The reason I wanted to say a few words about Lunenburg is that the town is an example of how the environment and business are intimately connected.

The tie between Lunenburg and sustainability is that it’s a UNESCO World Heritage Site and for more than 200 years was the reigning center of the cod industry. Hundreds of schooners set sail every year to deliver salt cod around the world.

The cod population collapsed as a result of overfishing and mismanagement of the natural resource. After 1945, deep-sea trawlers, freezer ships and sophisticated “super trawlers” began to deplete the resource. In 1991, the industry was devastated as northern cod stocks essentially disappeared. Moratoriums were imposed, and now fishing fleets operate on strict quotas.

I bring all of this up because we seldom visit a community that has suffered ecological collapse and rebuilt its economy (Lunenburg is actually in the process of rebuilding). The city is now capitalizing on the fact that it is the best surviving example of a planned British colonial settlement in North America. Established in 1753, it has retained its original layout and overall appearance, based on a rectangular grid pattern drawn up in the home country. The inhabitants have managed to safeguard the city’s identity throughout the centuries by preserving the wooden architecture of the houses, some of which date from the 18th century.

Collectively, there is a prevailing view of a disconnection between business and the environment, as though they exist as separate entities. They do not. There is no business without the environment.

Think of how a collapse in agriculture (or a shift because of climate change, droughts, etc.) would affect your supply chain.

Sustainability is about being proactive in managing resources (including your supply chain) just as you would manage your financial performance.
Perhaps we need a real profit-and-loss statement and balance sheet for natural resources.

Tim Carey from PepsiCo (Director, Sustainability) participated on the panel and presented “Sustainability in a Recession: Keys to Performance in a Capital-Constrained Environment.”

Tim presented a very clear and concise case for aggressively pursuing a sustainability strategy in the “middle” of this economic downturn.

His key theme was that during the recession it is essential (yes, essential) to leverage sustainability to drive innovation and increase resource efficiency. Why, you ask, would this be critical during a recession? Simply put, resource costs will continue to increase over time (energy costs from hydrocarbons will increase going forward) and we will come out of the recession.

So, how do you want your company to come out of this recession? Will you be tied to a costly supply chain lulled into thinking that current cheap fuel costs excuse inefficiencies, high material use in packaging, still tied to high carbon energy sources such as coal and the wasteful use of water (while water is relatively cheap, take note of increasing stakeholder interest in how companies use water)?

Now is the time to “dematerialize” packaging, increase energy and water efficiencies and move towards a low carbon footprint on an enterprise-wide and product basis.

The bottom line is that you want to be the low cost producer (low Cost of Goods Sold (COGS)) compared to your competitors when the costs of resources increase (which they will going forward).

So, what is PepsiCo doing now? Some recent public announcements:

Bottles – The new “Eco-Fina” water bottle uses 50 percent less plastic than traditional designs with a half-liter bottle that weighs in at just 10.9 grams. 
 “Eco-Fina” will save 75 million pounds of plastic a year according to estimates by PepsiCo. In addition, the company has eliminated the cardboard base pads from its Aquafina 24-packs which will result in a savings of 20 million pounds of corrugate by 2010.

Another clever move is that PepsiCo is manufacturing the water bottles at the purification centers where they are filled in an effort to reduce fuel consumption and greenhouse gas (GHG) emissions from transport.

Shipping – Quaker, Gatorade and Tropicana will be shipped exclusively on lightweight, recyclable plastic pallets as a way to reduce fuel costs. In addition, the pallets are tagged with bar codes to enable tracking throughout the supply chain.
Vending machines – PepsiCo launched a pilot program in the Washington, D.C.-area to test “green” or “climate-friendly” vending machines. The Pepsi Bottling Group (PBG) is placing 30 energy-efficient Pepsi-Cola vending machines in high-consumer traffic areas with machines comprised of all-natural refrigeration systems. The machines apparently use less energy and generate 12 percent less GHG emissions than current vending machines.

Water - PepsiCo India is changing all of the labels on Aquafina, its bottle water brand, to announce that by next year, PepsiCo India will be a “positive water balance company.” Apparently the labels will urge consumers to partner with the company to “use water wisely so it could be enjoyed by future generations.” In addition, water usage in its manufacturing plants has been reduced by over 60 percent, and that has saved 2 billion liters of water in the process.

Late last year, I was repeatedly asked if sustainability initiatives would continue during an economic downturn or would they be viewed as expendable.

PepsiCo and other companies such as GE, Wal-Mart and Coca Cola are answering this question.