fOILed by our spOILs

Companies are eliminating the potential for future energy market turmoil through social response energy diet solutions in their operations, product portfolio and community relations.

Is continued economic growth in the US and the world obstructed by the price and availability of oil? Is the lifeline of modern society clotting, or is it simply thinning out and offering no substantial pressure to continue its legacy of economic growth? Are the days of plundering ending or just beginning?

Oil has given society many rewards: the ability to transport people, goods and services; the ability to heat and electrify; the ability to produce quality products and services; the ability to shelter, feed and cloth billions of people; the ability to advance civilization through education, healthcare, telecommunications and scientific advancement.

The World Factbook published by the CIA lists the top economies of the world. In the list of 193 nations, firms like Wal-Mart and Exxon Mobil would rank in the top 30 largest economies of the world. If you totaled the sales of the following eight oil giants, they would equate to one of the top ten economies of the world.

Exxon Mobil
Royal Dutch Shell
BP
Total
Chevron
ConocoPhillips
Pemex (Mexico)
Petrobras (Brazil)

The sales of eight giants listed above exceed $1.8 trillion and their revenues exceed $160 billion. Together these firms employ more than 680,000 people worldwide.

Oil is one of the most widely used commodities on earth. Some 85 million barrels of oil are produced and used per day globally according to the Energy Information Administration, the data and analysis arm of the USDOE. Oil prices have reached record high’s topping more than $120/barrel in recent days. Over the past decade the price of oil has increased more than 1000%. On December 28, 1998 the price of oil was approximately $10 barrel. And during the week of April 22nd 2008 the price of oil flirted with $118, $119, and $120 per barrel.

The world has a love hate relationship with oil. When the economy is strong and the pocketbooks fat, we forget about the price of oil. When the economy struggles and our pocketbooks empty, we focus intently on the price of oil and point to it as the root of all economic evil. Every Greek tragedy needs a lead antagonist, and in the story of the rise and fall of global industrialization the antagonist is oil.

tOILing toward a balanced energy diet
Oil has been the consummate enabler for industrialized nations to feed the veins of commerce with a “performance enhancement” and “mood adjusting” supplement. It’s almost too bad that there were not product disclosures and warnings 100 years ago before we became fully addicted. You know those commercials where they say “side effects may include…nausea, vomiting, fatigue, etc.”. Perhaps the disclosure for oil would have read, “side effects may include…sluggish economy, natural resource damages, global warming, geo political and economic warfare, social inequity, and detachment from living due to chronic idle time spent driving”.

But truth of the matter is that 100 years ago we had no idea about the scale and magnitude by which oil would play in everyday life, our economy, our standard of living, and our ability to sustain critical infrastructure and networks. As oil has pumped through the veins of commerce, we’ve grown. But like the overuse of performance enhancement drugs in top athletes, too much can result in serious injury, suspension of play, or even death. In the case of oil, perhaps we’ve grown so quickly and have become so strong; we simply cannot score enough performance enhancement oil to help us keep pace. Or perhaps we’re now overweight, bloated and ready to suffer a massive heart attack due to one or more blockages in our system (e.g., global demand, climate change, availability of refineries, aging infrastructure, cost pressures, etc.).

Oil is not bad. It’s just a performance enhancer that has been over sold and over used. Sure it has its side effects, but no technology or energy source is without their fair share. And, with 6.5 billion addicts around the world a premium can be placed on the availability, price and quality of oil. Oil is an earth based commodity with a man-made purpose. Sometimes that point is lost. We’ve created a flat world whose pace of growth has quickened, all in part to our friendly performance enhancer, oil. We have the ability to transform our flat world into a new dimension, neither round nor flat, but shapeless bound by only our imagination and innovation to bring to it new life not bound by technology, resource or ideological constraints. Oil will have a place in this new shapeless world, but so to will other forms or energy that will displace and yet balance our traditional thirst for petro-based nourishment.

bOILing this down
When it comes to high energy prices and environmental challenges related to oil, we need to move beyond blame and get serious about creating real change. It's so easy to blame the Bush Administration or point the finger toward OPEC or hedge fund managers that are perceived to be in cahoots with big oil executives padding their wallets and patting each other on the back for influencing oil markets and reaping huge profits. Are their inefficiencies, potential back door deals, unneeded confusion in how the price of oil is set? Sure, but blaming one administration or one company over another will solve nothing and will only fuel more wasted time, money, and oil.

The 21st Century challenge before each of us, as consumers, industrialists, policy makers, shareholders, innovators, scientists, students and conservationists is to collaborate on a way to reduce our appetite for oil while simultaneously working toward performance enhancement supplements that we can develop and use to round out our energy diet.

So often I hear references to the “silver bullet” technology that will transform our energy diet. According to the Schlumberger Excellence in Educational Development project, oil was first drilled in 347 AD. Since that time oil has been somewhat of a “silver bullet” for the energy needs of human kind. Oil has provided us with heat, electricity, transport, cooling, and that performance enhancing high that has fostered economic growth. But we now know that oil cannot be the “silver bullet” for our future prosperity or sustainability.

There is no “silver bullet” anymore. A well balanced diet has a mix of energy sources rich in nutrients. A well balanced energy diet may include exercise (energy demand reduction), it may include a balanced approach (combined heat and power, distributed generation), it may include options low in proverbial cholesterol – that is carbon (wind power, solar, geothermal, etc.) it may include fortified vitamins and minerals (engineered petrochemicals and biofuels) and it may include new age supplements yet to be fully qualified (fuel cells, hydrogen, carbon sequestration techniques). The point is that we need an energy diet that is balanced, nutritious and positions us for longevity, not just performance enhancement. The performance enhancement will come from a renewed focus on energy research and development and new innovations. Besides are we foolish enough to believe the best we can do as a society is rely primarily on an oil based economy? Is that the extent of our ingenuity and imagination? Oil has given us so much, but its time to transition to more secure, reliable and economic sources of energy that promote independence and sustainability.

social response to energy - avoiding energy market turmOIL through social response product development, deployment and capitalism

It’s time for the oil economy to be shaken up, agitated, and churned. It’s certainly causing enough turmoil at its current state of being today. High energy prices, environmental degradation, water and soil contamination, air pollution, climate change, inequitable distribution of wealth, socio-political conflict. These are the spoils of oil? I don’t believe that’s what we had intended.

