Monday, September 1, 2014

"Corporate Sustainability" and "Corporate Environmental Programs": a difference?

A colleague recently asked if I saw any difference between "corporate sustainability" and "corporate environmental programs." 
I almost laughed.  "Of course," I said with dismissive certitude.
My colleague waited patiently.  Apparently, I was supposed to elaborate.  Which I couldn't do easily.  So after tripping down some blind verbal alleys and dead-end streets filled with logical potholes, I meekly had to admit that I couldn't clearly draw a distinction.  But despite my inability to articulate the difference, I felt certain that one exists. This post catalogs the result of the extended and at times messy wrestling match I've had with myself as I've tried first to understand and second to articulate what distinguishes the two concepts.

Step One:  A distinction without a difference?
Initially, I wondered if sustainability and environmental programs are merely just two terms for the same thing.  I concluded that for many people, that may be the case.  And that's not a problem, as long as everyone in the same dialog thinks the same thing.  It's sort of like ordering a polish sausage, when pointing at what is actually a bratwurst.  It probably doesn't matter, until you are at a Chicago Bears football game, where there is not only a real difference, but also hot-links, foot-longs, braedworst and blood sausage on the grill.  At that point, you risk serious linguistic confusion, as well as the chance of holding up the line, which really can have bad results not limited to verbal abuse (of you.)  So I'm essentially arguing that audience matters when one uses jargon, and therefore so does precision of language. 

At deeper level, I have come away believing that, even if the accepted parlance doesn't draw a distinction, it might be helpful to do so as the broader discipline of "Corporate sustainability" evolves.  Much of the work may alread be done--sort of the way that Inuits (allegedly) have 27 words for snow in its various manifestations, and that Soldier Field sausage vendors probably offer 27 different types of grilled, stuffed meat.   But I also believe that many firms are engaging in activities that can be cleanly divided into separate categories covered by these two terms--even if the firm itself hasn't expressly elected to call each group by a discrete name.

Step Two: "Twin Sons of Different Mothers"?
If we agree that there is a difference, is it important enough to define?  What if, for example, the distinction is merely one of genesis: "environmental programs" originate in external-facing business units (environmental affairs; public relations) while sustainability programs are authored by strategic/operational departments?  Aren't these really the same species of activities, just with different parentage? 

It occurred to me that the two terms could cover programs that at first glance look identical and in many ways behave the same way.  Sure, they are different entities, and within the corporate collective, borne of different initiatives--but don't they ultimately meet a similar if not identical standard?  For example, "corporate sustainability" programs might refer to those that work to reduce energy usage or water consumption, while environmental programs might encompass corporate sponsorship of select "save the (name your plant/animal/exotic locale here)" campaigns, Adopt-a-Highway programs or employee volunteerism to clean up local parks.

I begin to look more closely at the full complement of environmental initiatives undertaken by a variety of firms. My thesis was that all activities undertaken by the enterprise seek to achieve (at least perceived) environmental benefit--naive, perhaps, but I wanted to proceed from an objective starting point and thereby perhaps insolate myself from confirmation bias.

Step Three:  I expected them to shake out along a continuum between two extremes that would themselves become self-defining.  But the result was interesting, albeit surprising.  Activities did self-separate, but they fell into two buckets: those that have real environmental benefit, but also measureable "bottom line" impact; those that were optical in nature only, and usually the result of a afterthought culture ("we have to do something...") that focuses only on low-hanging fruit

Step Four: How to spot the difference
Experienced birders (I'm not one), tell me that there are numerous species that I have no hope of differentiating at 100 yards, but that they easily can.  With one eye closed.  At dusk.  Environmental programs include risk management and legal compliance, as well as public relations campaigns and--dare I say it?--greenwashing.  They lack coordination, strategic focus and any deep-rooting in either the corporate strategy or corporate ethos.  Put more simply, they are largely reactive and, most importantly, motivated by external factors.  These can include regulatory compliance or pressure from stakeholders (shareholder initiatives, social or environmental justice activists, consumer boycotts, etc.)

Here are the key defining features, and simple litmus test questions:
1.  Impact of discontinuation.  If the firm curtails the program, does it materially impact daily operations and/or the balance sheet?  ("Yes" for corporate sustainability; "no" for EPs)
2.  strategic versus complusory.  Is the program part of a coordinated, company-wide effort that has the ability to generate measurable financial benefit and the potential of paying dividends in the form of addition cost savings (to say nothing of profits) through non-target activity adoption and unintended innovation?  Or is more of a box-checking exercise--for example, 90% waste-stream diversion as required by municipal law?
3.  Genesis/motivation. Making profit versus avoiding loss.  Is the firm engaging in the activity specifically to improve operations, reduce inputs and/or waste and therefore improve financial performance?  Or simply avoiding regulatory sanction or financial penalty?
4.  holistic versus ad hoc.  Is the activity in question part of a coordinated, integrated program that may take years to realize its full benefit?  Or is it the result of either a decentralized, or short-term effort conceived or executed without regard to a broader corporate mandate?
5.  Proactive versus Reactive.  Is the program the result of anticipitory, forward-planning?  Or a response to an external force (statute/regulation/special interest)?

