The Verdant 360 Blog

There’s no alternative to sustainable development.

How’s that for an opening line. But that’s exactly how this September 2009 article published in The Harvard Business Review, Why Sustainability Is Now the Key Driver of Innovation, opens. The article’s authors Ram Nidumolu, C.K. Prahald and M.R. Rangaswami, make a compelling case that the companies that are early adopters of sustainable business practices are developing competencies that distance them from their competitors. They studied 30 major U.S. corporations including P&G, Cisco, Walmart and Hewlet-Packard. Among their conclusions:

• Sustainability isn’t the burden on bottom lines that many executives believe it to be. In fact, becoming environment-friendly can lower your costs and increase your revenues. That’s why sustainability should be a touchstone for all innovation.
• In the future, only companies that make sustainability a goal will achieve competitive advantage, That means rethinking business models as well as products, technologies and processes.
• Becoming sustainable is a five-stage process and each stage has it’s own challenges.

Here are the five stages they refer to:

Stage 1: Viewing Compliance As Opportunity

Stage 2: Making Value Chains Sustainable

Stage 3: Designing Sustainable Products and Services

Stage 4: Developing New Business Models

Stage 5: Creating Next-Practice Platforms

The study outlines each stage and discusses the challenges and how innovative corporations have overcome those challenges to be become segment leaders.

Their conclusion- the number of new consumers is projected to double over the next twenty years.  This will place an unprecedented demand on limited resources. Traditional approaches to business will collapse and companies will be forced to develop innovative solutions.

To the authors, “Sustainability=Innovation.”

You can get a copy of the article at: www.hbr.org

Sustainability, Uncategorized C.K Prahalad, Cisco, Harvard Business Review, HP, M.R. Rangaswami, Ram Nidumolu, Sustainability, Sustainable Innovation, Walmart

It’s hard not dwell on the importance of Walmart’s announcement this week. I have not previously devoted three straight posts to the same topic, but I do feel that it is potentially the most significant approach to sustainable business practices we have seen to date. Walmart’s global reach and purchasing clout are unparallelled in the retail space. It has over 100,000 suppliers. For this reason alone any announcement around sustainability is important, but when you combine it with an actionable request (albeit voluntary) to complete a survey by a target date (in this case, October for U.S. based suppliers) and all of a sudden it forces a whole bunch of people to evaluate their sustainability positions.

Broken into four sections, the survey appears simple at first glance and some of the questions are fairly opened ended, but the sum of the survey, is that it requires an examination of sustainability practices and will allow for comparisons that were not previously possible. In this blog post  I will list the questions by section. In subsequent posts I will examine the survey on a section by section basis.

Energy and Climate: Reducing Energy Costs and Greenhouse Gas Emissions
1. Have you measured your corporate greenhouse gas emissions?
2. Have you opted to report your greenhouse gas emissions to the Carbon Disclosure Project (CDP)?
3. What is your total annual greenhouse gas emissions reported in the most recent year measured?
4. Have you set publicly available greenhouse gas reduction targets? If yes, what are those targets?

Material Efficiency: Reducing Waste and Enhancing Quality
1. If measured, please report the total amount of solid waste generated from the facilities that produce your product(s) for Walmart for the most recent year measured.
2. Have you set publicly available solid waste reduction targets? If yes, what are those targets?
3. If measured, please report total water use from facilities that produce your product(s) for Walmart for the most recent year measured.
4. Have you set publicly available water use reduction targets? If yes, what are those targets?

Natural Resources: Producing High Quality, Responsibly Sourced Raw Materials

1. Have you established publicly available sustainability purchasing guidelines for your direct suppliers that address issues such as environmental compliance, employment practices and product/ingredient safety?

2. Have you obtained 3rd party certifications for any of the products that you sell to Walmart?
People and Community: Ensuring Responsible and Ethical Production
1. Do you know the location of 100 percent of the facilities that produce your product(s)?
2. Before beginning a business relationship with a manufacturing facility, do you evaluate the quality of, and capacity for, production?
3. Do you have a process for managing social compliance at the manufacturing level?
4. Do you work with your supply base to resolve issues found during social compliance evaluations and also document specific corrections and improvements?
5. Do you invest in community development activities in the markets you source from and/or operate within?

15 questions, simple enough, but when we dive into them by section in subsequent posts, you will see the answers may not be that simple.

-FR

Corporate Social Responsibility, Supply Chain, Sustainability, Uncategorized GHG's, Sustainability, Sustainable business practices, Wal-mart, Walmart, Walmart's Sustainability Index

Per my previous post, I have accessed the MIT Center for collective Intelligence site to further understand their efforts in utilizing “crowdsourcing” to address the issues around Global Climate Change and sustainability. It is clear that they see the value. How and when the benefits are realized will take time to unfold. However, MIT has gone so far as to create what they have termed a Climate Collabortorium. Here is how Founder Professor Thomas Malone describes the activities of the Climate Collabotoroium.

What we’re trying to do here at the Center for Collective Intelligence with our Climate Collaboratorium is what we call radically open computer modeling to bring the spirit of systems like Wikipedia and Linux to the problem of global climate change. We want thousands of people all over the world to be able to interact with and modify the system, create real quantitative representations of plans for what we could do.

