The UN Sustainable Development Goals

One year ago, “The Age of Sustainable Development”, a series of three posts to this blog, sought an operational definition of “Sustainable Development” as that term applies to smaller manufacturers. That is, a definition that answers the question: “what characteristics and actions can be expected to enable smaller manufacturing firms to grow and prosper indefinitely, within context of a sustainable world?” (A sustainable world does not self-destruct ecologically, socially or economically.)

UN FlagThe third of those posts explores the United Nations’ 17 Sustainable Development Goals. The United Nations’ Goals serve to remind us of just how broad the scope of doing business is today. Finding a way to keep in meaningful contact with the multitude of changes occurring in globalized commerce is a major management challenge for smaller manufacturers. The following is extracted from that post:


U.N. Sustainable Development Goals

Earlier posts in this series of posts looked at two routes to an actionable definition of “Sustainable Development”. The first was the original (1987) Bruntland Commission single sentence definition: “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” The second approach was to take the entire contents of Dr. Jeffrey Sachs’ “The Age of Sustainable Development” – the on-line university level course (a “MOOC”), along with the 500+ page textbook – as an operational definition.

Clearly, a single sentence definition isn’t specific enough, while a book plus a MOOC is a bit much. A third route involves the United Nations’ Sustainable Development Goals. By examining these global goals, smaller manufacturers can identify specific, actionable areas that fit with their business and those it serves. From those specifics, each firm can construct their own operational definition – a definition that reflects and contributes to global initiatives.

The U.N. adopted an Official Agenda for Sustainable Development in September of this year (2015). The Official Agenda includes 17 Sustainable Development Goals, to be achieved by 2030. The Goals are sweeping, general statements, each reinforced by a number of more specific Targets. Sustainable Development Goal #1, along with its associated Targets provides an example:

Goal #1: End poverty in all of its forms everywhere

Target 1.1: By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day

Target 1.2: By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions

Target 1.3: Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable

Target 1.4: By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance

Target 1.5: By 2030, build the resilience of the poor and those in vulnerable situations and reduce their exposure and vulnerability to climate-related extreme events and other economic, social and environmental shocks and disasters

 Target 1a: Ensure significant mobilization of resources from a variety of sources, including through enhanced development cooperation, in order to provide adequate and predictable means for developing countries, in particular least developed countries, to implement programmes and policies to end poverty in all its dimensions

Target 1b: Create sound policy frameworks at the national, regional and international levels, based on pro-poor and gender-sensitive development strategies, to support accelerated investment in poverty eradication actions

Before you throw up your hands and blow this off, consider that Goal #1 and its targets affect about 2 billion people. Any real global effort toward achieving this will involve huge opportunities in agricultural products, distribution methods, irrigation and other water related products, along with a multitude of other areas. Somebody will supply each piece of all that is required. Some will participate directly, others as suppliers to other manufacturers. So, many firms will do some business and help make the world a better place by doing so.

The remaining 16 Goals and the 162 Targets associated with them are just as ambitious as Goal #1. Rather than list them here, you can visit original list on the United Nations’ Sustainable Development website:

https://sustainabledevelopment.un.org/topics/sustainabledevelopmentgoals

For Smaller Manufacturers

>> Each of these Goals and Targets deserve careful thought as to how they fit with your firm’s business model and web of relationships. The 17 Goals, taken together, are so broad that there has to be opportunities for just about anybody who can make anything. Personally, I don’t believe that world poverty will be eliminated within the coming 15 years. But there may well be significant action toward that end. China’s progress over the last few decades demonstrates that major improvement is possible. Helping even a fraction of 2 billion people out of abject poverty is a very good thing.

>> The U.N. Goals signify that the U.N. has decided to combine its (human) economic development efforts with Sustainable Development. That means the U.N.’s current idea of Sustainable Development has a much different focus from the original Bruntland Commission definition. Bruntland emphasized the longer term (inter-generational) relationship between economic development (meaning industrial development) and environmental impact. The new U.N. focus is shorter term and emphasizes human and fairness matters. The U.N. hasn’t forgotten the environment – just much more emphasis on people issues.


Chuck - VancouverThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.

U.N. Flag image licensed via www.dreamstime.com


Links to the three posts comprising the “Age of Sustainable Development” series:

http://jerasustainabledevelopment.com/2015/12/05/the-age-of-sustainable-development-part-1/

http://jerasustainabledevelopment.com/2015/12/12/the-age-of-sustainable-development-part-2/

http://jerasustainabledevelopment.com/2015/12/19/the-age-of-sustainable-development-part-3/

 

The Triple Bottom Line in Context

The Triple Bottom Line

Sustainability guru John Elkington’s concept of a Triple Bottom Line provides the most used framework for discussing Sustainability. Elkington proposed that businesses should measure and report Return on Assets Deployed information for natural (ecological) assets deployed and for social assets deployed, as well as the usual financial assets (capital) deployed figures. The three “bottom lines” represent the business’s net effects on planet, people and profit. This is obviously a more comprehensive view. Perhaps more significant is the implication that the business should show positive results which indicate enhancement to the environment and society, beyond doing no harm.

