Archive for May, 2008

Even Bush Administration can’t ignore climate change

I’m somewhat surprised how little has been made in the media and blogosphere of a federal government report this week on how climate change is already be felt across the US.  Why the surprise? Because it’s being issued by the Bush Administration. 

An executive with the World Wildlife Fund told the Washington Post:

(T)he report represents “the very first upfront acknowledgment from the administration that we are already experiencing climate change impacts.” As recently as July 2007, the administration submitted a report to the United Nations that omitted any discussion of how global warming will affect wildfires, heat waves, agriculture or snowpack. 

According to the USDA, the report’s lead sponsor:

The report concludes that climate change is already affecting U.S. water resources, agriculture, land resources, and biodiversity, and will continue to do so.  Some agricultural and forest systems may experience near-term productivity increases. Over the long-term, however, many such systems are likely to experience diminished ecosystem services and the need for changes to management regimes.  Management of water resources will become more challenging. Increased incidence of disturbances such as forest fires, insect outbreaks, severe storms, and drought will command public attention and place increasing demands on management resources.  Changes in season length and primary productivity, along with possible breakdowns in traditional pollinator/plant and predator/prey interactions, are stressing and altering current ecosystems.  


Frankly, that’s quite an admission coming from this administration. If it’s willing to bless these conclusions, things have to be bad. And, in fact, probably worse than the report leads on, considering the lengths the White House has gone until recently to distance itself from the whole climate change issue. If nothing else, I hope this report sways at least a few conservative leaders to get off the global warming fence and start acting.


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.


Is sustainability possible without slowing down?

Do we Americans work too much or otherwise stay too busy to live sustainably? The question has been running through my mind since Saturday, when I joined about 50 other Portlanders in sampling a new discussion course on food by the Northwest Earth Institute. (I am a member of the NWEI board.)

I led a group of 10 people in discussing two articles from the course. One question from the readings, “Does slowing down in terms of food — shopping, preparation or eating — appeal to you?”, drew unsurprising consensus. Although some “hated” going to the grocery store and some “hated” cooking, the idea of slowing down around food appealed to everyone.

That is, until the follow-on question came: “What would be the trade-offs for you personally?” This was a group of well-educated adults whose intense work lives and family responsibilities seemingly allowed no room to slow down. Who has the time or the energy to shop, cook and eat in a manner that always makes a priority of sustaining the environment, our families and us?

We were talking about food, but the same could easily be said of any number of consumption, work and lifestyle choices we face everyday. Sustainable living requires conscious choices. When we’re overly busy or stressed we go on autopilot or revert to what’s convenient instead of what’s healthiest for all concerned.

One of the group members told me that slowing down would mean leaving her corporate job where she was held captive by the “golden handcuffs” — even though she had to work 60 hours a week to keep those handcuffs on. Millions of Americans find themselves in the same predicament. And when push comes to shove, most of us decide to keep our demanding jobs and the financial security they provide rather than choose a mode of living that leaves more time for the basic joys of life, such as preparing and sharing a meal with family or friends.

So what will it take for more Americans to choose to slow down? Or is the story we tell ourselves — that we can’t afford to slow down — true for most of us? And if the latter is the case, what does that say about the prospects for a sustainable future?


Picking up where Nau left off

Sunday’s Oregonian attempts to explain what sustainable businesses might learn from the closure of apparel maker Nau early this month. The paper draws a conclusion similar to my immediate reaction when I heard the news: that Nau’s ambition got the best of it.

The Oregonian’s assessment is too brief to be of significant value to existing or would-be green entrepreneurs. For instance, the paper responds to one of its own questions, “Is a sustainable business unsustainable?”:

Nau wasn’t around long enough to tell. And certainly, organic food companies have profited as demand increases. And renewable energy ventures — biofuel, solar power — still attract investors’ bets. “There are a lot of sustainable plays that are more capital efficient and less risky,” said David Kirkpatrick, founder of SJF Ventures, a Durham, N.C.-based firm that invests in green companies.

I’m sure the paper felt compelled to ask this question because many who heard the news of Nau are probably asking it. It would be sad indeed if people concluded from Nau’s experience that operating a business with social, environmental and profit motivations equally in mind cannot be sustained long-term. Unfortunately, the paper’s response to its question doesn’t really get at the answer.

How about we flip the question: Is an unsustainable business sustainable? Or ask it from a macro view: Can our economy continue to run indefinitely on the backs of companies whose only measurement of success is financial return?

Throughout our history as a country that’s the way business has operated. And the American economy has flourished as a result. But for how much longer can this go on? Especially as China, India and other countries look to duplicate our success.

