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The Journey of Sustainable Business

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Hello and welcome to Gecko online. In today's lesson we will take you on the journey of sustainable business. We've been working with business and manufacturing in China seeing a change in attitude towards sustainability. People want to know if business really can prosper by going sustainable. Or if this is all just a wishful thinking Everything we've seen has convinced us that the business really can lead the way. The ones that really embraced sustainability are showing us how it's done. But to understand where we're headed we need to look back and see how far we've come. And how far we've yet to go. Before we set off let's just get one thing of the way. It is this word “sustainable” since will be using a lot. Really what it means is “not unsustainable”, “not the end of the world”. So it means we're not using up all the stuff on Earth, we are not covering Earth in and waste that never goes away, and we're making life better for people, not worse. That's a good journey for business to be on. After all we invented business to make our lives better. Our journey starts back in the 1800's at the start of the industrial revolution. Back then we wouldn't call it a journey to sustainability. It looked more like a war between industry and the environment. Coil was burn freely with no filters. And the air in the industrial cities in Europe and America became increasingly gray. Unconstrained by any environmental laws industry continue to release more air and water pollution every year for a hundred years. By the middle of the XXs century the levels of pollution were jaw dropping. In december of 1952 London was hit by the great smog when the pollution was so heavy that within days it was killed 4000 people and sickened over a 100000. Meanwhile the United States experience similar smog events as well as uncontrolled water pollution. The Cuyahoga river in Ohio was black with a pollution. And when the river caught fire in 1969 for the thirteenth time it finally drew attention to the condition of the rivers. Citizens had had enough and demanded that the environmental laws will be passed. Britain and America soon passed their first clean air acts and clean water acts to regulate the worst of the abuses. Industry was forced to pay for pollution damages and install expensive pollution treatment equipment. Companies who fail to comply with the laws were shut down or forced to pay fines and the profits plummeted. A lot of them start to moving a production factories in China and developing countries where environmental laws were less strictly enforced. It became clear to everyone in business that protecting the environment was a cost. Plain and simple. So the battle line were drawn with business on the one side and environment on the other. Will we always be forced to choose between that two? The laws did help environment a little. At least in the developed countries. But the story does not stop there. There was another movement in the 1960s that brought conditions to ahead. Cheap production had already gotten ahead of what people had wanted, so they needed a way to increase demand. Advertisers and marketers put their heads together and consumerism was born. More and more cheaper products appeared on the market designed to last for a short time so more could be sold. Production increased. And with still much of the manufacturing already happening in countries with little environmental enforcement, and environmental impact got worse, not better. One multinational company set up a chemical plant in Bhopal in India ignoring safety regulations and working with oversized tanks of deadly poisonous chemicals next to the homes of the million people. Late one night in 1984 a tank ruptured releasing the toxic chemicals into the air of the city. Panic broke out as people woke up in clouds of poisonous gases that burned their lungs and killed 20000 people. It became clear that government regulations alone would never be enough. Businesses had to find their own reasons for pursuing sustainability. One reason was that energy and resources started to get expensive. In 1973 war broke out in the middle east. Oil-producing nations closed the pipelines. And gas tanks around the world hovered on empty. People waited in a line at gas pumps for hours only to find out the pumps are empty by the time the line has finished. Oil prices shot up to four times the original price and stay there for a decade. The stock market crashed and business ground to a halt. Today the oil prices are even higher. It was a wake-up call. Some companies realized they could save up money by using less energy and materials for their products and services. These companies were starting out on the new stage of the journey. By choosing to do more for the environment that law required they were taking their first cautious steps towards sustainability. We call them "The Tiptoers". Saving money wasn't the only reason. Companies also had the reputation to think about. If people believed that company was helping out in their community making safe and healthy products and treating their workers fairly it would improve their reputation and get them more customers. If people felt that company was poisoning the environment using dangerous chemicals in their products and abusing workers they would look bad and loose customers. Since so many companies had already moved their factories overseas there was nobody to police them. So the corporations were responsible to police themselves. They call this Corporate Social Responsibility (CSR). So they made a special new department in the company the Corporate Social Responsibility department and gave them the job of making the company socially responsible. The CSR departments did great work donating money to build schools, contributing to local charities organizing community events and tree planting. All good news. The only problem was it wasn't really helping that much. Sure the companies were saving a bit of energy here in there but that was never going to get them off fossil fuels entirely for truly sustainable energy. Not to mention dealing with waste, toxics or labor issues. And the CSR departments couldn't help much since they were separate form most business operations. So while the CSR departments were off planting trees, the rest of the company was doing business as usual. And they weren't even breaking even on the money they were paying for CSR. When they asked hundreds of tipoers companies about it less than a quarter said the sustainability investments were paying off. So far the sustainability journey wasn't looking so good. If it just meant companies changing the light bulbs and planting a few trees it wasn't ever going to get us anywhere. And it wasn't even making money. So companies might as well save themselves a trouble. So is our journey towards sustainability over? Not quite. You see all those problems that may does care about sustainability in the first place haven't gone away. In fact they're getting worse. And more more people are