8/24/2017

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Why Environmental Initiatives Fail

Ford's factory on the Rouge River in Dearborn, Michigan, has a storied history. Built before the Great Depression, it held 100,000 workers in its heyday, but in recent decades, the plant was in decline. To signal a rebirth of the company, Ford chairman Bill Ford Jr., decided to remake his great-grandfather's grandest factory. The redesign would also show the company's environmental commitment and "transform a 20th-century industrial icon into a model of 21st-century sustainable manufacturing."

Ford hired star green designer Bill McDonough to rethink the giant plant entirely. After a $2 billion overhaul, the new factory promised to be a paragon of efficiency and environmentally sound design, including a 10-acre "living roof" of grass that that captures rainwater and reduces the energy requirements of the building. The site includes solar panels, fuel cells, and constructed wetlands. Sounds great, right?

Well, yes and no. The green factory may indeed be a marvel. It doesn't, however, begin to address the real environmental issue at Ford: gas guzzling vehicles that contribute to climate change and local air pollution. From a life-cycle perspective, Ford's environmental footprint falls most heavily in the product use phase. Environmentalists won't declare Ford a green company until it makes real and sustained improvements in fuel efficiency and greenhouse gas emissions from its vehicles.

So was the factory redesign a failure? Not entirely. But this initiative accomplished far less than Bill Ford hoped it would. The lesson is that no company can afford to focus narrowly on its own issues--in this case, manufacturing processess--if this means ignoring the big concerns in its value chain. Failing to take seriously the reality of the extended producer responsibility movement stands as number one on the list of fundamental reasons environmental initiatives fail, as revealed by our research.

A quick review of the literature on green business ove the past 10 to 15 years might lead you to think that life was all wine and roses. The published books, articles, and case studies almost exclusively tell stories of environmentally driven initiatives that paid off. A casual reader might even be tempted to believe that corporate environmental strategy offers win-win outcomes all the time.

The reality is much more checkered. In many cases, eco-efficiency efforts and other environmental investments do pay off. But lots of initiatives fall flat. Some don't deliver the promised environmental gains. Others don't work from an economic perspective. Some fail on both accounts.

There's nothing new about that, of course. New product launches come up short every day. Marketing campaigns often don't boost sales. R&D investments sometimes yield nothing. As with these conventional failures, there's a lot to learn from environmental missteps.

As vast as the opportunities for Eco-Advantage are, successfully exploiting them is not easy. To pretend otherwise is foolish.

An excerpt from the book:

Green to Gold: How Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage
By Daniel Esty and Andrew Winston

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