Category Archives: carbon

Yogurt Maker’s Sustainability Approach Has a Different Flavor

Yogurt maker Stonyfield Farm recently revealed that it had calculated the carbon footprint of 150 of its products, three quarters of the items it sells. (Disclosure: some of those items are in my refrigerator right now.) If you are interested in how companies account for and manage their environmental impacts, you should take a look at Stonyfield Farm. Here are three things worth noting:

Over half of the carbon footprint comes from milk production. That means cows passing gas and cow manure. In other words, the biggest source of emissions are verdant pastures, happy bovines, not belching factories. Research is underway to reduce the footprint of milk production. But my point is that most people don’t think of basic agricultural processes can have such a big environmental impact. They can.

Data is updated daily. Most companies that calculate their carbon footprints do so yearly. That’s because the processes most companies use are very labor intensive. There is still little automation of carbon accounting. The system Stonyfield Farm uses calculates product footprints daily and allows continuous monitoring of the company’s performance versus its goals. That should give the firm an edge in meeting its targets by enabling it to make mid-course corrections and improvements as it learns.

Focus on greenhouse gases rather than energy consumption. Many companies that talk about reducing their carbon emissions are actually focused on reducing their energy consumption. There are two reasons for this. First, consumption of non-renewable energy is a pretty good proxy in many cases for greenhouse gas emissions: the more you consume, the greater your emissions. And second, and more importantly, energy costs money while emitting carbon is still free in much of the world. So companies manage energy consumption, aiming for cost reductions and reaping emissions reductions as an added benefit. Stonyfield Farm focuses on greenhouse gas emissions rather than energy partly because a lot of their emissions don’t come from energy use (they come from cows) and they don’t come from their own operations (only 13% of the footprint is attributable to manufacturing).The link between costs and greenhouse gas emissions is much looser for them. So they are directly managing for environmental benefits, not just cost.

Stonyfield Farm has long staked out a leadership position in its commitment to environmental stewardship and its use of that commitment to boost brand value. The company’s approach to managing and tracking its carbon footprint is part of that tradition.

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The Impact of Apple’s Withdrawal from EPEAT

It’s hard to know why Apple made the decision to opt out of certification by EPEAT, the green computing standard, without hearing from the company directly about it. One thing is all but certain: the company made a considered decision to do what it thought was in the best interests of its shareholders.

The reality is that there is no single definition of a “green product.” The manufacture, use and disposal of IT products can have a wide range of environmental impacts. Some products may have excellent environmental performance in some dimensions–such as energy efficiency or the absence of toxic materials–but unimpressive performance in others. Apple has performed life cycle assessments of its products in the past and found that 91 percent of the greenhouse gas emissions associated with its products are traceable to the manufacturing and use phase. It traced just 2 percent of its greenhouse gas emissions  to recycling. It will be interesting to see how the new Macbook pro fares in an updated LCA.

Some organizations have green procurement policies that require the computers they purchase to be EPEAT rated. Apple’s move may make it difficult for these organizations to continue purchasing Apple products in the categories that EPEAT rates. Notably, this does not currently include tablets or smart phones, two growth categories for Apple. I have seen little evidence that individuals or small businesses consider environmental labels highly when deciding to purchase Apple products.

This move may ignite a debate about the definition of a green computing product, and it may drive discussion about how to define standards for newer categories of products like tablets and smart phones that are not currently addressed by EPEAT ratings and in which Apple dominates. Defining a standard there that excludes the market leader would make the standard less relevant than it otherwise would be.

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When to Use Carbon Offsets and Renewable Energy Credits

I recently saw another research firm quoted as saying some firms are “buying” green credentials by purchasing renewable energy credits and offsets. The implication was that there is something dishonest about this practice.

That’s unfair. Most of the companies we work with are very thoughtful about their use of offsets and credits. The better ones recognize that their first order of business is to improve their own environmental performance as far as economically possible.

Many companies now have goals to reduce greenhouse gas emissions and to use renewable energy. But companies sometimes find achieving those goals through operational changes challenging. As they work on tuning their operations, closing the gap by purchasing credits and offsets is a completely defensible alternative–as long as it doesn’t become an execuse for inaction.

From: Annual Sustainability Executive Survey, 2012

Green Research recently conducted a major survey of senior sustainability executives at large companies in North America and Europe. According to the study, about half of the respondents’ companies will be purchasing RECs in 2012 and about as many will purchase green power. Thirty percent will purchase carbon offsets. Despite all this, the buyers are troubled about those products:

  • More than a third said it was very or extremely important that they have greater confidence in the quality of the credits or offsets they buy
  • 25 percent felt strongly that they needed to communicate better about why they use them
  • 27 percent said they need to reduce their reliance on them.

