Search

As the first federal criminal trial related to food-borne illnesses enters its third week, witnesses reveal a lack of regulatory oversight and unpalatable details of production at the Peanut Corporation of America (PCA), the company responsible for causing a 2008-2009 outbreak of Salmonella that killed nine and sickened over 700.

Samuel Lightsey, former plant manager at PCA, returned to the stand on Monday for his seventh day of testimony on the case, which alleges that the company knowingly shipped contaminated products to its customers and lied to federal authorities. According to Lightsey, the company prioritized sales over food safety concerns and had a system for deceiving its customers that included using fake lab results for untested or tainted products.

In his testimony on August 8, Lightsey explained that PCA regularly shipped its peanut butter to Kellogg’s, which had requested Salmonella testing, with false test results. Lightsey said that Mike Parnell, food broker and brother of CEO Stewart Parnell, had told him: “I can handle Kellogg’s. We’ve been shipping to them with false COA’s (certificates of analysis) since before you got here.”

Prosecutors showed company emails that documented Parnell filling out COAs -- official lab results -- himself. Other emails documented CEO Parnell’s insistence that products known to be contaminated with rat feces be shipped anyway.

While suits have been filed against companies involved in food-borne illness cases in the past, this is the first to come to trial in a criminal court. The heart of this case is focused on PCA’s fraudulent practices, rather than the human damage of the Salmonella outbreak. In fact, prosecutors agreed to not even mention the death toll in court. The Parnell brothers and quality assurance manager Mary Wilkerson are charged with 76 counts related to defrauding customers and lying to federal authorities. Shipley pled guilty to seven criminal counts for his role in the scandal and agreed to testify in exchange for lighter sentencing.

Lacking the resources for regular inspections, the FDA does not require food producers to test for Salmonella. Companies can request their ingredient suppliers to test for the bacteria -- as Kellogg’s had done -- but are not legally bound to test bacteria before releasing products to the public. When outbreaks do occur, the FDA has little leverage to make companies submit to an investigation.

“Records are voluntary,” FDA investigator Bob Neligan told the jury in the PCA trial. He visited the PCA plant in July of 2009 in the wake of the Salmonella outbreak, but it took five days of pressing employees and an FDA order to force PCA to supply testing and production records.

The Food Safety Modernization Act could help give the FDA more teeth. Passed in 2011, the FSMA is the biggest update to food safety law in the U.S. in 70 years and shifts the focus of FDA efforts to preventing contamination events, rather than just responding to them. However, three years after the law passed, the FDA still lacks a complete set of rules or an implementation plan. After a missed 2012 rule finalization deadline, the Center for Food Safety sued the FDA over missed statutory deadlines. In February, a federal court sided with the CFS and implemented a consent decree mandating FSMA regulations be finalized by 2016.

The Centers for Disease Control and Prevention estimate that every year 128,000 people are hospitalized and 3,000 die from a food-borne illness in the U.S. Salmonella is the leading cause of infection, with an incidence rate of 15.19 cases per 100,000 population in 2013, well above the government’s goal of 11.4.

Image credit: Flickr, NIAID

This is the second in a weekly series of excerpts from the upcoming book “The B Corp Handbook: How to Use Business as a Force for Good.” 

By Ryan Honeyman

I first discovered the AND 1 mixtapes in the late 1990s.

The mixtapes were a series of basketball “streetballing” videos, created by the popular basketball shoe and apparel company AND 1, that featured lightning-quick ball handling, acrobatic slam dunks and jaw-dropping displays of individual talent.

I was a huge fan of the AND 1 mixtapes because the players used flashy, show-off moves that were very different from the more traditional style of basketball played in college or the NBA at the time.

Many years later, I was quite surprised to find out that two of AND 1's cofounders, Jay Coen Gilbert and Bart Houlahan, along with Andrew Kassoy, their longtime friend and former Wall Street private equity investor, were the people who created the Certified B Corporation (also referred to as just B Corporation, or B Corp).

I learned that Gilbert’s and Houlahan’s experiences at AND 1, and Kassoy’s on Wall Street, were central to their decision to get together to start B Lab, the nonprofit behind the B Corp movement.

AND 1's rapid rise

AND 1 was a socially-responsible business before the concept was well known.

AND 1’s shoes were not organic, local or made from recycled tires. But the company had a basketball court at the office, on-site yoga classes, great parental leave benefits and widely-shared ownership of the company, and it gave 5 percent of its profits (totaling more than $2 million) to local charities promoting high-quality urban education and youth leadership development.

AND 1 also worked with its overseas factories to implement a best-in-class supplier code of conduct to ensure worker health and safety, fair wages and professional development.

That was quite progressive for a basketball shoe company, especially because their target consumer was the teenaged basketball player, not a conscious consumer with a large amount of disposable income.

AND 1 was also successful financially: From a bootstrapped startup in 1993 to modest revenues of $4 million in 1995, the company grew to more than $250 million in U.S. revenues by 2001. This meant that AND 1 — in less than 10 years — rose to become the No. 2 basketball shoe brand in the United States (behind Nike).

The challenges of success

As with many endeavors, however, success brought its own set of challenges.

AND 1 took on external investors in 1999. At the same time, the retail footwear and clothing industry was consolidating, which put pressure on AND 1’s margins. To make matters worse, Nike decided to put AND 1 in its crosshairs at its annual global sales meeting, in order to gain a larger share of the market.

Not surprisingly, this combination of external forces and some internal miscues led to a dip in sales and AND 1’s first-ever round of employee layoffs.

After painfully getting the business back on track and considering their various options, Gilbert, Houlahan and their partners decided to put the company up for sale in 2005.

