Three Strategies to Achieve Corporate Sustainability

By Dave Newman, Senior Strategist, Enterprise Solutions Group

After spotting the trends that corporate sustainability practitioners see in their daily work (Read: Four Trends in Corporate Sustainability), I looked deeper to figure out which strategies were getting leaders ahead. My conversations with some 20 leaders in Fortune 500 companies revealed three key strategies:

1. Changing how the business views sustainability benefits – from cost reduction to revenue growth
2. Moving sustainability out of departmental silos into shared business goals
3. Reporting and sharing the things that matter with the people who care

In this follow-on post, I’ll highlight some of the common obstacles to implementing sustainability within companies, how leaders are overcoming them to achieve true sustainability leadership, and what laggards can start doing now to catch up.

 

“It’s More Difficult to Change a Building Than to Change a Person.”

By Brandon G. Sprague, Brightworks Communications Team

Part One of our interview with architect, innovator, and thought leader Eric Corey Freed of organicARCHITECT explored his thoughts on the green building innovations and critical issues we’ll see in 2012. Here in Part Two, he shares practical steps building owners can take right now at no cost, and where he finds hope and the greatest potential for change.

 

Brandon G. Sprague: Many readers of this blog are members of the real estate community. When you travel around the country speaking and teaching, you often state, “My vision of why I’m doing this is the basic idea that everything that exists in this world should exist because it makes the world a better place.” In what ways is the design and building community making the world a better place with its current practices? In what ways is it not?

Eric Corey Freed: On a very high level, you can argue that the built environment – any built environment – improves the world by providing human beings with shelter, habitat, places to work, places to live…

But at the same time, practically all of the buildings that exist in the industrialized world – all but a very small percentage – ignore how they use energy, water, and resources. In creating such a built environment over the last 150 to 200 years, we have created a system that that is too expensive for us to maintain, a system that is actually threatening our existence. When we planned and designed this system, energy was cheap and abundant. But in the last 50 years, we’ve realized that energy is neither cheap nor abundant. And we’ve realized that our consumption of energy is actually threatening, if not killing, our way of life.

Now that cheap energy no longer exists and our consumption patterns are forcing us to change our way of life, what do we do? This is where the opportunity comes in for the design and construction industry to transform buildings and thereby transform civilization. We have the technology to do it, we have the ability to do it, we just need the will to do it. In doing so, we will have to look for innovative ways to work in, live in, and operate our buildings.

This could be your shopping center. Image via organicARCHITECT

Rejuvenation

by Scott Lewis | Brightworks CEO

The turning of the annual calendar always brings with it a range of associations, not the least of which is the idea of new beginnings.  We mark the occasion with a ritual of making resolutions that often vanish as quickly as our holiday leftovers, and yet, we still carry this intangible sense that after all, a new year is a chance for a fresh beginning.  It is the eternal human impulse to want a fresh start, to have another chance.

And somehow, deep inside, this desire for another chance has roots in an eternal optimism that says no matter how bad things have been in the past, there is still a possibility of a better tomorrow.

This resonates strongly for those of us in the sustainability business.  How can one look with open eyes at a world with so much trouble – from war and famine to financial scandal to the degradation of the vital ecosystems that sustain our prosperity and survival, and not simply despair.  The answer has to lie in some sort of deeper wisdom, which reminds us there have been challenges in the past, whose answers were not always visible at the time, yet human perseverance and ingenuity somehow provided solutions that could not have been imagined before they were invented.

And that is precisely where we stand today in the endeavor to create a post-carbon, socially equitable sustainable economy.  As Paul Hawken said in his brilliant 2009 commencement address to the University of Portland graduating seniors:

If you look at the science about what is happening on earth and aren’t pessimistic, you don’t understand data. But if you meet the people who are working to restore this earth and the lives of the poor, and you aren’t optimistic, you haven’t got a pulse. What I see everywhere in the world are ordinary people willing to confront despair, power, and incalculable odds in order to restore some semblance of grace, justice, and beauty to this world.

That captures it pretty well:  ordinary people willing to confront despair, power, and incalculable odds in order to restore some semblance of grace, justice, and beauty to this world.

Ordinary people doing the extraordinary.  That’s what it’s all about.  As 2012 dawns and sparks in us that sense of new beginnings, won’t you join us in doing something extraordinary?

