Seek to Rediscover and Redefine Energy in this New Century

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

"Irrational Greenness" – Version 2.0 – Avoiding the Potential Erosion of Reputation from the desire to Overvalue “Greenness”

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

"Irrational Greenness" – Avoiding the Potential Erosion of Image and Reputation from the Growing Allure to Overvalue “Corporate Greenness”

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

Are You a World Inc. Company?

Learn by Benchmarking with the Premier Leader in Social Response Capitalism

If you are a corporate, government or non-government leader seeking to advance your organization’s vision and mission; do you benchmark with a firm called World Inc.? If not, you should. World Inc. may surprise, fascinate and intrigue you. You may want to involve your CFO, CIO, COO and entire board. You may also want to include your shareholders, customers and government representatives. These stakeholders will likely value from the World Inc. benchmark.

Benchmarking with World Inc. will help you understand how to navigate the rising tides of energy and climate change, global pandemics, geo-political and resource conflict, global health and poverty. If these issues are not affecting you yet, they will. Benchmarking with World Inc. might just be one of the near term actions you can take to help you deliver on your vision and goals. For a benchmarking introduction, we provide summary information on World Inc. below.

World Inc. – A Firm for All Firms
World Inc. rocks all the lists and tops the charts when it comes to financial, social and environmental performance. It develops the cleanest and greenest products in the industry. It has an incredible employee benefit plan providing the industry’s best health coverage and employee assistance programs. Having helped reduce poverty, eliminate disease and address global health challenges, World Inc. is regarded by government and non-governmental organizations as one of the greatest influencers of a better world.

World Inc. has also just done all of this with a zero climate impact, having offset its carbon emissions and deployed the latest state of the art energy-efficient measures and controls while also purchasing and generating clean renewable power for all of its global facilities. This year the World Inc. also gave back billions through its charitable foundation, and in classic World Inc. style, the firm dedicated a portion of its next year’s profits to education and fighting global hunger.

World Inc. is capable of doing all of this because it leads its competitors in sales, innovation, employee retention, market share, market access and brand reputation and value. World Inc. has transformed its market – and in the process of doing so – has developed not only a very profitable company – but a long-term sustainable company that has the intellect, resources and vision to continually shape a better world. World Inc. is very well regarded by its shareholders, its governing board and its customers. The firm is rated as best in class by INNOVEST, Calvert, Domini, IRRC and other social fund investment firms.

World Inc. sounds like a pretty good firm to work for, invest in, buy products from and partner with. Perhaps you are you wondering how to further benchmark with or invest in World Inc.?

Unfortunately World Inc. is used fictitiously here as the “new era firm for all firms” – one that has a competitive spirit for the 21st Century and a social conscience for 100 years beyond that. Fortunately, environmental business expert Bruce Piasecki captured the essence of how companies are becoming more like this fictional World Inc., providing tangible value to shareholders, society and future generations.

In his new book World Inc., Bruce Piasecki examines how a new paradigm in how global companies and governments value and make money is shaping the future of business. Calling it ‘social response capitalism’, Piasecki unveils the somewhat hidden and innate truths that lurk within senior corporate and government leaders, and that are increasingly being made transparent as the most competitive corporations to go global while going green.

Within this global transformation there are implications for government, culture and our natural environment. Global firms are becoming socially progressive – driven by past mistakes, regulation, reputation and brand value and that ‘competitive spirit’. Companies of the future are embracing social response capitalism because it is a smarter, more enlightened and more socially conscious form of business. Piasecki examines how companies and governments are working toward this new form of capitalism in his book World Inc., which is a also reflection of the high-level executives and organizations he and his firm the AHC Group have assembled and worked with for more than 16 years.

Become a World Inc. Firm
Learning from leaders can be self enlightening. It can also be quite humbling. It’s a powerful tool smart leaders use to understand how they can improve and how they can also improve the livelihood of others. We see this in so many different forms including the Clinton Global Initiative and the Global Roundtable on Climate Change. In both cases governments and corporations are leading change by working together on solutions for a better world.

