Natural order: Customers get their products, clients get their services—but the environment is still waiting on its big shipment of respect

Entrepreneur,  Nov, 2001  by Jospeh Conlin

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Within weeks of taking office, President George W. Bush sent out a message: Business growth will be a higher priority than the environment. Bush acted quickly in pronouncing the Kyoto Protocol dead in the United States, angering leaders of industrialized nations who, alongside the previous U.S. administration, had hammered out what was to become the foundation of a treaty among 178 nations promising to lower greenhouse gases. At the same time, he pushed energy production rather than conservation as the solution to the energy crises on the East and West Coasts. By the 30th anniversary of the first Earth Day this past April, the environmental movement seemed to be losing ground, with business growth coming possibly at the expense of the environment.

PLAYING WITH RAINBOWS

But entrepreneurs like 26-year-old Darren Patrick aren't headed in that direction. Patrick may not have been demonstrating in Genoa against globalization, free trade or corporate pollution, but he is acutely aware of businesses impact on the environment as he runs his business in San Antonio.

Patrick founded Rainbow Play Systems when he was 20; three years later he was a millionaire. Rainbow sells redwood and red-cedar residential playground equipment in 14 Rainbow stores throughout south Texas and Mexico. The company will ring up approximately $6 million in sales this year, but it's that success that makes Rainbow one of the nation's largest consumers of redwood.

"Since the onset of our business, we have always been concerned about our lumber purchases and the mills that fulfill them," says Patrick, who purchases lumber only from mills participating in sustained-yield programs that protect the population of the nation's redwood trees. But Rainbow goes beyond simply making an effort to sustain its own natural resources. The company uses its marketing program to educate potential customers about the benefits offered by sustained-yield programs. "These programs have been successful environmentally and, for us, by creating a sustainable resource," says Patrick. "Today, we have more redwood trees than ever before."

Patrick has unintentionally embraced the concept environmentalist Amory Lovins calls "natural capitalism." In his book, aptly titled Natural Capitalism, Lovins notes companies that eliminate waste and become more environmentally efficient prosper while their competitors that are environmentally inefficient fail.

Patrick, along with hundreds of entrepreneurs like him, is forging the next industrial revolution by following--intentionally or not--the four principles of natural capitalism: increasing productivity of natural resources, modeling industrial processes after biological systems, selling service-based solutions for the environment, and reinvesting in natural capital.

GREEN MAKES GREEN

In the past decade, more companies have discovered that as they become more environmentally friendly, they 'become more financially attractive--a corporate makeover of sorts. As their numbers have increased, so has the evidence supporting their claims.

For example, a study by professors Michael Russo of the University of Oregon and Paul Fouts of Golden State University revealed firms with the highest return on assets went beyond competitors in terms of pollution control and waste reduction. Also, the environmentally sensitive financial analysts at the Dow Jones Sustainability Group Index discovered stocks of companies that account for their social, financial and environmental impact outperform the stocks of companies that don't. That study was supported by one by Innovest Strategic Value Advisors finding companies with superior environmental performance generate superior financial performance. And Vanderbilt University found that 8o percent of environmentally sound companies financially outperform their higher-polluting counterparts. As these studies shore up Lovins' claims, natural capitalism is pushing its way into the pantheon of strategic planning. Yet the concept remains young (read: relatively unknown); therefore, most entrepreneurs stumble onto it. W hat starts as a concern for the environment and for government regulation evolves into sound management strategy, as employees and franchisees of Brian Scudamore's $10 million 1-800-GOT-JUNK? discovered.

Each year, franchisees of the company pick up tons of junk, primarily from homeowners who want to throw things out--after spring cleaning, for example. They haul away old TVs, wood, appliances and furniture. If Scudamore didn't care, they could just take the junk to municipality transfer stations to get dumped. End of story.

So to protect the environment and earn more money, 1-800-GOT-JUNK? recycles cardboard, paper, concrete, sheet rock, metal, tires, furniture, garden refuse, and the list goes on. "Our target is to recycle a minimum of 40 percent of all loads," Scudamore, 31, says. But there's even more to it than that.

"We've turned our recycling system into a profit-share system," says Scudamore, noting that greed--once environmentalism's perceived nemesis--can potentially be its ally. "Our people get 20 percent of all the savings from what they recycle. Instead of paying $120 to dump a load, they may pay $70 as a result of recycling. It's win-win-win for the company, the franchisee and the environment."