This article was written by second-year MBA student Brinda Ramaiya. Brinda is co-president of the Duke Net Impact Club and an EDGE Corporate Sustainability Fellow.
Duke’s annual Conference on Sustainable Business and Social Impact (SBSI), which is hosted by the Fuqua Net Impact Club, took place on Feb. 9. We were honored to have Hannah Jones, VP of Sustainable Business and Innovation at Nike, attend as our opening plenary in conversation with EDGE executive director, Dan Vermeer.
Ms. Jones discussed all aspects of her role at Nike–from the development of Nike’s Trash Talk shoe that is made from manufacturing waste to how the company delivers innovation to the market. Nike’s ability to provide closed loop products by reusing excess material ($800M of materials is wasted on the manufacturing floor annual) confirmed to me how far we have come as a society by showing in action that sustainability can indeed increase gross margins. Ms. Jones also explained that Nike’s child labor criticism in the 1990s was the best thing that ever happened to the company as it forced them to become transparent, resulting in being an early leaders in sustainability.
Ms. Jones also delved into her views on business today. What most interested me were her observations on how changes in the environment drive business outcomes. According to Ms. Jones, we are at the “tipping point of post-globalization”, the current situations of Egypt and Tunisia being an example. She continued, “We’ve constructed a model of economic growth decoupled to equity” signifying an “absence of a strong global government.” What are the signs that the system is failing us? She asked attendees to go home after the conference and research the price of various foods and commodities and also disruptive climate change.
So I went home and did just that. An avid reader of The Wall Street Journal, I focused on articles from the past few days as well as looking at other recent news articles. Here are a few statistics and commentary I found:
- WSJ: Copper prices, which usually are a signal of global demand, are up 60% from a year earlier.
- WSJ: An article I read two weeks prior discussed fashion houses moving more towards rayon due to the price of cotton clothing rising. I researched to find the price of cotton has gone up 185% from previous years and is almost at $2 now. This is a direct impact to margins.
- Christian Science Monitor: The United Nations Food and Agricultural Organization (FAO) food price index hit an all-time high in December 2010.
- WSJ: The price of unleaded gasoline at the pump is projected to go up to $3.30 this year, perhaps even higher if Egypt blocks exports.
- Washington Post: An article discussing how the harsh winters the U.S. has been facing are a sign of climate change disrupting long-standing weather patterns.
- Raleigh News and Observer: This year’s winter in North Carolina has been the third coldest on record.
- Wall Street Journal: Weakness in the Egyptian pound has caused food prices in the country to rise 20%.
- Headline article on the WSJ cover for the day: “Inflation in China due to rising food and commodity prices.” Four out of the five regions that source the majority of wheat in China are in a drought.
- New York Times: Economics Nobel-prize winner Paul Krugman discusses in his article “Droughts, Floods and Food” how rising prices have led to instability. While he acknowledges economic growth and energy policy are partial causes of the price surges, he also points to recent weather. The flooding in Brazil and Australia and the 2010 heat wave in Russia show that “the evidence does, in fact, suggest that what we’re getting now is a first taste of the disruption…”
As we enter a time of change, how can we put this data together to come up with a strategy? Dan Vermeer and Ms. Jones both reasoned that people needed to “connect the dots” between various issues and understand the system as a whole, coherent story. “We cannot disconnect water, climate change, etc and see them as separate issues,” Dan explained.
I wondered how I, as a graduating MBA student, could change behaviors. Despite the discouragement that we may feel as individuals that there’s too much inertia to drive change and force must be the ultimate solution, Ms. Jones countered that fear doesn’t work, we must instead provide a roadmap. She used an example from Nike: they outsource almost everything but their design and marketing, they work externally with their suppliers to incentivize the sustainable behavior they want to see. Innovation is also a critical key; products need to be continuously used and decoupled from scarce natural resources.
Continuing like a true innovator, she offered, her last piece of advice: “We must have courage, be a voice, and disrupt. Reinvent yourself and your team. If you can, it’s the journey of a lifetime.”