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  • 1. state ofgreenbusiness2012by Joel Makower and the editors of GreenBiz.comJANUARY 2012GreenBiz Groupwww.GreenBiz.com
  • 2. Contents STATE OF GREEN BUSINESS 2012 2Top SUSTAINABLE BUSINESS TRENDS OF 2012 4 1. Sustainability Counts for CFOs 6 Will CFOs Ever ‘Get’ Sustainability? 7 2. Sustainable Consumption Gets Buy-in 7 3. Green Gamification Scores Points 9 Convergence and the Next Big Opportunity 10 4. Sustainable Mobility Hits the Road 11 5. Cleantech Survives a Crisis of Confidence 12 Green Buildings: A Foundation for Growth 13 6. Energy Efficiency Gains Star Power 14 7. ‘Big Data’ Creates Big Opportunities 15 Four Trends Shaping the Profession in 2012 — John Davies, GreenBiz Group 16 8. Footprinting Walks a Fine Line 17 Budgets and Jobs: Back on Track? — John Davies, GreenBiz Group 18 9. Sustainable Cities Take Center Stage 19 10. Non-News Is Good News 21 The Coming Shift to ‘Climate Preparedness’ — Marc Gunther, GreenBIz Group 22THE GREENBIZ INDEX 24 Carbon Intensity 27 Carbon’s Rising Costs, and Risks — Jigar Shah, Carbon War Room 29 Carbon Transparency 30 What’s Next for Carbon Reporting? — Paul Simpson, Carbon Disclosure Project 32 Cleantech Investments 33 Clean-Energy Patents 35 The Future of Clean Energy Innovation — Scott Elrod, PARC 37 Corporate Reporting 38 Reporting: The Seed for Innovation, Growth — John Hickox, KPMG International 40 Employee Commuting 41 How NREL Fosters Low-Impact Commuting — Lissa Myers, NREL 43 Employee Telecommuting 44 Telecommuting for Sustainability — Gordon Feller, Cisco 46 Energy Efficiency 46 Energy’s Two Revolutions — Interview with Amory Lovins, Rocky Mountain Institute 49 Environmental Financial Impacts 51 E-waste 53 Fleet Impacts 55 Car-Sharing: A Solution for Fleet Management — Lee Broughton, Enterprise 57© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 3. STATE OF GREEN BUSINESS 2012 3 Green IT 58 ICT and the Future of Low-Energy Computing — Jonathan Koomey, Stanford 60 Green Office Space 61 Inside LEED’s Disappointing Numbers — Interview with Rob Watson, EcoTech 63 Green Power Use 64 Best Buy and the Consumer Energy Market — Interview with Neil McPhail, Best Buy 66 Organic Agriculture 67 Organic Isn’t Enough; Here’s What Really Matters — Arlin Wasserman 69 Packaging Intensity 70 A Progress Report on Walmart’s Packaging Scorecard — Ronald Sasine, Walmart 72 Paper Use and Recycling 73 Toxic Emissions 75 Stopping Supply Chain Pollution Where It Starts — Michael Kobori, Levi Strauss 77 Toxics in Manufacturing 78 New Markets for Green Chemistry — Howard Williams, Construction Specialties 80 Transparency 81 About GreenBiz Group 83 Sponsors 84 state of green business 2012 Joel Makower, Executive Editor Matthew Wheeland, Managing Editor Tilde Herrera, Senior Editor Leslie Guevarra, Editor Celeste LeCompte, Contributor Mary Catherine O’Connor, Contributor Amy Westervelt, Contributor Infographics by Seth Fields - 00seth@gmail.com Thanks to Our Sponsors ®© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 4. STATE OF GREEN BUSINESS 2012 4 Top Sustainable Business Trends of 2012 Conventional wisdom says that sustainable business is in the dumps. Global markets are down for goods and services, companies and venture capitalists are tight-fisted in making clean and green investments, and the regulators have all but turned the henhouse over to the foxes. Cleantech has become a dirty word politically. Consumers are more preoccupied with saving their jobs and homes than with “saving the planet.” Activists are pedaling hard to keep green issues in view, while the public’s concern over climate change, at least in the United States, has pivoted from “dire” to “debatable.” Given this state of affairs, conventional wisdom says, the business world has moved on from environmental and sustainability concerns. After all, why be proactive when so little is being demanded of them? Conventional wisdom is wrong. “treading,” or from “treading” to “sinking.” Many of these are economy related, and we expect to see improve- Surprisingly—almost miraculously—environmental sus- ments as the recovery continues. Nonetheless, these tainability efforts continue to grow, relatively unabated, setbacks temper the otherwise positive trends. inside mainstream companies. As we’ve found through- out the global recession and recovery, companies con- Indeed, what setbacks we’ve seen in the worlds of sus- tinue to make, meet, and even exceed ambitious envi- tainable business and clean technology have been rela- ronmental goals related to their use of materials and tively minor, amplified by those seeking to score political resources, the emissions of their operations (as well as points or attract viewers or readers. For example, the their suppliers’), the efficiency of their offices and facto- failure of some high-profile solar companies is unfortu- ries, the ingredients of their products, and what happens nate, but it is part of natural technology cycles—in this to those products at the end of their useful lives. Beyond case, the commoditization of solar cells to the point that, companies continue to innovate, buoyed by ongo- where countries with high labor costs can’t compete, ing waves of new technologies and emerging business but also to the point where solar today is more afford- models that emphasize experience and access over able than ever. ownership and consumption. Few recall that there were once dozens of personal That’s the good news. computer manufacturers, some beloved—TRS-80, anyone?—that are now defunct, though one would be The bad news is that despite companies’ seemingly hard-pressed to make a case that PCs are a failed or full-speed-ahead efforts, some environmental indi- inefficient technology. Low-cost manufacturing com- cators are heading off course. In this year’s GreenBiz bined with continuous waves of innovation brought us Index (beginning on page 24)—our set of 20 indicators of the treasure trove of tech we enjoy today. And while how business is doing, environmentally speaking—six of reasonable minds debate the value of public subsidies them were downgraded. Using our swimming-treading- for solar and other clean technologies, few recall that sinking rating system, they dropped from “swimming” to the development of transistors, the Internet, and GPS,© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 5. STATE OF GREEN BUSINESS 2012 5among other technologies we rely on dozens of That, in short, sums up the larger story of sus-times a day, all once received heavy government tainable business: it has turned a corner tosupport. become a normal, even mundane, part of the business landscape. Investors and customers CommitmentAnd what about concern over climate change, are paying closer attention. Addressing sustain-and competenceconsidered by some the mother of all environ- do not always ability issues is no longer an optional, nice-to-domental issues? From a global policy perspec- lead to progress— activity. It is an expectation, no more PR-worthytive, it has all but vanished, the victim of politi- than safety, quality, employee retention, or cus- at least not at thecal squabbling over the fate of the commons. tomer satisfaction. pace and scaleBut many of the world’s largest companies aremoving forward, some aggressively, to reduce or As we said, commitment and competence do required. In someeven eliminate their greenhouse gas emissions not always lead to progress—at least not at the cases, it’s a raceand those of their suppliers. Unfortunately, the pace and scale required, say, to reverse the against time.overall trend on greenhouse gas emissions still decline of fisheries and farmland, or reduceisn’t heading in the right direction. air and water pollution, or stabilize the climate. In some cases, it’s a race against time, and theGiven the lack of mandates, why do companies clock is ticking furiously.bother to address climate? Because such emis-sions are a form of waste—a byproduct that But there is reason for optimism. In this fifthhas no value to the company or its customers, annual State of Green Business report, we takea proxy for inefficiency. And greenhouse gas stock of the trends and indicators that tell how,emissions are increasingly seen as a risk fac- and how well, the world of business is doing totor, a liability to a company and its sharehold- address sustainability concerns.ers should public and political climate concernsrekindle. The price and availability of energy and Where are we headed? We turned to thewater are also being scrutinized by investors to sources, research, and lessons learned fromensure companies won’t be caught flatfooted if the nearly 2,000 stories we reported during 2011geopolitics, natural disasters, or other perturba- in search of trends and themes about the yeartions upend supplies. For companies, the risks ahead. Here, in no particular order, are the 10 keyand potential costs of doing nothing are rising. trends you need to know for 2012.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 6. STATE OF GREEN BUSINESS 2012 61. Sustainability Counts for CFOs“Making the business case” has long been a man- Shareholders aren’t the only ones concernedtra of sustainability advocates. After all, if sus- about the impact of sustainability issuestainability doesn’t create business value, why on stock price. In 2010, the US Securities &bother? For years, the business case focused Exchange Commission issued guidance regard-on growing sales and cutting costs. But there are ing companies responsibility to disclose mate-other aspects of sustainability—transparency, The Big Four accounting rial risks related to climate change. It notes thatdisclosure, compensation, and risk—that garner a company’s CEO and CFO must certify that firms have takenthe attention of shareholders and others near the company has installed “controls and pro- notice. They see newand dear to the boardroom. cedures” enabling it to discharge its climate opportunities in helping change disclosure responsibilities. That placedEnter the chief financial officer, historically an CFOs bring the same sustainability directly into the realm of control-outsider to most corporate conversations about level of diligence to lership and financial risk management.sustainability, which was viewed as “too soft” to sustainability reportingbe relevant to hard-nosed bean counters. The Big Four accounting firms have taken that they bring to notice. During 2011, two of them—Ernst & financial reporting.That’s changing. According to a study con- Young and Deloitte—published reports onducted by Ernst & Young and GreenBiz.com, one CFOs and sustainability, while the other two—in six (13 percent) respondents said their CFO PricewaterhouseCoopers and KPMG—havewas “very involved” with sustainability, while 52 taken a keen interest in the topic. They see newpercent said the CFO was “somewhat” involved. opportunities in helping CFOs bring the sameThe survey was conducted for a forthcoming level of diligence to sustainability reporting thatreport from the two organizations, looking at they bring to financial reporting. In its report,trends in corporate sustainability reporting. Ernst & Young pointed to the growth of corpo- rate sustainability reports, but especially to theHow to account for this? A variety of issues— growing wave of integrated reports that com-among them, greenhouse gas emissions, toxic bine sustainability metrics and conventionalingredients in products, and reliable access to financial reporting.water, energy, and raw materials—are increas-ingly seen as material risk factors that warrant A handful of CFOs are starting to be heard onscrutiny by shareholders, customers, and regu- the topic. In 2011, for example, Kurt Kuehn, CFOlators. Growing calls for transparency and disclo- of UPS and a 33-year veteran of the company,sure of sustainability impacts are requiring more, gave a speech at the Boston College Centerand more reliable, information about increas- for Corporate Citizenship on “Five Reasons theingly deeper levels of company operations and CFO Should Care About Sustainability” (a sub-supply chains. Ratings and stock indices, such as ject he wrote about on GreenBiz.com in 2010).those from Newsweek and Dow Jones, are being He cited cutting costs, mitigating risks, generat-taken ever more seriously by companies, elevat- ing revenue, driving innovation, and improvinging the collection and dissemination of key data employee development and retention. “Theto the C-suite. Shareholder resolutions focusing one thing Wall Street hates the most is surprise,”on social and environmental issues made up the Kuehn told the audience. “So when a companylargest portion of all shareholder proposals in confidently talks about how it will reduce risks2010 and 2011. That further bonds sustainability and be successful for the long term, Wall Streetwith board-level interest. listens.”© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 7. STATE OF GREEN BUSINESS 2012 7 Will CFOs Ever ‘Get’ Sustainability? A 2011 report from the global accounting firm As sustainability issues intertwine with busi- Ernst & Young aims to help companies con- ness strategy, institutional investors are start- nect CFOs with their company’s sustainabil- ing to view financial and non-financial per- ity efforts. “Sustainability issues and finan- formance as two sides of the same coin. The cial performance have begun to intertwine,” report urges CFOs to “Work with your sustain- it begins. “CFOs are getting involved in the ability team to develop a sustainability story management, measurement and reporting of for your organization. If current trends con- the companies’ sustainability activities. This tinue, the CFO could be the one telling it.” involvement has expanded the CFO’s role in ways that would have been hard to imagine Reporting and assurance. Transparent even a few years ago.” reporting of sustainability performance is important, and not just to investors and rat- According to E&Y’s report, there are three key ings agencies. E&Y points to the growth of cor- areas where CFOs are playing a growing role in porate sustainability reports, but especially to sustainability: the growing wave of integrated reports that combine sustainability metrics and conven- Investor relations. E&Y describes this as “the tional financial reporting. art of storytelling.” Sustainability, says the report, “can be viewed as a new character Operational controllership and financial risk introduced into a familiar plotline. The story management. To quantify inputs and outputs is still about financial promise, but with a new related to climate change, CFOs will need twist: increasingly, a company’s sustainabil- accounting systems that track sustainabil- ity story is being heard and read by the same ity-related events that are significant from a people who read its annual financial reports.” financial reporting perspective.2. Sustainable Consumption Gets Buy-inThe years-long conversation about reducing subtle to not-so-subtle. It may not yet be sus-consumption by getting consumers and oth- tainable consumption, but it’s definitely smarterers to buy fewer, more durable goods is gaining consumption.attention—albeit still in small, tentative ways.While there’s not yet any sustainable consump- Patagonia and eBay made the biggest splashtion bandwagon, the companies and execu- with their Common Threads Initiative, whichtives talking the talk are appearing downright encourages consumers to sell their usedmainstream. Patagonia clothing and gear online. At the beginning of the 2011 holiday buying season,Last year heard some corporate voices that Patagonia took out full-page newspaper adscould signal a new approach to curbing con- featuring one of its jackets, with the provocativesumers’ all-consuming passions—and cre- headline “Don’t Buy This Jacket”. It counseled,ate business value, to boot. The approaches “Don’t buy what you don’t need. Think twicerange from incremental to radical—and from before you buy anything,” and directed readers© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 8. STATE OF GREEN BUSINESS 2012 8to a web page where they were asked to sign a Such efforts could finally bring life to the conver-two-part pledge: sations on sustainable consumption conducted for many years by organizations like the World Patagonia agrees to build useful things that Business Council on Sustainable Development, last, to repair what breaks and recycle what the United Nations Environment Programme, comes to the end of its useful life. and the World Economic Forum. And while the Global brands list of companies participating in those conver- I agree to buy only what I need (and will last), sations is long—including Coca-Cola, General can learn repair what breaks, reuse (share) what I no Motors, Henkel, Nestlé, Nokia, Procter & Gamble, from the new longer need and recycle everything else. SC Johnson, Sony, and Unilever—few of these generation of companies have had much to show for it, in startups—someAs GreenBiz.com senior writer Adam Aston terms of radical changes in products, serivces, for-profit, otherscharacterized the eBay relationship: “An auc- or business models. nonprofit—tion function may not sound revolutionary inthe retail world, but Patagonia’s broader agenda Perhaps these global brands can learn from the knownhere is an unorthodox, perhaps even radical, act new generation of startups—some for-profit, collectivelyfor the fashion industry.” others nonprofit—known collectively as “mesh” as “mesh” companies. The term, coined by entrepre- companies.Another apparel company, Puma, is taking a dif- neur and marketing guru Lisa Gansky in a bookferent tack: making its clothes compostable. of the same name, describes companies thatCEO Franz Koch said his company was working offer services instead of products—car sharingwith partners on developing products on the instead of car ownership.principle of “cradle-to-cradle” design, in whichevery component can be recycled back into a Already, there are dozens of mesh companies—acomparable raw material, or composted harm- database Gansky created has more than 2,000.lessly into soil. Nike, for its part, has its own initia- A sampling: A Box Life (keeps shippable card-tive, called Considered Design, whose goal is to board boxes in use longer); GoLoco (ride-shar-use the fewest possible materials and design for ing system that notifies users when their friendseasy disassembly, allowing items to be recycled or interest groups are going places they want tointo new products or safely returned to nature go); Instant Offices (matches businesses withat the end of their life. available office space); Kopernik (connects tools and people where they are most needed);It’s not just clothing. Electronics retailer Best and Local Dirt (helps consumers buy, sell, andBuy launched a kind of subscription model find local food).for electronics in the form of its Buy Backplan, inviting shoppers to “future proof” their Mesh companies could represent the futurenew purchases—for a price. Shoppers pay an of sustainable consumption—and the futureupfront fee—say $69.99, for a laptop or tablet— of commerce itself, at least for some productand receive 10–50 percent of the value of the categories. If consumers catch on to the ideaproduct back if it’s returned within two years, that access may trump ownership, it could beassuming normal wear and tear. It’s still unclear a win-win-win: companies make more moneywhether this will actually reduce waste or con- from less physical stuff; consumers get exactlysumption, but it does introduce a new business what they need, at lower cost and without themodel: the idea of electronics as a service, not worry of planned obsolescence; and the planeta product. is spared countless tons of waste.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 9. STATE OF GREEN BUSINESS 2012 93. Green Gamification Scores PointsMaking sustainability fun and accessible to the efficiently—has become a community activity.masses has long been a challenge for compa-nies, government agencies, activist groups, and Similarly, the Ford Fusion Hybrid uses aothers. While the über-notion of “saving the Tamogochi-style game, in which a small dash-planet” may be compelling, many of its constitu- board plant grows and shrinks based on greenent activities are easier said than done: reusing driving practices. As consumerand recycling, turning off lights, buying greener brands jump onproducts, driving less, and the like. That may SAP, the German software giant, has har- the gamificationpartly explain why so many of us—both at home nessed games as a key part of its employee- bandwagon,and in business—don’t engage in greener behav- engagement program. “I haven’t seen a single some are likely toiors, even when we know exactly what to do. sustainability application that didn’t use game use it to promote mechanics,” Mario Herger, SAP Labs seniorThat could change, thanks to gamification, an innovation strategist, told GreenBiz last year. green behaviors—admittedly kludgy word that describes using In Germany, for example, SAP employees earn and sell greensomething called “game mechanics”—points, points through a carpooling game called TwoGo, products.badges, leaderboards, and other schemes— aimed at making carpooling easy and sociallyto make ordinary activities fun and rewarding. cool. Employees win points by entering informa-Games have long been a business tool for effect- tion about themselves; the game matches theming behavior change—witness the decades-long with drivers going where and when they needsuccess of frequent-flyer and other loyalty to get to work. Riders also earn points by suchprograms that reward customers for repeat things as answering questions about their fel-business. In the past year or so, everyone from low riders. The game has been credited with tak-Samsung and Salesforce to Nike and the NHL ing thousands of cars off the road while helpinghave harnessed the power of games to incentiv- build social ties among employees. Since manyize and reward customers and employees. of these vehicles are company cars, there are direct cost savings to SAP.Increasingly, games are part of companies’ sus-tainability toolkits, providing rewards for making Such technologies represent the next big leapgood, green choices. Consider the Nissan Leaf, in fomenting behavior change around sustain-one of the first mass-produced electric vehi- ability. As consumer product companies jumpcles. Drivers using the car’s “eco mode” soft- on the gamification bandwagon, some are likelyware keep track of such variables as speed and to use it to promote green behaviors—and sellpower usage, receiving constant feedback from green products. The only question is one of mar-a display behind the steering wheel so they can ket saturation: how many ways individuals willimprove upon efficiency. Their achievements be willing to engage with companies and causesare seen as on-screen trees. An online portal through their mobile phones and devices? Ifconnected to the car’s dashboard lets driv- companies aren’t able to keep such “games forers know how well they are conserving energy, good” fresh and exciting, continually upping thecompared with other nearby drivers. The most ante when it comes to rewards and incentives,efficient drivers receive virtual bronze, silver, it will be a short-lived phenomenon. By the endgold, and platinum “medals.” What had been of the year, we’ll know whether it will be “Gamesolely a matter of personal virtue—driving more On”—or “Game Over.”© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 10. STATE OF GREEN BUSINESS 2012 10 CONVERGENCE AND THE NEXT BIG OPPORTUNITY It’s been said that everything that can be mashed together will be. That’s the recipe for the new-media landscape, not to mention fusion cooking. It’s also the basis for a technology evolution that we’ve been tracking: the convergence of energy, information and communications, CONVERGING building, and transportation technologies. That mashup, which we’ve dubbed VERGE, was the ENERGY, INFORMATION, basis for three executive roundtables in 2011, in Shanghai, London, and San Francisco. In 2012, BUILDINGS & VEHICLES GreenBiz Group is presenting a three-day VERGE conference in Washington, D.C., March 14-16, followed by VERGE events in Hong Kong, London, Rio de Janeiro, and New Delhi, as well as other VERGE events in the United States. VERGE has the potential to transform how we live, work, travel, shop, and play, by creating a new generation of smarter, innovative products and services. In some cases, VERGE technologies will radically improve efficiencies of today’s vehicles and transportation systems, buildings, urban infrastructure, industrial production, and other energy- and resource-intensive activities. Beyond that, VERGE has the potential to invent new products and services, even new industries, much like other technologies—such as the Internet, broadband, smart phones — have done in recent CONVERGING years. ENERGY, INFORMATION, We’re already seeingVEHICLES BUILDINGS & the ingredients for this convergence: • Energy technology is becoming decentralized, cleaner, better managed, and easier to store. • Information and communications technologies are making every device, building, and vehicle smarter, able to connect into a vast Internet of things that can be addressed, moni- tored, controlled, and optimized. • Buildings are becoming more intelligent and efficient, better able to optimize energy and resource use and enhance human comfort and productivity, with the potential of becoming net-positive, from the standpoint of their environmental footprint. • Vehicles are getting smarter, too, able to communicate with their drivers, other vehicles, and their surroundings, becoming safer and more efficient while connecting passengers and fleet managers to a broader transportation and energy grid. The early stages of the VERGE vision are coming to life in pilot projects and demonstrations around the world: Autonomous vehicles that can travel efficiently and safely with little or no driver interaction. Hyper-efficient, zero-energy buildings able to generate and store energy, vari- ously buying or selling power to the grid. Cities embedded with intelligence that move traffic, con- nect people, reduce emissions, enhance safety, and maximize well-being. Platooning technolo- gies that allow cars to travel at close range at high speed, reducing congestion and emissions. VERGE holds the potential to make gigaton reductions in greenhouse gas and other emissions, engender step-change improvements in energy efficiency, accelerate the growth of renewable energy, and bring dramatic advances in materials efficiency. To learn more, visit GreenBiz.com/verge.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 11. STATE OF GREEN BUSINESS 2012 114. Sustainable Mobility Hits the RoadWhile the public and media have focused on to garner a slice of the multi-billion-dollar pieelectric vehicles, others are taking the bigger found in easing congestion in cities.view. Smart transportation systems aim to movepeople and goods around more quickly, more The car makers are seeing their business modelssafely, and with less energy and pollution. upended by a new business model that puts the brakes on vehicle ownership. First among these In many of theThis is no idle matter. The world crossed a sig- is Zipcar, the largest of dozens of companies world’s largestnificant milestone in 2011: There are now more offering “mobility on demand,” better known cities, drivers arethan 1 billion cars and trucks on roads globally, up as car sharing—the ability to easily find nearby going nowherefrom 980 million at the end of 2009. That num- vehicles to rent by the hour, an alternative to car fast. Turningber is expected to double by 2020. Combine that ownership or traditional car rental. Zipcar and every car into awith two other recent thresholds—the seven-bil- dozens of other car-sharing services are beinglionth world citizen and the fact that a majority joined by big players: Hertz (HertzOnDemand), green one isn’tof humanity now resides in cities—you have the Enterprise (WeCar), and U-haul (uhaulcar- much help if nomakings for one hell of a global traffic jam. share). While most are currently available in only one can get from a handful of cities, they will be widespread in here to there.The United States boasts the highest density of the next few years. Last year, for example, Fordcars and trucks—one for every 1.3 people—but teamed up with Zipcar to make its vehicles avail-the 1 percent annual rate of growth pales com- able for car sharing on US college campuses.pared with China, India, and Brazil, where annualvehicle growth rates are 27.5 percent, 8.9 per- Behind that business model is an even more dis-cent, and 9 percent, respectively, according to ruptive one: peer-to-peer car-sharing services,the trade journal Ward’s and J.D. Power. In manyin which anyone can make his or her vehicle avail-of the world’s largest cities, drivers are goingable to others on an hourly basis. In the Unitednowhere fast. Mexico City; Shenzen and Beijing, States, RelayRides and Getaround are makingChina; Nairobi, Kenya; Johannesburg, South inroads in P2P, as it is known, allowing car ownersAfrica; and Bangalore and New Delhi, India face to make money renting their vehicles when theythe highest congestion, according to the 2011 would otherwise sit idle, which is about 95 per-IBM Commuter Pain Index. (By comparison, Los cent of the time. Software allows anyone with aAngeles ranked 12th, New York City 15th, and car- smartphone to find a nearby rentable vehicle,choked Houston didn’t even make the top 20.) and vehicle owners get to decide when, where,The index ranks the emotional and economic toll and to whom to rent—and for how much. In aof commuting in each city. nod to the vast potential of P2P, GM launched a partnership with RelayRides last year to allowIBM, which sells control systems to make trans- GM owners to rent out their idle vehicles usingportation systems smarter and more efficient, their mobile phone and GM’s OnStar service.is one of several companies for which backups,bottlenecks, and snarls represent a vast oppor- These are the first signs of a future not far downtunity. Another is Cisco; its Connected Urban the road, where owning a car is no longer a riteDevelopment initiative aims to harness informa- of passage or even a status symbol, and wheretion and communications technology to make “access to mobility” becomes the desired norm.fundamental improvements in transportation After all, turning every car into a green one isn’tefficiency. Providers of such technologies hope much help if no one can get from here to there.