FTC Settles With Amazon, Sears, Macy's Over Mislabeled Bamboo Clothing
Last week, the Federal Trade Commission (FTC) reached an agreement with four large retailers over charges that textiles the companies promoted as environmentally friendly “bamboo” were actually rayon. Sears, Amazon, Macy’s and Max Studio (Leon Max) agreed to pay a total of $1.26 million in fines.
The saga started in 2009, when the FTC warned consumers about four manufacturers that claimed they manufactured textiles out of bamboo using a “green” process. The reality, however, was that those companies used a more harmful technique standard for rayon manufacture that incorporated “harsh” chemicals and released hazardous air pollutants. One year later, the FTC sent letters to 78 companies with a warning that they were in danger of breaking the law if they sold rayon-based textiles but advertised them as “bamboo.” According to the FTC, any plant source--including bamboo--with cellulose can be churned into textiles, but the process is hardly eco-friendly and therefore technically it is rayon and must be labeled as such. Under the U.S. Textile Products Identification Act, even if a rayon-based textile contains bamboo, its manufacturing process is hardly green and therefore the label “rayon” must be on that item.
So are those bamboo socks of yours environmentally responsible?
The answer, of course, lies in the supply chain and how those “bamboo” products were manufactured. In the FTC’s view, many textiles containing bamboo are actually rayon--and even if bamboo was the plant sourced for its cellulose, the process is so caustic that no trace of the original bamboo plant is in the finished rayon product. The FTC alleged that despite repeatedly sending letters to the four retailers since early 2010, the companies still promoted clothing and other textile products as “bamboo.” Amazon appears to be the worst violator, with the company labeling products as “100% Organic Bamboo” and “100% Knit Bamboo.” The FTC, however, tagged Sears Holdings (which operates Sears and Kmart) with the highest fine, in part for its labeling of linens as “pure fiber” bamboo. Therein lies the reason for the fines--customers did not receive the kind of product they expected when they purchased items from crib sheets to football tees.
In addition to the fines, which the FTC based on the amount of products sold, each company is required to ensure that all labels and any ads promoting such products are accurate. The settlement, however, allows the company to score “good faith” guarantees that the products were not mislabeled before they were sold. The upshot for these companies is that any misleading claims by suppliers are not an excuse--no matter how tangled a supply chain may be, retailers must substantiate such manufacturing claims.
None of the companies mentioned the settlement in their online press rooms; Sears Holdings only acknowledged the incident to Bloomberg Business Week with a statement that the company was cooperating with the investigation.
Leon Kaye, based in Fresno, California, is a sustainability consultant and the editor of GreenGoPost.com. He also contributes to Guardian Sustainable Business; his work has also appeared on Sustainable Brands, Inhabitat and Earth911. You can follow Leon and ask him questions on Twitter or Instagram (greengopost).
Image credit: Wikipedia (fir0002)
Life on the Edge of the Sustainability Cliff: Rebuilding the Bonds Between Companies, Investors and Society
By Mark Tulay
Albert Einstein wrote "Not everything that counts can be counted, and not everything that can be counted counts” on the blackboard in his office at the Institute for Advanced Studies at Princeton. What was his point? The same as Robert F. Kennedy’s when he reflected on the inadequacies of our primary measure of economic progress – Gross Domestic Product (GDP):
“GDP counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl… Yet GDP does not allow for the health of our children, the quality of their education or the joy of their play…It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile” Robert F. Kennedy – March 18, 1968
Yet 45 years after RFK’s speech, GDP still is used globally as the primary indicator for measuring a country’s economic success. Why do we continue to utilize such an inadequate indicator for gauging our economic well-being? Similarly, why do we use share price and earnings to measure company performance? While such measures are seductively precise, isn’t there a better way to count what should be counted – both at the country and corporate levels? Assessing corporate performance and creating value in the 21st century requires a new approach. Below is one possible strategy – the creation of shared value – and a call to action for business, investors and NGOs in 2013.
Redefining the measurement of value and value creation by business
The Great Recession shook loose the pillars of trust and partnership between the public, investment community and companies. Over the last five years, most of the millennial generation has come to believe that Wall Street no longer serves Main Street. They see companies hoarding cash and holding back on hiring to pad the pockets of shareholders and executives. They often view business as the cause of, rather than the solution to, many social, environmental, and economic calamities facing the world today.
A fog of skepticism and malaise has rolled over global markets and undermined public confidence in whether companies can play a vital role in the transition to sustainability. Companies – such as BP and Apple – that once were revered for solving big problems are increasingly chastised for creating big problems at the expense of employees, communities and the environment. In a Harvard Business Review article, Michael Porter and Mark Kramer commented that the “legitimacy and credibility of business has fallen to levels not seen in recent history.” Such widespread disillusionment with business, if not reversed, portends a future of conflict and stalemate that neither people nor the planet can afford.
