Corporate Heretics

"Is genuine progress still possible? Is development sustainable? Or is one strand of progress—industrialization—now doing such damage to the environment that the next generation won't have a world worth living in?"^[3]

Those are not the words of the Sierra Club or Greenpeace, but of BP chairman John Browne. In 1997, Browne broke ranks with the oil industry to declare, "There is now an effective consensus among the world's leading scientists and serious and well-informed people outside the scientific community that there is a discernible human influence on the climate". Moreover, he argued that "the time to consider the policy dimensions of climate change is not when the link between greenhouse gases and climate change is conclusively proven, but when the possibility cannot be discounted".^[4]

Equally important, BP looks at the situation as a business opportunity."There are good commercial reasons for being ahead of the pack when it comes to issues to do with the environment", says Browne. Since 1997, the company has become active in public forums on global climate, has begun to reduce emissions in exploration and production, has started to market cleaner fuels, and has invested significantly in alternative sources of energy (such as photovoltaic power and hydrogen). All the while, Browne has led an effort to build a more performance-oriented culture, and company profits have been at an all-time high.

BP is but one example of the shift in thinking that is becoming evident in many companies and industries. Appliance maker Electrolux uses water and powder based paints (rather than hazardous solvent-based paints), prioritizes the use of recycled materials, and has introduced the world's first family of refrigerators and freezers free of the chlorofluorocarbons that contribute to ozone depletion. In 1999, Toyota and Honda began selling hybrid cars that combine internal combustion and electric propulsion, perform comparably to competitors—and can achieve up to 70 miles per gallon today, with prospects for two to three times that mileage in a few years.^[5] In 1998, Xerox introduced its first fully digitized copier, the Document Centre 265, which is more than 90 percent remanufacturable and 97 percent recyclable. The product has only about 200 parts, an order of magnitude less than its predecessor. Its sales have exceeded forecasts. According to Fortune, remanufacturing and waste reduction saved Xerox $250 million in 1998. Some firms, such as Interface Inc., a $1.3 billion manufacturer of commercial carpet tiles, which saved about $140 million in sustainable waste reductions from 1995 to 1999, are even rethinking their basic business model. Interface's goal is to stop selling product altogether. Instead, it will provide floor-covering services, leasing products and later taking them back for 100 percent recycling. Assessing the environmental impact of the carpeting industry, chairman Ray Anderson says bluntly, "In the future, people like me will go to jail".^[6]

These examples are all just initial steps, as each of these companies would readily admit. Ultimately, sustainability is a challenge to society as a whole. Nonetheless, business can play a legitimate leadership role as a catalyst for larger changes. We believe that a new environmentalism is emerging, driven by innovation, not regulation—radical new technologies, products, processes and business models. More and more businesses are recognizing the opportunities this creates. "Sustainability not only helps improve the world, but also energizes the company", says ABB's CEO Goran Lindahl.

The good news is that change through market-driven innovation is the type of change our society understands best. The problem is that much in today's business climate appears to run in the opposite direction. Short-term financial pressures, the free-agent work force, dramatic opportunities to start new companies and get rich quickly, often-cynical mass media, and industrializing countries aspiring to catch up to the industrialized world's consumption standards—these hardly seem like the conditions for increasing stewardship of the earth.

The challenge today is to develop sustainable businesses that are compatible with the current economic reality. Innovative business models and products must work financially, or it won't matter how good they are ecologically and socially. To explore how to achieve this, the SoL Sustainability Consortium was formed to bring together like-minded corporate executives experienced in organizational learning who also see sustainability becoming a cornerstone of their business strategy.^[7] Together, we are asking: Can organizations committed to sustainability work with the forces propelling most of the New Economy in the opposite direction? And, can organizational-learning principles and tools help in realizing the changes that this will require?

^[3]Browne 2000a, available from BP, London.

^[4]Browne 2000b.

^[5]See http://www.rmi.org/sitepages/pid175.asp for Rocky Mountain Institute publications about the Hypercar.

^[6]Gunn 1999.

^[7]The SoL (Society for Organizational Learning) Sustainability Consortium was established by BP and Interface and now includes established SoL members Royal Dutch/Shell, Ford, Xerox, Harley-Davidson, Detroit-Edison, Visteon, and the World Bank, along with new members Nike and Northeast Utilities. The group's current projects—on product development, innovation across complex supply networks, new energy sources, and leadership and cultural change—are described at http://www.SoLonline.org and are being studied through a National Science Foundation grant.