Category: March 2014 – Sustainable Business Leaders & Trends

Chris McKnett: The Investment Logic for Sustainability

from TED @ StateStreet (November 2013)

 

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Sustainability is pretty clearly one of the world’s most important goals; but what groups can really make environmental progress in leaps and bounds? Chris McKnett makes the case that it’s large institutional investors. He shows how strong financial data isn’t enough, and reveals why investors need to look at a company’s environmental, social and governance structures, too.

 

Chris McKnett of State Street Global Advisors helps institutional investors put money toward sustainable and socially-forward assets.

 

Whole Foods Market Celebrates 17 Years on FORTUNE’s ‘100 Best Companies to Work For’ List

 

Team Members cite commitment to health and professional growth opportunities as reasons for being a great place to work

Thanks to responses by Whole Foods Market Team Members, FORTUNE magazine ranked the grocer on its “100 Best Companies to Work For” list for the 17th consecutive year. The nation’s leading natural and organic supermarket ranked No. 44 on the list, and is one of only 13 companies that have made the list every year since its inception in 1998.

“What makes us a successful company is our 80,000 team members who demonstrate their passion and dedication to the company’s mission each and every day,” said Walter Robb, Whole Foods Market co-CEO. “We believe that their happiness and health is essential, which is why we invest in their personal and professional growth. We encourage team members to seek out opportunities that fulfill their deeper purpose and celebrate individual creativity and potential.”

FORTUNE cited the company’s commitment to professional growth and development opportunities, including the Academy for Conscious Leadership and the freedom to pursue personal passions as reasons for making this year’s list. The company’s dedication to promoting health, which includes its Total Health Immersions and healthy eating incentive programs, were also highlighted.

Whole Foods Market ranked 12th out of the 41 large companies on the “Best Companies” list. Whole Foods Market was one of 12 Texas companies, and one of two in Austin, to make the list.

In 2013, the World Retail Congress named Whole Foods Market “Retailer of the Year.” The grocer also made the Ethisphere Institute’s “World’s Most Ethical Companies” list, as well as a Harris Interactive consumer opinion survey’s top 10 list for “Most Liked” and “Most Reputable” companies. Whole Foods Market received a James Beard Award for “Best Group Food Blog” for its www.darkrye.com  e-magazine, and was ranked No. 1 on Greenpeace’s 2013 Seafood Retailer Scorecard.

The “100 Best Companies to Work For” list and related stories appear in the February 3, 2014 issue of FORTUNE at www.fortune.com  or at- http://money.cnn.com/magazines/fortune/best-companies

Contact: Whole Foods Market

Robin Kelly (201) 567-2090 x411 or-  robin.kelly@wholefoods.com

 

Green America’s Guide to Fossil Fuel Divestment and Clean Energy Reinvesting

Investing in our Future – Divest from Fossil Fuels Now
By Fran Teplitz, Social Investing Director, Green America

 

It’s time to stop this madness.” So said Yeb Sano, the Philippines’ lead negotiator at the UN Climate Summit in Warsaw, one week after the strongest typhoon ever to make landfall tore through Sano’s home country, killing 5,000 people, and leaving nearly two million homeless.

“To anyone who continues to deny the reality that is climate change, I dare you to get off your ivory tower and away from the comfort of you armchair,” continued Sano. “I dare you to go to the islands of the Pacific, the islands of the Caribbean and the islands of the Indian Ocean and see the impacts of rising sea levels; to the mountainous regions of the Himalayas and the Andes to see communities confronting glacial floods, [and] to the Arctic where communities grapple with the fast dwindling polar ice caps.”

We could fill the rest of this space with more examples from Sano’s extraordinarily moving speech about the climate, or we could tell you about the hunger strike he has undertaken, in solidarity with his suffering countrymen, to demand climate action now from the world’s governments. But we think that if you’ve picked up this Guide, you’re already convinced that climate change is real, and we want to give you something you can do about it — today.

In the Guide we offer five steps you can take to pull your support from the fossil fuel companies that have built businesses that can succeed only by wrecking the planet:

•  Divest your Fossil-Fuel Company Holdings

Sell any holdings in the top 200 companies holding the most fossil-fuel reserves. Call your mutual fund companies and urge them to offer fossil-free options. If they can’t, or won’t, tell them you’ll be shifting your mutual fund investing to a company that offers fossil-free funds.

•  Reinvest in Clean Energy and Fossil-Free Products

Buy fossil-free stocks in consultation with your financial planner, invest in fossil-free mutual funds and ETFs, or invest in crowd-sourced solar projects. Find resources inside the Guide.

•  Invest in Clean Energy for Your Home and Community

Boost your home’s value by installing clean energy, or look into community solar opportunities, on the rise nationwide.

•  Shift Your Bank Accounts and Credit Cards to Institutions that Don’t Invest in Fossil Fuels

Refuse to do business with mega-banks heavily invested in fossil fuels. Move your checking and savings accounts and credit cards to community development banks. Find resources at- https://www.greenamerica.org/break-up-with-your-mega-bank and-  http://www.takechargeofyourcard.org

•  Support Institutional Divestment Movements

Work with your city, house of worship, university, or other groups that may be invested in fossil fuels. Find ongoing campaigns at- http://gofossilfree.org

“There are both moral and financial reasons for investors to reallocate their assets from oil and gas and into clean energy,” says Elizabeth Glenshaw, a portfolio manager for Clean Yield, a sustainable asset management firm. “Both the science and recent weather-related disasters make it clear that we must move our economy off of fossil fuels as fast as possible.”

