Two Steps Forward

The State of Green Business, 2013

The 2013 State of Green Business report, our sixth annual, has just been published. It tells a story of the shifting business reality — a world slowly coming to grips with a changing climate, economic volatility and great risks to business as usual.

Simply put, it recognizes that business as usual isn’t sustainable during unusual times.

Ours is a world in which a flood in Thailand can cut off global supplies of computer disk drives for the better part of a year; where a record-low Mississippi River can choke the flow of commerce; where an unprecedented hurricane (or “superstorm”) can upend one of the world’s financial centers for weeks. In that context, how should a company view climate change, renewable energy and resource efficiency? How should its shareholders view risk and resilience as it relates to the surety of their investments? And how should communities assess the responsibility of companies within their regions, in terms of the fair appropriation of local resources when they become scarce?

With increasing volatility, where everything from natural resources to supply chains to political realities to the global economy can be turned topsy-turvy in relatively short order, “sustainability” takes on new, poignant meaning. It has to do with aligning economic, environmental and social interests, of course. But increasingly, it is taking on even more strategic importance, linked to reducing supply-chain risk and ensuring business continuity during disruptions, the right to operate in resource-stressed areas, reliable and cost-efficient energy supplies, and brand value and reputation.

In other words, the things upon which companies sink or swim.

In this year’s report (free  download here), we’ve made some significant changes — not just in the look and feel of the document, but in its content.

First and foremost, we’ve partnered with Trucost, a leading research firm focusing on natural capital and sustainability metrics, to revamp the indicators by which we assess progress by the private sector in addressing global environmental challenges. In the spirit of continuous improvement, we scrapped the set of metrics we’d used for the previous five reports in favor of a more comprehensive and robust set that is global in scope. They cover companies’ natural capital costs, their supply-chain impacts, various measurements of transparency and disclosure, and other things.

These are the new metrics of sustainable business. They go well beyond the nice-to-do issues of “corporate responsibility” and “eco-efficiency.” They view incrementalism as insufficient, ignorance as unacceptable, and unpredictability as the new norm.

Technology is playing a growing and critical role in sustainable business, with the growth and expansion of the interconnected, networked world. What has been dubbed the “Internet of things” is enabling companies, cities and others to monitor, track, analyze and control just about anything from just about anywhere, and do so increasingly cheaply and efficiently. Sensor networks and associated software and controls mean even highly rated “platinum” green buildings still can enjoy dramatic improvements in energy efficiency. Vehicles of all kinds, from bikes to buses, can operate more efficiently by maximizing their overall use and minimizing downtime, optimizing their innards to decrease fuel use, plotting routes to minimize time and energy, and employing other technological tricks. And communities, campuses and cities can improve and strengthen their infrastructure by providing real-time data about their use, analyzing and troubleshooting operations 24/7.

But it’s not just tech. Last year saw a resurgence of interest in the idea of accounting for natural capital — the indispensable stocks of natural resources provided by the planet that are essential for human survival and economic activity. The notion of integrating sustainability reporting with financial reporting — and, in the process, making the two inextricably linked — also got some lift. In both cases, progress is slow and the changes relatively small, but the conversation is changing: These things are now being discussed by some of the world’s largest companies, and not just in passing. In the coming years, they will become part of sustainability’s next wave — a new level of company engagement with the world in which they operate.

As engagement grows, some companies are finding they are able to achieve, even exceed, their sustainability goals. Suddenly, small improvements in energy efficiency seem quaint, compared with the leapfrog advances enabled by advanced technology and systems-level thinking. Some companies are even finding that they’ve set the bar too low.

The question, of course, is what positive changes are actually taking place, and at what speed, scale and scope. Is the growing engagement of companies sufficient to alter the trajectory of negative environmental and social trend lines — issues like climate change, air quality, the health of aquifers, species extinction, the abundance of topsoil and fisheries, human health and well-being, and all of the other things that make up, for lack of a better term, “the sustainability agenda”?

That’s an open question. In our 2013 State of Green Business report, we take stock of the trends and indicators that tell how, and how well, the world of business is addressing these concerns.

I hope you find the report useful in your work. I look forward to hearing your comments.

The State of Green Business report will be brought to life at our two annual GreenBiz Forums: Feb. 20 to 21 in New York, and Feb. 27 to 28 in San Francisco. Check the programs of both for more information.