Triple Bottom LineAndrew Savitz and Karl Weber’s book, The Triple Bottom Line, extends Elkington’s idea by representing the three “bottom lines” as intersecting circles. The areas of intersection are termed “sweet spots”, meaning synergistic opportunities. For example, when power utilization efficiency is improved, profits are improved due to lower power cost, while the environment and humanity benefit through reduced carbon dioxide emissions. So, improvements in the planet and people “bottom lines” are not necessarily at the expense of the profit “bottom line”. [1]

A Systematic Approach

Approaching the Triple Bottom Line through systematic business planning appears to me to be a clearer, more pragmatic approach. By “systematic business planning” I mean integrating all three aspects of the Triple Bottom Line: in definition of the business (mission statement, vision statement, values statement), in formulating goals and objectives, and in establishing and executing the business processes necessary to successfully pursue those goals and objectives. The sequence is clear enough:

Values to Results

In this sense, Triple Bottom Line involves an increased scope of management awareness that includes attention to the natural world and humanity, in lock step with attention to financial realities.

The rub lies in setting (and achieving) sufficiently aggressive goals and objectives that express timely progress toward achievement of the mission, vision and values that define your business. Those goals and objectives are unique to each organization, in context of the organization and the business climate that exists as they are set and pursued. Accordingly, there is no ready package of goals and objectives – you have to figure them out for yourself. However, you can look at the efforts of others to help you find your own way.

Here are a few starting places:

Fetzer Winery – Fetzer is a medium sized California winery that has Triple Bottom Line Sustainability in its DNA. Start with Fetzer’s website.[2]

Ben & Jerry’s – Yep. The Vermont – based premium ice cream company founded by two hippies. Try Ben & Jerry’s website [3], especially the tabs on values.  Also, Ben & Jerry’s – A Case Study in Sustainability [4],an earlier post to this blog, may be useful.

Hershey Company – The maker of Hershey Bars began as a fair example of an early 20th century mill town, and then morphed into an extraordinary example of what a successful business can do for its employees and their neighbors. Today, more than 70 years after the death of Hershey’s extraordinary founder, Hershey’s continues as a successful multi-billion dollar company that still focuses on its roots. Start with the Wikipedia wiki on The Hershey Company.

Interface Corporation – Interface makes carpets, primarily for commercial buildings. Interface provides an example of what can happen when a manufacturing company thoroughly embraces Sustainability, from its expressed mission and vision all the way through business results. Start with Whither Sustainability? [5], a recent post to this blog.

Waste Management – Waste Management changed its business model from a business based on collecting refuse and carrying it to landfill, to one based on profiting from the refuse it collects. Both Waste Management and Interface are examples of firms that fundamentally changed the basis of their business to embrace Sustainability. See Waste Management Corporation – A Case Study in Sustainability,[6] this blog.

The United Nations Sustainable Development Goals – The UN recently established a set of 17 goals for the world to achieve by 2030. The UN’s set of goals provides insight as to just how broad Sustainability is. Aligning your Triple Bottom Line goals and objectives with the UN goals may be a good idea. Start with The Age of Sustainable Development – Part 3 [7] this blog . Alternatively, just google “UN Sustainable Development Goals”.


Again, your goals and objectives are unique to your business and the business context within which it exists. The examples cited above are extreme cases which may be useful to stimulate your thinking.

Chuck in FranceThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.

Triple Bottom Line graphic credit – creative commons via Wikipedia


[1] The preceding two paragraphs are borrowed from Double Take on the Triple Bottom Line, an earlier post to this blog. http://jerasustainabledevelopment.com/2012/10/04/double-take-on-the-triple-bottom-line/

[2] www.fetzer.com

[3] www.benjerry.com

[4] http://jerasustainabledevelopment.com/2014/11/01/ben-jerrys-a-case-study-in-sustainability/

[5] http://jerasustainabledevelopment.com/2016/06/20/whither-sustainability/

[6] http://jerasustainabledevelopment.com/2015/01/30/waste-management-corp-a-case-study-in-sustainability/

[7] http://jerasustainabledevelopment.com/2015/12/19/the-age-of-sustainable-development-part-3/

 

The Triple Bottom Line – Up Close and Personal

3P GraphicThe Triple Bottom Line model for Sustainability emphasizes the interdependence of the natural world, productive industry (which includes manufacturing, mining and agriculture) and human society. “Triple Bottom Line” sounds almost trite when read or said. However, when I look out my bedroom window, I have a vivid example of that interdependence literally right in front of me — the Verde River Green Zone.

The Edge of the Wild, a post to this blog from nearly two years ago, takes an up close and personal look at the Triple Bottom Line. – C.H.


