February 8, 2012

Do B Corps Matter?

by Kellie Delaney

No one will be surprised to learn that Patagonia—the outdoor clothing and equipment company—was the first one at the California Secretary of State’s office when the doors opened for business on January 3, to file for status as a benefit corporation the minute a new law enabling them to do so went into effect.  A company like Patagonia had already embedded environmental consciousness into the corporation long before they adopted the new corporate form.  For a company whose website sells environmentalism as prominently as it sells parkas and backpacks, it’s a no-brainer to become a benefit corporation.

But what difference is this new corporate form really going to make when it comes to the duties of corporate directors in more “traditional” corporations?  For one thing, it may help to avoid shareholder lawsuits when the board openly weighs in on the company’s social mission even if this doesn’t always maximize shareholder returns.  While the business judgment rule—a judicial standard of review that insulates directors from liability when they make decisions with the best available information, exercising reasonable diligence and good faith—already arms directors with considerable discretion to take action (or not) to mitigate climate change risks, it’s not a barrier to lawsuits initiated by shareholders.  How much more discretion will directors of a benefit corporation have and is discretion really the point?

Sure it is.  If the directors had voted, two years ago, to enter into a 20-year power purchase agreement (PPA) and install a small solar farm onsite at their corporate headquarters, the business judgment rule would almost certainly protect them from liability to shareholders if the deal meant that shareholders would have to wait five years to see any positive returns on the investment.  In fact, while the decision benefits the environment immediately after the project is installed, the capital investment carries risks that could significantly dilute investor returns in the short term.  Under traditional corporate rules, as long as the directors used a rational process to evaluate both the environmental issues and the long-term potential for shareholder value, their decision might still pass scrutiny under the business judgment rule.  But being a benefit corporation could end the lawsuit before it got up the steps of the courthouse.  Benefit corporations—at least in theory—enable directors exercise greater discretion to balance shareholder interests against other goals.  In California, by statute, a benefit corporation must measure its sustainability goals against a third party standard.

Sure, the benefit corporation is partly about the corporate identity, culture, focus, and values.  So this may build in more corporate responsibility and accountability.  Besides, options like solar energy are becoming more viable all the time.  But it provides a concrete target and requires the corporation to apply an objective measure.  It’s not a license to throw shareholder profits under the bus but one way to ensure that the corporate vision stays aligned with those values.  That sounds like old-fashioned good corporate stewardship.  And the idea is catching on.  Who can argue with that idea?

Kellie Delaney is a California attorney and writer interested in climate change issues and the potential of clean technologies. In addition to her law practice, she helps develop legal process solutions for M&As, complex litigation, and corporate governance.

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February 6, 2012

Waste to Gold (or Silver, or Platinum): LEED and Waste Management

By: Anna Munie CHMM

Take a look at any news release about LEED-certified buildings, and you are likely to hear mention of energy efficient HVAC systems, improved indoor air quality and sustainable interior design. (LEED stands for Leadership in Energy and Environmental Design, a top green building standard.) This is for good reason: these areas can account for many points in the LEED rating system. But don’t overlook waste management, which also plays a key role in LEED certification. There are four different certification levels: Certified, Silver, Gold, and Platinum. Waste management credits could be what enables you to achieve the next level of certification.

In the case of new commercial building construction, the keys to gaining LEED waste management credits are sustainable management of construction materials and creativity with resources. Here are the credits available and tips on how to get them:

1) Prerequisite: Make Recycling Available
Requirements: Newly constructed LEED buildings must establish and maintain, at a minimum, recycling programs for paper, cardboard, glass, plastics, and metals.
Tips for Achievement: This item is required before a building can even be considered for any Materials and Resources credits. The good thing is that recycling programs can be easily established through either a third party provider or in many cases by working with the city or region the new LEED building is located.
2) Credit: Construction Waste Management Diversion
Requirements: 50% of construction waste diverted from landfills equals 1 point. 75% of waste diverted from landfills is worth 2 points.
Tips for Achievement: Part of this credit states that a construction waste management plan must be written and adhered to. This is for the benefit of the company, as these credits are going to be much easier to receive if a company does their homework and finds options prior to beginning construction. Some ways for companies to divert waste can include making agreements with local charitable organizations to donate unused or unsuitable materials, working with the right recycling provider to provide bulk containers for recycling, and making is a pre-requisite for construction companies to provide diversion options in the bidding process.
3) Credit: Materials Reuse
Requirements: Using 5% salvaged, refurbished, or reused materials in new building construction is worth 1 LEED point. Using 10% of these materials is worth 2 points.
Tips for Achievement: This credit offers a great way for companies to both find cost savings and use their creative sides. Reused materials can include anything from structural beams to flooring to decorative items, so there are many ways to achieve this credit. Reusing beams and posts from another building both utilizes local resources and can be more cost effective than working with virgin timber or steel. Reusing materials from another structure with historical significance (flooring, doors, decorative items) can improve community relations and provide a human interest side to your new construction project.

Top Ten States For LEED Green Buildings per Capita, 2011

Sq. ft. of space to earn LEED-certification in 2011

Per capita
District of Columbia

18,954,022

31.50
Colorado

13,803,113

2.74
Illinois

34,567,585

2.69
Virginia

19,358,193

2.42
Washington

14,667,558

2.18
Maryland

11,970,869

2.07
Massachusetts

13,087,625

2.00
Texas

50,001,476

1.99
California

71,551,296

1.92
New York

36,538,981

1.89
Minnesota

9,591,445

1.81

.

