Interview on Sustainability in the Retail Sector

I was recently interviewed by Steve Rowen, Senior Analyst at Retail Systems Research (RSR), regarding sustainability drivers, trends, strategies, & technologies in retail. RSR is a market research firm who focus solely on business challenges and technology strategies for the retail sector.

Key topics covered: market drivers in the sector today, such as customer demand, private label growth, and green branding; strategies for this sector, including gaining visibility on an enterprise’s carbon footprint, developing & leveraging new data sources and integrating for reporting & optimization; and future trends (such as leveraging life cycle assessments for green product design).The link for the article is here. Read more!

Article published on TriplePundit.com

"Do Global Clients need a Sustainability Strategy Today?" was published on TriplePundit.com; link is here. Read more!

What Sustainability Strategy Solutions do Global Clients want today?

(Note: this is the first post in a series of articles on developing, validating, and implementing a sustainability growth strategy for current (and future) market conditions. Overview blog post is here. The target audience is CXOs in technology companies and global Engineering Procurement & Construction (EPC) firms who are chartered to lead efforts to grow new revenue streams in this general market sector; as well as those executives in global enterprises who are considering implementation of such strategies.)

In the fall of last year, I wrote about the need for sustainability programs in the industrial sector, given the current economic climate (link). Since that time, we have seen market conditions deteriorate, but conversely, have also seen companies (both services and technology) who are starting to hire again to provide sustainability solutions to their clients. The purpose of this column is to provide some guidance on the state of the sustainability strategy market need; particularly in regard to enterprise systems. Notes from leaders from both the ‘sell’ and ‘buy’ sides of the equation provide additional data points on current trends.

Perspective from Sustainability / Environmental Executives

Many corporations have been focusing on very tactical and survival -based activities, such as cost control and risk / exposure management. The awareness for sustainability solution need (strategy, projects, implementation, reporting) is still relatively high, based on discussions I have had with executives in the energy development and discrete manufacturing industries; but that need is tempered by reduced internal budgets (and available staff), along with more immediate operating concerns (such as equipment maintenance, process safety, compliance, etc).

When sustainability programs compete against operations for resources and internal ‘mindshare’, one can get the ‘rubber band effect’, as an energy development executive referred to it: “the sustainability team gets ahead of itself on programs, and then gets yanked back”. A key issue: what sustainability metrics should be developed and adopted initially?

Another exec from the discrete manufacturing industry offers advice to solution providers: “don’t try to sell the ‘hearts and minds’ programs at this time: aim for the basic needs in environmental programs, such as self auditing programs, and look for opportunities to add value over time”.

And while corporate environmental, health & safety (EHS) departments still provide overall policy development and guidance, many sustainability initiatives (and leadership thereof) are being developed within business groups in the organization. “Initiatives for sustainability are being implemented in engineering departments, who may serve as ‘internal consultants’ to EHS and corporate sustainability staff”, an upstream energy development exec told me. “Sustainability leadership is moving from EHS departments to staff running business processes, such as supply chain management”.

So, from a management systems perspective, such as that for enterprise level risk or carbon management, it may be difficult to develop & sell a ‘top down’ solution. Initiative – specific strategies may be an easier sell.

Perspectives from the Engineering Industry

As I wrote last year, the global engineering procurement & construction (EPC) segment is positioned to provide a range of strategy and implementation services within key sustainability and cleantech segments (article link is here). How has this industry been impacted by current conditions? Talking to a number of executives, the common themes are as follows:

• What was once significant, backlog has been slowly been tapped and is diminishing, especially in the industrial sector and in international markets (which had been strong up to this point)
• Similarly, the increase in signed projects has slowed, as client projects have been delayed
• But, new markets are emerging (i.e. projects associated with the federal / state recovery act funds, energy mgt programs, and GHG inventory development); albeit slowly

Short Term Solutions of Interest

Notwithstanding the opportunities currently to provide energy efficiency & management solutions and GHG inventory / assessments, what are some of the focused sustainability solutions that appeal to executive level buyers today? Based on conversations above, the likely candidates include:

• Initiative Strategy Review (where a client is already performing energy management, GHG inventory assessment, Green IT programs etc; can you help them adapt their strategy to maximize value with current operating constraints?)
• Sustainability Diagnostic Review (evaluate current sustainability programs with focus on current economic conditions. Also, bring in any benchmarking information to competitors or across industries)
• Regulatory Landscape Review (given the myriad of state, federal, and NGO guidelines and proposed regulations, provide client – specific regulatory impact scenarios)
• Emerging Technology Review (appealing to CTO / CIO execs on advances in both IT based technology and ‘cleantech’ hardware)
• Executive Coaching (assisting influencers and other internal staff in evangelizing, educating, and selling sustainability solutions / strategy to internal decision makers)

Summary

Following the current market trends and anecdotes provided above, what are some of the key concepts to consider when developing and promoting sustainability solutions today?

• Pick ‘tactical’ sustainability projects (which may be an oxymoron…) such as strategies for maximizing the efficiencies of existing systems, buildings, and assets.
• You should articulate an accelerated ROI for your clients, but provide a 'platform' (technology based or process based) to allow your client to leverage incremental successes over time across his / her enterprise
• Assessment and benchmarking: executives place a high value on validation of industry trends and insights

Again, initiatives in sustainability ‘sectors’ such as Green IT, energy efficiency, and GHG inventory assessment are areas where solution providers may (and are) provide value to their clients. The purpose here is to find opportunities to assist clients in developing and implementing their sustainability strategies, in context with ongoing operating concerns.

The next article in this series will focus on technology – based sustainability solutions.

Read more!

Bentley Software's "The Year in Infrastructure"

Bentley Software published their "Year in Infrastructure" book last month, which provides an overview of product / solution strategy, as well as highlighting winners of the BE Awards. As mentioned in previous posts, I was invited to judge two BE categories for technology excellence: "Sustainability" and "Sustaining the Environment". This book details those winners, as well as in other categories such as bridges, water, buildings, and transportation.

The 'e-book' version can be found via this link:

http://www.nxtbook.com/nxtbooks/bemagazine/beawards08/ Read more!

New column on SustainableMinds

My column titled "In the age of financial meltdown, does sustainability matter?" was recently published by SustainableMinds; link is here. Read more!

In the age of financial meltdown, does sustainability matter?

I was in the UK at a CIO workshop last week (post coming up), and missed a lot of the on -going maneuvering on the part of both political parties here in the US. It made me think about sustainability market drivers (again; yes, I need a life...), and whether we have turned the corner from sustainability as a 'vitamin' (nice to have), or an 'aspirin' (critical need).

Right now, I would guess that most people (consumers) and many corporations are focusing on very tactical and survival -based activities, such as cost control and risk / exposure management. Where sustainability programs are already established, there is probably little impact from the financial crisis, in terms of potential termination, cancellation, etc.

But where sustainability initiatives are being considered or reviewed, I would venture that many will be put on hold for the time being, as corporations sort through on - going programs and rank and prioritize those that are truly 'mission critical' for short term goals.

But there may be a silver lining.

One could say that the current populism will engender more awareness of social impacts associated with current and projected modes of doing business. That could feed into more interest in sustainability as the template of conducting business: doing what is right (do no evil?), taking care of your employees and those who are affected / involved in your business, and developing strategy & inititiaves for promoting long term viability.

Another potential benefit: whoever becomes president, there is no doubt (in my mind) that we are entering a new age of regulatory oversight. I believe that the 'wave' of rule - making for the financial markets will spill over to other industries / sectors, and will include new environmental and social metrics.

Some may see additional regulation as anathema to the overall concept of sustainability, but as I have posted before on crisis management (link), sustainability will not be adopted by the majority of corporations until such time that: they have to incorporate programs to be competitive; or, they have to comply with new regulations. Indeed, if you view the UK and Europe, sustainability adoption is due to stringent new rules in building design & construction, consumer product design, and waste recycling; all driving much more awareness (and acceptance) in the local populations.

There. Anybody feel better about the current mess we are in? Read more!

Emerging Careers in Sustainability Consulting

Read an interesting overview of the career opportunities in sustainability consulting; both in traditional management consulting as well as with new boutique consulting firms (article on Triple Pundit). I think the E&C consulting industry is also a viable source of career opportunities as well.

