Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage Hardcover – Oct 9 2006
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From Publishers Weekly
Two experts from Yale tackle the business wake-up-call du jour-environmental responsibility-from every angle in this thorough, earnest guidebook: pragmatically, passionately, financially and historically. Though "no company the authors know of is on a truly long-term sustainable course," Esty and Winston label the forward-thinking, green-friendly (or at least green-acquainted) companies WaveMakers and set out to assess honestly their path toward environmental responsibility, and its impact on a company's bottom line, customers, suppliers and reputation. Following the evolution of business attitudes toward environmental concerns, Esty and Winston offer a series of fascinating plays by corporations such as WalMart, GE and Chiquita (Banana), the bad guys who made good, and the good guys-watchdogs and industry associations, mostly-working behind the scenes. A vast number of topics huddle beneath the umbrella of threats to the earth, and many get a thorough analysis here: from global warming to electronic waste "take-back" legislation to subsidizing sustainable seafood. For the responsible business leader, this volume provides plenty of (organic) food for thought.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.
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Most books on the topic leave you with the idea that all is rosey and money when "doing the right thing" and developing more sustainable business practices. Not so here - you will find many examples of what HASN'T worked out according to expectations. Case-in-point Interface Floor Covering, a company whose case is in about every book on sustainability. Well, in their pursuit to reinvent the way carpeting is made and sold (many excellent eco-accomplishments), they totally musjudged the marketplace and assumed corporate customers would be happy to switch from buying carpeting (out of annual capital budget) to leasing it (out of monthly operating budgets). They ignored one of the great rules of "Green Marketing": Don't expect the customer to change behaviour to make green choices. So, this book brings these valuable lessons for all to learn and avoid repeating.
This is a great book for VP, CEO, COO levels as it highlights the business case in a clear and compelling way and shows how, really, the business case for sustainability has been largely proven. Green to Gold is a quality, believable business book that will help especially managerial staff understand this topic in biz terms most known to them. It also gives some excellent but succict summaries of the top environmental problems that have led to unsustainable activity and how to savvily engage various stakeholders from Greenpeace to shareholder or employees asking tough questions.
Also highly recommended is "A Necessary Revolution: How Organizations are Collaborating to Create a Sustainable World" by MIT's Peter Senge (2008).
That's the striking core message of this 2006 business tome, which spotlights the cause of environmentalism with a decidedly capitalist slant. At the core of capitalism's success, they say, is innovation. That same innovation, when applied responsibly by businesses of many types, has resulted in big gains against pollution, resource depletion, and other sustainability issues, often helping those businesses add to their bottom line.
Authors Daniel C. Esty and Andrew S. Winston back up this central point with numerous examples of industries reaping the rewards of a green strategy, dating back to Toyota's milestone launch of the Prius hybrid in 1993. Not every earth-friendly idea is so rewarding, but even the hardest-cost items can be useful in demonstrating a corporation as a good citizen, something critical in the face of growing regulatory pressure and activist advocacy.
"No company can afford to ignore green issues," the authors write. "Those who manage them with skill will build stronger, more profitable, longer-lasting businesses - and a healthier, more livable planet."
Two groups of people are likely to find this book not to their liking. One are the group that believe climate change - presented as a simple case of fact in this book - is the product of phony science. However, as I write this on an 85-degree day in April, many of these people would likely agree with me that in the world of stock markets particularly, perception is reality and there's little value now in digging one's heels in the ground and calling Al Gore names.
The other group, interestingly, is hard-core environmentalists. "Green To Gold" is an eco-positive book, but its message will likely anger those who believe capitalism itself is the world's greatest environmental threat. Esty and Winston even go so far as to point out examples of where a green-first philosophy won't work for most businesses. Patagonia, for example, can charge more for its earth-friendly products because its a privately held company. For other businesses, as a Shell executive notes, the environment can be most effective as a "third button", not a reason for making a purchase in itself, but as a kind of feel-good value add.
There is a good deal of repetition, PowerPoint graphics, and acronymic dross in "Green To Gold", which at least establishes that it is indeed a business book. It's a little too rah-rah at times, like about cap-and-trade, which is pure taxation and only helpful in the way it can hurt your competitor more than you. At one point, the authors suggest businesses should embrace even stricter regulations, after preparing themselves to meet those regs, in order to gain competitive advantage against their scrambling peers. There's a green strategy Gordon Gekko would have liked!
I liked "Green To Gold" less for its message (no treehugger me!) than for the solid way it is presented. There's also useful information about how companies can foster an eco-friendly culture that will affect change within the organization, thus priming it for the tough regulatory stretch ahead. The fact is the world is taking green issues more seriously, and smart businesses need to stay ahead of this development. "Green To Gold" offers the kind of guidance that speaks to the comptroller as well as the dreamer.
