Desirability to Sustainability: The Opportunity for Brand and Design

Notes from Sustainable Brands Conference 2008
Attended as "Expert in Residence" for Sustainable Life Media
June 2-5, 2008
See Original Article


Given the inextricable link between building a strong product and building a strong brand, you’d think making the green design/green marketing connection would be a snap. (Surprise: It isn’t.) Attendees at the workshop Desirability to Sustainability: the Opportunity for Brand and Design, led by IDEO’s Steve Bishop and Ted Howes, learned some practical strategies for designing for sustainability.

Consider a can of Gillette shaving foam, as one workshop group was asked to do. The participants, which included a marketing consultant and a member of Disney Consumer Products, came up with a range of ideas, such as changing packaging to be not only biodegradable but refillable, shifting to organic and super-concentrated formulations, and applying Cradle to Cradle principles for managing product lifecycle impacts. They also tackled retooling the product’s marketing message for a prospective re-launch.

Although many workshop participants had no problem jumping into the redesign process, the frequently asked question eventually arose: What do you mean by sustainable? And in response, the frequent answer: Each company must decide the scope and parameters to be incorporated into its design thinking.

Proper consideration must be given to the way consumers perceive product changes. One participant voiced the concern of the potential to design sales right out of the product. Changes that affect perceived value would need to be navigated. There would be no escaping the implications to the brand.

Does this product need to exist? - the lesser-asked but even more important question - addresses the more substantial challenges for consumer products companies that are seeking to make the shift to sustainability. A whole category assessment and product rationalization process eventually will need to be undertaken by companies committed to long haul sustainability re-positioning -- RVN Consulting calls this Sustainability Transformation.

When considering design, rather then thinking about brand in terms of logos, taglines, advertising/ marketing, and numbers, IDEO invites clients to think about:

• Relationship between brand and customer. Bank of America’s Keep the Change program was provided as an example. The new service that helps customers save, also has the side benefit of improved customer retention.
• Conversation with the customer and Empathy to their experience. Potential Shimano customers with fond youthful memories of riding bikes found today’s shops and the complexity of equipment overwhelming. Becoming empathetic to this experience led Shimano to develop concept bikes, change the retail experience, develop a community around biking, and begin advocating bike paths and new engagement work around increasing bike riding in general.
• Story Telling. What story does the product tell for the company and the customer? Adobe had already made significant strides in greening. After considering eliminating packaging all together, the company instead opted to work with existing recycled materials and redesign for flat shipping to achieve transportation efficiencies to packaging facilities. Keeping the packaging supported the need of independent designer customers' to share a brand and credibility "story" by displaying product packaging on office shelves and displays.

Responding to the New Sustainability Marketplace

An audience member asked whether is it better to develop new sustainable brands versus change existing brands to be more sustainable? And although the question was not explored in significant depth in IDEO’s workshop, the danger of making brand claims that are not backed up is definitely a consideration of many companies going down the sustainability path. With activists and consumer groups targeting green washing, many companies are being very careful not to overly promote their greening initiatives.

Ted Howes expressed the perception of a green bubble similar to tech and the potential for consumer fatigue from the difficulty in navigating all the information associated with the green product marketing place. Consumers want to make choices that they can make readily.

Workshop participants were reminded of the challenge of shifting to sustainability. We’re dealing with a systemic problem, everything is attached to everything else and companies are not always sure where to start. But there is an opportunity to shift from a one way dialog to two way dialog with customers. Smart Meters were provided as an example of a product redesign that empowers customers in relationship to their energy use.

IDEO is using something similar to interactive design technique that involves developing specific customer personas and designing according to detailed first hand understanding about these model demographic profiles. Conducting in-person interviews with customers in their natural context allows themes and opportunity areas to be identified.

In the workshop, participants reviewed photos that were taken by our model customer and considered how our shave foam could be redesigned as a sustainable product offering for this customer.

Integration of Intuition

The intuitive nature of this sort of technique was questioned by one participant posing the change management question of how to explain these new types of techniques to our colleagues and companies. The answer: use both data driven and qualitative techniques as appropriate in different contexts. Qualitative and explorative techniques can be used to drill down into detail that can’t be explained by hard data.

A representative from EcoBags reflected on the importance of engaging suppliers as an extended part of the company allowing the company to stay in tune with customers’ entire experience. It was suggested that quantitative analysis is best for optimizing existing products and service offerings while qualitative is more effective for identification of new ideas.

