What is Real Sustainability in Business?

Can “sustainability” evolve to become more ?than just a fuzzy marketing term and deliver bottom-line results? ?Several local businesses think the answer is yes – maybe?.


Can “sustainability” evolve to become more 
than just a fuzzy marketing term and deliver bottom-line results? 
Several local businesses think the answer is yes – maybe

Back in 2005, Denise Taschereau came by Mark Trotzuk’s showroom on East Hastings to have a look at some apparel. She was director of sustainability for Mountain Equipment Co-op; he was a former banker who had morphed a clothing line into a corporate garment manufacturing company. The way he remembers their meeting, she looked around at his shirts and jackets and took a toxic inventory. 

“Wait a minute,” she said. “This has heavy metals in it, this has petroleum products, this has formaldehyde.”

“Really?” he asked, picturing a shirt acting like a nicorette patch, slowly leaching chemicals into his skin. “I guess I have to do something about it.” 

“You don’t have to do anything,” she replied. “Do you want to?”

Apparently he did. Flash forward to 2011, and his clothing has an altogether different anatomy. One January morning, in his office at TNT Garment Manufacturing Ltd. (head office and the company’s Boardroom Eco Apparel showroom are now at 1201 Franklin St.), Trotzuk shows me a glacier-toned men’s base-layer crewneck. The lightweight fabric is made of 50 per cent recycled polyester and also contains ground-up coconut shells. But more to the point, he pulls a thick binder off the shelf to prove to me what is not in the shirt. Never mind the heavy metals or petroleum. There are no halogenated or aromatic compounds here either. No chlorinated aromatics, no alkyl phenyl ethoxylates, and no polyurethane that is capable of releasing any of the carcinogenic amines listed in Appendix B. Every fabric, toggle, thread, trim, zipper, button, tag and cross-hatch in this shirt and the majority of his other garments is perfectly safe, according to the rigorous standards of the Switzerland-based independent auditor Bluesign Technologies. A Bluesign-approved factory has met environmental standards that address the entire industrial process, from raw materials and energy going in, to water and emissions going out. Every component is manufactured in an approved facility or sent away for chemical testing, and Trotzuk keeps the reports in this binder. 

Taschereau now runs a business called Fairware Promotional Products Ltd., which sources sustainable giftware for corporate, educational and non-profit clients. She remembers their initial meeting as less finger-pointing and more general discussion of the chemicals involved in fabric production. When Trotzuk told her a few months later that he was looking into Bluesign, she laughed. At the time she was sitting in on discussions with representatives from companies such as Nike and Timberland, who said the Bluesign standards were just too difficult. “I think Mark is doing the most robust, deepest work on sustainable textiles of anyone in the industry,” she says. “He’s miles ahead.” 

What is sustainability?

The definition of sustainability is most often traced back to the 1987 Brundtland Commission report, a UN study that addressed economic, environmental and social concerns around the world. It defines sustainability as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” The term tends to be used interchangeably with “corporate social responsibility,” which dates back to at least 1967 in a book by Clarence Walton, but that term focuses more on the environment.

Mark Trotzuk does not often use the S-word, which he finds a bit fuzzy. He prefers numbers and specifics. He knows, for example, that his business generated 101 tonnes of greenhouse gas emissions in 2009, nine tonnes less than the previous year. Eighty per cent of his clothing is sewn here at his factory. A flowchart illustrating his closed-loop apparel recycling program outlines efforts to reduce waste and pollution through every stage of manufacturing, sales and end use. 

Claiming to be sustainable, however, is misleading, Trotzuk says, because it’s not an absolute state. “We don’t sell environmentally friendly clothing,” he insists. “There’s no such thing. There’s always impact.” 

Trotzuk, who at 45 looks fit and perpetually well-rested, does not do yoga. He played hockey while doing his agriculture and economics degree at UBC and still plays in a Thunderbirds alumni league. Under his jersey he wears a ratty old cotton T-shirt, which he chooses over his highly technical athletic gear – for sentimental reasons but also because the most sustainable use of clothing is to wear it to shreds. His company doesn’t directly compete with Lululemon, as he sells through agents who deal with corporate clients, but he does give the apparel titan a bit of a hip check when he brings up the recent recall of Lululemon’s reusable shopping bags. The ink used to print such self-affirming faux-philosophy as Dance, Sing, Floss and Travel, was found to contain lead. “That,” Trotzuk points out, “would never happen with Bluesign.” 


TNT Garment Manufacturing
Mark Trotzuk overhauled his line of custom
clothing after learning it was leaching poisons.

