What Adam Smith Said About Making Businesses Sustainable

Adam Smith said many insightful things in his book An Inquiry into the Nature and Causes of the Wealth of Nations. He didn't have a great deal to say about what we currently call "sustainability", the efforts of companies to be more "green". But he did point out what motivates businesspeople to do things, and these motivations also apply to getting businesses to reduce their (and thus our) environmental impacts.

Green is nice, but the real reason companies do it is to save money.

Unless you are a hermit or a subsistance farmer disconnected from all commerce, most of your environmental impact is due to things you buy. That includes food, shelter, electricity, gas, water, stuff (like cars, clothes, books, or electronics), services (like travel, education, entertainment, cloud computing, waste disposal, or health care), food, motor fuel, public services, and all sorts of other purchases. Thus your environmental footprint is essentially the environmental footprint of the producers and deliverers of those products and services--mostly businesses. They affect the environment as they produce and deliver those things you demand.

You can reduce your environmental footprint by buying and consuming less of those products and services. For example, you could probably cut your carbon footprint in half by taking fewer car and airplane trips (if any) and using a bicycle or telepresence instead. Or maybe you could eat less beef.

But those businesses (or public agencies) that provide those products and services could also help you reduce your environmental footprint by becoming more efficient in their own operations. And they have a very strong motivation to become more efficient: it can save them money and thus increase their profits.

Self-Interest Gets Things Done

We can try to urge businesses to be more sustainable for the good of the planet, or we can try to force them to be more sustainable with laws and regulations. But as Professor Smith perceived, the strongest motivation for any business is its own self interest. And if you look at what businesses are actually doing that results in reduced environmental footprints you can see that saving money, increasing sales, and remaining competitive is exactly what is driving them.

(For some examples and more discussion of why and how businesses can be more efficient, and more green, and more profitable, you are welcome to access the free Talearnt Green Tech Basics of Business Sustainability mini-course.)

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You can read this famous passage of The Wealth of Nations here.

The Pitfalls of "Green" Standards: Defeat of EPEAT?

EPEAT^® is an environmental rating system that is supposed to help buyers choose green and sustainable computers and electronic equipment. Recyclability is one of its criteria. But apparently modern tablets and mobile devices don't fit easily into its standards. Apple has withdrawn all its certified products and won't submit future products for approval. Does this mean EPEAT is obsolete? What does this suggest for other "green" standards?

[Update 2012-07-13 2245gmt: Apple has announced that it will rejoin the EPEAT system and that all of its products that were formerly registered there are back on the EPEAT list. However, "We look forward to working with EPEAT as their rating system and the underlying IEEE 1680.1 standard evolve." Such standards have to evolve if newer, cooler products are to receive the EPEAT certification. Much of this post is still relevant: Certification systems need to be adaptable if they are not to be left behind by advancing technology.] [See further updates below.]

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The voluntary EPEAT standard was developed in 2003-2004 by a team representing "manufacturing, environmental advocacy, academic, trade association, government and recycling entities", including Apple Computer Inc.

However, computers have evolved quite a bit from the desktops, CRTs and laptops of that period. Apparently Apple has decided that its current and future designs will be unable to be disassembled and recycled as the EPEAT standard requires. So it has asked that its products be removed from the registry, and will not submit products for certification in the future (see this WSJ blog post).

According to that post,

One of Apple’s newest products, the MacBook Pro with a high-resolution “Retina” display, was nearly impossible to fully disassemble, said Kyle Wiens, co-founder of iFixit.com, a website that provides directions for users to repair their own machines. The battery was glued to the case, and the glass display was glued to its back. The product, released just a month ago, had not been submitted for EPEAT certification, according to the organization.

[Robert] Frisbee[, CEO of EPEAT,] said that the structure of that laptop would have made it ineligible for certification. “If the battery is glued to the case it means you can’t recycle the case and you can’t recycle the battery,” Frisbee said.

Presumably other manufacturers of tablets, smartphones, and newer laptops are facing similar design challenges. (No tablets are listed in the EPEAT registry.)

Green Standards

This situation raises a question that applies to all green certification, labeling, and registration schemes: What happens when technology outruns your carefully crafted compromise criteria?

And what happens when an obsolete certification scheme has become embedded in purchasing requirements? Many educational and public-sector institutions have established purchasing preference for EPEAT-registered electronic equipment. ("On 2007-01-24, President George W. Bush issued Executive Order 13423, which requires all United States Federal agencies to use EPEAT when purchasing computer systems." Source Wikipedia article.) Presumably educational institutions and government agencies will still want to buy Apple products sometimes. They will have to find ways to work around their outdated purchasing rules. Or maybe they will forego Apple products, as San Francisco threatens to do.

There are hundreds of green seals, badges, certifications and the like. Some, like ENERGY STAR, are managed by government agencies. Others, like LEED, UL Environment, and Marine Stewardship Council, and  are administered by industry groups or private organizations. All are meant to provide a shorthand way to communicate with purchasers, compressing elaborate evaluation criteria into a simple symbol or three- or four-level rating ("platinum, gold, silver, bronze").

It is a symptom of all such efforts to cram real-world complexity into a few simple categories that much information is lost, and sometimes unintended consequences result. Maybe such "seals of approval" make sense on a consumer product. They show that someone (but who?) has done some homework for you (and how?). But this is the information age: purchasing managers should be able to handle a certain degree of complexity.

