Leaders in the Clean-Tech Economy
October 7 2013 by Dale Buss
Every few weeks, dozens of denizens of 26 villages in the western Philippines gather up their discarded nylon commercial fishing nets and bring them to a central palletizer, where they’re crunched into raw material that will end up in carpet squares made by Interface, halfway around the world in Georgia. For at least three reasons, CEO Dan Hendrix is jazzed about the $1 billion company’s $300,000 investment in the process.
First, he says, the supply “is cost-neutral because if you get enough fishing nets, it’s much cheaper” than virgin nylon. Second, Interface is “cleaning up the ocean and doing something that’s helping these villages, too.” And third, the effort gets the company that much closer to an overall sustainability goal Hendrix calls Mission Zero, which is to completely eliminate Interface’s environmental impact by 2020.
“It’s good business and it’s the right thing to do and our customers care,” Hendrix says. “What every CEO is wrestling with is that consumers won’t pay more” for corporate sustainability, “but they care.”
In fact, nearly every CEO these days is dealing in some form with these twin modern dictates of corporate sustainability, which used to be called environmental stewardship. There’s an almost overwhelming public expectation for their companies to be working proactively, even aggressively, on this front. Therefore, about half of today’s CEOs agree that there is a business case for sustainability, up from just 20 percent three years ago, according to a recent survey.
Trend or Transformation?
On one level, sustainability is simply synonymous with productivity improvement and reduces stresses on the environment merely by extending the time-honored prosecution of innovation to reduce and improve inputs ranging from raw materials to energy and to refine the resulting outputs. Every CEO is constantly striving to do that anyway. The second level of sustainability is the tricky one: determining how much to capitulate to demands for sustainability measures where the raw and immediate business case alone isn’t enough to justify it.
“Sustainability is the next big wave; what if 15 years ago a CEO had assumed that the Internet was just a fad?” asks Jay Friedlander, a business professor at College of the Atlantic who specializes in social responsibility. “It’s about combining social benefits and environmental stewardship and economic vitality, figuring out ways to create shared values for all of those [goals]. That [activity] creates innovation and entrepreneurship and new ways of doing things. Companies will see value that was latent.”
Adds Chris Laszlo, an associate professor at Case Western Reserve University’s Weatherhead School of Management: “There are rising expectations by companies and employees and investors of what companies should do in terms of impacts on society and the environment. So it’s about a smart business solution, not about a liberal agenda.”