Many believe that we need a new roadmap for balancing corporate profitability and growth with the urgent need to protect and expand our “vital capitals,” which include not only financial capital but also human, social, intellectual and natural capitals. Some companies, though surely not enough, are taking on this challenge and demonstrating sustainability leadership. The last decade has witnessed the rise of sustainability as a defining element of responsible business strategy and performance. Companies like Nike, GE, Unilever, PepsiCo, UPS, Puma, Novo Nordisk, Natura and dozens of others recognize sustainability as integral to their global competitiveness and long-term prosperity. They understand that sustainability and long-term value creation are inextricably linked and that the world of 21st century business will not tolerate business-as-usual. The challenge is to move beyond this small pool of sustainability-conscious companies and vastly scale up their numbers in both developed and emerging economies. The time for business to lead on sustainability is now.
The Shared Value solution
Porter and Kramer’s Harvard Business Review article introduced the concept of “shared value,” which involves creating economic value in a way that simultaneously creates value for society by addressing its social, economic and environmental needs and expectations. Realizing this vision will require a new set of skills, tools and standards for disclosure and performance measurement, and a “far deeper appreciation of societal and environmental needs, and a greater understanding of the true bases of company productivity, and the ability to collaborate across profit/nonprofit boundaries,” says Porter. He further explains:
“The central premise behind creating shared value is that the competitiveness of a company and the health of the communities and the environment around it are mutually dependent. Recognizing and capitalizing on these connections between societal and economic progress has the power to unleash the next wave of global growth...It will also reshape capitalism and its relationship to society. Perhaps most important of all, learning how to create shared value is our best chance to legitimize business again.”
Isn’t it time for more companies to go “all in” on a more expansive, forward-looking, long-term value creation strategy that makes maximizing stakeholder value across the vital capitals its primary purpose? To guide this transformation, business innovation needs to be accompanied by a new generation of widely-accepted and globally-adopted corporate and product sustainability standards. These standards can serve as our GPS to steer the global transition to sustainability across all of the vital capitals. Standards are not a panacea, but they are integral to depicting normative business practices and outcomes that align companies with the principles of sustainable development.
Call to action
An unprecedented opportunity exists today for business, investors and NGOs to collaborate on and realize this vision of shared value creation and sustainability leadership. Five key sustainability initiatives are underway, and each is inviting stakeholder participation. Organizations, particularly companies, now have a small window of opportunity to engage in 2013 to this next generation of sustainability standards. 2013 is not the year to sit on the sidelines.
The five key sustainability initiatives are:
SASB. The Sustainability Accounting Standards Board (SASB) is developing sector-based Key Performance Indicators (KPIs) suitable for disclosure in standard filings such as the Form 10-K and 20-F. Through its evidence-based approach, SASB will dramatically improve the precision, materiality and disclosure of sustainability indicators to integrate ESG factors into financial markets. SASB is now hosting various sector-based groups to provide input into its KPI development.
GRI. The Global Reporting Initiative (GRI) is the de facto standard for corporate sustainability reporting. A total of 4,994 organizations have produced more than 10,000 corporate sustainability reports following GRI guidelines. GRI will introduce in 2013 the next generation – G4 – of its reporting guidelines.
IIRC. The International Integrated Reporting Council (IIRC), another disclosure initiative, is a global coalition of regulators, investors, companies, standard setters, accountants and NGOs. Together, this coalition shares the view that communication about businesses’ multi-dimensional value creation should be the next step in the evolution of corporate reporting. Already, hundreds of companies are experimenting in blending financial and sustainability reporting. IIRC is nurturing and tracking this process in its effort to build a generally accepted integrated reporting framework.
TSC. The Sustainability Consortium (TSC) is the leading authority on product sustainability standards. Under the leadership of TSC’s new Executive Director, Kara Hurst, TSC is expanding into China and is ramping up the release of scientific-based and collaboratively developed standards for improving product sustainability. TSC is staffed and supported by experts in academia, industry and NGOs.
GISR. The Global Initiative for Sustainability Ratings (GISR) is a new participant in the family of initiatives aimed at making capital and other markets agents of, rather than impediments to, achieving the post Rio+20 sustainability agenda. Complementary to the disclosure focus of SASB, GRI and IIRC, GISR's mission is to create a world class corporate sustainability ratings standard as an instrument for transforming the definition of value and value creation by business in the 21st century. GISR’s new global standard will be coupled with capacity-building, certification and analytical tools to embed sustainability into capital markets worldwide. GISR will release the principles component of this standard in May 2013 at the Ceres conference. Organizations can engage with GISR as a supporting stakeholder and can participate in the standard development program in 2013. GISR is moving from startup to mezzanine stage, attracting a broad range of investors, companies and NGOs to participate in its activities in the pivotal year 2013.
Collectively these initiatives, each with a distinct but linked role in the emerging sustainability information landscape, will:
- Transform the way corporate sustainability information is disclosed by developing new disclosure standards for material sustainability information and value generating strategies;
- Reposition corporate reporting to tell a more complete story of how an organization’s strategy, governance, performance and products lead to the creation of value over the short, medium and long term;
- Improve the precision, materiality and disclosure of sector-based sustainability (ESG) KPIs; and
- Build general acceptance for a new standard for measuring corporate sustainability performance that can elevate ratings as a more powerful tool for accelerating the integration of ESG factors into investment decision making.