The power and wealth of the world is concentrated in a few large governments and corporations. Together these leaders have the resources and capacity to create lasting value to the world. Will the world’s most powerful leaders envelop and embody the values of the fictitious World Inc. firm that we began this blog with? And, in knowing that it comes down to having the competitive spirit, leadership and will to do something or nothing, ask yourself, your top officers, shareholders and customers:

Are you on a path, and do you have the corporate and organizational strategies in place, to become a World Inc. company?

Do you want to learn how to become a World Inc. company? Join our conversation and get involved, contact Mark@ahcgroup.com to learn more.

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

The Future of Real Estate: Greening Your Home & Community – World Inc. Style

By Bruce Piasecki, author of World Inc. with Mark Coleman

In this new century of social and environmental obligation and expectation – real estate is emerging as the canvas by which new portraits of sustainability are being painted. New age development companies are earning green as they paint the past into new shades of green.

Take for example British Land of London who is developing commercial properties in the UK that balance economic and social impacts from a life cycle perspective, Windmill Developments of Ottawa Ontario who is working to green the urban environment in Canada, and East West Partners of North Carolina who are building sustainable residential communities like their East 54 development at Chapel Hill which is LEED Certified by the U.S. Green Building Council. These developers are just a sample of firms now looking at how to green our homes, our cities and our communities. These firms are what we call social response capitalists – developing new products, services and business models around social needs.

Greener Products – Greener Profits
The revitalization of real-estate is front and center in this new century of social obligation. We are becoming smarter in deciding where we build our living space, what materials to use, how to energize our spaces, and how best to optimize resources and minimize waste. Building products companies are also capitalizing on the need for greener building materials.

Take for example Toronto based Norbord, a $1.3 billion international manufacture of wood products is manufacturing more sustainable building materials like oriented strand board, engineered wood products (I-joists) and medium density fiberboard. These products reduce wood use, minimize waste and provide other value-added benefits to builders and consumers. In the same industry, the Nashville, Tennessee based LP has developed a new and innovative energy saving building material called LP® TechShield® which is an aluminum foil material used as a radiant barrier minimizing heat gain in summer months and heat loss in winter months. The LP® TechShield® product saves consumes up to 20% on their total energy costs.

The greening of products also transcends the more fashionable side of style as well. Herman Miller for example manufacturers intelligently designed furniture that meet what is known as Cradle to Cradle certification. The firm is looking at greening their products from the design phase through end-of-life and everything in between including better packaging solutions (e.g., reducing waste and minimizing packaging materials). Many of Herman Miller’s products are designed to be recycled, emit little indoor air emissions, use low VOC paints, contribute to LEED certification for users, and are manufactured using environmentally benign processes. Herman Miller has 28 product lines spanning healthcare furniture, furniture accessories, seating, freestanding furniture, and furniture systems that have environmental attributes and can be applied to LEED credits. Based in Oakland California, Michelle Kaufmann Designs is pioneering design and manufacture of affordable and sustainable living buildings. With an eye toward entire living systems the firm incorporates eco-friendly materials (like non-toxic low VOC paints and formaldehyde-free cabinetry) and energy-efficiency into each modular home product it designs.

Norbord, LP, Herman Miller and Michelle Kaufmann Designs are greening their product portfolios because they see not only a market, but a long-term solution to remaining competitive and staying in business. These firms are some of the early leaders in greening the real-estate industry.

The Greening of Brownfield’s: Turning Past Liabilities into Future Assets
Thus far we’ve mentioned the greening of building products, buildings, homes and community developments. What’s also occurring is a revitalization of the land itself. Like the earth’s other natural resources – land is limited. Europe is especially sensitive to land resources because they have, like all other areas of the globe, fixed land and space by which to make real-estate decisions and investments. European countries and corporations are seeking means to revitalize land resources, particularly Brownfield’s, into more productive higher uses.

Like Europe, the U.S. has thousands of Brownfield sites. These scars of industrialization remind us that our economy has been built up through depletion of natural resources, containment of waste, and contamination of soil and groundwater. These scars, some visible, some naked to the eye, are also reminders that our prosperity has occurred not without environmental, economic and social costs. In some cases blighted properties have had very adverse impacts on the socio-environmental context of communities, often yielding ethical debate and political action. While the scars of our industrial past litter our lands, they can be healed and reconstructed with technology, new business models and with proper definition of future productive land use.