Source: US Green Building Council, via Sustainable Facility

Anna Munie is a freelance writer currently working within the fields of sustainability and environmental health and safety management. She has 10 years of experience in hazardous waste management and is a Certified Hazardous Materials Manager (CHMM). When not developing sustainability programs and making sure the Ph.D.’s in her research department don’t blow themselves up, she competes nationally with her horse Lucky in the sport of reining.

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February 2, 2012

What’s Our “Ecomagination” Strategy?

Twice this week I heard stories from sustainability consultants about clients who were seeking help in creating their own version of an Ecomagination strategy. Ecomagination, as you probably know well, is the name for General Electric’s strategy to develop and market products with superior environmental performance.

Ecomagination has been a smashing success for GE. The company says Ecomagination revenues reached $18 billion in 2010. The reputational benefits of this strategy are no doubt great as well, though not for me to quantify.

Citing Ecomagination as an example recalls something a wise colleague of mine used to say when were were industry analysts covering the Internet. When a coworker would say, “Take Amazon.com, for example…” his retort would be, “Amazon is not an example of anything. It is one of a kind.” Very true and useful to keep in mind.

Is Ecomagination an example, a model for other companies, or is it one of a kind? To be sure, lots of other companies have developed environmental strategies centered on developing or reclassifying products as environmentally friendly. Chemicals maker BASF, for instance, reports that 2010 revenues of its “climate protection products” were €7.7 billion. The Eco Options line of retailer The Home Depot features some 3,900 products, though the company does not report Eco Options revenue separately.

Does every company have an blockbuster ecoimagination strategy inside, just waiting to emerge? Or is this just for the few? What do you think? (And please show your work.)

 

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January 18, 2012

Is Clean Water Vs. Dirty Air a Good Trade-Off?

Do you need to put 5,000 more cars to the road to get clean drinking water?

I find the trade-offs that arise in energy development, environmental protection and human health fascinating. Over the years I’ve written on this topic a few times:

Energy Technologies and Unintended Consequences

Unintended Consequences, Part II: Air vs. Water

Unintended Consequences, Part III: Electricity vs. Water

Today I want to talk about a 160,000 square-foot new water treatment facility in New York that will be going online this year, and how it’s giving us safer water at the cost of a hefty increase in greenhouse gas emissions. I’m referring to the Catskill/Delaware Ultraviolet Light Disinfection Facility, which is in the final stages of construction just north of New York City. The facility will use ultraviolet light to disinfect an average of 1.3 billion gallons of water per day. It’s also going to use a lot of electricity and, as a result, increase greenhouse gas emissions.

Source: NYC Dept. of Environmental Protection

The consequences of this project are neither unintended nor unforeseen. The project was required by Federal and State regulations to maintain the safety of New York City’s water supply, which is one of only a handful of major water supplies in the U.S. that remain unfiltered, according to civil engineer Robert Osborne, who is very into water. Having an unfiltered water supply is a kind of badge of honor. It means your water is exceptionally pure. But Federal and state regulations require water supplies to be protected by other means if filtration is not used. (The New York Times reported that a filtration system for this water supply would have cost up to $8 billion to build millions of dollars a year to operate.)

A project of this magnitude, whose costs are estimated at $1.6 billion, undergoes detailed analysis and planning, including an the creation of an environmental impact statement. The environmental impact statement says that the plant will draw an average of 4.45 megawatts of electric power. By my calculations (4.45MW X 24 hours X 365.25 days X 1000), that will equal about 39 million KWh of electricity annually.

You can calculate the amount of greenhouse gases emitted to provide 39M KWh of electricity in New York using EPA’s eGRID methodology (available via a cool tool on amee.com). Using my assumption, it comes to over 25,000 metric tons of CO2 equivalent. Taking the EPA’s estimate of the average annual greenhouse gas emissions of an average automobile (5.1 metric tons of CO2E per year) you find that these emissions are the equivalent of putting about 5,000 more cars on the road.

I have no doubt that this particular trade-off (cleaner water for dirtier air) is worth it. The project protects over 8 million people who depend on this water supply from the risk of water-borne contaminants that could cause a significant public health crisis. I point it out not to criticize this project but rather to illustrate the kinds of trade-offs policy makers face all the time.

I’d love to hear your thoughts.

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January 10, 2012

Do Americans Believe in Global Warming Anymore?

By Lakis Polycarpou

In the last couple of years, it became conventional wisdom that most Americans no longer believe in global warming—a dramatic shift from only a few years ago. In fact, according to Scott Keeter, director of survey research at the Pew Research Center for People and the Press, the change is “among the largest shifts over a short period of time seen in recent public opinion history,” dropping from 71 percent in 2007 to 44 percent in 2011.

To see the effects of this supposed change on the political climate, one has to look no farther than the current presidential campaign, in which a number of candidates–most notably Newt Gingrich, Jon Huntsman and Mitt Romney–have shifted their positions starkly away from their prior belief in human-caused climate change.

The reasons given for this dramatic shift in public opinion depend on who’s presenting the information; conservative think tanks point to supposed controversies that have arisen in climate science (controversies the scientific community insists do not exist). Climate activists, on the other hand, blame the change on a well-funded and orchestrated campaign by right-wing vested interests to change public opinion.