The early achievements of SASB, GRI’s G4, IIRC, TSC and GISR point to 2013 as a watershed year for accelerating the transition – and moving markets – toward more sustainable outcomes that both business and the world so urgently need. The shift away from myopic focus on short-term financial returns to a more expansive, long-term focus on vital capitals is an idea whose time has come. Such a transformation is no longer an option, but a necessity if the next decade and beyond is to avoid a “sustainability cliff.”
The time has passed for small commitments, hyperbole and platitudes – now is the time for leadership, investment and action. Please step in and lend your support to these efforts in 2013.
Mark Tulay has served in leadership roles in sustainability initiatives for over 20 years. As Program Director and the first employee of Ceres, he was involved in the early stages of the Global Reporting Initiative (GRI). He led a conservation campaign at the Nature Conservancy and served as an advisor to Greenpeace. He was the Head of Sustainability Business and Research for RiskMetrics (now MSCI), Institutional Shareholder Services, and IRRC where he served as the Head of sustainability research, ratings and business development. Mark currently serves as Program Manager for the Global Initiative for Sustainability Ratings (GISR), which is developing a new global standard for measuring corporate sustainability performance. Mark is the Founder of Sustainability ROI, a sustainability consulting firm that works with companies, investors and NGOs to accelerate the transition to sustainable markets.
Will a Tool for Measuring Sustainability Benefit Maine?
By Heidi Sistare
“Sustainability is much more than environment,” says Timothy Downing, President of Duratherm Window Corporation. “It pertains to your business culture, philosophies, the workplace environment, how you treat your employees, and how your business is involved in community. Once one has a more comprehensive understanding of what true sustainability is, it forever changes the way one evaluates a business and its success.”
Downing is one of the business owners who participates in the Sustainability Benchmarking Tool. The tool was developed by the Manomet Center for Conservation Sciences (Manomet) with Maine Businesses for Sustainability (MBS) and is available to business owners in the state of Maine. The free, online tool includes questions about four areas of sustainability: finances and governance, employee relations, community engagement, and environmental practices.
The Manomet Center has a long history of developing assessment tools but the process of developing this tool, in collaboration with MBS, and specifically for small business owners, yielded new challenges and new lessons. The tool needs to be free and quick to promote participation, since the tool is not linked to a technical assistance program, businesses that find success have a motivated leader who turns knowledge into action, and to provide one tool for all users requires questions that are relevant to a wide range of businesses.
Manomet developed the questions using input from topical experts, business owners, and research on existing certification standards. Using a beta version of the tool, Manomet and MBS tested it with five businesses and used their feedback to improve the tool. In addition to providing users with the results of their assessment, the tool generates a customized list of local, state, and federal resources that can provide support for improving sustainability in business practices.
The Sustainability Benchmarking tool was launched online in Spring of 2012. Benjamin Ayer, Communications and Community Affairs Manager at MBS, says that he hopes the tool will bring Maine recognition as a leader in sustainable business. Leaders at Manomet also see the potential for this tool to benefit the state. “Communities have the opportunity to re-brand themselves to attract new and green businesses and a well-educated workforce, and improve the sustainability of their business community,” says Julie Beane, Program Development Manager at Manomet. In the meantime, business owners like Downing can use the tool to grade their sustainability practices, make business decisions, and help them plan for the future.
[Image Credit: CasaDeQueso, Flickr]
Heidi Sistare is a freelance writer who just completed the documentary writing and multimedia storytelling program at the Salt Institute for Documentary Studies in Portland, Maine. She holds a BA in Social Work from Warren Wilson College and has experience in non-profit management, community development, and planning for small businesses.
LG Partners with EPA to Achieve Environmental Goals
LG Electronics logo. (PRNewsFoto/LG Electronics USA, Inc.)
With Help from IBM, Europe's EV Charging Network Surges Forward
Just a few weeks ago, IBM launched a nifty little electric vehicle charging demonstration project called the E-Mobility B2B Marketplace, which is designed to provide the business sector with seamless communication between electric vehicles owners, charging stations and electricity providers. Let's emphasize that focus on the business sector, because until now most of the public discussion of EV technology has revolved around the consumer market. That's especially relevant for issues like range anxiety and access to charging stations, which impact businesses just as much, if not more than consumers.
Unfortunately for us on this side of the pond, the B2B Marketplace project is located in Europe. However, if the demonstration can succeed in uniting different countries around a single EV charging platform, then it should have no trouble applying itself to a country like the USA, right?
IBM, EV charging and Green eMotion
The E-Mobility B2B Marketplace is part of the European Union's Green eMotion initiative is a public-private partnership that started in March 2011. The idea was to establish a single, unified IT platform for charging electric vehicles across all countries in the region by 2015.
Though the goal sounds a bit ambitious, consider that you can literally gas up a typical vehicle anywhere in Europe, or for that matter, anywhere in the world, regardless of its manufacturer.
