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For more than 20 years, I’ve been watching the world of business and the environment, as a publisher of a monthly newsletter on the topic during the 1990s, and as co-founder of a media and events company focusing on that topic ever since.
My universe is big business: how the world’s largest companies are integrating environmental thinking into their operations in a way that aligns with core business strategy. Every month, we watch companies make new commitments and achievements in the things they do and buy, the products and services they make and sell, and how they talk about this stuff to employees, customers, suppliers, investors and others.
It’s a world that’s largely hidden from public view. In most cases, companies aren’t promoting their efforts (unless you dig into their annual sustainability reports). A growing number of their initiatives are significant — zero-waste factories, renewably powered facilities, significant commitments to reduce carbon emissions, toxic chemicals and other things that cause problems for people and the planet.
So, how’s it going? For the past seven years, we’ve stepped back each year to look at whether and how all of these companies’ efforts are making a difference.
The short answer: It's all good. But it's not good enough.
That was the conclusion of our 2014 State of Green Business report (
free download). The report, produced by
GreenBiz Group in partnership with
Trucost, assesses how both U.S. and global companies are doing on energy, carbon, water, air emissions and other things, as well as in leadership initiatives like use of renewable energy, green office space and environmental R&D.
Have we hit a wall?
In most measures of corporate environmental impact, the progress is incremental. In some cases, it's flat, or even declining.
Take carbon, for example. Total greenhouse gas emissions among both U.S. and global market indices remain flat. For the five-year period between 2008 and 2012, U.S. emissions were essentially unchanged while global emissions ticked up slightly. All told, it’s a wash.
The data is vexing whether one views it in terms of absolute emissions or intensity, which are emissions normalized to economic activity. Intensity, too, is largely unchanged — from 450 tons per $1 million of revenue for both U.S. and global companies in 2008, to 440 tons for U.S. companies and 460 tons for global companies in 2012. Again, it’s pretty much break-even, meaning that for all of the efforts companies are making, it’s not leading to progress.
And the prognosis isn’t much better. According to the U.S. Energy Information Administration, energy-related carbon dioxide emissions in 2013 are expected to be roughly 2 percent above the 2012 level. Despite the best efforts of hundreds of U.S. companies — some of which are committing to be "carbon neutral" — greenhouse gas emissions are going in the wrong direction.
It's not just carbon. The progress on water use, air emissions and solid waste is minimal, or worse.
Still, business is changing, mostly for the better. Corporate supply chains are transforming as companies look farther upstream, beyond what they control to what they can influence.
Collaboration is spreading as industries and value chains come together to understand how to shift entire ecosystems of players. That’s especially true in agricultural commodities — soy, palm oil, cotton and more — whose supply-chain tentacles can extend to hundreds of thousands of enterprises around the world. These collaborations aren’t just talk-fests. They’re leading to systemic changes.
Some of these ambitious efforts are due to the rise of sustainability within companies, once seen as a nice-to-do, corporate responsibility initiative, but now increasingly as a core corporate value. In sectors as varied as finance and fast food, companies are recognizing that elevating sustainability leads to innovations, efficiencies and improved resilience amid turbulent markets — not to mention enhanced reputations. It is seen as a business continuity issue in some sectors, as competition for natural resources sometimes pits households, farmers and small businesses with the world’s biggest corporations for access to resources. Where communities compete with big business for access to water or power, communities often win.
In some sectors, the threats to companies extend beyond environmental concerns to social ones — human rights, liveable wages, working conditions, economic inequality and other issues. As a result, social and environmental issues, once seen as separate, are coming together inside some companies. They recognize that improving people’s lives — whether through promoting early childhood education, empowering women, investing in local economies or mentoring marginalized youth — is part of the sustainability equation. Equally important, it can have salutary business benefits, such as educating the future workforce, bolstering the economic well-being of customers and employees and creating healthy communities — in every sense of the word — in which to operate. That is to say: It’s just good business.
Scale, Speed, Scope
Such positivity notwithstanding, progress remains incremental and slow. The scale, speed and scope of change appears to be inadequate to the challenges we face. Case in point: A
2013 study of 100 companies’ climate commitments by Climate Counts and the Center for Sustainable Organizations found that only about half of those companies’ goals were sufficient to address the companies’ fair share of carbon emissions reductions needed to limit climate change to what scientific consensus deems to be tolerable. Indeed, that study was novel merely for the fact that it weighed corporate climate actions against the realities of science. That had never been done.
Water is another area where corporate activity is timid and inadequate. As droughts accelerate and population and economic growth lead to overpumping of groundwater supplies around the world,
the need for corporate action on water use (and reuse) is growing from a trickle to a flood. One big problem: The price of water (cheap) doesn’t reflect its value (priceless), especially when a shortage can all but put a company out of business.
It’s easy (and, for some, politically expedient) to write off corporate sustainability as fluff, or worse. That would be the easy assessment. But it’s hardly the full story.
My view is somewhat optimistic, powered by significant shifts in attitudes and outlooks among companies and their investors and customers, the growth of technology poised to leapfrog progress and accelerate change and a growing recognition among the public that “sustainability” isn’t just about preserving icebergs, rainforests and charismatic megafauna. It is also about public health, community well-being, food security, affordable housing and alleviating poverty.
Simply put, companies can no longer ignore these things, or view them as nice-to-do, feel-good activities. Companies sink or swim on the health of the world around them — natural resources, economic resources, and the human resources that comprise their employees, customers and neighbors. Can you have a healthy company in an unhealthy world?
It’s a question that more companies are asking. And that’s a healthy thing.
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BY: JOEL MAKOWER
