Green Machine

Gunter Pauli fires up his PowerBook and proudly displays an elaborate computer model of the world's most unconventional brewery. The plant is under construction in southern Africa -- Namibia to be exact. Water flows from the brewery into ponds designed for fish farming. Mushrooms grow on piles of spent grain from the fermentation process. Chickens feed on earthworms set loose in the grain. It seems part science experiment, part environmental theme park. Pauli says it's serious business.

"It's a small plant, but it will generate more sales than a traditional brewery of the same size," he declares. "And it will create more jobs. That's what 21st-century entrepreneurship is about. Companies have to be financially sustainable. They also have to be socially sustainable."

Gunter Pauli, 40, is a new breed of innovator: the social entrepreneur. There's no denying his corporate credentials and globetrotting workstyle. A graduate of INSEAD, the prestigious European business school, he spent several years criss-crossing Europe as a lecturer and consultant for IBM. He's written eight management books, is fluent in six languages, and maintains a travel schedule that would exhaust the most ardent road warrior.

But Pauli is as much social crusader as business leader. For the last five years, he's championed an ambitious program to challenge the logic of how conventional companies work. Pauli wants to create manufacturing facilities, like his new brewery, that function as closed-loop systems -- factories that completely eliminate waste by reusing or recycling all the raw materials they take in. He calls it zero-emissions manufacturing.

"This is part of the drive for higher productivity," Pauli argues. "We're always pushing to do more with labor and capital. It's time to focus on the productivity of raw materials. Zero emissions sounds radical today. In 20 years it will be standard operating procedure."

Standard or not, it's already operating in a few places. Pauli is the former CEO of Ecover, a small Belgian company that makes cleaning products (laundry powder, dishwashing liquid, car wax) from natural soaps and renewable raw materials. In October 1992, Ecover opened a near-zero-emissions factory in Pauli's native Belgium. A grass roof keeps the plant cool in summer and warm in winter. The water-treatment system runs on wind and solar energy.

Ecover's "green factory" triggered a media sensation in Europe. But Pauli left the company after a bitter struggle with its lead investor. The young CEO saw a chance to create a global brand by opening more factories around the world. His partner preferred a cautious approach: move the green factory into the black, then grow.

So Pauli moved to Tokyo, and the United Nations University, where he launched the Zero Emissions Research Initiative (ZERI) in April 1994. Today he sits at the center of a global network of scientists, corporate executives, and political leaders that is piecing together zero-emissions technology and documenting its performance benefits. ZERI's budget for 1995 was $2 million. Its budget for 1996 is $10 million. And Pauli is putting the finishing touches on a prospectus for a $50 million investment fund (to be financed by governments) to underwrite zero-emissions factories in industries from beer brewing to sugar processing. The goal is to have three plants up and running by March 1997.

Fast Company visited Pauli at his United Nations University office in Tokyo. We challenged him to discuss his agenda in terms even the most cynical venture capitalist could understand.

"I don't claim zero emissions is cheaper," he says. "I do claim it can make more money."

Here's the business plan.

What's the core idea?

Zero emissions is the next breakthrough in business productivity. Total quality management meant zero defects. Just-in-time manufacturing meant zero inventories. We're striving for zero emissions -- 100% throughout. You use everything. You completely eliminate waste.

Take beer. The brewing process wastes massive amounts of water. In Japan, it takes ten liters of water to brew one liter of beer. Japan isn't exactly overflowing with pure water. Brewing also requires huge supplies of grain. China imports more than 16 million tons of grain each year just to make beer and alcohol -- more than it imports for people. But the fermentation process extracts only 8% of the nutrients in the grain. Of the nutrients left behind, 26% is pure protein. Does it make sense -- morally, environmentally, economically -- just to waste those resources? Is there no food shortage in the world?