Is Wal-Mart saving the planet?

Last week, amidst a blizzard of hoopla, Matt Kistler, Wal-Mart’s VP for Sustainability, announced that Wal-Mart would start 1) asking all its suppliers to report on sustainability and 2) lead a process for being able to assess and report on all environmental and social impacts of the goods they carry. Commentary was immediate and vociferous:

This is as game-changing as getting a man to the moon!

Anything Wal-Mart does is somehow self-serving. Let the buyer beware of feel-good fuzzy ethics…–Karen, on EcoGeek

Wal-Mart to create eco-ratings for products?! Wal-Mart & eco issues/concerns? Isn’t that an oxymoron? –G Mikulsky, on Twitter

This is both more and less than meets the eye. – Joel Makower, Green Business

This is just Wal-Mart’s latest move to retain upscale consumers. — Daily Finance, on Twitter

So, is it as important as getting a man on the moon? Cynical greenwash? or something in-between?

What “reporting on Sustainability” means

When Wal-Mart requests its suppliers to answer 16 sustainability questions, to establish its “Sustainability Index v1.0″, they are establishing the engagement of the supplier as a company – not evaluating the sustainability of a supplier’s products. So it could be imagined that a supplier could answer the Index questions successfully, while still producing products that are damaging to workers, the environment, and local communities. In fact, more than half the questions are Yes/No questions: e.g. “#1: Have you measured your corporate greenhouse gas emissions?” or “#12: do you know the location of 100% of the facilities that produce your products?” There are no questions about human or ecological toxicity, emissions or effluent, or most of the measures that are used in assessing a company’s environmental management.

But things quickly get trickier.

“#2: Have you opted to report your greenhouse gas emissions to the Carbon Disclosure Project?” A visit to the Carbon Disclosure (CDP) Project quickly gets into measurement issues such as: do you know the emissions of everything you own (scope 1), and the indirect emissions of the energy you use (scope 2); what protocol do you follow in measuring this data? And even trickier questions about the risk posed by climate change – on material, energy and water sources; on plant locations; and on markets. Risks posed by potential regulations; as well as opportunities posed by regulation and by climate chanage.

And then the Wal-Mart questionnaire gets trickier still: “#4: Have you set publicly available greenhouse gas reduction targets? Enter % or # and target date, or leave blank.” “#15: Do you work with your supply base to resolve issues found during social compliance evaluations and also document specific corrections and improvements?”

Massive change – by stealth

To me this has all the stealth power of the US Toxics Release Inventory (TRI). While there was little or no legislation banning many of the chemicals in the inventory, and even less enforcement, the fact of having to measure and go public was sufficient to reduce emissions considerably: within 14 years of the first TRI reporting, toxic emissions had been reduced by ~70% and water emissions by almost 2/3 – in absolute terms. So during a period of tremendous economic growth, emissions were reduced.

How does that work? There are two drivers:

1. Prevailing regulation ensured that if a company didn’t know it was polluting, it was unlikely to be prosecuted. So there was a powerful incentive to keep in the dark: harder for your critics to get the information they would need to prosecute you and less chance of being held responsible. By being forced to report, companies had to set in place measurement and tracking systems, which meant they knew what they were releasing – and when.
2. It made available to those who cared, information on releases by company and by plant location. So community groups, environmental groups, researchers, and other people worried about the releases, could get access to, and then use the information: studies were made linking releases to cancer, for example, or assessing rates of illness near particular sources of emissions.

Wal-Mart has ~100.000 suppliers from whom it is requesting this information. And they had several competitors present, who are undertaking the same requests. Once they request this information, they cannot claim ‘not to know’ that a supplier did not have a mechanism in place for measuring emissions, or waste or social compliance.

The multitudes will start measuring. Then managing. And reporting.

Which means that hundreds of thousands of companies and their suppliers, are going to start measuring – first the easy things: energy use, waste, water; then the harder elements: origin of all their inputs (material, processed and energy); and finally the sophisticated certifications: CDP, but also Marine Stewardship Council or Organic certification; Energy Star; Green Seal; FSC; Rainforest Allicance; Fair Trade, etc. All already specified in the 16 base questions Wal-Mart is asking. And then they will have to establish plans and measures to reduce the negative impacts of energy, materials, natural resource use and on people and communities.

The BIG Game Changer

This is game changing already. But Wal-Mart is going a step farther. In conjunction with competitors, suppliers, universities, scientists and NGOs, it has established a Sustainability Consortium that will seek to develop a uniform protocol for measuring all impacts for all products. They have some experience with their Packaging Scorecard. Now they will expand this, using analysis of all the enivornmental impacts associated with the material and energy extraction; transportation, manufacture, distribution, consumption and waste/recovery. And, they will seek to create a label that can go on pack, like a nutrition label. So that suppliers will find themselves competing to provide the lowest impact product. For the best price.

Aligning the forces of Greed with the planet’s Needs

So it will be suppliers competing amongst themselves that will then drive the system to be more environmentally and socially sound. I quite like the idea that transparency would help align market forces with the environment… I just wouldn’t have guessed that Wal-Mart would make it so.

Lessons from . . . Pond Scum?!

Pond Scum, scum, and other scum

Those of you passionate about pond scum, or addicted to interest rates, or afflicted with pernicious diseases, understand that progress is described in DTs or doubling times: the time it takes the scum/money/disease to double in population. When it comes to pond scum we are largely indifferent; when it comes to money we want DT to be as short as possible, and when it comes to disease we would like to delay the day of reckoning (by in large) so long as possible. But very few of us associate climate change with pond scum.

That, dear reader, is a mistake.

The first global experiment
We are currently embarked on a huge experiment on earth - the experiment of "how to manage a super-successful species with an impossibly short doubling rate on a quite small planet". By which I mean, that we have quite a short doubling rate historically speaking and earth has no doubling capacity at all. So we are filling up every aspect of our planet with our presence, our waste, our demands, and the like. And the rest of the planet (meaning other mammals and fish and mushrooms and insects not to mention the water and the air and ... you see where I'm going...) has no say about this at all.

So at first gradually, and now pretty quickly, we are pushing other species out of our way, which means out of existence. You may be feeling triumphant about this: A sign of superior intelligence! A sign of greater strength! A demonstration of power! ...and a sign that God is on our side! Perhaps.

