Green Business: “Because It’s the Right Thing to Do”

If you don’t ask, the answer’s always no.

But when you do, sometimes, it’s a surprising yes.

That’s what I thought when I read the results from the First Annual Survey of New Jersey Business Sustainability survey. A group of state researchers  asked New Jersey business owners about their Sustainability practices.

The survey also asked, by keying in on motivations, whether business owners give a darn and more importantly, why.

The answer: yes. And more surprisingly, not for self-interested reasons.

The survey’s key finding is that NJ business owners are incorporating Sustainability practices into their business because it’s the right thing to do.

Via the wonderful earthpeopleco.com, authored by Matt Polsky:

What the First Annual Survey of New Jersey Business Sustainability Tells Us

The two strongest reported sustainability motives were a belief that it is the right thing to do and potential cost savings, with over 85% reporting at least a moderate amount of, and over 61% a great extent of influence. Other strong sustainability motives for which over 75% of respondents reported at least a moderate extent of influence included satisfying customers’ interests, potential to improve image and reputation, fostering a healthy society, and satisfying regulatory demands.

Doing well by doing good isn’t something new

It’s our heritage as Americans. As New Jerseyans.

We pull our weight, and then some. Always have, always will.

Trenton Makes, The World Takes.

So when it comes to doing the right thing in business, I’m not surprised that the state’s business owners have the bigger picture in mind.

With better information about what business leaders are doing today, and why, we have a baseline from which to launch meaningful, relevant education, support and resource programs.

All we had to do was ask.

Green Business: What International Development Can Teach Business About Metrics

Shoot for the stars, reach the moon.

The United Nations’ ambitious focus in the past 20 years to eliminate global poverty is commendable. Poverty is a huge, complex, systemically challenging set of interconnected problems.

For all the progress made, the process has not been without failures, omissions, mistakes, detours and missteps. All played out on the global stage. For everyone to see.

Sustainability practitioners face similarly complex, interconnected challenges that span the worlds of government, business and civil society.

There’s a lot we can learn from to learn from the work already done for us. All it takes is a willingness to look beyond our own sandboxes .

Here’s Part 3 of my co-authored series on Sustainability Metrics for Greenbiz.com.

What International Development Can Teach Business About Metrics

Since 2000, the International Development (ID) community’s battle to end (or substantially reduce) poverty by 2015 has played out on the world stage. There have been delays, defeats and some solid accomplishments. In doing so, the development community’s thinking has evolved about what best constitutes effective aid and how to know whether it’s working.

We find significant lessons for the sustainable business world in the story of the Millennium Development Goals (MDGs) and the groundbreaking shift towards metrics that occurred with the 2008 Accra Agenda for Action. The ID community has been considering questions of direction towards greater levels of sustainability and how to measure their actual effectiveness over 13 long years of debate and trial and error. We could learn from their longer experience with sustainability goals and metrics.

Green Business: Report from the Apr. 23 CSR Investing Summit

Between Two Rear Ends of a Horse

That’s the title I choose for this report from the Apr. 23 CSR Investing Summit: Measuring Responsible Leadership in New York City.

Topline: CSR Investing offers opportunities for long-term, sustainable value creation. But we won’t find them unless we stop siloing ESG factors mainly in terms of risks and negative screens and start applying ESG factors as value drivers. This holds true not in spite of, but because of, our increasingly unstable and unpredictable world.

*  * *

The past was about how ESG helped companies demonstrate their virtue by aligning a company’s actions with its values. The future of Responsible Investing builds on this by also creating value. That’s how Stephen Davis, Associate Director and Senior Fellow – Harvard Law School Programs on Corporate Governance and Institutional Investors, framed the CSR Investing landscape with the first presentation of the day.

Today, we’re somewhere in the middle, according to Davis. We’re searching for the tools, technologies and culture changes that will allow institutional investors to calculate the full impact of extra-financial—but highly material—ESG factors into their portfolio decisions. He cited three converging trends that are transforming the Capital Markets:

  • A growing awareness of potential risks and impacts from extra-financial material factors, such as environmental disasters and social issues.
  • A surge in measurement and reporting frameworks to help corporations and shareholders measure risks and how to better manage them, such as GRI, SASB, IIRC and S-Networks.
  • And thirdly, the rise in what Davis called “shareholder ownership with authority.” Institutional Investors are using the first two trends to take a far more assertive role in how companies are run.

