Sustainability Videos & Lecture Series

Dr. Kevin Dooley: Thank you for that introduction and thank you, everyone, for coming out today. This is a really happy and proud moment for me. I’ve been wanting to share what the consortium has been doing with GIOS and all of our friends here for quite awhile. I kept on thinking, “Well, we haven’t really got something yet, we’d just kind of be waving our hands and it would sound interesting,” and kept on putting it off. Finally, the opportunity came, I think, this semester and I can assure you that we’ve done a little bit more than just waving hands.

I’m able to share with you, both some of our progress, and then where we think the consortium is going in the future. I want to thank the friendly faces here in the audience. Thanks so much for showing up. I do have to give a shout out to–we have a number of our consortium staff here today. I just have to say that this is both one of the most exciting and challenging places, I think, to work on campus. It’s a lot of high pressure and really working on business timelines rather than academic timelines. I give a shout out to the staff, which has done a really fabulous job. We wouldn’t be where we’re at without their support.

Despite the lovely setting here, this is not the biggest event that’s happening in TSC today. Actually, a couple hours ago, we kicked off–opened our European office with our partner University Wageningen in the Netherlands. Several of our staff got to meet with the Princess of Holland–quite exotic.

First, I’m going to talk about the context of how the consortium got started and why we’re doing what we’re doing by talking about, really, consumer product sustainability.

There are a lot of different drivers of consumer product sustainability. First of all, consumer products matter. When we look at the overall impact that the consumer product economy has on things like greenhouse gases and other environmental and social impact areas, consumer products make up a significant portion of that overall impact. Depending on what data you look at, it could be anywhere from 30 to 50 percent of our environmental impacts, for example, are caused by the consumer economy.

It’s my belief that essentially the consumer economy has gotten us to where we are at today in large part. It’s also true, I believe, that businesses are certainly a critical, if not the critical player, in figuring us out how to get out of this mess. Unless we’re going to go backwards in our standard of living, then we have to figure out how to manage a consumer economy in a more sustainable way. That’s really what the consortium is about. That’s why we’re focused, really very particularly, on consumer products.

Now, there is increasing demand for green products. I’m going to come back to the issue of consumer demand here in a moment. When we talk about consumer demand or customer demand, it’s not just that end consumer like yourselves buying products at a retail store or online, but it’s also industrial buyers. If you think about a production supply chain, every company in that supply chain purchases materials, commodities, services, whatever it might be, from other manufacturers, other suppliers. It’s, in fact, that purchasing context, I think, that’s going to have a lot of positive influence on where we go over the next decade as we see more and more green purchasing standards being implemented.

In fact, I don’t know if you know this, but actually, ASU is certainly a leader, not just amongst universities, but really of all organizations, when you look at our green purchasing policy. It’s through that kind of leverage against or on consumer products that I think we’ll see improvement.

Supply chain inefficiencies–it is unbelievable how inefficient our supply chains remain. When this was kicked off with an event at a Wal-Mart meeting in 2009, there was a speaker who got up and talked for fifteen minutes about chicken coops. I’m sitting there thinking, “Gee chicken coops, chicken houses have been around for, I don’t know, a thousand years, three thousand years, longer, and we still haven’t figured out to optimize a chicken coop?”

We had the quality movement in the 1980’s. Then we had lean manufacturing come along in the 1990’s. Both of these were attempts to get at the waste in our manufacturing processes in our supply chains. For some reason, we didn’t really look at environmental issues with those two lenses. In many cases, companies today are really using sustainability as this third wave of process improvement, a yet different way to look for efficiencies and process improvement in their own systems.

There are a lot of sustainability reporting inefficiencies. There’s actually an individual from Dell Computer , who resides in this building right here, who employs a host of students as well as a lot of other employees simply responding to the requests that Dell gets to fill out sustainability surveys. Talk to any large corporation and they will tell you that they are surveyed to death, whether it be from retailers or other consumers, investment groups or media. There are probably more surveys about sustainability than there are companies following sustainability principles. A lot of this leads to a great inefficiency.

If you consider, for example, a multi sector consumer package goods company like P&G or Pepsi, them having to respond to every single different survey that comes from a retailer or investor or whatnot, can really be overwhelming. It’s just a waste. There’s no sense to it. There’s definitely a need to converge these different sustainability reporting initiatives. When we look back and if we say, “Okay, there’s a demand for more information about product sustainability. We need to make better decisions about product sustainability. Can we do that yet? Does the system enable us today to do that?” The answer back in 2009, when the consortium was started is, no, not really.

The science of looking at environmental and social impacts of our products is still maturing, but it’s far down the road. It’s relatively mature, especially in some particular areas. However, when we look at the data that is needed to drive that decision making, we find gross inadequacies.

As a grower in Brazil told us a couple of weeks ago, “We need to collect our own data. We’re looking at the life cycle impacts of our fruits using data that was collected in the 1980’s in Europe. That just doesn’t give us a very good picture to make good decisions.”

There’s a critical need across the board for better data and then really changing the science into something that useful. In other words, developing the methodological tools that really put these types of capabilities in decision makers’ hands. We have quite sophisticated science. Most of it is not accessible to the general audience of decision makers that we’re targeting.

Let’s take a look at whether there are, in fact, green consumers or not. In a study that the consortium did last year of 3,300 U.S. consumers, we found that consumers basically fit into four different demographic groups. About half of the respondents were negative on green products. They were either antagonists, who were actively against or disbelieving of the notion that green products existed and really were those who were going to be the first to talk about the problem of green washing–products making claims that are not supportable by underlying data or science. Then about a quarter of the population are pacifists–don’t really have a strong opinion either way. About half the population, we characterized as having positive attitudes towards green purchasing. I want to focus on these two subgroups right here of activists–talk the talk and walk the walk.

