Want to buy a ton of CO2? Just Use your GE Earth Rewards MasterCard

The New Greed for Green: Whether it’s Greener Homes, Planes, Computers, Coffee Pots or Financial Services, It’s all about Money! Money! Money!

Money doesn’t grow on trees. At least that’s what my father said a quarter of a century ago. My father was, and remains right. I can’t go out and pick a Franklin, Hamilton or Grant off of my 80 year old Maple tree. However, in a world that is increasingly constrained by carbon and looking at everything from reforestation to offset CO2 to the use of waste wood products for biofuel production from conversion of cellulosic material, the notion of money not growing on trees is taking on a new meaning. The human relationship with the natural world is disingenuous, distant and devoid of long-term social consequence. We’re the ants, marching one by one, building our financial nests but often forgetting how the interplay between money and markets hinges upon the long-term health and vitality of ecosystems.

In this new century a child is born into a world of media frenzy world where the speed of information and money transaction is measured in milliseconds. We’re seeing real-time multi-billion real estate, finance and private equity transactions occur daily before our eyes as the movement of money is at an all time high and its impact on social and environmental needs is also at its greatest.

The latest installment of this dizzying money culture is the “GE Green Card”, a credit card based way for consumers to “keep the change” for the environment. Titled the “Earth Rewards MasterCard” the GE financial tool may sound a bit gimmicky, however its intentions are routed in this new economy we term ‘social response capitalism’ where the tools, processes, services and products of our past are now being innovated from scratch or redeployed to provide social and environmental value like no other time in history. In addition, GE is educating consumers about the environmental impact of their daily lives, whether from use of their car, their home, or their day to day consumer purchases.

Using the GE Earth Rewards MasterCard consumers will be able “to dedicate one percent of their purchases to fund projects that offset carbon dioxide emissions”. GE will use its finance empire to pool the monies and once a year they will invest them in projects that reduce carbon dioxide.

The GE concept is not that bad of an environmental finance tool. There are other organizations like 1% For the Planet whose business members dedicate 1% of their annual revenues to environmental organizations. 1% For the Planet has 682 members who have contributed more than $21 million.

We have traditionally placed monetary value on the utility that earths natural resources provides us, but not on their depletion, waste or value to produce – including the cost of CO2. What is the value of the earth producing a gallon of petroleum over geologic time? What is the value of a pristine forest land on the top of a West Virginia mountaintop versus the value of coal removed from mining and earth blasting? With GE and other financial institutions testing the consumer demand to use financial tools to help mitigate carbon emissions, we will likely learn to valuate CO2 much quicker – particularly in this era of immediate transaction.

In his recent blog on the GE Earth Rewards card, renowned speaker, writer and corporate environmental strategist Joel Makower smartly asked, “Can all of this actually transform our consumptive behavior? Is GE joining the teeming masses of marketers seeking to encourage consumers shop their way to environmental redemption?”

Joel Makower also noted…“It's too early to tell, of course, but Earth Rewards has the potential to catch on with the large middle market increasingly concerned about climate change but willing to make only small, incremental changes, if that. (GE envisions a potential market of 25 million Americans.) Earth Rewards doesn't require consumers to change habits: It's a conventional credit card with a green sheen. Some would say that's a bad thing -- consumers need to make radical changes in their daily habits -- but it's also a realistic approach”.

Joel Makower’s thoughts are in step with World Inc. While some companies like Toyota and HP take more radical steps to innovate new products for social response, other firms like GE find a niche in redefining existing services, like their credit and financial service, to provide social and environmental value to those consumers that are willing to take smaller actions. While it may be necessary to take even more proactive approaches to climate change, we must understand that not every consumer has the financial or political power to make sweeping change. Thus, some consumers prefer tools, like the GE Earth Rewards card, as a way to contribute to a better world.

The success in the GE Earth Rewards card is already here in our view. Sure we can debate how much money actually goes to carbon sequestration or renewable energy projects, but the fact that GE is pushing the envelop across all of their product segments, be them big engines – power production – appliances – or financial tools. GE embodies its notion of ecomagination and is redefining its future through careful, targeted and strategic launch of social response products and services, World Inc. style.