Green eMotion includes 43 partners along with IBM, including other global IT leaders such as Enel, SAP and Siemens. It is part of a broader clean vehicle initiative called the European Green Cars Initiative, which is designed to help the European Union meet its goal of reducing carbon dioxide emissions by 60 percent by 2050.
IBM's B2B electric vehicle project
The outline of the B2B project is fairly straightforward, especially when you compare it to the global unity of transaction involved in buying conventional fuel.
B2B is based on IBM's cloud for businesses called SmartCloud Enterprise. It enables EV drivers to plug into a charger anywhere in the European Union and conveniently pay for the charge, regardless of who their home-based electric utility is. That makes EV charging as simple as paying for gas with a credit card.
According to IBM, when applied to electricity the concept is basically a shared network, like international roaming for mobile phones.
That's a big relief for business fleet owners, and it also relieves utility companies from the burden of managing payments. The project also includes an analytic component that enables its partners to develop additional services as the EV market expands.
IBM and electric vehicles
As far as public awareness of electric vehicles and hybrid EVs goes, until now the main focus has been on the vehicles. Here in the U.S., that means a lot of attention paid to GM's Chevy Volt and the Ford Focus along with Nissan's Leaf and other foreign models.
The launch of B2B is perhaps a harbinger of things to come, in which EV owners will be just as conversant with the EV infrastructure as conventional car owners are with various brands and grades of gasoline.
IBM is already heavily involved in this behind-the-scenes EV market. In addition to its participation in Green eMotion, in 2011 IBM signed on to Ecogrid EU, a European smart grid project that aims to provide 50 percent of its energy from renewable sources. IBM has also been introducing innovative solar power projects at its facilities, one recent example of note being its India Software Lab in Bangalore.
Renewable energy generation is an important connection, since until recently, one hitch about EVs has been their reliance on an electricity grid supplied by a heavy dose of fossil fuels.
As for the prospects for a seamless EV charging infrastructure in the U.S., we're not exactly laggards in that department. Among other recent initiatives from the public and private sectors, just last April IBM started up an EV charging partnership with Honda and Pacific Gas & Electric based on smart grid technology with an aim to maximizing use of renewable energy.
[Image: IBM logo by Patrick H~]
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Why Herd Mentality is the Key to Green Success
By Ryan Honeyman
The problem
Over the past few years, many businesses have launched an office green initiative with high-hopes, enthusiasm, and cheer. Six to 12 months later, many of these initiatives are rudderless and ineffective. Why?
Because most businesses overlook the key to green success: motivating and engaging their employees.
While physically greening your space is important, understanding what drives human behaviors--and how to motivate people to change--is more valuable. It doesn’t matter how many compost bins or energy efficient plug load adapters you install in your building. If your employees don’t understand how or why they should use the latest green thing you installed, they won’t. You will lose the majority of the benefits that come with an effective sustainability initiative without the buy-in of your employees.
What’s been tried before
Several tactics have been used to try and change employee behaviors in the past. The following theories have met with varying success:
- Fear/Pain: “If we don’t change, global warming will destroy the earth.”
- Moral: “Save the Whales!”
- Economic: “The Prius will save you $10k in gas annually.”
The “Herd Mentality”
A recent psychological theory, called the “Herd Mentality,” suggests that humans are more likely to adopt green behaviors because their friends, co-workers, and neighbors already have. We don’t want to be the first or last to do something—we want to be safe in the middle of the herd.
This is great news for businesses that want to encourage green behavior. Rather than trying to change every individual opinion, you only have to motivate enough people to get the attention of the herd. Then everyone will start moving in the same green direction.
5 steps to motivating your employees
Here are five ways to motivate your “herd” and improve the chances that your green initiative will be a success.
1) Benchmark your building
What: Benchmarking means figuring out how much electricity, gas, and water you are using at each of your facilities.
Why: “You can’t manage what you don’t measure.” Once you start gathering figures on your energy and water usage, you can start identifying trends that can later be used to motivate and engage your employees.
How: Use the free ENERGY STAR Portfolio Manager software (www.energystar.gov) to benchmark your electricity, gas, and water use.
2) Tailor your approach
What: Once you figure out how much energy you are using, start to identify the green allies within your workforce. This will help you build momentum for a green initiative.
Why: Don’t waste valuable time and resources by trying to get everyone onboard. Remember, you only need a small, critical mass of people to change their behavior.
How: Use the following descriptions to help you identify your green allies and focus your recruitment at work:
- Dark Green: The eco-diehards. They have been waiting for this opportunity for years. Engage them first.
- Light Green: They have started down the path towards living a green life. Some purchases and behaviors are already green. Another good group to engage.
- Beige: Saving energy and money are their primary motivation. They are beginning to connect some of their lifestyle choices to green.
- Light Brown: Not yet conscious about living or buying green but are starting to be influenced, even if subconsciously, by the green shift in the culture at large.
- Brown: Skeptical of environmental movement and its values. Browns will not make any earth-friendly choices no matter what. Don’t waste your time.
What: Once you’ve benchmarked your building and identified your green allies, create an energy reduction contest.