If we break those two groups down a little bit more, let’s look at the walk the walk. This is the group that is most likely to purchase green products and, in fact, are willing to pay price premium for such products. They are three quarters female. This is not surprising in a retail environment when you listen to Wal-Mart, Safeway, Kroger or Best Buy talk. They actually use the feminine pronoun rather than a masculine pronoun in talking about their customers. The green consumer is: 1) more likely female than male: 2) more optimistic about the future; 3) are opinion leaders within their own social networks; 4) believe that everyone’s contribution, including companies and government is important in this equation, and 5) are more likely to buy environmental friendly products and pay a premium. They’re also more likely to give to green philanthropy causes, etc.

This other category, who will buy green products but for different reasons: 1) is about split male versus female; 2) tends to be more personally pessimistic about the future; 3) tends to believe that government and business, even if they want to have a role, don’t make that much of a difference, are skeptical about that, and so they believe that they have to take the future into their own hands.

If I could sum up these two groups–and it’s quite interesting that they’re different in their environmental behaviors. This group will give money for green causes. They’ll purchase green products. They will smile when you talk about green initiatives. They won’t turn off the water in their shower after three minutes. They’re not the ones who are concerned about bringing their recycling–their bottles back to get money back. They are not the ones who essentially pursue green behaviors that are cost savings.

That’s really this group down here. We see two very different groups of people in terms of their consumptive behavior. One that’s really driven by the values behind it and puts faith that they’re making an effort towards the greater good. The other that’s really primarily driven by economic means.

Now, people have great belief that the little things that they do to be less wasteful make the biggest impact. In fact, there’s a bit of a psychology there, in that people think that they can have a little bank account for environmental goods and environmental sense. If at the beginning of the day, you do something that you pat yourself on the back for and feel good about; you’re being friendly to the environment. Then, sometimes people will get the idea, “Well okay, now I could be bad over here. It all evens out.” Lucky for us, a majority of people believe that it would be highly useful to have more and better reliable product information about the products that they’re purchasing.

How aware are consumers of the environmental and social impacts that they buy? They are not. I challenge you–those of you who have an opportunity to be in the classroom here at all, ask your students, undergraduate, graduate, school of sustainability, elsewhere, it doesn’t matter. You could ask your faculty. Hopefully the SOS faculty would know the answer. You could ask them, “Where does greenhouse gas come from?” I’ve been fascinated on campus when I’ve asked this question and basically have been pretty shocked by the answer. I’m not even going to go into the different groups that I’ve asked this question of, but let me say that if my sample is valid, then we have a long way to go in terms of awareness and education.

I was sitting at very technical meeting of chemical manufacturers. These were kind of midstream suppliers. These were not end made manufactures, but highly technical group. I asked them, “Where does greenhouse gas come from?” There was silence for awhile and then somebody raised their hand and said, “Volcanoes.” Well, okay. If you asked students or faculty, “Are you aware where greenhouse gas emissions come from when you use your laptop?” They’ll be unaware that there’s embedded energy in the production processes that make the laptop. They’ll be unaware that the energy they use in the consumption phase is a major contributor to the overall footprint of that product. People are just not aware.

People are not aware of how supply chains work. They know the word. The word has been out there enough, but what is a supply chain? We got business school students and if they don’t have working history, they have no concept of what of a manufacturing floor looks like or how maybe a hundred suppliers might be involved or a thousand suppliers in the manufacture of a typical product.

The typical consumer thinks about a supply chain as a farm. They’re aware of farms, they’ve got that. We’ve had enough farms on TV and stuff that, “Oh, farms, yeah, I know that.” Beyond that, if you asked, “What are people concerned about in environmental impacts of their products–packaging, packing, packaging. People are obsessed with packaging. Does packaging have impacts in any particular product category–sometimes yes, sometimes no. Across all product categories, yeah, absolutely, packaging is an important characteristic.

It’s also certainly a characteristic that NGO’s are very concerned about. You might have noticed that our toy companies have been targeted over the six plus months for some of the sourcing decisions they’ve made about their packaging by Greenpeace, by Rainforest Alliance, etc. People, though, are aware of packaging because they handle it. That’s what they’re most aware of. They know that they’re very frustrated when they have to go break down all this packaging and put it in a recycling bin, etc. It’s something tangible so it’s not surprising that people focus in on that. I will tell you that people’s perception of the importance of packaging is probably an order of magnitude greater than its actual impact.

This particular study done by a Boston consultant group looked at a sample of 9,000. I know this is an I chart here, but what the sample, the picks, is basically, “Do you think green products are better? Are you willing to pay a price premium for them?” At the one end, you have cleaning products. Only 18 percent are willing to pay a price premium. In other words, 82 percent are not willing to pay more for a green cleaning product. Only 20 percent believe that it’s better. 80 percent of people believe if you buy a green cleaning product it’s not of as high a quality. This is a real problem because cleaning fluid, obviously, has particular functional needs it has to meet. If the product doesn’t meet those basic needs, then it’s not even going to be considered for purchase.

Look at food. Fifty percent believe that green food products are of better quality and 25 percent are willing to pay a price premium. What we see again and again is that consumers are not of a single mind about different product categories. Consumers think very different about the sustainability attributes of electronics than they do food, than they do cleaning products, etc. Within those categories, it’s not clear that people distinguish much. Do people think about a laptop versus a mobile phone differently in terms of sustainability? Evidence is, probably not right now. Within those sectors–very different views of relevant sustainability attributes.

Let me introduce you to who TCS is. TSC’s mission is to design and implement credible transparent and scalable science-based measurement and reporting systems accessible to producers, retailers, distributors and users of consumer products, so, a few key words, here. Our focus is on consumer products. An important aspect of us is making these tools in science accessible. In a way we’re trying to democratize life cycle assessment. We’re trying to make it cost efficient and time efficient for everyone to use LCA based thinking, not just the large companies who have large science staffs.