The results of the sale were immediate and difficult for Gilbert and Houlahan to watch.

Although the partners went into the sale process with eyes wide open, it was still heartbreaking for them to see all of the company’s preexisting commitments to its employees, overseas workers and local community stripped away within a few months of the sale.

The search for what’s next

In their journey from basketball (and Wall Street) to B Corps, Gilbert, Houlahan and Kassoy had a general sense of what they wanted to do next: the most good for as many people for as long as possible. How this would manifest, however, was not initially clear.

Idea #1: Start a New Company

The three men’s initial, instinctive answer to the “what’s next?” question was to create a new company. Although AND 1 had a lot to be proud of, they reasoned, the company wasn’t started with a specific intention to benefit society. What if they started a company with that intention?

After discussing different approaches, however, Gilbert, Houlahan and Kassoy decided that they would be lucky to create a business as good as those created by existing social entrepreneurs like Ahmed and Reem Rahim from Numi Organic Tea and Mike Hannigan and Sean Marx from Give Something Back Office Supplies.

And more importantly, they decided that even if they could create such a business, one more business, no matter how big and effective, wouldn’t make a dent in addressing the world’s most pressing challenges.

Idea #2: Start an Investment Fund

They then thought about creating a social investment fund. Why build one company, they reasoned, when you could help build a dozen?

That idea was also short lived. The three decided that even if they could be as effective as existing social venture funds like Renewal Funds, RSF Social Finance or SJF Ventures, a dozen fast-growing, innovative companies was still not adequate to address society’s challenges on a large scale.

Idea #3: Create the Needed Infrastructure

What Gilbert, Houlahan and Kassoy realized, after speaking with hundreds of entrepreneurs, investors and thought leaders, was that there was a need for two basic pieces of infrastructure to accelerate the growth of — and amplify the voice of — the entire socially- and environmentally-responsible business sector.

This existing community of leaders said they needed a legal framework to help them grow while maintaining their original mission and values, and credible standards to help them distinguish their businesses in a crowded marketplace, where everyone seemed to be making claims that they were a “good” company.

To that end, in 2006, Gilbert, Houlahan, and Kassoy cofounded B Lab, a nonprofit organization dedicated to harnessing the power of business to solve social and environmental problems. The B Lab team worked with many of these leading businesses, investors, and attorneys to create a comprehensive set of performance and legal requirements and started certifying the first B Corporations in 2007.

To learn more about B Corporations, please visit www.bcorporation.net.

Image credit: Unsplash

Ryan Honeyman is a sustainability consultant, executive coach, keynote speaker, and author of The B Corp Handbook: How to Use Business as a Force for Good. Ryan helps businesses save money, improve employee satisfaction, and increase brand value by helping them maximize the value of their sustainability efforts, including helping companies certify and thrive as B Corps. His clients include Ben & Jerry’s, Klean Kanteen, Nutiva, McEvoy Ranch, Opticos Design, CleanWell, Exygy, and the Filene Research Institute.

To learn more, visit honeymanconsulting.com. You can also follow Ryan on Twitter: @honeymanconsult

When green building consultant Ricky Cappe set out to build his own green home on a modest budget, he wondered how it was possible. He found it very time-consuming to research the endless options, many of which weren't sustainable, and he found working with architects both expensive and time-consuming.

“You can pay anywhere from $5,000 to $75,000 to have your home designed by an architect," says Cappe. "Why do we need to reinvent the wheel every time we build?”

This quandary inspired him to start a company called SAK House, which sells sustainable, affordable house kits. These green home packages cost between $5,900 and $9,500 and include a set of building plans, green supplier contact information, material recommendations, a building timeline and technical support from Cappe. The homebuilder merely selects one of  five customizable models, hires the contractor and selects the finishes.

Cappe says this can save thousands in architectural fees and many hours of research. The finished product is a customizable home, for a fraction of the cost, in a shorter time frame. The homes have many qualities that are attractive to a green homebuilder: generous insulation, high air quality, natural lighting, an intelligent floor plan, durable construction and high-quality finishes. The exterior walls and roof of the homes use Structural Insulated Panels (SIPs), which contain a foam core sandwiched between oriented strand board. SIPs provide both structure and insulation for a home, resulting in a very comfortable, draft-free home. Although SIPs typically have a higher upfront cost than a stick-frame home, they pay for themselves quickly from the energy savings.

The SIP manufacturer drills holes for the electrical work and pre-cuts window and door openings. This streamlines the construction process and adds greater precision to the process. The SIPs on Cappe's prototype home were assembled in one day for the first floor, a day-and-a-half for the second floor, and a day for the roof. He describes the process as being like assembling a puzzle, but with a set of directions.

Cappe finds materials that are sourced within 500 miles of the building site, supporting local economies and reducing the fossil fuels required for transportation. He is also very diligent in selecting materials that are durable and stand the test of time. He embraces the concept of a home being easy to maintain because high-quality materials were selected in the beginning. This concept is especially important for items that people aren't likely to replace for decades, if ever, such as the wall assembly, foundation and roof.

The protype house contains FSC-certified lumber, a radiant floor heating system, a standing seam roof and a passive solar design. Solar gains significantly reduce the use of the heating system, with a comfortable and gradual heat. "You can be standing there in the middle of sunny winter day and it will be 71 in the house and the heat isn’t even on," explains Cappe.

Non-toxic materials are especially important as a home becomes more airtight. While leaks in a home help dilute indoor pollutants, a tighter home has less opportunity for toxins to exit. Numerous building materials contain volatile organic compounds, which deteriorate indoor air quality. Cappe is meticulous in the selection of non-toxic materials.

