Fast Company: Smart Energy Management Takes More Than Technology

Knocking down a brick wall by yourself with your bare fists is next to impossible. But organize a team equipped with sledgehammers and a plan, and it gets a whole lot easier. In other words, when tackling tough problems, it’s not just about the tools you have, but how you marshal your assets to break through.

That’s the message to CFOs, sustainability czars, and energy managers in a new EDF report, “Breaking Down Barriers to Energy Efficiency.” The report offers effective ways to motivate employees, create accountability for success, identify investment opportunities, ensure funding for financially attractive projects, measure cost savings, and scale performance gains continuously over time. The findings were drawn from the EDF Climate Corps program, where specially trained MBA students work in corporate summer fellowships to develop customized plans for cutting energy costs and greenhouse gas emissions.

Whether a company is trying to get off the starting blocks, or taking its energy and climate initiatives to the next level, the report outlines proven strategies for getting beyond the low-hanging fruit to the really big savings that energy efficiency can deliver.

Continue reading on Fast Company.

Harvard Business Students Debate KKR and Sustainability

Thirty-five years ago, Milton Friedman wrote a famous article for The New York Times Magazine whose title aptly summed up its main point: “The Social Responsibility of Business Is to Increase Its Profits.” Never mind that most companies don’t pay the full price for the pollution they create, or the health and environmental impacts that ensue. For years, Friedman’s theories held young business students in thrall across the country, but last week at Harvard Business School, I saw a totally different ethos.

I listened in as Harvard Business School professor Bob Eccles presented a new case study called KKR: Leveraging Sustainability (co written with Prof. George Serafeim and Tiffany Clay). The case centered on Kohlberg Kravis Roberts’ Green Portfolio Program, which improves environmental performance across the firm’s private equity portfolio of companies, and asked students to consider whether and how to expand it.

The discussion was eye-opening. The debate focused not on whether to expand the program, but on how to make it more meaningful and why KKR hadn’t moved sooner. Since its inception in 2008, companies participating in the Green Portfolio Program achieved more than $365 million in financial benefits and avoided 810,000 metric tons of GHG emissions, 2.2 million tons of waste, and 300 million liters of water. Faced with these kinds of savings, one student commented that it was like the companies had been walking around with eye patches on (preventing them from seeing opportunities at hand) and had finally taken them off.

Continue reading on Huffington Post.

Companies Save Millions By Hiring For Corporate Sustainability

I recently moved into a new house and for the first time in my life, I have a cleaning lady.  Like most people I know, on the day before she’s scheduled to arrive, I clean up a little. Because just having someone whose job it is, and knowing that she’ll be focused on that job, changes my behavior.

This behavior also happens on an institutional scale. While not every company needs a dedicated chief sustainability officer–or energy manager or corporate responsibility officer–having one can focus attention and change behavior from the C-suite to the factory floor. A recent Weinreb Group report documents the rise of chief sustainability officers and describes them as “business veterans who are good at leading new initiatives and cross-functional teams and who understand how to translate external factors into internal opportunities.”

While titles may vary, a new survey by Corporate Responsibility Magazine and others reveals that in 2011, 62 percent of participating organizations had a lead corporate responsibility role–a big jump up from 42 percent in 2010. We’ve seen this same trend in our own work at Environmental Defense Fund, especially when companies get a taste of what they have to gain from a dedicated resource.

For example, EDF Climate Corps places specially trained MBA students in companies for a summer to build the business case for energy efficiency. These gung-ho students have found over $1 billion in potential energy savings for their host companies, which are now creating new positions to keep the ball rolling year round. For example, Adidas created a new position of senior manager for environmental affairs for its Climate Corps fellow, Elizabeth Turnbull, after she graduated from Yale. Real estate firm The JBG Companies and manufacturer Cummins were similarly motivated by EDF Climate Corps savings to create new roles.

