According to Laszlo, good business is green business

In print | March 27, 2008

Chris Laszlo ‘80, the keynote speaker at this year’s Jonathan R. Lax ’71 Conference on Entrepreneurship, spoke with Phoenix reporter Mary Prager ’11 about his upcoming speech, the business of sustainability and his motivation for embarking on this particular career path. Laszlo is the co-founder of Sustainable Value Partners, a firm focusing on training executives at companies and business schools worldwide on “sustainability for business advantage.”

After his undergraduate studies at Swarthmore and graduate studies at Columbia University, Laszlo worked first for a bank on Wall Street and then for a consulting firm before eventually moving on to a major multinational company.

After about 15 years of working in a series of traditional corporate jobs, Laszlo began to notice in the late 1990s that some of the environmental and social issues he felt strongly about were becoming priced in the market.

Essentially, he came to the conclusion that it was not possible for companies to ignore the environmentally damaging consequences of industrial productivity ~~- the externalities, in economics jargon -~~ and he became increasingly aware of growing pressure on companies to be more cognizant of their impact on water, air and soil quality.

The Lax Conference, which will explore how business has and should interact with the problem of environmental sustainability, will take place this Sunday, March 30 from 11 a.m. to 5:30 p.m. The conference’s schedule is available at www.swarthmore.edu/lax.

Mary Prager: What will be the topic of your speech?

Chris Laszlo: Broadly speaking, the keynote that I will give is focused on corporate social responsibility and environmental sustainability. And I think the exciting message is that this whole topic area is moving into mainstream America.

It’s going from a specialty niche to larger business opportunities – we’ve all heard of Body Shop, Patagonia — to smaller outlets … And now we’re seeing bigger companies starting to make corporate social responsibility and environmental sustainability a central part of how they do business. A lot of my talk [centers] around this: why are we suddenly seeing global business leaders talking about [sustainability]? Is this just a fad?

When I was in college, when you thought about business you thought, “Do I have to choose between doing good or doing well?” Quakers have historically excluded many types of business based on the idea that some businesses aren’t doing the right thing.

Now we see that you don’t have to choose between making a profit and being socially responsible, and why we don’t have to is the topic of my talk.

MP: How did you get into the business of sustainability?

CL: Well, I had been interested in environmental and social issues back in high school, and certainly when I was at Swat these topics were covered.

Many of the topics around emerging-country poverty and some of the environmental issues were beginning to emerge and at the time, it seemed like if I wanted to have a good career and go into business, I would have to abandon the social and environmental interest and agendas that I had in my studies, so that’s what I initially did.

MP: So did your experiences in college and various jobs help you in writing your book? (“Sustainable Value: How the World’s Leading Companies Are Doing Well by Doing Good,” Island Press, 2003)

CL: It was around the late 1990s that I started saying, “Well, there’s actually an opportunity here to help companies to address these environmental and social issues not as an ethical agenda but as a business agenda.”

MP: What brings you back to Swat to talk about this? How did you get involved with the conference?

CL: Someone recommended me to a search committee for the Jonathan Lax Conference this year, probably because of the book … I’m delighted to be coming back to campus. I mean, I’ve been back a number of times since then, but to be coming back and talking on this topic is certainly something that I’m delighted to have the opportunity to do.

MP: Do you expect to talk to students afterwards, with particular student groups that are environment - or business - oriented?

CL: I think both environmentalists and business-oriented students should find this interesting because those that are looking at this from an environmental perspective will be interested to see how business is thinking about this, and students that are in the entrepreneurs’ club or wanting to go on from Swarthmore to get a business education will be interested to see how the environmental and social issues are putting pressure on and offering more opportunities for business to compete.

MP: Now you were telling me you had a story … ?

CL: After I graduated from Swarthmore, I came back as an alum in the 1990s … and asked iconic professor of economic theory and public policy Bernie Saffron whether he thought business has any responsibility other than just making a profit. There is a famous Chicago economist named Milton Friedman who in the 1970s said that the only social responsibility of companies is to make a profit. In the 90s, there was lots of talk about social responsibility, with the Exxon Valdez spill and other disasters, and when “sustainability” was formally defined by the United Nations. Saffron said that in his opinion, Friedman was right: business has no other social responsibility than to make a profit. That’s what the institution is set up for. It creates wealth and jobs, and you can’t ask more from business than that.

What I’ve come to realize [despite being shocked at the time] … is that Bernie Saffron and Milton were right after all. It’s not about having three separate targets. It’s not about having economic profit, social responsibility and environmental responsibility.

What has happened is that the marketplace has changed and today if you want to make an economic profit you have to pay attention to environmental and social issues in your business … because they’ve become enablers of competitive advantage. So we’re back to just a single purpose gain. So companies have come out with products that have environmental intelligence built in. Consumers tend to prefer those products if they don’t have to pay more for them.

There are lots of new markets for clean energy, hybrid cars, organic foods, biodegradable products, cosmetics that don’t contain salates or parabens and toys that don’t have leads. Suddenly the public has become very sensitized to environmental, health and social issues. There was a period when I resisted this idea … but now I think it’s right. In today’s economic environment, companies that do good also do well.