Saving on some of the initial costs with a SAK Home kit can save money for finishes and other features. More importantly, this concept allows the green building market to become more affordable, becoming more attainable on a modest budget. By using durable materials and an energy efficient design, with a passive solar design and generous insulation, the operating costs will be much lower for many decades.

Cappe is inspired by the motto, "Build it once and build it right." This concept fits well with the green building principles, as it reduces waste and energy to built it right the first time.

Image credit: SAK House

Sarah Lozanova is a regular contributor to environmental and energy publications and websites, including Mother Earth Living, Green Building & Design, Triple Pundit, Urban Farm, and Solar Today. Her experience includes work with small-scale solar energy installations and utility-scale wind farms. She earned an MBA in sustainable management from the Presidio Graduate School and she resides in Belfast Cohousing & Ecovillage in Midcoast Maine with her husband and two children.

By Jennifer Tuohy

The advent of the Web brought about the greatest shift in business since the Industrial Revolution. Companies had to adapt or die, and many have suffered in the face of online competition (Barnes & Noble, Circuit City, etc.).

However, as with all great revolutions, the Internet revolution generated an unintended consequence: crowd-sourcing. The collaborative power of the people is growing, and it is perfectly poised to bite big business once again.

Collectively described as the "collaborative economy," the various Internet-powered methods people are using to get what they need from each other (instead of from traditional businesses) include crowd-funding, the sharing economy, the maker  movement and peer-to-peer lending. From using someone's bedroom instead of staying in a hotel, to asking thousands of people you've never met to fund your idea for the ultimate cooler instead of going cap-in-hand to the bank, the collaborative economy is leaving big business out in the cold.

"The 20th century economy was powered by big corporations that standardized everything because they never really knew their customers," explains Brian Chesky, the 32-year-old founder of sharing economy darling AirBnB. "The 21st century economy will be powered by people."

Once again, it's time to adapt or die.

The crowd becomes a company

The uproar from "traditional" businesses affected by crowd-sourcing is getting louder by the day. Once legislature and lawyers get involved, you know you've hit a nerve, and evidently the collaborative economy is beginning to cut into numerous bottom lines. Just as with the Internet, crowd-sourcing is a threat for some, but it is also an enormous opportunity for businesses nimble enough to move with it and not against it.

"When you look carefully, the crowd is becoming like a company. Established industries need to pay attention to this," said Jeremiah Owyang, founder of Crowd Companies, which links big business to the collaborative economy, in an interview with Triple Pundit. "This is the first time competition is coming from the customers. AirBnB hosts are competing with hotels. Regular drivers are competing with taxi companies; the list goes on and on. This is not just a disruption. This is an opportunity to change your business model to leverage this... to work with the crowd so that the crowd becomes a partner."

By working with the crowd rather than against it, large companies can begin to shift their focus to making things people want, rather than making people want things. It's opening the potential for sustainable business models that produce less waste and are driven by consumer needs, and today's consumers are increasingly attuned to products that help rather than hurt the planet. At its essence, crowd-sourcing is the ultimate form of market research, capable of road-testing the market for a product before it's made. Businesses that embrace this concept could see a huge return. Take GE, for example, which almost ditched its appliance arm before the economy crashed. Today it is partnering with a funky little startup called Quirky to make smart air conditioners.

Embrace the little guy

Quirky is a leader in the field of crowd-sourcing, although its founder Ben Kauffman, a dynamic 27-year-old who invented the Mophie case, hates the word. He prefers "social product development."

Launched in June 2009, Quirky is an inventor-driven collaboration engine. Let's say I drew my brilliant idea for a paper towel holder that could refill itself on the back of a napkin: I could snap a picture of it and submit it to Quirky.com. There, a community of inventors almost one million strong would vote on it. The would-be inventions that rise to the top are then presented at a sometimes-raucous Thursday night meeting at Quirky headquarters in New York. The event is broadcast online and you can watch live as Kauffman and crew debate the best.

The chosen ideas then enter the modification process, where the crowd plays a role in every decision. From the simple (what color the product should be) to the complicated (how to solve a tricky engineering issue), the end product is entirely crowd-sourced. It's not only the inventor who makes money; the community gains influence points as they work on projects, which translate into slices of the profit pie.

The most famous Quirky invention to go through this process is a pivot-able power strip that allows you to actually use all four plugs in a four-outlet strip. This ingenious device represents the essence of Quirky's mission: finding simple solutions to small, everyday problems. Arguably large corporations are too focused on the next big thing to be able to look around at what basic things are still needed. From a wine stopper that lets you store your bottles horizontally in the fridge, to a smart propane tank that tells you when it's time to refill, most of Quirky's products are things you look at and say, "Now why didn't I think of that?"

Get set for the future

While most of these products won't have big manufacturers shaking in their boots, this bottom-up approach is gaining serious traction. GE has taken a proactive approach to the burgeoning competition by embracing this quirky start-up, investing more than $30 million into a partnership with the company. The smart air conditioner Aros is the first fruit of this, and more products are in the pipeline. According to the Wall Street Journal 30 such "connected home" products are coming from the collaboration over the next five years.

The connected home and its engine, the Internet of Things, is increasingly becoming Quirky's main wheelhouse. More and more of the products it is green lighting are "Internet of Things" type products. This has prompted the company to give birth to Wink, a smart home app and hub that connects all its devices. There are many such smart hubs coming on to the market, but Wink has one thing most others don't: a partnership with big business. National retailer Home Depot is making a big splash into the home automation world by showcasing Wink and the compatible Quirky products in all its stores as of July 2014. This move is just one more piece in the puzzle of how to bring the power of the people directly to the people.