We absolutely agree. When we finance fossil fuel companies we guarantee a return on investment that includes uninhabitable coastal cities, extreme storms, famine, water crises, and more. Pulling our investments from dirty energy and reinvesting in a clean energy future is an ethical decision we all can make, for our children and grandchildren, Yeb Sano’s children and grandchildren, and for the future of the planet we all share.

About Green America

Green America’s mission is to harness economic power for a just and sustainable society. We work for a world where all people have enough, where all communities are healthy and safe, and where the abundance of the Earth is preserved for all the generations to come. Our programs grow the green economy, stop corporate abuse, tackle climate change, build fair trading systems, support local communities, and help families and businesses go green. We define “green” to mean social and economic justice, community and environmental health—people and the planet. More information at- www.greenamerica.org

 

The US SIF Foundation Releases New Sustainable Investment Guide for Foundations

 

Report documents current trends in sustainable investing among foundations, provides practical resources

Earlier this year the US SIF Foundation released “Unleashing the Potential of US Foundation Endowments:  Using Responsible Investment to Strengthen Endowment Oversight and Enhance Impact.”

Download here-
http://www.ussif.org/files/Publications/unleashing_potential.pdf

The report, using extensive data from primary and secondary sources, assesses the current range and state of foundation involvement in sustainable and responsible investing (SRI). It suggests that the number of foundations engaged in SRI, often employing such terms as mission-related investing and impact investing, has been growing in the last few years.

The guide encourages foundations to adopt SRI strategies in order to have tools, in addition to grantmaking, with which to generate positive impact and to fulfill their fiduciary duties. It profiles a number of foundations whose approaches to SRI—including shareholder advocacy at publicly traded companies and investments in vehicles supporting community development, land conservation and other sectors— have resulted in meaningful environmental, social or corporate governance (ESG) outcomes. Another strategy foundations employ is to consider ESG criteria in addition to traditional financial indicators when selecting companies for their portfolios. Many of the foundations profiled in the guide provide background on the process they followed—with staff, trustees and consultants—to develop or update their responsible investing policies and procedures.

The report concludes with a list of practical steps that foundation staff and trustees can take to help their institutions align a broader portion of their assets with their programmatic or broader institutional goals. To assist these first steps, an extensive appendix of resources provides links to:

•  organizations offering assistance in sustainable and responsible  investing, including such specialties as impact investing, community investing and shareholder engagement;

•  research papers on SRI and financial performance and on fiduciary duty for foundations; and

•  investment policies, proxy voting guidelines and case studies of several foundations that are active sustainable and responsible investors.

US SIF Foundation CEO Lisa Woll said: “This guide provides compelling examples of foundations that have made the commitment to utilize their endowments for positive social and environmental impact.  We hope that the information and tools provided in this report will motivate many more foundations to follow their example.”

The US SIF Foundation is grateful to The J.A. and H.G. Woodruff Charitable Trust, Jessie Smith Noyes Foundation and Goodfunds Wealth Management for their generous support of this report.

About US SIF Foundation and US SIF

The US SIF Foundation is a 501c3 organization that undertakes educational, research and programmatic activities to advance the mission of US SIF. The US SIF Foundation offers an online course on the Fundamentals of Sustainable and Responsible Investment, a resource for investment advisors, financial planners and other financial professionals who want to learn the basics of sustainable and responsible investment.

US SIF: The Forum for Sustainable and Responsible Investment is the US membership association for professionals, firms, institutions and organizations engaged in sustainable and responsible investing. US SIF and its members advance investment practices that consider environmental, social and corporate governance criteria to generate long-term competitive financial returns and positive societal impact. US SIF’s members include investment management and advisory firms, mutual fund companies, research firms, financial planners and advisors, broker-dealers, banks, credit unions, community development organizations, non-profit associations, and pension funds, foundations and other asset owners. Learn more at-  www.ussif.org

Contact:

Megan Smith, US SIF

(202) 747-7820  or- msmith@ussif.org

Ice Cream Social: The Struggle for the Soul of Ben & Jerry’s

By Brad Edmondson, book author

 

Ice Cream Social: The Struggle for the Soul of Ben & Jerry’sIce Cream Social is the first book to tell the hidden story of a beloved company. Ben & Jerry’s ice cream has millions of customers who are passionate about its unusual flavors with unusual names, like Cherry Garcia and Americone Dream. What many of its fans do not know, however, is that Ben & Jerry’s has struggled valiantly for 35 years to live up to a vision its employees call “linked prosperity.” This is the simple but radical idea that the owners of the company should share their success with all of their stakeholders – everybody – including employees, suppliers, distributors, customers, cows, and even the people who own stock in the company.