(note: I posted a column on this market trend in the spring; CNET published an article on "Green is the new opportunity in consulting").

Both management consulting and engineering services firms (or engineering & construction firms; 'E&C's) are investing in sustainability practices. Management firms are building practices in environmental risk management, sustainability strategy (including organizational design, change management, as well as process design) and carbon management strategy.

The global E&Cs, such as Bechtel, CH2M, URS Corp, have some type of 'sustainability' practice. In many cases, this service offering is focused more on CSR reporting and strategy development; both growing segments.

I work with the global E&Cs as part of my practice, and I believe the bigger opportunity for 'talent' to enter this field is to focus on specific segments such as: buildings / facilities, energy development, water, transportation, and environmental. 'Sustainability' is being incorporated into many of these markets; with most of the interest coming from clients who want to manage their energy costs, minimize use (and costs) associated with resources such as building materials and water; and also manage environmental risks associated with past and current practices.

I actually think there is more potential for professionals who focus on these specific market opportunities in the short term, as industries such as process mfg, discrete mfg, energy development, retail, and real estate, for examples, are all turning to E&Cs for solution development and deployment. Read more!

Will Crisis Management drive Sustainability Adoption? (also published on TriplePundit.com)

(This post was also published on TriplePundit.com)

Recent conversations with sustainability execs, including those in the product - centric industries (CPG, discrete mfg) and in technology firms, have centered around adoption of internal sustainability programs (that is: executive sponsorship and enactment of internal initiatives to create a sustainable organization and business model).

A central issue comes up: how to convince executives that sustainability programs are critical to the welfare, brand, and growth of their company?

As in any nascent market or as part of a new management trend, there are always 'thought leader' executives that 'get it' quickly; in this case: they understand the sustainability value proposition for their company, and more importantly, may articulate the specific programs and initiatives that need to be executed to acheive success.

But many execs are viewing sustainablity with a jaundiced eye; it may appear to be 'one more corporate exercise' as one exec told me. And many view sustainability as an additional layer of compliance (more on this in a future post).

This is not to denigrate or judge those executives who don't get it; the incentives for most of these people are ones that you would expect:

- Increase profitability
- Find and develop new product and services lines, or expand to new markets
- Attract and retain the best talent
- And, keep the company out of trouble (i.e. regulatory compliance, product liability mgt, maintain positive press and brand image, etc)

So what may drive sustainability adoption broadly throughout various sectors, beyond that of the 'thought leaders'?

Perhaps the lessons of the environmental regulations wave in the 1970 - 1980's are applicable; when corporations were hit with a multitude of regulations, such as hazardous waste rememdiation, toxics management, and clean air and water requirements.

I worked with corporate environmental officers in the leading process, discrete, and energy companies in that time period, and I was frustrated when I tried to advance proactive strategic environmental risk programs. The value proposition was simply: it pays to stay out of trouble by investing in such a program on an enterprise level.

This sales approach was not extremely successful.

Clients would listen and adopt strategic programs after a crisis hit; a spill or leak of hazardous materials, or evidence of disposal at a Superfund site, for examples. It is hard to invest in the future, especially for events that have not been experienced.

The driving force of adoption of more proactive, strategic environmental risk managment programs was 'crisis management': some companies found themselves in significant risk, in terms of past environmental management practices (or legacies'), with associated regulatory, cost, legal, and negative public image issues as a result. When viewed in this light, proactive strategies (such as sustainability) that encompass processes, people, and products, look like very good investments after all.

When we view sustainability program adoption today, there are certainly those companies who are visible due to their proactive approach (think Walmart), but: we are also drawn to environmental and health crisis's that have occurred; the Mattel issue with it's suppliers was a highly visible example of the need for a corporate sustainability program (or at least a sustainability initiative for the supply chain).

I would advance the idea that in the near term, the vast majority of corporations (i.e. those that are not 'thought leaders', and are in the population within 2 standard deviations of the bell shape curve of their sector) will not adopt sustainability programs unless faced with a crisis; either their own or one from a competitor or well known company. The crisis may not be a major one, but could be big enough to cause negative impacts on brand, customers or employees. They could be: product returns, worker health & safety, past environmental liabilities, losing key talent to competitors, or have a supplier face the same issues.

