Innovations for a Sustainable EconomSustainable Economyyernaehrungsdenkwerkstatt.de/fileadmin/user_upload/... · In 1999, executives at DuPont boldly pledged to reduce the company’s

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Innovations for aSustainable EconomyInnovations for aSustainable Economy

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In 1999, executives at DuPont boldly pledgedto reduce the company’s greenhouse gas(GHG) emissions 65 percent below their1990 levels by 2010 as part of a company-wide strategy to lighten its environmentalimpact. The plan, in part, was to diversifythe product line—shedding divisions such asnylon and pharmaceuticals to focus on mate-rials that reduce greenhouse gases, such asTyvek house wraps for energy efficiency. Theplan worked: by 2007 DuPont had cut emis-sions 72 percent below 1991 levels, reducedits global energy use 7 percent, and, in theprocess, saved itself $3 billion. DuPont nowplans to go beyond mere efficiency improve-ments to make products that mimic nature,including plant-based chemicals like Bio-PDO that can replace petroleum in poly-mers, detergents, cosmetics, and antifreeze.1

DuPont’s actions—and similar ones indozens of other firms—reflect a recognitionthat the way goods and services are produced

must be radically rethought in this sustain-ability century. Over the past 100 years, theway humans made and sold goods and ser-vices took a heavy toll. Now, smart companiesrecognize the need to move beyond busi-ness as usual to meet people’s needs in sus-tainable ways.

Every year the world digs up, puts throughvarious resource crunching processes, andthen throws away over a half-trillion tons ofstuff. Less than 1 percent of the materials isembodied in a product and still there sixmonths after sale. All of the rest is waste.This pattern of production and the con-sumption it engenders now threaten everyecosystem on Earth. In March 2005, U.N.Secretary-General Kofi Annan observed that“the very basis for life on earth is declining atan alarming rate.”2

By the time most human artifacts havebeen designed but before they have beenbuilt, 80–90 percent of their lifecycle eco-

C H A P T E R 3

L. Hunter Lovins

Rethinking Production

L. Hunter Lovins is president and founder of Natural Capitalism Solutions and a professor of businessat the Presidio School of Management.

nomic and ecological costs have alreadybecome inevitable. For example, this bookyou are holding, the seat in which you are sit-ting, the airplane in which you may be fly-ing, the terminal at which you will land, thevehicle in which you will continue your tripare all the result of myriad choices made bypolicymakers, designers, engineers, crafts-people, marketers, distributors, and so on.Each step represents opportunities to deliverthe idea, the part, or the production processin ways that use more or fewer resourcesand result in a superior or suboptimal end-result. Thinking in a more holistic way andchoosing more wisely at each step can reducethe impacts of these choices on the planetand its inhabitants.3

This is the foundation of Natural Capital-ism, the framework of sustainability thatdescribes how to meet needs in ways thatachieve durable competitive advantage, solvemost of the environmental and many of thesocial challenges facing the planet at a profit,and ensure a higher quality of life for all peo-ple. It is based on three principles: • Buy the time that is urgently needed to

deal with the growing challenges facingthe planet by using all resources far moreproductively.

• Redesign how we make all products andprovide services, using such approaches asbiomimcry and cradle to cradle.

• Manage all institutions to be restorative ofhuman and natural capital.4

The good news is that meeting humanneeds while using less stuff can be more prof-itable and can deliver a higher standard of liv-ing than continuing with current practices.Combined with efforts to lower consumption(see Chapter 4), practices that raise resourceefficiency, circulate materials rather than dumpthem, and imitate nature offer a new modelof prosperity for an environmentally degradedand poverty-stricken planet.

The Solid Foundation of Eco-efficiency

The ability to produce cheap goods and shipthem around the planet derived in part fromabundant supplies of cheap energy. Usingthis inexpensive oil, gas, and coal has pollutedthe planet and dangerously warmed the cli-mate. In a carbon-constrained world, sur-vival depends on finding ways to producegoods and services in dramatically moreenergy-efficient ways.

The concept of making things using fewerresources is far from new, but it remains thecornerstone in producing goods and servicesmore sustainably. Critics such as WilliamMcDonough disparage eco-efficiency as sim-ply doing less bad, but therefore still bad.Greater resource productivity alone will notdeliver a sustainable society, but the criti-cism misses the significance of using as fewresources as possible. The foundation of abuilding is far from sufficient to house afamily, but without a solid underpinning nostructure can long stand. Without eco-effi-ciency, no system of production can be saidto be sustainable.5

More important, however, given the chal-lenges facing the world, is the fact that usingless stuff buys the critical time necessary tosolve such daunting problems as climatechange and to develop and implement pro-duction methods that meet humanity’s needsin ways that do not cause more problems.

Eco-efficiency is the easiest component ofthe transition to sustainability to implement.It is increasingly profitable, and psychologi-cally it is far more familiar to industrial engi-neers than are such concepts as biomimicryor the human dimensions of implementingthe changes necessary. It is therefore a greatplace to start.

It is now cost-effective to increase the effi-ciency with which the world’s resources are

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used by at least fourfold—dubbed “FactorFour” in a 1997 book. The European Unionhas already adopted this as the basis for sus-tainable development policy and practice.Some countries like Australia have set thisand even greater efficiency as a desirablenational goal. The Environment Ministersof the Organisation for Economic Co-oper-ation and Development, the government ofSweden, and various industrial and academicleaders in Europe, Japan, and elsewhere havegone even further, adopting Factor Tenimprovements as their goal. The World Busi-ness Council for Sustainable Development(WBCSD) and the U.N. Environment Pro-gramme have called for Factor Twenty, whichinvolves increasing efficiency 20-fold. Thereis growing evidence that even such ambi-tious goals are feasible and achievable in themarketplace. They may, in fact, offer evengreater profits.6