Or perhaps, this is a test we need to look straight in the face, and address.

Hardwired to behave like pond scum?
When I was born, the population of the earth was 3 billion people. You can thus assess to the year when I was born, or assume that I am wise beyond my years, or just an old crank. Each is, within measure, true. But it should be noted that fewer than 50 years later, the earth is ~6.8 billion people. That is to say that we are increasing at a very rapid rate. In fact, the rate of increase when I was born was roughly 2.2% year - a doubling rate of 31 years. We met that handily I'm afraid to say.

And when we double, we more than double our appetites. When I was born (let me come clean - we're talking 1960 here, not the dark ages...) there were no mobile phones (replaced every 2-3 years); laptops (replaced every 3-4 years); fax machines (come and largely gone), or most of the other absolutely essentials most of us live with today with hardly a thought (though plenty of complaints..).

Thus we have increased our per capita consumption of calories, meat, processed foods, packaging, fuel, electricity, batteries, furniture... pretty much everything. Which means that the rate at which we consume our planetary resources is even more rapid. So it is no wonder that WWF tells us that we have exceeded the earth's capacity: that rather than live off the interest, we are living of earth's capital.

We have now affected the global climate to a point that scientists consider detrimental to our prospects for survival as a species. And, like junkies hooked on drugs, we are so hooked on oil that even though we know that oil only makes things worse, we are exploring new sources that will take only slightly less energy extract than they will provide: oil sands.

Even though we are smart enough to see that we are heading in the wrong direction, we are hard-wired by millennia of evolution, to deal very well with immediate threats like a lion about to eat us, and very poorly with incremental threats - like climate change - even if they have equally detrimental consequences.

Pond scum, and . . . scum
Which brings us back to pond scum. If the doubling rate of pond scum is one day. It can take weeks and months - even years - for the scum to cover half the pond. But the day the pond is utterly covered with pond scum - and undrinkable, unswimmable and ultimately unlivable, is just one day after that. Yet when the pond is half full, everybody thinks, "well, it's not that full, we still have some time, it's growing bit by bit...".

And this is where scum come in. We are already hardwired not to really feel slow incremental change, even if our brains can see what is really happening. And some companies are playing on that: sowing doubt (where scientists have basically none). And others (who find it easier to do what they are doing today than change for the better) jump on the bandwagon, and suggest that any changes will bring down the system and create havoc... They are creating the urgent monster that inspire our brains to fight or flee: in this case, fighting people who attack the status quo in the name of climate change.

Here's why that (scummy) strategy works:
Dan Gilbert, Harvard professor of behavioural biology has studied the human brain for decades, and determined that we are brilliantly designed to respond to evil predators who suddenly threaten our immediate well being. Long term climate change doesn't meet our brain's warning and fear needs. But the alarmists who threaten we'll lose our way of life due to climate change - well they are the problem. Blame the messenger!

Beyond scumminess:
What you want to do is implement small changes, that can grow incrementally until, like pond scum, they are everywhere - without breeding resistance.

• At Yahoo they ran a competition to cut CO2 for each employee by 20% for one month. They provided power-saving-tips, carpooling, meatless lunches, etc. The prize if the company made it: see the CEO & COO fight wearing sumo-suits. Not only did this work, it so invigorated that organisation, that many other changes came to the fore, and while not all the initiatives lasted continuously, many did, and new ones had a chance to be evaluated and adopted.

• At IBM they said - "we want to make a business out of being green - so anything you think you can sell, we have to do internally. That will give us credibility in the market place." Not only did that excite people who wanted to sell ideas; it excited people who were back-office and could invent a product that company could then sell.

• At Wal-Mart they said to employees and suppliers: Here are our super-ambitious goals. We want to improve year-on-year - but we won't micro-manage - you tell us what's best. We'll work with you to get there, and we need you to work with us to get there." And while they had areas of focus (such as packaging) the benefits came from new products (such as concentrated detergents and compact fluorescents); and new processes (such as cooler lighting in freezers that reduced airconditioning).

We will survive...
With strong intentions we can rise above pond scum, use the brains we've built over millions of years of evolution, and grapple with the environmental problems we have actually created for ourselves.

Because the alternative is to grow like pond scum, choke our own home, and possibly choke our means for existence...

Can goats help your green initiatives succeed like this?

by Caroline Rennie

(image from Summitpackgoat.com)

Goats are buttheads. Driven by nature eternally to establish and defend their position in the hierarchy, they continuously butt eachother (and me!) into line. But once they're comfortably in line they not only follow you - they carry your load. Here's how this can practically apply to launching an initiative:

The pitfalls of launching your initiative

Its pretty common to want to start your environmental initiatives with activities your colleagues will see and feel and even participate in. Something like recycled paper in the copy room. That can be a success - people get inspired, they notice they can make a difference, and they start having ideas about how to contribute more.

More often it's a disaster. You get complaints: "the paper gets stuck in the copier"; "the colour is off and my documents don't look good"; Or snippy questions about the labelling ("what is Mixed Sources anyway? I thought we were going - like - recycled..."). Or questions about whether its worthwhile "I've heard that recycled isn't better for the environment anyway". Or more philosophical questions: "Shouldn't we be sticking to reading on our computers and not print out so much? You're just making people feel good about wasting...".

And really personal ones: "Oooh recycle folks, here comes the GreenQueen..."

Since you probably thought you were doing an unarguably good thing, you're surprised at this negative stuff. And you get aggravated and think it would be a lot easier to go back to the way things were done before.

Why so much energy around something like paper?
There are always - or at least usually - some tensions in an office. Things around work or relationships or even the coffee machine. You get a lot around whether people tidied up the conference room after a meeting, or talk too loudly on the phone, or cut somebody off during a discussion... And often the conversation to clear that is difficult.

So instead, people find a safe outlet. For example, attacking an imposed initiative - and even attacking it in a way that makes them feel they are supporting the company: We shouldn't use recycled paper - it costs more; recycled makes us look like eco-groovy hippy types - it's not professional! The paper jams are reducing our productivity!

This can feel pretty hostile. After all, it was an environmentally sound idea and you had had the permissions and you had to go out of your way to make this work.

Your colleagues may be goats.
So it can be just a safe outlet, a release. Or it can have a more butt-heady side to it too - establishing where they and you are in the company pecking order. And, to mix my metaphors, your sticking your head above the parapet makes you an easy target.