But is the supposed change as dramatic as it seems? Not according to a recent poll by Jon A. Krosnick and Bo MacInnis of Stanford University. In fact, the poll suggests that the number of Americans who believe the Earth has been warming has increased from 75 percent in 2010 to 83 percent now, with 72 percent believing that warming is either partly or mostly human caused. Nearly 42 percent described the issue as either extremely or very important to them personally.

So why the great discrepancy in poll results? After interviewing two public opinion experts, Joe Romm of Climate Progress suggests that the apparent drop is “almost certainly due to the combination of the collapse in media coverage of global warming and pollsters asking a deeply flawed question . . . instead of asking people what they believe or think, Pew asks them what they’ve read or heard,” which “fatally taints the whole question.”

What has changed, according to the Center for Science Policy and Public Research, is media coverage of climate change, which–excepting a brief spike in 2009–all but fell off a cliff since 2007, which makes sense given the somewhat ambiguous wording of the Pew question.

What’s more, if Krosnick is right, global warming was actually a winning issue for politicians in the most recent elections. Democrats who took “green” position, he writes, won much more often than Democrats who did not, while Republicans who took “non-green” positions won less often than those who remained silent.

Has president Obama gotten the memo? After effectively dodging climate issues for the last couple of years, the President seemed to respond to a sudden surge of popular opposition by postponing and possibly killing State Department approval of the Keystone pipeline that was slated to bring synthetic crude from Canada’s massive tar sands to refiners on the Gulf Coast. Noted NASA climate change expert James Hanson has said that exploiting the tar sands would be essentially game over” for efforts to stabilize the climate.

Finally, much to everyone’s surprise, the recent outcome of last months’ Durban was the first time participating nations agreed in principle to a legally binding treaty to curb emissions.

All of this suggests that companies who have committed themselves to lowering their carbon footprint should probably take heart and remain committed to their long-term greening efforts, especially if they have a global presence. Neither the issue nor the reality of global warming is going away any time soon.

Lakis Polycarpou writes extensively about climate, energy, urban planning, supply chain risks and other sustainability topics. Most recently his work has addressed issues of global water scarcity and climate-related water risks for the Earth Institute at Columbia University.

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January 4, 2012

Knowing Your Supply Chain from a Hole in the Ground

A new standard of accountability and traceability for supply chains is emerging. Companies are increasingly faced with the need to be able to trace their supply chains back to the hole in the ground their raw materials came from. This is one of the implications of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a U.S. Federal law passed in 2010. Section 1502 requires any company that must file reports with the SEC to assess its supply chain for the presence of “conflict minerals” and determine whether they originate in mines in the Democratic Republic of Congo or surrounding nations.

There are lots of nuances and implications to the law. (For more information, see Dodd-Frank Section1502.) But an essential one is that companies are being asked to know far more about where the raw materials in their products came from, and the conditions under which those materials were obtained, than ever before.

On behalf of a client I am currently researching the impacts of Dodd-Frank Secdtion 1502 on companies. A number of the firms I’ve interviewed see a broader trend toward ever higher standards of visibility, traceability and accountability in company supply chains. As they work to design processes that will enable them to comply with the new rules, they are trying to think ahead and design them to be able to accomodate new requirements, which they believe are all but inevitable.

Another example of these heightened standards for traceability and accountability is the recent announcement by fruit producer Chiquita Brands that it had committed to identifying – and eliminating from its list of fuel suppliers – all of the companies that it believes sell diesel made from Canadian tar sands oils. This action came after a pressure campaign from the environmental group ForestEthics.

We are entering an era when “fungible commodities” such as petroleum and tin are not as fungible as they once were. Companies are going to need to improve their supply chain game to keep pace with rising expectations for traceability and accountability.

What are your thoughts?

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December 28, 2011

Is Your Company Ready to Go Zero Waste to Landfill?

By Anna Munie, CHMM

Companies that divert solid waste from landfills are not only protecting the environment. Many are saving substantial amounts of money. Subaru now reaps yearly savings in the millions from its waste diversion programs, for instance. Some are improving manufacturing efficiency. And others are even developing new products: Interface created its entire line of modular re-usable flooring out of a desire to keep waste carpet from landfills.

Getting to zero waste can be a long journey, however. Here are some key steps along the way.

First, a company must perform a detailed audit of its current processes and materials. This includes determining each type of waste that is currently being generated, and then researching alternative options for every single item (recycling, re-use, re-sale, etc.). This may require literal “Dumpster diving” to see first-hand what is going into landfill Dumpsters, as well as time spent performing detailed reviews of both material purchase and waste disposal records. If a material you are purchasing can only be thrown away, switch to a product that has recycling options. (For example, in areas where number 6 plastics cannot be recycled, recycling may be available for number 2 plastics.) Have departments such as purchasing, operations and R&D make a list of all the materials they currently throw away. Then explore alternative options for disposal for each.

Finding solutions by working with suppliers can help a company down the path to zero waste to landfill. Many of the most successful zero waste to landfill companies utilize supplier take-back programs as a significant part of their waste reduction tactics. For example, the Subaru plant in Lafayette, Indiana ships all of its pre-formed Styrofoam casings back to its Japanese supplier for re-use with new engine parts. These closed loop systems can have a huge impact on reducing solid waste to landfill, but they also require additional logistics on both ends, so a company must have a good working relationship with their suppliers. (More on zero-waste car plants here.)

