Greening of business

Waste to Wealth: The Circular Economy Advantage. By Peter Lacy and Jakob Rutqvist. Palgrave Macmillan; 216 pages; $35 and £21.99.

Green Giants: How Smart Companies Turn Sustainability into Billion-Dollar Businesses. By E. Freya Williams. Amacom; 288 pages; $27.95.

No Ordinary Disruption: The Four Global Forces Breaking All the Trends. By Richard Dobbs, James Manyika and Jonathan Woetzel. PublicAffairs; 288 pages; $27.99 and £18.99.

SUSTAINABILITY suffers from an image problem. Not with granola-crunching sandal-wearers, but with executives and the middle-of-the-road consumers to whom they want to sell their wares. How exactly companies make their offerings, or design their services, has always mattered enormously to margins. The effects on the environment less so. But resources can stretch only so far: by the middle of the century the global population will be 9.7 billion people, up from 7.3 billion now according to the UN. Most growth will occur in Asia and Africa. Between 2014 and 2030 estimates say 2.5 billion new middle-class consumers will join the crush, guzzling their way to a better standard of living.

Fans of the “circular economy” want growth decoupled from the ever more voracious consumption of resources. Three new books promote this view to varying degrees. Peter Lacy and Jakob Rutqvist, both of Accenture and authors of “Waste to Wealth”, believe reuse and reduction will ensure that firms can “future-proof” their “growth agendas”. In “Green Giants” Freya Williams wants companies to do good as a by-product of their usual activities. After working for Ogilvy advising big firms on going green, she has come to believe that sustainability must be “built in” to operations, not merely “bolted on”. And Richard Dobbs, James Manyika and Jonathan Woetzel, who all work for McKinsey’s Global Institute and have written “No Ordinary Disruption”, see the circular economy chiefly as a clever way to cut costs amid the vast technological and demographic shifts already under way.

Efficiency is an obsession for the optimistic Messrs Lacy and Rutqvist. Cars sit unused for 90% of their lives, according to “Waste to Wealth”. Consumers should instead consider paying to drive as and when they need, renting a vehicle through car-sharing apps such as DriveNow and car2go. But this analysis presupposes that people spend their money on wheels mainly for mobility and not, for example, to stir up the envy of their neighbours.

The authors provide reams of alternative examples of green practices and the firms behind them. Tesla’s flashy electric vehicles may cut emissions while keeping their drivers hip, for one. But the book assumes that bosses are green converts, keen to overhaul their operations, and fails adequately to persuade those who might not be. Instead it just offers reams of factual fodder for those already on-board.

The idea of leasing products to customers, rather than selling them, drives efficiency (as the car-sharing apps show). Firms renting out vehicles want them to last as long as possible. But as no one wants to rent socks that someone else has worn, other types of retailers may struggle with this model, especially as durability may interfere with future sales. The longer socks last, the longer it will take a customer to buy a new pair. Recycling can help instead. Clothing firms such as H&M see it both as a way to hedge against volatile cotton prices and as a means of securing customer loyalty. In 2013 the chain encouraged customers to bring in old clothes in exchange for discount vouchers on new ones. A year later it launched a recycled denim collection and collected more than 3,000 tonnes of ancient frocks and fuzzy jumpers, many of which became pipe insulation or damping material in carmaking.

For some, “green” may mean “weedy”. Smart shoppers shy away from ecological washing powders they fear will not clean their tightest, whitest trousers. So firms keen to do good may manage to do so only quietly. Chipotle, an American burrito chain, is its country’s largest seller of naturally raised meats yet also its most profitable fast-food restaurant business. Chipotle’s revenues were more than $4 billion in 2014, according to “Green Giants”, a pacey attempt to convince business types of the advantages of sustainability.

Of the three books, “No Ordinary Disruption” does the best job of arguing why companies must consider their use of resources, and so inadvertently makes the strongest case for going green. The authors’ clear assessments explain why bosses cannot afford to view it merely as a costly fad. Startups have never been better placed to challenge incumbents across the world. Mid-tier cities across the developing world, rising in population and prominence, incubate such companies with vital local knowledge. Western firms may owe their future success to fast-growing centres they have not yet heard of: Surat, for example, which accounts for two-fifths of India’s textile production. Increasing interconnections between markets mean behemoths will suffer when suppliers fall short. Recycling and using resources sparingly will help firms survive despite the onslaught of newer foreign rivals.