Building Greener, Cleaner and Healthier Homes: The Home Depot Says, “You Can Do It, We Can Help” through its Eco Options Label Program

On the eve of Earth Day 2007, the world’s largest home improvement retailer The Home Depot announced a major long-term initiative to allow customers to easily identify products that have less environmental and energy impact. Known as the Home Depot Eco Options program, the company has launched this major initiative in the U.S., and plans to make it accessible to its base of 1 billion customers worldwide. That is a major initiative from a firm that has annual sales in excess of $90 billion and employs 345,000 people worldwide. To help create excitement around the initiative the Home Depot said it would give away 1 million energy saving compact fluorescent light (CFL) bulbs at its stores on Earth Day, April 22nd as well as launch an interactive web-site for the Eco Options program.

In preparing for the initiative launch, The Home Depot said it had identified more than 2,500 Eco Options products that fall into one of five categories: clean air, water conservation, energy efficiency, healthy home and sustainable forestry. Examples of products in these categories that The Home Depot carries in its stores include: all-natural insect repellents, cellulose insulation, front-load washing machines, solar lights that use natural power, CFL’s, programmable thermostats, certified wood products and organic plant food and vegetables in biodegradable pots.

To provide some perspective, The Home Depot sells approximately 45,000 different products. The 2,500 Eco Options products represents about 5 ½ percent of its total product portfolio. While seemingly small, the firm is seeing some immediate and large energy and environmental benefits. At the time of this blog posting, The Home Depot web-site stated that the Eco Options program had sold more than 354 million Eco Options products resulting in more than 3.7 billion kWh of electricity saved and 7.7 billion pounds of CO2 prevented from entering the atmosphere. In addition the firm had planted 90.1 million trees.

In his new book, World Inc., Dr. Bruce Piasecki examines how globally competitive firms are innovating products that meet quality, technical performance, price and social response requirements. Companies like HP, LP, Toyota and The Home Depot fall into the new economy space Dr. Piasecki refers to as social response capitalism. By offering better products - ones that compete on price, performance and social attributes - competitive firms of the 21st Century are creating a better, more ecologically and economically sustainable world.

We see this unfolding at The Home Depot, in part by their own initiative to screen 2,500 consumer products through their Eco Options program. By helping consumers identify and evaluate better (more energy-efficient and environmentally benign) product choices The Home Depot is helping drive the market for greener building products - ones that embrace energy and environmental attributes. Homeowners and builders that are seeking to find ways to reduce their energy costs, reduce indoor air pollution and emissions, and limit pollutants into the environment are driving this burgeoning market for greener products. The Home Depot is answering customer need and demand through its Eco Options program. In addition they are tangentially supporting and securing future growth of social response products from building product manufacturers.

The Home Depot is not only making it easier for customers to identify better products, it is spending its own money to help communities implement them. Through the The Home Depot Foundation, the company is promoting the development of “healthy, livable communities” by “supporting the development of affordable, healthy homes for working families”. To help achieve this goal the Home Depot Foundation is investing $100 million in the next decade to help build 100,000 affordable and environmentally responsible homes. In addition the Home Depot Foundation is planting 3 million trees in urban areas to help beautify the communities. The Home Depot is also working with The Conservation Fund to offset carbon emissions. As a partner in The Conservation Fund’s Go Zero Partners program, the Home Depot will “fund the planting of thousands of trees on nearly 130 acres across metro Atlanta to offset the carbon emissions”.

So as late Spring and early Summer emerge and you scour the web for green building products for that home renovation project you had in mind all Winter, keep Home Depot Eco Options product labeling program in mind, as a resource for your consideration. As a trend watcher we will be monitoring The Home Depot and other green building product companies to learn how these firms continue to provide new socially responsible products and services into the mainstream.

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

Where’s the Beef? – How Climate Change will Yield Greater Return on Social-and-Financial Equity

In the early 1980’s we Americans were amused by Clara Peller who asked us one simple question…‘Where’s the Beef?’ on behalf of the Wendy’s fast-food restaurant chain. The one-liner turned out to be a catch phrase in the 1984 Presidential election. In many ways Peller’s phrase continues to entertain us today.

The difference today however is that Peller’s famous line may become more of a literal mainstream reality adding additional irony to our consumptive big energy, big food, big stores, big homes, big everything culture. With agriculture feedstock’s affecting beef prices and the potential for climate change to shift food production in years to come – “Where’s the Beef?” might just turn out to be less funny. And in a satirical sense – we ask “Where’s the Beef?” to the many government leaders that appear to be less of change agents and more status quo - speak within the lines - types of policy makers.