The survey also cites improvements to customer relations and employee attraction and retention as the top benefits companies report from their sustainability programs. Conversations with our partner companies confirm these benefits and suggest one more: bottom line results. Private equity giant Kohlberg Kravis Roberts & Co. recently announced that its environmental program had saved participating companies $365 million in operating costs since 2008. The firm created a new position to manage the program in 2009, and has added more staff as the savings continue to accumulate. Other private equity firms like Blackstone, Doughty Hanson, 3i, and Actis have also brought in experts to focus on environmental management.

Having a dedicated sustainability position is helping these companies bridge the gap between environmental and business management, and to reap the rewards from doing so. I look to see this trend continue in 2012.

This content was originally published by Fast Company.

Remembering Ray

The world has lost a true business leader and sustainability pioneer.  Ray Anderson’s vision that business can and should solve environmental challenges, not create them is one that EDF shares and champions.  Just a few years ago, Ray joined the entire EDF team for our annual staff retreat.  As was his tradition, he finished his remarks by reading an original poem written by one of his employees at Interface titled “Tomorrow’s Child.”  Just like everyone that crossed paths with Ray, we were inspired and energized by his words, vision and accomplishments.  We still are and promise to continue to work hard to make this vision a reality.

Tomorrow’s Child

 

© Glenn Thomas

Without a name; an unseen face
and knowing not your time nor place
Tomorrow’s Child, though yet unborn,
I met you first last Tuesday morn.

A wise friend introduced us two,
and through his shining point of view
I saw a day that you would see;
a day for you, but not for me

Knowing you has changed my thinking,
for I never had an inkling
That perhaps the things I do
might someday, somehow, threaten you

Tomorrow’s Child, my daughter-son
I’m afraid I’ve just begun
To think of you and of your good,
Though always having known I should.

Begin I will to weigh the cost
of what I squander; what is lost
If ever I forget that you
will someday come to live here too.

Source: Ted Blog

Using Open Innovation To Bring The Gulf Of Mexico Dead Zone Back To Life

I don’t live on a farm, or anywhere near one. So I know that my mental picture of a farmer–a guy wearing overalls, driving a tractor and consulting the Farmer’s Almanac for advice–is right out of the 1950s. Today’s farmers are plugged in, tech-savvy, and globally connected.

The Iowa Soybean Association has teamed up with Environmental Defense Fund to develop the next new thing in farming technology. Using a new on-line Eco-Challenge Series, EDF and the soybean growers hope to solve some real-world environmental problems, while making farming more efficient and more profitable. The series is hosted by InnoCentive and taps into the company’s global community of more than 250,000 scientists, entrepreneurs, inventors, and other creative “problem solvers” in nearly 200 countries.

So what’s the problem we want to solve? It sounds crazy, but there is too much fertilizer being put onto fields. Yes, fertilizer helps crops to grow–it’s a good thing. But as is often the case, too much of a good thing can be bad.

Currently more than 50% of fertilizer applied to commercial crops in the U.S. is not absorbed by the plants and is instead lost to water and air, causing dangerous environmental and health impacts. Excess agricultural nitrogen (one of the main components of fertilizer) is a main cause of dead zones–literally, places where fish cannot survive–in the Gulf of Mexico and Chesapeake Bay. Excess nitrogen can also change forms and become a powerful greenhouse gas that contributes to climate change.

One “rule” for innovation is that the best ideas often come from unusual sources, so we’re looking for new ideas to help us solve the problem of excess nitrogen. We’ve posted two specific Eco-Challenges, and are looking for “solvers” to work on them.

The first Challenge deals with tile drains–these are porous pipes that lay beneath many farm fields and are used to keep the land well-drained. Unfortunately, they also provide an efficient route for fertilizer to pollute rivers, lakes, and drinking water supplies. We’re looking for ideas on how to capture or treat the nitrogen in those pipes. The second Challenge is to find new ways–including remote sensing and real-time monitoring–for farms of all sizes to evaluate the effectiveness of their fertilizer management practices for crop growth and yield.

So if you’ve got a new technology, and monitoring system or even just a great idea, sign up now to help compete for the cash prizes and help to solve these important environmental problems.

We hope that by showing that even tough problems like widespread nitrogen pollution can be addressed, more companies and organizations will turn to open innovation and crowdsourcing to find solutions to their toughest sustainability challenges.

