Businesses large and small are increasingly asking themselves: What is our green strategy? They may not understand exactly what that means, but they do know that they need to get one.
Along this road they are finding both obstacles and opportunities as they navigate through a green marketplace with few hard-and-fast rules, according to Joel Makower. Joel is GreenBiz.com's executive editor and author of the new book, “Strategies for the Green Economy: Opportunities and Challenges in the New World of Business.”
I sat down with Joel to talk about the book and the three keys he offers to help companies assess how well they are doing and answer the question: How good is good enough?
Tilde Herrera: So, Joel, it's been 14 years since your last book. How has the green economy evolved since you wrote Beyond the Bottom Line?
Joel Makower: I don't think we really had a green economy 14 years ago. In fact, that's a term that we really only starting to hear about lately. I think just when you go back even five years, let alone 14, it was just a collection of companies doing things. There wasn't any real strategy behind it. There wasn't any sense that this is more than simply doing well by doing good, or doing less bad, or somehow improving the bottom line by being more environmentally responsible.
And I think that -- we were talking about the green economy -- this is really about how does this go beyond improving the bottom line to how do we actually grow the top line?
How does green, and all of its manifestations, become a platform for innovation and for new products and services, new business opportunities, new markets, and in some cases, whole new business models?
And that's where this stuff gets exciting. That's where this really becomes sustainable from a traditional business point-of-view where this really becomes part of how companies operate and what they need to do to compete.
TH: So there's no uniform standard for what constitutes a green business. How do you foresee this changing and what are the factors and who are the players that are going to help create this definition of what it means to be a green business?
JM: One of the things I talk a lot in the book is the fact that we don't have a standard. We don't know what it means to be a green business.
We know what it means to be a green building because there's a standard for that. If you think about what green buildings were like before the advent of the LEED green buildings standard, you had any company that could say, 'We've got recycled carpet and low VOC paint on our walls. We're a green building. Or we've got double-glazed windows and recycled concrete. In effect, we're a green building.”
And those are all good things, but it turns out there was a much broader, more holistic definition of what it meant to be a green building.
So, too, with green businesses. We don't have any real standard. There are some industry specific standards and there are some standards for certifications for smaller businesses like Co-op America's, but we don't really have something that's understood by consumers or B2B customers, regulators, the media and others that says, "O.K. This company is green. This company has really sort of achieved some level."
I don't know what it's going to take to get there. There's a number of efforts that have been underway, some (are) still underway, to create this standard for a greener sustainable business, but none of them has any chance of getting traction any time soon. And some of them may eventually do that over a course of years.
So right now, it's really a matter of each individual -- individual consumers and individual B2B customers -- coming up with their, in some ways, their own definitions, their own standards. And that's a problem.
We don't have really the tools to do that and we don't know -- we don't have that information from the companies themselves to even allow us to make those things. And unless you're at the scale of a Wal-Mart where you can really command information if they want to do business with you, it's really kind of a free-for-all. And so for awhile, I think we're all going to be on our own.
TH: So how does that lack of uniform standard translate to the challenges faced by companies trying to market their green products?
JM: Well, it's very challenging. As we talk about in the book, I think there's at least as much of a risk of 'greenmuting,' which is to say, not talking about what you're doing, as there is of greenwashing, which is to say, talking about it in a way that's perceived to be hype or even misleading.
So I think that companies have to figure out how to walk that fine line, how to be telling their stories authentically that says, 'You know, this is what we're doing and this is part of where we're going -- to these bigger goals -- and we're not all the way there. We may never get there and here's some of the stuff we struggling with."
I think we're at a point now -- again, both with consumers and B2B -- where people want green heroes, corporate heroes. They want businesses to step up to the plate. At the same time, ironically, (they) don't tend to trust companies when they talk the green talk. So we need to break through that and we need to help show that this is a company -- we're a company -- that is on the right path. We're not perfect, no one said we were, we don't claim that, but we're on the right path. That's the challenge that I think companies are starting to face.
TH: So you just talked about two different audiences that companies are targeting. What are the rules for marketing your products to consumers versus a B2B business audience or customer base?
JM: Well, in some ways they're similar because you've got to tell the story in an honest and authentic way, but I think most people assume that this is being driven by consumers.