Ultimately, this post may be offering novel definitions of these terms.  But I don't see them as concrete definitions. One reader remarked that what fit my definition of an "environmental program" (a ), was actually achieving results more concordant with a "sustainability program."  I agree with his assessment.  Therefore, I would suggest that there are many initiatives that start out as ad hoc programs, but that evolve into sustainability practices.  To this extent, it seems to me that environmental activities are, like the entities they seek to protect, largely organic and dynamic.

Monday, August 25, 2014

Definition: Corporate Sustainability

Corporate Sustainability is a proactive, holistic strategy that necessarily creates shareholder value by reducing material inputs and waste stream outputs while maintaining productivity. It seeks to ensure the capacity of the enterprise, as part of an integrated natural system of limited resources and limited capacity as a waste sink, to endure profitably and in perpetuity. Sustainability will be, either as part of an explicit corporate mandate or as a direct and necessary dividend of corporate action, an instrument of value creation to the “triple bottom line” of profit, people and planet.

Corollary: Corporate Sustainability may result in efficiency improvements ("doing more with less"), but is benchmarked against maintaining current productivity levels and revenue.

Friday, August 1, 2014

The Sustainable Brand

"Sustainability" takes many forms and means different things to different audiences.  This blog is devoted--quite generally--to corporate environmental sustainability, with a hope that corporations will play a part in ending the mad-cap dash down the path to climate chaos.

But in that context, other types of sustainability come in to play--not the least of which is the durability of the corporate brand.  While some would love to see particularly destructive brands sink below the rising sea levels of global warming, those companies that choose to become part of the climate solution are not only "doing the right thing" they are demonstrating an awareness that long-term impacts on the environment will have long-term impacts--both positive and negative--on corporate balance sheets.  There will be winners and losers as the global climate de-stablizes.  For example, heavy construction firms that provide solutions to rising sea levels stand to profit handsomely.  Hospitality conglomerates with portfolios of beachfront properties somewhat less so.

Studies from both the United States and the United Kingdom continue to trumpet the rise of consumer preference for sustainably sourced and produced goods--but there is a rising tide of skepticism about greenwashing.  So the takeaway is clear: those firms that can truly adapt their business practices to changing environmental conditions aren't doing just the smart thing operationally, they are creating incredible opportunities to burnish the brand.  How?  Because such savvy, when born of genuine sustainability ethic and backed by meaningful changes in business operations, is loyalty gold among consumers.  (One note: As always, price is an important issue among consumers.  This often means re-framing how the market thinks about "value" in order to include sustainability attributes--but that is a discussion for a separate post.)

So when we speak about "the sustainable brand", we really need to think in two terms: the first is the ability of the business that underlies (and gives rise to) the brand to thrive in a world beset by the unpredictability of climate change--certain to bring about very significant environmental regulation; the second is the opportunity--based on how the company conducts itself on environmental issues--to capture value in the marketplace as a responsible corporate citizen.

I recently read an article that posited the following: "Protecting the Brand is the Riskiest Strategy."  It got me thinking of the vital inter-play between sustainable business practices, and sustainable companies, and that fact that you can't merely change core operations to address climate change: you have to integrate them into the corporate DNA.  In the end, that DNA is most vividly expressed in the corporate brand.  So for those of us in the business of corporate sustainability, understanding the interplay between brand and operations is an important and often neglected domain.

Setting aside for the time being that "protecting the brand" is a goal and not a strategy, I am unaware of any convention--at least among brand experts--that advocates a laissez-faire brand strategy as a path to safety.  True, brands are to be guarded jealously, but protecting brand equity is far different from leaving it to the fickle winds of fate, which is the only result when you "do nothing".
That said, I wouldn't argue Mr. Steinberg's implication that--in a dynamic, global economy--doing nothing amounts to brand neglegence, and would certainly agree that many iconic brands are in decay.  The driving force behind that erosion, however, is more likely to be poor product development than a failure of the brand strategy--the unhappy inversion of how Apple's (or, more accurately, Steve Jobs') maniacal obsession with design, product features and market re-invention rocketed the company's brand to unrivaled heights.
Atari didn't die because of a poor brand strategy, any more than Cadillac is no longer "the Cadillac of Automobiles" because the brand team took a long nap.  Both companies got passed in the fast lane by better, smarter, more innovative competitors who had their finger on the pulse of the market and were not beset by the sclerosis of complacency.  the point is simple: brand is a whole-system corporate imperative, not something that can be cultivated, nurtured and grown by an isolated box on a complex org chart.

If you believe the old saw that "a brand is a promise realized", then you understand that  brand manager's job does not start and finish at the threshold to the Corp Comm department.  Rather, the brand team must work with senior management and the product team to ensure the business is capable of fulfilling the promise of the past--quality products that have true value for customers.  For all involved in the business of brand-building, it is thus helpful to recall the words of the essayist Hugh Walpole: "Don't play for safety; it's the most dangerous thing in the world."