[Update 2012-07-16 1500gmt: EPEAT has issued a statement welcoming Apple back (currently on its home page). It says in part:

We look forward to Apple’s strong and creative thoughts on ongoing standards development. The outcome must reward new directions for both design and sustainability, simultaneously supporting the environment and the market for all manufacturers’ elegant and high-performance products. 

An interesting question for EPEAT is how to reward innovations that are not yet envisioned with standards that are fixed at a point in time. Diverse goals, optional points awarded for innovations not yet described, and flexibility within specified parameters to make this happen are all on the table in EPEAT stakeholder discussions. And of course, timely standards development, as with newly created Imaging Equipment and Television standards, and the current refresh of the PC/Display standard, is critical as well.

Elsewhere it is reported that Apple's "MacBook Pro computer with Retina display, rumored to have been the reason for Apple's withdrawal from the registry in the first place, was added to its list of certified products, achieving an EPEAT Gold rating, said Apple spokeswoman Kristin Huguent." (Source GreenBiz.com item).

So has EPEAT shown unexpected flexibility to enable the new MacBook Pro to be registered, or was Apple's earlier withdrawal based on some other issues? (Remember, just a couple of days ago the CEO of EPEAT "said that the structure of that laptop would have made it ineligible for certification" [see above].) And what will happen with tablets, which still aren't registered on EPEAT? I guess "ongoing standards development" and "flexibility within specified parameters" can make standards like EPEAT adaptable enough to survive after all. Especially when a participant with the clout of Apple throws their weight around.] [See more updates below the line.]

How Green is Apple?

Apple hasn't focused on green or sustainability as a marketing angle. It has been in the middle of the pack in Greenpeace's Guide to Greener Electronics. This post from last year reviews some of Apple's steps and missteps in sustainability. But the company has become increasingly transparent and responsive on green issues, as reflected in its environmental reports here.

[Update 2012-07-13 1430gmt: Greenpeace has upgraded Apple's rating on greenness of power used for its iCloud servers, though it still ranks Apple behind leaders in green power for the cloud.]

And Apple has clearly decided that it can be green on its own terms, even if that means its cutting-edge designs won't meet the requirements of EPEAT certification. Obviously it will still comply with the raft of existing regulations that cover hazardous materials and recycling of electronics, such as RoHS and WEEE. And many of its products are still listed as ENERGY STAR qualified, including those that have been removed from the EPEAT registry.

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[Further update--2012-10-15 2318UTC: Apple's MacBook Pro with Retina display, and several other ultra-thin compact computers with similar disassembly problems, have been given EPEAT's seal of approval, though Greenpeace still objects. See Environmental Leader story.]

[Yet another update--2012-10-16 1832UTC: More on environmental groups' concern that EPEAT relaxed its standards under pressure from Apple: businessGreen story.]

The image of the iMac G4 is in the public domain

The image of the "iPad 3" is by pahudson, used under a Creative Commons Attribution 2.0 Generic license

Gmail Up To 80 Times Cooler (More Energy Efficient)?

In a recent blog post David Jacobowitz, Google's Program Manager, Green Engineering and Operations, says cloud-hosted gmail is many times more energy efficient than privately hosted corporate email systems. He says:

"We compared Gmail to the traditional enterprise email solutions it’s replaced for more than 4 million businesses. The results were clear: switching to Gmail can be almost 80 times more energy efficient than running in-house email."

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You can read the analysis this claim is base on here (PDF). The case study considered energy used by the local clients, the network, and the servers in both Gmail via Google Apps and small, medium, and large corporate email systems.

There are two reasons, Google says, that its cloud is more efficient than your in-house-served email:

1. Many thousands of emails systems share the virtual servers in Google's cloud. Thus storage and computing cycles can be allocated much more efficiently. Since peaks of use of the different users and systems won't generally overlap, less reserve capacity needs to be kept available per account compared to a single-company system. Also, a small company on Gmail can use only a fraction of a server if that is all it needs, which wouldn't be possible if it had to provide its own.
2. Google's custom server and power supply hardware, custom software, and sophisticated data center engineering (cooling) make Google's systems among the most energy efficient in the world.

Larger systems (their case considered a firm hosting 10,000 email users) are significantly more energy efficient than small users (the case modeled a 50-user system)--using perhaps one-twentieth as much juice per user. Google just extends this, provisioning millions of users and operating with correspondingly greater efficiency per user.

Here are the results Google calculated:

Business Type	Annual Energy Per User
Small (50 users)	175 kWh
Medium (500 users)	28.4 kWh
Large (10,000 users)	7.6 kWh
Gmail	<2.2 kWh

Thus an email user on a system hosted locally by a small business uses 80 times as much energy per year than a Gmail user. Gmail is 80 times "cooler".
In fact the carbon footprint of Gmail is even smaller than this energy comparison would imply. Since 2007 Google says it has been completely carbon neutral, buying carbon offsets to cover emissions that it hasn't been able to eliminate by efficiency measures or purchase of renewably generated electricity.

The Google post also gives some figures on the energy consumed when you watch a YouTube video.

This article in InformationWeek mentions some of the other issues beyond pure energy economics that are relevant to the cloud vs in-house decision.

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Reposted from Doc's SCN blog.