Profit or Planet

Transcript

[Sheldon Young]
Welcome to No Footprints, a podcast brought to you by Alfa Laval, I am Sheldon Young. We are here to talk about impact and to share the efforts and people behind making sustainability real. Hello again, here we are.

[Jason Moreau]
What’s going on, buddy?

[Sheldon Young]
You with the alternative introduction, I like that you threw me.

[Jason Moreau]
A little bit, yeah. Not enough to like push you out of, like, yeah, you didn’t go completely off the track.

[Sheldon Young]
You just said just enough. You acknowledged me. I’m like, what?

[Jason Moreau]
A bit spicy.

[Sheldon Young]
Yes, I am Sheldon Young. Yeah. Did I say something wrong?

Did I not call myself by my own name, Jason? Very plausible. I’ve done worse.

Right. Oh, boy. All right, so let’s kick things off talking about, hey, what’s sustainability in your world?

Tell me what’s going on.

[Jason Moreau]
Not in my world per se, but a really interesting article that, like, I think brought together a lot of really interesting threads about sustainability and thinking through it. And it was this whole article on record beef prices here in the US. And it was fascinating because, I mean, we talk a lot about sustainability here, different people in the supply chain, right, and all of the factors and all of the things.

And it was fascinating reading this article because they spoke to a lot of ranchers. And obviously, when the price of something is high, you want to make more of it, right? Like, you want to capitalize on the upturn in the market.

But however, I was reflecting back, I think it was all the way our first episode with Paul who, I think, made the statement that, like, you know, a cow is an inefficient way to make meat. Right. When you think about it in terms of the amount of inputs that it takes and the amount of outputs that you get.

It’s an inefficient process. Tell me how much time it takes to get to that. Right.

Well, they were saying, like, even though prices are high, like, it takes three years to grow a cow. And not only that, but where most of the beef production happens here in the US and Canada are the most drought prone places. And so then that brings in sort of the sustainability aspect of, you know, weather change and climate change and how is that impacting our ability to make food and predictably make food.

Right. And so it was just, I don’t know, I just I found myself reading it. It was really, really interesting to read it from the ranchers perspective, but from a market perspective and environmental perspective.

And then, yeah, reflecting on some of the conversations we’ve had with people who are, we’ll say, experimenting with ideas in the new food space. Right. And how do you more efficiently produce protein, whether it’s beef or something else, to feed a growing population, but do that sustainably.

So it just was an interesting article on the face of it. But I found myself reflecting on a lot of the conversations that we’ve been fortunate to have with the guests here on the podcast because of.

[Sheldon Young]
Yeah, yeah. I think one thing I enjoy doing about this this podcast the most is that, look, I only know what I know. I mean, it’s a it’s a and that’s not a big wide, you know, encyclopedia of knowledge here.

It is.

[Jason Moreau]
You’re Sheldon Young.

[Sheldon Young]
I’m me. Right. I know that because you affirmed it.

But no, you know, you walk in, you we all have preconceptions and we have a story and we have information and we know what we know. What’s so fascinating about this show for me, it’s that we bring people in that have much more information about a topic than we do. And we learn all I’ve I’ve failed, not failed once to learn something from the guest.

And yes, to take that and to then add it to the bank, at least from a perspective, I mean, look, you may bring someone that has a different perspective and they may not align. And that’s OK, too. But at least it gets us thinking.

And that is really, to me, you know, I’m excited to hear that you’re it’s making you think more about things when you read a sustainability article. Now, I mean, my work is is is doing doing good on you and you’re starting to bring it bringing it to the sustainability table with me, Jason. I’m here.

[Jason Moreau]
Yeah.

[Sheldon Young]
OK. It’s really good. My my topic today is actually right here in Richmond.

I love it. We are building a new baseball stadium. So finally.

OK. Yeah. I know.

Fine. Well, that’s the thing. It’s like some people say, well, that’s such a waste.

Oh, it’s a lot of it’s a lot of land and space. And yeah. OK.

Yep. OK. I get it.

