies have been able to save $644 million, reduce 1.2 metric tons of greenhouse gases, 3.4 million tons of waste, and 13.2 million cubic feet of water. These are financial and environmental benefits that have never looked at before.
Two projects near and dear to Hutson include EDF’s work in Brazil to create deforestation free supply chains, and assurances that help companies know from where their products are coming. And EDF’s work on oceans, where the team is working with the fishing industry, particularly commodity fishermen, to reach the goal of ensuring that 50 percent of the worlds fisheries are sustainably managed in next 10 years. A sea change, indeed.