If the state of civilization were equated to the life-cycle of a human, we’re still in our infancy. We’ve been formula fed with oil for a few weeks/months and now its time to introduce new nutrients into our everyday diet so that we can grow, mature and lead a balanced life. The largest economies of the world, from industrialized nations to the wealthiest of corporations are taking strategic, proactive and leadership actions to prepare them for an exciting childhood, adolescence, adulthood and old age.

Companies that are rounding out their energy diet are becoming better investments. As they transition from the one-dimensional oil based economy to a multi-dimensional energy services economy they ultimately hedge on the price of energy in the future. In addition they are more apt to compete over a longer term as well as offer better products at a better price as they are less reliant on price fluctuations associated with oil. We call companies with well balanced energy diets social response leaders because they are positioning themselves for future growth and with growth that is in alignment with societal needs and values. Companies, large and small, public and private, that we classify under the heading of social response leaders (due to their responsible and innovative approaches toward a balanced energy diet and new age product and service innovation) include:

Boeing – is developing lighter and more fuel efficient airliners. This is a social response product innovation that is adaptive – meaning it seeks to optimize efficiency and reduce demand for aviation fuel. In the absence of other forms of energy, Boeings fuel efficient 787 Dreamliner is a dream. Boeing is contributing to a new era of efficiency in air travel that will reduce side effects of a petroleum rich diet like carbon emissions. With greater fuel efficient aircraft, Boeing stands to fly 30,000 feet above its competition toward a balanced energy diet.

Canadian National – is a Canadian rail company that operates the largest rail network in Canada and the only transcontinental network in North America. The company operates in eight Canadian provinces and 16 U.S. states. As part of its equipment upgrade policy the company is upgrading its fleet of locomotives with models that are at least 17% more fuel efficient than their predecessors which reduces air emissions and enables more efficient delivery of goods. The company also remanufactures its older locomotive engines which reduces waste, recaptures energy used in manufacturing processes and minimizes the need to produce new materials for locomotive engines. Canadian National optimizes the flow of goods through the use of rail, a demand side response to energy use in our transportation sector.

Energy Answers International – offers communities a resource recovery solution to solid waste. Since 1981 the company has been developing resource recovery facilities around the world with a goal of zero disposal of waste. The company works within communities to find equitable and economical production of energy. The company often works on Brownfield sites giving once blighted industrial facilities new productive uses and upgraded with state-of-the-art clean technologies that enable the more sustainable production of energy. Energy Answers excels at discovering how energy use can be optimized through the use of waste resources, another important input into a balanced energy diet.

Evergreen Energy Inc. – out of Denver, CO this small but growing company is attempting to transform the US’s largest energy resource (coal) into a highly efficient, low emission and economically viable fuel for the future. Evergreen Energy’s technology is offering many US industries and electric utilities a new option to balance their energy portfolio into the future. Reducing carbon dioxide emissions, enhancing the efficiency of operations and offering a cleaner fuel option for the future are each elements of the Evergreen Energy technology platform. Evergreen Energy is innovating new solutions for minimizing the impact of abundant fossil fuel resources, an important element of a well balanced national energy diet.

Fuhrlaender AG – one of the last (if not the last) privately owned and operated wind manufacturing companies in the world is also one with a strong product portfolio. Based out of Waigandshain, Germany this company has been a quiet innovation leader for years. They are developing more reliable wind turbines and with designs that are conducive to quick maintenance enabling them to be in operation longer thereby generating every last kWh that is possible. They’ve expanded into China and seeking to foster more sustainable growth of emerging economies through their portfolio of wind products that range from 30 kW to 2.5MW. The firm was one of the first in the industry to launch a production model for a 2.5MW wind turbine. Small, agile and committed to quality, Fuhrlaender AG is truly a “friendly energy” company that is worth watching in years to come even if not the size of a GE, Suzlon or Vestas. Fuhrlaender offers new economies an energy diet supplement, one that is less harmful and ultimately longer-lasting thereby contributing to a healthier energy diet.

Green Mountain Coffee Roasters continuously brews better coffee and a better world through social response innovations in their facilities, supply chain, products and operations. In the energy realm the company installed an electricity cogeneration system at its Waterbury, VT facility to reduce demand and reliance on the electric grid. The company also purchases 100% of its electricity from renewable energy credits making them greenhouse gas neutral. The company sets an annual goal to reduce energy use by 5% per a certain unit of sales. In 2006 the company reduced its natural gas usage by 15% from the previous year. The company has been active in conducting energy audits of its facilities and offices and retrofitting equipment where possible to foster energy efficiency improvements. The company is also greening its fleet of vehicles and encourages conservation of energy among its employees.

Social response corporate leaders are balancing their energy diet within their operations, their product portfolio, among their employees and within the communities in which they operate. Ultimately their more balanced energy diet is translating into a stronger business and a stronger bottom line due to operational efficiencies, cost recovery, product innovation, margin improvements and enhanced reputation.

Everyday we see more and more companies making conscious decisions to evaluate their firms’ energy diet and ways to enrich their diet. Share with us some of the corporate leaders you are aware of that are creating a more balanced energy diet for their operations, employees, customers, shareholders and communities in which they operate.

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

Author note: The Basel Agency for Sustainable Energy (BASE) provides a summary of big oil’s investment in alternative and renewable energy. While not summarized in this blog, the BASE summary is a useful comparison of the capital expenditures of big oil versus their investments in other forms of energy production.

