12/05/2016 08:25 am ET Updated Dec 06, 2017

Bringing the Culture of Sustainability Management to Princess Cruise Lines

On December 2, 2016, Katie Rogers of the New York Times reported that:

"Princess Cruise Lines has pleaded guilty to seven felony charges and will pay $40 million after employees on a cruise ship were caught dumping oiled waste into the seas and lying to cover up their actions, officials with the Justice Department said. Federal authorities called it the "largest-ever criminal penalty" for intentional vessel pollution."

Princess is a division of Carnival Cruise line, the largest passenger cruise company in the world. The dumping of oil sludge and gray waste water into the ocean bypassed the ship's own environmental filtration systems and is about as disgusting a cost cutting measure as you can imagine. (Actually, I can imagine others; I wonder if anyone's inspected their kitchens lately.) According to Ms. Roger's reporting, the practices started in 2005 and continued until 2013 when a new engineer noticed the practice, reported it to British authorities, and then quit.

In the Times' article, John C. Cruden, of the Department of Justice's Environment and Natural Resources Division, observed that this practice was a result of a problem of Princess' management culture. I think Cruden is correct to identify this as an issue of management, but I do not think this is limited to Princess or Carnival, but to whole areas of business practice that continue to ignore their responsibility to apply best management practices and the best available technology to operations such as waste disposal.

Every family and every organization consumes resources and produces a waste stream. When you take a short cut and dump your garbage by the side of the road or the side of your ship, modern waste does not simply dissolve or biodegrade, but persists. In the old days, engineers used to say that the solution to pollution is dilution. But in those days the planet had 2 to 3 billion people and we didn't wrap six-packs in indestructible plastic ring cases. Bottles and cans would eventually decompose. Sea glass over time becomes quite beautiful. Can't say the same about sea cigarette butts or plastic bottles floating in marine debris. The materials discharged from the Princess may not have been pieces of solid waste, but they were contaminated liquids and sludge that should have been treated before they were discharged.

Eventually the junk mixes with the sea water or comes to the surface and the more garbage we dump in the ocean, the more frequently we'll see and smell it. What is astonishing about Princess and Carnival doing this is that they are in the business of selling ocean views and sea breezes. Do they think people will really pay thousands of dollars to cruise through a global sewer? It seems to me that the people in that organization, and in many others, are caught in a mindset that should have been changed over the past fifty years. A little more than a decade ago we took our daughters on a Carnival cruise and it seemed like a business that worked hard to satisfy its many customers. Little did we know.

For a cruise ship line, the ocean should be seen as a vital business asset. As vast as the ocean seems, it is wise to not take it for granted and to understand that humans have the capacity to destroy it and that destruction would not be good for the cruise business. We need to rethink the environment and think about environmental policy in the context of the global economy. It's not 1970 anymore. Originally, the environment was seen as an aesthetics issue and an issue of conservation and nature preservation--become one with nature and respect all of God's creatures. Those values remain part of environmentalism and they are important values. But we have learned a lot in the past half century. A polluted environment can make you sick. We've learned about the toxic health effects of certain chemicals like lead, mercury, PCBs, DDT, and many, many others. We have learned that some chemicals such as carbon dioxide can intensify the planet's natural greenhouse effect and make the planet warmer than nature intended. We've learned that some toxics stay local and others are transported globally. Human population and consumption is pressuring the planet's resources and we need to learn to consume with less destruction and more wisdom.

I believe that the problems created by human technology can be solved by human technology and that often the cost of new sustainability technology is far less than the benefit it generates. Air pollution regulation returns $15 for every dollar spent. Human ingenuity has led to inventions in renewable energy and battery technology, water filtration, waste management treatment, agricultural production and in earth systems science and observation. It is possible to integrate a concern for our impact on the planet into routine best management practices.

We are capable of doing better. When someone dies during the construction of a building, we don't praise the construction company for saving money on safety equipment. When bus drivers run over pedestrians we don't congratulate them for meeting their schedule. We need to extend a concern for safety and best practices to all forms of resource and waste management.

This case demonstrates the power of groupthink. No one from within the Princess cruise line on any of the five ships cited blew the whistle during eight years of illegal dumping. An outsider came in, took one look at the disposal practice, and reported it to authorities. It is typically the case that if an organization is capable of producing one major dysfunction, it is likely engaged in others. This is a company that should subject itself to a major management audit of all operations.

But beyond Carnival and Princess, one only need to look at Volkswagen and British Petroleum to find major examples of corporate cultures built around cutting sustainability corners. This is a strategy that has been legitimized for too long. Pollution and illegal waste management practices are not only criminal, they are examples of management incompetence.

I should add that organizational dysfunction is not limited to private firms. Government regulators are also mired in bureaucratic morass and a lack of operational understanding of the businesses they regulate. Some companies legitimize their culture of noncompliance as a response to the arrogance of these regulators. Regulation is most successful when its goals are internalized by regulated parties, when regulators and regulated parties form a partnership to improve performance. Of course regulation is least successful when the regulator is captured by the regulated party and government officials participate in a corrupt revolving door. The issue for sustainability management is how the public and private sectors can partner without collusion.

We need to incorporate the precepts of sustainability management into routine management decision making. Just as competent managers follow the rules of generally accepted accounting practices, so too should they adhere to the precepts of sustainability management. Competent managers should seek to reduce energy and water use, reduce waste, and minimize environmental impacts. Fortunately, the most talented millennials entering the workforce today value sustainability and prefer working for organizations that take these responsibilities seriously. They are the next generation's leaders. In the long run, change will only come through changes in attitudes and values. In the short run, the $40 million hit to Princess and the billions spent by VW and BP provide added incentive to do the right thing.