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Question for Discussion: According to Hawken, what
are the basic principles companies need to adopt in
order to create Sustainable Businesses?

Readings: Hawken, pp. 137-171; "The Earth Charter" ;
Sarrell, Recycling Waste Computers

Video: CNN: Recycling Computers, DVD: Computer Waste
Ends up in China ; DVD: The Next Industrial Revolution (2008)

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Creating a Restorative Economy

Paths to a Restorative Economy

Hawken's Writing

Daly on Sustainable Economics

Rocky Mountain Institute

Sustainable Economic Principles

The Natural Step and Factor Four

Natural Capitalism Consulting


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Creating a Restorative Economy


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Recycling Computers as a sustainable Business

Let's start with the CNN report, "Recycling Computers," to understand what it means for a business to commit itself to becoming sustainable. There are a number of growing companies that are in the computer recycling business. They buy old, outdated computers from companies and public institutions like universities and take them apart and sell their components to other companies for a profit. These companies have a growing business because many people who have bought very expensive computers are reluctant to just throw them away when they become obsolete. In many cases, they have two to three thousand dollar computers stored in their closets and warehouses. Recycling computer companies then buy these old computers for between 30 and 50 dollars and can turn around and sell their components for between 200 and 300 dollars or more. Thus recycling computers can be a profitable business.

In addition, there are an increasing number of companies that will upgrade and renew people's old, outdated computers and make them like new. This reduces the costs that businesses would have to pay to get the newest, most modern computer equipment, alleviating the problem of having to simply throw away or sell for scrap very expensive computer equipment. In this case, the computer company is profiting by helping other businesses save money by recycling and updating their computer equipment. Of course, by recycling these computers, we reduce the amount of raw materials needed to build and upgrade computers, which preserves the environment and scarce natural resources.

There are even companies that produce new computers that will take in their old computers in trade for a reduced price on their new products. These companies that can use these old computers for parts to put into their new machines. In fact, since 1995, some computer companies have gotten into trouble because they have been caught using recycled parts in their new computers. Some customers complained they were getting used computers while paying for new computers. This problem can be alleviated if the computer companies notifies its customers that they are using recycled parts in their computers and will give them discounts off the price of these new machine.

All of these examples of recycling computers are examples of what Hawken call an "intelligent product system." Customers are buying the rights to use these computers and are exchanging them or renewing them and getting new computers. All of this saves companies money, provides additional business for computer recyclers and new computer companies, and reduces the amount of materials and energy required to make a new computer. In addition, this greatly reduces the disposal costs of throwing these computers into landfills or storing them in company warehouses. The CNN Recycling computers story illustrates how some businesses are actually profiting from recycling and creating a sustainable business.

Let's now look at some internet sites created by companies and entrepreneurs encouraging businesses to develop sustainable practices and design and sell sustainable and durable products. These internet sites demonstrate that business is now getting into sustainable development and beginning to seriously consider how they can profit by becoming sustainable businesses.

Sustainable Business on the Web

EcoMall: Sustainable Business Opportunities and GreenBiz.com are two sites that list companies that sell environmental and energy conservation services and business franchises. Looking at the list of companies providing services, solar technology, and recycling services and recycled products, we can see that companies throughout the United States see sustainable development and helping companies become sustainable businesses as a profitable, money-making proposition. I want to now look at one of these companies that I have some experience with, the Real Goods company.

Real Goods: Products for an Ecologically Sustainable Future provides a window into Real Goods business. They sell, install, and consult with homeowners, builders, and developers who want to make their homes energy efficient. They sell all the technology, products, and materials you need to make your house more energy efficient. I have been in one of their stores. They sell larger solar panels, windmills that generate electricity, and the batteries that store and convert this energy into electrical power for households appliances. They also sell energy-efficient insulation,windows, lights, lighting, doors, and heaters. Some people would go in to such a store and say all this stuff is neat but it is just too expensive for them to buy and put in their own house.