Jennifer Tuohy writes for The Home Depot and likes to voice her insight on how technology is changing businesses. To view The Home Depot's line of smart home products like the ones that Jennifer talks about in this article,click here.

The University of California, San Francisco (UCSF) is world renowned for its cutting-edge research and medical care. It is also a leader in sustainability, modeling healthy, sustainable food choices for patients, staff and visitors. In the recent 2014 townhall (see minute 21.20), an attendee asked University of California Office of the President (UCOP) President Janet Napolitano about UCOP’s sustainable food initiative, advocating for a move away from an animal-based diet. She responded that while UC is not moving toward a total vegetation approach, campuses are adjusting their procurement process to buy food from smaller, organic growers. Napolitano commended UCSF for its sustainable food efforts, notably efforts to eliminate antibiotics from the meat it serves at UCSF Medical Center.

I had the opportunity to speak with Dan Henroid, the medical center's director of nutrition and food services, to reflect on UCSF’s successes and challenges as it moves the needle on sustainable food. Based on our discussion, I offer the following three tips for other hospitals and institutions seeking to improve the sustainability of the food they serve:

1. Reduce conventional meat consumption in order to purchase more sustainable meat;


2. Collaborate to promote sustainable food practices; and


3. Get your local team on board.

What is driving sustainability in health care?

UCOP policy requires all UC campuses to procure at least 20 percent of their food from sustainable sources by 2020. UCSF has already reached this goal, yet continues to push the envelope on serving healthy and sustainable food. According to Janet Howard, director of facility engagement for Practice Greenhealth, three forces are driving sustainability in hospital food: health, climate and antibiotic resistance.

According to Henroid, “From our perspective, a heightened emphasis on personal health is driving this trend from our customers and patients. We are seeing a convergence where customers want both healthy food and sustainable food."

Using the word “customers” might seem odd for a medical center. However, according to the UCSF Sustainable Foodservice Annual Report, in addition to feeding 1,500 patients a day, the Department of Nutrition and Food Services at UCSF Medical Center is responsible for several retail food outlets and a very busy and successful catering department, with combined annual sales of over $9.5 million.

1. Reduce conventional meat consumption in order to purchase more sustainable meat

Nontherapeutic antibiotics in meat is a hot topic in the mainstream press right now: Recent pieces by the Huffington Post, Consumer Reports and Environmental Working Group all stress concerns over the use of antibiotics by the United States meat industry.

“There is overwhelming scientific consensus that overuse of antibiotics in livestock is a health hazard to people. It’s time for hospitals, universities and other consumers to stop buying meat raised with nontherapeutic antibiotics,” said Dr. Thomas Newman, the chair of the Academic Senate Sustainability Task Force at UCSF that originally spearheaded the resolution, and a member of the faculty at the School of Medicine at UCSF.

With an Academic Senate resolution to phase out meat raised with nontherapeutic antibiotics, the medical center recently announced that it will now serve only antibiotic-free chicken breasts on its patient and retail menus. UCSF now also offers a $4.50 grass-fed, antibiotic-free hamburger. In order to offer more sustainable meats, UCSF trimmed conventional meat purchases with offerings such as “Meatless Mondays” and other strategies for reducing waste. A new program recently put in place, offering hotel-style room service to patients, provides patients more control over food choices. Henroid expects this “on-demand” system will reduce waste and incur cost savings.

2. Collaborate to promote sustainable food practices

As reported in Civil Eats, hospitals attempting to purchase sustainable food face serious supply chain challenges. In the case of meat produced with nontherapeutic antibiotics, the market to date has been small in the U.S and the products costly. Even large institutions such as UCSF, not to mention individual food vendors, have problems getting the actual products they want in the quantity they need. No one hospital is big enough alone to shift the food production supply chain.  UCSF has partnered with colleagues at SF General, UCLA, Stanford, Kaiser, John Muir Health, Washington Hospital and USF to work together to promote sustainable meat practices.

At an unprecedented gathering last year,  80 participants gathered at the UCSF Sustainable Meat Summit, including sixth generation cattlemen, chicken farmers, and physicians, to explore how to benefit from small and medium livestock producers who offer alternatives to intensive farming practices that boost production through antibiotic use. At the Summit, each sector involved in meat production was able to meet and converse with the others in the business.

Estancia Beef attended the meeting and connected with UCSF, explaining that it was able to provide the necessary beef products consistently, in the volumes needed. While the cows come from Uruguay, which has carbon footprint implications, according to Estancia, grass fed, pasture-raised beef means a smaller carbon footprint, no concentration of waste in a small area (a hallmark of all feedlot operations), and no contamination (waste, antibiotics and/or growth hormones) from run-off into the local water system. As described by Health Care Without Harm, “Estancia Beef’s cattle are grass-fed, raised without antibiotics and hormones, certified by Animal Welfare Approved, and affordable. However, the company’s products were not available for hospitals to purchase through the major food distributors that they rely on, like US Foods and Sysco.”

UCSF reached out to hospitals statewide through Health Care Without Harm’s network, leveraging the combined purchasing power of multiple health facilities. With perseverance and collaboration, US Foods now offers Estancia products. UCSF’s work paved the way for other US Foods’ customers. The University of California at Los Angeles (UCLA) Medical Center is also now serving Estancia hamburgers and ground beef. “As more California hospitals join this initiative, pushing the total purchasing volume to 80,000 pounds and beyond, each facility that is purchasing meat from Estancia will receive a discount from the company, thanks to the combined demand,” explained Health Care Without Harm.

