I entered the room with more than a little trepidation; as a toxicologist and risk assessor, I know how heated the debate can get regarding the safety of chemicals used in consumer products. As an employee of EDF, I also knew that I was outnumbered by industry. Also, the title of the panel, for which I was a speaker, was loaded: Market Sustainability – The Retail Regulator. Not only does industry have to worry about being regulated by Federal and State governments, but retailers, too!But my message was (and is) essentially a positive one: there are many benefits for formulators to commit to a program of sustainability and green chemistry, substituting known hazardous chemicals with safer chemical substitutes. These benefits include: safer working conditions and reduced need for engineering controls and protective equipment, fewer releases of hazardous chemicals to the environment, less hazardous waste disposal, safer consumer products (even when misused!), and such down-stream benefits as fewer chemicals going down the drain and into wastewater treatment plants. How could anyone NOT like this? Read more
An article in today’s New York Times on how many colleges in the Northeast have eliminated the use of cafeteria trays in order to prevent food waste (and cut down on the dreaded “freshman 15”) reminded me of a conversation I had recently with a friend, and darn smart industrial engineer, about the best ways to change environmental behavior.
“Poka-yoke” he said.
“Poka-yoke, it’s a Japanese term.”
“Like tamagotchi or kaiju?”
“No. Not like that at all.”
Poka-yoke (pronounced “pokah-yokey”), he went on to explain, is the concept of mistake-proofing. Essentially, it seeks to create a system that makes it easy to do the right thing and difficult (if not impossible) to do the wrong thing. It stems from the quality movement, and the Toyota Production System specifically, where it was used to prevent worker error or injury by designing the possibility of occurrence out of the process. There are examples of poka-yoke in our lives everyday. If your car has ever prevented you from locking the keys inside, you’ve experienced it. Ever try to take the key out of your automatic vehicle’s ignition while in gear? You can’t. Poka-yoke won’t let you. If you’ve never been crushed by a file cabinet, you’ve benefited (most won’t let you open more than one drawer at a time). [Find other examples from everyday life here]
It seems to me that my industrial engineer friend and the food service people at Skidmore College (among others) are onto something. How do we crack the notoriously difficult challenge of changing peoples’ environmental behavior? Making everyday tasks environmentally error-proof might be a powerful solution- at least partially – to many of our most frustrating environmental dilemmas.
Hotels in Europe and Asia are already on top of it. In order to save energy and prevent guests from leaving on lights, televisions or other appliances, room keys are often required to be inserted into the wall to activate circuits. When you leave, you take the key with you, cutting off power to the room. This is a simple and elegant solution that results in huge cost savings and environmental benefits. We need more thinking along these lines.
Sheer fear. Maybe it's just me, but those 18-wheel truck rigs really scare me. Not only are they big enough to squash my Toyota Corolla should I make a wrong turn, but the air flowing off them at high speeds makes me grab the wheel a little tighter. But that's not what really scares me – it's their contribution to global warming. You see, the average heavy duty truck (known as Class 8 within the industry) achieves a paltry 6 miles to the gallon in fuel economy. Combine that with the fact that an individual truck often logs over 100,000 miles each year, and you've got a mobile smokestack. In fact, these vehicles are the largest source of transportation emissions from the corporate sector. Now, to be fair, these trucks do a whole lot more work – on a ton of goods moved basis – than my Toyota Corolla. But they're still essentially boxes on wheels with hundreds of inefficiencies.
Really we're all to blame. The growth of heavy duty trucks on our highways has occurred because of America's insatiable thirst for affordable goods on demand. Live in Boston and want bananas in the dead of winter? You got it. Want a $50 television from China? You got it. Just bought an iphone on Ebay, but the seller lives in California. No problem. Trucks are there to deliver it all – or part of – the way.
And therein lies the conundrum. Virtually none of us wants to lose our freedom to an affordable choice of goods. We all want those cheap, tasty bananas. But it means that absent a wholesale shift towards local-based economies, or $10 for a gallon of diesel, we're stuck with big trucks that will continue to move our goods 6 measly miles for every gallon of fuel on ever-crowded roads. This is why Environmental Defense Fund (EDF) is on the lookout for a game-changing model to reduce greenhouse gas emissions from heavy duty trucks.