I don't think this adoption driver will continue on indefinitely, but given the lagging economy and business investment in key sectors (construction, manufacturing), many companies may defer on moving forward with enterprise level programs. When the economy turns around, adoption will probably hit some level of inflection point in the near future (2 years), where sustainability programs will not be a 'nice to have', but will be necessary to compete. But I do not think we are there yet. Read more!

Social Networking column published on ENN

ENN (Environmental News Network) has published my column on "Why the Sustainability Community needs Social Networking"; originally published at TriplePundit.com

Link for the ENN article is here. Read more!

Exit Strategies for Sustainability Reporting companies?

Over the past few months I have had discussions with a number of sustainability technology firm execs, as well as with other tech execs that follow this field.

One particular question keeps coming up: what is the growth and exit strategy for these companies? Many have started with compliance (such EMS or EHS) as the building blocks, while others are new and have built the applications for customizable reporting for the myriad of NGO protocols out there.

While sustainability reporting is just taking hold here in the states, in Europe it has been adopted at a higher rate. Those companies providing such reporting technologies are now faced with the issue of building off this installed base, or seeking additional customers. Up - selling to the base may include providing additional functionality (i.e. I talked to one firm that is building a 'fraud control' set of features, for managing social impacts associated with fund disbursements in sustainability programs). Obtaining additonal customers can be acheived by acquisitions; which also allows for building a broader solution. One trend seen: EMS and sustainability reporting firms acquiring emerging GHG inventory application companies. Perhaps here in the US we will follow this trend of market evolution and consolidation in the next 12- 24 months.

But at the end of the day, it would seem that these firms should be part of a broader set of solutions, or embedded in a enterprise level platform, in order to meet the demands of clients. While reporting is important, I think the real value is in developing and implementing the workflow necessary to manage and improve sustainability processes, which means the reporting tool must be integrated into supply chain, product management, CRM, financials, and other ERP modules.

So, shall we see M&A activity in this sector in the next year? Consolidation of sustainability application companies (such as that of IHS's strategy)? Larger compliance / GRC platform companies such as BWave, Agentis, and SAP make key acquisitions in the GHG management space?

There are questions as to the viability of these growth strategies; a peer of mine on Sand Hill Rd. thought that 'we could develop a Linux platform and open it to developers, which could drive a lot of the sustainability tech firms out of business' (or general words to that effect).

That is certainly possible, although I think a more likely outcome will be that the lagging economy will reduce the overall urgency for sustainability reporting, with tech firms struggling to find paying customers and gaining leadership or market share. The near term result will be a lot fewer of these firms in the next 12 months, with a potential follow - on phase of acquisitions by larger platform companies.

Just a thought.... Read more!

The Need for Social Networking within the Sustainability Community

Over the course of the past 4 years I have had the opportunity to work with or share market strategies with executives at social networking companies such as LinkedIn, Spoke Software, Visible Path, and BranchIT. Of particular interest to me was the ability to develop and leverage what I referred to as "Relationship Capital Management"; the opportunity to develop, foster, and share relationships within an organization (or ecosystem) for the purposes of optimizing knowledge management and revenue generation. (I posted some columns on this trend a couple of years ago on "Relationships as Assets" and Relationship Capital Management and CRM).

Viewing the challenges and opportunities in the sustainability market, it seems that social networking (both process and underlying technology) could play a large role in accelerating both awareness of key issues as well as potentially accelerate adoption.

Why? Here are some of the big challenges in the sustainability / cleantech arenas:

• Talent shortage (engineers, executives, scientists) of trained staff worldwide, with increased demand forecasted
• Limited training and higher education programs available today, especially in light of talent demand
• Wide range of sustainability technology and processes mean no single person / entity can be an expert in everything
• Very few sustainability processes have been codified at this point; case in point: the number of sustainability reporting schemes

The early stage of this field means that formal, centralized business models may not be the best organizational structure to follow (whether within an organization, or within a vendor company providing sustainability solutions). The development of virtual groups, social networks and other more flexible organizations may be better aligned to develop and implement fledging solutions. This is particularly important when one considers the range of expertise required to develop and implement a sustainable solution, a process, or even a company: business case development, financial modeling, conceptual and detailed design, construction, manufacturing / supply of materials, operations, etc.