Lessons from ButtHeads

#1. Be cunning. When we were implementing a recycled-paper programme we decided to do it on the sly. We took recycled paper, put it in the normal paper boxes, and waited for a month to see if there were any problems / complaints, etc. Naturally there were none. Then we were able to say - we have piloted recycled paper for the past month. Based on its performance we have decided to continue to use recycled paper.
#2. Be encouraging. While the goats jostle with each other all the time, they are also sticking with each other in a herd kind of way. People do that too - rather stay close to the herd and complain, then go off alone! So make being part of the 'eco-groovy herd' a gratifying thing. Report on environmental savings; run contest for paper reduction, or double-sided printing, or ...
#3. Give them roles. The more people are clear on how they can contribute, the more they have an exclusive part to play, and the more they feel recognised for their contribution, the more likely they are to stay in line. Plus , the more people are involved, the more difficult it is for someone to make you the problem because the "problem's" now shared.
#4. Be offensive. I don't mean rude. I mean pre-emptive. With the goats (don't read this if you are sensitive), I found that very early on I would go up to one of the top goats and whack him in the belly with a rock. Not nice! But after a disgruntled snort and with a quick shake of his horns, that goat - and all the subordinate goats - would leave me alone. You may want to consider this as metaphor rather than literally applicable, but that could depend upon your company too!

Goats can be good
Like people, goats are herd animals, and once they've established their order, will plod along in relative peace for hours. The trick is, get the order established early, and don't try to shake it up. When you start something, anything, you are shaking up the established order by sending out little ripples of change. Some will see this as an invitation and some as a provocation, things will change, and suddenly you've got jostling all around.

So get the buttheads in line, reward them for staying there, and they'll carry your load to the goal.

Wordling what really matters @ ren-new!

from http://www.wordle.net

What energy has in common with hard drugs.

by Caroline Rennie

How do you know that your avant garde initiatives are actually mainstream?

The Mafia is muscling in as a supplier...

According to the Financial Times, renewable energy, particularly wind-farms, is increasingly owned and run by the Mafia - for the value of the subsidies, for the value of the renewable energy credits, and for the sale of the energy.

Some more legitimate firms got there too. But most companies have been content with the notion that 'green' means 'philanthropy'. And they treat it as such. Its ironic then, to find the mafia being the hardest-headed business people of all, exploring green energy as a particularly lucrative field for doing business.

How did they do it? The same way that you could (minus, I would suggest, some of the more hard-core tactics they use, that might be seen as violating the social-responsibility spirit of the enterprise):

1. create wind-farm companies at a relatively small scale. This enables them to receive subsidies, particularly in Italy, and stay under the radar;
   
2. build windfarms and capture the energy;
   
3. receive the subsidies for generating renewable energy, sell the 'renewable energy' credits that come from emissions-free production, and use or sell the energy itself.

The Mafia has so far avoided actually producing and selling energy, but this is where your opportunity lies: less in intimidating government officials, and more in producing energy. After all, it would be useful to your business, and the credits - if not useful to you - would be useful to a someone else - quite possibly a customer. They might even be useful to the government that could usefully use proof that its subsidies were actually subsidising energy production, not crime.

Finally, you can sell your capacity to a foreign energy firm: today International Power of the UK, Italy's Enel, Germany's Eon and France's EDF are the key players in the sector.

And that would provide all the proof you need in Italy (Europe now) that your energy is truly clean.

Thanks to Mallen Baker and Tony Webb for highlighting the article from the Financial Times. Bravo! or more accurately, Bravi!

Just how transparent is transparency?

by Caroline Rennie
How transparent is transparent? Well, how about publishing the webcast of your internal Sustainability meetings and presentations online on a site that has your goals, actions, performance, stories and videos? That's what Wal-Mart has done here. Mike Duke, the new CEO, speaks to his vision (and how it continues Lee Scott's) for Wal-Mart and sustainability, and notes strongly that employees who chose not to come because they were "too busy" might want to re-evaluate their priorities. And then he talks about Wal-Mart's expectations of their suppliers.

There's not a lot of wiggle room in this. Not for suppliers, not for employees, and not for the company. We're all invited to look. I'm paying attention sitting in a small town in Switzerland. I may be alone. But it's not very likely. So the world has a chance to pay attention to Wal-Mart, its commitments, how it's doing, and what it's expectations are. Welcome to the new reality. Wal-Mart's the largest retailer in the world. It is one of the few companies to have seen a considerable rise in profits this past year. And it has the most ambitious environmental commitment I've seen:

1. To be supplied 100 percent by renewable energy.
2. To create zero waste.
3. To sell products that sustain our resources and environment.

What are the implications of this? If you're a supplier to Wal-Mart, or a supplier to a supplier to Wal-Mart, you want to be working towards these goals - and you want to be doing it in a cost-effective way. Wal-Mart's not going to spend more on doing this. They are looking at sustainability as an immediate value generator and a strategic wealth generator: the message is, companies that figure out how to work in a way today that will enable them to survive energy, water and material shortages in the near and more distant future, will have an advantage. And the sooner you do that, the more you can do it on your terms, and the better a partner to Wal-Mart you'll be.

And while Wal-Mart's commitments are particularly sharp and compelling, Carrefour, Tesco, M&S and other retailers have ambitious targets too.

• Carrefour's sustainability programme concentrates on four priority areas: 1) Helping to fight climate change, 2) Acting to preserve biodiversity and natural resources; 3) Promoting methods of production and marketing that respect the environment; 4) Fostering fair, sustainable consumption.

• “I am determined that Tesco should be a leader in helping to create a low-carbon economy. We now have to make sustainability a significant, mainstream driver of consumption. I see this as a tremendous opportunity for Tesco.” Sir Terry Leahy, CEO Tesco

• Marks & Spencers: “We aim to use materials from only the most sustainable sources protecting the environment and the world's natural resources for future generations...”

These companies didn't get to the top of the league by being wooly-headed enviornmentalists. And they don't want to stay there by being hard-core depletists. Take their lead - sustainability means growth.

When a company loses its customer's values to win a legal point

by Caroline Rennie

McDonald's could be doing smart, community-building work that builds brand value. But they're not. Here's what they're doing - and what Wal-Mart's doing better.