You know. But when we had there was one there. It is very old.

It’s been around a really, really long time. It is run a pretty good, useful life. And it’s been years and years in the making to think about how do we do this?

And, you know, in a way that makes sense and the way that can be great for the community, et cetera, et cetera. So lots of things are happening. I’m not going to get into the into the issues around that.

But what I am going to talk about is it is going to be one of the largest ever kind of solo project solar projects. On something like a stadium. No kidding.

Yeah. It’s going to have a whole bunch. Seventeen hundred solar panels on the grounds.

It’s not actually powering the stadium. It’s powering things around the stadium. Yeah.

So it’s it’s enough energy for I would think it means here it’s one megawatt of peak power. It’s enough for two hundred and fifty homes at peak power. So what I like about it is there baseball stadiums are big.

There’s parking lots and all kinds of stuff. It’s at least being used as well to harness, you know, in a productive way to harness solar energy because you don’t get a lot of urban solar projects. It just don’t happen.

Not of this scale. And so I was excited to see that. And really interesting to know what is happening right here in Richmond in the park they’re opening next year.

So that’ll be fun to see. I can’t wait to go actually witness it and and take in a baseball game, you know, once in a while. I enjoy that myself.

[Jason Moreau]
Yeah. Well, I guess that’s the upside of when things take a long time.

[Sheldon Young]
Right. Yes. Right.

Well, I guess so.

[Jason Moreau]
Yeah. If they had built this 15, 20 years ago.

[Sheldon Young]
Yeah.

[Jason Moreau]
Sustainability may not have been at the forefront when they are thinking about the design and the architecture. Right. And so sometimes if an idea takes that long to simmer and percolate, it it kind of comes to fruition and it’s like, oh, there’s there’s new considerations for this.

So that’s, you know, I’ll I guess I’ll OK, fine. It’s good that it took as long as it did, because now it has the solar.

[Sheldon Young]
Right. Yeah, I guess so. I think you’re 100 percent right.

It’s that timing is everything. And I guess it was the right time for that conversation to happen around, hey, how do we how does someone incorporate sustainability into this project? And so what I want to find out is who was the person that kind of drove this.

And I want to I want to bring them on the podcast. I want to know. Oh, yeah.

That’s yeah.

[Jason Moreau]
Was it the I’m going to look at was it the organization? Was it the design and engineering firm? Yeah.

Yeah. That’d be great.

[Sheldon Young]
I want to I’m going to dive into that. I think there’s a I think it I know that the city of Richmond has a sustainability person. And so I want to start there, I think, and talk to them.

So anyways, that’s my topic for days. But the big topic of the podcast today, it’s something we’ve come back to a few times. It comes up a lot.

It’s something that as a sustainability professional that works with customers, it’s profit versus planet profit or planet. Can you know, why does it have to be either or? Right.

So that’s today’s topic. And what I wanted to dive in a little bit on, because we we bring this up a lot. We always have a comment around it doesn’t have to be.

But let’s talk a little bit about kind of, you know, the nuts and bolts of that. Right. Yeah.

So first, I’ll ask you, Jason, why does it not have to be either or? Tell me what you think. If I ask you, sustainability, is it a tradeoff?

[Jason Moreau]
No. Well, yes.

[Sheldon Young]
Excellent. Yes.

[Jason Moreau]
And no.

[Sheldon Young]
Okay.

[Jason Moreau]
Which is it depends, which is my favorite answer. And the answer my kids hate when I give when they ask questions of when I say it depends. But it does depend.

And I think you have to acknowledge that with almost any type of planning or strategy, you are always making tradeoffs. It’s just the tradeoffs that you’re willing to make and to what degree. That being said, I think there’s and if I’ve learned everything, anything over the course of the podcast so far, it’s that I think people tend to over overestimate that that tradeoff when it comes to sustainability.

I think there’s been, as we were just talking about, a lot of progress made in a lot of different areas, both in terms of materials, in terms of products, in terms of how we measure and think about things. And so I think a lot of people think that that tradeoff is way more binary when if there is a tradeoff, it’s maybe fairly minor. But in a lot of cases, surprisingly, you really can kind of like have both.