One of the foremost proponents of eco-efficiency is the World Business Council forSustainable Development, which introducedthis term to the world right before the 1992Earth Summit in Rio de Janeiro. WBCSDdefines eco-efficiency as:• reduction in the material intensity of goods

or services,• reduction in the energy intensity of goods

or services,• reduced dispersion of toxic materials,• improved recyclability,• maximum use of renewable resources,• greater durability of products, and• increased service intensity of goods and

services.7WBCSD is a CEO-led network of more

than 200 companies promoting market-ori-ented sustainable development and greaterresource productivity. It enables its membersto share knowledge, experiences, and bestpractices on energy and climate, develop-ment, ecosystems, and the role of business in

society. It maintains initiatives in sustainablevalue chains, capacity building, water, andenergy use in buildings. WBCSD conductssector-specific studies on how to reduceresource use in such areas as cement, electricutilities, mining and minerals, mobility, tires,and forestry. The group is led by an executivecommittee featuring leaders of such compa-nies as Toyota, DuPont, Unilever, Lafarge,and Royal Dutch Shell.8

Member companies have implementedprofitable resource productivity to lower theircosts and reduce their environmental foot-print. For example, AngloAmerican/ MondiSouth Africa increased the production capac-ity of one of its pulp mills by 25 percent.This enabled it to accommodate a 40-percentincrease in timber supply from more than2,800 small growers, while increasing theefficiency of using waste wood to power theplant, decreasing the use of bleach chemicals,and reducing the use of coal from 562 to 234tons per day—all while significantly cuttingcosts. The measures achieved reductions in:• 2,177 tons of sulfur dioxide—a 50-per-

cent reduction;• 509 tons of nitrogen oxide (NOX)—a 35-

percent reduction;• 297,121 tons of carbon dioxide (CO2)—a

50-percent reduction; and• total sulfur emissions—down approxi-

mately 60 percent. Energy-efficient technologies also reducedwater consumption and purchased energy.These enabled the pulp mill to use 44 percentless purchased energy in 2005 than in 2003.During 2005, one mill cut its energy andwater costs by 27 percent.9

Increasingly, companies are implement-ing eco-efficiency to drive their innovationand enhance their competitiveness. STMicro-electronics (ST), a Swiss-based $8.7-billionsemiconductor company, set a goal of zero netGHG emissions by 2010 while increasing




production 40-fold. ST’s GHG emissionswere traced to facility energy use (45 percent),industrial process (perfluorocarbon and sul-fur hexafluoride) emissions (35 percent), andtransportation (15 percent). The companyundertook to reduce on-site emissions byinvesting in cogeneration (efficient combinedheat and electricity production) and fuel cells(efficient electricity production).10

By 2010 cogeneration sources shouldsupply 55 percent of ST’s electricity, withanother 15 percent coming from fuel switch-ing to renewable energy. ST will reduce theneed for energy supply through improvedefficiency and implement various projectsto sequester carbon. This commitment hasimproved profitability. During the 1990s itsenergy efficiency projects averaged a two-year payback—a nearly 71 percent after-taxrate of return.11

Making and delivering on this promisehas also driven ST’s corporate innovationand increased its market share, taking thecompany from the twelfth to the sixth largestmicrochip maker by 2004. By the time STmeets its commitment, it expects to havesaved almost $1 billion.12

What is true in microchip manufacturingholds true in consumer retailing as well:things can be done more efficiently. In Octo-ber 2005, Wal-Mart, the world’s largestretailer, announced a corporate commitmentto cut greenhouse gas emissions and reducewaste, pledging to be supplied 100 percent byrenewable energy, to create zero waste, andto sell products that sustain resources andthe environment.13

To achieve this, Wal-Mart is working withits 60,000 plus suppliers to help them learnhow to produce “affordable sustainability,and become more sustainable businesses intheir own right.” The company began byreducing waste, announcing a goal of a 5-percent reduction in overall packaging by

2013. It estimated that the impact would bethe equivalent of removing 213,000 trucksfrom the road and saving about 324,000tons of coal and 77 million gallons of dieselfuel a year.14

Reducing packaging in the company’s KidConnection line of toys let Wal-Mart use427 fewer containers to ship the same num-ber of items, saving $2.4 million in shippingcosts, 3,800 trees, and 1,300 barrels of oilannually. The company estimates that a sim-ilar effort globally could save nearly $11 bil-lion. Wal-Mart’s supply chain alone couldsave $3.4 billon.15

Wal-Mart has pledged to implement an“Ethical Supplier Initiative” and is seekingmore long-term and sustainable partnershipswith the factories that supply its stores. Onesuch program in a candy factory in Brazilthat lacked a system for processing, recycling,and disposing of waste enabled the factory toinstall a waste management program, whichin turn let the supplier generate $6,500 ayear in new profits.16

Wal-Mart is working with suppliers todesign more-efficient products to offer to itscustomers. A partnership with the Eco-mag-ination program of General Electric (GE)will produce light-emitting diodes (LEDs).LED lights last longer, produce less heat,contain no mercury, and use significantly lessenergy than other bulbs. Lighting accountsfor about one third of Wal-Mart’s electricityuse. Since 2004 Wal-Mart has invested about$17 million in developing LED lighting sys-tems for its own refrigerator cases in morethan 500 stores. It projects that this will saveabout $3.8 million a year and reduce the




Companies are implementing eco-efficiency to drive their innovationand enhance their competitiveness.

company’s CO2 emissions by 65 millionpounds. Wal-Mart’s purchase will be suffi-ciently large that it will bring GE’s produc-tion costs for LED lighting down to levelscompetitive with ordinary lamps.17

The company is also taking a closer lookat how some of the products on its shelves aremade, in line with WBCSD’s emphasis onreducing the dispersion of toxic chemicals asone component of eco-efficiency. At theMarch 2007 quarterly meeting of senior man-agement and major suppliers of Wal-Mart,CEO Lee Scott indicated that the companywould begin phasing phthalates out of theplastics used in children’s toys. By July, Wal-Mart announced that it would no longer shipinfants’ toys containing these endrocrine-dis-rupting compounds.18