The story:
Nigel Haskel, a minimum wage, 21 year old employee, sees a man start beating a woman in the McDonald's he works in. He intercedes on the woman's behalf, gets the attacker to leave, and then blocks him from re-entering the restaurant. For his pains, the attacker shoots him multiple times, and Nigel has to have several abdominal operations to repair the damage and extract the bullets. He still has a bullet inside.

Six months and $300'000 later he is denied workers compensation benefits: McDonald's refuses his claim as they say he should just have called the police.

What's wrong with this position?
From a business point of view it is wrong because it tells customers that they may not be safe in a McDonald's because McDonald's will not protect them. That seems wrong-headed at a time when trust in business is at a low.

Secondly, it ignores fundamental human notions of protection, 'doing the right thing', standing up for decency and justice. This threatens their community standing.

Compromising your welcome in the community
When corporations forget the spirit of laws, and live for short term benefits based on the rule of law, they compromise their welcome in communities. That compromised welcome is what has driven Wal-Mart to embrace the environment and sustainability so powerfully and visibly: they needed to re-establish credibility with communities so that they could continue to expand. And in doing so, they have expanded among consumer classes who did not readily or happily shop at Wal-Mart before.

Wal-Mart seems to be learning that doing the right thing by community can build business [see next week's column on transparency]. McDonald's, who made themselves the butt of 15 years of jokes and bad press when they pursued two activists through the UK and European courts in a case dubbed McLibel, seems to be struggling with learning.

Better to Do the Right Thing
Two thirds of McDonald's revenue growth comes from upscale, healthy food*. This is exactly the kind of market that is most likely to be put off by insensitive behaviour and everything it implies. The public in general hasn't taken kindly to the arrogance of bankers and car companies. Perhaps this is a time for McDonald's to cede their "right" to do the wrong thing, and instead do the right thing- so that they continue to build brand value and affection.

ren-new works with you to stay clear of such situations, so that you find yourself in the hearts of your customers, and avoid litigation and public discontent.

*Dean Ornish, TED conference 2006

How is carbon like reporters in Iraq?

by Caroline Rennie

They're both embedded: journalists in the army, carbon in ... everything. When you calculate your company or product's CO2 impact, you're not just counting what you added - you're counting the embodied impacts - the energy used and CO2 released when the materials were made, distributed, manufactured into products, used and even discarded.

Its like the VAT (value added tax). At each step in the chain value is added, and with it - energy, possibly other materials, etc. Everything that adds energy or materials, comes with a load of carbon. So you take the carbon load of the product entering your operations, add your contribution, and pass it on.

Fortunately or unfortunately, depending upon your perspective, our environmental accounting hasn't quite got to that level. Instead, assumptions are made in general about quantity and sources of CO2 'embodied' in a product - like a tonne of a particular type of plastic. So the numbers are broad assumptions, useful to gauge the difference between, for example, the use of one material and another for a particular product.

The science of measuring everything
While it may be possible for a company to do all the measuring itself, the wealth of data to collect is huge, and the need for the results to be credible, equally great. Consequently, it is more credible, faster, and less expensive to work with companies that have databases with such information, as well as the methodologies to infer results. Most are profit-making, though Greg Norris, a lecturer at Harvard University and a professor at the University of Arkansas, is developing Earthster, an open-source software system that conducts life cycle assessments- measuring carbon and also other environmental impacts.


What do the databases contain?

• All greenhouse gasses - measured as "CO2 equivalents"; for example, methane is usually calculated to be around 21 times more potent than CO2.
• energy use in particular countries by type and proportion (e.g. in France energy is largely nuclear; in Switzerland largely hydro)
  
• Carbon associated with the energy (e.g. renewables don't add carbon, fossil fuels add a lot, and nuclear has the emissions associated with mining uranium and transport... as you can see, the figures are complicated - but the assumptions will at least be clear).
  
• Carbon associated with, for example, the fertiliser used in farming, or the energy associated with mining and refining;
  
• typical transportation vehicles, load weights, fuels and consequent CO2 emissions;
• carbon associated with extraction/harvesting of raw materials (and packaging); processing; manufacture; transport; use and disposal/recycling.

Some companies are already using the results publicly: in the UK, Walker's crisps (potato chips), Tropicana, Innocent Drinks and even the retailer Tesco, have gone public with the carbon associated with particular products. Others are using their carbon profile as a competitive tool in discussion with retailers - many of whom are insisting their supply chain continuously and significantly lower their carbon impact.

Government is perking up its ears
Recognising the need to make big changes throughout society to meet scientist's recommendations on carbon reduction, government is looking at ways to harness this information. Extended producer responsibility for waste products is working well. And now - they're looking at using the same tools for reducing carbon. As a first step in preparation - know your carbon footprint: you'll only be able to manage it once it's measured.

What will happen to your costs when ecosystem costs are priced in?

by Caroline Rennie
Late last year the US Department of Agriculture announced they were forming a new high level office of "EcoSystem Services and Markets" to determine the cost of depleting and the value of protecting, nature's services. What exactly does that mean?

A few years ago the UN assessed the value of the stuff nature gives us for free (clean air, humidity, water, resources, fertile soil, etc.), and it dwarfed all the economic activity at the time (and that was before the economy lost tens of trillions of dollars of value...). In the assessment was the notion that as we deplete resources, and degrade air, water and land, we will have to develop systems that clean up the environment, or that replicate its services. So the value of what nature gives us is described in terms of the cost of generating it (either by restoring nature or by replacing the function).

Nature does it cheaper
It was quickly clear that nature does it more cheaply. Much more cheaply. So much so that enlightened planners in companies and cities have figured out who to pay how much in order to get the service from nature rather than industry.

A case:
New York City's water had historically come from the Catskill mountains to the North. Due to suburbanisation, changes in forestry and farming practices, and other generalised environmental impacts, the water quality was degrading. The City looked into the cost of building a filtration plant: roughly $6 billion to build the plant plus another $250 million per year for maintenance. (in 2003 dollars). Instead, the City worked out an arrangement with farmers whereby the farmers were paid to farm in such a way that their land served as a filter for water, and the water that arrived in New York was clean (dubbed the "champagne" of water). This cost the city $167 million/year - a fraction of the maintenance and depreciation costs of a filtration plant.