As the world’s population grows, our nation continues to consume more resources and adding more stress and uncertainty on our atmosphere, ecosystem, ocean and land. We already see constraints in the availability of clean, fresh water in regions with growing populations like Asia, Africa and South America. Even the wealthiest countries of the world are not without water challenges including the U.S. Southwest who has some of the fastest growing cities in the country. With water constraints already affecting states like Arizona, Colorado and New Mexico some believe the U.S. Southwest could transform into dustbowl like conditions that plagued the Midwestern U.S. during the 1930s.

A report released by the Intergovernmental Panel on Climate Change on April 6, 2007 summarized a slew of dramatic impacts, caused by human induced climate change set to transform entire regions of the world. The IPCC report estimated that the earth’s warming temperatures could result in food shortages for 130 million people by 2050 and threaten to cause drought, higher seas and more severe weather in Australia and New Zealand by 2030.

The IPCC report noted that “drops in (food production) yields combined with rising populations could put close to 50 million extra people at risk of hunger by 2020, an additional 132 million by 2050 and 266 million by 2080” Associated Press. The report summarized how rainfall may decline by as much as 5 to 12 percent in China, greatly reducing food production yields for the billions that reside there. In addition the severity of weather in Australia, New Zealand and other countries is likely to increase as a result of climate change.

Questions of how climate change may impact social equity issues are emerging in our daily lives. Do we feed cattle or humans? Do we feed our cars or cattle? Do we invest in game-changing energy technology or pump more emissions into the air? Do we explore the development and use of genetically modified and bioengineered crops to meet growing demand for food and agriculture commodities? Do we wait for help, or reach out our hand and get involved? The debate on climate change is less of a debate nowadays. Instead the debate has shifted from whether or not it is occurring, to what to do about it.

Even so, we are only at the infancy of climate change and the debate about how the new social equity culture that has emerged can transform our ideologies as they pertain to consumption, production and economics. As human life and the state of our life-sustaining systems await our reaction – new one-liners will emerge:

Where’s the relief? (Here we think of the aftermath of Hurricane Katrina)

Where’s the light? (Here we think of our slow transformation to adopt technologies that can minimize electric grid disruption and enhance reliability)

Where’s the clean water? (Here we think about the nature of how we use water for production of goods/services disproportionately to longer term human health and environmental needs)

Where’s the food? (Here we think of the millions of hungry that are born into poverty and substandard living conditions – whose immediate environment constrains their ability to sustain life in a healthy way)

Where’s the leadership? (In World Inc. a new book by Dr. Bruce Piasecki he talks about “Developing Leaders One Can Trust” in this new era of social response capitalism – where product leadership is as important as the kind of leadership that runs larger multinational firms)

Where’s the dialog? (Is there enough or too much dialog on climate change and what the best options are for addressing it? We believe, in this instance, more is better. The AHC Group has been leading discussions on social response through its leader-to-leader benchmarking workshops covering governance & innovation, shareholder value, risk reduction & remediation, and emerging issues for the past 25 years.

So, as we think about our next pop-culture comedic rant like “Where’s the Beef?” let us consider some of these less humorous rants that we will be unable to drown out from our lives in years to come. While big food, big cars, big homes and big egos have sheltered and protected us from the world’s woes, we are now realizing that have to begin addressing social need through the power of business, government, philanthropy and individual care like no other time in history.

We believe this social history is leading us to become the “S-Generation” and we now must take on the responsibility and potential good fortune that comes with it. The “S-Generation” is being born today – at the dawn of our reflection and recognition that we cannot continue our rate of consumption and growth without changes in the way we think about, consume and use energy, food, water, land and air. The “S-Generation” is being born at a time when the law of the commons has become less common – a time when clean water and air is not as prevalent as they were 100 years ago. So – with diminish ecologic and social returns the “S-Generation” will likely emerge to transform our current state of assumptions as they reevaluate the role of business, government, politics and society in creating a better world.

As climate change affects the wealthiest nations of the world – our challenge will be to think not only of ourselves – but all people – as we seek new solutions to health, happiness and ecological freedom. Corporations have decided to move out of rank and file positions on climate change and begin evaluating their lot in a world on the cusp of climate fluctuation. Like the stock values that they grow – they are seeking to gain value in a world of uncertainty while providing value back to society. We see this as firms seek greater return on social equity as much as they do on their capital, investments and private equity.

Watch firms like Bank of America, HSBC, Suncor Energy, HP, The Gap, and Wal-Mart in months and years to come. We believe the thought leaders in these firms will lead new paths of growth in business while addressing issues pertaining to social equity and climate change – raising their social and financial equity with stakeholders and shareholders alike. They are clearly thinking about the “S-Generation” and may likely be around to help that generation tackle the challenges of climate change and other societal needs well into the future.

Mark C. Coleman
Senior Associate, AHC Group, Inc.