Chapter 2
The Four Principles for Managing and Scaling Sustainability
Problems cannot be solved at the same level that created them.
—Albert Einstein
With pressure on firms to innovate and disrupt themselves, there has been a rush into the sustainability space in all industries. Great news, right? Actually, the reality is more like a lot of businesses doing the right thing—providing products that are better for human health and the environment—wrong.
Here’s one example. Retail firms are leveraging their strong consumer relationships and multiple locations to serve as drop-off sites for clothing recycling. Sounds like a win-win-win for consumers, clothing manufacturers, and the earth; however, these retail giants are ill-suited for handling the volume of unwanted textiles they receive. The recycling process weakens the clothing fibers, resulting in a lower-quality output that either forms part of the (unsustainable) fast fashion production model or, worse, is totally unusable. In fact, it is common for less than 0.7 percent of the recycled clothes to be used in the creation of a new outfit.1 With all this energy being expended to arrive at a product not fit for retail, it makes you wonder whether sending your old clothes straight to the landfill might be the more earth-friendly option.
Consider also the use of biofuels derived from agricultural crops, an example that Julie Zimmerman, professor of green engineering at Yale School of the Environment, shared with students of her PhD alma mater, the University of Michigan, in 2014. Zimmerman is an internationally recognized engineer whose work is focused on advancing innovations in sustainable technologies. She and Paul collaboratively established the fundamental framework for her field with her seminal publications on the Twelve Principles of Green Engineering in 2003.
In her talk at the University of Michigan, she told the story of the rise and fall of corn-based ethanol. Once upon a time, corn-based ethanol was viewed as the bright, shining hope in the dark, dismal landscape of fighting climate change. It’s a renewable fuel with feedstock requiring only six months to grow. The growing of corn creates jobs in the agriculture sector. And the biofuel can be concentrated up to 10 percent, giving it great generalizability among most vehicles. For others, a few alterations to the engine allowed for easy compatibility.2
In hindsight, we learned that the widespread production of corn causes water-quality issues arising from fertilizer application, a decrease in food exports and a consequent increase in food prices, and deforestation leading to additional climate impacts. Even though the end product may have been competitive with traditional gasoline, from a supply-chain and system design perspective, corn-based ethanol was not a sustainable solution at all.3
One last example: photovoltaic cells, otherwise known as solar cells or PVs. If nature is solar powered and if we can design cells to store and transmit solar energy to homes, isn’t that a move in the right direction? You’d think so, but no. Generating electricity with solar panels can in fact be more harmful to the environment than good. The process actually releases more greenhouse gases than burning coal.4
The business case for PVs was initially a tough sell. In the 1950s, the cells had an efficiency of approximately 4 percent. Incremental increases in efficiency and declining prices with scale led to widespread adoption in geographies suited for solar. This, alongside a reputation for leading the clean-energy movement, has contributed to the perception that scaling PVs is not only a lucrative market but also aligned with the social and environmental values of its consumers. In reality, there are multiple areas where PVs fall short of perceived benefits.5
As it turns out, the manufacture of these cells results in large-scale leaching and chemical pollution leading to public health hazards. There is also a great deal of variability in performance of the cells depending on the technology used. Thin-film PVs and utility-scale PVs are known to be low on efficiency, which is compensated for during installation with greater land use—which leads to land loss. Its lifecycle analysis also shows that the energy to mine the raw materials used in these cells (e.g., quartz, sand for silicon, and zinc and copper for metal-grade cadmium and tellurium, respectively) can be quite high. It can take 20 to 30 percent longer to “pay back” the energy used to manufacture PV cells than for traditional fuel cells. This, by the way, is why firms prefer to manufacture rather than recover their “lost” e-waste from landfills—because their inflow of rare-earth metals is faster than their inroads in the supply-chain market for recovery of e-waste from landfills.6
What these examples show is that doing the right thing wrong is an easy mistake to make—and it doesn’t serve our purposes at all. So how can we ensure that the sustainability solutions we are working to design, implement, and scale are themselves inherently sustainable? How can we know we are doing the right things right... or at the very least, doing better things better?
Doing the Right Things Right
The first step in designing a sustainable operating model is to learn how to recognize when the right thing is being done wrong. Recognition is critical. But with the rise of several different certifications and attestations to the level of sustainability of various products, it can be confusing and even impractical to assess the long supply chains associated with every product line at a large organization. At some point, supply chains become opaque, and it can be difficult to trace the origin of component inputs of the supply chain from different parts of the world, with sourcing passing through various suppliers, vendors, subcontractors, and assemblers. In addition, the ideal audit of an entire supply chain includes an assessment of labor practices. This can be done to a degree with vendors who disclose their practices and meet certain certifications, but what happens when your supplies come from regions of the world where disclosure is not mandated or performed?