The sustainable brand is much like the sustainable company, both of which analogize to the sustainable planet.  They require great care and vigilance, and boldness in their stewardship.  The companies that incorporate sustainability into their mission will--by necessity--incorporate that ethic into their brand.  There is risk in doing so.  But current business practices are systemically unsustainable: they emit more greenhouse gases than the environment can absorb, poison water tables with fracking fluids and destroy vital virgin forestlands for timber and farmland.  And there is far greater risk--almost to the point of certainty--with this business-as-usual accommodation.  Because when a natural system collapses, all symbiots collapse as well.

Tuesday, July 1, 2014

A Sustainability Continuum

Sustainability in practice in the enterprise is a whole-system discipline.  Starting with source inputs and concluding with the final disposition of both waste stream and finished goods, a sustainability program has a cradle to grave scope.  All companies can be viewed through the sustainability lens, however, and one way to view the results is along a progression:

Legal-regulatory compliance: the company does only that which it must in order to comply with all applicable environmental regulations and statutes.  A reactive strategy.
Environmental Risk Management--The company anticipates potential future regulations and/or civil liabilities and executes strategies to limit corresponding risk.  A proactive strategy intended to reduce financial exposure.
Brand/Image/Reputation Enhancement.  Sustainability programs that are executed either piece-meal or without regard to a holistic, strategic plan can still create positive impact.  And the company may elect to celebrate such genuine efforts.  But a word of caution: low-impact initiatives (or worse yet, superficial programs undertaken to create the illusion of sustainability) may be perceived as "green-washing".
P&L Performance ("Value creation").  The company views sustainability as a profit center, and develops holistic, integrated strategies for both reducing costs and implementing line of business products and services.  The goal of Value Creation in sustainability is to improve financial performance while simultaneously reducing environmental impact.
Zero-net Enterprise.   Through aggressive strategies to improve resource utilization and multi-cycle the waste stream, total waste outflow is substantially reduced and remaining outputs are either fully remediated or offset.
Restorative Enterprise.  Beyond the achievement of a zero-net environmental impact, enterprise activities instead yield a net-gain for the environment, for example: C02 sequestiontration via industrial process.These require extensive planning, unwavering commitment from management, trail and error and an awareness that to migrate from business as usual to a zero-net impact is a complex evolutionary process.

No company arrives in the latter two stages easily or overnight.  This metamorphosis can be excruciating, complex and protracted, and brings to mind the observation of Teddy Roosevelt, himself a progenitor of environmental sustainability and the father of the National Park system: "It is only through labor and painful effort, by grim energy and resolute courage, that we move on to better things."

For most companies, "business as usual" probably falls into the first two strata; while management is awakening to the public concern with environmental sustainability issues, but remain skeptical that addressing them is anything other than a cost center.  Focused on shareholder value, management thus seeks to minimize costs, and therefore executes strategies focused on reducing legal and civil liability.

At this point, however, there is less and less room to simply comply with environmental regulations and go public with a position of "we are in full legal compliance with all state and local statutes."  This is because of both an increased cyncism among the green movement about the credibility of corporate PR, but also because of a recognition that most environmental laws do not go far enough.

When the Watchdog  Barks
Setting aside the frothy philosophical question of whether environmental solutions should be crafted by the hands of government or turned on the lathe of free markets, the reality is that current legal regimens are both not sufficient to address all sustainability concerns, and poorly enforced where they can.  As a result, groups like Greenpeace have entered the arena, and are actively pushing industry to do more.  Prodded by such external stakeholders, your firm may have to make a strategic, C-level decision about where it wishes to fall on the continuum.  If your enterprise has had a visit from Greenpeace or any other watchdog organization, residence in first three stages is probably no longer a comfortable accomodation.

Whether you like Greenpeace or not, you need to pay attention to organizations like them. They are a very real part of the sustainability landscape, and you must factor them in when developing any travel plans. Even if you are not in the electronics industry, Greenpeace provides an important lesson: someone may be watching your activities, and passive compliance as a risk management strategy is no longer sufficient. Instead, passionate advocates such as Greenpeace, especially ones with strong PR reach, have changed the rules: active involvement in sustainability activities is now the expectation and the yardstick against which industry can expect to be measured.

Sunday, June 1, 2014

Marketing of Sustainability Programs to Internal Stakeholders: A Blueprint

The success of a Corporate Sustainability program depends in large measure on its adoption by employees--even if the executive suite has bought into it completely.  While that's a big if, let's suppose that you are one of the few--and extremely lucky--sustainability professionals working under just such a forward-thinking leadership team.

