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Public Management Program

 

25th Anniversary

Industrial Ecology Session

Moderator
Jim Patell, Professor, Stanford Graduate School of Business

Panelists
Bob Grady, Managing Director, Bancboston Robertson, Stephens & Company
Laura Hattendorf, Executive Director, Sustainable Conservation
Susan Colby, Co-President, Monsanto, Sustainable Development Sector
Charles McGlashan, Principal, The Genesys Group

Student Organizer of the Panel
Brian Trelstad

Bob Grady
Managing Director, Bancboston Robertson, Stephens & Company
Few appreciate the significance and impacts of the original environmental regulations:

The Clean Air Act
The Clean Water Act
The establishment of the Environmental Protection Agency

There are still plenty of problems, but it's harder because resources are more dispersed. There's been an evolution in corporate attitudes due to regulations, threat of litigation, public relations. Problem today: true full cycle cost of using input is not fully accountable. Disposal costs not captured—it's a pricing problem. Poor accounting of future liabilities. Information will play an important role in getting to the next level of environmental performance.

Information is a powerful regulatory tool:

Example: TRI emission reporting requirements—data available to the public
Example: EDF scorecard—big emitters getting 1,000 letters a month from their Web site

The internet will help with the dissemination of information.

Laura Hattendorf
Executive Director, Sustainable Conservation
80% of copper going into the Bay is from storm water; 40% of this is from auto brake pads. Government monies focus on point sources (the other 20%).

Brake pad industry analysis: Very concentrated (four big players). Had other issues (asbestos). Brake pad particulates —pollution is a non-point source. Established a broad stakeholder group to discuss the problem.

SC's role was to create communication between the government and environmental groups with the manufacturers. The manager at one big company recognized that the threat of regulation is just as important as actual regulation—he rallied manufacturing support for the project.

There were other bad elements in brake pads too—wanted to create a model the industry could use in the future. They agreed to research on copper-free brake pads and a monitoring program.

Continue to work with government and environmental groups on an on-going basis. Minimize environmental impacts of future products. We still need to implement / take action.

Interesting project: Government role as a threat. SC played the role of the neutral party. Trust is important. SC's knowledge of the private sector was key. SC was also the developer of the information. We need public/private/nonprofit partnerships to solve these problems. The government's role is to provide a threat down the line.

Susan Colby
Co-President, Monsanto, Sustainable Development Sector
Susan's concerns:

Information and technology cannot solve habitat destruction or biodiversity destruction
Protecting biodiversity will be a great challenge

Industrial ecology is in the past. All companies comply—there's been a lot done and much is known about how to do it. 

Sustainable development: Each sector is organized to do different things and that's what they do best. Working together is very important. There's a high poverty rate in the world, so the environment is low on the list of priorities.

Monsanto: The CEO is committed to sustainable development. The sustainable development department explained why it's economically logical for a company to be engaged in sustainable development. The supply/demand imbalance in resource markets:

Land productivity—access to fresh water
Ocean productivity
Market reactions
Creation of market needs
Solutions to meet needs and create value
New system approach/design
New technology

Although I believe strongly that the three sectors should work together, trust is hard. People some in with assumptions. Doing work like this in a corporation is a challenge. Many are non-believers. Some take the leap of faith and care, but still don't really believe. Others have thought it through logically and do believe.

Charles McGlashan
Principal, The Genesys Group
Natural step: Build a discipline of anticipating future regulations/dilemmas trends. Business is increasingly constrained by a declining funnel. Declining amount of natural resources. Increasing affluence and demand for resources. We need to chart a course away from the walls of this funnel.

Brazilian Pulp Mill: Preempted by Scandinavian firm that adopted chlorine-free processes. Also being tackled by Greenpeace for Greenwash— claiming to be green while using chlorine. Sustainability strategy should incorporate social issues and potential behaviors well in advance.

Usually it's a happy accident to find who truly gives a damn. There's a huge disconnect between system rules that drive economic systems and those that drive the earth. Increasing the flow of information will not be enough. The air and water are cleaner, but the issues are more dispersed, harder to see.

We've built a system that is outside reality. The current efforts are not enough—and they're not soon enough—for us to survive. Trick from public policy—shift of public policy towards shifting true costs to consumers. Rate of destruction is driven by us, the consumers, and our buying behavior. We are trapped in a system that doesn't reward alternative behaviors.

We MUST shift the levers that drive our behavior:

Pricing
In stores
Through taxes

Question

Q. Do you see opportunities to start raising taxes in the US to cover costs that can't otherwise be recaptured?

A. from Bob Grady:
Most would say taxes should be used and true costs are not reflected in prices. Iterative prices, the last two times they tried to raise the gas tax, only got $.05 passed each time. It goes in fits and starts.