Mark C. Coleman
Senior Associate & World Inc. Case Leader, AHC Group, Inc.
Mark@ahcgroup.com

The Privatization of Business can be Aligned with Social Response Capitalism Goals

Reflections on "World Inc.": Questions from Government, Corporate & Social Leaders

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 this blog entry as an opportunity to address a one 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: There appears to be an emerging trend to take public companies private, and out of the hands of shareholders. What effect will this trend have on your thesis?

There is indeed a trend for firms to go through the transition from public to private ownership. We’ve seen this with firms like Georgia-Pacific who was acquired in 2005 by one of the largest private firms in the world, Koch Industries, Inc. for $21 billion. We also see the impact of private equity firms like the Carlyle Group, Blackstone Group, and Bain Capital. In February 2007 the electric utility TXU accepted a $45 billion offer from two leading private equity firms, Texas Pacific Group and Kohlberg Kravis Roberts, along with global investment bank Goldman Sachs to take the company private. The TXU deal was the largest private equity buyout to that date in time. As these examples show, the privatization of business is a significant trend to watch. We do not believe that these mega money deals will preclude private mega-corporations from having to operate in a world now being defined by social response capitalism we call “World Inc.”.

Although public firms have seemingly greater financial reporting and accounting standards to adhere to, private firms often undergo similar internal review from their leadership who oversee and manage finance and governance protocols. Businesses often prefer private ownership as it offers certain flexibility in making swift decisions, particularly in agile and industries in which companies compete heavily on price, quality and performance.

The ability to shift ownership from public to private has its downsides. Companies go public to increase investment and grow capital resources to maximize production and profit. Public firms that can compete on price, product performance and “social response” attributes like corporate social responsibility, environmental practices and sustainability metrics will yield new investment from shareholders and may develop competitive advantage over their peer private and public competitors. The privatization of corporations puts fears in the minds of some investors, environmentalists and consumers. Private companies do not have to report their financial statements as stringently as publicly traded firms have to do through SEC disclosure rules. With a perceived veil over their financials and operations, some investors fear the private companies may not be as open about their environmental and social efforts, and may actually minimize those efforts over time due to lack of financial scrutiny.

Some organizations, like SEIU, have studied and reported on the impact private equity firms have through their enormous buyouts of public companies. SEIU sees mega money buyout trends as impacting how companies go green and report social and governance performance. With 1.9 million members who have assets exceeding $1 trillion in pension funds, SEIU is a strong and fast growing union in North America. SEIU is the U.S.’s largest union of health care workers, property services works and the second larges union of public services workers. Thus labor groups like SEIU, large pension funds that invest in private equity firms and others will be interesting to watch over time on how they influence private company reporting of social, environmental and governance metrics.

But we see upsides in private corporations and private equity deals. Private firms we’ve encountered in our 25 year history as management consultants actively benchmark with public competitors and peer companies. This tells us that while firms may go private, they don’t necessarily completely veil themselves from the outside world. In addition, government and the public will always serve as stakeholders to any firms, public or private. So as firms go private, they may lose shareholder influence. They won’t however, rid themselves of government, societal and non-governmental organizations influence on their products, operations and long term stewardship of natural resources.

In the case of TXU, their decision to go private resulted in stronger environmental and alternative energy policies and operations. For example, the Kohlberg Kravis Roberts & Co. (KKR), Texas Pacific Group (TPG), and Goldman Sachs & Co., equity buyout of TXU was said to have the following benefits:

1. Planned coal-fueled generation units reduced from eleven to three, preventing 56 million tons of annual carbon emissions. This scale-back represents a 75 percent reduction in new coal capacity. In addition, the company is committed to continuing its efforts to meaningfully reduce existing carbon emissions and seeks to join the United States Climate Action Partnership (USCAP).

2. A $400 million investment in demand side management energy initiatives. TXU will implement an aggressive demand reduction program through a $400 million investment in conservation and energy efficiency activities over the next five years.