The bottom line in sustainability

But for all his research, measuring and modifying, Trotzuk will not say that being sustainable is good for the bottom line. His annual production of 100,000 to 200,000 units – including shirts, pullovers, jackets, accessories, pants, and a women’s line of clothing called Echorain – has been stable over the last five years, and he’s ­comfortable with revenues below $10 million. He doesn’t know the premium on a Bluesign garment, or how much he spends on all these efforts. Several large corporate sponsors of the 2010 Olympics enlisted his company to make their uniforms because they wanted local and sustainable, but in general he’s not sure whether he benefits by serving a niche market. He’s realized a profit every year in operation, however, and doesn’t feel the need to go huge. 

Trotzuk believes that legislation such as the 2008 U.S. Consumer Product Safety Improvement Act, which requires companies to certify that imported products conform to an enormous list of standards, shows that the game is changing and eventually he will be ahead of the competition. But really, he does it more or less for his own reasons. “It’s a pain in the ass,” he concedes, and laughs. “I just wanted to do it. Do people care? Not really.” If people like the style, the quality and the price, they’ll buy it, he says, regardless of whether it’s Bluesign-certified.

Socially conscious consumerism

June Cotte is an associate professor of marketing at the Richard Ivey School of Business at the University of Western Ontario. She has completed a systematic review of 30 years of research into socially conscious consumerism. Countless anecdotes and surveys suggest that many consumers will buy sustainable products and services at great premiums, but that research is flawed because people’s self-reported intentions are often far better than their actions. Recent research, Cotte says, indicates that Mark Trotzuk is essentially right: most of us will buy a sustainable product only if quality, performance and price are equal to the conventional product. 

But then there is the flipside of Cotte’s research: that while there’s little reward from consumers for being sustainable, if they don’t like the way you do business, they punish you by expecting to pay far less. “One of the things I say to firms is, if you’re seen as not trying on the things your consumer group cares about, 
then you’re not even going to be able to charge the market rate,” Cotte explains. “So in a hard-nosed business-case sense, this is becoming an arms race and you better keep up.” 

Cotte also points to consumer fatigue. “The thing that is particularly worrisome when you work in this area is that the more consumers know, the more conflicted they usually are,” she says. “I use the example of the tomato. In the middle of winter the Chilean tomato actually has a smaller carbon footprint than the local tomato, which makes sense when you think about how leaky those greenhouses are and what they cost to heat. The simple answer is not just, ‘Tell them more.’” 

Does sustainability sell?

Bob Rennie agrees with Cotte that more information is not necessarily the answer. He has been given the task of selling the discounted remaining units of the Millennium Water development at Vancouver’s Olympic Village. It was conceived as a model sustainable community built to LEED Platinum standards, and the condos boast Cadillac green features such as radiant capillary ceilings for heating and cooling, and thermal storage to conserve energy. Sales suffered because of the economic downturn and the fact that the village had to be occupied through the Olympics, Rennie says, but he concedes that the green features are not an automatic selling point. “Unfortunately when you explain to the consumer too many green initiatives, they don’t even conceptualize it properly. Their reaction is, ‘I’m saving the planet at my expense.’ If they have two ovens, when their friends come over they have value, they look successful. But when it’s green initiatives, they’re helping everybody else and footing the bill.” 

Depending on the level of LEED, Rennie estimates that a green building can carry between a two and 12 per cent price premium. Now that the city of Vancouver requires a minimum LEED rating for all new rezonings, he says, developers respond by choosing the least expensive features to gain points, like car plug-ins – features that don’t necessarily mean anything to the buyer. What Rennie would like to see is a “second generation” of green standards, framed in language the consumer understands. “What we need are things that the consumer can quantify. ‘Okay, my heating bill is 20 per cent less,’ a button by the front door so they can turn all the electricity off. People understand that. But it has to be things that people can measure.” 

Rennie estimates that less than half the buyers of Millennium Water will buy because it’s green, but that’s progress, according to Peter Busby, the pioneering green architect whose firm has designed many LEED Platinum projects. “If Bob Rennie says less than 50 per cent, that means more than 40 per cent,” says Busby. “So we’ve gone from zero to 45 in 10 years.” 

Busby Perkins + Will designed Victoria’s Dockside Green, another LEED Platinum project. The architect counters that ultra-green developments can be done at no extra cost. The buildings of Dockside, he says, cost five per cent more than a conventional condo, but the on-site sewage-treatment and water-collection systems produced savings in the infrastructure that paid for the premium. “Where Bob’s problem is,” Busby contends, “is that those are very expensive condos, so the people buying there, they’ve got one to two million dollars; that’s not their priority. Maybe they’re not concerned. The younger, just-out-of-university students are very interested in green. They’re all environmentalists.” 

