Balancing act

Autodesk’s Ecotect software helps designers measure environmental effects.

The drumbeat of bad economic news has been the soundtrack to all kinds of adaptations over the last six months: layoffs, budget trimming, bankruptcies and more. But in spite of widespread cost-cutting measures, it appears that most companies’ sustainability programs are relatively safe, in part because a focus on public policy changes, consumer awareness and energy price volatility remain. Companies that recognize the return on investment of sustainability initiatives such as energy efficiency and employee satisfaction aren’t letting a few bad fiscal quarters derail their long-term sustainability plans. In addition, most companies that have integrated sustainability programs into the core of their businesses, rather than creating peripheral programs to garner good PR, are more likely to survive and thrive in the recession.

“People feel more invested in the companies; they have a sense of upholding values,” says John Talberth, senior economist for Center for a Sustainable Economy, a public policy think tank. “They’re more likely to work together to get through the crisis than companies that haven’t really paid attention to the sustainability agenda.”

This phenomenon has played out at Interface Inc. (Nasdaq: IFSIA), the largest manufacturer of modular carpet in the world, which has a reputation for its aggressive sustainability initiatives. “[Our approach] has galvanized our employees, allowing them to come to work and do something more than just make carpet,” says Erin Meezan, the company’s vice president of sustainability. That morale boost has kept Interface moving forward on its sustainability initiatives in spite of recent sales declines in line with the rest of the overall market.  
Interface is proof that a serious commitment to sustainability can be profitable. Yet during a recession, even Interface is scaling back its sustainability budget. It laid off one of its five-person corporate sustainability team in December 2008.
 
Sustainable practices, sustainable products
For Blaine, Minn.–based Aveda, which uses some naturally derived ingredients in its beauty products, sustainability is vital to its success. Since 1999, Aveda has raised more than $11 million on behalf of NGOs, such as the Global Greengrants Fund and the Tribal Links Fund, that help indigenous people live sustainably in their environment and have a voice in their future. The company, which was purchased by Estée Lauder Companies Inc. (NYSE: EL) in 1997, remains steadfast in its commitment to such things as purchasing certified organic ingredients and using at least 80 percent post-consumer recycled content in its packaging.

Aveda has reportedly converted 90 percent of total tonnage of essential oils used to certified organic, and in 2008, it became the first beauty company to receive Cradle to Cradle certification for four botanical ingredients: sandalwood oil from Australia, rose oil and lavender oil from Bulgaria and uruku from Brazil. It also sources 100 percent of the power used in its manufacturing process from wind, according to Evan Miller, Aveda’s director of new and environmental media. “Being environmentally and socially friendly is just as important to us as creating products people like,” Miller says. “We aren’t willing to compromise.”

And maybe the company doesn’t have to. Miller says Aveda believes its approach makes it more competitive, even in a down market. While its parent company Estée Lauder is planning a company-wide 6 percent layoff preceding a 6 percent decline in revenue in the fourth quarter of 2008, Aveda’s sustainability staff and sustainability initiatives have so far not been affected, according to Miller.

“People are going to spend money. But market research shows that in times of recession, they want to give money to something that’s going to help other people or the environment,” Miller says.

San Rafael, Calif.–based Autodesk (Nasdaq: ADSK), which creates 2D and 3D software for the building, media and manufacturing industries, has built environmental protection into its product. Professionals tackle new design constraints around material toxicity, and water and energy use. “Designers are making decisions every day that affect climate and water and the different challenges we’re confronting,” says Lynelle Cameron, Autodesk’s sustainability director. “To make it easy for designers to make the right decisions, we’re building this into our core set of product tools rather than niche green innovation tools.”