A “Force for Global Good”…From Flighty Service to Social Response Leader: How Delta Airlines is Reshaping the Future of the Global Airline Business

With flights to 481 destinations in 105 countries on Delta, Delta Shuttle®, the Delta Connection® carriers, and their Worldwide Partners®, Delta Air Lines operates service to more destination than any global airline.

This past week Delta Airlines topped itself as a global destination leader with the acquisition of Northwest Airlines. The merger creates the world’s largest airline, a firm with that will have a value of approximately $17.7 billion (according to Delta). According to a LATimes.com article, the Delta/Northwest merger provides Delta with a fleet of 800 planes with a staff of 75,000 employees. In addition, Delta will now fly more than 105 million passengers annually to more than 390 cities worldwide, and would be the largest airline in terms of fleet, destinations and total passengers.

What’s interesting about the Delta and Northwest merger is the potential for Delta’s existing “Force for Global Good” initiative may have even greater global reach and influence. For those that are unaware, Delta’s “Force for Global Good” initiative is essentially their corporate social response solution to foster a more sustainable environment in the regions in which they provide service throughout the world. Delta’s web-site notes:

“Delta's employees, customers, and community partners—together form a force for positive local and global change, dedicated to bettering standards of living and the environment where we and our customers live and work. We are Delta's Force for Global Good.”

Delta focuses its “Force for Global Good” initiative on four critical social needs:

1. Breast cancer research in partnership with The Breast Cancer Research Foundation.

2. Protection and restoration of wildlife habitats including reforestation efforts in partnership with The Conservation Fund.

3. Elimination of poverty and substandard living conditions in partnership with Habitat for Humanity.

4. The need to think global but also act local on issues pertaining to “health and wellness” through its unique partnerships like the American Red Cross, Children’s Miracle Network, Martin Luther King, Jr. National Memorial Foundation, American Cancer Society, and The Juvenile Diabetes Research Foundation International.

Delta’s unique social response approach for engaging employees, communities and customers to have positive influence and impact on social needs is gaining elevation and respect. In 2007 Delta employees contributed more than $500,000 to The Breast Cancer Research Foundation, a record year for fund-raising at Delta on behalf of this cause.

Delta’s “Force for Global Good” initiative involves not just the firms’ employees and community partners, but also customers. In the month of April 2008 Delta will “match all carbon offset donations” made by ticket purchasers to their “Force for Global Good” partner, The Conservation Fund via delta.com. Carbon emissions offsets can be made when airline tickets are purchased at delta.com. Delta’s offer states, “For every customer who donates to The Conservation Fund when they purchase a ticket online at delta.com between April 1 and April 30, 2008, Delta will match the contribution amount up to $10,000 for total contributions.” For those travelers seeking to reduce their carbon footprint associated with airline travel, the Delta Airlines April 2008 promotion is a wonderful way to have an even greater impact. 100% of the carbon emission offset donation will benefit The Conservation Funds’s Go Zero program.

The Conservation Fund’s Go Zero program uses financial donations to plant trees to help offset carbon emissions. The Conservation Fund notes, “The average American's annual carbon footprint is just over 20 tons”. For airline travelers making a roundtrip flight from New York City to Los Angeles and back their carbon footprint would equate to approximately 1.19 tons (according to the The Conservation Fund - GoZero Calculator. The Conservation Fund estimates that at least one tree should be planted to offset each round trip between New York and Los Angeles.

At a time when airlines are being touted as the “New Culprit in Climate Change”, Delta’s social response partnership with The Conservation Fund to offset carbon emissions through reforestation practices is timely and necessary. Today’s companies are not evaluated by financial rating agencies, government, consumers or shareholders based solely on quality, service and price. These traditional tenants of business success remain the key performance indicators today. However, new indicators of success, focused on long-term sustainability are now reshaping how firms like Delta think about and conduct their business globally.

Building homes and revitalizing communities, conserving wildlife and natural resources, supporting local not-for-profit organizations focused on health and wellness, these are not the day-to-day business activities of most large corporations, particularly those that transport people over the Atlantic and Pacific oceans. However in an effort to create a better company and a better world, one that is more healthy, more diverse, and full of life and promise, Delta Airlines is becoming a “Force for Global Good”, competitively and philanthropically.

Does it make sense for a global airline like Delta to offer carbon emission offset programs in partnership with The Conservation Fund? Share with us your thoughts on how the Airline Industry can couple “green with green”, that is, remain financially strong while addressing contemporary environmental and energy challenges associated with airline travel.

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

For Businesses and Governments Embracing Social Response Capitalism…“All the World’s a Stage”

Shakespeare historically noted that we’re all merely players on this global stage – each with our exits and our entrances. Perhaps if he were alive today Shakespeare would say the same about the character and condition of the modern global corporation. Some companies come and some go. The only certainty is uncertainty in a global business environment. However, advancements in how global firms and governments think about, value, define and act out their respective futures are beginning to define who stays on stage longer than others… Emerging economies, social response corporate leaders, and governments and universities around the globe are seeking the knowledge from Bruce Piasecki’s book “World Inc.”. Piasecki’s summary on how the collision of capitalism and social responsibility is shaping the near future resonates with product and policy innovators both domestically and abroad.

When Bruce Piasecki released his 6th book, “World Inc.: When it Comes to Solutions - Both Local and Global - Businesses Are Now More Powerful Than Government” in April 2007 he knew that in the fast paced marketing savvy business of publishing that it takes a great deal of time to have foreign editions sold. Having written and published five previous books including the Nature Society's book of the year, In Search of Environmental Excellence: Moving Beyond Blame, Piasecki was prepared, like many authors, to travel to new destinations, meet new people, and actively market his new work.

