ethics news & views: Sustainable success: Interface CEO Ray Anderson on business and the environment

January 28, 2004

Sustainable success: Interface CEO Ray Anderson on business and the environment

Ray Anderson founded Atlanta-based Interface, Inc. in 1973 to provide modular, self-adhesive carpeting to business customers. Interface is now the global leader in commercial floor coverings and related interior products.

As recounted in Anderson's book Mid-Course Corrections, in 1994 customers began to ask what Interface was doing for the environment. A global task force was organized to research and promote Interface's environmental position to its customers. The task force asked Anderson to make the keynote speech at its inaugural meeting. He had no idea what to say.

It was at that time that someone lent him a copy of Paul Hawken's book The Ecology of Commerce. The book changed his life. He urged the task force toward a radical, new goal: first, total environmental sustainability, with no waste products returned to the environment. Then, Interface would strive to become the world's first restorative industrial corporation, not merely not causing environmental damage but actually contributing back to the environment.

Since then, Interface has shifted its operations to what it calls the "Evergreen Lease." Floorcoverings are no longer sold to customers, but rented and then maintained by Interface. This unique arrangement allows the company to insure that its products are recycled.

According to the 2002 annual report, since 1994 landfill wastes have dropped by 79%. Eight percent of the energy used in production is now from renewable resources. The majority of Interface's petroleum-based polyester products are from 100% post-consumer plastic soda bottles, thereby avoiding 39,000 metric tons of green house gas emissions. Cumulative savings from Interface's sustainability efforts now total over $200 million, proving that being ecologically sensitive can be profitable.

Ethics News & Views caught up with Anderson in Interface's corporate headquaters in The Vinings.

Q. Interface has set as its goal 100% environmental sustainability–no waste returned to the environment–a tough goal for a business that makes a petrolum-based product. How is Interface progressing?

Anderson: About a third of the way from where we started. We have a target date—2020. If you extrapolate the rate of progress, a steady pace, we can just about do it.

Q. In Mid-Course Correction you mention your search for "God's currency"–a measurement of the true environmental cost of a product. How is that effort coming along?

Anderson: It’s a mixed bag, you might say. It’s sort of like the Euro, it’s a mixed bag. [Laughter] It’s all these currencies rolled up into one.

What really, in fact, is emerging is the concept of life cycle assessments, so that products are assessed over their entire life, cradle to cradle, not cradle to grave. That is, cradle to grave to reincarnation as a recycled product.

To ascertain a product's environmental impact, we measure on about twelve different scales. So "God’s currency" has twelve different dimensions. One might be global warming, another might be toxicity. Another might be resource utilization. And toxicity itself is lots of different things–what we do to the air is one thing, what we do to the water is another, what we do to our bodies is still another. So "God’s currency" is in fact emerging in terms of quite a number of variables. How you minimize all of them at the same time is the challenge.

Q. Why aren't more companies striving for sustainability?

Anderson: We really don’t know. I’m sure lots of other companies are doing something. But I don’t think anyone’s quite taken the broad, formal approach that we have, aiming for zero impact. I’m sure a lot of people are moving in the general direction, but I don’t know of anyone who has gone beyond where we are, not just in commitment but in achievement. As far as I know, we lead the world.

Q. There is a global movement afoot to demand "transparent" reporting from corporations, not just in the financial sphere but also community and environmental aspects. Is the "transparency movement" helping to move corporate sustainability along?

Anderson: It’s certainly a complementary effort, if not overlapping. You see transparency on our website on the one dimension of the environment, and, secondarily, social equity. But transparency, of course, is bigger than that—it applies across the spectrum. Transparency of financial results is also a part of the picture.

I don’t think I can say that the transparency movement has led other companies to become more ecologically sensitive. I think that transparency is first addressed in terms of financials. The general picture in the corporate world is that we don’t know enough about this ourselves yet to make any bold commitments or bold statements, or exposing what we’re doing. There’s a more basic insecurity about that.

Q. Why aren't more companies following Interface's successful example?

Anderson: We’ve done our best to tell our story. So perhaps people are just not listening. [Laughter]

But I do think that CEOs by in large are missing something important. And I’ve asked myself why that would be, and I think basically it’s because there are three types of CEOs—there are those who founded their companies, those who inherited their companies, and those hired to run their companies. And the latter type is by far the largest segment.

The typical tenure of a CEO in a corporation is maybe ten years. And long range planning is maybe five years, so there is certainly not much of a sense of legacy in that type of CEO. And there’s a short-sighted pressure of the financial market. The focus is generally very short term. You don’t find CEOs thinking about 2020, much less environmental sustainability.

But most CEOs are the “hired gun” type. So think it’s basically my type—the founder or the inheritor—that has the sense of legacy. Where I see the greatest commitment is where the CEO is the founder.

In large companies, that’s rare. In large companies, the founder has already handed over to the “hired gun.” The larger companies are already into many generations of “hired guns.” So you don’t get that sense of legacy. That’s the biggest fundamental reason I can put my finger on.

Q. What might change that?

Anderson: Really, really powerful examples emerging. Companies that have done really, really well by doing good.

I had hoped that Interface would be that example, and I still hope it will be. What we’ve had is the intervening phenomenon of the worst marketplace we’ve ever seen for the last five years. The financial results for Interface have not been there, not because of sustainability, but because of the marketplace in which we’re operating where we haven’t had the financial results commensurate with the model you’d love to present to the industrial world.

When we can get that the financial component really going well, we will be that company, that model. What needs to happen is a sterling, undeniable, highly successful example, in conventional terms as well. What you do speaks mountains more than what you say.

Q. You joined the Center for Ethics' Advisory Council this past semster. What brought you to the Center?

Anderson: Jim Fowler. I’m a great admirer of him, and I would love to do anything I can to help him. I first heard him speak in LaGrange, Georgia, probably nineteen years ago. He was there for an annual event sponsored by the local medical clinic. Jim came and spoke, and I was there.

Q. As a new board member, what dreams do you have for the Center?

Anderson: It’s a little early for me to be having dreams for the Center–I’m just trying to catch up. [Laughter]

I would hope that the Center for Ethics would be the “leaven in the bread” for the entire institution. I would hope that the environmental dimension of ethics will also be developed more fully. That we think of all creation ethically, of stewardship, and not just of humankind. We’re way, way, way too anthropocentric as a culture. Is it possible to put too much value on the human being? It’s a good question to be addressed in ethical terms.

Q. What's next on your plate?

Anderson: The sequel to Mid-Course Correction is hopefully going to be entitled On Course. In that I intend to make the business case for sustainability more powerfully than in Mid-Course Correction.

The missing piece is financial performance, and as we come through this trough that we’ve been in, we’ll have that financial performance. Then we’ll be in a position to talk about the business case for sustainability in terms of the five Ps–people, process, product, profit, and purpose. All with proper attention to place—the sixth P. There must be a seventh one in there. If you can find me a seventh P, I’d be love to hear it.

[ Posted by Chance Hunter at January 28, 2004 02:35 PM |