Have We Reached a Green Business Tipping Point?

Where are we, exactly, in the trajectory of green business? Things seem to have changed decidedly in the past six to twelve months, as more and more companies do more and more things. But what should we make of it?

I've done close to 100 media interviews since New Year's, a wide assortment of publications, websites, broadcasts, and podcasts. And two questions keep popping up from reporters: Is there a green business bubble? And have we achieved a tipping point?

I've already largely addressed the bubble question. In short, the greening of business isn't a bubble simply because it's a bell that can't be unrung. Once companies wring out the resource waste, toxic ingredients, embedded energy, and carbon intensity of their products and services, there's no turning back. Even if energy prices were to take a sharp dive, the old inefficiencies won't return. (Indeed, cheap energy would exacerbate the problem, by increasing energy use and, hence, carbon emissions.)

The quality movement of yore represents a good analogy. During the late 1980s and early 1990s, "total quality management," popularized by American statistician W. Edwards Deming, was the rage. There were books, magazines, conferences, and untold experts making the rounds, preaching the gospel of kaizen, quality circles, and other business practices. Inevitably, it ran its course.

But when TQM faded from the limelight and the business media turned its collective gaze elsewhere, quality didn't go away; companies didn't revert to their old, inefficient ways. Quality became part of the fabric, eventually showing up in the form of six sigma, lean manufacturing, just-in-time inventory, and other business processes and strategies.

So, too, with the greening of business. Yes, some green products and companies will, inevitably, fail or lose favor. But the hardcore (and largely unsexy) stuff -- energy efficiency, waste reduction, pollution prevention, supply-chain management, environmental reporting, etc. -- will be around in one form or another for decades. So will the innovations, which are increasingly coming into the marketplace: green chemistry, biobased materials, nature-inspired design, cradle-to-cradle products, and all the rest. They're not going away once the green fever cools down.

The "bubble," to the extent there is one, is in media reporting. (And there are many days lately that I wish it would finally burst.)

So, what about the "tipping point"? It's become a hot topic at many of the business gatherings I've attended in recent weeks. With good reason: Those in the field are riding a surging wave of activity. Consultants who had not very long ago had trouble getting calls returned are turning away clients. Those that already were busy are now oversubscribed. Corporate environmental managers, once marginalized in their organizations, are becoming valued players. New headlines appear almost daily trumpeting companies' green initiatives, and it's no longer just the usual suspects of corporate names.

Many of my colleagues seem downright tipsy. "We've finally reached a tipping point!" they proclaim.

Have we? Not even close.

First, a refresher: Malcolm Gladwell popularized "tipping point" in his 2000 bestselling book of that title. "Ideas and behavior and messages and products sometimes behave just like outbreaks of infectious disease," explained Gladwell. "They are social epidemics."

As human beings, we always expect everyday change to happen slowly and steadily, and for there to be some relationship between cause and effect. And when there isn't -- when crime drops dramatically in New York for no apparent reason, or when a movie made on a shoestring budget ends up making hundreds of millions of dollars -- we're surprised. I'm saying, don't be surprised. This is the way social epidemics work.

The "tipping point," Gladwell told us, is "the name given to that moment in an epidemic when a virus reaches critical mass."

The virus called "green business" has not hit critical mass. The number of large companies that have embraced sustainability as a core business strategy remains small -- no more than a dozen of the Fortune 500, if that. True, more companies are paying attention. From where I sit, it seems as if nearly every company is asking some form of the question, "What's our green strategy?" They don't necessarily understand what that means, but they know they need one. And that's a sea change.

But for the most part, the answers they're coming up with are more programmatic than strategic -- a few noteworthy changes here and there, but mostly business as usual.

And small and midsized companies -- 98 percent of all firms in the U.S. (and probably most other countries) have fewer than 100 employees -- remain largely uninvolved. Look around your community and you'll find that most local business haven't changed much: dry cleaners, auto mechanics, small parts manufacturers, metal finishers, printers, butchers, bakers, and candlestick makers have largely been AWOL from this conversation, except in rare instances. They represent a large chunk of the economy that hasn't yet discovered "green."

Of course, there's little reason for most companies, large or small, to make such a discovery. The incentives simply don't exist -- whether from government, customers, suppliers, employees, job seekers, bankers, or most other business partners and stakeholders -- to spur companies to adopt cleaner and more efficient practices. For most firms, going green remains an investment with questionable or underwhelming payoffs.

None of this is to say that the conversation about green business hasn't changed. As I've said, the amount of activity has grown steadily and immeasurably in recent months. But a high level of interest and inquiry does not a tipping point make.

