PCDForum Column #66,   Release Date January 25, 1994

by Paul Hawken and William McDonough

Recycled toner cartridges, sustainably harvested timber, soy-based inks, and monetary gifts to nonprofits will not place commerce on the path to sustainability. Business is changing in response to the environmental crisis, but even if every company on the planet were to adopt the best environmental practices of the most environmentally conscious, the world would still be moving toward sure degradation and collapse. What we face is not a management problem so much as a design problem. Our present industrial system is linear. However, it is imbedded in and dependent on natural systems that are circular. This mismatch makes the industrial system unsustainable, until we redesign it to imitate natural systems. We believe it can be done and suggest the following objectives as a guide.

1. Eliminate the Concept of Waste. The redesigned system must deal with three types of product. The first are consumables, products whose waste when placed on the ground becomes food for other living systems without harmful side effects. These products go on the compost heap. The second are products of service. These are assembled durable products such as cars, TVs, computers, and refrigerators. These would be leased from the original manufacturer, who would be responsible for their 100 percent recycling. This would create a very different design and materials ethic. Third are unsalables, dangerous non-biodegradable materials such as radioactive material, heavy metals, and persistent toxins. These would always belong to the original maker, who would be fully responsible for the costs of their storage and containment and liable for any damages resulting from their discharge.

2. Restore Accountability of the Corporation. The charter of incorporation is a revocable dispensation that was supposed to ensure the accountability of the corporation to society as a whole. When any corporation continually harms, abuses, or violates the public trust, citizens should have the right to revoke the company’s charter, sell off its enterprises to other companies, and put it out of business. Employees would have jobs with the new owners, but the management would be out.

3. Make Prices Reflect Full Costs. The cost of every purchase should reflect not only the direct cost of production, but also the cost to the air, water, and soil; the cost to future generations; the cost to worker health; and the cost of water, pollution, and toxicity. We can make this happen by replacing the present tax system with green fees added onto products, energy, services, and raw materials to bring their prices more closely in line with their true costs. Eventually the cost of products using nonrenewable resources, extractive energy, and industrial modes of production would be more expensive than those based on renewable resources, solar hydrogen, and biological methods of agriculture.

4. Promote Diversity. Commerce must have unconditioned respect for the complexity of nature and the needs of a diverse human population. We need to take an inventory of the global ecology, enhance our understanding of its dynamics, and learn what we can and cannot do with it.

5. Make Conservation Profitable. It is possible, by turning resource companies into public utilities, to create a regulatory and rate setting framework under which it becomes profitable for a company to invest in conservation. The concept has been demonstrated in electric utilities where fee setting structures have created a profit incentive for them to subsidize their customers’ to invest in energy saving technologies.

6. Insist on the Accountability of Nations. No program of green fees to support full-cost pricing will be effective in one market place if companies can circumvent these fees by bringing in products produced where these fees are not applied. As a result, we should reverse the thrust of current trade policies and propose a new tariff based on the most sustainable nation (MSN) principle. Low or no tariffs would be granted on products from countries that practiced sustained-yield harvesting of resources, that did not despoil the environment, that did not allow worker exploitation, and that did not have corrupt government officials selling off tribal forests to the highest corporate bidder. Nations that continue to ruin peoples and lands would be penalized by significantly higher tariffs that would reinstate the costs those countries thought were being “saved” by taking social and environmental shortcuts.

7. Restore the Guardian. There can be no healthy business sector without a healthy governing sector. The guardian system has broken down because of the control exercised by business. Furthermore, undue influence of business over government is now actively preventing the economy from evolving toward sustainability. It is time to get business out of government.

It is time for those of us both within and outside of business who are concerned about the future of our planet to work together to redesign the system within which business functions. We hope these objectives may provide a useful initial guide.

Paul Hawken is the author of The Ecology of Commerce. William McDonough is an architect. This column is produced and distributed by the People-Centered Development Forum based on their article “Seven Steps to Doing Good Business,” in Inc., November 1993.

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