Now governments are wondering how to ensure you pay for your impact on the ecosystem and its servises.
The example above is of a stakeholder (the City of New York) seeking to conserve the quality of a particular 'product' (clean water). Similar programmes have been established by bottled water companies to guarantee the quality of the water they bottle. However now, governments are seeking to find ways to get a range of services/depletions to be paid for, including the following:

• Taxes and user fees for externalities - such as overfertilising leading to nutrients leaching into lakes and rivers, and fostering so much growth that effectively there is no oxygen and most animals and many plants die off.

• Creating markets like the EU cap & trade system For example, limit the amount of nutrients that can be "released" through fertilization to encourage more judicious use of fertilisers and cleverer means of application that did not result in run-off.

• Payment for ecosystem services A government could set a price for each service - and you pay according to the degree of your impact.

• Certification schemes: Today current certification schemes for sustainable fisheries (e.g. Marine Stewardship Council) and forest practices (e.g. Forest Stewardship Council) provide people, retailers amd branded goods companies, with the opportunity to promote sustainability through their consumption choices.

A working system is already in place in Costa Rica and, for cap & trade and offsets, in the EU.
In 1996 Costa Rica established a nationwide system of conservation payments as inducement to landowners to provide ecosystem services. Costa Rica brokers contracts between buyers and sellers of sequestered carbon, biodiversity, watershed services, and scenic beauty. There is also talk of “biodiversity offsets,” whereby developers would pay for conservation activities as compensation for the harm that their projects cause to biodiversity.

With a new President, a new attitude and even greater pressures, the likelihood that some of these elements will be put into practice is increased. The question for you is, how can you estimate today the extent of your impacts, and how to reduce them so that those kinds of fees just wouldn't apply to you? After all, it will be cheaper for you to drive your agenda on your own scale today, then wait for the rules to fall and herd with your competitors to the payment lines.

ren-new can help you determine the scale of your impacts, and work through scenarios on the implications to your business. We can also take a look at how you could use those resources to your advantage instead - meeting future requirements in a way that brings benefits today.

Resources of interest:

• http://ecosystemmarketplace.com
• http://speciesbanking.com/
  

Is your brand getting the support it needs to be trusted?

by Caroline Rennie

Currently Trust in institutions, corporations, and industry is at low ebb.

The low general level of trust means trust is applied not in a general way, but on a case by case basis (e.g. product by product and brand by brand). In this context, slips can have a disproportionately broad impact and be less readily forgiven by a bruised public. For example: consumption of all milk in China went down 50% even though only powdered milk was implicated; Consumption of milk chocolate in Europe decreased when some contaminated milk was found in a couple of European candy bars; dioxin in Buffalo milk mozzarella forced an immediate 50% decrease in Neapolitan mozzarella consumption, and a further decrease on the purchase of all mozzarella from Italy.

A long string of very public trust failures has increasingly demonstrated that the systems set in place to protect society's interests, are themselves not trustworthy: the Savings & Loan crisis suggesting poor regulation and oversight; then Enron/Arthur Andersen which suggested that the broader system was untrustworthy, not just individual companies; now our current financial crisis is demonstrating complicity throughout the "trust" chain - including auditors, ratings agencies and government. In fact government failure to keep watch and protect its citizenry culminated in Iceland going bankrupt and in the rest of us bailing out the very banks that lost our money, and even poorly run but very large companies.

Now Edelman's trust survey shows that trust in Government, Business and Media is low and falling. The most trusted 'institution' is NGOs globally: "54% of 25-to-64-year-olds trust them to do what is right".

What does this do to your Brand?
Brands and brand values depend upon people identifying with them- such identification being fully dependent upon trust. Lose that, and you've wasted your brand building. This is no insignificant - Robert Goizueta famously said that if all of his factories burnt down one night, the 'goodwill' he had built up around the Coca-Cola brand would ensure that investors would provide the cash for him to rebuild at once.

Consumers depend on trust to decide where and which products to buy. When trust in business is diminishing (62% trust business less this year than last) consumers need to find other ways to (re)establish trust. But that is a daunting exercise (where do you get the information? how can you trust it? and for how many transactions...), so consumers need short-hand to provide trust.

Enter the arbiters of trust: the NGOs.

A Power Shift
As noted above, the NGOs are believed to stand for the right thing. Interestingly, they are not expected to solve the problem - just alert people to the problem. So the power of the stamp of approval comes from NGOs. And the requirement to act, on you.

At the same time, NGOs are facing a difficult financial time: as consumers hold back on spending, NGOs are receiving less money then they need to meet their own agendas. And consequently they need to fight hard for relevance. So they need brands: either as a friend, or as a target.

The consequence - you can expect more NGO campaigns: NGOs have a strong drive to question trustworthiness of corporate claims and to campaign rather than engage.

This is the powershift: the general environment has led to a general sense of distrust, and the NGOs need little to focus distrust on products and companies. They have a very strong hand.

What to do? Engage with the NGOs you are most afraid of so that you gain trust through association adn perhaps even the stamp of approval. And do so with neutral facilitators to help manage the engagement. Everybody at the table is feeling at risk, so the situation is delicate and the stakes surprisingly high.

To engage effectively, you must be able to persuade the NGOs to take you seriously. And therefore you must be ready to:

• send senior people to the discussions
• commit to action(s)
• commit to transparency (at a minimum with the NGO)
• commit to goals and measures

In return, you need to request that they:

• not campaign against you or your general product line while working together
• that they not have a campaign against somebody else whose product's could be readily confused in the public eye, with yours
• and that they be themselves trustworthy partners, and partners that work to keep other NGOs off your back.
  

In this way, you can make a virtue out of necessity - "even in this difficult economic climate we determined to partner with the NGO community to improve .... ".

Nietzsche may have summarised the problem best: "I'm not upset that you lied to me, I'm upset that from now on I can't believe you." Far better to build trust and maintain it, than lose it and seek to rebuild. The public's willingness to re-trust has worn thin.

Contact us - we'll help you find the NGO partner(s) to work with to ensure that you and your brand are not only protected, but the favorite for years to come.

Lobbying: a proven way to lose money?

by Caroline Rennie

The International Energy Agency estimates that coal companies ought to be spending $2 billion a year for ten years on clean coal technologies, and Credit Suisse suggests they should be spending at least $1.5 billion. Actually, coal companies are spending a fraction of that on development, and half again as much in lobbying. To what end?

