Earth, Inc.: Five business lessons companies can learn from the environment

Business loves the environment.

Does that sentence read at odds to you? It doesn't to Gregory Unruh.

The author of the book Earth, Inc., Unruh says the interests of environmentalists and businesses are not only aligned -- in fact, companies can learn from nature's ecosystem to better their businesses.

I spoke with Unruh last month about how companies can be more sustainable, ecologically responsible and financially profitable in one fell swoop. Here's what he had to say.

SmartPlanet: What compelled you to write your book?

GU: I grew up in Northern California and was always interested in the environment -- I studied environmental engineering and earth sciences [in college].

I also worked as a consultant. Really, what we did was remediation: go to contaminated industrial facilities and try to clean up. I got disillusioned real quick because we were always cleaning up the problem, not avoiding it in the first place.

I left that industry in 1993 and went back to graduate school. I was interested in these larger questions: how do you redesign business and manufacturing? I studied industrial ecology...what about the metaphor of industry as ecosystems?

In 2005, I created the [IE Business School's] Center for Eco-Intelligent Management with [architect, designer and Cradle to Cradle author] Bill McDonough -- a name around closed-loop and cradle-to-cradle practices.

SmartPlanet: Why are business and environmentalism compatible?

GU: For businesses, sustainability equals profitability. If it doesn't sustain itself, it doesn't pay off in the long run. The principles that allow businesses to do this successfully are the same that allow the biosphere to do so.

We only really have one model of a sustainable manufacturing system, and that's the biosphere. We have to figure out how nature does it and translate that to business.

When did we take the off ramp from how the environment works? It really started with the industrial revolution, when we tapped fossil energy and allowed us to disconnect from nature. That's where we sort of got off track.

We're kind of shortsighted -- our lifetimes are as long as we can probably plan for, and that's not long enough.

SmartPlanet: Sounds reasonable. How do you convince corporate executives to change?

GU: There are enough people now that are interested that I don't need to convince.

There are a couple of tipping points. In terms of social responsibility and recognition that companies' efforts went beyond the traditional social contract, I would pick 1995 when that became clear to a number of companies. It was the first year that any company published a corporate social responsibility report -- and that was The Body Shop. That was a shift.

Another one was when London Greenpeace used Mosaic, the web browser, to make their court case against McDonald's. That was sort of the indicator of how the Internet had changed transparency, and how that power changed.

The big one was Shell. That was when they had problems with feldspar, but also in Nigeria, where they were partnered with its kleptocratic, brutal government. That forced Shell to dramatically rethink what it was doing. 1995 was a series of events that crystallized [the fact] that the ground had shifted.

As for sustainability, it was more recent -- the combined concern about climate and the run-up in oil prices and the potential limits of oil production. All of those factors conspired to put the green environmental agenda as beyond a hippie-dippy thing and core to a corporation's agenda.

Companies began to compete on sustainability, and that creates incredible pressure in the industry to get on board. That's happened in industry after industry.

SmartPlanet: In your book, you list something called the "biosphere rules." Tell me about them.

GU: They are the rules that help explain the sustainability of the biosphere. The ability of the biosphere to manufacture huge quantities of products -- every little thing we see. It's the principles that allow it to do so and constantly innovate and theoretically improve on the performance of these organisms and adapt.

• The first one is materials parsimony. It's not less is more, it's...nature builds everything out of a handful of materials. Sort of like Legos. It's a fundamental principle that makes value cycling -- taking materials and recycling them from one high-value product to the next.
• The second is power autonomy.
• The third is value cycling -- taking materials back for a future production run.
  
• The fourth is sustainable product platforms. Once you've selected your materials and you have your value-cycling manufacturing process...here's an example: Patagonia. They developed a polyester and their first product was long underwear. In order to make that profitable, you need to scale. But it's underwear. The better way to do it is to use that as a platform to build a wider range of products, so Patagonia has systematically began to manufacture hiking shorts, parkas, polos [from the same polyester material]. You're using the platform to produce a whole bunch of products. And that generates the economies of scale that drive profits.
• The fifth is function over form.

Nature has used one platform. The principles are the same for a bush and a blackbird. Nature shows us that you don't have to be limited. You can imagine in the future where everything in your house is made from two or three different platforms.

SmartPlanet: And laptops? They're awfully bad for the environment.

GU: Except for laptops!

SmartPlanet: Let's talk about the business ecosystem and how it can support cradle to cradle practices. That would, in essence, require businesses to be completely open with the partners and clients they do business with. Is this even possible?

GU: I studied companies trying to do cradle-to-cradle. What are the steps to take? You need standards -- agreements about the types of materials that you're going to be using, selected for their ability to be up-cycled.

You can either do it with complete transparency -- the easiest way to do that is vertically integrate, such as Shaw Manufacturing -- and the other is you set up agreed standards.

There are advantages in not being transparent and standard -- people have to buy your phone plug, for example. There are conflicting business interests that makes things difficult.

What companies have found, especially global brands, is that they have to keep as strict or stricter global regulation. They actually become sort of a global EPA in every jurisdiction in which they operate. They have a code of conduct.

A lot of this stuff is done in design up front. You decide what materials you're doing to manufacture your product out of. Those become specifications. The bigger question is [if] it makes sense to manufacture in China when you sell a product to someone, and in sale, you transfer ownership to that person and you don't care what they do with it -- throw it in a landfill, et cetera.

When you value cycle, you want those materials back for your future production run. Take industrial carpet manufacturer Interface. They make carpet tiles for offices and they're designed out of two basic materials -- the fuzzy soft top and the hard stuff on the bottom. Interface recovers them and passes them through a machine to separate the two layers and recycle it.

It's not just about physically doing it, but doing it in a way that's economic. They applied the biosphere rules before they started producing. Now they can forget about sustainability -- they embed it and forget it.

SmartPlanet: Who's doing things right? Who isn't?

GU: If you want to start out with one of the most challenging product classes to apply the biosphere rules, you'd try electronics.

The first steps are, can we confine or narrow down the really complex multi-material, multi-component component? Can we make that into a small module, and sort of apply the biosphere materials to the rest of the thing -- the casing, the screen -- so that when the computer comes back to us, we can separate out the integrated complex component into one pile with a strategy and the other mundane parts used as part of a value cycle?

Divide up the product into parts.

[In Earth, Inc.] I talk about two types of value cycling. One is "deep loop" -- where to take the plastic casing and put it back into your manufacturing process -- and "shallow loop," which is basically manufacturing and refurbishment.

You just have to point people in the right direction and give them permission to innovate around sustainability. Designers get really excited about this stuff. They want their design to have a positive impact on the world. There's a lot to that.

SmartPlanet: How will you get there?

GU: It has to do with the nature of organizations and the incentives created by the market.

Organizations by nature tend to be conservative. "We're able to make changes on the margin, but right now, our system works so well that if I make a 2 percent change here, OK. But if you're asking me to do something substantially different, that's a big change."

That's why I wrote the biosphere rules as steps. Even if you don't value-cycle or anything else, that first step sets you up for future possibilities and, in many cases, saves you money. The inertia in organizations is pretty high.

Follow Greg Unruh on Twitter.

This post was originally published on Smartplanet.com