A representative from UPS commented that he wished the company did more intuitive work, explaining the trap of size. Unless a new idea is going to generate 100x millions of revenues and 10x millions of profit it does not get much play - its just not big enough for a risk averse company like UPS to pursue. For UPS new products and services that are adjacencies to existing products are easier new ideas to push through.

Sustainability Redesign: Putting People Back into the Equation

Although the question was posed: "is there even a green customer?" the discussion will have to be saved for later. Instead we addressed another comment: "design for sustainability - could mean anything." IDEO’s perspective is that sustainability requires an expanded scope that puts people back into the equation.

Three facets to be considered in design are personal, social, and environmental impact of the product or service. Steven Bishop took on the audacious task of demonstrating use of a Nettypot (a traditional Indian nose irrigation technique) to explain in detail.

1. Personal Impact speaks to how the product aligns with personal values. The Nettypot makes the user feel good and aligns with his values of natural healing. Steve could avoid using the pile of drug store remedies presented as the typical alternative.


2. Social Impact speaks to the social benefits derived from the design. Using the Nettypot has the potential to reduce hospital visits. The stats were given that of 180 visits to emergency room, 108 are not urgent resulting in unnecessarily clogged emergency rooms.


3. Environmental Impact of the Nettypot is particularly compelling in today’s context, where the properties of both over the counter and prescription drugs are increasingly showing up in our rivers and streams.

Addressing the new sustainability marketplace is both a demand and supply challenge. IDEO suggests we respond and motivate demand by connecting with people and addressing desirability, values, and brand. On the supply side think about energy intensity, green material, and supply chain.

• Increase the positive experience for the customer.
• Consider the design but also consider communications.
• Communicate the value of the offer and provide education so that the customer can evangelize themselves.
• Make the change desirable as opposed to a sacrifice. The example of the Cool Biz campaign in Japan worked to reduce personal body temperature by eliminating men’s ties, a fashion change that was fun and contemporary.

Although lifestyle assessment can be an extremely valuable exercise the cost and complexity can be significant, and customers don’t necessarily read Sustainability Reports. Companies must help people take the journey by providing support and motivation for behavior change --Edmund’s competition for best hybrid performance was provided as an example. Wal-Mart's PSP has been well recognized as a behavior change program for employees.

The workshop concluded with the last part of the group work, a brainstorming on how we might help our target customer persona take on new positive behaviors related to our shaving foam redesign. Were there green design failures our customer was experiencing and how could these be addressed. Personal insight into target customers was reverted back to as the ultimate cornerstone of a solid methodology for new design.

Revi Schlesinger heads RVN Consulting, a network of experts aligning to support the success of large-scale corporate sustainability integration initiatives. Continue the conversation at www.ReviSchlesinger.com/blog.html

Winning the War for Talent: How the Right Environmental Strategy Can Help

Notes from Sustainable Brands Conference 2008
Attended as "Expert in Residence" for Sustainable Life Media
June 2-5, 2008
See Original Article

Sustainability is fundamentally a human issue, said Paul Hannam, president of Bright Green Talent, at the start of this session on recruiting and retaining top talent. To address today’s challenges you’ve got to understand the cultural and psychological factors at play.

While a relatively small number of people make the difference in organizations, talent is the greatest source of competitive advantage. At the same time, organizations are competing for the same top 10% of candidates in a talent market that is more mobile then ever. Given that 81% of U.S. respondents to a recent Ipsos Mori Survey stated that they would prefer working for a company that has a good reputation for environmental responsibility, it’s safe to say that a strong reputation for sustainability can improve a company’s capacity to recruit.

Attracting, Engaging, and Retaining Leaders

With the cost of replacing a senior manager averaging at 200K, retention can have a significant impact on the bottom line. Engaged employees are more likely to stay and are higher-performing overall, Hannam said. He recommends the following three strategies to attract, engage, and retain top talent:

Career Development. Offer a compelling salary and benefits (that’s a no-brainer). Make sure to explain how potential recruits can engage their values and grow inside your organization.
Employee Engagement. Many people experience a divergence between the way they work and the way they live. Bring these into convergences to engage people at the values level. People want more today. Personal, spiritual and professional development and growth opportunities all attract extraordinary people.

Commitment to Service. Show that your organization applies its values to everything it does. Be specific! Prospective employees want to hear about:

• Integration of green in mission and values
• Green products and services
• Green building and practices
• Green transport policies
• Employee programs
• Community events

Once you’ve developed your value proposition, set up a green recruitment brand - essentially an elevator pitch for why your company is a great place to work.