The Facts
The American Coalition for Clean Coal Electricity (48 coal and utility companies in the US) spends the equivalent of 350 million a year (for ten years) on clean coal technology development, and the US government adds 190 million more. At the same time, the Center for American Progress reports that coal companies are spending $125 million/year to lobby against carbon emission standards, and a further $45 million on advertising to consumers: $170 million a year total for communications and lobbying.

Assessing the value
How do we assess if that is a smart investment for the companies, or money that would be better spent working on technology development?

A smart investment is an investment that 1) minimizes a company's costs both in the short term, and in the long term; 2) serves as a profit center; 3) builds relationships with key stakeholders.

• Cost minimization It can be argued that the lobbying minimizes short term costs as it serves to keep investment costs at 1/4 those recomended by the IEA (1/3 if we include the amount spent on lobbying). Longer term it would be surprising if the costs of buying themselves out of the obligation didn't rise substantially - after all, as an industry they are relatively easy to regulate: a narrow sector with few companies, responsible for 27% of the US greenhouse gas emissions. The Obama administration has already signalled that it supports cap-and-trade policies. Thus the ability to simultanously reduce their own emissions and sell the unneeded credits would be rewarding in the US as well as in Europe.
  

• Profit Center European companies are working on developing carbon capture and storage capabilities - witness the Vattenfall plant in Schwarze Pumpe, in the former East Germany. While this is smaller than standard plants, it has been in operation since September, 2008, and the learnings will enable Vattenfall to sell carbon offsets for the recaptured carbon, as well as selling the technology, thus making their investment pay twice over. The carbon market today is over $64 billion according to the World Bank, and is predicted to grow to $100 billion by 2010. This will stimulate demand both for carbon reduction technologies, and for carbon credits. Given their current focus, US coal companies may deprive themselves of the opportunity to develop a profitable technology and to lower their emissions. Worse - they may end up buying both the technology and carbon credits from their European competitors. Were they to use their lobbying resources to grow public investment in clean-coal technologies instead, they might get the kind of returns Vatenfall is foreseeing (and quite possibly realising).
  

• Building Relationships Short term, relationships are built at the political level - but lobbying relationships aren't loyal relationships - they depend on a constant infusion of cash. Furthermore, the approach taken by the industry has raised such ire among environmentalists, that the latter are paying for ads to counter the coal industry "clean coal" advertisements. So the positive feelings that the clean coal campaign is seeking to engender in consumers, are being undermined publicly by sources fundamentally more credible - including Al Gore.
  

A Shining Example
Lest this be seen as too hypothetical, let us take the case of GE - which in 2004 developed its "Ecomagination" green initiative. At the time, their green products were worth $4-5 billion per year. Today, four years later, they are worth $18 billion. To take this to the next level, GE's CEO Jeffrey Immelt is lobbying Washington to extend tax credits for Renewables, as well as to invest in Smart Grids. And he lobbies in conjunction with environmental partners as well as with unexpected business partners like Google. (Jeffrey Immelt discusses their business centered environmental approach - "not CSR" he emphasizes- at Google Zeitgeist. video below)

Has the industry done a cost-benefit analysis on its lobbying strategy? Undoubtedly specific companies are seeing benefits to their lobbying: several companies including Duke Energy, Consol, and Southern Co., have projects in which the government puts in twice as much money as the private companies do. But most do not see these benefits. Overall, the strategy the coal industry is taking seems liable to cost it considerably more than it saves: in terms of cost of doing business, in public good will, in future investments, and in relationships with the new administration and its allies. But perhaps most humiliatingly, the industry and its executives could be seen as backwards, much as the American car company executives are today.

In light of climate change and the mechanisms that are pricing carbon globally, the opportunities to make money from doing the right thing by the climate are huge. Why choose a rear-view mirror for steering?

Find your smart sustainable business strategy with ren-new today! contact us by clicking here.

Happy Holidays!

All best wishes for a very Happy New Year!

We invite you to pick up a free gift for yourself and your friends here - something to chew on that's good for a laugh, and good for the heart.

And here is a sneak preview of your gift:

Your customer goes sustainable - and demands you do the same. Are you ready?

by Caroline Rennie

Nestle Waters has told Plastics & Rubber Weekly that it expects its suppliers to be making demonstrable progress towards sustainability:

"We are going to be pushing more on our suppliers to figure some of this stuff out" said Kim Jeffery, President Nestle Waters.

Are you ready the day your customer tells you he "expects you to figure this stuff out"?

Customers flag their intentions to the stakeholders they worry about: retailers, environmental NGOs, government regulators, and interested consumers. What they don't necessarily remember to do, is flag their intentions to you - until you receive a demand in the mail. In their annual report, Nestle Waters North America stated that they want to have PET bottles with 25% recycled content on the market by 2013, while developing a "next-generation bottle" manufactured entirely from recycled materials or renewable materials by 2020.

If you are not ready for these kinds of demands, the costs to you can be huge. Coca-Cola was behind the successful development by its suppliers of the plastic can in the 1980s (the PETainer - PET body with aluminium ends). The aluminium industry convinced municipalities and community groups (who earned money collecting aluminium cans) that if a tiny number of these containers came to their smelter, the smelter would explode and aluminium recycling would be finished. An exaggeration perhaps, but effective enough to convince several states to ban the can and scupper its chances of making it in the market. The result: Coca-Cola didn't buy, and the development, testing, marketing and manufacturing costs were born entirely by the suppliers, with no return.

Today Nestle Waters is under pressure as cities and counties (from San Francisco to Toronto to New York to Bern) call for a ban on plastic bottles for water on environmental grounds (there is even an award winning documentary in theatres called "Flow" that takes issue with Nestle's use of water. Nestle felt compelled to respond to it, also by video, though on their website rather than theatres). To save their business Nestle Waters want to ensure their environmental story is good and improving - and they are turning to suppliers to make this so.

Which brings us to the question - how do you ensure that your product is "future proof" when your customers, under pressure, put the performance burden on you?

• Check their websites and reports and find out what their public commitments are with respect to the environment;
• Check out the broader context - in this case "bottled water bans" - and see where the pressure is coming from;
• Determine how you impact your customer's environmental impact - and what you can do to reduce not only your own impact, but the impact you have on them.
  