Davis then contrasted these trends with a description of how today’s legacy culture and obsolete infrastructure are unprepared and unsuited to manage these new financial market realities. His analysis is that the Capital Markets are currently stuck between the status quo of “we’ve always done it this way” and the changes bearing down on them.

Thus putting us for the moment, he said metaphorically, “between the two rear ends of a horse.”

He went on to explain that this expression springs from the curious fact that the United State standard railroad gauge is precisely 4 feet, 8.5 inches. A historical review of how we build roads, so the story goes, leads all the way back to the original specification for an Imperial Roman war chariot. So in essence, our railroads are designed to accommodate the back ends of two war horses rather than the key performance needs of a modern transportation system.

While this story paints a vivid picture of how the status quo suffocates innovation, and it pains me to disagree with Professor Davis, the conclusion—modern rail gauge follows Roman road construction—is false. While U.S. rail gauge is exactly 4 feet, 8.5 inches, a strangely precise number, this is a case of convergent evolution rather than direct descent. (The full debunking can be found in this delightfully named 2001 U.S. Department of Defense journal article: “Roman Chariot, Railroad Tracks, MilSpecs and Urban Legends.”)

Said another way, the problem is that we’re hamstringing our future performance by replaying the moves that got us past results. Business-as-usual will not suffice for coming systematic disruptions in how Capital Markets work and the increasingly climatically unstable world in which they seek to operate, according to Davis.  We need better ways of looking forward.

Davis’ recommendations for where Responsible Investing needs to head include a vastly better educated and engaged citizen investor community, broad access to transparent ESG reporting tools, and political will.

Much of the rest of the day built on this foundation, with discussions of Board and Director fiduciary duty and performance, calculating ESG valuation, acknowledging supply chain risks and impacts that happen “outside the factory walls,” and integrating ESG factors into the investment process.

I’d like to direct readers to some of the reports and research mentioned during the day:

With the exception of Koehler’s presentation, the day’s presentations were mostly silent on the explicit risks of climate change disruptions as outlined by the World Bank’s Nov. 2012 report “Turn Down the Heat.” I was encouraged to hear about admirable progress being made by committed professionals to change hugely complex, interconnected financial systems for the better. And yet, I came away with a feeling of creeping around the edges.

I support a bolder stance by sustainable business and finance leaders to go beyond relative improvement goals based on past performance, to science-based absolute goals based on planetary limits.

So this is the challenge facing the Responsible Investing community: to champion the technology and business changes that allow ESG factors to carry their full weight in investment considerations. And then to make business and investment decisions that accurately reflect the risks and realistically embrace the opportunities that lie ahead.

I’m hopeful for a time when we will no longer need to identify externalities, and measure them, because we will have successfully learned how to responsibly claim them as a natural part of successful, sustainable business.

When this happens, we’ll no longer be behind the horses. We’ll be out in front.

 

Green Business: Reading & Links from April 1 Hunter Lovins & Andrew Winston Talk At Bard’s MBA in Sustainability Program

Inspiring.

Last night’s Bard MBA in Sustainability’s program called The Frontiers of Sustainable Business was that, and more.

Hunter Lovins and Andrew Winston talked expansively about everything from proving the sustainable business case and setting science-based goals, to planetary limits and compelling narrative storytelling. And the role that business must play to stave off global climate catastrophe.

If you click just one link in this post, watch this: Unilever’s Lifebuoy: Help a Child Reach 5 Years

Three minutes. Then Share, Link, Tweet, Tag it to your networks.

 
The following is presented as things came up in conversation, more or less:


Books (Amazon links noted for easy reference. Buying used and local are always better):

Green to Gold, Andrew Winston

Natural Capitalism: Creating the Next Industrial Revolution, Paul Hawken, Amory Lovins, L. Hunter Lovins

Saving Capitalism From Short-Termism: How to Build Long-Term Value and Take Back Our Financial Future, Alfred Rappaport

Factor Five: Transforming the Global Economy through 80% Improvements in Resource Productivity,  Ernst Ulrich von Weizsacker

The Necessary Revolution: How Individuals and Organizations Are Working Together to Create a Sustainable World
Peter M. Senge, et al

Winning the Story Wars, Jonah Sachs

Bury the Chains: Prophets and Rebels in the Fight to Free an Empire’s Slaves, Adam Hochschild


Ideas/Articles (Wiki links for convenience; caveat emptor):

Michael Porter: Climate Change is unlike any other challenge the world has ever faced. (citation needed)

Not if. When. Make that now. Business leaders need to set science-based carbon goals. Setting targets based on prior business performance is irrelevant–and dangerously naive. It ignores the external realities of irreversible, inevitable global resource scarcity, social and climate disruptions.