A number of frameworks aim to help com-panies use resources more efficiently. Leanmanufacturing arose from the Toyota Pro-duction System and was popularized in the1996 book Lean Thinking by James Womackand Dan Jones. It emphasizes reduction inprocess variability as a way to identify andeliminate inefficiencies that reduce quality.Waste is eliminated as a byproduct of enhanc-ing the smoothness of the process. Similarly,the Six Sigma system trademarked byMotorola and fanatically implemented byhundreds of companies seeks to cut wasteby eliminating any variability in the produc-tion of items.19

These two systems are valuable approaches,but management needs to understand theirlimits. Manufacturers have found that bothhave the drawback of inhibiting creativity.The mental model that seeks to eliminateany defect or deviation from a given standardis inimical to the sort of intellectual curiosity,tolerance for ambiguity, spirit of experimen-tation, and appetite for risk that characterizesgreat invention. Many companies now insu-late their creative staff from the salutary dis-

cipline of Six Sigma. But once the inventionis conceived, lean manufacturing enables acompany to deliver exceptional quality,squeeze out waste, and scale up productionto efficiently deliver a predictable product.

Lean manufacturing, as implemented byToyota, features an almost manic dedicationto reducing the “seven wastes” as a way toenhance customer satisfaction. It identifiesany part of an operation that does not con-tribute to customer satisfaction as waste,specifically targeting product design, sup-plier networks, and factory management. Itseeks to eliminate the production of moreitems than are demanded by the customer,the movement of people or machines, anyidle time of people or machines, the move-ment of material or product, inefficient pro-cessing (see Box 3–1), excess inventory ofinput or product, and the need to rework orthrow out anything.20

As lean manufacturing caught on in theUnited States, it was logical that it would becombined with clean production, which iswhat the U.S. Environmental ProtectionAgency, the Chicago Manufacturing Center(CMC), and others did.

CMC sponsored the GreenPlants Sus-tainable Leadership Program to help a groupof Chicago area manufacturers implementlean, clean, more-sustainable production, inorder to enhance the competitiveness of man-ufacturing companies threatened by foreigncompanies. Working with Natural Capital-ism Solutions, the program helps local man-ufacturers implement more-sustainableproduction techniques as the basis for retain-ing globally competitive manufacturers inthe Chicago area. The 84 CMC clients sur-veyed in fiscal 2004 reported that they hired194 people for newly created jobs, saved 527jobs, and did not lay off anyone due toimprovements.21

PortionPac Chemical Corporation is using




CMC’s program to develop sustainable clean-ing systems. The cleaning industry has tradi-tionally wasted energy in manufacturing,shipping, and disposing of cleaning formula-tions that were 90 percent water; these were

shipped in steel pails and multigallon drumsthat were then discarded. Many cleaning for-mulations being used were extremely haz-ardous, and few janitors understood how toapply the solutions correctly. To address theseproblems, PortionPac Chemical Corporationwas founded in 1964 to eliminate the waterand instead ship small plastic packets of con-centrated, portion-controlled solutions. Por-tionPac helped Boeing reduce costs andsimplify its cleaning process by reducing athousand different brands of cleaning prod-ucts to just 10, with PortionPac products as3 of those 10.22

PortionPac has gained market sharebecause of its sustainability campaign. It hasalso shifted its business model to sell cus-tomers the service of a cleaner facility, inaddition to selling chemicals that others canuse. In 1999, the company helped schools inTacoma, Washington, save 627,000 hoursof labor, including moving drums around,and $102,000 in chemical purchases byimplementing this system. Now more than7,000 schools have signed on to Portion-Pac’s set cost fee, which includes the clean-ing products the schools need plus propereducation on how to clean, proper mixing,and safe usage. PortionPac works with cor-rectional facilities, schools, hotels, hospitals,and industrial plants to limit the number ofproducts and ensure proper usage.23

The company has also helped such clientsas Cornell University earn Leadership inEnvironmental and Energy Design (LEED)certification from the U.S. Green BuildingCouncil by using PortionPac’s GreenSeal–certified products. Dale Walters, Gen-eral Manager of Facilities Operations at Cor-nell, notes that “over time, Cornell savedcosts by using the right amount of productand going from twenty cleaning productsto four. It also reduced safety risks involvedwith handling chemicals. When we sought to




A Wall Street Journal article exploring why Toy-ota was outcompeting Detroit and its suppli-ers stated that the Japanese manufacturer wasable to “produce vehicles with one-third thedefects of mass-produced cars using half thefactory space, half the capital, and half theengineering time. Elements of leanproduction, such as ‘just-in-time’ shipments ofsupplies, are familiar to most U.S. manufactur-ers. But adapting the whole Toyota system,and the cultural changes that go with it, hasproven difficult for many Americancompanies.”

The article tells one of the classic Toyotastories of an engineer making wastefulreliance on expensive high technology looksilly. Painting processes are one of the autoindustry’s more polluting activities.

Armed with a $12 dryer from adiscount store, Mr. Oba proved to engineersfrom Michigan’s Summit Polymers Inc. thattheir $280,000 investment in sleek robotsand a paint oven to bake the dashboardvents they produce actually was undermin-ing quality and pushing up costs. The fancyequipment took up to 90 minutes to drythe paint and in the bargain caused qualityflaws because parts gathered dust as theycrept along a conveyor.

Mr. Oba’s hair dryer did the job in lessthan three minutes. Chastened, Summit’sengineers replaced their paint system withsome $150 spray guns and a few light bulbsfor drying and integrated the painting intothe final assembly process. Family-ownedSummit cut its defect rate to less than 60per million parts from 3,000 per million.

Source: See endnote 20.