Cases In Point: Interface & Seventh Generation

Joyce LaValle, SVP of Marketing for InterfaceFLOR, took the session floor to reflect on her company’s experience with recruitment and retention. Interface has the benefit of a stellar reputation as a sustainability innovator. Fifteen years ago, Interface shifted from a Take, Make, Waste mode of operating to a plan the company calls Mount Sustainability. (For a video clip of what inspired CEO Ray Anderson to reposition the company, click here.)

But engaging this work on the outside must be accompanied by the work on the inside, LaValle said, and Interface soon set about engaging employees around the company’s new mission by playing to their strengths. Interface uses the Gallup’s tools for Strengths-Based Development to evaluate each employee’s unique abilities and level of engagement. People want to be known and understood, and be able to make a difference, LaValle explained. This is a life process.

Interface’s Mission Zero sustainable strategy has been a significant attractor of top employees to the company. Thanks to Interface’s highly committed workforce, the rate of innovation at the company has reached extraordinary levels, according to LaValle.

Jeffrey Hollender, CEO of Seventh Generation, called developing employee programs is a sloppy creative process, emphasizing that it’s ok to make mistakes as long as they’re dealt with quickly. When hiring a candidate, values always must come first and skills second, according to Hollender. If a person doesn’t align with the company’s values they will do far more damage than good, regardless of their skills for the job.

Conversely, once you’ve got your team in place it’s important to support a strong sense of we all succeed and fail together. (To that end, Seventh Generation does not give individual bonuses.) An atmosphere of openness and transparency helps, according to Hollender. For example, reporters regularly roam Seventh Generation’s offices, free to ask anyone anything. It’s a testament to our open environment and culture, Hollender said. He also suggested that companies should freely disclose their employee turnover rates, because that kind of metric tells people what’s really going on. (For more on building a strong culture of sustainability at Seventh Generation, click here.)

The Bottom Line

Today’s employees look for much more then the traditional salary and benefits in their work, Hannam concluded. Happy people want creativity and innovation, and they want to work with like-minded people in healthy context where they are appreciated and find meaning and purpose in their work. What’s great about green is it brings all these things together.

Revi Schlesinger heads RVN Consulting, a network of experts aligning to support the success of large-scale corporate sustainability integration initiatives. Continue the conversation at www.ReviSchlesinger.com/blog.html

Trends in Consumer Brand Perception: Who Made This Year's Green List?

Notes from Sustainable Brands Conference 2008
Attended as "Expert in Residence" for Sustainable Life Media
June 2-5, 2008
See Original Article

Amid talk of recession (or perhaps in the midst of a recession already), consumers are now more worried about the economy than the environment - a significant shift since last year’s Sustainable Brands conference, where Annie Longsworth, Russ Meyer, and Jay Leveton presented the findings from their first ImagePower Green Brands Survey. This year’s follow-up to that groundbreaking study, which covers the attitudes and perceptions driving green product purchases, shows a decidedly mixed bag.

The wave of eco-marketing and media attention over the last year and half appears to have been effective, with one-third of Americans reporting that they take part in environmentally focused activities and as many as eight in ten think it important or very important to buy from greener brands. At the same time, however, consumers reported a definite sense of eco-fatigue from the more than 3,600 new green products that have debuted in the last year.

It’s important that marketers focus on messaging that is effective rather than overwhelming.

~Annie Longsworth, Cohn & Wolfe

Concern about the economy has swelled to its highest level in 30 years, taking focus away from environmental issues, according to the report. In the U.S., 77% of respondents said they are more concerned about the economy versus 17% who are more concerned about the environment. In the U.K., the numbers were 65% and 28%, respectively.

It’s unclear, though, if consumers are feeling upbeat about anything these days. There appears to be a pervasive sentiment that things are generally getting worse not better, particularly among lower income brackets. In terms of environmental concerns such pessimism has shifted in recent years, according to the report, with more consumers saying the trouble lies with government's lack of initiative rather than industry's polluting activities. Better than a third of consumers (36%) said they expect the government to do more, followed by industry (26%) and consumers themselves (11%).

The Greenest Brands: Who’s Getting Ahead, Who’s Falling Behind?

Top-finishing brands included Whole Foods, Burt's Bees, and Trader Joe's (in the U.S.) and Body Shop, Marks & Spencer, and Waitrose(in the U.K.). (For complete lists in both markets, click here.)

That said, a lack of consumer awareness continues to plague marketers, with 33% of those surveyed failing to identify any green brands by name. Brands that garnered the most specific mentions included GE (5%) and Toyota (4%) followed by Wal-Mart and Whole Foods in a surprise dead heat (2%).