• Start developing the products that will let you grow as the pressure increases: In this case, if you were providing the raw materials to Nestle you would want to have had a programme working on recycled content and renewables for some time if you are to meet their market demand by 2013. ("By 2013, we plan to reduce carbon intensity by 20% across our full value chain — from the production of plastic resin to delivery of products to our customers.")
• ..and you may want to know what your competitors and Nestle's competitors are doing already. Coca-Cola has had a more ambitious plan on their website for years. And Wal-Mart is increasing the pressure on the entire supply chain to provide products that are zero waste or fully renewable.

Would this label affect sales? Tell us what you think...

by Caroline Rennie


When it comes to nutritional information, data is presented relative to "recommended daily allowances". Innocent Drinks (with the Carbon Trust) estimated the food & drinks RDA for each UK citizen at 2.90 Kg CO2 equivalents. A cheeseburger weighs in at 3.08 Kg CO2 equivalents, exceeding an individual's daily allowance for all food and drink. (Calculations from Jamais Cascio at OpentheFuture.com)

The RDA in this case is effectively an MDA - a maximum daily allowance. Which suggests that the code orange in the picture on the left should be a deep red instead.

Here are Innocent Drink's calculations, and how they report them on line: click on the pictures to enlarge.


How do you believe on-pack labelling would affect purchasing decisions?

Sure fire labelling - that sways consumers

by Caroline Rennie

As UK retailers outdo eachother in their efforts to build consumer and political good will, they have had to develop immediate and compelling ways to help consumers do the right thing. Among other techniques they have demonstrated that labelling can not only sway consumers, but change the company as well - in a way that makes them better citizens. A case in point: Sainsbury's.

Sainsbury's had determined that its key focus would be health. They worked with nutritionists to translate nutritional information into readily understood symbols - and came up with the "traffic light" (pictured above): red denotes "eat rarely", orange "in moderation" and green "abundantly". They moved the information from the back of the pack, to the front. Then they tested the symbol on their ready-to-eat meals.

In a tub-style refrigerator they put two meals: a vegetable curry with rice whose stoplight was all green, and Salmon in pastry, whose stoplight was largely red. And they rolled the cameras.

Shoppers would look in, reach for one product and look at the label; then reach for the other and look at the label; back and forth, and... by and large leave with the green label product. Over time, sales of the green-labelled products became important.

Interestingly, back in the development kitchens, developers didn't want to be associated with the red-labels, and started to tweak their recipes to make them healthier. So that the label started to change everybody's behaviour - for the better.

Not surprisingly Marks&Spencers has developed a similar label for its foods - and also puts the information on the front of the pack.

Which suggests that a similar scheme for environmental labelling could be developed. One idea would be to address the big LCA categories:

• Global Warming - gases released that contribute to global warming
• Toxicity - a measure of the toxic emissions to air, water and land
• Acid Rain - the potential to damage water and soil systems by increasing their acidity
• Resource Depletion - the extraction of non-renewable resources from the lithosphere which is not a sustainable practice

Thanks to Interface for these definitions

Alternatively, it could be based on current key categories - though these are less accurate and comprehensive: Waste (packaging recyclability); CO2 (climate change); transport (food miles). In any case, they would need to incorporate the impacts associated with the food, preparation, packaging and transportation, on average, for that product.

As WalMart (and Asda, its UK subsidiary), Tesco, and M&S have ambitious public goals (e.g. zero waste, carbon neutral, and the like) we could expect them to start testing such labels - as soon as they can develop some consensus behind them!

And when they do, what will this mean to you - and your products?

For assistance in thinking through the impacts of retailer's environmental assessment and labelling programmes, contact ren-new!

Brands successfully avoid value from environmental activities

by Caroline Rennie

Most companies are wasting their environmental investment - at least as far as reputation goes: while they may be doing, and saying, a lot - the public doesn't buy their story. Except, that is, Toyota's.

click on picture to enlarge

source: MapChange 2008

What's going on?
Let's look at GM and Toyota. GM is seen as a laggard, almost as bad as Esso. Toyota, on the other hand, has the highest perceived environmental value, with quite a good relationship between perception and actions.

How can this be? Well, for one thing, Toyota has gone public for years with a clear vision understandable to all: "Our goal: zero emissions" which they then backed up with a car that was clearly a step change towards that goal. So, a clear goal, and clear movement toward that goal. In fact, they quickly came out with a hybrid Lexus, and have a commitment to having a hybrid option for each car model they have on the market today.

And GM? Well, leaving aside that there was a terrific film called "Who killed the electric car" blaming GM for withdrawing electric cars from California, GM has had no such clear and consistent positioning in the environment. As a consequence the actions they take, and by all accounts they are undertaking quite a few, have little resonance.

And this is where most companies lose value through their environmental activities: rather than give a clear, understandable (and preferably inspiring) vision against which they measure performance, they speak to how they are reducing negative impacts. The frame is already negative ("we may be doing a bit less bad than our competitors") and it requires a great deal of work on the consumer side to understand whether the information is relevant and significant.

Should companies care? A 5% change in a company's reputation is equivalent to 1-5% change in their market value according to the Research Institute at New York University’s Stern School of Business.

So, do it right, and you build good will and increase sales. Do it wrong, and you strip value from your brand. So far, there's only one company doing it right.

ren-new works with you to increase the value you get from the environment - better for your profits, better for the planet. Contact us to find out how!

Increase your sales through Good Causes

by Caroline Rennie

Linking your brand to a good cause can increase sales of your products by as much as 74% according to the 2008 Cone/Duke University Behavioral Cause Study. To gain the increase, the cause must be linked to what the brand and company stand for as a business, as well as the target consumer's preferences.

Researchers tested this by having volunteers read magazines in which some saw the brand's advertising linked to the good cause, and others saw a normal advertisement. Those volunteers who saw the cause-related advertising were 28% more likely to purchase the product than those who had not. (64% of those who saw the cause ads chose the target brand vs. 50% who viewed the generic corporate advertisement)

"Qualitative consumer responses showed that the issue, the nonprofit and the inherent nature of products were key factors in making cause-related purchasing decisions" states Environmental Leader.com, noting that some categories showed little response, while shampoos and toothpaste showed considerably more.

