How green energy crowdfunding is 'coming of age'

Will Nichols

Triodos Renewables' $7.95 million crowdfunded share issue is a sign that peer-to-peer lending for green energy products is "coming of age," claims the company behind the initiative.

The renewables investment arm of Triodos Bank recently launched the offer to fund an expansion of its 11-project, 53MW portfolio, with investors able to pledge as little as $80 — the lowest minimum investment for a Triodos Renewables share issue.

The company, which has 5,000 shareholders, said it wants to ensure investing in renewable energy is "an option for everyone" and has teamed up with crowd financing platform Trillion Fund to promote and distribute the offer, timed to coincide with Good Money Week.

Investors like reliable returns

The U.K. crowdfunding market hit $3.18 billion at the beginning of this month. It has been identified as an increasingly important method of financing green energy projects, with companies such as Good Energy, Abundance Generation and E2 Energy successfully funding installations.

Julie Groves, chief executive of Trillion Fund and director of the UK Crowdfunding Association, said the predictable returns offered by the subsidies renewable energy projects receive make them highly attractive to the estimated 5.5 million people with savings and investments but no adviser.

"I think it's really interesting that a company as big as Triodos, with a bank behind them, is embracing crowdfunding," she told BusinessGreen. "When you look at the main mass market, what is really appealing are fairly steady returns of 5 to 7 percent which are significantly higher than what we're getting in the banks.

"What we're finding is that a lot of people who are very committed to the environment, but maybe don't feel particularly confident as investors, will come in where there's a low investment amount. You can go through the whole experience and get some things right and some things wrong with ($80) before you make a decision for the bulk of your money."

She added that many of these people represent so-called "patient capital" — leaving money in one place if the returns are sufficient, which also benefits the projects. "People want to put their money in, hear about how it's doing once in a while, but just leave it there," she said. "They don't want to have to switch and churn every two months to make a bit of money for an adviser."

Groves also believes crowdfunded renewables projects should get more support from government, given their potential to lower both energy bills and carbon emissions while feeding into ministers' push for local decision-making and community-based energy schemes.

Having a low minimum investment also ensures as many people as possible can benefit from green energy subsidies such as the feed-in tariffs, which are paid for via a levy on bills, she added.

"We define community as the whole country -— this is an issue for all of the energy bill payers," Groves said. "We can't define it too narrowly as only being small, local groups — we can't be reliant on there being an organized co-op in your town to drive the adoption of renewables and decentralization. We're trying to argue that anybody who pays an energy bill is paying feed-in tariffs and they all should have a chance to profit from them. That's why we think it should be really inclusive and open to anyone."

Green ISAs around the corner

However, while renewable energy project share issues are proving successful, Groves sees the advent of loan-based crowdfunding being included in ISAs from April next year as the change that truly will kick-start the sector by opening up the green energy market to around $731.8 billion of savings held in Indvidual Savings Accounts.

Green ISAs are likely to be among the first products to be launched as they are asset-backed and marry social and financial returns, an increasingly popular outcome for investors, and offer the potential to raise returns while lowering the cost of capital for developers.

"The fundamental change we see is ISAs in the first half of next year," Groves said. "We've still got a long way to go but we think it's the point where crowdfunding will go mainstream."

With green bonds also expected to hit $40 billion this year and reports showing sustainable investments are outperforming the industry average, it could be a bumper 18 months for greener capital.

Top image of leaves and electrical tower by Tor Kristian via Flickr. This story first appeared at BusinessGreen Plus.

What Google knows about greener offices

Heather Clancy

Interior waterfalls and aquariums. Workstations that offer views of gardens, orchards and bright sunshine. Living walls brimming with ferns, ivy and other greenery.

A growing number of organizations from Google to the federal government are incorporating homages to nature into their office blueprints, not just to earn more green building certification points but to reduce employee stress, improve cognitive function and encourage creativity.

"Biophilic design is happening more and more as an outcome of sustainable design and as an outcome of particular design aesthetics," said Suzanne Drake, associate and senior interior designer with architectural firm Perkins+Will. "The driver has been studies that help validate what a lot of designers feel intuitively."

For those who need a primer, "Biophilia is humankind's innate biological connection with nature," wrote design firm Terrapin Bright Green in its recent report, "14 Patterns of Biophilic Design." "It helps explain why crackling fires and crashing waves captivate us; why a garden view can enhance our creativity; why shadows and heights instill fascination and fear; and why animal companionship and strolling through a park have restorative, healing effects. Biophilia may also help explain why some urban parks and buildings are preferred over others."

[Learn more about biophilic design later this month at VERGE SF 2014, Oct. 27-30.]

Terrapin's founding partner, Bill Browning, has been abreast of the biophilic design movement since it emerged in the 1980s. Interest has accelerated in the past six to eight months, especially among the high-tech and healthcare sectors, he noted.

"This really focuses on the people rather than the design of the building. Some green buildings miss the human factor," he said. "A structure could be a great, green building but it might not be biophilic."

Pattern and response

Recent examples of groundbreaking biophilic design include the visitor center at the VanDusen Botanical Garden in Vancouver, which is shaped like an enormous orchid for a flood of natural sunlight; the award-winning Via Verde housing complex in the Bronx, N.Y.; and the General Service Administration's modernization of the Federal Central South near Seattle, originally constructed as a warehouse. Among other things, the project converted large areas of "hardscape" into green space.

Judith Heerwagen, an expert in environmental psychology who is an affiliate faculty member at the University of Washington, said early pioneers in biophilic design are beginning to demonstrate tangible financial benefits.

For example, she points to research that shows hospitals can shorten the amount of time patients spend convalescing by providing them a view of trees or other elements of nature from their beds.

"If you can show a competitive advantage, it will catch on very quickly," she said. "Where you put walls, daylight is one of the biggest factors of all."

[Catch Judith Heerwagen in person at VERGE SF 2014, Oct. 27-30.] 

Browning cites a more specific example involving the call center for a utility company. By spending about $1,000 per workstation to let employees glance outside, the organization was able to boost call-processing time and improve per-employee productivity by 6 percent, he said.