What caught Piasecki by surprise in the 9 months after the release of “World Inc.”, however, was just how rapidly the book’s rights were sold as foreign editions. In less that a year, Bruce Piasecki’s “World Inc.” is on its way to being translated and sold in:

Brazil – Greece – Italy – Japan – Korea – Portugal

What’s interesting to me about the proliferation of the book globally is the way other regions of the world are finding new grounds for hope and inspiration in reading their translated version of “World Inc.”. For example a Japanese reviewer recently noted, “…in Japan, Corporate Social Responsibility became a very popular concept in the last few years, and people are more and more concerned about CSR, environmental problems, and the future of capitalism…”.

As the world’s developed and developing nations wrestle with limitations to their natural resources, energy security and doing business in a more environmentally and socially responsible way, “World Inc.” is providing a source of enlightenment while serving as a social response solution in its own right by educating and inspiring the leaders of today, and tomorrow. We also see how many foreign governments, corporations and citizens are beginning to frame the discussion Piasecki expertly crafts within “World Inc.” into a roadmap for how they can work collaboratively into the future. As social response capitalism eclipses capitalism as an advanced form of doing business, we believe more governments and corporations will take note.

From a US perspective I find it encouraging that foreign corporations and governments are so engaged in discovering “social response capitalism” through Bruce Piasecki’s “World Inc.”. Many US based corporate, social and government leaders have engaged Piasecki on “World Inc.” to speak to them and help them learn what foreign nations are so interested in. That is, how can growth occur in a socially and environmentally responsible way while delivering financial value to shareholders? As the swiftness of information and severity of market conditions push more businesses toward social response capitalism it becomes necessary to learn from other corporate, government and social leaders. Piasecki’s “World Inc.” is a life time of learning wrapped into a couple hundred pages of prose and wisdom that is shaping the foundations of business and governments globally.

Remove Complacency from the Existing Equation
The competitiveness of US based companies will be tested in years to come on their ability to address social needs. When I see other nations and foreign corporations embracing the theme’s of “World Inc.” I sense that the world is transitioning from an industrial age where machines were king to a socially responsible and enlightened age where social consciousness merges with economics and democracy. On occasion I hear rumblings of other nations of the world developing so fast that they may actually leap-frog the US with regard to the state-of-the-art technologies and infrastructure. That is not a bad thing if you consider green growth and sustainable development as global imperatives in the 21st Century. However, from a competitiveness point of view it could hurt the US whose aging infrastructure is in need of a technology refresh. In addition the US has an aging population of engineers, scientists, researchers, educators and manufacturing leaders whom seek to retire in the next ten to fifteen years. The baby boomer and previous generations may be leaving behind an infrastructure that was once a poster child for prosperity, but may now look weak and decrepit to the newer, faster, and more efficient infrastructures of other nations.

To stay on the proverbial world stage the US cannot be complacent with its people, policies or its prosperity. The US needs to embrace the change and transformation occurring around the world right down to the tiniest of US towns. That transformation can be simply recognized as “the need to create a better world”. That statement can mean less reliance on oil. That can also mean cleaner water. That can mean removing barriers to accessing education. That can mean feeding the hungry and providing job training and opportunities to the poor. However it’s defined, the notion of a better and more enlightened way of living, doing business, and governing has emerged as a global priority. Call it a social enlightenment period of history or a reflection that what we’re currently doing does not work. Either way a new era of business is upon us, and its time to remove complacency to change out of the equation.

So what is a nation in the midst of change to do?
Be a leader on the world stage, of course. The US can benefit from what so many other foreign corporations and governments have discovered in “World Inc.” already.

1. Rejuvenate with the power of business – Some of the largest economies of the world are now corporations, not nation states. Business is a powerful driver of change and partner in creating a better world. The responsibility for creating a better world resides not only with the checks and balances of government, but also the ingenuity and infrastructure of business.

2. Celebrate collaboration - Citizens, business and government need to work together to address critical social, environmental and economic challenges. Without the collaboration of each, solutions will be short term.

3. Accept the fact that small is beautiful - Principles of efficiency, conservation, security and protection are not counter intuitive to economic growth and development. In fact, in today’s resource constrained world these words are business opportunities for leading companies and opportunities for governments to ensure the needs of society are met today and into the future.

4. Allow capitalism to transform - Social response capitalism is an advanced form of capitalism emerging like a tsunami. However damage will not be to those in its path, instead this wave will lift up the economies of the world while cleansing what we know about how not to conduct business and past mistakes.

5. Address degradation of global ecosystem services - Clean Air – Fertile Land – Potable Water are the battle songs for future global conflict if we fail to redefine our values and align our goals domestically and abroad. We need to establish new age public-private partnerships between government, corporations, NGOs, universities and the public if we are to address past environmental damages and prevent any further degradation to ecosystems and their ability to provide us with future utility.

6. Make it a priority to be in-search of a better world – to address healthcare, energy security, environmental damages, natural resource constraints, education and democracy a renewed commitment to innovation, arts and sciences, philosophy, social sciences, engineering and all disciplines is required. The solution to a better world is not hidden, yet to be discovered, in one disciple. Instead the solution resides in our ability to use frameworks and best practices that involve the intersection of many disciplines so that multiple points of view can be tested and so that the best and brightest of ideas can become innovative solutions to our complex challenges.

7. Get up on the World Inc. stage and perform with grace and fascination – it’s of no use watching the show from the rafters. The nation must be a part of the growing world stage! We need to take part in creating a better world by being a part of a global alliance and solution, not one that polarizes or is blind to others needs.

Tell us your thoughts on what else can a nation in political and economic transition can do to embrace change and foster a more sustainable future?

