Elkington: Whispering radical ideas to CEOs

300px-John_Elkington_06“The time has come to tear down the old order and begin to create the new.”

John Elkington sounds like a Wall Street occupier, or a Bolshevik. He is neither. He is, instead, a 63-year-old consultant who has advised executives of global corporations, including Ford, Shell, BP, Toyota, HP, Nike, Nestle and Bayer, over the course of a long career at the crossroads of business and the environment. Along with such thinkers as Paul Hawken and Amory Lovins, Elkington all but invented the discipline of corporate sustainability. He’s got a new book out, called The Zeronauts, so I paid him a visit a week or so ago when I was in London.

The book’s very good. It celebrates a new breed of innovators, called Zeronauts, who set out to create wealth while driving negative outputs — greenhouse gas emissions, toxics, waste, pollution and poverty — to zero.

The idea of zero is intended to be a wake-up call. It’s a reminder, not that we should need one,  that incremental change won’t get us where we needs to go.

“It helps reframe things,” Elkington told me. “It’s a catalyst.”

Elkington has a knack for coming up with language that gets people’s attention. He called his consultancy SustainAbility in 1987 when the idea of a sustainable business was brand new. He wrote the first book about the “green consumer” in 1986. (My friend Joel Makower co-authored the US edition.) He coined the term “triple bottom line” (profits, people, planet) in 1994. His thinking has always been bold, but he has a gentle sense of humor and low-key manner that allows him to whisper radical ideas into the ears of CEOs without unsettling them. [click to continue...]

Instead of shopping, why not yerdle?

It’s Black Friday. Instead of shopping, why not yerdle?

Yerdle is a sharing and shopping website and mobile app being launched today by two stalwarts of corporate sustainability — Adam Werbach, the former Sierra Club leader and Saatch & Saatchi marketing guy, and Andy Ruben, Walmart’s first sustainability director.

Andy and Adam, who are both 39 and live in San Francisco (natch), have come up with a very cool idea. Yerdle is a way for people who have stuff to give away, or other stuff they want, to share with one another–before heading out to the store to buy something new. By today, after a beta test in the Bay Area, they expect that more than 10,000 items will be offered on Yerdle.

I took a sneak peek at the site the other day and found, among other things, a Ikea children’s table and chairs, a yoga DVD, Sesame Street DVDs, red Baby Gap sweats, a dustbuster, a radio alarm clock, a laptop sleeve, a pasta maker, kids books, a collection of little wooden dress-up dolls, and more–and that’s before inviting my friends to join. [click to continue...]

Reader faves: Best books about green business

Thanks for your emails and comments to my post last week, Best books in corporate sustainability? Not surprisingly, there was no consensus on what books are best–probably 200 books in were recommended–although many, many people suggested the writings of Paul Hawken and Bill McDonough. I don’t want to overwhelm you by listing all of the books that were recommended by email,  but here are some of my favorites as well as a few selections from last week’s comments, which can be found here.

From sustainability consultant Gil Friend, the ceo of Natural Logic:

My current picks:
> New: Climate Capitalism, Hunter Lovins & Boyd Cohen
> Venerable: Operating Manual for Spaceship Earth – R. Buckminster Fuller
> Practical: The Truth About Green Business – Gil Friend
> Inspiring: Confessions of a Radical Industrialist – Ray Anderson

There are many more good ones, so here’s TriplePundit.com’s [year-old] list of the “must read” sustainability books:
http://www.triplepundit.com/2010/02/sustainable-mba-crash-course/

A classic suggestion came from Keli Rae McMillen of Winter Park, CO, who send me a PDF of essays by Ralph Waldo Emerson, as well as this quote from Emerson’s History:

In old Rome the public roads beginning at the Forum proceeded north, south, east, west, to the centre of every province of the empire, making each market-town of Persia, Spain, and Britain pervious to the soldiers of the capital: so out of the human heart go, as it were, highways to the heart of every object in nature, to reduce it under the dominion of man. A man is a bundle of relations, a knot of roots, whose flower and fruitage is the world. His faculties refer to natures out of him, and predict the world he is to inhabit, as the fins of the fish foreshow that water exists, or the wings of an eagle in the egg presuppose air. He cannot live without a world.
(Coincidentally, I’ll have some news about Emerson later this month but I can’t say more now.)

Steve Schein, a longtime business exec who now teaches sustainability at Southern Oregon University, sent a Top 20 list: [click to continue...]

Best books on corporate sustainability?

Judging by the number of books about business and the environment piling up on my shelves, the corporate sustainability movement is alive and well.