The Edge of the Wild (from 9 December 2014)

The Verde River and Its Green Zone

My house is on a bluff, above and overlooking the upper reaches of the Verde River in the high desert of central Arizona. The Verde isn’t very big. However, its source is on the Mogollon Rim (a long stretch of stark cliffs marking the edge of the Colorado Plateau), fed from the 12,600’+ heights of the San Francisco Peaks. So, unlike many rivers and streams in Arizona, it rather reliably has water in it. (About 90% of all streams in Arizona are “ephemeral”, meaning they are dry except after heavy rains – which are rare.) Not surprisingly, the Verde is Arizona’s only federally designated Wild and Scenic River.

Sycamore Canyon RailwayThe Verde supports a narrow riparian green zone, typically spanning a hundred yards or so. The green zone, with its trees and foliage, stands in sharp contrast to the rocks and scrub of the adjacent desert. Riparian zones are quite rare in Arizona, constituting only about 0.4% of the land. Development within the riparian zone is hindered, since almost all of the land within the zone is subject to flash floods. Also, much of the land adjoining the river is within national forests, or is otherwise public property.

In Arizona, a few, thin riparian zones support an abundance of wildlife – coyote, javelin, waterfowl, eagles, hawks, hummingbirds and much more, including a significant number of endangered species. Riparian zones, to beg the obvious, are critical to biodiversity in arid Arizona.[1]

Little Daisy

Arizona is nicknamed “The Copper State”. The Little Daisy mine, extensively developed just in time to supply copper for the First World War, had a lot to do with that. The Little Daisy is on the slope of Mingus Mountain. Copper ore was moved down the mountain to be processed and smelted near Clarkdale, on the banks of the Verde. Mine tailings went along with the ore.[2]

There are a fair number of photographs of copper mining and refining operations here, many from a century ago. Suffice it to say that early 20th century copper mining was an environmental calamity.

Tuzigoot

Tuzigoot National MonumentTuzigoot National Monument stands near the Verde, about two miles downriver from Clarkdale. Tuzigoot is an archeological site where ruins from the Sinaguan Native American culture have been unearthed and partially reconstructed. The Sinaguan culture dates from about 550 C.E. – 1425 C.E. There are several more unexcavated sites like Tuzigoot along the Verde, including one about a quarter of a mile downriver from my house.[3]

The Sinaguan sites along the Verde were likely abandoned around 1200 C.E. The reason the sites were vacated is not clear. A period of severe drought is a reasonable guess.

Getting to the Point

This blog is about Sustainability. This post offers three examples, all within a few miles of my home that help clarify what Sustainability, in the Triple Bottom Line sense, is all about.

The Verde and its riparian zone >> I like to think of Common Wealth, that is, of worth held mutually by the inhabitants of some place or nation – or by humanity in general. This is a form of mutual inheritance that the current generation holds in trust for future generations. Each generation is entitled to the fruits of the Common Wealth, in return for protecting and extending the orchard.

Mining operations >> Early 20th century mining operations placed enormous stress on the environment, including waters like the Verde. The photographs are really striking. And the Verde, then as now, is a major water source for Phoenix, over a hundred miles downstream. Containing the effects of mining and industrial operations is a primary management responsibility, ethically as well as legally.

The Sinaguan people >> Apparently, the Sinaguan people lived along the Verde for several centuries. Then they left. The reason for their departure may well have been a collapse of the natural environment they depended on due to a prolonged drought.

This is a rather vivid illustration of the dependence of peoples and cultures on the natural environment. It applies to everybody. And it applies to human – generated pressures on the environment, as well as natural cyclic phenomena. The natural environment is your business – and your business’s business.


Chuck - Red RocksThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.


[1] For more on riparian green zones, see http://arizonaexperience.org/land/riparian-areas

[2] For more on the Little daisy mine and early 20th century copper mining, see http://azstateparks.com/Parks/JERO/

[3] “Sinagua” means “without water”. For more on the Sinaguan culture, see http://en.wikipedia.org/wiki/Sinagua

 

“The Age of Sustainable Development” – Part 3

This is the last of a three post series seeking an operational definition of “Sustainable Development” as that term applies to smaller manufacturers. That is, a definition that answers the question: “what characteristics and actions can be expected to enable smaller manufacturing firms to grow and prosper indefinitely, within context of a sustainable world?” (A sustainable world does not self-destruct ecologically, socially or economically.)

U.N. Sustainable Development Goals

Part 2 of this series of posts looked at two routes to an actionable definition of “Sustainable Development”. The first was the original (1987) Bruntland Commission single sentence definition: “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” The second approach was to take the entire contents of Dr. Jeffrey Sachs’ “The Age of Sustainable Development” – the on-line university level course plus the 500+ page textbook – as an operational definition.

UN FlagClearly, a single sentence definition isn’t specific enough, while a book plus a MOOC is a bit much. A third route involves the United Nations’ Sustainable Development Goals. By examining these global goals, smaller manufacturers can identify specific, actionable areas that fit with their business and those it serves. From those specifics, each firm can construct their own operational definition – a definition that reflects and contributes to global initiatives.

