In 2008 I was inspired to take the plunge and establish a new company. The basis for the business was a series of conversations with high-profile players in the food industry clearly illustrating that there was an urgent, strategic need for tangible, factual data about their environmental impacts to help drive informed operational decisions. At the time, the industry was woefully lacking in such data. A concept like “carbon footprints” was a mysterious and ethereal thing that only environmental scientists or experts really understood.
Early in my career I spent a number of years with a healthcare information company based in the suburbs of Chicago. The company sold fact-based information to support intelligent business decisions in hospitals. They created customized reports that helped guide hospitals in making resource-saving and profit-making decisions about the services they offered to their community. My job was to take Medicare data together with patient data from the hospital and cross-match it to publicly available census data and forecasts to produce reports that showed a hospital that their population was getting younger or older, richer or poorer. From there a hospital could decide to invest in a new orthopedic practice for their older patients, or a new neo-natal center for the younger families moving into their community, and so on. Their decisions were based on factual, tangible, understandable data that gave them clarity and brought with it long-term profitability.
Compiling Expertise for the Sustainability Agenda
Many years later, after working for a year as a consultant supporting food companies in their transition to fair trade, I realized that there was a huge lack of understanding between what we now call “sustainable” business and the goal of increased profitability. Sustainability (or CSR) was (and still is, for many) considered to be a cost to a business and not a revenue-generating activity. Switching to fair trade ingredients, or working with fishermen to consider long-term effects on fish populations, or taking into account the environmental impacts of palm oil, or changing clear-cutting practices, was bucketed into the “social responsible” (aka “charity”) side of the business. There was an obvious disconnect between the business operations and their “corporate responsibility." The clearest example was a project I worked on where we individually interviewed each member of a board of directors and asked about their awareness and level of concern regarding environmental issues that could affect their business (in this case the cost and supply of cocoa). Without exception, each expressed serious concern about environmental issues for the business, not to mention the future of the planet for their children and grandchildren. The next day, they went back into the board room to make a decision about their supplier relationship, and they voted unanimously against any environmental impact reduction measures. (There’s always tomorrow, right?)
To me, it seemed that they just didn’t have the right information at hand. I was convinced that if companies concerned about environmental issues could see graphs that showed that reducing carbon meant reducing costs and increasing profitability to the company, they would vote differently. If they could see, in terms that they understood, that the long-term rising costs of commodities due to environment degradation, reduced harvests, changing workforce demands, and additional costs to industry through regulation, could be mitigated and managed starting today, they would immediately start the process of measuring and reducing their impacts. With this conviction, I set about using my experiences in healthcare information to replicate a process that was affordable, user-friendly, and provided accurate information to support intelligent business decisions in what soon became known as “sustainability." The result was my web-based environmental impact measurement tool, Carbonostics.
Where are the new stories?
In 2009, we started hearing inspiring case studies about name brand (and smaller) companies doing great work in sustainability. France-based Danone was experimenting with reducing methane emissions from cattle by changing their feed mix. France was readying to pass legislation for environmental display on products. Coca-Cola was looking at ways to reduce their water impact. Smaller companies were realizing great cost reductions by investing in bio-digesters. Apple farmers were being encouraged to use their land more productively, especially in the off-season. And employee absenteeism was reduced and productivity was increased at a company where they uncovered all the skylights in their factory. If you go to a “sustainability” conference today, you are quite likely to hear the very same stories touted by the very same companies. And while obviously inspiring a few years ago, they were inspirational enough to engineer real change. In addition, the French policy that was expected to drive legislative compliance at the European level was abandoned at the last minute, evolving into a 5-year test phase which has had wide-reaching consequences in terms reducing motivation across industry. Clearly, real change was not going at the pace many had once believed.
We know that a lot of companies are working on sustainability and doing great things. But why are we not hearing these exciting stories? There seems to be 3 main reasons that the same old tired stories are being recycled year after year. First, companies (and I think this is particularly true in the food sector) are afraid of disclosing too much information that is proprietary to their business or that could be held against them in future negotiations with their clients (retailers). (We overcame the privacy issues surrounding sensitive patient data from hospitals and Medicare data. Why can’t we instill the same level of confidence for the food industry?). Second, there is a fear of taking the first steps before there is a clear legislative or client (retailer) mandate and finding out that you’ve taken the wrong path. And third, the belief that sustainability is actually a profit-making activity is still incredulous to the majority of decision-makers and is therefore relegated to a back-burner nice-to-have-if-you-have-some-time status. Add to that, a frustrating lack of transparency both from the companies that deliver the services, and their industry clients, has led to this round-robin of the same stories being repeated again and again.
Survival of the Leader?
There are two mantras that I keep hearing - first, is that everyone feels that there’s “probably a future for sustainability measurement and consulting, but few are investing at the moment”. (There’s always tomorrow, right?). And second, is that “we’ve already invested in sustainability activities and we’re waiting for them to pay off”. From what I hear, most of the leading “sustainability” consultancies today seem to be supporting their sustainability departments with revenue from their non-sustainability services. When is there going to be enough great stories to inspire true collaborative understanding about our collective challenges ahead to drive real movement in the industry?
It reminds me of the Bystander Effect. We are all witnessing drought, flooding, deep freezes, overly warm temperatures, mud slides, avalanches, and more. We see wildly fluctuating commodity prices and play financial games to mitigate them in the short- term. And all the while, we’re waiting for someone else to fix the problem because our daily operational lives are too busy with budget meetings, contract negotiations and focusing on our monthly KPIs. What I witnessed in the healthcare industry, and what we deliver today to the food industry, shows that it even small changes can make a difference. But how do we know which small changes to take on if we are still waiting for someone else to tell us a convincing story?
Sara Pax is the president of Bluehorse Associates, a developer of environmental sustainability metrics solutions specialized in the food and beverages industry, featuring the Carbonostics suite of web-based applications for carbon & energy accounting and reporting, product portfolio assessments, product carbon footprinting, and lifecycle analysis. Carbonostics received a 4.5 star rating in the 2013 Environmental Leader Technology Review. For more on Carbonostics “best-in-class” technology, visit: www.carbonostics.com