How can a company recoup that financial benefit? "You already see this captured in real estate values or hotel room prices," Browning noted. "The view of the parking lot is less expensive than the view of the ocean."

In its report on biophilic "patterns," Terrapin Bright Green highlights some of the more common design elements: visual and non-visual connections with nature; non-rhythmic sensory stimuli; variations in thermal and air flow; the presence of water; use of dynamic and diffused light; connection with natural systems.

Google's interest in biophilic design is probably best personified by its Healthy Materials Program, a corporate-wide program that screens building products for hazardous or health-questionable substances and seeks bio-based alternatives to items of concern. In addition, the company has issued guidelines for designing sunlight and fresh air into workplaces wherever possible, said Anthony Ravitz, Google's real estate and workplace services green team lead.

"Here at Google, we value feedback and want to make sure people are comfortable and happy, so every quarter we issue a workplace survey to understand how our workplaces, including the biophilic elements, impact the day-to-day lives of Googlers," Ravitz said in an emailed response to my questions about the company's interest in biophilia.

"We've found that Googlers with desks closer to windows are more likely to feel that their work environment lets them be more productive and sparks creativity," he wrote. "This feedback reinforces our belief that building design helps reduce stress levels, increase creativity and improve performance, and we'll continue finding ways to measure and support this."

vandusenvisitorcentre_niclehoux.jpeg

Susan Shaheen: How car sharing accelerates sustainability

Matthias Krause

Catch Susan Shaheen in person at VERGE SF 2014, Oct. 27-30.

If you've attempted to dive deep into the topic of car sharing, chances are you've come across Susan Shaheen, or at least some of her studies. About 18 years ago she fell in love with the concept, even though she'd probably never put it that way.

The idea of car sharing "resonated" with her, she said, as a Ph.D. student at the University of California at Davis looking for a dissertation topic. She saw a lecture by Michael Glotz-Richter, a German Marshall Fund Fellow from Bremen. She was fascinated by behavioral effects of people joining car sharing, and the resulting benefits for the environment, she recalled from her office at the University of California at Berkeley, home of the Institute of Transportation Studies, where she serves as a co-director of the Transportation Sustainability Research Center.

"He essentially showed that 44 percent or 45 percent of vehicle kilometers traveled were declining due to the use of car sharing, and people were selling their cars or not buying cars, somewhere around 7 to 15 I think the numbers were,"  Shaheen said. The reductions in energy use and CO2 emissions were notable, achieved by people changing their behavior.

"I had been working on this idea of the station car that goes to and from the transit station. Is there a way that those vehicles could be shared and we could bring the concept of car sharing to the U.S.? And I was really deeply interested, and studying this by actually demonstrating it, putting a real project on the ground and seeing if we could get people to behave differently, and that's where my work began."

By the numbers

Now Shaheen can prove that the numbers in North America are actually very similar to what Glotz-Richter witnessed in Germany. In a recent study with close to 7,000 participants, a stunning 50 percent either sold a car or didn't buy one because car sharing was available.

And while the general concept has been around for a while now, Shaheen still sees a lot of potential for growth. The classic model of sharing is a round-trip, station-based model. But recently, point-to-point car sharing services have been making inroads, a concept that allows participants to actually use the service to commute to work instead of relying on it more typically just on evenings or weekends.

Shaheen added, "We see college market applications of it in the university environment. We also see employer-based applications of it, and then there's peer-to-peer, so you put your own personal vehicle in. There's a lot of room for expanding this or scaling it into new market segments, both physical and socio-demographic — so older individuals, younger individuals, say in the college setting, but maybe also in retirement communities."

 Richard Masoner / Cyclelicious

She sees opportunities to move into a suburban setting with peer-to-peer sharing concepts as well. Which does require a significant behavioral change, though — people having to get into the mindset of sharing their personal asset: their car. And there are risks that need to be addressed, such as the questions of what the insurance is willing to cover. Shaheen feels that the context of the greater sharing economy, a hot topic among Silicon Valley investors, furthers the evolvement of making one's car available for others to use instead of having it sit for 90 percent of its lifetime as well.

"People sharing rooms in their houses through services like Airbnb use TaskRabbit, where people are offering up individualized services to other individuals in their communities," said Shaheen. "We are also seeing bike sharing, which has grown really rapidly. We're seeing scooter networks here in San Francisco, and there's a similar type of program in Barcelona. We're seeing ride sourcing or these types of services that allow people to be community drivers of their own private vehicle and take people from point to point, like Uber, Lyft, Sidecar."

New players are coming into the mobility space and providing options, bringing a new perspective to an old problem.

At the same time, players in the traditional auto environment are starting to toy with the idea that they have to think differently about transportation. Maybe the aim is no longer to have as many people as possible own cars, but to provide transportation services — including real-time traffic information and parking information — and allow people to use cars when they need to without having to own them. Often, Shaheen conceded, the environment turns out to be an afterthought, no more than a welcomed side effect.

All gain, no pain

Which brings Shaheen back to her high school years in upstate New York. As a young student, she started thinking about why protecting the environment is considered a sacrifice.

"Why can't it just be a competitive, compelling, interesting and exciting option, an innovative option that makes me feel really good?" she asked herself back then — and it seems that the challenge of yielding environmental benefits without having to sacrifice hasn't lost its relevance today.

Shaheen grew up in what she describes as a safe, suburban environment, taking the bus to school and the bike to get to the stores, the movie theater or the tennis court. She credits her family's strong agricultural background for her interest in environmental issues.

"We always had gardens and it was a very agrarian environment, so I don't think it was clear to me that I was going to be connected to the environment," she said. "I think it was just organic."

Top image of Susan Shaheen courtesy of UC Berkeley.

Interface's Net-Works program brings fish net recycling to Africa

Heather Dietz

Last month, the Net-Works team had the honor of being in the heart of New York City during Climate Week, participating in the Clinton Global Initiative.