Product categories considered greenest included body care, grocery, appliances, household, technology, automotive, energy, and travel, in that order. In a bit of a surprise, Amtrak is getting some play among green travel brands amid increasing consumer awareness of the climate impact of air travel.

Thirty-eight percent of consumers said they plan to spend more on green products, and another thirty-five percent said they expect such expenditures to remain flat. Categories that seem set for a bump in green-product sales include household cleaning, energy, and appliances, according to the report.

So, what are the key takeaways for green marketers? The report consistently reinforces the fundamentals of branding. Values that drive brand strength are the same they always were: honesty, trust, quality, and safety. Only after these basics are met will most consumers reach for the greener products. And don’t bother trumpeting your company’s green vision for the future: As far as consumers are concerned, the proof is in the pudding.

Revi Schlesinger heads RVN Consulting, a network of experts aligning to support the success of large-scale corporate sustainability integration initiatives. Continue the conversation at www.ReviSchlesinger.com/blog.html

How to Establish Marketing Credibility and Avoid Greenwashing

Notes from Sustainable Brands Conference 2008
Attended as "Expert in Residence" for Sustainable Life Media
June 2-5, 2008
See Original Article


Walk through any grocery store and you can’t miss it: eye-catching product packaging that screams “essentially non-toxic!" or “eco-safe!” or “recyclable!” These vague, feel-good environmental claims are popping up on an ever-wider range of merchandise these days, thanks to a scorching-hot market. At the same time, the Federal Trade Commission and other governing bodies have offered little guidance (so far) on what exactly manufacturers can responsibly say about the environmental attributes of their products.

Well, you can’t fault marketers for trying or can you? Conscious consumers are calling the more egregious offenders “greenwashers,” and in an overloaded product market where customer loyalty is a powerful differentiator, it’s a backlash you definitely want to avoid.

In April 2007 Scot Case, of environmental marketing firm TerraChoice, sent teams of researchers into the retail environment for a little good old-fashioned field work. The group identified 1018 products that made environmental claims and captured the information available to support them (in many cases, it wasn’t much). Today, he and lawyer Brooks Beard of Morrison & Foerster shared with SB’08 attendees the key findings of that research “The Six Sins of Greenwashing," if you will to help savvy marketers get religion.

The "Sin of Fibbing" misleading customers about the actual environmental performance of products. A good example is “Energy Star Certified.” “ Energy Star does not actually certify products. The most grievous sin, fibbing is thankfully also the rarest, present in only 1% of claims reviewed, according to Case.

The "Sin of No Proof" occurs when a company is unable to provide proof of claims. This is definite potential target for the FTC and could be subject to penalization.

The "Sin of Irrelevance" refers to claims that are factually correct but essentially meaningless. For example, noting that a product is “CFC-free” when CFCs have been banned for years takes advantage of consumers’ lack of information.

The "Sin of Hidden Tradeoff" focuses consumers on a single issue while ignoring or hiding other tradeoffs, causing the buyer to perceive the product’s environmental performance as better then it actually is.

The "Sin of Vagueness" refers to claims that use meaningless terms. For example, one 100% petroleum brand listed “100% natural” on its label. When a person at the toll-free number was asked to substantiate the claim, the representative replied that oil comes out of the ground and was therefore “natural.”

The "Sin of Lesser of Two Evils" occurs as a result of attempts to differentiate products as having the best environmental performance in their class. But can a case really be made for organic cigarettes?

Stricter Enforcement on the Horizon

The FTC ruled against just 37 false or misleading ads in the 1990s, and since then most of the agency’s limited budget has been directed toward education rather than enforcement. This may soon change, with William E. Kovacic, the new FTC chair, signaling a change in direction. Brooks Beard warned attendees to prepare for a crackdown on boundary-pushing marketers within the next few months.

FTC’s Green Guides for marketing claims are not law, but they are given some weight by the courts. The FTC is now considering revisions to its Green Guides governing environmental marketing claims. Adjustments could include closer scrutiny of the words “renewable,” “sustainable,” and possibly “local”; a reevaluation of the word “recyclable” given variations in regional recycling services; new standards for the use of green seals and labels; and guidance on how lifecycle assessment might fit into the claim-substantiation process.

Companies should also anticipate increasing action on the state level. The “Plaintiff’s Bar” is being referred to as next “big ticket” in this area; the search has begun for consumers who are willing to pay more for environmentally friendly products to be included in class action suits.

What’s a Green Marketer to Do?