3. Increased commitment to exploring renewable energy sources and investing in alternative energy technologies. TXU will reduce mercury (Hg) emissions, sulfur dioxide (SO2) and nitrogen oxides (NOx) by 20 percent from 2005 levels, as previously committed, through reductions at existing units and installation of emission controls on the new Oak Grove and Sandow units. TXU will reduce its own carbon emissions by increasing efficiency of its generating facilities by up to 2 percent. TXU will become a leader in providing electricity from renewable sources by more than doubling its purchase of wind power to more than 1,500 MW, maintaining its status as the largest buyer of wind power in Texas. TXU will also promote solar power through solar/photovoltaic rebates. The company also intends to join the FutureGen Alliance, a non-profit consortium of companies supporting FutureGen, the U.S. Department of Energy project intended to create the world’s first near-zero-emissions fossil-fuel power plant.

The TXU example tells us that perhaps there is promise and benefit in firms going private from a social response perspective.

Global environmental and social needs have ballooned to the point where the roles of governments and businesses are no longer mutually exclusive. Businesses are taking on the role of government in providing social products and services to the world’s population that is impoverished, unhealthy and uneducated. Governments are taking on roles for creating wealth and providing incentives for new technology. In our view, the book World Inc. is mostly about recognizing that a transition in how we value products, services and investments through advanced capitalism is upon us. The role of private equity firms and companies in creating a better world by delivering social products is as important as the public firm. The World Inc. thesis on how public and private companies are innovating superior products, delivering on their bottom lines and providing societal value based upon social response capitalism will be played out in the next decade. We believe there will be winners and losers from both sides of the publicly held and privately held corporation.

Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com

Seeking Social Response Solutions for Clean Water: How Some Firms Are Working Now to Mitigate the Potential Risk of Global Natural Resource Wars

You think business and society is carbon constrained…look at water. Future resource wars are inevitable without swift social response.

If the world’s population continues to grow, if we continue to expand our economies, and if we continue to use our resources more quickly than natural processes can replenish them – then resource wars are inevitable. I say this because there simply are not enough resources, be them oil, gas, water, timber, fisheries or agriculture land available for us to continue our rate of consumption unabated. This is known. Yet, we are slow to adopt strategies that can serve to mitigate the risk of future resource constraints and worse yet, resource wars and catastrophic resource failures.

Proclaimed as the “Blue Planet” approximately 71% of the earth’s surface is covered with water. This sounds promising until you consider that about 97.5% of the water on earth is saline, while the remaining 2.5% is fresh water. And the majority of fresh water (68.7%) is currently in the form of ice. With a world population of 6.6 billion people and growing, the amount of fresh water for hydration, hygiene, agriculture, industrial production and ecosystem health gets stretched thin quickly.

The Business for Social Responsibility (BSR) summarizes the challenging water issues society now faces in this new century. According to BSR, industry accounts for 23% of the total fresh water use worldwide. The United Nations estimates that more than 1.4 billion lack access to clean, fresh and potable water.

With so much attention on climate change, clean energy and alternative transportation fuels and technologies, often other significant environmental issues and social response actions taken by leading corporations are overlooked or understated. We focus on water in this blog because it is literally life line for all human existence and life on earth. Water is a big time resource issue in this new century. Companies like Pepsi, Coors Brewing, Coca-Cola, Diageo, and numerous others taking very proactive measures to conserve, protect and enhance the quality of water for their customers, communities they serve and future generations.

Water is something that we take for granted. It’s likely more precious to human health, quality of life and the sustainability of our planet and future generations than oil, yet we place tremendous economic value on oil, and very little on water. Water is essential to life, yet we pollute and waste it daily with for products, services and activities that on the surface – provide economic utility – but in reality – may be irrational choices we’ve made to earn a buck. If we continue to undervalue water and utilize it for wasteful products and processes, we will constrain future growth and ultimately impact global ecosystems and human health.

Social Response Water Leaders
Coca-Cola’s corporate social responsibility efforts focus on numerous issues including climate change, accountability, packaging, manufacturing processes and water. Coca-Cola recognizes the value of water to its brand, reputation and long-term longevity as a global beverage company. Coca-Cola has developed a Corporate Water Pledge that essentially state’s that they will reduce, recycle and replenish the water they use. First they will reduce and recycle water from their manufacturing operations. Secondly they will replenish water by developing watershed protection program, community water partnerships and developing rainwater harvesting structures in regions that lack access to clean and potable water. Imagine if big oil reduced, recycled and replenished?