For the past two years, the Net-Works team, made up of changemakers within Interface and the Zoological Society of London, has been dedicated to designing and proving an inclusive business model. This model enables impoverished fishing communities in the Philippines to collect damaging, discarded fishing nets from the ocean and shores. The nets are sold to our yarn supplier, which recycles the nets into nylon yarn that we use in our carpets.

Net-Works in the Philippines has been a success because of the time and dedication committed by our partnership. Making the decision to participate in the Clinton Global Initiative was difficult for us because the time and resources needed to properly make our “commitment to action” and attend the event were time and resources not going directly to the work on the ground.

Once we arrived, all those concerns immediately were replaced by palpable electricity in the air. At first, we felt it was just the rush of being part of such an epic week in the city, but we soon found out that the air literally was humming with the thousands who descended on New York for the historic People’s Climate March. Heather Koldewey, of the Zoological Society of London, and I quickly rushed down to the street, anxious to take part in such a momentous occasion. It was the perfect way to kickstart the week, marching alongside more than 350,000 people dedicated to making change. 

Inspired and energized, we set about the task at hand: declaring our commitment to action.

Our Interface delegate, chief innovation officer Nigel Stansfield, was gracefully received behind the velvet curtain, alongside political and environmental superstars, heads of state and visiting dignitaries. 

Meanwhile, in the lobby of the Times Square Sheraton, hundreds of “do-ers” — support staff, program managers, advocates and press — carved out impromptu offices from which to network and connect. Everywhere I looked, people actively were engaged in conversation, excited as they talked through ways to collaborate on some of our world’s most pressing challenges, including environmental protection, supporting the fragile infrastructure of developing countries and providing a sustainable future for precious social and ecological resources.

It was impossible to have a bad conversation. 

On day two, Nigel participated in an interactive session focused on proving the interdependence of conservation, profitability and economic growth, a meaty topic. He used the power of storytelling to share the history of Net-Works, showcase how the program delivers commercial, environmental and social benefit for all participants, and ultimately delivered our official commitment to action.

Net-Works will add three new net collection hubs in three years and positively affect 10,000 people by 2020.

So that’s it. We’re official.

We always have believed our unconventional partnership would make a dramatic difference in social and environmental sustainability by bringing some of the poorest people in the world into the global supply chain, and by turning waste into resource. But now we’ve declared to the world that we want to grow — and fast.

When Nigel came out of his session, he walked over to our “office” with the grin of a father who just watched his child ride off without training wheels for the first time. As Jesse Jackson sat to our left and Muhammad Yunus walked down the hall, I realized this was exactly where we were meant to be: together as a team, in a flurry of world-changing activity, throwing down a gauntlet.

To date, we have collected 85,000 pounds of discarded fishing nets with our two hubs in the Philippines. Those are nets that are no longer choking the marine ecosystem, but instead have provided supplemental income for people to help support their families. Now those nets will be given a second useful life — as nylon yarn we use in our carpet tile.

Next year, we will launch Net-Works in the Lake Ossa area of Cameroon, West Africa. Our team of marine biologists, manufacturing experts, materials scientists and innovation managers likely will encounter new challenges and face operational hurdles. I am confident that we will overcome them together as a team.

boysittinginnets_zoologicalsocietyoflondon.

Drucker Nonprofit Innovation Awards spotlight social ventures

Susan Nickbarg

Innovation starts with being curious. Calling all the curious!

In its 23rd year, the prestigious Drucker Nonprofit Innovation Awards had 687 applications and 10 finalists, naming one winner last week: HopeLab, a nonprofit that develops games to improve human health and well being.

The finalists have helped to make society more sustainable by addressing pressing human health, education, environmental, and social challenges, such as the availability of safe water.

So often we default to a view of sustainability centered on carbon abatement, energy efficiency, renewable energy or recycling. The work of these nonprofits spotlights additional or new approaches based on shared value, which can provide ideas for unique product, program, or partnership concepts.

The awards, launched by Peter Drucker in 1991, are run by the Drucker Institute of Claremont Graduate University. Drucker, a man filled with curiosity, was a pioneer in management and social theory as well as a writer, consultant, advisor to heads of GE, IBM, the Red Cross, and as a social ecologist. The lessons and legacy of the late Drucker linger on and, in a sense, are renewed and remade each year with the awards.

“In the years ahead, America’s nonprofits will become even more important,” Drucker said in 2005. “As government retrenches, Americans will look increasingly to the nonprofits to tackle the problems of a fast-changing society. These challenges will demand innovation—in services, and in nonprofit management.”

The nonprofit sector is the third largest industry in the United States, with one nonprofit per 175 people.

The winner: HopeLab

HopeLab, founded by scientist and philanthropist Pam Omidyar (wife of eBay founder Pierre), grabbed the $100,000 Drucker prize made possible by the Coca-Cola Foundation. Through its Resilience Initiative, HopeLab addresses the problem of the lack of adherence to medical treatment by young cancer patients. It uses digital games and social technology to help people effectively tackle physical and psychological challenges and increase their self-efficacy.

HopeLab also met a key criterion of the Drucker Award: rigorously documenting measurable impact. To date, the "Re-Mission" video game had the largest randomized controlled study of a videogame intervention ever conducted, with results published in the journal Pediatrics. HopeLab has distributed more than 210,000 copies of the game in 81 countries. It claims a culture of curiosity, complete with its own handout, “Questions of a Curious Leader.”

Finalist: water.org

The finalist with the most intertwined social and environment impact was water.org. The needs are great. The World Economic Forum, in a 2011 report, named water scarcity as one of the top risks facing companies. In fact, 780 million people lack access to an improved water source, about one in nine people. Every minute a child dies from a water-related illness.

In response, Water.org's WaterCredit program helps people with limited access to safe water, sanitation, and financing in the developing world to obtain these necessities. WaterCredit connects financial institutions that can make needed loans available to those in need. Loans mostly go to helping pay connection fees for house water taps and to construct toilets. According to water.org, the loan repayment rate is 99 percent.

Water.org is the result of a 2009 merger between WaterPartners, co-founded by Gary White, and H2O Africa, co-founded by  actor Matt Damon. It operates in part with funding from the PepsiCo and Skoll Foundations.

