BUSINESS

GREENING THE PROFITS

COMPANIES ARE FINDING THAT SELLING ENVIRONMENTAL HEALTH IMPROVES THE EARNINGS CURVE

PATRICIA CHISHOLM November 7 1988
BUSINESS

GREENING THE PROFITS

COMPANIES ARE FINDING THAT SELLING ENVIRONMENTAL HEALTH IMPROVES THE EARNINGS CURVE

PATRICIA CHISHOLM November 7 1988

GREENING THE PROFITS

BUSINESS

COMPANIES ARE FINDING THAT SELLING ENVIRONMENTAL HEALTH IMPROVES THE EARNINGS CURVE

Patrick Carson, recently installed vicepresident of environmental issues and supplies for the Loblaws supermarket chain, points to a copy of the Brundtland report on the environment, released last year by a United Nations commission. But he is not talking about its celebrated contents. Instead, he is noting that its pristinely white pages have probably been bleached with dangerous chemicals to make them more attractive. With the fervor of a recent convert to the cause, Carson expounds on his company’s commitment to reduce waste and toxicity in the environment. The gigantic supermarket chain is considering a full line of so-called environmentally friendly products, to be sold under the name Nature’s Choice. For Loblaws, the environmental message is also good business. Said Carson: “If the market’s there, let’s take advantage of it.”

The initiative is an improbable meeting of the profit motive and environmental sensitivity, and Loblaws is not alone in realizing their compatibility. More and more Canadian companies are becoming sensitive to a tidal wave of consumer concern about the environment and dangerous chemicals present in products they use every day. Last week, federal health department researchers announced that they had found dioxin in Ontario milk packaged in cardboard cartons. For their part, businessmen are taking advantage of the fact that individuals are not only clamoring for change, they are willing to pay for it. As a result, retailers are promoting more all-natural products and encouraging customers to recycle bags and bottles. Makers of widely used foam-plastic products—coffee cups, meat trays and fast-food containers—are now producing alternatives that do not use ozone-damaging chlorofluorocarbons (CFCs). The plastics industry is producing new compounds that disintegrate within a few months or years, instead of centuries. And behind the scenes, gigantic chemical producers, including Du Pont Canada Inc., are spending millions looking for alternatives to a wide range of potentially dangerous substances.

Other companies are switching back to paper-based packaging from plastics. But paper products can pose environmental threats of their own. Many scientists say that chemicals used to bleach paper produce dioxin. The Canadian Pulp and Paper Association responded to the federal milk carton study by launching a testing program to determine the level of dioxin produced by the industry. But industry spokesmen say that producers need two more years to stop their mills from contaminating paper products with dioxin. For his part, National Dairy Council president Kempton Matte said that, although the federal government has declared the milk safe, the aim is the “total elimination of contaminants.”

Over the past year, rising consumer concern with the environment has focused attention on dangerous chemicals in food, poisoned air and water—and mountainous piles of garbage. A study conducted by Winnipeg pollster Angus Reid Associates Inc. in September found that a staggering 83 per cent of Canadians surveyed ranked the environment as very important, and four out of five said that they were willing to pay more for such items as hamburgers and candy in degradable wrappers. In a sharp rebuke to business, only 11 per cent said that private industry contributes to solving environmental problems. Some critics say that the commitment of most businesses to environmental protection is still not firm. Torontobased Pollution Probe researcher Pamela Miller said businesses that become involved with environmental issues are taking advantage of the potential for profit. Said Miller: “It’s a great marketing ploy right now.”

But some businesses are moving at high speed to correct what spokesmen acknowledge are past mistakes. Toronto-based Lily Cups Inc. is the largest supplier of disposable foodservice containers in Canada and its clients include McDonald’s Restaurants of Canada Ltd. and 7-Eleven Food Stores. In a changeover that has taken only four weeks to complete, Lily has switched from CFC-based products to an “ozone-friendly alternative compound.” Lily vice-president of marketing John Bell said that the change was made in large part because of increased public concern over the environment, particularly in the past four or five months. He added, “Since the switch was announced, we have received many calls from individuals thanking us.”

McDonald’s experts began studying ways to eliminate the company’s own use of CFC-based food containers two years ago. The mammoth chain sells $1.3 billion worth of fast food a year in Canada alone and, until recently, most of its hamburgers came encased in shiny foam clamshells made with CFCs. But it has been gradually switching to other materials over the past year and will be “100 per cent CFC-free” by the end of this month, according to vice-president Peter Beresford. He said that the new containers will look the same and cost slightly more, but the increase will not be passed on to consumers. Beresford added that public pressure was one factor that prompted the change. According to Beresford, “McDonald’s use of CFCs is a fraction of a fraction of a percentage point of the problem with the ozone.”

Reaction by individual companies to environmental concerns has produced a kind of snowball effect. Changes at one company often lead to changes at a competitor or a supplier. Many producers of CFC-based products would not have been able to find an alternative without original research conducted by Du Pont in its search for CFC substitutes. Du Pont has earned billions from the sale of CFCs, which are used in connection with a wide array of products, including electronic circuitry, refrigeration equipment, medical supplies including blood storage bags, drugs and contact lenses, furniture and automobile foam insulation and aerosol sprays. Now company officials say that Du Pont hopes to cease all CFC production—although they could not guarantee that this would happen even by the end of the century.

Food retailers have been particularly sensitive to changing consumer demands, and their mammoth size has been instrumental in forcing change. Provigo Inc., a Quebec-based grocery chain with about 1,500 retail-food outlets across Canada, including convenience stores and other subsidiaries, was one of the first to reassess its practices. More than a year ago, Provigo responded to inquiries from Ottawabased environmentalist group Friends of the Earth by eliminating CFC-based coffee cups and egg cartons from store shelves and telling suppliers that they must find substitutes for other CFC-based packaging by the end of the year. Provigo’s sheer buying power helped ensure co-operation, says Provigo spokesman Kathy Megyery. She added, “We can demand certain specifications.”

But some companies are finding that the rush to protect the environment does not always lead to the right solution. Although Loblaws offers biodegradable garbage bags and diapers that are popular with customers, Carson acknowledges that biodegradability may not be the whole or the right answer to huge volumes of garbage. Recycling is likely to be more important, and the company now tells customers that they can bring their own shopping bags to the store.

A few businesses have avoided having to make massive changes by starting out with an environmentally conscious attitude. The Body Shop is a British-owned retail franchise that markets skinand hair-care products in 350 stores around the world. More than 60 are in Canada. Company officials say that there are no environmentally harmful chemicals in any of the chain’s products—none of which is tested on animals—and all of its plain plastic bottles may be returned to the store for recycling. Said Canadian president Margot Franssen: “Vendors have such power to change attitudes— look how we influence what people wear, what they eat—and most are not using it in the right way.” But there are increasing signs that those roles are in a process of readjustment. More and more, consumers are exerting their own, far-reaching influence over the marketplace. And business is listening.

PATRICIA CHISHOLM with JOHN DALY in Toronto

PATRICIA CHISHOLM

JOHN DALY