Starbucks plans to eliminate plastic straws from its stores by next year. Lyft has committed to “carbon neutrality.” Candy-maker Mondelez says all its wrappers will be recyclable by 2025, and Goldman Sachs has banished paper cups. But there’s scant evidence that these gestures benefit customers, shareholders, employees or the environment.
Consider Starbucks’ decision to ditch plastic straws for recyclable lids, supposedly reducing plastic waste. Turns out, straws are a tiny share of waste, accounting by one estimate for only about 0.025% of the eight million tons of plastic that flow annually into the ocean. But no matter: the new lids contain more plastic than the straws. The lids are ostensibly recyclable—but consumers must separate them from the cups and throw them into recycling bins. Who’s going to do that?
Even the lids that make it into bins will probably end up in landfills. They’re made of polypropylene, which used to be sent to China to recycle. But China recently stopped accepting U.S. waste, complaining it was too dirty. At least that saves the carbon emissions from shipping it across the Pacific. At least we can be happy about that!
Then there are practical concerns. Starbucks in 2008 set a “bold goal” to serve 25% of its beverages in reusable cups by 2015. It later revised the goal down to 5%, in part because it was inefficient for baristas to wash dirty cups while other customers waited. Cleaning mugs also requires water and paper towels, which end up in the trash. Meanwhile, every Starbucks I have been in (for the past, oh I don’t know, 10 years) is absolutely filthy. Dirty windows and sticky tables.
Then there’s Dunkin’ Donuts, which spent nearly a decade (a decade!) devising an alternative to foam cups. Some decomposable cups were too expensive in large volumes, while others, which were manufactured from recycled materials, simply collapsed. Dunkin’ settled on cups made from “ethically sourced paper.” In most places, they can’t be recycled.
The international banking firm of Goldman Sachs last year decided to ban paper cups from its offices and asked employees to bring ceramic mugs instead. Great idea. Earlier this year, the bank announced it would stop carrying throwaway utensils in its cafeterias and replaced plastic soda bottles with aluminum cans in vending machines. Too many employees were throwing the items in the trash rather than recycling. Perhaps they should have offered good old American-made forks, knives, and spoons.
How many Goldman bankers are willing to wash dishes at the office? Many will instead eat out. As for bottles vs. cans, aluminum production consumes huge amounts of energy and produces masses of CO2. Lest we forget, in the good old days, when things mattered, we made our lunches, placed them in reusable lunch pails, grabbed a bottle of soda, and went off to work. Rinse and repeat.
There are other actions corporations could take that would be more beneficial to the environment—for instance, setting office thermostats a few degrees higher or providing employees paid time-off for tree-planting or highway-cleaning projects.
So why are businesses taking these costly and often counterproductive actions?
They’re trying to show employees, customers and shareholders—including institutional investors with a political agenda—they care about the environment.
And in so doing, many crucial questions go unanswered:
- How many investors buy shares in a company because of its “sustainable” policies?
- And how much do office paper-cup purges aggravate employees and reduce productivity?
- How much do the higher costs of these policies reduce earnings and lower share prices?
- How many consumers care if the food they buy comes in recyclable packages?
- How much do higher costs from more expensive materials reduce purchases?
- How often do businesses bother to undertake cost-benefit analyses before implementing such policies—and how often are they merely following the lead of other companies or bowing to political pressure?
Perhaps the primary reason for such policies is to meet a demand for virtue signaling. Customers want minor inconveniences. It all boils down to feeling good about driving 10 minutes to buy a $5 cup of coffee, so long as they feel bad about it.
Turns out, signaling one’s virtue to the world costs money. How about focusing instead on your business and remind employees of the little lunch pail?
[Borrowed from the WSJ, May 27, 2019. The copyright is theirs.]
Interesting article Dr Joe! I believe that most of us want to do “good”. The question that remains, just what does that mean? How do we go about making a real difference rather than just feeling good.
Jerry
First of all, thanks for reading my blog! Secondly, how the heck are you? Third, I think that Milton Friedman had it right: The business of business is business. If our customers are rewarding our commitments with more business, then we have gotten it right. Otherwise, it seems to me to be a distraction. And a costly one at that. Of course, I know what Jerry Kleeman would say, and that is, “leadership takes many forms and from time to time it is in our best interest as a company to take a leadership position on matters pertaining to the general welfare.” Customers will reward us if it scratches an itch. The point of the article (albeit lost in my bad writing) is that, often, customers don’t care about recyclable this and reusable that. We must be careful. The straw thing is best left, in my opinion, to the entrepreneur who will come to us (if we are, say, Starbucks) with an environmentally safe alternative. We then adopt it into the value proposition. Something like that.