Why: Contests are the ultimate motivator. People begin to change their behavior as they see others doing it.
How: I highly recommend a pizza party as an incentive. For some reason, the thought of pizza makes people go absolutely bonkers. Reward your employees if they can lower their energy bills from one month to the next.
4) Monthly usage reports
What: Once you have people’s attention from a contest, you can start to give them regular feedback about their electricity, gas, and water use.
Why: Avoid “out of sight, out of mind.” Monthly feedback also helps your employees make a personal connection between their actions and their building’s energy performance.
How: After benchmarking your building, the Portfolio Manager software can create simple, easy to read usage reports and graphs. Email a copy of the graph to your employees. Post the most recent usage report in the break room.
5) Use humor to communicate
What: People are suckers for fun. Be witty, clever, and creative when communicating your green ideas.
Why: People are resistant to change. Humor is one of the best ways to break down resistance.
How: Create a green staff of the month award. Have the winner wear a ridiculous green hat. Send their picture and a brief interview about sustainability to your other employees. Experiment with different ideas. It will make a difference.
Things to avoid
Now that you have a good idea of how to motivate behavioral change, here are some things that definitely should be avoided:
Going all-out on Day One: No one can turn an organization green overnight— true change is incremental and takes time. Break the work down into bite-sized pieces.
Waiting for 100% agreement: Getting agreement from everyone is a perennial challenge. When you are 80 percent ready, move! Otherwise you will be standing still forever. The other 20 percent will be figured out along the way.
Strict compliance policies: Not good. Strict compliance and zero-tolerance policies don’t let people learn from their mistakes. Allow people to experiment with green, give concrete and measurable goals, and give out rewards.
Ceasing innovation: There is no such thing as “green enough.” Keep on the lookout for new green technologies or new best practices in sustainability. It will reinvigorate your green initiative and keep it fresh.
Being obsessed (and judgmental): Just because you had your green epiphany doesn’t mean others have also. Nothing kills enthusiasm quicker than an obsessed and judgmental eco-disciplinarian. Keep things fun, be positive, and be patient while others learn at their own pace.
Final thoughts
Remember, it’s not only about physically greening your building. It’s about successfully motivating and engaging your employees.
That’s the key to green success.
Ryan Honeyman is the founder of Honeyman Sustainability Consulting LLC, a certified Benefit Corporation. Ryan helps businesses save money, improve employee satisfaction, and increase brand value. Ryan is a LEED Accredited Professional in Existing Buildings Operations & Maintenance, a registered PG&E Trade Professional, and a member of both the U.S. Green Building Council and the Rotary Club of Oakland.
Prior to starting his own business, Ryan was the Sustainability Manager for Seneca Center. He created and oversaw the “Seneca Green Initiative”– a sustainability strategy for Seneca’s 38 facilities, 800 employees, and 3,000 emotionally troubled youth in San Francisco, Alameda, Marin, Sonoma, Contra Costa, Napa, and Solano Counties.
Top Sustainable Business Strategies from 2012
By Dr. Ram Nidumolu
As you go about developing or revising your strategies for making your business more sustainable, it is worth reviewing last year’s key developments in important areas of business strategy.
They will only grow in importance this year.
Rather than focus on particular stories ably summarized elsewhere, here are key strategic themes and the underlying research that you can use as practical guidance.
Core capabilities
1. Business Value of Sustainability: The best work on the business value of sustainability in 2012 showed that sustainable businesses significantly outperform unsustainable businesses in both market value and book value (e.g., ROA, ROE) over the long term. Expect more outstanding work in this area.
2. Sustainable Innovation: Business model innovations that are driven by sustainability got attention: dematerialization, open loops, low-carbon energy, and restorative innovations. The industrial Internet got a lot of attention, while an annual assessment of sustainability practices showed that sustainable innovation was the common thread among successful sustainability programs.
Markets
3. Consumers: The environment continued to rate low in national importance for consumers globally. But the silver lining was that Americans are increasingly linking climate change and extreme weather. The rest of the world continues to lead the U.S. in seeing signs of climate change.
4. Emerging Markets: Executives in emerging markets say that sustainability is more critical to business than those in developed markets. But poor disclosure of environmental, social and governance (ESG) issues is the biggest challenge to making investments in emerging markets.
Governance
5. Megatrends: Sustainability megatrends got increasingly factored into strategic planning, with improved analysis of the differential exposure of industries. Zero-impact growth gathered momentum, as the top five factors driving sustainability initiatives were better understood.
6. Reporting: Sustainability reporting gained momentum, with most CFOs of global companies saying sustainability challenges will alter financial reporting and auditing. A framework for integrated reporting began to be put together, while voluntary accounting standards for sustainability reporting got started through the Sustainability Accounting Standards Board.
7. Risk Management: Corporate planners got better at modeling climate change risks. The short and long-term physical and economic impacts of climate change by business sectors got more attention. Eighty-three percent of the S&P 500 incorporated climate change into its business processes for managing enterprise-level risk. The concern with business resilience to climate change increased. 2012 is likely to break the 2011 record of natural disasters costing $380 billion globally, with Hurricane Sandy already clocking in at $50 billion.