Tim Mohin is the former CEO of Global Reporting Institute, which set the first global standards for sustainability reporting, and the author of the books Changing Business from the Inside Out and A Tree-Hugger’s Guide to Working in Corporations. He famously slept in dormitories and spent his days in factories to obtain a firsthand account of Apple’s supply chain and labor conditions in its Chinese operations. But not all firms can afford to send corporate social responsibility (CSR) executives across the world for surprise labor practice and materials audits. So what do you do when your organization is constrained by such boundaries? Where does the tracing stop for each component? How can we realistically develop “farm-to-table” supply chains for businesses without jumping down a global rabbit hole each time? There are several solutions that we will get into; however, technological solutions such as those offered by the Queen of Raw, Stephanie Benedetto, to create supply-chain transparency in the fashion industry go a long way in enabling visibility and securing trust by way of a blockchain solution.
The question of system boundaries and constraints is inherent to sustainability, and always top of mind for sustainability management students as they plan life-cycle scenarios. These challenges are big—but so are the consequences of allowing unsustainable practices to persist in your supply chains. And that is why the need for the Sustainability Scorecard and its principles has never been greater. Next, we’ll explain the origin of these science-backed principles.
The Twelve Principles of Green Chemistry
We based the sustainability management principles on the Twelve Principles of Green Chemistry that Paul and his partner at the EPA, Dr. John Warner, developed in 1998. Green chemistry is the utilization of a set of principles that reduces or entirely eliminates the use and/or generation of harmful substances in the design, manufacture, and application of chemical products. The call to action in this branch of chemistry is to develop entirely new and unexpected chemical reactions that create products and processes that are environmentally benign and safe for human health, in addition to creating resource efficiency, energy efficiency, and operational safety. Green chemistry is applied robustly in industry and in research and development today. High schools hold Olympiads to test the knowledge and skills of students, and various awards recognize the impact of this field in industrial ecology and economics. The Green Chemistry Challenge, also known as the Presidential Green Chemistry Awards, was started by the EPA in 1996 to “promote the environmental and economic benefit of developing novel green chemistry.”
The Twelve Principles of Green Chemistry bring design thinking and complex problem-solving strategies up front in the “discovery” phase of product and process design. They have led to the design of countless processes that not only achieve superior performance goals but do so in a manner that is environmentally benign and nontoxic. (Accepting anything less is, as Paul likes to say, absurd.)
THE TWELVE PRINCIPLES OF GREEN CHEMISTRY
1. Waste prevention
2. Atom economization
3. Reduced hazardous chemical synthesis
4. Design of safer chemicals
5. Safer solvents and auxiliaries usage
6. Design for energy efficiency
7. Use of renewable feedstocks
8. Reduction of derivatives
9. Catalysis
10. Design for degradation
11. Real time analysis for pollution prevention
12. Creation of inherently safer chemistry for accident prevention
The principles serve as a “how to” for chemists globally in the innovative design of unexpected solutions. They have been adopted by the EPA in the US, global multilaterals such as the United Nations and World Health Organization with a focus on sustainable development goals, and educational institutions. Through the years of the Green Chemistry Challenge, disruptive firms have used the principles to achieve unexpected, seemingly impossible goals, including the following:
▪ The elimination of 830 million pounds of hazardous chemicals and solvents each year—enough to fill almost 3,800 railroad tank cars or a train nearly 47 miles long.
▪ Saving 21 billion gallons of water each year—an amount roughly equivalent to the amount used by 980,000 people annually.
▪ The elimination of 7.8 billion pounds of carbon dioxide equivalents from being released into the air each year—equal to taking 770,000 automobiles off the road.7
While leading visionary firms can demonstrate countless excellent examples of commercialization, those innovations have not been systematically incorporated, and they have not been translated into business management principles until now.
The economy of the future will have fundamentally different levers than those that got us to this point today. The future will require a triple-bottom-line approach—that is, an approach that is circular and requires ESG-related value propositions. We drew on the Twelve Principles of Green Chemistry to provide management leaders of tomorrow a scientifically derived framework by which to implement and profit from sustainability.
The Four Principles for Managing and Scaling Sustainability
Chemistry is an exact science. As Paul often states, “Chemicals are dumb; they know not what they do.” To that end, following the Twelve Principles of Green Chemistry enables scientists, researchers, and developers to create new, unexpected solutions by creatively manipulating these chemicals.
However, these disruptive new technologies need to be successfully implemented into organizations. Smaller, more agile start-ups may be able to more easily scale such innovative solutions, but first they need to prove the viability of those solutions in order to raise adequate funding. Meanwhile, large organizations with embedded capital (financial and human) will need a more deliberate approach to adopting new solutions in order to manage the short-term effects on operations and their balance sheets. The Four Principles for Managing and Scaling Sustainability and the Sustainability Scorecard offer a proven path forward for both types of firms.