Luckily, we're not alone. EDF is engaging with others, including EPA's SmartWay program, Cascade Sierra Solutions, Rocky Mountain Institute, the Department of Energy, and corporate players like Wal-Mart to seek new and innovative technologies and models for hauling goods cheaply and efficiently. Not to mention the dozens of cutting edge aerodynamics, tire, engine, and weight reducing technology companies out there in the labs and achieving early penetration in the marketplace.
At EDF we're building upon a history of developing market-based solutions for two other classes of corporate vehicles – medium duty delivery trucks and corporate car fleets (in partnership with FedEx and PHH Arval, respectively). We're going to be hitching onto lessons we've learned from each of those projects to try and craft a new way forward on heavy duty trucks. These lessons include:
1) Finding the leverage. One of the greatest challenges in getting trucking and fleet companies to improve their fuel efficiency and reduce carbon emissions is the fragmented state of the marketplace. Unlike many other industries that we've worked with, no fleet goliath exists. In fact, one of the largest fleets – Coca Cola – represents no more than 2% of new truck purchases each year, so the power of a company like Coca Cola or Wal-Mart to push manufacturers to innovative in a way that will benefit other truck purchasers is reduced.
On the other hand, there is concentration in the truck manufacturing sector. But, we've heard time and time again from the Original Equipment Manufacturers (OEMs) that they're hesitant to sink investment into energy efficiency innovation unless a clear market for these trucks exist. Solving this chicken and egg problem is critical.
2) Staying technology neutral. In our project with FedEx, we didn't set out to develop the first hybrid delivery truck. Rather, we set out to develop the first delivery truck that was 50% more fuel efficient and no more expensive than a conventional truck over its lifetime. It happened that FedEx's suppliers identified hybrid technology as the most promising innovation to reach this goal, but we didn't pigeonhole them into making that decision.
Too many groups and companies have placed their hope on the next green technology, only to find out later that it has limited greenhouse gas benefits (think ethanol) or is likely to be cost prohibitive in the foreseeable future (think hydrogen fuel cells). It's far better to allow companies and suppliers to stay flexible – by developing a rigorous and measurable performance-based metric, and allowing entrepreneurs to innovate the heck out of the market.
3) Keeping both eyes on the prize. While efficiency goals are helpful, they're the wrong measurement. Efficiency is a means, not an end to carbon reductions. The carbon benefit of a 20% truck efficiency gain could be wiped out if nationwide goods shipment shifts away from rail to truck transport, or the same trucks simply travel more miles. Instead, it's critical for companies to adopt a metric, like tons of carbon per ton-mile of transport, and seek continual improvement.
So, these are just three key "frames" by which EDF is thinking about this problem and potential solutions. But, we can't do it alone. And so I invite you to share your innovative ideas on ways that EDF (and others) can spur widespread innovation in this space. It may not solve my fear of driving next to big rigs on the highway, but the Earth will thank you.
Just returned from the Fortune Brainstorm: GREEN conference and thought this might be the perfect reason for me to write my first blog post: For the second year in a row, it was the best conference I've ever been to. What made it so great? The biggest single reason was the interesting and candid conversations that took place about sustainability. It was the business guys (and it was the guys. By my calculation only 21% of attendees, and 12% of panelists, were female) talking very frankly about the coolest ideas and the biggest challenges in a fast-paced and open way.
It's truly uplifting hearing about the revolutionary things going on out there that together could save the planet and have business opportunity written all over them. Some of the best were the ones that EDF worked hard to unearth in the Innovations Review 2009 that we released at the conference. Some fall into the category of extremely creative with far-reaching impact, such as Patagonia’s Footprint Chronicles that lets consumers track the impact of specific Patagonia products. Patagonia gets why this is important. More companies should get it. It reminds me of something someone said at Fortune Brainstorm: GREEN — Your supply chain is your company.
