TranscriptQuestion: What incentives are there for companies to work toward sustainability?
Amit Chatterjee: For public companies, their primary driver today is still shareholder value. Meaning that they’re going to look for profits and they’re going to try to identify ways to maximize their environment or their energy consumption so that it still impacts shareholder value. We call this actually something called "organizational metabolism."
OMI is very similar to BMI, right? Your Body Mass Index. The notion that you have height as a constraint, because you can’t grow any taller once you sort of mature age-wise, but your at a weight point, and that weight can either be something where—ideal weight or can be something where you’d be a little bit above ideal weight. Right? There are five things you can do to sort of help drive down value—or drive down your weight. Right? It’s change your diet, exercise, do weightlifting, take diet pills, potentially do liposuction. Right?
Each of those different aspects of weight management come with a certain cost as well as a certain amount of timeframe. Right? To eat right and exercise everyday, usually takes nine to 12 months for you to get to the weight that you want. If you do liposuction, it’s an in and out procedure, right, in nine hours. Costs are different, timeframe is different. The same thing holds true for organizations. When they think about organizational metabolism index, they have to think about all the energy waste, or I say the energy that comes into the organization, the water that comes into the organization, and more importantly, all the raw materials that come into the organization and identify a balance and say, "To what extent is all of this coming in, can I actually lessen it, or green, or change the actual consumption that I have of that particular aspect and lower my greenhouse gas footprint, lower my wastewater, or lower my solid waste?" All of this with a profit mentality in mind.
So as a result, organizations try to go after this in a meaningful way without having to necessarily compromise their profit motive, but still be able to drive shareholder value. It is always important to note, though, that there are three main drivers. Right? Number one is cost savings, number two is brand equity, and number three is what we call "risk mitigation." The notion that, "If I run out of a particular raw material that I’m dependent on, what happens to my business?" And that forces organizations to start to rethink in a post-carbon economy mindset, how do I change what I do so that if rice runs out, how do I still run a Thai restaurant or an Indian restaurant that’s dependent on rice?
Interviewed by Jessica Liebman