Sustainability may be all the rage but, as the song says, it's not easy being green.
Without widespread standards, companies are struggling with how to properly calculate and disclose their carbon footprint to the public. And many don't have the financial resources to address environmental resource concerns.
Kevin Wilhelm is the chair of the Greater Seattle Chamber of Commerce Sustainability Committee and CEO of Sustainable Business Consulting. His new book, "Return on Sustainability," which got endorsements from environmentalists Robert F. Kennedy Jr. and Laurie David, takes a shot at deciphering the ins and outs of corporate sustainability given the current economic downturn.
The environmental capitalist talked with CNET News about the recession, the next Y2K event, outsourcing, wasteful surprises most companies find, and why comparing carbon footprints can be like comparing apples to oranges.
Q: Are sustainability efforts taking a bad hit with this recession?
Wilhelm: Yes. It's just like so many other initiatives big companies are doing, whether it's IT infrastructure or energy upgrades. Traditionally, sustainability and green efforts are seen as additionals. Because the marketplace hasn't gotten to where it's fully required, it's definitely been hurt by budget cuts. Some current clients have asked to hold work for 2009 because there's no more budget. All that being said, I think everyone was in this panic over the economy. Now that the bottom is somewhat stabilized, I think the fear is gone and people realize sustainability is part of a long-term strategy. And even though they may have to slow down their efforts, they still have to go through with them.
Explain what you mean in your book by "waste equals money."
Wilhelm: Anything that you're throwing out or not using to its full effect becomes waste. People's time when they're not producing is wasted time and wasted money. Materials are a big component. When a company throws out something, they're not only throwing out scrap. They paid for that in the cost of whatever they bought. The most famous example is Ben & Jerry's ice cream. Ben & Jerry's was used to disposing of slop through traditional sanitation methods. They found they could take their waste from dairy production and sell it to pig farmers.
Cascade Designs makes thermal things for backpackers that have this foam (in them). With their cuts there was always left-over foam and they were throwing it out. They turned it into camping pillows, and what was this expensive thing they paid to be hauled to a landfill was turned into a profit center.
How does outsourcing come in to this? I've talked to people from major companies who wonder if competitors could be fudging carbon footprint numbers by eliminating their manufacturing from the U.S. and outsourcing it to China. While our local U.S. air may get cleaner as a result, that company is still contributing to pollution that's going to affect us long-term.
Wilhelm: You're right. It's just like any time when anyone tries to externalize their costs. You look right now at any company polluting the air. Companies pay to recycle or take out garbage, to have wastewater treated, but air goes up and what happens to it? Nothing. We all pay the price. In terms of the carbon footprint, you're dead-on. With companies right now--because they're just now understanding what you have to measure--you may find you're comparing apples to oranges sometimes. What you try to do with companies is get them to say what the boundaries of the company are for the footprint. They can say they're only doing U.S. operations and exclude anything manufactured in China. In terms of what the standard is, companies can include operational control, economical control, or subsidiary control.
Look at all the products being made and shipped from China. Some of the factories are giant and make (products) for four or five brands at a time. You look and say 20 percent (of their production is going) toward our product, so 20 percent of their energy needs to be part of our carbon footprint. There are standards, but people can define it in different ways. Starbucks only looks at energy use and transportation. They don't count their cups, and everyone walks out with at least one of those. But they're very transparent about it. They say it's complicated and they haven't gotten to it yet. It's new for a company and they usually say, "We want to do a carbon footprint for everything." Then they realize, "Oh, I have to go to China to figure this out?"
In your book you say that whether you believe in global warming is beside the point.
Wilhelm: It is. If you're a businessman who doesn't think climate change is manmade, well, the EPA (Environmental Protection Agency) has said it is and they're coming out with climate regulations. The Kyoto Protocol is coming up and they'll have a new treaty in Copenhagen. So whether you believe or not, you're going to have to respond. The trend with consumers is huge and from a global perspective, climate change is like the Y2K event. The Y2K prep is nothing compared to what's coming this December, January, and February in terms of regulation.
You mention in your book how REI was shocked to find that 26 percent of its carbon emissions came from its Adventure Travel division, while it had assumed it would all be from shipping and distribution. Depending on the type of business, what's the likeliest culprit between energy, travel, waste, paper, and freight?
