Threats if you don’t pursue sustainability

 In addition to the benefits of pursuing sustainability, there are also threats you can avoid. Organizations that choose to ignore this worldwide trend may put themselves at unnecessary risk. In 2007 alone, if you understood sustainability, you might have foreseen:

 • The rise in oil prices;

• The increase in grain prices;

• The backlash against plastic bags and water bottles;

• The rise of investment in the clean-tech sector; and

• The embarrassing series of Mattel recalls.

 It’s tricky to predict the timing but the trajectory is clear. This helps you prepare for future challenges and you can be more confident that capital expenditures will make sense over the long term. For example, a 2001 Toyota Prius is worth almost its original cost (especially after tax incentives) seven years later, maintaining its value much better than the typical vehicle. The longer the intended lifetime of the capital investment, the more important it is to know where the world is headed.

Climatologists predict that climate change will bring bigger, more violent storms and paradoxically severe droughts, something the people in the southern states in the US can appreciate after counting their water supply in weeks this year.

The jump in oil prices has been predicted by Hubbert’s Curve for decades, although the precise date for peaking oil supplies is still in dispute. Looking forward, effects of climate change (environmental and social), persistent toxins and emerging pollutants, invasive species, peaking fossil fuel supplies and water availability are at the top of our list of concerns.

 Prudent leaders factor these risks into their plans

 The threats to you may not be as dramatic as the ones described above. Here are some of the more everyday problems that sustainability can help you avoid.

 Liability for pollutants

Even though smokestack emissions and waste-pipe discharges have long been the targets of environmental regulations, organizations are still often caught off guard every time a new substance is added to the list of regulated substances. Smart companies anticipate these hits by taking a proactive look at the raw materials they use in their processes. If it goes into your product, likely as not at least some of it will end up inyour waste stream. Increasing attention to waste lead, for example, caught most of the members of the metal casting industry unprepared. One small metal caster in Oregon, Barr Casting, anticipated the problem and developed a casting process that didn’t use lead. When the owner of a now-defunct competitor discovered what Barr had done, he moaned,

 ‘Why didn’t my engineer tell me about this?’

 Liability is also beginning to extend beyond the factory gates. More and more industries are surprised at how far their liability for toxins and other damaging substances extends. The current trend toward product stewardship or producer responsibility increasingly holds manufacturers responsible for the impacts of their products for their entire life cycle. Electronics companies, for example, are scrambling to design end-of-life options for their products in anticipation of state and national regulations that are likely to prohibit the disposal of computers, televisions and cell phones.

 Supply problems with raw materials and energy

 Sustainability helps you to foresee potential future supply and demand problems. Wouldn’t you like to know in advance if a material or resource is likely to become much more expensive or unavailable? When the energy crisis of the 1990s hit the US Pacific northwest, it resulted in closing down the area’s entire aluminum industry, which had become dependent upon cheap hydropower. In the half century they had been around, many other industries had undergone major transformations in process efficiencies, but the aluminum industry was still melting rocks with electricity. Had they been better able to foresee the future of energy, they might still be operating.

 Attacks on your image

 Sustainability helps you to understand the expectations of all your stakeholders. It can take years to recover from one well-publicized mistake or omission. In 2007, Mattel had to recall millions of toys due to lax standards in China, affecting both the company and the country. It takes a long time to build up a positive image and an instant to destroy it. And the public’s memory, while fickle, can be enduring. I recall hearing an eight-year-old boy respond to the mention of an oil company with the question, ‘Exxon, you mean like Valdez?’ He wasn’t even alive at the time of the Valdez oil spill but it was the first word he associated with the company. On the other hand, taking a leadership role can build goodwill that can help you when accidents happen. BP, for example, got off easy when the media reported they’deglected to maintain their Alaskan pipes, causing a spill. They also, the prior year, had a refinery explosion. The public response would have been uproar had it been Exxon and not BP! Instead, the goodwill BP had developed for being the first oil company to acknowledge climate change helped them manage these public relations problems.

 Legal risks

 Many companies have been held responsible for actions that were legal at the time but later determined to be harmful. General Electric is fighting litigation intended to make them pay to clean up toxic chemicals they dumped into the Hudson River. So staying within the bounds of current legal practice is no protection. Sustainability can help you assess your environmental legal risk, taking into account issues beyond compliance with current environmental regulations.

 Bad-mouthing of your product

As others become more aware of sustainability, certain materials tend to get labeled as ‘good’ or ‘bad’. Polyvinyl chloride (PVC) manufacturers have been on the defensive since Greenpeace labeled it as the worst plastic. A number of manufacturers, Nike included, have committed to phasing out PVC from their products. Retailers like Target are also phasing out products made from it. Sustainability can help you uncover your product’s weaknesses so that you can overcome them before Greenpeace shows up on your doorstep or the media runs a story.

 Being closed out of certain markets

Sustainability is driving the marketplace in many countries. The European Union, which is banning certain toxic chemicals, turned away an entire shipment of Sony Play stations because of too much cadmium in one of the parts. Agricultural sustainability certification schemes are popping up, closing the market to farmers who aren’t yet certified.