In such an ideal situation, your strategy is simple (as distinct from easy, but more on that below):
Step 1: Educate--explain what sustainability is, how it works and how it benefits the triple bottom line of "people, planet and profit."
Step 2: Demonstrate--if education is telling, demonstration is showing; this phase of the program equates to an academic practicum, in which every employee has an opportunity to participate; after educating with theory and examples, develop a simple, easy to engage initiative that will have easy to see results.
Step 3: Recruit--after the demonstration phase, invite employees to leverage their experience, insight and unique perspective in order to indentify new opportunities to reduce waste and improve efficiency.
Step 4: Reward--find ways to give both emotional/personal ownership and financial reward to employees who originate ideas that become actuated programs.

These are the essential program components, and it is extremely helpful to think in terms of education as the over-arching strategy as you design your communications/outreach materials.  Why?  Because the idea that something that is good for the environment can also benefit the bottom line is extremely counter to the corporate culture that has grown up in the United States.  As a result, your job is not merely to role-out a new initiative, but to give all employees the conceptual tools to adopt sustainability, own it, and drive it forward as part of their day-to-day job function.  This latter point is especially important, because the most successful sustainability programs are strategically "top-down", but find that their greatest waste reduction opportunities areidentified on the "shop floor."  Therefore, management is doubly-incentivized to actively recruit rank and file employees into its sustainability mission.  Education is the key to this recruiting process.

Underlying any successful education campaign is a standard communication planning process.  As a result, the standard marketing challenges are in place: defining a value proposition, building awareness, over-coming barriers, getting "prospects" to try your product and building repeat "purchases."  The good news: You have a dynamite value proposition, one that virtually every one in the company should want to embrace--after all, who doesn't want to work more efficiently, while also saving money?  So the value proposition of sustainability is as universal as it is simple: sustainability increases profitability.
The bad news is your prospects are all extremely busy.  While sustainability can reduce inputs and thereby reduce costs, someone has to design the actual operational program that yields such wonderful results.  Employees recognize that this probably means they are the ones who will have to fill the role of architect.

Because you won't be able to count on most employees to jump right in and re-design core business processes (or even on them having the time to listen to and process the sustainability Gospel that will be the salvation of  their company), you will have to rely on old-fashioned hard work.  Most notably, developing a communications plan, and executing it across the entire enterprise. 

Your main steps in this process are as follows:
  1. Refine the language of your value proposition to dovetail with your corporate culture and strategic goals.
  2. Define "success" for your program
  3. Develop metrics for measuring program performance
  4. Identifying barriers: Apathy, commitments that compete for mindshare; antipathy (a certain percentage of people not only don't care about environmental issues, they actively think pursuing environmental programs is a waste of time and resources); time; term to payback; insufficient ROI)
  5. Construct strategies for overcoming barriers
  6. Establish achievable goals.  This is huge, and the long-term survival--to say nothing of success--may turn on this issue. 
  7. Consider Multi-level marketing.  It may be a bad word, and certainly has a bad reputation.  But the underlying model works: build a network of passionate missionaries to carry the sustainability doctrine through-out the corporate community.  Recruiting opinion leaders or otherrs who are well-positioned to influence large numbers of employees is especially effective.
  8. Review and refine.  Just like the management strategy of "Continuous Improvement Process", your program must include a protocol for regularly reviewing your success and modifying your messaging and outreach to capitalize on any lessons learned.
  9. Anticipate fail-points and short-circuit them.  Many sustainability marketing campaigns--like marketing campaigns in general--are prone to fail.  Why?  there are two main reasons.  First, the product is ill-conceived; second, the marketing campaign is either poorly designed or executed.  In the former case, it isn't that sustainability is a bad "product" and one that your target market is pre-disposed to reject.  The history of the auto industry is strewn with the wreckage of failed models--yet we all know that cars are one of the most fabulously successful products ever introduced.  Sustainability is the same: it has inherent value, but it must be properly crafted, regardless of how good the marketing program that surrounds it.  Employee education  initiatives of all stripes are no different from consumer markets, where "nothing kills a bad product faster than good advertising."
The final point in this "To-do" list reveals some helpful additional planning considerations. 
Step 1: design and package the sustainability program honestly; don't fail prey to the path of least resistance suggested by green-washing: be honest with your stakeholders about the hard work ahead, but engage them as experts in the field who will be leaders in developing actual on-the-ground programs, and not merely on the receiving end of corporate mandates.
Step 2: Design the communication strategy, messaging and tactics for marketing it for mass appeal within your target audience.
Step 3: Establish easily achievable but nonetheless meaningful "first level targets".  Success demonstrates the legitimacy of sustainability to stakeholders, which in turn builds momentum and eventually loyalty to the program (also: cultural shift--the goal of a sustainability program is to get every employee to address every task by asking: how can I do this sustainably?); it also gives both the program and the executing team credibility with senior management which is necessary for on-going sponsorship and support.

A sobering word.
As noted, a successful roll-out of a sustainability program is a simple undertaking--but just because it's simply, doesn't make it easy.  It requires careful planning, studious preparation and willful conviction during the execution phase.  Just like running a marathon, or swimming the English Channel, sustainability program marketing is formulaic.  In the same way that endurance athletics is based largely on resolve and repetition, so too is program marketing that supports a dynamic and self-evident value proposition.  As long as you are prepared for a long ramp-up period of preparation, and you have the right support team in place, you will cross the finish line.

