Author Archive

Oregon law gives teeth to business sustainability

Oregon has opened its doors to a new kind of corporation. In a bill passed by the Oregon Legislature in 2007, businesses can state in their Oregon articles of incorporation they will operate with equal regard for environmental, social and shareholder impact. It appears Oregon is the first state to adopt such a law. And according to The Oregonian:

It’s not an empty gesture. One of the principles of business law is that corporations must act in the best interests of their shareholders. Some courts have narrowly interpreted that to mean companies must act only to maximize profits, even if the action runs roughshod over wider community interests.

It will be fascinating to see where this little publicized change in Oregon’s corporate governance laws will lead. Last spring, I heard a presentation from the founders of B Corporation, an organization whose aim is the widespread formation of corporations acting on behalf of all stakeholders (environmental, community, employee, supplier), not just shareholders. Oregon’s new law gives legal teeth to efforts such as this. According to Oregon Lawyers for a Sustainable Future, which drafted the legislation (HB 2826),

The statute makes it clear that anyone forming an Oregon corporation can include a provision in the
articles authorizing or directing the corporation to be operated in a sustainable manner. Moreover, any
existing Oregon corporation can take that step by amending its articles of incorporation, which will
then govern operations after the date of the amendment.

Under such a provision, corporate officers will be directed or authorized to make decisions that adhere to a triple bottom line (people, planet, profits). How this will all play out is anyone’s guess. Ideally, we will see businesses throughout Oregon adopting the triple-bottom-line standard for governance. And perhaps even a rush of out-of-state companies that want to incorporate here so they can legally act out of concern for more than maximizing shareholder return. But how long might it be before powerful investment groups challenge Oregon’s amended corporate code in the courts? Or an individual company is sued by shareholders for failing to act in their best interests while making decisions that benefit other stakeholders? Conversely, will the adoption of these sustainability provisions leave businesses vulnerable to lawsuits from other stakeholders who claim the business is failing its environmental and social responsibilities?

Legal issues aside, I’m anxious to see how companies that adopt these new governance provisions actually behave. Will their conduct be measurably different from shareholder-centric companies? When push comes to shove, will they make decisions that reduce short-term corporate profits or shareholder return out of an obligation to the environmental or social common good?

The Oregon lawyer group behind HB 2826 acknowledges “profitability is built into the DNA of a corporation.” The question for Oregon, and the rest of the country, is whether the truly sustainable corporation is even genetically possible. Thanks to the Oregon Legislature, we’re about to find out.


A little video just in the time for the holidays

As my last post before the holidays, I want to point you to a breezy little interactive video called “The Story of Stuff.” (Thanks to my friend Derrell for sending me the link.) As the producers describe it:

The Story of Stuff is a 20-minute, fast-paced, fact-filled look at the underside of our production and consumption patterns. The Story of Stuff exposes the connections between a huge number of environmental and social issues, and calls us together to create a more sustainable and just world.

As Americans again gorge on the stuff we call holiday gifts, the video is a timely reminder of the costs of our obsessive consumption. Some may see it as a too-simplistic, one-sided view of modern materialism. But I’m certain it will get you thinking. Along with the video, you’ll find myriad resources on the site to learn more about the problems the producers’ illuminate in the video and some ways out of our materialistic trap.

Check it out.

Friday, December 21st, 2007
Posted in Sustainability | No Comments »

Forget emotions, crunch the numbers

I had a conversation late last week with a representative of a firm in LA that invests about $40 billion on behalf of large institutions and pension funds. He described his firm’s investing philosophy as “quantitative”, employing as they do a bunch of PhD scientists and mathematicians who examine financial, numerical and measurable data to determine value. “We take the emotion out of investing,” this young guy told me proudly. “Is that a good thing?,” I asked.

Although my sarcastic retort was meant to tease him a bit, it was a genuine question. Virtually every individual and institutional investor is looking for the greatest possible ROI. We recognize that humans can fall prey to their emotions when choosing where to invest their money. Haven’t we all experienced this in our own lives?

Emotions are messy things, often leading us astray. Perhaps it is better to have cold-blooded algorithmic efficiency when it comes to our financial decisions. But why stop there? In this digital era, why not reduce all of our emotional lives to ones and zeros that can be manipulated on a computer screen? How convenient it would be if we weren’t distressed by emotional decisions such as who to marry, who to hire or fire, where to spend the holidays, which homeless person to help, whether to have children and how to tell an elderly parent he shouldn’t be driving anymore. Just tap the digital oracle icon on your iPhone screen and, voila, there’s the recommended decision and the expected benefit you will receive from making it. Easy. Efficient. Productive.

In fact, I can see the oracle’s slogan now: “We take the emotion out of life.”

I’ll crunch some numbers and get back to you on its investment value.

Monday, December 10th, 2007
Posted in Business & Economics | No Comments »

While business waits for incentives, Earth heats up

A new report by energy consultants at McKinsey & Company says the US could fairly painlessly reduce our greenhouse gas emissions by 28 percent, although the consultants were not optimistic this would happen anytime soon.