Finally, going  100 percent zero waste to landfill is a long-term goal. It has taken Honda 10 years to achieve zero waste to landfill at its 14 North American manufacturing plants. Set realistic goals and deadlines for waste diversion, including taking into account the type of business you operate. Production and assembly based companies can often get to zero landfill goals faster because they already incorporate lean manufacturing and other structured processes. Retail and service organizations, on the other hand, may see a rougher road initially due to a larger number of locations, variety of goods, and wide range of operations. These companies may need to take more step-by-step reductions such as 25 percent or 50 percent before going for the ultimate goal of 100 percent diversion.

Whether your business is a manufacturer, fabricator, retailer, or service provider, zero waste to landfill is a lofty but worthwhile goal. Follow the right steps and you could see significant business and environmental benefits.

Do you have any waste management success stores or questions to share? Please consider leaving a comment.

Anna Munie is a freelance writer currently working within the fields of sustainability and environmental health and safety management. She has 10 years of experience in hazardous waste management and is a Certified Hazardous Materials Manager (CHMM). When not developing sustainability programs and making sure the Ph.D.’s in her research department don’t blow themselves up, she competes nationally with her horse Lucky in the sport of reining.

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December 23, 2011

Hospitality Industry Needs to Expand Sustainability Program Participation

By Jennifer Moon

The largest hotel companies have all launched sustainability or corporate responsibility programs. The programs feature significant similarities and differences. This post provides an overview of how the programs of the top firms compare.

The top five hotel companies (by number of hotel rooms) are Intercontinental Hotels Group, Marriott International, Wyndham Worldwide, Hilton Worldwide and Accor.  Combined these hotel groups represent over 23,000 hotels (about 3 million hotel rooms) worldwide—suggesting the large potential impact the global hospitality industry can make.  The table below summarizes how these hotel companies have structured their sustainability programs.

Hotel sustainability/responsibility programs have two principal pillars: social and environmental.

Social. Why should hotel companies care about developing social components to their sustainability strategies?  Hotels are social hubs that bring people to destinations.  This makes hotels responsible for the impact they have on surrounding communities. Hotel brands tend to place importance on supporting economies of developing countries within which their hotels are located.  All five companies have invested in education and training programs for their associates.  In addition, IHG and Wyndham both offer degree programs for hospitality management studies.  IHG, Hilton and Accor also emphasize the importance of ethics and preserving cultures through their philanthropic aid programs. Accor stands out from the group with the broadest social program, one that supports several human rights campaigns.  Hotel companies seem to take the ”social” aspect of the triple bottom line strategy quite seriously.  I was impressed to find that these hotel companies offer such robust support of social initiatives.

Environmental.  Environmental programs are at the forefront of hotel sustainability.  Aiming to reduce a hotel’s ecological footprint is at the heart of all environmental sustainability efforts for hotel companies. With the exception of Hilton, all of the other companies engage in sustainability reporting. Accor was the first in the group to issue a sustainability report, starting in 2006. Most hotel sustainability reports provide sustainability metrics that assess the environmental impact of the company’s hotels— by measuring energy, water and waste.  IHG, Wyndham and Hilton have developed proprietary systems that help measure and report environmental footprint data, but requires data input from individual hotels in order to be used as an effective sustainability measurement tool.

Sustainability and Franchising

Not all the properties under these brands actually participate in the brands’ sustainability programs.  Why not? The answer can be found in the operating structure of the hotel business.  Many hotels that bear the name of a brand are often franchised.  In the event a property is franchised but managed by the hotel brand then participation can be widespread.  However, when a property is solely franchised it gets increasingly more difficult to mandate participation in reporting programs.  Wyndham, for example, where 99.6% of the properties are franchised (based on 2010), is positioning their investments in the right direction by engaging stakeholders through establishing the Green Franchisee Advisory Board.  I strongly believe that as sustainability practices get more refined, the next frontier for hotel companies to tackle will be 100% participation from their franchised properties.

Jennifer Moon is currently pursuing a M.S. of Sustainability Management at Columbia University and holds a B.S. in Hotel Administration from Cornell University.  She works in hotel operations at The New York Palace hotel.

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December 19, 2011

Seven Highlights from 2011 and the Outlook for 2012

With the end of 2011 in sight and a new year on the horizon, it’s a good time to reflect and to plan. Let’s reflect on the key events in supply chain sustainability from 2011.

Highlights from 2011

So many supply chain sustainability initiatives and announcements occurred in 2011 that any summary is necessarily selective and subjective. But here are a few that I think are significant.

Greenhouse gas inventories of the supply chain

More companies are going to begin calculating greenhouse gas inventories for their supply chains and their products following the release in 2011 of two standards. In October the World Resources Institute introduced the new standards for value chain (scope 3) accounting and product life cycle accounting. Already, according to a new Green Research survey of sustainability executives, sixty percent of respondents say their company will calculate its scope 3 emissions in the coming year and over half intend to report the results publicly. These standards will help companies understand and begin to take responsibility for the carbon emissions of their supply chains.