In addition, Coca-Cola is working in partnership with the World Wildlife Fund (WWF) to conserve water in seven of the world’s most critical eco-regions. The seven eco-regions in which Coca-Cola and WWF are collaborating include: the Yangtze River, the Rio Granda/Rio Bravo in U.S. and Mexico, Southeastern U.S. Rivers and Streams, the Mesoamerican Reef, Mekong River on the Tibetan Plateau, Rivers and Lakes of Coastal East Africa, the Danube River in Europe. Coca-Cola and WWF are addressing unique conservation and watershed issues in each of these seven eco-regions.

In Burkina Faso, one of the poorest countries in the world, Diageo worked with to deliver its Water of Life initiative with NGO partner WaterAid. Together Diageo and WaterAid enhanced access to clean water, improved sanitation, and provided effective sanitation and hygiene education to local community organizations.

As global risks of water (price, availability, quality, conservation) impact consumers and communities, pressures will increase on corporations and governments to provide solutions. Whether delivered by corporations like Coca-Cola, NGOs like WaterAid or governments, the worlds growing population is thirsty for clean water, and is placing new demands on water for sanitation, agriculture and industry. We see the life-cycle of water as a social response product growth market in this new century.

Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com

Electricity, the New Alternative Transportation Fuel: Ford & SCE team up to accelerate commercialization of plug-in hybrid-electric vehicles

“We see electricity as itself an alternative fuel in support of transportation”

That was the statement made last week by John Bryson, chairman of Rosemead, Calif.-based Edison International (NYSE: EIX), parent company of Southern California Edison (SCE) as SCE and Ford Motor Company accelerate the commercialization of plug-in hybrid vehicles and rechargeable battery technologies.

To date, plug-in hybrid vehicles and advanced battery technologies have largely been laboratory scale demonstrations. Ford and SCE have teamed up to bring more real world experience and real world customer data to this promising technology and application. Together, SCE and Ford are seeking to test the viability of mass producing and mass deploying plug-in hybrid recharging technologies in the future. To get there, the companies will test up to 20 plug-in hybrid vehicles in the SCE electric service territory which serves 13 million people in central and coastal Southern California. SCE is providing the real-world test conditions and electric power grid and Ford is providing the plug-in hybrid vehicles. The partnership will test vehicle durability, driving range and overall reliability impacts on the power grid.

Talking about the new partnership with SCE, Susan M. Cischke, Ford senior vice president for sustainability, environment and safety engineering stated, “They [SCE] have the wire-side knowledge about the grid and all the issues there…By partnering with these two industries...we're hoping that it does accelerate the commercialization and certainly drive some of the cost issues down”.

Some proponents have criticized plug-in hybrid vehicles because they are recharged by from the power grid using electricity that may be generated from coal, oil or gas which still contributes to CO2 emissions and other greenhouse gases. In addition, plug-in hybrids may add additional power demand to an already constrained power grid potentially causing reliability issues. However, many advocates for plug-in hybrid technology note that vehicles can be recharged in the evenings when electric demand is lower. And, renewable energy technologies like wind can be utilized in the evening to provide clean electric power – thereby minimizing concern over additional climate change impact. Further, plug-in hybrids can be regional/localized sustainable mobility solutions. Offsetting localized emissions from the tailpipe is of high interest to many cities and regions nationwide. Plug-in hybrid technologies might just be one technological and infrastructure solution to mitigate localized pollution and air quality impacts.

Thinking about what makes a good social response leader, one that addresses near-term customer needs and expectations along side business growth goals, we view Ford and SCE’s partnership on plug-in hybrid vehicles a good sign of the future. The merger of old and new (existing electric infrastructure with newer mobility technologies) to create more sustainable solutions to transportation is a step in the right direction. As the concept and potential viability of electricity as a transportation fuel unfolds, we will look toward Ford’s and SCE’s outcomes with great interest and enthusiasm. As big time infrastructure and product leaders, the Ford and SCE partnership might just result in an innovative game changing technology for the energy, transportation and utility sectors.

Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com

What is the Responsibility of Business?: Reflections on World Inc., Addressing Questions from Government, Corporate & Social Leaders

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: Milton Friedman, in his classic 1970 New York Times Magazine article titled, “The Social Responsibility of Business Is to Increase It’s Profits”, wrote “The discussion of the social responsibilities of business are notable for their analytical looseness and lack of rigor. What does it mean to say that business has responsibilities? Only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but business as a whole cannot be said to have responsibilities, even in this vague sense. The first step towards clarity in examining the doctrine of the social responsibility of business is to ask precisely what it implies for whom.” – Response? [Government Executive]

Milton Friedman was right, particularly at that time in social, industrial and human history. The question may be is Milton Friedman right today? We believe he is, but that does not necessarily mean that corporations don’t have responsibilities. Friedman’s point that “the first step towards clarity [toward social responsibility] is to ask precisely what it implies for whom” is as relevant today as it was 37 years ago.

This inspires the thought, “are corporations truly transforming their business practices, policies and products toward a more socially responsible ground, or are they simply reacting in the short term, to price and competitive signals abound in the marketplace and as heightened by popular press and the convergence of science and knowledge that for the first time in human history, has been assembled in a global way?”

There are multiple signals that tell us that our natural resources are limited, that the carrying capacity of planet earth is being tested, that global pandemics and natural disasters will increase in intensity and volume in years to come and that we need to work within our socio-political-economic constructs to develop more sustainable ways to produce and consume goods as a global society. The World Forum on Sustainable Development, the Coalition of Environmentally Responsible Economies (CERES), the Millennium Ecosystem Assessment by the United Nations, the Intergovernmental Panel on Climate Change (IPCC), and the Kyoto Treaty are all examples of how science and technology have been tangling with policy and social need for more than 20 years. What these global initiatives point to however is a world that is on the verge of a social, cultural, political and economic transformation.

The result may be great cultural and systems change like what resulted from the Industrial Revolution, Scientific Discovery era or Renaissance period. We are just beginning this important transformation to a more sustainable society – thus as we grow, learn and mature as social capitalists we will inevitably stumble a bit, particularly as we define the role of government and business as they pertain to individual and social responsibility. The world is just beginning this transformation, so it’s a challenge to reflect in real time on what works and what doesn’t.

Businesses have responsibilities to their shareholders, private investors, customers and communities in which they do business in by way of their leadership. Milton Friedman stated that business lacked rigor and analytical strength when it came to social responsibility. However, in this 21st Century new forms of social enterprise have been born out of the need to identify, measure, and report social, environmental, governance and health related metrics. Firms and organizations like the Investor Responsibility Research Center, Innovest Strategic Value Advisors, Calvert, Domini Social Investments, SocialFunds.com, Dow Jones Sustainability Indexes, Standard & Poor's, among hundreds of mutual fund firms like Portfolio 21 and Walden Asset Management and other rating agencies have developed their own financial tools and processes for measuring corporation’s impact on society through environment, governance, and social metrics.

The money and market innovators noted above have added analytical rigor and strength to the notion of social responsibility, and have made what Friedman once cited as a “looseness” a multi-trillion dollar industry with teeth.

Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com

HYBRID is to PRIUS as Toyota is to Social Response Capitalism

What is a social response capitalist?...A Social Response Product?...A Social Response Company?

Yesterday’s New York Times article, “Say ‘Hybrid’ and Many People Will Hear ‘Prius’” says it all. With sales topping 400,000 in the U.S. alone, Toyota has enjoyed great success with the Prius. Competing models like the Ford Focus, Honda Accord or Saturn Vue hybrids have not found as much success as Prius. And recently Honda decided to discontinue production of its Accord hybrid after two years of lackluster sales in the U.S. Last year Toyota Prius sales represented 40% of all hybrid vehicles sold in the U.S. The distinguishing factor for Toyota…is what we call social response product development and Social Response Capitalism.

Toyota built the Prius on an entirely new knowledge and technology platform. They did not try to fuse existing technology with a consumer need. Instead they gave the consumer something they were seeking all along – a new identity. In the sea of SUV’s, sport sedans, compact cars and trucks, Toyota found a consumer niche that was socially and environmentally motivated. They recognized, before their competitors, that a new kind of car needed to be born, and tailored its design over the past eight years to appeal to a new kind of consumer, the socially response consumer.