Yet, except for UCLA, other campuses and medical centers have not been able to make the switch. Henroid responded, “The primary barrier to other institutions incorporating antibiotic-free meat is cost.  At the end of the day, we still don't have enough operators who are committing to this effort. 
If we had more institutions demanding it, the costs would go down.”

By pooling purchase power, large institutions can improve their ability to access new products. Collective demand can lower costs by creating economies of scale and provide institutions access to new products. As detailed in the Farm Fresh Healthcare Project 2014 How-To Guide, “If everyone is independent, no one is going to be able to drive this huge system forward, but if we have three or four hospitals working together, that’s a game changer,” explained Luis Vargas, Procurement Manager, UCSF Nutrition and Food Services.

3. Get your local team on board

Henroid attributes his success to his team and recommends one of the first steps is to get your local team in order. According to Henroid, you need your local team members to be committed to your sustainability effort. “It takes a whole lot of constant effort and commitment to go through all of the different options and stay on top of the market. If I was the only one in my department committed to this, we still wouldn't be making progress,” he stressed. One way he incorporates sustainability into his department’s culture is by talking about sustainability during the interview process.

Image credit: Food and Environment Reporting Network (FERN)

Last week, I went surfing for the first time with my 10-year-old son Evan. Not wanting to be outshined or embarrassed, I spent more time then I care to admit reading up on websites proclaiming to help 40 something’s like me learn how to surf. Initially, my preparation paid off and I was able to ride the first wave to the shore -- albeit in kneeling position. Success lasted a fleeting, blissful few seconds, just before reaching the shore while Evan was able to stand up on his second try, demonstrating the paradox in George Bernard Shaw’s quote: ‘What a pity that youth must be wasted on the young”. Or perhaps a more fitting for me is Oscar Wilde’s: ‘I can resist anything but temptation’.

Companies are now facing similar challenges adapting to the ‘new sustainability math’ where finding the right balance between investor, consumer, and stakeholders interests – including deciding which sustainability reporting standards to adopt, rating survey to respond to, or environmental initiative to engage with – is riddled with complexity and confusion. At the core of this challenge for companies is finding the sweet spot between demonstrating to investors ‘quantitatively’ the direct link between its sustainability initiatives and value creation while also communicating ‘qualitatively’ its sustainability story authentically to consumers.

The Sustainability Conundrum

Joel Makower’s recent piece titled:”#Fail: Why CEO’s and consumers are out of step on sustainability” describes this expectations gap between consumers and CEOs in citing a recent study by Accenture and Havas Media:

“Business is failing to take care of the planet and society” is the stark conclusion of a new global study of 30,000 people across 20 countries on five continents that found that nearly three-fourths (72 percent) of consumers believe that business is failing to live up to expectations.”

This follows similar findings from the most comprehensive CEO study on sustainability to date in a September 2013 report by the UN Global Compact-Accenture which surveyed more than 1,000 CEOs worldwide and concluded:

“Only 32% of CEOs believed that the global economy is on track to meet the demands of a growing population within global environmental and resource constraints…and 67% of CEOs believe that business is not doing enough to address global sustainability challenges… Companies feel constrained by market expectations and struggle to quantify and capture the business value of sustainability.”

These findings are in stark contrast to a more upbeat UN Global Compact-Accenture study in 2010 which expressed optimism among CEOs at the time of how ‘business could lead the way in tackling sustainability challenges’ and that a new ‘summit or peak’ was in sight for harmonizing global capitalism and sustainable development.

It seems in 2010 many CEOs’ got too far ahead of the wave, believing the journey to sustainability excellence was more a matter of tactics—a few new metrics, better supply chain management—than strategy, building competitive advantage by identifying long term needs for good and services in a resource constrained world. The hope for a predictable, smooth trajectory devoid of friction and qualitative judgment has given way to the reality that the pursuit of sustainability performance excellence is uneven, with often murky ROIs over the short-term.

The New Sustainability Math

“In Facts are stubborn things” quipped John Adams in 1770. The new sustainability math provides compelling evidence for companies to step up sustainability initiatives and rethink measurement of risk and value. The costs of ignoring climate change impacts, for example, are mounting as demonstrated by headlines such as:

• June 2014 was the hottest June ever recorded by NOAA since it began collecting records in 1880 and was the 352nd month in a row where the global temperature was above the 20th century average, according to NOAA.
• “Declining crop yields could put hundreds of thousands of people at risk for starvation” (The Nature Conservancy, Climate Change Impacts)
• “Carbon-Intensive Investors Risk $6 Trillion ‘Bubble,” Study says. (Bloomberg, Sally Backerall, April 2013)
• “Damages from storms, flooding, and heat waves are already costing local economies billions of dollars...With the oceans rising and the climate changing, the costs of inaction in ways that are easy to understand in dollars and cents—and impossible to ignore”. (Risky Business Project Co-Chair Michael R. Bloomberg)

The CEO response to the new sustainability math has been mixed. Many companies appear to be scaling back their sustainability investment and taking a step back on sustainability reporting. Companies seem to be in a holding pattern now in deciding the next big steps in sustainability performance improvement. Part of the reason for this pullback has been attributed to the perceived confusion and proliferation or so-called ‘alphabet soup’ of sustainability initiatives, standards and frameworks.

Some companies seem to express concern that can be encapsulated in Bob Dylan’s song, Along the Watchtower: “There must be some way out of here, said the joker to the thief. There's too much confusion, I can't get no relief.” But a deeper dive into this proliferation of initiatives unmasks solutions, innovations and opportunities and suggests reasons for companies to engage more deeply at this time.

