The Costs of Meltdown

It is the nature of a crisis that we tend to focus on the problems in front of us. It is the nature of our democracy that we tend to solve problems in two and four years chunks. Remarkable, therefore, that during 2007 and 2008 we saw systemic changes in environmental business practices and legislative structures that looked across decades and not months. In the Summer of 2008, the Commonwealth of Massachusetts passed a suite of environmental statutes that truly change the regulatory landscape and that speak in terms of decades and not months or even years.

Similarly, I spent yesterday consulting to the Sustainability Committee of the Tree Care Industry Association (TCIA). The Association's board has committed itself to "Contribute to sustainable communities by promoting the environmental and economic value of maintaining healthy trees," and now the staff and dedicated members, small business owners all, are working on a sustainability strategy for the industry. Present at the meeting was a Vice President for a supplier to the tree care industry, a major manufacturing company that itself launched a sustainability strategy last year. As he described it, the company came to sustainability because of a concern over costs, and found that recycling steel in their manufacturing process saves the company $6 million per year. What followed was a company-wide explosion of interest in sustainability and a commitment to exploring environmentally sounds practices across the company--a culture shift. This VP reported that the company had changed forever and that he was urging his colleagues not to feel guilty about how they got to the table (reducing costs) and rather to focus on sustaining the momentum.

A true tragedy of the timing of this financial crisis then is that it comes at a time that new institutions were beginning to take sustainability seriously. Most of the Massachusetts legislative initiatives require new staff at the state level--and the Governor is sure to require a hiring freeze as the state looks at massive deficits and as the Treasurer cannot even borrow against current receivables. Quite apart from the fact that sustainability practices save money, layoffs and slowdowns will inevitably blunt the momentum within companies like the one I met yesterday as well. This morning in the Boston Globe, there is a story about the businesses, big and small, that are struggling in the face of the credit crisis. The point, of course, is that the financial meltdown is already hitting main street and has been for a long time. The article suggests we take a wider view on how this current crisis effects a broader scope of people and of issues--how it touches or will touch lives outside Wall Street and institutions and issues far removed from a handful of investment banks.

A new challenge, then, for the coming several years: How do we sustain the momentum for deep and systemic change in a climate of fiscal crisis?