Interface CEO Ray Anderson attended the CleanTech Investor Summit last week in Palm Springs, California. That's a good sign for innovative young companies like Climate Earth -- his presence is a signal that investors must participate in creating markets for green products.
Anderson is a legend for rethinking business as usual. He made flooring manufacturer Interface an industry leader by investing in green technologies and using sustainability as a key performance indicator.
His vision continues to drive profitability and market leadership for the company. At the GreenBuild conference and trade show in November, Interface's booth featured an enormous pachyderm hanging from the ceiling above pillars of fossil fuel -- the proverbial elephant in the room. It wasn't just clever marketing.
According to an Interface representative at the show, the company has extracted so much fossil fuel from its supply chain that it was buffered from fluctuations in oil prices last year.
While competitors had to raise prices, Interface proudly told customers about their efficiency and had no cost increases to pass along. Talk about a competitive advantage.
The Associated Press reported Tuesday that oil prices rose to a 15-month high in January as a result of cold and snowy conditions. Now, prices are being impacted as much by China's bank lending practices as domestic supply and demand.
Weather and foreign economic policies are only two of an infinite number of factors that affect oil availability and price. This unpredictability presents a threat to profits, especially for companies dependent upon low-margin products and carbon-intensive materials.
CEOs looking for new ways to cut costs should focus on reducing their company's supply chain dependence on oil. The first step is to understand their current fossil fuel exposure.
Fortunately, carbon accounting offers a business-friendly way to achieve this goal. Like financial accounting, it provides a consistent and reliable way to measure the performance of your company, its supply chain, products and raw materials.
Full-service carbon accounting is managed by specialized experts in carbon science, and as a result, it overcomes historical limitations with timeframes, expense and scope while maintaining high standards of accuracy. For instance, Climate Earth's accounting system can analyze an entire company's operations 10 times faster than typical lifecycle assessment can complete a much smaller one-off project. This is not your father's carbon accounting.
Why start now?
The market is increasingly demanding action. Everyone from industry giants like Walmart to individual citizens want to buy green products and services.
Companies that wait until they are pushed will end up doing carbon accounting regardless. But they will lose out on the time-value of carbon cost reductions and the benefits of market leadership for reputation and top-line revenue.
Meeting the letter of compliance is like receiving a D- grade in school. It's the bare minimum level of performance acceptable to society. That's no way to run a company.
CEOs and investors should acknowledge the elephant in the room -- enterprise and supply chain carbon emissions -- and take their rightful leadership roles in building a prosperous, low-carbon economy.
Frankie Ridolfi is director of marketing for climate accounting company Climate Earth Inc., which helps executives understand their full enterprise and supply chain carbon footprint.
Elephant images CC licensed by Flickr user digitalART2 and sxc user Chemtec.
Ray Anderson inset courtesy of Interface.