You’ll see these words all over the place. You could look at almost any sustainability initiative in the consumer product space and it’s almost going to read identical to this paragraph. They’re going to use the words: 1) credible, because of the green washing issue; 2) transparent, that’s a key issue to consumers is transparency; 3) scalable, it’s gotta work actually on the whole consumer economy and; 4) science based, because again and again when you look at the environmental and social impacts of products without science and good data, we often find that our common sense leads us in the wrong direction.

Here’s a sample of some of our corporate members. We have suppliers like ALCOA and VASF. Retailers like Best Buy, Wal-Mart and Safeway, brand manufacturers, such as Coca Cola and Panasonic. We have service providers, such SAP. I think we have about 80 corporate members so far.

We’ve also worked with a number of universities. Arizona State and University of Arkansas are the founding universities of the consortium. This week we have added Wageningen University to our board of directors and as another partner university. Then, we have outreached to number of other universities, both individuals and research contracts. We’re actually forming an academic advisory council right now. I suspect that by the end of the school year that we’ll have a council of, I don’t know, maybe upwards of 20 or 30 different universities participating with us.

Our work is broken into working groups. Let me start down here. We have individual sectors that work together. This would include corporate members, research staff, as part of TSC as well as NGO’s and government organizations. We have activity in electronics, food, bev and agriculture, home personal care, paper, toys and retail. Each of those groups essentially work on science and data involving products within their industry sector.

Then we have a number of working groups that cut across the sectors. For example, consumer science did that study that I just talked about. They look at consumer behavior and attitudes. Our measurement science working group are where all the life cycle assessment nerds are. They really determine the rules of how we’re going to do LCA across all the sectors.

IT standards and tools–when you’re talking about a system that eventually will support hundreds of thousands of suppliers sharing product sustainability data across supply chains, IT is obviously a key part of that solution. Then, packaging, all of these product categories have packaging. Much like our other efforts, we attempt to standardize as much as we can across the sectors.

These different sectors have very different dynamics. As a business school professor, that’s been one of the most fascinating things even though it’s been personally frustrating sometimes, just to observe the different dynamics of the different industries.

We contrast for example, food, bev and agriculture with electronics. In food, bev and ag, you have 500 or 1,000 years basically of legacy that are embedded as memory in this system. There are long standing relationships and conflicts and fights over territory and fights over philosophy that exists in food, bev and ag.

You have the challenge that you’ve got millions and millions of individual farmers that contribute, essentially supplies into this production chain. It’s incredibly complex in terms of really understanding, especially the farm level impacts, and then how those tie to the world commodity markets and whatnot.

Look at electronics. Electronics has been around for 50 years. For the most part, from the very beginning, electronics industry has forced, because of regulatory forces, to work together and in fact, have already worked through several industry-wide initiatives in which they view sustainability issues as precompetitive. It’s a very different environment.

On the other hand, you have the challenge that technology changes every six months. You gain an understanding of one product that may or may not help you understand the sustainability attributes of the next technology coming down the road. There, it’s a very different set of challenges to measure product sustainability.

In our home and personal care sector, it’s all about human safety and toxicity. Yes, these footprints have carbon footprints and they could use more or less water, but really what sustainability attributes people are concerned about with these products, are really the human safety and the toxicity elements. I’ll come back with some comments about that later.

Here’s a brief history of TSC. How does an organization like this emerge? We had an initial gift from Wal-Mart. Wal-Mart really had the problem that their suppliers were coming to them with green products. Their buyers had no way to know whether these claims were valid or not. Can we indeed believe that this product is greener because the manufacturer says so? They saw the need to have a system that would measure product sustainability in a reliable way, then recognized that if they were to do this alongside other retail competitors, that it would be a much more cost-effective way and reliable way to disseminate this type of practice.

Wal-Mart provided ASU and Arkansas their initial gift in the summer of 2009. We, through that period of the initial six months, invented the SMRS. One thing that TSC–and is another acronym there, we are great at creating acronyms. I think we have created as much acronyms as we have science at this point. SMRS is one of our homemade acronyms. It’s added a whole life onto itself that I’ll write a linguist paper about one day. It’s basically our Sustainability Measurement Reporting System. I’ll get into some details of that here in a moment.

Through 2010 and 2011, we worked on life cycle assessments and so called product category rules that define how you do the LCA for seven product categories. We did: 1) laptops; 2) orange juice; 3) wheat cereal; 4) yogurt; 5) detergents; 6) shampoo, and; 7) surface cleaning fluid. During this time period, we also established a new governance structure. We hired an executive director. We established a board of directors, both academic NGO and corporate representation on it.

This past summer and fall, we’ve been working on another product work screen that we call product category dossiers and profiles. We’ve been doing this for a hundred different product categories. I’ll show you an example of those in a moment. We’ve been working on expansion into both Europe and Latin America and Asia. Looking forward, right now we’re involved essentially in reengineering our concept to scale to reality. In 2012, I think we’ll continue to develop elements of the SMRS and, looking into the future, probably consider involving into a yet more complex governance structure to deal with the multiple stakeholders that we have involved.

What is the SMRS? SMRS is the framework that TSC is developing to enable creation analysis and communication of standardized and comparable data about the life cycle of a product. Comparable, at some point, one will be able to compare one brand of a laptop computer or an orange juice maker to another using the system that we have and standardized. Standardized, in a sense that everyone who is reporting into this systems will be using the same rules. If you’re an orange juice manufacturer, all orange juice manufacturers are going to use the same attributes to report on their sustainability of their orange juice products.