Green markers that are doing their job well are using language that attracts the “hard-core greens,” backing up their statements with detailed information made available on a website. Be aware, though, that it’s difficult to extol the virtues of one product without exposing others. Precision is recommended but, more importantly, don’t over do it; honesty and a little humility are the best policy. Case says it’s okay to be subtle upfront as long as you offer lots of additional information online or via phone hotlines, while Beard tells his legal clients to avoid broad claims altogether.

Environmental certifications are an additional tool for avoiding greenwashing. But with over 350 certification labels right now, navigating which one to use can be complicated in itself. Case and Beard both suggest working with those created by diverse stakeholder groups and verified by third parties.

Follow these basic guidelines (and the FTC’s revised Green Guides), and ye shall sin no more!

Revi Schlesinger heads RVN Consulting, a network of experts aligning to support the success of large-scale corporate sustainability integration initiatives. Continue the conversation at www.ReviSchlesinger.com/blog.html

Companies Take Eco-Concerns Seriously at ECO:nomics Conference

Published by GreenerWorld Media on GreenBiz.com
See Original Article

March 21, 2008

Last week's ECO:nomics Conference, the Wall Street Journal's first gathering dedicated solely to the topic of sustainability, offered a snapshot of what may be a pivotal moment in time. One after another, CEOs of industry-leading global companies repeated the fact that CO2, waste, and the environmental and physical constraints of the planet are very real issues and absolutely critical concerns for business.

The roster of corporate leaders at the conference -- which included heads of General Electric, Wal-Mart, Duke Energy, Dow Chemical, Archer Daniels Midland and many more -- clearly articulated the pressing reality of eco-concerns and the imperative for business. The speakers offered a clear commitment to rapidly address energy use (appropriate enough, given it was the conference's focus), but also other challenges that could be more broadly framed in the context of triple bottom line sustainability, and to accelerate change by identifying new technologies and resources, developing new ideas, working with new partners to share information and offering incentives.

Throughout the presentations by the invited speakers and the subsequent Q&A sessions with members of the audience, the overarching message seemed to hold true: corporations and their leaders are taking environmental concerns very seriously, they are committed to making change and are actively exploring ways to respond.

Jeffrey Immelt, CEO of GE, couched his commitment in the context of fiduciary responsibility to his shareholders: "It's about getting ahead of risk," he explained. Placing these new environmental challenges squarely within the realm of the primary levers of corporate financial effectiveness -- risk mitigation, revenue generation and cost reduction -- highlights the ways that CO2, energy access and energy costs have become fundamental concerns for business. In addition, successfully addressing these issues can mean a major windfall for a company: GE, for example, sold $10 billion of wind turbines last year.

At the same time, these gains are not necessarily coming back to the U.S. Andrew Liveris, the head of Dow Chemical, commented that the company has made capital investments of around $60 billion outside of the U.S. last year because this country's energy policy -- or lack thereof -- makes it difficult for businesses to accurately gauge the economic impacts of these investment decisions. Immelt reinforced this message, stating that the United States could have a competitive edge if we don't put our "heads in the sand."

The consistency of the message from these CEOs was so clear and undisputed that the carbon-oriented interviews sounded repetitive by noon on the first day, and audience members began raising questions about topics not on the agenda. Water was a subject mentioned a number of times, as was global political stability, another major risk factor for big businesses operating in a global economy.

Unfortunately neglected throughout the conference, the business realities of implementing significant changes in business practices rarely came up among the interviewers' questions. But Wal-Mart CEO Lee Scott was among the few leaders who gave us a glimpse of the issues, when he spoke of the challenges of consumer education at the point of purchase. Scott also advocated using pricing (and taking lower margins) to help customers make sustainable choices.

Jim Rogers, the head of Duke Energy, opened his talk by commenting that with an issue of this magnitude, we have to address it with optimism and confidence about our ability to solve it. And the urgent need to solve these problems was driven home by Christophe de Margerie, CEO of Total, who argued that his assessment of the impact of peak oil was even more dire than the recently worsened estimates provided by Cambridge Energy Research Associates, a leading advisor to international energy companies.

De Margerie spoke candidly and advised other CEOs to take the risk of being exposed to those who do not agree. He said it is the right thing to do, and that companies should be really clear on what is doable and what is not, and what is doable at what cost and how it will be managed. He also advocated accountability for "full cycle" impact (taking into account the entire lifecycle of products, from manufacturing to disposal), and advised CEOs to explain the "real debate," arguing that using the term "clean energy" is misleading, when the debate is not about clean or not clean, but about the real implications of the various alternatives to fossil fuels.

