New War on Waste

By Eric Roston/Charlottesville, Va.

By profession, William McDonough is an architect and industrial designer. But by temperament and ambition, he is much more: a visionary, a prophet, even a zealot. In his new book, Cradle to Cradle, written with business partner Michael Braungart, McDonough dreams of a world without waste, a world without poisons, a world in which all materials are continuously recycled. He thinks sneakers, for example, should have biodegradable soles so that whatever material scrapes off onto the ground can be readily consumed by worms and microbes. The ultimate goal is to create a sustainable world, enabling humans to "love the children of all species--not just our own--for all time."

Before you dismiss McDonough as a lunatic, consider this: he has already won over a big-time convert by the name of Bill Ford. When the chairman of Ford Motor Co. decided to rebuild the company's historic River Rouge complex, destroyed by an explosion in 1999, he hired McDonough, who is based in Charlottesville, Va., as a sustainability expert to help make the new plant outside Detroit as environmentally friendly as possible. The result, which is scheduled to open next year, may not fulfill all McDonough's ideals, but it will be the greenest car factory ever. Thirty-five skylights will illuminate the 2.1 million-sq.-ft. area to save money on lighting. Sedum, an ivy-like plant, will cover the roof and help insulate the building while absorbing storm water, providing a natural habitat--and saving the company an estimated $35 million in construction costs and much more from lower energy use. Just as Henry Ford was the father of the Model T and modern mass production, his great-great-grandson says he wants to be a father of nothing less than a new industrial revolution.

There was a time not too long ago when Big Business tended simply to fight environmentalists, arguing that many measures to keep things clean were at best half baked and posed a threat to profitability. But as public concern about the environment grows, there is an increasing acceptance in executive suites that industrial reform can be good for the environment and good for profits. Efficient use of energy and materials and a reduction in waste can help the bottom line. Everything that is recycled reduces the expense of buying raw materials.

Could there ever be a system that is perfectly efficient? Actually, yes. It already exists, as old as the planet. We call it nature. In the natural system, there is no waste, only food for the decomposers. And the same materials have been recycled for billions of years. The new industrial revolution is all about absorbing the lessons we should have learned from nature long ago.

As revolutions go, this one has a large number of theorists and manifestos. Besides McDonough and Braungart's Cradle to Cradle, there is Natural Capitalism by Paul Hawken (founder of gardening supplier Smith & Hawken), Amory Lovins and L. Hunter Lovins; it makes a strong case that natural resources should be just as valued a part of our capital base as factories and machines. Biomimicry by Janine Benyus encourages companies to look to nature for possible design techniques. She cites San Francisco's Iridigm, whose flat screens for mobile electronic devices produce color in a manner similar to the way microscopic structures create color on butterflies' wings. And in The New Economy of Nature, Gretchen C. Daily and Katherine Ellison tell the stories of innovators trying to "make conservation profitable," including financier Richard Sandor (see box).

The new ideas are taking root worldwide. BASF Corp.'s carpet-fiber unit has developed a recyclable nylon that makes it possible to reconstitute old carpets into new. Swiss semiconductor maker ST Microelectronics has saved more than $60 million by cutting its energy usage and more than $20 million by reducing water consumption below baselines set in 1994--a program initiated after CEO Pasquale Pistorio's son Carmelo questioned his father's environmental stewardship. The company issued a "decalogue"--or 10 commandments--of environmental goals and empowered its divisions to become creative. The responses include using solar power and finding ways to recycle water.

Natural materials are all the rage. Cargill Dow, a joint venture by the agricultural giant (Cargill) and the chemical company (Dow), is manufacturing biodegradable and recyclable plastics from corn sugars. The company already makes environmentally friendly packaging for Sony products and pillow stuffing for Pacific Coast Feather. "Our fate is tied to how many products we can make from renewable resources," says chief technology officer Patrick Gruber. The company opened a $300 million facility in Blair, Neb., last year that makes packaging material, plastic cups and film wraps.