One of the best is Business Lessons from a Radical Industrialist by Ray Anderson, the founder and chairman of the commercial carpet company Interface.

I’ve been provided with two signed copes of the paperback edition to give away. I’m expecting a signed copy of Howard Schultz’s book, which I’m also going to give to a blog reader. More on that, in a moment.

But first, a few thoughts about Ray and his book. Ray is a terrific guy who has had a great influence on business people across America, by tirelessly promoting the idea that a truly sustainable approach to business  is good for business. (See my 2009 interview, Ray Anderson, Radical Industrialist.) “Take nothing from the earth that cannot be replaced by the earth” is how he puts it. [click to continue...]

Can sustainable investing beat the markets?

This week, Newsweek released its second annual  Green Rankings of the largest companies in America, as well as a new analysis of big global corporations. These sorts of cross-industry comparisons of companies are difficult to do, but my sense is that Newsweek has done a credible job, with the help of partners MSCI ESG Research, Trucost and CorporateRegister.com. Given the attention that the list is getting,  it seems like a good time to return to a question I’ve thought about for years: Do companies committed to sustainability represent good investment opportunities?

The stock-market performance of Dell, which tops the 2010 list, is not encouraging: The firm’s shares have fallen by 55% during the last five years, while the NASDAQ is up by 18% during the same time period. Of course, one company’s performance over one time period doesn’t prove a thing. It turns out that over the past year, the top 100 companies on the 2009 Newsweek list outperformed the S&P500 by 6.8%.  While this data point doesn’t prove anything either, it’s interesting. So I arranged an email interview with Cary Krosinsky of Trucost to explore the issue further.

Cary Krosinsky

Cary is head of investor and corporate services for North America for Trucost, which is based in the UK. He’s also the author and co-editor, with Nick Robins of HSBC, of Sustainable Investing: The Art of Long Term Performance (Earthscan Publications, 2008), and he has taught classes on investing and sustainability at Columbia.

Marc: Cary, let’s start by defining “sustainable investing.” Is it different from socially responsible investing?

Cary: Socially responsible investing, or SRI, is too broad an investment category.  SRI encompasses very different things—alternative energy investing on the one hand, funds with a religious mandate on the other, as well as funds investing in a mainstream index such as the S&P 500, and subtracting out alcohol, tobacco and firearms.  We see many different styles of SRI.

Sustainable Investing is the more positive strand of SRI – one that is future-oriented, risk-adjusted and opportunity-directed. It looks at what companies can do to lessen risk, as well as capitalize on opportunities, in order to be ahead of the curve in their respective industries. It helps create long-term value, identifies “predictable surprises,” (as opposed to “black swans,”) such as climate change, diminishing water availability, human rights issues and others that influence investment outcomes.  Innovation emerges as a key driver of value through sustainability, as does the active management of environmental impacts.

Marc: It sounds like sustainable investing means identifying the smartest, most forward-thinking companies. In your book, you write that “sustainable investing funds have already outperformed consistently over the short, medium and long term.” How can you support that claim?

Cary: We found that for the 1, 3 and 5 years leading up to the end of 2007, when looking at SRI funds with this positive, opportunity-focused sustainable investing methodology, that they consistently outperformed their mainstream index equivalents.  When updating this study for a UN Principles of Responsible Investment academic paper in 2009, this still held true, both before, through and after the recent financial crisis of 2008 into 2009.

Further correlation of this has been demonstrated by diverse investors including Paul Hawken, who helps manage the Highwater Global Fund as well as Abby Joseph Cohen of Goldman Sachs.  Mark Fulton of Deutsche Bank spoke earlier this year regarding how the climate change sectors they are tracking have been outperforming their benchmarks since the recent market bottom. Matthew Kiernan, formerly of Innovest, now runs money and is also demonstrating outperformance from this more positive approach. The top 100 performers in the Newsweek Green Rankings which we actively participate in at Trucost, have outperformed the S&P 500, on an equally weighted basis, by 6.8% over the last year. [click to continue...]

The high cost of cheap food

hamburger-and-fries-l“We have very, very expensive food in this country.”

“It’s just that the prices are cheap.”

So said Paul Hawken, the environmentalist, entrepreneur and author, in a speech that began Cooking for Solutions, a conference on food and the environment, accompanied by lots of marvelous eating and drinking, this week at the Monterey Bay Aquarium in Monterey, CA.

The American industrial food system, he said, is bad for the planet, bad for farmworkers and bad for consumers.  “How did we make destroying our land, our children and our health a big business?” Hawken asked.

