Tuesday, February 28, 2006
I’m an optimist by nature, I’ll confess. (A nature that sometimes seems hard to express in these times.) With that disclaimer, I told a business leadership conference last month that we’re likely to look back on 2005 as the tipping point for “sustainability.” Here’s why.
In his 2001 bestseller The Tipping Point: How Little Things Can Make a Big Difference, Malcolm Gladwell used the metaphor of epidemics to demonstrate how a small number of ‘carriers’ in a ready context can unleash massive and market-altering — or world-altering — waves of change.
His questions are potent, and still relevant: ‘Why is it that some ideas or behaviors or products start epidemics and others don’t? And what can we do to deliberately start and control positive epidemics of our own?’
Momentous change is not always visible at the moment it happens — in fact it doesn’t always happen in a discrete moment. And a change can take on a nearly irreversible momentum long before it becomes the dominant phenomenon.
The ‘sustainability trajectory’ I’ve tracked over the past 35 years (since long before it was called that) has looked to me like a fairly consistent exponential curve of uptake. Whether the time span is the last three decades, or one decade, or five years, or two, the curve charting the uptake and penetration of these ideas has been exponential. (See diagram.) We’ll see even more progress in coming years — and still have major challenges ahead (see below). But 2005 may be the year of critical mass (to use another popular metaphor).
Here are a few of the milestones marking 2005:
General Electric’s Ecomagination announcement was probably the one most people remember. GE is not only big, diverse, and technologically sophisticated; it also has one of the most respected management traditions; GE’s most notable product isn’t jet engines, medical equipment or financial services, but exceptional managers — which makes this top-level, business-integrated initiative all the more notable, and potent.
Boeing announced that its new 787 jetliner (coming in 2008) will be 20% more efficient than anything comparable, and 70% more fuel efficient than the first commercial jet aircraft some 40 years ago. I’m someone who always pushes the companies we work with to take on audacious goals, but given the already optimized environment of aircraft design, this one surprised even me. (With growing concern about the greenhouse gas implications of air travel, it will be interesting to see how far this trend can go.
JPMorganChase was one of a growing number of major financial institutions signing on to the Equator Principles. Rainforest Action Network gets the kudos for pushing major banks to the table. The banks themselves get kudos for being willing to be pushed.
Investment bank Goldman Sachs pledged to make $1 billion available for investments in renewable energy, as part of a comprehensive ‘Environmental Policy Framework’ that bespeaks both a substantial grasp of the business risks and opportunities. According to an Alternet analysis, ‘It’s the first corporate environmental policy to hinge on the newly minted idea of “ecosystem services,” which is a way of looking at the environment in terms of what [economic services] it provides for humans.’
WalMart’s recent ‘greening’ announcement was notable (though it met with some skepticism) both for its potential scale of impact, and the indications of serious thinking behind it. As I wrote late last year: Does it go beyond lip service? That remains to be seen, of course, but it’s a telling sign that WalMart CEO Lee Scott isn’t just talking about ‘greening’ his stores. Here’s what he said in Forbes: ‘There will be a day of reckoning for retailers. If somebody wakes up and finds out that children that are down the river from that factory where you save three cents a foot in the cost of garden hose are developing cancers at a significant rates — so that the American public can save three cents a foot — those things won’t be tolerated, and they shouldn’t be tolerated.’ Whatever you think about WalMart’s social footprint, that’s one thoughtful CEO.
Even among the acknowledged leaders, the bar keeps ratcheting higher. (I love it when that happens! Don’t you?) Starbucks announced a commitment to a 20% renewable energy portfolio — no small thing for such a rapidly growing company — and Whole Foods trumped with a 100% commitment. (Making Whole Foods the second largest US renewable energy purchaser, by the way, right behind — are you ready? — the US Air Force! Interesting times, indeed!)
And then there were Katrina, Wilma and the two-dozen other major storms of last season. The fact- and science- averse among us may still claim to not be persuaded about global warming, but I’ll wager that everyone else got the message in 2005. (For those who didn’t, and who pay more attention to the pundits on Fox News than the executives at Swiss Re, one more hurricane season should do the trick.)
On the other hand
Not all the news is good news, of course, so this is not the time for complacency. If little things can make a big difference, the tipping point can tip the other way as well.
NASA’s James Hansen, Director of NASA’s Goddard Institute for Space Science, asserts that ‘The Earth’s climate is nearing, but has not passed, a tipping point beyond which it will be impossible to avoid climate change with far-ranging undesirable consequences. These include not only the loss of the Arctic as we know it, with all that implies for wildlife and indigenous peoples, but losses on a much vaster scale due to rising seas.’
We face many serious challenges. The progress I’m lauding, and encouraging, is still too slow to avert major socio-ecological disruptions from climate change (the issue the general public is most concerned about, while scientists consider biodiversity loss to be even more serious). Major resource systems — fisheries, forests, soils, fresh water, biodiversity, coral reefs and more — are generally in decline worldwide. Most leaders — in fact most people — are still ignorant of exponential & long-lead effects, and lull themselves into the complacency of ‘doing OK so far.’ Grinding poverty still immiserates a third of the human family, and shames us all. The addiction to stuff drives our market. And the market still lies, by dismissing the inconvenient parts of physical reality as ‘externalities’. In the face of all this, better still isn’t good enough.
So what can be done to maintain the momentum, in the face of good news and bad? I’m reminded of labor organizer Joe Hill’s admonition: “Don’t mourn. Organize.” It comes down to big pictures and small acts.
- Be sure your leadership team is tracking big picture drivers like climate change and market expectations. (And if you think meeting the European product directives is challenging, just wait ’til China steps up to the plate.)
- Get out ahead of Kyoto, and drive greenhouse gas emissions down aggressively. Even if you can’t do it as profitably as BP has, do everything you can to insulate your organization from future energy shocks.
- Engineer non-bio-compatible materials out of your supply chain. Whether because the European (and Chinese?) markets will reject them or because they have no place in living systems, they will be gone some day; your only question is ‘will you wait until you have to change, or will you lead the change?’
- Challenge your finance organization to adequately track ‘whole system,’ life cycle costs, risks and opportunities. If the tools to do it aren’t there, invent them; schedule a brain transplant if necessary.
- Communicate your aspirations, commitments, actions and results — prolifically and fiercely — at every level of your organization, and throughout your supply chain and stakeholder network. There’s no telling where the next breakthrough will come from, and you want to be sure you have all ears open and all brains engaged when it does.
(For a longer discussion of both positive and negative trends, see my recent article in Corporate Strategy Today, and my forthcoming book, Risk, Fiduciary Responsibility and the Laws of Nature. You can listen to a preview here.)