Too many corporate leaders are waiting for a silver bullet to drive sustainability changes in their companies -- and are missing out on a prime opportunity to seize a competitive advantage.
Rather than focusing on simple changes that can be made now, says Matt Kistler, Walmart's senior vice president of sustainability, companies are “dabbling” and waiting for “the thing” that will drive transformational change.
“Shooting big and going for those opportunities we all hope to find,” is a must, Kistler says, “but let’s face it, it takes a long time to implement, it's expensive and requires radical change.”
Instead, Kistler advocates that companies should “do the small things, look for the big ones, but just get started.”
Appearing as part of a panel convened last week in San Francisco by Rocky Mountain Institute at RMI2009, Kistler was joined by HP's Bonnie Nixon, Paul Westbrook of Texas Instruments and Tony Malkin, owner of the newly retrofitted Empire State Building.
Moderated by Adam Werbach, the CEO of Saatchi and Saatchi S, the group discussed how forward-thinking corporations are using sustainability as a key competitive driver.
Ranked the No. 1 green company in America last month by Newsweek, HP is already helping customers reduce their carbon emissions -- developing teleconference technology to replace air travel and using cloud computing to reduce reliance on massive data centers.
But HP is also taking simple steps, Nixon says, such as delivering computers to retailers in stylish, reusable messenger bags rather than boxes. Created in response to a design contest issued by Walmart, HP's design -- which won the challenge -- reduces the amount of product packaging by 97 percent.
Walmart's Sustainability Index, announced earlier this year, is part of a major attempt by the retail giant to develop a more transparent supply chain. The index will show what is in each product and how the product is made -- from raw materials to disposal.
Yet, Werbach asked, can Walmart really justify a sustainability index that isn't all about saving money when customers suffering from job losses and a crippling recession are trying to make every dollar count? And can the company keep prices low but still sell sustainable products?
“At midnight at the end of the month, that's when many Americans finally have money and can go shopping,” Werbach says.
The index is meant to drive innovation throughout Walmart's supply chain and allow customers to evaluate products on something beyond just price.
Last year, by making changes based on sustainability, Kistler says, Walmart increased its income by $200 million just by revamping product packaging. “Rather than paying someone to haul away what we previously thought was waste, we're getting an income stream to help make those small changes.”
The recent retrofit of New York's Empire State Building was a major undertaking to remake an iconic brand known the world over.
“The view of the world towards the Empire State Building was always from the 70th floor up,” Malkin says. “But I wanted it to be the world's most famous office building."
The key to that, he says, and to attracting higher-paying tenants, was to increase the building's energy efficiency and create a better, healthier, more productive workplace.
“It's a viable business model and a way to get a better economic result,” Malkin says. “Without compromise -- the building's not darker, not colder -- we were able to drive change and creating a competitive advantage, that's what drove us.”
Size matters, as HP discovered when, earlier this year, Greenpeace painted the words “Hazardous Products” on the roof of its headquarters in Palo Alto, California. As a $130 billion technology company, Nixon says, HP acts as a tipping point, and while the company's leaders did not take kindly Greenpeace's actions -- to say the least, it did get them talking internally about how to be a leader in driving change.
“From my perspective, when NGOs come to the table and say, 'We've got a problem with this,' we as a company have always said OK, let's figure out what the issues are and come up with solutions,” Nixon says. “When you look at who we are in the market -- the scale, the breadth, the depth -- Greenpeace knew by targeting us it could push the other companies to match us.”
Businesses exist to make money, says Texas Instruments' Paul Westbrook, but they are starting to discover there is a way to make money, be profitable and do the right thing. And when one company does it, others will soon follow.
“You're starting to see corporate peer pressure,” Westbrook says. “Executives are very competitive people and no one wants to be the company that got left behind.”
Nixon, calling it “coop-ition,” says that companies have to work together. “If we go it alone we can go fast, but if we go it together we can go far. We have to get with our competitors and we have to push the envelope.”
Rebecca Cole is the web content manager for Rocky Mountain Institute, she helps drive the direction, strategy and content for RMI's online presence.
Image CC licensed by Sebastian Mary.