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Since the release of Bruce Piasecki’s new book, World Inc.: When It Comes to Solutions - Both Local and Global - Businesses Are Now More Powerful Than Government, and the launch of our Blog World Inc. "For Better or For Worse?", we’ve received many insightful questions from government, corporate and social leaders. We have decided to use our next few blog entries as an opportunity to address a few of the questions we feel are important to our pursuit to have more dialog and interaction on how business going global is colliding with business going green. Question: "Being from Washington D.C., and given the subtitle of the book, it is appropriate to ask whether you think government is part of the problem or partner in the transitions you identify?"
[Executive from an Environmental Non-Profit in D.C.]The subtitle of World Inc. “When It Comes to Solutions — Both Local and Global — Businesses Are Now More Powerful Than Government”, is meant to be provocative and engage intelligent questions like yours. We believe the social-political-economic transformation that is upon us, and that has signaled a new form of capitalism we call social response capitalism, is like a tidal wave. The wave is being fed by the curiosity of consumers, the rules and regulations of government, the graciousness of philanthropists and foundations, the careful eye of non-governmental organizations and the competitive spirit of corporations. The subtitle for World Inc. suggests its just one element shaping this wave, when in fact the wave is being shaped by all of these forces working together. The wave is now being mounted by a few choice social philanthropists, social capitalists and mega-corporations that have all been watching and waiting for the opportune time to get on and ride. As the wave builds in the next 5-to-10 years it will sweep along with it, many other firms that will announce, like Citigroup and Bank of America, their intentions to go global and go green. We don’t believe the wave will dissipate. Instead it will build with force as it finds a way to gracefully wash us all ashore in a few decades, on a more sustainable and carefully position beach front. 
We’ve found that calling government part of the problem is unproductive. However, challenging government leaders to recognize the transition that’s upon is appropriate and necessary. It is the challenges of all those that feed the wave to monitor one another’s roles, responsibilities and actions. The gale force winds of government may be appropriate to push back the onslaught of corporate greed for green. In this sense we mean green both literally and figuratively. For example, as Western countries transition from a century of industrialization it will need to educate those countries just entering an era of industrialization. Policy has a role in shaping this new world just as much as better products do. And the thread weaving policy, products and people together is leaders – ones that we can trust – ones that see through the clutter and listen for opportunity and for what’s essential right for all of the forces upon the wave. The power of government to influence social transformation is reenergized and will emerge (in our view) with more gusto in the energy and environmental space more rapidly across the next 60 months. Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com
Global CO2 emissions are on the rise, and China, not the U.S., is now leading the way. That’s the finding from a new study commissioned by the Netherlands Environmental Assessment Agency (MNP) released June 19th. Our appetite for less expensive products is catching up with us, as least as far as global CO2 emissions go. As China grows, they are doing so in a quick, low-cost way. The net result: business as usual old school manufacturing, natural resource depletion and poor environmental quality. 
The MNP provided some further CO2 analysis from a per capita basis and found that the U.S. produces nearly four times as much CO2 as China, or about 20 tons per person. MNP also noted that China’s CO2 and other greenhouse gas emissions are primarily a result of the production of goods which are exported to industrialized countries. Global CO2 risk is a tricky thing, particularly for U.S. businesses, policy makers and consumers. On one hand, we continue to reap the rewards of inexpensive consumer products, relatively inexpensive oil and gas (compared to Europe or other industrialized nations), and on the other we may just be deferring the true cost of climate change, resource depletion and human health impacts to future generations. When these true costs will hit us, we don’t really know. However, we know that the culture and tactics by current administration leaders like Vice President Dick Cheney have had there day, and are fading quickly like big dinosaurs that once also ruled. These leaders will yield and transition to a new generation of social entrepreneurs, philanthropists and policy makers who seek a better world. This change is not being brought on by what’s en vogue, its being brought on by a shift in values, ethics and concern for the future. 
