Last January, unbeknownst to most Denverites, thousands of economists descended upon the city in what could be one of the greatest concentrations of power in the nation outside of Washington DC: the American Economics Association’s annual meeting.
While throngs of economists sampled downtown’s finest hotels and restaurants, I reckon that I was the only one who ventured to Stapleton – a grey industrial zone that’s flanked by a SuperFund site to the north and the I-70 to the south. I went to understand the movement toward socially responsible and environmentally sustainable business.
I visited a local entreprenuer named Scott Leopold, who heads the Leopold Bros. distillery along with his brother Todd. With a background in environmental engineering and business, Scott’s vision for the distillery integrates environmental conservation into the basic principles of doing business – minimizing costs and delivering a quality product to the consumer.
At the business’s earlier incarnation as a brewery in Ann Arbor, Michigan, Scott engineered a brewing process that brought the volume of waste water from 10 glasses down to one glass per glass of beer. Improvements like this have myriad benefits for municipalities, consumers, and the environment. But they are also just good business.
By neglecting the environment, many businesses are also forgoing money-saving opportunities. A well-known 2008 analysis by McKinsey & Company states that the United States could reduce its overall greenhouse gas emissions by almost 30 percent of current levels while saving money in the process. As it turns out, Scott Leopold himself tackled these very issues during his previous career advising Fortune 500 firms how to save money and conserve resources at the same time. I asked him whether his innovations were being widely adopted throughout the industry and his views on the barriers to change.
While Leopold Bros. has successfully passed on many of their sustainable practices to other brewers and distillers, the industry still has a long way to go. Implementing sustainable practices requires the rare combination of environmental engineering expertise and master craftsmanship that are possessed in abundance by the brothers Leopold (Todd has a degree in brewing and apprenticed in Germany), but few other outfits in the alcoholic beverage industry. In practice, lack of awareness and expertise can severely limit the pace of innovation adoption. Even socially-minded entrepreneurs like Scott Leopold are not nearly enough to bridge the knowledge gap.
So what can we do to encourage environmental efficiency in business?
Challenges for consumers
The best way for consumers to push for sustainable practices is to reward businesses that adopt them. But given the scarce and often misleading information about corporate practices, this is easier said than done. From his experience, Scott Leopold warned that appearances can be deceiving. Many resource-efficient companies don’t advertise their practices, and many touting green credentials don’t even do the most basic actions to back up their claims.
In my view, the most important thing consumers can do is to educate ourselves. And there are a growing number of resources like and The Green Lantern providing trustworthy information.
Challenges for business
An alarming number of business leaders are still asleep when it comes to combining conservation with good business. But with looming energy price hikes and the long-term inevitability of a price on carbon emissions, it behooves even the staunchest resource hogs to start thinking differently. Using studies like McKinsey’s and experience from pioneering firms like Leopold Bros., it’s not hard to identify broad categories of profit opportunities. Shifting gears so dramatically will no doubt prove too difficult for some businesse, but those that do will be better positioned to succeed.
Challenges for academics
Finally, I think academics can play a crucial role to bridge the knowledge gap between industry leaders who are identifying and implementing environmental practices, and those who lack the awareness and expertise to do so. Perhaps future AEA meetings will show that studying corporate conservation can make for good economics.
Jialan Wang is an Assistant Professor of Finance, Washington University in St Louis, and writes about economics, food, and the environment on her blog Studies in Everyday Life. EDITOR’S NOTE: This is an online-only column and has not been edited.
