Jim Boyle shares an inspirational story of how he put his vision of a sustainable society into action by creating the Progressive Business Leadership Network, and then went on to create the Sustainability Roundtable, Inc. (www.sustainround.com). The Sustainability Roundtable, Inc. provides a new model of sharing that allows companies and governments to reach sustainability goals faster and at less cost through collaboration.
I remember in the late 80's through early 2000's the complaints I would hear about "fads" in quality. TQM, ISO, Lean, Re-engineering... the list of buzzwords goes on and on. A funny thing happened on the way though. American quality has gotten significantly better over the last 25 years. The truth is, any given label might have been a fad, but the trend was (and still is) quality improvement in US manufacturing.
A fad has a relatively short term lifespan and may be vague. A trend last a long time. I remember when people thought jogging was a fad. Health consciousness is the trend.
The term "Green" is the current hot word for anything that may be or pretends to be environmentally friendly. But sustainability (defined as meeting today's needs without sacrificing the resources of future generations) is a trend. We are not acting sustainable now, but momentum is in place to drive forward putting the systems in place to become sustainable.
How do I know... some of the biggest companies in the world like Walmart and Proctor & Gamble are forcing their suppliers to create continuous improvement systems to become more sustainable. If you cant put a good sustainability management system in place, you lose Walmart or P&G as a customer. These players are just too big to ignore.
At the World Economic Forum the most discussed topic is sustainability. The top leaders know their businesses will die if they don't have clean water and breathable air. When the big boys lead the rest will follow because their pocket books depend on it.
One big hurdle for the laggards and haters will be putting sustainability management systems in place in their companies. I'll talk about what a sustainability management system is in a future post if you don't already know (hey, maybe it will be the next buzzword that people call a fad!).
Will there be resistance? You bet. Will people say it is a fad? Of course. Will new terminology replace the current language? Absolutely. But the trend is there. Get on board or get out of the way.
In the end we as individuals and businesses pollute because it is free or nearly free to do so. The actual costs of our actions are recognized elsewhere in taxes, healthcare or put off for future generations to pay. They are called externalities.
All of the products (like water, coal, oil and other extracted things) and services (like air that does not make us sick and allows food to grow) that we get from the earth and atmosphere are ecosystem services. And those services have a price.
The solution is to value these ecosystem services. “This is nothing to do with corporate social responsibility and the green agenda, it is hard-nosed economics,” says Chris Knight, assistant director of the forestry and ecosystems team within PwC’s sustainability practice in the Financial Times.
The challenge is to link the scientific data with business and personal choice. And the way businesses and individuals make choices is based (mostly) on cost and benefit. Also known as accounting in business speak.
The World Business Council for Sustainable Development, a global coalition of some 200 companies, is about to release a guide to corporate ecosystem valuation.
A new report, The Economics of Ecosystems and Biodiversity, aims to put a price on those products and services that we get from nature, so we can recognize the costs. I believe there is nothing more critical to sustainability than paying the price of all we consume at the time of use.
The Financial Times article referenced here is "Biodiversity: Valuing nature can cut business costs" published on March 21, 2011.
To see the report The Economics of Ecosystems and Biodiversity you can go to www.teebweb.org.
Whatever business you are in, the best way to put yourself on a track to long term success is to master the green trends of your industry.
Are you a builder? Green building is the only growing trend in the space. A pest control company? People want green solutions over the conventional. Parts supplier to a major manufacturer? Manufacturers are requiring carbon footprint and input reports more than ever before and will continue to do so.
Not only will it reduce your costs, it will put you ahead of your competition.
Bloomberg's BusinessWeek.com has a great article today showing how Siemens went from nearly being toppled from a bribery scandal to completely turning the company around. All of it was done by following megatrends, with green leading the way. See the article here: http://www.businessweek.com/magazine/content/11_06/b4214018593359.htm
If a company with over 400,000 employees can make a turnaround in a short period, surely you can.
The Empire State Building has gone to 100% wind power for one reason. It is cheaper than using coal and prices are more stable.
Not only are operating costs lower, but the building owners are able to attract the best tenants and higher rent because of the switch. "Clean energy and our nearly 40% reduced consumption of watts and BTUs gives us a competitive advantage in attracting the best credit tenants at the best rents" said Anthony E. Malkin, president of Malkin Holdings, which runs the building, in an announcement.
"Everything that we're doing at the Empire State Building is about business and bottom line, that's the first and most important thing," Malkin said. "We're not about paying more to do something qualitatively different, we're about market-ready solutions. We didn't know we were doing green power until the bid was won by Green Mountain."
I speak to building owners all the time. Two of the biggest objections I hear is "my building is too big for this" and "my building is too small for this." Those are excuses to stop people from doing better because change is scary. Embrace the change. You will feel better and you'll prove your a better business-person than the others.
Read more: http://www.greenbiz.com/blog/2011/01/06/empire-state-building-turns-100-green-power#ixzz1AvO0hNvE
Does doing the right thing pay in the pocket book. Hell Yes! A recent study of 144 LEED Certified homes that included apartments, townhouses and duplexes and single family homes recently showed a 40% savings in utilities. 64% of the properties surveyed were NOT single family dwellings.