What would a green business tipping point look like? How would things change? I can't honestly say. Can you?

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Comments

[Justin Davey]

Maybe the incorporation of green and sustainable design practices into large and small businesses alike hasn't quite reached a tipping point yet and until such design improves the bottom line, it won't. I would have to say that as a concept or idea, green business has definitely reached a tipping point. I would have to say that a critical mass of corporations have come to know the idea.

[Dana Leipold]

I agree that business has not even come close to reaching the tipping point when it comes to "going green." I believe it is all public relations right now. Businesses want to "appear" green to consumers and the global economy. I will believe that the tipping point has been reached when I start seeing companies, especially manufacturers, create cradle to cradle green products (that includes packaging, how the products are made, how waste is being recycled or reused, and the ingredients they use).

[Melissa]

Good point raised Joel. When I hear discussion of green business bursting bubbles I suspect that the media social programming is once again dictating our ability to concentrate on subject matter that hangs around more than 30 days. In my estimate there is little proof of a bubble burst. The investment thus far in clean tech is a scant percentage of the overall venture capital investment in technology. The general consumer who is not directly involved in the green business movement knows little of what happens behind the scenes and sees only the rise of Whole Foods and celebrity trends towards being green. How is it then that there are discussions of a bubble, we're no where near the 1990's "frothiness" of dot coms which seemed to dampen the outlook for everyone everywhere, including my Aunt Connie in Columbus, Ohio.

[Janna Olson]

I think the "bubble" nature of recent green tipping point editorializing ("We've seen eco-trends come and go on both the business and consumer-side") sometimes forgets that Global Warming is not a fad. Its mitigation and our survival are new drivers that are here to stay.

Since this is measurable not just scientifically or in the business case necessity of factoring climate risk but in our own psyche, maybe Dana's comment about businesses wanting to "appear" green to consumers holds a key to perpetuating the "tip" that is building to some Gladwellian scale: There is a mutuality of interest on the part of both businesses discovering how the bottom line benefits from sustainable conduct and the US public's slow, courageous strip tease of the "tamper-proof" clamshell of consumerism.

Both are exploring how some new economic relationship would work. This is a big deal considering the historic paucity of trust on both sides - citizens reading "altruistic business" as an oxymoron and business subscribed to the eternal gap between what people say and what they do in the marketplace.

I agree with Joel that we are not peaking the summit of the green business bell curve. But the potent prospect of a citizen/corporate citizen truce being forged by mutual, level headed motives to triumph over climate change and climate risk is an unprecedented factor in our economic dialogue.

So, I'd like to posit that, with the broader framework of human survival now shaping all our posturing over consumer/green business tipping points, this conversation stealing space in editorial columns is here to stay. And the arrival of our true green tipping point is, as Gladwell reminds us, as unpredictable in its immediacy as the course of next season's hurricane.

Global warming may prove the action-item that finally blinds us to these former polarizations and ultimately succeeds in rendering green business merely business.

[Andrew Winston]

One definition of reaching a tipping point, to me, is seeing some real change in environmental outcomes. Meaning, wouldn't we know we had passed some important inflection point if we actually saw U.S. (or global) GHG emissions DROP one year to the next? In terms of media focus, we passed the tipping point (i think about the time Sports Illustrated did a cover story on it), but we likely have a long way to go to see a real, hard data, shift in the impacts companies are having.

[Joe Galliani]

Isn't the truth really that "tipping points" only become obvious AFTER the fact and not during? It also depends on where you work and what industry you're in. Here in California we see tipping points before they reach the rest of the country in many areas. And if you're working in IT with Data Centers where everyone is running around with the hair on fire over power and cooling issues and desperate for solutions right now, you might think the tipping point had already arrived.

Even though he wrote the book, Malcolm Gladwell's definition of Tipping Points is now seven years old. His definition was only the starting point and not the end of the story.

Tipping points follow pain that is no longer tolerable. For some businesses and geographies that pain is already there. For other industries and places the pain is still apparently bearable. But the more that pain stays centralized in the wallet the more tipping you will see.

[John Neville]

The tipping point for green businesses will come from the consumers - when they finally redefine themselves as users and participants in the economy - and reject completely their role as consumers. Business will tip green when: people shopping for products start reading the labels and buy only green products produced by socially responsible companies; people begin walking to work or riding the bus; people turn off their TVs and purchase what they need instead of what they are told they should have; people become educated about the issues and vote only for those representatives who understand what is needed to move our society towards sustainability. After all, business is us, the people. It is how we have chosen to interact in this strange economy we have designed for ourselves. When we change - business will change. We talk much about this at SustainableArizona.org.