Yeah. And and so that that to me was also a surprise. So, yeah, that’s that’s my very nuanced political answer to that question.

[Sheldon Young]
Yeah. Well, I’ll go right. I’ll go right down to it.

Look, if you I’ve said this before, so it should be a surprise if you do sustainability quote right, it shouldn’t be a tradeoff, right? At least if you’re if you’re in a business, if you’re in a business and you’re thinking about sustainability, it should there’s no reason you can’t make a good business case for it much of the time. There are some things there are some things that happen.

So I guess I am leading to it depends as well. Right. There are some things you just have to do things right.

Because, look, oh, you know, let’s just say I’m dumping radioactive waste into this river. OK. That’s that’s going to be a big no, no.

I guess you could argue the the the tradeoff, the the incentive is I’m not going to be fined into oblivion. But even sometimes you need to do these things, even if it’s not in the face of fines. Right.

It’s in the face of it’s a stakeholder versus stockholder approach. Right. You could argue that the only reason a business exists is to make money.

OK. That’s one argument. I would posit that by taking that you are missing a bunch of other stakeholders that can greatly influence your business and make it more successful if you take them into account.

And sustainability to me is taking into account all stakeholders.

[Jason Moreau]
Right.

[Sheldon Young]
Understanding their values, their needs and what is going to help them thrive and survive. And then taking that into account when you make business decisions. So, you know, so sustainability, you know, I’ve taken a simple word there, maybe overcomplicated it some.

But I think all that stuff comes into play when you when you’re putting a sustainability choice on the table. Now, why do why do people still feel it’s a tradeoff? I’d argue there’s a couple of reasons.

One is they don’t have all the information. That’s one. I know I see this every day.

I’ll use an example from our world just to make it simpler. You know, for example, let’s say I’m going to buy this valve. I need to buy a valve.

OK, well, I have a choice. I can pay X for this valve. We’ll call it one.

Or I could pay one point one five for this valve. Well, they’re both valves. What does this one do?

Oh, this one uses less water. Oh, well, that’s what is cheap here. I don’t think that’s really worth doing.

OK, well, all right. Fine. So you could stop it right there and say, hey, it’s just water.

It’s no big deal. OK, that’s that’s the amount of information you may have. Now, let’s take it one step farther and say.

What other information would let that person make a better business decision? OK, well, what kind of water is used to clean that valve? You know, I’m sorry when I say what I’m talking about, cleaning water.

OK, so now you clean them in a sanitary world. Oh, well, actually, that water may have chemicals in it. Oh, are those chemicals expensive?

Well, they can be. How often are you cleaning these things? Well, I’m cleaning them multiple times per day.

And oh, how many valves you have? Oh, I have 200 of these valves. Right.

Oh, and. Oh, and. Oh, that water needs to be heated.

Oh, really? Well, what do you heat that water with? I heat that water with steam.

Oh, you do. Interesting. How do you make that steam?

I make it with a boiler. And what do you burn in that fossil in that boiler? Fossil fuels.

Oh, OK. That creates CO2. And there’s a cost to burn that that steam.

Right. And create that steam. There’s a cost to those chemicals I put in there to clean these valves.

And what do those valves create when they were cleaned? Oh, they create wastewater. What happens to wastewater that goes down a drain?

Oh, what happens then? Well, I have to either treat it myself at a cost or I have to send it to the municipality. And they’re going to charge me all kinds of money to clean that for them.

I can sit there and that’s a lot more information than probably anyone asked for right now. But that is the full story.

[Jason Moreau]
Right. It is the full story. And that’s the challenge, right?

Because the person who has the purchasing responsibility for the valve, are they the person who A, has the full story or B, feels like it’s their job to get the full story? Right? Like sometimes if sustainability is, we’ll say, separated or divorced from all of the other roles where you could actually implement it and where it’s taken into account.

If it’s like, oh, it’s somebody else’s job. Somebody else looks at all that stuff.