You’d think that the U.S., after 100+ years of industrialization, may have a thing or two to teach China about growing in a smart, more sustainable way. But the fact is – we don’t, not because we won’t or that we don’t know how. We are just very slow, like the big dinosaur, to adapt and change. The battle over who emits more CO2 is nothing to be proud of. CO2 emissions are considered a measure of economic productivity. Think about it, the more CO2 being emitted, the greater economic productivity. This is not a metric worth touting however. To transform our current state of global competitiveness, innovation and economic growth to one that is more enlighten and more conscious we need to begin utilizing our knowledge to help other countries develop their markets with the best available clean technology and processes.
As CO2 and other greenhouse gases become more heavily regulated, they may constrain economic growth in the short term. However, there are economic solutions. We know that ramping up the manufacture of clean and renewable energy production technologies, embracing energy efficiency and conservation, deploying clean manufacturing technologies, and rethinking the design, use and disposal of consumer products to be more sustainable is all possible. We see the transformation to more social response product solutions cascading throughout all product sectors: energy, transportation, building products, food and beverage, clothing and retail services. The change is upon us – and companies are strategizing how to minimize their carbon footprint en route to a more competitive market position. 
According to the Netherlands Environmental Assessment Agency, China’s CO2 emissions now top the U.S. by 8%. In 2005 China’s emissions for CO2 were 2% lower than the U.S. Forgetting the number game for a moment, the future of global competitiveness, diplomacy and democracy is not going to be fought over the availability or price of oil. That war has been waged, arrogantly and wastefully for decades. The war of the future will be over clean air, clean water, and access to new markets based upon what we call Social Response Capitalism.
It won’t be a war in our notion of fighting; rather it will be a race to achieve zero net emissions – and new pride driven by social needs for healthcare, education, sustainable communities and sustainable business enterprise. We’re forging ahead on this new economy, and hope you will join us!
Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com
Have you ever heard of a company named Noisette? Me either until yesterday when my friend and colleague Bruce Piasecki, founder of AHC Group, Inc. and author of “World Inc.: When It Comes to Solutions - Both Local and Global - Businesses Are Now More Powerful Than Government” mentioned how he met John Knott, President and CEO of Noisette Company in Vancouver BC while on a speaking tour for his book.
And, after doing some research on Noisette Company, I’d like to report out on this impressive firm. I encourage all to read more about Noisette, as they are an excellent case example on how community redevelopment and sustainability are transforming the future of our real estate and living environments. The company has the right balance of leadership, talent, creativity and experience. Please review the Case Western Reserve Weatherhead School of Management interview with CEO John Knott and case example of Noisette Company.
Noisette is working to develop a 3,000 acre sustainable community, what they call a “city-within-a-city” in North Charleston, South Carolina. CEO John Knott believes that sustainable communities need to “be equally responsive to social needs, environmental responsibility and economic vitality”, each a major theme captured by Bruce Piasecki in World Inc. The principles and values of Noisette’s vision for a sustainable community include: healthy indoor environments, ecologic health, social equity and just, culturally creative, beautification of human built environment, physical and economic accessibility for all, resource efficiency, diversity, and evolutionary potential.
Noisette Company is comprised of a unique team of redevelopment experts. They have, in their community planning for North Charleston, developed the “Noisette Urban Alliance” a group of manufacturers that are partners in the Noisette redevelopment effort. Each manufacturer is a manufacturer of high quality green building materials, furnishing and appliances – each dedicated to clean manufacturing and adhering to sustainability principles throughout their product development and operations. The Noisette Urban Alliance of companies has teamed to create one of the nation’s most ambitious sustainable redevelopment projects. Noisette Urban Alliance partners include: Kohler, Carrier, Andersen, Whirlpool, Hearth & Home, Hubbell Lighting, Sherwin Williams, Owens Corning, Herman Miller, James Hardie, Universal Forest, Therma Tru, Interface, Hanson and USG.
We’ve had direct experience with many of these Noisette Urban Alliance partners though our global network of Corporate Affiliate Leaders that work with us at AHC Group. We are proud to say that these firms are social response leaders, each developing new products and services that meet economic, environmental and social parameters – and do so through robust product certification and testing. In addition these firms have developed internal metrics and standards for operating sustainable enterprises.
