Posts Tagged ‘Sustainable Industries’

Sustainable Industries offers up 9 trends in 2009

Sustainable Industries magazine has just issued its top 9 trends for 2009. They are not posted online, so I’ll summarize them here. (If you’re not a subscriber yet, consider becoming one.)

  1. Smart grid takes off: “Though the term ‘smart grid’ is somewhat fluid and encompasses a range of technologies—from so-called smart meters to home area networks—analysts and industry insiders seem to agree the time is at hand for many such technologies to be widely implemented.”
  2. Year of the carbon market: “At a time when U.S. unemployment rates are reaching levels not seen in decades, the carbon market is likely to go on a hiring blitz in 2009.”
  3. Green building sets the code: “While 2007 and 2008 proved big years for the widespread adoption of building standards by major cities—including Los Angeles, Boston and Seattle—the coming year is expected to bring even more.”
  4. Banks for the new economy: “With the collapse of giant financial institutions in the third quarter of 2008, some industry experts are predicting a bigger push toward a community-based model of banking and investing in 2009.”
  5. Green jobs hiring blitz: “The West Coast, with its state renewable portfolio standards, the California Solar Initiative, massive wind power plants and strong venture capital presence, is well-positioned to lead the growth of the green-collar job sector.”
  6. Tapping into water conservation: “While some companies are already viewing water as the next oil—and are starting to prepare s if the world is approaching ‘peak water’—2009 will bring a new wave of water conservation efforts among U.S. organizations.”
  7. Get on the bus: “Simply put, Americans think life is better when they have the option not to drive.”
  8. Solar’s future luster: “Despite what could be a rough 2009—or at least a rough first quarter of 2009—analysts remain optimistic about the (solar) industry’s long-term future following the ITC extension and a new administration stepping in to Washington, D.C.”
  9. ‘Go green’ goes down: “(B)ecause the media and its consumers have matured a bit in relation to what they view as truly ‘green,’ companies need to stretch much further to garner attention for their environmental initiatives.”

Overall, the trend report suggests an economy that will continue to transform itself in the face of a deep recession. Progress may slow some next year, but sustainability is no passing fad.

Share
Thursday, December 18th, 2008
Tags: , , , , ,
Posted in Business & Economics, Marketing, Sustainability | No Comments »

Imperfect triple bottom line far better than alternative

Sustainable Industries magazine asks the question: “Is triple-bottom-line accounting really possible?” From their reporting, the answer appears to be not yet. The article quotes a San Francisco attorney:

“The notion of triple-bottom-line accounting assumes or incorporates the idea in the nomenclature that there’s a standard…The reality is, there isn’t.”

He is referring to the absence of a unit of measure that works across each of the three dimensions of economic, social and environmental accountability. Right now, environmental or social investments or decisions tend to be evaluated by the one measurement businesspeople best understand: financial ROI. In other words, the one bottom line that has always been with us. As a result, decisions that would appear to benefit the environment or community, but hurt profitability, are too easily dismissed. As in, we can’t afford to do the right thing.

I believe we are making the notion of the triple bottom line (TBL) too complex. And that’s preventing businesses from embracing its simple principle, which is to strike a balance among the sometimes competing interests of making money, protecting the environment and supporting our communities.

As Sustainable Industries observes, financial accounting over the course of many years has “established standardized, legal frameworks for what to measure, how to measure it, how to report it and how to interpret it.” The environmental and social components of the TBL are far from reaching that status. And yet, businesses can’t let that stop them from at least trying to find balance in their decision making, even when social or environmental outcomes may be difficult to measure and value.

Consider today’s financial crisis. Fingers are pointing in every direction, and there is indeed plenty of blame to go around: greedy investors, lenders and home buyers, lax regulators, gutless politicians, to name a few. But I can’t imagine we’d be in this mess if business was guided by the triple bottom line, even as it’s loosely understood today:

  1. Would mortgage lenders concerned for their customers and communities ever have offered $400,000 loans to people with no proof of income or assets?
  2. Would Wall St. investors ever have purchased these so-called subprime loans and packaged them for sale as low-risk securities if they were thinking of more than just maximizing profit?
  3. Would government ever have let investors acquire and trade trillions of dollars of these securities without public scrutiny if they actually felt obligated to protect the individual taxpayer?

We’re seeing now, in the prospect of a $700 billion taxpayer bailout, what this country’s obsession with making money has cost us. The financial bottom line alone is like the presidency without Congress and the Supreme Court: There are no checks and balances. The only brakes on economic excesses are wrenching recessions, if not depressions, after which we’re back to business as usual. How quickly did we move from the dotcom bubble to the housing bubble?

To return to the question the magazine asked: Maybe triple-bottom-line accounting isn’t possible. But there’s no excuse any longer for pretending our unfettered pursuit of profit is the answer.

A banker who gets sustainability

Good piece in the June issue of Sustainable Industries (subscription req.) on Dave Williams, CEO of ShoreBank Pacific bank and a resident of the Portland area. The magazine named Williams one of its 20 Leading Green Executives for his success in taking ShoreBank Pacific into the black using a triple-bottom-line (people, planet, profits) approach to its business.

A couple of Williams’ comments struck me as right on. One was his comparison of the cultures of Oregon and the Bay Area around sustainable business development:

 

“Oregon has historically been a small-business state, so the strength of any particular community is dependent on the strength of the business in it,” he says. ”But in the Bay Area, business is oddly independent of community.” Williams attributes that to a venture-capital mindset in the region. “The thinking is, ‘How do we build it and make it international then sell it off and do something else?” he says. “There’s a different approach to business and community that you get in Oregon where the feeling is more that we need these businesses and we’ll keep them going for the next 100 years.”

From my two decades in high tech, I know the VC model of the Bay Area (and elsewhere) has its place, especially in fostering innovation. But Williams perfectly captures the limitation of the VC business culture: it operates independent of community.

The mindset of fund it, build it and sell it has yet to translate into most urban areas, much less rural areas. That’s certainly the case in Oregon. What’s needed and wanted in most communities are stable, locally rooted businesses that provide solid jobs over many years and understand their success cannot be divorced from the communities in which they operate. The VC model doesn’t serve that need.

 

Williams, a Portland area resident, also drew an important distinction between green and sustainability. He says his bank distinguishes itself from other banks by focusing on sustainable communities not just green.

 

“My sense is there will be a backlash over the next three to four years about sustainability, caused by concerns about ethanol and rising food costs, and we need to be prepared for that and consistent in telling our story and why it makes sense.” In the end, Williams says ShoreBank’s commitment to sustainable communities may help it weather a shift in public opinion. ”People who only characterize themselves as being ‘green’ will be under more stress than those that focus on community development and building sustainable communities.” 

 

 

I agree with Williams. Green is often more about how businesses see themselves, while sustainability emphasizes the interconnections among business, community and environment. In other words, sustainability is not all about you, the business. It’s about operating from a larger mission or purpose than simply finding ways to make money from your customers’ interests in green products or services. And I believe over time, people will reward those businesses, like ShoreBank, that understand the difference.