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 12. STATE OF GREEN BUSINESS 2012 125. Cleantech Survives a Crisis of ConfidenceLet’s be clear: The perception of clean technol- now provides 20 percent of electricity in Iowaogy these days is far less sunny than the reality. and South Dakota, according to the American Wind Energy Association, and at key momentsThe perception, at least in the political arena, is surges to 50 percent in Colorado. The market Cleantech isthat cleantech was a promise that largely failed, research firm Lucintel predicts that the world going throughlike universal health care or a balanced federal market for wind energy will grow at a compound a reset, not abudget. After all, 2011 saw a few spectacular annual rate of 12 percent for at least the next retrenchment.swan dives by promising companies, several of five years. In some parts of the world—Brazil, for And it portendswhich had received US government funding, at example—the price of wind energy is now belowleast one of whose name is destined to be syn- that of natural gas. more roilingonymous with wasteful taxpayer subsidies. The of cleantechprevailing narrative is that solar and other clean All this turmoil notwithstanding, the United markets.technologies have not lived up to their promise States became a net exporter of solar productsand remain costly and unreliable, out of reach to the tune of $1.8 billion in 2010, according tofor most mainstream uses. GTM Research and the SEIA, primarily through sales of solar manufacturing equipment andThe reality is quite different. Cleantech is matur- polysilicon, solar modules’ main ingredient.ing, growing, and doing reasonably well. In 2011,for the first time, power plants operating on With all this growth, why are companies fail-solar, wind, and biomass energy garnered more ing? It has to do largely with natural technologyinvestment than those powered by natural gas, growth cycles, seen with nearly every technol-oil, and coal—$187 billion for renewables com- ogy over the past century, from cars to com-pared to $157 billion for fossil fuels, according to puters to cell phones. As technologies mature,Bloomberg New Energy Finance. The group pre- industries consolidate, with a handful of win-dicted that renewable energy investments will ners emerging. In the early 1900s, for example,double over the next eight years. there were more than 1,000 American automo- bile manufacturers, from Acme (1903-11) to ZipSolar energy, for all the high-voltage company (1913-14). All but a few are gone.failures, hit record growth in the United States—more than 1,000 megawatts installed during the As technologies mature, the winners becomefirst three quarters of 2011, compared with 887 the value-added players—in solar, companiesMW in all of 2010, according to GTM Research like SolarCity, Sungevity, and SunRun—non-and the Solar Energy Industries Association manufacturers all—which provide turnkey solar(SEIA). The solar market grew globally, as well. installation for homes and businesses, oftenAccording to a report by GTM Research and for little or no money down. So, too, with otherBridge, India is facing a perfect storm of fac- clean technologies, like LED lighting, where bulbtors that will drive solar photovoltaic adoption makers are getting squeezed by ever-droppingat a “furious pace over the next five years and prices, but downstream value-add players likebeyond.” And NDP Solarbuzz forecast that in Adura and Digital Lumens, which package LED2011, China would surpass United States and bulbs into modules for commercial use, areJapanese solar installations for the first time. growing. Rodrigo Prudencio, a partner at Nth Power, a longtime energy-tech investment2011 was also a boom year for wind energy, which firm, calls it finding new value in “old” clean© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 13. STATE OF GREEN BUSINESS 2012 13 GREEN BUILDINGS 2011: LEED bounces back In 2010, the market for green buildings suffered the belated impacts of the economic downturn, with plans to construct new LEED-certified buildings dropping precipitously over 2009. But 2011 saw a roaring return to busi- ness as usual, with “usual” here meaning “rapid growth.” The 2011 Green Building Market & Impact Report—written by Rob Watson, CEO of EcoTech International and senior contributor to GreenBiz.com, and a founder of the LEED rating system—tracked for the fourth year the current and future state of LEED and the environmental benefits of green buildings. • Registrations Bounce Back: In another sign of promising future growth, registrations of new projects across all LEED standards grew by 45 percent over 2010, although newly certified LEED buildings grew by just 2.6 percent, a slowdown to LEED’s previous meteoric growth. • LEED Raises the Bar: Among the biggest developments this year was the maturing of the LEED 2009 standard, which drove buildings to be even more energy-efficient—averaging 30 percent energy savings over conventional buildings—as well as more “location-efficient.” Constructing LEED buildings near transit, homes, and offices reins in sprawl while saving drivers time and money: In 2011, the location of LEED buildings saved drivers 5.7 billion miles driven. • Reduced Impacts Across the Board: In addition to saving energy and commute miles, LEED buildings in 2011 resulted in major reductions in water use—48 billion gallons of water saved in 2011 alone—as well as large reductions to the nation’s carbon footprint. Last year, LEED build- ings saved 9 percent of the nation’s total non-residential energy use. • Existing Buildings Certifications Taking Off: Perhaps most importantly, this year for the first time the amount of square feet certified under LEED for Existing Buildings surpassed the figure for New Construction. This is pivotal not only because square footage is the key benchmark for real impacts of LEED, but also because there is vastly more existing building stock, and momentum behind greening our current facilities will be fundamentally important to making the massive energy and emissions reductions we need.technologies, noting: “Value creation around source among many but in some markets are acommoditization happens in any industry.” direct competitor with fossil fuels.”So, cleantech is going through a reset, not a Cleantech is more than just electricity, of course,retrenchment. And it portends more roiling of though these technologies often get the mostcleantech markets, as competition continues attention. It also includes next-gen electric vehi-to squeeze out weaker or inefficient players and cles, advanced materials, biofuels, water effi-new, innovative companies enter the field. At ciency and purification, and more. Each of thesethe end of 2011, the venerable energy industry is maturing at its own pace, as technologies andjournal Platts noted: “Heading into 2012, renew- markets develop and grow. And each holds greatable energy is entering a new phase, with win- promise to address critical societal needs.ners and losers emerging both within renewableenergy sectors and as part of larger energy mar- Put together, it suggests that cleantech still haskets. Renewables are no longer just one energy bright times ahead.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 14. STATE OF GREEN BUSINESS 2012 146. Energy Efficiency Gains Star PowerClean technology may have been a political hot reduce fuel use by up to 23 percent, depend-potato in 2011, but energy efficiency is becom- ing on truck type, while the passenger vehicleing downright cool. standard should bring average new vehicle fuel economy to just under 50 miles per gallon byA major overhaul at the iconic Empire State 2025. The feds also introduced new efficiencyBuilding helped raise the profile of energy effi- standards for appliances like residential refrig-ciency. That project—which included replacing erators and air conditioners and furnaces.6,500 windows, adding insulation, upgradinglighting, and installing a digital wireless monitor- The big question is whether consumers willing system—is powering a 38 percent annual join in. To date, individuals haven’t found muchenergy reduction and $4.4 million in annual sav- appetite for efficiency measures, short of turn-ings. Publicity surrounding the project—from ing off switches or swapping out a few lightthe likes of Presidents Clinton and Obama, not bulbs—if that.to mention major flogging by the companiesand nonprofits involved with the $13 million But that’s changing. Cool technologies are start-project—amounts to a towering achievement ing to make home energy efficiency more com-for energy efficiency, which has remained in the pelling, such as a smart thermostat from Nestbackground, an unheralded hero, for years. Labs, created by one of the designers of Apple’s iPod. Smartphone apps from companies asThe Empire State Building wasn’t the only aging varied as ecobee and General Electric allow forstar getting an energy makeover. Sixty-odd near-real-time information about home energyblocks downtown, the 104-year-old New York use. Facebook joined forces with Opower andStock Exchange building replaced more than the Natural Resources Defense Council to allow7,000 square feet of windows with super-insu- members to benchmark their home energy uselating SeriousGlass. The windows were designed against a national database of millions of homes,to increase the thermal performance by almost as well as with their friends. Best Buy announced60 percent and reduce solar heat gain by 40 plans to start carrying home energy manage-percent compared to the original glass. Clearly, ment tools, and Pike Research predicted thatthere’s a bull market for saving energy. worldwide users of home energy management systems will reach 63 million by 2020, up fromSuch initiatives are destined to grow, thanks in just over 1 million in 2011.part to federal government efforts to promotebuilding efficiency, along with other initiatives Clearly, we are only at the beginning of a newby US cities and states. But the impacts are lim- era of energy efficiency, as continuous innova-ited to date. As our Energy Efficiency indicator tions in techno-wizardry make our homes, vehi-shows, progress has slowed or reversed in the cles, office buildings, appliances, and devicespast couple years (see page 47). increasingly efficient. The ability for anyone to get real-time, detailed information about theirIt’s not just buildings. The federal government energy use portends a new democratizationissued the first-ever efficiency standards for of energy among consumers. The question,heavy-duty trucks and proposed new standards of course, is whether all of this intelligence willfor passenger vehicles. The truck standard will actually smarten, and change, individual habits.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 15. STATE OF GREEN BUSINESS 2012 15 7. ‘Big Data’ Creates Big OpportunitiesBillions of bits of data are streaming in from years, hundreds of millions of households andeverywhere: buildings, vehicles, manufacturers, businesses worldwide will have “smart meters”warehouses, government agencies, credit card installed by their local utilities, each one spew-transactions, traffic signals, the electric grid, ing real-time data about energy use. Collecting While nearly everyand just about anything else that is connected— and analyzing all of that data will enable utilities device is gettingwired or wirelessly—to something else. This and grid managers—as well as their customers— smaller and more“internet of things,” as it’s been dubbed, already to ensure a steady and reliable energy supply, efficient, informationconsists of a trillion connected devices, and it’s predict rates, and make decisions accordingly. is getting much biggergrowing exponentially. That, in turn, will better manage existing power plants, reducing the need for new ones and and unwieldy.Consider: Within a decade, the number of reducing emissions overall.mobile phones and devices globally will growto more than 10 billion—each a powerful com- Or consider the data streaming from an officeputer capable of sending large amounts of data. building equipped with sensors and smartMeanwhile, nearly 2 zettabytes—that’s 2 trillion devices. IBM placed more than 250,000 sen-gigabytes—of data were created and stored in sors within a 3.3 million-square-foot manufac-2011, according to IDC. According to IBM, more turing site in Minnesota. It sampled only a subsetthan 2.5 quintillion bytes—about 2.5 billion giga- of them every 15 minutes, collecting 2.15 millionbytes—are created every day. For companies, points of data per month. A Microsoft pilot attracking and making sense of all this data is like its Redmond, Wash., campus looked at publicdrinking from a fire hose. While nearly every and private data for a subset of its buildings anddevice is getting smaller and more efficient, gathered 500 million data points a day. All thisinformation is getting much bigger and unwieldy. data can allow you to make buildings more effi- cient and more comfortable—if you know how toWelcome to the world of “big data,” the IT world’s harness it.latest catch phrase. It refers to data sets toobig to be accessed with traditional databases Much of the data doesn’t sit still. For example,and spreadsheets. They require a new set of as smart, electric-powered cars hit the roads,tools and techniques, including massive com- they’ll be streaming data to and from the elec-puting power, vast quantities of storage, and tric grid, IT-embedded “smart roadways,” charg-the human resources needed to turn it all into ing stations, the driver, other vehicles, andknowledge and action. Used well, big data can navigational equipment—all at the same time.lead to accurate predictions of everything from Collecting and crunching all this data in micro-crop yields to consumer habits. It’s become axi- seconds could go a long way toward allowingomatic that companies’ ability to harness big vehicles to travel hyper-efficiently and safely,data will become a core competitive strategy. saving time and fuel.Big data has big implications for sustainability. These are glimpses into the tsunami of informa-Consider, for example, the emerging smart grid, tion that’s bearing down on companies, govern-the interconnected collection of utility plants, ments, and others—the leading edge of a waverooftop solar panels, wind turbines, and other of products and services harnessing big data togeneration systems, along with every device in reduce waste and improve efficiency, and makeevery building that uses energy. In the coming big profits along the way.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 16. STATE OF GREEN BUSINESS 2012 16 FOUR TRENDS SHAPING THE Profession IN 2012 Ten years ago, the formal role of the sustainability professional didn’t exist. Today, the sustainability executive has emerged as a unique role in industry. At GreenBiz Group, we gain tremendous insights from the more than 70 members of the GreenBiz Executive Network (GBEN), our member-based, peer-to-peer learning forum for sustainability professionals. We bring mem- bers together three times a year for a day of face-to-face meetings. They help us—and each other—understand how leaders with limited staff and huge mandates are working to operationalize sustainability. Below are four trends we’ll be focusing on in 2012 as we look at where the profession is headed. Through interviews, case studies, and surveys of our GBEN members as well as our 3,000-member GreenBiz Intelligence Panel, we’ll highlight how the practices of sustainability leaders are transforming their companies. • Strategy Is Job No. 1. The primary task for all sustainability executives is helping senior manage- ment develop a sustainability strategy that syncs with their company’s overall goals. According to a recent GreenBiz Intelligence Panel survey, 85 percent said this has placed sustainability perma- nently on their company’s agenda. Dow Chemical is an example of a company working to incor- porate the economic value of nature into its strategies, goals and decision-making, while Intel has aligned a portion of its employees’ compensation with environmental criteria. • Raising the Bar. Leading companies are working to operationalize sustainability by setting the bar high and targeting what Good to Great author Jim Collins calls “big, hairy, audacious goals.” Campbell’s Soup has set a 2020 goal to cut its product portfolio’s environmental footprint in half. IBM requires suppliers in 90 different countries to install management systems to track environ- mental data. • Strange Bedfellows. To meet big goals, companies are establishing unique partnerships. At a 2011 GBEN meeting, McDonald’s described its 20-year journey working with NGOs as different as World Wildlife Fund and Greenpeace. For those outside the sustainability profession, that’s as surprising as hearing that Patagonia advised Walmart on its sustainable supply-chain efforts. • Built to Last. Last year, budgets and teams grew for many sustainability departments, despite the economic doldrums. Eighty-six percent of large companies now have at least one person focused full time on sustainability. But there’s still no consistency as to where the role reports. While a number of sustainability executives report into public affairs, many others report into operations, marketing, HR or general counsel. That may not be a bad thing. Sustainability executives must use influence to leverage their efforts, and GBEN members tell us their ability to work across functions is more critical than where in the company they sit. For leadership companies in sustainability, 2012 may look unglamorous to the outside world. After picking low-hanging fruit, the work becomes much more challenging—a series of incremental improve- ments built upon earlier improvements. But these efforts will clearly differentiate the leaders from the rest of the pack. —John Davies, VP and Senior Analyst, GreenBiz Group© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 17. STATE OF GREEN BUSINESS 2012 178. Footprinting Walks a Fine LineThe idea of calculating one’s “footprint” began to make reductions. For example, the Northin the 1990s with the notion of an “ecological American arm of LG Electronics announced infootprint,” a measure of human demand on the late 2011 plans to halve its carbon footprint byEarth’s ecosystems. In those terms, a footprint 2020. Also last year, Verizon unveiled a carbonis a standardized measure of demand for natural footprint metric to help the telecom giant trackcapital relative to the planet’s capacity to regen- how efficiently it delivers data to its customers— The paradoxerate it. Organizations like the Global Footprint specifically, the amount of carbon dioxide emis- aboutNetwork (whose founder Mathis Wackernagel sions produced while moving a terabyte of data. sustainablehelped popularize the concept) use footprint Five major hotel chains—Fairmont, Hyatt, MGM, business is thatcalculations to answer such confounding ques- Hilton, and Marriott—joined forces to create a there are tootions as “How many Earths would it take if every- single methodology for measuring and commu- many standardsone lived like us?” nicating their carbon footprints. and not enoughToday, companies are conducting exercises to Most such efforts dovetail with growing metrics.determine their carbon footprints, water foot- demands for corporate transparency of envi-prints, toxic footprints, energy footprints, land ronmental impacts or emissions (see Carbonfootprints, even paper footprints. For better or Transparency, page 81). There’s not necessar-for worse, “footprint” has become variously syn- ily a legal mandate for companies to discloseonymous with “analysis,” “impact,” “measure- such things, but a growing number are doing so,ment,” or “consumption”—or even “emissions.” pushed by institutional investors, customers, activists, and others. In 2011, more than 3,000This is largely a step forward, in that it shows that companies, including more than 80 percent ofcompanies are taking stock of their environ- Global 500 firms, voluntarily reported at leastmental impacts, presumably with the intention some of their carbon emissions, water manage-of reducing them. While purists may scoff at the ment and climate change policies to the Carbonpitter-patter of little footprints, decrying them Disclosure Project.as a weak substitute for more holistic analyses,the talk of footprinting has become fashionable Some carbon footprinting exercises seem,among companies. As “footprinting” becomes well, silly. Over the past year, we’ve learned theincreasingly commonplace, however, the term carbon footprint of unwanted emails (a.k.a.is being used, and misused, in a growing number “spam”)—roughly 0.3 grams of carbon dioxideof ways. It’s hardly a case of greenwashing—that per message, in case you’re wondering. (That, itis, of knowingly misleading, either by omission turns out, is far more deleterious than the foot-or misrepresentation. But the term risks being print of a tweet—just 0.02 grams per 140 char-rendered meaningless, thereby distorting what acters.) Kudos to those who take the time tobegan as a useful scientific concept. calculate the various activities of our lives, for whatever it’s worth.Carbon remains the principal focus of footprint-ing: an analysis of how much carbon is emitted To the extent that footprinting develops andin the making, or the use, or the life cycle of a propagates new methodologies that becomeproduct or service, or the operation of a build- standards within or among industries, suching or company or some other entity or activity. exercises stand to make a significant contribu-In many companies, this leads to commitments tion. Case in point: More than 30 companies and© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 18. STATE OF GREEN BUSINESS 2012 18 Budgets and Jobs: Back on Track? Businesses are back to investing in their green efforts. Driven by customer demand and senior leadership, corporations large and small continue to drive growth in the green economy. In 2008, we created the GreenBiz Intelligence Panel to take a monthly pulse of the green business world. Twice a year, we ask the panel’s nearly 3,000 members for their views on key economic indicators. Our December 2011 survey garnered 282 responses, two-thirds from companies with revenues greater than $1 billion. The indicators remain positive for the green economy, including spending, employment, and product development. Some key findings: • Fewer Job Openings, but Growth Continues. In July 2011, we reported that there were jobs, but they weren’t new jobs. Thirty percent of large companies in mid-2011 posted open requisitions that would not add to their department’s headcount and 22 percent reported openings that would increase headcount. At year’s end, the numbers have flipped, with 30 percent adding new jobs and only 15 percent making replacement hires. Another positive sign? Hiring freezes were reported by only 3 percent of companies, compared to 8 percent in mid 2011. Biggest  Environmental  Impact  in  2012   • Investments Stay the Companies  with  revenues  greater  than  $1  billion   Course. Eighty-six per- Decreasing  the  environmental  impact  of   cent said their 2012 envi- 51%   our  companys  operaAons   ronmental, health, and Decreasing  the  environmental  impact  of   25%   safety spending will be our  customers   equal to or greater than Decreasing  the  environmental  impact  of   13%   our  suppliers   in 2011, a slight dip from a Decrease  the  impact  of  our  product  at   6%   year prior. After dipping to end-­‐of-­‐life   79 percent last summer, Other  (please  specify)   5%   those who cite increasing investments rose to 84 percent by year’s end. • Economic Pressure Turns Business Green. Forty-two percent said economic pressures caused them to invest more in environmental and sustainability activities while only 33 percent indicated they cut back. • New Sheriff in Town. During the summer of 2010, the number of respondents anticipating increased regulation within the subsequent four years peaked at 92 percent. That number has since plummeted to 72 percent—its lowest point since we began the survey. As we’ve seen for years, the locus of action is around business, not regulatory, demands. —John Davies, VP and Senior Analyst, GreenBiz Group© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 19. STATE OF GREEN BUSINESS 2012 19organizations—including Nike, Gap, Patagonia, And then there’s Puma, which raised the barand Walmart—last year joined forces to create for such analyses by putting a dollar value on itthe Sustainable Apparel Coalition, with the first impacts on nature. The shoe and sportswearitem on their agenda being the creation of a tool company is measuring its use of ecosystemsto measure the environmental impacts of cloth- and plans to determine its economic impactsing. Similarly, the Sustainability Consortium— on ecosystem services, which is basically any-convened in 2009, initially by Walmart and now thing that nature provides: clean water, crops,boasting a membership of nearly 80 retailers soil formation, wildlife habitat, protection fromand consumer packaged goods companies— storms, and the like. Puma’s effort comes clos-has set out an ambitious agenda to create stan- est to the original notion of understanding one’sdards and tools to collaboratively develop life- full ecological impacts and, if emulated by oth-cycle–based standards and measurement tools ers, stands to bring the idea of footprinting backfor consumer products. in step with reality.9. Sustainable Cities Take Center StageWhile national governments grapple with eco- climate-related actions at the local level. Thenomic issues and policy gridlocks, pushing sus- combined group, in turn, formed a partnershiptainability measures to the side, cities are pick- with the World Bank to help cities accelerateing up the mantle. Some of the world’s largest actions to reduce greenhouse gas emissions.cities are emerging as laboratories of innovativetechnologies, business models, and efficiency A sampling of cities’ sustainability initiatives,measures, many of them with salutary environ- courtesy of C40:mental and social outcomes. To the extent thatthe green economy flourishes, it is becoming • Seoul plans to retrofit 10,000 buildings byclearer that it will likely be a bottom-up, grass- 2030.roots evolution. • Austin has a zero-waste plan for 2040.It makes sense. Cities are where more thanhalf the global population lives. In developing • London aims to have 100,000 electric vehi-countries, urban growth is exploding, stretch- cles on the streets by 2020.ing demands for food, water, energy, jobs, andmobility to the breaking point and beyond. In the • Buenos Aires is implementing a network ofdeveloped world, the need for upgrading older dedicated bus and taxi lanes to improveinfrastructure is driving leaders to invest in new, fuel efficiency.cleaner and more-efficient technologies. • Tokyo is introducing higher energy-During 2011, the role of cities in sustainability efficiency standards for large urbanbecame increasingly evident. New York City developments.Mayor Michael Bloomberg and former PresidentBill Clinton merged their respective sustainable • São Paulo plans to reduce the use of fossilcity initiatives to create the C40 Cities Climate fuel on public transportation by 10 percentLeadership Group, a network of large cities each year, aiming for 100 percent use ofaround the world committed to implementing renewable fuels by 2017.