Likewise, behind the scenes, when we look at data that characterizes transportation and logistics or energy production or waste management, all of these systems will also have standardized models and data so that we maximize the comparability of that data.

We work off a diagram. Another one of the notions that we developed is that our SMRS is actually applied at two different levels of complexity. When we got about a year into doing the seven prototypes, our stakeholders said, “Well, you did seven products in a year, how are you going to do the other 500 or 1,000 or 2,000, however you count, that are in the retail space.” We said, “Well, we’re not going to use that method because it will take us a couple of hundred years.”

We have to automate a system. We have to develop an automated system. Also, we have to develop work products on a quicker time scale. We came up with a notion that really, as a first step, what the SMRS is attempting to do is, through rapid research, understand environmental and social hotspots. What’s relevant in that product category? Then, share or set up a system so that companies can share their best practices for addressing those hotspots.

What comes out of this are category sustainability profiles. To give you a sense of the scale and speed of this, we started this particular work stream in July and will have delivered on 100 of these categories by the end of the calendar year; probably not in a complete form, but nevertheless, we’re generating these in a production line mentality.

In fact, I used some of my industrial engineering background to actually use line balancing techniques to figure out how the researchers should be allocated to the various tasks that we kind of maximized the throughput of the production line. What comes out of this are really conversations between retailers and manufacturers. I’m fairly confident that they’ll–I won’t name them, but they’ll be at least two retailers who as of January, February, will be using these profiles to survey their particular manufactures in the information technology product area.

It’s very exciting for us, for researchers, to be working on stuff that they know is going to be used by some of the world’s largest retailers in a matter of months. It makes it very exciting, very tangible because you know the science you’re doing is going to be utilized for real.

At a more complex level, the SRMS is about setting up a system that allows companies to differentiate their products from the norm. What do we do better? Then, declare those differences in the form of a product sustainability declaration. We have two different basic outcomes of these two different work streams. The category sustainability profiles apply to a whole category, like laundry detergents or beets. They’re really for sharing information.

The declarations are more like a food label. You know, how you have the nutrition quantitative data on a food label that essentially is what the product declaration is. It gives you your water footprint, your carbon footprint, attributes, for example, about the percent of your supply chain that is undergoing some particular best practice or whatnot. And these declarations apply to individual products. They’re the outcome of what a company would make about their product.

Here’s an example of the category sustainability profile. We have environmental and socioeconomic hotspots. We have indicators or improvement opportunities that address those hotspots. Then we also generate information about stakehold or concerns recognizing that, in fact, what NGO’s and what consumers are concerned about is not necessarily the same as the environmental hotspots. That’s very important for retail buyers to know and for manufacturers to know. What does the NGO community–what are they concerned about in this product category.

Our more complex analysis allows us to do life cycle assessment of products and identify where hotspots are. For example, if you look at laundry detergent and you include the fact that you have a washing and drying cycle in there, you’ll find hotspots both in the production of the chemicals used for the laundry detergent as well as the use phase. This is where, for example, using a concentrated detergent mix or using a cold water formulation would be an attribute that you would report that would differentiate your product from the norm. That’s a best practice that reduces that particular hotspot in the use phase. Similarly, we would have product declarations that have more quantitative information about the product category. How do we actually scale this?

Audience: As far as implementation–you early on mentioned transparency that they think for consumers. Are you seeing this model for the SRMS–

Dooley: SMRS. Uh huh.

Audience: -being adopted by certification organizations or consultants or maybe government? How do you vision that to be like the process of validating claims?

Dooley: There’s two components there. One is that whenever you set up any kind of reporting system, you have to worry about the assurance of the data that’s reported. It would be nice to give a scientific answer as to how much assurance you need, but we’ve been assured by all the assurance companies, KPMG and McKenzie. We’ve talked to ULE, a lot of the assurance companies and they said, “No, assurance is a market issue.” So, who’s receiving the data? Is a retailer receiving data from a manufacturer? It’s really up to the retailer and manufacturer to decide how much assurance is needed, validation of that data. It’s really a market issue.

The second issue is that our product declaration data we expect to be used by the other third parties. It’s not in the form that you would communicate to an end consumer. We expect eco label companies, indexing companies, like Good Guide, perhaps certification companies, like TUV or ULE, would use that data to make a consumer facing communication out of it.

Audience: [Inaudible 0:35:39.1]

Dooley: Thank you.

One of the ways that we scale our effort is by going crowd sourcing. Our simpler work, which is around qualitative data research summaries of different product categories, uses a web-based Wikipedia style system. We think that is really the key towards maintaining an essentially good knowledgebase here. To eventually get it out literally into the open and make it publically available and have the various quality assurance mechanisms to allow experts to input information into the knowledgebase for the greater good.

This is a commons product. In fact, have quality assurance to make sure that the knowledge that goes in here is of high quality. I spent the summer studying how Wikipedia sets up their quality assurance mechanisms and all that stuff. We’ve replicated that within the consortium.

What about LCA? Those of you who are familiar with life cycle assessment know that it can cost tens or even hundreds of thousands of dollars and months of time. One of our partners is involved in a pork LCA that costs $5 million and it takes three years. How are we actually going to make LCA affordable and time effective?

The way that we’re doing that is essentially by parameterizing LCA. What we do is we invest the time to come up with a LCA model of a generic product within the product category. That’s what we call a baseline or reference model. This is the default. This is what you start off with. Essentially every product in a product category has the same scores, has the same impact over greenhouse gases and water and waste, etc.

We then have a set of predefined sustainability performance drivers and their associated impact. We have an equation that says, “Okay, if the default is a 15” laptop and you have a 17” inch screen, here’s how your footprint is affected by that different parameter.” Or, the default is that you’re not energy star efficient and your computer actually is. Then, you say, “Yes, here are my efficiency ratings.” It goes and calculates what the differential is in your carbon footprint, water footprint, etc. By combining a reference or baseline model with these predefined drivers that will literally be in a pull-down menu kind of interface.