[Greenbang]

I can't see how anyone would think we are close to the tipping point - you're bang on right, Joel.

Certainly over here in Europe we have so much legislation coming into play, the eco industry has barely started to strut its stuff.

There is of course a danger that for a short time everyone will try to be seen as green while some businesses will not change anything other than the label they sell their products with. I suppose that's fashion to an extent.

But the real business and potential for this space is huge and barely recognised. Joe Galliani was also right - "when we change - business will change." But check out Greenbang.com as well ;)

[Kim Allen]

To get an idea of the magnitude of "tipping," consider the transitions from hunter-gatherer to agriculture, and from agriculture to manufactuing. That's what we're talking about when changing from "business-as-usual with a green shine on the surface" to TRULY sustainable ways of behaving.

Indeed, we are not there yet. But changes of that magnitude don't happen overnight, nor would we necessarily want them to. There is value to smooth societal transitions, done peacefully, leaving no one behind.

[Arlene Fairfield]

We will have reached a tipping point when 50 percent or more of the products and services we consume daily have a sustainability attribute as one of the key selling propositions. Consumption can include eating the organically grown blueberries for breakfast, communiting via public transportation, recycling the plastic water bottle after the workout, and buying a Nau jacket for fall.

[Jeff Swartz, CEO, The Timberland Co]

I believe we are living on the curl of revolution civically; as a CEO competing in fast changing global markets, I feel the earth moving under my feet. From where I sit, at a noisy intersection where consumers and brands dance around each other globally, it seems clear to me that the road heads towards more thoughtful consumption. A combination of consumer common sense (organic food is better for me) for-profit enterprise self interest (by eliminating waste, I can lower costs and reduce my carbon footprint), fueled by thought leadership civically (hybrid taxis in New York, congestion charges in London, reforestation in China) and civic boldness--we may not be at a "tipping point," but it seems to me like it is very much in our hands to insist that we move from this moment's reality, in a relentless direction towards making it better in the civic square. When we began talking to consumers about the accountability of our business for its environmental consequence 10 years ago, we had a hard time sustaining a conversation, except with the most ardent activists. Today, look at the website of the Fortune 500, and find a CEO who is not at least paying close attention to the notion of sustainability. Don't look now--but if it looks like a revolution, and it sounds like a revolution, and it shakes the civic square like a revolution....

[Andy Hultgren, Environmental Performance Group]

Jeff, I think the "revolutionary" image you used brings a helpful perspective to this discussion. If you take Gladwell's definition of "tipping point" and put it on the time line of a revolution, then the tipping point is the time when the revolution succeeds, takes hold, becomes irreversibly ingrained in society.

Clearly, we have not yet reached that point. There are certain areas in which we as consumers have started to vote green with our purchases, but for the most part "green" is a second or third tier selling point (albeit a sometimes powerful one). It is certainly not a table-stakes consideration for consumers - an expectation without which there is no deal.

When sustainability moves beyond a selling point to a simple expectation, that's when the revolution has arrived.

I like the image of a revolution in this discussion, though, because it captures well the very real, very tangible forces and responses facing business today. The revolution has not yet arrived, but it is certainly starting to shake society. And, given the limited carrying capacity of our little Earth relative to the amount of life now on it, I don't see how the revolution can stop until it does arrive.

"Que viva esta revolucion."

[Jeff Swartz, Timberland]

To carry the idea of a revolution one step further ... revolutions don't just happen. People -- crazy-passionate, die-for-the-cause committed leaders -- make revolutions happen. Could be we haven't reached the tipping point because would-be leaders are still too busy figuring out how to look green and talk green and haven't yet realized there are, to Andy's point, real stakes on the table.

We can't anticipate the tipping point -- we've got to make it happen. We have to bring the conversation so front-and-center and make it so simple to understand and personalize that no one -- not thought leaders or business leaders or consumers -- is left questioning why they should care or how they should take action. We need more zealots, more revolutionary leaders ... businesses that close the gap between what they say and what they do ... brands that not only say they're accountable, but also back that claim by putting environmental impact labels on all of their products ... consumers who use this information to better understand the power of their dollars and their potential for impact, so that they can no longer claim ignorance as a reason why they haven't yet made this cause their own.

No we haven't reached an epidemic yet, but the train (running on bio-diesel) has left the station. Who's on board?

