CEO redesigns business for zero environmental impact
Although the business of running a resort might appear to have little in common with the business of manufacturing and selling carpets and flooring, Fortune 1000 CEO Ray Anderson believes that all business structures share the same basics of supply and demand, distribution, marketing, financing, staffing, transportation of people and goods, and so on and so on.
He also believes that its possible to eliminate waste at every stage of the process, to redraw the lines on the flow chart that connect these basics in such a way that a company can eliminate, not just reduce, its environmental impact.
"And if I can do it in this business," says Anderson, the founder, chair and CEO of Interface Inc., the worlds largest manufacturer of commercial carpet and flooring, "then anyone can do it."
Anderson gave a presentation at the Whistler Conference Centre on Dec. 1 as part of the Leadership Through Sustainable Innovation speaker series, which is being held as part of Whistlers own sustainability initiative; Whistler. Its Our Nature. The night was also the official community launch of the Natural Step initiative, and featured booths by the early adopters of sustainability Whistler-Blackcomb, the Resort Municipality of Whistler, Tourism Whistler, AWARE, the Fairmont Chateau Whistler and Whistler FotoSource. According to Anderson, Interface didnt start out as an environmental leader. "It was until 1994 that I began to hear something from the marketplace. Our customers began to ask us what our company was doing for the environment. The answer was nothing. It embarrassed us. It embarrassed me."
Anderson was expected to make a speech to shareholders outlining the companys environmental vision, which it didnt have. "I couldnt get beyond obey the law comply," he says.
Before his speech, someone gave him a book, The Ecology of Commerce: A Declaration of Sustainability by Paul Hawken. The book was based on three principles: that every living system and life support system was stressed and in decline; that business and industry were the primary culprits; and that species were disappearing off the face of the earth at a faster rate than they did during a mass extinction 260 million years ago, when 96 per cent of species disappeared.
The clincher for Anderson was the real possibility that we would be next.
"Scientists are telling us how much time we have to try and change the course were on. One generation? Two generations? Three generations at the most," he said.
Rather than be discouraged, Anderson decided that while industry created this mess, the only institution that had the money and the resources to clean it up was industry.
His speech went a little further than anyone expected, but by the end of the week the company was committed to a course that would lead to sustainability.
Using a typical business structure as a guide, he began to change the way the lines were drawn and came up with a seven step program for climbing what he called "Mount Sustainability."
The first step was to eliminate waste by taking an honest look at where waste exists within the companys own processes and its supply chain.
In six years Interface cut waste in half, and in the process saved over $70 million through more efficient operations.
The second step was to control industrial emissions. When Interface started down the road to sustainability they had 270 outlet stacks and pipes. "By now weve closed 29 per cent of them, and our goal is to shut them all down. We now do our business using processes that dont require stacks or pipes," says Anderson.
The third step is to power the company with renewable energy. "Right now it has to be solar because we cant afford wind just yet," he says. Some Interface factories, like the one in Belleville, Ontario, had access to renewable hydroelectric power.
Although solar has a cost, the benefits are there. "I asked the accountants if we could afford solar, and they said no. So I called up the marketing department and asked them if they could sell solar-made carpets, and they said yes. Marketing loves it. Customers want it."
The fourth step is closing the loop, recycling 100 per cent of the carpets and flooring solved using renewable energy. Interfaces goal is to not take one more drop of oil out of the earth, either for the production of textiles or to run the factories, by 2020.
The fifth step is transportation, "perhaps the most difficult problem to solve," says Anderson. "Moving people, moving our product, its really in the hands of the automotive industry which is starting to think the same way we are. I drive a Toyota Prius (gas/electric hybrid car) and get 46.5 miles per gallon."
The sixth step is sensitivity training teaching sustainability to the staff so they dont just understand it, but take the initiative upon themselves to advance it. It also means educating customers and suppliers.
The seventh step is the reinvention of commerce, giving people added value rather than lower prices by creating superior and competitive products.
It also means switching the focus from labour productivity getting the most product using the fewest workers, for the lowest price to resource productivity, which means getting more from resources.
Since his speech in 1994, Anderson says Interface has cut carbon fuel use by 31 per cent.
"The Kyoto Protocol, which the U.S. does not support, is only asking for about a seven per cent reduction by 2010," says Anderson. "We cut our use by 31 per cent in this industry, which is almost dependent on the stuff, in just seven years and the U.S. cant cut even seven per cent. If we can do it, everybody can."
From a business perspective, going sustainable was "the best thing we could have ever done, thats from the most hard-headed business sense."
Customers are embracing Interfaces efforts, and several companies are attempting to follow Interfaces lead.
"Theyre our customers now, and were theirs," says Anderson.
His final message to the more than 300 people who attended his presentation at the conference centre was that time was running out.
"Every one of us has a choice of what we can do on our brief visit to this planet, hurt it or help it. Im so glad that this community has chosen to help it."
The next speaker in the series will be Dr. Mathis Wackernagel, co-founder of the "Ecological Footprint" concept that is now used as a measure of sustainability world-wide, on Jan. 13.