In the 1980s, co-founder Ben Cohen and a fellow board member, Jeff Furman, pushed Ben & Jerry’s to set a course that a generation of socially responsible entrepreneurs would follow. In 1991, Ben & Jerry’s was probably the first publicly traded American company to offer health and other benefits to same-sex partners of employees. It was also the first American company to produce a transparent audit of the impacts it had on society, positive and negative. It took unusually aggressive steps to limit its environmental impact, and it set a level of charitable giving that was four times higher than the average for US corporations.

Ben & Jerry’s took radical, crazy-sounding ideas and proved they could work. They showed that optimizing a business for linked prosperity is fun when you’re doing it right, and that this approach creates amazingly loyal suppliers, employees, and customers. Their efforts made it easier for the socially conscious entrepreneurs who followed them. But breaking these trails wasn’t easy.

The company has a three-part mission statement, and the three parts are equal and interrelated. It wants to make the world’s best ice cream, to pursue progressive social change, and to provide fair compensation to employees and shareholders alike. Ben & Jerry’s stuck to these principles as it became an international brand. But the company eventually grew beyond the managerial abilities of its board, and after years of struggling, they were forced to sell to Unilever, the world’s second-largest food company. Co-founder Ben Cohen walked away from the deal with $41 million, and Jerry Greenfield got $9.5 million. Yet both of them have also said that losing control of their company was one of the worst experiences of their lives, and they still don’t want to talk about it.

The three-part mission did survive the sale, however. The founders and the board accepted Unilever’s offer only after negotiating a detailed agreement that guaranteed them a continuing role in the company and gave them legally enforceable powers.

Under the agreement, Ben & Jerry’s continues to exist as a corporation chartered in Vermont. But it is a “close corporation.” Howard Fuguet, the company’s lawyer during the negotiations, defines this legal term as “basically a corporation that has only one stockholder. And in the case of Ben & Jerry’s, the stockholder grants certain powers to the board. One of the board’s powers is to appoint new members without the shareholder’s approval. This means that the shareholder can never fire the board.” These non-Unilever directors control nine of the board’s eleven seats.

The guiding principles of the contract are set out in a four-page Shareholders Agreement and parts of a sixty-five-page Agreement and Plan of Merger, along with several attachments. They are public documents, on file and available through the federal Securities and Exchange Commission, and fourteen years after the sale, they are still in use. The agreements exist in perpetuity, which means they won’t ever expire. And this is the crucial difference between Ben & Jerry’s and other socially responsible businesses that sold themselves to multinational corporations. The folks in Vermont aren’t going anywhere.

The sale agreements give the Ben & Jerry’s board of directors primary responsibility for “preserving and enhancing the objectives of the historical social mission of the company as they may evolve,” and for “safeguarding the integrity of the essential elements of the brand.” Unilever has primary responsibility for the financial and operational aspects of the business, and it also retains all powers not expressly given to the board.

“The idea was to follow the historical pattern of the three-part mission,” says Howard Fuguet. The agreements captured the tension that had always existed between the product quality, economic, and social parts of Ben & Jerry’s and set up a system of checks and balances so the three parts could keep moving forward together. “The important thing, historically, was that no part of the mission should be more important than any other part,” he said. “They are supposed to be equal.”

The sale agreements also describe the job of the CEO in detail. They require the board of Ben & Jerry’s to agree with Unilever on an annual business plan and delegation of authority to the CEO, with Unilever having the final decision on both counts. They also allow Unilever to hire and fire the CEO after “good faith consultation” with the board. But the board has the express power to prevent the CEO from changing product standards, introducing new products, or changing marketing materials or any use of the Ben & Jerry’s trademark. Some of the CEO’s compensation is pegged to the company’s social performance, and this part of the compensation package is decided by the board of Ben & Jerry’s.

The agreements require Unilever to pay a “living wage” to all Ben & Jerry’s employees, based on local calculations of the cost of what the board calls “a decent life.” The agreements also require Unilever to contribute $1.1 million a year to the Ben & Jerry’s Foundation, plus adjustments to ensure that its contribution will increase in step with inflation and increased sales. They require Unilever to fund an independently audited annual report of Ben & Jerry’s social performance, and they call upon Unilever to develop its own system of social assessments.

These points were negotiated in marathon sessions between Ben Cohen and Richard Goldstein, the chief of Unilever’s North American operations. “It was by far the most unique deal I have ever been involved in,” said Goldstein, who negotiated dozens of acquisitions for Unilever. “When we were getting toward the end of it, Ben used to call me at home at all hours. My wife would answer the phone and he’d say ‘Yo, it’s Ben.’ She’d say, ‘Ben, he’s traveling. I’m going back to sleep.’ And after we signed the deal, Jerry and his wife asked my wife and me to come to their house for dinner. I can’t remember ever doing something like that. I was flattered.”

Ben Cohen’s public image is that of a happy-go-lucky hippie, but he is actually a shrewd businessman who is capable of driving a hard bargain. He negotiated the sale agreements under incredible pressure, as a bidding war for the company heated up, lawsuits were filed, and friendships were frayed. “He was disciplined,” said Pierre Ferrari, another board member who went through the sale. “He pushed the process. The sale agreements have precise numbers in them. That was Ben.”