Because of these concerns, in recent years, some companies have backed away from offsets and RECs. In 2011, for instance, computer maker Dell announced that it had ended its purchases of RECs for the purpose of classifying its operations as carbon neutral. Nike and PepsiCo stopped buying RECs and carbon offsets in 2010. The reason: to focus on direct investments that will accelerate their use of alternative energy sources. That’s great, if a company is savvy enough to know how to carry out such direct investments. Until that point, supporting the transition to a low-carbon economy via offsets and credits is a fine alternative.

What do you think?

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The Most Interesting Things Today

One of the most interesting things for me at today’s New York Times conference on the future of energy was a comment that U.S. Secretary of Energy Steven Chu made.

Thomas Friedman asked Secretary Chu what he would want to work on if he were just coming out of school today, a freshly minted Ph.D. Rather than choose a particular scientific or technological focus, his choice was “systems.” He cited the Toyota Prius as innovative system created from existing technologies.

That’s a pretty interesting answer.

Systems thinking is the key to unraveling some of our toughest challenges, particularly those related to energy and environmental sustainability. Everyone from scientists and technologists to individuals to corporate managers to policy makers ought to beef up their systems thinking skills.

The other interesting thing was a brief, low-key but mind-blowing presentation by Mitja Hinderks in which he explained how his little organization is going to cut global CO2 emissions by 25% with an innovative new design for an uncooled internal combustion engine that, compared to today’s engines, will have a fraction of the parts, a multiple of the efficiency, and could be swapped in and out of vehicles like a cartridge.

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Will The New Biobased Label Help Your Brand?

By Bonnie J. Wallace

It’s becoming clear that the proliferation of eco-targeted labels (currently 424 in 26 countries, according to Ecolabel Index) is contributing more to confusion than to loyalty among consumers. Except for a handful of the most recognized logos– the Recycling Symbol, ENERGY STAR, and USDA Organic lead the rest by a long shot– most people still make decisions primarily based on price, style, convenience, and health benefits. Only the last of these ties in directly with perceived green qualities.

The Biobased label could well add to this confusion, since a product can get certified as Biobased without any demonstration of its superior environmental performance. It’s not technically an eco label in this sense. So why do we need yet another label, and why should you consider incorporating the USDA Certified Biobased standard into your company’s marketing strategy? For three major reasons: first, because this label has the recognition and credibility of the USDA’s backing.  Secondly, the muscle of the Fed drives the initiative. Finally, it’s in alignment with a move away from petroleum-based materials, toward renewable materials, and efforts to reduce greenhouse gases. The label is part of a larger program backed by Executive Order to create agricultural jobs and better manage the carbon cycle. (http://www.biopreferred.gov/).

Distinguishing this label from so many others is its test-based standard, and the requirement that the percentage of Biobased content be included on the label. This makes for a powerful antidote to the numbing and meaningless claims of “natural,” “non-toxic,” etc. that flood the market and lead to a sense of greenwashing for even legitimately sustainable products. Different product categories have different content requirements to be recognized as Biobased. Categories of product that don’t yet have a standard established must meet at least 25% Biobased content to qualify for the label.

A controversial aspect of the new standard is its exclusion of “mature market” products from the program. Products with significant market penetration in 1972 (example: paper plates, cotton t-shirts) are excluded; the rationale being that the government wants to encourage the development of new Biobased products. But this can lead to the odd prospect of a new plastic plate with only 51% corn-based PLA qualifying for certification, while its 100% Biobased paper plate competitor does not, which is both confusing and misleading to consumers.

One way to get around the mature market issue is already in the hands of green marketers. Since sustainable qualities alone are not enough in a crowded field to compel most consumers to open their wallets, the best opportunity for market share may in fact be to create a new market category entirely.  This could mean either redefining an existing product to fill a new or unmet need, or approaching old needs with a new eye. Most of the examples I can come up with in this category are technology or service-based (iPad, ink-jet printers, Zipcar, pizza delivery) but this doesn’t mean the opportunity is missing.

Redesigning existing products to meet new category status could both qualify the product for the USDA Certified Biobased label and open up an entirely new field to lead. What products do you have that may already qualify as Biobased? What might you be able to reposition in a new category, pairing green aspects with a compelling benefit (cost savings, stronger design, more convenient) to win both the label and a first mover advantage?