The study was replicated online - and demonstrated that people spend almost twice as long reading cause-related ads as they do on standard advertisements, and that this leads to higher sales. Closer analysis of the purchasers highlighted that women (the target audience) increased cause-related purchases more than men.

The study further found that consumers:

• want to select their own cause - 84%
• say the cause must have personal relevance - 83%
• care about which nonprofit the campaign is linked to - 80%
• say practical rationales for involvement, such as saving money or time, are important - 77%
• find emotional incentives for involvement, such as feeling good or alleviating guilt, important - 65%

The study focussed on Americans, and found that there was a strong desire that companies address growing domestic and global needs. Companies were seen to have the scale and resources to have an important impact. The issues include:

• Education – 80%
• Economic development (i.e.: job creation, income generation, wealth accumulation) – 80%
• Health and disease – 79%
• Access to clean water – 79%
• Environment – 77%
• Disaster relief – 77%
• Hunger – 77%

So, leveraging a cause for sales can work - if you do it right. To do it right you have to target your consumer, target your cause, and ensure it's linked to your product. Otherwise you have done little for the cause, and even less for your shareholders.

Source: Environmental Leader and causerelatedmarketing

To determine which causes could help boost your sales, contact ren-new.

Exploiting Green Guilt for profit: a lesson from the Catholic Church

by Caroline Rennie

Purchases of carbon offsets* by individuals are at an all time high - despite the grim economic news, reports the Washington Post. And this tells us that there is money to be made by businesses who invite consumers to participate in solving environmental problems.

A lesson from the Church
The Catholic Church has known this from its inception - and used to sell indulgences (the promise of eternal salvation, for a small fee) to fund its activities. The need they responded to then continues to exist in the human heart, even in our more secular society. Today ABC agnostics buy eternal salvation in the form of offsets - the promise that some good is being done somewhere that cancels out the feeling of guilt from personal actions today. And they feel even better than the Catholics of yore because they are not only buying personal salvation, but the salvation of the planet.

But this means that people are investing more than their money - they are investing their faith in the solution - and if they discover that their faith was misplaced, they'll hold onto a sense of betrayal for years - and perhaps for ever.

An anecdotal illustration. I was at a dinner a few days ago, at which people were discussing the environment and climate change and the general difficulty of dealing with this at the personal level. The conversation turned, as it usually does, to recycling. "A total waste of time", declared one participant, "after you do all the separation, they lump everything back together and put it in the trash. I don't see the point of participating any more."

She was Swedish, and referring to a scandal in Sweden more than five years ago. We were having the discussion in Switzerland, with a known and effective system. But the memory and resultant behaviour are proving irreversible.

So, if you are going to provide the means for consumers to participate in improving the environment, ensure you have NGO support, external advisors, and a solid programme. The closer you come to pure PR, the harder the fall for you and your (ex) consumers when they learn the truth.

After all, it takes 20 years to build trust, just 20 seconds to destroy it.

contact ren-new if you want to capture consumer's faith for your business.

* Carbon offsets are the credits provided by, for example, a switch to green energy, sold on to third parties to "neutralise" their impacts. The thinking is that this creates an incentive to keep organisations investing in clean technologies. In fact, regulation and standards are inconsistent and poorly policed, and the programmes are sufficiently dubious that the US government has come out with a report questioning their validity. (Last week the Wall Street Journal writes, the General Accounting Office released a report criticizing “the limited assurance of credibility” in the voluntary market for offsets.)

Weee! Stealing a march on your competitors*

by Caroline Rennie
HP, leading manufacturer of electronic products such as printers, computers, and the like, has implemented a take-back programme in the US with a difference: you can ship any brand's cartridges or computer hardware back to them - and they will send you a coupon greater than the cost of shipping, towards an HP product.

So, they get a triple win: consumers switch to HP, enhance their good feelings towards HP, and HP gets a ready source of high cost materials such as gold in the process.

What they have cleverly done is take the learnings from their required participation in recycling systems (the EU's Waste Electrical and Electronic Equipment programme - the 'Weee!' of the title) and turned them into competitive advantage in the US.

Cleverly, they do not stop at the promise of "take back" - but are working on programmes to ensure they know where the products are going and how they are treated - while linking that to social benefits. And rather than do this alone, they are working with competitors and NGOs to ensure that the results are credible and the standards shared.

So we're seeing alchemy in action: turning dross into gold...

-Caroline Rennie

video source: Business Week

To see how to use the environment to steal a march on your competitors, contact ren-new.

* Stealing a March definition: to spoil someone's plans and get an advantage over them by doing something sooner or better than them. Source: the Free Dictionary

Is government really setting your environmental agenda?

by Caroline Rennie

I don't think so.

Business is.

Let's take a look at Bisphenol A to see why.

picture source: tree hugger
(referring to Ontario's ban on BPA in baby-bottles)

Bisphenol A (BPA) is a monomer used in the production of polycarbonate plastic, among other applications. It is also an endocrine mimic - affecting our bodies as if it were a hormone our bodies produced itself.

The FDA has been dithering for years about whether or not the quantities that leach out of these plastic bottles is significant in terms of its effects, and even now has a committee studying the issue. On the whole, it has been supporting the polycarbonate industry's studies that suggest it is not dangerous.

However, business has been more pro-active. Wal-Mart, Nalgene (the pre-eminent polycarbonate bottle manufacturer) and Toys'R'Us have effectively banned BPA from the products they sell: products such as baby bottles, microwavable containers and other applications from which leaching is significant.

This has been a prudent move.

The latest research, and the first done on humans, has shown that people with elevated levels of BPA in their urine have much higher risk of diabetes and other diseases. Children and infants are particularly at risk due to the hormone mimics that leach from warm baby-bottles, for example [see chart below].


source: National Toxicology Program, U.S. Department of Health and Human Services, from Wikipedia

Today the FDA is reviewing BPA with a view to banning its use in certain applications. Increasingly, government confirms what business drives. And business responds to targeted pressure from advocacy groups.

PVC had a similar story - almost no bans at the government level, but effectively in most of the developed world, PVC water bottles used to be dominant, and today are non-existent: banned by retailers.

There used to be an ad: "When EF Hutton speaks, people listen." Well, when Wal-Mart speaks, count on competitors, suppliers and governments listening.

- Caroline Rennie

To determine how best to drive your environmental agenda, contact ren-new.