Cohen is also a perfectionist. After the sale, he left the board of directors and never returned, citing irreconcilable differences with Unilever. Today he and Jerry are paid to represent the brand, but he keeps his distance from the company and has, at times, been sharply critical of Ben & Jerry’s multinational parent. But his old partner in the social mission, Jeff Furman, stayed on. Jeff is currently Chair of the Board of Ben & Jerry’s.

The story of the company’s endless pursuit of linked prosperity offers answers to the questions Ben and Jeff first posted in the 1980s: What would the world look like if businesses got serious about pursuing social and environmental justice? What if a business was directed toward several equally important goals, with profit being only one of them? And what would happen if social justice activists controlled the boards of directors of a large, global enterprise? Could that work?

There’s a second, related question. It’s the question of legacy. Thousands of business owners do value their employees, the natural environment, and the community at least as highly as their own bank accounts. But investing in these areas rarely produces an immediate financial return, and many investors see social investments as unnecessary costs. So how can socially responsible businesses retain their progressive values after the founding generations retire? Or, to put it another way, how can someone give up control of a successful enterprise without throwing away its purpose?

Jeff Furman doesn’t know the answers to these questions, and, like Ben, he would also prefer that Unilever did not own Ben & Jerry’s. He stayed to protect the vision of linked prosperity and pass it on to the next generation.  And, he says, he knows that the struggle to reconcile profit making with social justice will never end. At Ben & Jerry’s, however, the struggle has a permanent seat in the boardroom.

Article by Brad Edmondson is an award-winning journalist and the former editor of American Demographics magazine.  He is regularly posting new material about Ben & Jerry’s at the site–  www.icecreamsocialbook.com

 

Money & Life: A Renaissance Moment

By Katie Teague, film writer and director

 

Money & Life is a lucid exploration about how one of humanities most brilliant inventions has turned into its darkest shadow, how money and debt haunt our highest aspirations, and undermine our greatest needs. Katie Teague’s documentary is populated by some of the most thoughtful monetary pioneers who explain money’s curse and promise, and point to new economic models that create social justice, economic security, and environmental health.”

– Paul Hawken, Author, The Ecology of Commerce

I’ve just returned from a screening of the documentary film Money & Life at my alma mater, the University of the South in Sewanee, Tennessee.  During the Q&A following the film, a middle-aged woman took the microphone in tears and shared that she realized while watching the film how “pessimistic” she had become.  She expressed her grief openly and then turning on a dime she lit up like a street lamp in the dim theatre as she went on and shared how inspired she felt in knowing that a groundswell movement to create a better world was really afoot.

As writer/director of the film, I responded assuring her that there was a lot to feel daunted about with the converging crises in the world but that there was equally so much to feel excited and encouraged by, though the latter does not make the daily headlines and therefore goes largely unnoticed in the mainstream.  It was my vantage point of doing research for the film that allowed me to see what I referred to that afternoon as “spores of human regeneration,” collectively giving rise to new ways and means of trans-acting in the world.

Her vulnerability was refreshing and moved the conversation forward and more deeply, not an uncommon occurrence in the conversations that follow the film.  It’s a film that lends itself to engaged dialogue, not in hashing out what’s wrong with the current economic system but in reclaiming our sovereignty and inalienable right, as people and as communities, to participate creatively and innovatively in our collective evolution, to take an active part in living the New Economy.

Here is a synopsis of the film:

Money & Life is a passionate and inspirational essay-style documentary that asks a provocative question: can we see the economic crisis not as a disaster, but as a tremendous opportunity? This cinematic odyssey takes us on a journey, from the early days of money to connecting the systemic dots on the current global financial crisis and how we got here. Most importantly, Money & Life says that we owe it to ourselves to understand the fundamentals of this technology called money in order to be effective participants in the economic transformation that is happening around us, a shift more rapid and as profound as the Industrial Revolution.

The film is a tapestry of beautifully shot expert interviews woven with compelling vignettes of individuals and businesses consciously transforming their relationship with money.  Together with dynamic animation, an original music score and an elegant voice of narration, the film tells a new story of money, but more broadly it tells a new story of humanity.  Money & Life aspires to be a part of bringing a new consciousness to our understanding and practices in the world of money, bringing a touch of humor and a lot of heart to a matter that concerns us all.

An optimistic film steeped in appreciation for human ingenuity, Money & Life does not dictate answers. It is a respectful invitation to consider questions critical to all our well-being: How can we move beyond being merely consumers, debtors and creditors, and put money in service to what we really care about as citizens, as human beings? Can we design a monetary circulation system that fosters democratic equality? What responsibilities should a corporate charter convey? What does it really mean to make a living? The film itself demonstrates how to approach these questions with both clarity and compassion.  Money & Life empowers each of us to respond to the fundamental issues of our time and participate in the emerging new economy.

The question I most often get asked is what inspired me to make the film to begin with (seeing as my background was counseling psychology and not film or money/finance)?  In short, the film was my personal response to the heartbreak I experienced sitting with people as a counselor and feeling into the epidemic of self-hatred that has so many people suffocating their dreams and passions and values to meet the too often cruel expectations of the profit-over-people industrial complex.  Sitting in that role, I became acutely aware of our collective disconnect from who we are as human beings and our own innate brilliance, of our profound disconnect from one another and our communities, and most obviously from the earth and the natural world.