Summary: Marketing Sustainability to your internal stakeholders
GOAL: Adoption by rank and file at high rate
STRATEGY: Educate, demonstrate, recruit, reward
RESULT:  Succeed in achieving a high level of program participation and messaging uptake, reesulting in improved sustainability practices

Thursday, May 1, 2014

Global Warming: Competitive Advantage

Global warming may be real. Or it may be a mis-reading of science, or a figment of Al Gore's imagination, or even an anti-business conspiracy of radical eco-socialists. But whether it is a wake-up call or a false alarm, its net effect for corporate (and especially industrial) enterprise is the same: reducing GHG output reduces costs throughout the fulfillment chain; the resulting savings flow directly to the bottom line.

Some yeards ago, I gave a presentation that outlined progress made by California toward achieving the goals of AB32, the Golden State's "Global Warming Solutions Act." Enacted in 2005, AB32 requires that the state--really meaning its businesses and citizens--reduce aggregated GHG emissions to 1990 levels by 2020. My presentation involved a crazy quilt of policy contortions and self-inflated jargon--low carbon fuel standard, cap and trade, combined heat and power, line loss, renewable energy, megawatt reductions, negawatt increases, parts per million, the Industrial Revolution, battery storage, and lots and lots of acronyms (PPM, LCSF, CHP, RETI, RPS, CTPG, CREZ, CCA, etc and ad nauseum). What that means, practically, I'll address at a later date. For the time being, however, consider the first question I received during the Q&A: "Since man-made Global Warming isn't real, why are we doing all this?"

It's a great question. Though I didn't think so at the time. (What I thought at the time was, "How'd I miss the sign saying: 'American Tea Party: San Francisco Chapter'?".) But in fairly short order, I realized two things: for some audiences, a torturous review of the Precautionary Principle is about as effective as a buggy whip on a bull elephant; second, there is a perfectly cogent, rational and most importantly economically compelling argument that essentially says 'who cares whether Global Warming/Climate Change/methyl klathrates/Al Gore and his 79-room mansion are real?' Because the simple threat of the possibility of total planetary cataclysm gives us a new lens through which to look at the enterprise, providing a rare moment of perfect vision to examine "business as usual", and have its deeply-seated flaws perfectly crystallized for us.

A defining characteristic of Western-style industrial capitalism is inefficient resource utilization to the point of absurdity. Look at virtually any industrial process--from large scale agronomy in which the energy invested on energy returned often reaches a 10-1 ratio, to central station electricity generation which struggles to exceed 50% fuel utilization--and what you find is that the target product is effectively a secondary output. The primary deliverable? Waste. Pundits often get excited about how Congress can't balance a budget, and wonder if elected officials run their household checkbook the same way. But as business people, we can use a similar analogy to illustrate a similar folly: next time you make a home-cooked meal, simply dump most of the pan of lasagna, the tureen of soup or the rack of baby-back ribs right in the garbage. You probably won't do it, and would feel foolish if you did; after all, we're talking about a resource (food) that still has value as nourishment, and would be costly--in terms of both raw input and embedded labor--to replace. Yet, virtually every company that provides any good or service is similarly wasteful--they simply are able to pass the costs through to the end consumer.
So back to the Q&A session for a moment. I had no idea how to respond to the question.  Really none at all.

I wish I had said: "Let's say you are right. Let's posit that global warming is best an errant scientific conclusion and at worst a sinister left-wing hoax. And then let's forget about it entirely and focus instead on what we've learned during the debate--because the possibility of global warming has revealed some fairly stunning realities about how businesses--clearly motivated by short-term profit, but not necessarily by long-term viability--leave a lot of money on the table. So again, forget that you've ever even heard of global warming. Instead, embrace the revelation: how you do business is profligate, to be sure; but in less moral terms, current practices are completely counter to the capitalist mission of optimizing shareholder value, and are instead sending billions of dollars of current and future profit up the stack, out the effluent pipe and into the landfill. And that's just on the output side. think about the cost of raw materials, energy, and human resources."

However, I really needed to conduct quite a bit more research before I could form even a cogent thought on the issue, much less a compelling response.  And as I probed deeper, I discovered something else: in many cases, we are conducting 21st business with 19th century technology and practices. The embedded inefficiency and waste is breathtaking, to be sure. But it is also reckless, destroying shareholder value, and eroding competitive advantage.