For the past decade AHC Group, Inc. has been researching, benchmarking and implementing strategies for large industrial firms to remediate past environmental liabilities. Our firm has worked with large transportation, chemical, oil, utility, consumer product, pharmaceutical and industrial manufacturing companies on discovering ways to optimize their clean-up of past liabilities while simultaneously identifying ways to bring those less productive properties into higher-valued real-estate. While technology, economic and environmental challenges impede fast transformation of remediation sites, innovative companies are beginning to find financial and social value in cleaning-up their legacy sites.

For example GM is studying new innovative technologies and approaches to restoring former industrial sites for redevelopment. And oil giant BP who is moving “beyond petroleum” is also moving “beyond pollution” by redeveloping past industrial sites. In fact BP won a US Environmental Protection Agency award for excellence in Brownfield redevelopment for the transformation of their former Casper, Wyoming refinery site into a 340 acre business park and recreational area. In our experience, every major industrial company is looking for opportunities to revitalize their real-estate assets. In 2005 BP spend more than $366 million worldwide on remediation projects. The firm’s remediation team manages a provision of more than $2.3 billion for future expenditures.

As these numbers show, real-estate clean-up, risk management and redevelopment is “big” business. As big industrials decommission facilities, expand into new markets, and realign their corporate strategy with a new era of social and environmental reporting, the best firms are discovering that real-estate revitalization goes hand in hand with long-term risk reduction and creating lasting shareholder value.

Financing Greener Communities
The organizations and companies driving greener growth in building products, buildings and real-estate are not alone in their pursuit of better products. The financial sector is increasingly recognizing that their capital can be spent more wisely and with less risk, if social and environmental attributes are included in their financial risk assessment for financing projects. Take for example Bank of America who recently committed $20 billion to support the growth of environmentally sustainable business activities and to address global climate change. Bank of America has committed $18 billion of this investment toward the finance of environmentally friendly commercial real-estate developments. The company will focus on real-estate projects that address “LEED certification, improvements in building energy efficiency, Brownfield redevelopment, promotion of smart growth, and the use of energy-related tax credits.” With this kind of financial backing and leadership from Bank of America, the greening of our homes and communities stands to benefit enormously.

How World Inc. is Creating a Greener Real Estate Industry
In World Inc. fashion firms from large multinationals to small agile regional residential developers and property managers are discovering that the rubber meets the road for them on the real-estate playing field, particularly as it aligns with technology insertion – green building products – and community-based economic revitalization strategies. In World Inc. we capture how firms create real-estate value in this new era of social response capitalism. In the next 5-years we see the greening of your homes and communities building like a tidal wave. This wave’s energy is being fed by the metrics and standards of the U.S. Green Building Council, the regulators and policy makers in the U.S. EPA and DOE, the green building products firms like Norbord and LP, the international remediation experts at BP and GM, and all those interested in revitalization of the economy through social response like foundations, developers, financial institutions and the public. We look forward to reporting to you on how this wave grows in more intensity and how government, corporations and society will benefit from riding this wave into a better, sunnier, and safer beachfront.

Dr. Bruce Piasecki is the author of World Inc.: When It Comes to Solutions — Both Local and Global — Businesses Are Now More Powerful Than Government available at www.worldincbook.com. Dr. Piasecki is also the founder of the AHC Group, Inc. a management consulting firm focusing on social response and corporate environmental strategy. Learn more on how to create value in social response at www.ahcgroup.com. Dr. Piasecki can be reached at Bruce@ahcgroup.com.

Mark Coleman is a Senior Associate with the AHC Group, Inc. and a major researcher on World Inc. As a researcher and practitioner of social response strategies Mark is helping corporate, foundation and government leaders discover the value in social response capitalism while aligning resources and creating actionable strategies for creating a better world. Mark can be reached at Mark@ahcgroup.com.

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.