[Sheldon Young]
Right.

[Jason Moreau]
Like I’m just. I’m just a purchasing guy. Yeah.

Yeah. I think that’s really interesting. Yeah.

You could see where, you know, if I was that person, I’d be like, look, I did okay by the company, right? Like for my role. But zooming out.

Yeah. But you’re still at the expense of heating the steam, the expense of using more chemicals, the expense of now treating wastewater, right? Like it adds, it adds, it adds, it adds.

Right. So, yeah, we kind of come back to one of those things that we’d like to talk about a lot too, which is, you know, what is the, what is the culture of the organization? And how are they empowering or educating or inviting everybody there to participate and sort of have that view and have that curiosity to where they can go?

Well, I don’t know. Why would, you know, if it costs, you know, 15% more, why, why would I consider that? Right.

You know, and totally made up the question. Yeah.

[Sheldon Young]
But yeah, I think, I think you are 100% right on that, Jason. The good thing about sustainability is that it gives us another way to look at problems and a way to look at impact and a way to, you know, to put attention on these things that will create a better future. The challenge with sustainability is it can create complexity in understanding the impact of our decisions.

Yeah. So that is where, you know, it’s part of every organization’s sustainability journey is to how do you start to incorporate your new understanding and new interests into the decision and business framework? There’s a couple ways, you know, that we’ll talk about in a minute.

My first thing I want to talk about, though, is around, hey, are there people out there proving that it is, in fact, a good business decision? So I like examples, Jason. I don’t know if you had any, but I wrote, I know I wrote down a few.

I’ll shout them out again. This is just basic research, folks. I’m not going to dive into the deep understanding and financials of every one of these organizations.

But there are a couple here that brought interest to me. Hey, Sheldon Young likes examples. Sheldon Young likes examples.

All right. So one of them, one of the world’s largest food companies is Nestle, right? So again, if you go look, there’s a lot of sustainability commitments are made.

There’s a lot of energy put into improving the sustainability of their impact. So they’ve cut over 20% absolute emissions since their 2018 baseline. 21% of the key ingredients are made or grown through regenerative agriculture.

By the way, there’s an episode on regenerative agriculture if you guys want to go back and listen to that. While they also maintain really strong margins. You know, again, I don’t have all their financials in front of me.

But again, if you look, they’re strong in their industry. And they’re not afraid to step up and do the things and lead the way in, frankly, many ways around sustainability. There’s a lot of other great companies that fall into that as well.

In the pharmaceutical world, you have Sanofi. They’re listed as one of the top 10 sustainability-related companies in the world. And they’re outperforming, again, if you look at their numbers, they’re outperforming a lot of their peers in many ways, right?

So these are just anecdotal examples. But it can posit the fact that if these successful companies are willing to make the investment in sustainability, then there’s probably a good return on it for them, right? Because these aren’t dumb companies in terms of making business decisions.

So they’re looking at it and saying, How do I take sustainability and make it work for me from a business perspective as well?

[Jason Moreau]
Yeah, I think maybe the way I’m framing the question, you know, sustainability or profit now is sustainability versus easy profit. Sustainability versus, you know, long-lasting growth profit, right? Like, so the company examples that you just gave, none of that was easy, obvious stuff.

But the effort was worth it, right? And so going back to your valve example, it’s just, okay, easy. I don’t want to get into the weeds, right?

So sure, you could make that call. And yes, in the small scale, it was the right practical decision. But if you’re willing to invest, be curious, right?

Like go on that sustainability journey. Then yeah, it is worth it in terms of the outcome.

[Sheldon Young]
Yeah, and I think you also have to step back and consider the concept of timeframe, right? Because this is the, you know, a lot of finance frameworks are around a certain ROI period, right? It’s like we need to return our investment within, let’s pick a number of two years.

Okay, that’s our threshold. That’s our bar where there’s something gets considered. Sometimes, you know, I think some of the more, I would say, what’s the word I want to use?

