Attention from the Beginning: Early Stage Social Enterprise Funding

[twitter-follow screen_name='Sequoia_Lab'] by Eva Yazhari

I have just returned with a fresh perspective from SOCAP/Europe, a conference that brought together leading investors, entrepreneurs, philanthropists, government funders, and innovators in Amsterdam for a dynamic conversation on social impact investing. When analyzing an investment over a range of asset classes social impact investing focuses on the triple bottom line of people, profit and planet. (Think SRI, venture capital, hedge funds, fixed income,...)

SOCAP/Europe’s tag line is “Moving Minds, Moving Money”. During three days spent in a state of constant learning and connecting I am sure many minds were lifted to new heights considering how money can change the world.  I am also confident that there is a significant market opportunity for impact investing over the next ten years, as cited in J.P. Morgan’s impact investment research published early last year.

But the cold hard cash has yet to move off the sidelines en masse, and I see this as more of an opportunity than a problem. The question is not how much money will flow, it’s where and when the money will flow.

There is a gaping hole in many developing countries’ small and medium enterprise  landscapes due to a lacked access to capital. In research conduced by the Small and Medium Enterprise Development Authority in Pakistan, 53% of applications for bank loans were rejected over a two year time period. Moreover SME’s get priced out of the market in countries like Pakistan where commercial annual interest rates reach 18%.

Many small enterprises in developing nations have built financial and social returns into their bottom lines, the challenge facing such enterprises however is how these social enterprises will be funded in their early stages.

Take some time to think from an investor’s perspective: Which would you rather fund? A business with a clearly defined market for selling solar lamps, a proven concept and tested revenue projections ready to scale to thousands of households? OR An idea and a team of social entrepreneurs that has done extensive research on clean water distribution, and are working in the field to deploy their pilot project?

The answer is simple. VC’s and financial institutions have been investing in the more mature start-ups for decades and there are a handful of well-endowed social impact investors also playing it safe.

One of my colleagues safe guarding billions of dollars recently complained that there are not enough mature social enterprises to invest in. What the market also needs to acknowledge however is that without early stage financing social businesses will never reach maturity.

I am asking investors and philanthropists to think holistically about engaging in social impact investing. Early stage social enterprises should not be left out of the funding continuum that businesses must access to survive.  If we do not nurture the best ideas from the beginning, there is no hope of achieving the large-scale change everyone boasts about.

Rigorous due diligence and an intelligent approach to portfolio management should mitigate many of the teeth clenching, sleep taunting risks that come with early-stage investing.  Furthermore, foundations and charities are the best positioned to pioneer early stage investing because their capital is seen as grant money not seeking a return. Generating a holistic return would be a bonus to current grant-making strategies.

I applaud some of the early stage funding pioneers such as E+Co and the KL Felicitas Foundation. Their work has served as an example for many, however more players need to participate to move the needle. If we all agree that sustainability is the way forward, then market-based solutions provide one of the most efficient strategies for sustainable development. The steps it will take to solve some the most difficult challenges on Earth require more than talk, more than thought, more than an idea, they need attention from the very beginning.

Frankenfood or Real Food?

[twitter-follow screen_name='Sequoia_Lab'] by Alberto Gonzalez, founder and CEO of GustOrganics,www.gustorganics.com, the world's first certified-organic restaurant, and one of the greenest and most progressive restaurants on the planet

America is an overfed and undernourished country.

About 80 percent of the population is considered overweight, and almost one-third is obese. According to the National Cancer Institute, serious diseases that are linked to what we eat kill an estimated three out of four Americans each year. These diseases include heart disease, high blood pressure, stroke, some types of cancer, and diabetes.

So food is killing more people than anything else in America.

What is going on? Who is responsible for this gruesome situation?

For years, we have inadvertently been in a collaborative mission along with food and agrochemical companies to get cheaper and bigger foods, and we all did a simply terrific job. By making "Cheap" the main virtue in our food system, we dedicated our dollars to feeding ourselves in a totally wrong way that has deteriorated our collective health but also created a monster food system. Our behavior as consumers was, in my opinion, a key success factor in creating a Frankenstein that took over the health and destiny of most Americans.

What we eat has been the problem, and I think we now have a great opportunity to transform it into the solution. The best starting point to properly solve a problem is to clearly define it; therefore we should take a look to some definitions.

Real Food: I define it as food that is free of synthetic hormones, antibiotics, chemicals, and genetically modified organisms (GMOs). Food produced with integrity, using clean and fair farming practices, developed and harvested by socially and ecologically responsible farmers. Today, these transparent food systems represent less than 2 percent of total U.S. agriculture.

Frankenfood: It is an obvious metaphor in reference to Frankenstein, which means food that is engineered and processed to be more appealing and profitable. I consider Frankenfood to be any food that is not Real Food. Today, Frankenfood represents about 98 percent of the food produced and consumed in America.

Mercenaries: For the purpose of this article, I call all marketing people using their talents to create distribute and promote Frankenfoods in any way mercenaries. Many of them are highly educated, from world's best universities; therefore, they are extremely smart about achieving their goals while disguising their real intentions. As consumers, to be engaged in the food system, we must be very aware of them.

Food: Any substance or material eaten or drunk to provide support for the body or for pleasure. Usually of plant or animal origin, it contains essential nutrients such as carbohydrates, fats, proteins, vitamins, or minerals, and is ingested and assimilated by an organism to produce energy, stimulate growth, and maintain life.

It might be a good idea to ask ourselves, what is left from the previous definition in most food available today?

The problem we face as consumers is that Frankenfood is everywhere. No matter where we go, for the most part, that is all we find. When it's about food, America seems to be a country of huge contradictions. We use our tax dollars to subsidize food that is poisoning us and our children, also mortgaging the future of the next generations.

We go even further, taking our own money--yes, what's in our pockets--and giving it to food companies full of mercenaries that are producing Frankenfood just to maximize their profits. They also use the cash we give them to block any kind of change in agricultural policies, perpetuating the system to simply keep making money.

In case you did not notice it, fast-food companies are the great masters of Frankenfood, engineering and processing their products to taste and look great.

These companies are mainly powered by agrochemical corporations with big pockets, and their army of effective lobbyists in Washington is devising strategies to keep our subsidies and continue promoting more of the same products that have been contaminating our health for the last 50 years.

It is good to remark that the amount of food that we buy daily in the U.S. is so significant that at the same time that our collective health keeps deteriorating, we are also polluting the air as never before, contaminating our water streams in an outrageous way, and generating a tremendous impact in the environment overall.

Frankenfood companies have always had lots of marketing resources, so they have led us to believe almost everything they wanted.

I know it is awkward to discover that as food consumers, we have not been smart at all: We have been manipulated by the food corporations and agribusiness during the last 50 years, and in fact, our food-purchasing decisions resulted in very poor choices. However, we must now face this reality if we want a different future.

The good news is that what we eat matters big-time. Americans spend around $1.6 trillion annually in food; this is about 11 percent of the GDP.

Food is who we are. Real Food cleans. Real food creates positive jobs, helps local communities, uses sustainable resources, and most importantly, Real Food incentivizes life and well-being. The most effective and peaceful way to change the industrialized agriculture system that is killing our people is to simply stop buying Frankenfood and start supporting Real food.

Consumers' consumption is one of the greatest ways to evolve capitalism. Profits can make miracles in the corporate world. This is true change coming from within, and it is very handy, we just need to use it. If we demand food that is free of chemicals, the chemical companies devoted to agribusiness will starve and disappear in the same way rats abandon a building that is empty of all sources of food. At least they will be forced to reinvent themselves in a sector away from our food and bodies.

The revenue that we provide through our purchases is to Frankenfood corporations or to Real food farmers what blood is to the human body. Those who make it or break it depend exclusively on our food choices.

