For a manufacturer of plastic, the signature product of the fossil-fuel era, this sounds near suicidal. Not so, Keller insists. Plastics manufacturers need fossil fuels—nowadays, mostly natural gas—as a raw material. "That's a good reason not to use them for fuel," Keller says. "We're avoiding greenhouse gases by turning natural gas into a long-lasting product that can be recycled, as opposed to burning it."
Greening up plastics manufacturing is neither cheap nor easy. Nonpetroleum-based bioplastics are not yet viable or cost effective for the kind of heavy-duty products Cascade specializes in. And increasing recycled content requires technical innovation, a more laborious manufacturing process, and sometimes—depending on fluctuations in the price of recycled versus virgin-plastic resin—additional costs. Nonetheless, Keller and Cascade command considerable respect in the industry. In 2008, the Society of Plastics Engineers presented Cascade with a Greener Environment Award for its EcoCart, a heavy-duty recycling container with up to 50 percent recycled content, more than any similarly sized container on the market.
Some sustainability initiatives have increased costs. But Keller is quick to point out that many others do just the opposite. Cascade's waste-reduction program, for example, has slashed landfill costs from more than $250,000 in 2002 to less than $10,000 in 2010. And recycling doesn't add any significant expenses of its own: Recyclers of products as diverse as paper and glass and plastic scrap and batteries offer free collection. Meantime, as the first Michigan office building to attain LEED Platinum status, the highest green-building rating, Cascade's headquarters uses 22 percent less energy than comparable facilities.
What's more, the company's embrace of sustainability has been a powerful differentiator—and customers with sustainability agendas have gravitated to Cascade to pursue partnerships. Lowe's, the home-improvement giant, recently tapped Cascade to become one of the first vendors involved in the Energy Center, a store within a store that gathers a variety of home-efficiency products, including compact fluorescent bulbs and solar panels. The centers debuted in California in late 2009 and will soon be launched nationally. Lowe's will also carry Cascade's home wind turbine, as well as a Cascade-produced line of consumer products bearing the Re:set brand; the first product is a remote-controlled system for completely shutting power to appliances that are turned off but still drawing energy in standby mode.
Keller's youngest daughter, Christina, 29, has inherited her father's mindset. She worked at a carbon-trading organization in Washington, D.C., before coming to Cascade to lead a new-business unit called Triple Quest. Its initial product, the Hydraid BioSand Water Filter, is a low-cost purification system designed by a Canadian civil engineer. Initially, Cascade manufactured the filter as part of a humanitarian effort in conjunction with a NGO partner called International Aid. But when that group ran into financial troubles, Cascade took the mold back and decided to try a for-profit model.
For now, the plan is to sell to nonprofits and governments. But long term, the Kellers, father and daughter, envision a microfranchising model, in which entrepreneurs in local communities sell the filters to their neighbors. A pilot program in Honduras is testing that model. "If it works," says Christina Keller, "the product line would expand to include things like solar lanterns and cook stoves, and other essential-needs products to people at the base of the pyramid. If it fails, at least a lot of people got clean water."
Being a capitalist with goals that seem more in line with those of a nonprofit is not without its challenges. "In business school, you learn a Milton Friedman approach, where the most important job of a business is to maximize profit," Keller says. "That's the head talking. The heart says we want to make an impact on this world, do something positive."
So four times each spring semester, Keller flies to upstate New York to teach such principles at Cornell's Johnson School of Management. He has been doing so for 10 years, a relationship that began when entrepreneurship professor David BenDaniel invited Keller to present a case study about an instance in which Cascade was considering purchasing a plant in California. Keller was woefully out of sync with what was then being taught in business schools. At the end of the class, when he told students what actually happened (he didn't buy the plant) and why, his spiel on values left them dumbfounded. "Fred, we don't teach that here," BenDaniel told him. "We teach maximizing value in three to five years and selling." "Well, I don't believe in that," Keller responded. And then BenDaniel talked him into teaching a course on what he did believe.
The extent of Keller's efforts demonstrates a core belief that businesses are accountable beyond their walls and balance sheets. In the language of triple-bottom-line business, this work falls under the rubric of social-capital building. And in our version of capitalism, there is no accounting for it. A Cascade program that offers jobs to welfare recipients, for example, is responsible for 40 current employees, which saves the state about $500,000 a year in benefits payments. Cascade, by contrast, does not receive a cent in incentives or tax breaks. "It's fun to be a leader and to be recognized," Keller says. "But ultimately, you want to see policy changes so that businesses who are willing to do these things can monetize them."
By establishing a standard for measuring such efforts, B Corporations are a step in that direction—giving social entrepreneurs a place in the legal infrastructure of the corporate system and investors a framework for assessing their performance. Keller sees this as a new form of capitalism, in which profit-making remains key but financial rewards reflect not only goods sold but good deeds done. It's not as radical as it sounds. Adam Smith, whose Wealth of Nations is a touchstone of modern capitalism, had a similar vision. For Keller, Smith's overlooked first book, A Theory of Moral Sentiments, holds the key to mitigating the cold, invisible hand of free markets. "His basic premise was that man is eminently moral," Keller says. "He was talking about candlestick makers and butchers and broom makers working together to make an ecosystem for a community—as opposed to what we have today."