Many companies that put sustainability up high on their list will say, okay, if there’s a true sustainability long run benefit for us, we will stretch that ROI a little bit. And, you know, does it put it on a different platform? Yes, but it’s really hard to quantify the non-numeric aspects of sustainability, but they’re there, right?

There is a lot of good reasons to do things that are not financially motivated. You still need a financial return. You can’t just throw that out the window, at least when prioritizing, right?

You need to say, okay, this one, great impact. That one, great impact. This one has an ROI of two years.

This one has an ROI of 12 years. Okay, I’m going to do the two-year one, right? But by sitting back and saying, okay, we’re going to consider sustainability and maybe give it a slightly more lenient threshold on some things, you can then open up your mind a little bit and say, all right, there is a positive reason to do this that is beyond the ROI metric, but we’re also going to hold our bar to that.

And use it for prioritizing those efforts. And so I think that is a, I’m going to call it a, the word I’ll use is mature way of looking at it, but it’s really a evolved way from the perspective of a sustainability leader. You prioritize sustainability enough to say, I understand the benefits beyond the ROI.

And I am willing to put some money where my mouth is in that case.

[Jason Moreau]
Yeah, I would say mature or even balanced. That’s a good word, yeah. We brought up the concept of the triple bottom line before.

So not just looking at profit on the bottom line, but looking at profit plus people plus planet, right? And you are sort of responsible for all of those and keeping those in balance. And yeah, when you start to add those other frames into the picture, then that rigid ROI calculation that you were talking about becomes a little bit more nuanced.

And you might take the longer view if the people and the planet part of your bottom line is off the charts in comparison, right? Yep.

[Sheldon Young]
Yeah. And I think as we continue to go down the road here, it’s like, you know, I’d mentioned the financial frameworks and the financial returns and the things like that. Important.

But where we’re also seeing things change right now, in particular over in Europe, for example. Companies, particularly larger companies, are required to have essentially audited reports around their sustainability impact. You know, it is – there are basically – it’s the CSRD rules, the Corporate Sustainability Reporting Directive.

They are required to have an accounting of kind of the sustainability impact they have. And, you know, it’s – and they’re held to a bar, right? And so that puts a whole different spin on this, a whole different level of, I guess, accountability that, you know, it’s going to change the way that sustainability, I think, fits on the priority scale for a lot of companies.

And, you know, because it’s becoming more – I guess I’ll use the made-up word – businessified, right? You like that word, Jason? It’s a con, yeah.

Is that going to catch on? Is that going to be part of the vernacular? But no, but I think it’s like you’re taking this subject that maybe was a little more squishy and you’re starting to put it into frameworks.

And a lot of companies have already done this, by the way. It’s not new news. But I think, you know, as that starts to solidify and hopefully spread more, we’ll start to see a little bit more rigor around the way companies are looking at these things and their impact.

And hopefully it falls into more prioritization frameworks and decision frameworks when it comes to making purchasing decisions down the line. So all fun stuff.

[Jason Moreau]
Yeah, I hope so. I mean I do feel like here in the U.S. we will always be somewhat different than our Fairfellows in the EU.

[Sheldon Young]
We’ll see. I don’t know.

[Jason Moreau]
Yeah, nobody knows. I do think that absent stronger regulations like that, there still is sort of a – I call it like a cultural sort of just like, you know, again, I feel like I’m talking about different concepts that we’ve talked about a little bit in previous episodes. But I do think – I just keep on reflecting on them because it does seem to describe a lot of what happens.

And I know I’ve mentioned the Maya principle before. And, you know, people might be more familiar with the Overton window. And just so as more and more organizations sort of conduct business in a more sustainable forward way, that just becomes the norm.

Yep. Agreed. And so regardless of whether it was prompted by regulation, company values, it kind of starts to fade away.

It just becomes what companies do. And so that is where I think some of these ideas could become pervasive and take root more here too, even with the difference in terms of how we view it from a government standpoint.

[Sheldon Young]
Absolutely. And again, to that point, I think we’re also in the midst of a generational shift, right? Oh, yeah.