Let's look at this proposition. A homeowner could walk into a Real Goods store at get a complete estimate and retrofitting their home to make it energy efficient. Let's say they are given a estimate of between 15,000 and 20,000 dollars to retrofit their house with this new energy-efficient technology. Some customers would say that is way too much money, they could never afford to do that. But the Real Goods businessman would have to educate them about the real costs of installing this equipment. First of all, it would pay for itself in reducing energy costs in five to ten years, it would increase the value of the home by making it energy efficient, you could get tax breaks from local, state, and federal governments for installing this technology, and finally you could deduct the money and interest you paid from your income tax as a capital improvement on your home. But, in addition to all this, if you look at the life of your home, let's say between 50 and 100 years, the money you will say over the lifetime of the house will be much, much greater than the initial costs of the investment in installing this energy-efficient technology. The real challenge facing the businessman here is to educate the customer about the real costs. In the light of real costs to consumers, even though some sustainable technology, products, and services cost more in the short-term, in the long-run they are much cheaper.

Let's now look at some internet sites that provide companies guidelines and strategies for making their businesses sustainable. See the Site: Sustainable Business Practices. This is a list of strategies for redesigning companies to make them sustainable. This list is put together by the World Business Council for Sustainable Development . The World Business Council for Sustainable Development describes itself in this way:

The World Business Council for Sustainable Development (WBCSD) is a coalition of 120 international companies united by a shared commitment to the environment and to the principles of economic
growth and sustainable development. Its members are drawn from 34 countries and more than 20 major industrial sectors. The WBCSD also benefits from a thriving global network of national and regional business
councils and partner organizations.

The World Business Council is a major example of global corporations increasing interest in sustainable development, and, of course, in saving money and making increased profits by reducing their energy costs, their material costs, and their production and waste disposal costs. If environmentalism increases their bottomline, then it seems that global companies are interested in it.
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Sustainable Development Resources
for Business on the Web:

1. Sustainable Business Network

2. The Business Case for Sustainability

2. The Business Charter for Sustainable Development

3. A Guide to Creating a Sustainable Business

4. Building a Business Case for Sustainability

5. The Natural Step advises Global Businesses

6. The International Institute for Sustainable
Development

7. Natural Capital Soluitions

10. The Rocky Mountain Institute.org

11. MDBC Consulting

12. SustainAbility Online: Business Sustainable Development Consultants

13. EcoMall: Sustainable Business Opportunities

14. GreenBiz.com

15. Real Goods: Products for an Ecologically
Sustainable Future

Sustainable Development Principles developed by the Manitoba Round Table:

MANITOBA ROUND TABLE ON ENVIRONMENT & ECONOMY.

PRINCIPLES & GUIDELINES OF SUSTAINABLE DEVELOPMENT

1. INTEGRATION OF ENVIRONMENTAL AND ECONOMIC DECISIONS: requires that we ensure economic decisions adequately reflect environmental impacts including human health. Environmental initiatives shall adequately take into account economic consequences.

2. STEWARDSHIP: requires that we manage the environment and economy for the benefits of present and future generations. Stewardship requires the recognition that we are caretakers of the environment and economy for the benefit of present and future generations of Manitobans. A balance must be struck between today’s decisions and tomorrow’s impacts.

3. SHARED RESPONSIBILITY: requires that all Manitobans acknowledge responsibility for sustaining the environment and economy, with each being accountable for decisions and actions, in a spirit of partnership and open cooperation.

4. PREVENTION: requires that we anticipate, prevent or mitigate significant adverse environmental (including human health) and economic impacts of policy, programs and decisions.

5. CONSERVATION: requires that we maintain essential ecological processes, biological diversity and life-support systems of our environment; harvest reusable resources on a sustained yield basis; and make wise and efficient use of our renewable and non-renewable resources.

6. WASTE MINIMIZATION: requires that we endeavor to reduce, reuse, recycle and recover the products of our society.

7. ENHANCEMENT: requires that we enhance the long term productive capability, quality and capacity of our natural ecosystems.

8. REHABILITATION AND RECLAMATION: requires that we endeavor to restore damaged or degraded environments to beneficial uses. Rehabilitation and reclamation require ameliorating damage caused in the past. Future policies, programs and developments should take into consideration the need for rehabilitation and reclamation.