De Margerie provided a fitting summation in his talk: he advocated being optimistic about the potential, and stated the need to be more vocal about the importance of these topics. In closing, de Margerie threw out the comment that the economic impact of implementing these changes will be "relatively" limited compared to the impacts of not acting.

Revi Schlesinger heads RVN Consulting, a network of experts aligning to support the success of large-scale corporate sustainability integration initiatives. Continue the conversation at www.ReviSchlesinger.com/blog.html.

The Environment and the Business of Business

Opening Talk:
The Environment and the Business of Business
Jeffrey Immelt, Chairman and CEO, General Electric

Notes from Wall Street Journal ECO:nomics Conference
Santa Barbara, California
March 12-14, 2008

The Wall Street Journal ECO:nomics conference opened up on the evening of March 12, 2008 with a very animated interview of Jeffrey Immelt, Chairman and CEO of General Electric.

Beginning by talking about GE’s business drivers, Immelt explained the reasons the company was engaged in the “eco”-conversation including: technology availability, global risk and the potential impact of regulations. As CEO of a global conglomerate, Immelt’s job is to get ahead of risk and generate earnings for his investors.

It was a bristly talk, with Immelt early on stating, “I don’t believe in hobbies” and “I’m a capitalist.” On Carbon Caps, “you’re either going to get ahead or get stopped.”

Advocating an 80% reduction by 2050, Immelt declared that we are already paying higher energy prices and that will continue. His appeal: this country could have a competitive edge if we don’t put our “heads in the sand.”

Articulating a number of issues, Immelt explained that 12 states have their own cap and trade systems and we can’t build coal fired power plants -- there is no regulatory tapestry for energy (this is in comparison to other industries). Immelt commented that when you really look around you can see that all industries are regulated. The current lack of an energy policy creates a particularly challenging environment for business because of the difficulty of evaluating the financial impact of business decisions.


Energy Policy Facilitates Business Decision-Making

Companies use financial business cases as a basis for justifying decisions. Caps, taxes and other charges, and price impacts, set the parameters and provide some fixed values so that variables can be evaluated (you could also think of this as the implications of selecting various scenario options). You often hear the business environment referred to as a “playing field”. There’s a context to work in and you are trying to get to a goal.

In order to define how you are going to get from point A to point B – you need to be able to figure out what point B is. In today’s unknown energy context, every product and service is fair game to question, as well as create or re-create .

Companies need to establish the constraints that they have to work with (the Carbon Cap will certainly be a significant one)– something like the boundaries of the playing field . Alternatively, it might be even better to think of business as a game of pin ball where different obstacles each get a different point value, and you have to, not only get to the goal, but also reach it in one piece - gaining as many points along the way as possible. I wouldn’t be surprised if Immelt played football – another possible analogy.

Immelt also commented that Clean Energy is the “best export story” we have going, including gas, wind, and nuclear which has been stopped in the US.


Diverse Energy Sources Required
Need to Slow Demand Growth through Efficiency & Conservation

Stressing the need for access to energy diversity, Immelt was the first to state something that all the Energy CEOs repeated. Timing generally seemed to be the reason for:

• Nuclear: All CEOs consistently expressed a perceived need for nuclear as a component of a total energy portfolio, required to deliver existing energy requirements during the transition from current fossil-based energy to future renewable sources.
• Government Regulation: Was advocated as a means to spur action. “It’s about getting ahead of risk.” A long term competitive cap is an “inevitability.”
• Carbon Sequestration: Immelt implied that this was necessary and would be figured out….
• Conservation: An absolute necessity given rising energy costs and the reality of energy availability and current technology solutions.

Patricia Woertz, Chairman, President and CEO of Archer Daniels Midland, echoed the need for diversity adding that it is a “corporate responsibility” to have an impact on the future.

Referring to GE’s Ecomagination “Commitments”, Immelt advocated for greater R&D investment, comparing energy industry R&D spend valued at 2%, to that of the health care industry which spends 8% of revenues on R&D.

Fred Smith, from the Competitive Enterprise Institute (CEI), warned not to rush in too fast, “make sure you’re thinking before you act.” He commented that the Environmental Protection Agency was a partner of theirs (which I couldn’t help thinking was a little scary). In response to Allan Murray’s re-enforcement of Fred Smith comments, Immelt asked annoyed/jokingly, “now really, tell me what you like best about today’s energy policy?”

Commenting again, that conservation and efficiency are the best things we can do immediately, Immelt highlighted the need for analytical studies to really figure out and be educated in the decision process.

