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How Leadership at Cabot Creamery Makes All the Difference
January 20th, 2012
When was the last time you saw the CEO of a world-class company wading knee-deep in the specification and design of sustainability metrics? Dr. Richard Stammer of Agri-Mark, Inc. (d.b.a. Cabot Creamery Cooperative) is one such person.
Stammer, a former economics professor at Rutgers University, became involved with his cooperative’s sustainability program in late 2007, by becoming a permanent (and charter) member of its sustainability scope committee, the governance body for the program. Working with the other members of the committee, Stammer quickly found himself having to contend with an unavoidable issue: whether or not to embrace a context-based approach to sustainability as the basis of his company’s program.
The easiest path Cabot could have taken is the context-free path, according to which sustainability performance is measured in terms of incremental improvements (e.g., using less energy this year than last, less water per pound of product produced, etc). The context-based approach, by contrast, specifies minimum and/or maximum impacts a company can have on social and environmental conditions based on who its stakeholders are and the actual social and ecological facts on the ground, as it were. Under Stammer’s leadership, Cabot took the road less traveled (the context-based one), resulting in what is arguably one of the most advanced context-based sustainability programs in the world.
Now for most people, that brand of leadership would be satisfying enough, but for Stammer it was just the beginning. He also wanted to participate in the nitty-gritty of designing metrics, measuring performance, and putting management systems in place in order to make it happen. Metrics, in particular, would have to be designed so that norms, standards and thresholds for performance could be determined.
Take water use, for example. Shortly after Cabot’s sustainability program was launched, the scope committee took up the question of how best to establish thresholds for water use at each of its manufacturing plants. Data concerning annual precipitation levels were readily available, but a decision had to be made on how much of the available renewable water at each site could notionally be allocated to the plants. One way to do so would have been to divide the available supplies equally amongst the inhabitants of the relevant watersheds, in a manner that would treat employees at the plants as proportional members of the populations involved. This would be a per capita method of allocating water.
While fair at first glance, Stammer felt the per capita method did not adequately address the role that manufacturers play in society. Manufacturers of food products, in particular, Stammer argued, should be entitled to use more than their employees’ per capita share of available natural resources given the value and importance of what they do.
Stammer then proceeded to devise a different way of allocating shares of water resources to manufacturing facilities that would more accurately reflect the contributions they make to public well-being. It would be based on the company’s contribution to gross domestic product (GDP), but it would first ensure that everyone’s domestic or household needs in the community are fully satisfied before allocating anything to organizations. This would involve a five-step calculation.
The first step is to identify renewable supplies (of water), to be defined as precipitation volumes (only) in the watersheds where Cabot does business – conservatively, no surface or groundwaters would be touched. Next would be to subtract a percentage of annual precipitation for evapotranspiration, which in New England can be fifty-percent or higher. Third - allocate half the remaining supplies to ecological or non-human needs. Fourth would be to fully satisfy all household needs in the watershed. And finally, the fifth and last step is to allocate the remaining supplies – something like a quarter of what originally shows up in the form of precipitation – to organizations, including businesses, based on their proportionate contributions to GDP in the watershed.
This ingenious approach to allocating shares of available water supplies to organizations in specific watersheds was affectionately dubbed the Destamminator, since standards of performance in context-based metrics are always expressed as denominators in quotients, and can certainly be named after their creators. In this case, it was the Stammer denominator, a.k.a. the Destamminator!
What this brief account shows is that leaders can have impact on both the conceptual foundations of a sustainability program and the specifics of its implementation, too, to great effect. Without a doubt, the development of the Destamminator will go down as a great moment in the evolution of context-based sustainability, thanks entirely to Dr. Stammer’s involvement.