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

“This Land is Your Land, This Land is Our Land”…Just Don’t Take Our Waters

…“From the Redwood Forest to the Gulf Stream Waters, this Land Was Made for You and Me”…

Can natural resource rights divide a nation, a world? Unfortunately growing constraints on fresh and potable water are doing just that. And, without more care, courage and commitment from governments, corporations and citizens, our natural resource disputes could be grounds for future conflicts. Already some natural resource debates are being touted as “resource wars” and “civil wars”. Thanks to our democratic society, the resource wars of today are at least being waged in the courtroom. With a growing population and increased drought in certain regions of the US (and world), demand for water is increasing. Currently a new aged battle is being fought in the South where Georgia and Tennessee are head-to-head in a water dispute dating back to 1818.

With drought severely impacting the Southeast US in the past 12-months, particularly the State of Georgia, discussions on water rights have citizens and policy makers boiling. The State of Georgia recently filed a resolution to create the “Georgia-Tennessee Boundary Line Commission” to perform joint surveys of the true boundary line between the adjoining states. Georgia claims that boundary line was erroneously surveyed in 1818 and that the State never fully accepted the survey. Georgia believes the boundary should follow the 35th parallel. If it did, the boundary would move approximately one and a half miles to the north. Not a great distance, however the impact on water rights would be enormous. If the boundary line were changed, millions of gallons of water could be diverted from the Tennessee River into Georgia. It’s amazing the role geography can play in social, environmental and economic issues. In the case of Georgia and Tennessee even few hundred feet makes the difference between resource rich and resource poor.

However, the Georgia-Tennessee water war is not simply about who is resource rich and resource poor or who is right and who is wrong regarding land rights, deed restrictions and old surveys. It’s about society’s use of natural resources and our ability to conserve and protect them. It’s also about responsible resource and land management by government, industry and citizens. One thing we can agree upon is that resources, be them water – fossil fuels – forestland – fisheries – certain ores and materials, are being depleted, damaged and threatened as population growth demands more resources for survival and economic growth. This generation, not future generations, but this generation, is in a position to have a lasting impact on our natural resources, how we use them, how we value them, and how we respect them today and for tomorrow. A band-aid approach to solving natural resource challenges has not worked in the past and will not work today. The complexity of social, environmental and economic challenges that envelop our natural resources requires holistic thinking, balanced governance, smart innovation and sound practices and policies to be put in place.

Many governments and corporations are now working together to identify natural resource challenges and appropriate (and balanced) solutions to those challenges, particularly the availability of clean and potable water. For example, the Business Roundtable’s Society, Environment and Economy (SEE) water initiative is a focused effort on improving the quality and availability of water. In its “Water Brief for Business (WBFB)” the Business Roundtable summarizes three reasons water is a strategic issue for business and society in this new century:

1. Risk - Freshwater scarcity and threats to water quality are increasing dramatically, both in the United States and across the world – making water one of the leading social, environmental, and economic challenges facing humanity in the 21st Century.

2. Responsibility - Water presents both a major business risk and an increasingly important corporate social responsibility issue.

3. Social Response - Businesses can make a big difference in achieving sustainable use of water resources – while simultaneously adding business value.

We commend the Business Roundtable and the SEE water initiative Corporate Leaders that are taking swift care, courage and commitment to affect change with regard to emerging water constraints and resource challenges. Corporate leaders like Alcoa, Coca-Cola, Dow, DuPont, GM, FPL, GE, HSBC, ITT, Office Depot, Siemens, Weyerhaeuser, Xerox (to name a few) are members of the SEE water initiative seeking, in their own right, social response solutions to cleaner water.

As we advance through this new century, an abundance of social and environmental challenges are before us. In some instances these challenges will constrain us, in other instances the challenges will inspire use to be innovative and responsive. While we are eager to solve our natural resource challenges through quick fixes, we ultimately know that there is no silver bullet or no one size fits all approach.

As the caretakers of our natural world need to redefine our values and boundaries that separate our past with our future. In doing so we must be cognizant of the fact that our resources are precious and that it is our generation whose needs must be met, but that it is our generation who are also the stewards for the future. Let’s shed the boundaries of the past and redefine the role of government, industry and citizens to collaboratively engage in a new era of social responsible enlightenment toward natural resource consumption.

What natural resource issues do you see emerging in the US and the World where geography plays a strategic role, like in the Georgia-Tennessee boundary debate?

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

Mark@ahcgroup.com

Listen to the Georgia-Tennessee Water Debate at NPR.
Watch a video clip of the story at MSN.

Social Response Capitalism Unveiled: How Siemens is Greening Corporate America, and the World, through New Product Innovation in Built Environments

Based out of Buffalo Grove, Ill, Siemens Building Technologies, Inc. might as well be called Sustainability Inc. The company is a bustling provider of energy and environmental solutions, building controls, fire safety and security system solutions. Siemens Buildings Technologies, Inc. makes buildings comfortable, safe, productive, energy efficient and less costly to operate. Parent company Siemens AG is one of the largest electronics and industrial engineering firms in the world. Reporting more than $112 billion in sales in 2007 Siemens AG is a global giant employing more than 390,000 employees worldwide with operations in 190 countries.

To support new market access and continued competitive growth this global giant is also an innovation leader. Siemens has 50,750 patents worldwide and in fiscal year 2007 the firm spent more than $3.4 billion on R&D. Strategic R&D topical pursuits for Siemens include: technology for the environment, digital health, the thinking car, intelligent networking, personalization, remote services, elements of life, always-on-society, software, sensor technology, clean energy, materials research, new light sources, medial imaging, robotics and agents, usability, factories of the future, and logistics.

Without even exploring each of these R&D topics in depth one can begin to see the depth and breadth of Siemens innovation pursuits as well as how the firm is positioning its future products with social and environmental needs including environmental management, energy efficiency, healthcare, resource conservation, and global connectivity. Siemens Building Technologies, for example, is looking at the building retrofit and new build markets as opportunity for innovation and social response through energy efficiency, smart sensor technology and new sources of lighting and intelligent networking. Data from McGraw-Hill and Siemens shows that corporate America may be at a “green building tipping point”, and that a technological and social transformation is underway in how corporations do business.