The U.N. adopted an Official Agenda for Sustainable Development in September of this year (2015). The Official Agenda includes 17 Sustainable Development Goals, to be achieved by 2030. The Goals are sweeping, general statements, each reinforced by a number of more specific Targets. Sustainable Development Goal #1, along with its associated Targets provides an example:

Goal #1: End poverty in all of its forms everywhere

Target 1.1: By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day

Target 1.2: By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions

Target 1.3: Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable

Target 1.4: By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance

Target 1.5: By 2030, build the resilience of the poor and those in vulnerable situations and reduce their exposure and vulnerability to climate-related extreme events and other economic, social and environmental shocks and disasters

 Target 1a: Ensure significant mobilization of resources from a variety of sources, including through enhanced development cooperation, in order to provide adequate and predictable means for developing countries, in particular least developed countries, to implement programmes and policies to end poverty in all its dimensions

Target 1b: Create sound policy frameworks at the national, regional and international levels, based on pro-poor and gender-sensitive development strategies, to support accelerated investment in poverty eradication actions

Before you throw up your hands and blow this off, consider that Goal #1 and its targets affect about 2 billion people. Any real global effort toward achieving this will involve huge opportunities in agricultural products, distribution methods, irrigation and other water related products, along with a multitude of other areas. Somebody will supply each piece of all that is required. Some will participate directly, others as suppliers to other manufacturers. So, many firms will do some business and help make the world a better place by doing so.

The remaining 16 Goals and the 162 Targets associated with them are just as ambitious as Goal #1. Rather than list them here, you can visit original list on the United Nations’ Sustainable Development website:

https://sustainabledevelopment.un.org/topics/sustainabledevelopmentgoals

For Smaller Manufacturers

>> Each of these Goals and Targets deserve careful thought as to how they fit with your firm’s business model and web of relationships. The 17 Goals, taken together, are so broad that there has to be opportunities for just about anybody who can make anything. Personally, I don’t believe that world poverty will be eliminated within the coming 15 years. But there may well be significant action toward that end. China’s progress over the last few decades demonstrates that major improvement is possible. Helping even a fraction of 2 billion people out of abject poverty is a very good thing.

>> The United Nations’ Goals, along with Professor Sachs’ book and MOOC, serve to remind us of just how broad the scope of doing business is today. Finding a way to keep in meaningful contact with the multitude of changes occurring in globalized commerce is a major management challenge for smaller manufacturers.

3P Graphic>> The U.N. Goals signify that the U.N. has decided to combine its (human) economic development efforts with Sustainable Development. That means the U.N.’s current idea of Sustainable Development has a much different focus from the original Bruntland Commission definition. Bruntland emphasized the longer term (intergenerational) relationship between economic development (meaning industrial development) and environmental impact. The new U.N. focus is shorter term and emphasizes human and fairness matters. The U.N. hasn’t forgotten the environment – just much more emphasis on people issues.

Thoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

P.S: Contact me when your organization is serious about surviving and prospering in this globalized 21st century. … CH

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.

U.N. Flag Image: www.dreamstime.com

 

Environmentalism and Sustainable Development – Take 2

This post is a revision and upcycle of Environmentalism and Sustainable Development from April 2014. It brings context and a much needed degree of clarity to the often convoluted discussion of Sustainability as applied to business.  – C.H.


Some Operational Definitions

>> EnvironmentalismThe active recognition that the natural world sustains all life on this planet, that the capacity of the natural world is limited, and that the natural world needs active protection from human abuse and degradation.

>> Sustainable DevelopmentEconomic activity that meets the needs of humanity today without sacrificing the needs of future generations.

>> SustainabilityA business philosophy through which firms pursue long-term viability and growth while actively respecting the needs of the natural world and of humanity.

The Big Picture

Here’s the big picture view of Sustainable Development: Consider the entire planet, all of humanity, and the entirety of world industry, [1] where “industry” includes manufacturing, mining, agriculture, forestry and any other activity the produces commercial “stuff” (goods, not services). Humanity currently consists of about 7 billion of us, expected to grow to around 9.5 billion by 2050. Many are very poor. Almost all want to become richer and consume more, which is happening. Something like 2.5 billion people are expected to rise above subsistence poverty over the same period. So, the global demand for commercial “stuff” continues to increase. Rapidly.

3P GraphicHowever, the earth isn’t getting any bigger. The sum total of natural resources isn’t growing either. Nor is the space available for waste disposal. The natural world is under duress, and increasing demand for “stuff” is going to increase that pressure. So, the ecological “bottom line” improves when detrimental impact on the natural world decreases, while the social “bottom line” improves when the welfare of humanity improves.

The latest report from the UN’s International Panel on Climate Change cites some of the dangers the natural world — and humanity with it — may face in the near future. However, should the poorer fraction of humanity continue to be denied improved access to economic benefits others enjoy, social and political upheavals may well cause as much, if not more misery than natural disasters.