Happy New Year.

Eric Corey Freed on “Innovations That Would Freak People Out”

By Brandon G. Sprague, Brightworks Communications Team

Eric Corey Freed

We at Brightworks are frequently in conversation with clients, partners and the media about what’s new and what’s next in sustainability. Heading into 2012, we sat down with architect, innovator and thought leader Eric Corey Freed of organicARCHITECT to get his perspective on the future of green building. A frequent speaker and author of four books on sustainable design, Eric shared his views on the limits of “sustainable design”, the three most critical issues for the building industry in 2012, and the next waves of innovation.

Brandon G. Sprague: Organic Architecture is an approach to the design of buildings that has guided your career. How do you describe Organic Architecture?

Eric Corey Freed: For decades now, we’ve had this thing called “green building” or “sustainable design” which dictates that the designers, builders, owners, and operators of buildings orient them in certain ways and take responsibility for the energy, water, and materials used in them. Defined this way, sustainable buildings are pretty straightforward. Make “better” siting and material and building system choices and you make a “better” building by focusing on the nuts and bolts of the building’s assembly. Organic Architecture – which is the term Frank Lloyd Wright used for designing the way nature designs – looks beyond that, into how the form and structure is shaped by these natural principles.

Photo via organicARCHITECT

Developing Your Talent for the Business of the Future

By Nate Young, Brightworks Education Coordinator

It goes without saying that conducting business “sustainably” requires a new paradigm of operations. Given that, it should also go without saying that businesses will need a different employee skill set as well. Unfortunately, companies that pursue sustainability are often hesitant to equip their employees with the necessary knowledge and tools to realign their operations.

A recent Wall Street Journal article highlighted this disparity. “American companies don’t seem to do training anymore,” it declared. While the U.S. unemployment rate is almost 9 percent, 52 percent of employers reported having difficulty filling positions because of talent shortages, according to Manpower. By offering “just a bit” of employee training, these companies could develop the talent they need.

Instead, in-house training opportunities have all but dried up, the article reported. “Data are hard to come by, but we know that apprenticeship programs have largely disappeared, along with management-training programs. And the amount of training that the average new hire gets in the first year or so could be measured in hours and counted on the fingers of one hand.”

And yet, opportunities abound for professionals to develop the skills that make sense for progressive companies: from ongoing workforce education programs (like we offer at Brightworks) up to a graduate business degree with a sustainability focus.

To get a better idea of the benefits of burnished sustainability skill sets, I chatted with Scott Marshall and Alison Dennis of the Portland State University (PSU) MBA program. Given that PSU’s MBA program was recently ranked by the Aspen Institute’s Beyond Grey Pinstripes as the best small business school in the world, I figured they understood what skills companies should and would look for in new and existing employees.

Clear is the New Black

by Scott Lewis, Brightworks CEO

A couple of weeks before the 35th celebration of Earth Day in April 2006, the New York Times declared “Green Is The New Black.” The article reported on how environmental friendliness had reached into consumer trends, business and fashion, and stated, “Eco-awareness is becoming a hot topic and a growing business.”

Five years later, an Obama has replaced a Bush in the White House (and finally done something for the planet); the economy is showing tentative signs of life after suffering a meltdown; and green has gone from trendy to what the MIT Management Review calls “table stakes” for doing business. As companies and industries move from compliance to strategic investment in sustainability throughout their value chain, the new watchwords are disclosure and reporting.

We’re now in the age of transparency: Clear is the New Black. Hiding sustainability exposures behind the veil of corporate secrecy is shifting from common practice to a sign of weakness. Today, leading companies – in sectors ranging from consumer goods to major extractive industries – are producing public reports with greater detail and transparency than ever thought possible.

Public Reporting Requirements Grow

In the U.S., two recent developments have hastened the shift toward greater public reporting of sustainability risk, opportunity and progress:

• Under a federal rule (referred to as “Part 98”) published in October 2009, all “large source” greenhouse gas (GHG) emitters in the U.S. are required to track and report their emissions. The rule, under what is also called the Greenhouse Gas Reporting Program (GHGRP), covers more than 10,000 facilities in the U.S. and accounts for more than 85 percent of all U.S. greenhouse gas emissions.
• In January 2010, the Securities Exchange Commission – the federal agency charged with determining what business risks publicly traded companies must document in their quarterly or annual reports – for the first time included climate change on the list of required disclosures.