We commend John Knott, President and CEO and Noisette Company for their leadership and drive to truly work on some of the most pressing challenges of our time. Together, the Noisette redevelopment team and its alliance partners will make a powerful impact on the community of North Charleston. We wish them well and encourage our readers to learn more about them at: http://www.noisettesc.com/discover.html.
Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com
What is energy? In high school physics we learned energy is the “ability to do work”. We also learned through the law of conservation that energy can not be created or destroyed; it can only be changed from one form to another. How do we value our future ability to do work? As some forms of energy are constrained - particularly oil, natural gas and coal - will our ability to do work, grow the economy, or continue a standard quality of life be constrained as well?
Energy has evolved to a necessity in our daily lives. It powers our portable electronics, it cools our indoor offices in the steamy summer months, and it gets us to work everyday…fashionably late. Our relationship with energy is love-hate. We love all the great quality of life elements that energy provides us, but hate that pest of a utility bill at the end of the month. We’ve come a long way since Edison commercialized electricity; however we still have a lot to learn about “energy”. In this new century we are increasingly being forced to reevaluate our long-term relationship with our great friend and foe, energy.
The availability of coal, natural gas and oil is fixed. At least, this is our general understanding as far as we know, even if some scientists like Thomas Gold who wrote the book “The Deep Hot Biosphere: The Myth of Fossil Fuels” and was referenced in a February 17, 2003 Fortune Magazine story on how he hypothesizes that oil is not made from fossils and that the earth may contain more oil than we estimate, albeit at greater depths and pressures than we have technology to extract it. Regardless of how much oil is in the earth, the constant we know in the equation is that burning it degrades our climate and our ecosystems. So, in a world that is increasing its use of oil, gas and coal to convert them to heat, electric or kinetic energy what are we to do when the pump runs dry and the canary has sung its last song?
I’m not sure when conservation ever became a dirty word. Somehow we’ve come to accept that driving vehicles that get 12 miles per gallon and heating/cooling homes 3500+ square foot in size for families that have less people than our parents or grandparents did is fashionable. We have the technology and know-how to conserve energy and natural resources, but why? Energy is still relatively cheap. And why conserve something that is seemingly infinite.
Well, the bounds of our old illusions are being tested by new market, technology and political realities. The conversion of oil, gas and coal to other useful forms of energy can be inefficient. It also creates greenhouse gas emissions that pollute and impact our air quality and cause global climate change. Governments, corporations and the public are now seeing global risks unfold, all related in some way to climate change. The loss of ecosystems, diversion of clean water, and desertification of what was once plush green lands, and increased intensity and frequency of significant natural disasters and pandemics each have been influenced by global climate change. We know that the energy we use and how we use it is part of our future risk. This new century will require us to rediscover and redefine our notion of energy. And, perhaps more value will be placed on conservation than it has been in last 100 years.
The energy transformation has started. Leading companies are now seeking to mitigate climate risks by transforming how we value, consume and conserve energy. Consider the following firms:
GE Global Research is working to develop commercially viable thin-film solar cells that can be integrated with a variety of materials including metal, glass or plastic. Thin-film solar cells have been proven in laboratory scale testing environments however, their reliability and efficiency in commercial applications has been varied. The commercial potential for thin-film solar cells is large however, and new R&D will help uncover new options for using this technology. GE is purchasing thin-film from DayStar Technologies, Inc. among other suppliers.
Sterling Planet markets and sells renewable energy. They recently sold PepsiCo. three years of renewable energy certificates (RECs) comprising more than 1 billion kilowatt-hours of renewable electricity per year. The PepsiCo purchase of Sterling Planet’s RECs was the largest corporate purchase in U.S. history. See the PepsiCo Press Release.
MeterSmart, L.P., formerly Hunt Power, provides comprehensive advanced energy information and advanced metering services to utilities and their end-use customers. Using advanced meters, state-of-the art data management tools and real-time energy pricing, MeterSmart, L.P. is able to help its customers save energy and money simultaneously through smart use of market information and metered energy use data.
