“Nature is the goose that lays all the golden eggs. We don’t want to squeeze her to death…If we don’t take care of nature, we won’t have a civilization someday.”
Does that sound like a tree-hugging environmentalist? Well, it is, but it’s also the founder and chairman of a $1-billion a year carpet company. His name is Ray Anderson, he calls himself a “radical industrialist” and he has led his company, Interface, on a remarkable 15-year journey to sustainability. He’s got a lot to teach the rest of us.
One of the best things about my work is that I get to spend time with people like Ray. He’s got a new book out—it’s called Confessions of a Radical Industrialist—and so we got together last week when he was in Washington.
With his gentle Georgia drawl and genial manner, Ray, who is 75, does not look like a radical—but he believes that business as usual is the principal agent of global destruction, and that only new industrial revolution can save us. His goal for Interface is Mission Zero—zero waste, zero pollution, zero use of fossil fuels, and zero use of materials from the earth that cannot be renewed rapidly and naturally. This is where all of business needs to go, he says, paraphrasing his mentor, Paul Hawken:
There’s really only one institution on earth that’s large enough and powerful enough and pervasive enough and wealthy enough to really change all that, and it’s not government and it’s not the church and it’s not education. It is the institution of business and industry, the very institution doing the damage, my institution.
Ray is optimistic because of his experience at Interface. Sustainability, he says, “has proven to be the most powerful marketplace differentiator I have known in my long career.”
“I can’t tell you how much business we’ve won because of the reputation we’ve developed,” he says.
How’s Interface doing? Here are some of the metrics cited in the book:
- Since 1996, Interface’s baseline year, the company has cut its net greenhouse gas emissions by 71% in absolute tons.
- Consumption of fossil fuels per square yard of carpet fell by 44 percent.
- Renewable energy provides the electricity to power eight of its 10 factories.
- The percentage of recycled and bio-based materials used to manufacture our products worldwide has grown from 0.5 percent in 1996 to 24 percent in 2008.
- Companywide waste elimination measures saved a cumulative $405 million, which Interface then used to invest in other “green” initiatives. Sustainability has been self-funding.
- And sales are up by 60 percent.
To dig deeper into Interface’s sustainability story, read the book. But a couple of examples of wins and losses jumped out at me.
Like many companies, Interface was intrigued by the idea of putting solar panels on the roof of one of its factories; an engineer named Mike Bennett who ran the numbers found the cost of the project, $1.2 million, could not be justified in strictly economic terms, even with subsidies from the state of California. Then he ran some other numbers–how much carpet could be made if the solar-powered electricity was channeled to run carpet-tufting machines in the factory. It turned out that Interface could make 1 million square yards of what it came to call Solar-Made [tm] carpet. This was 1996, solar energy was a novelty and buyers reacted, particularly the University of California, which awarded the company a $20 million three-year order.
All the talking, all the advertising and marketing in the world, could not have bought that recognition without the actual doing. That is how what seemed like a terrible investment came out golden.
Not as successful were Interface’s efforts to transform its entire business model from selling carpets to selling a “floor covering service” by leasing carpets, promising to clean and maintain them, and then take them back (for recycling) when customers needed new ones. Carpets would actually last longer, because the company would repair and replace only those tiles that were worn. (The 80-20 rule applies to carpets, it turns out, with 80% of the wear affecting 20% of the carpet. But people typically throw away the whole thing when only parts of it need replacing–a real waste.) In any event, customers didn’t go for the new model for a host of reasons, including FASB rules (read the book, too complicated to explain here), a reluctance to enter into long-term contracts and their belief that leasing was more costly than an outright purchase. Anderson says they were mistaken. But the idea of product takeback is gaining ground, and I suspect that business models like this one will catch on before long.
When we talked, Ray told me that he doesn’t just want Interface to be a sustainable company; he wants it to be a restorative company, to leave the earth better off than before. How? Through its influence. Ray gives dozens of speeches a year, he’s written the book and Jim Hartzfeld, who helped lead Interface’s transformation, now heads up an Interface consulting business called Interface Raise that shows other companies how sustainability can drive innovation and profits.
One of the most remarkable things about Ray was that he had his epiphany at age 60. It came after reading Hawken’s brilliant book, The Ecology of Commerce. Ray, Paul and Janine Benyus of Biomimicry fame spoke at an all-star panel last year at FORTUNE’s Brainstorm Green. Unfortunately, we didn’t videotape the session, but below is a short video of Ray talking about how the book changed his life. You can also read an edited transcript of my conversation with Ray here at Greenbiz.com.