The Tipping Point for Green Buildings
In 2007 a McGraw-Hill Construction study, commissioned by Siemens Building Technologies, Inc., reported out on the “attitudes of corporate leaders toward sustainability and green building”. The study relied on interviews and surveys with close to 200 corporations with revenue exceeding $500 million. The McGraw-Hill Siemens study reported the following insights:

· 63 percent of CEOs recognize financial benefits of green building.
· 67 percent see a specific operating cost benefit from Green.
· 57 percent of respondents think green fosters innovation within their companies.
· 60 percent of CFOs see the market differentiation sustainability activities and green building can provide their companies as a definite benefit, with over half of the other executive respondents agreeing as well.

These findings are significant, and Siemens believes they point to a green building “tipping point” among American corporations. Although there are many drivers impacting the transformation of Corporate America to greener pastures, rising energy costs were identified by more than 75 percent of the McGraw-Hill and Siemens survey participants as a major motivator for building or retrofitting buildings with more energy efficient technologies and green building solutions.

In the US buildings account for approximately 65% of total US electricity consumption, 36% of total US primary use, 30% of total US greenhouse gas emissions, 136 million tons of US construction and demolition waste (about 2.8 lbs. per person per day), 12% of potable water, and
40% of annual raw materials use globally (3 billion tons). Most all corporations operate and maintain buildings as part of their daily business. Driven by the cost of energy and growing concern over the influence of carbon on future business risks, design and development of “green buildings” has emerged as a business strategy and sustainability objective. Every sector of society (businesses, universities, governments) are looking at greening their buildings as a way to reduce operating costs, reducing their carbon footprint, creating a competitive edge, and delivering more value to their bottom line and to their stakeholders. For many, carbon will either be a cost or revenue stream in the future. Thus organizations need to understand their carbon footprint in relation to their competitors, industry sector and society. Most firms are doing this by inventorying their greenhouse gas (GHG) emissions for all segments of their operations. And smart firms are beginning to assess “what stage of sustainability” they are in, and how to improve.

Five Stages of Sustainability
I recently listened to Rick Walker, Manager of Sustainability Initiatives for Siemens Building Technologies, Inc. outline what he termed the “Five Stages of Sustainability” at a private Leadership Benchmarking Workshop facilitated by the AHC Group, Inc. in Phoenix, Az. Mr. Walker identified the following Five Stages:

Stage 1 - Green not part of the company mission

Stage 2 - Green enters into the company mission as it is legally required

Stage 3 - The company considers the proactive application of Green to be consistent with the profit mission

Stage 4 - The company transforms into a Green organization. Green is viewed more as an opportunity than a cost

Stage 5 - The company approaches business as a holistic, restorative company

The majority of companies are in stages 1, 2 and 3. And fewer companies have entered into stages 4 and 5. Companies that we study at AHC Group, Inc. are in all Five Stages of Sustainability as defined by Siemens, but we typically report on those companies that clearly fall in Stage 4 and 5 as they’ve typically developed internal management practices, governance policies, reporting structure and operational strategies for sustainability within their organizations and often, within their supply chains and internal/external partnerships. In addition, the companies we see in Stage 5 usually have an enlightened sense of the near future and an intelligence and innovation infrastructure that allows them to rapidly sense market needs and deliver new products that have social and environmental consequence more competitively than firms that have not yet arrived to Stage 4 or 5.

Another compelling insight of Stage 4 and 5 firms is the use of internal and external “Sustainability, Environmental Leadership, or Green” Committees. The members of these committees typically consist of all segments of the organization (finance, sales/marketing, product/service development, legal, facilities management, risk management, HR) and at decision making levels. Companies/organizations including LP Corporation, Siemens, USDOD, HSBC, and Mitsubishi have internal committees that report through a governance structure to their respective executive committees. Internal “sustainability” committees are the eyes, ears and mouth for the company. They communicate the vision and mission sustainability roadmap to internal and external audiences. They listen to internal and external stakeholders on needs and requirements. They seek to coordinate the design and implementation of sustainability strategies internally and externally. And they seek to build trust and reputation through transparency and visibility of how sustainability strategies are developed and implemented as well as the overall “sustainability performance” of the organization.

Amid the evolution of “sustainability and green” committees has been the slow metamorphosis of the “Chief Sustainability Officer (CSO)” for many leading firms. The CSO has emerged as the internal champion for sustainability initiatives, but more than that, we find CSO’s to be revenue generators and responsible for overall risk management. For more insight on the emerging roles of CSO’s and those firms in Stages 4 and 5 please see World Inc.

Staging the Transforming Within Your Organization
Mr. Walker’s presentation and summary of the “Five Stages of Sustainability” encapsulated the idea that sustainability is a continuum as well as a process of transformation for businesses, governments and consumers. Sustainability is not something that can be delivered to a company’s doorstep in a UPS box, opened and installed. Instead, sustainability has to be studied, defined, embraced, implemented and measured by each organization. The corporate trend toward sustainability involves elements of social, technological, and business transformation. Thus corporations, governments and consumers alike will discover what sustainability means to them and how much emphasis to place immediately or over a longer term on transformation and going through the stages of sustainability.

As you begin or continue your journey of sustainability, keep in mind firms like Siemens that have much to offer by way of tools, technologies and services that can aid in your organizations transformation. As the cost of energy and collision of carbon on business risks elevate discussions of sustainability within your organization consider the following questions to help you navigate your course:

Strategy & Roadmap Development
· What stage of sustainability is our organization in? What are the practical solutions oriented strategies we can develop and deploy to continue our journey toward the next stage?
· Has our organization established strong pillars of sustainability: vision and mission, roadmap and implementation strategy/plan, an open learning environment and a way to inventory, measure and report out on progress/goals?
· Do we have an existing “sustainability or green” strategy and roadmap?