It’s the first program of its kind, serving as a model in the sector. (Before WaterCredit, virtually all water and sanitation "access" programs were charity-driven). As of June, more than 329,443 WaterCredit loans were made. Water.org seeks to expand operations from nine countries into new markets and models, including new products and channels for deployment.

The potential of microfinance to democratize access to capital for water access and sanitation is paralleled by the potential of technology and social media to democratize access to information: Game changing.

Awards finalists highlights

The remaining Drucker finalists, selected for their social and environmental innovations are:

  • 92Y, which created #GivingTuesday to catalyze philanthropic giving following Black Friday and Cyber Monday.
  • Arogya World, whose mDiabetes program spurs people to adopt healthier lifestyles through text messages.
  • Community Environmental Defense Council, whose Taking Local Control initiative makes innovative use of local regulations to give municipal governments the power to stop environmental degradation from fracking.
  • Found in Translation, which is helping to lift low-income bilingual women out of poverty through its Medical Interpreter Job Training Program.
  • Freedom from Hunger, which is conveying vital health information to millions of impoverished women in the developing world by reaching them through microfinance institutions.
  • Lincoln Center for the Performing Arts, which has diversified its revenue streams, reduced its reliance on philanthropy and added value to the larger arts community through its consulting arm, Lincoln Center Global.
  • MIND Research Institute, which has created ST Math, a highly effective visual approach to teaching mathematics based on neuroscience research.
  • SightLife, which works with partners across 29 countries to establish eye banks and support more than 17,000 corneal transplant surgeries each year.

Back to innovation

Drucker’s definition of innovation is one I agree with: change that creates a new dimension of performance. Winners of his namesake awards must exemplify this. At the same time, they must create impact, especially in people’s lives. This makes innovation seem pretty straightforward, doesn’t it?

That’s not a quick answer. Many of these nonprofits –and innovators – define and cast an innovative solution on a narrow area of a larger problem. Then, they create, validate, and distribute. To do so takes daring. On top of which, in order to develop and advance, it also requires management skills, capacity-building skills, and committed donors and staffers.

The real winners

The work of these nonprofits creates value for society and provides the underpinnings for business, people and communities to thrive. Innovators and change-makers like these appear to solve problems with ingenuity and little money, at least compared to the typically greater resources of business.

Taken all together it’s a pretty big win. The real winners are communities, individuals and the environment as a whole.

Valuable lessons

These are only a few examples of nonprofits effecting social and environmental change. They confirm that it’s possible to make things happen in areas that strike at the social and ecological commons. I would argue that “getting things done,” and well, is best achieved through sound marketing and management fundamentals.

When I make time after hours and on weekends to teach or train working adults marketing, corporate social responsibility and sustainability in university certificate and executive programs or in workshops, I emphasize the fundamentals. Alongside, I set up discussion and examples of innovation. It helps us to gain practice with thinking creatively in ways that lead us into a more sustainable future.

In a sense, the Drucker finalists mimic their new-product-developer counterparts within the private sector. They imagined a new way forward as architects of innovation and evolved new dimensions of positive social and environmental change.

As Peter Drucker said: “The best way to predict the future is to create it.”

Does data spell relief for congested cities?

Christine Hertzog

Can data kill your pain? The city of Los Angeles is hoping it will, at least where some data sources are concerned.

In May, the city launched a new DataLA site that features data downloads on topics such as crime statistics and budget information, as well as easy-to-understand visualizations of key metrics at a separate portal called PerformanceLAcity.

A June hackathon encouraged developers to take these datasets and create solutions that improve city life. Projects focused on affordable housing, public transit, and — spurred by a devastating statewide drought — apps to report water waste.

Code for America has similar objectives to enhance the quality of civic life on a broader landscape, organizing hackathons in over 130 U.S. cities so far. Its fourth annual Summit occurred in late September in San Francisco. The non-profit organization places software developers, user interface designers, and data enthusiasts into projects to re-imagine, re-think and/or redesign existing processes to optimize productivity, experiences, and satisfaction.

Traffic hacks with ATSAC

For many cities around the world, one of the most intractable problems is traffic congestion. It’s certainly one of the biggest problems for L.A., where 65 percent of commuters are solo travelers. This sprawling metropolis, which installed the world’s first traffic lights in 1924, has ambitious hopes for innovative solutions based on their traffic data.

The data is collected by Automated Traffic Surveillance and Control and city parking management systems. ATSAC, first rolled out to manage signal timing on the streets surrounding venues used for the 1984 Olympic Games, is now implemented citywide at over 4.400 intersections with traffic signals. Street sensors monitor vehicle passage, speed and congestion in one-second increments. This realtime data delivers situational awareness to the ATSAC operations center to adjust traffic signal timings to reduce congestion. The ATSAC system has a number of measurable benefits, most specifically in travel times, CO2 emissions and fuel use. Any concomitant reductions in road rage haven’t been tracked, but that’s not as easy to measure.

[Learn more about resilient cities at VERGE SF 2014, Oct. 27-30.]

On Sept. 22, the city published Request for Information focused on that realtime ATSAC data. The objective is to learn who is interested in this data and what new information and valuable services can be derived with this data.

Smarter grids, smarter decisions

Imagine if electric and water utilities operated this way. If meter data, properly anonymized and aggregated into data sets to protect privacy, were available for hackathons, more feasible solutions for residential rentals and multi-family housing might pop up — two markets sorely underserved by existing home energy management applications.

The federal Green Button initiative has sponsored and participated in hackathons, most recently an event in August in San Francisco, and in September at the KTH Royal Institute of Technology in Stockholm, Sweden. Kudos to the organizers, sponsors and participants of these hackathons that take existing energy data sets and create new applications to address the event challenges. It would be interesting to see utilities get engaged in hackathons. One starting point would be to consider what types of data and data sets could be made available to answer a wide range of their challenges.