Box 3–1.The Robot Versus the Hair Dryer

create LEED certified buildings, we workedwith PortionPac to establish a green house-keeping strategy.” Walters reports that “Por-tionPac products reduced chemical wastethrough both the proper use of cleaningchemicals and the sheer reduction of pack-aging (small packets versus large jugs or plas-tic containers). PortionPac products are amain component of our sustainable cleaningstrategy.” By helping organizations find bet-ter ways to motivate their janitors and cleantheir facilities, while reducing the use ofchemicals, PortionPac is winning contractsand expanding its business.24

Cradle to Cradle:Extending a Product’s Life

“Cradle to cradle” is a concept introduced byWalter Stahel more than 25 years ago inEurope. In 1976, as Director of a project onproduct life extension at Battelle researchlaboratories in Geneva, Stahel embarked ona program to return products to useful lives.He analyzed cars and buildings on micro-economic and macroeconomic bases and con-cluded that every extension of product lifesaved enormous amounts of resources in con-trast with turning virgin material into a newproduct, and it also substituted the use of peo-ple for the expenditure of energy.25

Stahel found that 75 percent of industrialenergy use was due to the mining or pro-duction of such basic materials as steel andcement, while only about 25 percent wasused to make the materials into finished goodslike machines or buildings. The converse rela-tionship held for human labor: three times asmuch labor was used to convert materialsinto higher value-added products as in theoriginal mining. He suggested that increasingthe kinds of businesses that recondition oldequipment as opposed to those that convertvirgin resources into new goods would sub-

stitute labor for energy. And he pointed outthat such work could be conducted in smallworkshops around the country where theproducts that needed rebuilding werelocated—something like car repair shops thatare located in every village. This sort of jobcreation would address both unemploymentand resource waste.26

In the early 1990s Walter Stahel, by thenwidely recognized in Europe as a founder ofthe new sustainability movement, proposedthat sustainability rests on five pillars, each ofwhich is essential for the survival of humanson Earth. None of these pillars is a higher pri-ority, he observed, or subject to tradeoffs. Sta-hel’s pillars roughly mirror the history of thesustainability movement.

The first pillar is the conservation of natureas the underpinning of a prosperous economy.This involves the need to preserve intactecosystems as the basis of all life-support sys-tems. It applies to such planetary systems asa stable climate or the ability of the oceans tosupport life, as well as to local carrying capac-ities and the ability of regions to assimilatewaste. The second pillar is the need to pre-serve individual health and safety that may bejeopardized by economic activities. This seeksto limit toxicity and pollution by such thingsas heavy metals and endocrine disruptors.

The first two pillars form the domain of theoriginal environmental movement. They arecharacterized by command-and-control leg-islation and by minimalist compliance byindustry. They tend to be dominated by tech-nical experts and agency bureaucrats. Thisapproach to protecting the environment costsmoney and created the belief that environ-mental protection, actually the basis ofdurable prosperity, is incompatible with eco-nomic success.

The third pillar adds resource productiv-ity, innovation, and entrepreneurship to thesustainability approach. It assumes a Factor




Ten increase in efficiency as the way to fore-stall such threats as climate change and theloss of ecosystems. This is the approach ofeco-efficiency in industrial as well as devel-oping countries.

Stahel argues that implementing the firstthree pillars is the basis of a sustainable econ-omy. But, he says, “a sustainable economy isonly part of the objective to reach a sustain-able society. A distinct border-line exists there-fore after these first three pillars, whichseparates techno-economic issues from soci-etal ones. The coming ‘Quest for a Sustain-able Society’ must be much broader andinclude social and cultural issues.”27

Thus the fourth pillar adds social ecologyto the mix. This is the first element of thehuman dimension of sustainability andincludes, in Stahel’s words, “peace and humanrights, dignity and democracy, employmentand social integration, security and safety,the constructive integration of female andmale attitudes. Key words here are: the com-mons, ‘prisoners’ dilemma’, sharing and car-ing, barter economy.”28

The fifth pillar Stahel calls cultural ecology.This encompasses how different cultures viewthe concept of sustainability and how toachieve it. It includes attitudes toward risk-taking and a sense of national heritage. Forexample, American engineers may see a goodbusiness case for eliminating waste, but theJapanese have an almost visceral distaste forwaste. It offends them. The fifth pillarincludes the critical aspects of corporate cul-ture, whereby, for example, in 1995 DuPontcalled for 100-percent yield rather than zerowaste. This pillar also considers the humanpart of the equation, such as whether peopleshould be retrained rather than fired.

The First Industrial Revolution, the fore-runner of modern manufacturing, arose at atime in history when there were relatively fewskilled people to run the new machines that

were revolutionizing production. There wasan apparent abundance of nature and itsservices. Profit-maximizing capitalists “econ-omized on their scarce resource” (people)and substituted the use of natural resourcesand ecosystem services (the ability to spewpollution into the air that everyone breathesand pour wastes into rivers) to drive profits.From this the modern world was born. Thistransformation enabled a Lancashire weaverto spin 200 times as much fabric on thenew machines as his predecessor did on aspinning wheel.29

The Holy Grail of prosperity was believedto be labor productivity, and indeed still todaypeople believe that increasing labor produc-tivity will increase well-being—as if the goalof the economy is one person doing all thework and everyone else out of work. But intoday’s world of relative scarcity, the tables areturned. About 10,000 more people arriveon Earth every hour, and every major ecosys-tem is in peril. Greater use of ecosystem ser-vices impoverishes everyone, and people needwork. Yet the whole mental model of how torun the economy is based on the 200-year-oldperception of the basis of prosperity: penal-ize the use of people, subsidize the use ofresources, and increase labor productivity.30

Stahel describes how in 1993, as U.S.companies faced hard times, the corporateworld made heroes of such restructurers asAl Dunlap and Jack Welch. Dunlap, in thename of “creating shareholder value” gainedthe nickname Chainsaw Al: in 20 months asCEO of Scott Paper, he devastated the 115-year-old company by terminating 11,000people—35 percent of the labor force—including 71 percent of the staff at corporateheadquarters. He, of course, made enor-mous personal gain. His counterpart at GE,dubbed Neutron Jack Welch, cut GEemployment from 380,000 to 208,000.31

The logic of capitalism, the greatest known




system in human history for the creation ofwealth, has not changed. But the relativescarcities have. In today’s world, the recipe forprosperity is to encourage, as Stahel has out-lined, the use of people and to penalize theuse of resources.