We also want them to be able to discuss the advantages and disadvantages of different plans in an organized way, and we want them to be able to collectively select the most promising plans from all the possibilities that have been proposed.

In his interview on the MIT Sloan Business School Website, All Together Now (or, Can Collective Intelligence Save the Planet?) Professor Malone outlines his belief that the potential for collective intelligence can be a very powerful tool to address the challenges raised by Global Climate Change.

To solve the climate problem, we need a huge range of expertise. We’ve got to know things about the physics of the upper atmosphere and the chemistry of the oceans and the economics of carbon taxes and the psychology of consumers who are making decisions about when to drive versus take public transportation. Collective intelligence mechanisms are ideal for bringing together those diverse kinds of knowledge.

To download a copy of the first working paper created by the Climate Collabotorium click on this-Can We Exploit Collective Intelligence for Collaborative Deliberation? The Case of the Climate Change Collaboratorium.

-FR

Sustainability, Uncategorized, climate change Center For Collective Intelligence, climate change, Climate Collabotorium, Crowdsourcing, MIT Sloan Schoolof Business, Sustainability

Came across this story in The Wall Street Journal yesterday, “Sustainable Success.” It is a joint Wall Street Journal/ MIT Sloan School of Management report on businesses focusing on sustainability in developing countries. Their key finding- in developing countries those businesses focusing on sustainability and environmental responsibility are the most profitable.

But here’s a lesson many executives have yet to learn: A commitment to improving social and environmental conditions in the developing countries where a company operates is the key to maximizing the profits and growth of those operations.

That’s the conclusion we drew after studying more than 200 companies. As a group, the companies most engaged in social and environmental sustainability are also the most profitable

Particularly compelling , according to the report are the six major competitive advantages that sustainable management yields. They are:

• A Sterling Reputation
• Better Employees
• More Efficient Production
• A Smoother Relationship With Authorities
• Better Cooridnation-Internally And With Suppliers
• Suppliers That Are More Reliable and Flexible

I recommend that you take a look at the report. Incrementally it seems, there is more and more evidence supporting idea that there are significant positive business aspects to implementing an executable sustainability strategy.

-FR

Sustainability, Uncategorized M.I.T., Sloan School of Management, Sustainability, The Wall Street Journal

The question of the ROI of sustainability is often talked about but not examined nearly as closely as it should be. Yesterday I was at a lunch seminar put on by Corporate Responsibility Officer (CRO) Magazine, Responsible & Sustainable Communications in the Age of Brand Risks. CRO Publisher Jay Whitehead moderated a very informative discussion between Mark Comolli of the Rainforest Alliance and Guy Boucher VP Sustainability at Domtar Paper. The discussion centered around Domtar’s efforts to effectively position their brand as a market leader in the development of sustainable paper sourcing through chain of custody certifications, primarily FSC Certification and Rainforest Alliance certification. In particular it focused on the collaboration between two organization that at first to have divergent interests

A lively discussion took place when the question of ROI was brought up during the question and answer period, and it is clear that ROI is on every-one’s mind. As company’s weigh the costs and associated benefits from the implementation of an effective sustainability strategy, I sense there is still feeling among many that sustainability is high cost low reward scenario. That may be changing, and it should be changing. The challenge is in demonstrating that there are direct ROI benefits from an effectively implemented sustainability strategy.

Interestingly, yesterday morning I received via my RSS feed the following report from the Aberdeen Group, The ROI of Sustainability: Making the Business Case. I highly recommend that you read it. Their research based on interviews with of 200 enterprises came up will the following conclusions.

Using six key performance indicators to distinguish Best-In-Class companies they found that those BIC companies achieved a 6% to 10% reduction in costs while making strides in in retaining customers.

Best-in Class-Performance

• 9% reduction in carbon footprint
• 6% reduction in energy costs
• 7% reduction in facilities costs
• 7% reduction in transportation/logistics costs
• 16% increase in customer retention

The survey showed that the companies identified as Best-In-Class shared the following characteristics:

Competitive Maturity Assessment

• The Best in Class are 52% more likely to incorporate sustainability metrics into value chain performance management
• 74& of the Best-In-Class have an organization wide sustainability policy compared to 58% of all others

The report also highlighted the need d to track, measure and communicate sustainability progress, successes, challenges and areas of opportunity.

-FR

Carbon Footprint, Corporate Social Responsibility, Supply Chain, Sustainability, Uncategorized Carbon Footprint, Chain of Custody, FSC Certification, Sustainability, The Rainforest Alliance

It appears that the recession may be easing, though there is clearly more pain ahead.  Organizations that had the vision and necessary resources  continued to focus on  sustainability plans even in the face of tough economic times. Many more however are simply dealing with the day-to-day challenges of keeping their expenses down, their employees motivated and making the difficult decisions that current economic conditions demand.

