In this column, we’ve talked quite a lot about the implications of green building and the wider sustainability movement for LBM dealers and distributors. For the most part, the conversation has focused on evolving market opportunities, merchandising appropriate products, and creating operational eco-efficiencies. But are the pursuits of “green” market opportunities and cost-saving efficiencies sufficient to make a business “green” or its leaders green capitalists?
Devotees of Adam Smith might answer, “yes”, as long as such activity maximises profit. It’s the result that counts and if “the invisible hand” does its job, then what’s best for society will emerge naturally through the activities of masses of economic decision makers, each pursuing their own self interest.
Of course, the economic world Smith inhabited was quite different from today’s global corporate economy. But in at least one respect, the reality for a merchant capitalist two hundred years ago is very nearly the same as for many dealers in today’s LBM supply chain. In Smith’s day, the merchant was intimately woven into the fabric of local society and “the invisible hand” operated within an ethical framework that assumed as given the interests of a wide range of stakeholders within the community.
So, was Adam Smith the first “green” economist? No. But notions of green capitalism are becoming just as mainstream, being taught in leading business schools and adopted by leading corporations and green building companies. For locally-focused members of the LBM supply chain, these new articulations of capitalism may already seem familiar. But delving deeper and adopting new approaches to business leadership may hold long term strategic value.
For many, the term “triple bottom line” (TBL) has become the short-hand definition of what a green business is all about. It was coined by John Elkington in the 1990s as a way of joining the concepts of “sustainable development” and “corporate social responsibility”. The idea is that if businesses tracked their performance in the realms of social and environmental impacts, as well as profits, they might then be accounting for their full cost of doing business. And in so doing, would seek to improve where performance lagged, ameliorating social and environmental problems along the way.
Though this sort of formal accounting may be problematic at the moment, there are advantages for LBM dealers who adopt TBL principles or a similar approach. Perhaps the best place to start is with a book that’s required reading for every Green MBA. “Natural Capitalism”, by Paul Hawken (co-founder of Smith & Hawken), Amory Lovins, and L. Hunter Lovins, identifies the four principles of “capitalism as if living systems mattered”: radical resource productivity, biomimicry, service and flow economy, investing in natural capital. In short, by reducing resource use, eliminating waste, rethinking the provision of goods in terms of services, and by treating sources of natural capital (such as local wetlands that naturally purify water, for example) as real sources of wealth to be restored, nurtured and grown, businesses can lower costs, maximise profit, and solve many of the world’s problems.
This alternative vision of capitalism, and others like it, offers a useful strategic framework, especially in light of economic and social challenges we’re sure to face in coming decades. This kind of thinking has already helped companies like Interface in the carpet industry and Steelcase in office furniture, lead their respective industries. In any case, adopting a “natural capitalist” framework will lead a business toward best green and most economic practices as a matter of course. For dealers seeking to win in the green building arena, becoming a green capitalist seems like an important and natural next step.
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