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 20. STATE OF GREEN BUSINESS 2012 20Such ambitious projects build on efforts these buildings, smart transportation systems, andand other cities already have made over the past more. (More on VERGE, page 10.) Each of thesefew years to divert waste from landfills, reduce holds great promise to make cities more livablegreenhouse gas emissions of municipal opera- and efficient—in a word, sustainable.tions, harness a growing percentage of powerfrom renewable energy, purchase electric or The implications for business are implicit, if notultra-efficient vehicles, and leverage their sub- explicit: Cities are gaining enormous power tostantial buying power toward purchases of other create markets for both local and sustainably Purists scoffgreener goods and services. Leadership exam- produced goods and services, in some cases at the pitter-ples abound, from Copenhagen to Curitiba. helping create economies of scale that make patter of little these things cheaper and more widely available.Some future-focused cities are helping to usher Such efforts further support business by mak- footprints,in a new wave of IT-enabled “mesh” businesses ing cities more desirable places to live, shop, decrying themthat promote sustainability by facilitating and work, attracting employees and custom- as a weakaccess to transportation services, real estate, ers. City leaders recognize this. A survey by the substitute fortools, and many other things. As mesh compa- Carbon Disclosure Project and KPMG of lead- more holisticnies grow and succeed—and as cities recognize ers of 58 cities around the world, representing 8 ecologicalthe benefits they bring in the form of such things percent of global population, found that nearlyas economic development, reduced conges- 8 in 10 believe the physical impacts of climate analyses.tion, and social connectivity—a few cities are change directly or indirectly threaten the abilitybeginning to identify and nurture the conditions of local businesses to operate successfully. Asthat make mesh businesses successful. cities compete to attract companies and a high- quality workforce, sustainability will likely be partMesh builds on an older but still growing trend to of their competitive strategies.support local economies, especially local grow-ers and producers of food. Farmers markets, One development from the last year may epit-community-supported agriculture, food coop- omize cities’ growing potential as hotbeds oferatives, food swaps, slow-food movements, sustainable innovation. The cutting-edge con-and more are flourishing in both struggling and ference TED, which brings together peoplewell-to-do neighborhoods, and they are provid- from the worlds of technology, entertainment,ing the inspiration for other, non-food-related and design to promote “ideas worth spread-community enterprises. All of these are helping ing,” each year grants a TED Prize to a visionaryto reinvigorate cities in both the developed and individual. For 2012, it designated “The City 2.0”developing worlds. as its prize winner, for the first time granting the prize to an idea, not an individual. TED’s organiz-The latest developments in information and ers are using the prize to solicit ideas for whatcommunications technologies are also spur- The City 2.0—“a real-world upgrade tapping intoring cities to create new, smarter infrastructure humanity’s collective wisdom”—should be andsystems that promote energy and resource how to make it a reality.efficiency while providing new products andservices. For example, the convergence of We’ll wait to see what that collective wisdomenergy, information, building, and transporta- brings forth. At its best, it will unleash the bright-tion technologies—which is the basis for a tech- est ideas from around the world for redesigningnology framework we’ve dubbed VERGE—is how people live, work, play, travel, and shop inspurring the development of smart grids, smart more sustainable ways.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 21. STATE OF GREEN BUSINESS 2012 2110. Non-News Is Good NewsWhat passes for state of the art in sustainable supplier surveys or questionnaires. So manybusiness rises continually from year to year. companies are doing these things that it is rareThe same cannot be said of the state of the art that any one of them is considered “news.”of public relations and the media, mainstreamand otherwise, to which they pitch story ideas. The growing body of non-news is good news forSo many of the stories sent our way, both by in- businesses, consumers, and the planet, if nothouse and outside PR professionals, are of the for PR professionals. Yesterday’s leadershipbeen-there-done-that variety. So 20th century. initiative is today’s societal expectation. LastThey’re simply not new—or news. decade’s cutting-edge practice is today’s stan- dard operating procedure. Bold, audacious sus-Many of the things companies are doing have tainability goals of the past are now consideredbecome so common that they are not, from business as usual.a journalistic perspective, newsworthy. Twodecades ago, the news was that a company Of course, a lack of newsworthiness shouldn’tachieved ISO 14001 certification, attesting that mean that these things aren’t worth doing.it had rudimentary processes in place to address They are, but for sound business reasons, notits environmental impacts, particularly in the for scoring PR points. Companies create greencase of an accidental spill or emissions release. buildings because they are more cost-effectiveEvery manufacturer issued press releases that and better places to work, with higher produc-managed to point out some “first”—the first tivity and occupant satisfaction. They makeISO 14000-certified company in a given city, a energy upgrades because they save moneygiven industry, or something else. For a time, ISO and improve operations. They report on their14000 certification was, newsworthy. But not sustainability performance because custom-for long. ers and investors demand it. They set green- house gas reduction goals because doing so canNext, it was companies issuing a sustainability reduce long-term risk.report—something that is still considered pitch-worthy by some PR types, even though sustain- All of which begs the intriguing question: Whatability reporting has become commonplace will be newsworthy in 2012? What corporate(see Corporate Reporting, page 38). After that, commitment or achievement during the yearit was companies boasting about switching to will capture the public’s imagination, set a newrecycled or reduced packaging (see Packaging standard, or even disrupt markets? And whatIntensity, page 70), or having a LEED-certified activities will become no longer newsworthy—building (see Green Office Space, page 61), or things so commonplace that a press release,setting a greenhouse gas reduction goal (see PR pitch, or executive speech about them willCarbon Intensity, page 27). In all but extreme cause our collective eyes to roll?cases, these are non-stories, part of what’s con-sidered business as usual—barely more news- As journalists and analysts of the sustainableworthy than a company filing its taxes on time. business scene, these are the questions that make our juices flow, that motivate us to sepa-Today’s non-stories are about zero-waste fac- rate the newsworthy stories from the rest—atories, energy-efficiency building upgrades, and never-ending quest for the new, new thing.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 22. STATE OF GREEN BUSINESS 2012 22 The Coming Shift to ‘Climate Preparedness’ By Marc Gunther, Senior Writer, GreenBiz.com Last December, thousands of government customers and elected officials about pre- officials, corporate executives, and activists paring for a warming climate. Not surprisingly, met in Durban, South Africa, for high-level the company got focused on the problem climate talks. They went home with an agree- after Hurricanes Rita and Katrina hit in 2005, ment ... to keep talking. Meanwhile, we’re followed in 2008 by Gustav. emitting more carbon dioxide every year, and atmospheric concentrations of greenhouse “That really put a face on what the future was gases are steadily rising. If carbon dioxide going to be like,” said Jeff Williams, director levels were somehow to stabilize now—they of climate consulting for Entergy. “Clearly won’t—the world will keep warming. The bot- we are facing risks from sea level rise, more tom line: Global action will not prevent cli- intense storms, floods, and surge damage.” mate change. So the world needs to learn The company has looked at “hardening” key how to prepare for it. assets including power plants, substations, and transmission lines; it is beginning with Increasingly, businesses are starting to do just investments designed to make Entergy “more that. Utilities, the oil and gas industry, agricul- resilient in ways that minimize business inter- tural companies, and insurers are building ruption loss,” Williams says. The National assumptions about rising temperatures and Oceanic and Atmospheric Administration extreme weather events into their scenario has estimated that 30 percent of US GDP planning. Adaptation—some people prefer depends on the Gulf region, mostly because to call it climate preparedness—is simply the it is a hub of the domestic oil and gas industry. effort to protect people, places, and corpo- rate assets from known risks. The payoff from As an example, Entergy has begun a five-year, investing in adaptation could be substantial. $73.5 million project to relocate and harden In 2011, insured losses in the United States transmission and distribution lines serving from natural catastrophes, including torna- Port Fourchon, La., which is the single larg- does, floods, and hurricanes, topped $105 bil- est point of entry for crude oil coming into lion, breaking the record of $101 billion set in the United States, handling about 13 percent 2005, the year of Hurricane Katrina, accord- of national imports. After Katrina damaged ing to Munich Re, the world’s largest reinsur- the electrical infrastructure, 25 percent of ance firm. Some of those losses had nothing oil production and 44 percent of natural gas to do with climate change, but others did. production became shut in, Entergy says. National oil prices went from $60 per barrel Let’s get specific. Entergy, an $11 billion-a- before Katrina to $70 per barrel after Katrina year utility company based in New Orleans, because of supply interruption; national nat- commissioned a Gulf Coast Adaptation ural gas prices went from $8 per thousand Study that has opened up conversations with cubic feet (Mcf) to $15 per Mcf.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 23. STATE OF GREEN BUSINESS 2012 23 Smaller businesses are acting, too. The the Atlantic Coast, in part because of fears McMcIlhenny Co., which makes Tabasco that stronger hurricanes will do more wind Sauce and was founded in 1868 on coastal damage. (Citizens Insurance of Florida, a non- Avery Island, La., has made its factory and profit, state-run company that takes on prop- visitor center more resilient to better absorb erty owners who can’t get private coverage, future storms. has become Florida’s biggest insurer.) Even the oil and gas industry–which, of course, is a Agriculture is another industry that will be major contributor to climate change–is pay- reshaped by a warming world, with some ing heed. Several years ago, IBM, along with UK regions and crops doing better, thanks to a consulting firm Acclimatise and the Carbon longer growing season and higher levels of Disclosure Project, published a report called CO2 in the air, and other suffering. Seed com- Building Business Resilience to Inevitable panies have renewed their efforts to develop Climate Change [PDF] urging oil-and gas drought-resistant crops, said John Soper, companies to review their strategies, busi- director of product development at Pioneer ness models, and supply chains to “check Hi-Bred, a unit of DuPont. “We’re expecting their resilience to the new risk landscape cre- some drier weather to move into the key corn ated by inevitable climate change.” growing areas,” he said. “The climate in Illinois might be more like the climate in Arkansas.” Environmental groups, which once focused solely on curbing carbon pollution, are now Pioneer is testing drought-resistant corn looking at adaptation, in part to underscore and other crops in desert-like test fields in the urgency of the climate threat. Theo California and Chile, he said, in part because Spencer, a senior advocate at the Natural farmers who now irrigate their fields are Resources Defense Council, which has been already telling Pioneer that they expect limits meeting with utilities, insurance companies, on the availability of water. In India, Pioneer and others to talk about climate prepared- is working to develop drought-tolerant vari- ness, says more companies are coming to eties of rice, which is now grown on flooded understand that “the weather is changing, land but may have to adapt to a drier climate. and we really need to do something about it.” Other seed companies including Monsanto, He quotes the White House science advisor Syngenta, and Bayer Crop Science are work- John Holdren, who said the task ahead is not ing on their own drought-resistant crops. just “avoiding the unmanageable” but also “managing the unavoidable.” Unavoidable cli- The insurance industry, meanwhile, has been mate change, and its consequences, are likely declining to write property coverage along to be a corporate worry for years to come.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 24. STATE OF GREEN BUSINESS 2012 24 THE GREENBIZ INDEX This fifth annual edition of the GreenBiz Index tells a story about how US companies are doing in 20 aspects of environmental performance— from operational efficiency to employee commuting to investments in clean technologies. At best, it’s a mixed story, one far more sobering than we would have hoped. For the first time, we saw a significant decline in prog- That’s not the full story. Despite our efforts to normal- ress—not just in one indicator, but several. Cleantech ize many of the indicators to Gross Domestic Product in investments, energy efficiency, green office space, order to avoid spikes and drops resulting from economic packaging intensity, toxic emissions, and toxics in manu- booms and busts, we believe that less economic activity facturing—all of these trend lines leveled off or reversed doesn’t always lead to lower environmental impacts. In course in 2011. Only one indicator—green power use— some instances—electricity power plants, for example— markedly improved. industrial operations must operate at baseline levels that don’t always move in lockstep with the economy. What’s to blame? Simply put, sustainable business is suffering a recessionary hangover. There is, to be sure, some cognitive dissonance. We continue to see growing corporate sustainability com- For much of the past few years, many of our indicators mitments to reducing climate emissions, increasing moved in positive directions. Combined with the com- energy efficiency, eliminating toxic ingredients, and mitments we were seeing, as well as our surveys of sus- reducing waste. We report on these every business day tainability leaders in large corporations—which told us on GreenBiz.com. that their budgets, staff, and goals were holding steady or growing during the recession—we concluded that the Many of these commitments are long-term ones, sug- economic turmoil, at least in the United States, wasn’t gesting that we’ll see renewed progress in the coming putting a damper on companies’ efforts to improve their years, especially as the economy rebounds. We con- environmental performance. The results could be seen tinue to be optimistic, though perhaps more cautiously each year in the continued progress measured by the than in the past. GreenBiz Index. As in past reports, we’ve summarized each data set We were, shall we say, irrationally exuberant. using one of three icons, stating whether we believe companies are making progress (“swimming”), standing The reality is this: Much of the progress we saw in our still (“treading”), or falling behind (“sinking”). 2010 and 2011 reports were lagging indicators based on SWIM TREAD SINK work done with pre-recessionary budgets. As the eco- nomic realities have set in, environmental progress has stagnated, or worse.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 25. STATE OF GREEN BUSINESS 2012THE GREENBIZ INDEX: SUMMARY 25 Swim Tread Indicator What We Measured What We Found Sink Carbon Intensity Emissions of energy-related Emissions growing carbon dioxide per unit of faster than the GDP economy Carbon Transparency S&P 500 companies US response rates dip responding to Carbon for the first time Disclosure Project Cleantech Venture capital investments Cleantech takes a Investments in clean technology mild hit from a weak economy Clean-Energy Patents Patents issued by US Patent Innovation continues to Office make leaps and bounds Corporate Reporting Number of reports from S&P Disclosure grows slowly 500 companies while investor interest rises Employee Commuting Number of workers driving Commuters can’t shake solo, carpooling or using the driving habit mass transit Employee Number of US telecommuter Remote worker Telecommuting households ranks creep up, with corporate support Energy Efficiency Energy use per unit of GDP Wasted energy grows as investments wane Environmental Environmental damage costs Companies get Financial Impacts as a percentage of economic slightly smarter about output managing eco-costs E-Waste Percentage of recovered Hints of progress, but equipment still dumping too much toxic trash SWIM TREAD SINK© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 26. STATE OF GREEN BUSINESS 2012 26 Swim Tread Indicator What We Measured What We Found Sink Fleet Impacts Estimated annual Emissions creep up but greenhouse gas emissions fleets are shrinking per vehicle Green IT Products certified under Companies still Energy Star and EPEAT enthusiastically plugging in to green certifications Green Office Space LEED-certified commercial A slow-down in LEED building space registrations could spell trouble Green Power Use Renewable energy as a Explosive growth, but still percentage of all electricity less than 5 percent of US generation energy Organic Agriculture Sales of organic food in the Organic continues its US small growth Packaging Materials used per unit of Lightweighting hits the Intensity GDP wall, progress stalls Paper Use and Paper use and recycling per Paper use climbs for the Recycling unit of GDP first time since 2004 Toxic Emissions Toxic releases per unit of A huge spike after some GDP years of positive decline Toxics in Emissions per year of 27 An 80 percent increase Manufacturing bioaccumulative and toxic after years of minimal, chemicals but steady, decline Transparency How much data companies Radical transparency still disclose on environmental a pipe dream as disclo- impacts sure rates stay flat SWIM TREAD SINK© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 27. STATE OF GREEN BUSINESS 2012CARBON INTENSITY 27WE’RE MOVING THE NEEDLE … BACKWARDSMillion tons of energy-related CO2 per million dollars of GDP* 500 475 474.5 456.1 455.2 450 441.3 430.4 425 421.2 419.8* 400 375 2005 2006 2007 2008 2009 2010 2011Source: US Energy Information Administration*Early estimate; number is likely to increase once final data for the year is in.What We Found: The economy is growing, but stabilization, with emissions from increasednot as quickly as carbon emissions, making the natural gas activity offset by the decommis-global economy more carbon intensive, not less. sioning of coal-fired power plants. Don’t cheer quite yet, however: The Energy InformationWhat We Measured: Carbon intensity—a mea- Administration estimates only a 0.7 percentsure of energy-related CO2 emissions per dollar decrease in emissions between 2010 and 2011.of gross domestic product—increased 2.2 per-cent from 2009 to 2010, the most recent data. Why It Matters: If the United States isn’t able to grow its economy without increasing car-Globally, carbon emissions rose 5.8 percent bon intensity, then stopping global warming atwhile the economy grew 5.1 percent in 2010, 2 degrees per year—which scientists say wouldpushing growth of carbon emissions past eco- require a drop in emissions of 25 percent belownomic growth for the first time since people 1990 levels by 2020—is an unreachable goal.started measuring such things. In the United This metric helps us focus on whether we’reStates, energy-related CO2 emissions rose making meaningful energy-efficiency and4 percent in 2010 after declining for several renewable-energy efforts, regardless of eco-years. Early estimates for 2011 show a slight nomic conditions.*All GDP data in this report are from the US Department of Commerce’s Bureau of Economic Analysis andare stated in 2005 chained dollars.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 28. STATE OF GREEN BUSINESS 2012 28What We’re Seeing: The Pricewaterhouse­ What’s Next: The future largely depends onCoopers Low Carbon Economy Index, released two key drivers: the ability and desire of govern-in November 2011, cited several factors con- ments to commit to emissions reductions, andtributing to the global rise in carbon intensity in the scaling up of renewable energy technologies:2010: the rapid growth of emerging economies, For the first timeincluding China, Brazil and Korea, fueled by high- • Climate summits in 2012 could finally lead we have madecarbon energy sources; colder winters (and a to binding global emissions targets, if the no improvementresulting increase in heating demand); the fall United States, China, and India can be con- in our rate ofin the price of coal relative to gas; and a drop in vinced to act sooner than 2015, the date decarbonization. Werenewable energy deployment. these Big Three emitters have been push- ing for. At the 2011 COP Summit in Durban, have in fact increased“The results are the starkest yet,” said Leo South Africa, negotiators hoped a legally the carbon intensity ofJohnson, a partner in the sustainability and cli- binding treaty would be set forth; instead, growth.mate change practice at PwC. “For the first time the United States suggested setting 2015we have made no improvement in our rate of as the target date for a treaty, which woulddecarbonization. We have in fact increased push implementation off to 2020. Forthe carbon intensity of growth. The economic African and European Union countries, arecovery, where it has occurred, has been dirty.” delay of that magnitude is unacceptable. Negotiators from those countries will beAlthough early numbers for 2011 show a slight pushing against that deadline in an attemptdecrease in carbon intensity—due to an increase to spur quicker action in the years ahead,in renewable energy projects, decommissioning particularly when they can come to theof coal-fired power plants, and more economic table armed with the Intergovernmentaldownturns—the final number is still likely to be Panel on Climate Change Fifth Assessmenthigher than in 2009. Overall, it’s a bleak pic- Report, Climate Change 2013: The Physicalture. The 2011 PwC Low Carbon Economy Index Science Basis, which comes out toward theshows that the G20 economies have moved end of the year and is expected to makefrom travelling too slowly in the right direction, more strongly than ever the case for urgentto travelling in the wrong direction. action on anthropogenic climate change..There are a few bits of optimism, however. • Low polysilicon prices will continue to driveHistorically low prices for photovoltaic panels solar projects in 2012, as module priceshave enabled numerous large-scale solar proj- remain low. As large-scale solar projectsects to move forward. As we found in tracking come online, the price of solar will drop evenGreen Power Usage this year (see page 64), as further, which will in turn spur more large-of third quarter 2011, there’s more than 1 giga- scale deployments. In the United States,watt of installed solar capacity; the total in 2010 pending cuts to incentive programs are alsowas just 887 megawatts. Companies also seem likely to spur more activity in the short-termto be more committed than ever to tracking as developers rush to cash in on incentivesand reducing emissions, as we discovered when before they expire. In the long-term, thelooking at the Corporate Reporting indicator loss of those incentives will slow renewable(see page 38). energy deployment, particularly for wind.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 29. STATE OF GREEN BUSINESS 2012 29 Carbon’s Rising Costs, and Risks By Jigar Shah, CEO, Carbon War Room carbon intensity is also a proxy for dependency Renewable Energy. According to the REN21 on volatile fossil fuels, rare earth materials, global status report for renewables, renew- water, and other supply chain risks. The rise in able electricity deployments are acceler- emissions will incur a cost for business, either ating. They now represent more than 50 in the shortterm or longterm, given that coun- percent of incremental new capacity addi- tries are moving toward international commit- tions in 2010. However, we face an inevitable ments to reduce emissions for all countries. A “catch-up” in emissions as the economy further cost will arise from the need of com- picks up speed again, so the bottom line panies to contribute to the cost of adapting to is that we are headed in the right direc- a changing climate, given that the increase in tion with renewable energy development, emissions will lead to a warmer world. just not nearly fast enough due to inertia in the system from existing coal, oil, and gas Regulation. Hopefully, governments are see- infrastructure. ing that we simply cannot delay any further. Climate change solutions represent the larg- There is no silver lining in the latest carbon est, most dependable source of GDP growth intensity news, but it is true that wind and in this decade. Governments need to act solar have about a two-year energy payback. more swiftly to align their economies with the This means that while their deployment is only sustainable growth opportunities avail- accelerating, it takes more coal and natural able to them. gas electricity to make these technologies until growth rates come down. We have the Founded by Sir Richard Branson, the Carbon War potential to reach 100 percent of incremen- Room is a nonprofit that aims to harness the power tal energy coming from renewable electric- of entrepreneurs to implement market-driven ity within this decade. Once we reach that solutions to climate change. Shah has been at the point, growth rates can stabilize. leading edge of renewable energy development since founding the first solar-as-service company, Cost of Carbon. The business risks asso- SunEdison, in 2003. ciated with climate change are increasing rapidly. Carbon emissions are one risk, but© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 30. STATE OF GREEN BUSINESS 2012carbon transparency 30quality RISES, BUT NOT QUAntITYNumber of S&P 500 companies responding to Carbon Disclosure Project 350 339 332 321 282 2007 2008 2009 2010 2011 Source: Carbon Disclosure ProjectWhat We Found: Despite the fact that 2011 saw for climate change-related risks and businessthe number of S&P 500 companies disclosing opportunities. Carbon accounting and reportingtheir carbon footprints decline for the first time are the first steps of the carbon managementsince 2006, other evidence suggests that car- journey, typically followed by setting goals andbon footprinting has become more robust and action, both of which key ingredients needed tomore common among large companies. move the needle forward on addressing climate change.What We Measured: The number of S&P 500companies responding to the Carbon Disclosure What We’re Seeing: After years of increasingProject dropped 3 percent this year—the first carbon disclosure, the number of companiesdecrease in reporting since 2006. However, responding to the CDP’s annual questionnaireamong companies that did report, scores for dipped for the first time. This can largely bequality of reporting continued to improve. explained by the churn rate of the S&P 500, an index whose makeup is constantly changingWhy It Matters: Carbon disclosure and trans- as companies are added and dropped basedparency is a proxy for good corporate gover- on their market capitalization. Other factors atnance, and it gives investors and stakeholders play: companies abandoning voluntary disclo-an idea of how well companies are preparing sure as they get swept into the EPA’s mandatory© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 31. STATE OF GREEN BUSINESS 2012 31reporting program and half-hearted disclos- continue rippling further up the supply chain.ers leaving the game when the chances forfederal climate change legislation evaporated. “Every company needs to understand that this is“We think it’s a blip, not a trend,” CDP CEO Paul just a part of doing business,” said Darrel Stickler,Simpson said. corporate social responsibility manager for Cisco, which has performed well on the CarbonThe news isn’t all bad. Those that do report are Disclosure Leadership Index for four years. “It’sgetting better at it and becoming big believers almost like doing a financial statement.” Demand will growin its business value. Board-level oversight of for the data to beclimate change issues has surged, and the per- And just like financial information, carbon data verified by a thirdcentage of companies incorporating climate will move into the realm of chief financial offi- party, beginning withchange into their business strategies topped cers, predicts Chris Walker of Ernst & Young.65 percent in 2011, compared to 35 percent in And, like financial information, demand will the CDP, which now2010. The quality of their reporting continues grow for the data to be verified by a third party, assigns more weightimproving, although the quality gap between beginning with the CDP, which now assigns more to verification whenUS and global firms persists—and actually wid- weight to verification when calculating disclo- calculating disclosureened—in 2011. Even the best of the best—the sure scores. But with fewer S&P 500 companies scores.S&P 500 companies on the Carbon Disclosure making the effort, it’s unclear what it will take toLeadership Index—have been unable to match reverse this trend.the disclosure scores of their global peers. What’s Next: Expect more companies to reportWhether the decline in disclosure for S&P 500 their Scope 3 emissions, those produced out-companies speaks to a larger trend remains to side their operations, including employee com-be seen, but response rates are rising globally. muting, transportation, the use phase of prod-US companies generally don’t face the same ucts sold, and business travel. These emissionsregulatory pressures as their European counter- have always been a struggle to count, but com-parts, but are still subject to many of the same panies now have for the first time a commonpressures to report their carbon emissions. framework: the Greenhouse Gas Protocol’s recently released Value Chain standard.It all comes down to money. For one, 551 long- Ultimately, we see this development as one thatterm, institutional investors—the kind big com- will bring even greater scrutiny to supply chainspanies want to attract—are the driving force as companies identify hot spots for exposure tobehind the CDP, and their ranks swell every year. climate-related risks and disruption.The data will also grow in importance for otherinvestment players, including equity analysts Until there is federal climate change legislation,and rating agencies. we will continue to see a division in the market between leading companies, which are bothMarket share is another powerful driver as com- disclosing and reducing their carbon footprints,panies find they must disclose just to keep cus- and the laggards, a smaller group of firms thattomers ranging from Walmart to the federal doesn’t view climate change as a material issuegovernment. Those information requests will for their companies.