And if you look at the surveys, consumers have been telling us for, well, 20 years that they want to buy green products from so-called good companies. But it's actually the B2B world that's driving the changes far more so because businesses are setting standards in their supply chains.
Look, when a Wal-Mart says, "We want to get rid of unconcentrated detergents to these condensed 2X kinds of versions," nobody says, "Why?"
Ironically, this was tried in the early '90s and the consumers rejected it. Procter and Gamble is one company that tried to create a condensed concentrated detergent and put the same amount in half the size. You had consumers sit there and say, "O.K. There's a 64-ounce bottle and 128-ounce bottle, and they both cost the same" -- never minding the fact that they actually do the same number of loads. "I want the bigger bottle."
And so, even though it's heavier to carry home, people rejected those and it wasn't until Wal-Mart came along and said, "O.K., we're no longer going to sell the bigger bottle. We only want the small concentrated version," that the entire industry had to change.
And we're seeing that not just with retail, but with lots of companies that are saying, "We don't want those other products anymore. We don't want the raw materials that are polluting, that are over-packaged."
General Motors recently committed to having 80 plants around the world that throw away zero waste, (with) nothing going to landfill. Most of it gets recycled, and a little bit of it goes to waste-to-energy. They already have 14 plants worldwide that have already achieved that. That sends tremendous change down the supply chain as companies have to say, "O.K, we can't package things anymore the way we packaged them because it's disposable packaging."
Here's just one example of the savings: GM has basically eliminated wooden shipping palates from their supply chain because they're a one-way, one-time use disposable. They're throwing away hundreds of thousands of them a day. And by doing so, General Motors is saving $100,000 in disposal fees and earning $50,000 re-selling the corrugated cardboard pallets that have replaced them -- saving $100,000 and earning $50,000 every business day.
So once you've done that, why would you do business any way different? That speaks far more than consumers whims, where they say they want to change, but only on the condition that I want to buy the greener product as long as it doesn't mean I have to pay any more, suffer any inconvenience or go out of my way in the slightest. That's a much tougher bunch of hurdles in which to clear.
TH: Now, I've heard you say quite a bit in the past that one of the most frequent questions you get asked is: How good is good enough? What does that mean, and what is you answer to that, and how has your answer changed over the years?
JM: Well, this is a problem that we don't have real standards for what a green business is. If you start with the assumption that the market for any trend or technology or transformation requires some kind of norms and standards - whether they're legal ones or voluntary ones or just cultural ones. We don't have that here, and so that's causing companies to try and figure this out.
How do we know how good we have to be? I actually hear from companies asking me that question: "How good do we have to be?" And it sort of reminds me, my father was a dentist and some of his patients used to occasionally ask him, "Do I need to floss all my teeth?" To which he answered, "Only the ones you want to keep."
But how green do we have to be? Well, ideally you have to try and do everything right to some extent, but there's no standards and the market isn't telling you that. And consumers and even B2B customers aren't necessarily telling you here is the mark you have to pass or the hurdle you have to clear. So until we have those kinds of standards, it's really companies (that) are grappling with this. You end up with situations -- this paradox in which when you talk about what you're doing right, you often illuminate problems that the public didn't know you had.
"Oh, really, you're using 2 percent organic cotton now? Why? Oh, well, really I didn't realize that cotton was such a pesticide-intensive industry. That's incredible implications for groundwater run-off, and worker health and safety and the birds in the trees. Why are you only (using) 2 percent? Why aren't you doing 5 percent? You know, we're going to do campus boycotts until you commit to 10 percent organic cotton."
That's the challenge companies often face in thinking about, well, how good do we have to be?
TH: Well, that sort of touches on one of your previous points: greenwash versus greenmuting. Which do you think is a bigger concern?
JM: Well, greenwashing is a bigger challenge to companies. Greenmuting is a bigger challenge to society. When you talk about things that are accused of greenwash -- and these days that term is thrown around willy-nilly -- it's sort of guilty-until-proven-innocent. And particularly, if you're a big company, anything you do, any green claim you make is automatically assumed to be greenwash until somehow proven otherwise.
That's a problem for you as a company right now, although some companies just blow through that and say, "Look, does it matter what people say? We're committed to this and we're going to do this in either case."