These social consumers might also be referred to as LOHAS Consumers or cultural creative’s, who represent “an estimated $208 billion U.S. marketplace for goods and services focused on health, the environment, social justice, personal development and sustainable living” (LOHAS). These consumers are beginning to influence new product innovation we term social response product development at the world’s largest corporations, like Toyota.

Toyota’s approach to social response product development is rewriting the textbook on innovation, product development and marketing. Toyota began the launch of Prius in 1999 with a loyal following of technology first adopters. After years of product refinement and consumer awareness Toyota has now moved the Prius toward a more mainstream consumer concerned about domestic and global energy and environmental issues like climate change or energy price volatility.

The July 4th New York Times article noted, “Unlike the original Prius buyers, who wanted to be first with its innovative technology, the latest owners are far more conscious of foreign oil dependence and global warming, said Doug Coleman, Toyota’s product manager for Prius…Consumer knowledge and consumer awareness is changing, Mr. Coleman said”.

Toyota’s grassroots approach to tweak the first generation and second generation Prius’ gave it a technology edge among competitors. Further, by focusing the Prius with a niche consumer initially Toyota was able to refine and redefine the vehicles performance and identity. Toyota proved with the Prius, that companies need to now compete on product price, quality, performance and social need. Toyota took eight years to get Prius to be the unique brand it is today where HYBRID is synonymous with PRIUS. Toyota found that it's not enough to simply offer a new or superior technology. The technology has to be multidimensional, it has to exceed the baseline technology on price and quality, and it has address true social needs in the marketplace. With Prius, Toyota created a new brand, a new social identity, like the way SUVs provided a certain identity for consumers in the mid-to-late 1990s.

In our view the future of global corporate competitiveness will be waged by the smartest, most savvy and strategic and most socially responsive firms. As social needs are defined in this new century by new requirements for clean air, water, transport, and energy – the most successful firms will be those, like Toyota, that answer public and social expectation through social response capitalism.

Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com

Lincoln, the Consummate Chief Social Response Leader and Executive

On this, the eve of the 4th of July, it seems timely and appropriate to write briefly about a new kind of leader emerging strong, with grace and force in the world of business...The Social Response Leader

Today’s New York Times Business page has an article titled “Companies Giving a Green Office”. The article reports how many large corporations have now added “Chief Environmental Officer” and “Chief Sustainability Officer” to their starting team rosters including the CEO, COO, and CFO.

Chief Sustainability Officers are the new hammers inside corporate mansions, driving efficiency and looking toward new innovation to reduce operational costs while entering into new product markets. Driven by the regulatory and business risks and opportunities surrounding climate change, resource constraints and global competitiveness, modern sustainability officers are both subtle chameleons and fierce lions. They are change agents working against a hundred years of industrialization and know-how, discovering new ways to do business while delivering profits and enhancing shareholder value.

Traditionally thought of as a cost center focused on reducing compliance, environmental and health and safety risks and corporate exposure, this new century’s corporate environmental officers are multidimensional strategists that navigate internal and external business opportunities and politics as they work to deliver on the bottom line. In doing so these modern day hero’s not only ensure a company is operating within compliance, they create new product, service and market opportunities for greener products and clean production. In the late 1970s and early 1980s corporate environmental efforts were about containment and treatments of legacy wastes and compliance with the law. In the late 1980s and early 1990s corporations became more attune to reducing risks and preventing pollution. In the mid-to-late 1990s corporations adopted environmental management systems, developed eco-efficiency tools and began to look at the life-cycle impacts of their operations, products and materials use. Since 2000 the modern corporation has continued all of its historic environmental, health and safety responsibilities, but has now also evolved to include more corporate social responsibility, sustainability and ethical guidelines in its mission, vision and operations.

No longer a discrete function in the modern corporation, today’s environmental officer now has its own trade and executive leadership training groups including AHC Group Corporate Affiliate Program, GEMI, Business Roundtable, and Business for Social Responsibility. In addition there are numerous executive briefing publications like The Corporate Responsibility Officer Magazine and Corporate Strategy Today.