[pagebreak]Does it pay to be sustainable?

According to June Cotte, however, there is no coherent view of who is a socially conscious consumer. All the usual measurements used in consumer research, such as age, gender, income, education, country and attitudes, are not helpful. What she will say about that group of committed green buyers, however, is good news for people like Mark Trotzuk and Bob Rennie: it’s growing. 

If we broaden the question from, Does it pay to make sustainable products? to, Does it pay to be sustainable? the answers get more indefinite and more interesting. John Peloza, an assistant professor of business at SFU, has focused much of his research on this area. After publishing a review of 159 studies examining whether it pays to be good, he concludes with “Probably; it depends.” That is, there is a small but positive relationship between a company’s sustainability investment and its financial performance. However, he says there is still a big problem of causality: Do sustainability activities improve financial performance, or does financial performance give firms more resources to invest in sustainability?

As well, the relationship is not linear. “It’s not like, if I invest a dollar in sustainability, I get a dollar back. There’s no steady increment and it doesn’t rise at a continual rate,” he says, explaining that there are all kinds of theories and shapes of curves describing that relationship. “The firms that do very little generally have poor performance, and as you start to do a bit more generally the performance goes up. But at a certain point, performance goes down again. So if you do too much, you’re sort of over-investing.” 

Even if it’s more art than science, Peloza says it’s important to make a business case for sustainability. Financial metrics turn abstract concepts into a common corporate language and help managers to choose from the endless ways to invest. As with any other business expenditure, managers are expected to clearly quantify how their programs affect the bottom line. He gives three categories of metrics: financial, such as return on equity from a profitable sustainable product line; operational, such as the money saved from using less paper; and strategic, which describes the firm’s improved ability to create value and manage risk. 

The first two, financial and operational, are relatively straightforward. Figuring out how much money the company saved on energy-efficient light bulbs is easy to do. That kind of “low-hanging fruit,” says Peloza, tends to be gone. Most of the business value in sustainability now lies in strategic impacts, which are the most intangible. “How do we know what our employees think about our programs and how do we get at what kind of impact that has, not only to the things that are relatively easy to measure like turnover rates, hiring costs, etc. but then to productivity? People are working harder and finding ways to innovate, helping each other out. We know that the kinds of things companies do around sustainability impact those kinds of behaviours, so how do we measure that? Researchers over the last 30 years have not really delved into this because it’s messy and complex. But that’s where we’ve gotten to now.” 

Corporate social responsibility

Andrew Wilczynski, manager of corporate social responsibility at Telus, touches on all those metrics. “The traditional approach would see sustainability as a feel-good type of expense,” he says, “but over the last decade, there’s been a shift in the way companies approach it, to being really core and strategic in terms of the operations.” Wilczynski points to a Telus program that allows employees to work from home. The flexibility helps the company retain older employees and attract new ones, and provides the social benefit of saving people commuting time. There are also environmental (fewer cars on the road) and economic (less office space) benefits. Wilczynski says approximately 18,000 out of about 26,000 domestic Telus employees are currently enabled to work remotely, including 1,000 call centre agents. The company aims to have 30 per cent of its work force working full-time from home, and another 40 per cent working part-time from home, by 2015. 

On its website, Telus highlights the role of communications technology in reducing environmental impact. That is a good example of what SFU’s Peloza calls “self-oriented value,” which means that the customer gets the benefit. “Most people have the erroneous notion that sustainability activities are a form of other-oriented value. So if you buy fair-trade coffee, someone else gets the benefit. But research shows that consumers will not give up functional value for ethical, so if you can tie those things together and say, ‘You’ll get a warm fuzzy feeling and a good product’ – that makes it much more compelling from a customer point of view. You need a balanced portfolio of value, but the most important is self-oriented value.” 

Stephanie Bertels is a self-proclaimed former “placard-waving environmentalist” who picked up a bachelor of science degree in environmental engineering from Queen’s University and a master’s degree in petroleum engineering from Stanford University before working as an environmental engineer for the engineering firm Golder Associates. She then did a PhD in business strategy and sustainable development at the University of Calgary, and is now an assistant professor of business at SFU. She recently completed a report called “Embedding Sustainability in Organizational Culture,” reviewing 179 research articles. The most advanced companies, she says, are moving beyond the business case (if I don’t do this, I’ll lose market position) and also beyond the idea of social license to operate (if I don’t do this, no one will want to do business with me). “The current framing, which seems to have much more traction,” she explains, “is the opportunity to revitalize the business and the opportunity to envision what the business will be in 20 years and use this as a leverage point for meaningful change in the organization.” 