Some of the environmental innovations in our report fall under the "No Brainer" category in my mind: Things like hotels using a system that links all heating, cooling and power to the keycard that guests insert upon entering their rooms. That simple change can save 25 to 45% of the energy used by hotel rooms, yet few hotels in U.S. have taken advantage of these systems. I again think of the Fortune conference. I overheard a senior executive from Marriott talking to Bill Clinton about the funds they were committing to the rainforest and thought "Great, but what about your hotels?" Right there at the conference I had seen water glasses filled up automatically before people arrived and bluefin tuna served at dinner (a health and overfishing double-whammy). Perhaps the small things they could do right here at the Ritz Carlton (owned by Marriott) would add up to a big environmental impact.
It's clear that companies that "make sustainability part of their DNA" (in the words of Cisco's Laura Ipsen) will reap the benefits. They will survive (Ford was at the conference) and thrive (Wal-Mart was too). They are saving money, reducing risk, gaining customers. It's not always an easy choice. Fisk Johnson, CEO of SC Johnson, talked about changing Saran Wrap from a chlorine-based polymer which cost them customers who didn't like how the change affected the product's feel and performance. Fortune's Marc Gunther half jokingly said, "We only like the positive stories here." But I think that this, no doubt, is a positive story. Products that harm our health and our earth should go away and companies like SC Johnson that have the courage to act on their green principles are most certainly doing the right thing for their business in the long term.
Here at Environmental Defense Fund Corporate Partnerships Program we work with business because we think that it's one of the most effective ways to create big, meaningful environmental change. I'm more hopeful than ever after the Fortune Brainstorm: GREEN conference.
What a whirlwind this conference has been – some new information, some of the same old stories – but many opportunities for interesting discussions.
One interesting discussion I followed was the Innovations Review 2009: Green Advances for a New Economy panel hosted by Gwen Ruta and Fortune's Julie Schlosser with guests from Bon Appetit, REI and Verizon (several other companies with innovations featured in the Review were in the room).
Check out my first attempt at "live tweeting" a play-by-play for highlights.
The CEO of Bon Appetit took the prize for most illustrative quote, "We just aren't flying fish around any more," in reference to the company's sourcing of local food, per its Low Carbon Diet.
Gwen asked the panelists how innovation could spread throughout a sector, the consensus was that the people doing the work know how best to find innovations and save energy, so it's necessary to engage employees at all levels.
That sounded a lot like the point Gwen made a few months ago in a podcast with Marc Gunther after we announced results from the companies piloting the Green Portfolio Project tools: "The drivers know what’s going on in the fleet and the guys in the production line know what’s going on there. It’s a matter of being able to capture those ideas and systematize them. We see over and over again that that’s what’s behind a lot of this environmental innovation – it’s unleashing the workforce."
Unfortunately, time ran out just as the discussion was heating up, but we hope that the discussion will continue here in the Innovation Exchange.
I'm headed back to DC tomorrow and with the time change probably won't get a chance to do another post from here, but you can follow all the EDF_InnovEx tweets from the conference – including highlights of the breakfast roundtable Gwen Ruta is hosting tomorrow on The New Lean Green here.
Today, EDF releases Innovations Review 2009: Green Advances for a New Economy. As the title implies, we're highlighting compelling new practices and technologies that drive operational efficiency, create new business opportunities and carve out competitive advantage in these challenging times. Why? Because even though these practices have been proven to be technically and financially feasible, they're not yet in widespread use. Simply put, we want to see these innovations – and the environmental benefits they represent – spread more quickly.
- High-tech computer systems that monitor real-time weather data and soil conditions to help companies reduce the water needed for crop irrigation and commercial landscaping by 15-40%.
- A new mortgage program that is boosting sales by offering homebuyers lower interest rates if they elect to install solar panels in their new homes.
- Annual employee performance reviews that now tie environmental results to compensation, up to the senior executive level.
We hope that Innovations Review 2009 will provide your company with useful models and inspire your team to go even further.
Talk and follow the conversation about Innovations Review 2009 with the tag: IR2009
Passing through the MIT book store on my way to visit the Center for Collective Intelligence I stumbled across a copy of Richard Lester and Michael Piore's book "Innovation: The Missing Dimension." It was a happy accident as the book makes a few points that will help frame development of the Innovation Exchange. Based, in large part, on a series of case studies of new product development in cellular telephones, medical devices, and fashionable blue jeans, the authors explored how innovation happens in corporate ecosystems.