Bhutan’s journey to Gross National Happiness

The evolution of the UN Millenium Development Goals to the new Sustainable Development Goals framework

Hunter Lovins’ work with the United Nations Development Programme

Planetary Boundaries

“Earth’s Tipping Point”, article in the journal Nature (June 2012)

“Global Warming’s Terrifying New Math”, Bill McKibben, Rolling Stone magazine (July 2012)

“Time to Wake Up”, Investor Jeremy Grantham on the price of everything going up (May 2011)

Unreasonable Institute partnering with Semester at Sea to offer Unreasonable at Sea

“The Elephant in the Room is Growth”, Patagonia founder Yvon Chouinard lays it out. (GreenBiz Forum SF, March 1, 2013)

“The Fallacy of the China Defense” (Stop claiming that China isn’t doing anything about climate change. It’s not true.) (March 2013)

“The fossil fuel industry is a rogue industry.” McKibben (December 2012)

David Keith on Tar Sands and CO2 Capturing Technologies (January 2013)

“The Tar Sands Disaster” What if Canada becomes like the U.S? (March 2013)

Unilever’s CEO Polaman Quit Reporting Quarterly in 2009. Long-term corporate stewardship is possible. It takes leadership. So let’s stop saying it can’t be done.

Earnings guidance is not a necessary evil to be endured. Coca-Cola, Google and Costco shun quarterly guidance and reporting too.

Systems Thinking as a core sustainability professional competency

“Looking Back on the ‘Limits to Growth'” Smithsonian Magazine looks back at the 1970s prescient description of our world’s current state. (April 2012)

Unilever Sustainable Living Plan

Buckminster Fuller’s Trimtabs

Mondragon Cooperative in Spain


On the power of conversations to change the world:

Daniel Ellsberg meeting Gary Snyder

Joyce LaValle gives Ray Anderson a copy of Paul Hawken’s The Ecology of Commerce


People:

David Brower

Paul Hawken

Ray Anderson

Michael Porter

Kees Kruythoff (Unilever President North America)

 

Green Business: How do we get investors on board with Sustainability?

Getting Sustainability solutions to scale is going to take a lot of money.

But at present, the investor community is not placing their bets on Sustainability-driven companies.

That’s a disconnect to me, because the business case for doing so is solid. Research  shows that businesses that make Environmental, Social and Governance (commonly known as ESG) factors part of their strategy do just as well in the marketplace. Sometimes even better.

The research borne this out in 2011, and it’s still true today.

Via Harvard Business School http://www.hbs.edu:

The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance

Finally, we provide evidence that High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance. The outperformance is stronger in sectors where the customers are individual consumers instead of companies, companies compete on the basis of brands and reputations, and products significantly depend upon extracting large amounts of natural resources.

So why isn’t the investor community on board?

Cary Krosinsky’s work is all about understanding and bridging this gap between investors and sustainability. And, approaches for getting money flowing towards positive sustainability investments.

I heard Cary and Steve Viederman speak Mar. 4 on Getting Investors Engaged in Sustainability at the Bard MBA Sustainable Business Series.

Cary is Executive Director of the Network for Sustainable Financial Markets, and teaches Sustainability & Investing at Columbia University and University of Maryland.  Previously, he was senior vice president for Trucost, a company that helps organizations measure their environmental impacts. He’s also an author of Evolutions in Sustainable Investing: Strategies, Funds and Thought Leadership (Wiley Finance).

First, the bad news.

Status quo is strong.  The people who make investment decisions have deeply entrenched beliefs and behaviors about how to make money.  Monolithicly so. Cary’s company, the Network for Sustainable Financial Markets, just released research that finds only 1% of global assets under management overall are managed by investors looking at sustainability.

Via sustainablefinancialmarkets.net:

NSFM White Paper – The State of Ownership (the real size of SRI Assets + the Systemic Nature of Equity Ownership)

1%.

So at least we know where we stand. Now on to changing it.

