AT A CLIMATE change conference in Vancouver in 1996, I ran into David Suzuki. He wasn’t well versed on the issue back then and wanted to know if there were any companies doing something about climate- change. I named a few and he suggested that it would be a good idea to give these forward-looking firms a big pat on the back to encourage them to keep on with their good practices. Maybe it would convince others to do the same. Use the carrot, he was saying.
AT A CLIMATE change conference in Vancouver in 1996, I ran into David Suzuki. He wasn’t well versed on the issue back then and wanted to know if there were any companies doing something about climate- change. I named a few and he suggested that it would be a good idea to give these forward-looking firms a big pat on the back to encourage them to keep on with their good practices. Maybe it would convince others to do the same. Use the carrot, he was saying.
The number of companies doing something about climate- change has expanded since that encounter, but not by as much as Suzuki and others would like, and certainly not by as much as is needed. So when I came across the industry-led back-patting work of the Canadian Business and Biodiversity Program (CBBP), I was skeptical. I wondered what impact, if any, it would have on encouraging the sort of fundamental changes needed to protect the environment, including biodiversity.
The CBBP recently released a 92-page report that includes stories of good biodiversity practices of 17 Canadian businesses in nine sectors. It’s the brainchild of Johanne Gélinas, formerly Canada’s Environmental Commissioner and now a partner with Deloitte Inc. in Montreal. “Biodiversity is the poor cousin to climate change,” she told me. “We thought that it would be a good idea to approach companies to be part of a compendium of good practices presented through case studies.”
One of the companies that paid $5000 to have its story included in the CBBP report is Ontario Power Generation (OPG). Steve Hounsell, a senior advisor to the company, convinced OPG to become the first energy company in Canada to have a biodiversity policy and implementation plan. A keen supporter of the CBBP, he says the case studies are a bit of a carrot. While admitting that the track record of Canadian businesses saving biodiversity isn’t very impressive, Hounsell says that businesses will fight a big regulatory hammer. “If we want to prevent global collapse,” he argues, “we have to engage the engine of economic activity.”
John Elkington, Paul Hawken and others have long advocated using market forces as a catalyst for environmental change. In his new book, The New Entrepreneurs: Building a Green Economy for the Future, Andrew Heintzman follows in their footsteps. Some of Heintzman’s finest examples of new green businesses come from Ontario’s energy sector where provincial policy has provided the carrot required to get a new breed of entrepreneurs involved in green-energy initiatives.
But as effective as it may be, Ontario’s carrot – incentives for wind and solar energy – is linked to the heavy hand of the provincial government. It did, after all, regulate Hounsell’s employer, OPG, to shut down its coal-fired power plants. While some may argue that the two are unrelated, there are definitely both carrots and sticks at work in Ontario’s successful bid to improve its track record vis-á-vis alternative energy.
Another type of carrot involves paying for, or even trading, ecosystem services. The report, The Economics of Ecosystems and Biodiversity (TEEB), is the outcome of a 2010 global study hosted by the United Nations Environment Programme and coordinated by Joshua Bishop from the venerable International Union for Conservation of Nature. In it, the authors make a business case for “integrating the economics of biodiversity and ecosystem services in decision making.” Paying for ecological services (trees cleaning air, moraines purifying water, bee pollination, plant pharmaceuticals, etc.) is catching hold with business, especially in the climate change arena, where the global carbon market was estimated to be worth over $140-billion in 2009. However, as the TEEB authors write, this growth in the carbon market came about as a result of new regulations. While it’s not nearly as robust, a trade in biodiversity services, such as those mentioned above, is also emerging.
It’s debatable whether Walmart’s ambitious environmental plan, which includes efforts to green its supply chain, is a carrot (if you comply, your company will be a preferred supplier) or a stick (if you don’t comply, your company will not be a preferred supplier); but no one doubts its effectiveness. Although Walmart hasn’t made supplier participation mandatory, it’s clear that the behemoth corporation (more than $400-billion in sales in 2009) prefers doing business with compliant companies. The result is that firms such as Mississauga-based Kruger Products LP, which isn’t traditionally known for being particularly green, announced a major initiative in August entitled Sustainability 2015.
Kruger Products, the maker of Cashmere, SpongeTowels and Scotties, also manufactures White Cloud, which is available only at Walmart in the United States. The privately owned company will not say how much money it’s investing in initiatives to reduce its ecological footprint between now and 2015, but the program includes nine reasonable sustainability goals. They include reducing the company’s overall energy consumption by 15 per cent and manufacturing products using only 100 per cent, third-party-certified wood fibre. The plan also involves Kruger Products’ commitment to encourage its 13,000 suppliers to green their efforts.
As companies such as Kruger Products grapple with how to maintain favour with Walmart, there will be spin-off opportunities for Heintzman’s green entrepreneurs. In an interview on a Harvard Business Review blog, Andy Rueben, Walmart’s vice president in charge of sustainability, said, “This is the largest strategic opportunity companies will see for the next 50 years. This is the most exciting time to be in business, with more opportunity to create change in the world than ever.” Carrot or stick, the economic engine, driven by a green giant of a retailer, is indeed revving up.
At Walmart’s annual business meeting, Suzuki gave a keynote address. He told the audience, “Walmart’s commitment to sustainability acts as an inspiration and incentive to other corporations to follow suit. The company has enormous influence on corporate thinking and I am delighted with the priorities it has selected.”
But do we want Walmart setting our national environmental agenda?
Heintzman writes in The New Entrepreneurs, “Canada has virtually no national strategy on renewable energy; no plans for high-speed rail lines in development; no national smart-grid plans of any consequence; no greenhouse gas emissions reductions targets of any meaning; and no energy efficiency goals. In short, Canada is lacking a coherent national strategy on the most important economic questions of our time.”
To give Hounsell his due, a big regulatory hammer may not, on its own, be the best option to encourage corporate action on biodiversity or any environmental matter. But as Walmart is demonstrating and Heintzman suggests, a visionary strategic plan can be a very effective carrot and a very pointed stick too.
Nicola Ross, editor-in-chief of Alternatives Journal, has not yet abandoned her boycott of Walmart.
Download a pdf from the Canadian Business and Biodiversity Council: Case Studies Compendium, Volume 1, 2010, at businessbiodiversity.ca.
Nicola Ross is the former Editor of Alternatives Journal, and is a member of the editorial board.
