Greening Business to Boost Local Competitiveness

Can environmentally responsible business practices help improve local economies?

That’s the question asked by Environmental Strategies for Industrial Development, a new report from the Alliance to Save Energy, the product of a roundtable of business, government, and academic leaders held last fall at Clemson University in South Carolina.

Their answer: An emphatic Yes.

The report describes an industrial economic development vision that is both environmentally positive and pro-business. It illustrates how industry’s ability to comply with environmental regulations will improve directly with increased resource management competencies. The report’s vision is to help government and industry to find less costly ways to administer the monitoring and reporting duties required by regulatory compliance.

It concludes with a call-to-action for implementing a demonstration project in South Carolina. But the lessons can apply anywhere.

The project resulted from a 2004 U.S. Commerce Department report titled Manufacturing in America, which summarized business leaders' concerns about the lackluster performance of the U.S. manufacturing sector.

Two industry concerns that were articulated in the Commerce report were access to affordable, reliable energy supplies and the burden of industrial regulations and reporting requirements. These concepts are related—any manufacturer that reduces energy waste also reduces combustion emissions. By extension, this reduces the company’s exposure to the risk of regulatory non-compliance.

The new report offers a strategy for economic development that (1) enhances industry’s awareness and practice of waste minimization, (2) implements simplified, less costly methods for administering regulatory duties, and (3) evolves the regulatory enforcement role of government to include valuable technical assistance for industry.

Central to this vision is voluntary participation by companies in benchmarking of common air, water, and waste management functions. “Focusing on everyday plant utilities largely avoids the issue of sharing proprietary information among competitors,” says the report. “Overall stewardship of these resources is extremely practical to manufacturers seeking ways to trim costs, boost revenues, and reduce the risk of environmental non-compliance. Given this focus, resource management should become a strategic industrial interest.” This conclusion has value for a wide variety of stakeholders, including manufacturers, their service and supply allies, regulatory agencies, energy and water distribution utilities, and taxpayers.

The rationale looks like this:

The report offers a blueprint on how government and industry can partner to reduce their mutual costs of environmental regulation. “Industry’s voluntary benchmarking discipline can support industrial cost competitiveness, thus sustaining economic development,” says the authors.

The suggested steps for implementing this partnership are as follows:

1. Assemble a clearinghouse of technical assistance material related to industrial energy, water, and waste management. State and local chapters of professional engineering societies can help in organizing existing technical information. This kind of information is well-suited for Internet presentation. Similarly, regional networks of industry practitioners can partner with regulatory authorities to support a technical assistance agenda. This collaboration will cost government agencies little or nothing. It is in the professional societies’ interests to contribute to this activity.

2. Promote environmentally-sustainable economic development through a government-business communications partnership. Industry will respond better to an environmental agenda that communicates clear business value. The messenger is just as important as the message. Business leaders from forward-thinking companies need to “lend their faces” to this promotional effort, encouraging their peers to take action. Case studies can be used to illustrate success stories. Many recent waste minimization case studies exist. It will also be useful to generate local, “home grown” case studies and testimonials. Appendix A of this report presents Business Outcomes for Environmental Strategies.

3. Encourage the voluntary benchmarking of waste minimization and environmental compliance. Benchmarking of energy and water management practices should be a collaborative function, conducted by industry with state and university participation. Economic development is within the charter of most land-grant universities, which offer cutting-edge science and engineering knowledge with no commercial bias. State regulatory officials need to ensure that benchmarking activities contribute to environmental mitigation agendas, and that results are summarized for industry-wide benefit. Each industry participant bears a fraction of the cost of benchmarking. Therefore, the budgetary impact on individual companies and government agencies should be negligible.
   
   
4. Progressively adopt environmental benchmarking activities that help industry to meet regulatory obligations in a more cost-effective manner. Implementation of a voluntary benchmarking function does not have to happen all at once. It can be piloted for a single medium (air, water, or solid waste) and expanded with experience. In many cases, manufacturers can use their environmental compliance data to benchmark their waste efficiencies. Lessons learned from environmental benchmarking will bring value to industry through avoided waste, improved production capacity, and simplified, less-costly regulatory compliance. Neighboring states can and should collaborate in benchmarking efforts, since stronger industrial performance will benefit industry’s service and supply allies that are a valuable part of interstate economies. Regulators should leverage benchmarking data to simplify their compliance monitoring duties.