Leaders engaged in smart city initiatives acknowledge that they don’t have all the answers when it comes to data manipulation and analysis, and welcome outside help via hackathons to optimize infrastructure, enhance services and improve civic life. Could similar activities help utilities engaged in smart grid initiatives ensure that they are getting the most from their data? There’s no doubt that plenty of pain points potentially could be addressed with intelligent data visualizations and analytics. Maybe expanding the pool of solution contributors could accelerate development and deployment of painkillers.

Image of data in city by Zhu Difeng via Shutterstock. This article first appeared at SmartGridLibrary.

How a small company can join ranks with Etsy and Patagonia

Julie Fahnestock

We want to create change and make a profit. We want to improve systems and pay our employees well. We want to innovate, create and produce and we want to do it with all resources, all stakeholders, including the earth, in the forefront of our minds. We don't want to sacrifice profit for mission or mission for profit. We live in the blur. We are the business leaders of the 21st century.

This blurred space has formalized itself as the Benefit Corporation model, where profit and mission are held as equals. B Corps have done something no other business model has ever done. In the same room, they've brought together the big social enterprise players like Patagonia, Ben and Jerry's and Etsy with sole proprietors and smaller enterprises like Honeyman Sustainability Consulting, WorkSquare (and soon my newly founded B Storytelling). We are equals because we share the same standards, the same values and the same goals.

I recently spoke with Ryan Honeyman, CEO of Honeyman Sustainability Consulting and author of The B Corp Handbook: How to Use Business as a Force for Good about the B Corp movement and what he learned from interviewing several B Corps for his new book. Honeyman got involved with the B Corp model because it represented everything he was talking about with his clients in his sustainability consulting firm.

Free to be better companies

"I used B Lab's Impact Assessment to say to my clients, 'here's what being socially responsible means.' The initial response was excitement. I would show them that Bill Clinton recognized the model and that Patagonia was part of the movement. I was seeing the B Impact Assessment help companies save money on energy, waste, water and increase efficiency and employee engagement. The B Impact Assessment explains the why behind what we do and it increases brand value," said Honeyman.

The B Impact Assessment — created by B Lab, the founding organization of the Benefit Corporation legal structure and certification process -measures a company's impact in four areas: governance, workers, community and environment. Companies must score a minimum of 80 out of 200 on the assessment as part of becoming a B Corp. Honeyman found that there was still a lot of confusion about the B Corp model and the differences between being a B Corp and a B Lab Certified company.

"I needed a tool to hand to a business owner, a tool which outlines everything they needed to know about becoming a Benefit Corporation. The B Corp Handbook is designed to be written in, earmarked and used as a guiding tool," explained Honeyman.

The B Corp Handbook includes a 'Quick Start Guide' to becoming a B Corp which details a plan for taking the B Impact Assessment. Honeyman outlines a process for internal engagement and a plan for improving particular criteria. It also highlights interviews with various industry leaders like Jed Davis, director of sustainability from Cabot Creamery. As part of his research for The B Corp Handbook, Honeyman reached out to the entire B Corp community-over 1100 companies-with five questions. He received 100 responses.

 Honeyman Sustainability Consulting

"How did companies benefit from being a B Corp? What is the biggest gain?" I asked Honeyman.

"A peer group of thought leaders," Honeyman responded. "A lot of companies didn't have peer communities to accelerate and celebrate their individual actions in a global movement. But because we are both part of the B Corp community, I can talk to my friends at Patagonia, for example, about how to attract and engage employees."

Honeyman continues, "In the past, when a company like Patagonia would get press for being a cool company this wouldn't help anyone else. Now when people talk about them, the whole B Corp movement gets press."

A community of diverse peers

Honeyman refers to the B Corp Community as a "tribe of like-minded people." At last year's B Corp retreat in Colorado, Honeyman remembers everyone clapping for the one B Corp who came from Mongolia.

That sense of camaraderie is easy for Honeyman to explain. "Most social entrepreneurs want to be part of something that is bigger than their own business. I never thought I could be considered a peer to Ben and Jerry's or Patagonia. I'm a one-person company, but also part of the community right along with King Arthur Flour."

This camaraderie comes from sharing similar values as defined by the rigorous standards in the B Impact Assessment. But, it's also a tool any company can use, says Honeyman. At last year's B Corp retreat he was seated next to Ben and Jerry's team and the challenge of measuring the impact of their suppliers came up in discussion.

"I suggested they have their five biggest suppliers fill out the B Impact Assessment. This way they could see across their supply chain and see how they were doing in environmental and employee issues. Soon after the retreat, they hired me to work with these suppliers, including one of the largest chocolate companies in the world. And now, one of the largest chocolate companies in the world has taken the B Impact Assessment," said Honeyman.

B Corps represent a new era for business: an era of community, employee empowerment, transparency, accountability and vision. We are the generation who uses business as a tool to make money and to make the world a better place. We seek to "Be the Change."

Top image of B the Change logo via B Lab. This article first appeared at Just Means.

Why Procter & Gamble is resetting its sustainability goals

Joel Makower

Today, Procter & Gamble is updating its sustainability commitments, expanding some of its efforts and dialing back on another. Behind that announcement is a larger story about how the world’s largest consumer packaged goods story is viewing sustainability these days.

Setting sustainability goals for a multinational company can be tricky stuff. How high can you set the bar and still set yourself up for success? And what if you reach your goal ahead of schedule — do you raise the bar? What if you’re not making the progress you hoped — do you lower the bar? Four years ago, P&G set a series of 10-year goals. As it nears the halfway point, it’s a good time to reassess.

As part of its assessment, P&G is adding four new 2020 goals, aimed at expanding its efforts in water conservation and improving the environmental sustainability of its packaging. It is also revising an existing goal to drive more innovation on renewable materials.

The reassessment coincides with the emergence of Martin Riant, group president, Global Baby and Feminine & Family Care, who late last year became P&G’s executive sponsor of sustainability, a position for which he volunteered. Riant, who has been with the company since 1980, took a fresh look at the 2010 goals. Riant leads Procter and Gamble’s $21 billion baby, feminine and family care business. The sector features a portfolio of powerful billion-dollar brands such as Pampers — P&G’s largest — and Bounty, Charmin and Always, along with other iconic brands including Tampax, Naturella, Puffs and Luvs.