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 32. STATE OF GREEN BUSINESS 2012 32 what’s next for carbon reporting? By Paul Simpson, CEO, Carbon Disclosure Project Growing pressure. Measuring, verifying, and Gas (GHG) Protocol will enable businesses to communicating carbon footprints will become better understand and manage the climate more prominent in 2012 and beyond—by impacts beyond their own operations and investors, businesses, and governments but improve efficiency across the value chain. also consumers. The rapid rate at which the They will provide a standard framework for citizen-led Occupy movement spread across reporting Scope 3 emissions and facilitate continents demonstrates a growing distrust companies to heighten their understanding of the global economy and the businesses of climate change risk to their business. and institutions within the system. As a result of this widening chasm between citizens and This is another trend that will be mirrored the businesses, as well as the public’s grow- by investors over time. To “identify potential ing concern and awareness of climate change, mitigation opportunities, as well as to inform low-carbon or carbon-neutral claims are likely its appreciation of business risk associ- to come under greater levels of scrutiny. ated with a carbon constrained future,” the International Finance Corporation, part of Investors, including the 550 that we work with, the World Bank, has started measuring the want to understand the implications of these GHG emissions of its direct investments. pressures on their portfolios. Couple this with established correlations between effec- An evolution in carbon reporting. The com- tive carbon management and above-average panies that report through the CDP are well financial returns by companies in the Global positioned to respond to an increase in the 500 equity index and we predict investors will number of countries adopting mandatory pay closer attention to emissions reporting. climate change reporting policy at national, regional, state and city level. California’s Grasping the full scope. The number of revised mandatory GHG reporting regula- companies that report their Scope 3 emis- tion came into effect on January 1, 2012, while sions (those outside their direct operations) the UK Government is expected to kick-start will continue to increase in 2012 as climate the year with an announcement this month change forces global businesses to confront detailing whether or not mandatory reporting risk across their supply chains and reduce the will be introduced. To prepare for and meet impact of their products. Floods in Thailand mandatory requirements, but also to aid last year wiped $450 million of profit from the stakeholder trust, verification of emissions Japanese automotive industry as a result of data will increasingly become the norm. the interruption to Thailand-based suppliers. Already this year, beverage companies are We expect corporate reporting will also paying close attention to the unusual weather evolve to adopt a stronger focus on company in Florida that threatens the orange crops used strategy. Since climate change is increasingly to make juice that retails around the world. becoming material to future business suc- cess, we expect it to be a key topics to accel- New standards launched by the Greenhouse erate the shift towards integrated reporting.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 33. STATE OF GREEN BUSINESS 2012cleantech investments 33EVs keep vcs on the moveVenture capital investments in clean technology, in millions $4,932 $4,870 $3,762 $1,264 2008 2009 2010 2011Source: Ernst & Young, based on Dow Jones VentureSourceWhat We Found: Venture capital investments generation, environmental services, industry-in clean technology moderated during 2011, focused products and services, and water.essentially reaching the same level as in 2010. Why It Matters: Clean technology has long beenWhat We Measured: Venture capital invest- seen as a major force—not just for building thements in clean-technology firms. For the past so-called “green economy,” but for building thedecade, VCs have been the leading funders of economy overall. Many of the leading cleantechcleantech startups, which—as measured by companies have gotten their start from ventureDow Jones VentureSource and analyzed by capital investments, so VCs are a leading indica-Ernst & Young—include alternative fuels, energy tor of future technology development as well asefficiency, energy storage, energy and electricity of confidence in clean technology overall.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 34. STATE OF GREEN BUSINESS 2012 34What We’re Seeing: With the exception of 2009, “What you’re seeing is a maturing industry,”when the global recession hit hard, VC invest- says Jay Spencer, Ernst & Young LLP’s Americasments in cleantech have grown every year. That Cleantech Director. “You’re seeing productschanged in 2011, when there was a slight down- coming to market. You’re seeing products outturn, according to Dow Jones data. in the field being used. As things are being used, like electric vehicles, people are starting toLast year was a tumultous one for cleantech. think about other business models that can be For all the tumultAside from the challenges of surviving in an developed. It’s an extremely exciting time to be over Solyndra, solarunforgiving global economy, the politics of clean involved in cleantech.” companies continuedenergy took an unfavorable turn. Clean energyhad never received overwhelming political sup- As solar and other clean technologies—biofu- to attract capital,port—especially in the United States, where els, efficiency, electric vehicles—start to reach garnering 80 percentincumbent fuels have strong and powerful lob- commercialization, VCs become less relevant of all energy andbyists—but what support it had dropped in the and investments shift to large corporations—as electricity generationface of the bankruptcy of Solyndra, a solar start- potential buyers of the technologies—or invest- investments.up heavily backed by government loan guaran- ment banks, pension funds, and other insti-tees. Suddenly, solar—and, by extension, clean- tutional investors—which invest in large-scaletech—was under a cloud of suspicion, seen as a projects such as solar and wind farms.risky investment unworthy of taxpayer support. “Corporations have woken up and are payingSolyndra wasn’t the death knell for clean energy, very close attention,” says Sheeraz Haji, CEObut its demise had a sobering effect. Amid spec- of Cleantech Group, a research and advisoryulation about a bursting cleantech “bubble,” services company. He points out that it’s notinvestors pulled back. Initial public offerings just the corporate venturing departments, butplummeted during 2011, far more than the 33 also some CEOs who see cleantech as a stra-percent drop in venture investment. tegic investment. He cited GE CEO Jeffrey Immelt and NRG CEO David Crane as two whoBut that doesn’t tell the entire story. The nature are leading their companies’ charge to invest inof investment shifted in a way typical of matur- clean technologies. “It goes to the heart of whating technologies. In recent years, investment aggressive, talented CEOs want to do,” he says.was roughly split between early-stage compa-nies—those just starting up or undergoing initial What to Expect: Cleantech isn’t going away,product development—and those generating political winds notwithstanding. But it’s unclearrevenue and needing to scale up. During 2011, what role venture capitalists will play going for-things tilted heavily away from startups in favor ward. In the present economy, VCs are strug-of later-stage companies, which received two- gling to raise new cleantech funds, meaningthirds of VC investments during the year. their lifeblood will be constrained going forward. But there are still technologies in need of devel-And for all the tumult over Solyndra, solar con- opment—battery storage, for example, andtinued to attract capital, garnering 80 percent next-gen electric vehicles, not to mention manyof all energy and electricity generation invest- aspects of the so-called “smart grid.” Expectments, leaving all the other technologies—gas- investments to bouce back in 2012, as politicsification, geothermal, hydroelectric, hydrogen, fades and investors and entrepreneurs get backtidal/wave, and wind—to compete for the rest. to the business of inventing a cleaner future.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 35. STATE OF GREEN BUSINESS 2012clean-ENERGY patents 35innovation is on a forward marchNumber of patents filed with the US Patent and Trademark Office 2331 1882 1125 928 917 894 827 2005 2006 2007 2008 2009 2010 2011Source: Heslin Rothenberg Farley Mesiti P.C.What We Found: Clean-energy patents jumped indicator of technology development. While notagain in 2011, growing 24 percent over 2010’s all patents turn into inventions, let alone intorecord high. That continues the steady growth commercial products—and even those that dowe have seen for the past decade, but especially can take years to get from the drawing boardthe past three years. Between 2008 and 2011, to the marketplace—patent filings show whereclean-energy patent filings have grown more there is potential for innovations, efficiencies,than 250 percent. and advancements.What We Measured: Clean-energy patent appli- What We’re Seeing: Over the past decade, pat-cations filed with the United States Patent & ents for a wide range of clean-energy technolo-Trademark Office, as compiled by the law firm- gies have been on a relentless march upward,Heslin Rothenberg Farley Mesiti P.C. growing nearly every year. And in the two years where patent filings dropped, they were smallWhy It Matters: Patent filings are a leading downturns, with growth resuming the following© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 36. STATE OF GREEN BUSINESS 2012 36year. That’s a remarkable and consistent tech- technology commonly seen as mature. After all,nology success story. how many more ways can you innovate on the basic windmill? Apparently, a lot.The patents were across the full spectrum ofenergy technologies, as well as hybrid and elec- What to Expect: We haven’t yet seen the peaktric vehicles. Within those technologies are of the cleantech innovation trend. There aresome interesting story lines. areas still ripe for change, notably battery stor- We haven’t yet seen age, which shows up partially in the fuel cell data the peak of theTake solar, for example. Many now view solar as (which dipped slightly in 2011), though it doesn’t cleantech innovationa “mature” technology; indeed the Solyndra nar- reflect the fast pace of innovation coming torative, including by us, is that its demise is a natu- conventional lithium-ion batteries used in con- trend.ral part of the evolution of technological cycles, sumer electronics and some electric vehicles,and that as technologies mature, companies as well as new battery technologies being devel-consolidate, and competition narrows. And yet oped. Electric vehicles, meanwhile, are just nowthe number of patent applications for solar- in their infancy, a technology with lots of oppor-related technologies was one of several bright tunities to improve.spots in 2011: solar patent filings jumped nearly50 percent in 2011 over 2010, after more than And then there’s the smart grid, a vast array ofdoubling between 2009 and 2010. That strongly switches, sensors, software, and other thingssuggests that innovation in solar energy is still being harnessed to make energy-using devicesevolving, and that new, more efficient—and pos- smarter and easier to monitor and optimize,sibly disruptive—technologies are yet to come. as well as to efficiently integrate clean-energy technologies into the existing grid. Patents forWind patent filings were brisk, too, jumping more those technologies aren’t reflected in our indi-than 85 percent year over year. That’s another cator. There’s lots more yet to come.Clean energy patents, by type Hybrid or Electric Fuel Hydro- Tide or Geo- Biomass/ Wind Solar Vehicle Cell electric Wave thermal Biofuels Other Total* 2002 42 162 144 349 6 9 2 12 9 723 2003 49 156 122 464 5 11 5 24 3 824 2004 72 124 98 551 8 18 8 16 4 885 2005 92 104 101 501 7 11 6 14 3 827 2006 109 95 105 572 8 18 5 13 5 917 2007 133 100 105 517 4 15 4 28 2 894 2008 155 95 86 530 10 34 9 19 9 928 2009 156 155 105 634 3 26 10 49 2 1,125 2010 245 363 168 996 19 40 6 63 17 1,882 2011 455 541 203 952 15 60 7 104 38 2,331 * Row totals may be less than the sum of the row because some patents fall into more than one category Source: Heslin Rothenberg Farley Mesiti P.C.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 37. STATE OF GREEN BUSINESS 2012 37 THE FUTURE OF CLEAN-ENERGY INNOVATION By Scott Elrod, VP and Director of the Hardware Systems Laboratory, PARC While technologists like me imagine forests of efficiencies: There’s no Moore’s Law for PV, quantum-nanowire photovoltaic (PV) panels just a 4 percent improvement in conversion powering the planet by 2050, the reality is that efficiency every 10 years. clean-energy innovation in the next 40 years may not be as sexy as you imagine. So where do we get 10-20 terawatts of non- carbon-emitting energy by 2050—what UN Don’t get me wrong. I believe the ability to climate scientsts say we’ll need? Only the envision new possibilities is needed to move technologies that are reasonably mature science forward. Some of the most elegant today—silicon PV, solar thermal with steam innovations that have come out of research turbines, demand management—have a labs—Stanford’s photon-enhanced therm- chance of mitigating climate change. PV ionic emission, Berkeley’s hot-electron PV alone could supply global electricity needs device—inspire wonder. But the more realistic if annual production of silicon panels grew and likely path for cleantech will be through 30 percent a year until 2030 steady improvements to existing technolo- gies: innovations as opposed to inventions. While less sexy than thin-film approaches, silicon PV technology will win in much the Here’s why: Technology adoption doesn’t same way silicon CMOS technology wins in happen in a vacuum. There are broader microelectronics: despite many competi- social, cultural, political, and especially eco- tors, none have succeeded. So expect sig- nomic contexts that influence things. There nificant innovations in the coming years, are powerful incumbent technologies, like ranging from novel manufacturing and solar coal-fired power plants and oil extraction and cell printing approaches like PARC’s—which refining. These have large economies of scale: allow PV deployment to be self-sustaining terawatt-level, far beyond the gigawatt scale without subsidy in less than 10 years—to of today’s solar. So displacing today’s carbon demand-side reduction strategies (LED economy is easier said than done. lighting, efficient cars and appliances, smart systems) that can be implemented very While many have already dissected what quickly to cut energy use. went wrong with Solyndra, the company actu- ally had one thing right: It recognized that Alan Kay, a computer scientist at PARC, the only way to compete with incumbents is famously said, “The best way to predict the to grow very big, very quickly. Unfortunately, future is to invent it.” When applied to clean- Solyndra’s CIGS approach was unproven tech—where the future hinges on deploying and did not result in the necessary cost per- solutions at a massive scale—I say the best formance. Why? Because the process of way to predict the future is to innovate it. optimizing novel semiconductor materials like Solyndra’s is painstaking, a point made Elrod directs the Cleantech Innovation Program abundantly clear by the National Renewable at PARC, which focuses on energy efficiency, Energy Laboratory’s research into PV-cell clean water, renewable fuels, and more.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 38. STATE OF GREEN BUSINESS 2012corporate reporting 38INVESTORS SAY, ‘INFORMATION, PLEASE’Number of reports filed by S&P 500 companies 240 250 230 163 197 200 148 All Reports 150 131 107 104 97 100 81 68 55 45 50 GRI-compliant 0 2006 2007 2008 2009 2010 2011Source: CorporateRegister.comWhat We Found: Forty-eight percent of S&P of investing in a particular company. Of course,500 Companies now report non-financial envi- they can benefit the companies themselves,ronmental and social performance indicators, too, by providing a road map for efficiency andup 4 percent from 2010. other improvements.What We Measured: Data from the UK-based What We’re Seeing: Bloomberg, ThompsonCorporateRegister.com, which maintains the Reuters, and other financial data providers haveworld’s largest online directory of sustainability moved to incorporate sustainability indicatorsreports. Over the past 5 years, the number of into their databases, making corporate sustain-reports has increased 125 percent. ability data available at investors’ fingertips. The information contained in a company’s corpo-Why It Matters: When companies track envi- rate responsibility report is increasingly impor-ronmental and social impacts, they can gain tant to investor decision making and, as a result,a great deal of self-knowledge. They also can to companies’ boards and executives.begin to set goals and targets for improving per-formance. Doing so aids investors and share- “Shareholders are changing the game,” says Mikeholders as they analyze the overall health of Wallace, US director of the Global Reportingcompanies and assess the benefits and risks Initiative (GRI), a global framework for corporate© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 39. STATE OF GREEN BUSINESS 2012 39responsibility reporting. “They feel emboldened “Procurement is probably going to end up beingby all the recent market turmoil and they are the biggest driver,” Wallace says, pointing atdemanding more transparency.” companies like Puma, Microsoft, and Nestle that require suppliers to publish sustainability Companies in the DowCompanies are keeping up with those demands. reports. “Suppliers want to comply because Jones and NasdaqThe KPMG International Survey of Corporate they want to keep the buyer happy, but also buy-Responsibility Reporting 2011 found that 95 ers can freely stop in and check things out—gov- sustainability indexespercent of Global Fortune 250 companies are ernment officials and investors can’t do that.” are required to issuereporting on corporate responsibility. Reporting sustainability reportsincreased 11 percent among the 100 largest What’s Next: With more global companies using and they are currentlycompanies in the 34 countries surveyed since the GRI indicators and framework to report, outperforming non-the firm’s last survey of reporting in 2008. the next move is toward getting these reports verified by third-party auditors. Several of the reporting companies.More importantly, the survey showed that over largest accounting firms that audit companyhalf of the reporting Global 250 companies said financial statements are beginning to train staffthey gain financial value from their sustainabil- to audit sustainability reports. The Singaporeity initiatives. Companies in the Dow Jones and stock exchange recently issued a preference forNasdaq sustainability indexes are required to companies whose CSR reports were third-partyissue sustainability reports and they are cur- verified, and GRI’s Wallace expects to see morerently outperforming non-reporting companies. institutions showing this preference. Currently only 10 percent of US companies have their CorporateRegister.com is theInitiatives by governments, stock exchanges and reports verified. global corporate responsibilitythe United Nations (through its Principles for (CR) resources website. It hosts the world’s most comprehensiveResponsible Investment, or PRI) are driving the Key Players: directory of CR and sustain-uptick in reporting, as well. In South Africa, for ability reports, profiling overexample, corporate reporting rose to a whop- • Puma has joined with GRI-certified partners 38,000 reports worldwide from almost 8,700 companies. With anping 97 percent in 2011, up from 45 percent in to train its suppliers to produce reports that archive stretching back to 19902008; KMPG attributes this dramatic increase align with its own. The plan now is to get it is indispensable for anyone working in the field of CR andto the country’s King Corporate Governance all of the company’s suppliers producing sustainability reporting.Commission code. On the global scale, all 800 reports, and then ask them to have thosePRI signatories—which includes large interna- reports verified by a third party. Working with some of the lead- ing organizations in corporatetional asset managers such as CalPERS, the responsibility, CorporateRegister.AFL-CIO Reserve Fund, and the BBC Pension • Copenhagen Stock Exchange. The Danish com hosts several official report- ing registers. Further site featuresTrust, as well as investment managers such as government is requiring that all listed com- include a fully searchable direc-Black Rock, JP Morgan, and T. Rowe Price—have panies either report on material environ- tory of over 7,000 organisationssaid they want to see more disclosure, not just mental and social governance issues or (‘reporting partners’) actively involved in CR reporting.on carbon emissions, but on corporate envi- explain why those issues are not material.ronmental and social governance more broadly. CorporateRegister.com devel- oped the world’s first an-Thirty-three of the world’s stock exchanges now • US General Services Administration. The nual global online CR reportingeither require or strongly encourage listed com- biggest buyer in the world is the US govern- awards, the CRRA – see www.panies to report on their management of envi- ment, and it is looking to green its supply reporting-awards.comronmental and social issues. chain. Its impact remains to be seen, but www.corporateregister.com • the GSA has had procurement staff trained info@corporateregister.com • +44 20 7014 3366It’s not all top-down efforts driving disclosure. on the GRI indicators.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 40. STATE OF GREEN BUSINESS 2012 40 Reporting: The Seed for Innovation, GrowtH By John Hickox, Americas leader for Climate Change & Sustainability, KPMG International Corporate responsibility (CR) reporting was treated as part of the company’s compre- once seen as fulfilling a moral obligation to hensive performance reporting, both to inter- society. Now, many companies recognize that nal management and external stakeholders. disclosing activities that benefit their employ- Ultimately, a combination of financial and CR ees, community, and the environment has reporting is a more comprehensive approach become a business imperative. Organizations to reflecting a company’s full performance in are increasingly demonstrating that report- delivering on its strategy. ing provides financial value, drives innovation, fosters efficiency, and promotes learning, all Data Assurance. As CR reporting becomes de of which helps companies expand their busi- rigueur, both external and internal stakehold- ness and increase value to stakeholders. ers will be reviewing the reports with increasing scrutiny. That raises another issue: data qual- A recent KPMG study found 83 percent of the ity. Because CR reporting is still a nascent field, largest firms report their CR activities, up from each company seems to be slowly evolving its 74 percent in 2008. There are several reasons own information systems and processes. for this growth. The top motivations included reputation and brand, employee motivation, In the long run, however, restatements, errors innovation and learning, and risk manage- and omissions in CR reporting can begin to ment—all of which combine to provide greater erode investor confidence in the data, but impetus to make CR reporting part of an orga- also in the quality of the organization’s wider nization’s overall business strategy. But nearly governance structure and internal controls. half of the companies reported increased As a result, CR reporting systems must quickly financial value as a result of their CR reporting. reach a level equal to current financial report- ing, including a comparable quality of gover- Although there is plenty of progress being nance, controls and management. made on sustainability reporting. There is plenty of progress being made on sustainabil- While external assurance results in enhanced ity reporting. Here are credibility, companies can also gain internal benefits, as well. For example, assurance can Integrated Reports. The rise of CR reporting provide opportunities to identify and drive raises the question of how companies should process and performance improvements. be providing this information to their stake- And it can provide opportunities for organiza- holders to receive the greatest benefits from tions to sharpen their CR reporting to deliver its disclosure. more value to all interested parties. A few companies have combined their CR and CR reporting is now a requirement for any financial reports into one annual report. While company hoping to be seen as a responsible this is a valuable stepping-stone in building a corporate citizen. But the benefits go far holistic understanding of how CR impacts the beyond bolstering reputation: CR reporting business, companies will likely gain greater can be an integral part of a business’s strategy value once both sets of information are to innovate, grow, and gain market share.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 41. STATE OF GREEN BUSINESS 2012employee commuting 41CARPOOLING TAKES A U-TURN Mode of commuting, by percentage Drive Alone 75.7 76.6 73.2 64.4 Carpool 19.7 13.4 12.2 9.7 Public Transit 6.4 5.3 4.9 4.7 1980 1990 2000 2010Source: US Census Bureau and American Community SurveyWhat We Found: The American workforce work is an important but often-ignored factorhasn’t shaken its love affair with driving just yet, in a company’s overall environmental impact.but there are promising signs for the future. But most commuters—about 105 million of them—drive, singly, most days. For a five-day-What We Measured: A half percentage point a-week habit with a car that gets 19 MGP, theincrease in commuters driving, solo, to work, average 24-mile roundtrip commute generatesalong with small dips in carpooling and public 8,000 pounds of CO2 emitted each year. Andtransit use, according to the US Census Bureau while many commuters would love to defrayand American Community Survey. the thousands they spend on gas and car main- tenance (about $8,000 for an average familyWhy It Matters: How employees get to and from of four) each year, they generally consider the© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 42. STATE OF GREEN BUSINESS 2012 42alternatives—long bus or train rides; biking on settings with few public transit options andpoor roads—unappealing. expansive campuses. This can serve as a part of a larger initiative to lower the organization’sWhat We’re Seeing: While the latest data from overall emissions, as is the case at the Nationalthe US Census Bureau doesn’t reveal any dra- Renewable Energy Lab (see page 43).matic shift in commute preferences, it alsogives a very wide-angle view. The survey asks Another hopeful sign is that during the first Employers arecommuters how they normally get to work, but it nine months of 2011, the American Public looking for ways todoesn’t reveal that many people telecommute Transportation Association tracked a 2 percent entice single driversone or two days a week, says Phil Winters, direc- increase in ridership on public buses and trains.tor of the transportation demand management out of their carsprogram at the University of South Florida’s This trend may continue, even as the economy through initiativesCenter for Urban Transportation Research. recovers: A study, commissioned by car-shar- that increaseOr that they ride their bikes from time to time. ing service Zipcar, found that 55 percent of transit options andThese “alternative” commuting methods might Millennials (18-34 year-olds) are actively try- encourage ridesharingnot dominate, but they’re hidden from view in ing to drive less, up from 45 percent in 2010.the stats. Millenials also indicated a preference for using a and cycling. car-sharing service over private car ownership.The economy is also having an impact on pref-erences. “If you and I carpool together, but then What It Would Take: More employers taking aI get laid off, that’s two less carpoolers,” he says. proactive approach to encourage alternativeSimilarly, employees who are concerned about commuting methods and to connect the dotsjob security in a tight job market may not be will- between forms of commuting and good health.ing to gamble on a late bus or a sweaty bike ride Also key is government support, such as taxif they’re used to driving. benefits, that encourage public transit, carpool- ing and biking. Currently, cycle-commuters canStill, things are changing. In Sweden, Volvo earn $20 month in commuter checks, while driv-employees designed a smartphone application, ers can earn up to $240 to cover parking fees.called Commute Greener, that allows individu- Bike advocates say that’s not enough incentiveals to determine the carbon emissions related to ditch cars.to their normal commutes, as well as test outalternative means of getting to work. Employees What to Look For: While most US programs arewere able to reduce the carbon footprints of still nascent, bike-sharing is emerging as a meanstheir commutes by as much as third within a to an end for commuters who find that publicmonth of using the tool. Mexico City used the transit can get them close to their offices, butapp in a pilot program as part of its initiative to not close enough. Bike-share stations near tran-redice city-wide emissions. The pilot showed sit hubs allow commuters to ride that last mile orthat individuals were able to reduce their com- two without trying to lug their own bikes—if theymute-related emission by up to 40 percent. have one—onto a bus or train. And in a whole new twist on the concept of frequent-flyer rewards,Employers are also looking for ways to entice a London startup called PleaseCycle has devel-single drivers out of their cars through initiatives oped an application that lets employees trackthat increase transit options and encourage their bike-commuting miles in exchange for dis-ridesharing and cycling—especially in suburban counts on products or even days off.