Stakeholder management
8. Suppliers: Resilient supply chains became more critical to business strategy, whether through new models for dealing with transportation and supply risk, a more comprehensive view, better supplier self-assessment, or a more aggressive, risk-focused stance given the world is at risk of 6°C warming. Rising fuel costs led to a rethinking of existing transportation practices, as well as a rethinking of current approaches to sustainable packaging.
9. Business Management: The success of corporate sustainability champions was shown to depend more on their relationships with their internal business than subject matter knowledge. Becoming a sustainable company required leadership commitment, stakeholder and employee engagement, and disciplined mechanisms for execution.
10. Investors: Sustainable and responsible investing accounted for one out of every nine dollars under professional management in the U.S. In 2012, $3.74 trillion in U.S.-domiciled assets were engaged in sustainable and responsible investing practices. Corporate cost savings from sustainability and rising expectations of limited partners were the biggest reasons for their increased focus on ESG issues. Comparatively, while U.S.-based investors mainly focused on eco-efficiency initiatives, EU-based investors used a wider range of ESG issues.
Resource management
11. Food and Water: There was a lot more attention to how feeding the world in the future is increasingly a daunting challenge, as extreme weather exacerbated the production of food and increases food prices, and put greater pressure on smallholder farmers who comprise 50 percent of the malnourished. Attention grew on reducing the 40 percent of food (worth roughly $165 billion) in the U.S. that currently gets wasted.
Interest in water escalated rapidly, with long-term projections that 45 percent of the expected worldwide GDP of $63 trillion in 2050 will be at risk because of business-as-usual practices for water management. Sustainable water strategies increasingly emphasize local solutions and working with stakeholders at the watershed level. Disclosures on water risks grew, but disclosure of water footprints continued to be slow. The value of water to U.S. industries saw a major shift. Despite these trends, water-related concerns have not hit boardrooms yet.
12. Energy: The EIA’s 2012 projections got attention, especially that U.S. reliance on imported oil will reduce as domestic production of natural gas and domestic crude oil (from tight oil and shale resources) will exceed consumption. Also, coal-fired plants are being retired at a faster rate, though not fast enough for many.
The global outlook for clean energy was both good and bad news in 2012. Mature clean energy sources such as hydro, biomass, solar PV and onshore wind made good progress. But less mature clean energy sources, such as CCS, offshore wind, and concentrated solar power, are not growing fast enough. Despite potential savings and job opportunities from energy efficiency, the worldwide lack of progress on it has been equally alarming.
13. Natural resources: 2012 was the year in which business began to recognize the vast scale of its impacts and dependencies on nature. Nature provides $72 trillion worth of free services to the global economy every year, but we lose about $6.6 trillion in natural assets every year due to business. Well-publicized corporate actions included PUMA’s Environment P&L Coalition (which focuses heavily on natural capital), Dow’s partnership with The Nature Conservancy to launch pilots on evaluating natural capital, etc. The TEEB for Business Coalition got established to drive corporate action on natural capital.
What is needed is a framework for corporate change that accelerates the adoption of natural capital in companies (Disclosure: I am leading a project in this area for TEEB for Business Coalition).
And that was the year for sustainable business strategies.
Dr. Ram Nidumolu is the founder and CEO of InnovaStrat, Inc., a US-based firm that provides sustainability advisory and research services to large corporations. He is a recognized thought leader and the lead author of the Harvard Business Review cover article, "Why Sustainability is Now the Key Driver of Innovation." He is currently completing a book on business and being-centered leadership that will be published by Berrett-Koehler later this year.
Compassionate Workplace Culture Leads to Triple Bottom Line
By Kevin Owyang
“Get to financial success first,” says Sonny Vu, CEO & Co-Founder of Misfit Wearables. “If you build a culture that cares about its social purpose and its spiritual purpose on this earth,” you will realize the goals of social and environmental responsibility. Vu is John Sculley’s latest brilliant partner, and creator of one of the Top 10 Gadgets of Consumer Electronics Show (CES) 2013.
Success follows Vu
Vu is a New Hampshire-based serial entrepreneur, but global companies like Toyota embrace his message. His previous venture, AgaMatrix, created one of the first hardware medical devices that works with the iPhone and is heading towards $100 million in revenue. Vu left as chairman about a year and a half ago to start Misfit Wearables and has since raised over $8 million in financing.
Misfit Wearables’ first product, the Shine, is an elegant, all-metal activity tracker that you can sync with your smartphone just by placing the device on the screen. It can track cycling, swimming, walking, and running.
Purpose is different from profit
Vu says Misfit has two purposes. The first is “to provide goods and services that enable communities to flourish.” That means, “you’re making stuff that’s really useful for people… and as a result you earn the financial and well-being rewards to flourish [yourself].”
The second is to “provide opportunities for people to express their innate capacity for productivity and creativity in meaningful ways.” For Vu, this has deeper meaning. “Does that mean job creation? Yes. Does that mean making work meaningful? Absolutely.”
