The Post-Carbon Economy Mindset

Question: What incentives are there for companies to work \r\ntoward sustainability? 

Amit Chatterjee: For \r\npublic companies, their primary driver today is still shareholder value.\r\n Meaning that they’re going to look for profits and they’re going to try\r\n to identify ways to maximize their environment or their energy \r\nconsumption so that it still impacts shareholder value. We call this \r\nactually something called "organizational metabolism."

OMI is \r\nvery similar to BMI, right? Your Body Mass Index. The notion that you \r\nhave height as a constraint, because you can’t grow any taller once you \r\nsort of mature age-wise, but your at a weight point, and that weight can\r\n either be something where—ideal weight or can be something where you’d \r\nbe a little bit above ideal weight. Right? There are five things you can\r\n do to sort of help drive down value—or drive down your weight. Right? \r\nIt’s change your diet, exercise, do weightlifting, take diet pills, \r\npotentially do liposuction. Right? 

Each of those different \r\naspects of weight management come with a certain cost as well as a \r\ncertain amount of timeframe. Right? To eat right and exercise everyday, \r\nusually takes nine to 12 months for you to get to the weight that you \r\nwant. If you do liposuction, it’s an in and out procedure, right, in \r\nnine hours. Costs are different, timeframe is different. The same thing \r\nholds true for organizations. When they think about organizational \r\nmetabolism index, they have to think about all the energy waste, or I \r\nsay the energy that comes into the organization, the water that comes \r\ninto the organization, and more importantly, all the raw materials that \r\ncome into the organization and identify a balance and say, "To what \r\nextent is all of this coming in, can I actually lessen it, or green, or \r\nchange the actual consumption that I have of that particular aspect and \r\nlower my greenhouse gas footprint, lower my wastewater, or lower my \r\nsolid waste?" All of this with a profit mentality in mind. 

So as\r\n a result, organizations try to go after this in a meaningful way \r\nwithout having to necessarily compromise their profit motive, but still \r\nbe able to drive shareholder value. It is always important to note, \r\nthough, that there are three main drivers. Right? Number one is cost \r\nsavings, number two is brand equity, and number three is what we call \r\n"risk mitigation." The notion that, "If I run out of a particular raw \r\nmaterial that I’m dependent on, what happens to my business?" And that \r\nforces organizations to start to rethink in a post-carbon economy \r\nmindset, how do I change what I do so that if rice runs out, how do I \r\nstill run a Thai restaurant or an Indian restaurant that’s dependent on \r\nrice? 

Recorded on May 19, 2010
Interviewed by Jessica Liebman

Organizations need to reconsider all of the waste and energy consumption associated with their business—while still keeping profits in mind.

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