Commitment & Communication
· Because “green” and “sustainability” are philosophies that organizations adopt and a journey each organization takes, there needs to be commitment from all stakeholders, internal and external (from executive management to vendors and customers). Has our organization communicated its philosophy for “sustainability” to stakeholders and been granted their commitment to see it through?
· Do we have an internal “sustainability or green” committee that overseas the strategy roadmap and implementation? Has the committee developed a vision, mission and goals for the strategy roadmap?
· Has top level support for the strategy roadmap been achieved? Have operational level personnel been educated and involved in the strategy roadmap development?
· Is our strategy communicated at all levels of our organization and to our partners, suppliers, customers? Do our employees, vendors, suppliers, customers know what is expected of them?
· Do our stakeholders know the performance of our strategy? Has it been communicated to them successfully?

Competitive Differentiation
· What is unique or different about our organizations’ strategy? Compared to competitors, compared to other industries?
· Have we evaluated our product and service impacts and how to innovate better?
· Do we have the need for a cross functional CSO that is an internal enabler for governance, environmental/operational excellence, design of environmentally benign products/services and risk reduction?
· What is the carbon footprint of our buildings/facilities? Does our carbon footprint matter relative to our peer companies? How can we reduce our carbon footprint at our facilities, fleets, purchasing and other business units?

The road to sustainability is not yet paved. In fact it has barely been scouted. As you chart a path toward the destination that most suits your business, products, organizational culture and industry sector remember that sustainability is a journey. The journey is rich with opportunities, but also risks. So chart your course with care, and where possible, learn from other leaders that have, like Siemens, much to offer by way of social response intelligence and innovation.

Tell us about the challenges and opportunities you’re experiencing during your journey to sustainability.

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

Managing Carbon Risk in High Seas

Like the “Electrifying” Discoveries of Ben Franklin 250 Years Ago, Innovative Marine Shipping Companies Are Experimenting with Flying Kites to Deliver a Social Response to Contemporary Business Challenges in the Shipping Industry

It was June 1752 and one of the Founding Fathers of America began an experiment to see if lightening was actually electricity by flying a kite into a thunder storm. That prolific leader, a well known inventor, scientist, author, politician, civic activist and diplomat was Benjamin Franklin. Franklin’s kite flying experiment which set out to prove that lighting had electricity “energy” was an influential, as it led to the invention of the lightening rod.

Two hundred and fifty-six years later a German shipping company named the Beluga Group has experimented with using a kite to use the power of the wind to reduce oil consumption on board its massive shipping vessels. In December 2007 the 10,000-ton 'MS Beluga SkySails' set its maiden voyage route from Bremerhaven, Germany, to Venezuela. But instead of relying solely on its petro-based engine to power its course, the MS Beluga SkySails used a 320 square meter sail to reduce its petro-consumption by relying on the force and grace of the wind, like early ocean going pioneers travelled hundreds of years ago. Like Franklin’s experiment of 1752, the Beluga SkySails is a new age experiment using technology as old as the kite, but still as innovative as it is applied to a new era of energy challenges.

The Beluga Group estimates that 20% or $1,600 of the daily fuel bill can be reduced by using its large kite. If the first maiden voyage from Germany to Venezuela proves successful the company intends to increase the size of the kite to 600 square meters and deploy them on its fleet of 1,500 oceanic vessels.

The price volatility of oil, increased corporate financial and reputational risks surrounding climate change and carbon, and cost of transportation have influenced Beluga Group’s decision to integrate the kite concept with their shipping vessels. According to REUTERS, “…the world's 50,000 merchant ships, which carry 90 percent of traded goods from oil, gas, coal, and grains to electronic goods, emit 800 million metric tons of carbon dioxide each year. That's about 5 percent of the world's total. Also, their fuel costs rose by as much as 70 percent last year...”.

According to researchers at Rochester Institute of Technology (RIT), pollution from the marine shipping industry contributes to 60,000 premature cardiopulmonary and lung cancer deaths around the world each year. The RIT report, “Mortality from Ship Emissions: A Global Assessment” was released just as the International Maritime Organization (IMO) began meeting to discuss how to regulate emissions from the marine shipping industry.

Calling the “Beluga SkySails” an “innovative auxiliary propulsion system” Niels Stolberg, CEO of the Beluga Group noted, “…you have to have the courage to try out something new”. The Beluga Group also states, “…application of the towing kite propulsion system points to a sustainable way out of direct dependence on the oil price. Furthermore, the MV “Beluga SkySails” even combines ecology and economy on the high seas.”

The Beluga SkySails propulsion system is a hybrid, taking the best of the old and integrating it with the best of the new to create a truly unique way to continue its maritime shipping operations in our fast paced 24-7 in a world that is also constrained by carbon and health impacts of an oil-dominated economy. In providing a social response service upgrade to its operations, Beluga stands to win credibility, reputation and market access from those seeking lower carbon risk shipping methods.

Even at the high seas, innovative applications to conserve energy, integrate economics with ecology, reduce climate/carbon risk and enhance corporate reputation and product/service offerings are well underway. It’s an exciting world, with a rich mix of new and old intersecting toward new paradigms for business growth.

Share with us your thoughts on the Beluga SkySails social response to energy and emissions, and your views on how others firms are merging old concepts with new innovations to create positive environmental, economic and social impacts.

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

To see a video stream of the Beluga SkySails: http://www.wintecc.de/video_en.html

Tough Challenges in a Complex World: Why A Focus on New Product Development and Innovation is a Business Requirement for this New Century…

As local and global economies collide, the complexities of the world present new and tough challenges for business. Once thought of as emerging issues, there are a slew of challenges that have risen to the top of the daily agendas for businesses, governments and citizens. Consider these 21st Century issues of consequence:

· Concern over climate change and appropriate government and business response.
· Concern over the availability and cost of energy.
· Concern over the availability of natural resources and environmental damages.
· Concern over increased potential for global pandemics.
· Concern over terrorism and asymmetrical warfare.
· Concern over social needs, human rights and product pedigree.
· Concern over the globalization of business and its impact on society, environment and economy at local and global levels.