A few conclusions that most intrigued me (emphasis below is mine):
- There are two kinds of "innovation" the authors call analysis and interpretation. Analysis is essentially problem-solving and is what you do when "alternative outcomes are well understood and can be clearly defined and distinguished." Interpretation, on the other hand, leads to a new insight, new product, or new approach, where there wasn't necessarily an understood problem or gap. They suggest that "the analytical perspective dominates the scholarly literature on innovation, competitiveness, and economics, particularly in business and engineering schools."
- Lester and Piore argue that "ambiguity is the critical resource out of which new ideas emerge" and conclude "that the way in which problems come to be identified and clarified to the point where a solution can be developed is through a process of conversation among people and organizations with different backgrounds and perspectives." They equate the role of manager of an innovative process to "hostess at a cocktail party" (mind you, these are MIT professors of "nuclear science and engineering" and "economics and management" respectively).
- Finally, they point out that these cocktail parties–what they also call "interpretive spaces"–"do not grow up naturally in market economies. They must be created; and once created, they must be cultivated, renewed, and enriched."
What do these insights mean for the Innovation Exchange?
One issue they raise is whether we focus on both types of innovation; on analysis and interpretation. We see both types in our work. Gwen describes a number of analytic challenges in her recent post "Less Glitter, More Green" while the exciting examples from Earth: The Sequel tend towards the interpretation end of the spectrum. Given the severity of the environmental problems facing the globe, I doubt that focusing on analysis alone will be sufficient and suspect we need to encourage interpretation as well.
I'm pretty comfortable with, even excited by, the idea of innovation resulting from "conversation" and leveraging social media to join in. Of course, this isn't a new meme online. It dates back, at least, to the dark ages of 1999 and the Cluetrain Manifesto. Levine strongly invoked the conversation metaphor explaining that "the Internet is a conversation carried on in a variety of formats–Web pages, e-mail, discussion groups, mailing lists–that bring new possibilities to human relations." Locke even used the cocktail party image, writing "Stuff, as the digital world has taught us, isn't always stuff. And coordinating how it gets distributed is more like a cocktail party than a strategy session."
At the Innovation Exchange, we've started to develop our voice and join the conversation though this blog, our activity on twitter, reaching out on social media platforms, and through various networking venues online and off.
But does this really address the gap that Lester and Piore describe? They write:
The dominant approach to innovation seeks to strengthen and extend the domain of market competition. But the interpretive perspective points in the opposite direction, toward the creation of sheltered spaces that can sustain public conversation among a diversity of economic actors who would be unable to interact in this way on their own.
Could and should EDF engage in the development of these non-market, sheltered spaces? It seems like this falls into the realm of "finding the ways that work" but what would it mean practically and what would EDF's role be? Anyone have examples or suggestions?
As a reporter who writes about business and the environment, I've heard the expression "low hanging fruit" used to describe energy efficiency many times. Google the words "low-hanging fruit energy efficiency" and you’ll get 57,100 hits. Maybe 57, 101 by now.
I've spent parts of the last month or so helping Environmental Defense Fund write a report on business innovations and the environment, and it has helped answer a question that bugged me for years: Why don't people pick the low-hanging fruit?
The answer is that business does not operate according to classic free-market principles. Business is messier than that. Human emotions come into play.
The result is that companies that could (and should) easily save energy and money by becoming more efficient don’t.
Let me offer a couple of examples.
One comes from hotels. Hotels could save thousands of dollars a year by installing key-card systems that would automatically shut off the power whenever a guest leaves the room. A 616-room Westin hotel in Pittsburgh invested $120,000 in a key-card system and got all that money back in energy savings in a year. After that, the hotel could use the savings to lower its room rates, increase its profits or both–and in a world of truly competitive markets, others would follow. That hasn’t happened. Not in Pittsburgh or elsewhere.
And why not? Hotel owners apparently worry that some guests may not like the loss of control or the inconvenience of arriving at a slightly colder room in winter or slightly warmer room in summer–even though the owners could keep room temperatures just a few degrees from 70 or 72. That's human emotion. By the way, travelers in Europe and Asia have come to view the key card system as routine.