Cary suggested a positive investing mindset to work with the status quo rather than against it. This means focusing on adding Sustainability-minded assets to a portfolio–what’s possible–rather than focusing on what we shouldn’t buy.   As an example, he mentioned Bill McKibben’s 350.org college endowment fossil fuel divestment campaign. Instead of lobbying to cull  fossil fuel-related investments from university endowments, a positive approach would be to add a percentage of Sustainability-focused investments to a university’s investment portfolio.

I’m really taken with this concept because it has significant potential to create change from the top-down. It’s really the simplest idea in the world. Put our energies towards finding sustainable solutions instead of stamping out fires. It takes more time and energy to say, “What should we do?” instead of “Stop that,” true, but these are conversations worth having. Taking the time it takes, takes less time.

I’m all in for the “and also” top-down, bottom-up, sideways innovating systemic solutions that keep us away from the brink of a 2 degrees-hotter planet. I believe in the scientific consensus about our world becoming fundamentally less hospitable to human life if we don’t.

Putting all issues of money aside, as climate change realities become the new normal (resource scarcities, extreme drought, rising sea levels), business and investors have real skin in fixing things.  If we don’t come up with cures for our environmental and energy problems, there’s not going to be a world in which to invest money.

Many thanks to the Bard MBA program for the chance to hear about Cary’s research and contributions to the Sustainable Investing field.

Green Business: How Unilever Makes Sustainability Look Smart

Global business leader Unilever walks the walk.

If you want to know what a Sustainability leader looks like, sounds like, and acts like, here’s an article for you.

Replete with targets, actions and results. Integrated with the business’ overall strategy.

My favorite part:

The Sustainable Living Plan is our business plan; it is not part of our business plan.

Via packworld.com:

Waste reduction is central to Unilever’s sustainability strategy

In November 2010, Unilever launched a new strategic business direction in the form of The Sustainable Living Plan, a company-wide initiative to double the size of the business by 2020 while reducing emissions by half in that same time frame.

Unilever is one of the world’s leading suppliers of food, home, and personal care products, with global sales of more than $67 billion in 2012. More than 2 billion people use Unilever’s products on a daily basis. The Sustainable Living Plan encompasses the entire value chain, with Unilever taking responsibility not just for its own direct operations, but also for its suppliers, distributors, and consumers. Underpinning the plan are more than 50 targets.

Green Business: News from the Big Green Tent

I believe in the Big Green Tent.

Meaning, I think that the world’s largest corporations have a role to play in creating a more sustainable world.

That includes chemical companies.

Speaking practically,  giant chemical companies employ a lot of scientists. Smart, educated people. The ones we need to invent solutions to raging global problems.

Clorox is a Big Chem Company. Yes.

Clorox also published their first integrated report this year, putting their financial and environmental results on the same balance sheet.  Did not know that.

Clorox Recognized for Innovative Corporate Social Responsibility Reporting

Another thing I did not know: Clorox owns the Burts Bees brand. A personal favorite of mine.

So, a little research gave me a better, more informed picture of what Clorox is about and what they are doing.

Moving on, agri-giant Monsanto has joined a global business council that is working to achieve ambitious sustainability goals by the year 2050.

Monsanto Company joins World Business Council for Sustainable Development (WBCSD)

I personally don’t like all of the products these companies produce. Or the way they market them to consumers.

For example, the Clorox Wipes twitter feed is a paean to joyful germ eradication. I’m all for killing flu viruses and food-borne pathogens. Trust me. But overcleanliness is not a virtue.

And Monsanto’s self-branding as a Sustainable Agriculture Company gives me pause. Considering this. And this. 

That said, with the problems we face as a planet, any and all solutions are welcome.

Green Business: Fake It Till You Make It Green

Greenwashing is good.

Hunter Lovins said that? Hunter Lovins, as in Natural Capitalist Solutions Lovins?

Yes. And she also said this.

Via marketplace.org:

Greenwashing is a Gateway Drug

[O]nce you hold yourself up as ‘green(er)’, increased scrutiny follows. Plus, no one likes to be a hypocrite. Once you say you’re doing it, there’s a tendency to start doing it. In GE’s case, Lovins points out that once GE saw their ‘eco’ products had twice the sales volume of the regular products, “all of a sudden a company without a green bone in its body has one–attached to its wallet.”

Lying as a specific approach? Encouraging superficial actions? Took me a minute to come around. But then I got it.

You don’t throw a non-dancer into the swing of things. You dance with them a little bit at the edge. Let them see how good is.