I hope people don’t see Nau’s failed attempt at “challenging the nature of capitalism” as evidence our economic system does not need serious repair. Yes, the company’s ambition exceeded its reach. But the folks at Nau knew there’s nothing sustainable about business as usual. And we all need to pick up where they left off.


Ambition, not patience, the operative word at Nau

I only knew my hometown sustainable clothier Nau by what I read and saw in the media. Sadly, they closed their doors so fast I didn’t have a chance to buy any of their clothes. I suspect they would have been right up my alley.

Even though I didn’t really know Nau, something about them seems very familiar: venture capital. Or more precisely, reliance on venture capital. I spent more than 20 years in high tech. Venture capital is the lifeblood of most tech startups.

Venture capital, however, is not patient capital. Most VCs are seeking to make their money back plus a handsome profit within three to five years, usually by selling to a larger company or going public. Nau had reportedly raised $34 million since its founding in 2005. Its inability to close another round of financing led the company to shut down last week.

Nau was in many ways the perfect candidate for venture capital. They had name-brand management, an incredible commitment to innovation and ambition as outsized as any venture capitalist. The media took notice. Fast Company reported in June 2007, “The business plan projects $11 million in revenue this year (2007), growing to $260 million and 150 stores by 2010.” Nau CEO Chris Van Dyke told the magazine:

“We’re challenging the nature of capitalism. We started with a clean whiteboard. We believed every single operational element in our business was an opportunity to turn traditional business notions inside out, integrating environmental, social, and economic factors. Nau represents a new form of activism: business activism.”

In the end, none of that was enough as Nau could not survive in the suddenly tight-fisted capital market. Its plan to grow to $260 million in revenue by 2010 clearly required a constant stream of capital.

Having seen this story line play out over and over in high tech (especially in the dotcom era), I’m hardly surprised by Nau’s fate. I only wish the universe would have rewarded Nau for its commitment to doing the right thing for Earth and its inhabitants.

Some day soon, I hope to be reading case studies of what the Nau founders could have been done differently. Maybe these study authors will answer the question uppermost in my mind: Should Nau have hitched its wagon to the race horse team of VCs or reined in its ambition to change the world overnight and settled into a trotting pace that could be sustained indefinitely?

Even more than financial capital, patience is in short supply in business. I understand the world needs big, audacious ideas like Nau’s to meet the urgent social and environmental needs of our time. But it seems to me there’s a lot to be said for thinking big — and starting small.


Painful choices along the path of sustainability

Imagine for a moment you’re an executive for a fertilizer company. And let’s say you have a genuine commitment to the triple bottom line: people, planet, profit. Worldwide demand for fertilizer is off the charts, so that’s good for your company’s finances (profits). You sell a terrific product that dramatically increases crop yields, making a meaningful contribution to the world’s food supply (people) and to increased biofuel production (planet).

End of story, right? Well, not exactly. A New York Times article on the worldwide fertilizer shortage gets at some of the potentially agonizing tradeoffs in following a commitment to sustainability.

First, the good (taken from the article):

“Putting fertilizer on the ground on a one-acre plot can, in typical cases, raise an extra ton of output,” said Jeffrey D. Sachs, the Columbia University economist who has focused on eradicating poverty. “That’s the difference between life and death.”

And now the bad:

Environmental groups fear increased use, particularly of nitrogen fertilizer made using fossil fuels. Because plants do not absorb all the nitrogen, much of it leaches into streams and groundwater. That runoff has long been recognized as a major pollution problem, and it is growing. A barometer of the pollution is the rising number of dead zones where rivers meet the sea. In the Gulf of Mexico, for instance, nitrogen runoff from fields in the Corn Belt washes downstream and feeds plant life in the gulf. The algae blooms suck oxygen from the water, killing other marine life. More than 400 dead zones have been identified, from the coasts of China to the Chesapeake Bay, and the primary reason is agricultural runoff, said Robert J. Diaz, a professor at the Virginia Institute of Marine Science.

You’re the fertilizer executive. With one hand you’re helping to eradicate poverty, plus you’re creating good jobs in your company because your product is in such high demand. With the other, you’re helping to destroy marine life and adding to greenhouse gas emissions because of the fossil fuels required to make a usable form of nitrogen.

My in-laws and their ancestors have been farming in Oregon since the 1850s. I remember my mother-in-law saying awhile back that it wasn’t until chemical fertilizers came along in the 1950s and 60s that they were able to move out of pure survival mode. For them, it meant the difference between a family farm that remains in operation today and one that would have long ago been plowed under.

I believer her, and I still wish the runoff from agriculture wouldn’t find its way into the murky Willamette River running through my hometown of Portland.

I understand why the financial bottom line rules in business. Who really wants to confront the choice of feeding the poor or destroying ecosystems?