What's holding green products back?
What's holding green products back?
This article originally was published in the Fall '15 issue of Trim Tab, the International Living Future Institute's magazine for transformational people and design.
The sustainable products industry has garnered new traction recently, as more companies adopt sustainable practices in their operations and in the design of their products.
It is encouraging to see this surge in the movement toward a more sustainable manufacturing industry. People such as Jeffrey Hollender, co-founder of Seventh Generation, and John Warner, one of the founders of the green chemistry field, have participated in this movement since its inception and have been integral to its growth.
Transforming the materials economy is a tall order. It is critical to focus on the creation of truly sustainable goods using both short-term and long-term thinking.
The gradual improvement of products to be better than their predecessors is an important step — a multitude of products in the marketplace simply need to be less carcinogenic.
And there is a growing demand on businesses to work toward long-term systemic change in both their internal processes and product design. Simultaneously focusing on both approaches will lend itself to a sustainable products industry.
Trim Tab talked with Jeffrey Hollender and John Warner about how business and green chemistry are using both approaches to change the manufacturing industry, and how the sustainable products industry effectively can address the social and environmental challenges we face.
Joanna Gangi: You are both founders and developers of the first truly sustainable brands — what do you think has changed since the establishment of those brands, and how has the sustainable product industry changed? Where do you think the industry is headed in the future?
Jeffrey Hollender: I think there’s both good news and bad news. The good news is that business, in a pretty widespread fashion, has become increasingly focused on issues of sustainability. Many companies now think about these issues in their operations and in the design of their products.
That widespread concern and awareness is a good thing. At the same time, the business response and the business strategies that are in place to deal with sustainability fall hugely short of both what’s possible and what’s required to address the social and environmental challenges that we face. That gap between what is required and what is actually happening is quite dangerous.
It’s not a lack of technology — in many cases, we have the technology. But, what we don’t have is an economic system and structure that will encourage the sustainable products industry to move forward fast enough.
John Warner: I do feel that technology’s development timeline is a little shorter than we believe. The positive thing is that the movement is growing. Fifteen years ago, there was only a small niche group of people demanding sustainable products. The trend is clearly in the direction of more and more people wanting, demanding and looking for sustainable products.
Unfortunately, as Jeffrey said, I feel with this growing demand and desire, we are not commercializing these sustainable technologies at an equal rate. I think Jeffrey is exactly right that we are in the situation that we’re in now because the mechanism of investment demands short-term, narrow focus of the development of products.
By definition, sustainability is looking for the opposite. So, while the demands of sustainability are looking for a long-term, whole systems [and] big-picture viewing, the mechanism to develop products is still looking on a quarterly, short-term basis. And those two things are in conflict with one another.
If the technology were advanced enough, we could get away with this short-term thinking. But unfortunately, technology isn’t there yet, and we need longer R&D cycles to develop these technologies. Also, sadly, we don’t see this getting into the curriculum in universities of the core scientists — the chemists that are inventing new molecules. The designers making products are embracing sustainability, but they’re stuck with the same building blocks. They’re stuck with the same number of materials to design sustainable products. Until every chemist is given this training, we can’t meet these needs.
Gangi: What trends do you see in transparency and toxic avoidance in the manufacturing industry? What recommendations do you have for companies that are embracing or evaluating this process?
Warner: We at the Warner Babcock Institute came up with a technology to increase the use of recycled asphalt in paving and to reduce the processing temperature. And there have been no barriers to introduction to the market. The product is called Delta S, and it is doing really well in the market.
My expectation for green chemistry is a technology that has superior performance to an incumbent technology, superior cost to an incumbent technology, and of course is better for human health and the environment. My position is that the best path forward is for chemists to design products that would sell absent of the sustainability narrative and that the sustainability narrative isn’t required for market penetration, but is a facilitating force.
The product sells itself because it does something that other products can't do, at a cost that’s appropriate. So, really the only barrier is the invention of that product — the barrier is that these products are not being invented fast enough. This creativity, this ability to go from idea in the lab to marketplace, is being hampered by the short-termism of how we do R&D.
Hollender: Over the last decade, there has been a great increase in demand for transparency. That demand has come in part from consumers, and in part from businesses. If manufacturers don’t have good transparency on their ingredient lists, they can’t make the kinds of claims they might want to make to their customers.
This together with the aspects of transparency that are often highlighted in corporate sustainability reports is a huge leap forward. Companies weren’t talking about how much water or energy they’re using or how many toxic chemicals they’re using. The transparency story has been a positive movement within the larger movement toward sustainability.