Jeff Sonnenfeld, management guru and founder of the Chief Executive Leadership Institute at Yale University, states that one of the strongest indicators of an environmental focus in corporate strategy is the creation of an executive-level sustainability position: chief sustainability officer (CSO).8 The CSO is responsible for applying scientific advances to industry in “the right way”—the way that leads to an increasingly sustainable and profitable future. We developed these principles for CSOs, operations-focused leaders, strategy and innovation professionals, and anyone else looking to make sustainability a strategic priority, complete with metrics to measure the principles’ business success. We did so by consulting and collaborating with hundreds of industry leaders working to innovate processes and products in a manner that was financially and operationally forward looking. And now, here they are. (We’ll discuss the Sustainability Scorecard—the metrics by which to measure your sustainability progress—in the next chapter.)
Principle 1: Waste prevention
Principle 2: Maximizing efficiency and performance
Principle 3: Using renewable inputs
Principle 4: Ensuring safe degradation
Any product or process that fulfills all the principles will be inherently sustainable and profitable. New products and processes that follow the principles will also be inherently “unexpected,” as these constraints have never been embedded into the design process before. Next we dive into each of the principles to explain how.
Principle 1: Waste Prevention
GOALS
▪ Prevent waste from entering terminating graveyards
▪ Eliminate hazards
▪ Close material loops to maximally recover the economic value of the material inputs
Many of today’s manufacturing processes follow a linear path wherein inputs are pushed through a production chain that results in the creation of products and by-products that are either unintentionally persistent or toxic. In fact, many processes produce waste at a much higher quantity or concentration than the actual product they are designed to create. But what if manufacturers sought sustainable growth by creating closed-loop systems, with the by-products being neither toxic nor waste but having their own value? Later in the book we’ll discuss a very cool company that is doing just that with its carbon dioxide waste.
You may have noticed that we have used the term e-factor previously in this book. E-factor is simply the weight of waste produced in relation to the weight of the desired product. Therefore, empirically, the principle states that the concept of waste must entirely disappear from the process design frameworks and supply chains of the future. Whether in terms of material flow or energy, the goal is to generate value from each by-product of the process. True sustainability requires firms to address waste generation at every stage of a product’s life cycle, including what happens at the end of its life. (Upcycling may extend a product’s useful life, but if it still eventually ends up in a landfill, there’s more progress to be made.)
When thinking about waste prevention, one of the first areas to study is waste generation—for example, by tracking the weight of the raw materials that will be disposed of at the end of the production cycle. In various industries, this can take the shape of tracking the amount of “active” ingredient that made its way into the final product in proportion to the weights of all the inputs. A focus on waste generation lends itself to exploring various process improvements—for example, process efficiency, speed of reaction (in the case of chemical manufacturing), and the use of alternative raw material inputs that increase yield without compromising performance. The other major consideration is end-of-life management: What happens to the product when it is no longer useful? Where does it end up—recycling, landfill, compost—and what’s the impact? End-of-life management requires that you understand the categories and weights of the materials that can be recovered and reentered into production as inputs or even upcycled into new products.
Principle 2: Maximizing Efficiency and Performance
GOALS
▪ Create products/materials and process energy and material inputs efficiently
▪ Expand the definition of high performance to include “benign by design” and being nontoxic to human health and the environment (i.e., nondepleting, nontoxic, and nonpersistent)
In the past, performance was viewed almost entirely as the ability to efficiently accomplish a narrowly defined function (e.g., the number of pests killed per certain volume of pesticide). But, as we know, this focus solely on function or on achievement of a single goal has led to the creation of numerous pesticides that not only eliminate pests but pose significant health hazards to humans and the environment. Perhaps the focus is on an anesthetic gas, a dye of a certain shade, or the ability of a vehicle to accelerate to high speeds in minimal time. Performance has to date focused singularly on desirable qualities and thereby driven a singular focus to achieve them.
What should performance mean today? And what constitutes an operations process that yields high-performing products?
With this principle, we are broadening the definition of performance to include all of the aspects that we care about in addition to function—particularly the elimination of negative externalities related to human and environmental health. For process designers, this means understanding the functional specs of the end product and also the hazardous downstream effects of the process, the waste generated, and the product itself to make sure they are nondepleting, nontoxic, and nonpersistent in the environment.
Consider a chemical plant. Traditionally, measuring the performance of a chemical plant would take into account the efficiency of production and viable storage of the end product. With respect to production, this can typically include metrics such as machine downtime, batch production cycle times, or error mitigation (loss of a produced batch of chemicals if it is out of specification). An expansion of the definition of performance for this scenario would include the efficient removal of externalities related to chemical safety for the environment and worker health.