I believe that as consumers we must nurture a new generation of food producers that will eventually take care of us, in the same way a mother gives birth to a baby that at some point in life, when grown, will take care of her. Conscious food consumption is not only a great way to change our health and preserve our planet, but also a chance to generate new meaningful jobs in a very powerful industry. This is a precious opportunity to activate our economy through true, sustainable development.

Many people go to Washington to petition for change in food policies. I think that helps, however, I am inclined to believe that the current administration has some other urgent matters to deal with. Politics is the art of the possible, and in the current economic situation, what is possible for this administration seems to be very limited, so I will not have high hopes for significant food policy changes at the speed we need.

On a separate note, I know many people will argue these organic and sustainable ideas with phrases like: "How are we going to feed the world with organic agriculture?" so I say, a) organic agriculture seems to be more productive than conventional agriculture if we take into consideration all the real costs involved. And b) aside from this, shouldn't we start focusing on doing a better job of feeding ourselves before we try to feed the world? By the way, it looks like we have not been doing a good job so far, have we?

I feel that as consumers, we have somehow co-created this Frankenstein that is living among us. We should stop Frankenfood because we all deserve Real food. It looks like we now have the responsibility to pass the baton that we once gave to Frankenfood companies to the Real Food farmers.

Thinking about this food problem, I thought of this appropriate quote from Oliver Wendell Holmes: "I find that the great thing in this world is not so much where we stand, as in what direction we are moving." I would love to set our goal as a nation to transform together America's food system from Frankenfood to Real Food at pace of 2 percent per year. We should all be active part of this productive change, and we will surely live healthier and happier and be able to leave a better world for the future generations.

First published on huffingtonpost.com

Designers that make a Difference, take the Spotlight!

by Sass Brown

We have reached an interesting time in the fashion industry, when a lot of things are possible.  This is a moment when the fashion guard is aging and retiring, with few serious contenders to take their place. Calvin Klein, Donna Karan and Vivienne Westwood, the untimely death of Alexander McQueen and the recent shaming of John Galliano, has all left a huge void in the mainstream fashion industry. This isn’t news of course, the old guard has been aging for some time now, with the likes of Zac Posen and Proenza Schoeler poised to replace them, yet as much as they have been heralded as the next waive of superstar designers, they are poor reflections of the real thing, mimicking the symbols of a system that isn’t sustainable in the long term.  The concept of global branding and iconic super star fashion designers is a system that has passed its time, a system that is already crumbling with its movie star bling and red carpets, a system that is being eaten away at the edges if only they could see it through the spotlights glare.

The fashion system at its best is a reflection of our culture, of our values, and of our worldviews.  We are in a time of great change, of climate crisis and cultural shifts, of alignment of our conscience, our lifestyle choices and our work. This season some of the most exciting collections, designers and shows around the globe, were by designers also pushing forward the frontier of Eco fashion.  Not all citing themselves as ecological or ‘green’, but who, never the less are making a difference to this industry, through their actions and their choices.  In London, Milan, and Berlin’s fashion weeks, the broad range of talented Eco designers was amazing.  The champagne brunch at London Fashion weeks Estethica, incredibly drew more traffic than the mainstream fashion trade show.

At London’s Estethica, part of London Fashion week, Orsola de Castro, showcased her most recent collaboration with Speedo, in the form of a capsule collection of fun, playful and sexy dresses.  Speedo’s banned LZR competitive racing swimsuits were reconfigured by de Castro, in a groundbreaking model of production scale recycle, reuse, and redesign. A brave and enlightened move by Speedo to consider alternatives to destroying the suits, and a creative collaboration with the talented de Castro, who repurposed them into a line of funky, cool must have dresses.

Also showing at Estethica, was Michelle Lowe Holder’s Ribbon Reclaim project. The winner of the London College of Fashion’s sustainability center award, showcased her handcrafted collection of accessories made entirely from reclaimed and vintage ribbons, all produced ethically and locally in the UK.  Pulling inspiration from history and with a greater than average respect for technique and detail, pieces are modern in expression but historic in inspiration, with more than a nod to Elizabethan ruffs and collars reinterpreted into architectural cuffs and neck pieces.

The eponymous Junky Styling, long producing a timeless, deconstructed, re-cut and completely transformed collection for women, made entirely out of men’s suitings, also showcased at Estethica.   Now championed by Livia Firth on the red carpet and in her blog on British Vogue, the label continues to break new ground with their creative reinterpretations of menswear to women’s wear.  The collection is edgy, fashion forward and yet timeless.

Another label showing at the mainstream fashion exhibit in London was Tamara Folge.  Not positioning herself as an ecological label, but never the less making a difference through her choice of materials and production. Fogle creates an amazing collection of bags from reclaimed German flour sacks, Hungarian grain sacks, French mattress ticking, French military tents and hand stitched quilts from Pakistan.  Some of her material choices dating back to the 1830’s, with others much more recently discarded.  Creating a heritage and luxury bag collection through local British production in an artisanal workshop setting.

The White show in Milan, is one of the premier fashion trade shows in the world, specializing in cutting edge and avant-garde European design.   Showing their collection in the coveted basement alongside the likes of industry stars such as Alessandra Marchi, was Km/a from Vienna, who combine performance, fashion, art, installation and ecology. Multi talented, multi inspirational and producing a beautiful collection, they don’t purport to be an ecological label, but never the less use organic fabrics and recycled materials. Producing an understated collection from recycled parachutes layered with organic fleece and cotton jersey, top stitched and shrunk to create wonderful textural effects.  Displayed on wire hangers in a moldering, distressed basement, the collection was as inspirational in presentation as it was in styling.

Barbara Congini from Denmark, also showing in the basement of White, has one of the darkest, most creative collections since Rodarte, and worthy of McQueen himself with layer upon layer of tonal slashed and wrapped fabric, but also combining interesting use of materials with organic cottons and vegetable tanned leathers. Her avant-garde and conceptual designs drape, wrap and cocoon the body with a post apocalyptic sense of style meets hard rock goddess, to amazing effect.  You would be hard pressed to find a more inspirational designer anywhere.

The Touch show in Milan featured featured the work of Roya from Afghanistan, who’s work in this warn torn country is legendary, with the set up of her atelier in Kabul, bringing work to women who have traditionally been denied self sufficiency, while simultaneously mining their artistic and cultural past through her ongoing support of traditional hand weaving and embroidery designs.  Showing in the mainstream part of the trade show, and with stores ordering the beautifully cut jackets and coats purely for the aesthetic reasons, as opposed to the groundbreaking work she undertakes, her designs stand on their own aesthetically.

Menswear label Banuq, showing at the GREENshowrooms in Berlin, brought ethics as well as sustainability to the men’s wear market, with their easy wear, understated collection in organic, vegetable dyed winter weight cotton.  Designed for the urban traveler, something the Italian duo epitomize themselves, the collection is produced in Africa to fair trade standards with GOTS certified fabrics.  With an effortlessness ease to the designs, they bring the focus back to the wearer instead of the clothing.

Viennese label Steinwidder, showing at THEKEY.TO in Berlin, produce a collection of women’s dresses and separates made entirely out of pre consumer sock production waste.  Yes, you heard me right, socks!  At first an odd sounding concept, but the textures, color variations and styling they achieve through this single material source, has to be seen to be believed, creating interlocking patterns and textures from the jigsaw puzzle material base, then reconfiguring them into entirely new contexts through their edgy designs.

These are not just designers paying lip service to eco design, in some cases ‘eco’ isn’t even a term in their vocabulary, yet they are designers that are making a difference with their commitments and actions; ground breakers on multiple levels, in many ways far more admirable and altruistic than some of those postulating their ecological achievements, while simultaneously taking advantage of their workforce or the environment.