So how are sustainability professionals interacting, sharing knowledge, and organizing for solution development and deployment? Here are some best guesses:

• Discipline - related: civil / environmental engineering (ACEC, ASCE, AWWA), Sustainable MBAs, etc
• Business process - related: supply chain management, process optimization, procurement, product management
• Industry groups: LEED, AIA, AGC, buildSMART, and other buildings initiatives for architects and engineering design professionals
• Regional groups: such as those in NY, Boston, India, and Silicon Valley; where there is an abundance of educated professionals with significant interest and expertise in relevant business processes
• On - line networks, such as groups set up in Plaxo, Ning, LinkedIn, Virid.us, Facebook, and Yahoo.

In the short term (next year or so) we will probably have multiple small networks that will grow organically along with their aligned sustainability / cleantech sectors (i.e. green buildings, green IT, etc). Over time I think there will be significant opportunities for start ups (one or more of the current social networking sites?) to build fee - based networks and integrate knowledge management, training programs, and perhaps certification programs to ensure high quality and continuous improvement / innovation of delivery.

I'm ready to help.

Read more!

CIO Workshop on Collaboration & Interoperability

I have been invited to attend the CIO Workshop for executives in the AEC industry, to be held in London in mid September. This yearly event is an invitation - only meeting and an interactive exchange of insights by CIOs and thought leaders in the AEC industry.

Attendees of the workshop are in the infrastructure, engineering and construction sectors and have global responsibility for the planning, implementation, and management of information systems in their enterprises.

This year's event will focus on "Information Management for Tomorrow's Asset Infrastructure", and will include discussions on how to deliver 'sustainability' in an engineering & construction organization. Read more!

Highlights from the Bentley BE 2008 Conference

This week I had the opportunity to attend the annual BE conference in Baltimore MD, hosted by Bentley Systems; a leading provider of design & construction technology solutions for infrastructure, government, and industry. I was invited to be a judge of sustainability technology submissions in the "BE Awards of Excellence"; Bentley's program to recognize innovative use of their technology in various settings.

Up to this year, categories have included those typically associated with infrastructure solutions: design innovation, project management, visualization, civil works, geospatial, plant design, and water systems, for examples. This year's conference theme was "Sustaining Infrastructure": sessions reflected the emphasis of building sustainability concepts into infrastructure solutions.

My role was to judge submissions in two new categories:"Sustaining Society" and "Sustaining the Environment". Since this was the first year for these categories, the submissions were quite varied in scope, detail, impacts, and type of technology used (Bentley's....). The winners were: CH2M Hill for an innovative design of a fish barrier system for water intake; and a Badlupar based water utility that designed and implemented upgraded water services (both delivery and quality) to local populations, with the additional goal of knowledge transfer to other Indian water agencies as well.

I think this was a very good start for incorporating sustainability metrics into their awards program, as well as integrating sustainability into the conference and company strategy as well. Indeed, CEO Greg Bentley talked at length about Bentley is managing their own carbon footprint, as well as building sustainability metrics & process into their solution strategy.
Read more!

Some thoughts on sustainability in the supply chain

As the sustainability technology market develops, it appears that there are a number of segments within (such as CSR reporting, supply chain mgt, etc) that are gaining traction, and may 'drive' general adoption of sustainability within organizations. I find it interesting that there are a number of different tech firms such as Aravo, Stakeware, CSRware, Credit360 and many others, that are coming at sustainability from different business processes. The recent Forrester report on sustainability technology (which I commented on in this post) details the general groups as well, but does not identify supply chain solutions as a specific segment. I think this may be an area that could drive faster adoption, and also be a platform that could integrate with other sustainability processes & metrics as they were developed in an organization.