This content is cross-posted on Fast Company.

Power Company Trades Your Jobs And Our Health For Its Profits

Over a decade ago, EPA began developing new regulations to cut dangerous pollution from power plant smokestacks. These plants churn out most of the mercury, acid gas and arsenic pollution in our air, and the new rules will dramatically slash this pollution, saving up to 17,000 lives and preventing 120,000 asthma attacks each year.

Most power companies have prepared for these changes by improving the efficiency of their plants and investing in cleaner fuels and new control technologies. But not American Electric Power. Instead, the company is threatening to shut down dozens of plants and lay off hundreds of workers unless EPA delays its clean air standards.

This means that while other companies were preparing for the future, AEP was pocketing the profits now while cynically assuming it could change the rules later. How do we know this? Because just last year, AEP filed a report with the Public Utilities Commission of Ohio in which it noted that while the new rules could take effect in 2015, “for planning purposes” it was assuming that the rules could be “extended and staggered” beyond the end of 2015.

And that’s not all. A recent New York Times editorial noted that the units AEP says it would close because of the EPA rules are, on average, 55 years old and running well below capacity, with many slated for retirement anyway.

Normally, I write about working with corporations, and the leverage they can have to help create a more sustainable world. My experience has been that most companies are responsible, and that most of the people who work for them care as much about the future as I do. But it’s hard to see any of that motivation in AEP’s recent actions.

If these plants do close and jobs are lost, it’s not because of EPA regulations, but because AEP made a bet against our health and lost. The short-terms gains that AEP and its shareholders made as a result of that bet should go to offset any losses in community jobs and health benefits.

This content was originally published on Huffpost Green.

Spreading Sustainability: From the Fortune 500 to the next 5,000

Recently in Harvard Business Review, Michael Porter and Mark Kramer wrote about “The Big Idea” – that companies must take the lead by “creating economic value in a way that also creates value for society by addressing its needs and challenges.” Driven by win-win success stories, by a vacuum in policy leadership, and by the embrace of thought leaders like Porter, this idea has surged into the mainstream. Even in the grip of the recession, companies across the Fortune 500 – from Walmart (#1) and GE (#6) to Owens Corning (#431) and SunGard (#472) – are actively pursuing a sustainability agenda.

But for the companies that make up mainstream corporate America, environmental issues may still largely be seen as a cost center rather than a competitive edge. What will it take to show these companies that environmental innovation can be an opportunity rather than a burden? How can we spread the principles of sustainability from the Fortune 500 to the next 5,000?

Start with energy efficiency

Every company uses energy, and can do so more efficiently. The consulting gurus at McKinsey & Company calculate that by deploying an array of NPV-positive efficiency measures, commercial and industrial users could generate $732 billion in energy savings by 2020 while avoiding some 660 million tons of annual greenhouse gas emissions. In other words, we can make a lot of money and cut a lot of emissions simultaneously by using proven technologies.

But, it’s not quite as easy as it sounds. Companies fail to reap the benefits of energy efficiency for reasons that have nothing to do with what we learned in Econ 101. In the real world, managers are overburdened, useful information is hard to find, lease arrangements stand in the way of smart investments, and competition for corporate dollars is sharp.

Sometimes it takes “fresh eyes” to overcome the barriers to change. Our EDF Climate Corps program uses business students to find energy savings opportunities at participating companies. In just 10 weeks at 50 companies last summer, we found $350 million in potential operating savings. And that’s just the tip of the iceberg.

Stimulate innovation

Environmental goals, combined with open networking, can be a great way to stimulate innovation that can lead to new products and greater market share. The impetus can come from the top, because when executives set rigorous goals and metrics for measuring them, they unleash innovation throughout the company. GE’s Ecomagination program, which generated $18 billion in revenue on $1.5 billion in investments, is a good example of this approach.

Innovation can also come from the bottom up, as illustrated by Toyota’s “Treasure Hunt” process, which uses operators, engineers and maintenance staff to find process innovations and energy savings.

