Can big companies be profitable and environmentally-conscious? Yes. Not only can they be mindful of the environment, they can actually benefit (as in cut costs and profit) by thinking about the planet as much as their bottom line.
That's what Rick Fedrizzi, the man who helped make LEED certification for buildings, argues in his new book, Greenthink.
Fedrizzi started thinking about eco-friendly architecture, selling air-conditioners in Florida over 20 years ago. Today, he's the CEO and founding chair of the U.S. Green Building Council (USGBC) and LEED certification is perhaps the most widely used green building rating system in the world. The industry is expected to be valued at more than $3 billion by 2020. According to Greenthink, LEED has more than 14 billion square feet of registered and certified space and is in effect in 150 countries in the world.
Environmental activist Leonardo DiCaprio who has written the forward for Fedrizzi's book calls his work "revolutionary."
Here's my conversation with Fedrizzi:
Esha Chhabra: You write in the book, "Everyone has a clear, simple goal: making a buck by pillaging the Earth, or killing jobs to save some flora and fauna. It's an ‘either/or’ scenario in most everyone's book. The idea that it could be ‘both/and’ is, to the vast majority, unfathomable."
Has this notion changed, are more companies waking up to a reality of the two colliding?
Rick Fedrizzi: It’s clear from the examples in Greenthink that we are witnessing the first wave of success stories of companies who are doing well by doing good. Sustainability is driving a level of innovation that is rewiring how whole industries approach their business and operational models, resulting in approaches that not only do less harm, but in fact do more good. But it requires open minds and hearts to help drive the behavioral changes needed for success – and it starts with showing how money can be saved – and made – when ESG metrics are part of the decision-making.
Chhabra: “Profit can save the planet” is repeated throughout the book. Is there a limit to this? Many MNCs have thrived because there is no limit on how much money they can make – what’s your take?
Fedrizzi: The premise of the book is straightforward, built on the proven concept that companies are business entities motivated by profitability and growth. There will always be companies who will do the wrong things for all the wrong reasons, but the market is still the best arbiter of what works and what matters. Health, jobs, a prosperous future for our children matter, and today’s most successful companies are using a sustainability platform to solve problems and deliver an array of products and services that meet those needs in improved, cost-efficient ways. Clinging to the status quo is not a growth strategy for a big-data, hyper-connected, performance driven, increasing values-based generation of consumers and employees.
Chhabra: What do you think about the latest buzzword, "sustainable?" What does it really mean to you?
Fedrizzi: In it’s classic sense, sustainability means to use what you need, not what you can, to ensure there is enough for the next generation. That’s not been our overall operating philosophy as a planet, and consequently, we’ve stressed the planet’s resources so that, in some cases, there IS nothing left over. But for me the definition is much broader. Sustainability doesn’t just mean doing something so that the planet can thrive; it means doing what it takes so that the humans thrive, too. That perspective continues to place huge emphasis on efficiency and conservation, but it also brings forward human health in ways we’ve not considered. And that matters most of all.
Chhabra: How much "greenwashing" is still being done?
Fedrizzi: Too much. That’s why third-party certification delivered transparently is the only way to be sure people are living up to their word. Volkswagen’s stunning transgressions are a cautionary tale about how critical it is to do the right thing and how costly it can be when you try to cover up the wrong thing with greenwash.
Chhabra: What are the first steps for a company that wants to be eco-friendly? Where should they start?
Fedrizzi: Companies should look both inside and outside for opportunities, and couch their initiatives in the business case. Inside, start by greening their buildings. The advances we’ve made in energy efficiency are enormous, and the vast majority of our US building stock – the more than 5 million commercial buildings out there – are energy hogs and water guzzlers that could benefit from improved HVAC and water-efficient plumbing upgrades. This has the multiple benefits of saving energy, saving water and saving money. Greening their fleets is another big area that can show immediate and measurable returns. Externally, helping their supply chains improve their sustainability performance provides huge dividends with a significant multiplier.
Chhabra: A growing number of startups these days that are fixated on their carbon footprint. Simultaneously, there seems to be the idea that smaller is better. So live smaller, buy local, buy artisan. Do you think that this is the answer (in a world where corporate giants still wield so much power)?
Fedrizzi: Global perspective. Regional management. Local execution. It takes all of it. Pure economies of scale are required to make progress on some of the biggest issues and at the same time the aggregation of a million small things can have huge impact. It’s a question of balance, and, of course, trade-offs.
Chhabra: What about the circular economy? Can it be a massive industry? Is it still in its infancy?
Fedrizzi: If you believe, as we do, that natural systems have much to teach us, then this concept is fundamental to good business. Waste should always be investigated as a value stream, not just purely a waste stream. Some of the most forward-looking innovations have come from this area. However, we are long overdue for a rethink on the business model for recycling.
Chhabra: Some companies are making products that the world could do without, for instance,
Fedrizzi: Every single industry can do things more sustainably. Every one. And precisely because it uses so much water, Pepsi has been at the forefront of water conservation and accessibility issues globally in a way that benefits us all. They’ve also embraced green building and greening their manufacturing facilities, helping pioneer some really advanced processes that benefit the entire manufacturing industry’s efforts to be more sustainable. As the market decides that it wants less sugary fizzy water then their product mix will reflect that, but in the meantime, like many companies, they are opting to take a broader view of their mission, and that benefits us all.
Chhabra: What has been the toughest part of building USGBC?
Fedrizzi: We had to get out of our own way, and that took us a few years. Once we figured out that leading with the economic case rather than the environmental case, our growth was assured. We also set high standards and established transparent process, in hopes that greenwashing would become so difficult people would simply do the right thing instead of just pretending they were. Clearly we’ve had some high profile examples of late of how much more work we need to do. Third-party verification that you did what you said you were going to do, and finding ways to incentivize and measure outcomes, not inputs, has been important.
Chhabra: What would you say to an aspiring entrepreneur who came to you today, seeking advice on how to start a business that could be people and earth-friendly?
Fedrizzi: That sustainability is profitable and that profitability can be sustainable. The green building industry has been a huge driver of innovation in the last decade, and in doing so created a market that never existed before: new formulations of core products; new processes for traditional manufacturing; new applications of technology and performance measurement that is both fascinating and fantastic. American business has a long history of working to “obsolete its greatest triumphs.” That’s what took us from agrarian to industrial; from industrial to technological; from analog to digital; from fossil fuel-based energy to renewables. Vast portions of sustainability’s contributions to progress are not about doing the same thing better – it’s about doing different things.
I would encourage every would-be entrepreneur to embrace both business and sustainability in equal measure, and that will open up a world of possibility.