For companies that want to become greener--whether out of a sense of duty, to ward off damaging protests or just to make more money--there are organizations that can help. McDonald's, Home Depot, Nike and Starbucks have enlisted Natural Step, a San Francisco nonprofit, to help them understand their environmental and social impact, envision what their company would look like if it were sustainable and then realize that vision with new processes and materials. McDonald's, which has had a relationship with the advocacy group Environmental Defense for 13 years, this year stopped buying chicken treated with Cipro-like antibiotics. And, yes, Nike has begun stripping toxins from its shoes, which makes McDonough happy. You can now buy baseball cleats free of polyvinyl chloride.

The key to sustainability is making the market work for the environment instead of against it. For too long, capitalism has not put a proper value on the services nature provides, such as water supply and climate control, nor has it accurately measured the costs of the damage industry can do to the environment. But putting a larger price tag on pollution can quickly alter behavior. Anticipating the global movement to combat climate change, BP, the British oil giant, decided in 1997 to reduce its carbon emissions to 10% below 1990 levels by the year 2010. To reach that goal, the company let each of its units trade the right to emit specified amounts of carbon (a system similar to one that may be set up among nations under the Kyoto Protocol). This has allowed managers to use their internal market incentives to cut carbon emissions as deeply and efficiently as possible. Result: BP hit its target this year--seven years ahead of schedule--at no net cost to the company.

More than 100 corporations, including General Motors, Bristol-Myers Squibb and British Airways, now release data on their environmental and social performance according to protocols spelled out by the Global Reporting Initiative, a collaboration of nonprofit organizations and companies based in Boston. In the 2001 report by Baxter International, a Deerfield, Ill., medical-products maker, the company detailed how reductions in energy and water use and improved waste disposal and recycling over the past seven years cut costs by $53 million last year. That savings amounted to nearly 10% of its 2001 net income.

For investors who want independent analysis of corporate environmental performance, Innovest, a research firm based in New York City, assigns bond-style ratings. A report on the automotive industry gave high marks (AAA) to Toyota and Honda for their work in setting environmental standards for their factories--and their suppliers. Porsche (CCC) trailed all 13 competitors that Innovest studied, partly because of a poor showing on fuel-economy standards.

Innovest's ratings are of particular interest to a growing class of fund managers, including pioneers Amy Domini of Domini Social Investments and Reto Ringger of Sustainable Asset Management, who limit their investments to companies that meet certain environmental and social criteria. Assets in U.S. socially screened funds surpassed $2 trillion last year, a 36% increase since 1999 and a rate of growth 1.5 times as fast as the average of other professionally managed U.S. funds, according to a Social Investment Forum study.

Other independent groups are emerging to certify that companies' boasts about particular products are true. "It's getting more and more complicated to 'greenwash,'" says Reid Lifset, a faculty member at the Yale School of Forestry and Environmental Studies. The Environmental Protection Agency's "Energy Star" label for efficient consumer appliances is the best-known program. Beyond that, Green-e, based in San Francisco, certifies energy that comes from such renewable sources as sun or wind, while Green Seal, of Washington, blesses various consumer products from air conditioners to paper towels.

Ironically, corporate self-interest may become a force for environmental protection. "This is not philanthropy," says Bjorn Stigson, president of the World Business Council for Sustainable Development, with 160 corporate members in 30 countries. "Companies that don't get it will lose their competitiveness."

For those who want to "get it," the new visionaries are always ready to help. Rick Haythornthwaite, CEO of Britain's Invensys, an industrial giant reborn this spring as an energy and production management firm, read Natural Capitalism and invited Amory Lovins to speak at the company. To an audience of 400 managers, Lovins, a globetrotting consultant who makes his home at the Rocky Mountain Institute in Colorado, posed questions the group had never heard. How do spiders spin threads stronger than Kevlar but without factories? How might Exxon officials have cleaned up Alaska after the Valdez disaster if they had known that hair absorbs oil better than anything else? Says Haythornthwaite: "He had us eating out of the palm of his hand."

The new industrial order envisioned by revolutionaries such as William McDonough and Amory Lovins is still in an early phase. But with each manager they convince, each CEO they mesmerize, their powerful ideas come one step closer to transforming the world.