This was not an upbeat way to start the two-day event, but it’s hard to argue with his analysis. Big Ag produces lots of food–particularly grain and meat–at very cheap prices. According to USDA (cited by Bryan Walsh in this terrific article in TIME), Americans spend less than 10% of their incomes on food, down from 18% in 1966. Farm price supports, cheap fossil fuels and vast amounts of water all drive down the price of food.

And the true social and environmental costs? Let’s tally them. They include millions of tons of fertilizer that runs into rivers and the Gulf of Mexico, created an oxygen-starved dead zone that kills of sea life. Hog and chicken waste that contaminate waterways and the Chesapeake Bay. Overuse of antibiotics on animals that helps create antibiotic-resistant bacteria. If you care about animals, there’s the horror of confined animal feeding operations, or CAFOs. We’ve got food safety risks. Tons of global warming pollution. And, oh yeah, an epidemic of obesity, which, again according to TIME, adds $147 billion (that’s billion with a B) a year to our medical bills.

Ugh. And so, for the rest of day, scientists, activists, academics and a sprinkling of farmers and food company executives such as Gary Hirshberg of Stonyfield Farm and Margaret Wittenberg of Whole Foods Market talked about how to make our food system more sustainable.

Here are a just a few highlights: [click to continue...]

Paul Hawken’s winning investment strategy

If you believe that companies that are strongly committed to socially and environmentally sound practices will outperform their peers in the long run, then you would expect so-called socially responsible investment (SRI) funds to deliver superior returns to investors.

The trouble is, they don’t. Sure, some years the mutual funds run by the Calvert, Domini, Parnassus and the rest do very well—they excelled during the tech boom of the late 1990s because they tend to eschew heavy industry—but other years, they lag market indexes. Over time, most track the broader market.

paul-hawkenOver the three years ending December 31, 2009, for instance, among the big SRI funds, Calvert Social Investment is down by a cumulative 13.02%, Domini Social Equity is down by a total of 16.2% and Parnussus Equity Income is up by 0.14%. Only Parnussus performed significantly above the S&P500, which was down by 15.9%,

Why haven’t they done better. Some of us have long believed that the problem with conventional SRI funds is that their definition of “socially responsible” is not nearly as rigorous as it could or should be.

Paul Hawken has been vocal in his critique of the SRI establishment, and since 2005 he has put his money where his mouth is. In a partnership with Baldwin Brothers, a Massachusetts-based investment firm, Hawken has overseen the Highwater Global Fund, a fund for qualified investors (i.e., the rich) that invests in companies “that have a clear sense of current global trends and future societal needs.” His results have been impressive, to say the least.

Since inception in the fall of 2005, Highwater is up by a total of 52.55%. During the three years ended in December (the same period cited above), Highwater is up by a total of 19.75%.  This is, in part, because Hawken and the other fund managers are very picky about what stocks they hold. More than 90% of the FORTUNE 500 fail their screens.

[click to continue...]

Brainstorm Green’s all-star team

William Clay Ford Jr.

William Clay Ford Jr.

Before I head to Copenhagen this week for the global climate extravaganza, I want to bring you the latest news about Brainstorm Green, FORTUNE’s conference about business and the environment. I’m delighted by the caliber of leaders and thinkers who have agreed to speak at the event, which will be held April 12-14 in Laguna Beach, CA.

Bill Ford, the executive chairman of Ford Motor, who was a huge hit last year, will be back in 2010. Ford (the company) is one of the few bright spots in the U.S. auto industry, as you know, and while it took a long while coming, the firm seems committed to hybrids, electric cars and other environmentally-friendly technologies, including wheat-straw reinforced plastic and other bio-based materials. Hybrid sales are taking off, as the company recently reported:

  • Ford Motor Company’s year-to-date hybrid sales are 73 percent higher than the same period in 2008, fueled by the introduction of hybrid versions of the 2010 Ford Fusion and Mercury Milan
  • More than 60 percent of the sales of Fusion Hybrid are by non-Ford owners – with more than 52 percent of those customers coming from import brands.
SBjpg-filtered

Stewart Brand

One of the best books that I’ve read in a long time is Whole Earth Discipline: An Eco-Pragmatist Manifesto by Stewart Brand, so I’m thrilled to announce that Stewart will be featured at Brainstorm Green. In the book, he brings a fresh perspective to nuclear power (he’s for it), geo-engineering (he’s intrigued) and megacities (they are both green and engines of economic growth). You can be sure he will challenge conventional wisdom at the conference.