Move the Market, Don’t Let the Market Move You

By Josh Hatch

For those of you impatient with progress on sustainability in our society, I have wonderful news: Sustainability is here. Today.

OK, we haven’t literally solved it. But it is possible, within reach even. This is encouraging, right? Most of us worried about sustainability are concerned we aren’t moving fast enough — and we aren’t. But not because renewable energy isn’t cheap enough, worldwide climate protection policies are insufficient, or Whole Foods’ Organics aren’t organic enough. Nor does sustainability cost too much, require additional technological breakthroughs or need further study.

Progress is being held back by the widespread, self-defeating business mindset of “waiting for a good time” to consider sustainability — when the best time is always now.

Why Standing Still is the Greatest Risk of All

Truly innovative and leading organizations make decisions with imperfect or partial information, or in spite of immature or uncertain technology. And they use creativity or partnerships to work around financial obstacles. They are successful independent of these limitations — perhaps even more successful because their competitors stand flat-footed, unwilling to challenge assumptions that prevent action.

Unfortunately, sustainability won’t be “easier” to address in the future when solar energy is cheaper and ecological impacts are fully valued and integrated into reporting. Why?

• Sustainability problems – such as risk of climate disruption and increasing prevalence of toxins in our air, water and soil – are becoming increasingly severe.
• Available options and resources – such as time to act, collective willpower and financial resources – are becoming increasingly limited. Inaction or complacency based on deferred action is a human behavioral phenomenon. Decisions by society or corporations to defer or de-prioritize action on sustainability represents a mental barrier more than a consequence of technology, information or financial resource limitations.

Forward-Thinking Decisions That Pay Off

The Toyota Prius, Forward-Thinking Success. Photo via Consumer Reports

Many companies have defied predominant business norms or customer preferences and transformed their industries for the better. A modern classic is, of course, the Prius. For automakers, developing a hybrid-electric vehicle seemed niche at best and suicidal at worst. Previous electric car efforts had gone poorly for other manufacturers. And there was a very small market, at best, for these expensive, fuel-sipping vehicles when Toyota began their designs. But when the company released the first Prius, they had a multiple-year lead on the entire automotive industry and are now the de facto “brand” of hybrid electric vehicles.

Who in your company has the analogous good idea that is being prevented from implementation?

Four Trends in Corporate Sustainability

by Dave Newman, Senior Strategist

This two-part post is the result of more than a dozen in-depth conversations with leading sustainability practitioners, most of them within Fortune 500 companies. We wanted to understand the sustainability trends these practitioners see to help us convey where, why and how leading companies are engaging sustainability to achieve their business goals.

This piece will explain the trends themselves. Part two will focus on how leaders are accomplishing their work and the first steps others can take to stay competitive.

In the last four months of conversations, we saw consistent sustainability themes emerge as companies move through the cycles of their business: from procurement and resource use to measuring and marketing. Leading companies are:

• Acknowledging their supply chains
• Examining their relationship to nature’s systems instead of single elements
• Improving their data quality
• Telling customers simple, memorable stories with that data

Climate Neutrality: A Viable Corporate Strategy?

By Dave Newman, Senior Strategist, Sustainable Systems Group

In September 2011, the London 2012 Olympic Games made news by dropping plans to offset the event’s carbon emissions. The Games organizers said offset projects would have taken place away from Britain, and they prefer to maximize their environmental efforts locally.

Development for the London Olympics in 2012, photo via energydigital.com

This dramatic change made me wonder what caused the London Olympic organizers to renounce their offset plans, besides the estimated $4 million price tag. Climate neutrality was considered a leadership position back in the mid 2000s. But in recent years the value of climate neutrality has diminished, mostly because carbon offsets have fallen out of favor.

What changed the landscape for carbon offsets? Could it be trendy sustainability measures are losing currency as companies find and adopt strategies whose business benefits better align with their needs?

What is a Carbon Offset?

A carbon offset is a “promise” to avoid creating a ton of carbon emissions somewhere else in the world, typically in a developing country.