It is for industry to resolve these two: to create value, in the form of the “stuff” that an increasing, and increasingly prosperous, population demands; while preserving or, better yet, enhancing the natural environment upon which humanity relies today and will continue to rely in the future. All the while, in doing so, earning sufficient profits to keep the improvement process going.

Why is this for industry to resolve? As entrepreneur and environmentalist Paul Hawken put it: “… not only is business and industry the principal instrument of global destruction, it is the only institution large enough, wealthy enough, and pervasive and powerful enough to lead humankind out of the mess we are making.” [2]

The Way Forward

What does all of this mean for actually operating a manufacturing business? It means that times have changed. Today, all manufacturers face a competitive environment driven by a confluence of potent change drivers which substantially increase the scope of issues to which managers must attend. Surviving, let alone thriving, in today’s competitive environment requires a fresh line of strategic thought that is aligned to present realities. Fortunately, such a line of strategic thought — Sustainability — does exist. More fortunately still, it works!

Ray Anderson writes about his company’s experience: [3]

“Here’s the thing: Sustainability has given my company a competitive edge in more ways than one. It has proven to be the most powerful marketplace differentiator I have known in my long career. Our costs are down, our profits are up, and are products are the best they have ever been. It has rewarded us with more positive visibility and goodwill among our customers than the slickest, most expensive advertising or marketing campaign could possibly have generated. And a strong environmental ethic has no equal for attracting and motivating good people, galvanizing them around a shared higher purpose, and giving them a powerful reason to join and stay.”

So, Environmentalism — actions to protect the natural world — is a necessary condition for assuring humanity’s future. Humanity, however, also demands continued economic development. For humanity to be sustainable — to persist indefinitely — economic development cannot continue to be at the expense of the natural world. Paul Hawken is right: the resolution depends on industry. However, “industry” is a collective term. The decision to pursue Sustainability lies with each individual unit of production. Remarkably, manufacturers that choose to pursue Sustainability find significant competitive advantages. The natural world wins — humanity wins — sustainable manufacturers win.


Chuck - FranceJera Sustainable Development exists as a resource for those that choose to pursue Sustainability.

Thoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

P.S: Contact me when your organization is serious about pursuing Sustainability … C.H.

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published on weekly.


[1] For more on this, see Double Take on the Triple Bottom Line, this blog: http://blog.jerasustainabledevelopment.com/2012/10/03/double-take-on-the-triple-bottom-line/

[2] From Ray Anderson, Confessions of a Radical Industrialist, St Martin’s Press (2009), page 14, citing Paul Hawken, The Ecology of Nature, Harper Business (1993, revised 2010).

[3] Ray Anderson, op cit, page 5.

 

Goal Setting for a Sustainable Future

Last week’s post, On Goals and Objectives, [i] suggested that a manufacturer’s financial goal reflect financial sustainability by emphasizing an adequate return on capital employed, taken across the business cycle. A business that is not sustainable in a financial sense ceases to exist, so it can’t be sustainable in any other sense either.

However, to be sustainable in a financial sense requires more than a stated goal, regardless of how well formulated that goal may be. For a firm to be sustainable in a financial sense – or any other sense – requires a sustainable environment in which it can operate. “Environment”, as used here, doesn’t just refer to the natural world. Rather, “environment” also includes a multiplicity of human aspects, such as the increasingly globalized economy, political factors such as regulation and taxation, educational resources and much, much more.

Triple Bottom Line – Jera Style

Sustainability guru John Elkington’s concept of a Triple Bottom Line provides the most frequently used framework for discussing Sustainability. Elkington’s core idea is that firms should foster return on environmental assets employed and return on social / cultural assets employed on an equal basis with fostering return on financial assets.

3P Diagram with captionThe graphic to the right presents the Triple Bottom Line somewhat differently. In this view, industry (manufacturing, along with agriculture and mining – businesses that produce tangible goods) is in symbiotic relationship with the natural world and with humanity. Industry draws resources from nature and uses nature as a sink for wastes. Industry draws talent, creativity and physical efforts from humanity, while humanity relies on industry for the “stuff” of sustenance and affluence, and for the ability to pay for it. Industry is in the middle, charged with interfacing and reconciling the other two. [ii]

It is clear that the natural world is under great pressure due to an increasing human population and from an increasing per capita affluence, both facilitated through industry. Manufacturing CEO Ray Anderson provides a remarkable insight (or, more properly, an epiphany):

“ According to Hawken, not only was business and industry the principle instrument of global destruction, it was also the only institution large enough, wealthy enough and pervasive and powerful enough to lead humankind out of the mess we were making.” [iii]

Mess indeed. But symbiosis works both ways. As a report from consulting firm McKinsey & Company’s global Sustainability & Resource Productivity practice [iv] points out, leading humanity out of the mess offers an extraordinary business opportunity. According to McKinsey, that opportunity includes  “by the mid – 2020s, there could be a dozen or more US$100+ billion global markets scaling up around the combination of resource productivity and clean tech.” Of course, each of those new global markets will have value chains stretching upstream and down, meaning opportunities for many, many businesses.