In 1977, the Eagles introduced their smash hit “Hotel California”. Similar to the confusion today surrounding sustainability standards, there was confusion around the meaning of the lyrics of this iconic song. When Eagles lead singer Don Henley was asked to explain what the song was truly about, he said in 1980 it was about ‘the dark underbelly of the American experience’. Several years later, and a bit more circumspect, Henley said the song was really about the ‘uneasy balance between art and commerce’. And in 2013 Henley provided his final answer: Hotel California, he explained, was simply about the ‘journey from innocence to experience’. In a similar fashion, many companies today have mischaracterized the proliferation of sustainability initiatives in a negative light, where innovation is mistaken for chaos. More forward looking companies, however, realize we are now approaching the next phase, where new standards for sustainability disclosure and measurement are being developed and harmonized—and collectively this new ecosystem of standards promises to help companies scale sustainability at the pace needed to address global sustainability challenges.

Five years from now we may very well look back and regard this time not as a time of confusion, but rather as the renaissance period of the global sustainability movement–where companies that embrace the new sustainability math and engage in the next generation of sustainability standards will be more likely to emerge as the future fit companies of the 21st century.

The Emergence and Convergence of Sustainability Standards

An unprecedented opportunity exists today for business and investors to collaborate on and realize this vision of sustainability leadership. Four key sustainability initiatives are gaining momentum, and each is ramping up stakeholder participation. Organizations, particularly companies, now have a window of opportunity to engage to shape this next generation of sustainability standards that include:

1. SASB. The US-based Sustainability Accounting Standards Board (SASB) is developing sector-based accounting metrics 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 disclosure of US companies.

2. GRI. The Global Reporting Initiative (GRI) is the de facto standard for corporate sustainability reporting. Thousands of organizations have produced more than 10,000 corporate sustainability reports following GRI guidelines. GRI has recently hired a dynamic new Executive Director, Michael Meehan, who encouragingly said in his first interview that collaboration and finding ‘common ground’ with sustainability disclosure standards was a top priority.

3. IIRC. The International Integrated Reporting Council (IIRC), a disclosure initiative, is a predominantly industry led effort designed to help companies communicate about businesses’ multi-dimensional value creation as the next step in the evolution of corporate reporting. Already, hundreds of companies are experimenting with integrating financial and sustainability information. IIRC is convening new programs such as the Corporate Reporting Dialogue (CRD) launched in June to foster ‘better alignment and reduced burden in corporate reporting’.

4. GISR. The Global Initiative for Sustainability Ratings (GISR) is a new participant in the family of initiatives aimed at making capital markets agents of, rather than impediments to, achieving the post Rio+20 sustainability agenda. GISR’s mission is to create a world class corporate sustainability ratings standard and ‘Center of Ratings Excellence’ (CORE) as an instrument for transforming the definition of value and value creation by business in the 21st century.

Collectively these standards and frameworks, 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 accounting metrics;
• Accelerating the integration of ESG factors into investment and credit rating decision making.

Call to Action

The achievements of SASB, GRI’s G4, CDP, IIRC and GISR point to 2015 as a watershed moment 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.”

Companies committed to sustainability excellence and leadership should consider pursuing the following to optimize sustainability ROI over the long-term:

1. Closely examine the GRI’s G4 Guidelines and, in particular, the Principles for Defining Report Content and Quality and commit to publishing a CORE level report by 2015.
2. US-based companies should engage substantively with SASB and join an Industry Working Group.
3. Report following CDP’s climate change and water use disclosure protocols - and pay close attention to CDP’s climate ratings for climate change.
4. Join GISR’s Supporting Stakeholder Program and participate on one of its leadership committees.
5. Participate in IIRC’s Pilot Program Business Network and lend your support to the Corporate Reporting Dialogue program.

The time has passed for small commitments, hyperbole and platitudes – now is the time for leadership, investment and action. Companies that remain on the sidelines will sacrifice their opportunity to shape their own—and the planet’s—future.

 

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). Mark currently serves as COO for the Global Initiative for Sustainability Ratings (GISR), which is developing a new global standard for corporate sustainability and credit ratings. Mark is the Founder of Sustainability Risk Advisors, a sustainability consulting firm that works with companies, investors and NGOs to accelerate the transition to sustainable capital markets. 

 

Sustainability Metrics Master-Class, London & Amsterdam 21 & 22 October 2014
Mark will be leading a series of executive training seminars in London and Amsterdam (and Sydney in 2015), sponsored by GTQ International titled ‘Quantifying ESG: The New Sustainable Math for Business’ which will provide tools, techniques and guidance on the new sustainability math and standards.

 
 

Campaigners against planned coal mines on the German/Polish border will be making their presence felt this weekend when they orchestrate a massive international demonstration.

Greenpeace together with partner organizations and local associations are inviting people to join in creating an 8km-long Human Chain Against Coal.

According to campaigners, more than 6,000 people in the border region could lose their homes and livelihoods to new open-cast mines as energy companies such as Swedish Vattenfall and the Polish energy group PGE aim to dig up lignite which lies beneath their villages.

The participants of Saturday’s anti-coal human chain will link the two villages across two countries endangered by planned open-cast lignite mines. From Kerkwitz Church in Germany, across the Neisse river, to the school of Grabice in Poland, they will stand hand-in-hand to show opposition to the planned coal mines and solidarity to the local opponents to the planned mines.

Meri Pukarinen, Climate and Energy Unit Head at Greenpeace Poland, commented: “If proposed lignite plans become true, this landscape would turn into the biggest dirty and dusty hole in Europe. This Human Chain clearly shows the growing anti-coal movement, not only in Germany and Poland, but in the whole of Europe. We expect people there from at least 14 European countries who want to declare, ‘The age of the coal is over and the era of renewables is here!’”

