The world’s top 3,000 companies cause $2.2 trillion dollars in environmental damage per year, according to a study conducted by Trucost for the United Nations (U.N.). The Guardian reported that if these companies had to pay for the damage they are causing, it would wipe out nearly a third of their profits. If you add in the impact of other companies, plus government and household activities, the financial cost is far higher.

Eight years of research went into creating the report which will be published later this year. Richard Mattison, Trucost’s chief operating officer, explained to the Guardian that the goal of the report is to inform and encourage investors to pressure companies to reduce their environmental impact before governments are forced to step in.

Led by economist Pavan Sikhdev, the report may suggest that governments get rid of the billions of dollars in subsidies that they give to harmful and polluting industries each year. Tougher regulations or more taxes may be in store for companies that cannot clean up their act.  Companies need to get ahead of these environmental issues, and make real changes–not just new “green” marketing campaigns.

Mattison also told the Guardian, “What we’re talking about is a completely new paradigm. Externalities of this scale and nature pose a major risk to the global economy, and markets are not fully aware of these risks, nor do they know how to deal with them.”

The largest share of the $2.2 trillion in environmental damage is expected to stem from greenhouse gases emissions. Over use and pollution of freshwater also accounts for a large portion of the environmental damages tally. And while Trucost did not name which sectors caused the most damage ahead of the full report’s release, energy companies, heavy energy and water users, such as aluminum producers, clothing, food, and beverage companies, will be high on the list.

“Another major concern is the risk that companies simply run out of resources they need to operate,” Andrea Moffat of the US-based investor lobby group Ceres told the Guardian.

As we have previously written, water scarcity poses significant risks to companies. This report will confirm that the financial cost of damage being done to the environment is immense. Companies have a real incentive to reduce their negative impact on the environment. If the world reaches a crisis point (where water is scarce or polluted, fisheries collapse, or soil is no longer fertile) there could be a populous backlash against those deemed responsible for the damage.  If so, companies that change to environmentally-friendly operations now could save themselves from having to “pay” for the damages later.

And amid all the finger pointing that will ensue over how we got to a crisis scenario, governments could choose to impose new taxes and regulations to “protect the environment” moving forward. For example, India is considering taxing coal in order to pay for renewable energy development.

So our message to companies is this: Act now, for the good of your company, profits, and the planet. Start by…

• Looking at your business and supply chain from top to bottom.
• Eliminating waste and improve efficiencies. This will improve profitability and reduce your company’s environmental footprint.
• Examining new technologies to power your operations like the Bloom Box, reduce packaging, and adopt water-saving and emissions-saving technologies such as AirDye where you can.
• Creating benchmarks to reduce your environmental impact each year.
• Establishing incentives to encourage your employees to participate.

If we don’t act today, there may not be much profit in our businesses tomorrow.

photo credit: smoke stack from nixter / flickr

The Network for Business Sustainability, a Canadian business organization which claims to be comprised of over 300 researchers, has released a report detailing what the group believes will be the top sustainability challenges for companies in 2010. The report, titled 2010 Knowledge Priorities for Business Sustainability, lists the following seven questions as the top sustainable challenges for businesses:

1. How can we measure and value a firm’s ecological impacts (e.g. ecological footprint)?
2. How can we build a durable, enduring sustainability corporate culture?
3. How can we promote and ensure sustainability within our supply chains?
4. How can we incorporate sustainability into employee incentives?
5. What business risks are associated with water quality and water shortage?
6. What is the aboriginal perspective on business sustainability and what are the best approaches to constructive engagement?
7. Are the concerns of NIMBY-ism borne out?

The presence of question number five signifies that even in water-rich Canada, companies are examining the ways in which water will affect business in the future. The report asks these additional questions focused solely on water risks:

• How can we evaluate the risks of poor water quality and quantity?
• How do the risks differ in different contexts?
• What can we learn about water management within businesses operating in other countries?