“Those two things are actually in our corporate charter at a very deep level and it’s actually repeated in every single [employment] offer at the very top.” “It’s an employment offer agreement so it’s like the official thing you sign on to… it’s the first thing you see when you encounter the company.”
Servant leadership delivers results
“One of the most distinctive features about Misfit is servant leadership. We believe that the customer is the leader. And scientists, engineers, and designers serve the customer, or the user, first and foremost.” “The team leads serve the engineers, designers, and scientists; I serve the team leads; and the board serves the company. So when you look on our website, you don’t see leadership or management.”
And while Vu admits group dynamics are never perfect, “a servant’s heart exists across the organization” and that makes tension constructive and healthy when it could otherwise be difficult.
Meritocracy measured on cultural fit
Vu emphasizes “first and foremost is [corporate] culture. In fact, we will fire a person on a culture basis alone. You know, we had one guy who was a superstar, very good at what he does, top of his field. [He] was not a cultural match. And we let him go. It was a difficult thing to do but it was not a difficult decision to make.”
Is Vu onto something? Steve Gandara, co-founder of ExcellentCultures, works at the highest level of global companies like Toyota’s Scion Division. He notes that cultural solutions are in demand because “the most recent Gallup Employee Engagement Survey tells us that 71 percent of employees are disengaged from work and ineffective leadership style is the primary cause. What’s more, 70 percent of managers lead in a way that stimulates defensive behavior and destroys productivity and morale.”
What about the environment?
At this point, Misfit is not in production. Yet, Vu notes that thoughtfulness is a core value. “Put away the dishes. Push in your chair after you get up from a meeting. It’s very subtle, but what is expressed internally will be expressed externally.” And perhaps this is the basis for a sustainable supply chain that is thoughtful about the environment and workplace of companies that manufacture Misfit’s products.
Vu will be appearing at Digital Health Summit with Dr. Sanjay Gupta January 8-11 and CES2013, with Arianna Huffington and Deepak Chopra January 8, 2013.
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Kevin Owyang is Founder of B Jibe. B Jibe reports on people and companies that “Give Back”. B Jibe is a not for profit project of Avolusis, LLC where Mr. Owyang is CEO. Previously Mr. Owyang held various executive level positions in technology and telecommunications and was Executive Vice President, Risk Management at Kinder Morgan Inc. You can read more about him here.
image: courtesy Misfit Wearables
Wind Production Tax Credit Extended in Fiscal Cliff Deal
At least part of the fiscal cliff deal, which people will no doubt be debating for weeks to come, was a boon to sustainable business—the extension of the wind power production tax credit (PTC).
The credit, which was included in a “tax extenders” package, will apply to all wind projects that begin construction in 2013. This is a departure from the original language which only targeted projects that began operation during the year in question. This effectively broadens the scope of the credit due to the long lead time involved in developing a wind farm.
The 2.2 cent per kWh credit will be applied for ten years of production for any project that qualifies within the one year extension window. The credit is expected to cost $12.1 billion over the next ten years.
There are presently about 75,000 people employed in the wind industry, which has factories or wind farms in all 50 states. The measure is expected to save some 37,000 jobs from the budget axe. In a post last summer, I spoke of a 91,000-job swing hanging on the outcome of the PTC renewal. That encompassed the 37,000 jobs expected to be lost, plus an additional 54,000 jobs expected to be added if the credit was extended for four years.
Since last night’s deal only extended the credit for one-year, there won’t be that many additional jobs created, though it’s not unreasonable to expect some gains.
Last year saw a record 44 percent of newly installed electric generation capacity take the form of wind turbines which substantially outpaced natural gas at 30 percent.
The wind industry, which involves some 500 manufacturers in the US, has become a force to be reckoned with in Washington. Many of the 2,000 companies that belong to the American Wind Energy Association (AWEA) sent delegations to the capital in the closing days of 2012, delivering hundreds of thousands of letters from constituents.
Given the lobbying clout of big oil and coal, it clearly takes fire to fight fire in today’s energy business. This is something outgoing AWEA CEO Denise Bode, a former lobbyist for the Independent Petroleum Association of America, knows all too well. Bode beefed up the AWEA staff after coming on-board, a move that appears to have paid off nicely.
Said Bode, upon hearing the news, "On behalf of all the people working in wind energy manufacturing facilities, their families, and all the communities that benefit, we thank President Obama and all the Members of the House and Senate who had the foresight to extend this successful policy, so wind projects can continue to be developed in 2013 and 2014.”
Colorado Senator Mark Udall had also lobbied hard for the extension, giving some 27 speeches in the senate on the subject. Udall clearly recognized the importance of wind power to Colorado’s economy. “Thanks to the PTC extension, I am confident the wind industry will be able to create jobs and help revitalize our American manufacturing sector,” Udall said.
Some, like Pete Maysmith, the Executive Director of Colorado Conservation Voters, felt that the one-year extension was insufficient.
“Without that extension, you were really going to see the wind industry grind to a halt or at least wind way down. And that’s not okay, because it’s a clean, non-polluting source of energy we need to power America. But we believe it should be more than one year. We can’t stop worrying about the PTC today, but we got a reprieve. Coloradans who are employed in the industry and who care about a clean energy future got a reprieve.”