How? Well, first let's set aside the warm-and-fuzzy hippy-days drum-beat. Just for a moment, let's look at the situation through the eyes of a cold-hearted capitalist. And look through your most cynical, bottom-dollar glasses: does it make an iota of sense to run a power plant that sends 60% of its energy potential up the stack in the form of waste heat? Are you really optimizing shareholder value when you send a delivery truck out with a 70% load, on under-inflated tires and no wind-skirts? The answers are obvious. So if I'm a business manager, I will swear all the way to the boardroom and back that responding to the threat of Global Warming--even if it isn't "real"--is the right thing to do. (Perhaps especially if it isn't real, and therefore my competitors don't react by re-tooling their systems). My response to the revelations of waste, inefficiency and resource optimization is simple: I'm going to pluck all of those dollars out of my fulfillment stream and pass them on to shareholders.
Perhaps Global Warming is a false alarm. (or a radical left-wing conspiracy, meant to de-rail industrial progress.)  Perhaps it is, as the honorable Senator from Oklahoma avers, "the greatest hoax every perpetrated on the American people." But for a business manager, aren't the lessons you are learning as a proximate result of the threat of climate change a good thing? If a false fire alarm in your building identified very real problems--locked emergency doors, expired fire extinguishers, broken sprinkler systems, flawed evacuation plans--what business wouldn't be grateful for the opportunity the correct those problems? Especially if doing so doesn't merely improve process, it actually identified real savings and opened new profit centers. In short, what if the false alarm revealed a better way of doing things?
That should be the key take-away from the Global Warming dialog: by turning the lens inward, the enterprise can optimize its fulfillment process, reducing waste and lowering costs. In turn, these initiatives create real competitive advantages and improved financial performance.

Tuesday, April 1, 2014

Is Global Warming Real?

I pose this question with no intention of answering it.

Rather, the question is a springboard for addressing a situation that many in the sustainability community have to face: curiosity, doubt, cynicism, and often-times outright hostility about the topic of man-made Global Warming. Corporate sustainability is not limited to questions of climate.  However, there is no other aspect in the field that inflames passions so greatly (on both sides of the debate)--and therefore no issue that potentially can impede your successful execution of a corporate sustainability program.   The point of this post is merely to give you both a strategy and some tactics for overcoming this particular objection. 

As a sustainability professional, one of your principal job requirements is salesmanship: you are asking a lot of very busy people to do things very differently; doing so will benefit them, but that doesn't mean that they see that end-game when you first walk through their office doors.  And because Global Warming is such a radioactive topic, the likelihood of deep-seated objection increases greatly.  The Japanese martial art of Aikido emphasizes non-violent resolution of conflict, often by pre-empting the attack before it can gather momentum--a strategy that works well when you enter the ring of Global Warming debate.  I hope that the following approach enables you to side-step an unwinnable debate about an un-knowable topic, while advancing toward your goals of building internal partnerships that will achieve sustainability goals.

I have found that the best approach to what I will term "Global Warming Deniers" is preemptive action.  I try to dispense of objections before they can even be raised.  This means introducing the topic early and proactively, and framing it in a non-threatening way.  In all formal presentations and in many less-than-formal discussions, my goal is to de-fuse the Global Warming dynamite before the fuse even ignites.  My standard opening gambit goes something like this:
"Is Global Warming real?  Who knows.  And more importantly, who cares?  Because the (political/management/regulatory/market) concensus is that Global Warming is real, dangerous and already underway.  So unless you are (US President/company CEO/agency director/market maker), what you and I believe, or what we think we can prove doesn't matter.  The context in which you do your job must be that Global Warming is real--because the rulemakers have deemed it so."
For some people, this is enough, and the subject is put to bed.  For many others, however, this is just the opening they've been waiting for.  If you don't control the discussion, you may be in for a protracted and thorny interchange that bears only passing resemblance to productive dialog. Sadly, Global Warming incites nearly religious fervor, and certain opponents demand the opportunity to advance their dogma.  For example, I was recently told:  "You have to admit that the emails [day-lighted leading up to the Copenhagen summit] prove that Global Warming is a hoax."  Even if I believe that assertion (I believe the emails raise additional questions about the causes of current Climate Change, but that they prove nothing about the actual inter-relationship of man and climate), there is ABSOLUTELY ZERO constructive result that can emerge from engaging in a dialog on the subject.

In such instances, I try to move quickly beyond the the environmental impact of corporate sustainability, and onto its potential for reducing costs and increasing profits.  That dialog goes something like this:
Global Warming Denier: "Well, I don't believe in Global Warming, and therefore, I don't see any reason to support any program that will reduce our carbon footprint."
Me:  "Okay, so I'll concede for the sake of this discussion that reducing your company's carbon footprint won't make any difference related to global temperature.  But what if I told you it will increase your company/business unit's profitability?"
Usually, this tactic yeilds the "tell-me-more" response.  But I believe that its success depends on two pre-requisites.  First,  you must shift the discussion out of the realm of climate dogma and back to business basics: what if that which I am describing can make good business sense? This approach can rapidly migrate a person from global warming denier to curious capitalist.  But I also think it is crucial to frame this issue as a question.  This has a dual effect: it takes the counter-party out of the pulpit of his expertise, and shifts the dialog to an arena where you are--at least between the two of you--the expert.  It therefore gives you control of both the direction and the tenor of the conversation.  What was momentarily contentious can swiftly become instructive.  Finally, it gives you credibility in the eyes of the counter-party: since you are demonstrating a willingness to supplicate at the Temple of Almighty Profit, you can't really be a total lefty-loony bugs-and-bunnies eco-nut.