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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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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Pharma Companies Face a Supply Chain Sustainability Opportunity

We published another sustainability goals benchmark report today, this one  focused on the pharmaceutical industry. A couple of things that stand out from the benchmark:

- Judging from the goals they have announced, the major pharmas are serious about sustainability. All but one have specific, quantified sustainability goals.

- The pharmas are facing a major opportunity. Ninety percent of the goals they’ve announced deal with their internal operations. Most of the pharmas are not yet willing or able to announce supply-chain goals of any specificity. Yet the supply chain may account for the bulk of potential environmental impacts in some cases. GlaxoSmithKline, for instance, found that in 2009, the greenhouse gas emissions from its supply chain were twice those from its internal operations.

This suggests an opportunity to seize sustainability leadership for whichever companies can bring some focus to improving the environmental performance of their supply chain. These are highly sophisticated companies. I’m sure they are up to the challenge.

You can find our goals benchmarking research here.

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Setback for Carbon Sequestration

The New York Times reported today that American Electric Power has decided to put aside plans to build a full-scale carbon-capture plant at its Mountaineer coal-fired power plant in West Virginia because of inadequate economic and regulatory rationale.

The company has had operated a successful carbon capture pilot at the site for the last two years. The full-scale carbon-capture plant would have been operational in 2015 and would have captured and stored approximately 1.5 million metric tons of CO2 per year. It was intended to remove up to 90 percent of the CO2 from a 235 MWe portion of the power plant’s flue gas, according to AEP.

The Times reported that company officials were dropping plans for the full-scale plant, which would have cost $668 million, because they thought state regulators would not let the company recover costs by charging customers.

The $668 million price tag may seem high, but the Department of Energy had pledged to cover half of it. The remaining $334 million is nearly equal to AEP’s first-quarter 2011 earnings. The company expects to earn about $1.1 billion this year.

The chairman of AEP said “We are placing the project on hold until economic and policy conditions create a viable path forward.” But it’s not immediately apparent why the investment in carbon capture wouldn’t be “viable,” unless it simply fails to meet the company’s standard investment criteria. It would modestly depress the company’s profitability over the life the the plant. In exchange, the company, a major operator of coal-fired power plants, would be able to stake out a leadership position in carbon capture and sequestration.

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PUMA and Environmental Costs

Did you hear that “sportlifestyle company” PUMA burns up about half its income in environmental degradation? That factoid was not emphasized in this week’s announcement that the company had developed an “Environmental Profit & Loss Account.”

The E P&L calculates environmental aspects of the company’s operations, such as water use and greenhouse gas emissions, and ascribes a financial cost to them. An E P&L doesn’t have to show only costs; it would ascribe revenue to initiatives that produced a net improvement of environmental performance, such as planting trees. PUMA does not show any such “environmental revenue” lines.

The company calculated that the environmental cost of the greenhouse gas emissions and water consumption across its supply chain in 2010 was €94.4 million, with over 90% of the total attributable to its suppliers. Net earnings in 2010 were €202.2 million, meaning that including environmental costs in the company’s P&L for real would slash its earnings nearly in half.

This initiative, the splashy announcement of it, complete with a live online Q&A by PUMA CEO and chief sustainability officer Jochen Zeitz, and ensuing publicity around it, are likely to stir greater interest in the corporate mainstream in the financial costs of environmental degradation.This is a great thing because accounting for the full cost, including ecological costs, of doing business, would go along way toward creating the incentives needed for dramatic improvements in corporate environmental performance. So despite my grim take on PUMA’s numbers, this is a wholly positive step and should be applauded.

PUMA’s calculus draws on the concept of ”ecosystem services.” For readers wanting to get up to speed on the concept of ecosystem services and how they are valued financially, I’ve assembled this selective reading list to get you started. If you have other sources you find valuable, please leave a comment.

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Filed under carbon, ecosystem services, emissions, Supply chain, sustainability, water

High Carbon Companies Have Lower Values

New research by researchers from the University of Wisconsin, University of Notre Dame and Georgetown University found that companies with higher carbon emissions tend to have lower valuations. Environmental Leader reported on the study here. The full study is here (for now; if it’s missing and you want it, please drop me a line).

This finding is consistent with what others have been suggesting for some time. A while back I blogged on the question of whether climate-savvy companies may better investments here.