“As I came in to my role the first thing I was looking at is, are we very clear on where we have our strategic focus on sustainability?” he told me recently. “Are we really working on the areas that are going to have the most impact, both in terms of sustainability but also in helping us create value as a company?

“The vast majority of those goals that we established at the time looked like they were in the right order of magnitude and we should be able to deliver on them by 2020. ... (However,) it became apparent that while we’re on track for most of these goals, there are some areas which we should be acting on — or should at least be talking about — that were simply absent from the goals.”

Moreover, “The goals weren’t sufficiently hardwired with the business units in the company,” a state of affairs with which many corporate sustainability executives can identify.

Liquid assets

The water goals being announced today reflect the understanding among many companies about the declining or unreliability of that precious resource in many parts of the world. While Riant said P&G isn’t a major water user in most areas where it operates, it’s still a growing concern. The lion's share of P&G's water impacts come during the consumer-use phase — think shampoo, toothpaste and laundry detergent.

As a result, the company is focused on the smaller share: water used in its own facilities. Specifically, P&G is committing to reduce water used in its manufacturing by 20 percent per unit of production, with a specific focus on conservation efforts at facilities in water-stressed regions, and to provide 1 billion people access to “water-efficient products,” although that is not defined.

As part of its focus on water, the company is being "much more rigorous about doing assessments of our facilities,” said Riant. “Before any new facility is located or decided upon, we want to make sure we understand its supportability from a water availability point of view. We are also going through each of our existing facilities and understanding the current water availability environment where they are located. Are they in stressed areas? Do we need to give them a priority in the interventions that we can make from a technology point of view? I think we’re getting much more systemic about our operations in that regard because it’s necessary given the problems in some areas now.”

I asked Riant how much of the company’s water-efficiency goals will come from new technology and how much from operational changes. “It’s frankly quite hard to separate the two,” he responded. “A lot of the what you might call operational impacts are very dependent on us finding new, efficient processes. There will also be operating efficiencies — being careful that we recycle water by allowing it to evaporate out of the system and that kind of thing — but a lot of it is coming up with novel, more efficient technologies for using water.”

Foiled by oil

The other part of P&G’s announcement has to do with its commitment, set out four years ago, to replace 25 percent of its petroleum-derived raw materials with renewable materials by 2020. Today, the company is revising that commitment downward. Rather, stated the company, it is committing “to creating technologies by 2020 that would let P&G substitute its top petroleum-derived raw materials with renewable materials, as cost and scale permit.”

To be sure, there’s an barrelful of squishiness in that statement.

The original commitment turned out to be unfeasible, due in large part to the drop in petroleum prices brought about by the fracking revolution. That made the cost of adopting alternative solutions less financially viable.

Like so many seemingly simple commitments — to outsiders, at least — this one turned out to be not-so-simple.

“We developed a number of solutions, but they proved to be too costly and too complex to expand on a global scale,” Riant said. “As we started getting into the process of going through our materials list and seeing what we could change to biobased feedstocks, these were at a scale nobody had really done before.” Each new process “needed to be confirmed, scaled up and done in an affordable way, and in many cases would require substantial infrastructure investment by our supply base to get there.

“In other cases, the materials already existed but the cost of production was so much higher than the petro-based materials that to get to a full 25 percent substitution by 2020 would have hugely added costs either to us, our suppliers or the consumer. And based on where we understand consumers to be in terms of not wanting to make tradeoffs in that respect, we said, ‘We’re just not going to be able to go that fast but we shouldn’t stop. Eventually we’re going to need to do this.’”

The company has started to incorporate some of the more available and affordable feedstocks in parts of the business, said Riant, “partly to get the learning of how to use them but also to learn how we can start to engage consumers in a way that would impact their purchase preference.” For example, Pantene Nature Fusions is packaged in bio-plastic bottles, and the company has made that part of the brand positioning.

The potential payoff

Meeting its sustainability goals is not just a technology challenge, said Riant. It’s also a people challenge. “We’ve got to learn how to communicate this to consumers in a way that they can make a choice for more sustainable products, and somehow converge getting more affordable costs with the consumer willing to pay a little bit more for these biobased products, until they really have a scale.”

It’s a challenge that P&G — along with every other consumer goods company — has struggled with for more than two decades: inspiring consumers to embrace sustainability in no-compromises kind of way.

“I don’t think we’ve done nearly enough with consumers in this area,” said Riant. “Some of that flows from us not having the businesses as connected in the delivery of our sustainability goals as they need to be. And that’s something we’re changing. I think there is a lot of upside if we can make sustainability more accessible and transparent to consumers so people can actually find out what we’re putting in our products and why, and how renewable they are. And then, as we make progress in this area, communicating that to consumers in a way that it makes the overall proposition more attractive.”

The potential payoff is considerable. Procter & Gamble serves nearly 5 billion people around the world — about 70 percent of the planet. Getting even a fraction of those souls committed to less-resource-intensive products could lead to significant reductions in energy, material and water use, solid waste, and their concomitant greenhouse gas emissions.

It won't be easy, but the convergence of technology and people can ease the way. “In the days when a lot of our communication with the consumer was a 30-second TV commercial, you’re not going to allow much of your communication time to be about sustainability because you need to communicate a reason why the consumer should choose your product,” said Riant. But online is a different world, where interested consumers can click endlessly to learn more: “It gives us much more option to introduce elements of sustainability into the overall consumer communication on our brands, and that’s something we’ll be working on.”

For Riant, this isn’t just business — it’s personal. Before we ended our conversation, he emphasized that he is “personally very keen to make this happen,” referring to the company’s overall sustainability strategy. “I am in charge of a business which is essentially a disposable business. I would feel much better personally if more of those products were made of renewable materials and were ending their life more usefully.”

