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Is going green more than a fad?

Dan Esty

TEXT OF INTERVIEW

Kai Ryssdal: There's a case to be made that the word "sustainability" is over used. That we all know we've got to do more to make how we live and work gentler on the planet and its people. There are sustainability initiatives, sustainability desks and sustainability consulting firms.

But Yale University's Dan Esty says a lot of companies still don't get it. He writes that sustainability is the latest corporate "mega-trend" and businesses ignore it at their peril. Dan, it's good to have you here.

Dan Esty: Thanks very much. A pleasure to be with you.

Ryssdal: So Dan, we all know what business trends are. What are these things you're calling "mega-trends"?

Esty: So a business mega-trend is something that transforms the competitive landscape, that so changes how businesses operate and what society's expecting from companies that anyone who doesn't pick up the trend is at risk of losing their position in the marketplace. And we've seen that play out with a number of issues in the past.

Ryssdal: Like what?

Esty: Things like the information technology revolution, which started in the late 70s, even into the 80s, with a small set of big businesses finding ways to bring computer power to bear in their businesses. And over time, that spread through all kinds of companies -- middle-size companies, and eventually, even small business. And we see the same thing happening now with sustainability. A leading set of big companies are really finding this as an important element of strategy, because these core principals that sustainability is a societal value that's not going away, that care and how you spend money on energy, what you use in the way of resources, how much waste and scrap you have in production are aspects of what can give you a leading edge position in the marketplace.

Ryssdal: Give me an example. If I am, say, Allen Mulally, running Ford Motor Company, and I've read your article in the Harvard Business Review, and I said, "Man, this Dan Esty guy, he's really onto something." What should he do?

Esty: Well, Allen Mulally and the Ford Motor Company are a very good example of a company that has now got it quite clear what they need to do. They know they need to produce cars that are cutting edge, that are fuel efficient, that are less polluting. But beyond figuring out what to do, he's really got to develop methods and models for delivering this across the business. He then has to make sure that all of his sustainability initiatives are aligned with the broader strategy of the company of cutting costs, of driving revenues with new models, of really delivering on a quality and sustainability commitment to the customer. You've got to have metrics to track, and you've gotta then be able to report on this to internal audiences and then to external audiences as well.

Ryssdal: I don't want to sound like I'm disrespecting your academic insight, but you don't have to be a professor at Yale to know that sustainability is a big issue, and companies have to pay attention to this.

Esty: You would be surprised how many companies are still in the posture of thinking somehow sustainability's a passing fad. But the broader set of concerns around water, both availability and quality, around chemical exposures, heavy metals, food safety give this set of issues lots of logic as a core element of business focus.

Ryssdal: What happens if a company doesn't get the sustainability imperative right. I mean, can you look back at the quality imperative or I-team imperative, and say, "Look, here's a company who blew it and look what happened to them."

Esty: We think there are a whole set of examples of companies that missed these prior business mega-trends and have ended up in the dust bin of history as a result. Companies like Kodak and Polaroid failed to appreciate their businesses were going to be transformed by this shift to digital technology. And both of those companies have gotten themselves in deep trouble. Polaroid is, of course, gone. So if you don't see these business mega-trends coming, it can restructure the competitive landscape in ways that have profound effects, particularly for the current leaders, who if they're not on the ball, will fall behind.

Ryssdal: Dan Esty is a professor of environmental law and policy at Yale University. He writes on the sustainability imperative in the May issue of the Harvard Business Review. Dan, thanks a lot.

Esty: My pleasure. Great to be with you.

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