Plenty of answers already exist. And while some large companies, such as Intel and MillerCoors, are cognizant of the business risks associated with water scarcity and quality, many others have yet to fully examine this potential problem.

Far more companies are concentrating on measuring their ecological impacts, or creating a sustainable supply chain. However, those questions have far more to do with water than these companies might think. For instance, in order for a company to properly examine its ecological impact, they must include a look at water sourcing, how the company uses water, and what happens to that water after the company uses it.

The same applies to creating a sustainable supply chain. At some point in the supply chain, water is used. In the textile industry, water may be used to grow raw materials or dye garments. A supply chain cannot be “sustainable” if the water used within the supply chain gets polluted or contaminated.

The seven questions outlined by the Network for Business Sustainability are quite important for companies to examine in 2010. However, we have one minor quibble. Because of water’s integral role in almost all companies’ operations, we believe it deserves higher placement on this list. At the very least, risks from water scarcity should have been listed above finding a way to incorporate sustainability in employee incentives.

Interest in creating a sustainable textile industry is growing. At Colorep and Transprint we work with designers and manufacturers serving a variety of markets: from hospitality to health care to fashion. More and more often we’re hearing that these companies are examining the impact of their products cradle-to-cradle and looking for creative solutions to reduce waste, green house gases, and water use.

While we have a suite of solutions around eliminating water and reducing energy demands during the dye process, there are many other opportunities to “green” the textile industry along the entire supply chain.

To bring more people into the conversation and be able to help our customers and colleagues broaden their professional network, we’ve started the LinkedIn Sustainable Textiles group. Membership is growing nicely and has attracted people from the across the U.S., Canada, India, and Pakistan.

The Sustainable Textiles group will quickly become a valuable resource as members post relevant news, ask questions, engage in conversation, even post jobs–all with building a more sustainable textile industry in mind.

Certainly you have something to contribute. Won’t you join us?

In the coming decades, a number of factors will strain the world’s freshwater supplies, increasing the need for effective water management. A growing number of companies have begun to prepare for the ensuing risks and opportunities–and they hope to gain a competitive edge by being better positioned for a future of water scarcity.

why should businesses conserve water?

Freshwater worldwide is limited, mostly inaccessible, and coming under increasing strain from several factors. According to the U.S. Geological Survey (USGS), only three percent of all the water on earth is freshwater. Of that, three percent, 68.7 percent is locked in icecaps and glaciers, 30.1 percent is groundwater, and only 0.3 percent is surface water–water found in lakes, rivers, and swamps.

Available freshwater may face a growing threat from climate change. If the polar ice caps melt, the nearly one-third of the world’s freshwater classified as groundwater could become contaminated along coastal aquifers from rising ocean levels. Changes in weather patterns could reduce the snow or rainfall in areas reliant on those sources of water. An increase in global temperatures could force farmers to use more water to grow crops.

Climate change is not the only force that could increase demand for freshwater. The growing global population and the rising wealth of third world nations are among a myriad factors sure to boost demand. According to the United Nations Population Fund, the world’s population has tripled over the last 70 years, yet water consumption has grown six-fold. Satisfying the needs of 77 million additional people each year requires a greater percentage of the available water.

The current world population is using 54 percent of the accessible freshwater. If consumption rates remain steady, by 2025 our global use of freshwater will reach 70 percent. But if per-capita water consumption rates increase worldwide to the levels in developed nations, 90 percent of freshwater supply could be in use by 2025. As the world’s freshwater needs rise, water management will become an integral part of doing business.

risks and opportunities

The World Resources Institute, Goldman Sachs, and General Electric Co. announced last month an initiative to measure water risks and opportunities. The initiative would include an index to identify and mitigate water-related corporate risks and would provide advice to business leaders and clients on water-related investments. The Water Index would use publicly available data on physical scarcity and water quality, and would examine the regulatory, social, and reputational factors not previously incorporated in water risk assessments. The creation of the index is evidence that these organizations believe water management will be a growing business issue. Some companies, including Walmart and Coca-Cola, are already attacking the water risk issue.

