Several weeks ago we asked Starbucks, at its annual meeting, about whether this shift away from straws actually created value for shareholders. Their response? “We have not disclosed the financial impact of strawless lids.”
The fundamental question we were asking was about the sustainability assumption: that you can go green and make green at the same time. That you can save the planet by recycling more, while not affecting your shareholder return. And now, one of the biggest brands in the world is making it clear: we won’t even tell our own shareholders whether the sustainability assumption is true. Go away.
Several years ago, the coffee giant made a bid to phase out their routine usage of plastic straws in favor of strawless lids. The rationale? As per Starbucks, “sustainability.” And yet the result, at least immediately, was anything but. Analysis from Reason Magazine’s Christian Britschgi revealed that the ‘strawless’ replacement actually used more plastic than the straw/lid combo, and Starbucks only fixed the problem years later — already evidence in favor of its sustainability strategy being more vibes than sound business analysis.
As it happens, that’s an industry-wide problem.
The narrative on plastic use is ingrained deep within the corporate psyche. 72% of the top 300 companies in the world have made commitments to reduce plastic use, with many setting specific targets for reducing plastic waste in their production chains. From tech giants like Google to food producers like Mars Inc, recyclable/reusable plastic is an issue that the world’s largest companies are hell-bent on opining on and making commitments to “fix.” But are their solutions working — even by their own standards?
The Half-Truth of Biodegradable Plastics
Let’s take biodegradable plastic — plastic that presumably breaks down to its base components more quickly than traditional plastic options. Major brands have tested the concept, including producers like McDonald’s and PepsiCo. And yet, what’s the basic assumption behind biodegradable plastic? That the material will actually degrade faster in the environment. As per one analysis, “Biodegradable plastics decompose in environments such as soil or water, or in compost. In other words, creating an environment conducive to microbial activity is crucial for plastics to decompose effectively.”
Yep. We knew that. And yet, here’s a 2015 report from the United Nations Environment Programme: “some plastics labelled as ‘biodegradable’ require the conditions that typically occur in industrial compositing units, with prolonged temperatures of above 50°C, to be completely broken down. Such conditions are rarely if ever met in the marine environment.” So… the key assumption behind biodegradable plastics (aka their biodegradability) is precisely the assumption that has yet to be proven.
131st Time’s the Charm for Reusable Shopping Bags
Let’s take another example: reusable shopping bags.
Retailers like IKEA, Whole Foods, and Patagonia have either outright banned plastic bags or taken significant steps to encourage customers towards using reusable bags made out of materials like cotton. The assumption here: the reusable bag has less of an environmental footprint than the plastic bag. And yet the reusable bag strategy is fraught with problems. For one, many of the alternatives are made out of biodegradable materials (see above discussion about some of them only degrade if consistently kept above 120 degrees Fahrenheit which, surprise surprise, doesn’t consistently happen in nature). For another, the amount of times you have to reuse a bag to offset the environmental impact is astronomical — one UK analysis from the Environment Agency found that “cotton bags should be reused at least… 131 times respectively to ensure that they have lower global warming potential than conventional carrier bags that are not reused.” One hundred and thirty-one times just to break even.
This is the Moment to Question ‘Sustainability’
What’s the next move? As ESG, DEI, and the corporate activist agendas that accompany them fall out of favor, true believers in sustainability could bother to make a serious business case for why actually reducing plastic (and not just saying you’re doing it) creates brand value for its owners, the shareholders. Or (and this is more likely) they’ll make the moral argument: that the ineffective policies and questionable-at-best impacts of the corporate sustainability obsession were justified because… wait for it… they were trying to do the right thing.
Do DEI programs actually help — or are they often designed to make consultants money as opposed to fix prejudice? Does ExxonMobil really need to do less business in oil and gas — or did a bunch of activists just make that up? Many of the questions that ESG and DEI-aligned activists consider asked and answered are, in fact, just loudly stated claims that almost no one has the guts to seriously challenge — claims that corporate engagement firms like us, as advocates of markets and fiduciary duty, have a responsibility to be questioning. And maybe the biggest claim that deserves questioning is this one: are corporate ‘sustainability’ practices actually…. Sustainable?
Life is full of moments in life where we realize: I’ve always assumed that was true — but is it?
Asking a simple question about the structure of a business can be the difference between investing in a successful start-up and sinking thousands into a scam. Asking a simple question about the details of a story you’ve been told can reveal a web of dishonesty. It’s an unfortunate reality that many dysfunctional systems, from the scam to the cult to Ponzi scheme, operate on premises that were never true, but that people just assumed to be so.
All things come with tradeoffs, a simple reality that sustainability experts understand. You can ban plastic straws, but paper ones come with their own cost, including environmental ones.
University of Michigan researchers recently examined the trend of sustainability-minded consumers from single-use plastics to reusable products, such as bamboo drinking straws. Remember the assumption: that sustainable products, with enough use, have less environmental impact than disposable ones. The UM researchers, however, found that some products, like beeswax wrap (an alternative to plastic wrap), silicone bags, and bamboo drinking straws never end up being better on environmental impacts like energy usage and water consumption. UM environmental engineer Shelie Miller summed up the study’s findings: “Don’t always assume that reusable is the best option,” Miller said. “Some reusable alternatives never break even because it takes more energy, and generates more greenhouse gas emissions, to wash them than it takes to make the single-use plastic item.” It’s the assumption game — and far too many corporations banked on that assumption because a loud cadre of activists told them they shouldn’t question it.
The best time to question the fundamental assumptions of the sustainability narrative was years ago, before corporate policies started being made in its image. The second-best time is now. And when the only answer we consistently get to these questions is diversion and secrecy…maybe the scrutiny’s overdue.