Initiatives to ‘green’ the supply chain generally follow these key metrics:

• Lower energy use and increase energy efficiency in storage and transportation
• Minimize packaging via improved product design and use of recycleable materials
• Lower carbon footprint and emissions via improved energy (above), use of alternative energy sources (where appropriate)
• Substitution or elimination of toxic materials when possible
• Effecient use of resources; i.e. "embedded water" costs
• Optimize the supply chain as to minimize impacts on stakeholders

The market drivers for greening are:

• Product - specific compliance, such as REACH
• Sustainability reporting
• GHG emission reductions and credits
• Improved risk management (in light of recent supply chain incidents with Mattel, others)
• Cost savings of shippers / suppliers; leading to better value pricing
• Stronger relationships & transparency with key suppliers; strategic value

In discussions with many supply chain management solution providers, it appears that many end user clients are deploying 'green' solutions in the supply chain to achieve better energy efficiency, because it is the most visible and generally the easiest issue to solve with key suppliers and logistics partners. But it remains to be seen whether that issue will continue to drive the growth of this segment. There is a general feeling that any additional 'incidents' with global brands will increase awareness and urgency on the part of corporations to gain complete transparency in their supply chains and manage them beyond just energy efficiency gains. Along those lines, continued regulation enactment similar to REACH and RoHS in the EU will also force companies to align their supply chain (and product management) processes so as to be in compliance with product - centric regulations.

Read more!

Use of Life Cycle Assessments (LCA) in Sustainability Programs

Recently read a blog post on TriplePundit by ClimateCheck, regarding the development of ISO 14064, which covers the measurement and reduction of GHG emissions.

A comment in the article (link is here) caught my eye:

"One of the challenges is the use of an “approved or standardized” approach to quantifying the carbon credits created by new technologies. There are many approaches being used, ranging from in-house engineering calculations to full life cycle analyses (LCA) and computer models"

It made me think about the 'state of the art' of LCAs...(yes, I know: I may lead a very lonely life)......anyway, I do think that LCAs can be a very powerful tool to identify, measure, and manage GHG emissions, as well as do the same for other important 'sustainability' metrics such as: resource consumption (i.e. water); toxics use and emissions, and of course carbon footprinting.

LCAs have been around for quite a while; I developed (rudimentary) tools for environmental management problems in the 80s and 90s; focusing on chemical disposal / recycling challenges. Product Stewardship and 'Responsible Care' were the primary drivers of this market at this time; both programs were developed by the chemical industry in response to potential strict regulations in the aftermath of catastrophic environmental incidents (Bhopal, West Virginia chemical releases). But these programs did not really look at impacts in production; they focused more on the impacts after the sale.

Currently, qualitative LCAs are in use ("LCA Lite" is a term a peer of mine in the manufacturing consulting industry has used). These are quite useful for strategic planning, prioritization and ranking of initiatives and programs, and communications / marketing purposes, but may not add value for decision making on supply chain optimization and 'greening', or similar decisions in green product development in PLM efforts.

I think the standards organizations such as ISO and the Voluntary Carbon Standard are taking a lead in the development of rigorous methodologies, as well as definition of metrics that may be accepted by industries.

This is a market sector that I think both technology companies and service providers may have significant success in the next few years; tech companies in the CSR and supply chain mgt sectors are well positioned to incorporate LCA functionality (and data sets); and 'white space' development and industry - specific customization will be required to get LCAs to the point of being widely accepted tools for sustainability decision making.
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When Compliance is not enough...

Recent industrial accidents have been in the news: an International Paper plant explosion in Mississippi, and in February, another explosion at the Imperial Sugar plant in Port Wentworth GA (link).

When thinking about 'sustainability', it would seem that governmental compliance needs to be adhered to, first and foremost. Compliance in most cases is performed as result of required regulations by EPA, OSHA, and state government groups, for these two cases. But what happens when a facility (or warehouse or distributor) is in compliance, but an accident of this magnitude still occurs?

As reported by the Wall Street Journal earlier this week in their article "Dust Cloud Settles Over Industries", there was a significant dust problem at the Imperial Sugar plant, and questions were raised by outside experts as well as those in OSHA as to how effective cleaning procedures were. In this case, the plant had been cited for numerous violations in the past, but as one inspector put it, they probably did not know the severity of their own dust problems:

"They don't see it, they don't clean it, because they don't realize the hazard is there," says John Vorderbrueggen, lead investigator for the blast at the U.S. Chemical Safety Board, a federal agency that probes chemical accidents. "I wouldn't call it negligence. I'm sure any company, if they had an awareness that a hazard existed, they would take corrective action. So it's really an ignorance issue." (Wall St. Journal)

OSHA regulations may not have been sufficient, according to a member of their own safety board:

"OSHA has a 'gotcha' approach," says Stephen Selk, investigations manager for the safety board. "They look hard and creatively to identify sometimes arcane interpretations of rules that were broken. We're suggesting to OSHA that they don't offer clear guidance. They don't tell industry the things to do to prevent a disaster like this." (Wall St. Journal)

And this is where I started thinking about 'sustainability' versus compliance.