I would suggest that as the economy and business stabilize, it is critically important that business leaders prepare there businesses to be competitive in a carbon-constrained, sustainably focused future. Many major corporations, whether it be Wal-Mart, Microsoft, Toyota, IBM, Shell, or BP are clearly positioning themselves to take advantage of the opportunity, yes, take advantage of the opportunity that sustainability presents. Smaller businesses should be leading this transition, not following in the footsteps of larger less agile organizations.

The challenge as I hear it from many business leaders is that they don’t not know where to begin. They are unclear on what sustainability really means, they are confused by the “green” hype. They are simply unsure where the value to their business is.

Over a series of upcoming posts I will attempt to outline a potential direction for business leaders who want to understand the value of sustainability, articulate the benefits and challenges in implementing a sustainable business strategy, and highlight some immediate direct positive results that will support your efforts.

Three important traits that business business leaders need to bring to the table if they are going to be successful are traits that are common to all successful business leaders; vision, awareness and commitment.

Vision to see trends before they develop and understand the implications positive and negative for your businesses.

Awareness of the needs of your stakeholders inside and outside your organization, your customers and your communities.

Commitment to articulate your vision, to implement change and to recognize that long term benefits will almost always need to out way short term gain.

We need to be aware we entering an era of global business and societal transformation that will demand clarity, accountability and the ability to translate our vision into action. If we are going to make the difficult decisions that an effective sustainability plan requires, we will need to be committed, determined and believe in the efforts we are undertaking.

-FR

Sustainability, Uncategorized Sustainability

Recounting a conversation with Captain Jacques Cousteau, media icon Ted Turner discussed his optimism that awareness of global warming is increasing. He stated his belief that this could result in fundamental changes in the world’s approach to the problem, at the launch of the Columbia University Climate Center. However, he did temper his optimism by using a baseball analogy saying “that it is the bottom on the 7th and we are down by two runs.” Mr. Turner made his comments during a discussion with economist Jeffrey Sachs. In his usual down home style he, lamented the coverage of the environment on CNN, the network he helped found and expressed disappointment that U.S. automakers have been slow to adopt alternative energy technology.

The event held on March 31st, marked the official launch of Columbia University’s Climate Center and provided a platform not only for Mr. Turner but also for the aforementioned Jeffrey Sachs,  Robert C. Orr the U.N. Assistant Secretary-General for Policy Coordination and Strategic Planning as well as a number of Climate Center directors and researchers. The program which featured Columbia’s interdisciplinary approach to climate change included presentations from Dr Richard Seager, an LDEO senior scientist; Patrick Kinney, Associate Professor of Environmental Health Sciences Mailman School of Public Health; and concluded with a rousing presentation by Dr. Wally Broeker whose book Fixing Climate: What Past Climate Changes Reveal About the Current Threat—and How to Counter It is definitive in describing the scientific evidence of climate change but more importantly offers a practical potential solution to the problem.

It is clear that with the launch of the Climate Center, Columbia is committed to leadership in academic research, global and national policy guidance, and the development of programs that promote understanding of the challenges presented by global climate change as well as mitigate it’s affects on current and future generations.

Exactly what men of good conscience should do.

-FR

Uncategorized

So spoke President Barak Obama in his first inaugural address. The question we as citizens must answer is, will we be the leaders in this change or will we follow the rest of the world? I am firmly convinced that we will heed the call, we will lead. We are a nation of innovators, a nation of explorers, a nation built on the backs of those who had the courage to come to a distant land, the courage to challenge outdated ideas, the courage to establish a nation that fosters creativity, new ways of thinking. We can accomplish whatever we set our minds to.

It was 40 years ago this year that we achieved one of the greatest feats in the history of mankind, landing 2 men on the face of the moon. We did it with computers that were roughly comparable in computing power to those found in current game systems. There was no Internet to connect us. And yet, we saw for the first time, those incredible shots of the earth photographed from a manned space capsule. A manned space capsule that was bringing home samples of rock from the surface of the moon. We led then, we must lead now.

We are now faced with an equally daunting challenge. How to manage the earths resources in a way that reverses the negative impacts of climate change, resource depletion, and pollution. At the same time we must ensure that current and future generations maintain a quality of life that includes access to a healthy diet, clean water and the opportunity to live healthy prosperous lives.

A daunting task indeed, but no less daunting than the challenge we faced in 1969. We were then following the lead of an equally charismatic president, with a similar message of hope and optimism. A President who believed in America’s talent and resources. In his May 25th 1961 speech to a Joint Session of Congress titled “Urgent Needs” President John F. Kennedy outlined his plan to put a man on the he moon. He said, “Now is the time to take longer strides—time for a great new American enterprise—time to take a clearly leading role in space achievement, which in many ways may hold the key to our future on earth.” We took those strides, we embarked on that great American enterprise and we reached the moon. We changed the world.

Barak Obama’s words yesterday echoed a similar belief. He said, “We will restore science to its rightful place, and wield technology’s wonders to raise health care’s quality and lower its cost. We will harness the sun and the winds and the soil to fuel our cars and run our factories. And we will transform our schools and colleges and universities to meet the demands of a new age. All this we can do. All this we will do.”

Yes, we can. Yes, we will.

-FR

Sustainability, Uncategorized