starting to pay attention. First. The governments are still pushing companies. And the regulations keep getting stricter. Even for companies that moved all their factories overseas. When European regulations required electronics companies to recycle their products when people finished with them that affected every company that wants to sell in the EU. Even if they're from China or America. Second. Investors are getting involved. If the company's is about to get fined by the government for pollution or have its reputation ruined because of environmental scandal the investors could lose a lot of money so they want to know the risks. The carbon disclosure project pushes companies to disclose their climate change risks. And it has a lot of muscle behind it. It represents investors with 71 trillion dollars under management. That's more money than the entire worlds GDP in 2010. Third. Employees want to work for companies they can believe in. The best job candidates are now looking very carefully at companies' sustainability track records. Afterall if you've got good enough grades in school to choose the company to work for which one would you choose? But most importantly, consumers care more than ever about buying from companies that do the right thing. Many of them care not only about products, quality and personal health effects but about the impact of the company on the environment and society. Marketers have come up with a name for this segment. They call it LOHAS: Lifestyles of Health and Sustainability. And it has become a major influence on how companies market their products. In this new landscape some companies see sustainability as essential for being competitive. They pursue it not only for cost savings or improving a reputation. But they're going further embracing sustainability as part of their core business strategy. Because they're consistently walking the walk and not just talking about it we call them "The marchers". Instead of just making sustainability as the job of the CSR department they get the whole company involved from the CEO all the way down. Whenever they make a business desicion, the impacts of that decision on the environment and community are included. "The marchers" noticed that sustainability can help them attracked the best employees and challenge those employees to come up with new and better ways of doing things. And this innovation can win the company new customers and expand market share. Sometimes these benefits can be hard to predict and to just go ahead and do them. But "Marchers" are confident enough up to act without all the answers. And then measure the results as they go. One famous example this is "Interface". The world's biggest carpet tile manufacturer. In the mid-1990s the founder Ray Anderson had customers asking what's Interface was doing for the environment. He found he didn't have much to say. But this simple question set up a chain reaction that convinced Ray that sustainbility was the right thing to do. Interface started investing in efficiency cutting their waste and saving energy. But Ray realized it would take a lot more than that. Ray got everyone in the company involved together they defined their vision of sustainability. The company's goal was that one day they would take nothing from the Earth that the Earth cannot naturally and rapidly renew and do no harms to biosphere. Knowing it would be a long journey they called it "climbing mt. Sustainability" and aimed to reach the top by 2020. Without hard data to prove investments in sustainability would ever pay off Interface's investors didn't jump at the opportunity. But Interface was willing to take a leap of faith. To eliminate their greenhouse gas emissions of the first Interface factory they looked at the city's landfill which was releasing tons of methane a greenhouse gas twenty times stronger than CO2. It also happened to be an excellent fuel. If they could find a way to harvest that methane they would eliminate all of their factories emissions and save money on their energy costs. They couldn't prove for sure that it would pay off but their research convinced them that it was likely enough to go ahead. Sure enough they not only got enough methane to fuel the plant but enough to sell to other factories easily paying off their investments. By eliminating the city's main source of methane emissions their factory became carbon neutral. As if that weren't enough they were also able to sell carbon neutral carpets which became a surprise hit with customers. With this momentum behind them they were ready to attend something that had never been done before. Taking the old carpet piling up in landfills and recovering the materials to turn it back into new carpet. Closing the loop. They had to invent all the technologies to do it. But today 40% of Interface's carpet is made from all carpenter biomaterials. Their wasting of greenhouse gas emissions are quarter of what they were when they started their journey. This goes for all their plants including the new one in China. Cost savings alone are not enough to explain the full value that Interface has achieved through sustainability. As Ray puts it: "The goodwill in the marketplace — it's just been astonishing". As interfaces continued his seventeen-year climb up mt. Sustainability the company's profits have tripled. The evidence is showing that companies who integrates sustainability into their core strategy get a lot more from their investments than companies that only tiptoing in that direction. Two thirds of the marchers say they're profiting from their investments in sustainability. Even more of them report that they are beating the competition. So we see that it is possible to prosper through sustainability. And not only that. It's becoming necessary just to be competitive in business. Sustainability is not a trend. It's always been about the survival of people on this planet. And now it's becoming neccesary for the survival of business too. All of this has happened because companies are made of people: employees, citizens and consumers. And as people we want to believe that tomorrow will be better than today. So where will the journey of sustainable business take us? The Marchers are showing us the way. From where we are today we can see there's only one direction to go. We hope that you too can help lead the way. In memory of Ray Anderson. 1934-2011. This lecture was developed after four years of training and lecturing in China by Greenovate If you have suggestions or comments, please send us e-mail: [email protected] 1. Educate yourself 2. Buy less, buy better 3. Eat seasonal and local foods and organic if you can 4. Use energy efficient transportation 5. Join initiatives in your community 6. Reduce, reuse, recycle 7. Live responsibly today for tomorrow

Video Details

Duration: 12 minutes and 55 seconds
Country: China
Language: English
Genre: Animated
Views: 530
Posted by: irarmy on Jan 8, 2013

Can business profit through sustainability or is this all just wishful thinking? Trace the journey from the Industrial Revolution to the present to find out.

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