Traditional solutions to increase site safety include pipe enhancements, security-related enhancements such as interlocks and access control, and even accessibility to respirators for worker safety. However, if a new, more sustainable solution in this scenario is considered, how does that change the product? If a system is to not only deliver high performance but also ensure safety and financial feasibility, the answer could lie in inherent site safety. That is, a chemical plant with an inherently safe structure would not need to rely on regular assessments, maintenance upgrades to pipes, and the like, and would thus prevent ongoing year-over-year operating costs and procurement of replacement equipment.
In 2016, an erroneous chemical reaction at a manufacturing and storage facility in Atchison, Kansas, resulted in the production of a toxic cloud that exposed more than 140 individuals to toxic chlorine gas that can damage lung tissue, and led to a shelter-in-place warning for thousands of others in the community. According to a study by the National Association of Chemical Distributors, more than thirty-nine million metric tons of the product were delivered to the community every 8.4 seconds.9 To improve the performance of this facility, the firm introduced safer and greener processes that led to the elimination of several toxic bulk chemicals and the phasing out of another chemical. These eliminations and the design of a safer, greener process led to inherent safety of the site, making the plant’s functionality safe in and of itself, and resulted in significant operating cost savings for the firm.
The introduction of inherent safety as a design mechanism or product specification expands the definition of performance to reach beyond function and encapsulate environmental and human health externalities, and reduces worker safety expenses and overall operating expenses related to handling, storing, and transport of chemicals. Traditional mechanisms for ensuring site safety (such as pipe enhancements to prevent leaks) are certainly effective safety measures, but they appear to be less optimal solutions (financially and in terms of performance) than the “unexpected solution” of inherently safe chemical plants that leverage green chemicals. These plants would be safe even in the event of a leak and therefore are not only safer but also more cost effective.
Principle 3: Using Renewable Inputs
GOALS
▪ Create circularity in the energy system
▪ Minimize or negate the use of depleting resources for energy
One of the key messages we want you to take away from this book is that material and energy inputs are a major influence on the sustainability of products, processes, and systems. Inherently sustainable systems cannot be created without a strong focus on material inputs and how they impact sustainability at each stage of a product’s life cycle. For example, biological inputs, though renewable, also produce waste as a by-product. What about leveraging that waste to serve as an input and to create circularity in the energy system (i.e., to close the energy loop)?
Supplier diversity can help in making sure a firm has access to renewable inputs without any disruption in business continuity (because if one person can’t provide something, another person will). Streamlining inventory and managing complexity are other complementary tactics. In particular, the diversity of mineral inputs can be minimized for ease of recoverability, value retention, and disassembly.
Principle 4: Ensuring Safe Degradation
GOALS
▪ Safely disintegrate components using nontoxic products and processes
▪ Ensure that disintegrated components are nontoxic to humans and the environment
Vast numbers of synthetic chemicals are used in everyday consumer products that routinely expose large populations to toxic chemicals for long periods of time—especially if the product is used on a daily basis. For example, phthalates are widely used to increase the flexibility of plastics, but also disrupt human hormonal balance. And organophosphates are highly effective insect repellents, but are severely neurotoxic to mammals.
Unintended biological or environmental effects can be avoided through the use of safe substitutions that are functionally equivalent but less of a concern from a safety standpoint. That’s where safe degradation comes in. Abidance with this principle ensures that hazardous chemicals do not persist in the environment. (Persistence leads to bioaccumulation—the accumulation of toxic chemicals into human and animal bodies either through air, water, or food intake, or directly through the skin.)
Toxicology knowledge is essential to identifying chemicals that degrade safely and designing out molecular features that are the basis for hazards. Fortunately, there are databases and models that evaluate biodegradability and can be used to evaluate the sustainability and toxicity of chemical inputs.
Another important consideration for fulfilling this principle is the safe separation of components. For example, many conventional methods for recovering materials from products at the end of their lives require the use of hazardous solvents or the use of high heat and energy. Addressing safe end-of-life recovery up front in the design phase for safe end-of-life recovery can also yield significant financial benefits for firms by way of decreased waste and waste management efforts and reduced processing time for recovery.
Onward and Upward
The Four Principles for Managing and Scaling Sustainability can be applied to firms at any stage of their sustainability journey, whether they are established, market-leading firms; new start-ups; or any size in between. In the next chapter, we will dive deep into the Sustainability Scorecard, which uses metrics based on the sustainability management principles to assist firms in
▪ Designing and refining their sustainability strategy
▪ Prioritizing future initiatives
▪ Developing additional firm-specific sustainability metrics that are truly forward facing
Let’s go!