And innovation can come from the outside. Breakthrough ideas can – and often do – emerge from bringing a new and diverse perspective to a familiar problem. Environmental Defense Fund recently teamed up with InnoCentive, a global leader in crowdsourced innovation, to work with companies to create business breakthroughs that deliver environmental results. InnoCentive’s web-based platform gives over 250,000 entrepreneurs, inventors and scientists around the world the chance to solve them. With the likes of Eli Lilly, NASA, and Procter & Gamble using the platform, it’s redefining the innovation process.

Capture operational excellence

For most companies, including those that provide business capital, environmental issues are still thought of as a liability rather than an opportunity. To build value, firms must think beyond compliance. Smart companies are positioning themselves to compete in a resource-constrained world, where efficiency and innovation trump risk management.

Working with private equity giants The Carlyle Group and Kohlberg, Kravis, Roberts & Co., EDF has developed tools that are available to any company for systematically identifying opportunity and measuring improvements in environmental and business performance. In just two years, those tools generated $160 million in operating savings for companies including Dollar General and US Foodservice.

Drive supply chain improvement

Companies will want to focus first on their own operations, but for many small and medium-sized businesses, their biggest impacts lie not within their own fencelines, but in the lifecycle of the products they buy and sell. And while smaller companies may not feel that they have the clout to create supply chain mandates, they do have ability to ask pointed questions and shop around for the best prices. Why should your company be paying for the extra energy or water or wasted raw materials embedded in products made by another company that has not yet embraced sustainability?

There are several good examples to work from. Walmart’s Supplier Sustainability Assessment questions are simple, straight-forward and a good place to start. Procter & Gamble has a similar supplier scorecard designed to track and encourage improvement on key environmental sustainability measures in P&G’s supply chain. The company reports that about 40% of the completed scorecards it receives have offered at least one innovation idea.

Today, we are all feeling the stress of a pinched economy, resource constraints, volatile fuel prices and global competition. At the same time, we’re seeing examples every day of companies that have successfully turned environmental sustainability into competitive advantage. By building capturing energy and operational efficiencies, stimulating innovation through aggressive goals and creative networking, and driving lifecycle change through the supply chain, we can bring Porter’s big idea to life.

This content was originally published on Green to Gold’s BRASS TACKS blog.

EDFbiz Brief: Highlights of our recent work

Understandably, hectic schedules and information overflow makes it easy for news to sometimes slip through the cracks. This is why we want to recap some of the exciting things we’ve been working on over the last few months at Environmental Defense Fund (EDF).

EDF CLIMATE CORPS

As we gear up for the summer, we’ve closed the recruiting season for this year’s participants of EDF Climate Corps.  We’ll have 57 fellows working at 49 companies across the U.S.  About half are “repeat customers” – companies that have already participated for at least one year.  This is consistent with our strategy of moving companies beyond the “low-hanging fruit” and expanding program impact through a combination of growth in numbers and deeper change.

Also, in less than a month EDF Climate Corps 2011 will be officially launched with our annual fellow training. We hope you stay tuned to more information on the training and this summer’s program over the next few weeks.

WALMART

On the retail side of things, Walmart recently announced it has diverted 80% of the waste generated by its stores in California from landfills through a combination of recycling and reuse (the national average is 45%). The company plans to roll out the program to its 4,400 stores and distribution centers across the nation.

In late February, The Washington Post reported that Walmart will start testing products to ensure they do not contain polybrominated diphenyl ethers (PBDEs), chemicals commonly used as flame retardants in furniture, toys and other products.  PBDEs are believed to impact the nervous and endocrine systems in humans.  In consultation with EDF and others, the retailer asked suppliers to stop using PBDEs several years ago; testing will reinforce that supply chain mandate.

Also this year, EDF joined with a group of organizations including Walmart, Target adidas, JC Penney, Levi Strauss and the U.S. EPA to launch the Sustainable Apparel Coalition. The coalition intends to develop lifecycle impact information on apparel products, leading toward a sustainability score for garments.  This process complements the sustainability consortium’s efforts to develop measurement and reporting systems for the life cycle of consumer products in other categories, including Food, Beverage, Toys, Electronics, Clothing, Textiles, Home and Personal Care and Paper.