Stahel describes how, also in the early1990s, Honda used its workers to maintainand repair its own machines rather than suf-fer layoffs that would damage worker moraleand lead to work stoppages. Increasingly,European and Japanese policymakers are con-sidering the approach of tax shifting: elimi-nating taxes on employment and income,things people want more of, and replacingthem with taxes on pollution and depletionof resources, things the world wants less of.32

Stahel cautions that of the five pillars,social and cultural ecology are the weakestunderpinnings. To the extent that the socialfabric breaks down, the other pillars sooncollapse. The current focus on eco-efficiency,clean production, green products, and the useof technology to implement sustainability arenecessary, but it is equally important to con-sider the human dimension, including suchissues as meaningful employment, sustain-able development, and enabling people toachieve their full potential.

Sustainability, Stahel notes, has little appli-cation in the short term. Its value is as avision. He tells the story of the three stone-cutters who are asked what they are doing.One says that he is putting in his eight hours.The second replies that he is cutting thislimestone into blocks. The third answers thathe is building a cathedral. Sustainability, saysStahel, is the cathedral we are all creating.33

Following Nature’s Lead

Biomimicry, the conscious emulation of life’sgenius, is an even more profound approachto making manufacturing sustainable. Janine

Benyus, author of the groundbreaking bookBiomimicry, asks the simple question, Howwould nature do business? She points outthat nature delivers a wide array of productsand services, but very differently from the wayhumans do. Nature, for example, runs onsunlight, not high flows of fossil energy. Itmanufactures everything at room tempera-ture, next to something that is alive. It makesvery dangerous substances, as anyone who hasbeen in proximity to a rattlesnake knows well,but nothing like nuclear waste, which remainsdeadly for millennia. It creates no waste,using the output of all processes as the inputto some other process. Nature shops locallyand creates beauty. Buckminster Fuller oncepointed out that “When I am working on aproblem I never think about beauty. I onlythink about how to solve the problem. Butwhen I have finished, if the solution is notbeautiful, I know it is wrong.”34

The discipline of biomimicry takes nature’sbest ideas as a mentor and then imitates thesedesigns and processes to solve human prob-lems. Dozens of leading industrial compa-nies—from Interface Carpets and AT&T to3M, Hughes Aircraft, Arup Engineers,DuPont, General Electric, Herman Miller,Nike, Royal Dutch Shell, Patagonia, SC John-son, and many more—use the principles ofbiomimicry to drive innovation, design supe-rior products, and implement productionprocesses that cost less and work better. (SeeBox 3–2.)35

Biomimicry invites innovators to turn tothe natural world for inspiration, then eval-uate the resulting design for adaptiveness inthe manufacturing process, the packaging,all the way through to shipping, distribu-tion, and take-back decisions. It ensures thatthe energy used, production methods chosen,chemical processing, and distribution are partof a whole system that reduces materials use,is clean and benign by design, and eliminates




the costs that last century’s technologiesimposed on society and the living world.36

EcoCover Limited of New Zealand usedthe concept that in nature there is no waste—the output of all processes is food for someother process—to develop an organically cer-tified, biodegradable mulch mat to substi-tute for black plastic sheeting used inagriculture to prevent moisture loss and weedgrowth. Using shredded waste paper thatwould otherwise have gone to landfill, boundtogether with fish waste, the material is pro-

duced by previously unemployed people.37

The product uses waste to improve soilproductivity, conserve soil moisture, and cutwater use. It cuts the use of chemical fertil-izers, pesticides, and herbicides that conta-minate soil and groundwater. It reducesweeds; increases plant growth, quality, andyield; and keeps paper and fish waste out oflandfills. The cover is left in the soil asimproved organic and nutrient content. Thisis not recycling. It is “upcycling” waste backinto productive soil.38




Industrialist Ray Anderson, chair of the billion-dollar-a-year carpet company Interface, tells thestory of the creation of his product Entropy. DavidOakey, the head product designer of Interface,sent his design team into the forest with theinstruction to find out how nature would designfloor covering.“And don’t come back,” he in-structed,“with leaf designs—that’s not what Imean. Come back with nature’s design principles.”

So the team spent a day in the forest, studyingthe forest floor and streambeds until they finallyrealized that it is total chaos there: no two thingsare alike, no two sticks, no two stones, no twoanything....Yet there is a pleasant orderliness inthis chaos.

They returned to the studio and designed a car-pet tile such that no two tiles have the same facedesign. All are similar but all are different. Inter-face introduced the product into marketplace asEntropy, and in 18 months the design was at thetop of best-seller list. This was faster than anyother product in the company’s history. How different is that from the prevailing industrial paradigm of every mass-produced item? A typicalindustrial product must be cookie-cutter the same.

The advantages of Entropy were astonishing:almost no waste and off quality in production.The designers could not find defects in the delib-erate imperfection of having no two tiles alike.Installers could put the carpet in quickly withouthaving to take time to get the pile net all runninguniformly. They could take tiles from the box as

they came and lay them randomly, the more ran-dom the better—like a floor of leaves.The usercan replace individual damaged tiles without the“sore thumb effect” that comes with precisionperfection and uniformity and can rotate tiles justlike tires on cars in order to extend useful life.Moreover, dye lots now merged indistinguishably,which means sellers do not have to maintain aninventory of individual dye lots waiting to be used.

Yet one wonders: could there be more toexplain the success of entropy? Perhaps there is.

A speaker on an environment lecture circuitbegins every speech by having her audience closetheir eyes and picture that ideal comfort zone ofpeace and repose, of solitude, creativity, security—that perfect place of comfort. She then asks, howmany of you were somewhere indoors? Almostno one ever raises their hand. This quality has aname, biophilia—humans gravitate to nature forthe perfect comfort zone.

And somehow, subliminally, Entropy seems tobring the outdoors indoors. That is its real appeal.

Entropy is made with recycled content in aclimate-neutral factory; 82 of Interface’s productsare now designed on the principle of no twoalike.These represent 52 percent of Interface’ssales. Using principles like waste minimizationand biomimicry has enabled Interface to bringthe company’s CO2 emissions to roughly 10 per-cent of their 1996 levels.

Source: See endnote 35.