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 43. STATE OF GREEN BUSINESS 2012 43 How NREL FosterS Low-Impact Commuting By Lissa Myers, Traffic/Transportation Project Manager, National Renewable Energy Laboratory The US Department of Energy’s National Web-based rideshare database; free shuttles Renewable Energy Laboratory (NREL) is across the campus and to nearby transit sta- committed to advancing renewable energy— tions; bike paths, bike parking and showers for and not just in theory. NREL’s Golden, Colo., cycling employees; and flexible work prac- campus, just west of Denver, is more than tices ranging from compressed workweeks to a decade ahead of the 2030 Department regular telecommuting options. of Energy mission directive to produce a net-zero energy building, thanks to an ultra- NREL’s commuting program is consistent efficient building design and the use of clean with its mission and with federal mandates, power, such as that collected from rooftop but it is also a sound business practice. photovoltaic panels. The focus on energy Executive management continues to sup- conservation extends beyond buildings. port the program because it delivers results, NREL’s employee commuting program has including providing better quality of life, led to a 6 percent decrease in single-occu- improved employee morale, and increased pant vehicle commute trips, during a time productivity. when the facility’s staff grew by 50 percent. Despite ongoing logistical and geographic NREL’s culture supports its employee-­ challenges, NREL continues to make prog- commuting initiative, and the program plays ress on its commuting program. In the latest an important part in NREL’s wider effort commuter survey, approximately 19 per- to reduce its greenhouse gas emissions to cent of NREL staff said they telecommute meet federal reporting goals. Plus, the pro- at least one day a week and another 24 per- gram helps NREL, which employs 2,000 cent reported telecommuting at least once people in Golden, act as a good neighbor by a month. Telecommuting now represents reducing traffic and environmental impacts. about 4 percent of total commute trips, up from just 1 percent in 2007. NREL wants to Altering the way people commute hasn’t improve on these stats, with a goal of hav- been easy. It’s a big behavior change, even ing 32 percent of staff telecommute at least among the most green-minded employees. once a week. NREL’s campus is located in a suburban environment surrounded by low-density It takes time. Growing our complex program residential development, minimal business has required champions at the highest level development, and limited transit service. within NREL, convenient access to informa- Before the program launched in 2008, there tion about alternative commuting choices, were few easy alternatives to driving to work. staff training and guidance, as well as devel- oping a top-down and bottom-up approach To encourage staffers, NREL offers a buf- that includes individual attention and nurtur- fet of options, including free public-transit ing as employees adopt significant behavior passes and vouchers for vanpool services; a changes.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 44. STATE OF GREEN BUSINESS 2012EMPLOYEE TELECOMMUTING 44MORE WORKING AT HOME, BY DESIGN OR CIRCUMSTANCEMillions of telecommuter households 10.0 9.5 9.2 9.1 9.0 8.9 8.6 8.6 8.6 8.5 8.5 8.4 8.0 7.5 2004 2005 2006 2007 2008 2009 2010 2011 Source: IDCWhat We Found: Telecommuting is gaining Why It Matters: The conventional 9-to-5, com-popularity with both companies and employ- muter workforce has a major downside: cloggedees, and 2011 saw slight gains in the number of roadways. For more than 75 percent of workinghouseholds where someone works from home Americans, driving solo to and from work is theat least three days a week. norm (see page 41). And there’s the negative impact of business travel, which puts peopleWhat We Measured: There were 8.6 million in security lines and hotel lounges when theytelecommuter households at the end of 2011, could be doing actual business. The energy weup a tick from 8.5 million in 2010, according to could save if US employees with telecommute-IDC Research, based on its analysis of a survey compatible jobs worked from home half theit administers. IDC defines a telecommuter as time equals almost half of the oil we import fromsomeone who works from home at least three the Persian Gulf, figures the Telework Researchdays per week. Network, a research and consultancy firm.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 45. STATE OF GREEN BUSINESS 2012 45What We’re Seeing: The cubicle is doomed, but Moreover, the costs of IT resources needed tojust how long a plank it will walk is still unclear. support telecommuting can be offset throughAfter steady growth in telecommuting during lower real estate needs, lower energy consump-the early 2000s, it petered out in the recession tion, and the ability to keep people working dur-and workers started feeling insecure about their ing disruptions, such as severe weather events.absence from the office. But the tide is turning, Employers are also increasingly interested in Distrust among middleboth among telecommuters and their current using telecommuting and flexible schedules as managers is the(and possible future) employers. Between now a means of reducing their organization’s carbonand 2016, the Telework Resource Network (TRN) footprint, as the National Renewable Energy Lab biggest single hurdleestimates the number of regular telecommut- is doing (see page 43). If everyone in the United to growing the ranks ofers will grow by 69 percent. States who could telecommute did so regu- telecommuters, says larly, TRN estimates the greenhouse gas impact the Telework Resource“People are really bummed out and burned out would be equivalent to taking the entire New Network.as result of the recession,” says Kate Lister, pres- York State workforce off the road.ident of TRN. “At the beginning of the recession,they were glad to have a job. But now they have For telecommuting to really take off, employersto do more with less. They’re discontented. So need to stop equating productivity with arbitraryemployers are looking again at work-life quality hours, so-called “face time” and the clamor of aissues.” That means they’re eager to offer tele- crowded office, because distrust among middlecommuting options to employees who prove managers is the biggest single hurdle to growingthemselves productive outside the office. And the ranks of telecommuters, says TRN. On thewhen it comes to hiring, offering flexibility and flip side, employees and job-hunters also needsupport for telework can be what wins over a to prove themselves to be effective communi-favored candidate. cators who are able to meet or exceed work tar- gets in order to gain employers’ confidence.Obviously, no one could telecommute withoutsome basic technology, such as a fast Internet Who’s Making It Work: Plantronics, a maker ofconnection and reliable phone service. But tech wireless handsets, recently redesigned its Santaadvances are also chipping away at the biggest Cruz, Calif., headquarters and included largehurdle for remote workers: the fact that they’re monitors in meeting rooms, so employees cannot physically at work. Virtual conferencing tools call in both audibly and visibly, using confer-can’t totally replace every nuance of in-person encing software. The office also includes small,meetings, but they’re perfectly adequate for private meeting rooms with monitors, for one-many types of collaboration and interaction. on-one virtual meetings. Plus, the office, which is big on meeting spaces and small on cubicles,Plus, telecommuting can be good for busi- is designed to accommodate only about 75 per-ness. Researchers at Stanford teamed up with cent of employees, expecting the rest will bea Chinese travel agency to test the anecdotal either traveling or telecommuting.evidence that employees who telecommute aremore productive. It proved true. Operating at Cisco is taking a similar tack in how it redesignshome, the group of 255 newbie telecommuters its workspaces (see page 46). It helps reignplaced more calls, worked longer hours (thanks in the emissions produced through businesspartly to no commute time) and took fewer sick travel with its TelePresence platform. This tooldays than their in-office colleagues. The upshot: goes beyond basic videoconferencing by cre-improved sales and reduced turnover, thanks to ating virtual meeting spaces for small groups ofmore contented workers. people who can be located around the world.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 46. STATE OF GREEN BUSINESS 2012 46 Telecommuting for Sustainability By Gordon Feller, Director, Internet Business Solutions Group, Cisco How do we reduce the environmental impact 67 percent of all assigned seats were empty. of, literally, going about our business? We Observed occupancy studies showed that start the way we always have: with infrastruc- even badged-in employees spent far less time ture and the tools and technologies that sup- at their desks than they thought they did. The port it. Ultimately, these are the things that workspace simply no longer fit the nature of shape our cities. the work or the worker. Research models suggest that within five By allocating workspaces and developing tools years, a smart and connected city of 5 million to foster telecommuting, we were able to bet- can realize an estimated $15 billion growth ter utilize the campus and lower the percent- in revenues, 9.5 percent GDP growth, and age of empty assigned seats to 50 percent. 30 percent in energy savings while creat- Along the way, we created a template for work- ing approximately 375,000 new jobs. This place efficiency. Non-entitled and non-hier- revolution presents enormous potential to archical, the spaces respond to group-level enhance workplace performance and sup- needs and actual workplace demand. port workplace mobility in many ways, includ- ing rethinking the office experience. The Amsterdam Smart Work Centers. What office won’t disappear, but it will attain higher began as a mayoral initiative to reduce com- value at the nexus of social interchange and muting grew within three years into a public- collaborative knowledge sharing. Look for private network of more than 100 telepres- design innovations that hybridize the norms ence centers, virtual clusters of network and of a conventional workspace into an experi- videoconferencing services that change the ential destination: user-centric, flexible, and way work and collaboration is organized. dynamic. Amsterdam’s vision evolved into a Cisco Where collaboration goes to work. Suppose Smart+Connected Communities initiative, your company champions collaboration and providing services for connected real estate, teamwork, but then you find that, because of government services, utilities, transportation, this collaboration and teamwork, two-thirds and healthcare. Teaming with a large eco- of the total assigned seats in your real estate system of private and commercial partners, portfolio are going unoccupied each day. Amsterdam deployed a citywide network That’s what we found at Cisco, and it’s why we that forms a strong foundation for the deliv- decided to redesign how Cisco works. ery of smart services and fostering economic growth. A public telepresence service allows With more than 63,000 employees in a global people to collaborate and work face to face real estate portfolio of 21.5 million square so that they can reduce travel, save time, and feet, Cisco faced the same workforce and accelerate decision making without having to technology shifts as all organizations. Work purchase or support high-end videoconfer- styles were changing, but space allocation encing equipment—and ushers in the possi- was static and underutilized. On a typical day bility of disconnecting the workplace of the in our San Jose, Calif., campus, an average of future from the office building entirely.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 47. STATE OF GREEN BUSINESS 2012energy efficiency 47AFTER DECADES OF DECLINES, A SHOCKING UPTURNBTUs per dollar of GDP 8.34 6.97 6.38 4.58 3.12 2.42 1.85 1.80 1950 1960 1970 1980 1990 2000 2009 2010Source: US Energy Information AdministrationWhat We Found: The energy consumed per change—will improve without major changesdollar of gross domestic product grew slightly in to how businesses invest in energy efficiency2010, the first increase after steady declines for technologies and techniques. Inefficiency rep-more than half a century. resents a major opportunity to improve energy utilization and reduce the amount of energy weWhat We Measured: A 4.5 percent increase in need to produce to keep feeding the economicthe combined primary energy consumption, by machine. Moving to renewable sources ofthe industrial and commercial sectors, from the energy is vital to sustaining the economy in theUS Energy Information Administration, normal- future, but the first order of business is to makeized for GDP. sure we are using the least amount of energy needed to do the most amount of work.Why It Matters: We waste about 86 percent ofall the energy produced in the United States. What We’re Seeing: “In 2010, we had an econ-Experts don’t expect that our overall efficiency omy that was weakened, and investments were—not to mention our impacts on global climate down to 1998 levels. As a result, we weren’t© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 48. STATE OF GREEN BUSINESS 2012 48upgrading and moving toward more productive There are hopeful signs, however, such asand more energy-efficient technologies in 2010, President Obama’s Better Buildings Challenge,as we might have, otherwise,” says John “Skip” which commits $2 billion to energy upgradesLaitner, the director of economic and social of federal buildings, and another $2 billion ofanalysis for the American Council for an Energy- private capital commitments for efficiencyEfficient Economy. upgrades of existing buildings. The goal is to Until the pain of make buildings 20 percent more efficient by energy costs rises,That picture didn’t much change in 2011. Laitner 2020.also notes a worrying trend in his research: most Americans won’tslow economic growth isn’t sufficient to sup- What It Would Take: Increasing efficiencies will be in the mood to doport efficiency improvements. Because we’re require retooling industrial systems, using inte- anything about it.not working on improving efficiency, the cost of grative design as a model (see our interview withenergy services is going up. “When I say energy Amory Lovins, page 49). Out of all the resourcesservices, it’s not just the cost of energy, but we extract and industrial processes put in place,also all of the associated market constraints,” we’re only turning about 14 percent into usefulhe says. For example: Increased air pollution energy that drives the economy, says Laitner.air leads to more acute illnesses, which lead to Doubling or tripling that would be both a majormore people missing work and less productivity. economic driver as well as a significant cut toAlso included in energy services are the costs of greenhouse emissions.pollution-control measures and technology toboost energy efficiency and research. That means marrying energy-efficiency efforts with renewable energy—something some utili-We should see a small increase in efficiency for ties are already doing, in part by rolling out smart2011, once the data is available, but it’s not likely meters to ratepayers and offering dynamic pric-to be a sizable one. And it’ll be nothing on the ing to encourage the use of renewables.scale of what we need to see, says Laitner. “Inthe next couple of years we’re going to see 1.4 But we’re at a crossroads. Laitner says utilitiesor 1.5 percent increase in efficiencies per year— need to turn ratepayers into investors in newless than half of what we saw in the mid ‘90s energy-efficiency efforts and technologies byand early 2000s, when there was a 3 percent demonstrating how much they can reduce theirimprovement in efficiencies per year.” overall costs. But Amreican ratepayers already are showing signs of fatigue when it comes toIt’s a non-virtuous circle: In today’s weak econ- taking energy-efficiency measures. A surveyomy, gross domestic product is not likely to by research firm Shelton Group found thatincrease by more than 2 percent a year, which 58 percent of respondents would not be will-reduces the chances for a revitalized job mar- ing to invest their money in energy-efficiencyket and continues to eliminate new investment improvements until their utility bills increasedopportunities to power the economy efficiently; more than $75 each month.it also lowers tax revenue and limits govern-ment’s ability to invest in climate change solu- That is to say, until the pain of energy costs rises,tion, such as more energy-efficient technolo- most Americans won’t be in the mood to dogies and renewable energy. anything about it.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 49. STATE OF GREEN BUSINESS 2012 49 ENERGY’S TWO REVOLUTIONS Interview with Amory Lovins, co-founder, chairman and chief scientist ,Rocky Mountain Institute GreenBiz: What does the near future hold these give you much more than the sum of the for businesses looking to make progress on parts, especially in creating disruptive busi- improving energy efficiency? ness opportunities. Amory Lovins: Many more business leaders We also detail the opportunities for busi- will start to realize over the next year that the nesses to get more work out of the energy efficiency potential is much larger and more they’re now using. We found that the 120 mil- lucrative than had been thought and that the lion buildings in the United States could triple channels for delivering efficiency services or quadruple their energy productivity with an and performance to them are maturing. average internal rate of return of 33 percent. That is, by investing $0.5 trillion, you could We’ve just surveyed the opportunities return $1.9 trillion in present value. In indus- in depth in a new business book called try, too, we found ample scope for doubling Reinventing Fire: Bold Business Solutions for energy productivity with a 21 percent internal the New Energy Era and a supporting web- rate of return. These are among the highest site ReinventingFire.com. We had extensive and least risky returns in the whole economy. participation by business in both content and peer-review. The findings were star- The 120 million buildings in tling: The book details how the United States the United States could triple could run a 2.6-fold bigger economy in 2050 or quadruple their energy with no oil, no coal, no nuclear energy, one- productivity with an average third less natural gas, and at a $5 trillion lower return of 33 percent. net present value cost, assuming all exter- nalities are worth zero—meaning we calcu- GreenBiz: A lot has been achieved in terms late savings only from market prices without of energy efficiency over the past few years, counting any hidden environmental or social especially in commercial buildings. Are there costs or benefits. All this requires no new specific technologies or systems that you inventions and no new acts of Congress: the think hold particular promise for expanding on transition is led by business for profit. these gains? We integrated all four energy-using sec- Lovins: I think the big story in buildings, indus- tors—transport, buildings, industry, and try, and vehicles efficiency is what we call electricity—and found, as you might expect, integrative design. That’s not a technology; it’s a lot easier to solve the automotive and it’s way of combining technologies to get big- electricity problems together rather than ger savings at lower cost—that is, to achieve separately. We also integrated four kinds of expanding returns, not diminishing returns, to innovation—not just the usual two, technol- investments in energy efficiency. ogy and policy, but also design and strategy, which are even richer in potential. Together, (continues on next page)© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 50. STATE OF GREEN BUSINESS 2012 50 The Empire State Building, where we co-led renewables in 2010 were more than a $151 bil- the design [of a recent efficiency overhaul], is lion business that added over 60 billion watts a good example. The key to the Empire State in that year alone, and thereby exceeded the Building retrofit was an unprecedented onsite installed global capacity of nuclear power. remanufacturing of all 6,514 windows so they’d pass light much better than heat. Those This is a big opportunity, not only for those “superwindows,” combined with better lights who sell the equipment but also for all elec- and office equipment and other improve- tricity users, because it implements the early ments, cut the peak cooling load by a third. stages of a very important shift to an effi- Then, instead of replacing and expanding the cient, distributed, diverse, renewable sup- old chillers, we could renovate them in place ply system. That’s already happening very and reduce them. That saved over $17 million quickly. Portugal went from 17 to 45 percent of capital expenditures, which helped pay for renewable electricity during 2005–10, while the United States went from 9 to 10 percent. Most people don’t realize While congressional wrangling in 2010 halved that half of the world’s new US wind-power installations, China doubled generating capacity since its wind capacity for the fifth year in a row and 2008 has been renewable. blew past its 2020 target. Germany, which gets less sun than Seattle, added 242 percent as much photovoltaic capacity in the month everything else. The overall results have been of July 2011 as the United States added in all of stunning: payback of the investments in three 2010. If we catch up to what other countries, years, enormously improved financial perfor- especially China, are doing, we’re in the midst mance, and higher occupancy with higher rent of the biggest infrastructure shift in history. and higher-quality tenancies. And to [owner The efficiency and renewables revolutions are Tony Malkin’s] great credit, he’s rolling these intimately intertwined; each of them helps the projects out to his whole portfolio and freely other happen better, faster and cheaper. sharing all of the analysis and findings with his competitors. That public-spirited generosity Amory Lovins is a thought leader who’s not con- benefits the whole industry. tent with just thinking. In addition to his work as a consultant to major corporations and ad-hoc GreenBiz: How fast is all of this moving? Can advisor to heads of state, he’s an experimental we really get there quickly? physicist whose CV includes designing ultra-light and extremely efficient vehicles as well as showing Lovins: There are two revolutions going on that the more efficiency is designed into a building in electricity. One is saving most of it that’s or factory, using his disruptive integrative-design now wasted, and the other is making it differ- approach, the faster its payback and the lower its ently. Most people don’t realize that half of the costs. He co-founded Rocky Mountain Institute, a world’s new generating capacity since 2008 “think-and-do tank” that conducts research and has been renewable. If you exclude the big engages with stakeholders to drive the efficient hydro dams that are still being built in some and restorative use of resources—creating, as he countries, the remaining, more distributed puts it, “abundance by design.”© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 51. STATE OF GREEN BUSINESS 2012environmental financial impacts 51a DROP in what companies are costing the earthCost of environmental damage as a percentage of economic outputSource: TrucostWhat We Found: The environmental impacts economic activity, as a proxy for improvements,of the 1,600 companies contained in the or lack thereof, across the economy.MSCI World Index—a stock market index usedas a common benchmark for stock funds— Why It Matters: Aggregated financial impactincreased from 2009 to 2010, the most recent measures how efficiently companies producedata, but revenue grew slightly more, resulting goods and services. It measures ongoing com-in a 3 percent decrease in companies’ environ- pany efforts to improve efficiency, providingmental impact intensity. (The data are based goods and services to a growing global popula-on companies’ fiscal years, for which they issue tion while consuming fewer resources and gen-reports, but which do not necessarily coincide erating fewer emissions and less waste.with calendar years.) What We’re Seeing: The environmental costsWhat We Measured: Each year, the UK-based associated with companies in the MSCI Worldresearch firm Trucost measures the financial Index increased between fiscal years 2009 andcosts of hundreds of environmental impacts 2010. But overall corporate revenue increasedof 4,300 of the world’s largest companies, even more, meaning that the ratio of emissionsincluding the 1,600 from 24 countries listed in to revenue decreased—a seemingly positivethe MSCI World index. It tracks more than 700 sign. But because intensity improved even whileenvironmental impacts for each—a wide range total emissions increased, this indicator trendof emissions into air, water, and soil, including a line appears better than it really is.range of pollutants from acetaldehyde to zinc—and assigns a dollar amount to each impact and The lion’s share of the financial impacts—thatfor each company. This indicator shows the is, the companies levying the highest cost oftotal impacts for the MSCI subset, normalized to environmental damage—lie with just four of© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 52. STATE OF GREEN BUSINESS 2012 52the 19 sectors Trucost assesses: utilities, food universe. Dow has committed $10 million to forand beverage, basic resources, and oil and gas. research on applying scientific knowledge andTogether, these four are responsible for 65 experience to understanding the interrelation-percent of the roughly $1.2 trillion in impacts. ship between Dow’s business and the ecosys-It is well worth noting that these four sectors tems in which it operates. Dow plans to publiclyconsist of companies from which companies share information from the process and createin other sectors purchase the ingredients for tools for other companies to use. That’s the brass“downstream” products and services. “Those ring: fully integratingfour industries are supplier industries to all the That’s hardly the only research going on about environmentalother industries,” notes James Salo, Senior Vice the economics of nature’s services. Another isPresident, Strategy and Research at Trucost. The Economics of Ecosystems and Biodiversity financial impacts into“Whereas auto manufacturing isn’t one of the (TEEB) study, initiated by the G8 and five major financial reporting,top sectors, their purchasing is really driving the developing economies and focusing on “the allowing companiesimpacts.” That, he says, underscores the need global economic benefit of biological diversity, and their stakeholdersfor companies to take stock of the environmen- the costs of the loss of biodiversity, and the to get visibility intotal impacts of their upstream suppliers. failure to take protective measures versus the the financial impacts costs of effective conservation.” TEEB make theHow much did the economy factor into the drop case for integrating the economics of biodiver- companies are levyingin impacts? Simply put, it’s hard to know,. Even sity and ecosystem services in decision-making. on the planet.though the data are normalized to revenue,which should account for flucutations in eco- A glimpse of this can be seen in the pioneer-nomic activity, it’s unclear, for example, whether ing efforts of Puma, the shoe and sportswearthe reduction in impacts had to do with com- company, which last year said it would measurepanies being more efficient, or because they its use of ecosystems to determine its eco-made less stuff, selling things they already had nomic impact on ecosystem services—any-in inventory from previous years. As Salo suc- thing that nature provides: clean water, crops,cinctly puts it: “It’s complicated.” soil formation, wildlife habitat, protection from storms, and more. Puma is looking at both theWhat’s Next: Complexity notwithstanding, impact of its direct operations and its sup-there’s a growing movement to better under- ply chain, and plans to issue an environmentalstand companies’ financial impacts on the envi- profit-and-loss statement based on its find-ronment in order to help them measure, track, ings. The company is working with Trucost andand reduce them. Last year, for example, Dow PricewaterhouseCoopers.Chemical announced a five-year partnershipwith The Nature Conservancy to help incorpo- That’s the brass ring: fully integrating environ-rate the value that nature brings—from water mental financial impacts into financial report-and soil’s value to agriculture to the benefits ing, allowing companies, and all their stakehold-wetlands and reefs offer to insurance compa- ers, to get visibility into the financial impactsnies—into business decisions, plans and strate- companies are levying on the planet, and whatgies, both for Dow as well as in the larger business steps they’re taking to reduce them.