Harbec Plastics, Inc. specializes in precision injection molding, rapid prototyping and low to high volume production of injection molded parts. The firm does so with a large commitment to environmental sustainability. Harbec has been integrating new clean energy technologies at its manufacturing facility for close to a decade (see Northern Development, LLC for more information). The company currently uses on-site wind generation and 25 microturbines (combined heat and power) in an integrated energy system at its manufacturing operation. It is seeking to also incorporate biodiesel fuel, geothermal energy, biodigester technology and more wind generation to its current capacity. As the firm grows and as new business and industrial tenants locate near the Harbec facility, the firm will seek to integrate its systems with others, potentially creating a sustainable energy and industrial park where all tenants value from lower-cost, reliable and clean energy.
Each of the firms identified above have begun to create new business models around how they value and use energy. They are doing so by creating new energy products and services that commercially address energy conservation, efficiency, clean production and a future defined by energy price volatility and environmental risk. The firms range from public to private, and diversified multinationals to small regional suppliers. In each case they have found success in rethinking what energy means to them and to their bottom line. In addition, these firms have pioneered new paths for others, taking on market and competitive risk. And, in each case that risk is paying off as these early adopters are quick learners and already charting new opportunities to rediscover and redefine energy for their customers, their shareholders and investors and themselves in this new century.
Go seek to rediscover and redefine what energy means to you and your firm in this new century. You may just find yourself in a market leadership position.
Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com
Last Friday I wrote about the potential risks of corporations going green to fast. The blog has turned out to be all too timely, as questions on product green washing are emerging at the world’s largest retailers.
This Monday the New York Times published the article, “At Home Depot, How Green Is That Chainsaw?”. The article provides an overview of the emerging clash between environmentalists and product marketers over how “green” some products really are. Jim O’Donnell a manager with the Sierra Stock Fund, a $50 million portfolio of environmentally friendly companies was quoted, “Everybody is in a mad scramble to say how green they are.”
Referencing The Home Depot as one of the firms under scrutiny, the article quoted Ron Jarvis, a senior vice president who managers the Home Depot Eco Options program…“In somebody’s mind, the products they were selling us were environmentally friendly…Most of what you see 
today in the green movement is voodoo marketing…If they say their product makes the sky bluer and the grass greener, that’s just not good enough.”
Mr. Jarvis was referring to the onslaught of criticism that some products listed in his firms 2,500 Eco Options program are not all “environmentally preferable”. The movement to reap benefits from “going green” quickly is impeding the ability to accurately verify whether or not a product is truly green. And, what standards exist to certify if products are truly green? Is an outdoor mat for shoes made from bio-based materials more green than one made from recycled plastics? Is an electric chainsaw preferable over a gas chainsaw because it does not use oil or gas?
According to the Home Depot they are working closely with the private certification company, Scientific Certification Systems to “develop new broad-based standards”. Scientific Certification Systems will evaluate and “grade” products based upon their environmental impact over an entire product life cycle. They will also investigate the production processes and product end-of-life disposition options as a way of including sustainability metrics into their evaluation process. This certainly adds more complexity and robustness to The Home Depot’s Eco Options program. Their challenge will be how best to serve as a gatekeeper between consumers demanding greener products and manufacturers, some of which legitimately produce environmentally preferable products and some of which have simply caught the Irrational Greenness buzz and seeking to reap quick near term profits.
To legitimize the greening of industry and the economy, further standards and qualifications will be required to certify what is green from what is green-washed. Firms like Scientific Certification Systems will become increasingly important in this process, as will consumers, retailers and government. Are mega-retailers like The Home Depot, Wal-Mart, and Whole Foods among others moving to quickly to sell “greener products”? Should the onerous of qualifying and certifying products be on retailers, government, manufacturers or independent rating firms?
As the green market unfolds, the winners, in our view, will be those firms that think through the total supply chain and life-cycle issues associated with their products and services. These firms will also strategically question other questions concerning materials selection, consumption of materials, waste and social equity. Smart firms are beginning to look at sustainability, not just as producing a greener product, but from a total system perspective, ensuring they can claim true environmental and social gains. The smart firms are asking themselves:
- Are green products simply about market differentiation and short term profit?