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The Carbon Footprint of Bread

I came across a nifty study of the carbon footprint of bread, just published in the International Journal of Life Cycle Assessment. The study looked at bread produced and consumed in the U.K. The bottom line: the carbon footprint of bread ranges from 977 to 1,244 g CO2 equivalent per 800 g loaf. On their own those numbers aren’t that interesting,though the fact that carbon footprint exceeds the weight of the product itself, while not all that unusual, does makes one think.

Data from the referenced study

The study was interesting for what it revealed about the major sources of carbon emissions (the so called hot spots) in the life cycle of a loaf of bread . The study is also interesting because it compared the footprint as calculated using primary data from a specific U.K. bread supply chain against calculations using generic data from life cycle inventory databases. Using primary data tends to be costlier and more time consuming. So if generic data can suffice to acheive the goals of a life cycle assessment, it is a more economical choice.

According to the study, wheat cultivation contributes 35 percent of the carbon footprint, and consumption (including refrigerated storage and toasting) contributes another 25 percent. Assumptions about the amount of food consumers waste suggest that another 5-10 percent is contributed by waste bread being discarded by consumers. Packaging and transportation were relatively small contributors to the carbon footprint.

The hot spots were the same for primary-data analysis and the secondary-data analysis, supporting the idea that the goal of a study should determine its data-gathering strategy. Carbon-labeling–providing data to consumers supposedly to enable them to make purchase decisions based on product carbon footprints–requires data from specific product supply chains. But other uses, including identifying the hot spots so a manufacturer could focus on those for improvement, could well be supported by secondary data.

My favorite finding from the study is that whole wheat bread has a lower carbon footprint than white bread. Milling the flour for white bread uses about 23 more energy per loaf, because it uses the grain less efficiently. So eat healthier and reduce your carbon footprint.

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Carbon on Company Balance Sheets?

Despite the fizzle after the great fanfare of the Copenhagen Summit, many companies remain intensely focused on the strategic implications of climate change. Some believe that a requirement to monitor, report and reduce their carbon emissions is coming and is just a question of time. Indeed, some observers believe that carbon accounting is destined to be embedded in the core of enterprise systems, with carbon emissions tracked continuously and treated like any other balance-sheet item.

I recently had the opportunity to speak with David Abood, Managing Director, Sustainability Services North America and Climate Change Solutions Global Lead at Accenture, the consulting and strategy firm. In his experience, the attention companies are putting on carbon accounting, tracking and reporting varies according to the risk and opportunity they attach to it. Companies that see themselves “in the cross hairs” of future cap and trade programs are, as you might expect, paying close attention. For instance, Accenture is being asked right now by major companies that would be “capped entities” (bound, under proposed cap-and-trade legislation, to limit carbon emissions) to do company-wide system implementations to handle the requirement of detailed tracking of carbon emissions, or to do carbon analytics as a managed service.

But even companies that are not destined to become capped entities are getting increasingly engaged, he says, whether due to pressure from their customers or from organizations like the Carbon Disclosure Project. He expects the CDP to push for increasingly granular emissions tracking over time. This will inevitably drive more detailed reporting by the growing number of reporting companies and eventually their supply chain partners too (as I’ve noted here).

Accenture has made a substantial investment in building a capability to help clients cope with climate change. The firm has some 200-300 people in its Sustainability Services practice and around 2000 people company-wide with a focus in this area alongside their principle functional or industry expertise. The company has done an analysis of the “whole software market” around carbon accounting, Abood says, and are working with SAP, Carbon Networks and IHS, among other potential partners.

So, is the day at hand when most companies will track carbon emissions continously, and integrate emissions reporting into core financial and operational reporting? Not quite. Abood says that vision is “in everyone’s sights” but ackowledges that no one has yet “cracked the code.”

If you have a point of view on where carbon accounting is headed, please consider leaving a comment.

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Lowering the Cost of Carbon Footprinting

Despite the proliferation of carbon accounting tools on the market today, calculating carbon footprints—especially product footprints–is still very time-consuming. According to David Walker, Director of Environmental Sustainability at Pepsico International, most tools “pick up the automation at the point that most of the work as been done.” The work Walker refers to is the painstaking gathering of data. Since Pepsi wants its carbon foot prints to meet the standards of third-party certification organizations such as Carbon Trust, it aims for a relatively high standard of accuracy and methodological transparency.