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 53. STATE OF GREEN BUSINESS 2012e-waste 53STILL JUST A DROP IN THE DIGITAL BUCKET Thousands of tons of electronics discarded and recycled annually in the United States 2,600 2,590 2,440 2,460 d D iscarde oducts 2,270 Comp uter Pr 1,710 649 600 560 550 cycling r Re Colle cted fo 360 2010 2009 190 2008 2007 2005 2000Source: US Environmental Protection AgencyWhat We Found: Collection and responsible Why It Matters: In addition to significant healthdisposal of recycling are improving, but today’s and environmental hazards from both landfilledsuccesses are still just a molehill compared to and poorly dismantled electronics, e-waste isthe mountain of e-waste to be addressed. increasingly recognized as a waste of valuable and competitively strategic materials.What We Measure: In 2010, 2.44 million tons ofelectronics were discarded in the United States, What We’re Seeing: That old saying about trashand just 649,000 were recovered for recycling. being like treasure? It turns out that is more trueThat’s a slight improvement over 2009, when of e-waste than almost any other type of trash.600,000 tons were recycled out of a total 2.59 The mountain of gadgets that Americans dis-million tons discarded, according to the US card every year—a mountain that this year, forEnvironmental Protection Agency. the first time since record-keeping began, didn’t© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 54. STATE OF GREEN BUSINESS 2012 54grow over the prior year—contains rivers of gold, processing of e-waste. While domestic pro-silver, copper and a host of materials that have cessing requirements have been responsible forpotentially long and valuable lives ahead of much of the resistance to the federal e-wastethem. Those same electronics also pose major laws (especially from the scrap recyclers’ tradehealth and environmental risks, whether they’re association ISRI), such standards are gain-sent to landfill or inexpertly dismantled, as is ing traction with other stakeholders. Recently,often the case with “artisanal” e-waste opera- a splinter group of recycling companies has The trend in e-wastetions overseas. launched the Coalition for American Electronics has been the same Recycling to push for a domestic-only e-waste over the past fiveE-waste is on the radar for everyone from envi- management policy.ronmental groups like the Basel Action Network years, with theto the federal government to retailers like Corporate Buy-Back Initiatives: Companies are amount of electronicsBest Buy and eBay. Unfortunately, the trend in stepping up to the plate, even in the absence of discarded growinge-waste data has been more of the same over legislation. Retailers are increasing their incen- at the same rate, ifthe past five years, with the amount of electron- tives for electronics take-back and trade-in not faster, than theics discarded growing at the same rate, if not programs, in the hopes of reselling equipmentfaster, than the amount collected for recycling. that hasn’t yet reached the end of its useful life amount collected for or selling the end-of-life materials to recycling recycling.There are encouraging signs, however, that companies. eBay and Best Buy have ramped upchange is happening behind the scenes that will their programs to take-back and resell electron-make it possible to recover more of the mate- ics, while Sprint set an ambitious target of cre-rials in gadgets, and to process them domesti- ating zero e-waste by 2017. Sprint is also build-cally and responsibly. ing incentives for cell phone recycling into the buying process, offering instant rebates for oldLegislation: At the federal level, a new focus on phones when you buy a new one.the economic benefits of responsible e-wasterecycling may give this year’s bill the legs past Where It’s Going: There will no doubt be somebills have lacked. First, requiring domestic pro- policy debate this year as the latest federalcessing of electronic waste would be a boon e-waste legislation grinds through Congress. Infor job creation. Second, by not reclaiming our 2010, President Obama tried to launch a federalown e-waste, we’re exporting rare and valu- strategy for e-waste management, but it’s beenable materials—including the aptly named rare stalled repeatedly; 2012 may be the year thatearth minerals—to China and other economic recommendations get published. In the pre-competitors. These materials are critical to sumed policy lull, we expect to see companiesnext-generation technologies—including LED continue to step up their efforts to capture atlighting, hybrid and electric vehicle batteries, least some of the flow of unwanted electronics,telecommunications gear, and medical innova- including novel efforts like ecoATM’s e-wastetions—and many US corporations are keen to recycling kiosk, which sat front-and-center atkeep such resources close at hand. the CES consumer electronics show in January and will roll out nationwide this year. As moreStandards: Two competing responsible e-waste people cycle through more gadgets at a morestandards, e-Stewards and R2, continue to rapid clip, there’s incentive aplenty to recapturetake up market share, with the main difference the value from unwanted electronics, functionalbeing e-Stewards’ requirement of domestic and otherwise.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 55. STATE OF GREEN BUSINESS 2012fleet impacts 55EMISSIONS IMPROVEMENTS STILL CREEPING FORWARDEstimated annual greenhouse gas emissions per vehicle (in tons) 14.85 14.63 12.41 12.13 11.53 2007 2008 2009 2010 2011Source: GreenBiz Group researchWhat We Found: Greenhouse gas emissions per Why It Matters: The commercial fleet industryfleet vehicle rose 13.8 percent in 2011, after fall- is a major contributor to transportation-relateding steadily since we first tracked this indicator greenhouse gas emissions—but it’s also a majorin 2007. force for reducing emissions. Through their frequent use, passenger vehicles within com-What We Measured: GreenBiz aggregates fuel mercial fleets emit twice the carbon pollutionconsumption data from the largest US fleet as personal cars. In fact, the Environmentalcompanies, including ARI, Donlen, Enterprise Defense Fund estimates that fleet passengerFleet Management, GE Capital Fleet Services, vehicles and medium-duty trucks on US roadsLeasePlan, and PHH Arval, then determines the produce at least 45 million metric tons of carbongreenhouse gas emissions per vehicle based pollution each year. Since the inaugural Stateon the Environmental Protection Agency’s of Green Business report, in 2008, companiesgreenhouse gas inventory data. We’ve revised have reduced per-vehicle emissions by as muchlast year’s figures based on newly updated EPA as 15 percent in a single year, saving billions andfigures. improving driver behavior along the way.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 56. STATE OF GREEN BUSINESS 2012 56What We’re Seeing: It’s hard to know exactly In coming years, Sumrall believes more fleetwhat led to the per-vehicle emissions increase managers will look closely at the life-cyclein 2011, but the total number of fleet vehicles costs of the vehicles they bring into their fleets.fell from 2010 to 2011, indicating that more “People have done their experimentation,” hemiles were put on each vehicle. “The [fleets] says. “And now they’re asking ‘Okay, how do Iindustry is getting busier,” says Doyle Sumrall, tailor my technology to be the right long-termsenior director of business development for improvement?’”the National Truck Equipment Association. Over the coming“The year 2009 was the worst for trucks” as Key Players: years, fleet managersthe recession squelched demand. This led to a will look closely at the“huge glut of extra vehicles” and so fleet manag- • Delivery Services. The US Postal Service isers reduced fleet size. But with an eye toward leading the charge in reducing the impact of lifecycle costs of thelowering costs and improving their environmen- its fleet. Alternative-fuel vehicles account vehicles they bring intotal credibility, fleet managers are not buying as for 20 percent of its overall delivery fleet, their fleets.many new vehicles, while trying to improve utili- and it has replaced 6,600 vehicles withzation and efficiency of current stock. more efficient vehicles, saving 2.2 million gallons of gas a year. USPS also is relying lessAcross all fleet vehicle categories, from pas- on vehicles and more on bicycle-poweredsenger cars to heavy duty trucks, fleet manag- and foot-powered routes.ers have turned in recent years to the use oftelematics, which combines in-vehicle tele- FedEx and UPS have also moved into alt-communications and information technology to fueled trucks. Both rely on telematics andimprove routing and efficient driving; right-sizing driver education to boost vehicle efficiencyfleets so that vehicles are well matched to their and software to improve how parcels aretasks, in terms of power, size, and fuel consump- loaded for shipping. FedEx Express got intotion; and testing out alternative fuels and drive the act this year, announcing it will moretrains, such as compressed natural gas, electric than double its fleet of all-electric vehi-and hybrid vehicles, to reduce emissions. Fleet cles to 43 and increase its use of hybrid-companies are also moving toward car-sharing electric vehicles. UPS has been usingmodels as a means of reducing the size of pas- hydraulic hybrids. In addition to capturingsenger car fleets (see page 57). power through the braking system, hydrau- lic hybrid engines can be shut off whenWhile production of electric vehicles during stopped or decelerating.2011 was lower and slower than many predicted,fleets (including rental and car-share fleets) • Municipalities. Many cities are reducing theare where EVs are expected to make an initial emissions of their fleets, particularly waste-impact. EVs are scaling up in size, too. Missouri- hauling trucks. In addition to using routingbased Smith Electric Vehicles filed for an initial software to reduce fuel and optimize eachpublic offering in 2011 and plans to build a man- truck’s time on the road, waste collectionufacturing facility in New York next year to pro- agencies are turning to a resource they’veduce its all-electric medium duty vehicle with a got plenty of to fuel their collection trucks:range of up to 150 miles. Duane Reed, Staples, landfill gas. DeKalb County, Ga., is one ofand Frito-Lay are among the companies that many cities and counties converting itshave added Smith’s trucks to their fleets, which trucks to operate on compressed naturalcost one-third to one-half that of conventional gas supplied by a processing facility at onediesel trucks (of comparable weight) to operate. of its landfills.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 57. STATE OF GREEN BUSINESS 2012 57 Car-sharing: A Solution for Fleet Management By Lee Broughton, Corporate Sustainability, Enterprise Holdings Providing sustainable transportation and dishes to introduce innovative equipment mobility solutions has been at the core of our and alternative-fuel vehicles, gradually social- company’s mission for more than 55 years. izing new technology where people live and With this mind, Enterprise Holdings—which work. We’ve offered hybrids for years in both owns and operates our Enterprise brand as corporate and retail programs, and we’re well as the National Car Rental and Alamo currently offering electric vehicles in many Rent A Car brands—has helped advance a WeCar programs. These fleet enhancements new tool for companies looking to enhance are allowing some partners to dramatically fleet management operations and sustain- reduce the carbon footprint of their fleets. ability initiatives: car sharing. To that end, we consider car sharing to be In 2005, the Enterprise brand introduced part of the ongoing local mobility evolution hourly car rentals in large urban centers as and another step toward more efficient, a natural extension of our business rental sustainable transportation solutions. Given program. Then, in 2007, we launched our such attributes, it’s not surprising that car membership-based program WeCar by sharing sometimes can be used to reduce Enterprise B2B to embrace and help speed corporate fleet overhead. Many of our clients the adoption of car-sharing technology, and have leveraged car-sharing technology to the program has now expanded to more than reduce their traditional fleets by 30 percent 25 states. Our experience suggests that car or more—and they are able to start allocat- sharing can offer what many businesses, uni- ing these expenses on a broader basis since versities, government offices, military bases, vehicles no longer are assigned only to cer- and other facilities are seeking: a more nim- tain employees or departments full time. ble, accessible, and energy-efficient vehicle that can quickly respond to seasonal, geo- There’s an added bonus: WeCar supplements graphic, and daily fleet demands. This, in and facilitates our Rideshare vanpooling pro- turn, helps ensure drivers find WeCar vehi- gram. Rideshare serves both individual com- cles when and where they are needed, while muter groups and large employer work sites, advanced telematics simultaneously help with the average van freeing up nine parking boost vehicle utilization and reduce costs. spaces and eliminating 12,500 pounds of car- bon dioxide a month. WeCar and Rideshare The growth of nonprofit and for-profit car- also help reduce traffic congestion and fuel sharing services—at transportation hubs, consumption and, in the process, support corporate parks, college campuses, and long-term sustainability initiatives. other high-density locations—is highlighted elsewhere in this report. And while car-shar- As a result, innovative fleet management now ing’s novelty, convenience, and cost-effi- includes car sharing—along with car rental, car ciency have been well documented, there leasing, and vanpool programs—particularly is another major reason for its growth and as businesses incorporate their sustainabil- popularity. Local car-sharing fleets, just like ity goals into their comprehensive, long-term local car-rental fleets, can be used as Petri local transportation planning.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 58. STATE OF GREEN BUSINESS 2012green it 58IT’S TIME FOR STANDARDS TO REBOOTNumber of computers certified by Energy Star and EPEAT 15000 12684 12000 9798 9000 7004 6000 3656 3881* 3000 0 2007 2008 2009 2010 2011*Denotes year of transition to new level of Energy Star certification requirementsSource: GreenBiz Group researchWhat We Found: Green labels have come to stay green design to energy efficiency to easy recy-for computers and displays, with double-digit clability at end of life—will be increasingly impor-increases in both Energy Star and EPEAT cer- tant to make step-changes in energy and mate-tifications—but electronics manufacturers are rials sustainability.coasting to success, thanks to aging standards. What We’re Seeing: Green IT has proven to beWhat We Measured: The number of products one of the consistently most promising dataachieving Energy Star certification went up 20 sets we research, and this year’s data is nopercent over last year, while EPEAT certifica- different.tions rose 37 percent. First, the data: We measure adoption of greenWhy It Matters: As the world shifts to conduct IT based on the number of computers and dis-more of its business digitally, green IT—from plays that earn certification under Energy Star© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 59. STATE OF GREEN BUSINESS 2012 59and EPEAT. And those figures continue to show they’re not doing anything, and the energy usedsteady growth, if not quite as rapid as in years to power them is simply wasted.past. Where It’s Going: The next year will almost cer-Those figures are slightly complicated by the tainly continue to speed the adoption of green ITfact that both data sets are somewhat long in the certifications—unless either or both standardstooth: EPEAT standards haven’t been updated raise the bar. If Energy Star 6.0 is made final The evolution fromin five years, and Energy Star 5.0 is nearly three in 2012, expect to see a significant drop in the Energy Star 3.0 to 5.0years old; given the ever-improving state of number of products bearing the label—although between 2008 andcomputer efficiency, it’s gotten easier to design such a drop is actually a good sign, since it willmachines to meet such aging standards. prod manufacturers to step up their energy per- 2012 will drive down formance. The same goes for EPEAT, although the energy used byBut the growth in certifications does indicate since the standard is likely to expand its reach to large televisions by asan increase in awareness of energy efficiency in cover printers and televisions in 2012, don’t hold much as two-thirds.IT products. EPEAT, in particular, is both rapidly your breath for an EPEAT 2.0 in 2012. Outside ofexpanding its reach around the globe and set- certifications, we expect to see more collabora-ting its sights on a broader range of products tion and further innovation among IT giants, asdomestically. The market’s rapid shift to por- the trend toward openness continues and thetable devices—especially laptops, tablets, and major players share their skills to bring everyonee-readers—also drives the growth in demand for up to speed.energy-efficient electronics. Key PlayersBeyond green IT certifications, another trend inthe greening of IT is cloud computing, as com- • IT leaders: Google and Facebook in par-panies shift ever more of their computing oper- ticular represent the welcome new trendations beyond their own four walls, and major in openness, at least around energy andplayers like Amazon, Microsoft, and Google step carbon, in the IT sector. Facebook’s Openup to become the world’s data centers. Compute Project shares detailed speci- fications to help anyone build a cheap,Despite an ongoing debate about the secu- high-powered, and highly efficient server.rity and environmental benefits of outsourced Though it was launched last spring, expectcomputing, there’s little doubt that cloud com- the initiative to make bigger impacts in 2012.panies, driven by direct bottom-line benefits,have a strong incentive to run their massive • Greenpeace: The well-known rabble-rous-operations as efficiently as possible—includ- ing organization has notched significanting energy-efficiently. And the corporate data successes in campaigns against Apple andcenter is certainly in need of a push: Estimates Facebook, and its ongoing Guide to Greenerby IT leaders suggest that as many as 30 per- Electronics serves as a kind of priority-set-cent of servers are comatose—they’re on, but ting guide for the industry.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 60. STATE OF GREEN BUSINESS 2012 60 ICT and the Future of Low-Energy Computing By Jonathan Koomey, Ph.D., Consulting Professor at the Department of Civil and Environmental Engineering, Stanford University The performance of computers has shown and only just now beginning to be understood. remarkable and steady growth over the past 60 years. The electrical efficiency of com- As an example of what’s possible using puting—the number of computations that ultra-low-power computing, consider the can be completed per kilowatt-hour of elec- wireless no-battery sensors created by tricity—has doubled about every 18 months Joshua R. Smith of Intel and the University of since the dawn of the computer age. The Washington. These sensors scavenge energy existence of laptop computers, cellphones, from stray TV and radio signals, and they use and personal digital assistants was enabled so little power that they don’t need any other by these trends, and has led to continuing, power source. Stray light, motion, or heat rapid reductions in the power consumed by can also be converted to meet slightly higher battery-powered computing devices. And power needs, perhaps measured in milliwatts. that in turn has made possible new and varied applications for mobile computing, sensors, The contours of this exciting design space are and wireless communications and controls. only beginning to be explored. Imagine wire- less temperature, humidity, or pollution sen- The most important of these trends is that sors powered by ambient energy flows, send- the power needed to perform a task requir- ing information over wireless networks, and ing a fixed number of computations will fall by which are so cheap and small that thousands half every 18 months, enabling mobile devices can be installed where needed. Imagine sen- to become smaller and less power consum- sors scattered throughout a factory so pol- ing. Alternatively, the performance of some lutant or materials leaks can be pinpointed mobile devices will continue to double every rapidly and precisely. Imagine sensors 18 months while maintaining the same bat- spread over vast areas of glacial ice, measur- tery life—assuming battery capacity doesn’t ing motion, temperature, and ambient solar improve. These two scenarios define the insolation at fine geographical resolution. range of possibilities. Some applications (like Imagine tiny sensors inside products that tell laptop computers) will tend towards the lat- consumers if temperatures while in transport ter scenario, while others (like mobile sensors and storage have been within a safe range. and controls) will rely on increased efficiency. These will help us lower greenhouse gas emis- sions and enable vastly more efficient use of These technologies will allow us to better resources. The possibilities are limited only by match energy service demands with energy our own cleverness. service supplies, and vastly increase our abil- ity to collect and use data in real time. They Koomey is one of the leading researchers on will also help us minimize the energy use and energy-efficient computing and the econom- emissions from accomplishing human goals, ics of reducing greenhouse gas emissions. a technical capability that we sorely need to This essay is adapted from his forthcoming combat climate change. The environmental book Cold Cash, Cool Climate: Science-based implications of these trends are profound Advice for Ecological Entrepreneurs.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 61. STATE OF GREEN BUSINESS 2012green office space 61NEW BUILDINGS improving FASTER THAN EXISTING ones LEED - New Construction NC Certifications NC Registrations 18573 17568 15751 9905 5650 5205 3744 2187 927 1453 2007 2008 2009 2010 2011 LEED - Existing Buildings and Commerical Interiors 5909 5969 CI Registrations EB Registrations CI Certifications EB Certifications 4009 3934 3454 2775 2211 2121 1435 1452 1711 701 626 767 814 399 209 170 356 69 2007 2008 2009 2010 2011Source: US Green Building CouncilWhat We Found: Despite a downturn in the What We Measured: 2011 saw nearly 2,000 newreal estate market, new construction projects offices certified under the US Green Buildingin the United States continued to pursue LEED Council’s Leadership in Energy & Environmentalgreen building certifications. However, interest Design (LEED) rating system, with the majorityin LEED certification among owners of existing of that growth coming from newly constructedbuildings dropped from 2010 to 2011. buildings. Meanwhile the number of buildings© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 62. STATE OF GREEN BUSINESS 2012 62seeking the relatively new LEED for Existing and thus the net premium to the occupant isBuildings certification dropped in 2010 after smaller than one might imagine.”rapid growth in 2008 and 2009. Holtzer cites talent retention as another partWhy It Matters: There are 4.8 million com- of green buildings’ allure. “Our clients’ newestmercial buildings in the United States, and col- and youngest employees are demanding greenlectively, they are responsible for 46 percent workspaces,” Holtzer says. “For the newestof the nation’s building energy use. Addressing entrants into the workforce, acting sustainably The number of boththe impacts of the built environment is key is critical. Many of our tenants see occupancy in new and existingto addressing a wide range of environmental a green building as a tool to attract and keep the buildings registeringissues. Also, green workspaces are often more brightest and most productive workforce.”efficient, both in terms of operating costs and in for LEED certificationthe ability to accommodate people comfortably Two initiatives from the federal government—the dropped from 2010 toin less space, thereby cutting real estate costs. revision of the General Services Administration 2011, which will resultAnd studies have shown that green workplaces (GSA) green leasing guidelines and President in a drop in certifiedare healthier and promote higher productivity Obama’s $4 billion Better Buildings Initiative— green office space inand employee satisfaction. are likely to fuel more growth in green office the year to come. space in 2012. The federal government is by farWhat We’re Seeing: Despite the recession and a the biggest tenant in the country, and the GSAsagging real estate market, green office spaces handles leasing for 193 million square feet. Whilecommand a premium and post above-average not a code or regulation, the Better Buildingsoccupancy rates. Rents are 4 percent higher Initiative is likely to fuel growth in the green build-for Energy Star–rated buildings and 5 percent ing market as well. As Watson says: “It’s difficulthigher for LEED-certified buildings. Green office for a $4 billion initiative not to make an impact.”buildings also sell at a premium—about 25 per-cent for both LEED and Energy Star. Key Players:“Tenants and their brokers increasingly under- • Citigroup. The financial services companystand that many of the benefits of green office has been leading the charge to designspaces accrue to the tenant and are therefore and implement energy efficiency financ-using sustainability as a way to determine which ing tools in the United States. Citi, alongoffice space fits their needs,” says Gary Holtzer, with Deutsche Bank and JPMorgan Chase,global sustainability officer at Hines, a privately- is looking to finance energy-efficient ret-held developer and property manager with a rofits via a financial vehicle similar to thatlong-standing commitment to building, owning, employed by energy services companies.and operating green office buildings. • Johnson Controls. A leading provider of“Market dynamics being what they are, people equipment and services for both pub-naturally are willing to pay more for quality and, lic- and private-sector buildings, Johnsonif it’s accessible financially, more people are Controls earned $4.1 billion in its Buildingwilling to buy quality,” says Rob Watson, CEO Efficiency business during Q4 2011, up 14of EcoTech International, senior contributor to percent from 2010. All five segments of itsGreenBiz.com, and a founder of the LEED rating Building Efficiency business increased fromsystem. “Although the rent might be higher for 2010 to 2011, led by the Global Workplacegreen space, the operating costs are also lower Solutions division (up 24 percent).© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 63. STATE OF GREEN BUSINESS 2012 63 Inside LEED’s Disappointing Numbers Interview with Rob Watson, CEO, EcoTech International GreenBiz: LEED for Existing Buildings (LEED ASHRAE 189 [the technical association’s sus- EBOM) seems to have slowed. Why is that? tainable building standard] also has been in the market for about a year now and people Rob Watson: First, the number of buildings are becoming more familiar with it, so it should is not important when gauging the impact of not be too long before we see the first official LEED. If we want to gauge the impact envi- adoption of the standard. We will see a signifi- ronmentally and financially, the correct mea- cant impact from the adoption of this stan- sure is square footage. By this measure, the dard, both in terms of raising the floor for mini- real issue—and the real disappointment—is mally acceptable green construction, as well that the total floor area certified decreased as pushing voluntary standards like LEED. compared to 2010. Registrations performed slightly better—it is hard to be disappointed if GreenBiz: What general trends do you see in anything grows 17 percent in one year—but the green office space? truth is that the growth in existing building reg- istrations and certifications needs to double Watson: It is difficult to find a tenant lease or for the next three or four years and maintain construction specification from any major that level of certification and registration in corporation that does not have explicit guide- order to approach the carbon dioxide reduc- lines for space that is either LEED-certified, tions science agrees must happen. Energy Star-certified, or “built to LEED.” Most of the major new construction under way has There could be any number of things slowing some sort of Energy Star or LEED certification down adoption. Projects that were going to be attached to it. This is likely to drive the exist- built new have been repurposed for upgrading ing building stock because buildings that were existing buildings, which has delayed certain formerly “Class A” are no longer in this cate- timelines. Large portfolio holders that were gory, principally because the buildings coming going to put multiple buildings into the LEED online have an environmental certification. volume-build program have not yet done so because of delays in getting that program GreenBiz: What effect will the new GSA green launched. The building market across the leasing guidelines have on the overall market? board, including existing building upgrades, has also been affected by the financial crisis. Watson: A common refrain that I hear is that the old, 20th-century structure of leases GreenBiz: Are there new regulations or build- discourages the investment in green, either ing codes on the horizon that might affect from the tenant side or from the owner side. green office space? Although the impetus to go green is not strictly financial, lease structures that do not allow the Watson: Last year, the International Code investment to be recouped by the investor— Council launched its International Green whether it is the tenant or the landlord—can Construction Code, which puts green code put a brake on the move to go green. The struc- language at the fingertips of progressive code turing of lease documents to encourage green officials worldwide starting in spring 2012. actions can only benefit the market as a whole.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 64. STATE OF GREEN BUSINESS 2012green power use 64LARGE-SCALE INSTALLATIONS ARE A BRIGHT LIGHTPercentage of all US electricity generation from non-hydropower renewable sources 2005 2006 2007 2008 2009 2010 2011*Source: US Energy Information Administration* As of September 2011What We Found: Renewable energy still makes What We’re Seeing: Renewable energy installa-up just a small sliver of the total US energy pie, tions are still far behind where they need to be tobut the quantity has more than doubled since stem the rise of greenhouse gases, but the mar-2001 and the rate of growth increased in 2011. ket is maturing and 2011 saw rapid growth in the sector thanks largely to plummeting prices forWhat We Measured: 4.56 percent total US photovoltaic (PV) panels.power generation comes from non-hydrorenewable energy, up from 4.1 percent in 2010, The price of polysilicon dropped 89 percentbased on data from the US Energy Information between February 2008 and August 2011. InAdministration. addition to making the business case stron- ger for companies to own their solar systemsWhy It Matters: Businesses are heavy consum- as opposed to signing power purchase agree-ers of energy worldwide. As renewable energy ments, the newly low price of PV spurred varioussources begin to replace fossil fuel–based utility-scale solar projects, many of which hadenergy sources, carbon emissions will decline. been stalled thanks to the recession, to moveAt the same time, the greater the renewable forward.energy capacity, the better the business casebecomes for on-site renewable energy as well as “The cost reductions that are happening haveutility-scale projects, as costs continually drop. a real material impact on utility-scale solar© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 65. STATE OF GREEN BUSINESS 2012 65projects,” says Dan Shugar, CEO of Solaria. In the solar market. That means concentrat-California alone, there are more than 10 giga- ing solar power (CSP) could see a lull, butwatts (GW) of solar PV projects planned, up utility-scale solar plants may come onlinefrom 0.3 GW of operating projects today. These sooner than anticipated. Lower PV pricesaren’t pie-in-the-sky projects, either: 8.6 GW of aren’t great news for everyone, though. 2011that future capacity is already contracted for saw the shuttering of several leading solarthrough power purchase agreements. companies, including Evergreen Solar and The market is maturing SpectraWatt. Companies in the CSP space and 2011 saw rapidBy the end of first quarter of 2011, non-hydro were equally unsettled by low PV prices growth in the sectorrenewable energy accounted for about 10 per- as major utility-scale solar farms, such ascent of the global power supply, according the California- and Nevada-based Solar thanks largely toto the REN21 Renewables 2011 Global Status Millennium, opted to replace planned CSP plummeting prices forReport. With solar posting a record third quarter installations with more PV. photovoltaic panels.in 2011, that number could be significantly largerby year’s end. As of September 30, 2011, the • Section 1603 Treasury Program and fed-total solar installed in the United States was over eral Production Tax Credit. Set to expire1 gigawatt, compared to 887 MW in 2010. December 31, 2011, the 1603 Treasury Program allows developers to receive aThe wind industry also grew in 2011. At the end cash grant in lieu of the Investment Taxof the third quarter, 8,400 megawatts (MW) of Credit (ITC). The TGP has supported morewind power capacity were under construction than a thousand solar projects representingin the United States, and installed wind power over $3 billion in total investment. If the pro-capacity stood at 3,360 MW, exceeding installa- gram is not renewed, expect to see a down-tions up to the same point in 2010 by 75 percent. turn for all renewable energy sectors in theDespite increasingly loud complaints about aes- United States. The Production Tax Creditthetics, noise pollution, and the impact of tur- (PTC), meanwhile, is set to expire at the endbines on bird and bat populations, wind power of 2012, pushing developers to completelooks set to continue growing. China alone plans construction of numerous projects in orderto install more than 30 MW of wind power by to get the tax credit while it’s still available.2012. We’re likely to see increased geothermalcapacity in the years ahead as well, thanks to • Offshore wind. In early 2011, the provincetechnological advancements that are opening of Ontario, Canada, canceled all offshoreup new possibilities. And while wave and tidal wind plans, saying it needed to further studytechnologies are still nascent, both made big possible health effects. The cancellationstrides toward commercialization in 2011 with of offshore wind projects was also seen inthe largest pilot installations yet off the coasts the United States in 2011, including the 150of both Ireland and the United States (Oregon). MW Great Lakes Offshore Wind Project. Nonetheless, Secretary of the Interior KenWhat to Watch: Three key factors are likely to Salazar and Secretary of Energy Steven Chuhave a big impact on green power in 2012: unveiled a national offshore wind strategy in February 2011 with a goal of deploying 10• Polysilicon prices. If they stay level or GW of offshore wind capacity by 2020 and drop, PV is likely to continue to dominate 54 GW by 2030.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 66. STATE OF GREEN BUSINESS 2012 66 Best Buy and the NEW Consumer energy Market Interview with Neil McPhail, Senior Vice President and General Manager, Best Buy GreenBiz: You began selling plug-in charging Tony Fadell to what it does for you and the stations this year—why? story behind it. It’s a very nice-looking piece of equipment. Second, there are some tech- Neil McPhail: We saw it as an open area in the nologies out there that consumers have been launch of electric vehicles. There was a lot of hearing a lot about for a long time, but don’t consumer confusion around charging, the necessarily understand. A lot of the home choices available, and then who’s my part- energy control devices, for example. There’s ner for that? We had the opportunity to step a lot of interest in lighting. We hear all the in and fill that niche, helping customers navi- time, “Why is an LED light more expensive?” gate the confusion and make good choices. and that helps us engage in conversation and One of the things we do at BestBuy is educate demystify that technology a bit for customers. consumers around technology and choices, we help to demystify things a little. That’s GreenBiz: Is consumer interest driven by the the same whether you’re talking about new sleeker, better-designed form factors of these mobile technology or new clean technology. products, or by energy savings? GreenBiz: Is it possible we’ll see Best Buy sell- McPhail: It’s the integration of both: a cool, ing solar and wind systems at some point? new product and the value it brings to the con- sumer, particularly those products that inter- McPhail: We hear questions around solar and act with devices the consumer already has. In wind all the time. I think there has been more the home-energy control space, for example, and more curiosity lately because the startup we’re able to show people in the stores how community has created this groundswell of you can use this new device with your smart opportunity with different finance models. phone and turn down the heat when you’re There’s a tremendous amount of interest. at the office, then turn it on a half hour before We’re very interested in understanding our you’re home so you’re not wasting a day’s customers’ needs and constantly looking for worth of heat. That’s huge when we can show ways to fulfill them. them that this ubiquitous device that’s already been controlling other parts of their life can GreenBiz: What has the reception been to now be translated to energy efficiency. the home energy departments you’re piloting in three Best Buy stores? GreenBiz: What about business customers? McPhail: Consumer interest is stronger than McPhail: There are a lot of opportunities for we initially anticipated, and that interest has technology and knowledge transfer from the so far been driven by a couple things. First, home energy space to small and medium there are some cool new technologies out businesses. The home energy group can do there, like the Nest Learning Thermostat. business-level audits as well and we would That’s an exciting product and an iconic love to take the solutions we’re seeing for con- sort of product with a lot of consumer inter- sumers and what we’ve learned and use them est around everything from [iPod designer] to educate small businesses.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 67. STATE OF GREEN BUSINESS 2012organic agriculture 67SALES RISING FASTER THAN CONVENTIONAL FOODSSales of US organic food, in million $ consumer sales; percentage of total food salesSource: US Department of AgricultureWhat We Found: After slowing with the Great Organic Trade Association (OTA), a member-Recession, the market for organic foods began ship-based business association for the organicto climb out of a trough during 2011. industry in North America. During the same period, overall food sales in the United StatesWhat We Measured: Organic food sales rose 7.7 crawled, at just 0.6 percent—the slowest growthpercent in 2010, according to the Organic Trade in the past decade. Organic fruits and vegeta-Association’s 2011 Organic Industry Survey. bles accounted for 39.7 percent of the total organic food growth and 12 percent of all US fruitWhy It Matters: Agriculture accounts for roughly and vegetable sales, while organic dairy grew by7 percent of US greenhouse gas emissions, but 9 percent in 2010, accounting for 6 percent of allorganic farming practices help reduce that dairy sales. Combined, these two organic seg-impact in a number of ways, such as avoiding ments represent $14.5 billion in sales.synthetic pesticides and fertilizers and theirassociated emissions. Soil in organic farmland Not too shabby, but still the $29 billion organicis also better at recycling organic matter and (food and non-food) market represents just 4conserving nutrients than soil on conventional percent of all agriculture products. Aside fromfarms, which means it sequesters more carbon. a few titans, such as the organic dairy co-opOrganic practices allow less nitrates to leach Organic Valley, the industry is still just a sprout.into groundwater, improve biodiversity in both More than 60 percent of the OTA’s trade mem-flora and fauna, use more energy-efficient farm- bers are small businesses.ing systems, and reduce soil erosion. But the industry’s growth shows that it is winningWhat We’re Seeing: US sales of organic food hearts and minds. Organic Valley’s CEO Georgegrew by nearly 8 percent during 2010, says the Siemon says the current surge in organics sales© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 68. STATE OF GREEN BUSINESS 2012 68has much to do with the industry’s outreach to Another resource, Siemon says, is acreage com-young families—specifically to young mothers, ing out of the USDA’s Conservation Reservemore of whom are choosing to feed their chil- Program, under which the agency pays rent fordren organic food. acreage along streams and rivers. The land is planted with grasses and trees, which reduceIn addition to healthy sales, there’s a growing erosion, retain nutrients, and provide valuablebody of evidence that organic agriculture can— habitat for wildlife. As land is cycled out of that There’s a growingdespite conventional wisdom—be scaled up program, it’s primed for use raising organic body of evidence thatenough to meet global food demand. Findings crops. “It’s our job to try to grab those acres,” organic agriculture canof the Long-Term Agroecological Research says Siemon. “But it would be good if the govern-Experiment, a 13-year-old study run by the ment could encourage that kind of thing.” be scaled up enoughIowa State University’s Leopold Center for to meet global foodSustainable Agriculture, show comparable What’s Next: In 2011, sustainable farming advo- demand.yields in organic- and conventionally-raised cates (in fact, the whole agriculture sector) werecommodity crops. caught by surprise when legislators pushed for an accelerated schedule to renew the Farm Bill,Plus, there are troubling signs that conventional a massive piece of legal wrangling that is up forfarming tools are becoming less useful: Weeds renewal in 2012. Advocates called negotiationsare becoming resistant to potent herbicides, secretive and worried that farm programs thatand insects are starting to show tolerance for benefit small producers would be axed by thegenetically engineered plants like Monsanto’s Super Committee, tasked with cutting trillionscorn. And research is suggesting that organic from the US deficit.farming systems and best practices like inte-grated pest management can reduce harm from The committee failed to do anything and nowpests and weeds in a chemical-free manner. organic farming advocates, such as the Organic Farming Research Foundation (OFRF), are gear-Despite the industry’s growth, attaining acreage ing up for a fight in 2012 to protect the fundingfor organic farming is still a big challenge, says that supports organic certification, research,Siemon. “Ethanol has shifted the dynamics of standards, crop insurance, and data collection.feed and livestock. We’re seeing 40 percent ofcorn [grown in the United States] going to etha- The Farm Bill is criticized for favoring commod-nol, and that has raised land rent tremendously. ity crops and Big Ag through its subsidies pro-This is a real challenge for people looking to get gram. OFRF and other groups point to the stronginto organic farming,” he says, adding that to growth of the organic industry, its role as a jobscounteract that, Organic Valley tries to connect engine, and forecasts that show demand for landlords who want their land farmed organi- organics will outstrip supply in the coming years cally with would-be organic farmers who have as reasons the industry should receive more been priced out by land costs. government backing.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 69. STATE OF GREEN BUSINESS 2012 69 Organic Isn’t Enough; Here’s What Really Matters By Arlin Wasserman What we eat has a major impact on the econ- one of the early successes toward our goal. omy and the planet: The global food and agri- So have efforts to promote sustainably pro- culture industry uses about a quarter of all duced seafood, tropical products, and live- arable land, is responsible for 20 percent of stock. Each has different concerns, from greenhouse gas emissions, and food produc- species extinction to reforestation to reduc- tion and service employs about one billion ing methane emissions. So by looking only at people, many of who live in poverty. certified organic food, one would miss the changes Sodexo is trying to achieve. While interest in food choices—where it comes from, how it’s grown, who grew it— Certified organic purchases reflect success increases (at least in the United States and in the older approach to selling green prod- Europe), consumers are ceding more of those ucts alongside products where sustainability choices to businesses by eating fewer home- isn’t on the ingredient list. That’s a shift other cooked meals. Making more of those choices industries have moved through and the food has been a big opportunity for the food ser- and agriculture sector is now taking on. vice industry and companies like Sodexo, one of the world’s leading providers of contracted Until 2007, “sustainable” food service was services to business and institutions, includ- an option available to clients and custom- ing food service. Sodexo now serves about 50 ers to choose, but didn’t leverage Sodexo’s million people a day globally, including 9 mil- national and global purchasing power. Dining lion meals in the United States alone. formats like PLANit—which focused on cer- tified organic and natural ingredients—mir- In 2007, Sodexo began a new chapter in its rored earlier trends in green marketing: bet- approach to sustainability, especially in food ter products available at a higher price for a service operations. It recognized that its abil- niche market, but not an innovation or driver ity to impact the health of the planet, the of change in our business. people it serves, and the communities where it operates was tied to its overall operations. Moving forward, the state of green business Its impact and opportunity lies in the purchas- in the food and agriculture sector will need to ing choices made on behalf of the millions of look at more complex indicators of success people it serves and its ability to focus those like improving food production practices in choices to deliver greater environmental and conventional operations and creating new social benefits. For example, Sodexo found market opportunities for small and mid-sized the carbon footprint from a couple of items— producers that also are providing ecosystem beef and cheese—was greater than emissions services by improving water quality, rebuild- from all office, travel, and fleet operations in ing soil, and restoring wildlife habitat. North America combined. Arlin Wasserman is a partner at Changing Initiatives like Meatless Mondays, which pro- Tastes and a fellow at the Aspen Institute. motes a diet including more plant-based From 2007-2011, he was Vice President for foods and fewer animal proteins, has been Sustainability at Sodexo.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 70. STATE OF GREEN BUSINESS 2012packaging intensity 70EFFICIENCIES ARE FLATTENING OUTThousand of tons of packaging material per billion dollars of GDP 5.09 4.90 4.59 4.57 4.34 2006 2007 2008 2009 2010Source: GreenBiz Group researchWhat We Found: Retail packaging has gotten What We’re Seeing: From 2005 through 2009,lighter and smaller over the last several years, we watched packaging intensity decrease,but an increase in secondary packaging—used slowly but surely. Light-weighting, the practicein wholesale distribution and e-commerce of reducing the amount of material needed tosales—has helped drive up total material use for produce a given packaging type, was a big rea-packaging. son. It’s been the low-hanging fruit for manu- facturers who want to lighten their packagingWhat We Measured: Packaging material inten- load. Kraft Foods, for example, used it as partsity grew 5 percent in 2010—a disappointing of a larger effort through which it reduced itschange from steady declines over the previous packaging intensity by 200 million tons between5 years. We collected data showing the produc- 2005 and 2010.tion of paper, plastic and aluminum for packag-ing in the United States to determine the amount “Since we work on various projects related to theof packaging used, then we normalize this based sourcing of materials, their design and end of life,on the gross domestic product. the weight reduction we’ve achieved is based on a combination of projects,” says RichardWhy It Matters: About a third of what you’ll find Buino, spokesperson for Kraft Foods. “Many ofin a landfill is packaging, and businesses are the projects are driven by how we’ve ‘designedthe ones producing it. While we need efforts to out waste’ by reducing the amount of packag-improve recycling, we also need less of the stuff ing material needed in a particular design. Onceto begin with. With some products, such as sin- implemented, this adds up over time. Anothergle-serve beverage containers, the packaging is method is altering the sourcing of our packagingsometimes the biggest contributor to its carbon materials, such as moving from glass to plastic,footprint. or to a composite paperboard canister.”© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 71. STATE OF GREEN BUSINESS 2012 71But light-weighting works only up to the point then you take all of the secondary packaging itwhere manufacturers can’t safely remove any arrives in, and you cut open the box and air pil-more of the weight from the packaging, as it low or whatever is used to protect it, and you layneeds to protect its products. That’s what all that out, it might be 6 square feet, and maybe Some manufacturershappened, says Coca-Cola, when it had cut 57 weigh 8 ounces. If you did that with the primary have removed sopercent, 33 percent and 25 percent from its packaging, that might only be one square footglass bottles, aluminum cans, and PET bottles, much weightthat and maybe one ounce,” says Salazar.respectively. they’re seeing more What to Look For: Sourcing better materials for breakage of productsThis scenario played out among a number of packaging is another positive approach compa- in transport. The fix?major consumer packaged goods companies, nies can take—even though it’s not revealed in Beef up the secondarywhich could be partly why we didn’t see fur- the weight-based statistics we use here. packaging used to shipther declines in packaging weight in 2010. As forwhy the weight increased a bit, green packaging Using recycled materials helps create markets the goods.advocate and consultant Dennis Salazar thinks and encourages growth in recycling programs,that could be due, ironically, to these aforemen- while also reducing the environmental impactstioned light-weighting efforts. Some manufac- of packaging. One positive sign of change is thatturers have removed so much weight, he says, the amount of recycled PET produced in thethat they’re seeing more breakage of products United States has been steadily increasing—upin transport. The fix? Beef up the secondary 2.2 percent between 2009 and 2010, and uppackaging used to ship the goods. 121 percent between 2001 and 2010, according to the National Association for PET ContainerAdd increasing demand in the e-commerce Resources.sales channel, and secondary packaging lookslike a serious culprit. “Most people only think Coca-Cola and PepsiCo are both making majorabout primary packaging, but think of the shift moves into switching from oil to agriculturalwe’re seeing from retail to e-commerce,” he byproducts for source material for their PET, andsays. That’s where the secondary packaging, they’re already offering 100 percent bio-basedused to ship individual items (as opposed to high-density polyethylene. The tougher part isthe cartons used to ship items in bulk to retail scaling up a bio-based source for terephthalicstores) comes into play. acid, which accounts for 70 percent of PET bot- tles by weight. Coca-Cola has announced part-“If you order some ink cartridges for your com- nerships with three materials science firms toputer online, rather than going into a store, and ramp up this research.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 72. STATE OF GREEN BUSINESS 2012 72 A Progress Report on Walmart’s Sustainable Packaging Scorecard By Ronald Sasine, Senior Director of Packaging, Walmart As the world’s largest retailer, Walmart’s • By working with our Great Value yogurt actions can drive throughout our industry, supplier to reshape containers and shift among manufacturers, and along our global from a single-serve container to a four- supply chain. These suppliers share our pack, we reduced shipping costs, saving vision and understand how much we value about 20 million gallons of diesel fuel the environment, and they are taking steps annually, while eliminating the equivalent to reduce the impact of their packaging. They of 48 garbage truck loads of packaging. have recorded packaging details for over 650,000 items (including Walmart in-house • We changed the dimensions on a series and national brands) in our sustainable pack- of in-store foodservice items—think veg- aging scorecard, launched in 2008. etable trays—that improved our freight efficiency by 96 percent and shelf- One of our goals is to reduce the emissions of stocking efficiency by half, reduced CO2 greenhouse gases that result from packaging emissions by 765,000 pounds, and cut the products we sell. We’re measuring these in-process scrap materials by 629,000 improvements and comparing current emis- pounds a year. sions per unit of product to the improvements that a new package would potentially bring. • We’ve found specific ways to elimi- Many of our largest opportunities involve not nate unneeded packaging components just packaging, but our entire network of dis- and simplify the way our products are tribution, logistics, and in-store operations, shipped, and we’ve achieved multi-mil- and the results can be far-reaching. This type lion dollar savings in a variety of our high- of holistic analysis has helped drive packaging est-volume product categories reductions across our stores and clubs: A secret of what we are doing is this: The • We launched a new bottle for our private most meaningful improvements we are mak- label Oak Leaf wine. It weighs 25 percent ing are those that appeal to our consumers less than the current bottle, which lowers and do a better job of delivering high-quality shipping cost, saves 6,700 tons of glass products to their homes. When our custom- from landfills, and $0.20 in savings per ers capture the impact of these packaging bottle that is passed along to customers. improvements in their own lives, whether through a price reduction at shelf or through • We partnered with our toy suppliers to better performance in their homes, they are remove the frustrating wire ties often much more likely to reward our actions with used to secure a toy in its packaging. The their repeat purchases. wire ties have been replaced with a much better option—paper string made of 100 Likewise, when these changes drive opera- percent recyclable pulp—which results in tional savings and labor efficiency in our eliminating over a billion feet of wire ties stores, we drive sustainability right to the bot- that would eventually end up in landfills. tom line.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 73. STATE OF GREEN BUSINESS 2012paper use and recycling 73some recent improvements are erased Thousands of tons of paper per billion dollars of GDP 11 109.77 9.16 9 8.58 8.56 8.28 8.31 8 7.88 7.76 7.33 7 6.79 6.13 6.20 6 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Source: American Forest & Paper AssociationWhat We Found: Paper use has been on the waste of office paper, packaging materials, anddecline for years, but it rebounded slightly in paper products are all business-related issues,2010. Recovery rates continued their upward and getting paper out of the waste stream is amarch, however. sign that companies are paying attention to their material use at the office—and in their products.What We Measured: We used 6.2 tons of paperper billion dollars of GDP in 2010, according What We’re Seeing: Over the past 13 years,to the American Forest & Paper Association paper intensity—paper use per billion dollars(AF&PA). That’s up slightly from 6.13 tons in of GDP—has declined steadily, and recycling2009, but we reclaimed more of that paper than rates have risen simultaneously, meaning thatever, with a 63.5 percent recovery rate. less paper is being used, and even less of what’s used is going into landfills. But 2010 saw a level-Why It Matters: Despite advances in digital ing off of recovery rates and a slight increase inworkflow, paper still has its place in the office, paper intensity. Whether this is the beginning ofas well as in the factory. Today, the AF&PA esti- the plateau we predicted in last year’s report, ormates that paper makes up about 5 percent just a blip, remains to be seen. Likely, it’s just aof the nation’s manufacturing GDP. Reducing blip.