******

It remains to be seen whether Imperial Sugar and International Paper were in compliance with relevant environmental health & safety regulations. But assuming that they were, they still have incurred very high costs (financial, loss of human lives, diminished brand) as a result of these accidents. Could the implementation of a risk management or sustainability program avoided these accidents?

I think the issue here is that instead of just meeting compliance, or even adhering to a sustainability program, there is a need to monitor and optimize the processes and associated metrics of any compliance, risk management, and even sustainability program. You might be in 'compliance' with a governmental or NGO regulation, or even in compliance with your own sustainability program, but if your processes are faulty, or if you are not measuring the correct metrics, or you don't have a standard to measure the metrics.....then compliance is all for naught.

We have seen this type of problem in the supply chain, with the crisis that Mattel went through recently when it was discovered that toys were being produced by second and third tier suppliers with hazardous metals. Mattel did not have a process that was applicable for evaluating and managing this risk; they essentially had zero transparency into that part of their supply chain. Their financial 'hit' was close to $40MM, along with massive disruption of their supply chain.

These events provide ample evidence that key to any program is the accuracy of data and consistent processes to measure it; selection of appropriate metrics and ones that can be measured; and a validation process to constantly review and amend, in light of business changes, technology advances, etc. 'Sustainability' in its most basic form is then a result.
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Who are the buyers (and users) of Sustainability Solutions?

Have had conversations with leading CSR and Sustainability technology companies in the past month or so; focusing on how this market is going to evolve, what are the technology needs, and how to sell complex solutions in an emerging space. What results in this post are some insights from specific tech firms coming at 'sustainablity' from differing business process and requrements.

That leads to the question: who is buying (and using) sustainability solutions? The answer is probably dependant upon what type of sustainability solution is being sold, as much as in how the term 'sustainability' is defined.

Credit360 is a European company with offices here in the US, and providing sustainability reporting solutions to clients such as Ford Motor Company. Christina O’Connell is the director of US sales, and had some interesting perspectives on selling these types of solutions. She mentioned that "sustainability teams are not comprised of technical staff, but have more brand management and PR teams involved". For their clients, many are using solutions to report on sustainability protocols such as GRI, but will also modify those protocols according to company - specific criteria as well.

Bill Best is CEO of Proquis, an UK based risk management technlogy firm. Given their offering in corporate governance and risk, many buyers and users are at a corporate level, and report into the chief counsel or CFO. Many of their clients are pursuing sustainability, but view it as part of a larger risk management strategy. Bill mentioned that their clients are "executives who want to see everything"; assuming a dashboard or similar portal, with the ability to drill down on issues.

From an environmental management system perspective, the usual buyers have been corporate EHS officers. With the need of managing greenhouse house gases (GHG), these EMS systems take on added importance. Users in this case may include those in the CFOs office, as well as the aforementioned EHS officers. Larry Goldenhersh, CEO of Enviance, an EMS technology firm, said that many of their clients have established a role of "Chief Risk Officer", who will oversee GHG emission monitoring and control. An interesting comment: "Many companies are going back to compliance in order to get it right", meaning that sustainability is important, but not at the expense of compliance.

There are other buyers of sustainability solutions in the supply chain and PLM (product lifecycle management space) that represent a more product - centric group of users; that will covered in an upcoming post.

Read more!

Sustainability and Bisphenol A (BPA)

Viewing the recent statement by the National Toxicology Program regarding potential health risks associated with BPA , and the controversy regarding BPA in a variety of consumer products, such as water bottles, made me think of these questions:

If Nalgene and Playtex had corporate sustainbility programs in place, could this issue have been avoided (or mitigated)? and,

If they do have CSR programs, do they need to amend them to 'anticipate' (if possible) and manage potential health and resouce management risks?