Box 3–2. Biomimicry and Carpets

The humble abalone sits in the PacificOcean and in seawater and creates an innerlining immediately next to its body that istwice as strong as the best ceramics thathumans can make using very high tempera-ture kilns. The overlapping brick-like struc-ture of the seashell makes it very hard tocrack, protecting the abalone from sea ottersand the like. Dr. Jeffrey Brinker’s researchgroup at Sandia Labs found out that the iri-descent mother-of-pearl lining of the abaloneself-assembles at the molecular level whenthe animal excretes a protein that causes seawater to deposit out the building blocks of theabalone’s beautiful shell.39

The researchers mimicked the manufac-turing process of the mollusk to create min-eral/polymer layered structures that areoptically clear but almost unbreakable. Thisevaporation-induced, low-temperatureprocess enables the liquid building blocks toself-assemble and harden into complex“nano-laminate” structures. The bio-com-posite materials can be used as coatings totoughen windshields, airplane bodies, oranything that needs to be lightweight butfracture-resistant.40

Companies are using biomimicry to matchnot only the form of natural products but alsothe function of larger ecosystems. In July2007, Toyota Motor Corporation announcedplans to increase the sustainability of its pro-duction operations. The Tsutsumi Prius pro-duction plant will add a 2-megawatt solarelectric array. It will also paint some of its exte-rior walls and other surfaces with a photo-cat-alytic paint that breaks down airborne NOXand sulfur oxides. This will do as much toclean the air as surrounding the plant with2,000 poplar trees would have.41

The plant’s impressive biomimicry pro-gram is coupled with a strong foundation ofeco-efficiency. The plant is installing innov-ative assembly-line technology and further

streamlining current production systems suchas the Global Body Line and Set Parts Systemto greatly improve both productivity andenergy efficiency. By 2009, the plant isexpected to achieve an annual CO2 reductioneffect of 35 percent.42

The practice of using nature as model,measure, and mentor lies at the heart of thechange in the industrial mental model that willbe essential if humans are to survive. Natureruns a very rigorous, 3.8-billion-year-old test-ing laboratory in which products that do notwork are recalled by the manufacturer. AsJanine Benyus says: “Failures are fossils, andwhat surrounds us is the secret to survival.”43

The First Industrial Revolution was basedon brute force manufacturing processes thatinefficiently heat, beat, and treat massiveamounts of raw materials to produce a throw-away society. The next Industrial Revolutionwill rise upon the elegant emulation of life’sgenius, a survival strategy for the human race,and a path to a sustainable future. “The moreour world looks and functions like the naturalworld,” Benyus notes, “the more likely we areto endure on this home that is ours, but notours alone.”44

Riding the New Wave of Innovation

Business success in a time of technologicaltransformation demands innovation. Sincethe First Industrial Revolution, there havebeen at least six waves of innovation (see Fig-ure 3–1), each shifting the technologies thatunderpin economic prosperity. In the late1700s textiles, iron mongering, water-power,and mechanization enabled modern com-merce to develop.45

The second wave saw the introduction ofsteam power, trains, and steel. In the 1900s,electricity, chemicals, and cars began to dom-inate. By the middle of the twentieth century




it was petrochemicals and the space race,along with electronics. The most recent waveof innovation brought computers and usheredin the digital or information age. As theIndustrial Revolution plays out andeconomies move beyond iPods, older indus-tries will suffer dislocations unless they join theincreasing number of companies implement-ing the array of sustainable technologies thatare making up the next wave of innovation.46

Perhaps the tipping point in corporatemovement to greener production came whenGeneral Electric announced Eco-magination.As part of the initiative, GE board chairmanJeffrey Immelt promised to double the com-pany’s investment in environmental tech-nologies to $1.5 billion by 2010. He alsoannounced that GE would reduce the com-pany’s greenhouse gas emissions 1 percent by2012; without action, emissions would haverisen 40 percent. Immelt stated: “We believewe can help improve the environment andmake money doing it.”47

Critics charged that GE was greenwashing,simply labeling some of its existing productsas green and changing very little. Hypocrisy,

however, is often the first step to real change.A little less than a year after the campaign’slaunch, Immelt announced that his green-badged products had doubled in sales over theprior two years, with back orders for $50 bil-lion more, blowing away his initial predictionof $12 billion in sales by 2010. Over thesame time frame, the rest of GE productshad increased in sales only 20 percent. GE alsoannounced that it had reduced its GHG emis-sions by 4 percent in 2006, dwarfing its 2012target of 1 percent.48

Companies that increase resource pro-ductivity and implement sustainable produc-tion strategies such as biomimicry and cradleto cradle, especially in the context of a broaderwhole-system corporate sustainability strategy,improve every aspect of shareholder value.What constitutes shareholder value? Whatenhances it?

Traditionally, the “bottom line” measuredwhether a company was profitable. Morerecently, a company’s profits and stock valuehad to increase over the next quarter or thefirm was considered unworthy of investment.This highly questionable metric is so incom-




1785 1845 1900 1950 1990 2020

Inno

vatio

n

1st Wave

2nd Wave

3rd Wave

4th Wave

5th Wave

6th Wave

IronWater powerMechanization

TextilesCommerce

Steam powerRailroad

SteelCotton

ElectricityChemicalsInternal

combustion engine

PetrochemicalsElectronicsAviationSpace

Digital networksBiotechnology

Softwareinformationtechnology

SustainabilityRadical resource

productivityWhole system design

BiomimicryGreen chemistryIndustrial ecologyRenewable energy

Green nanotechnology

Source: Natural Edge

Figure 3–1. Waves of Innovation

patible with management of an enterprise forlong-term value that even the FinancialAccounting Standards Board has undertakento rewrite financial reporting to encouragealternatives to such short-sighted behavior.(See also Chapter 2.)49

Sustainability advocates have urged com-panies to manage a “triple bottom line”:achieve profit but also protect people andthe planet. While this is a tempting formula-tion, it has had the effect of bolting concernfor the environment and social well-beingonto companies as cost centers that reduce thetraditional measure of profit. A much moreuseful approach is that of the “integratedbottom line.” This recognizes that profit is avalid metric, but only one of many that givea company enduring value.50

Other aspects of shareholder value includeenhanced financial performance from energyand materials cost savings in industrialprocesses, facilities design and management,fleet management, and operations. Reducedrisk is another key point to consider, tied toinsurance access and cost containment, legalcompliance, reduced exposure to increasedcarbon regulations and price, and reducedshareholder activism. Finally, core businessvalue is enhanced through:• sector performance leadership;• greater access to capital; • first-mover advantage;• improved corporate governance;• the ability to drive innovation and retain

competitive advantage;• enhanced reputation and brand develop-

ment;

• increased market share and product differ-entiation;

• ability to attract and retain the best talent;• increased employee productivity and health;• improved communication, creativity, and

morale in the workplace;• improved value chain management; and• better stakeholder relations.