Monitoring and reporting the use of conflict minerals

This year saw a lot of discussion and analysis of the implications of a new U.S. law that will shine a light on the supply chains of thousands of companies. The law in question is the Dodd-Frank law, whose conflict minerals provisions require U.S.-listed companies to conduct due diligence of their supply chains and report whether they are buyers of conflict minerals (minerals that may originate in the Eastern Congo and surrounding areas and whose trade may provide funding to armed groups in the region). In 2011, dozens of major companies including Apple, General Electric, Ford, Hewlett-Packard, Intel and Motorola worked to analyze their exposure and obligations under the law and began to put in place the due diligence processes required to ensure they are in compliance with eventual final rules. Given the global nature of supply chains, these regulations will have global impact and will accelerate the broader trend toward supply chain visibility and accountability. We maintain a site with news and information on the conflict minerals provisions of the Dodd-Frank law at section1502.com.

Sustainably sourced packaging

Green Research studies have found that companies in many industries entered 2011 with goals to reduce the volume of packaging they use. In 2011, we saw a number of commitments and initiatives to enhance the sustainability of packaging materials themselves. Toy makers Hasbro and Mattel announced commitments to shift to sustainably sourced packaging materials, for instance. Dell announced a new packaging material made of sustainably sourced mushrooms. PepsiCo announced a new plant-based bottle, and AT&T announced plans to begin using packaging that is partly plant based.

Commitment to sustainable palm oil

The Roundtable on Sustainable Palm Oil announced a surge in purchases of certified sustainable palm oil and many major companies, including Asda, Johnson & Johnson, Kellogg’s, McDonalds and SC Johnson announced commitments to shift their most or all of their purchases of palm oil to certified sustainable sources.

Forest products certification controversy

A conflict between competing North American forest products sustainability standards boiled over in 2011 as a number of major U.S. companies including Aetna, Allstate, AT&T, Comcast, Garnet Hill, Office Depot, Performance Bicycles, State Farm, Sprint, Symantec, United Stationers and U.S. Bank dropped the Sustainable Forestry Initiative in favor of Forest Stewardship Council. There are already too many “standards” in the sustainability field; some consolidation is welcome.

Business decisions about ecosystem services

The World Business Council for Sustainable Development introduced a new tool this year to help corporations put a monetary value on the ecosystem services they affect or depend on. The Corporate Ecosystem Valuation (CEV) tool is intended to help companies incorporate thinking about ecosystem services corporate in their strategic and financial planning. Shortly after the CEV tool was published sports-lifestyle apparel maker PUMA released a much-lauded “environmental profit and loss” statement that not only valued the company’s environmental impacts but also revealed that most of its impacts occur in its supply chain, something that is true for many companies.

Supply chain goals still in short supply

Despite the growing awareness that, for many companies, the supply chain is where many if not most of their environmental impacts occur, many companies have struggled to make firm commitments for improvement in this area. In a 2011 study of the global pharmaceutical industry, for instance, we found that ninety percent of the sustainability goals pharmaceutical manufacturers have announced deal with their internal operations; only a handful deal with the supply chain. Supply chain goals are scarce in the other industries we studied as well, including alcoholic beverages, food processing and telecommunications.

Outlook for 2012

All of this sets the stage for what promises to be redoubling of effort to improve the sustainability performance of company supply chains. According to the aforementioned survey of senior sustainability executives, improving supply chain sustainability is the number two sustainability initiative (behind employee engagement) of their companies for 2012. I expect to see companies aim for closer collaboration with suppliers, adopt more stringent scorecarding, put a greater focus on ecosystem services and biodiversity, and apply the new carbon accounting standards to their supply chains, among other initiatives.

[This post first appeared on the 2degrees Network.]

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December 16, 2011

Wielding Influence as a Sustainability Leader

With small budgets but big responsibilities, wielding influence is a critical skill for sustainability leaders. Influence, and how to get it, are among the topics explored in the latest Green Research corporate sustainability study.

A handful of top sustainability executives believe they have total control of their companies’ sustainability strategies. Most share influence with others, but nonetheless feel they are in the strategic driver’s seat. Three quarters of them rate their influence over sustainability strategy at their company as four on a five-point scale. Perceived influence is somewhat correlated with proximity to the C.E.O. but other factors affect influence, such as the talents of the sustainability leader, the board’s commitment to sustainability and cultural factors that determine a company’s ability to adapt and to act on stated priorities.


Corporate sustainability starts with strategy and continues through tactics, policies and procedures. In the areas of communications and external affairs, sustainability executives generally perceive themselves to have substantial influence. This is partly due to where the sustainability function reports in corporations: an earlier Green Research study found that 30 percent of sustainability departments report into public affairs or marketing groups. But when it comes to other corporate functions such as procurement, supply chain or product marketing, they carry less sway. Over a quarter of respondents to our survey report having little or no influence over supply chain policies or procedures at their company and another half have moderate influence. Many companies are just beginning to contemplate how to obtain sustainability performance improvements from their suppliers.

It is rare that sustainability executive have much influence over the finance function at their companies. At some companies, finance has taken on the role of calculating and reporting sustainability metrics such as carbon emissions. With a reputation for sober and credible reporting, the finance department can raise the credibility of such reports. At a few companies we know, the head of sustainability has enlisted the finance department as an ally. One chief sustainability officer told us that his CFO has helped identify unspent funds and applied them to sustainability projects planned for the coming year, and has approved sustainability related projects with a lower rate of return than the usual investment hurdle.