For commercial property owners utilities can make up 35% of a buildings overhead so this savings will go straight to the bottom line. Add to that the fact that you can charge a higher rent for a green rental and you quickly can see the benefits.
Estimates to remodel or build to LEED standards range anywhere from 2-15% of the building or remodeling cost. If it is financed in the same way as the rest of the building, and incentives are thrown in, the investment is cash flow positive from day 1.
For more info on the study go to: http://www.alliancees.org/index.php/RT_PreOcc/
After a summer hiatus, the blog is back. Here I will continue to show that sustainability is not only good for your neighbors, but good for the bottom line.
A big piece of news that crossed my desk recently is that the beverage maker Sunny Delight, makers of Sunny D, Veryfine Juices and several other brands, achieved zero waste to landfill from its 6 plants in the US recently.
They started this quest in 2009, with a goal of reaching zero waste by 2013, and hit it three years ahead of schedule. As recently as 2007, 36% of waste in plants went to landfills.
According to the company's sustainability report, in the first six months of working toward the goal, it was able to change waste from an expense to a revenue stream by sorting trash and, when possible, recycling it.
In addition to waste reduction, the company has been able to cut energy use by 8% and water use by 9% — dropping carbon emissions by 17% in the process and reducing operating expenses.
As they work on their own processes the company is also now turning to its supply chain to help reduce total emissions and waste.
Eco-efficiency pays dividends year after year. Various practitioners have different titles and phases for implementing sustainability in organizations (and buildings for that matter). I have taken those stages and put them in financial terms. The good news is the more mature you get in the phases, the more money you make over time.
1. Pre-compliance was what we had at the turn of the 20th century all the way until as late as the 1960's. Reckless abandon with regard to worker rights, the environment and the community.
2. Compliance is where about 90% of buildings and companies are right now. They are doing what they need to do to meet the minimal requirements to stay out of the courts.
3. Easy money is the current sweet spot for most companies and buildings. If you haven't initiated any green initiatives or if you've implemented only a few, this is where to start. Usually by upgrades in buildings and the waste stream you can see huge savings. There are two great benefits to this phase at this point in history. First, there are plenty of tax breaks that make this available without any money up front and immediate additional cash flow. Second, these items require no cultural or work practice changes by employees or building occupants. So they can be done easily for immediate cash flow.
4. Long Term Gain happens when you combine what you have already done in stage 3 to changing procedures, supply issues, stakeholder relationships and more. At this phase your profit margins will soar as you can keep price where it is (or even raise price) but your customers stay with you and you even gain more customers because your reliability is so high and people like dealing with a firm they can trust (see the book "Firms of Endearment" for plenty of evidence of this). You will be able to recruit and keep the best employees and they will be more productive than they would have been if they worked for your competitors. You are now in the virtuous cycle (the opposite of a vicious cycle). At this phase employee turnover is very low, customer loyalty is high, margins are high and sales can withstand economic downturns. If you don't believe it just ask the owners of Stonyfield Yogurt, The Body Shop and many more...
5. Highest Company Value is where the dividends really pay. Because your firm has such high margins and is at low risk, the value of the company itself is very high. When you are ready to take on new investors or sell the company or building, you will get a premium price for it.
The bottom line: The more eco-efficient you are the more money you make at every phase of implementation.
Think employees only care about money and time-off. Think again. New Belgium Brewery in Fort Collins Colorado is most famous for its wonderful Fat Tire Amber beer. But it is also one of the leading companies in the world for creating a sustainable business. But the story of how it went to clean renewable energy deserves a page in HR manuals as well.
The owners of the business are committed to the environment and wanted to run on completely renewable clean energy. This is done through wind power and the on-site waste-water treatment operation.
In 1998 the 32% employee owned company brought the idea of going to wind power to a company vote. At the time it meant a 30% higher cost of electricity, most likely meaning the loss of significant end-of year bonuses for the employees. Despite knowing that their bonuses were going to suffer, the vote was unanimous to go to the clean energy solution. And not surprisingly, because of these high moral decisions, turnover is low and productivity is high because people feel like they are contributing to something bigger in the world.
To see how New Belgium produces some of its own power through it's waste-water treatment, check out this video.
New Belgium Brewing from whatis waste on Vimeo.
It has been proven over and over again that businesses that have a higher purpose than just profit can recruit and keep the best employees. Furthermore, those good employees are more productive than their counterparts in companies that are only focused on profit. But why is this so? How do you nurture those great employees to deliver their best? The answer is NOT money.
To learn what motivates good people, and why, watch this great lesson from RSA.
For entrepreneurs and funders that want to make a difference.
Greater Good Entrepreneur is a video podcast where I interview entrepreneurs that are making a difference in the world.
Feel free to reach out to me with success stories or for help.
Jim Verzino
617-669-2125
jim@jimverzino.com