Photocollage at top by GreenBiz Group

How Paul Gagliardo taps the 'next big thing' at American Water

Matthias Krause

Hear Gagliardo explore Big Data and big water at VERGE SF, Oct. 27 to 30.

Who would predict that an environmentally conscious hippie would become a prominent name at America’s largest publicly traded water utility (or a self-proclaimed alien, for that matter)? Yet those who hear Paul Gagliardo talk about his work as manager of American Water’s Innovation Development Program can’t help but think that his has a lot of fun with it.

“I am a venture capitalist without the capital,” says Gagliardo. Basically, just like a VC, he shifts through pitches from people who have great ideas about how to make American Water’s business cleaner, more efficient and more successful. Those who make the cut get 15 minutes to state their case. Next, Gagliardo decides if the idea has any merit to be eligible for the next steps, potentially resulting in a strategic partnership.

He looks at new technologies, products and services, and vets them for their technical efficacy and value proposition. “If it’s only 5 percent better than what works now, it’s not that big a deal,” says Gagliardo, “if it’s 50 percent better, now we’re talking. And so that’s how we look at it.

Looking for the next big thing in the water space, he says, “My hit rate is 2 or 3 percent, which is a typical venture capitalist hit rate. You get to plow through a lot of stuff to see what works, how it applies to your business, where the big value proposition is, where the interest is in the company. And the business models of both companies have to align.”

After almost 25 years working on waste projects with the city of San Diego, Gagliardo called it quits. A stint at an engineering firm and with a real estate developer followed before he says his “perfect job” opened up in New Jersey at American Water, revenue $2.9 billion in 2013.

What would be really cool and is badly needed, he says, are water-borne drones with a very special skill set. The drone of his dreams would be very small, less than four inches, and could be deployed into a water pipeline through a fire hydrant. Untethered, it could be driven with a handheld device, going upstream or downstream. It would spot a leak in a pipeline, stop, hover, and then fix the leak with special glue that works even under water.

“That is one of my personal favorites,” says Gagliardo, “super glue could work when it’s fully wetted, in other words, when the pipe is full of water, but that’s certainly an issue. A bigger issue may be communicating with the drone, untethered.”

The potential would undoubtedly be huge since the largest expenditure that all water utilities are facing is fixing and replacing existing underground infrastructure, namely pipes.

“The lessons I learned a long time ago and have carried through over the years I worked for American Water is to get rid of the losers fast,” he says.

Gagliardo learned the business part of the job at a later stage of his career, yet his interest in the environment sprouted early. Growing up on Long Island, he often took a boat with his father onto the South Oyster Bay, where he would notice when the sewage plant wasn’t working very well or when residents’ septic tanks were leaking. For him, these problems were obvious, even though not many people in the 1950s and 1960s would acknowledge them.

“I spoke at the first Earth Day in 1980,” says Gagliardo, “so I was more an environmentalist than a hippie, I guess.” When it was time to pick his first job, he went for a poorly paying solar company instead of a well-paying oil firm.

Following his green-leaning beginnings, Gagliardo, an engineer by trade, took a job with the city of San Diego. Starting in public works construction, he moved on to hazardous waste remediation, because that became a “big thing” in the mid-1980s. He moved to the trash business in the early 1990s, when that became a “big thing”. “I don’t know if you noticed a pattern here,” Gagliardo says. “Everything is a big thing; that’s when I get involved.”

In the mid-1990s, when the drought hit California, he was shifted to a big toilet-to-tap program. The idea: Filter and purify sewage water to make it potable again. By 1999, all the major problems were solved and the program was ready to be implemented. However, the effort was killed by what Gagliardo describes as “political reasons.”

“I was always on the bleeding edge of things nobody else wanted to work on,” says Gagliardo, “I was kind of the guy that took all the heat, and if [the program] succeeded, everybody else took credit for it. If it failed, my joke was I would get my head cut off and they’d stick me in the corner.” That reminds him of the character Jack Jeebs in the movie “Men in Black”. Jeebs is alien living on earth in the disguise of a pawn shop owner. “And when they shoot his head off, it grows right back,” Gagliardo says.

“I have an unreasonable faith in myself, and I have thick skin,” he adds. “I really like being out on the edge. And seeing what’s over the edge and bringing the news back and being the advocate for it.”

As for all those water utility pipes? They were designed to last 50 years, but are 100 years old now, and by the time they’re all replaced, they’ll be 200 years old.

“We’ll never catch up; it costs too much money,” says Gagliardo. But with the right kind of drone it could be done. He sounds ready to tackle the problem, without fear of failure or losing his head.

Is Santa Claus in a new war zone or a growth market?

Sharon Burke

Of all those in Russia's "near abroad," who nervously look over their shoulders at Ukraine and wonder who is next, one individual has more cause to worry than most: Santa Claus.

Vladimir Putin has, after all, claimed the North Pole as Russian territory, going so far as to plant a flag under the ice and establish a new Arctic military command. For that matter, Canada and Denmark also have declared ownership of the North Pole and are stepping up their polar military presence, as well.

The children of America can relax, however: Santa is not likely to get caught in the crossfire. Only someone with mystical powers could afford a significant year-round military presence at the North Pole right now. There's no actual land there, just snow and ice with more than 13,000 feet of frigid ocean underneath and summer temperatures that barely break 0 degrees Fahrenheit.

That hasn't stopped the hype, however, about a new arms race in the far north, or a land grab, or a trade war. On the other hand, what's happening in the North Pole will be consequential — just maybe not in the ways grand strategists expect.

If this keen interest in the Arctic seems sudden, in many ways it is. Much of the recent literature on the subject won't necessarily clear up why that's the case, though. In their article announcing the launch of the new Congressional Arctic Working Group, for example, Representatives Don Young and Rick Larsen point to new regional shipping, tourism and resource extraction opportunities and security challenges, but they gloss over the reason this is happening.

Here is the reason: the sea ice in the Arctic is melting. This is not an opinion; it is an observed phenomenon, documented by satellite imagery. There is variation in the amount of ice from year-to-year, but the last 20 years have seen the most pronounced thawing trend in recorded human history. This is climate change, and it's not just an academic point to score. A better understanding of why the thaw is happening will help us plan for a smarter, safer future.