The validity of this management approachis borne out by a recent report from GoldmanSachs, which found that companies that areleaders in environmental, social, and goodgovernance policies have outperformed theMSCI world index of stocks by 25 percentsince 2005. Seventy-two percent of the com-panies on the list outperformed their indus-try peers.51

It is daunting to realize that achieving asustainable society will require changing howwe manufacture and deliver all our productsand services. But the evidence increasinglyshows that companies taking a leadershiprole in using resources more efficiently, inredesigning how they make products, and inmanaging their operations to enhance peo-ple and intact ecosystems have found a bet-ter way to make a bigger profit. Solving thechallenges of implementing a transition to asustainable society can unleash the biggesteconomic boom since the space race. Therehas never been a greater opportunity forentrepreneurs to do well by doing good andfor communities to enhance energy security,improve the quality of life, and enable peo-ple to join the transition to a more sustain-able future.




Environmental Management (Washington, DC:2002), p. 5.

37. Esty and Winston, op. cit. note 27, pp.24–27.

38. Savitz and Weber, op. cit. note 24, p. 210.

Chapter 3. Rethinking Production

1. Reduced energy use from Marc Gunther,“The Green Machine.” Fortune Magazine, 27July 2006; Cynthia Henry, “A Model of Corpo-rate Action,” Philadelphia Inquirer, 15 February2007.

2. Paul Hawken, Amory Lovins, and L. HunterLovins, Natural Capitalism: Creating the NextIndustrial Revolution (New York: Little, Brownand Company, 1999), p. 52; Annan quoted in“The State of the World? It Is on the Brink of Dis-aster?” The Independent (London), 30 March2005.

3. Hawken, Lovins, and Lovins, op. cit. note 2,p. 111.

4. For more information on Natural Capitalismand how to implement these principles, seewww.natcapsolutions.org. The entire text of thebook Natural Capitalism and many other refer-ence works can be downloaded for free from thissite.

5. William McDonough and Michael Braun-gart, Cradle to Cradle: Remaking the Way WeMake Things (New York: North Point Press, 2002).

6. Ernst von Weizsäcker, Amory B. Lovins, andL. Hunter Lovins. Factor Four: Doubling Wealth,Halving Resource Use (London: Earthscan, 1997);adoption of Factor Four philosophy in EuropeanUnion environmental policy also described inEster van der Voet et al., Policy Review on Decou-pling, Commissioned by European Commission(Leiden, Netherlands: Institute of EnvironmentalSciences, 2005); Australian Ministry of the Envi-ronment and Heritage, Visions, Management Toolsand Emerging Issues Towards an Eco-Efficient and

Sustainable Enterprise, Second EnvironmentalEconomics Round Table Proceedings (Canberra:2000); Factor Ten Club members available atwww.factor10-institute.org; Friedrich Schmidt-Bleck, The Factor 10/MIPS-Concept: Bridging Eco-logical, Economic, and Social Dimensions withSustainability Indicators (Tokyo: Zero EmissionsForum, United Nations University, 1999), p. 6.

7. Stephan Schmidheiny with the BusinessCouncil for Sustainable Development, ChangingCourse (Cambridge, MA: The MIT Press, 1992);definition from World Business Council for Sus-tainable Development Web site, at www.wbcsd.org.

8. Programs and executive committee from“About the WBCSD,” at www.wbcsd.org.

9. National Business Initiative, “Case Study—Anglo American/Mondi: Improved Energy &Efficiency,” 3 January 2007, at www.wbcsd.org.

10. STMicroelectronics, Sustainable Develop-ment Report (Geneva: 2003). Perfluorocarbon isa powerful greenhouse gas emitted during theproduction of aluminum (a fluorocarbon is a halo-carbon in which some hydrogen atoms have beenreplaced by fluorine); it is used in refrigeratorsand aerosols. Sulfur hexafluoride is another potentgreenhouse gas. It one of the most popular insu-lating gases.

11. STMicroelectronics, Environmental Report(Geneva: 2001); correlation of year’s payback toreal after-tax rate of return from Hawken, Lovins,and Lovins, op. cit. note 2, p. 267.

12. STMicroelectronics, op. cit. note 10; MurrayDuffin,Center for Energy and Climate Solutions,discussion with author.

13. “Sustainability 360: Doing Good, Better,Together,” Remarks of H. Lee Scott, Jr., CEO andPresident of Wal-Mart Stores, Inc., Lecture tothe Prince of Wales’s Business & the Environ-ment Programme, 1 February 2007.

14. Ibid.

15. Gunther, op. cit. note 1.



Notes

16. “Sustainability 360,” op. cit. note 13.

17. Gunther, op. cit. note 1.

18. Lee Scott, discussion with author, BusinessMilestone meeting, March 2007.

19. James P. Womack and Daniel T. Jones, LeanThinking (New York: Simon & Schuster, 1996);“The History of Six Sigma,” at www.isixsigma.com.

20. Box 3–1 from Norihiko Shirouzu, “HowDoes Toyota Maintain Quality? Mr. Oba’s HairDryer Offers a Clue,” Wall Street Journal, 15March 2001.