And so taking a healthy dose of my own medicine (following my intuition over the voice of doubt and criticism and “conventional wisdom”) I set out to make a social-issue documentary.  When considering what subject I would take on, I deliberated what area of the modern world was the greatest leverage point for social change, which also felt like the area where we were most unhealthy or in need of healing (to use more psychological language).

This contemplation took place in October of 2008 and so it didn’t take me very long of watching the news streaming the collapse of the housing market and the financial crisis at large to decide on MONEY as the central character in my first foray into the world of documentary filmmaking.

Thus the journey began and the trail led me to interviewing some of the forefront thinkers and leaders in the “New Economy” conversation: David Korten, author of Agenda for a New Economy; Hazel Henderson, president of Ethical Markets; Bernard Lietaer, guru of complementary currencies; John Fullerton, president of Capital Institute; Lynne Twist, author of Soul of Money, Vicki Robin, co-author of Your Money or Your Life, William Grieder, author of Secrets of the Temple; Rebecca Adamson, president of First Peoples Worldwide; Ellen Brown, author of The Web of Debt and many more.

My central inquiry and presupposition going into the film was exploring how the economic crisis might be genuinely presenting us with an opportunity to rethink our system and culture of money.  Does the breakdown truly portend breakthrough?

Of course, this inquiry necessarily led me down the path of my own research and synthesizing so to be able to weave the story together.  My intuitive understanding that we were “sick” in our relationship with money catalyzed the inception of the film and I was stunned to more clearly decipher the systemic inconsistencies and insanities of our current economic system that demands endless growth and encourages insatiable consumption and accumulation.  And this discourse takes up the better part of the first hour of the film as I found that most people have still not connected the dots.  I’ve even had seasoned finance professionals thank me for the film for how it helped them understand the overall situation more clearly.  And I’ve had investment managers and advisors buy up bundles of the DVD to share with colleagues and clients.

In ways, the trajectory of my own four and a half year journey making the film mirrored the woman who spoke during the Sewanee screening, from a dark pessimism to profound inspiration.  The shift for me came when the “spores of human regeneration” became visible to me.  And these spores vary from the noble courageous efforts of reformers and social investors working from within the system to right the mighty ship to the growing endeavors to create viable resilient systems outside the juggernaut, such as Transition Towns, the Sharing Economy development and the complementary currency movement (to name only a few examples).  In my vision, the myriad seemingly disparate currents emerging and flourishing are all clearly connected in what feels like the Renaissance moment of our age.

One of my favorite lines is at the end of the film when evolution biologist Elisabet Sahtouris recites a line from a Rumi poem: “Why do you stay in prison, when the door is so wide open?” First we must be able to see the prison, and a film like Money & Life is one of many useful tools in creating such awareness. Then together we innovate, invest and imagine more loving, sustainable ways and means of expressing our values in our relationship with money. Together, we live more from our hearts than our checkbooks and reclaim life from the rule of money. Together, we step out of the prison.

For additional information and to order the DVD go to- http://moneyandlifemovie.com

More Reviews:

“Viewing Money & Life was a life-altering experience…a wake-up call. This film deserves to be widely seen.”

– Grady McGonagill, McConagill Consulting

“In Money & Life, the groundbreaking documentary, money takes center stage as a fascinating, fully-fleshed out yet still-evolving character. We learn of money’s birth as a brilliant piece of social technology, contemplate its evolution through the centuries, discuss society’s near-worship of it today, and examine its current incarnation in an unsustainable debt-based economy. It’s a complex story, but the beautiful graphics, personal stories, and interviews from financial thought leaders provide many windows from which to view money.“

–Partners for Prosperity

Article by Katie Teague, documentary film director, producer and editor of Money & Life  . Katie is an independent documentary filmmaker working in the growing field of transformational media. In 2009 she founded StormCloud Media, LLC, for the purposes of bringing forward Money & Life. StormCloud Media is committed to telling the emerging story of humanity and bringing inspired educational media to the social change process. Katie’s post-graduate background is in depth and developmental psychology. Prior to filmmaking she had a counseling practice in Seattle, Washington.  Katie brings years of study in depth psychology, human development and the world’s wisdom traditions to her work as a social and spiritual change agent.  Katie is also one of the 2012 Sundance Grantee filmmakers contributing on 99% The Occupy Wall Street Collaborative Film.

 

Top Sustainable Business Trends of 2014

From Joel Makower and the editors of GreenBiz.com

 

It’s easy to look at 2013 as a series of disappointments and frustrations, at least through the lens of sustainable business. Companies continued to tinker with incremental changes in their products and operations to reduce their carbon emissions, energy use, waste, chemicals of concern and other aspects of their environmental “footprint.” All told, they were necessary but wholly insufficient to address their fair share of environmental impacts. Meanwhile, scientists reported that the climate continues to cross new thresholds of carbon concentration and temperature rise, while the global growth of middle-class consumers continues unabated. Political leaders around the world continued to dither on decisive action on climate and other pressing environmental and social challenges. And citizens around the world demonstrated relatively little concern over the fate of their planet’s environment — at least not enough to make significant changes — focusing instead on the daily realities of getting by in still-shaky economic climes.