Back to Goals

On first thought, the Triple Bottom Line idea seems to suggest that at least three primary business goals are needed – one concerning the financial sustainability of the firm, a second regarding the firm’s relationship with the natural world, and a third pertaining to the firm’s interactions with humanity.

However, the symbiotic relationships among the components of the Triple Bottom Line suggest that it is practicable to formulate a single goal that embraces all three aspects of Sustainability.  A single clear, coherent goal, deployed throughout the organization through well aligned objectives can provide the focus needed to keep a complex system, which a manufacturing business is, operating effectively.

In 1995, Ray Anderson established such a goal for his billion dollar global carpet manufacturing firm. That goal was to prosper as a company while eliminating all waste discharges to landfill, eliminating pollution to air or water and taking nothing from the earth that the earth cannot renew rapidly and naturally – and to do so by 2020.

What happened? — Anderson put it this way:

“Here’s the thing: Sustainability has given my company a competitive edge in more ways than one. It has proven to be the most powerful market differentiator I have known in my long career. Our costs are down, our profits are up, and our products are the best they’ve ever been. It has rewarded us with more positive visibility and goodwill among our customers than the slickest, most expensive advertising campaign could possibly have generated. And a strong environmental ethic has no equal for attracting good people, galvanizing them around a shared higher purpose, and giving them powerful reason to join and to stay.” [v]

For Manufacturers of all Sizes

We have all learned that Quality is not a cost – consistent product quality reduces costs while retaining or even increasing revenues. Quality is not optional in today’s world. We have all learned that Safety is not a cost – remaining accident free reduces costs and frees human beings from painful injuries. Safety is not optional in today’s world. We all need to learn that Sustainability is not a cost – Sustainability is a better way to do business. A business that isn’t Sustainable simply doesn’t have a future.

Chuck - Red Rocks3Thoughtful comments and experience reports are always appreciated.

 

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

 

P.S: Contact me when your organization is serious about prospering in the 21st century … CH

 

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published weekly.


[i] On Goals and Objectives, this blog, http://jerasustainabledevelopment.com/2015/03/28/on-goals-and-objectives-2/

[ii] For more on the Triple Bottom Line, see Double Take on the Triple Bottom Line, this blog, http://jerasustainabledevelopment.com/2012/10/04/double-take-on-the-triple-bottom-line/

[iii] Ray Anderson, Confessions of a Radical Industrialist, St. Martin’s Press (2009), page 14. Anderson refers to Paul Hawken, The Ecology of Commerce, originally published in 1993, revised edition in 2010. Note: These two books, both written by entrepreneurial business CEOs, should be required reading for anyone interested in sustainable business.

[iv] Jeremy Oppenheim, How to make Green Growth the new normal, McKinsey & Company, Sustainability & Resource Productivity Practice (May 2013). Available at: http://mckinseyonsociety.com/make-green-growth-new-normal/

[v] Ray Anderson, Confessions of a Radical Industrialist, op cit, page 5

 

Jera, Pragmatism and Sustainability

Manufacturing in the 21st Century

Everyone watched, astonished, as the global price of petroleum plunged by more than half since May 2014. The global price of petroleum and its derivatives – especially fuels and process feedstocks – affects just about all manufacturers, some to a significant degree. The question before manufacturers right now is how to respond. Are today’s lower prices the new normal? Or will petroleum prices rebound toward last summer’s level? Is this a strategic matter? Or a welcome windfall (or transient disaster, depending on your business)?

This change in petroleum prices is neither the first nor the last seismic – scale change to affect manufacturers, especially since the millennium. Since then, tens of thousands of American factories have closed and millions of manufacturing jobs have disappeared as consequences of those changes and manufacturers’ reactions to those changes.

Four Change DriversThe causes for changes like the global petroleum price meltdown can be found in major disruptions in an expanded global business environment. “Global business environment” means the context within which manufacturers must operate. As context expands, so must the scope of management attention. The expansions in the context within which manufacturers must operate can be loosely categorized as Globalization, Sustainability, Technology and Demographics & Trends.

In short, managers need a significantly more zoomed out [1] scope of awareness in order to anticipate and adapt to a continuing barrage of changes.

Jera and Pragmatism

Jera Sustainable Development exists as management’s resource for determining and understanding those factors within the 21st century business context that are most likely to cause significant changes for smaller manufacturers. Zoomed out understanding of context allows managers to anticipate and to effectively adapt to change as it develops.

As management’s resource, Jera maintains an attitude of pragmatism, meaning a focus on desired outcomes – especially that of survival and prosperity within the realities of the 21st century. 3P Diagram with captionMany important 21st century issues are, unfortunately, emotionally charged, or, worse yet, substantially politicized. Pragmatism means respecting sincerely held positions while emphasizing actions most consistent with desired outcomes. Jera’s view of the Triple Bottom Line [2] provides a framework for structuring objectives – desired outcomes – that accommodate the zoomed in present and zoom out into the future.