Get their feet moving. Confidence up.

Before they know it, their friends are watching. Maybe admiringly.

And suddenly they’re dancing. Next thing you know they’ve enrolled in a tango class.

They’re hooked but good.

Classic case of fake it till you make it.

This came to mind when I read that a majority of Fortune 500 companies reported on their sustainability programs, actions and results in 2011. More than doubled from 2010.

Via triplepundit.com:

Record Number of U.S. Companies Issuing Sustainability Reports

G&A Institute states that 53 percent of the 500 companies indexed by Standard and Poor’s issued sustainability reports in 2011, a drastic increase from 2010, when only around 19 percent of the companies reported.

Moreover, this report found that companies that issued sustainability reports enjoyed higher financial returns than their non-reporting competitors.

Does this mean that all these companies have good sustainability metrics? Is there a healthy amount of greenwashing going on? Do the numbers lack context? Are they disconnected from the company’s material pursuits?

Sure. But who cares. They’re in it.

For those who are already on the people-planet-profits bandwagon, these numbers show momentum.

For those new to the party, still mired in short-term shareholder value thinking, this shows a business case.

So I’m seeing the wisdom of bringing everyone to the sustainability conversation. Most of all the skeptics, wallflowers, and foot starers.

Hear that music?

Let’s dance.

Green Business: AT&T’s Greenwashing FAIL

Green isn’t always what it seems.

AT&T claimed to be the “World’s Record” holder for recycling phones, and paid Guinness for the right to say so.

Fact is, Sprint is far ahead of them, but missed the boat on telling their customers.

What’s the harm? Well, greenwashing erodes customer trust.

Greenwashing makes consumers feel tricked and less likely to believe genuinely green claims that might positively influence their choices.

Hat tip to Marc Gunther for his reporting.

Via SustainableBusiness.com:

Sorry, Wrong Number: AT&T’s Recycling Claim Doesn’t Add Up

AT&T says it collected 3 million cell phones for reuse and recycling in 2011. Sprint says it collected 11 million in 2011–an average of more than 200,000 a week, easily topping AT&T’s so-called record.

Gunther uses this example as an opportunity to talk about how businesses can do a better job of assessing, counting and reporting on their environmental impacts.

What’s needed here are common metrics and better transparency, as well a concept called sustainability context. Sustainability context that seeks to put corporate claims in the context of what the planet’s limits are when it comes to greenhouse gas reductions, water usage and the like.

Context is a fascinating development that brings absolute limits and thresholds into the mix.

“How many?” leaps beyond “Out of how many?” to the real question we face: “How much can the planet handle?”

Now things are getting interesting.

Green Business: IKEA Adds “Restore” to Sustainability Goals

Reduce, reuse, recycle.

Good start. But we need a few more letters.

On the front end, I propose, let’s add an R for “Refuse.”

The world’s climate change challenges aren’t going to be solved by doing better while we still take and make too much. Speaking as a First World citizen, at the heart of it, we have to use less. Of everything.

With that out of the way, let’s look at the back end. After the R for Recycle, let’s make room for Rot.

As in, whatever you can’t recycle, please send to compost. (Feel free to quibble to be had that composting is already rolled in to Recycling, but I feel it bears special attention.)

Which brings us to the most important R of all: Restore.

There’s a compelling case to made going past doing less harm, or slowing the rate of harm, or ceasing the harmful activities entirely.

If the next generation is going to have a world that they can thrive in, or any world at all the ways things are going, we have some cleaning up to do.

The next active step is to heal, to fix, and Restore our natural world, ecosystems and communities to sustainable, balanced health.

I’m starting to see examples of  this in the business world with Sustainability commitments that explicitly address Restoration.

As an example, IKEA just issued new 2020 Sustainability targets to increase the availability of clean water where it operates.

Via edie.net:

IKEA to become ‘water positive’ by 2020
IKEA Group has revealed its new sustainability strategy which includes measures to balance its water footprint and contribute to the increased availability of clean water in the communities where it operates.

A Restore mindset is about leaving the world a better place, which is exactly how American poet Ralph Waldo Emerson defined success:

“To laugh often and much; to win the respect of intelligent people and the affection of children...to leave the world a better place…to know even one life has breathed easier because you have lived. This is to have succeeded.”

Refuse, Reduce, Reuse, Recycle, Rot, Restore.

I’ll be on the lookout for more Restore examples like this one from IKEA.