That would be the easy assessment. But it’s hardly the full story.

Our assessment is somewhat more optimistic, powered by significant shifts in attitudes and outlooks among companies and their investors and customers, the growth of technology poised to leapfrog progress and accelerate change and a growing recognition among the public that “sustainability” isn’t just about preserving icebergs, rainforests and charismatic megafauna. It is also about public health, community well-being, food security, affordable housing and alleviating poverty.

In a world where technology enables pervasive and persistent connectivity of just about everyone and everything, there are signs that people — from business and political leaders to everyday citizens and consumers — are themselves making connections between the well-being of species and ecosystems and that of their companies, communities and families. And that is being reflected by an upsurge of concern and action by the private sector.

THE FUTURE, FASTER

Some of our optimism is reflected in the Law of Accelerating Returns, promulgated by Ray Kurzweil, an American author, inventor, futurist and a director of engineering at Google. It describes the notion that people tend to overestimate what can be achieved in the short term (because we conveniently tend to leave out necessary details and simplify complexity), but underestimate what can be achieved in the long term (because the effects of exponential growth of technology and ideas are misunderstood or overlooked).

Kurzweil’s law can be seen in a number of sustainability-related inflection points, some of which took longer than expected but are now on steep, upwards trajectories. Consider renewable energy, long considered a niche technology: It is on a growth path many experts didn’t see coming. Seventy percent of new power generation capacity added globally between 2012 and 2030 will be from renewable technologies (including large hydro), according to Bloomberg New Energy Finance. Only 25 percent will be from coal, gas or oil, with the remainder from nuclear. Solar installations are growing at 30 percent annually in the United States, and are on track to reach a million installations by 2016, generating the equivalent of more than 14 coal-fired power plants, according to GTM Research. Clearly, renewables are no longer niche.

Electric vehicles may be on a similar path, though they are several years behind solar. Just five years ago, no one foresaw EVs having any significant market uptake. Technological advances — not to mention the cool, high-performance image created by Tesla Motors — has led every major car company to promise one or more EV models in the next year or two, many during 2014. They still represent a tiny fraction of sales in the sector — but so did solar not that long ago. We expect EVs, too, will reach an inflection point in the near term.

Will other technologies and trends — advanced biobased materials, green chemicals, plant-based protein alternatives, battery storage for renewables, ultra-efficient appliances, and many others — abide by Kurzweil’s law? Some, perhaps many, will. And each that does will advance the global economy further towards a low-carbon and sustainable future.

COLLABORATING FOR A CHANGE

It’s not just technology. Corporate supply chains are transforming as companies look farther upstream, beyond what they control to what they can influence. Collaboration is spreading as industries and value chains come together to understand how to shift entire ecosystems of players. That’s especially true in agricultural commodities — soy, palm oil, cotton and more — whose supply-chain tentacles can extend to hundreds of thousands of enterprises around the world. These collaborations aren’t just talk-fests. They’re leading to systemic changes.

Some of these ambitious efforts are due to the rise of sustainability within companies, once seen as a nice-to-do, corporate responsibility initiative, but increasingly as a core corporate value. In sectors as varied as finance and fast food, companies are recognizing that elevating sustainability leads to innovations, efficiencies and improved resilience amid turbulent markets — not to mention enhanced reputations. It is seen as a business continuity issue in some sectors, as competition for natural resources sometimes pit households, farmers and small businesses with the world’s biggest corporations for access to resources. Where communities compete with big business for access to water or power, communities often win.

In some sectors, the threats to companies extend beyond environmental concerns to social ones — human rights, livable wages, working conditions, economic inequality and other issues. As a result, social and environmental issues, once seen as separate, are coming together inside some companies. They recognize that improving people’s lives — whether through promoting early childhood education, empowering women, investing in local economies or mentoring marginalized youth — is part of the sustainability equation. Equally important, it can have salutary business benefits, such as educating the future workforce, bolstering the economic well-being of customers and employees and creating healthy communities — in every sense of the word — in which to operate. That is to say: It’s just good business.

SCALE, SPEED AND SCOPE

Such positivity notwithstanding, progress remains incremental and slow. The scale, speed and scope of change appears to be inadequate to the challenges we face. Case in point: A 2013 study of 100 companies’ climate commitments by Climate Counts and the Center for Sustainable Organizations found that only about half of those companies’ goals were sufficient to address the companies’ fair share of carbon emissions reductions needed to limit climate change to what scientific consensus deems to be tolerable. Indeed, that study was novel merely for the fact that it weighed corporate climate actions against the realities of science. That had never been done.

Water is another area where corporate activity is timid and inadequate. As droughts accelerate and population and economic growth lead to overpumping of groundwater supplies around the world, the need for corporate action on water use (and reuse) is growing from a trickle to a flood. One big problem: The price of water (cheap) doesn’t reflect its value (priceless), especially when a shortage can all but put a company out of business.

As always, it’s a mixed bag of progress, with inspiring stories of leadership weighed against sobering environmental realities.

