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Corporate Essays: | The Future of Forest Products | Powering the Future | Water Management for the 21st Century

These partners concluded that their organizations - and our society as a whole - need to take climate change seriously. And based on a common vision of a future that leads to both economic and environmental security for society, they articulated actions for business and for government that would help ensure both a safe climate and a sound business outcome.

What business can contribute is substantial. By innovating, by offering products and services that take advantage of markets influenced by climate policy, and by looking to improve its operations, business can help lead the needed changes. Moreover, business has a strategic responsibility to its employees, shareholders, customers, and the public to respond to the global climate change issue.

Even though business can accomplish a lot on its own, much more can be achieved in a supportive policy environment that encourages technology development, energy conservation, renewable energy sources, the capture and sequestration of carbon, and early action.

It is clear that the world has a significant challenge before it. The sources of human-caused greenhouse gas emissions are at the very heart of our economies and livelihoods. A shift in the direction of economic development to move purposefully toward sustainable development will help the world address not only climate change concerns but other economic and social issues as well.

Business has a fundamental role to play in this movement. Not only does business have a large stake in this issue, it also has much to offer in policy and technology development. Public and private policies, if implemented wisely, can spur markets and businesses to employ these resources to achieve the vision and hope of sustainable development.

British Petroleum, General Motors, Monsanto, and WRI intend to implement their recommendations for business within their own organizations. The partners have crafted a Safe Climate, Sound Business Action Agenda for continued collaboration and invite other business and non-governmental organizations to join the effort. The agenda aims to integrate climate protection into internal operations, investment decisions, strategic alliances, overseas facilities, supplier relationships, and policy engagement.

Adapted by Paul Faeth from Safe Climate, Sound Business: An Action Agenda (WRI, 1998).

Case Studies

Creating New Markets

Is it possible to manage a radical transformation in a conservative industry? One example of just that is the Royal Dutch/Shell Group, a company that has seen its share of controversy and criticism from both environmental and human rights groups during the 1990s. But instead of ignoring or rejecting the issues raised by its critics, the company undertook a sweeping review of how it operated and what values it wanted to embody. In 1998, it startled both critics and the business community around the world with a report, Profit or Principles, that laid out new environmental and human rights principles for the company and a road map for the Group's plans to integrate sustainable development into all its businesses. The message in the report, produced with help from consulting firms Arthur D. Little and SustainAbility, was clear: "There does not have to be a choice between profits and principles." Putting its principles into action, the company also withdrew from the industry-sponsored Global Climate Change coalition and endorsed action to forestall climate change, sending an important signal of industry leadership on a contentious issue.

Shell's goal, while providing its customers with energy products and services that meet their needs, is also to convince customers and critics alike that there is a sustainable path for the future development of the energy industry. Shell's investments in renewable energy technologies such as windpower and solar photovoltaic are positioning the company well for a carbon-free future, as well as helping to make that vision a reality. The company also wants to demonstrate that its activities create wealth which benefits society as a whole rather than reinforcing profound social differences, and the company's commitment to stakeholder engagement gives it a means to learn how to meet the needs of many different groups. These are ambitious and wide-ranging goals, especially for a global giant in the largely conservative energy industry. To meet these goals, Arthur D. Little is helping Shell adapt its existing management framework.

Environmental design is catching on among architects and design firms. One supplier they are turning to is Collins & Aikman Floorcoverings. Over the past five years, per yard of carpet produced, the company has managed to cut energy use by 43%, water use by 58%, and waste shipped to landfills by 85%. Moreover, the company now offers to take back any carpet it manufactures and recycle it into new carpet or into industrial flooring materials: it guarantees that none of the returned carpet will be incinerated or sent to landfills. Instead, the company now offers a carpet line with a backing made entirely from recycled and remanufactured carpet, a product for which the company had to develop new extrusion techniques and design a process for recycling old carpets. In effect, old carpet is chopped into small pieces and turned into pellets that are mixed with other recycled materials, melted, formed into new backing, and combined with the fibers that make up the pile of the new carpet, which also contain recycled material.

The new product has equivalent performance as carpet made of virgin raw materials, emits fewer volatile organic compounds, and has been installed in more than 120 corporate, government, and retail facilities nationwide. And, of course, the new carpet dramatically reduces use of raw materials and the associated costs. Looking outside its own operations, Collins & Aikman has developed partnerships with its key suppliers, working with DuPont on nylon that has higher recycled content and with other suppliers to eliminate ozone-depleting chemicals and other environmental contaminants. And the company continues to set even more ambitious goals for itself for the future, aiming to completely "close" the materials cycle for its products.