Three powerhouse leaders of the enviromental movement–Frances Beinecke of the Natural Resources Defense Council, Fred Krupp of Environmental Defense and Mark Tercek of the Nature Conservancy–are also planning to attend. Fred and Frances have ben at the event before, and they both plugged into the Washington scene, which will surely be a topic this spring, while Mark, formerly of Goldman Sachs, will be able [click to continue...]

Ray Anderson, radical industrialist

“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.anderson_ray

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 [click to continue...]

You are brilliant, and the earth is hiring

While I thoroughly enjoyed all of FORTUNE’s Brainstorm Green conference last month, my personal highlight was meeting and interviewing Paul Hawken. He’s done great work as an entrepreneur, social critic and teacher. His books have inspired me. And now he has done something really hard: He has given a commencement speech worth reading. Ordinarily, I don’t republish the writings of others on this blog but I want to share Paul’s words with you. (You can download a PDF version that’s easy to print out here.) The speech was delivered on May 3 at the University of Portland. Enjoy! And then pass it on to a young person you know.

paul-hawken

When I was invited to give this speech, I was asked if I could give a simple short talk that was “direct, naked, taut, honest, passionate, lean, shivering, startling, and graceful.” No pressure there.

Let’s begin with the startling part. Class of 2009: you are going to have to figure out what it means to be a human being on earth at a time when every living system is declining, and the rate of decline is accelerating. Kind of a mind-boggling situation… but not one peer-reviewed paper published in the last thirty years can refute that statement. Basically, civilization needs a new operating system, you are the programmers, and we need it within a few decades.

This planet came with a set of instructions, but we seem to have misplaced them. Important rules like don’t poison the water, soil, or air, don’t let the earth get overcrowded, and don’t touch the thermostat have been broken. Buckminster Fuller said that spaceship earth was so ingeniously designed that no one has a clue that we are on one, flying through the universe at a million miles per hour, with no need for seatbelts, lots of room in coach, and really good food—but all that is changing.

There is invisible writing on the back of the diploma you will receive, and in case you didn’t bring lemon juice to decode it, I can tell you what it says: You are Brilliant, and the Earth is Hiring. The earth couldn’t afford to send recruiters or limos to your school. It sent you rain, sunsets, ripe cherries, night blooming jasmine, and that unbelievably cute person you are dating. Take the hint. And here’s the deal: Forget that this task of planet-saving is not possible in the time required. Don’t be put off by people who know what is not possible. Do what needs to be done, and check to see if it was impossible only after you are done.

When asked if I am pessimistic or optimistic about the future, my answer is always the same: If you look at the science about what is happening on earth and aren’t pessimistic, you don’t understand the data. But if you meet the people who are working to restore this earth and the lives of the poor, and you aren’t optimistic, you haven’t got a pulse. What I see everywhere in the world are ordinary people willing to confront despair, power, and incalculable odds in order to restore some semblance of grace, justice, and beauty to this world. The poet Adrienne Rich wrote, “So much has been destroyed I have cast my lot with those who, age after age, perversely, with no extraordinary power, reconstitute the world.” There could be no better description. Humanity is coalescing. It is reconstituting the world, and the action is taking place in schoolrooms, farms, jungles, villages, campuses, companies, refuge camps, deserts, fisheries, and slums.

You join a multitude of caring people. No one knows how many groups and organizations are working on the most salient issues of our day: climate change, poverty, deforestation, peace, water, hunger, conservation, human rights, and more. This is the largest movement the world has ever seen. Rather than control, it seeks connection. Rather than dominance, it strives to disperse concentrations of power. Like Mercy Corps, it works behind the scenes and gets the job done. Large as it is, no one knows the true size of this movement. It provides hope, support, and meaning to billions of people in the world. Its clout resides in idea, not in force. It is made up of teachers, children, peasants, businesspeople, rappers, organic farmers, nuns, artists, government workers, fisherfolk, engineers, students, incorrigible writers, weeping Muslims, concerned mothers, poets, doctors without borders, grieving Christians, street musicians, the President of the United States of America, and as the writer David James Duncan would say, the Creator, the One who loves us all in such a huge way.

There is a rabbinical teaching that says if the world is ending and the Messiah arrives, first plant a tree, and then see if the story is true. Inspiration is not garnered from the litanies of what may befall us; it resides in humanity’s willingness to restore, redress, reform, rebuild, recover, reimagine, and reconsider. “One day you finally knew what you had to do, and began, though the voices around you kept shouting their bad advice,” is Mary Oliver’s description of moving away from the profane toward a deep sense of connectedness to the living world.