The Murky World of Corporate Transparency

Here's a riddle: What has two faces and just one name?

The answer: Many large companies, at least when it comes to their corporate responsibility practices when compared to their lobbying efforts.

That’s the not-so-surprising conclusion of a report issued this week by WWF and SustainAbility, which ranked the world’s top 100 companies on the transparency of their lobbying activities. This is an often murky world in which corporate PR departments are known to portray their organizations as clean and green while their Gucci-shod lobbyists in Washington and other capital cities work behind closed doors to oppose the very same environmental and social policies being promoted.

According to Influencing Power, only about half of the leading multinationals are providing “some degree of transparency” around lobbying activity. And while the authors acknowledge that this is a clear improvement over the last five years, when “only a handful” of companies publicly revealed their lobbying efforts, a close read of the report suggests that even the best is not good enough.

The researchers found several worrisome examples of disjointed company practices, including those at BP (which is a signatory to the U.K. Corporate Leaders Group on Climate Change but was alleged to have been lobbying in the US compulsory limits on carbon dioxide emissions), Ford and General Motors (which similarly both claim green leadership but lobby against efforts to control greenhouse gases), and GlaxoSmithKline (which is a major member of an industry association that is regularly criticized by HIV/AIDS experts for its lobbying on intellectual property rights), where government lobbying fly in the face of the companies’ public positions.

Perhaps ironically, all four of these companies -- along with BASF, Chevron, Dow, and HP -- were considered the highest-rated multinationals. This is progress?

No company reveals the amount it pays to professional lobbyists, although the amounts are staggering. In 2004 alone, the collective invoices of Washington lobbyists were likely to have exceeded $3 billion. In Europe an estimated 15,000 lobbyists represent a 60-90 million euro industry, but no comprehensive figures are available, since disclosure takes place only on a voluntary basis.

Can you say “Campaign finance reform”?

It’s not all bad news. According to the authors:

Our research has shown that significant numbers of companies have responded to the challenge from NGOs, investors and others to be more transparent with regard to lobbying activities. It seems that companies are developing a better understanding of the dimensions of this agenda that contribute to business risk, and how to manage these issues through greater transparency and consistency.

In the end, the report envisions a “third generation” of corporate lobbying that sees corporate responsibility “as a strategic differentiator and recognizes the potential for public policy to drive higher standards in support of business activities and wider social and environmental objectives.”

It’s a compelling vision, but the report makes it crystal clear that we’ve got a long way to go.

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Is Chevron Changing Its Stripes?

“Energy will be one of the defining issues of this century, and one thing is clear: the era of easy oil is over. What we all do next will determine how well we meet the energy needs of the entire world in this century and beyond.”

Ah, yes. Another in a string of cautionary statements about the imminent peak in the rate of global oil extraction -- the point at which oil becomes increasingly scarce and expensive and we all, presumably, become nostalgic for $60-a-barrel prices.

So, who’s making this latest statement: A geologist? Physicist? Economist? Investment banker?

Nope. An oil company.

That’s the strange-but-true tale of WillYouJoinUs.com, a bold ad campaign launched this past week by ChevronTexaco.

Up to now, Big Oil has pooh-poohed the notion that we’re running out of petroleum. There’s plenty more, they say, a proclamation usually followed by a litany of technological advances touting their ability to squeeze oil from heretofore uneconomical sources, such as Canadian tar sands.

Now comes ChevronTexaco, breaking ranks with its industry brethren through its heavily footnoted Web site and ad campaign that proffers a more-or-less honest assessment of the world of oil. It culls from the likes of the Worldwatch Institute, World Resources Institute, The Economist, and other credible and well-regarded resources to talk about:

the world’s increasing population . . .

At 6.4 billion and climbing, the world’s population is expected to exceed 9 billion by 2050. Yet our known fossil fuel reserves are in decline, and alternative energy sources are not expanding rapidly enough to meet future demand.

our huge appetite for energy . . .

By 2020, some experts predict the world’s energy consumption will be 40% higher than it is today. Efficiency, improvements, and conservation are part of the solution, but will not, in themselves, meet the need for more energy.

our dwindling supply of oil . . .