But there's a case to be made that not talking about what you're doing is a disservice -- not only to yourself as a company and to your employees and the other people who are pitching in, often against all odds, to get these things done -- but to society who may not see the bandwagon that's really taking place in the business world, and therefore not be able to get on that bandwagon and accelerate this transformation we're going through. So I don't know. I don't know how to definitively answer that except they're both big problems.
TH: Now, going back to your question, how good is good enough? You also offer companies three questions or keys that they can use to help answer that question. What are they?
JM: Well, very simply, these are of a high-level and came out of my own asking questions, a series of questions, to companies. When I boiled it down, they basically amounted to these three questions: What do you know, what are you doing and what are you saying?
So what do you know? Do you really understand what your impacts are? Most companies don't, and when they look and figure it out, they're often surprised.
So Coca-Cola a few years ago tried to figure out the carbon footprint of its operations. And you think about all that they're doing: Sourcing bottles and cans and aluminum, glass and plastic, and moving water, which is extremely energy intensive and transporting it all over the place from their nearly 1,000 bottling plants. And if you would actually count all the number of vehicles in the world that had the Coke logo on it, and assume that they were company-owned fleets, which isn't the case, they'd have the biggest fleet on the planet. So what's the biggest part of their carbon footprint?
It's actually refrigeration. It's Coke machines: Coke machines and fountains in restaurants, and those refrigerators when you go into the 7-Eleven and they have the Coke-labeled refrigerators that's marketing equipment. It's not just the energy use but it's actually the refrigerant that has intense greenhouse gas-building power.
So what do you know? Do you know that and until you really look at these things, you're often surprised at what you find.
TH: And what's the second question?
JM: Well, what are you doing now that you know? Do you have a plan?
And increasingly these days it's sort of a bold, audacious plan: zero waste or 100 percent renewably powered or carbon neutral. But even if it's not an absolute, all-or-nothing kind of goal, do you have a plan to move forward? A maybe two- or five- or 10-year plan that may never get you to perfection, but is it there, and is top management involved? Is everybody else involved; are their paychecks in some way, or bonuses in part, dependent on how they perform?
Are the suppliers and customers involved? Is there a plan?
And finally, once you know what you're doing and have a plan, what are you saying? How are you talking about this? Are you talking about it openly and authentically to everyone involved -- again, to suppliers, customers, employees, the media, the regulators and so on? And not just waving your arm saying, "Hey ain't we green?" But actually, actually having an honest conversation.
So, I maintain that companies that can demonstrate that they really understand their impacts, have a plan in place to do something about it and are talking about it openly and authentically, aren't necessarily good enough from a sense of this is all you need to do, but they're on solid footing on which to build environmental and make environmental claims and are far more insulated against charges of a greenwash.
TH: So in terms of moving that needle forward, are we at the tipping point? Is this just a trend?
JM: I get those questions a lot. People see all the action, all the stuff we report on GreenBiz.com everyday. It's easy to say, "Wow, this is really happening, we've reached the tipping point." And the fact is, we really haven't. There's is a lot going on, but in terms of a lot of companies doing a lot of substantive things? We're just not there yet. (We've) got a lot of companies doing a lot of things, but it's still kind of what I call random acts of greenness.
It's just this assortment of different activities, and isn't necessarily coherent and cohesive and it isn't enough to really move the needle to really address the environmental challenges.
In other words, if all companies were doing what the best companies are doing, would we really transform climate change and the water and energy challenges that we're going to be facing? I'm not so sure. So we've got a long way to go.
And then you asked, is it a trend? Absolutely not. This is a transformation of how business is being done. I mean, think about it. Once companies wring out the carbon and waste and inefficiency and materials and energy embodied in all their products and operations, those aren't going to come back once oil prices were to drop to only $75 a barrel.
This is the new way of doing business, and when you see the transformations taking place, and getting off of oil over the next couple of decades, and the new business opportunities that are coming out of that, and the new kinds of materials, and the new water efficient or closed-loop processes, and bio-mimicry, and the whole range of sort of cutting-edge technologies, we're not going to be going back to the way it used to be. And so, green business and the green economy is really here to stay.
Tilde Herrera is associate editor at GreenBiz.com.