So, is a melting Arctic an economic opportunity or a military challenge? An entirely new global shipping route, after all, does generate excitement in both camps. The answer to that question could determine just how worried we all should be.

The economic impact of an Arctic that is open for business could be huge. For centuries, explorers have sought a polar shortcut between Asia and Europe, potentially trimming thousands of miles off the journey. Last year, Canada finally recovered the 170-year-old remains of one of those ill-fated expeditions — the same year that as many as 91 ships safely crossed the Northwest and Northeast passages through the Arctic, a record.

In that context, it looks more sensible than sinister that China, a non-Arctic nation, is building its second icebreaker and seeking property in the region. China has a strong economic motive, given its reliance on trade. There's also China's increasingly urgent quest to diversify its energy supplies, as its import dependence continues to soar. The U.S. Geological Survey estimates (PDF) that 13 percent of the world's remaining oil and 30 percent of its natural gas are in the region, as well as minerals important to today's high-tech economy. It's not been technically or economically feasible to confirm what's there, but the surrounding geology and reserves facilitate an educated guess, and the melting ice is starting to make it possible to explore for and produce Arctic resources.

Another sign that this is an economic challenge: Shell, already having spent $6 billion in the Alaskan Arctic, has announced new plans to drill off Alaska's northern coast, despite a mishap in the area last year. Exxon-Mobil is drilling a $3.2 billion test well in the Kara Sea right now, although the project's future may be at risk due to Russia's invasion of Ukraine and U.S. sanctions.

Russia, of course, complicates what appears to be an economic opportunity. With the longest Arctic coastline and a sea route with warmer, faster-thawing waters, Russia has a clear comparative advantage in the region. Part of that advantage is its 38 icebreakers — more than double all the other Arctic countries' fleets combined — and the world's only nuclear icebreaker fleet. But here's the thing: Although Russia is noisily claiming to be re-establishing its Cold War-era polar military presence, most of its actual investments are focused on oil and gas and areas that are clearly Russian territory.

Territorial matters have the potential to be incendiary, however. These new shipping channels run through an almost fully enclosed ocean, ringed by five nations, which in the past have not really needed to iron out competing claims in the largely inaccessible region. As that situation has begun to change, some territorial disagreements have been worked out peacefully. But considering that four Arctic nations are NATO members and one is Russia, remaining claims may be harder to resolve these days, and the differences in regional presence are becoming more strategically significant.

In other words, the economic and military interests in the Arctic are not only both important, they are intertwined.

So, what is Uncle Sam to do? As an Arctic and seafaring nation, the United States also has compelling economic and military interests at stake, but not much capacity to promote those interests. And yet President Obama's Arctic Strategy (PDF) largely vows just to study the matter, in a wait-and-see approach.

Strangely enough, that may well be the best strategy, at least for now. "The challenge," as U.S. Department of Defense report (PDF) to Congress noted, "is to balance the risk of being late-to-need with the opportunity cost of making premature Arctic investments." Indeed.

The area is still difficult and dangerous to transit and that is likely to be the case for some time to come, and specialized polar equipment is very expensive. Consider Canada's ambitious plans to build a new naval base at the eastern entrance to the Northwest Passage. As those costs ballooned past $200 million, Canada quietly scaled back to a 15-person seasonal outpost with no airstrip. For that matter, the Congressional Arctic Working Group notwithstanding, it remains to be seen if Congress is willing to foot the $1 billion bill for a single polar icebreaker.

But just because it may not pay to be a first mover in Arctic investments does not mean the United States should do nothing at all to get ready for the Arctic spring. The recent appointment of a Special U.S. Representative for the Arctic could help, especially with the U.S. taking its turn as chair of the Arctic Council next year. As long as it isn't just a stunt appointment to further delay actually doing anything, that is.

In particular, the United States should continue to take action to protect U.S. borders and territory, as well as access to international waterways. The United States, working with Canada, has fairly robust northern missile defense, although it may be in a state of disrepair in places. This obviously is ripe for reinvestment, as are communications and surveillance capabilities in the region, which are sketchy at best. Those particular baseline investments may well be the best response to Russia's bold pronouncements.

As for territory and international waterways, in a pinch, the United States has the means (such as submarines) to protect those claims without a large icebreaker fleet. It would, of course, be a big help if the Senate would just ratify the Law of the Sea Convention, which a radical fringe of the Republican Party has been preventing with oddball proclamations about world government. That is rubbish, given the structure of the treaty, but the fringe's instransigence puts the United States at a disadvantage in working out conflicting Arctic claims.

One of the clearest and most present dangers in the Arctic today is actually just the uptick in maritime traffic, raising the risk of accidents. Given the long distances, harsh environment and lack of suitable equipment, this really is a disaster waiting to happen. Indeed, that alone is a good argument for another heavy icebreaker, which will bring the total in the U.S. inventory to two. It's not as exciting as a trade war or an arms race, but it is a very good reason for regional powers to pool their resources and information.

Finally, and this gets us back to acknowledging why we have this challenge, the United States should set trip wires that trigger additional investment if the situation warrants it. The most recent United Nations Intergovernmental Panel on Climate Change report (PDF) projects that the Arctic will see "ice free" summers (not locked in with solid ice) by mid-century, which means there is time to make the appropriate investments. Or maybe not. In the last few years, the seasonal ice retreat has outstripped projections and it is possible the region could see "ice free" summers within a decade or two.

The question of whether the contest for the Arctic is predominantly economic or military might be somewhat moot in that scenario. Such a profound thaw likely would mean radically accelerating climate change, with pervasive effects on the worldwide availability of freshwater and the volatility of weather patterns. It is a mark of the absurdity of the U.S. polity that some business and government leaders tout the commercial opportunities and security risks of a fully navigable Arctic, without acknowledging what it really means.

They probably want to arm Santa Claus, too. If Putin doesn't get to him first.

This article originally appeared at New America. arcticocean_ruzanna_sstock.

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