What’s a “Green” or Sustainable Business? The “Doux Commerce” Principle: no transparency, no business deal - it’s in your best self-interest to act in a transparent way. Adam Smith explaining the Dutch superior trading skills. Smith postulated that Reputation is extremely important in Business. Jane Jacobs, a top American anthropologist (1992) stated on Humans: either we steal, or we trade to make a living (51-53).

1. RENACER
Presents:
Workshop
How to use “Green”
Business methods to
create (More) Profits
(for All)
Presented by
Douglas Lezameta &
Hernan Vargas, RENACER
Sam Jensen Augustine, PG&E
Antioch, CA
October 2013

2. AGENDA
• Introduction
• A brief perspective – the social role of business
in History
• What’s a “Green” or Sustainable Business?
• How to use “Green” business practices to
generate more profits
• Special Presentation by PG&E
• Cases – restaurant, construction contractor,
janitorial services
• Q&A, Conclusions and Recommendations

3. A brief perspective – the social role of business in History
From Corporate Responsibiity by Toby
Webb, www.tobywebb.blogspot.com

4. A brief perspective – the social role of business in
History
•
From Corporate Responsibiity by Toby Webb,
www.tobywebb.blogspot.com

5. A brief perspective – the social role of business in
History
The 1800’s Cadbury Family expansion plan
The Bournville manufacturing plant – first workers’
village in Victorian England
Designed explicitly and purposefully to create a high
quality of life environment for workers
Results:
 Significant accident reduction
 Very low absenteeism
 Dramatic reduction in employee
turnover
 Much increased profits, successful
market expansion, market
domination
From Corporate Responsibiity by Toby
Webb, www.tobywebb.blogspot.com

6. A brief perspective – the social role of business in
History
The 1911 Manhattan Sweatshop Fire
The Nov 2012 Tazreen Bangladesh Sweatshop
Fire
The April 2013 Rana Building Collapse in Bangladesh

7. A brief perspective – the social role of business in
History

8. A brief perspective – the social role of business in
History
• Bangladesh: Minimum average wage $ 37
monthly, in Cambodia is $ 61 a month, and in
industrialized China is $ 150 per month
• The average cost of manufacturing a dress shirt is
between $1 to $1.50 in Bangladesh, and in
industrialized China is between $3 to $4.
• But after what happened…what is (was?) the true
cost of production (including “bad publicity and
bad reputation” risks)??
• This is when the concept of ”Externality” comes
into place
From The Wall Street Journal Online article “Before Dhaka Collapse, Some
(Western) Firms Fled Risk”, May 8 th, 2013

9. A brief perspective – the social role of business in
History
Externalities usually
show up in unexpected
ways, mostly through
significant (and
destructive) legal costs
associated with
damages….
From Corporate Responsibiity by Toby
Webb, www.tobywebb.blogspot.com

10. A brief perspective – the social role of business in
History
…a present debate: “Fracking” in the extraction
of Natural Gas
Obvious benefits of natural gas…
….but the Fracking process,
based on water usage, is fraught
with big questions…..
..No doubt on the significant visible benefits of the
Marcellus Shale and its economic value…
…but we know the costs???? Fracking exemption of
the Clean Air y Water Acts

11. A brief perspective – the social role of business in History

12. A brief perspective – the social role of business in
History
There is no available data to
assess quantities of water
used, nor the impact on the
quality of water sources
caused by fracking
We can’t know if the
fracking process is
dangerous to human health
and the
environment….exactly what
happened with DDT some 40
years ago….
…and that’s the nature of
Externalities

13. A brief perspective – the social role of business in History
The banking and financial
sector became
Too Concentrated,
Too Complicated and
Interconnected,
Too Distant from their
clients,
Too Big to Fail….
…until the point when
those externalities
became realities, and
we all suffered the
consequences, not just
the entities that
indeed failed.

14. What’s a “Green” or Sustainable Business?
• The “Doux Commerce” Principle: no transparency, no
business deal - it’s in your best self-interest to act in a
transparent way.
• Adam Smith explaining the Dutch superior trading skills.
• Smith postulated that Reputation is extremely
important in Business.
• Jane Jacobs, a top American anthropologist (1992)
stated on Humans: either we steal, or we trade to make
a living (51-53).

15. What’s a “Green” or Sustainable Business?
• Human TRUST is thus paramount in
business dealings….
• …Trust rests on two key assumptions:
 The Market must have complete
information on the transaction at hand
(including the effect of externalities), and,
 The Parties involved in the transaction deal
believe and understand that both can be
accountable and suffer / enjoy the
consequences of the trade

16. What’s a “Green” or Sustainable Business?
“The Capitalism System is in danger…. We are not valuing things correctly….
We all are to blame for this predicament….”
Dr. Michael Porter, the most prestigious Strategy Guru in the world, HBR
2011

17. What’s a “Green” or Sustainable Business?
 These are the 10 global megaforces WE have created that make
our world and the way we live not viable in the not so long run
 From the research paper performed in2012 by KPMG, Expect the
Unexpected

18. What’s a “Green” or Sustainable Business?

19. What’s a “Green” or Sustainable Business?

20. What’s a “Green” or Sustainable Business?

21. What’s a “Green” or Sustainable Business?
 The famous 2007 paper by The Hartman Group:
 Sustainability is becoming more and more important as a key attribute in purchase
decisions by prospective clients across many industries and business segments
 Sustainability = social aspects - employees welfare and wellness
 How has this dynamic continued evolving?