Where that next generation is starting to come up and take professional roles and impact decisions at the business level. To them, this stuff is just normal. It’s just how they grew up.

The sustainability view and the transparency of what’s happening in the world around them, I think, gives them a different perspective that you’re right. It’s going to be more normal for them. And I think it’s going to be interesting to watch and hopefully positive in a lot of ways.

But again, you see it with every generation, a whole new set of, I guess, priorities and understandings and knowledge comes in. And that becomes, again, as you said, the baseline. So it should be interesting.

All right. So if you’re listening, this is a sustainability podcast about how we make it real, right? So how do we make it real when it comes to clearing up the clouds around sustainability versus profitability?

I kind of laid out three little things here. One, if you’re in an organization and maybe you’re new in the journey or your organization is new in the journey, find your community. Whether it’s in your organization, other people that prioritize sustainability and want to work together on making it more important or in your industry even.

I know, for example, when I’ve worked with some groups, I do a lot of work in the dairy space. There are a couple of great ones, Dairy Sustainability Alliance and the IDFA. Both of them, strong sustainability communities there where you can connect and learn from each other.

But find those people. Understand the ones that are progressing and making progress. Learn from them.

Bring those ideas and make them into something that you can use as a framework for yourself, right? Almost any industry that produces something essentially will have folks that are kind of connected in that and look for them and find them. Second thing is kind of step back.

Most of that information that kind of clears up the real impact of sustainable practices isn’t always right in your face, right? It’s kind of what we talked about earlier. I gave that example with a valve.

It’s like what’s right in front of you might just be – you see what’s there. You can look at that and say, OK, that valve cleans itself once a day or whatever it is. Let’s just make that number up.

OK. Ask yourself what if. Do that kind of – if you’re into lean and six sigma, it’s like the five whys.

Tell me what happens when I go back in the chain a little bit. What happens downstream of this? What impact does it really, really, really have over the course of time if I let this continue as it is and in the magnitude that it’s present?

That gives you a better idea of the impact you could have with a small change, right? Then keep looking. Don’t be stagnant.

If you learn anything in the sustainability world, it’s changing all the time, whether it’s in what we know about what’s causing impact, what those impacts are. PFAS, a lot of people know what PFAS is now. Go back 10 years and they do not know what PFAS is, but it was still there, right?

The world is changing. The views and abilities to make impact are changing. The technology changes so regularly, right?

Understand where the biggest impacts are occurring and then look for the innovations that are delivering the sustainability objectives that matter to you and your company and your stakeholders or whatever group you’re in, right? All those things are there and present for you. You don’t have to move mountains with every shift.

Moving 1,000 things a little ways is the same thing as moving one thing 1,000 times. It’s just how you want to look at it, right? Little impacts done repeatedly can lead to big impact.

[Jason Moreau]
Man, those were all really good. This is where I hang out with you. I feel like I’m cool.

Well said.

[Sheldon Young]
Thank you. Well, I mean, thanks, Jason. I appreciate that.

But I think we’re all on this journey together, on this big rock together. And the more we can learn from each other, the more we can do together, the better impact we’re going to have on making this thing last a little longer for us. Hopefully, for as long as we’re around, it will be around as well.

That’s right. That is the hope. All right.

So thank you for joining us for this episode. Again, we love to always hear your thoughts and ideas. If you have ideas for a topic or a great guest or whatever about making sustainability real, you can reach out to us.

We have an email. It is nofootprints.podcast@alfalaval.com. And Alfa Laval is spelled A-L-F-A-L-A-V-A-L.

And so with that, I wish you a great day, Jason, and keep on making sustainability real.

[Jason Moreau]
I will. Thanks, Sheldon Young.

[Sheldon Young]
Our guests come from many industries and companies as we’re talking about how the world makes sustainability real. Our company, Alfa Laval, is a global supplier of process solutions. So it’s very possible that the organizations our guests are with may use Alfa Laval or even our competitors’ products.

This does not mean that we, the hosts, or Alfa Laval are endorsing any of the company’s guests or the specific ideas that we discuss.