President Lincoln is often referenced for his strong leadership. His experiences and actions throughout his distinguished life continue to teach us how to be better leaders. In World Inc., author Bruce Piasecki examines what makes an effective leader in this new era of social responsibility and corporate environmental strategy. In the chapter titled, “Developing Leaders We Can Trust” Piasecki notes, “It is my view that with the right kinds of social leaders, large multinational corporations can play the key role in solving the long list of challenges facing society in the 21st century.” Piasecki goes on to draw out leadership lessons from Donald T. Phillips book “Lincoln on Leadership: Executive Strategies for Tough Times”. Phillips summarized many of Lincoln’s leadership strategies including building strong alliances, serving with honesty and integrity, persuading rather than coercing, being a master of paradox, and encouraging innovation. In his storytelling way, in “World Inc.”, Piasecki presents how he sees these Lincoln traits in the most impressive and effective executives he’s worked with over the past 30 years, including Chief Sustainability and Environmental Officers of major corporations.

We welcome our readers to watch firms like Wal-Mart, Nike, IBM, Green Mountain Coffee Roasters, DuPont, Dow, GM, FirstEnergy, Shell, Whirlpool, Honeywell and other global giants in our Network that have elected to have Chief’s of environment, sustainability, energy and social responsibility. These leaders are influencing tomorrow’s products and markets as they seek to deliver value to their firms’ bottom line, and society’s bottom line. We welcome you to learn more about these leaders through our executive workshops. To learn more contact Mark@ahcgroup.com.

Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com

Reflections on World Inc.: Questions from Government, Corporate & Social Leaders

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: “The Wall Street Journal recently reported that several prominent environmental groups gave a “lukewarm” response to Citigroup’s announcement that it will spend $50 billion over the next 10 years on a wide range of climate change issues. How can corporations communicate effectively that they are “doing enough” for the environment?”

[Environmental Executive from Multinational Firm]

The Citigroup $50 billion announcement is very significant. It aligns with a trend we are seeing cut through the finance and investment community – which is greater scrutiny and value placed on how money is managed, invested, compounded and expended. Bank of America made a $20 billion commitment this past March. Like Citigroup, Bank of America is seeking to invest and finance in green building products, alternative and renewable energy technologies, and projects that minimize greenhouse gas, particularly carbon, emissions. Before these announcements, Goldman Sachs developed an Environmental Policy Framework as part of its guidelines for investing in clean energy via its 2005 pledge of $1 billion. There is a cascading waterfall effect happening among the worlds finance giants. At first a little capital investment flowed into tech start-ups and environmental related projects.

As the past 2 years have played out, the size of the investment and breadth of the investment has increased, as the flow of new environmental finance dollars has created a waterfall of change in the finance industry. There are some social and environmental groups that look at these finance industry trends with watchful eyes. They believe, in short, that these industries have been highly profitable and have collected billions from customers over the years in unnecessary fees to begin with. And, the lending practices of the industry, in general, have not aligned with environmental conservation or preservation in the past. So they feel that these large dollar commitments are a form of green-washing that society at large may not benefit from. We believe that the influx of capital into clean energy and environmental goals is a welcomed investment, and one that overshadows some government programs. The Citigroup, Bank of America and Goldman Sachs investments alone total more than $70 billion, many times larger the budget for the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy. Even so, it’s the cascading effect of money and investments, the return on investment that these firms are seeking, that will drive greater future social and environmental investments that what’s been reported in the past 3 years.

The water is just beginning to rush toward the waterfall. Corporations have difficult time reporting that they are “doing enough” for the environment. The accelerated “fear factor” of climate change being played out in the popular press has the public more informed, but also more charged than ever before. Regardless of how much climate change may impact major environmental systems like fisheries, water cycle, agriculture production and forest resources – there is an increasing general public sentiment that every firm has a responsibility for action, not just the big utility, energy, or transport firms that emit a large percentage of greenhouse gases. Corporations need to align themselves with environmental goals that match their future competitiveness. This will include their products, operations, processes, competitors, markets and customers. If the “flat world” has taught us one thing, it’s that what is important to just one customer can rapidly become important to millions of customers through the click of the send button or snap of the digital camera.

Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com