How to Boost Influence

The most effective means of enhancing one’s influence over sustainability strategy and tactics at work is participating in face-to-face meetings with senior leadership. Eighty-three percent of respondents to our survey cited this as a key means of extending their influence, more than any other choice. Among top sustainability executives, the figure is 90 percent. Sustainability executives should push for face-to-face meetings, including dedicated time with the C.E.O. and at board meetings. Some companies, like Alliance Boots, the U.K. retailer, have board-level sustainability committees that meet regularly and are governed like any other topical committed such as audit or compensation.

The second-most effective approach for extending influence on sustainability inside a company, according to our respondents, is helping executives in other departments develop the business case for sustainability initiatives. Sustainability departments should compile case studies of successful sustainability initiatives at other companies, along with costs and benefits and financial models. Acting as an internal consultant and champion who can help obtain greater budget for other departmental leaders is a powerful way of boosting influence.

Another potent method for building influence inside an organization is through the use of third-party sustainability rankings. Sustainability executives cite those rankings and their companies’ standings in them to motivate employees and galvanize action. “We’ve used DJSI as a benchmark, and the questionnaire has helped drive certain reporting and analysis initiatives internally,” one chief sustainability executive told us. “I think the most immediate implication is a sense of pride that tightens bonds between employees and strengthens both their connection to their workplace and their resolve to continue to make progress.”

For more information on the Green Research Annual Sustainability Executive Survey research, click here.

[This post was originally published on sustainablebrands.com]

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December 14, 2011

Uptake of Energy Management Standard Likely to be Muted

What is the uptake of ISO 50001, the new international energy management standard, going to be? No one knows yet, though it seems like everyone following it has an opinion. We have some data that suggests that the initial uptake will be more modest than bullish proponents suggest.

When a new business process or technology standard is introduced, it sends a ripple through industry. There may be pressure from customers to adopt the new standard; there is impact analysis, training, consulting, auditing; there may be redesigns of products or processes; there is marketing and messaging touting one’s compliance. And then, of course, there are the intrinsic benefits, if any, of adhering to the standard.

ISO 50001 promises to enable companies to wrap their energy use in a well-managed process that can help them increase their efficiency and lower costs over time. What’s not to like? Largely, the expense of training, modifying processes, auditing and certification. That’s why some companies want to wait until the benefits of certifications are proven or until their customers demand it from them.

Some boosters of the standard point out that two other management standards, ISO 9001 (quality management) and ISO 14001 (environmental management) have been widely adopted.  (Globally, over 1.1 million ISO 9001 certifications were granted by 2010; over 250,000 ISO 140001 certs were active in the same year.) Familiarity with those standards paves the way for adoption of the new ISO 50001, proponents say. Skeptics argue, however, that it’s easy enough to add energy management procedures to an existing ISO 14001-compliant system, obviating the need for an entirely new system.

There are similarly two ways of looking at the adoption of European-centric energy management standards such as EN 16001. Some say a company that’s gone through the trouble of obtaining a certification for EN 16001 will have little appetite to do it over again for ISO 50001, unless of course customers demand it. On the other hand, having been certified in EN 16001, it’s little additional work to be recertified in 50001.

It seems likely that energy intensive industries such as smelting, mining, chemicals production, glass and cement making and the like will be early adopters of the standard. Broader adoption will depend in part on demands from customers.

One measure of interest in the standard is the number of copies of it that have been purchased from the ISO in the early months after it was issued.  In response to an e-mail query from me, ISO sent me these figures which are the sales volumes for the standards specifications in the four months following their issuance:

Standard First Four Month Sales
ISO 9001:2008

3547
ISO 14001:2004

1031
ISO 50001:2011

503

Note that the proportion of sales for 9001 and 14001 is similar to the proportion of certification issued years later. Judging from this data point alone, you might expect adoption of 50001 to be roughly half that of 14001. But that’s not the only data point we have. In a November 2011 Green Research survey of 47 senior sustainability executives, a quarter of respondents said they were unfamiliar with the standard and over a third said their company had no intension of complying with the standard. Just 13 percent said they intended to comply with the standard in the next two years.

Early indicators are that it’s going to take some education and some time before ISO 50001 goes mainstream.

What is your company doing about ISO 50001?

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December 11, 2011

Book Review: Greener Products

Greener Products: The Making and Marketing of Sustainable Brands

by Al Iannuzzi

CRC Press; November 8, 2011

Creating a sustainable society will depend in large part on reducing the environmental impacts of making, distributing and using products and of disposing of them at the end of their useful life.  Every product company that hopes to have a role in our future is going to have figure out how to do this. They now have an excellent guide in a new book called “Greener Products: The Making and Marketing of Sustainable Brands,” by Al Iannuzzi. Dr. Iannuzzi is Senior Director of Product Stewardship and Worldwide Environment, Health & Safety at Johnson & Johnson, a $60 billion healthcare products company. He has spent his entire career advancing the environmental performance of his company and its products while helping it achieve its business goals. He therefore is very well qualified to have written this book.

The book is distinguished by its comprehensive scope, which ranges from the drivers of green product development, to the methods for developing greener products, through advice for marketing those products effectively.  It is organized in three sections. The first section covers the market and regulatory drivers for green products. The second section looks at examples of greener products that have come to market. It also includes a chapter by James A. Fava, a founder of sustainability consulting firm Five Winds International. The chapter provides an overview of some of the many tools companies can use to analyze the environmental characteristics of products and processes and to develop more environmentally efficient designs. The third section looks at green marketing “because,” says Dr. Iannuzzi, “what good is a greener product if you can’t get the customer to buy it?” The marketing section includes a chapter by executives of the Shelton Group, an advertising agency focused on sustainability and energy efficiency and a leading provider of consumer insights related to green products. Though the consumer data discussed in the book is focused on U.S. consumers, the book takes a global perspective, citing product examples from North America, Europe and Asia and examples of regulations in effect on six continents.

