The Industrialist

You want to talk about skin in the game? It's time to meet Ray Anderson.

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If you believe Ray Anderson, we are at the dawn of the New Industrial Revolution.

Anderson, 72 years old, a man with a soft Georgia accent and a kind, rather rumpled face, makes an unlikely-looking radical. But he may well be the most visionary figure in American business today. As chairman of the textile manufacturer Interface (NASDAQ:IFSIA), he has transformed the company he founded 33 years ago into the world's first industrial firm devoted to sustainability. By this Anderson doesn't mean conservation or being more careful about pollution. He means sustainability in the strictest sense: "taking nothing from the earth that is not rapidly and naturally renewable, and doing no harm to the biosphere." This would be a tough mission if you grow lettuce commercially. If you make carpeting, which for decades has been utterly dependent on petrochemicals, it is seemingly impossible. But it is happening. From a standing start in 1994, Interface is on track to be sustainable by 2020.

As Anderson tells his story, it involved something little short of a conversion experience--and yet it began as a response to the market. Interface makes carpet tiles, the 19.7-inch-square pieces of floor covering that you see everywhere, in airport lounges and office buildings and increasingly in private homes. Interface's clients are for the most part architects and interior designers, a group ahead of the curve in environmental awareness. In the early '90s Anderson was confronted with customers who wondered what the company was doing for the environment. They could not have anticipated the response they got.

Anderson confesses now that he had not really thought about the environment as a concern. The company, it was true, had taken steps to reduce interior air contamination; otherwise its only "policy" was to comply with the law. But when he began to ask questions about Interface's overall impact he became alarmed. Coincidentally, a book published that same year, 1994, came to his attention: The Ecology of Commerce by Paul Hawken. Hawken, founder of the garden supply company Smith and Hawken, among other ventures, is a passionate environmentalist, and his book decries the industrial devastation laying waste to the world's resources.

Anderson asked his engineers to determine what had been extracted from the earth to produce the company's income. That year Interface was enjoying some $800 million in revenue, and the engineers concluded that to get there they had used 1.2 billion pounds of raw materials, most of it oil and natural gas, and much of that incinerated. "I was staggered," Anderson later said. "I wanted to throw up. My company's technologies and those of every other company I know of anywhere, in their present forms, are plundering the earth. This cannot go on and on and on."

He announced to his customers that he was setting out in quest of sustainability, and within the year he had set the company on that seemingly quixotic course. Anderson is reticent about the way he persuaded his colleagues, but it must have taken some art and all of his newfound passion. "What are we going to do, use hemp and wool?" someone asked. "Who's going to raise our sheep?" But Anderson, who had recently stepped down as CEO but retained the chairman's role, had a lot of clout. Though publicly traded, Interface remained very much his company. Once it had been a handful of guys who had bought a small factory and were waiting for the first order to come in; it was now approaching a billion dollars in annual sales.

The company's first move was to concentrate on waste reduction, everything from carpet scraps to industrial effluent, which immediately led to savings--more than $60 million in the first three years. To date, cost reductions for waste have amounted to more than $300 million, enough to finance Interface's research into the heart of its sustainability problem, how to use recycled textiles for its products. Currently such material is used for most of the company's carpet backings, and Anderson is confident that Interface will soon know how to use it for everything, to achieve a "closed loop" system. In the meantime, Interface looks everywhere for reductions in energy use and raw materials, which has led to a frenzy of innovation, mundane and exotic: from redesigned pipelines (wider openings, smaller pumps) to a study of the gecko to figure out how to get carpet to stick to floors without glue.

Interface also expects ultimately to effect a change in consciousness in customers. The company has already established a program under which customers lease carpet tile installations. The company keeps them clean and replaces individual tiles as needed, and at the end of the life cycle reclaims and recycles everything. It is a vision shared by a number of environmentalists: companies take lifetime responsibility for what they produce.

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