One gets products that if they have same attributes; they have the same relative scores. You can do this in a matter of minutes on your desktop. To get there, you have to pre-invest in the science and the modeling to get these into your system. We then allow the option that people can report their own primary data. If you talk to people in agriculture for an example, they’ve got all sorts of measurement tools down at the farm level. You have to have a system that can incorporate that unique proprietary data within supply chains as part of your reporting system.

How does this lead up to the so called index? That was one of the words that was associated with us early in our history as the Wal-Mart index. I think that Wal-Mart, and other retailers, and other manufacturers have become a little bit more conservative about their use of that word and what they’re doing with it. Actually putting labels on products is an incredibly risky and expensive gesture. I think that, definitely, companies want to do real market studies of whether consumers will react to label information and stuff. But, actually making that decision to go full force into that, I don’t think anyone’s comfortable we have the evidence that would be the best idea right now.

How does our system work and how does it lead up to a potential index? We have this reference model or this baseline model in our drivers. That gives us our life cycle inventory, so our energy, our water, our greenhouse gas, our waste. We combine that with impact assessment methods and the consortium uses essentially the recipe system for that. We have potential impact, some things like ozone depletion and global warming potential, etc. We recognize that life cycle data cannot capture all of impacts. In fact, when we look at things like land use, biodiversity, toxicity, as well as social issues, those are not necessarily captured well or at all by a life cycle assessment.

We have performance indicators that are those best practices and design or supply chain operations that get at those issues that LCA cannot. That forms essentially the product declaration. There then is a bit of a firewall, because if TSC did this, it would not be a third-party validated system. We really kind of separate the science from the communication component.

The communication component would take that declaration, would take some type of algorism that might weight, for example, global warming potential versus ecosystem quality and would perhaps generate a single number or some type of index for that product category. In order to get a reliable index, you really have to have good science and data behind all these intermediary steps.

Let me conclude the talk and then we’ll do some Q&A with some observations that I’ve had throughout my time in the consortium, first, about sustainable production and consumption. Eco efficiency is an easy win. I mean, for the next 10 years, all you have to do is–not all you have to do, but, I mean, if you tackle energy, water and waste, they all cost money. They’re all relatively easy arguments to make in today’s businesses. As long as it’s going to save me money, you can show me, you can calculate the ROI, then, “Oh, yeah, I’ll go for it.” And let’s face it; there still is a lot of inefficiencies around energy, water and waste that are low-hanging fruit that we can take advantage of.

Now, do you get the same drivers for human toxicity? No. Right. That’s not looked at as business opportunity. That’s not cost saving or revenue generating. That’s risk avoidance. Yeah, we’re concerned about toxicity for risk purposes, both in terms of actual risks to the consumers as well as reputational risk, but it’s a different driver.

What about social issues, the same thing. I think we’re going to see a lot of cleaving of progress. We’re going to see those environmental attributes, water, waste and energy that can be quantified in terms of economic value. We’re going to see those progress way ahead of our other issues, I think, just because it’s easier to make that internal argument.

We’re definitely going down an adoption curve. If I look at the companies joining the consortium now, we’re beyond that one to two percent of companies who basically will join anything because it’s new. We’re now into that phase where the companies looking at us are more careful about their adoption, they’re more careful about the business proposition. If we get those on board, they’re the thought leaders that will influence the rest of the supply chain to buy into this approach.

Overall, I see that we’re definitely in the midstream of adopters in terms of sustainability practices in businesses. We’re definitely in the area where there’s as much likely a copying going on as kind of rational decision. A company’s likely to get into sustainability because their competitors are, because their trade association is talking about it. That’s just as likely to drive them as, “We looked at our strategy and this makes sense.”

Big gap, I mean, you look at the gap of what some of our corporate members can put on the table in terms of dozens or even hundreds of people dealing with these issues. Then, you look at some of our other member companies and they’ve got one person who’s responsible for everything. There’s just no comparison as to the progress they can differentially make. I mean, we’re really at a point where literally the number of people that companies put on these issues makes a huge difference in their progress. Yes, working smarter is important here, but we’re literally at a point where so many companies have under resourced these efforts, they’re not making the progress that they can.

Retailers are acting as the new regulators. Whether it’s focusing on the bottom or focusing on the top, retailers are taking that role that government regulation has. They have the most buying influence. I think our corporate members have $1.5 trillion annual in revenue and employ 58 million people. That’s a lot of leverage. The fact is that most governments and their environmental protection agencies and so on, have been downsized. They don’t really have the capacity to work on these things and kind of keep up.

Retailers are taking that space. Retailers and manufacturers, but retailers in particular, are really scared that we’re going to run out of stuff. I mean, they won’t talk about it in public. These are conversations that are occurring in their strategic planning board rooms and stuff. Do they just think this is all a trend? No. They are scared to death that we don’t have enough stuff to sell when they look at the markets that they want to expand into and the materials that are needed to support those markets. There is true, true concern in the production economy that we are in a bad position.

Audience: [Inaudible 0:46:23.5].

Dooley: Stuff, products. We don’t have–

Audience: [Inaudible 0:46:31.6].

Dooley: Any product, basically. There are so many different categories of natural resources, of materials that are projected to run into critical shortages. They’re afraid there’s not going to be enough aluminum to sell all the patio chairs that they want to sell.