 

Picture credit: © Gunold Brunbauer | Dreamstime.com
 

Ford Motor Co. has been one of the more interesting automakers to watch as it has increased its focus on sustainability in recent years. Now the company is ramping up its solar portfolio to match its efforts on recycling and using more “greener” materials within its cars.

Last week the Dearborn, Michigan-based company announced it will work with DTE Energy, a Michigan electric utility and energy services firm, to build what the companies say will be the largest solar array in Michigan. Scheduled to start construction next month with a finish date targeted for early 2015, the carport at Ford’s global headquarters will be the second-largest solar carport in the Midwest. After completion, DTE will continue to operate and maintain the installation for 20 years.

DTE will fund the project, according to a press release posted on Ford’s website. The carport will cover up to 360 parking spaces and include 30 electric vehicle charging stations. The company expects the carport to generate more than 1,000 megawatts of electricity, enough to power between 150 and 160 average-sized homes. Furthermore, Ford estimates the array will offset almost 800 metric tons of carbon dioxide annually. Both companies benefit: Ford will pull less energy from the local grid, while DTE nudges closer towards its goal of having 10 percent of its energy from renewables by 2015. According to Ford’s Director of Vehicle Electrification and Infrastructure Mike Tinskey, the fact that solar prices have decreased almost 60 percent the last three years made this an attractive project for both firms.

The project piggybacks on similar initiatives going on at Ford. The two companies have already partnered on a 500 kilowatt solar installation at the automaker’s assembly plant in nearby Wayne, where some of Ford’s hybrid and electric cars are manufactured. And Ford’s River Rouge Plant has undergone a transformation in recent years with its rooftop solar and green roof.

The success of this project could be another step for the greater Detroit area’s economic shift. Much has been made of Detroit’s struggles as the Big Three automakers have taken their lumps. But despite the focus on bad news, including Motown’s bankruptcy, Detroit has slowly become a hub for clean energy and technology, startups, and sustainable business.

There’s really no excuse for Detroit not to compete with the likes of Silicon Valley and Boston, as its central location, infrastructure and universities—not to mention the lower cost of living—can help southeastern Michigan thrive in the near future. More projects like this, which in turn would attract more companies, suppliers and, of course, talent (and would keep additional talent already in Michigan), could be a long-term boost to the region far beyond what Ford and DTE gain.

Image credit: Ford Motor Co.

Leon Kaye has lived in Abu Dhabi for the past year and is on his way back to California. Follow him on Instagram and Twitter. Other thoughts of his are on his site, greengopost.com.

Poultry producer Tyson Foods has announced that the Environmental Protection Agency is launching a criminal investigation into last May’s wastewater discharge at Tyson’s Monett, Missouri plant.

The information was revealed in Tyson’s Aug. 7 Securities and Exchange Commission filing, in which Tyson acknowledged that it is also being sued by the state of Missouri for the company’s part in allegedly causing a massive fish-kill in Clear Creek in May of this year.

According to a report filed by the state’s Department of Natural Resources (DNR), the city wastewater plant first acknowledged there was a problem on May 21 when it reported a potential violation of effluent discharge into the local waterway. The foul odor led the department back to Tyson, where it discovered that the wastewater the company was discharging apparently contained large amounts of the feed supplement Alimet. The supplement is used to help chickens absorb protein more readily from feed. However, the high doses of Alimet, which Tyson’s Monett plant says it was not aware was in the discharge, caused the city’s wastewater plant to release large amounts of ammonia into the water system. The ammonia has been credited with killing more than 100,000 fish in a four-mile stretch of the river.

If the EPA finds Tyson is in violation, the company will not only be subject to heavy fines but may also be subject to “government contract suspension and debarment,” said Tyson. “We are cooperating with the Environmental Protection Agency but cannot predict the outcome of its investigation at this time.”

The company has also acknowledged that its troubles may not stop with the EPA’s finding.

“It is also possible that other regulatory agencies may commence investigations and allege additional violations. Finally, we may be subject to claims from the City of Monett for causing it to violate various municipal regulations and for damages to the City’s treatment system,” Tyson stated in its August SEC filing.

According to the Monett Times, Tyson said that the Alimet was shipped to the Monett pre-treatment facility on Friday, May 16 for disposal and would normally have been specially processed before being released as wastewater. A series of “miscommunication[s]” between Tyson staff, however, led to a portion of the feed being released into the waterway, which in turn, caused the city’s wastewater plant to counteract the discharge with large amounts of ammonia.

The city has also been cited for violations of the state’s Clean Water Law, since it was working with Tyson at the time to process the company’s wastewater and did not report the potential violation until five days after Tyson had begun releasing the discharge. The city maintains that it was unaware that there were high levels of feed supplement in the discharge.

A string of bad news

It’s been a difficult few years for Tyson. In Feb. 2011, the company agreed to pay a $4 million criminal penalty after investigators asserted that the company had bribed meat inspectors in Mexico. The deferred prosecution agreement charged Tyson with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and with violating that Act. According to a DOJ brief, the company was forced to “accept responsibility for the actions of its subsidiaries, employees and agents who made improper payments to government-employed veterinarians who inspected two of its chicken processing plants in Gomez Palacio, Mexico."

Tyson admitted in its Aug. 7 SEC report that it is facing a number of other challenges including “other lawsuits, investigations and claims (some of which involve substantial amounts) arising out of the conduct of our business.” It did not specify the nature of the lawsuits, but acknowledged that it has "various employment matters outstanding," which may be a reference to the citations it received in 2013 from the Occupational Safety and Health Administration for a workplace injury relating to missing safety guards and training issues at its Hutchinson, Kansas facility.