The automotive sector faces major challenges to adapt to rising worldwide concern over the environmental impact of its products. As a result, many automobile companies are developing alternatives to the internal combustion engine. Among those moving the fastest has been Toyota, which has been selling an electric version of its RAV4 in several markets. Toyota will introduce a new electric-hybrid sedan, the Prius, in the United States this year, and is planning to produce it in quantities large enough that it may well become a familiar sight on urban commuting routes by the end of the year. Other car companies are also moving in this direction. DaimlerChrysler is investing heavily in leading-edge fuel cell technology, and so are Ford and GM, as well as Toyota, with a vigorous competition emerging to see which company can bring this revolutionary technology to market first.

These changes have been matched by new vision at the top as well. GM's sponsorship of the National Town Meeting on Sustainable Development and its collaboration with the World Resources Institute in the Safe Climate, Sound Business project is helping to find the common ground between environmental protection and corporate financial performance. And at Ford, new Chairman William Clay Ford Jr.'s bold statements in support of the environment are promising impressive changes to come. Ford has also used its clout to address social needs, explicitly encouraging minority-owned businesses by purchasing more than $2 billion in goods and services from them; the company wants to increase such purchases to 5%, or $2.5 billion, of its total purchases by the year 2000.

One major transportation user is the US Postal Service, which has the nation's largest fleet of delivery vans that run on clean-burning compressed natural gas (CNG). These 7,000 CNG vehicles emit 95% less carbon monoxide, 34% less nitrogen oxide, and 45% less reactive hydrocarbons than compared gasoline-burning vans. As a result, these high-efficiency alternative fuel vehicles help to slow the growth rate of urban smog, acid rain, and global warming. Since CNG is cheaper than gasoline, operating costs are lower; the vehicles also require less maintenance. The USPS is also a national leader in the use of re-refined oils and retreaded tires and has more recycling centers than any U.S. company.

Global demand for energy will more than double by 2050, increasing the risk of climate change. Major energy companies are developing renewable energy technologies.

Innovative approaches also hallmark UT's civilian technology efforts. Its Carrier division is helping to pioneer the idea of selling warmth and "coolth" by providing heating and cooling services rather than selling furnaces and air conditioning units. This approach offers advantages to the customer such as freedom from maintenance worries and gives Carrier the incentive to manufacture the most efficient and low maintenance units it can.

The German glass company Schott makes ultra-thin glass for electronic visual displays and a wide variety of other products for industry as well as for household use. Along with other European manufacturers of the glass tubes used in television sets, Schott has agreed to voluntary standards for the composition of the glass, a move that should allow recycling of television tubes that are now thrown away. The company participates in an international working group for tube recycling and is working to increase recycling of other glass products.

The electric utility industry is a major source of the carbon dioxide emissions that contribute to climate change. But under the leadership of the Edison Electric Institute, they have also launched a major voluntary effort to mitigate greenhouse gas emissions. The industry's Climate Challenge Program supports development of renewable technologies, funds tree-planting, and promotes geothermal heat pumps and electric transportation.

Some companies are doing more. Green Mountain Energy is already offering its customers renewable energy choices. Enron is investing heavily in windpower. American Electric Power is working with the U.S. Department of Energy to develop a new generation of "clean coal" technologies that can significantly increase energy efficiency.

Many important pharmaceutical products are derived from natural plants. So Bristol-Myers Squibb has a special interest in preserving a wide array of natural plants and animals. The company has made a commitment to buy and preserve biologically diverse land around the world at least equal in area to the land occupied by its manufacturing facilities. This "manufacturing offset" includes 140,000 ecologically-valuable acres in Brazil's Pantanal, the world's largest wetlands.

Some companies have turned their expertise in managing their own environmental problems into a business solving similar problems for others. Ryder, for example, offers transportation and real estate-related environmental services ranging from emergency spill cleanup to auditing of facilities to training.

Arthur Daniels Midland (ADM) believes that technology can help feed a growing world and feed it better. The company has introduced new products created by advances in fermentation technology, including amino acids and vitamin C, and is making growing use of biotechnology to create improved hybrid crops. In addition, ADM embraces high-yield but environmentally-friendly farming techniques such as soil conservation and satellite-positioning to guide planting and harvesting.