The first section of the book sets the context for the development of greener products. It highlights many of the market factors that are creating demand for greener products including consumer demand, retailer mandates, socially responsible investment, product ratings systems and green public procurement. Among the regulatory factors the book discusses are regulations covering packaging; restrictions on the use of chemicals; and an increasingly important concept called “extended producer responsibility,” which requires that manufacturers take responsibility for their products at the end of their useful life.

Section II is packed with examples of companies and the greener products they have introduced across a range of industries from apparel to consumer electronics to household cleaning to industrial chemicals and health care. Concise case studies of companies including Timberland, SC Johnson, Clorox, Philips, Samsung Electronics, Apple, Seventh Generation, Proctor & Gamble, Unilever, DuPont, BASF and Johnson & Johnson, review what impelled them to invest in greener product development, what they did, how they did it and what the result was, providing a valuable overview of the experiences of companies that have taken a leadership position in the development and marketing of greener products.  A good example in this section is the Earthwards process developed at Johnson & Johnson. Earthwards enables “product development teams to evaluate a product throughout its life cycle and identify areas where it can be improved to lower its impact and increase social benefit.” The process uses a scorecard approach that was developed after looking at other companies for examples, interviewing people inside and outside the company and under the guidance of consultant Five Winds. The company also asked an environmental non-governmental organization to review the process and make recommendations, which were incorporated.  At J&J a product receives the Earthwards designation if achieves significant improvements in at least 3 of 7 dimensions (such as packaging, energy, waste, etc.) identified by the scorecard. By 2015 the company expects to have at least 60 products in its portfolio that have achieved the Earthwards designation.

The Chapter by Dr. Fava of Five Winds reviews many of the management systems (such as ISO 14000), programs (such as product stewardship and Design for Environment), tools (including life cycle assessment and environmental impact assessment) companies can use to build their own greener product future. I suspect most readers who are unfamiliar with this material will come away from this chapter somewhat overwhelmed by sheer volume of material packed into a small chapter. This is probably fine; it highlights the need to recruit some competent help when building a greener products process and culture.

The final section, on green marketing, presents an analysis of consumer survey data that segments consumers into four broad behavior and attitudinal groups, each of which has somewhat different motivations and find different messages appealing. The “Actives,” for instance, represent 22 percent of the U.S. adult population, are well educated, have above-average income, and participate in significantly more green activities such as recycling than average consumers.

A substantial amount of consumer research conducted over the years by many companies has failed to provide a silver bullet approach to marketing green products. Most research concludes that the majority of consumers is fundamentally more interested in meeting their own needs than the needs of the planet, and more consumers show interest in green products than are actually willing to buy them if those products fall short in meeting their price, performance or emotional needs.

It’s possible that over time some consumers will begin to consider “environmental performance” an important dimension of performance along with the others. And even today many consumers, including the “Actives” mentioned above, derive some emotional benefits from associating themselves with products that make credible green claims. But the fundamental approach to understanding customers and reaching them with marketing messages is no different for green products than for traditional products. “In short,” writes the Shelton Group,“the best advice for the successful marketing of green products is the same as it is for successfully marketing any other product: Know thy buyer!”

Section III also presents a set of examples of green marketing, describing positioning, packaging and messaging of products ranging from Clorox Green Works to Honest Tea to Neutrogena Naturals. It’s valuable to have all of these case examples in one place. But it’s speculative to consider them “best practices,” since most provide no information about the success of these products. The section also reviews and explains greenwashing, regulatory standards for green marketing, ecolabels and cause marketing.

For sustainability practitioners who have followed green marketing and green product development closely over the last few years much of the material in this book will be familiar. But for those new to this topic, or any marketer, product developer, consultant or product-company executive who wants an efficient way of getting a comprehensive overview of this field, which is becoming a pillar of successful business, this book is a valuable resource. (It’s available for sale now on Amazon.com and elsewhere.)

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December 5, 2011

Traditional Marketing Discovers Sustainability

By Bonnie J. Wallace

Philip Kotler, influential marketing guru, has published an article announcing that marketers must begin to account for environmental constraints in their marketing strategies. Kotler declares the new norm in the July 2011 issue of the Journal of Marketing in his article titled, “Reinventing Marketing to Manage the Environmental Imperative.”

To illustrate, he redefines the 4 Ps:

  •  Product: Sourcing, carbon footprint minimization, and packaging issues are emphasized. Service-based companies are urged to include energy use, supplies, and contribution to green causes to demonstrate their commitment to sustainability.
  • Price: Kotler reminds us that conscious customers are often willing to pay more for greener products. He highlights the growing role of regulation and its effect on pricing through anticipated greater responsibility for externality costs.
  • Place: The focus is on local, decentralized production, online selling to reduce the carbon footprint of individual purchasers, and examination of the sustainable practices of supply chain partners.
  • Promotion: Kotler’s ideas for environmentally responsible promotion include the standard print-to-online shift, making label changes to reflect ingredients more specifically, and general broadcasting of an increased “good citizen” status. Sustainable paths to growth are emphasized.