It does not appear that Nalgene is using sustainability management tools. I am assuming that they have an environmental management system in place (EMS), but an EMS will not necessarily help in brand management, as well as product stewardship, which is where the problems lie.

I was speaking to Kari Birdseye, VP of Sustainability at CSRware (http://www.csrware.com/), a sustainability technology company located in the SF Bay Area, about the BPA issue and what it means to other companies, especially ones in the consumer markets.

Kari thought that "it takes a crisis to look inward and begin the self-evaluation, which would have raised awareness not only related to their environmental practices but in the socially equitable areas as well". Nalgene has marketed its products to a 'green' audience (i.e. water bottles for hikers, runners, etc), so one would assume that they would be especially aware of the opportunities (and challenges) in developing and maintaining their brand.

So, could have this situation been avoided or managed better? Some thoughts:

- Stakeholder Analysis: if a broad group of stakeholders were being polled on critical issues (resource mgt, social equity, materials mgt, emissions mgt), perhaps this issue might have been identified as a potential concern early on, and the company could have evaluated alternative materials and manufacturing processes. This process could provide a 'real time' feedback loop to executives on emerging issues & opportunities

- Product Stewardship: This type of program has been advanced & utilized by the chemical companies; not only to mitigate risks associated with use (or misuse) of their products, but also to provide competitive advantages in commodity markets (i.e. content & services designed to help customers maximize their investment in procuring / buying, using, and ultimately disposing or recycling the product). I am not sure if Nalgene has such a program, but again: it could serve as an additional process for 'anticipating' what problems could occur with product use.
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Investment Perspectives for the Water Sustainability Market

Have been discussing investment opportunities in the cleantech space with a number of investment groups, particularly in the water sector, which has not received much buzz or press to date. But given critical water demands here in the US (see the recent drought and related policy issues in the southeast) and overseas (need for consistent potable water supplies, as well as for agriculture), it is apparent that this sector within 'cleantech' has significant room to grow.

One investment group that is solely focused on the water sector is XPV Capital in Toronto Canada. I had a chance to talk with Khalil Maalouf, who is a partner, about the market conditions and emerging trends in the water sector. They are focusing solely on investments in water -related ventures, and have a 'book' of 300 or so investment opportunities worldwide in this general sector that they are tracking. Khalil generally described their interest in the following broad categories (I am paraphrasing to a certain degree; my notes in italics):

• Energy Efficiency of treatment & distribution systems
• Security (I am assuming it could be both physical and IT related security)
• Scarcity of Supply (identification of new sources, cost & time effective means of capture)
• Waste minimization (sludge management / recycling)
• Materials substitution (less toxic and less use of chemicals for treatment)

(I think another segment for investment opportunities is Information Technology; those required to find, capture, treat, distribute, recycle & reuse, and optimize systems throughout the water lifecycle)

Following XPV's definitions (and those of others) it would indicate that the market sector fo water sustainability opportunities itself is very broad. So what segments might catalyze interest and growth? I think energy efficiency technology to develop water supplies (includes technology such as desalination) and for water treatment may get traction, especially in arid areas such as the Middle East.

Following a recent post I wrote (link), another area of investment opportunity could be those technologies to allow for assessing, managing, and optimizing water use throughout the lifecycle of a product (consumer, construction, and industrial would be important verticals). This "embedded water" or "water footprinting" concept seems to have caught on in EMEA already; it remains to be seen how soon it follow similar concepts for CSR and sustainability reporting here in the US.

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Executive CSR roles & pay are growing...

A recent article from the UK indicated that corporate CSR roles have grown significantly, along with pay scale; link is here.

This certainly a promising trend; the key is to encourage / empower these CSR executives to be part of the decision making process at a corporate level. MBOs could include:

- Increased profitability from effective material use and workflow (use of lifecycle cost assessment tools to measure and optimize processes)

- Increased positive brand awareness; measured by feedback from focus groups, advisory & customer panels, stakeholder input

- Effective risk management: compliance with governmental and NGO standards; increased ROI on risk mgt expenditures

- Identification and development of new business lines that embrace sustainable principles

I am sure there are others, but if the executives are not involved in critical corporate decisions, then their roles will be relegated to more of the "EHS" roles of the past 20 years, which were non - mission critical...

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