A second example involves corporate computer networks. They waste a lot of energy because most computers run at night or on weekends. If you work in an office, you know that networks are controlled by IT departments who want access to fix bugs or deal with security issues. They want power, and they don't, as a rule, care about wasting power because they aren't responsible for paying the electricity bills. They think they've got enough to worry about. That's human emotion, too.
As it happens, there are a number of software products out there that will allow the IT guys to control the network and save energy at the same time. So far, though, these products haven't been selling widely. The people who pay the energy bills don't buy software. The technical word for this in corporate America is "silos." Most companies have silos, and they are another reason why the low-hanging fruit keeps on hanging.
EDF's report, out next week, will highlight best practices in all these areas and others. We will also point to government policy that can help–some states, for instance, give rebates to hotel owners who install the key–card systems because in the end efficiency benefits all of us. It means that collectively we will emit fewer greenhouse gases and that we won't need as many new power plants.
So take a look at the report next week. And do me a favor–even if we can't pick all the low hanging fruit right away, let's retire the metaphor.
Marc Gunther blogs about business and the environment at www.marcgunther.com.
Next Tuesday, EDF will release the second annual Innovations Review at the Fortune Brainstorm Green conference.
The Innovations Review is our survey of the most compelling — and implementable — new practices and technologies that generate environmental and business benefits for companies.
The Review team has been toiling away for months looking for advances in water conservation, packaging, supply chain management, IT and more. In the back of all our minds is the question: Given state of the economy, is environmental innovation still a viable use of company resources?
The answer is a resounding "yes." We looked at nearly 200 examples of new environmental practices across industries and sectors. We narrowed this pool down to a final slate of 15, based four criteria: environmental benefits, business benefits, replicability and innovativeness.
These 15 represent a broad range of innovations. Some can lower operating costs or drive sales or strengthen the brand. Others create new markets, reduce risk or stake out leadership positions. If taken to scale, all offer huge benefits for the environment.
Innovations featured in last year's Review included:
Fireman's Fund's Green-Guard insurance, special coverage for green-certified commercial buildings.
Telepresence systems—offered by Cisco and HP—the next generation of video conferencing that can virtually eliminate the need for business travel.
Solar power purchase agreements, financing tools that are allowing Target, Macy's, Wal-Mart and Microsoft, among many others, to equip their buildings with solar panels at no capital cost to the company.
Truck engine controls that cap truck speed to reduce fuel consumption. Staples put a 60-mile per hour ceiling on its truck fleet, resulting in a 15% increase in fuel economy.
To download the 2008 report, click here. And watch for the next installment on April 21.
A recent article in the New York Times' Green Inc. column suggests that the dual concerns of greenwashing and reputation management are critical for corporations and non-profit organizations alike – especially as the prevalence of partnerships between these two groups continues to rise. This is something we've known for a long time at Environmental Defense Fund (EDF).
No partnership between a non-profit and a corporation should be taken lightly on either side. For the NGO, it is critical to maintain the independence, ability to challenge and focus on environmental results that are at the roots of its mission.
EDF has built a twenty-year track record of doing this by establishing partnerships when there is clear potential for measurable and significant environmental improvements and by holding our partners accountable to achieving and reporting on them – all while maintaining our financial independence.
EDF does not accept payment or financial contributions from our corporate partners. This helps us uphold high environmental standards and makes it clear that the innovations we develop with our partners are to be publicly shared. We are advocates, not consultants, so the new best practices and innovations we create are for the broader public good. Our ambitious goal is to spread these innovations across entire industries, multiplying the environmental benefits.
Understandably, at times EDF is lumped in with NGOs that do accept funding from corporate partners, as Ms. MacDonald has done in her book.
Are we saying our model is the only way to go? No, but we believe it has contributed heavily to our results over the years. We've seen time and time again that corporate-NGO partnership can create both credible environmental results and business benefits like cost savings, market growth and improved risk management. When this happens, the environment stops being sidelined and becomes a key driver of innovation and growth.
For more on our model, check out the Guide we issued last year for a run down of best practices for partnering. And for more on the results of our work with corporate partners, visit www.edf.org/partnerships.