These concerns are being addressed by businesses in unique and innovative ways. This past January I met and participated in discussions with 88 global corporations in Phoenix, Arizona as part of the AHC Group’s ongoing Corporate Affiliates Workshop Series focused on its signature leader-to-leader benchmarking for corporate strategy. The 2-day executive workshop yielded for me, another intriguing look inside the drivers of corporate strategy and how leading firms are addressing issues of consequence to their customers, employees, suppliers and shareholders. One of the major themes that surfaced rapidly among several firms was the level at which they respectively are dealing with business risks like carbon, climate change, natural resource and material availability, employee health and safety and product pedigree.

From my perception the leading firms are focusing not on “green branding” of products but a well conceived internal effort to innovate new products and services that can reduce their business risks and deliver value to their firms’ bottom line and corporate reputation. The issue of product claims and legitimacy is very important for leading firms, thus they are not riding a “green wave of optimism” for the sake of being perceived as a green company. Rather, most firms are looking at their technology, employee and product strengths as well as partnerships and identifying opportunities for innovation. And in most cases the new innovation is based on a business risk turned into opportunity. Leading companies are seeking market access and leveraging their expertise to create new businesses that begin to address complex social and environmental challenges like carbon reduction, energy efficiency or end-of-life product reclamation, reuse, recycle or remanufacturing.

In the short case example below I highlight how IBM is focusing on new products and innovation for solving tough challenges in this complex world. While IBM was not part of the 88 firms I learned from at the AHC Group workshop in Phoenix, their approach to new products and innovation is similar to what’s happening at some of the largest electric utilities, building products, energy, chemical, manufacturing, computers/electronics, defense and aerospace, consumer products and healthcare/pharmaceutical companies of the world.

An Innovation Business Machine – From Eco-Patents to Big Green Innovations, IBM is building on its technology portfolio to capitalize on social needs.

Perhaps IBM should be called Innovation Business Machine. With a commitment to bring “game changing” innovation to market, the $91 billion giant is delivering on its promises. In December 2007 IBM announced Five Innovations that Will Change Our Lives Over the Next Five Years. Among those five innovations were “smart energy technologies” that will allow consumers to better manage their personal “carbon footprint” through intelligent appliances and smart electric grids.

On February 1, 2008 IBM announced the creation of its “Global Center of Excellence for Water Management” in Amsterdam, the Netherlands. Focusing on two global business risks, climate change and water, the center of excellence will draw on “…IBM consulting, technology and research expertise, and will help IBM's public sector clients worldwide to develop enhanced prediction and protection systems for low-lying coastal areas and river deltas.” The IBM Center of Excellence will help the more than 60% of the world’s population that live in coastal and low-lying delta regions and that may be impacted by climatic influences on water in those regions.

IBM’s Center of Excellence is part of its Big Green Innovations initiative which is focusing on commercializing new products and services across four strategic areas: advanced water management, alternative energy, carbon management and computational modeling. Each of these four targeted areas stems from an existing core IBM technology. For example, one of IBM’s ‘big green innovation’ ideas is for advancing the energy efficiency of large data centers through its collaboration in the Green Grid.

IBM has committed an investment of $100 million toward its ‘Big Green Innovations’ initiative and collaborative. With a focus on emerging environmental management opportunities, IBM developed its ‘Big Green Innovations’ initiative as a platform to design and develop products and services (and 10 new businesses) that address global environmental and social challenges in what they call “the latest step in a journey that began 35 years ago”.

Continuing its theme on green innovation, IBM recently announced its Eco-Patent Commons initiative, a program designed to provide the public domain access to dozens of environmentally responsible innovative patents developed by leading corporations. The intent in providing the public access to these patents is to spawn a new era of ingenuity, innovation and development of new products and services that also have a social and environmental purpose. IBM announced the Eco-Patent Commons initiative with the World Business Council for Sustainable Development (WBCSD). In addition, several peer-corporate leaders are a part of the IBM Eco-Patent Commons initiative including Nokia, Pitney Bowes and Sony. By sharing innovations within the public domain these leading corporations seek to enhance and accelerate sustainable development in a resource constrained world. Membership in the Eco-Patent Commons initiative is open to all individuals and companies pledging at least one patent. More information is available at the Eco-Patent Commons website hosted by the WBCSD.

IBM’s Eco-Patent Commons initiative is just the type of innovation that environmental business expert Bruce Piasecki uncovers and examines in depth in his book, World Inc.: When it Comes to Solutions - Both Local and Global - Businesses Are Now More Powerful Than Government. Piasecki notes, “Fifty-one of the world's top 100 economies are now corporations, and more than 40% of world trade now takes place within multinationals. As power moves into the hands of corporations, the world is looking to business instead of government to solve its problems. The corporations that can best address social issues by creating superior products will thrive and profit in this new world.”

As one of the larger corporations in the world IBM seems to be using its power and influence to solve social and environmental challenges in partnership with other peer companies and leading organizations like the WBCSD. IBM seems to have launched its product, service and R&D portfolio into what Piasecki calls “social response capitalism” a new and advanced form of capitalism that delivers shareholder value on product performance, quality and price but also a 21st Century requirement for all corporations – value toward society and social needs.

Forward thinking partnerships “on sharing ideas for the greater social and business good” like IBM’s Eco-Patent Commons are rapidly becoming the new turf on the expanding playing field by which fortunes will be won or lost and as both shareholder and stakeholder value is created by business.

What firms, like IBM, do you see as new social response product development and innovation leaders of market and global consequence tackling global carbon, climate, resource and health risks?

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