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November 20, 2006
Book Review: Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage
by Bill Baue
The plethora of real-life examples of corporate environmental initiatives is where readers will
find value in this book from two authors associated with Yale.
SocialFunds.com --
In their new book Green to Gold, Yale Center for Environmental Policy and
Law Director Daniel Esty and Director of the Center's Corporate Environmental Strategy project Andrew
Winston advance their message of "eco-advantage," or the benefits of strategic corporate
environmental sustainability, by plying a couple of key metaphors. First, they lean heavily on the
"Green Wave," envisioning the trend toward eco-advantage as an oceanic image. Second, they tweak
the standard alchemical equation, transforming "green" (corporate environmentalism) into "gold"
(money). These metaphors predominantly reveal the significant strengths of the book, though they
also expose some weaknesses that may be more or less significant depending on the eye of the
beholder.
 The authors introduce the Green Wave concept through
examples that illustrate it most vividly: the Ecomagination initiative at General Electric (ticker:
GE) and the
recent conversion of Wal-Mart (WMT) to embracing environmental
sustainability. The dynamics of climate change, the earth’s finite resources and stakeholder
pressure create the swell of the Green Wave, according to the authors. Unfortunately, they fail to
acknowledge California State Treasurer Phil Angelides' role in popularizing the term by launching
the Green Wave
initiative in 2004 by steering portions of the state's public pension funds toward environmental
investing.
The wave metaphor extends throughout the book through the image of WaveRiders,
or companies surfing the Green Wave. In contrast, companies that "dive beneath the wave,
submerging themselves in the hopes that it will pass, will be disappointed by its enduring presence
and pounding tenacity." The authors create an elaborate methodology for identifying and ranking
WaveRiders.
Here, they recognize the importance of the socially responsible investing
(SRI) field. They base a quarter of their score on SRI indexes--mostly AAA or AA ratings from Innovest Strategic Value Advisors or
inclusion in the Domini
400 Social Index from KLD Research &
Analytics, the FTSE4Good Global Index, or
the Dow Jones Sustainability Indexes (DJSI). Lesser weight is given to inclusion in
the top 10 holdings of Calvert funds, the Sustainable Business
All-Star 20, or the Sierra Club Mutual
Funds. The methodology also considers company connections to Ceres, the Global Reporting Initiative (GRI), the UN Global Compact, Business for Social Responsibility
(BSR), and the Environmental Protection Agency
(EPA) Energy Star and Performance Track programs. As well, the authors
conducted their own survey.
The top 50 WaveRiders internationally include BP (BP), Shell (RD), and Toyota (TM). In the US,
top WaveRiders include Johnson & Johnson (JNJ), Baxter (BAX), DuPont (DD), 3M (MMM), HP (HPQ), Interface (IFSIA), Nike (NKE), and Dow (DOW). A graph illustrates that the
top 50 WaveRiders (minus the seven private companies) significantly outperformed both the S&P 500
and the FTSE 100 from 1996 to 2006. Unfortunately, the graph is not accompanied by detailed
numbers in the body of the book nor in the endnotes, preventing readers from scrutinizing the data
more thoroughly.
Perhaps the best part of the book is the trove of real-life examples of
corporate environmental initiatives the book catalogues based on in-depth interviews and site
visits to WaveRider companies. While many books discuss Shell's mid-'90s proposal to decommission
the Brent Spar oil platform by sinking it into the North Sea, this book reveals that Greenpeace, whose protests
prevented it, later admitted it got its facts wrong, exaggerating pollution levels a thousandfold.
And it was Unilever that partnered with the World Wildlife Fund (WWF) to create the Marine Stewardship Council (MSC) and committed to 100 percent sustainable fishing by 2005. And
Wal-Mart's Acres for
America program seeks to preserve land equal to the company's entire operational footprint of
130,000 acres.
"This action isn't a full environmental strategy by any means, but it is
one attempt to answer the concern some communities have about how Wal-Mart gobbles up land," the
authors state.
One example illustrates the second metaphor. Rio Tinto (RTP) geologists found a gold mine
in Flambeau, Wisconsin in 1968, but community opposition delayed the commencement of mining
operations until 1993. This exemplifies the importance of stakeholder engagement.
"Recognize that feelings are facts," the authors state. "Top performers know that what NGOs
[nongovernmental organizations], employees, customers, communities, and other stakeholders
feel about a company's environmental performance and reputation can be much more important
than the reality."
"It's not what the data is, it's what the perception is," says
Rick Paulson, a plant manager for Intel (INTC), as quoted in the book.
Early in the book, the authors discuss "mining the gold in environmental strategy," but when
they present this actual example of gold mining late in the book, they neglect to underscore how it
exemplifies their "gold" metaphor. In fact, the gold metaphor may weigh down the book, as it
prioritizes the profitability of environmental initiatives, sometimes at the expense of maximizing
environmental and social well-being.
"If an electronics producer finds a way to make its
products without heavy metals, why share that with the competition?" the authors ask. "Why not use
the Eco-Advantage to stick it to competitors?"
Elsewhere in the book, the authors quote
the CEOs they spoke with as adopting corporate sustainability because it is "the right thing to
do," yet here they prioritize competitive advantage over minimizing heavy metals in products. Most
of the book focuses on fusing green with gold. Here, however, gold trumps green.
©
SRI World Group, Inc. All Rights Reserved.
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