The majority of people in business are coldly profit-driven.  By migrating sustainability discussions into constructive dialog focused on balance sheets and P&L performance, you will have greater success in building internal partnerships and advancing your sustainability mandate.  Internal stakeholders, whether "global warming deniers" or not, who see the business sense of reducing material inputs and lowering costs associated with waste stream remediation, become valuable allies.  Over time, such recruiting is your central mission.  The enterprise that unifies the most employees under the banner of sustainability--whether to curtail Global Warming or simply to enhance profitability--is the one that will see the greatest success.

Full disclosure:  On balance, I believe the evidence supports the thesis that anthropogenic forces account for a rise of atmospheric carbon levels from a pre-industrial revolution average levels of 280 ppm to current readings around 385 ppm.  But those findings do not prove causation.  As an advocate of the Precautionary Principle, I therefore am also a strong proponent of all reasonable efforts to curtail human-driven GHG emissions, especially in concert with a reduction in industrial dependence on fossil fuels. 
Put more simply:  Do I believe that Global Warming is real?  Who knows. and who cares: the evidence suggests it is, and it would be a really bad idea to proceed down a business-as-usual path that results in irrevocable damage to our people and our planet.

Saturday, March 1, 2014

Sustainability in practice: Doing. With less.

In an earlier post, I noted that one of the central pre-requisites of embedding sustainability in the enterprise (in addition to it being a process and not a moment; more on that later) is a cultural shift. This post deals with the rationale that underlies the need for cultural migration away from heavy dependence on materials inputs and low-cost access to waste sinks, to consumption minimalization.
Remember, sustainability only succeeds when it becomes a holistic, corporate strategy—not an add-on, an after-thought or an accommodation such as black-letter compliance with environmental regulation. For any transformative strategy to succeed, it must be embraced throughout the enterprise; if it is not, it simply becomes a stuck-in-the-mud mantra, or—worse yet—a failed slogan.

Under the rubric of Environmental Sustainability, a cultural shift is both very simple, and very profound. It is simple, because it complements the core directive of any enterprise: profit-making. It is profound, because it requires the rejection of a long-standing bias that says that environmental protection can only be a cost. But viewed through a different lens—that of efficiency, of getting the same unit of output with lower levels of constituent inputs—brings these two (falsely) disparate concepts together. Why? Because using fewer inputs means spending less on input materials—and it also means generating fewer non-productive outputs. Another name for outputs? Waste. Fewer outputs means less waste to be treated, remediated, stored, landfilled or offset. Each of those waste stream management activities costs money. So yielding the same unit of productive output from fewer inputs pays a double dividend: lower materials costs; lower waste stream management costs. And the environmental benefit is also two fold: fewer input materials means less extraction (mining/harvesting/refining/processing--all of which have attendant waste streams and carbon output from energy usage); less waste means fewer demands on the “eco-assets” of the planet as a waste sink.  The enterprise saves money that flows directly to the bottom line; the environment is treated more gently on both ends of the production cycle.  Profits rise; environmental impacts fall; the enterprise enters a sustainable production cycle

But back to the idea of a cultural shift for moment—those are the component parts, but it is actually a much simpler undertaking. Collectively, the enterprise stops thinking exclusively in terms of maximizing profit, and elevates the comfortable and constructive interplay of the so-called “triple bottom line” to priority status. Consciously, the decision makers recoginize that long-term profit for the enterprise depends on the long-term health of the planet. To achieve this balance, the enterprise needs to take less and more importantly dispose of less into the various common waste sinks (air, water, land) that have been so inefficiently exploited in the past (a review of the classic essay by Hardin, "the Tragedy of the Commons" is helpful...

But a funny thing happens on the way to the landfill: people realize that short-term profit can be captured from sustainability activities, that what was once viewed as a cost center is actually a profit driver: sustainability is an engine for value creation in the enterprise.

Finally, it is absolutely essential to manage expectations (both your own and that of the C-level) about the timeline for shifting internal perceptions and behaviors.  In this way, embedding sustainability in the enterprise is a process.  It won't occur at the end of the metaphorical bayonet point of a corporate mandate.  Rather, it occurs gradually, as your team deploys a planned, coordinated communications effort aimed at first eductating employees, and then rewarding them for involvement in the program's cross-enterprise success.

As a result, it is critical to up-ramp your Sustainability program gradually; you need to ensure success with early initiatives in order to develop credibility with rank and file employees and to demonstrate to management that a properly conceived and executed sustainability program can yield measurable activities that translate to waste reduction and further to bottom line profit. But more on that in a future post, when I will outline the essential steps for triggering such a shift, through Marketing the Environmental Sustainability Program to Internal Stakeholders.