In a study conducted for Walmart, on site water recycling programs were found to save 80 to 90 percent of the water required from municipal water utilities, and 85 percent of the energy required to deliver that water to Walmart. The energy savings from on site wastewater recycling was found to be more significant than the savings from installing solar panels on the roof of that Walmart store.

Coca-Cola, a company already familiar with the social and reputational risks of water scarcity, announced via Chief Executive Neville Isdell that it plans to become water neutral. Though Isdell did not commit to a timetable, he said Coca-Cola wants to ensure that the more than 80 billion gallons of water it uses each year either returns to the earth, or is offset by conservation programs.

While we have already covered the business risks of water scarcity, the creation of a Water Index clearly indicates that leading organizations believe there are worthwhile opportunities for water management. For instance, aging water infrastructure in developed nations will need upgrades and replacement–providing project opportunities for many companies. In the developing world, the construction needs will be even greater.

There are other opportunities, too. Companies like Walmart and Coca-Cola will need technologies to help along their water recycling and management programs. New water extraction methods like desalination will see further deployment to meet rising demand. One such plant is being planned for Southern California. In nations where waterborne illnesses are rampant, purification or filtration technologies are needed to rein in what the World Health Organization calls the “world’s number one killer.” Rivers, lakes, and groundwater have been polluted by industrial waste, giving rise to the need for technologies that could extract the pollutants. Perhaps the most universal opportunity for water management is in agriculture, which accounts for an astonishing 70 percent of the world’s freshwater use annually.

In the greater business community, there seems to be a lack of awareness about impending water scarcity issues, and the business implications of decreasing available freshwater. Water prices worldwide are expected to rise in the coming decades. With demand for freshwater on the rise and supply remaining relatively constant, water volumes available to businesses will be smaller, more difficult to obtain, and more expensive. Water supply shocks in states like California, Texas, and Georgia did little to convince businesses to address the problem, but it’s clear that companies that move first to assess water risks and take action will have an advantage in what is sure to be a big business in the future.

photo credit: Hyflux Ltd

The surf industry, long a bastion of rebels and anti-corporate types, has grown up in the past decade. According to Surf Industry Manufacturer’s Association (SIMA), the combined surf/skate industry posted respectable retail sales of $7.22 billion in 2008. That’s a far cry from the days when most surfboards were shaped in local garages. And while the surf community has generally been comprised of environmentally conscious individuals, the materials and production of surfing equipment and surf wear is at odds with that ideal. Two California companies, however, are working to reduce the environmental impact of traditional production.

Green Foam Blanks and Resurf.org are two San Clemente, Calif.-based organizations trying to add a bit of “sustainability” to the surfing industry. Green Foam Blanks, founded by Joey Stanley and Steve Cox, creates recycled polyurethane “blanks,” the foam core inside of a surfboard. Most of the 750,000 surfboards produced annually are made using polyurethane foam, the production of which releases toxic chemicals, carbon dioxide, and volatile organic compounds into the atmosphere. The company hopes to reduce the demand for new polyurethane by recycling the waste created when shaping a surfboard from a new block of foam. About 20 percent percent of the foam is discarded after shaping a new board, and Green Foam has developed a method of recycling the unused scrap.

“For the last 50 years, all this waste has been going straight to the landfill and still is today,” Santley said in a recent New York Times article.

Resurf.org, a non-profit organization created by the Green Foam founders and Matt Biolos, is recycling neoprene (a common material in wetsuits) to make yoga mats, surfboard leashes, and sandals. The company also takes old or broken surfboards, and reduces them to a dust that has other practical uses, such as filler for asphalt. Neoprene waste from wetsuits is estimated to total 250 tons a year–a significant source of material for recycled products.

Both Green Foam Blanks and Resurf.org are niche players today, but they represent a potentially important shift within the industry towards lower-impact manufacturing.

photo credit: Andy-Beal / Flickr