Schools for a Sustainable Future -The Next Reformation, Part 3 October 1999

Sarah: Could you clarify the distinction between the effects of a global corporation's operation on the environment and the community and that of a local company?

Paul: A local company has more accountability. Local companies don't have to internalize their costs, and few actually do, but they tend to more often because the owners live there and they have to show their face in town, and their kids play with other kids.

And also, more and more businesses really want to do the right thing. They feel better about themselves, their workers feel better, and so do their customers. I think this is equally true in the transnational corporations, but it is harder to express in those situations.

Sarah: Have you encountered businesses like that?

Paul: I think we all have. And I think we can all see that they're frustrated because they're playing on an uneven field. Businesses who are members of Businesses for Social Responsibility or the Social Venture Network are internalizing costs on a voluntary basis and therefore raising their costs of doing business, but their competitors are not required to. They can only do that to a certain degree before they hurt themselves, their company, and their future.

On the other hand, there are many things that companies can do to make themselves more efficient, that internalize costs at a savings rather than an expense. This is where the excitement is, and this is where what we can call the next industrial revolution will start. It'll start where the systems are badly designed.

Companies that create more elegant ways of doing things, that create material and energy flows that are exponentially more efficient will become inefficiency arbitrageurs. They'll force internalization onto their competitors because these companies will achieve efficiency at negative or nearly negative costs, which will set the standards for the rest of the industry. This will be the wedge, the foot in the door. It's not going to begin with legislation or regulation; it's going to begin by imagination.

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	The Next Reformation an interview with Paul Hawken, by Sarah Van Gelder
	Part 3 Sarah: Could you clarify the distinction between the effects of a global corporation's operation on the environment and the community and that of a local company? Paul: A local company has more accountability. Local companies don't have to internalize their costs, and few actually do, but they tend to more often because the owners live there and they have to show their face in town, and their kids play with other kids. And also, more and more businesses really want to do the right thing. They feel better about themselves, their workers feel better, and so do their customers. I think this is equally true in the transnational corporations, but it is harder to express in those situations. Sarah: Have you encountered businesses like that? Paul: I think we all have. And I think we can all see that they're frustrated because they're playing on an uneven field. Businesses who are members of Businesses for Social Responsibility or the Social Venture Network are internalizing costs on a voluntary basis and therefore raising their costs of doing business, but their competitors are not required to. They can only do that to a certain degree before they hurt themselves, their company, and their future. On the other hand, there are many things that companies can do to make themselves more efficient, that internalize costs at a savings rather than an expense. This is where the excitement is, and this is where what we can call the next industrial revolution will start. It'll start where the systems are badly designed. Companies that create more elegant ways of doing things, that create material and energy flows that are exponentially more efficient will become inefficiency arbitrageurs. They'll force internalization onto their competitors because these companies will achieve efficiency at negative or nearly negative costs, which will set the standards for the rest of the industry. This will be the wedge, the foot in the door. It's not going to begin with legislation or regulation; it's going to begin by imagination. Introduction Part 1 Part 2 Part 4 Part 5
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