9. SCIENTIFIC AND TECHNOLOGICAL INNOVATION: requires that we research, develop, test and implement technologies essential to further environmental quality including human health and economic growth.

10. GLOBAL RESPONSIBILITY: requires that we think globally when we act locally. Global responsibility requires that we recognize there are no boundaries to our environment, and that there is ecological interdependence among provinces and nations. There is a need to work cooperatively within Canada, and internationally to accelerate the merger of environment and economics in decision making and to develop comprehensive and equitable solutions to problems.

Guidelines

1. EFFICIENT USE OF RESOURCES: we shall encourage and support development and application of systems for proper resource pricing, demand management, and resource allocation together with incentives and disincentives to encourage efficient use of resources and full environmental costing of decisions and developments.

2. PUBLIC PARTICIPATION: we shall establish appropriate forums which encourage and provide opportunity for consultation and meaningful participation in decision making processes by all Manitobans. We shall endeavor to ensure due process, prior notification and appropriate and timely redress for those affected by policies, programs, decisions and developments.

3. UNDERSTANDING AND RESPECT: we shall be aware that we share a common physical, social and economic environment in Manitoba. Understanding and respect for differing social and economic views, values and traditions and aspirations is necessary for equitable management of these common resources. Consideration must be given to the aspirations, needs and views of various regions and groups in Manitoba.

4. ACCESS TO ADEQUATE INFORMATION: we shall encourage and support the improvement and refinement of our environmental and economic information base and promotion of the opportunity for equal and timely access to information by all Manitobans.

5. INTEGRATED DECISION-MAKING AND PLANNING: we shall encourage and support decision making and planning processes that are open, cross-sectoral, incorporate time horizons relevant to long-term implications and are efficient and timely.

6. SUBSTITUTION: we shall encourage and promote the development and use of substitutes for scarce resources where they are both environmentally sound and economically viable.

The Bellagio Principles and IISD

Let's now look at the International Institute for Sustainable Development and their sustainable development principles for business. See the internet site : The Bellagio Principles: Assessing Sustainable Development

1. Integrate environmental considerations into our business planning and decision-making processes, including product research and development, new manufacturing methods and acquisitions/divestitures;

2. Identify, assess and manage environmental risks associated with our operations and products throughout their life cycle, to reduce or eliminate the likelihood of adverse consequences;

3. Comply with all applicable legal and regulatory requirements, and to the extent we determine it appropriate, adopt more stringent standards for the protection of our employees and the communities in
which we operate;

4. Establish a formal Environmental Protection Program, and set specific, measurable goals;

5. Establish assurance programs, including regular audits, to assess the success of the Environmental Protection Program in meeting regulatory requirements, program goals and good practices;

6. To the extent that proven technology will allow, eliminate or reduce harmful discharges, hazardous materials and waste;

7. Make reduction, reuse and recycling the guiding principles and means by which we achieve our goals;

8. Prepare and make public an annual report summarizing our environmental activities;

9. Work as advocates with our suppliers, customers and business partners to jointly achieve the highest possible environmental standards;

10. Build relationships with other environmental stakeholders including governments, the scientific community, educational institutions, public interest groups and the general public to promote the
development and communication of innovative solutions to industry environmental problems;

11. Provide regular communications to and training for employees to heighten awareness of, and pride in, environmental issues.17

Also see The Natural Step: Sustainable Development
Principles Guidelines on the Web

The Earth Charter and Global
Sustainable Development Agreements

I believe you will find that are an emerging set of basic principles for creating sustainable businesses that all the above lists share in common. What are they? What does the growing interest among national and global corporations in sustainable business practices tell us about the movement towards sustainable development in the United States and in the world? In addition to winning the support of business, what other social groups and institution do we need to win over in order to create a sustainable economy? This is a question Hawken hasn't yet sufficiently addressed.

Hawken : Basic principles for creating sustainable business:

1. Replace nationally and internationally produced items with products created locally and regionally.

2. Take responsibility for the effects they have on the natural world.

3. Do not require exotic sources of capital in order to develop and grow.

4. Engage in production processes that are human, worthy, dignified, and intrinsically satisfying.

5. Create objects of durability and long-term utility whose ultimate use or disposition will not be harmful to future generations.