How to minimize human misery in recessions or the macroeconomic implications to hedonic adaptation?

by Fabrice Grinda

As I was reading The Upside of IrrationalityDan Ariely’s sequel to the brilliant Predictably Irrational, I started wondering whether there were macro implications and applications for behavioral economics and specifically to the concept of hedonic adaptation.

As I described over the years in my musings on happiness, hedonic adaptation is the process by which we rapidly adapt to changes in our life circumstances and return to our mean level of happiness. Because we disregard its existence, we humans are particularly bad at predicting how positive and negative changes in our lives will affect our happiness. People in Michigan predict that people in California will be happier than they are given the weather. Empirical evidence suggests that a move to more clement weather does temporarily improve people’s happiness, but their happiness level rapidly reverts to the mean as they get used to the gorgeous weather. Likewise, when asked to predict how they would react in the face of negative events such as losing the ability to use their legs, people underestimate their ability to cope. They predict they would be miserable forever while research suggests that after an initial dip in happiness, people rapidly revert to their mean level of happiness.

Behavioral economics suggests ways to delay or speed up our adaptation. If you are considering indulging yourself by buying a new wardrobe and plasma TV for instance you are better off spacing the purchases. Likewise, if you are receiving a massage, you are actually better off interrupting it for a few minutes in the middle.

The reverse applies to negative changes in your life, especially economic cutbacks. People intuit that they should spread the pain, but research suggests that are much better off reducing consumption all at one. In other words, you should move to a smaller apartment, give up cable television and cut back on expensive coffee all at once rather than in increments. The initial amount of pain will be higher, but as we rapidly adapt to our circumstances, the total amount of agony will be lower.

It strikes me that our society and politicians have been making the wrong choices over the last few years in terms of economic policies as we seem unable to take a bit more pain in the near term and thus end up enduring pain for much longer than we might otherwise have to. It was not always the case. In 1981, when Paul Volcker increased the Feds Funds Rate to up to 20% in June 1981, he plunged the US in a deep recession increasing the unemployment rate from 5.8% in 1979 to 9.7% in 1982. However he tamed inflation which peaked at 13.5% in 1981. By 1983, inflation was lowered to 3.2% and the stage had been set for a period of sustainable growth.

More recently though we have artificially propped up many sectors of the economy through bailouts, subsidies and policies which delay those markets reaching equilibrium. We thus create an impression of continued economic malaise as these markets slowly reach equilibrium. In other words, we have longer lower level pain instead of more pain for a shorter period of time.

Even assuming that the total amount of pain is the same in the case where we let markets clear on their own versus propping them up and it’s just the intensity and duration that changes (and I suspect that it’s not), we are clearly making the wrong choice. The continual arrival of bad news prevents us from adapting to our circumstances and we are thus suffering much more than we would otherwise if we had experienced the entire negative outcome in a brief period of time. Moreover, I suspect that continued arrival of negative or mixed economic news is detrimental to society at large and not just for those who have lost their jobs and/or home as the economic uncertainty makes them fear for their own well-being. In other words it’s better to have brief deeper recession than 20 years of Japan like stagnation.

This is not to say we should not act when the economy is in recession. Running counter cyclical fiscal and monetary policy has proven effective time and time again. The issue has more to do with policies that prop up real estate, car manufacturers, and banks, and delay the inevitable reform of public pensions and our overall fiscal adjustment. Despite the potential for moral hazard, you actually can’t let your financial sector go out of business because it is the engine of credit creation without which you don’t have an economy. My concern is less with the need to bailout banks (unfortunately we had to), but the fact that we did not do a good job at cleaning their balance sheets. Instead of disposing of most of their toxic assets with a good bank / bad bank approach (or a number of approaches with the same outcome), we are hoping to let them earn their way out of the problem by keeping short term interest rates low (banks make a lot of money in low rate environments because their borrowing decrease which increases the spread with the rate they earn on the long term loans they made). The result is not dissimilar to the zombie bank problem that infected Japan for the last twenty years. It took twenty years for these banks to clean their balance sheets and start lending again. Credit creation remains broken in the US and might worsen if housing takes a turn for the worse, which it very well might as we don’t seem to have reached the market clearing equilibrium as suggested by continuing price decreases.

 

Likewise, the entire slew of policies enacted to stem the decrease in housing prices have merely delayed many foreclosures, price decreases and decreased labor mobility as people have stayed in their home longer than they should in the hope of a price recovery. Instead of seeing a rapid adjustment to the market clearing price and acting accordingly, homeowners are enduring agonizing small decreases in prices year after year. Again, in this, we seem to be copying the Japanese example where house prices fell a few percent a year every year for 18 years from 1989 to 2007. In the end residential real estate prices fell over 90% in Tokyo between 1989 and 2007 and commercial real estate fell over 99% in some cases!

As our politicians and public unions face fiscal retrenchment, they should really focus on decreasing human misery by making more cuts and adjustments upfront rather than spreading them little by little over many years.

Hedonic adaptation is one of the most powerful tools at our disposal for stemming human misery. Let’s make the most of it!

How Upcycling ‘Ups’ Options for Re-Use

by Megan Yarnall Most municipalities don’t collect all kinds of plastics. Most people don’t take the effort to sort trash or clean out bottles before tossing them to the curb. Compostable packaging is “too noisy” or “doesn’t feel right”. Most single-use packaging is non-recyclable. Products lose shelf-life and consumer safety by switching to a different type of packaging.

Brands face numerous challenges in strengthening the eco-friendly features of their products especially the packaging, and consumers often have no options for recycling or reusing the product or its packaging. Research to create eco-friendly packaging, implementation of more responsible packaging, and the packaging itself is often more expensive than the alternative.  This cost drives up the price and drives away customers regardless of the social or environmental benefits. For brands that want to stay competitive while also becoming more responsible, these problems must be solved.

The question arises – what can a brand do that has a relatively minimal cost, but is still eco-friendly and easy for consumers? The answer – a habit that is gaining increasing attention – is upcycling.

Upcycling refers to reusing a product in as close to its original form as possible when it would otherwise be sent to the landfill. Upcycling can be used to give a new, longer lifecycle to a material that can’t be recycled, thus the name “Up” – “Cycling”. Since upcycling can often be done by consumers in their own homes, it’s an economic option for brands, if they design their product or packaging with eye towards reuse or upcycling. Water bottles or soda bottles can be made into pencil holders or vases, yogurt containers can be fashioned into flower pots, coffee cans can hold everything from spare change to cooking grease.

Even common food and beverage packaging such as Capri Sun juice pouches, Bear Naked granola bags, and even Mars candy wrappers can all be made into bags, pencil cases, or even hair barrettes. A consumer need only visit http://familycrafts.about.com or www.craftzine.com/ to see a plethora of options. When this can’t be done by the consumers themselves, this packaging can be sent to recycling and upcycling companies such as TerraCycle, Inc.

But corporate commitment is not enough! If a company does decide to go the upcycling route, be it through a partnership with TerraCycle or through a thoughtful redesign of their packaging, the onus for responsible action still lands firmly in the lap of the consumer. Only the consumer can choose what happens with the product once it’s on the shelf. Here is where my opinion differs from many in the “green” space. I feel that consumers voting with their dollars, with their purchasing behaviors, with their choices in brand loyalty is the single most impactful and important ingredient to spawn change in our consumer goods addicted economy.

Companies will only continue down the long and windy road of sustainability if their consumers encourage them and encouragement at the corporate level tends to come in only one color. So then our society is faced with two challenges: will corporations be willing to take the jump, and will consumers be willing to support them, by ignoring that noisy chip bag and actually recycling or upcycling that new type of packaging? Without effort and support from both sides, neither will succeed and we will all lose.

So, how can a brand do this? Incentivize, educate and inspire. Take the TerraCycle example, when brands partner with TerraCycle to run free collection programs for their waste, they not only pay for shipping to make the program free and easy but they also contribute two cents for every item returned to a charity or your choice. Look at Recyclebank, who provides coupons and discounts for more recycling. These companies, and those with whom they partner, are successful because they incentivize the action.