22. What’s a “Green” or Sustainable Business?

23. What’s a “Green” or Sustainable Business?

24. What’s a “Green” or Sustainable Business?

25. What’s a “Green” or Sustainable Business?

26. What’s a “Green” or Sustainable Business?

27. What’s a “Green” or Sustainable Business?

28. What’s a “Green” or Sustainable Business?
Sustainability, or “Green Business”, it’s a growingly very
significant business opportunity:
 It’s creating new opportunities for high-growth
markets, sales and revenues,
 It’s facilitating the implementation of processes and
tools that help reduce operating costs, thanks to
enhanced cost efficiencies in resource utilization,
 It’s increasing the productivity and yields of
resources due to lower usage of them in creating the
same products, or by increasing the volume
produced while using the same level of resources

29. What’s a “Green” or Sustainable Business?

30. What’s a “Green” or Sustainable Business?
A not-so-fairy tale from Disney:
The risk (and opportunity): the discovery of Nike’s children
sweatshops - 1994
Disney’s solution: the implementation of Disney’s
International Labor Standards
It required significant effort and enforcement together with
the support of Governments and Licensees
It cost Disney $$$$$$$$
Sustainable Shared Value created: Preservation, if not
enhancement, of the Disney brand, organic less risky sales
growth
 Financial Sustainability Fact: the shared value created was much
higher than the direct cost of the initiative and than the potential
liabilities
 Social Sustainability Fact: workers’ rights and welfare indicators
improved in many regions around the world where Disney
operated with their standards

31. What’s a “Green” or Sustainable Business?
•
But “green business” or sustainable practices are neither only for big
corporations….nor just focused on environmental issues….

32. What’s a “Green” or Sustainable Business?
• The U.S. Federal Government Plan to
confront Climate Change, June 2013
• The Federal Government will issue new
regulations through EPA and other agencies
• The Plan is focused on three key areas
of the American economy:
“We have to act”, President Obama at
Georgetown University, June 2013
– To significantly reduce pollution in energy generation and reduce the
consumption of energy
– To significantly increase the utilization of renewable energy
– And to Build sustainable infrastructure
• Which Small Business sectors will be affected the most?
–
–
–
–
Construction – standards for “green building”
Commerce and Retail – standards for the use of energy in refrigeration, heating
Restaurants – standards for water consumption and others applicable to retail
Transportation, distribution and logistics – standards for efficiency in energy
consumption
– And all suppliers of goods and services to large, big corporations

33. What’s a “Green” or Sustainable Business?
…to become “green” or sustainable, it can be an advantage
for small and mid-sized (SMBs) businesses…
 SMBs are local, and locality is becoming a major selling
point,
 It’s usually easier to differentiate their value proposition,
and
 They are more agile to respond and adapt to changing
environments
…and the biggest impediments to become a “green”,
sustainable business?:
 ..surprisingly, it’s not financing, but…
 Technical capabilities and managerial acumen, and
 Access to entrepreneurs’ support networks
Plus, of course, an open mind and motivation

34. How to use “Green” business practices to
generate more profits
Building a sustainable business is a Journey.
There are diverse paths for all.
We propose the following method:
1. Pick two or three quick positive hits you could
get by using green practices
2. Build on those quick successes by taking on one
or two structural fundamental operating
challenges that could benefit from a “green”
solution
3. Seek and utilize continuously available support
networks (many of them free!)
4. Make a habit of controlling and measuring
results and adjust your plan as you go

35. How to use “Green” business practices to
generate more profits
1. What could you change quickly in your
business that your clients would appreciate
or would reduce your operating costs
without doing a major investment, using
“green” practices?





Something related to quality of life?
An upcoming change in regulations?
Are new materials available?
Could a new technology be implemented?
Are there networks of sustainable support
services available we haven’t used?

36. How to use “Green” business practices to
generate more profits
2. For structural changes:
– How do you really create sustainable value:
•
•
•
Can you enhance your productivity?
Can you improve the welfare and wellness (of your
workers and/or community)?
Can you regenerate or restore resources, can you
eliminate waste, can you use non-toxic materials and
processes?
– Could you or should you differentiate, or target
a specific market niche better than others?
– This is a more complex process, but you can do
it.