6. Change consumers to customers through education.

Hawken:What is the Purpose of Business?

"If DuPont, Monsanto, and Dow believe they are in the synthetic chemical production business, and cannot change this belief, they and we are in trouble. If they believe they are in business to serve people, to help solve problems, to use and employ the ingenuity of their workers to improve the lives of people around them by learning from the nature that gives us life, we have a chance." (55)

Hawken,The Opportunity of Insignificance

"Small business is the arena in which pragmatists, inventors, and idealists operate, where they can act clearly, directly, and affirmatively. Since they are closer to their customers, by dint of size, they are in a better position to organize and educate those customers to perceive the difference between a product made sustainably and one that is not. This is a difficult task, because when you are trying to act responsibly with respect to the environment, you find yourself competing in price against organizations that have several advantages, including their unwillingness or inability to examine the wider implications of the production and consumption of their product, as well as their inclination to do almost anything by way of advertising to sell it." (138)

What is Sustainability?

"A cardinal principle and practice of any new business should be to perform tasks and services that are sustainably produced and/or promote sustainability in society as a whole. ....Sustainability is an economic state where the demands placed upon the environment by people and commerce can be met without reducing the capacity of the environment to provide for future generations. It can also be expressed in the simple terms of an economic golden rule for the restorative economy: Leave the world better than you found it, take no more than you need, try not to harm life or the environment, make amends if you do. Sustainability means that your service or product does not compete in the marketplace in terms of its superior image, power, speed, packaging, etc. Instead, your business must deliver clothing, objects, food, or services to the customer in a way that reduces consumption, energy use, distribution costs, economic concentration, soil erosion, atmospheric pollution, and other forms of environmental damage." (139)

"The distinction between growth and development is at the heart of a restorative economics. Economist Herman Daly writes: "'To grow ' means to increase in size by the accretion or assimilation of material. `Growth ' therefore means a quantitative increase in the scale of the physical dimensions of the economy. `To develop ' means to expand or realize the potentialities of; to bring gradually to a fuller, greater or better state. `Development ' therefore means the qualitative improvement in the structure, design and composition of the physical stocks of wealth that results from greater knowledge, both of technique and of purpose. A growing economy is getting bigger; a developing economy is getting better. An economy can therefore develop without growing, or grow without developing. " Growing implies size for the sake of size, while the idea of development implies that the product or service supplied will actually help people use fewer resources in the long run, and at the same time will serve or improve their lives. In the restorative economy, a company is based on the idea that its products or services will improve people's lives qualitatively, not quantitatively. It should provide a product or service that helps people develop their lives, and not merely increase the amount of their possessions. The smaller the business, the easier it is to internalize this distinction."(140)

"What has this to do with the principle in question? Oil, and coal are all growth industries, requiring large capital investments, not only in rigs, supertankers, machinery, and plants, but, as we have just seen, in military preparedness. Energy conservation is a developmental business. Saving four-fifths of our daily current consumption of energy through efficiency and conservation is more productive than drilling or mining for energy, and it provides energy on a renewable basis. Conservation does not run aground in Prince William Sound . On the other hand, it is labor intensive, creates jobs; and promotes real economic prosperity while lowering and wealth, our overall impact upon the environment. Our air gets cleaner, global warming is tempered, acid rain is reduced, and pollution dramatically decreases." (142)

"Principles of Sustainable businesses:

1. Replace nationally and internationally produced items with products created locally and regionally.

2. Take responsibility for the effects they have on the natural world.

3. Do not require exotic sources of capital in order to develop and grow.

4. Engage in production processes that are human, worthy, dignified, and intrinsically satisfying.

5. Create objects of durability and long-term utility whose ultimate use or disposition will not be harmful to future generations.