While carbon footprinting may seem like it’s mostly about counting carbon, many companies have found that conducting corporate or product-line carbon footprints deepened their understanding of their own operations. This in turn exposed opportunities to lower carbon emissions, increase efficiency or cut costs. If carbon footprinting is costly and time consuming, complying with carbon regulations is burdensome. And companies will be slower to adopt it voluntarily, deferring its benefits to companies and to the environment.

Pepsico’s Basket Approach

Pepsico is keenly interested in understanding the carbon footprint of its products but has to reckon with the high costs of doing so and limited resources available for the task. The company’s strategy is to be selective rather than exhaustive. Pepsi defined a “basket” of some 25 products to analyze (out of some 6000 product varieties it sells globally). The products were selected to enable the company to draw broad conclusions from a limited sample size. In some cases, for example, Pepsi chose a single product and computed its footprint for multiple markets in which it is distributed. That allows the company to isolate the effects of variations in sourcing and distribution on the products’ carbon footprint. In other cases Pepsi has looked at unlike products in the same market, which can reveal the impacts of raw materials and manufacturing processes. The company works with the Earth Institute at Columbia University to perform the footprinting.

This approach, coupled with the company’s focus on “compressability”—the Pepsi term for the potential to reduce a product’s carbon foot print—will help the company prioritize its carbon reduction efforts on the products that will yield the greatest return on their effort.

A Path to Better Tools

While Pepsi’s approach is smart, there is still room for improvement in lowering the costs of carbon footprinting and life cycle assessments in general. Some groups are taking innovative approaches to this problem. The Applied Sustainability Center at the University of Arkansas is developing an open-source lifecycle assessment tool. The idea is for companies to contribute what they learn about their own processes to a database. The tool will aggregate the information submitted and overtime will provide increasingly precise models of the environmental impacts of different processes. As adoption of the tool grows, its usefulness should grow, and the costs of conducting lifecycle analyses should drop. Significantly, the tool aims to capture the value of aggregating this information while keeping proprietary, company-specific information private.

Another group with an approach to lowering the cost and improving the accuracy of carbon footprinting is AMEE, a small venture capital-backed firm that has built a Web-accessible database of carbon models and emissions factors. AMEE seeks to be the clearinghouse for the most accurate and up-to-date information about carbon emissions to enable companies ranging from enterprises to carbon accounting software vendors to lower the cost of calculating accurate carbon footprints.  Want to know how much carbon was emitted to generate the 3 megawatt hours your plant in Scotland used during the night shift? AMEE aims to be able to tell you.

Eventually, I suppose, carbon will be as easy to meter as electricity. But that is years off. Until then, it’s interesting to see the innovations that are getting us closer.

If you have thoughts about how to bring down the costs of carbon footprinting, please consider leaving a comment and sharing your thoughts.

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The Multidisciplinary Challenges of Clean Tech

I am having a blast covering clean tech from a research and consulting perspective. What is it that makes clean tech such a stimulating area?

The panel discussions at the excellent Financial Times conference on the U.S. energy business yesterday prompted me to reflect on this question. (You can see my conference tweets here.)

Yes, the opportunities are huge. And yes, the core problems the sector is tackling, including climate change and energy availability, are critically important. Beyond that, though, there’s this: the hurdles facing this set of industries are high. If you like hard challenges, clean tech has a lot to offer. Consider these challenges, all of which surfaced in discussion at the conference.

Image representing A123Systems as depicted in ...
Image via CrunchBase

Scientific and technical. Researchers are working to break new ground in areas ranging from basic materials science in photovoltaics and batteries to engineering and systems design in smart grid. No new scientific breakthroughs were announced at the conference but there was buzz about the successful IPO of battery maker A123 Systems. It was observed that this IPO was not a mere liquidity event for the investors. It was a critical capital infusion necessary to enable the business to scale up while continuing to perfect its technology.

BP p.l.c.
Image via Wikipedia

Political. This area is way more political than IT or even financial services, two areas where I’ve spent a good chunk of my career. From BP America chairman Lamar McKay arguing for the “equitable” distribution of costs of moving to a low-carbon economy to PSE&G president Ralph LaRossa complaining of his utility’s struggle to get a permit to run a transmission line on an existing right of way, so much of the commercial and environmental promise of clean tech depends on clearing political hurdles.
Financial. The financial needs of the clean tech sector present a variety of challenges. A few examples:

  • Most consumers and businesses are not prepared to make capital investments to obtain electric power. So new financing mechanisms have had to be invented to make it easier for businesses and consumers to buy solar power, rather than solar panels.
  • Given the importance that coal is expected to continue to have for a long time, carbon capture and storage (CCS) is an experimental technology that is drawing  a lot of interest. But, as Alan Salzman of VantagePoint Venture Partners observed at the conference, it does not fit the model of venture capital investing.At least it’s been tough for start ups in this area to attract much VC.
  • Energy is a giant business, and most energy generation technologies need to be able to scale up to enormous volumes to be practical. Salzman’s panel was in agreement that while VC investments might be able to help get some of these companies to $100 million in revenue, they will need some kind of bridge financing to get them to the billion-dollar level that can establish their long-term viability.

