Bloomberg News

What Students Can Teach Congress About 'Environmental Responsibility'

May 17, 2012

Workers at an Intel Semiconductor Plant

Intel Semiconductor plant in Albuquerque, New Mexico. Photographer: Ed Kashi/Corbis

U.S. Senator Lamar Alexander, a Republican from Tennessee, gave his daughter some reasonable advice as she finishes up a program in environmental management at Duke University: “Don’t use that word with a lot of people,” he said. “They won’t know what you’re talking about.”

The word he was talking about is “sustainability,” and while the Senator’s observation is correct, so was his daughter’s response: Well, they know what it means at the university, and corporate executives do, too. It's a global company's long-term strategy to thrive amid unprecedented change in population growth, middle-class consumption and resource availability.

Sustainability executives from Intel Corp., Procter & Gamble Co., Eastman Chemical Co. and FedEx Corp. brought that expertise to Capitol Hill Wednesday, at the request of a Senate subcommittee that oversees "children’s health and environmental responsibility." Alexander, ranking Republican on the subcommittee, shared the anecdote at a hearing the name of which could have been ripped from a garden-variety conference agenda, “Growing Long-Term Value: Corporate Environmental Responsibility and Innovation.” Senator Tom Udall, a Democrat from New Mexico, is chairman of the subcommittee.

Sustainability hearings however aren’t garden-variety events in the nation’s capital. Congress tends not to direct its investigative powers at trends in corporate strategy. For one thing, such trends don’t make great TV. As I waited in the (very short) line outside the committee room before the hearing, a group of high-school students from a charter school in Pillager, Minnesota, filed in, after meeting with Senator Al Franken. Given a choice between the subcommittee hearing on corporate supply-chain environmentalism, and the FBI director testifying downstairs about anything else, nine of the 12 chose the latter.

In his opening remarks, Udall cited five recent reports summarizing executives’ thoughts on the topic, from MIT Sloan Management Review and the Business Roundtable, and affiliates of KPMG International Cooperative, PwC International Ltd., Ernst & Young Global Ltd. “The emerging trend toward corporate environmental responsibility in the business world is in contrast to Congress’s increasingly growing division,” Udall said.

The four executives each walked the senators through some of their company’s epiphanies. Intel invested more than $100 million in the last decade in water conservation measures that have saved more than 40 billion gallons. The company links sustainability performance to employees’ bonuses. Procter & Gamble developed Downy Single Rinse for developing countries. It’s a soap that saves water by washing out in one rinse. Energy efficiency improvements at Eastman Chemical help keep costs down and consequently make it easier to keep most of its manufacturing jobs in the U.S. Fed Ex took advantage of a federal measure for accelerated depreciation of capital spending, which allowed it to buy fuel-efficient planes that can fly non-stop to Asia, and get packages delivered faster. The full testimony is available online.

Business has gone through this before. The four panelists and two senators agreed that corporate sustainability reminded them of a business trend in the 1980s, called “quality,” a term about as useful as sustainability. In practice, “quality” offered concrete management procedures and employee best practices for rooting errors out of manufacturing lines to ensure the highest-quality products.

What business hasn’t gone through before is an efficiency revolution brought on by both global demographic and environmental trends external to the company. Sustainability strategy is a refuge from 21st-century risks: resource scarcity, the middle-class population explosion that is driving up consumption and the myriad other trends that make the ability to sustain an enterprise over the long-term no longer automatic.

Some companies are still getting the message. They’d better hurry up, lest even the U.S. Congress beat them to it. As for the companies at the hearing -- and pretty much anybody younger than 30 -- they’re way ahead of the pack.

Visit www.bloomberg.com/sustainability for the latest from Bloomberg News about energy, natural resources and global business.


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