In the seventh annual State of Green Business report, we assess the current state of sustainable business activity, taking stock of the trends and indicators that tell how, and how well, the world of business is addressing these concerns. Where are we headed? Here, in no particular order, are 10 key trends for 2014:

•  Collaboration Becomes an Accelerator

•  Chemical Transparency Creates a Window of Opportunity

•  Water Rises as a Risk Factor

•  Shadow Pricing Steps into the Limelight

•  The People Side of Sustainability Gets Legs

•  Food Sustainability Gets a Seat at the Table

•  Employee Engagement Becomes Strategic

•  Energy Storage becomes a Game-Changer

•  Cities Become Hotbeds of Promise

•  Buildings and Companies Go Positive

Source: State of Green Business 2014 Report

Natural Capital Leaders Index: Identifying Corporate Sustainability Leaders

by Joel Makower and the editorial team at GreenBiz.com and Dr. Richard Mattison and the team at Trucost

 

Recently, GreenBiz Group and Trucost launched the Natural Capital Leaders Index (NCLI), a breakthrough methodology for identifying corporate sustainability leaders that are making genuine progress in reducing their environmental impacts.

Simply put, NCLI is the first-ever assessment to identify companies that have done the most to address absolute natural capital impacts, such as pollution and unsustainable demand for natural resources. NCLI achieves this by decoupling those metrics from revenue growth, which can distort corporate results by presenting efficiency gains without acknowledging that overall natural capital impacts for the enterprise are continuing to grow.

NCLI recognizes companies that have, in effect, begun to address their absolute impact, separate from their business growth. This year’s inaugural list identifies 34 companies globally that have met our criteria.

One of the interesting things about the Index is that it is not your usual cast of widely recognized “sustainable” companies. In fact, we present two lists side by side — one of efficiency leaders (companies that are using natural capital most efficiently to generate revenue), the other of decoupling leaders (companies that have successfully decoupled revenue growth from natural capital dependency and impact). There is no overlap between the two.

This new Index was released as part of GreenBiz Group’s 7th annual State of Green Business Report, an annual, award-winning assessment of corporate sustainability progress, or lack thereof in the case of this year’s findings.

From the 2014 SOGB Report – The Natural Capital Leaders Index

This year, GreenBiz is introducing a new metric of company performance: The Natural Capital Leaders Index, developed by Trucost. It assesses companies in an innovative way — one that we believe shines a light on those that are making the most progress in addressing planetary limits on natural capital.

Companies have long been measured on their environmental performance against a wide range of standards and metrics. Some of these measurements are created by companies themselves, others by outsiders: advocacy groups, government agencies, media companies and others. Most focus on identifying the leaders — the “greenest” or “most sustainable” companies.

There are challenges with many of these ratings, rankings and indices. One challenge has to do with the difference between “absolute” and “relative” performance, also referred to as “intensity.”

Most assessments of companies look at intensity — the company’s resource use or emissions normalized to revenue.

So, for example, if Company A uses 50,000 gallons of water to generate $1 million in revenue, and Company B uses only 35,000 gallons to do the same, Company B is seen as the more efficient company.

So far, so good. Companies should be lauded for efficiency. But “efficiency” doesn’t always equal “progress,” at least from the planet’s perspective. As an efficient company inevitably grows, its resource use and emissions typically grow, too. And the burden on natural capital — the use of the earth’s resources and the dumping of waste into the air, water and soil — continues to grow.

The planet doesn’t care about relative performance or intensity. It cares about absolute performance — the total amount of resources extracted or emissions created.

So, if companies achieve high levels of efficiency and their revenue grows at the same historical rates as over the past 30 years, they will not effectively address the challenges of climate change, resource depletion, air and water pollution, land use and other issues.

Please understand: There is absolutely nothing wrong with economic growth. The economy and jobs rely on companies to grow year over year. Growth is expected and inevitable. The challenge is how to accommodate economic growth within the planet’s finite limits, so as to ensure future economic, environmental and social sustainability.

Trucost’s Natural Capital Leaders Index aims to show not just which companies are the most efficient, but which ones have separated growth from impact — that is, which companies have reduced their absolute impacts at the same time that they have increased their revenue.

We believe that measuring whether and how a company is “decoupling” revenue growth from environmental impact will become an increasingly important tool for assessing a company’s sustainability goals and achievements.

In October 2013, GreenBiz.com published the draft methodology for the Natural Capital Leaders Index. Following consultation with the thousands of companies within Trucost’s research universe as well as with the GreenBiz community, Trucost compiled the Natural Capital Leaders Index. It features two categories of leaders:

•  Efficiency Leaders use natural capital most efficiently to generate revenue over the past year.

•  Decoupling Leaders have increased revenue while decreasing natural capital impacts over the most recent five-year period.

Both lists were culled from the same universe of more than 4,600 publicly traded companies used to compile the other metrics in the State of Green Business report. (Learn more about Trucost’s methodology in the Appendix at the end of the GreenBiz State of Green Business Report.