An example of a carbon offset project is a factory in Indonesia replacing an oil-fired boiler with a natural gas boiler. The sale of these carbon offsets would provide the necessary return on investment to pay for the cost of the new gas boiler. The owner paying for the gas boiler can sell carbon offsets equal to the amount of CO2 they will avoid emitting by upgrading their equipment.

It was an elegant idea, but eventually problems surfaced:

• Many projects did not produce the carbon offsets they promised or their measurements could not be independently verified.
• Investigations revealed many of projects would have occurred regardless of whether carbon financing was included – thus the purchase of a carbon offset produced no added benefit.
• Many U.S.-based companies want local carbon offsets so they can be seen as helping their own communities, but offset projects are typically located in the developing world.

Unclear ROI: A Recipe for Disaster

The cost of carbon offsets ballooned in the late 2000s, selling anywhere from $8 to $20 a ton. Renewable Energy Credits (RECs) became a very popular substitute for carbon offsets and were much cheaper, priced from $.50 to $3 a ton. The use of RECs came under heavy criticism as they were used by some companies like offsets to reduce a firm’s overall carbon footprint. Whether businesses purchased carbon offsets or RECs, they incurred costly annual expenses from offsetting their CO2 emissions.

Most companies featured these programs in corporate responsibility reports or related marketing efforts, but they began to ask: Should a U.S.-based company invest in carbon offsets to achieve climate neutrality goals when a large percentage of the U.S. population does not believe climate change is real? Do U.S. or global customers care if a company has either achieved or established a climate neutrality goal?

As these questions became harder to answer, many companies re-examined climate neutrality as a corporate goal: If consumers don’t believe in or care about climate charge, why make the investment?

The deepest liability of carbon offsets, and the reason their ROI is so hard to quantify, is they are frequently just a band-aid on business-as-usual practices. Environmentalists frequently saw them as a way for companies to pay their way out of their carbon “sins.” This made them unsatisfying for the audience companies wanted to win over with their environmental initiatives.

Environmentalists were frequently right. Many companies were not making offsets part of a broader effort to take sustainability deeper into their organizations, find recurring cost savings and spark innovation (Click here to read some success stories of companies that did). As a result, these companies were not capturing any real value or public relations value from their offsets.

Every Business Case for Sustainability is Different

Every business will find its own unique mix of business benefits from sustainability (learn more about the Business Case for Sustainability). Buying carbon offsets alone seemed to be of less value than many companies hoped when this trend took hold. But there are still exceptions. About one month after the London Olympics announcement, British Petroleum (BP) and their not-for-profit carbon management arm, BP Target Neutral, announced they would purchase carbon offsets to cover the emissions from spectator travel to the London Olympic Games at no cost to the ticket-holder.

BP Target Neutral is hoping to sign up enough spectators to set a new world record for the largest offset as measured by number of participants. Participants can sign up using BP Target Neutral’s London 2012 web page or its Facebook page.

Making the offsets an interactive event with customers is probably an effort to build goodwill and customer engagement. BP and its subsidiary perceived a business value from purchasing carbon offsets that just wasn’t there for the Olympics organizers.

That’s the business case philosophy in action – sustainability makes sense for everyone differently. The trends of the moment won’t last if they can’t create real value for businesses. As companies think more deeply about how to create and capture the sustainability benefits they need most, we can expect carbon offset programs to continue falling away.

Good News, Bad News

Scott Lewis is founder and CEO of Brightworks

Well, the bad news is that 2010 had the highest annual net increase in atmospheric carbon dioxide ever, a 6 percent increase, with China and the US leading the pack.

This coincides with the human population passing 7 billion people for the first time.  Not a coincidence, perhaps.

7 billion and going strong. Source: ngm.nationalgeographic.com

The good news is that the world is just brimming with opportunity for rapid transformation to a renewable energy economy, if only we could get those dang policy makers – the ones who make the rules about what kinds of energy get most heavily subsidized, incentivized and regulated or not regulated – to make decisions in the public interest rather than the interest of their funders.

Seriously, the good news is that when enough people clamor loudly enough for real change, the technology and resource capacity is not the barrier: Scientific American published a plan to power the whole world with 100 percent renewable energy back in 2009.  Here’s to the possibility of a future with lasting prosperity for all, just waiting to emerge.