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Adam Werbach: The Future of Sustainable Business

user profile picture Adam Taggart Feb 10, 2013
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Adam Werbach has been at the vanguard of the sustainability movement since high school when he founded a national organization of over 30,000 student volunteers who mobilized around environmental projects. A few years later, at the age of 23, he was elected the national President of the Sierra Club – the youngest in its 100+ year history.

In 2004, Adam turned the environmentalism movement on its head by publicly decrying its outdated thinking and lack of progress, given the scope of its mission. He challenged its followers to link their goals to other broad social and economic ones in order to have more impact.

He led the way, controversially, by working with Wal-Mart in 2006 to help them integrate sustainable practices into their supply chain and operations – a model he subsequently brought to many of the world's largest multinational corporations in over 80 countries.

In this interview, Chris and Adam discuss the "sustainable business" movement and its future prospects, including such questions as What does sustainability really mean? What are the key success requirements? What models show the most promise today?

On Business Sustainability

Here is the transition we have seen: We have environmentalism as the framework for that set of things necessary with actions to protect the earth. What ends up happening, one of the reasons why companies in particular and so many institutions weren’t able to adopt environmentalism, was it was largely a kind of a political or ideological goal set that wasn’t actionable by them.

The broad term “sustainability” as a business context has four components: social, economic, environmental and cultural. So instead of just figuring out how does this action protect the environment? the question is how does this action make my enterprise more sustainable? How does it actually push culture, the culture in the company inside and out, how does it move that, how does it move the economics of the initiative we are looking for? Does it save me money? Does it increase my bottom line? What is it doing for society? And what does it do for the environment? How do we blend all of these things together?

In the context that I use it, sustainability in a business context really means long-term profitability. It means the ability of an enterprise to continue into a long term. Part of it involves the missing link in the way that many businesses have been operating — in the United States in particular — which has been one of the core reasons why we see this quarterly profit push that has built not a lot of value for shareholders and also has these negative externalities that we see in terms of the environment.

On the Future of Business Sustainability

I think this is completely inevitable: Resource productivity and basically making things work better will just happen. It just does not make sense to constantly make new things from the things we have that are good. It doesn’t make us happy. It is expensive. The formal economy, in durable goods from toasters to bicycles to camping equipment to kids clothing to clothing, is about a trillion dollars a year in the United States  a trillion dollars a year. The informal market for that is much bigger. That means every time you borrow something from your dad, or you give maternity clothes to your sister, or you give a hand-me-down to someone else, or a neighbor borrows a shovel, that happens many, many more times than if you go to a store. It is decreasing, actually, because of the separation that we feel in the communities we live in. What ends up happening is, it is easier to order something on Amazon.com than to ask a neighbor and see if they have it.

What we haven’t seen is the same type of software technology and care and marketing, frankly, to the informal economy as we have in the formal economy. So when we start having the same things, you would expect to see when you go to Amazon.com to know when it is available, to see a picture of it, to be able to get it delivered. The things that you have in your friends’ closets, I think the world is going to start choosing that just because it is easier, it makes sense, it saves money. Actually, in the end, it is more fun to see your friends than to click around online. I actually think it is inevitable. The challenge is, we don’t yet have enough people throwing themselves into it. I think that is why the dialog we are having today is so important and what you are trying to bring about.

Things are the way they are because we made rules to make them like this. We have to change that. We change that with recycling. That has to be a step. Recycling didn’t exist 30 years ago in America. Now most people understand that you don’t throw away valuable resources. Reuse will similarly be a norm. In the same way, we spend lots of care buying things and bringing them into our home. We will understand that maintaining those things and putting them into other people’s hands will be similarly an important and well-respected pathway.

Key Trends to Watch

A trend forwards is productivity per unit of energy.

There are a couple of macro ideas in economics that are on the fringes that I think move into the center. I think one is the fact that we have a circular economy. It has been championed by Bill McDonough and Daniel MacArthur in Britain that suggests that we are moving from a make-take-waste economy  making something, taking it and then throwing it away  to a more circular economy where you take something, you make it into something else, and then you put it right back in the cycle. So the waste of one item becomes the feedstock for the next.

The other idea is this idea of collaborative consumption, or the sharing economy ,where we are actually finding ways to with each other consume items together. You don’t really consume a baby stroller, but you in this case encourage the creation of a better baby stroller that I can use, and I can pass on to my sister, and she can pass onto her brother-in-law and it can keep on moving. That idea we are seeing in all sorts of different sectors. We have seen that with zip car, with car sharing, we have seen it with Airbnb with renting out your extra rooms; we don’t need to build a new hotel. We have seen that in information sharing, Wikipedia. In traffic data with Waze. We are seeing lots of places where we are collectively coming together and making our resources much, much more effective and getting more utility out of it by our collective resource sharing.

The third concept is like what Bill McDonough calls “cradle to cradle” – this idea that you are thinking of a product throughout its entire lifecycle. So when you make it, you think about do I actually just sell this product ever, or actually sell this product as a service? Consider DetailLab, which is a 40,000-person Fortune 500 company based in Minnesota. They are the biggest buyer of dishwashers in the world. Most restaurants that you eat in have a DetailLab dishwasher. They lease it to the restaurant. Restaurants fail all the time. If they fail, they take it back. They rent the dishwasher as a service to the company. So instead of each company having its own dishwasher, if they go out of business or move locations, DetailLab does it. The best thing about DetailLab is they push the manufacturers to make [dishwashers] better, because it is in their interest to have a better functioning dishwasher that they don’t have to go and service every week.

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