Brands also need to let consumers know what options they have. As I mentioned before, the responsibility of recycling lands largely on the consumer, but since brands only leave the consumer few options for packaging – that which the brand or local waste management companies offer – it should be expected of the brand to help the consumer understand their options.. That is where the education piece comes in to play. By educating consumers, companies can help them to make the responsible choice; by then offering that responsible option they can increase brand loyalty while also becoming more eco-friendly. Not only that, but upcycling and consumer education are financially friendly for both the brand and the consumer.

It’s a win-win: eco-friendly, inexpensive, and beneficial for all.

Will The Real Food Movement Please Stand Up?

This week on Down To Earth Blog, Sequoia Lab Team welcomes Woody Tasch, Founder of Slow Money and author of Inquiries into the Nature of Slow Money: Investing As If Food, Farms and Fertility Mattered. Slow Money’s third national gathering takes place October 12-14 in San Francisco. by Woody Tasch

Farmer Bob Comis recently suggested that the food movement is suffering from “multiple personality disorder.”

He argued that several vocal minorities—foodies, locavores and “smallists”—tend to dominate the food movement discussion, unrealistically distracting us from our ultimate objective: bringing affordable, organic food to all as part of a broader commitment to social justice.

For decades, now, organic farmers and sustainable food activists of all stripes have been vexed by the question:

Is this a movement? Can it scale and have meaningful impact?

At one eloquent and entrepreneurially-impeccably-credentialed end of the spectrum stands farmer Joel Salatin:  “Don’t let them confuse you. Organic farming is not an industry. It is a movement. It is part of a movement that began when the first indigenous peoples fought against the Conquistadors. It is fighting back against the modern Conquistadors, the multinational corporations, those who would patent and genetically modify life and destroy diversity.”

At the other eloquent and entrepreneurially-impeccably-credentialed end of the spectrum stands Stonyfield Farm CEO Gary Hirshberg:  “I hate the ‘m’ word. Organics is an industry. We must build and utilize industrial-scaled enterprises, if we are going to get toxics out of the food chain in one generation.”

There are 6,132 farmers markets in the U.S., up 350% since 1994. There were 60 CSAs in 1990; today there are almost 13,000. Some 400,000 people belong to them. That seems movement-ish, until you consider some countervailing data. 50,000 in Copenhagen, alone, belong to a single box scheme. More than 60 million people play Farmville online. McDonalds first quarter profits in 2011 were $1.21 billion, up 11% from Q1 2010.  So, despite FOOD INC.’s nomination for an Oscar, Michael Pollan’s single-handed splicing of the local, organic food gene into the American consciousness and Jamie Oliver’s much ballyhooed “Food Revolution” on TV, where’s the (grass-fed, organic) beef?  Where’s the movement?

The beginning of an answer lies with Paul Hawken, who beautifully argues in Blessed Unrest that it is a fool’s game to try to put a single name on the millions of initiatives emerging around the globe as an immune response to the destruction of natural systems. Add to Hawken’s prognosis Wendell Berry’s disdain for movements. Berry fears that movements, however well intentioned, devolve into warring special interests, abstractions that deflect us from reducing, in our daily lives, our complicity in the destructiveness of the modern economy.

Where does that leave us?

Well, being stubborn, slogan-loving Americans, we could try to come up with names anyway:  Foodie, locavore, vegan, localism, smallism, anti-GMOism, anti-Conquistadorism, anti-Twinky-ism, raw milkism, school lunchism, ethical treatment of animalism, family farmism, urban farmism, farmers market vs. Wal Martism, heirloom variety-ism, real foodism, slow foodism, indigenous culturism, nurture capitalism, biocharism, terroirism.

Or we can zoom out, and zoom down, and look for the broader and deeper process of which all this food related activism is a part.

THINK:  Eliot Coleman’s advice, “Feed the soil, not the plant.”

THINK:  Gary Snyder’s observation:  “Food is the field in which we daily explore our harming of the world.”

THINK:  Joan Gussow’s aphorism, “I prefer butter to margarine, because I trust cows more than I trust chemists.”

THINK:  Odessa Piper’s insight, “Local is the distance the heart can travel.”

Along this Coleman-Snyder-Gussow-Piper axis lies the connection between the food movement and its deepest roots, which reach all the way to nonviolence.

This enterprise that we are a part of, with its new organic farmers and the host of small food enterprises that are emerging to bring their produce to market, is about an economy that does less harm. It’s about rebuilding trust and reconnecting to one another and the places where we live. It’s about healing the social and ecological relationships that have been broken by hundreds of years of linear, extractive pursuit of economic growth, industrialization, globalization and consumerism. It’s about pulling some of our money out of ever-accelerating financial markets and its myriad abstractions—called, with more than a little irony, securities—and putting it to work near where we live, in things that we understand, starting with food—creating a more immediate and tangible kind of security.

This attention to and, even, celebration of the small, the slow and the local can seem, at times, rather precious against the scale of global economic, political and environmental challenges. But it was agriculture that gave birth to the modern economy, and, as Paul Ehrlich recognizes, it must be agriculture that we fix if there is to be a postmodern economy:

“The agricultural revolution led to a period of cultural evolution unprecedented in its rapidity and scale…. It is a story that starts with the obtaining of food but returns us to two aspects of human behavior that, although present in hunter-gatherers, became even more important in sedentary groups—religion and violence.”

CSAs to the rescue. Local Harvest and Greenling and Green Mountain Creamery and  Mamma Chia and Revolution Foods and People’s Grocery and Gather Restaurant and Shephard’s Way Cheese and High Mowing Organic Seeds and Growing Power and Slow Food and the Business Alliance for Local, Living Economies and RSF Social Finance to the rescue.

Can we imagine a pro-soil, pro-earthworm, pro-small farmer, anti-fiduciary-razzmatazz, pro non-capitalist-pig movement that becomes as robust in this second decade of the 21st century as the anti-war movement was in the 1960s?

Peace Now.  Fertility Now.  Food Here Now.   Slow Money.

