Environmental vision and profit4 min read . Updated: 16 Apr 2012, 11:21 PM IST
Environmental vision and profit
Money talks. Sometimes the best way to persuade business leaders to rethink their profits-only approach and instead take into account the well-being of their employees, of their community and of their environment, is to talk about what their focus on money is costing them. So let’s look at the value of a natural process from a dollars-and-cents perspective—say, the activities of honeybees, whose numbers have been declining, possibly due to pollution and other human actions.
The value of a hive goes far beyond the value of the honey it produces to the value of the crops, the fruit and the vegetables that the bees pollinate. In the US, the services of bees as pollinators are worth $15 billion (Rs 77,550 crore) to $20 billion a year—and worldwide this is estimated at $200 billion to $400 billion.
Much of our food supply, and in consequence, human wealth, is built upon bees’ work fertilizing crops—bees are just one of our planet’s resources that need to be valued in a radically different way. With climate change already under way, in large part due to greenhouse gases emitted by industry, many lives depend on how we resolve the current tension between doing business and doing the right thing.
The great news is that companies that get this right will create jobs, save money and propel our society towards a way of life that is far more harmonious with nature and more prosperous for all.
We at the Virgin Group are working to ensure that we get our own house in order. We have made great strides, and we have a long way to go. We are following in the footsteps of some great pioneers who have led the way by changing what their businesses value and measure.
In the 1990s, Ray Anderson’s carpet tile company, Interface Inc., which is based in Atlanta, Georgia, was making a healthy profit selling carpet tiles to customers such as corporate offices, malls and hotels. Then some customers began asking unfamiliar questions: What is Interface doing for the environment? What’s in a carpet tile? Is it organic? Will it exacerbate my allergies? Will it poison me or my kids?
Ray did not have the answers, which concerned him. His company might lose projects to competitors.
Others in the company proposed creating a task force to find answers. “Great," Ray said. “Go for it." There was one hitch: they wanted Ray to launch the project with a speech about his environmental vision.
But Ray didn’t have an environmental vision. What could he say? “Interface obeys the law. Interface complies." Then a book landed on his desk: Paul Hawken’s The Ecology of Commerce.
For Ray, it was an epiphany. Hawken explains that the biosphere is in decline, and industry is the major culprit because of the way it extracts resources and uses them to make products that, sooner or later, end up in a landfill. And that only industry can find the solutions to this problem.
In the three-and-a-half years following the audit, Interface reduced its total worldwide waste by 40%. This saved the company $67 million, which paid for the rest of Interface’s revolution.
Ray turned his company into an environmental pioneer by brilliantly working out a way to measure his company’s ecological footprint. He added costs to his balance sheet—items that convention preferred to ignore. As he noted in his book Mid-Course Correction: “We define waste as any cost that goes into a product that does not produce value for our customers." Also, he explains, “Our definition of waste includes not just off-quality and scrap (the traditional notion of waste); it also means anything we don’t do right the first time— a misdirected shipment, a mispriced invoice, a bad debt and so forth." And: “[We have declared] energy derived from fossil fuels is waste, waste to be eliminated systematically, first through efficiency improvement and, eventually, by replacing it with renewable energy."
Interface says that as of 2010 it has reduced energy use per unit of product by 43%, and 30% of the energy that it uses is from renewable sources. Water use per unit of product has decreased by 82%, and 40% of the raw materials that it uses to make carpet come from recycled or bio-based sources.
Interface tries not to sell broadloom carpet and carpet tiles any more. It rents them, offering customers a lease programme for carpet, called the Evergreen Program. It replaces damaged tiles free of charge and, when the lease is up, Interface recalls them all and recycles them.
Interface now knows exactly what it is doing for the environment. And, as is usually the case, the company is building its customer base and its profits in consequence.
The world lost a visionary leader when Ray Anderson died in August 2011. Entrepreneurs who want to make a difference should consider carrying on the great work he started.
BY NYT SYNDICATE ©2012/RICHARD BRANSON
Richard Branson is the founder of the Virgin Group and companies such as Virgin Atlantic, Virgin America, Virgin Mobile and Virgin Active. He maintains a blog at www.virgin.com/richard-branson/blog. You can follow him on Twitter at twitter.com/richardbranson.