6. Change consumers to customers through education." (144)

"To rebuild an economy to honor the natural communities on which the human society depends involves a patient reconstruction of the commercial ties and connections that bind and separate us. It is one thing for corporations to promote individual responsibility as a means to "save the earth," and quite another for an enterprise to conceive and design itself so that choices are enlarged. If changing from linear to cyclical processes is a key to re-creating business in an ecolog­ ical manner, then an important component of that redesign will be feedback, accountability and responsibility. Local ownership, while not guaranteeing such a result, makes it much easier for producers and customers to know, understand, and respond to one another. Further, it also helps to maintain capital pools in the community of origin and strengthen local economies." (147)

"And any substantial change in the ways in which we degrade our environment will have to emerge from business leadership. It is an insult to our intelligence when companies shrug at environmental problems by saying "the consumer made me do it." It is true that existing companies cannot easily or quickly change long-standing practices, especially when those practices were deemed acceptable and effective for so many years. But new companies must take into account all that we know to date about destructive commercial practices and build on that knowledge to avoid routes to commercial meaninglessness." (148)

"The result is waste and burn-out. Companies that manage to grow with moderate amounts of outside capital, that take time to mature, that have deeper familial bonds, either with relatives or with the community, seem to have a better effect on society and employees than hose that swing for the fences. There are notable exceptions, but in order to create an economic environment that has stability, the primacy of capital needs to be adjusted to the needs of workers and the community. This deeper understanding of the effects of capital flow on both businesses and community is lacking on almost all levels of commerce and government. There is no question that capital is needed in society, but the timing and movement of that capital have to be more humanely considered if we are to create healthy companies , " (150)

"But in fact, all products and businesses do not add value. Many do quite the opposite, a result Ivan Illich calls disvalue. Selling products that are wasteful, cheap, quick to be thrown away, or of marginal utility is more common than it should be. Because industrialism has historically been fed by increasingly cheaper stocks of energy, it has been able through technology to lower the real price of goods for many decades, affording those in industrial countries broad materialistic options that few could resist. But industry has overshot its mark. Products have become increasingly shoddy and ill-formed, reflecting the needs of marketing and image-makers more than those of society and the environment." (155)

"Sustainable businesses change consumers to customers through education. In some ways, looking directly to the customer may be the best way for a businessperson to envision the issues I have been discussing. What is the best way to serve my individual customer? The economics of restoration rests on the premise that people, if given honest information, not only about price, but about cost, will make intelligent and appropriate decisions that will improve both their own lives and life around them. Whoever has the most intelligent customers will flourish, and this is true for countries as well as companies." (155)

"In the restorative economy of the future, the fundamental principle to be honored is the covenant between company and customer. Businesses will become instruments of the customer; the consumer as the passive instrument of commerce will disappear. Businesses large and small that comprehend this distinction and make the change will have a far better chance to succeed in the decades ahead." (156)

"Companies large and small must transform their customers so that the company can change. No businesses do this better than the Japanese, which compete to spoil the customer. If you buy a car in Japan , it is delivered to your door. If you want it serviced, it is picked up at your door. New cars are exhaustively detailed to a level that far surpasses American service. And not surprisingly, Japanese customers have become very demanding, if politely so, with high expectations built upon a lifetime's experience. By training their customer to have only the highest expectations, the Japanese have made their companies the most competitive in the world. Surviving in the Japanese market is very difficult. For this reason alone, Japanese companies have gained a powerful competitive edge over American corporations." (157)

"If there is a covenant between businesses and the individual customers whose will they borrow, then the underlying principles guiding a business must be based on what that business senses about the customer. And it seems that the most profound, basic, and enduring quality uniting businesses and customers is gratitude. First, gratitude from the business to the customer; then, reciprocally, from the customer to the business because of the service, quality, and value received. Of course, the product or service is also a direct connection, but gratitude is the enduring quality of the relationship." (158)

"A business 's relationship with its customers is, in this respect, as important as its relationship to the ecosystem. The ecosystem is vast; the problems we have created are intimidating. The individual customer is "local, " right there in front of you, more easily understood." (159)

"A restorative economy will have as its hallmark a business community that co-evolves with the natural and human communities it serves. This necessitates a high degree of cooperation, mutual support, and collaborative problem-solving. It depends on very different skill-sets than those that are being drummed into us in sports, movies, and business schools. Competition for the consumer or between businesses is impractical, wasteful, expensive and degrading to all involved. It imitates an immature ecosystem, and in this day and age, that is retrogressive, not progressive." (159)


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