Lee Scott, CEO of Wal-Mart was asked to comment and just gave Immelt a sort of ‘right on’ reinforcement of everything he had said. He joked that the one advantage that Wal-Mart has over GE was that they were used to criticism.

I personally left the room thinking “this is going to be entertaining.” I think that’s the first thing I said to another person as we walked out….

Side Note
After Immelt’s talk the audience was invited to Cordials in the Bar. It was particularly interesting to hear people’s take on Immelt’s comments. Apparently statements such as “I don’t believe in hobbies” and “I’m a capitalist” were interpreted by some to mean he doesn’t care about the environment and that he is all about the money. Personally, I didn’t take his comments that way at all. But I’ll admit it is hard for me to imagine anyone who lives on earth really not caring at all about the environment. Can anyone honestly state that they care nothing for the environment – the idea itself sounds almost absurd.

About the author; Revi Schlesinger heads RVN Consulting, a network of experts aligning to support the success of large-scale corporate sustainability integration initiatives. Continue the conversation at www.ReviSchlesinger.com/blog.html

Sales Job: Will Consumers Spend Green to Go Green?

Sales Job: Will Consumers Spend Green to Go Green?
H. Lee Scott, Jr., President and CEO, Wal-Mart Stores

Notes from the Wall Street Journal ECO:nomics Conference
Santa Barbara, California
March 12-14, 2008

If there was any debate whether CEOs cared about the environment, it was obviously clear that Lee Scott, CEO of Wal-Mart, did when he spoke the next morning. Scott, much humbler and softer spoken than I had seen him at the Wal-Mart CEO Sustainability Summit back in October, started by explaining Wal-Mart’s classic story -- the company continued to adhere to the mission set by founder Sam Walton who created the Wal-Mart Five & Dimes to support Americans in saving money while living better.

He described the Wal-Mart demographic, commenting that most of the conference audience had probably never been to a Wal-Mart. He communicated the statistic that 20% of Wal-Mart customers did not hold a bank account. Scott went on to explain that the company’s sales were actually affected on a monthly basis by consumer spending that was tied to a twice-monthly pay check cycle, demonstrating how Wal-Mart customers are living hand-to-mouth, paycheck-to-paycheck.

He also commented that there are things one can do as a business manager that are cost-effective, but that are wrong. We have to eliminate waste and it offers an appropriate way to reduce cost. Revenue generation will also come because people will want better products and will choose them – this is already being seen in stores in higher income areas where consumers are purchasing organics. Price sensitivity for the Wal-Mart customer is significant.

Scott reiterated Immelt’s position stating that a “carefully crafted” carbon program is inevitable and probably needed. But even with significant reductions, Wal-Mart will grow its carbon footprint by 8-9% per year just from new store growth.

Commitment at the Grass Roots Employee Level

Scott reported that 500K people (a third of the Wal-Mart work force) had taken the PSP, Wal-Mart’s Personal Sustainability Program. This was good to hear. Considering the payroll size, it’s difficult not to excuse the fact that a significant number of Wal-Mart employees are still unaware of the company’s “sustainability” commitments.

Visiting a store a couple weeks ago, I asked a number of Wal-Mart associates if they had experienced the PSP program. One person had heard of PSP but wasn’t sure what had happened to it. While Wal-Mart is now recognized as the largest distributor of organics, an associate stocking shelves in the food section could not identify whether they had any organic products and a manager quickly brushed off the question saying whatever you find on the shelves is what’s there.

None of the employees I spoke to had seen the company’s internal communications video that had been distributed to the supplier CEOs who attended Wal-Mart’s October Summit. The DVD provides an overview of what specific Wal-Mart businesses are doing about sustainability in their area. The DVD is called “Sustainability 101” and includes a short inspirational video called “Spirit of Sustainability” where Wal-Mart executives talk about how powerful an experience it is for Wal-Mart to be participating in impacting the “sustainability of life on earth”, empowered “to become leaders in sustainability.” Twelve “Sustainable Value Network Profiles” are presented in short videos covering:

• Greenhouse Gas
• Global Logistics
• Sustainable Buildings
• Ops & Procurement
• Packaging
• Chemical Intensive Products
• China
• Electronics
• Food & Agriculture
• Forest Products
• Jewelry
• Seafood
• Textiles