Audience: The problem is that we have too much stuff. For example, [cross talk 0:46:55.0]. A lot of us, we do. If anyone drives to Palm Springs, you see this giant wind turbine. You know at least one turbine is not working. It’s because the cost of the energy produced in there. They’re saying that they have too much energy that they don’t know what to do with it. Is it a problem of not having enough storage or is a problem of producing so much that we don’t care? Just like China has two thirds of their wind turbines are overproduced and they’re just sitting around doing nothing. We have the problem of people thinking we’re running out of stuff, running out of resources, but it’s because we’re creating too much. We’re creating exponentially more than we actually need.

Dooley: I won’t disagree with the overconsumption, that’s definitely true. I do think that there is a healthy emphasis on innovation rather than regulatory bottom policing. Do we need minimum standards? Yeah, I mean that’ll always push stuff. Regulations are effective in this arena. But, will that drive us where we need to go? No. What is really needed are more breakthrough innovations that occur from those companies that are competing at the top not worrying about how to stay off the bottom.

This world is one of small world networks, the only way to think reasonably about this space is as a network of networks. If you look at all of the environmental and social organizations that exist and how companies belong to those organizations and whatnot, it’s a very complex landscape. A CEO told me a couple of weeks ago, “We look at any initiative and we put in into three buckets. We either have to join because it’s critical to our strategy. Leave it aside because it’s not relevant. Or, we have to join because it’s critical that it not succeed.” There’s very complex political dynamics in all of these networks, then, how the various networks align with one another, especially across regional boundaries.

What about the science component? LCA is still young, so we’ll continue to see improvements there. Science is definitely socially interpreted. Just bring up the issue of hazard versus risk analysis to our chemical companies and you are up for a decade long debate. If you’re not familiar with that, there is two general approaches to looking at human health in chemicals. One is essentially; you have a black list of chemicals that you just basically say are no good. Regardless of the amount or regardless of the way that those chemicals might be diffused into people, into human systems, you just say, “That’s a bad chemical. It’s bad when it’s accumulated. There’s danger to workers, material handling, etc. that says there’s unknown effects on those interactions. Precautionary principle we’ll ban it.”

The other approach says, “No, we have to consider exposure. We have to consider how the chemicals are exposed.” Water has arsenic, but is that a risk? No. We really need to take into account the mechanisms by which people are exposed, which is much more difficult to model. This argument has gone on for decades. We’re kind of in the middle of it. The real problem is that most chemicals aren’t even characterized at all. That’s really the debate. The debate shouldn’t be let’s do Method A or Method B, and that’s interesting, it’s important. The fact is that it only applies to five percent of the chemicals that we have in our production economy. Most chemicals, we have no knowledge of what their toxic effects are at all.

It’s very interesting to work in a deadline driven research environment kind of working on business time. One of the things that we find in implementing that type of science is that you’re always trading off the liability versus validity. In other words, you’d like to train a group of researchers to do the same thing and interpret the data the same way, but science is not mechanical.

When you implement a mechanical process, you lose that base validity and come up with some silly answers sometimes. That’s one of the tradeoffs in our own research production system that we’re trying to grapple with.

Finally, big picture, the economy won’t change. The production economy won’t change until the economy embeds the true cost of our environment, until we internalize those externalities. You need something like SMRS, whether it’s TSC’s SMRS or some other incarnation. You need this to ever get to accounting for those externalities. You need a common measuring stick. You need to know how to measure stuff if we’re ever going to actually begin to account for the whole true economy.

To pick up on an earlier question or comment, yeah, there is a next step here. That is that we have to stop buying so much stuff. We have to produce less and we have to consume less. That’s really where the movement from products to services comes in. I see that as the next big phase for the consortium after we feel relatively good with understanding how to measure existing product sustainability to work with retailers and manufacturers towards servitization of their products.

When I talk to people about this, the fact that you won’t be able to own products and you’ll have to lease everything, people get really angry and defensive. I just say, “Well, you know, it’s gonna happen.” Once it makes business sense for companies, you won’t have a choice. Once they decide it’s worthwhile for them to do it, they’ll do it. It will be good for you, believe me. It won’t matter what you think. When you start talking about taking stuff away from people, people get really upset. That’s why I, trying to walk the talk–this is my office. I think offices are kind of a quaint 20th Century thing. I’d much prefer to walk around with my office right here. With that, let me stop and we can have questions and comments. Please.

Audience: Can a big retailer like Wal-Mart, at least in certain product categories, drive greenness into the product by only giving consumers the choice of green, greener and greenest?

Dooley: Yeah. I think that there are two examples there. One is of the laundry detergent. Concentrated laundry detergent, which greatly reduces the size of the package, should reduce your packaging. You reduce your weight. You’re not shipping water around, which makes no sense. The package is smaller so you stick more stuff in the truck. So you reduce logistics impact. Total win, right? All sorts of brand manufacturers tried it for about five years. It would never work.

I was talking to a cereal company last year. They said, “Oh, yeah, you know, you could take a cereal box, get rid of the cardboard, change the cellophane container a little bit so that it’s more robust, reduce all that air in the package, and we could reduce our packaging by 85 percent. But, we won’t do it because basically consumers won’t buy it.” Until everyone does concentrated laundry detergent and that shelf looks all the same, then a consumer doesn’t have a choice. I know, people at Wal-Mart told me they did an in-store survey last year. They said, there’s still like 60 percent, if not more, of their consumer packing that could be reduced. Again, it’s this phenomenon where if just one company does that, it’s not comparatively competitive.

Somewhere out there, there’s a Noble Prize waiting for someone who figures out the psychology to get consumers to not associate bigger packages with higher value. The other story there is that a Wal-Mart buyer of watches looked into getting the mercury out of the watch batteries and went around to the existing manufactures, who assured him or her that this couldn’t be done.

