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 / Fall 2005 / Issue 40(originally published by Booz & Company)


Materials Witnesses

When companies come together to save the world, what’s more compelling — environmental results or competitive advantage?

Illustration by Lars Leetaru
During the past decade or so, people have increasingly looked to the private sector for solutions to global environmental problems — and the private sector has grown increasingly interested in providing them. BP’s former chairman Lord John Browne, GE CEO Jeffrey Immelt, and Nissan CEO Carlos Ghosn, among many other corporate chief executives, have gone on record naming ecological sustainability as a central component of their corporate strategies. For every CEO joining the bandwagon, there are seemingly hundreds, perhaps thousands, of midlevel managers and engineers trying to implement solutions on the ground.

Which naturally raises the question: What kind of effect does the current wave of corporate environmentalism have — both on business culture and on the environment? For the past year, I’ve been paying close attention to a group whose work provides a living answer to that question: a particularly passionate consortium known as the Materials Pooling Project. Their stumbling but persistent progress demonstrates exactly how difficult the environmental challenge will be for most of the corporate world.

Some members of the consortium are household-name companies: Nike, Ford, BP, Unilever, Harley-Davidson, Hewlett-Packard. Others are specialized, innovative manufacturers with an environmental identity: Aveda (a division of Estée Lauder dedicated to ecological cosmetics) and Plug Power (a pioneering fuel cell company). The consortium also includes Sikorsky (a helicopter manufacturer), Pratt & Whitney (the jet engine division of United Technologies Corporation), and about 20 component and commodity suppliers at various times, of which the largest and most consistently present is Visteon, a former division of Ford. They come together under the joint auspices of the Rocky Mountain Institute (or RMI, a well-known think tank led by energy-efficiency and “hypercar” expert Amory Lovins) and the Society for Organizational Learning (or SoL, an international group focused on organizational learning practice, founded by Fifth Discipline author Peter Senge).

Materials pooling is supply chain management across corporate–customer boundaries — in this case, for environmental ends. In its simplest form, manufacturers pool their purchasing power to favor raw materials that are freer of toxins and waste, and easier to recycle or reuse; this gives suppliers more of an incentive to provide such materials. But that collaboration inevitably means sharing information, articulating definitions of such evanescent concepts as “toxins” and “waste,” and ultimately opening the door to new intercompany relationships. Hence the attraction of such projects: The managers involved in the RMI/SoL Materials Pooling Project are enthusiastic, innovative, and capable, and their story is inspirational. I was immediately drawn to write about it when I heard their presentation at a 2004 Society for Organizational Learning conference. But their story is also sobering.

Once, companies thought it would be hard to build partnerships with environmental groups. In fact, that proved to be easy: DuPont and McDonald’s have maintained close working relationships with the Environmental Defense Fund (now called Environmental Defense) for almost 20 years. The truly hard part turns out to be forging and maintaining relationships with other companies, especially competitors. In fact, there is a direct clash between the collaboration needed for genuine environmental impact and the control over information that is needed to maintain a competitive advantage. The Materials Pooling Project’s slow start is a result of these warring imperatives, and thus has something to teach any executive who wonders why his or her company’s environmental initiatives — or, indeed, any supply chain initiative — are failing to gain traction.

Reframing Industrial Society
In the last few years, supply chain management in general has moved away from an ethic of squeezing suppliers and pitting them against one another to a more cooperative ethic based on long-term relationships. (See “Building the Advantaged Supply Network,” by Bill Jackson and Conrad Winkler, s+b, Fall 2004.) The materials pooling concept represents a similar move, a shift from fighting regulators separately to collaborating on solutions that regulators never thought of. There are pooling projects for automobile parts (, consumer product containers (the Sustainable Packaging Coalition), cotton (the Organic Exchange), and environmentally benign lumber (the Forest Stewardship Council, known for certifying the wood carried in stores like Home Depot). But the RMI/SoL Materials Pooling Project is unique: It operates across a variety of industries. Its members have thus learned to talk about highly technical subjects, like ma-terials specifications, with a rare quality of freewheeling transparency. This is what keeps many of the participants interested; indeed, it’s an inherent part of the culture of both Rocky Mountain Institute and the Society for Organizational Learning, and thus originally helped to attract the man who instigated the project, Michael Braungart.

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