Certainly I can appreciate the challenges of reaching all Wal-Mart associates and addressing these remaining gaps. The PSP was developed as a voluntary mechanism to encourage awareness and support interested associates in personally incorporating sustainability into their lives by setting relevant personal goals such as weight loss, smoking cessation, recycling, etc. Wal-Mart still has a tremendous amount of work to do to get an organization of its size and scale mobilized to operate in a new paradigm, let alone to be aware of the work that the company is doing. Scott repeated a message I heard him say in Bentonville as well, “We are not green” we have a long way to go…

Sustainability As a Business Opportunity

During his interview in Santa Barbara, Scott reiterated that the business opportunity of sustainability was huge. With implementation of the Packaging Score Card this February (the first of more than 10 score cards to be implemented), Wal-Mart had already reduced packaging by 10-15%. Scott provided the example of the Nutrigrain Snack Bar that eliminated a cardboard insert without any impact on the stability of the product. The cardboard insert never actually served any real purpose – it was simply a waste that could be eliminated.

Scott jokingly commented as he lifted the plastic water bottle that was given to him to drink while on stage at the super posh and palatial Bacara Resort & Spa, “I am surprised that this conference should have bottled water.”

Pricing for Sustainability

Scott challenged business to address pricing to allow for sustainable choices, stating that it used to be that organic or sustainable items were higher margin, but the price needs to help the consumer make the better choice. Scott also provided some specifics about how the company intended to use end caps [shelves located at the end of store isles] to provide higher visibility and sales support for sustainable products. Wal-Mart also intends to use point of purchase displays for “story telling” about sustainable choices.

Scott believes you “don’t have to make [financial] tradeoffs” for sustainability. He also stated “there are certain chemicals that just shouldn’t be products”. A similar statement is made by Ray Anderson, CEO of Interface Carpets, in an excepted movie clip from The Corporation. See blog posting titled “Addressing Negative Associations with term 'Sustainability'"
on this site.

Scott said his managers were approaching this work by reflecting on their own experience, and looking to the future generation of management and asking what would they want us to have done.

Scott acknowledged Wal-Mart suppliers for doing the work involved in addressing the sustainability of their products. It’s commonly held in the consumer products industry that Wal-Mart tends to make what many suppliers consider "unreasonable" demands on price and value. This was not reflected in the first question taken from the audience. The CEO of a Wal-Mart supplier from China was the first to comment.

What About Consumer Education?

Ellis Yan, CEO of TCP out of China, the largest global producer of CFLs, spoke about his company’s adoption of Wal-Mart’s PSP program - a wonderful case study to be investigated and evangelized within Wal-Mart. Apparently Wal-Mart actively supported the work that led TCP to eliminate 80% of their waste. Ellis also proudly stated that TCP was now recycling 95% of their glass, the most significant material component the company works with. At the same time, Ellis challenged Lee Scott, in such a nice non-confrontational Chinese way, in regard to addressing consumer education and awareness.

Scott’s response was that the company’s focus was on the customer base. He commented that the work of sustainability “takes everybody” and that the NGOs have been wonderful resources to push Wal-Mart further than they were comfortable. He mentioned that they were doing an Earth Day tab [a newspaper advertising insert] but that they were still struggling with how to approach in-store signage. Controversy about what to communicate was leading the company to hold out on communicating messages that may be misleading or contradictory to new information that might become available in the future. Figuring this out is part of a process that Wal-Mart is currently engaged in.

Sustainability Integration

The last phase of RVN’s Sustainability: Where to Begin Methodology, involves the “Integration” of sustainability into a continuous improvement process. This is particularly important now as we don’t have a clear picture of what a sustainable company looks like. In this context, companies have more impetus than ever to keep pushing the boundary further and further in their work, experimenting and adding new technologies and processes as they come online, finding new and more creative ways to conserve, reuse and restore so that business (and now life) can be sustained.

Ideas for Wal-Mart

In regard to the challenge of reaching consumers, Wal-Mart might expand its sustainability-minded approach even further and consider how its current available resources can be tapped to address this issue. For example:

• Each Wal-Mart has a large TV aisle that could be used for running targeted audio visual communications that reach both customers and the remainder of its million and a half employees.
• Wal-Mart could partner with not-for-profits at the retail level who could answer questions or host information booths in the stores.
• Green Jobs Program information could be hosted in stores, combining sustainability education and new economic development in Wal-Mart communities, leading to more sales for Wal-Mart. Reference Van Jones’ work at http://ellabakercenter.org/page.php?pageid=5

About the author; Revi Schlesinger heads RVN Consulting, a network of experts aligning to support the success of large-scale corporate sustainability integration initiatives. Continue the conversation at www.ReviSchlesinger.com/blog.html