Free Market Sustainability: Environmentally Sustainable?
By 2050, the world population is estimated to be approximately 9 billion. Resources will be scarce, food and fresh water sources will be less secure, and energy will be harder to come by.
While it's tough building environmental regulatory consensus among global governments, surprisingly some corporations are stepping up to adopt long-term sustainability initiatives, anticipating future crises. Being for-profit organizations, there is a clear incentive and need to formulate a contingency plan in a world of fluctuating resources. Such corporate leadership is good news to the environmental community, but it's no substitute for developed and developing world governments to institute clear and strong environmental regulations.
Remember, corporations are doing what's in their best economic interest, and for now that happens to involve strong environmental stewardship. But if the financial incentives wane, there's no guarantee corporate commitment to the environment will remain as strong for most firms.
In the meantime, several large corporations are spending a great deal of money to radically change the way in which their businesses operate, mainly through “greener” supply chains and increasing investment in renewable energy sources. If governments are unwilling to help regulate sustainability initiatives to prevent a future energy, food, and general resources crisis, can corporations successfully go it alone?
In June, governments, non-profits and the private sector came together in Rio de Janeiro, Brazil for the United Nation’s Rio + 20 Conference on Sustainable Development. To the surprise of many observers, business executives took the lead in proposing initiatives to encourage consumers to buy more eco-friendly products, how to make their suppliers create greener products, and how they were going to reduce waste, water and energy use.
In Minnesota, corporations and environmental non-profits have also realized the necessity to work together. The NorthStar Initiative for Sustainable Enterprise (NISE) was created by the Institute on the Environment at the University of Minnesota-Twin Cities in July 2009 with a goal to bring together academics, non-profits, and corporations to identify and solve sustainability issues.
Issues include: how to make consumers aware of the difference their product choices make; how to convince consumers to buy more eco-friendly products; and how products can be manufactured in eco-friendly ways. Examples of Minnesota companies that partner with NISE are Aveda, Best Buy, 3M, Andersen Corporation, General Mills, and Medtronic.
East metro-based 3M, has a three-pronged approach to its sustainability goals, which include environmental, social, and economic strategies. While the corporation's past products and actions have been of concern to environmental activists, it claims to be striving for 100% compliance with global environmental requirements in all the different companies in which it operates.
Its environmental goals for 2015 include reducing hazardous air emissions by 15%, reducing solid waste disposal by 10%, and increasing overall energy efficiency by 25%. Many of 3M’s products have an environmental or energy advantage for customers, such as paint systems that reduce the need for cleaning solvents, window films that ease energy consumption, and eco-tape made with plant based adhesive and film. 3M is also focused on instigating water conservation plans in communities in which it operates which have limited or strained water resources.
Golden Valley-based General Mills has been repeatedly recognized by international ethical and corporate responsibility organizations as one of the best “Corporate Citizens.” General Mills has several environmental goals for 2015, which include 20% energy consumption reduction, 20% water usage reduction, 50% solid waste reduction, and 40% reduction in packaging volume.
To improve and increase sustainability practices, General Mills employs an energy audit program to distribute the best procedures through its production facilities. For all ingredients purchased to make its products, suppliers must provide data on the energy use, water use, and solid waste generation during the ingredients creation on a “supplier scorecard.” This is an excellent way for companies to manage their supply chains, and ensure that their products are sustainable at every level of manufacturing.
While these actions are commendable, letting the free market run its course without government intervention or regulation demanding some level of sustainability might not help encourage other businesses to adopt sustainability strategies. Introducing tax incentives for corporations which improve and promote sustainable development practices, providing financial and technical aid to smaller businesses to encourage sustainable development, and creating a regulatory system that focuses on outcomes and innovative development and production rather than “command and control” regulations are several options to encourage sustainable development.
If Minnesota companies can step up their sustainability initiatives and government on the state and city level is willing to introduce some regulatory measures and incentives to promote these, we could start to see a cultural change in how companies do business, and how consumers buy products.