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 74. STATE OF GREEN BUSINESS 2012 74The economy has had a profound impact on just residential markets and into commercialnearly every indicator in our set over the last few markets, where paper makes up a higher per-years, and paper is no exception. Paper use has centage of the waste stream. That could helpsteadily dropped in good economic times as boost recovery rates in the commercial sector,well as bad, though after the recession of 2002 supporting continued progress on our indicatorand 2003 there was a similar uptick in 2004. It in the years ahead.seems likely, then, that intensity will shrink again Recyclers and paperin the coming years. What to Look For: manufacturers both point to an increaseAs for collection, recyclers and paper manufac- • New Paper Products: Waste Management in single-streamturers both point to an increase in single-stream says it’s working to capture more value recycling collection asrecycling collection as one reason the 2010 from paper that’s recovered through single- one reason the 2010numbers may have wobbled. Overall, these stream programs by looking at new prod-recycling programs, which mix paper, plastic, ucts. While the company isn’t likely to begin numbers may haveglass, and metals in the same bin, have helped manufacturing its own recycled paper any wobbled.boost collection rates across residential mar- time soon, look for it to begin piloting newkets. That’s especially true for plastics and glass, ways to pull value out of the waste stream,which have lagged behind paper in recycling beyond traditional recycling. First up? Fuelrates. According to Lewis Fix, Vice President of pellets from recovered paper that doesn’tBrand Management and Sustainable Product make the grade for traditional recycling.Development at Domtar, the long-term impacton paper recycling is somewhat ambiguous. • Paper Use Rebound. While reducing paper use has become a marquee environmen-“I’ve heard some folks say it’s ‘bad for paper’ tal behavior at home and at work, there’s abecause it’s tough to keep that product in that growing awareness that substituting digi-top tier of recycled paper,” he says. “The stuff tal products for paper use isn’t always theyou put in your blue bin; that’s not going to go best environmental choice (see E-wasteback to the top of the food chain.” With more and Green IT indicators, pages 53 and 58).materials mixed up in the bin, paper that ends While it may not happen in 2012, Fix saysup in the recycling can get wet and dirty from he expects to see paper use rise within theother items, making it harder to collect clean, next few years. “When the automobile wasdry fiber for recycling back into the high-quality invented, a lot of cities ripped out their tran-paper markets. But Fix cautions, “I talk to other sit—streetcars, lightrail systems, etc.” hepeople that are very in touch with the recycling said. “They’re starting to put them back inindustry that would say exactly the opposite. now.” He expects to see something similarMaking it easy … has turned far more people into happen where paper use is concerned: “Irecyclers than ever before in the past.” think that there’s probably some similarity that’s going to happen with digital commu-While the jury is still out on the impact of single- nications, digital workflow. We’re going tostream programs, Waste Management says it’s really figure out the best, most efficient waybeginning to look at extending its efforts out of to integrate the two of them.”© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 75. STATE OF GREEN BUSINESS 2012toxic emissions 75an unhealthy rise in Hazardous materialsPounds of emissions per thousand dollars of GDPSource: US Environmental Protection AgencyWhat We Found: Toxic emissions are on the on the economy, it’s no real surprise toxic emis-rise, and without regulatory action, they seem sions increased in 2010, the most recent yearunlikely to abate in the year ahead. for which data is available. According to the EPA, such increases can typically be traced to a fewWhat We Measured: Total emissions to air, soil, big polluters, and the 2010 increase is no excep-and water of toxic substances measured by the tion. Emissions of lead, arsenic, and asbes-US Environmental Protection Agency’s Toxics tos are responsible for the lion’s share of theRelease Inventory increased 4 percent from increase, due largely to the expansion of mining2009 to 2010 after declining steadily from 2005 and manufacturing activities.to 2009. While an uptick in domestic manufacturing mayWhy It Matters: The EPA tracks only a fraction of be good for the economy, more steel manu-the country’s toxic emissions, but the inventory facturing—particularly at US Steel’s factory inprovides a snapshot both of how regulations are Ecorse, Mich.—resulted in a large increase inaffecting emissions and of what businesses are asbestos emissions: That factory alone wasdoing about emissions voluntarily. responsible for 26 percent of asbestos emis- sions in 2010. Similarly, an increase in demandWhat We’re Seeing: Despite the mild progress for fertilizers, pesticides and soil supplementsmade via voluntary company programs and the was a boon to Honeywell’s Agriculture Division,pressure of activist groups, toxic emissions are and also led its Geismar plant, in Louisiana, toon the rise, further bolstering arguments that release 650,184 pounds of arsenic—about halfvoluntary actions are not enough and regula- of the nation’s arsenic emissions in 2010.tions need to get tougher. As we found in the Toxics in ManufacturingWith reform of the Toxic Substances Control indicator (see page 78), the mining compa-Act (TSCA) still far off and attention focused nies responsible for the year’s increase in lead© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 76. STATE OF GREEN BUSINESS 2012 76and lead compound emissions (those min- It demands we direct flows of capital towardsing for zinc and gold, primarily) are not likely to sustainable innovation. It demands that winningdrop; indeed, these companies’ operations are must be defined as our ability to deliver sustain-expanding. able business models to the markets and that economic growth that is decoupled from scarceStill, there are bright spots. Some companies, resources.”particularly in the apparel industry, are volun- In China, watchdogtarily phasing out toxic chemicals and keep- In China, watchdog groups are increasingly help- groups areing better track of emissions. Adidas, Nike, and ing western companies, particularly those in increasingly helpingPuma have committed to have zero hazardous the tech sector, to keep their suppliers honest.discharges by 2020. Apple was faced with negative media in 2011 western companies, when a local activist group revealed the subpar particularly those inUnfortunately, self-awareness and voluntary working conditions and illegal dumping of toxics the tech sector, toaction have proven to be weak drivers in a poorly at some of its China-based suppliers. keep their suppliersregulated market. honest. “It is shocking,” Ma Jun, director of Institute ofWhat It Would Take: Regulations, and the Public and Environmental Affairs, the Beijing-authority to enforce them, continue to be a based nonprofit organization at the center ofproblem in the United States, particularly at the the Apple story, said in 2011, referring to thefederal level. The perennially hamstrung EPA wastewater, hazardous waste, and solid wasterelies heavily on companies to self-report toxic he has witnessed at IT plants. Information tech-emissions and, as the case of rampant pollution nology is not the virtual industry that peoplefrom a coal-processing plant in Tonawanda, N.Y., often envision, Ma said. “It’s an actual industryshows, not all companies can be trusted to play with huge amounts of discharged pollution,by the rules. In the absence of stronger regula- including toxics and heavy metals.”tions and the resources to enforce them, thepublic is increasingly stepping in to hold com- Apple has said it is moving quickly to address thepanies accountable, a tactic that has worked issue, but increasingly the suppliers themselvesparticularly well with companies that make con- are feeling the pressure to improve voluntarilysumer products. or lose out on both local support and foreign customers. Microsoft supplier KYE Systems wasWhat companies are often finding, however, is similarly outed in 2010 in an investigative reportthe need for better collaboration to find ways to from local watchdog groups, and the companyreduce, eliminate, or replace toxics in their sup- has since rolled out a comprehensive CSR pro-ply chains. The tech industry has done a reason- gram. As a result, KYE found itself not only ableably good job of this, and now the apparel indus- to attract better local talent, but better custom-try seems to be headed in that direction as well. ers as well.In a widely circulated op-ed in The Guardian,Nike executive Hannah Jones wrote, “Designing “All the effort that we spend on CSR causesthe future demands a different action plan. It higher costs, but it also distinguishes our factorydemands open-source sustainable innova- from our competitors,” says Terry Chen, deputytion. It demands we build collaboration mod- plant manager and CSR program coordinator forels at scale. It demands we learn to treat social KYE Systems. “It helps us attract a better cus-and environmental issues as pre-competitive. tomer base.”© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 77. STATE OF GREEN BUSINESS 2012 77 STOPPiNG Supply-Chain Pollution Where It Starts By Michael Kobori, VP for Social and Environmental Sustainability, Levi Strauss & Co. Our reputation as a company is our most but they don’t want to pay more. This is a valuable asset. That’s why it’s crucial that we chance to change how cotton is grown with- put the health and safety of our consumers out raising prices. and workers as our highest priority. One of the ways we do that is to reduce the use of chemi- Sustainability in a Vacuum. In the apparel cals in our products, and thus any emissions industry there is a general lack of agreed- related to their production, use, or disposal. upon base metrics, and that makes it difficult to address sustainability. When you are trying Restricted Substances. We have strict guide- to reduce the amount of energy or chemicals lines about the materials used by factories to or water either used in a product or emitted create our products, to protect our workers in the process of manufacturing that prod- and the environment. We were the first com- uct, it’s important to know the baseline of pany in our industry to establish a Restricted what you’re starting with. Many of these facts Substance List identifying the chemicals we and figures are disputed in the retail indus- will not allow to be used in our products or in try—or in some cases, the data doesn’t exist the production process due to their potential at all. We have had to start measuring all of impact on consumers, workers, and the envi- these things from ground zero with each ronment. In an effort to build sustainability manufacturer. We want to add what we’ve deeper into our business, we are working to found to the industry conversation so that phase out two chemicals in particular from consumers are ultimately able to compare our production cycle, given their recognized the sustainability of one product to another. or potential impact on the environment and natural ecosystems: alkylphenol ethoxylates Beginning at the End. The single most impor- (APEOs) and polyvinyl chloride (PVC). tant piece of advice I give to other companies looking to reduce both emissions and the Reducing Emissions Without Raising Prices. use of resources in their supply chain is this: We have committed to the Better Cotton Do a life-cycle assessment. Our sustainabil- Initiative, and that’s a commitment we made ity strategy is based on a product life-cycle for a variety of reasons. Over 95 percent of assessment of the environmental impact of our products are made with cotton, and cot- two of our most iconic products—a pair of ton grown using Better Cotton techniques Levi’s 501 jeans and Dockers Original Khakis. has been shown in pilot projects to use about The study examined all environmental one-third less water and one-third fewer pes- impacts, including their impact on climate, ticides. Farmers are also taught important energy, water, materials, land use, and biodi- labor standards including education on inter- versity. It clearly showed us that the greatest national standards on child labor and financial opportunities for reducing environmental training to improve their long-term profitabil- impact exist at the beginning and end of the ity. Perhaps most importantly, Better Cotton product’s life cycle: in cotton production and won’t cost more for consumers. We know that customer use. What we found out surprised consumers want to buy sustainable products, us and guides our strategy.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 78. STATE OF GREEN BUSINESS 2012toxics in manufacturing 78a big jump in the use of chemicals of concernTons of selected toxic chemicals used per billion dollars of GDP 34.92 23.57 22.26 20.10 19.28 18.94 2005 2006 2007 2008 2007 2009 2010Source: US Environmental Protection AgencyWhat We Found: A variety of factors, largely What We’re Seeing: After trending downwardrelated to economic and technology shifts, from 2007 to 2009, manufacturing-relatedled to a huge increase in toxic emissions from toxic emissions spiked in 2010, due primarily tomanufacturing in 2010. This trend isn’t likely to increases in mining zinc and gold, as well as anreverse in 2011, either. increase in domestic steel manufacturing. Gold continues to be priced at an all-time high, andWhat We Measured: Total emissions to air, soil, with the economy still struggling, that recordand water of 27 chemicals that are most preva- price shows no sign of dropping, which meanslent in manufacturing EPA’s Toxics Release gold mining companies will continue to expandInventory) increased a whopping 78 percent their operations.from 2009 to 2010, attributed primarily to muchlarger releases of lead, arsenic, and asbestos. Lead emissions were up in 2010 as a result of increased zinc mining. Mining companies glob-Why It Matters: Energy and climate change ally are looking to extract more zinc from exist-issues can often take center stage in discussion ing mines, as a zinc shortage is predicted to hitof business environmental impact, but toxics between 2012 and 2016. In the United States, thehave real, immediate impacts on physical envi- Red Dog Mine, in Alaska, was particularly active,ronments and human communities. Business expanding its territory and ramping up bothattention to such issues has been on the rise exploration and extraction, resulting in nearlysince the 1970s, but recent softening of regula- 320 million pounds of lead emissions (about 55tion has undercut years of improvement. percent of the total 585 million pounds).© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 79. STATE OF GREEN BUSINESS 2012 79In more positive news, emissions of mercury What to Watch:compounds, isodrin, and dimethyl phthalate alldecreased in 2010, a turnaround largely attrib- • BizNGO Working Group on Saferuted to a combination of bad press around Chemicals. Comprised of private compa-these chemicals and the work of several com- nies and NGOs, the group is spearhead-panies that are beginning to embrace the idea ing voluntary chemical reform. In 2011, it Companies leadingof green chemistry. Emissions associated with released two tools for use by companies the green chemistrytrade secret chemicals also decreased in 2010. looking to reduce their use of concerning trend are reactingNonprofit groups like the Campaign for Safe chemicals—the Principles for Sustainable not only to consumerCosmetics and the Environmental Working Plastics and the Chemical AlternativesGroup have successfully pushed for more Assessment Protocol. Look for new poli- pressure, but also totransparency from companies producing con- cies from its member companies to reduce market demand.sumer products. manufacturing-related emissions, and new tools to help other companies follow suit.Those companies leading the green chemis-try trend are reacting not only to consumer • TSCA Reform. Environmental and healthpressure, but also to market demand. Richard groups have been pushing the governmentLiroff, executive director of the Investor to reform its Toxic Substances Control ActEnvironmental Health Network, pinpoints three for years. (It was last updated over 30 yearsprincipal drivers of green chemistry: chemi- ago). This may just be the year it happens,cal laws in Europe (such as REACH and RoHS), particularly with large companies such aswhich have prompted Apple and other compa- Dow and BASF backing reform. If it becomesnies to encourage their suppliers to move away a hot partisan issue, which it could, expectfrom halogenated chemicals (e.g., bromine- and to see it punted to post-election years.chlorine-based chemicals); state-level regula-tions in the United States, which have recently • Nyrstar, Xstrata, Teck, Hindustan Zinc, andbeen tightened in the absence of strong federal Glencore. These mining companies are qui-regulation of chemicals; and rising customer etly ramping up exploration and extractiondemand for green chemicals. of zinc in anticipation of a coming shortage, as demand increases and supplies levelNike recently announced its preference for off. Teck is currently expanding its Red Doggreen chemicals and released a Restricted Mine, in Alaska, into the adjacent AqqalukSubstances List to suppliers, and Staples also deposit to eke 12 more years out of thatrecently developed a list of Bad Actor Chemicals resource. The only untapped large storesfor its suppliers. An association of group pur- of zinc are in Iran, Namibia, and the Yukonchasing organizations in the health care sector, territory. Given the instability of Iran and thewith buying power estimated at roughly $20 fact that the supply in Namibia has alreadybillion, recently developed a questionnaire for been bought up by Hindustan Zinc, expectsuppliers that focused on various sustainability to see a race to develop the Selwyn depositquestions, including the presence or absence in Yukon Territory—and a correspondingof specific chemicals of concern. increase in North American lead emissions.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 80. STATE OF GREEN BUSINESS 2012 80 Finding New Markets for Green Chemistry By Howard Williams, Vice President, Construction Specialties Construction Specialties is a supplier of mate- getting PVC out of products. We do so much rials in the commercial and industrial con- work with healthcare, and that industry in struction space. Since 2004, it has been work- particular had seen a lot of research on flex- ing to remove chemicals of concern from its ible PVC showing that phthalates were bad for materials, starting with PVC before moving on human health. So we started with PVC, and to the EPA’s list of Persistent, Bioaccumulative then we moved beyond that to look at remov- and Toxic Chemicals (PBTs) and neurotoxins. ing all PBTs, and now we’re screening for neu- According to Vice President Howard Williams, rotoxins and endocrine disruptors. Every the approach has not only resulted in better time we finish one task, we see more areas for products, but also in better profits. improvement. Business Benefit. The marketplace is mov- The trade groups would have us believe that ing toward green chemistry, and we have cus- looking for safe alternatives to chemicals of tomers that have certain requirements for the concern is a very, very difficult process. But materials they purchase. We have a contract while it is sometimes frustrating and some- with Kaiser Permanente, for example, that’s times expensive, the marketplace has contin- worth a substantial amount of money annu- ued to reward the effort. ally, and if we did not have the sort of chemical policy we have in place we would not have got- Green Chemistry For All. I’m a conservative ten that contract. Republican, and in environmental circles it’s almost like, “Who let you in the door?” But Since the 1990s, demand for eco-friendly safe chemistry is not a political issue, it’s a products has gone from essentially nothing people issue. And when I talk about this stuff to about 87 percent of customers. And not with my equally conservative friends they say, only did we start hearing this demand from “You’re right, we need to do better.” We’ve all our customers, but we also worked with NGOs been touched by cancer, or infertility issues, to get a sense of where the market is heading. or asthma—all of these issues seem to be on The industry groups, on the other hand, tend the rise, and I don’t think it’s because we’re to be much more protective of largely capital- devolving, I think it’s because something has ized infrastructures and not open to change. happened. Even if the science out there about these chemicals is 50 percent wrong or even Trade Groups Don’t Buy Products, 75 percent wrong, which I don’t think it is, it still Customers Do. In 2004 and 2005, when we makes sense be on the safe side. The com- were first beginning to rethink our chemi- mon sense is so apparent to so many people. cal policy, we actually discussed whether we should listen to our customers or to what That’s why I think the market for green chem- industry groups were saying. It didn’t take us istry will only continue to grow. At the end of long to figure out that industry groups don’t the day, consumer demand is a stronger force buy products, but customers do. than an industry’s will or legislation, and given that consumers are asking for safer alterna- At the time, our customers were interested in tives, that’s where the market is headed.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 81. STATE OF GREEN BUSINESS 2012transparency 81DISCLOSURE RATES ARE slowing downDisclosure of Material Environmental MSCI World Companies Not DisclosingImpacts (percentage) Impacts (percentage) 2007 2007 2008 2008 2009 2009 2010 2010 2007 2007 2008 2008 2009 2009 2010 2010 53% 53% 48% 48% 43% 43% 43% 43% 40% 40% 39% 39% 36% 36% 31% 31%Source: TrucostWhat We Found: The disclosure of the environ- companies. When information is not available,mental impacts of the 1,600 companies in the Trucost fills in the missing information usingMSCI World index was stagnant, staying virtually “granular benchmarking calculation of environ-the same in FY2010 as in FY2009. mental impacts from each company’s busi- ness operations.” It then applies a financial costWhat We Measured: The percent of companies’ to each. The total value or cost of the impactstotal environmental impacts that they disclose, disclosed by companies are normalized by theas measured and assesed by Trucost. Each year, total environmental impacts of the companies,Trucost tracks more than 700 environmental both disclosed and estimated.impacts of more than 4,000 companies—suchthings as greenhouse gases, emissions contrib- Trucost also tracks the number of companiesuting to smog or acid rain, solid waste, water use that do not disclose any environmental impactand emissions, resource mining and consump- data. That number is divided by the total num-tion, and natural resource use. This indicator ber of companies to calculate the percent oflooks at a susbset—the 1,600 companies con- non-disclosers.tained in the MSCI World Index. The informationis used, among other things, to assess the envi- For the 1,600 companies in the MSCI Worldronmental financial impacts of each company— Index, the percent of the total environmentalhow much their operations are costing the earth footprint disclosed remained unchanged at 43(see page 51). percent The percent of nondisclosing com- panies improved very slightly, from 40 per-To make its calculations, Trucost combs com- cent in fiscal year 2009 to 39 percent for fis-panies’ environmental reports and other disclo- cal year 2010. (Higher numbers are better forsures or seeks such information directly from disclosure rates; lower numbers are better for© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 82. STATE OF GREEN BUSINESS 2012 82nondisclosure rates.) overall disclosure of environmental impacts (75 percent), likely due to the long-standing regula-Why It Matters: This metric highlights how well tions placed on this industry, requiring utilities tocompanies understand their environmental disclose a great deal of information.impacts, which is strongly correlated with theirability to manage those impacts. With greater What’s Next: Transparency continues to be ofunderstanding come greater opportunities for high interest among a growing number of par- “What this means iscost savings, innovation, and risk reduction. ties—not the least of which are institutional that 57 percent of allIncreased transparency also benefits custom- investors, who view the kinds of data Trucost the greenhouse gasesers, regulators, and others who want to know and others compile as a means of risk mitigationwhat a company is doing to address its environ- in a world of resource uncertainty and climate and 57 percent of of allmental impacts, and how well it’s doing it. concerns. The challenge, of course, is how to the water emissions, bring on board the next wave of companies—the are unrecognized byWhat We’re Seeing: Overall, after years of ones not naturally inclined to be seen as leaders, companies,” saysimprovement, companies’ disclosure of their or who aren’t under intense scrutiny by custom- Trucost’s James Salo.environmental impacts has flatlined. It’s not ers, activists, regulators, or shareholders.a good sign. Disclosure and transparency arekeys to progress. If companies aren’t signal- Should it be carrots or sticks? Both seem toing that they understand and are addressing be effective. For example, business and insti-their impacts by reporting in a systematic way, tutional customers have significant ability toit doesn’t bode well for their making informed leverage their buying power to spur reluctant ordecisions on how to reduce those impacts. recalcitrant companies to provide more trans- parency. Some are incorporating transparency“What that means is that, by our calculations, into their procurement or RFP decisions. Somemore than 57 percent of all the greenhouse public agencies are doing this, too.gases, 57 percent of all the water impacts, areunrecognized by companies,” explains James Of course, to the extent that transparencySalo, Senior Vice President, Strategy and becomes a consumer issue, it will drive changeResearch at Trucost. “Is that good or bad? If even faster. According to the Eco Pulse 2011 sur-you’re talking about being able to make intelli- vey conducted by The Shelton Group, corporategent decisions, then they’re not going to be able reputation surged into third place as a criteria forto do anything about it.” deciding if a product is green. (In other words, “I need to believe the company is green before I’llSome sectors are doing better than others. believe the product is green.”) More than half ofThree sectors had modest improvement in dis- Americans, 52 percent, said it was important.closure: telecommunications (up 4 percent), This audience includes not just potential con-technology (up 5 percent), and financial ser- sumers, but also future employees.vices (up 6 percent). However, in the case of thefinancial services sector, there still is a long way One barrier to transparency is the lack of stan-to go; at 27 percent disclosure, it is the second- dardization of this information. Each researchmost-secretive sector, after real estate. firm, company procurement department, and government agency has the potential to seekUtilities actually disclosed less environmental different information or ask the same questionsimpact information in FY2010 than they did in in slightly different ways. That’s another chal-FY2009, though the sector maintains the highest lenge to simplifying disclosure for companies.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
  • 83. STATE OF GREEN BUSINESS 2012 83 Defining and accelerating the business of sustainability. GreenBiz Group is an integrated media company focused on supporting professionals who view sustainable practices as a core part of their businesses. GreenBiz is focused on telling the stories, providing the insights and advancing the sustainability profession through four platforms: We Tell the Stories Our acclaimed websites and newsletters are daily “must reads” for sustainable business professionals. We Build the Network Our peer-to-peer learning platforms create valuable opportunities for professionals — both online and off. We Advance the Profession Our conferences and forums bring together thought leaders and professionals to share trends, technologies, and leadership practices. We Provide the Insight Our backgrounders, reports, and analysis provide the essential information professionals need to make intelligent decisions.© 2012 GreenBiz Group Inc. (www.greenbiz.com). May be reproduced for non-commercial purposes only, provided credit is given to GreenBiz Group Inc. and includes this notice.
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