37. How to use “Green” business practices to
generate more profits
1. Seek and utilize continuously available support
networks (many of them free!)
–
National, regional and local resources
•
Trade groups, associations, conferences
•
Suppliers networks
•
Nonprofits (like the ones that certify green businesses)
•
Chambers of Commerce
•
Public / Private Partnerships
•
Educational institutions
•
Social media platforms
•
Traditional media
•
Government agencies
•
Financiers and financial institutions
•
Investors’ groups

38. Cases

39. Cases
•
The issue: Construction industry’s challenges
–
–
Sector Construcción, muy lenta recuperación…
Las oportunidades: en el sub-sector construcción “verde”

40. Cases
Environmental Leader, “Green Building Market To Hit $173.5 Billion by 2015,” July 1, 2010
..la construcción en general crecería solamente un 7%...
 …en dónde se está produciendo este cremiento de construcción “verde”


41. California’s ZNE Plan for Buildings
Zero Net Energy (ZNE) Action Plan for Buildings (Aug. 2010).
To shift California’s 5B ft2 of commercial property space
from using 38% of the state’s energy to
“net zero” energy users by 2030.
ZNE buildings have net energy consumption of zero,
using energy efficient construction
and use on-site renewable energy sources.
1.
2.
3.
4.
4 Big Bold Energy Efficiency Strategies (BBEES)
All new residential construction will be ZNE by 2020
All new commercial construction will be ZNE by 2030
Optimize / upgrade existing HVAC systems
Low-income energy efficiency program by 2020
Environmental Leader, September 2, 2010
“California Rolls Out Zero Net Energy Plan for Buildings”

42. Cases
•
–
–
–
–
–
–
–
–
And there’s more:
Recommissioning of old abandoned commercial buildings
into “green infrstructure”: urban gardens, schools,
hospitals
“Green” Hospitals – this is a large part of President
Obama’s plan
Renovation and remodeling of schools – one of the three
fastest growing sectors
Infrastructure for mass transit – BRT in Oakland / Berkeley
Energy distribution and generation – the largest and
fastest growth sector
Sewer, water treatment and wastewater treatment plants
Brownfield restoration and detoxification (Oakland Army
base)
“Green” remodeling and renovation of old multifamily
and apartment complexes

43. Cases
• What’s going on, what to do?
– Change in market preference – sustainable buildings
– Change in regulations – sustainable buildings
– A challenge: availability of resources – qualified, skilled workers in
green sustainable building practices
– If you are not “green”, you are risking losing sales and getting out of
the market
– First step – to get certification - training
– Engage in training opportunities- network
– USGBC and a few non-profits, community colleges
• Owners and Partners must get LEED certification
• Workers can get formal training and certification through USGBC associated
entities or through authorized nonprofit institutions
• A great way to begin is to connect with your County’s ABAG Green Business
program representative
http://www.greenbiz.ca.gov/BGRemodeler.html
– Join a trade group (like the NorCal USGBC) or at the minimum
actively participate in USGBC’s regional expos, conferences and
events

44. Cases

45. Cases
 Not all restaurant “concepts” suffered during the Great Recession



The sub-sector called “fast casual” kept growing vigorously
All projections indicate that this sector will be the most dynamic and most profitable in this decade
“Fine Dining” and other options seen as “not healthy” will suffer during the following years

46. Cases
 Case: Antojería Mexicana El Chilar, Oakland, CA
 Started as a very small place inDowntown Oakland
 Fresh, delicious and practical menu inspired in popular Mexican and
TexMex cuisine, at accessible prices
 Established strategic alliance with local supplier of red meats produced
organically and sustainably in the region– Niman Ranch
 Implemented some sustainable business practices for workforce
management to enhance productivity
 Connected with local resources
 Established a successful catering line of business
 It became one of the highest ranked Mexican restaurants in Yelp (learnt to
use social media)
 It eventually expanded and opened a full-service restaurant, Molcajete

47. Cases

48. Cases

49. Cases
Connect and use your local resources - EBMUD

50. Cases

51. Cases

52. Cases

53. Cases

54. Cases
 Connect and use your local resources
 ABAG Green Business Program
http://www.greenbiz.ca.gov/BGrestaurants.html
 The Food Service Technology Center PG&E in San Ramon
 http://www.fishnick.com/
 And also regional and national resources
 The CONSERVE Program of the National Restaurant
Association
http://conserve.restaurant.org/

55. Cases
•
–
–
–
–
–
Other issues and opportunities in the
restaurant industry:
Two of the highest operating costs in a
restaurant are energy consumptions and
water consumption. Another significant cost is
the so called FOGs (Fats, Oils and Grease)
For cities, FOGs are also a headache. In San
Francisco, the city spends a $ 3.5 Million
annual budget to declog and clean up sewer
systems congested by these FOGs.
These FOGs are highly toxic, pollute the ocean
and devastate the marine biodiversity
Nowadays, San Francisco and other Bay Area
cities have programs that pay you for the
FOGs you produce.
You could establish and alliance with Northern
California’s People’s Fuel Cooperative and / or
register with the Office of SFGreaseCycle.

56. Conclusions and Recommendations
•
•
•
•
•
“Green” sustainable business practices are not a
fashion or a fad, they are the present and the future
of business management practices
“Green”, sustainable business practices are not
applicable the same way in all industries nor in all
enterprises
It’s an evolving business model, but it is already
generating proven positive results, which go beyond
the so called “green” economy
There are several good examples of successful small
businesses that applied these principles even though
they were in a disadvantaged situation
It is not too late, in fact it is still in its early stages of its
widespread and mainstream acceptance