Fossil fuels currently supply most of the world’s energy, and are expected to continue to do so for the foreseeable future. While supplies are currently abundant, they won’t last forever. Oil production is in decline in 33 of the 48 largest oil-producing countries, yet energy demand is increasing around the globe as economies grow and nations develop. Abundant energy drives economic development, which in turn creates demand for still more energy. But it also puts pressure on supply and impacts the environment.

the challenges of global security . . .

Even if disruptions do not affect supply in any meaningful way over the long-term, they do create a psychological risk factor, which can lead to short-term volatility in energy markets, and a reluctance to invest in those regions.

and the environmental implications of it all . . .

The use of fossil fuels to meet the world's energy needs has contributed to an increase in greenhouse gases -- mainly carbon dioxide and methane -- in the earth's atmosphere. Many think this increase is leading to climate change, with potentially adverse effects on people, economies, and the environment -- from coastal flooding, to droughts, to changes in ecosystems and biodiversity. Many governments and businesses agree on the importance of addressing the risk of climate change. The challenge is to do so while still providing the energy required to meet the demands of growing populations and economies.

The site has been buttressed by a new ad campaign (estimated by one source at $50 million) that includes print, television, outdoor (billboards), and online ads.

Chevron isn’t the first big oil company to commit glasnost through a campaign to position itself as a beacon of honesty and social concern. Shell launched a “Tell Shell” campaign in the late 1990s that included uncensored public comments on its Web site -- and effort to improve its images after social and environmental missteps in Europe and Asia. And BP has gotten considerable mileage out of its “Beyond Petroleum” tagline and an aggressive ad campaign that touts its efforts in the renewable energy arena.

But such campaigns are risky. Shell, for one, seems to have stopped actively promoting its Tell Shell site -- perhaps not liking much what people had to say. And BP’s ad campaign risks overreaching, since only about 1% of the company’s revenue comes from “beyond petroleum” products. For all the hype, it’s still overwhelmingly an oil company.

So I’ll watch ChevronTexaco’s current campaign with high interest to see where it goes -- and how much change is apparent in the company’s actions, including its commitment to mitigating climate change. Does WillYouJoinUs.com signal a significant shift in policy and practices -- or a means of buying a little time from critics? Will the company promote its concern about climate change but lobby against climate regulations and other commitments at the national or state levels? Stay tuned to see if ChevronTexaco will really walk the walk.

In the mean time, the company seems to have a pretty good job of talking the talk. Its Web site seems an honest and authentic assessment of today’s energy realities and is based on real facts, not just vague marketing platitudes.

So, to borrow from ChevronTexaco’s earlier ad campaign: do people in giant oil companies have the ability to speak candidly about the state of the world? Apparently, people do.

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The Aspen Ideas Festival: TED Meets Davos at 8,000 Feet

This post comes to you from the Aspen Ideas Festival in Aspen, Colo., where I've been in residence since Tuesday. This is a first-time event, produced by the Aspen Institute and Atlantic magazine, and has brought together an amazing group of speakers, including current and former politicos (Bill and Hillary Clinton, Colin Powell, Wesley Clark, David Gergen, William Bennett, Dianne Feinstein), media heavyweights (Jim and Kate Lehrer, Ken Auletta, David Brooks, Jim Fallows, Cokie and Steve Roberts, Chris Matthews), and assorted others (Steve Case, Jeff Bezos, Arthur Schlesinger, Dean Ornish, Arriana Huffington, Toni Morrison).

Think of it as TED meets Davos at 8,000 feet.

And that doesn’t even include the environmental heavy-hitters: Jane Goodall, Peter Gleick, Sylvia Earle, Amory Lovins, John Holdren, Gus Speth, Tom Lovejoy, and others.

It's been quite a line-up, and an exhausting few days, with no fewer than seven tracks -- Global Dynamics, Leadership, Global Economy and Society, Health and Bioscience, American Experience, Culture and the Media, and State of the Environment -- with sessions running from breakfast well into the night.

I’ve been part of the environmental track, running two sessions, one on sustainable business practices and another on renewable energy. The latter of those featured a more-or-less dream team: Lovins of the Rocky Mountain Institute; James Woolsey, former CIA director and now VP at Booz Allen Hamilton; John Doerr of Kleiner Perkins, the legendary Silicon Valley venture capital firm that’s funded many of the big dot-coms; and John Calaway, a Texas oil man who now runs Superior Renewable Energy, a wind farm developer. Together, we explored renewables through the lens of national security, venture capital, geopolitics, and other topics.