The one note of caution and the one concern I have is that if you put all these pieces together and look at one of the most important aspects of sustainability, which is the way in which businesses and products externalize their costs onto society and the planet, I think we still have a long way to go in terms of clearly understanding that.
For much of the past decade, transparency has been focused on looking at the direct external implications of the supply chain through to the manufacturing of the product. Eighty percent of the negative impact or externality comes in the consumer’s use of the product. We focus a lot of energy studying the ingredients, sourcing, packaging, etc., but the vast majority of the impact comes when the consumer uses the product.
The next great leap forward is getting a much better picture of the product’s use and its impact. It is critical to develop because, in many cases, we might come to very different conclusions about where the product development priorities lie if we're looking at the consumer use.
Warner: I think there is still a lot of indecision on how transparency is communicated. Looking at lists of ingredients and saying, "This product doesn’t have a certain ingredient," doesn’t really mean it's safe. It just means it doesn’t have a certain ingredient. There’s always a disconnect between the people in the labs inventing new things and the people in marketing who say that is not what the market needs.
When you factor in sustainability, it’s the use of the product that ultimately is the most important. So we need to invent technologies where the scientists inventing it understands that use and can invent to what society needs.
Gangi: How do you think the concept of net positive is reframing the sustainability movement?
Hollender: Net positive is the most promising and hopeful framework, and if pursued and followed by business, would lead to the most dramatic positive impact for the planet and society. The challenge that we face is that the concept is so new, and most businesses aren’t familiar with it.
We have, in many ways, defined much of what sustainability is about within the context of being less bad — less pollution, less energy, less water. Net positive is a whole different way of thinking about innovation and product development, and it places challenges and requirements on business and industry.
While, conceptually, it’s absolutely what we have to promote and embrace, what worries me is the gap that exists between the conceptual framework and the political and economic framework within which business and industry work. There’s a gigantic gap between what we need to do and what we’re doing.
Warner: My issue with net positive is the discussion about not being less bad, but being good — my concern with that thought process is the current state of science. There are so many carcinogens in today’s products. We have products that cause birth defects. We have products that end up in the oceans and never degrade. We have problems that must be solved, and we’re not smart enough to solve them yet.
I don’t want to put a wet blanket on making products that don’t cause cancer, making products that don’t persist in the environment and making products that don’t cause birth defects. If we jump to the next level and say, "Well, that’s not good enough. We’re not going to invest in that."
We’ve got to be careful how we phrase net positive because there are a lot of problems and, frankly, I would be happy making some products less bad. There are a lot of problems to solve. The reality is that the majority of products have something that needs to be improved in the sustainability realm. Some are bigger issues than others. Inventing is hard enough, so I don't want to start saying to those very few chemists and material scientists who are trying to make products that are less carcinogenic isn’t good enough, because we certainly need to make less carcinogenic things.
When one says, "Let’s do something positive," there is an implication that we are making a decision of what not to do, that we are deciding what net positive is. It’s a brilliant concept and very important, but I want to throw a lot of caution at it because once we start picking what it means to make things better, we’re choosing what we want to have happen. What if we’re wrong and we’ve designed products to do something that maybe nature isn’t ready for or wants?
Hollender: When I look at the challenges facing us from a net positive perspective, I look at the economic framework within which business is functioning. If we had full cost accounting, if businesses had to pay for the carcinogenic chemicals that they put into the environment and had to pay for the health costs related to that, we would see a very dramatic change in the landscape because it would not make business sense.
By allowing businesses to dump their externalities onto society, we’ve allowed companies to make all these carcinogenic and toxic products and not pay the price of the implication to society. So, we need to change the tax, legislative and policy framework within which business operates.
One of the reasons we don’t have more toxicologists and material scientists is because we’ve largely let business off the hook and have insisted that they pay the price for products that cause harm. And in terms of the moral implications of making decisions about what’s good and what’s bad, I agree with John that the concept comes with great risk, and it requires great humility.
But I worry that our society is less willing to undertake that process than it used to be. I worry that the framework that governs the way business operates today has more to do with what the law allows and permits than what we believe from a human and humane perspective is the right, best, moral thing to do.
Gangi: Is there anything that could make this concept more attractive to business and industry?
Warner: Creating tax incentives or some financial incentive for long-term investment would help deal with the short-termism. Combining this with incentives for long-term research — encouraging patient investments — would help address these issues.
Hollender: We can do that if we redefined the way capital gains taxes are paid. Instead of giving people a huge tax break after 12 months, incentivize them by allowing them to pay no taxes if they make an investment over 10 or 15 years. And penalize them for short-term investments by a high tax rate for a less than 12-month investment.