According to the authors, the state of the art in environmental thinking can be summed up with the slogan, "Reduce, Reuse, Recycle." The best pollution-control option is to reduce the use of resources and eliminate waste. The next best option is to refurbish or reuse items. Then recycle what's left. As a last resort, throw something out.
I really enjoyed the many case studies included. Here are a few:
(a) In the weeks before Christmas 2001, the Dutch government was blocking Sony's entire European shipment of PlayStation game systems; more than 1.3 million boxes were sitting in a warehouse because a small, but legally unacceptable, amount of the toxic element cadmium was found in the cables of the game controls. Sony rushed in replacements to swap out the tainted wires. It also tried to track down the source of the problem by inspecting more than 6,000 factories and resulted in a new supplier management system. The total cost of this environmental problem was more than $130 million.
(b) In a speech to shareholders, Wal-Mart CEO Lee Scott vowed to cut energy use by 30 percent; to use 100 percent renewable energy (from sources like wind farms and solar panels); and to double the fuel efficiency of its massive shipping fleet. The company will invest $500 million annually in these energy programs.
(c) In the mid-1990s, executives at Unilever saw a big threat to one of their product lines. Supply for the frozen fish sticks business was at risk because the oceans were running out of fish. In partnership with World Wildlife Fund, the company set up the Marine Stewardship Council, an independent body to promote sustainable fisheries around the world. The Council certifies fisheries where the total catch is limited so that fish populations do not diminish over time. To create specific incentives for fishermen to seek certification, Unilever committed to buying 100 percent of its fish from sustainable sources by 2005.
(d) Over the last 15 years, chemical giant DuPont has cut its contribution to global warming by 72 percent. Half of the cuts came from changing one process: the production of adipic acid. This modification eliminated emissions of nitrous oxide, a potent greenhouse gas that causes far more warming than carbon dioxide.
(e) IKEA is proud of its "flat packaging." Efforts to squeeze millimeters out of every box have allowed the company to pack its trucks and trains tighter. That saves up to 15 percent on fuel per item.
(f) Toyota saw the Green Wave coming and responded with the energy-efficient "hybrid" Prius, a breakthrough product that enhanced profits.
According to the authors, the top 10 environmental issues facing humanity are:
1. Climate Change. This includes rising sea levels, changes in rainfall patterns, severe droughts and floods, harsh hurricanes and new pathways for disease.
2. Energy. Companies selling goods and services that promise to improve energy efficiency will claim market share.
3. Water. Companies around the world now face limits on access to water.
4. Biodiversity and Land Use. Biodiversity preserves our food chain and the ecosystem on which all life depends. It also holds prospects of new drugs, foods and other products. A key factor in the decline of biodiversity is habitat loss.
5. Chemicals, Toxics and Heavy Metals. Part of what makes air pollution more dangerous is the presence of toxic elements. Exposure to chemicals like dioxin, a byproduct of production processes such as papermaking, and heavy metals such as lead and mercury can create severe public health risks.
6. Air Pollution. Significant air-quality controls on factories, cars and other emissions sources have reduced air pollution over the past 30 years in the United States, Japan and Europe. But the air is still not clean.
7. Waste Management. The EPA estimates that the 1,200 Superfund sites across the country will require
about $200 billion to clean up over the next 30 years. Under the liability provisions of the Superfund law, anyone found responsible for the waste at a site can be held liable for the full cost of cleanup, even if the toxics were legally disposed.
8. Ozone Layer Depletion. With a thinned ozone layer, the world becomes a more dangerous place, with
reduced agricultural productivity, higher risk of skin cancer and other health problems.
9. Oceans and Fisheries. More than 75 percent of the world's fisheries are over-exploited and beyond sustainability.
10. Deforestation. Every company that uses wood, paper or cardboard packaging has a stake in, and responsibility for, the state of our forests. When McDonald's realized 15 years ago that litter was an issue, it began working on reducing packaging.
Companies can and should be a force for good, leading the charge on caring for the environment and protecting our shared natural assets. Financial and environmental success can be achieved together. With the right mindset and tools, companies can handle the hard trade-offs.
This is a great book that should be required reading to executives at all levels!
This book taught me to look at "green" and sustainability in a whole new light, and allowed me to offer intense business cases to my employer, rather than focusing on the fluffy "green" language that you hear from most environmentalists etc. It legitimately allowed me to justify certain sustainability initiatives with pure numbers, and solid arguments.