Spreading sustainability: From the Fortune 500 to the next 5,000

Today on Sequoia Lab Blog, Gwen Ruta discusses how we can spread the principles of sustainability beyond the Fortune 500.
Recently in Harvard Business Review, Michael Porter and Mark Kramer wrote about “The Big Idea” – that companies must take the lead by “creating economic value in a way that also creates value for society by addressing its needs and challenges.”   Driven by win-win success stories, by a vacuum in policy leadership, and by the embrace of thought leaders like Porter, this idea has surged into the mainstream.  Even in the grip of the recession, companies across the Fortune 500 – from Walmart (#1) and GE (#6) to Owens Corning (#431) and SunGard (#472) – are actively pursuing a sustainability agenda.
But for the companies that make up mainstream corporate America, environmental issues may still largely be seen as a cost center rather than a competitive edge.  What will it take to show these companies that environmental innovation can be an opportunity rather than a burden?  How can we spread the principles of sustainability from the Fortune 500 to the next 5,000?
  • Start with energy efficiency
Every company uses energy, and can do so more efficiently.  The consulting gurus at McKinsey & Company calculate that by deploying an array of NPV-positive efficiency measures, commercial and industrial users could generate $732 billion in energy savings by 2020 while avoiding some 660 million tons of annual greenhouse gas emissions.  In other words, we can make a lot of money and cut a lot of emissions simultaneously by using proven technologies.
But, it’s not quite as easy as it sounds.  Companies fail to reap the benefits of energy efficiency for reasons that have nothing to do with what we learned in Econ 101.  In the real world, managers are overburdened, useful information is hard to find, lease arrangements stand in the way of smart investments, and competition for corporate dollars is sharp.
Sometimes it takes “fresh eyes” to overcome the barriers to change.  Our EDF Climate Corps program uses business students to find energy savings opportunities at participating companies.  In just 10 weeks at 50 companies last summer, we found $350 million in potential operating savings.  And that’s just the tip of the iceberg.
  • Stimulate innovation
Environmental goals, combined with open networking, can be a great way to stimulate innovation that can lead to new products and greater market share.  The impetus can come from the top, because when executives set rigorous goals and metrics for measuring them, they unleash innovation throughout the company.  GE’s Ecomagination program, which generated $18 billion in revenue on $1.5 billion in investments, is a good example of this approach.
Innovation can also come from the bottom up, as illustrated by Toyota’s “Treasure Hunt” process, which uses operators, engineers and maintenance staff to find process innovations and energy savings.
And innovation can come from the outside.  Breakthrough ideas can – and often do – emerge from bringing a new and diverse perspective to a familiar problem.  Environmental Defense Fund recently teamed up with InnoCentive, a global leader in crowdsourced innovation, to work with companies to create business breakthroughs that deliver environmental results.  InnoCentive’s web-based platform gives over 250,000 entrepreneurs, inventors and scientists around the world the chance to solve them.  With the likes of Eli Lilly, NASA, and Procter & Gamble using the platform, it’s redefining the innovation process. 
  • Capture operational excellence
For most companies, including those that provide business capital, environmental issues are still thought of as a liability rather than an opportunity.  To build value, firms must think beyond compliance.  Smart companies are positioning themselves to compete in a resource-constrained world, where efficiency and innovation trump risk management.
Working with private equity giants The Carlyle Group and Kohlberg, Kravis, Roberts & Co., EDF has developed tools that are available to any company for systematically identifying opportunity and measuring improvements in environmental and business performance.  In just two years, those tools generated $160 million in operating savings for companies including Dollar General and US Foodservice.
  • Drive supply chain improvement
Companies will want to focus first on their own operations, but for many small and medium-sized businesses, their biggest impacts lie not within their own fencelines, but in the lifecycle of the products they buy and sell.  And while smaller companies may not feel that they have the clout to create supply chain mandates, they do have ability to ask pointed questions and shop around for the best prices.  Why should your company be paying for the extra energy or water or wasted raw materials embedded in products made by another company that has not yet embraced sustainability?
There are several good examples to work from. Walmart’s Supplier Sustainability Assessment questions are simple, straight-forward and a good place to start.  Procter & Gamble has a similar supplier scorecard designed to track and encourage improvement on key environmental sustainability measures in P&G's supply chain.  The company reports that about 40% of the completed scorecards it receives have offered at least one innovation idea.
Today, we are all feeling the stress of a pinched economy, resource constraints, volatile fuel prices and global competition.  At the same time, we’re seeing examples every day of companies that have successfully turned environmental sustainability into competitive advantage.  By building capturing energy and operational efficiencies, stimulating innovation through aggressive goals and creative networking, and driving lifecycle change through the supply chain, we can bring Porter’s big idea to life.
 

B Corporations: A Better Way to do Business

by Andrew Kassoy Green business and CSR (#SmartCSR) are fast becoming buzzwords in the business world. Greater awareness of the importance of socially and environmentally responsible businesses is undeniable progress. However, it is becoming increasingly difficult to differentiate between good businesses and just good marketing. This is where certifications that look at the entire company, not just a product, come in.

Certified B Corporations are a new type of corporation which uses the power of business to solve social and environmental problems. B Corps meet rigorous, independent social and environmental performance standards and are certified by B Lab, a nonprofit organization. To be certified, B Corporations take and pass the B Impact Ratings System, which examines a company’s cumulative impact on all its stakeholders. The B Impact Rating System has been taken by over 5,000 companies and is customized, depending on type and size of company.  B Corporations must score at least an 80 and make their results transparent (each B Corporation’s B Impact Report is available online). B Corporations also adopt the B Corporation Legal Framework to integrate the mission of the company into its legal DNA, setting higher standards of accountability.

These standards of performance, accountability and transparency set B Corps apart. Data shows B Corps are effectively creating a greater, positive impact. B Corporations perform 25% better than Other Sustainable Businesses on the B Impact Rating System. When scores are broken down by impact area, B Corporations maintain their lead, scoring 7% higher on employee impact, 19% higher on consumer impact, 5% higher on environmental impact and 10% higher in accountability. Little data is available on how ordinary businesses stack up. However, research suggests that few even measure impact, let alone use a common yardstick.

Consumers are demanding a new way of doing business. Research conducted by branding firm BBMG found 73% of conscious consumers consider both product and company claims when making a purchase. However, almost no one (<1%) trusts company advertisements and statements on packaging. Consumers are much more likely to trust third parties or themselves. People are hungry for independently certified companies having a positive impact. B Corporations fill this need.

To ensure positive momentum forward, we must identify and support those walking the walk. With higher standards of performance, accountability and transparency, B Corporation Certification does just that. The market has never been so ready for triple bottom line businesses. The time for action is now.

To learn more about B Corporations or take the free B Impact Assessment, visit bcorporation.net

Facilitated design: the need for leadership development within design education

by Simon Kavanagh  From managing this:                                    To managing this:

 

[B. Lawson, 2006]

‘One of the essential difficulties and fascinations of designing is the need to embrace so many different kinds of thought and knowledge’ [Lawson 2006:13-14]

The realisation has arrived; that the degree of complexity of the ‘wicked’ challenges we’re facing in the world today requires multi faceted and experiential teams of people. At the KaosPilots we have stepped up our research into how best to train our students to play a significant role in the leadership of such processes, adding it to an already strong change making competency and methodology. We want to produce KaosPilots who can facilitate, nourish and create the safe spaces for these multi-disciplinary processes to take place and evolve, ensuring a high level of innovation and collaboration, where ego is left at the door, aiming at solving ‘holistically’ and authentically the need at the heart of the problems we face.

In doing this, we are exploring in many ways and through many collaborations spanning the 3 sectors and design disciplines, with the sole purpose of learning and co-creating hybrid creative and innovative processes whilst anchoring and developing the KP core disciplines of leadership, project management and process facilitation and social enterprise. One such collaboration is with Ideacouture who believe:

“What matters most in today's business climate is the design and delivery of innovation value. Meeting this goal demands the simultaneous application of design thinking, creative thinking and analytical thinking.” Ideacouture

It is true that design institutions, (generatively speaking) are waking from their long slumber, realising and acting upon the future needs of their students and their potential employers. To be a creative designer is not enough anymore. Employers are looking for that creativity, but across multiple competencies and skills including dynamic project and authentic leadership, social engagement as well as a working knowledge of soft skills. This is the reality for students, not in the future, but now. We teach these skills in abundance at the Kaospilots and want to share and expand our methodology and approach.

Three major shifts occurred in the last 2 years that have increased exponentially the opportunity and necessity of design students to graduate with a more realised and practiced skill set and talent supported by enterprise and leadership that is relevant to the needs of the world today.

The first was the economic downturn, forcing universities who have squandered so much cash in the past 10 years designing courses and faculties on a whim, to hire part-time lecturing staff out of necessity. Finally!, students are being tutored by the experts in their field, introducing them to the latest designs, trends and problems in their industries, and in the process putting an end to ‘case study brief’.

The second is the fact that the students who are graduating now are competing on a global scale, as are companies. The smart companies know who and what they need in terms of creative sustainable innovation and growth, but the current educational system is letting them down and missing the opportunity to produce more confident design students. More and more companies are outsourcing or developing their own internal programs to enhance personal and professional leadership and creativity skills as well as project and innovation management. The KP have answered this particular call with the development of a Creative Leadership program.

