The business logic of sustainability - Ray Anderson

[Music] [Applause]

Believe it or not, I come offering a solution to a very important part of this larger problem with the requisite focus on climate, and the solution I offer is to the biggest culprit in this massive mistreatment of the Earth by humankind and the resulting decline of the biosphere. That culprit is business and industry, which happens to be where I have spent the last 52 years since my graduation from Georgia Tech in 1956 as an Industrial Engineer, coming aspiring and then successful entrepreneur after founding my company Interface from scratch in 1973.

Thirty-six years ago, I produced carpet tiles in America for the business and institution markets and shepherded it through startup and survival to prosperity and global dominance in its field. I read Paul Hawken's book, "The Ecology of Commerce," in the summer of 1994. In his book, Paul charges business and industry as one: the major culprit in causing the decline of the biosphere, and two: the only institution that is large enough, pervasive enough, and powerful enough to really lead humankind out of this mess.

By the way, he convicted me as a plunderer of the Earth, and I then challenged the people of Interface, my company, to lead our company and the entire industrial world to sustainability, which we defined as eventually operating a petroleum-intensive company in such a way as to take from the Earth only what can be renewed by the Earth naturally and rapidly, not another fresh drop of oil, and to do no harm to the biosphere. Take nothing. Do no harm.

I simply said if Hawken is right, and business and industry must lead, who will lead business and industry? Unless somebody leads, nobody will. It's axiomatic—why not us? And thanks to the people of Interface, I have become a recovering plunderer. [Applause] I once told a Fortune Magazine writer that someday people like me would go to jail, and that became the headline of a Fortune article that went on to describe me as America's greenest CEO.

From plunderer to recovering plunderer to America's greenest CEO in five years; that, frankly, was a pretty sad commentary on American CEOs. In 1999, I was asked later in the Canadian documentary "The Corporation" what I meant by the "go to jail" remark. I offered that theft is a crime and theft of our children's future would someday be a crime.

But I realized for that to be true, for theft of our children's future to be a crime, there must be a clear demonstrable alternative to the take-make-waste industrial system that so dominates our civilization and is the major culprit stealing our children's future by digging up the Earth and converting it to products that quickly become waste in a landfill or incinerated. In short, digging up the Earth and converting it to pollution.

According to Paul and Anan, their well-known environmental impact equation, impact (I) is a bad thing and is the product of population (P), affluence (A), and technology (T). That impact is generated by people—what they consume in their affluence, and how it is produced. I know the equation is largely subjective; you can perhaps quantify people and perhaps quantify affluence, but technology is abusive in too many ways to quantify. So the equation is conceptual. Still, it works to help us understand the problem.

So we set out at Interface in 1994 to create an example to transform the way we made carpet, a petroleum-intensive product for materials as well as energy, and to transform our technologies so they diminished environmental impact rather than multiplied it. Paul and Anan's environmental impact equation, I = P * A * T. I wanted Interface to rewrite that equation so that it read I = P * A ÷ T.

Now, the mathematically minded will see immediately that T in the numerator increases impact—a bad thing—but T in the denominator decreases impact. So I ask: what would move T—technology—from the numerator (call it T1) where it increases impact, to the denominator (call it T2) where it reduces impact? I thought about the characteristics of the First Industrial Revolution, T1, as we practiced it at Interface, and it had the following characteristics: extractive—taking raw materials from the earth; linear—take, make, waste; powered by fossil fuel-derived energy; wasteful, abusive, and focused on labor productivity—more carpet per man hour.

Thinking it through, I realize that all those attributes must be changed to move T to the denominator in the new Industrial Revolution: extractive must be replaced by renewable; linear by cyclical; fossil fuel energy by renewable energy—sunlight; wasteful by waste-free; abusive by benign; and labor productivity by resource productivity.

I reasoned that if we could make those transformative changes and get rid of T1 altogether, we could reduce our impact to zero, including our impact on the climate, and that became the Interface plan in 1995 and has been the plan ever since. We have measured our progress very rigorously, so I can tell you how far we have come in the ensuing 12 years: net greenhouse gas emissions down 82% in absolute tonnage. Over the same span of time, sales have increased by 2/3, and profits have doubled, so an 82% absolute reduction translates into a 90% reduction in greenhouse gas intensity relative to sales.

This is the magnitude of the reduction the entire global technosphere must realize by 2050 to avoid catastrophic climate disruption. So the scientists are telling us fossil fuel usage is down 60% per unit of production due to efficiencies in renewables. The cheapest, most secure barrel of oil there is is the one not used. Through efficiencies, water usage is down 75% in our worldwide carpet tile business, down 40% in our broadloom carpet business, which we acquired in 1993 right here in California, City of Industry, where water is so precious.