This person then went to some startup firms and said, “Well, you know, if we helped you gain capacity, could we solve this problem?” The answer was, yes. Now all watch batteries do not have mercury. In fact, because Wal-Mart initiated that, there was no reason not for all the other retailers, Target, K-Mart, etc., to not adopt the same sourcing strategy. It can make a big difference.

Audience: Assuming that the seven product categories rules didn’t meet [fading voice 0:56:09.6].

Dooley: Schedule. We follow ISO 14025 and 44 as kind of our principles. Really, our whole organization principles are based off ISO 14020. Those prototypes went out for independent review and they’re now under revision and will go out for public comment hopefully by the end of the year.

Audience: Where is your 80 corporate members? Where is the funding coming from, departments within, research, marketing, purchasing?

Dooley: Oh, a good question. For the most part, you see it coming from individual business units or marketing or manufacturing areas. The fact is that even the largest corporations have very small budgets in their corporate sustainability office. That typically is not the place that has resources to make commitments.

Audience: Back to Wal-Mart again. I bought some LED light bulbs, pseudo-bulbs. First of all, they’re not bulbs. They don’t need to call them bulbs. They could have their own ecological name and get rid of that envelope that’s wasteful. Secondly, they’re packaged in a way that you know it takes a bigger container again. Now, that’s clearly something that people can see is unnecessary. There’s two ways that they can redefine a product and make money.

Dooley: My guess is that it’s just one of those things where they haven’t gotten around to it. The opportunity space is much bigger than even companies like Wal-Mart are investing in right now. There is a lot of low hanging fruit, a lot of easy opportunities that still await action. I can only claim it to basically under-investing and not really grabbing all the opportunities they can.

Audience: What was the initial investment, the gift that Wal-Mart gave you?

Dooley: $6 million.

Audience: Six?

Dooley: Yeah.

Audience: All those changes to capital investments and packaging, huge capital investments.

Dooley: Yes.

Audience: Are you familiar with the Sterling Energy Systems?

Dooley: No.

Audience: It was a huge manufacturing plant in Scottsdale, north Phoenix. They actually got shut down like four or five months ago. They were making mirrored solar panels. They lost funding from the government, like over a $1 billion, probably because of the Solyndra scam. I was curious in regards to that, have you guys calculated a life cycle assessment for solar being produced in China compared to other factories in America that you guys are aware of that you can revert people to that decrease in our logistics. I mean, is it financially feasible for people to buy solar and are they able to find out from American manufacturers, than from Chinese plants?

Dooley: No. We haven’t really dealt with infrastructure. The kind of capital equipment in infrastructure is something that we see we need to tackle down the road because it’s an important part of the supply chain, but we haven’t gotten there yet. I do think that life cycle assessment is the approach that one would use to get an objective view of that if you could grab the data.

Audience: You made the joke earlier about the greenhouse effect and gasses, and you were talking about the little shower.

Dooley: Yeah.

Audience: Where would people get that kind of information? What is a good resource for people to do? A friend and I had an argument about cutting the shower off when you put on soap. Where do you get the good information from?

Dooley: I do know that, since I started with the consortium, that I’ve probably increased my own footprint by 5X or something like that because of all the flights. We are trying to be conscious. We took a lot flights last year and we did a greenhouse gas calculation so we got a baseline. Now, we have a really exaggerated baseline. Now, when we do it next year, we’ll look great. We’ve made all this improvement. I know that there’s a book called–oh, it’s got the word carbon footprint in it that I know is a popular book that talks about the carbon footprint of different things that consumers will run across. Does anyone else have an answer to that one, what are–

Audience: Carbon funds, they have a great resource to offset and figure out how to find everything else [fading voice 1:00:54.1].

Dooley: I know at a product level, we have something called open IO, input-output database. If you go to our consortium website, you can find a database that has all of the consumer product categories then using input-output analysis, greenhouse gas, water, ecosystem quality impacts. Likewise, I think I mentioned before, Good Guide is another tool that some consumers use because you can swipe a barcode with your phone and you can get information on the product right there in the store.

Audience: I have a question about the sustainability product [inaudible 1:01:43.8]. Is that the absolute benchmark for sustainability at the goal? Because otherwise it just seems like there’s a [inaudible 1:01:52.8] options, but none of them might be sustainable options.

Dooley: Well, this is all about being more sustainable. None of these products nor their best incarnation are sustainable. The drivers are meant to be positive, innovation focused attributes that would differentiate from the baseline, yeah.

Audience: How are companies feeling about this servitization? Is this big manufacturer feeling, “I’m getting ready for these changes that are coming?”

Dooley: You see attitudes across the spectrum. It’s always surprising to me how conservative many companies will be about these issues, not recognizing that if they don’t work at them now, it takes ten years to build up the core capabilities to succeed here.

For example, around product stewardship, I don’t understand why any company thinking strategically would not want to pursue product stewardship in a very aggressive way. The fact is, we are going to run out of many materials. The fact is that the reverse supply chain is going to be of high economic value. Who’s going to own the reverse supply chain? Is it going to be a waste management? Is it going to be a Wal-Mart or a Best Buy? Is it going to be a Dell Computer or is it going to be maybe even a raw material supplier? Or, maybe a specialized recycling firm.

I think there’s a lot of money in the reverse supply chain. I do see some more aggressive companies really beginning to say, “Yeah, we’re going to work in the next decade to develop that capability.” When the pricing of materials and whatnot is there, then this is going to be a big business opportunity. Most companies say, “Oh, product stewardship, that’s just a hassle, get it away from us.”

Audience: Are they going to [inaudible 1:03:53.7]?

Dooley: Well, they’re already doing that.