[Andy Hultgren, Environmental Performance Group]

Information and education will be key to driving the revolution - if we as businesses and consumers remain ignorant of the effects of our decisions, the real consequences won't be felt until we have, at best, a really bad situation on our hands...

This is where business, with the immense amount of information it collectively disseminates each day, can be a powerful influence. What are the statistics on how many thousands of ads we all see each day? And the consistent message: buy without considering the consequences.

Revolutionary businesses will develop truly revolutionary products and then tell people about them! Tell everybody. Expose the problems and offer a game-changing solution.

A simple walk through the park, right? But that's what will fuel the revolution.

"We must be the change we wish to see in the world." A popular quote, but no less true for its popularity.

[Alvaro]

The real tipping point, as mentioned by Joel and some of the comments, depends on mainstream adoption of green practices, not just on "awareness of the issue". It depends on a beautiful tree flourishing-yes, planting seeds helps, but it is only the first step.

What may be a few of indicators that we have reached such a state?
- That we stop talking about "green" business, and it becomes simply "business"
- That current Heads of Sustainability become CEOs, VP of Marketing...
- That pioneers like Joel find a new topic to blog about :-)

All of which will take time. Companies need to learn and internalize the day-to-day habits of running successful "green" operations. What I like most about Joel's post is the reflection that, once you internalize something, there is no turning back. It becomes part of you, and you build on it. For people, and for companies.

[Greenearth]

It is great to see companies looking at green options, but we are all just starting to understand what is happening to our planet.

Where I live in Australia we are running out of water. This is a totally new experience for us all and a product of Global Warming. Both business and individuals are having to change their ways and fast.

This is a learning curve we are all in together and it is only the beginning of the journey not the tipping point.

[Andy Hultgren, Environmental Performance Group]

These are the kind of stories we (in America) need to hear, to understand the gravity of the issue we are facing and generate real action. I have to believe that every time a new story like this one comes out, more people commit more seriously to tackling global warming and other environmental issues through their workplace, purchasing, and other lifestyle decisions.

[Caroline Cummings, VMO OsoEco]

I don't believe any of the small to mid-size companies ever jumped on the TQM, six sigma, and lean manufacturing bandwagon since these processes (which are rather time consuming) usually requires hiring very expensive process improvement consultants. Having worked for a Fortune 500 company in the past I can say they went through all of these processes merely for the impact on the single bottom line - PROFIT. Now - the challenge in the sustainability movement - has added two additions to that bottom line - PEOPLE and the PLANET. So until we can develop quantitative standards for measuring the Triple Bottom Line it's going to be a huge challenge to get the small and mid-size companies to understand the true value - let alone the Fortune 500 companies. Especially when the consumer wants big business to prove they’re not only in it for the economic gain, but that they are in fact – true stewards to the environment and the community. I think many business have the “brand” – but are still working on the “product.”

I recently read the excerpt below on Forbes.com (“How to Shop Green” 07.31.07). I think it speaks well to the need for standardization around sustainability.

"While an ever-growing range of "green" consumer products are finding their way into our homes, there is very little in the way of industry standard. One manufacturer's green product may have been produced in an entirely different manner than another's. As a result, experts say it's good to maintain a healthy dose of skepticism when choosing environmentally friendly products, and to rely on a select group of organizations monitoring the practices of certain industries."

We've been conducting several focus groups with the conscious consumer and skepticism is a common thread among them. They say they don't believe the business owners alone, or so called 'experts' alone, or user generated content tools (like Wikipedia). The real question around whether we've reached a green tipping point will come when we can collaboratively define what the heck it is! Otherwise our consumers aren't going to trust us…

[Patrik Marckert]

I discussed these issues at:
http://renewabletech.blogspot.com/2007/05/difference-between-renewable-energy.html

One can only agree. There is no turning back, once you go green you can't turn back. The sustainability trend has got a snowball effect, when a few large corp's join, others will follow. Soon, it is going to be something natural for companies to consider. Probably start-up companies will have sustainability as an integral component to consider when developing their business plan.

Of course, the value of many cleantech companies may be inflated, especially in uncertain markets where political decisions have an important impact, such as the solar power and corn ethanol sectors. But the business as such is not something that will disappear. When we get cleaner water and air, we will not want to go back. As the renewable energy sector grows, prices will fall. If we can develop an infrastructure that provide us with energy from fossile sources thousands of feet deep in the ground in unstable countries at low prices, surely we can develop an energy system providing energy at low costs using the resources in our backyard: sun, wind, biomass, geothermal heat & water