Trucost intended to include up to six companies from each of 19 sectors (three each from the S&P 500 and MSCI World Index), for a total of up to 114 Decoupling Leaders. However, out off the roughly 4,600 companies screened, only 34 met the standard of rising revenue and declining impact over a five-year period. Those companies are listed alphabetically by sector.

To provide additional context, Trucost has published a series of sector-based Natural Capital Benchmarks. Working with the Center for Sustainable Organizations, Trucost provided environmental context alongside financial context through Context-Based Sustainability analysis. Initially, that analysis is limited to carbon, but as consensus is reached on planetary limits for other environmental impacts such as water and land use, Trucost will incorporate them into future editions of the index.

The Natural Capital Leaders Index represents the beginning of a journey to create a new era of sustainability metrics that effectively align business strategies with sustainable development imperatives.

More information on the NCLI methodology can be found in the report, or at

www.trucost.com/naturalcapitalleadersindex

“We believe that measuring whether and how a company is “decoupling” revenue growth from environmental impact will become an increasingly important tool for assessing a company’s sustainability goals and achievements.”

Information from the State of Green Business Report 2014 by Joel Makower and the editorial team at GreenBiz.com and Dr. Richard Mattison and the team at Trucost.

State of Green Business 2014 Report

from Joel Makower and the editors of GreenBiz.com

 

State of Green Business 2014 ReportThe State of Green Business Report, seventh annual assessment of corporate sustainability trends and metrics, was released earlier this year. It paints a picture that is both optimistic and highly problematic — a perfect metaphor for the sector.

First, the good news. The state of the art of corporate sustainability continues to evolve. What’s business as usual today was not that long ago innovative, even breakthrough: bio-based products, accounting systems that place a realistic value on water and carbon, smart supply chains that optimize transportation and energy, renewable energy that isn’t just for show, and more.

In the free report, we identify 10 key trends that point the way toward future advancements and progress in the year ahead.

Now, the bad news. For all of the advancements and achievements — some of which are chronicled in the more than 1,200 articles that we run each year on GreenBiz.com — we’re not making much progress. When you actually measure year-on-year progress companies are making, it’s a disappointing state of affairs.

That’s what we do each year in the report, along with our partners at Trucost plc (www.trucost.com ), which helps companies, investors, governments and others “understand the economic consequences of natural capital dependency.” Trucost researches and standardizes the environmental performance disclosures of more than 4,600 companies worldwide, representing 93 percent of global markets by market capitalization.

To create the metrics for State of Green Business, Trucost looked at two subsets: the 500 U.S. companies that make up the Standard & Poor’s Index, and the MSCI World Index, covering more than 1,600 companies in 24 developed markets. For most metrics we present, we compare the 500 U.S. companies alongside the larger, 1,600-plus global universe over a five-year period.

In most cases, the progress is incremental. In some cases, it’s flat, or even declining.

Take carbon, for example. Total greenhouse gas (GHG) emissions among both U.S. and global market indices remain flat. For the five-year period between 2008 and 2012, U.S. emissions were essentially unchanged while global emissions ticked up slightly. All told, it’s a wash.

The data is vexing whether one views it in terms of absolute emissions or intensity, which are emissions normalized to economic activity. Intensity, too, is largely unchanged — from 450 tons per $1 million of revenue for both U.S. and global companies in 2008, to 440 tons for U.S. companies and 460 tons for global companies in 2012. Again, it’s largely a wash, meaning that for all of the efforts companies are making, it’s not leading to progress.

And the prognosis isn’t much better. According to the U.S. Energy Information Administration, energy-related carbon dioxide emissions in 2013 are expected to be roughly 2 percent above the 2012 level. Despite the best efforts of hundreds of U.S. companies — some of which are committing to be “carbon neutral” — greenhouse gas emissions are going in the wrong direction.

It’s not just carbon. The progress on water use, air emissions and solid waste is minimal, or worse.

And lest you think that companies are talking more than they’re walking, there’s not much growth when it comes to corporate transparency and disclosure. The number of companies issuing sustainability reports continues to grow, as it has over the past half-decade, but the amount of data being reported is leveling off. We may soon reach the point where companies have picked the low-hanging fruit on disclosure and transparency. That is, companies are saying most of what they plan to say about their environmental performance and impacts. Have we hit “peak transparency”?

But there remain reasons for optimism, powered by significant shifts in attitudes and outlooks among companies and their investors and customers, the growth of technology poised to leapfrog progress and accelerate change and a growing recognition among the public that “sustainability” isn’t just about preserving icebergs, rainforests and charismatic megafauna. It is also about public health, community well-being, food security, affordable housing and alleviating poverty.

In a world where technology enables pervasive and persistent connectivity of just about everyone and everything, there are signs that people — from business and political leaders (http://bit.ly/LpneMm ) to everyday citizens and consumers — are themselves making connections between the well-being of species and ecosystems and that of their companies, communities and families. And that is being reflected by an upsurge of concern and activity by the private sector.

Are we sinking, swimming or just treading water? I’ll leave the conclusions up to you. I encourage you to download and read the report. The field of corporate sustainability remains vibrant and alive. Now, all that’s needed is progress.

Article by Joel Makower is chairman and executive editor of GreenBiz Group Inc., producer of GreenBiz.com

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