Audience: Do you have to do any work or how does this fit in with the suppliers of energy, waste and water, people who are in the business of selling more energy and taking care of waste. Is there…

Dooley: Waste management is a member. Again, that’s one of those infrastructure processes that we haven’t addressed as differentiators. One thing is that, a lot of these infrastructure issues are something that only can be impacted really at an industry sector level and whatnot. Since we’re so focused at the product level, a lot of those infrastructure topics, issues or opportunities haven’t popped up yet, but they eventually will. Especially as we begin to allow companies to report their own proprietary data, then it will make a big difference. If, for example, you’re talking about a telephone service provider, they have their server farm that’s powered by alternative energy. When we allow that kind of differential reporting to happen, I think that will engage a lot of those infrastructure processes.

Audience: Probably two or three slides back, when you had the dotted line and then the index, what is the difference between–or can you talk about the difference between multipliers at the bottom versus the impact assessments?

Dooley: Well, impact assessment weighting converts life cycle inventories to another metric that relates to essential impact on earth or social systems. The algorithm for calculating an index would take multiple categories that have different units, so different impact categories and combine them into perhaps a single number or letter or color whatnot. My feeling is that the trend is not towards a single indexing. Different retailers want to emphasize different attributes impact areas and, I think, consumers also want the flexibility to say, “I’m really concerned about free trade, weight that heavily for me.”

Audience: Do you have any interaction with product stewardship institute that is working with different categories similar to yours, like electronics and [inaudible 1:06:30.0]?

Dooley: They just invited us onto their board of directors or the advisory council, I think, literally yesterday. I think I have a phone call with them next week.

Audience: Is there or will there be a way for ASU students to get involved in [coughing 1:06:47.5]?

Dooley: Thank you for reminding me. Yes, absolutely. I would love to say that we have a big budget and are looking to hire student workers all over the place. I’d love to say that, but I can’t say that. What I can say is that we are open and interested in student volunteers, that we have all sorts of different research opportunities that we can make available to you. I think that, again, it’s an extremely exciting place to work because, on one hand, many of the issues that we’re dealing with are really difficult to get your arms around.

At the same time, you kind of know that the work you’re doing is going to be used in a really short timeframe. If you’re interested in volunteering, please send me an email, kevin.dooley@asu.edu. If you can just send me some sense of what issues you’re interested in, what type of research you like doing, so are you a number cruncher, like to do background research, you like to interview people, you’re interested in environmental or social, interested in a particular sector. Then we can see what we can set up for you.

Audience: That actually brings up a question that I was just going to ask about that. Have you heard of ATT, Arizona Technology [cross talk 1:08:15.5]?

Dooley: Sure.

Audience: So pretty much, there’s like over a hundred inventions that our professors at ASU are working on and you can take the opportunity and create a business and leverage that invention and pretty much create an organization themselves, the public–what I was going to ask is, in regards to say these huge players like Wal-Mart and Dell, and I don’t’ know if IBM’s part of you. They’re investing millions of dollars, what happens if say a startup or a college person wants to create one of these ventures? Won’t IBM or Wal-Mart eat up, like one day just pretty much bar out any small people starting up trying to their own, create a better place in the world?

Dooley: You’re talking about technology based ventures?

Audience: Yeah. Like, what’s the opportunity for like mom and pop shops who are trying to be green to get involved with the consortium, the TSC?

Dooley: That’s a tough one. When we’ve tried to do outreach to farmers, we found out how difficult it is to reach the smaller to medium sized enterprises. It’s so difficult. On their end, they don’t have trade organizations that co-elect them. You might think they do, but they don’t. They’re all fractured and stuff. There’s no one really to interact with on their end. Likewise, if you think that a trade organization is speaking for the minds of small and medium size enterprises, there’s so much variance of where companies are at. Large organizations, yeah–the the small organizations, no, so it’s a future challenge. We do hope to get to the point–my vision is, where we’re like a lead US GBC, where we have opportunities for individuals to participate not just organizations, but we’re a ways from that.

Audience: InterfaceFLOR is an example of a company that’s been focusing on some servitization [cross talk 1:10:12.1]. Now, do you have some other ones in the product space that are sort of leading the charge in that area?

Dooley: Well, we’ve been approached by a lot of companies in the electronics end of life space. The reality is that we have very little understanding of basically what happens to computers after their first use. How many really get stuck in a closet or a garage? How many get passed on to somebody else and used? How many get refurbished? What are the different recycling streams they enter into? We don’t know any of that stuff. Again, to really make good end of life decisions, we need the data first to even understand what’s going on. In our toy sector, take a product like LEGO. What’s going to drive the LCA of a LEGO building block? It’s what you expect the lifetime. That’s going to be the biggest driver. I’ve got several thousand dollars worth of LEGOS. Probably some of you do too. Those are getting thrown into the recycling bin. Those will go to my grandkids and probably their grandkids and their grandkids.

Audience: Is that your eight foot tall LEGO man that washed up on [cross talk 1:11:39.3]?

Dooley: No. It could have been though.

Audience: [Inaudible 1:11:44]. I am interested in what would you think, what part [inaudible 01:11:51] would be playing in the future, and if the–because they can use [inaudible 1:11:54] techniques and [inaudible 1:11:55], but are GPS kind of getting in more technique?

Dooley: Well, one thing is that logistics and certainly critical to the reverse supply thing. It becomes more and more critical as energy costs increase, obviously. Beyond that, I think, logistic companies actually give us a view into the future of where we want this system to head. You think about what life cycle assessment does right now. It does not measure reality. It uses previous data to make a prediction about the impacts of a product. It doesn’t look at anything that really happens with that actual product. Logistics–right now people are experimenting with, “We can put GHG emission data on the bill of landing in our transaction paperwork to show you that this load should be associated with this GHG. Logistics is beginning to move from this, “Oh, let’s predict what will happen” to actually, “Let’s measure what actually did happen.” I think, there’s lots of important roles for them to play.

Audience: My question ki