The third shift, if it is indeed true in practice, is the most positive. Experts now say that for the first time since the industrial revolution the mindset has overtaken the skill-set in terms of employer focus. When asked, “… which would you be more comfortable predicting, the mindset of the staff you will desire in 10 years form now, or the skill-set. In the UK, 97% said mindset”1. As companies face an uncertain future in terms of their product and service offerings & development in the next 15 years, we are doomed if design schools are simultaneously facing the same question!

Meanwhile, design colleges are trying to keep up with demand for something new, but by scrambling over each other to create the next big Master programs in everything from trans-disciplinary design to social sustainable innovation they are missing out on the support needed for the students around professional and personal leadership, management and facilitation of creative multi-disciplinary people and multiple stakeholders in the multitude of new and existing challenges that need to be solved. Skills to enable them to participate in and towards global careers and positive change. This is what we do at the Kaospilots!

The Kaospilots are positioned to strike and create from this ‘shift’ across the board. It seems that now, a lot more people are talking our language, or at least understanding it better. We are offering well developed and tried approaches to some of the challenges that companies, NGOs and the public sector are facing and that our students and the school have experience facilitating and delivering results within and across. At the kaospilots, we follow a very simple mantra, everything starts with 3 questions.

As a result, some major organisations across these sectors are looking to partner with our school and students for inspiration and innovation to solve problems related to products, services, business, organization or innovation development. Some examples of these are Unicef, to develop ‘out of the box’ solutions to their supply and demand challenges, IE school of Business in Madrid, to co-create a more social facilitation and process orientated skill-set for their social entrepreneurial MBA students, and companies such as Wolff Olins to continuously develop their creative social brand tools and methods.

What does all of this mean? Well I think the reset button has been pressed on everything and that we are now entering a time of amazing potential to alter and improve the system, especially within design education and professional growth.

We have the opportunity and the technology to bring already existing and working initiatives and institutions to a new level of cooperation across sectors, not only to create new and more sustainable solutions, but in the process create new approaches to multi-disciplinary team work, leadership, (social) enterprise and organisational development and perhaps even an “economy of happiness” Bordieu

So here is the call, what would it look like if the KP in developing these processes and facilitative skill sets could share them real time between staff and students from multiple institutions who are trying to increase their leadership and enterprising competencies. This is an invitation to design and business schools everywhere to work together with us and our students in deepening the training and methodology around solving these ‘wicked’ complicated, multi system challenges. Perhaps taking them to a new level of consciousness! Our first step in this process is to completely open-source our curriculum, content and methodology to everyone, and hope that those who hack it will feed back to the system….

1. NEW findings on the mindset / skillset shift: “Putting your mindset to work” James Reed - http://www.reed.co.uk/

Website:

Books:

  • Hansen, H. T. R. 2007:SENSITIVITY ANALYSIS as a Methodical Approach to the Development of Design Strategies for environmentally sustainable buildings. PhD thesis, Aalborg University Denmark. (chapter 7)
  • Lawson, B. 2006: How designers Think – the design process demystified. Architectural Press/Elsevier, Great Britain.
  • Schön D. 1983: The reflective practitioner – how professionals think in action. Basic Books Inc., USA
  • Trebilcock, M. 2009: Integrated Design Process: From analysis/synthesis to conjecture/analysis. Conferencepaper - PLEA 2009 conference, Canada
  • U-Theory by Otto Scharmer etc.

Fooling Around in the Name of Organics

by Seth Goldman

For the past few years I have been disappointed when I consistently see market research that indicates consumers don't view the word "organic" as a meaningful term. In fact, most market research suggests that consumers view the term "natural" as far more valuable than "organic", when the term "natural" is a completely empty word in terms of packaging language. Alas, most of the surveys suggest consumers interpret "organic" to mean less tasty, too expensive, and even a term associated with false promises.

The irony is that "organic" is one of the few packaging terms that is actually federally enforced by the U.S. Department of Agriculture. A manufacturer cannot display the USDA Organic seal on a package unless at least 95% of the product is made with organic ingredients, and the manufacturer must be able to present a paper trail for each one of those ingredients. 

So it is clear more education is needed. Given 1) the stakes for our earth and our diets; 2) the gap between perception and reality, and; 3) the fact that today is April Fool's Day, we are taking radical measures. So today we are releasing our first, (and perhaps last?) rap video, Rethink What you Drink.

Our video was inspired by my longtime board member and friend, Gary Hirshberg of Stonyfield Farm, who released "Just Eat Organic" last month. Gary and his chorus of three Moms highlight the importance of organics to our diets and to the earth. I enlisted two of our field marketing managers, along with members of our staff and unsuspecting Bethesda residents, to join me in our video, which offers a different way to think about organics, and to highlight the importance of selecting organic beverages. Two of my favorite lines are:

Middle age guys rapping, what could be sadder? I'll tell you Holmes, what you put in your bladder!

Organic tastes better cause nature got it right. You don't need chemicals to keep a drink tight.

When my three sons first heard I was going to star in a rap video, they started thinking about changing their last names, but when I told them I was more concerned with getting out the message than embarrassing myself (or them), they became supportive. In fact, my oldest son (and his chest) makes a guest appearance in the video.

I will admit that ever since college, I had wanted to record a rap. My Harvard college roommates and I actually had a group called the Educated Devastators (back in the 80's), but we never recorded anything. So this is probably as close as it gets. And so, with the extra license that it's especially OK to laugh at yourself on April Fool's Day, we (very) humbly offer www.justdrinkorganic.com.

In the hopes of expanding the reach of the organic message, and in the interests of encouraging others to share their organic vibe, manufacturers and consumers alike, Stonyfield and Honest tea are sponsoring a rap video contest.

This blog post first appeared on Seth blog post on Treehugger.com

Ask Customers to Use Less of Your Product: The Big Heresy

by Andrew Winston I recently attended an Executive Sustainability Summit hosted by XeroxWaste Management (WM), and Arizona State University. The short conference brought together public and private sector managers working on environmental and social issues. Xerox asked me to attend and give my thoughts on what I heard and saw.

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What really struck me is that both Xerox and Waste Management are doing something mostly unheard of: they're working with customers to help them use less of their traditional product or service. The plenary panel during the Summit included execs from both companies proudly talking about these fast-growing, service-oriented parts of their businesses. And what's really important is that these are not just niche product lines, but fundamental shifts in what these companies do.

In some sense, this shift is not optional, as both companies are in the throes of fundamental transformations of their industries. Xerox has been navigating the shift to digital documents for years, and WM is facing an existential threat. As CEO Dave Steiner put it, "When your company is called Waste Management, and your customers all talk about 'zero waste,' you better change your business model."

So both corporate giants are handling the industry transitions by embracing sustainability to the core. Xerox's president, North America , Russell Peacock, speaking for the company at the event last week said, "Sustainability...is what is driving the transformation of Xerox to a services-led business."

Xerox advises companies on how to save money on document handling, and holds a sizable 48 percent market share in the broadly defined, and surprisingly large, $7.78 billion "managed print services" (MPS) industry (according to research firm IDC). Part of this new strategy is an outsourcing play — they'll take over all your print needs for you — to grab share. This is clearly not a niche business-this is a firm that existed on selling devices, paper, and machine servicing, so the more it's used the better.

But at the core, what Xerox is offering is less total printing. That's a big shift in business as usual.

Xerox has worked with multinationals such as Dow (case study here) to drastically reduce the number of printers sitting in individual offices by thousands, shifting instead to many fewer centrally-located multifunction devices. But at the Summit, Xerox execs gave an example from their corporate backyard. The company helped the city of Rochester, NY slash the number of printing devices from 459 to just 168, saving a very budget-constrained local government millions of dollars over the next five years.

These printing retrofits save clients up to 30 percent of their document-related costs. And the sustainability story is significant. In addition to using less energy to run machines, slashing paper use also saves large amounts of energy and water upstream in the paper production process.