Restructuring capital gains would have a ripple effect of making far more money available for those long-term investments that doesn’t exist today.
Gangi: What recommendations do you have to others in building a business for sustainability that also has a social mission?
Warner: The structures that we have in place are just strange. There are weird, idiosyncratic forces that inhibit people from doing the right thing.
For example, a big company that is being challenged from an investment perspective because they have too much money in R&D and they’re not returning enough shareholder value can’t talk about long-term research. They may want to. And by definition, anything under the sustainability umbrella is long-term research.
So there are organizations that may want to do this kind of research, but they’ve got stakeholders demanding that they make a good return for the quarter. I find that the individuals want to do the right thing but when faced with the current corporate structure, they feel trapped in a system they can’t control.
Hollender: I think you have to focus on two things in order to not fall into that trap. First, you have to focus on your source of capital.
If you take capital from investors that want to see you triple their investment over a three-year period of time or at a minimum, return 30 percent compounded interest, compounded return on investment, then that’s a recipe for disaster. It doesn’t give you the time or place the priority on the kind of much needed long-term development that John is talking about. You have to pay very careful attention that you don’t raise money that forces your business to function in a way that isn’t aligned with your sustainability goals.
Second, you have to pay attention to corporate governance. We often give investors too much control and too much say over what we’re doing with our businesses. The B Corporation movement is a big step in the right direction, but it’s not even adequate to protect the mission from the often perverse incentives of the funding that comes into most startup companies.
We need capital that is committed to values like net positive and sustainability. There’s a big disconnect between what most individual investors would support and what happens when their money gets placed in institutional hands and is invested in businesses.
Gangi: What is holding the market back, and what can be done to fix it?
Hollender: The biggest concern I have is the fact that money has become such a dominant influence and is risking the destruction of our democracy at this point. When you have individuals who put $10 million into elections, you end up with politicians that are beholden to the interests of the wealthiest members of our society. The individual vote counts for less and less as more individuals in businesses influence the outcome of the political process.
So I think we need to get money out of politics. I’m worried that until we get money out of politics, we will continue to head down the wrong road.
Warner: As we work on the demand for sustainable products, we need to also work on the supply of those sustainable products. We need to expand the science and chemistry curriculum and get universities on board. If the inventors of chemistry know nothing about these issues, it doesn’t really matter, they cannot contribute solutions.
But if we could get the inventors of technology to understand these issues, we can address them all. Universities need to come together and share approaches to develop a curriculum so that in the future we can have all scientists learning technologies to make sustainable and healthy products. Beyond Benign is a small nonprofit pushing for this. Almost 50 universities have already signed the green chemistry commitment.
So I’m hopeful. But at the end of the day, we have to focus on the reality that molecular scientists, the only people in the world who can make a new molecule, are unlikely to have any training on how to make a molecule that’s sustainable.
Gangi: How do you see the potential of standards and frameworks like the Living Product Challenge to transform the marketplace?
Hollender: I am thoroughly impressed and amazed with the initiative. The biggest thing that amazed me about it is that I hadn’t heard of it yet. I think that the Living Product Challenge is exactly the right kind of framework to help us make progress toward greater sustainability.
The challenge we face is exactly what we’ve been discussing today, which is, what kind of system needs to surround a challenge like that to make it as successful and impactful as possible?
Warner: I’m equally surprised that I haven’t heard more of the Living Product Challenge. In order to improve something, you need to know how to get there. The verb of improvement resides somewhere else. It’s not the tally of the performance, but it’s how it was invented and carried out, that changes things. And that’s where green chemistry and the inventors reside.
So, we need clear and unequivocal measurements to know that we are going in the right direction to make sure we are doing and accomplishing the things that we want to accomplish.
But we have to realize that saying "we need better products" louder and louder does not create the ability for a scientist to actually do it. And that’s where curriculum comes into play.
I would love to see the Living Product Challenge incorporate education, maybe even the Living Education Challenge, where chemistry departments of universities are evaluated.
Gangi: What excites both of you in the sustainable business movement?
Warner: The next generation. When I meet with established organizations that have legacy issues, I am impressed and sometimes moved by their commitment. But it’s not universal. There are a lot of infrastructure issues that are pushing people back.
But when I meet the next generation and when I speak to students and early-career scientists, there is a passion within them. I feel unequivocally hopeful that good things will happen as long as we give the next generation the tools to do it.
Hollender: I feel the same way. When I was teaching at NYU, the students made me feel the most hopeful. They will replace us, and their concerns and their values will shape a very different world from the world we have today. I just hope that we have enough time for them to bring that influence to bear.