Wednesday, January 1, 2014

Energy Use: The Devil Inside

In several other posts, I've noted that energy is the both the Holy Grail and the Gordian Knot of environmental sustainability.  In the Pandora's box of environmental threats, anthropogenic climate change--aka, Global Warming--is the greatest scourge: on its own, it has the potential to destroy human civilization as it currently exists.  The corresponding loss of life, destruction of property and decimation of productive land and industrial capacity renders questions of clean air, clean water, arable land and food supplies almost totally irrelevant.  As a result, solving the Environmental Energy Crisis (not a shortage of fuel sources, but a shortage of the right type of fuel sources) lies at the center of the global need to migrate human activity to a sustainable model.

Crusaders sought the Holy Grail because it supposedly possessed mystical powers of salvation.  In this context, clean, zero-carbon energy is an industrial Holy Grail: it enables "afterlife" for modern industrial society, enabling us to live beyond our current energy accomodations, which appear to have a termination point somewhere around 550 PPM of atmospheric carbon.

But like the Holy Grail, zero-carbon energy is elusive.  In this respect, it is the Global Warming Gordian Knot: the bonds of energy consumption patterns, structural bias toward existing fuels and technologies, system realiability, economic considerations, backward compatibility with installed transportation and distribution infrastructure and--ironically--environmental regulation have tightly lashed the helm of the contemporary economy on a collision course with Fate.  Without a broad-based, international migration away from fossil-instensive feedstocks, the planet--and the civilizations, economies and capitalist systems it supports appear posed to collapse.

Energy in the Enterprise
There is a on-going (and some would argue, terminal) debate about what the solution to Global warming should "look like." Should it be a multi-lateral, internationally negotiated governmental fix?  Or should it be left to markets to resolve?  For sustainability officers in the enterprise, this debate is immaterial, because you already have a strategic mandate outside of any broader systemic response.  Beyond questions of environmental sustainabilility, your enterprise embraces the profit potential and competitive advantage of sustainability practices and is moving forward.  As you design your program, energy usage is thus a key component in achieving your goals.
In an ideal scenario, the enterprise will become a zero-net emitter of greenhouse gases resulting from fossil fuel driven energy systems.  Reaching a zero-emissions standard is a two-step process:
1.  Minimize useage of GHG-emitting energy and system inputs that have high levels of "embedded" energy;
2.  "Offset" that energy usage which cannot be eliminated from the production chain

In the first case, actual implementation will depend largely on the type of business you are running.  Manufacturers may need to install higher efficiency pumps and motors, utilize "load-building" software that optmizes transportation loads and reduces fuel waste, and install oversite controls in the supply chain;  Services companies may simply build-out renewable (solar; micro-wind) on-site to diminish reliance on fossil-driven grid energy, retro-fit buildings to improve on-site efficiency, and optimize business travel  for the sales force.

After the enterprise has done everything it can to wring energy waste out of its operational processes, there will still activities that generate carbon.  To achieve a goal of zero-net emissions, the enterprise must then engage in offset activities--the purchase of renewable energy credits, and forest offset products are leading candidates for this process.  These are available either through commercial brokerage services, or through bilateral contracts with originating project developers.  In either case, the enterprise must be cautious, ensuring that the products it buys are real, additional, verifiable and permanent.  If a product fails that four-prong test, the enterprise cannot reliably assert that its emissions activities have genuinely been negated.

The question often arises: if Sustainability is supposed to flow profit through to my bottom line, why am I incurring a hard cost in the form of offset purchases?  This is both a fair and important question: remember, sustainability is a viable strategy only if it does not raise operating costs (and preferable reduces them). So reconciling incremental costs with your sustainability program is essential to success. The first answer to the question is that reduction in energy costs will at least partially cover the cost of offset purchases. The firm realizes hard-dollar savings from reduced energy use, which then offsets the cost of offsets.

 The second answer is more subjective, because it depends largely on the industry and type of business you are managing and therefore your needs for energy inputs and thus your opportunities for reduced usage and increased efficiency will vary.  Generally speaking, overall savings from increased efficiency and lower costs of both energy inputs and waste management remediation (such as purchasing allowances for the emissions of SOX, NOX and/or particulate matter) counter offset costs and yield hard dollar savings.  (Note: this phenomenom will become increasingly important in jurisdictions that implement some sort of GHG control, such as either a cap and trade system or an emissions tax.  In such a case, those firms that have seen anticipated government controls and prepared for them realize immediate benefit in the form of compliance costs never expended.  Proper planning in the name of enviromental sustainability yields "preventative profit" instead of requiring expensive compliance payments.

Finally, it is worth noting that a willingness by your firm to purchase offsets is a powerful driver toward reducing GHG emissions from energy consumption.  Obviously, the less energy used, the lower the emission load that needs to be offset.  So there is a positive feedback loop: as the enterprise seeks to reduce its liability for offsets, it innovates in its core business activities--driving down offset costs certainly; but also further reducing energy needs and thus front-end energy costs.  As a result, Environmental Sustainabilty has mutually reinforcing  forces that move more dollars into the profit column.