For Waste Management's part, the story their execs told was similar but goes beyond cost savings and has a measurable financial upside. When WM helps customers reduce waste to landfills — which is how WM has made all its money until recently — it diverts those waste streams to recycling facilities which segregate materials to resell or to waste-to-energy (WTE) plants.

Recycling streams can generate income for customers. So instead of paying to dump garbage, customers may get paid for valuable material, which adds up (GM, for example, has made $2.5 billion on recycling over the last five years). Meanwhile, the other stream of waste will create a potentially significant source of clean energy (adding to the sustainability win). In its WTE plants, WM now produces enough energy to power 1 million homes, more than all the solar power in the United States. From waste hauler to energy company — that's a transition for sure.

These two companies are not the only ones out there going down the "use less" path. It's increasingly common in the B2B space. Another client of mine, Kimberly Clark Corporation, has similar conversations with its customers for its K-C Professional division, which supplies paper and cleaning products to public and private sector organizations. The customers appreciate supply partners that help them save money.

Let's be clear: Xerox, Waste Management, Kimberly Clark, and others are purposely cannibalizing their own businesses. The wisdom of such a strategy has been discussed in business circles for years, most notably in the work of Harvard's Clayton Christensen (The Innovator's Dilemma). My tweak to Christensen's famous term "disruptive innovation" is to describe sustainability-driven creativity as even more heretical; it's about questioning the entire consumption model — it's heretical innovation.

It can be painful for companies to threaten their own cash cows, but what's the other option? I interviewed Xerox's CEO Ursula Burns for my last book, Green Recovery, and asked her about this strategy. Talking about Xerox's service business strategy and its "solid ink" technology, both of which displace existing printers, she said, "Will these new products cannibalize our machines? Maybe, but someone else doing it is much worse."

So the choice is not between asking your customers to use less of your product and ignoring the trend...it's between you doing it or your competitor. That's the risk reduction logic. But a related logic relies on improved customer service and deeper customer relationships. As Waste Management's Steiner said last week, "We're cannibalizing our own business to give back more to our customers."

Xerox's VP of Environment Patty Calkins probably put it best during the Sustainability Summit: "Who would think that Xerox would help you reduce printing or that Waste Management would move toward zero waste?"

Who indeed.

(Andrew Winston works with leading companies to drive growth with environmental thinking.  He is a globally recognized expert on sustainability and is author of Green Recovery and co-author of Green to Gold, the best-selling guide to what works - and what doesn't - when companies go green. This post first appeared at Harvard Business Review Online and is reprinted here with the permission of the author).

 

What Do iPhones, Coca-Cola and SunChips Have in Common?

By Gwen Ruta The ruckus over Frito-Lay’s recent decision to pull some of the compostable bags it uses for SunChips snacks is missing the point.  The point is not whether compostable bags are too noisy – that was the complaint that precipitated the bag redesign – but whether they really are better for the environment.  And the answer is, “only if they actually get composted.”

The bags do crinkle loudly, though hardly like the “revving motorcycle” reported in the Wall Street Journal.  But that’s nothing compared to the noise being generated by this announcement.  USAToday wrote a feature article that generated hundreds of scornful comments (on both sides) and later The New York Times' Green blog called it a “Snacklash.”

“There was so much hype when the bags were introduced,” I was asked by a reporter.  “Doesn’t that make the move back to the old bags that much worse?”

So much hype?  He’d clearly forgotten the uproar when Apple’s much-heralded new phone came out with a flawed antennae.   Or the massive marketing campaign for “new Coke”, which was quickly pulled off the shelves when consumers didn’t like the taste.  Companies introduce and tweak and refine their product offerings all the time.

What’s missing in this cacophany about the bags is any discussion on what it means for packaging to be “compostable.”  In the case of SunChips, the small print on the bags says that it is suitable for industrial composting, and that industrial composting is not available in all areas.  That may be the understatement of the year.

According to Waste Age magazine, only about 2% of food waste is composted.  Last summer, San Francisco passed the first large-scale municipal composting law in the nation and Seattle also mandates composting for single-family homes.  But this country does not have a comprehensive composting infrastructure, so while it may feel good to have packaging that’s “compostable”, unless you live in San Francisco or Seattle, it’s not actually being composted.  Rather it ends up in landfill, where it takes as long to break down as everything else and may actually contribute more greenhouse gases than traditional plastic packaging.

And if you try putting the SunChips bag (or most other compostable packaging) in your backyard composting pile, as one of my staff did recently, you’ll find that doesn’t work either.

I hope that Frito-Lay and the other companies that use compostable materials will think about that in their next round of packaging design. If they're moving toward compostable packaging, they'll also need to support composting facilities that can capture the environmental benefits.

This content is cross-posted on The Huffington Post and posted on EDF Business Blog

Corporate Philanthropy: Beyond the Checkbook

 

Save a Tree! Save a Whale! Save your breath. Today’s consumer is too socially savvy to be impressed by companies who simply write a check to a cause whose mission has no affiliation with their brand’s position or offset to their impact on society. Consumers want companies to make thoughtful choices in determining where their donations are directed and furthermore, they want to have a say in the matter. Does your company’s philanthropic giving align with your overall strategic goals?

Strategic Philanthropy is a powerful way to connect with your customers and your community and to create a positive association with your brand in a relevant way.A recent Harvard Business Review article spotlighting smart philanthropy highlighted Nike, Intel, and Goldman Sachs for their integrated and large-scale approaches to corporate philanthropy – each of which were different from each other but relevant to their respective organization’s mission.

Nike’s Girl Effect stems from their core belief in the power of human potential; Goldman Sachs 10,000 Women and 10,000 small business programs provide training and funding to individuals around the world in depressed economies to start and maintain small businesses; and the Intel Teach program serves to measure Intel’s success in training 8 million teachers in 60 countries.

How can your organization make an impact on both your community and your bottom line using smart philanthropy?

Relevant Selections

A vital aspect to smart philanthropy lies in choosing which organizations to support based on the core strengths of your business or based on the industry you are in. When a company in the electronic industry sponsors a service dog training center, it is certainly magnanimous but not relevant to the electronics industry. Furthermore, it doesn’t create a positive association with their product.The most effective corporate philanthropy will strengthen your business and will support the community.

One example is Moody’s, the rating agency, who sponsors the annual “Moody’s Math Challenge” for high school students to prove their aptitude for quantitative analysis. They award scholarships and internships for the school to put these skills to work. The Moody’s Foundation wants students to study math and economics so that they can work in financial services and that is exactly what their contest promotes. How does the destination for your donations align with your company’s purposes?

Board Placement

Making contributions to relevant organizations sets the tone for smart philanthropy but you can take it a step further by engaging with those as members of the board. According to a recent Fast Company article, if you aren’t, you are “missing out on a number of valuable opportunities, including: government and community relations, economic development, leadership development, and effective stewardship of your costly grant-making.” Serving on a non-profit board also allows your executives to be trained on being effective board members and potential board leaders. The idea is an all around win for you, the non-profit, and the community.

Engaging Your Customer

You’ve heard the old adage: two heads are better than one? Well imagine what could be done if you had access to all of your customers’ heads. Many companies originally engage in corporate philanthropy for the purpose of creating goodwill with customers. These days it is about engaging your customers.

This goes beyond inviting them to participate in a community service project.Companies like Global Giving can help with crowdsourcing tools that help connect companies with donors in need. Beth Kanter of the Huffington Post identified crowdsourcing as “creating collective knowledge or wisdom, crowd creation, crowd voting, and crowd funding.” Crowdsourcing is an opportunity for you to bring your customer to the table and find out what they think is the most relevant way for you to give back. Have you opened the dialogue with you customers about corporate philanthropy?

These are only three ways that companies can improve their impact through corporate philanthropy. The more innovative you get and the more customized you can make a program, the more likely you are to be successful at executing that program. International Philanthropy Day is February 28, 2011 led by the Committee Encouraging Corporate Philanthropy (CECP). How will you, your company, and your customers celebrate?