This is a must-read for corporate managers, not only because sustainability is here to stay, but because it will help you know what to look for in order to be the person that winds up saving your company millions of dollars with one simple idea.
It is a pro-business book that focuses on opportunities. It is extremely well-organized, with three parts, twelve chapters, and three appendices including a superb list of active web sites relevant to doing well by doing good.
This book is based on hundreds of interviews over four years, and every aspect of it is professional presented, including boxes with "10 second overviews" interspersed throughout.
The authors are compellingly pointed in their discussion of how the environment, and attendant regulations and attendant risks of catastrophic costs, is no longer a fringe issue. Mistakes in cadmium content of connecting cables can cost hundreds of millions.
The authors excel at discussing the new pressures from natural limits that are now visible (changes that used to take 10,000 years now take 3--see my reviews on Ecological Economics, the Republican War on Science, the varied books on Climate Change, etc) and the fact that there is a growing range of stake-holders who are altering the balance of power.
The authors are clear in noting that environmental compliance and wisdom is neither easy nor cheap, but they are equally detailed in documenting that most investments to reduce environmental costs are recouped within 12-18 months. In one cited example, 3M saves $1 billion in the first year alone on pollution reduction, and over the course of a decade, was able to reduce its pollution by 90%.
On page 33 they list the top 10 environmental issues and I like this list very much as an expansion on "Environmental Degradation" which is the over-all threat that the High Level Threat Panel of the United Nations ranked as third out of ten, to Poverty and Infectious Disease. They are:
01 Climate Change
04 Biodiversity and Land Use
05 Chemicals, Toxics, and Heavy Metals
06 Air Pollution
07 Waste Management
08 Ozone Layer Depletion
09 Oceans and Fisheries
The authors do a superb job in summarizing each of these in several pages perfectly suited to the busy manager. For those desiring more in-depth looks, see my many reviews across the board, including Priority One: Together We Can Beat Global Warming; various books on energy, Water: The Fate of Our Most Precious Resource; Pandora's Poison: Chlorine, Health, and a New Environmental Strategy, Blue Frontier: Dispatches from America's Ocean Wilderness; and The Blue Death: Disease, Disaster, and the Water We Drink.
The bottom line for the first part of the book: extremes can no longer be dampened down; and we now recognize the eco-system value of the wetlands that we have paid the Army Corps of Engineers to eradicate for decades.
The authors devised a schema for businesses to develop an understanding and then a strategy for reducing their environmental footprint. The authors do extremely well with their organized examination of Aspects, Upstream, Downstream, Issues, and Opportunities (AUDIO), and anyone looking at the book in a store can go directly to pages 62-63. This is an operational management handbook.
There is an excellent overview of the many new stake-holders (or significantly matured stake-holders including NGOs, religions, and local citizens. Business can no longer bribe government--government cannot "deliver" the way it used to (see my review of The Global Class War: How America's Bipartisan Elite Lost Our Future - and What It Will Take to Win It Back for a sense of how corruption of other elites by our elites has accelerated all the ills of the world).
Regulations, according to these authors, should be seen as vital incentives and parameters for both reducing costs and gaining trust.
Forty global banks, and many insurance companies, now demand proper examination of ecological costs as a condition for funding or coverage.
The authors remind me of General Tony Zinni, whose books I have reviewed, in their emphasis on relationships developed over time. They urge a strong focus on relationships NOW, across the board, as a means of building a "trust bank" as well as a deeper understanding. Blocks that used to be labels "not our problem" or "not legally liable" are now labeled "IMPORTANT TO US."
In the middle of the book they explore the digital information advantages that can accrue to those who get out of their closed loops and increase innovation. In one instance, simply adding load to trucks reduced fuel consumption and emissions considerably.
The middle of the book contains 8 detailed "Green to Gold" plays, and I won't spoil it by listing them. A box in this section says "Truth Matters" and I applaud silently.
The authors stress that mind-set, not just a check-book, is required to get this right. Five basic rules are 1) See the forest; 2) Start at the top; 3) No is not an option; 4) Feelings are facts; and 5) Do the right thing, morality DOES pay.
Pages 168-169 are sheer brilliance, and illustrate why the value chain must be completely integrated into the environmental strategy of each element of that value chain and most especially the largest and most powerful of the elements, which must carefully consider and accept responsibility for demanding improvements by the smallest elements.
Eight lessons of partnering, 13 problems and their solutions, and a final chapter of very specific actions that managers can take, conclude the book.
My final note on this book: a pleasure to read, easy to read, so well done I got through it in half the time characteristic of denser or less well designed books. This is first rate stuff!
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