21. Chicago Manufacturing Center (CMC),“Green Plants Sustainable Leadership Program,”at www.cmcusa.org.

22. For more information, see PortionPac, atwww.portionpaccorp.com.

23. Marvin Kline, founder, PortionPac, discus-sion with author.

24. Walters cited in CMC, “PortionPac: At aGlance,” at www.cmcusa.org.

25. Walter Stahel with G. Reday, Jobs for Tomor-row: The Potential for Substituting Manpower forEnergy (New York: Vantage Press, 1981).

26. Walter Stahel, “Pillars of Sustainability,”Product-Life Institute, Geneva.

27. Ibid.

28. Ibid.

29. Hawken, Lovins, and Lovins, op. cit. note 2,pp. 157–58, 170.

30. Ibid., Chapter 3.

31. William Lazonick, “Corporate Restructur-ing,” in Stephen Ackroyd et al., eds., The OxfordHandbook of Work & Organization (Oxford:Oxford University Press, 2005), pp. 577–601.

32. Stahel, op. cit. note 26.

33. Interface Dream Team meeting, Nether-lands, discussion with author, 2001.

34. Janine Benyus, Biomimicry (New York:William Morrow, 1997); Fuller quote fromcoolquotes.wordpress.com/2006/09/26/r-buckminster-fuller-quote-on-beauty.

35. Biomimicry Institute, “Biomimicry in a Nut-shell,” at www.biomimicry.net/biomimicryintroduction.htm. Box 3–2 from Ray Anderson, atWingspread Conference, discussion with author,1 October 2007.

36. Biomimicry Institute, “Biomimicry DesignProcess,” at www.biomimicry.net/designmethodologyA.htm.

37. “EcoCover: Redesigning Waste for a Tangi-ble Benefit,”at www.ecocover.com.

38. Ibid.

39. Biomimicry Institute, “Mother-of-PearlInspires Lightweight Building Materials,” atwww.biomimicry.net/casestudyabalone.htm.

40. Ibid.

41. “Toyota Announces ‘Sustainable Plant’ Activ-ities,” Industry Week, 27 July 2007.

42. Ibid.

43. Biomimicry Institute, op. cit. note 35.

44. Ibid.

45. This concept was first presented in “Catch theWave,” The Economist, 18 February 1999; Figurecourtesy of The Natural Edge Project, Australia,30 October 2006.

46. For a detailed synthesis of this thesis, see K.Hargroves and M. Smith, The Natural Advantageof Nations: Business Opportunities, Innovation andGovernance in the 21st Century (London: Earth-scan, 2005), developed by The Natural Edge Pro-



Notes

ject, at www.naturaledgeproject.net, 30 October2006.

47. General Electric, at www.ge.com/ecomagi-nation; Gunther, op. cit. note 1.

48. Kevin Voigt, “Business Sees Green in GoingGreen,” CNN Report, 21 December 2006.

49. David Reilly, “Profit as We Know It Could BeLost With New Accounting Statements,” WallStreet Journal, 12 May 2007.

50. John Elkinton, Cannibals With Forks: TheTriple Bottom Line of 21st Century Business(Oxford: Capstone Publishing Ltd., 1997).

51. Margo Alderton, “Green Is Gold, Accordingto Goldman Sachs Study,” The CRO (CorporateResponsibility Officer), at www.thecro.com, 11July 2007.

Chapter 4.The Challenge of Sustainable Lifestyles

1. “Ethical Man,” BBC Newsnight, 22 May2007.

2. Data on income, household structure andsize, and energy consumption supplied by BBCteam.

3. Historical data and forecasts from J. Ablettet al., The “Bird of Gold”: The Rise of India’s Con-sumer Market (London: McKinsey Global Insti-tute, 2007); population projections from U.S.Bureau of the Census, International Data Base,Suitland, MD, updated 16 July 2007.

4. HSBC Holdings plc, HSBC Climate Confi-dence Index 2007 (London: 2007).

5. U.N. Population Division, World Popula-tion Prospects: The 2004 Revision (New York: 2006).

6. See Gary Gardner, Erik Assadourian, andRadhika Sarin, “The State of ConsumptionToday,” in Worldwatch Institute, State of the World

2004 (New York: W. W. Norton & Company,2004).

7. Carbon footprints based on data suppliedby the BBC Newsnight team and only includethe carbon dioxide (CO2) emissions from theburning of fossil fuels; they include the directhousehold emissions from electricity, cooking,and transport and an estimate of indirect emissionsbased on the household income. Table 4–1 basedon data in International Energy Agency (IEA)CO2 Emissions from Fuel Combustion 1971–2004(Paris: Organisation for Economic Co-operationand Development (OECD), 2006).

8. Cumulative CO2 emissions in different coun-tries from World Resources Institute, EarthTrends:Environmental Information, online database,Washington, DC, 2007.

9. Figure 4–1 from IEA, op. cit. note 7; Nether-lands Environmental Assessment Agency, “ChinaNow No. 1 in CO2 Emissions: USA in SecondPosition,” Climate Change Dossier, 19 June 2007;“Summary for Policymakers,” in Intergovern-mental Panel on Climate Change (IPCC), ClimateChange 2007: Mitigation of Climate Change (NewYork: Cambridge University Press, 2007).

10. IPCC, Climate Change 2001: Third Assess-ment Report (New York: Cambridge UniversityPress, 2001).

11. D. Farrell et al., From ‘Made in China’ to‘Sold in China’: The Rise of the Chinese UrbanConsumer (London: McKinsey Global Institute,2006).

12. For examples of utilitarian model, see AndreuMas-Colell, Michael D. Whinston, and Jerry R.Green, Microeconomic Theory (Oxford: OxfordUniversity Press, 1995), and David Fischer, Stan-ley Dornbusch, and Rudiger Begg, Economics,7th ed. (Maidenhead, U.K.: McGraw-Hill, 2003);for the theory of “revealed preference,” see PaulSamuelson, “A Note on the Pure Theory of Con-sumers’ Behaviour,” Economica, February 1938,pp. 61–71.

13. “Science of desire” from Ernest Dichter, A



Notes

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