“Framing,” or how you communicate the message, is one of many strategies for embedding sustainability that Bertels evaluates in the report. She understands Mark Trotzuk’s discomfort with the word itself, but she doesn’t share it. “I think the power is in its lack of definition,” she says, “and that’s the beauty of frames.” 


Rob Safrata Novex Courier
Rob Safrata’s Novex Courier vehicles carry their
own message of what he calls “conspicuous

The executives of one company Bertels has worked with, Suncor Energy Inc., have put a lot of time and thought into exactly how they articulate the notion of sustainability to different audiences. Although they were successfully communicating those efforts externally (Fortune magazine named the company one of its Ten Green Giants in 2007), the word had contested meaning internally. Employees on the operations level kept talking about sustainability as something done by head office in Calgary. “If you talk about the triple bottom line, promoting social well-being and preserving the environment with a young truck driver in Fort McMurray, it’s not going to resonate,” Bertels says. “So for him, it had to be framed as ‘operational excellence.’ Your job is to do things right, be safe, not spill stuff on the ground.” 

Rolling “sustainability” into the broader context of “operational excellence” in internal communications was a crucial shift. It was the same message, just different language. Part of the effort was to break down the old paradigm that sustainability and profits are necessarily at odds. “Suncor said, ‘This is not something extra that we’re doing, this is core to our operations,’” she explains. “They were really trying to make the point internally that facilities with environmental compliance have high productivity, because those are the facilities where people care, where they prioritize health and safety and the environment. Operational excellence is about all those things; it’s not about trading one off the other.”

Rob Safrata, CEO of Richmond-based Novex Couriers, has gone a long way in embedding sustainability into his business. After taking Novex over in 2001, he started with an environmental assessment. The company’s biggest source of carbon emissions was obvious: the vehicles, which together travel as much as 20,000 kilometres a day. He began to convert the fleet to hybrid cars, natural-gas vans and electric trucks, and he estimates that the new vehicles now save about 88 tonnes of CO2 a year. The vehicles advertise their own environmental virtue, a good example of “self-oriented value” or what Safrata calls “conspicuous sustainability.” 

Spurred on by his wife Jacqueline Koerner, the founding chair of Ecotrust Canada, Safrata followed with dozens of initiatives, including reducing paper, water and energy, composting, and adding a training budget that employees can use for a gym membership, a cooking class, a family activity, or “anything that brings you energy and makes you happy.” The benefits of these are many, he says, including saving money, reducing risk, lowering staff turnover and receiving better job applications. Several customers have come to Novex specifically because of its green delivery services. And there are those impalpable paybacks as well. “When people are proud, there is tremendous energy,” Safrata says, “and that’s something that has stayed. It gets us through some tough times.”

Safrata’s business follows the triple bottom line philosophy (people, planet and profit), but he stresses that it’s not a chicken-and-egg relationship: profit is definitely the most important. Still, he identifies with Bertels’s point that the deeper you go, the less important it is to prove that sustainability pays off. The habits become like breathing: natural and necessary and unworthy of comment. Let’s call it post-sustainability, or maybe just nothing. “I always laugh when I hear somebody say, ‘Let’s make our business more sustainable’ and they sort of use the word any way they want. They throw it in there because you’re supposed to,” he says. “We don’t think of it as being a sustainable business or operating sustainably. It’s just how we do business. I can’t imagine doing it any other way.”


Climate Capitalism

Climate Capitalism

When Boyd Cohen finished his PhD in business at the University of Colorado, one of his advisers gave him the book Natural Capitalism. “When I read that book,” he recalls, “I had that whole epiphany that, could you actually have a business doing the right thing and make money doing it? I thought that’s something I could really enjoy doing as a career.” After several years of teaching and research in that area, including an assistant professorship at SFU, Cohen decided to leave academia to start up his own green business. He now runs a Vancouver-based company called CO2Impact Social Carbon Inc., which develops carbon-offset projects in Latin America and Canada focusing on energy efficiency, bioenergy and coal-mine methane-emission reductions. It sells the carbon offsets in markets in Europe and North America. 

In 2001 Cohen met Hunter Lovins, one of the writers of Natural Capitalism, and later convinced her to help him write a sequel. Their book, Climate Capitalism, will be released this month by Farrar, Straus & Giroux. It looks at the business opportunities in climate change in a number of economic sectors. One of the examples is Wal-Mart, whose program of improving energy efficiency in all stores and facilities is expected to save $300 million a year. “We’re focusing on examples where companies are making more money because they’re addressing climate change,” says Cohen. “That, I think, is how to make businesses embrace things faster, to say it’s all about money.”