The company also announced that it is reconsidering an agreement it made earlier this year to acquire the Hillshire Farms brand (SEC filing, pg. 44). According to the SEC report, Tyson is now questioning whether it will be able to absorb the new acquisition successfully.

“Employee uncertainty and lack of focus during the integration process may also disrupt our business and result in undesired employee attrition. An inability of management to successfully integrate the operations of the two companies could have a material adverse effect on the business, results of operations and financial condition of the combined businesses.”

The company did not say whether the impending criminal investigation and other possible violations played into its decision.

Wastewater discharge: Missouri DNR

Tyson chicken: Tyson Foods

Last week Burger King had some news for us: The fast food chain announced it will stop serving Satisfries, its lower-calorie french fries, at most restaurants.

The reason?  Apparently, most customers didn’t like this low-calorie option. “More than 100 million customers had tried the fries, but that sales were too weak to continue offering the item throughout its United States stores,” the company told the New York Times.

But this wasn’t the only fry news Burger King had last week – one day before it waved goodbye to Satisfries, the company announced on the return of "the great-tasting Chicken Fries”!

The reason? Again, it was all about the customers. “Sparked by an overwhelming number of enthusiastic tweets, Change.org petitions, dedicated Tumblr and Facebook pages, and phone calls from devoted fans, these voices are the reason this cult favorite menu item is back.,” the company reported.

So, in most of Burger King restaurants, customers will keep enjoying the same number of options after these changes, only instead of one with 270 calories, 11 grams of fat and 300 milligrams of sodium (aka Satisfries), they will have one with 290 calories, 17 grams of fat and 780 milligrams of sodium (aka Chicken Fries).

However, there’s more to this story than just calorie, fat and sodium accounting.  Here are four lessons we can learn from last week’s news:

1. Customers want better value, not necessarily healthier fast food

Business 101: Customers want better value for their money. Now, value is a subjective thing, and indeed many people value healthy fast food. But you probably won’t find those people at McDonald’s or Burger King. Most customers in big fast food chains seem to be paying more attention to parameters like taste, price or even the coolness of the item.

So, given that Satisfries were pricier ($1.89 for a small order, compared with a $1.59 for regular fries), didn’t taste better and the sad reality that there’s nothing cool about low-calorie options, the fact that customers didn’t see it as a 'valuable' alternative shouldn’t come as a surprise.

2. No behavioral experiment is complete without a nudge

When Burger King launched Satisfries last September it labeled their sale a test. Yet, it’s not clear what effort Burger King made to increase the chances of this test to succeed.

First, as Huffington Post reported, it's unclear whether customers were aware of what made the fries lower in calories: “The company did not have signs in restaurants explaining the difference between Satisfries and regular fries.”

Now, given what we know so far about the success of calorie labels in fast food, it wouldn’t make much of a difference. As Dan Ariely, professor of psychology and behavioral economics at Duke University, explains: First, the number of calories itself is not very informative as most of us don’t really know how many calories we’re supposed to eat. Second: “We are getting people who already made a decision about which restaurant to enter. So if you go into McDonald's or you go into a fast-food Chinese place, you're not going to look at the board and say, oh my goodness, I didn't know these places were so calorie full, let me go somewhere else,” Ariely explains.

While information itself might not be effective in changing our behavior at fast food restaurants, other interventions might work. “Offering people a chance to exercise self control can be effective, but we need to stop people, slow them down and offer them to take a better path at the moment when they are placing their order,” Ariely says.

Any sort of intervention, what Ariely equates to looking more like a nudge (“Any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives,” as Richard Thaler and Cass Sunstein define it), seems to be better than doing nothing.

Yet, doing nothing is exactly what Burger King did, which is why I believe that the test they ran was flawed or have been done done much better if they really wanted it to succeed.

3. To move the needle you need leadership not nudges

Even if Burger King would have come up with a powerful nudge to change their customer behavior, my guestimation is that it wouldn’t result in a significant change (i.e. Satisfries becoming more popular than regular fries). A real change could probably be achieved if Burger King decided it’s time to take bold steps and move from adding more choices to eliminating the ones that are less healthy (like it did with its kids' meals).

Now, I believe this is more a question of leadership rather than of the number of choices. You need to be strategic like CVS eliminating cigarette sales and explaining that “ending the sale of cigarettes and tobacco products at CVS/pharmacy is simply the right thing to do for the good of our customers and our company.”

Could Burger King lead its customers rather than following them? I doubt it, but otherwise the best the company would get (with nudges) would be incremental changes.

4. Design-thinking is not enough

This story could easily be framed as an example of a company taking a design-thinking approach: It is  about experimenting, embedding a human-centered approach, and trying to iterate its way to better solutions.

When you look at it this way, the company did well by eliminating a choice the customers rejected after testing it and bringing back a choice they really wanted.

However, taking this approach without having a sustainability framework embedded into it means that the company might make the right decision in terms of human-centered design but could take the wrong path.

In other words, Burger King might satisfy its current customers’ needs, but if it doesn’t have a clear vision for the the wellness of its customers over the long-term -- and what that means in terms of the food it offers -- it shouldn’t be surprised if its competitive position doesn't improve that much, even with “the great-tasting Chicken Fries” back on the menu.

Image credit: LoveBeauty NGlam, Flickr Creative Commons

Raz Godelnik is an Assistant Professor of Strategic Design and Management at Parsons The New School of Design. You can follow Raz on Twitter.