The festival has been the beneficiary, if you can call it that, of world events. The opening night’s session on the future of the Supreme Court -- featuring David Boies and Ted Olson, who represented Gore and Bush, respectively, in the 2000 election’s Supreme Court case -- came just four days after Sandra Day O’Conner’s announced resignation. A session on The American News Media in Crisis -- with David Brooks, Evan Thomas, Jim Fallows, Juan Williams, and Ken Auletta -- came on the day the New York Times reporter Judith Miller went to jail. A session on global security took place just hours after the London bombings.

But in many ways it was the less timely, more perennial topics that seemed to capture many participants' imagination. For example, a session on “The Problem of Evil,” featuring two theologists, Baptist minister and professor Peter Gomes and Saddleback Church founder Rick Warren, was the talk of much of Friday. It explored how various religions and ethical standards address evil and how we respond to it, from resistance to retaliation.

That session was one of the few that offered a genuine and serious debate, perhaps the only criticism I have of the event. The Aspen Institute’s mission -- "to foster enlightened leadership and open-minded dialogue. . . to promote nonpartisan inquiry" -- didn’t always shine through. A session on the challenges of globalization featured raging agreement among three pro-globalization speakers. The “challenges,” it turned out, had to do with making globalization work better, not whether it's a worthy experiment in the first place. (I admit to being complicit in this. My session featuring four renewable-energy advocates might have benefited from someone arguing nuclear power’s climate friendliness, perhaps fomenting a healthy discussion about the role of nukes in a carbon-constrained world.)

But I’m happy to cut the organizers a little slack, given that this was a maiden voyage. The Aspen Ideas Festival has great potential to become a potent breeding ground for the next generation of breakthrough, world-changing ideas.

Note: All of the sessions were recorded. At present, the festival's organizers weren't certain whether or how they would make the recordings available. Check the Aspen Institute web site for updates.

Destiny USA's High-Wire Act

My friend Amanda Griscom Little’s piece in Sunday’s New York Times Magazine about Destiny USA offered a glimpse into this mega-green project: a $20 billion retail-and-entertainment development in upstate New York with big-time renewable energy ambitions.

But it only begins to tell the story.

My colleagues at GreenOrder, the New York-based consultancy that recently helped GE bring Ecomagination to the world, have been working with Destiny’s developers since late last year, helping them develop and implement the project’s bold green strategy. As I’ve watched Destiny USA unfold firsthand, it’s become clear that this is not your basic “green development”: Nearly everything about the project seems outsized and implausible. And just about everyone involved has at first viewed this project askance, questioning whether shopping center developer Robert Congel could pull off his audacious green goals.

I can attest that it’s all very real.

Little’s NYT piece captured part of the project’s essence. Congel intends that renewable energy alone will power Destiny’s hundreds of shops and restaurants, tens of thousands of hotel rooms, and sizeable entertainment and sports venues. As the Times article describes, Congel’s green vision to make his 200-acre development fossil-fuel free stemmed from an epiphany about America’s oil addiction following a visit to the D-Day beaches in Normandy soon after 9/11.

What the Times piece doesn’t make clear is that Destiny has gone well beyond the vision stage. The project is just now breaking ground on the first phase of development and Destiny is currently making deals with solar, wind, and biomass companies that will bring several megawatts of renewable power and clean-tech jobs to upstate New York.

And Destiny’s green plans go beyond energy to include design and construction of the buildings and grounds; the transportation systems within the development; and the food, dining, and hospitality services. There’s also a plan to develop an extensive clean-air transit system to bring visitors to Destiny (addressing one of the few concerns expressed by environmentalists in the Times piece). In short: Every part of the Destiny experience is meant to create environmental awareness that visitors will take home with them.

But there’s more here than just education. Congel and company hope to make Destiny a test bed for innovative clean technologies -- and to showcase them to the world. Congel sees Destiny as an incubator for technologies and companies that will help make upstate New York a hotbed for renewable energy, biofuels, sustainable agriculture, and green transportation.

Will it all work? It’s too soon to tell. Nothing like this has been done before, which makes Destiny something of an environmental high-wire act. But, to cite one of Destiny’s self-governing principles, “Green is a journey, not a destination.” I’m looking forward to tagging along on this journey, being helpful where I can -- and sharing it all with you. Stay tuned.

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