Millions of people are working on behalf of strangers, even if the evening news is usually about the death of strangers. This kindness of strangers has religious, even mythic origins, and very specific eighteenth-century roots. Abolitionists were the first people to create a national and global movement to defend the rights of those they did not know. Until that time, no group had filed a grievance except on behalf of itself. The founders of this movement were largely unknown — Granville Clark, Thomas Clarkson, Josiah Wedgwood — and their goal was ridiculous on the face of it: at that time three out of four people in the world were enslaved. Enslaving each other was what human beings had done for ages. And the abolitionist movement was greeted with incredulity.  Conservative spokesmen ridiculed the abolitionists as liberals, progressives, do-gooders, meddlers, and activists. They were told they would ruin the economy and drive England into poverty. But for the first time in history a group of people organized themselves to help people they would never know, from whom they would never receive direct or indirect benefit. And today tens of millions of people do this every day. It is called the world of non-profits, civil society, schools, social entrepreneurship, non-governmental organizations, and companies who place social and environmental justice at the top of their strategic goals. The scope and scale of this effort is unparalleled in history.

The living world is not “out there” somewhere, but in your heart. What do we know about life? In the words of biologist Janine Benyus, life creates the conditions that are conducive to life. I can think of no better motto for a future economy. We have tens of thousands of abandoned homes without people and tens of thousands of abandoned people without homes. We have failed bankers advising failed regulators on how to save failed assets. We are the only species on the planet without full employment. Brilliant. We have an economy that tells us that it is cheaper to destroy earth in real time rather than renew, restore, and sustain it. You can print money to bail out a bank but you can’t print life to bail out a planet. At present we are stealing the future, selling it in the present, and calling it gross domestic product. We can just as easily have an economy that is based on healing the future instead of stealing it. We can either create assets for the future or take the assets of the future. One is called restoration and the other exploitation. And whenever we exploit the earth we exploit people and cause untold suffering. Working for the earth is not a way to get rich, it is a way to be rich.

The first living cell came into being nearly 40 million centuries ago, and its direct descendants are in all of our bloodstreams. Literally you are breathing molecules this very second that were inhaled by Moses, Mother Teresa, and Bono. We are vastly interconnected. Our fates are inseparable. We are here because the dream of every cell is to become two cells. And dreams come true. In each of you are one quadrillion cells, 90 percent of which are not human cells. Your body is a community, and without those other microorganisms you would perish in hours. Each human cell has 400 billion molecules conducting millions of processes between trillions of atoms. The total cellular activity in one human body is staggering: one septillion actions at any one moment, a one with twenty-four zeros after it. In a millisecond, our body has undergone ten times more processes than there are stars in the universe, which is exactly what Charles Darwin foretold when he said science would discover that each living creature was a “little universe, formed of a host of self-propagating organisms, inconceivably minute and as numerous as the stars of heaven.”

So I have two questions for you all: First, can you feel your body? Stop for a moment. Feel your body. One septillion activities going on simultaneously, and your body does this so well you are free to ignore it, and wonder instead when this speech will end. You can feel it. It is called life. This is who you are. Second question: who is in charge of your body? Who is managing those molecules? Hopefully not a political party. Life is creating the conditions that are conducive to life inside you, just as in all of nature. Our innate nature is to create the conditions that are conducive to life. What I want you to imagine is that collectively humanity is evincing a deep innate wisdom in coming together to heal the wounds and insults of the past.

Ralph Waldo Emerson once asked what we would do if the stars only came out once every thousand years. No one would sleep that night, of course. The world would create new religions overnight. We would be ecstatic, delirious, made rapturous by the glory of God. Instead, the stars come out every night and we watch television.

This extraordinary time when we are globally aware of each other and the multiple dangers that threaten civilization has never happened, not in a thousand years, not in ten thousand years. Each of us is as complex and beautiful as all the stars in the universe. We have done great things and we have gone way off course in terms of honoring creation. You are graduating to the most amazing, stupefying challenge ever bequested to any generation. The generations before you failed. They didn’t stay up all night. They got distracted and lost sight of the fact that life is a miracle every moment of your existence. Nature beckons you to be on her side. You couldn’t ask for a better boss. The most unrealistic person in the world is the cynic, not the dreamer. Hope only makes sense when it doesn’t make sense to be hopeful. This is your century. Take it and run as if your life depends on it.
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Paul Hawken is a renowned entrepreneur, visionary environmental activist, and author of many books, most recently Blessed Unrest: How the Largest Movement in the World Came into Being and Why No One Saw It Coming. You can visit his website at
www.paulhawken.com