Behavioral and Attitudinal. Some clean tech plays depend on changes in consumer behavior:  electric vehicles, for instance, obviously require a change in how consumers fill up their cars. Home energy management, a promise of the smart grid,will require a change in consumer attitudes too. According to a consumer survey conducted earlier this year by Pike Research, some 30% of consumers felt that “demand response” programs smack of “Big Brother.” (Demand response programs allow utilities, with the consent of consumers, to turn off or turn down certain power loads at consumer homes.) LaRossa of PSE&G said his customers were not ready for it.

Clean tech is a highly interdisciplinary field, and not only because the definition is broad. It’s also because its future depends on tackling challenges across science, finance, politics and consumer behavior. What more fun could you ask for?

If this post inspired any thoughts, please consider leaving a comment.

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Savvy Strategy Guides Carbon Disclosure Project

The Carbon Disclosure Project (CDP) is an organization with a clear goal, a simple premise and a savvy strategy. A research project on sustainability in the supply chain that I just completed (link forthcoming when the report becomes available for purchase) clued me into just how effective its strategy has been.

First, its goal. CDP was founded in 2000 with the goal of motivating investors, corporations and governments to take action to prevent climate change.

Its premise is the old management adage that “what gets measured gets managed.” By asking corporations to disclose their greenhouse gas emissions, CDP is implicitly asking companies to measure those emissions. And once companies get in the habit of measuring their emissions they are in a position to begin to manage and reduce them.

Indeed, it’s not hard to find companies that will tell you that once they began measuring their carbon footprint they gained a better understanding of how their business really operates and uncovered opportunities to improve efficiency and reduce costs.

It’s CDP’s strategy that I find most interesting. How does this nonprofit organization persuade companies across the globe to disclose information that, for most of them, never before required disclosure, not by statute, treaty or custom?

At its inception, CDP enlisted hundreds of institutional investors as backers. It persuaded them that prudent investing increasingly needs to take account of companies’ environmental performance and specifically their exposure to the regulatory and cost burdens of carbon abatement regimes.

With hundreds of big investors managing trillions of dollars in assets now interested in this information, CDP was able to begin asking corporations to supply it.

Amassing a set of influential backers is part of CDP’s strategy. Another is striking a business-friendly tone. CDP positions itself as an ally, not an adversary, of big business. It does not hammer companies to reduce their emissions; it merely asks that they comply with requests to disclose them. It does not shame non-compliant companies. Rather, it celebrates leaders. Its Carbon Disclosure Leadership Index, for example, ranks companies according to the quality of their disclosure, not their level of emissions. A friendly, non-judgmental tone eases the way for wary companies to begin to participate.

A third pillar of the strategy is exploiting network effects. It was this that I became aware of in my supply-chain research. Several of the major manufacturers—companies like Diebold and Alcatel-Lucent–said that they had begun to measure and disclose their greenhouse gas emissions to CDP at the request of their customers. Indeed Alcatel said it now planned to ask some of its own suppliers to begin reporting to CDP. This is the network effect in action. To accelerate the network effect, CDP has launched a supply chain initiative to enlist large companies to persuade their suppliers to begin reporting to CDP. “The information gathered,” notes CDP, “is used by senior management in over 40 of the largest organizations worldwide such as Walmart, PepsiCo and IBM.”

How successful has CDP been in encouraging companies to disclose their emissions? The number of companies responding to its emissions questionnaire has soared over the last five years, from 235 in 2003 to over 2200 in 2008.

Companies Responding to CDP

Companies Responding to CDP

CDP is seeing improvement in the quality of reporting as well as the number of companies participating. And it is racking up a growing number of testimonials from participants supporting the premise that measuring and disclosing their carbon footprint has already produced tangible business benefits.

Do you have any experience with the Carbon Disclosure Project and its impact on business? What do you think of the strategy? I’ll look for your comments below.

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