GreenBiz Forum day 1: Going beyond the low-hanging fruit in sustainability
Dow Chemical Co. and Agilyx launched a recycling program to convert hard-to-recycle plastics into synthetic crude oil. Partnering with a California city, they aimed to tackle two big sustainability problems: what to do with the mountains of plastic waste in landfills and how to secure fuel without drilling for fossil remains.
But whether the Energy Bag pilot program for recycling such plastics as juice pouches, candy wrappers and plastic spoons into crude oil will go beyond the pilot depends on whether the partners can scale it to be economically viable.
“The biggest issue is the scale of collection,” said Jeff Wooster, Dow’s chief of sustainability describing the breakthrough program on hard-to-recycle plastics at GreenBizForum opening day.
Integrating planning for the end of use of a product into its original design was another idea that garnered a lot of interest. The circular economy philosophy that entails such design is finding an audience even among mainstream companies, said William McDonough, founder of the Cradle to Cradle Product Innovation Institute and chair of the World Economic Forum’s circular economy council. Another Great Idea discussed was bringing electricity to the 1.4 billion people in the world without it by installing simple solar photovoltaic structures in rural Third World villages.
But rather than proclaiming answers, the over-riding conversation in all these discussions about what’s possible was that now is the time to push through with innovation, to try harder and move faster if the planet is to be saved.
“We’ve picked the low-hanging fruit. We’ve done the things with quick buy-in. But it's that bigger opportunity, that bigger impact,” that lies ahead and must be tackled to move the needle on sustainability said Joel Makower, chairman and executive editor of GreenBizGroup.
“Those bigger opportunities are primarily in supply chains,” he said.
The way to scale impact, to scale, say, a promising plastics-to-energy recycling program, or to conserve enough water so that both a company and its surrounding communities are not thirsting, is to spread implementation of sustainable practices down into a supply chain.
The Twittersphere agreed:
Integrating a company’s true expenditure of natural capital or natural resources into mainstream corporate accounting will demonstrate just how much risk exists around sustainability issues and why going beyond the low hanging fruit is imperative. Companies face financial risk when their natural capital spending is high.
About 350 companies are now engaged in initiatives to measure their natural capital expense, said Richard Mattison, CEO of Trucost environmental data firm. Why? Because if If companies had to pay for all those natural capital uses, those costs would wipe out profits, as Mattison reminded was a finding of the State of Green Business 2015 report.
Examples of risk are not hard to imagine. Unchecked, or unmeasured, use of water leaves companies exposed in times of drought. Agricultural commodities might spike in cost due to weather changes or water scarcity. Alex Wittenberg, Partner in the Oliver Wyman risk management advisory unit of Marsh & McLennan, said his firm has made a practice of helping companies understand the sustainability factors in risk mitigation and corporate strategy.
For this reason, it is important for companies to not only examine their own natural capital expenses but such expenses throughout its supply chain base, by all the companies and raw materials suppliers it buys from, because most of that natural capital impact is in the supply chain.
Beyond the low-hanging water fruit
Water is one of those natural commodities typically subject to run-of-the-mill conservation measures like turning off the faucet and minimizing leaks. And though water prices remain much lower than might suggest looming issues with widespread scarcity, new areas of innovation are emerging. Supply chain water stewardship, for instance, is one area that presents lots of room for improvement.
But another opportunity exists to meld sustainable water initiatives with one of the biggest buzzwords in corporate social responsibility. Closed loop systems, or self-supported systems meant to help conserve resources, are being applied to water in multiple ways.
One big area of opportunity for closed loop systems is in the hospitality industry, where companies like Marriott International are honing measures like incorporating water conservation into architectural and planning designs, capturing rainwater or treating wastewater to feed internal water demand, lowering the need for outside supply, said Marriott International Resort Manager Brad Colton at a GreenBiz forum panel on Tuesday.
“Beneficial reuse is really the future,” said Ecolab Vice President of Sustainability Emilio Tenuta during the same GreenBiz Forum panel.
However, challenges remain to recognizing this potential at scale. On the flip-side of the enduring low price of water, prohibitively expensive or nascent new water treatment technology (which sometimes produces its own environmental ill effects) is another obstacle.
Insight from the Tutorials
One might think that the combination of daunting climate forecasts and the ethics of environmental issues might already make for a convincing business case for sustainability.
But despite the efforts of myriad NGOs and a select few businesses, the data shows that large corporations are still focused largely on incremental sustainability efforts mismatched with the magnitude of the challenges at hand.
“There may be no force stronger in this whole world than corporations,” said John Heckman, chief sustainability strategist of consultancy PE International at a GreenBiz Forum 15 workshop held Tuesday.
Heckman explained the business case for sustainability can be broken into four categories: revenue, cost reductions, branding and risk mitigation. The concepts come with a quantifiable value for large corporations, which PE International has calculated as:
- 3 percent–8 percent of revenue
- 10 percent of brand value
- 15 percent contribution to hiring and retention efforts
- 1 percent–3 percent of cost of goods sold
- 1 percent–10 percent of sales risk
In particular, the concept of risk has emerged as a flashpoint for broadening the sustainability within businesses, thanks to research like the World Economic Forum’s recent pre-Davos report highlighting the nexus between environmental issues like water scarcity and social, economic or political turmoil that might undermine business operations.