INNOVATION EXCHANGE

If you’ve been following our blog, then you know all about the Solutions Labs we hosted last year. What came out of those, you ask? Well, we worked with Alta Terra to publish a Summary Report on this series of “unconference” events produced through our Innovation Exchange. These meetings, or Solutions Labs, took place in nine U.S. cities in 2010 and provided more than 700 thinkers and doers from 300 organizations the opportunity to network, share new innovations and inspire further progress.

Also through our Innovation Exchange, we announced an exciting new collaboration with InnoCentive – a “crowdsourcing” platform for innovation – we hope will accelerate environmental performance in business.  We are now recruiting companies to use the web-based platform to access 250,000 entrepreneurs, inventors and scientists around the world to solve environmental challenges with real benefits for business.

As always, you can stay tuned to what is going on in our exciting world of green business by subscribing to our EDF Business blog.

Can Open Innovation Save the Planet?

Imagine if you could tap the brainpower of proven innovators from around the globe to help your company create its next business breakthrough and enhance its environmental record. Environmental Defense Fund (EDF) announced today that it is teaming up with InnoCentive, a global leader in crowdsourced innovation, to help companies do just that through a new Eco-Challenge Series to accelerate green innovation in business.

Breakthrough ideas can–and often do–emerge from bringing a new and diverse perspective to a familiar problem. Having that “fresh set of eyes” is one way that EDF has been able to catalyze and spread environmental innovations like redesigned packaging with McDonald’s, hybrid trucks with FedEx, and next-generation solar technology with Walmart.

The folks at InnoCentive have taken this idea–that diversity of thought yields better outcomes–into the 21st century. Recognized as a global pioneer in Challenge Driven Innovation, InnoCentive’s web-based platform and methodology help organizations formulate their most intractable problems, and gives over 200,000 entrepreneurs, inventors and scientists around the world the chance to solve them. With the likes of Eli Lilly, NASA, Procter & Gamble, and The Rockefeller Foundation using the platform, it’s redefining the innovation process.

InnoCentive’s unique approach to innovation is already solving tough environmental problems. The Oil Spill Recovery Institute used it to find a way to keep oil and water on oil spill recovery barges from freezing into a solid blob. The solution came not from the oil industry, but from a chemist who once spent a summer pouring concrete. He realized that the vibrators construction crews use to keep concrete in liquid form might also do the same for the frozen oil and water mixture on the barges. And it worked.

Another organization called SunNight Solar used the InnoCentive platform to create a dual-purpose solar light that serves as both a lamp and a flashlight in African villages and other areas of the world without electricity. The solution came from an electrical engineer living in New Zealand.

Now EDF is joining its environmental expertise with the InnoCentive global innovation platform to find and tackle business sustainability challenges. We’re looking for companies to join us in launching a series of open innovation challenges designed to inspire new solutions that are good for both business and the environment. They could focus on a range of sustainability issues and opportunities including reducing water, energy, or other resource inputs, redesigning products, replacing materials, and creating new business or manufacturing processes. Successful solutions will also generate tangible business benefits like operating cost reductions or increased market share.

Our economy is global, our communications systems are global, and our environmental problems our global–so why do we look no further than our own R&D labs to solve them? Let’s bring together the collective intelligence of the world’s most creative thinkers–and get to work on solving our toughest and most important challenges.

For more information on this series, visit edf.org/ecochallenge.

This content was originally published by Fast Company.

We Are All Going to Be Naked Soon: Radical Corporate Transparency

“We are all going to be naked,” says my friend Andy Ruben in an intriguing TED talk, “so you might as well get buff.” Referring to transparency in the corporate supply chain, this statement is pretty radical coming from a senior executive at Walmart. Despite its size and the fact that it is publicly traded, until recently Walmart had a reputation as one of the world’s most insular companies.

Yet what Andy is talking about is a seachange in the retail supply chain. Not only do consumers and stakeholders have access to more information about their purchases these days, Walmart managers are also looking deeper into their supply chain than ever before.

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