Renewable or recycled materials account for 25% of the total and are growing rapidly. Renewable energy is 27% of our total, going for 100%. We have diverted 148 million pounds—that's 74,000 tons—of used carpet from landfills, closing the loop on material flows through reverse logistics and post-consumer recycling technologies that did not exist when we started 14 years ago. Those new cyclical technologies have contributed mightily to the fact that we have produced and sold 85 million square yards of climate-neutral carpet since 2004, meaning no net contribution to global climate disruption in producing the carpet throughout the supply chain— from mine and wellhead clear to end-of-life reclamation.

Independent third-party certified, we call it "Cool Carpet," and it has been a powerful marketplace differentiated, increasing sales and profits. Three years ago, we launched carpet tile for the home under the brand "FLOR" (misspelled F-L-O-R). You can point and click today at flor.com and have cool carpet delivered to your front door in 5 days. It is practical and pretty too.

We reckon that we are a bit over halfway to our goal: zero impact, zero footprint. We've set 2020 as our target year for zero— for reaching the top, the summit of Mount Sustainability. We call this Mission Zero, and this is perhaps the most important fact that we have found: Mission Zero has been incredibly good for business—a better business model, a better way to bigger profits.

Here's the business case for sustainability from real-life experience: costs are down, not up, reflecting some $400 million of avoided cost in pursuit of zero waste—the first face of Mount Sustainability. This has paid all the cost for the transformation of Interface and this dispels a myth: the false choice between the environment and the economy. Our products are the best they've ever been, inspired by design for sustainability and an unexpected wellspring of innovation.

Our people are galvanized around the shared higher purpose. You cannot beat it for attracting the best people and bringing them together, and the goodwill of the marketplace is astonishing. No amount of advertising, no clever marketing campaign at any price could have produced or created as much goodwill. Costs, products, people, marketplace—what else is there? It is a better business model, and here's our 14-year record of sales and profits.

There's a dip there from 2001 to 2003—a dip when our sales over a three-year period were down 17.7%. But the marketplace was down 36%. We literally gained market share. We might not have survived that recession but for the advantages of sustainability. Now, if every business were pursuing the Interface plan, would that solve all our problems? I don't think so.

I remain troubled by the revised early equation I = P * A ÷ T2, that A is a capital A, suggesting that affluence is an end in itself. But what if we reframed it further, and what if we made a lowercase a, suggesting that it is a means to an end, and that end is happiness? More happiness with less stuff—you know that would reframe civilization itself and our whole system of economics. If not for our species, then perhaps for the one that succeeds us—the sustainable species living on a finite Earth, ethically, happily, and ecologically in balance with nature and all her natural systems for a thousand generations or 10,000 generations.

That is to say, into the indefinite future. But does the Earth have to wait for our extinction as a species? Well, maybe so, but I don't think so. We really intend to bring this prototypical sustainable, zero-footprint industrial company fully into existence by 2020. We can see our way now clear to the top of that mountain, and now the challenge is in execution. As my good friend and advisor Amory Lovins says, if something exists, it must be possible. If we can actually do it, it must be possible.

If we, a petro-intensive company, can do it, anybody can. And if anybody can, it follows that everybody can. Hawken fulfilled—business and industry leading humankind away from the abyss. Because with the continued unchecked decline of the biosphere, a very dear person is at risk here, frankly at unacceptable risk. Who is that person? Not you, not I.

But let me introduce you to the one who is most at risk here, and I myself met this person in the early days of this mountain-climb, on a Tuesday morning in March of 1996. I was talking to our people, as I did at every opportunity back then, bringing them along and often not knowing whether I was connecting. But about five days later, back in Atlanta, I received an email from Glenn Thomas, one of my people in the California meeting. He was sending me an original poem that he had composed after our Tuesday morning together.

And when I read it, it was one of the most uplifting moments of my life because it told me, "By God, one person got it!" Here's what Glenn wrote, and here's that person most at risk:

"Please meet Tomorrow's Child, without a name and unseen face, and knowing not your time or place. Tomorrow's Child, though yet unborn, I met you first last Tuesday morning. A wise friend introduced us to, and through his sobering point of view, I saw a day that you would see—a day for you but not for me. Knowing you has changed my thinking, for I never had an inkling that perhaps the things I do might someday somehow threaten you.

Tomorrow's Child, my daughter, son, I'm afraid I've just begun to think of you. And our you are good, though always having known I should. Begin I will to weigh the cost of what I squander, what is lost. If ever I forget that you will someday come and live here too. Well, every day of my life since Tomorrow's Child has spoken to me with one simple but profound message, which I presume to share with you: we are each and everyone a part of the web of life, the continuum of humanity is sure.

But in the largest sense, the web of life itself, and we have a choice to make during our brief visit to this beautiful blue and green living planet—to hurt it or to help it. For you, it's your call. Thank you."