One example they cite is making changes in the lighting, heating and cooling of buildings that would save emissions and money. The problem is landlords and builders are able to pass energy costs on to tenants or home buyers. They have no incentive to spend more upfront for energy efficient equipment.

Another example is the potentially large energy and emission reductions made possible by choosing more energy efficient computing equipment. The problem here, the consultants say, is few consumers consider energy consumption when choosing which computer or electronic gadget to buy. That means consumer electronics manufacturers have little incentive to make their products more energy efficient.

This study underscores the challenge in achieving goals of dramatically lower carbon emissions. Too many business decision makers require financial incentives before taking steps to slash carbon emissions. Too few are investing in reducing CO2 emissions because it is simply the right thing to do. Period.

Fortunately, there are growing numbers of enlightened entrepreneurs and businesses that recognize something must be done to stave off the worst effects of climate change. And they are determined to make money while they do good. I learned of one such outfit yesterday, when speaking with a local general contractor. In addition to his contracting business, he is an independent representative of Citizenre Corporation. From what this contractor told me, Citizenre is launching a completely new business model for supplying residential solar panel equipment. According to the company Web site:

The Citizenre REnU program is the first to give residential customers the chance to use green energy in their home without the usual dilemma. A photovoltaic (“PV”) array, inverters, and an exchange point (“XP”) are prepackaged to deliver energy to the customer or the utility from power generated at the home. Our new program takes care of all the usual headaches: it provides hassle free installation, operation, and maintenance – and does so with the most attractive terms in the industry. Customers have the option to rent the system for either 1, 5 or 25 years. This arrangement eliminates the traditional up-front investment and associated investment risk.

But before you get too excited by those grand claims, it sounds like the company is quite a few months away from getting its panel manufacturing worked out. So the most you can do right now is sign up early and lock in your rates. Then wait until their product is ready for installation.

The point here is many, if not most, businesses want to be assured of profits before doing the right thing. But a few are willing to risk doing the right thing with no guarantees of making money. I know which group I want the market to reward.

Friday, November 30th, 2007
Posted in Business & Economics, Climate Change, Sustainability | No Comments »

If you can’t resist Cyber Monday, at least buy local

Today is Cyber Monday. A day major e-tailors are said to be offering “incredible one-day sales” to get people to do their holiday gift buying online. The Motley Fool calls Cyber Monday “a joke.” I agree, but not for the reasons they suggest. To me, unless you’re buying online from a local business, you’re wasting an opportunity to support your local community. Just as you do when you shop in-person at a non-local big box or chain store.

My holiday wish is that people think first about what gifts they can buy from businesses owned and operated by local merchants. If you prefer to shop online, then see if you can buy online from your favorite local businesses. If they’re not set up to sell merchandise on the Web, call them and see if they could mail you a gift certificate. Or find a quiet time to stop in and shop.

I realize people are drawn to Black Friday and Cyber Monday because they’re bargain shoppers. For some, bargains are the only way they can afford holiday gifts. Others simply love the hunt for an irresistible deal. But just remember that every time you buy something from a business that’s not locally owned, your local economy and community are the poorer for it. You may save money, but the money you spend ends up benefitting far-away businesses and their owners/shareholders. So think about extending your gift-giving this season to your entire community by making your purchases local (and green).

Monday, November 26th, 2007
Posted in Business & Economics, Consumerism, Sustainability | No Comments »

Buy Nothing Day, Buy Local Week

Friday after Thanksgiving. A perfect day to stay home, or at the very least do no shopping. Instead, join with folks around the US and the globe who are observing the 15th annual “Buy Nothing Day.” The Adbusters Media Foundation originated the event in Vancouver, BC. According to Kalle Lasn, the organization’s co-founder, the day’s focus has shifted over the years from simply an escape from modern life’s obsession with consumption. Increasingly it’s about making a statement that we cannot continue our consuming ways in the face of climate change.

“So much emphasis has been placed on buying carbon offsets and compact fluorescent light bulbs and hybrid cars that we are losing sight of the core cause of our environmental problems: we consume far too much. Buy Nothing Day isn’t just about changing your routine for one day. It’s about starting a lasting lifestyle commitment. With over six billion people on the planet, it is the responsibility of the most affluent, the upper 20% that consumes 80% of the world’s resources, to set out on a new path.”

I couldn’t agree more. There’s another way to make a statement this holiday season: buy local. Keep your gift dollars circulating in the local economy by shopping at locally owned, independent businesses. Avoid the chain and big box stores this year. Not only will more of your money stay in the community, you’ll be reminding others of how important local merchants are to the unique character of our communities.

Here in Portland, the Sustainable Business Network of Portland is sponsoring Buy Local Week, December 1-9. (Full disclosure: I am a board member of SBNP.) Vote with your dollars by visiting your favorite neighborhood businesses, restaurants and service providers the first week of next month (and throughout the year). Also, start looking for a special Buy Local Coupon Book at a variety of SBNP member businesses across the city.

Buy less. Buy local. Sounds like a great New Year’s resolution.

Monday, November 19th, 2007
Posted in Business & Economics, Climate Change, Oregon, Sustainability | No Comments »