Kotler has personified traditional marketing, and now he’s getting on the sustainability bandwagon. This is another sign that sustainability is going mainstream. Good news for the planet, bad news for companies who have been relying on green branding as their chief marketing strategy.

It won’t be long before green marketing strategies fail to differentiate products at all—which may be a good thing.  In what ways do you think companies dedicated to sustainable values might pursue new avenues of differentiation?

Bonnie J. Wallace is a freelance writer living in Los Angeles, specializing in responsible business. She holds a Sustainable MBA from Bainbridge Graduate Institute as well as a strong belief in business as a tool for transformation. When she’s not writing, Bonnie enjoys exploring ways that art can create community, and performing her supporting role as a stage mom.

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December 2, 2011

Creating a Water Management Plan

By Martyn Harrison

Recent large global water catastrophes; flooding in Australia, Thailand and the U.S. can hide the fact that there is a global freshwater shortage not just in well publicized countries like Ethiopia and other similarly arid places, but also in developed countries across the globe.

The Carbon Disclosure Project recently release its CDP Water Disclosure Global Report 2011 (PDF). The report is based on a survey of some 190 organization. It found that 57 percent of responding organizations had board-level oversight of water policies, strategies and plans. For Paul Smith, CEO of CDP, that’s not enough. He wrote:

We need to see more companies understand that water is a critical issue, requiring greater board-level attention than it currently receives. Those corporations that navigate the challenges effectively will be able to profit from the significant opportunities that result from a robust water strategy.

A water management plan can deliver both financial and environmental benefits. Here are some examples of water management initiatives I have personal experience with:

  • Undertake a water audit. If you do not have the in-house expertise this may cost some money but the savings should easily cover this. In the U.K. a number of start-ups have formed to help with water audits. See, for example, Waterscan and The Green Water Company.
  • Check water bills (past and present) for inaccuracies. I disputed a large water bill in the U.K. that had a discrepancy of over £25,000 because the original bill was based on historical estimated readings.
  • Install water smart meters. To get a truly accurate picture of your water use in real time these are essential.
  • Ensure your operation complies with all applicable regulations. For instance, regarding water discharge.
  • Publicize your work.

Water has to be on corporate agendas across the globe and not just as an afterthought following electricity and gas. If you’d like to share your experiences with water management, or would like to comment, please leave a comment below.

Martyn Harrison has a Masters’ degree in Resource and Environmental Management and a Bachelors’ degree in Environmental Conservation Management from the UK and loves all aspects of environmental
management and sustainability and how to make the world a better place. He has recently relocated to Singapore to further enhance his career and he is a  doting father of his 16-month-old baby.

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November 30, 2011

Corporate Sustainability Leaders to Focus on Employee Engagement and Supply Chain in 2012

Study Identifies the Only Two Sustainability Ranking Schemes Relevant to a Majority of Companies

New York City (November 30, 2011) – Green Research, a New York-based corporate sustainability research and advisory firm, today released a new report based on its annual survey of sustainability executives. The report, a planning and benchmarking tool for sustainability executives, finds that companies will focus significant staff time and financial resources on two sustainability initiatives above all in the coming year: employee engagement and supplier sustainability performance. Believing engaged employees to be a key to high performance, 88 percent of companies will be investing significantly in employee engagement in 2012, while 73 percent will focus on improving the sustainability performance of their suppliers. “Companies have good reason to focus on employee engagement and supply chain,” said David Schatsky, author of the report. “Engaged employees make things happen. And the supply chain is where the bulk of the environmental impact is for many companies.”

The study analyzes the staffing and spending plans and high-priority initiatives of top sustainability executives at some of the world’s leading companies. It draws on an exclusive, in-depth survey of nearly 50 senior sustainability executives (three quarters of which are the senior-most sustainability executive/chief sustainability officer) at global companies. These are leading companies in a dozen industries across North America and Europe, 80 percent of which have revenues of $1B or more. “We think this is the highest-quality panel of respondents ever assembled for a survey focused on corporate sustainability tactics and strategies,” said Schatsky.

The report finds that sustainability spending will rise significantly in 2012. About a third of companies surveyed are adding staff to their sustainability departments in the coming year. And fifty percent of firms will increase spending on sustainability initiatives across their companies, compared to a quarter that will increase the budgets of their sustainability departments.  “Companies are funding various departments to support their sustainability initiatives, rather than centralizing those funds with sustainability teams,” said Schatsky. “The crucial role of sustainability teams, besides coordinating sustainability strategy, is to help other departments make the business case for those initiatives,” he added.

Other topics covered in the research include: carbon accounting, ecolabels, life cycle assessment, corporate reputation, sustainability reporting, environmental credits and offsets, and sustainability rankings. The report found that despite a proliferation of corporate sustainability rankings, only two rankings are relevant to a majority of companies: the Carbon Disclosure Project (CDP) and the Dow Jones Sustainability Indexes. Sixty-four percent of respondents consider CDP important to the company and its stakeholders; 53 percent say the same about the Dow Jones Sustainability Indexes. All other rankings are important to a small minority of companies and their stakeholders.

The study, “Annual Sustainability Executive Survey, 2012” is available online at greenresearch.com. To learn more about the research, please visit greenresearch.com or contact David Schatsky at 646-783-8337 or info@greenresearch.com.

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