What Jera Does

Weekly Essays: This blog now consists of over 180 essays on topics related to Globalization, Sustainability, Technology and Demographics & Trends, all from the perspective of smaller manufacturers. New essays will continue to be posted weekly, as they have since 2011.

Commentaries: Commentaries are longer, more in depth discussions on timely topics. The first of these will look at the rapidly changing petroleum industry as it affects smaller manufacturers. Look for it sometime in February. An editorial schedule for later commentaries is still under consideration.

A Book: There is a book on 21st century manufacturing currently in the works. More on this as work progresses.

Individual Firms: Jera is available to assist individual firms with specific concerns in their pursuit of sustainability in the 21st century.

S/W Ver: 97.04.30RThoughtful comments and suggestions are always appreciated.

 

…  Chuck Harrington

(Chuck@JeraSustainableDevelopment.com)


 

[1] Zooming Out means smoothly transitioning from a tight focus on a specific to a wide angle perspective, like a zoom lens on a camera. For more on zooming, see Zooming Again!, this blog,   http://jerasustainabledevelopment.com/2014/08/07/zooming-again/

[2] For more on Jera’s view of the Triple Bottom Line, see Double Take on the Triple Bottom Line, this blog, http://jerasustainabledevelopment.com/2012/10/04/double-take-on-the-triple-bottom-line/

 

Ben & Jerry’s – A Case Study in Sustainability

Artisanal Ice Cream

This post continues a series of Case Studies, intended as examples of what Sustainability means, in an operative sense, to some well known companies. It also continues a series on artisanal manufacturers – very small manufacturing firms that grow from a kitchen table, home studio, garage or, in this case, an old gas station.

Who Are Those Guys?

Ben & Jerry — Ben Cohen and Jerry Greenfield – are two guys from Brooklyn who became friends in middle school. Each went off to college, then messed around with a number of unfulfilling jobs. The 1970’s being what they were, the term “hippies” may have fit.

Ben & Jerry 2In good time, they got together and decided to go into business. Bagels were their first choice, but the equipment required seemed too pricy. On the strength of a correspondence course in making ice cream, they set out to open an ice cream cone scoop shop in some warm weather college town. They chose Burlington, Vermont. Burlington is a college town. Warm, I suppose, is relative term.[1]

The TBL in Vermont: the 7½ % Solution

In 1978, Ben and Jerry had $8,000 between them, and found somebody to lend them another $4,000. With that, they set opened a homemade ice cream scoop shop in what had been a gas station. Vermont is famous for cows: certainly a good place for cream. Vermont, as its name could be taken to imply, is also a good place for thinking Green. College students do like ice cream cones. The guys did have a flair for inventing quirky flavors that reflected college town culture. The marketing was just as quirky (like the world record ice cream sundae – 27,102 lbs.) Quirky, but authentic, and fun. The scoop shop worked. And then some. Within a few years, they added an ice cream production and bulk packaging facility, along with the beginnings of a franchising network.

Ben and Jerry were, and still are, very Green people. Vermont exudes environmental awareness and attention to healthy living. To that, the guys added a deep personal commitment to the social aspect of the Triple Bottom Line.[2] That commitment permeates the entire company. As Ben & Jerry’s website puts it:

“Ben & Jerry’s has always believed in linked prosperity — that all stakeholders connected to our business should prosper as we prosper, from those who produce the ingredients, to employees who make the product, to the communities in which the company operates.”

Here are some examples:

>> All employees, including those at entry level are paid a living wage, not minimum wage.

>> The company uses Fair Trade suppliers for imported ingredients (like cocoa for chocolate). Fair Trade ensures that small producers receive fair payment for the goods they produce.

>> Ben & Jerry’s earmarks 7½ % of earnings for support of social causes.

B Corporation

In 2010, Ben & Jerry’s became a wholly – owned subsidiary of Unilever,[3] the international consumer products giant. Unilever owns the stock, but Ben & Jerry’s continues to exist as an autonomous business unit under an independent Board of Directors.

The business exists as a B Corporation. A “B” corporation is a legal entity that, unlike other corporations, is not obligated to put shareholders’ interests ahead of the interests of other stakeholders. Twenty-seven states currently offer “B” incorporation, including Vermont and Delaware (where most corporations register). Fourteen additional states have “B” incorporation legislation in process.[4]

For Smaller Manufacturers

Ben & Jerry’s is a great example of a started-on-a-shoestring manufacturing business that has achieved notable success. Here are a few points that stand out for me:

>> Premium Pricing – From the beginning, Ben & Jerry’s has been able to price their products to yield an adequate margin. Without an adequate margin, profits are inadequate. Absent adequate profits, benefits to stakeholders (including stockholders) just can’t happen.

>> Differentiation – Ben & Jerry’s apparently recognizes that “product” refers to that collection of tangibles, services and perceptions that customers choose to buy. Ben & Jerry’s is more than good ice cream. The entire somewhat counter-cultural mystique wrapped up in a sense of humor is integral to the product – that is, integral to what it is that people choose to buy.[5]

I find it interesting that Ben & Jerry’s continues to exist as a distinct entity within Unilever. It seems that Unilever, big as Unilever is, understands and appreciates the importance of the perceptions component of Ben & Jerry’s product.