Emily Cangie contributed to this article.

If GE, Ford & Nike Can Find Business Growth and Brand Value in Green, Anyone Can

Photo Credit: www.howcast.com 

By Trey Trenchard

The term “differentiated green” refers to companies who pursue green strategies to go beyond clearing regulatory and negative PR hurdles.  It refers to companies who create green strategies for reasons such as cost savings and creating a larger and more loyal customer base.

The most notable country to not sign the Kyoto Protocol is, as we know, the United States of America.  Despite the size of its economy and the living standard among its citizens, the U.S. has historically been behind its sovereign peers as far as adopting regulations and in turn encouraging its corporations to adopt sustainability strategies. However, on an optimistic note, three of America’s most iconic companies find great value in pursuing comprehensive green strategies.  At least to them, “differentiated green” is real, valuable, and achievable.

General Electric

From 2004-2008 General Electric’s new Ecomagination program not only reduced its greenhouse gas emissions by 30% but also delivered $100 million in cost savings to the company.  The profitability of Ecomagination did not stop there.  By focusing on green initiatives through this program, the company has made innovating energy-efficient products a core competency.  While often the value of sustainability programs are discussed relative to the bottom line, for GE, the real value has been realized in its top line.  The $100 million cost savings of this period seems minuscule compared to the $17 billion ANNUAL revenue GE generated in new energy-efficient products such as light bulbs, MRIs, and locomotives.

In addition to financial results, GE has leveraged Ecomagination to improve customer retention and brand awareness.  The company recognized that it had an opportunity to boost its brand by educating the public on its commitment to environmental responsibility.  According to Interbrand, “GE Ecomagination is cited as a leading contributor to the 17% rise in GE brand value since its launch in 2005.”

Ford

Ford Motor Company recently rolled out its impressive Ford Focus EV.  It seems that everyone is going after the Electric Vehicle market and it is looking like Ford may have nailed it.  In addition to product development, Ford has also hired in-house climate scientists to set scientific mandates on its production as a whole in an effort to guarantee that the company does not contribute to certain catastrophic climate change metrics.  All this has resulted in a wealth of good publicity for the company and is promising to give Ford a drastic image makeover.  Not only is it acquiring a reputation as a socially conscious organization, but also, perhaps something no one thought it would ever be, an environmentally friendly company.

This is the type of marketing magic that cannot be bought with expensive advertising or a massive PR campaign.  Ford saw the future and decided to make the real changes earning them praise from even some of their toughest critics in the grass-roots environmental blogosphere and from formerly skeptical consumers who may even be converted into brand evangelists.

Nike

Nike recently produced jerseys for world cup teams made of plastic bottles found in landfills in Taiwan and Japan.  Nike’s focus on repurposing started in 1993, by reusing materials from old shoes to produce basketball courts and track surfaces.  Since their first decision to “go green” in 1993, Nike has been an early adopter of numerous sustainable strategies.  It has taken a serious stance on selling recyclable components, reducing waste, and reusing byproducts like rubber or plastic to create new products.  This has resulted not only in cost savings but in a wave of positive PR.

Its financial results are also staggering.   In the last 10 years, Nike’s stock price has increased 216%, and year to date, has increased 31%, relative to the S&P 500’s 4% decrease and 19% increase respectively.

* * *

As a business owner, American or otherwise, are you missing out on an opportunity for growth and brand equity?  As discussed above, cost reduction is now only part of the equation.  If embracing green leads to top line growth, there is no time like the present, especially in the United States.  We are on the cusp of another commercial revolution.  The advent of electricity caused a revolution that built GE.  The advent of the automobile did the same for Ford.  The wellness revolution that started in the 1970s opened the door for Nike.  Most recently, the technology revolution has created some of the largest market cap companies in the world.

The green revolution is just starting and there is plenty of market-share up for grabs.  The United States has historically been known as a great innovator and has led the pack in many of these revolutions.  If US companies actively embrace sustainability, they stand to see great profitability from this global movement.  If your business embraces it, so can you.

Insights on the Eco Index: how the outdoor apparel industry’s sustainability tool changes the game for any business

If you could reduce your product packaging costs by 38% while offering a more sustainable solution to your customers, would you think twice? Many companies are taking bold steps to incorporate sustainability into their core business strategy, reaping not only brand and customer benefits, but bottom line benefits as well.

In a recent example, the outdoor industry, whose customers are known for their environmental savvy, is embracing sustainability through industry wide collaboration. A sub-group of the Outdoor Industry Association called the Eco Working Group spent the past four years creating the Eco Index - an environmental assessment software tool designed to advance sustainability practices among the apparel, footwear and equipment manufacturers.

Launched in the summer of 2010 and backed by supporters like REI, Target, Timberland, Patagonia, Brooks, Levi's and Nike, the Eco Index is quickly earning credibility and has the potential to drive major changes in the apparel industry.The Eco Index addresses two of the biggest challenges companies face in making a case for socially responsible business practices - quantifying the costs and savings and standardizing performance metrics that can be easily communicated to customers.

According to their website, the Eco Index “provides companies throughout the supply chain a way to benchmark and measure their environmental footprint, allowing them to identify areas for improvement and make informed sourcing and product life cycle decisions.” Furthermore, the index seeks to create “common language” around sustainability for consumers and retailers alike that will allow for more informed decisions.

The Eco Index is similar to Energy Star, the EPA’s rating program that ranks the energy efficiency of appliances such as refrigerators, which has become the international standard in measuring appliance energy efficiency. In the Eco-Index, products are ranked based on suppliers’ answers to survey questions and then assigned a score that is some percentage of "perfect" in each of 7 “lenses”: Land Use Intensity, Water, Waste, Biodiversity, Chemistry/Toxics – People, Chemistry/Toxics – Environment, and Energy Use and Green House Gas Emissions.

Unlike the Energy Star program, the Eco Index is currently only an internal supply chain tool and is not a consumer-facing label. In order for the Eco Index to reach such a level of adoption, it would have to be made available at the point of sale. For now, "it's a tool for a company to use to make a better choice," Amy Roberts, vice president of government affairs for the Outdoor Industry Association explains.

While the Eco Index does provide a methodology that is easily applied across categories, it is only in Phase 1 roll out and there are still some big questions to address. For example, some survey questions rely on estimates from suppliers, which could call into question the accuracy of a score; and currently there is no total score, although one may be incorporated during later phases of the project.

Despite the fact that it’s still a work in progress, the Eco Index has proven that a focus on sustainability can impact the bottom line. Even at the most basic level, programs that reduce, reuse and recycle frequently lead to cost savings. According to the Eco Index website, Patagonia's efforts to encourage its supply chain to adopt more sustainable practices have resulted in eleven of its textilemills adopting the Bluesign standard - allowing Patagonia to reduce the costs and time associated with monitoring those vendors.

Wall Street Journal article reports that, in and effort to improve their Eco Index score, “Brooks got rid of moisture-absorbing silica bags, which turned out to be ineffective, and stopped stuffing the insides of shoes with tissue paper. As an added benefit, the " green" changes reduced the cost of the shoe box by 38%.”

With both proven bottom line impact and growing consumer feedback favoring green minded companies, as a business leader, are you adequately engaging your customer around your sustainability efforts?

Many consumers cite that they recognize that sustainability and social responsibility is a developing conversation in the business world and they want to hear about the work in progress. They don’t expect companies to have all of the answers, but they do expect a response.

As the Eco Index, and tools like it in other industries, moves toward a more consumer-facing model, there will be increased incentive for companies to incorporate sustainability in all facets of their business from product design to supply chain. Will you be a leader in green innovation, or will you be left standing in a pile of tissue paper and silica bags?

Sequoia Lab consultant Emily Cangie contributed to this article.

Photo credit: www.rei.com