- Or is there more to green products from a quality, performance and sustainability perspective?
- As retailers, manufacturers, energy suppliers, etc. how do we legitimately claim our products are green?
- How do we certify our products as having green attributes or performance benefits by independent and trusted advisors?
- What is the risk for having labeled a product or service as green when it shouldn’t have been?
- Are our products achieving a true social need, or are they only banking green because they are marketed as green?
The winning firms, those that continue to grow and outperform their peers over a long-term horizon, will be those that can legitimately claim their products superior quality, performance and social products. Doing so will require them to heed to the short-term “greed for green” that is infiltrating mass consumerism.
Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com
Summer has arrived, and so is the warm weather. In some cases, so has the hot air. In other’s it’s a breath of fresh air. Needless to say, it’s been a busy month.
The G8 Summit took place June 6-8, 2007 in Heiligendamm, Germany. During June 2-7, Los Angeles hosted 7,000 people for a record breaking attendance for WindPower 2007 sponsored by the American Wind Energy Association (AWEA). And, during the same week The Economist magazine put out a 15-page report on how business is tackling climate change. One of their features is “Everybody’s green now: How America’s big companies got environmentalism”. I like the title, almost suggesting that big firms finally “got religion”.
All major media outlets have been covering the politics, market potential, technology potential of climate change strategies. We see the Senate seeking to raise gas mileage standards, new opportunities for ranking corporate performance on climate strategies and technology options for enhancing electric grid reliability while getting more fuel economy from hybrid vehicles. And if its not enough that climate change is being discussed diplomatically, negotiated into new policies, re-engineered into new products, and given a new line of credit through independent ratings of financial groups – it will make its way to the stage July 7th at the Live Earth global concert to raise awareness.
Live Earth will feature hundreds of performances and stage official concerts at Giants Stadium in New York; Wembley Stadium in London; Aussie Stadium in Sydney; Copacabana Beach in Rio de Janeiro; Maropeng at the Cradle of Humankind in Johannesburg; Makuhari Messe in Tokyo; the Steps of the Oriental Pearl Tower in Shanghai; and HSH Nordbank Arena in Hamburg.
As more green news breaks, as more policies are debated, and as more products are launched – it will become increasingly important to keep a keen eye on what’s realistically doable, plausible and possible. It’s a gold rush in the environmental and clean energy and technology market – and venture capitalists are financing new ventures like it was 1999. Government policy makers are seeking to balance an old world economy with newer thriving industries that have not had enough market experience (primarily with consumers) to know how to provide incentives, taxes or new policy mechanisms to focus growth.
For some firms, keeping their “greenness” to a respectable level will become important. The erosion of reputation, brand value, market share and stock price is very real – for those firms that risk going to green to fast. There is so much momentum behind this new wave of environmentalism and social responsibility in the market. It’s pent up and needs to release. We see it growing for another 3 to 5 years with intensity, but ultimately washing ashore many winners and many losers. Keeping an eye on the “Irrational Greenness” during the next decade will be as important as growing the right firms, technologies, policies, talent and infrastructure.
A few years ago we predicted this avalanche of social and environmental change that is transpiring in government and business. The green revolution has turned in its rose colored glasses and is now looking at the world through some fashionable spectacles. And the vision is grand and clear. Understanding the economic potential to do what’s morally and socially right, the world’s largest and most prominent corporations are shaping our world with new innovations, products and services that answer public expectation for environmental change. Sure there remain some policy hurdles and market challenges, but it is clear – we have entered a social and industrial revolution worldwide. We’re living it. And we’re driving a future focused on responsible government and business practices and consumerism. It’s healthy. We put on all of this extra CO2 and industrial waste weight over the past 100 years of industrialization; and now its time for a diet; a change in our behaviors; and a change in how we consume goods and services.
So, as you listen in to the global climate change conversation in the next few weeks – either from the global diplomats in blue suits or the global rock stars in blue (but hopefully “green”) jeans – keep an open and critical mind toward what everyone is actually saying. Leadership and reputation is about slowing down that big moving train and its constant momentum to the point where irrational exuberance can be better understood and managed.
Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com