Wilhelm: If you're a manufacturer, energy is your biggest. If you're service-based, electricity is a part but employee travel is a big, big deal. That's the one that always shocks people. I biked an entire year to work, then I took one trip to China and wiped it all out. I could have driven a Hummer to work, used plastic bottles, used virgin paper, and it wouldn't have been as much.
Wilhelm: When a company looks at the cost of travel, they may only look at the cost of the ticket and hotel, and don't take in the effect of a person's time away from the office, their loss of production, or flight delays. But you're right, the video tech is not going to replace 100 percent the face-to-face because, let's face it, people do business with people. But instead of making four trips you make two: the first impression, then do videoconferencing, then when you need to make that final report or finalize that deal you can shake hands in person.
What are the biggest obstacles for a company in calculating an accurate carbon footprint?
Wilhelm: Getting the data is the first one because a lot of people aren't used to it and have never had to get this data before. Second, they don't know where to go or who's got it, and it may not be in the format they need. If they lease, which most service-based businesses do, they have to get it from the building manager, who may not know or not want to know how to do it. The first time through you get most data but have to make some assumptions. It then helps companies realize they should be tracking things or are overpaying for some things.
Your book has a lot of case studies. The quirkiest one may be how General Mills was able to reduce Hamburger Helper packaging size by changing the shape of their noodles, which not only reduced packaging costs by 10 percent, but resulted in a fuel savings equating to 500 fewer distribution trucks on the road each year. What's an example that surprised even you?
Wilhelm: One of the reasons I threw that out there is because people say, "Oh my God, really?" One that is really obvious was that it used to be, even a year ago, that you could buy those big plastic bins of laundry detergent, and now you see the same brands sold in concentrate. Procter & Gamble originally said, "Sell it in concentrate?! We need the big one for shelf-space advertising, and people think big is more." But Wal-Mart said, "It's too much shelf-space, too pricey to ship." So then Wal-Mart wouldn't have the big ones from them. And soon, you didn't see them at Target and other stores, and now hardly anybody sells them.
Not every company has
Wilhelm: With small clients we suggest using our ROS (return on sustainability) chapter, where people can figure out cost savings, brand value, and . Then sit down and have a brainstorming session on ways to save money as a company with the potential to be environmentally sustainable but really focus on saving money. Things start popping up where there's inefficiency. A nonprofit did a drawer clean-out day. People could keep what they wanted, and if they had, like, three staplers, they put two back in the supply room. When they were done, they realized they didn't need to order supplies for the next six months and saved $8,000. The other thing I would say is do the carbon footprint assessment. There's a lot of tools out there to do that. Even a small business will find a surprise of "Gee, didn't realize we were spending that on paper."
Usually the problem is there's a resistance to change in an organization--especially if you have a powerful office manager who likes to do things how they've always done them. If you can say you're trying to reduce the carbon footprint and achieve sustainability goals, it's a way to get people to look at it through a new lens. Maybe a small business will only find a couple hundred dollars' worth of savings, but they can report to customers and clients that they did a carbon footprint and are trying to be as green as they possibly can.
Your book is filled with quick charts, tables, and statistics on things like physical water scarcity regions in the U.S., weather-related insurance losses, carbon metrics, and consumer surveys on sustainability. Do you think all this freely available information is empowering or overwhelming?
Wilhelm: It's definitely overwhelming and can be discouraging. You don't even want to think about water scarcity. If we think there was a war over oil, what's going to happen over water? You look for sustainability and a million sites pop up. There's too much info. And whose ideas are political motivated?
OK, but what are some of the tools or standards you would recommend?
Wilhelm: If you're in the U.S., there's no one way on how you have to do the carbon footprint. It's voluntary. Look at carbon offsets. There's no agreement. Sustainability is now where organic food was 10 years ago. People liked it, but there was no certified label. Then there was, but then people thought well, what about if it's local and all these things? Right now, it's the Wild West because for CSR (corporate social responsibility) reporting, there's a lack of standardization. And it's funny because I find that people rather be told, "Do it this way." They're always asking which one is the best to go with? What are the pros and cons? I tell them go with the de facto standard, the GRI (Global Reporting Initiative), but until it becomes the standard, companies can report it any way they want.