Because of the last minute nature of the deal, as compared to the long term nature of wind power projects, there will have been some lost opportunities.
A statement from wind turbine manufacturer Vestas said, “Unfortunately, the late timing of the extension will result in a significant reduction in 2013 installations from previous years due to the time it takes from when an order is placed to project completion, the U.S. market will nonetheless be stronger as a result of the PTC extension.”
Also included in the fiscal cliff deal is a two-year extension for a 20% credit for advanced biofuels research. This extension is estimated to cost $14.3 billion. Energy-efficiency incentives for new and existing homes were also included in the bill.
[Image credit: Lsbentz: Flickr Creative Commons]
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RP Siegel, PE, is an inventor, consultant and author. He co-wrote the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water in an exciting and entertaining format. Now available on Kindle.
Follow RP Siegel on Twitter.
Forget the Triple Bottom Line, It’s Culture that Matters
By Kevin Owyang “The triple bottom line is ridiculous, I know it’s totally heretical to say that, but have you ever tried to build a business? Even just the financial bottom line is really, really hard.”
When I heard this, I thought I was listening to the echoes of a 1970’s era Clean Water Act opponent, but the words came from Sonny Vu, CEO & Co-Founder of Misfit Wearables and creator of one of the Top 10 Gadgets of Consumer Electronics Show (CES) 2013. He shared his thoughts with me during a recent interview.
“Get to financial success first,” says Vu. “If you build a culture that cares about its social purpose and its spiritual purpose on this earth,” you will realize the goals of social and environmental responsibility without “all the infrastructure and requirements that’s going to weigh you down.”
Success follows Vu
Vu is a New Hampshire-based serial entrepreneur, but global companies like Toyota embrace his message. His previous venture, AgaMatrix, created one of the first hardware medical devices that works with the iPhone. AgaMatrix is heading towards $100 million in revenue. Vu left as Chairman about a year and a half ago to start Misfit Wearables and has since raised over $8 million in financing.
Misfit Wearables’ first product, the Shine, is an elegant, all-metal activity tracker that you can sync with your smartphone just by placing the device on the screen. It can track cycling, swimming, walking, and running.
Purpose is different from profit
Vu says Misfit’s has two purposes. The first is “to provide goods and services that enable communities to flourish.” That means, “you’re making stuff that’s really useful for people… and as a result you earn the financial and well-being rewards to flourish [yourself].”
The second is to “provide opportunities for people to express their innate capacity for productivity and creativity in meaningful ways.” For Vu, this has deeper meaning. “Does that mean job creation? Yes. Does that mean making work meaningful? Absolutely...Those two things are actually in our corporate charter at a very deep level and it’s actually repeated in every single [employment] offer at the very top.”
Servant leadership delivers results
Vu has flipped the org chart upside down - putting customer needs at the top of the priority list. “One of the most distinctive features about Misfit is servant leadership. We believe that the customer is the leader. And scientists, engineers, and designers serve the customer, or the user, first and foremost.”
Then, the company is organized to address those customer needs best. Say Vu, “The team leads serve the engineers, designers, and scientists; I serve the team leads and the board serves the company. So when you look on our website, you don’t see leadership or management.”
And while Vu admits group dynamics are never perfect, “a servant’s heart exists across the organization,” and that makes tension constructive and healthy when it could otherwise be difficult.
Meritocracy measured on cultural fit
Vu emphasizes “first and foremost is [corporate] culture.” “In fact, we will fire a person on a culture basis alone. "You know, we've had people who were superstars, very good at what they do and on top of their field. They were not a cultural match. And we let them go. It was a difficult thing to do but it was not a difficult decision to make.”
Is Vu onto something? Steve Gandara, Co-Founder of ExcellentCultures works at the highest level of global companies like Toyota’s Scion Division. He notes that cultural solutions are in demand because “the most recent Gallup Employee Engagement Survey tells us that seventy-one percent of employees are disengaged from work and ineffective leadership style is the primary cause.
What’s more, seventy percent of managers lead in a way that stimulates defensive behavior and destroys productivity and morale.”
What about the environment?
At this point, Misfit is not in production. Yet, Vu notes that thoughtfulness is a core value. “Put away the dishes. Push in your chair after you get up from a meeting. It’s very subtle, but what is expressed internally will be expressed externally.” And perhaps this is the basis for a sustainable supply chain - thoughtful about the environment and workplaces where Misfit's products are manufactured.
Vu will be appearing at Digital Health Summit with Dr. Sanjay Gupta January 8-11 and CES2013, with Arianna Huffington and Deepak Chopra January 8, 2013
Kevin Owyang is Founder of B Jibe. B Jibe reports on people and companies that give back. B Jibe is a not for profit project of Avolusis, LLC where Mr. Owyang is CEO. Previously Mr. Owyang held various executive level positions in technology and telecommunications and was Executive Vice President, Risk Management at Kinder Morgan Inc. You can read more about him here.