>> Seriously Green – The entire company and its culture could be labeled “seriously Green”[6]. Apparently, when done authentically, as Ben & Jerry’s does, it works. The authenticity, in my view, is critical.

Chuck - Sedona 5K - 2Thoughtful comments and experience reports are always appreciated.

…  Chuck Harrington

P.S: Contact me when your organization is serious about confronting the realities of 21st century manufacturing … CH

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published weekly.


[1] For more on Ben and Jerry, see the Wikipedia wiki at http://en.wikipedia.org/wiki/Ben_%26_Jerry%27s. For more on the business, see  http://www.benjerry.com/about-us

[2] TBL – Triple Bottom Line – is the most familiar means for discussing Sustainability in business. TBL balances profitability with the interests of the natural world and with the interests of humanity. For more on the Triple Bottom line, see Double Take on the Triple Bottom Line, this blog, http://jerasustainabledevelopment.com/2012/10/04/double-take-on-the-triple-bottom-line/

[3] Unilever is an international Sustainability leader. For more on Unilever and Sustainability, see Unilever – A Case Study in Sustainability, this blog, http://jerasustainabledevelopment.com/2014/07/17/unilever-a-case-study-in-sustainability/

[4] For more on B corporations, see http://www.bcorporation.net/

[5] Customers pay premium prices for products they perceive to offer better value than others. Case in point: Ben & Jerry’s ice cream, one pint packages were priced at $3.99 today at my usual local supermarket. One pint packages of the supermarket’s house brand of ice cream were priced at $1.49. Presumably, the cost to manufacture and distribute the house brand is less than $1.49. It is hard to image that Ben & Jerry’s manufacturing and distribution cost is much different – perhaps a few cents. That’s an extra ($3.99 – $1.49) = $2.50 margin dollars on each pint, based almost entirely on perceptions. Wow.

[6] There are people who maintain that dairy products, especially ice cream, aren’t even Green, let alone Seriously Green. As President Clinton didn’t say, “it depends on what you mean by ‘Green’”.

Walking the (Triple Bottom) Line

When I first heard the term “Triple Bottom Line” I said something like “uh-oh… another way for managers to claim a bonus without making their numbers.” Happily, I was wrong.

Sustainability guru John Elkington’s concept of a Triple Bottom Line provides the most used framework for discussing Sustainability. Elkington proposed that businesses should measure and report Return on Assets Deployed information for natural (ecological) assets deployed and for social assets deployed, as well as the usual financial assets (capital) deployed figures. The three “bottom lines” represent the business’s net effects on planet, people and profit. This is obviously a more comprehensive view. Perhaps more significant is the implication that the business should show positive results which indicate enhancement to the environment and society, beyond doing no harm.

Andrew Savitz and Karl Weber’s book, The Triple Bottom Line extends Elkington’s idea by representing the three “bottom lines” as intersecting circles. The areas of intersection are termed “sweet spots”, meaning synergetic opportunities. For example, when power efficiency is improved, profits are improved due to lower power cost, while the environment benefits through reduced carbon dioxide emissions. So, improvements in the planet and people “bottom lines” are not necessarily at the expense of the profit “bottom line”.

Triple Bottom Line

Let’s look at this using a zoom lens, like a camera.


First, zoom out to the wide screen macro view. Consider the entire planet, all of humanity, and the entirety of world industry, where “industry” includes manufacturing, mining, agriculture, forestry and any other activity the produces commercial “stuff” (goods, not services). Humanity currently consists of about 6.8 billion of us, expected to grow to 9.5 or 10 billion by 2050. Many are very poor. Almost all want to become richer and consume more, which is happening. So, the total demand for commercial “stuff” continues to increase.

However, the earth isn’t getting any bigger. The sum total of natural resources isn’t growing either. Nor is the space available for waste disposal. The natural world is under duress, and increasing demand for “stuff” is going to increase that pressure. So, the ecological “bottom line” improves when environmental impact decreases, while the social “bottom line” improves when the welfare of humanity improves.

It is for industry to resolve these two: to create value, in the form of the “stuff” that rising prosperity demands, while also enhancing the natural environment upon which humanity relies. And, in doing so, to earn sufficient profits to keep the improvement process going. That’s the big picture view of what Sustainable Development is all about.


Now, let’s zoom all the way in, to a micro view. Consider a smaller manufacturing firm striving to survive and prosper in a global economy. To improve all three “bottom lines” while also enjoying the benefits of doing so requires a well thought out plan of systematic actions, sustained over time. The Getting Started tab in the www.JeraSustainableDevelopment.com website provides the information you need to get going.

Jera Logo white with caption centeredThoughtful comments are always appreciated.

… Chuck Harrington

Image Credit: Cleveland Museum of Natural History, Creative Commons