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Life Technologies: When the Search for Sustainability Becomes a Radical Overhaul

09 Wednesday Jul 2014

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For Cristina Amorim, sustainability has been an evolutionary journey.

Having spent almost a decade with Life Technologies – a life sciences company that produces a wide range of medical and research science products – which quadrupled in size through a series of mergers and acquisitions in that time, the company’s chief sustainability officer has seen multiple renditions of sustainability evolving to the next level.

“I’ve spent a decade looking at opportunities and getting sustainability initiatives off the ground that engage every employee, from the copy room to the board room,” she says. On the heels of the announcement that Thermo Fisher Scientific, a giant in life sciences research, is acquiring Life Technologies, I caught up with Amorim on what the past decade has taught her – and her employer – about setting a sustainability strategy that is evolutionary—moving from being good to being smart business.

Evaluating Sustainability: Asking the Right Question

From 2008 to 2012, the company cut energy use by 22 percent, water use by 52 percent, hazardous waste by 13 percent and CO2 emissions by 21 percent, according to its latest sustainability report. With greater growth on the horizon, can Life Technologies continue its sustainability march?

According to Amorim, that’s the wrong question.

“We’re well positioned to harvest the smart business prophecies of sustainability. There is a lot to do to reach a closed loop system and position ourselves in the circular economy. The question is: when do you know you’ve gotten there?”

“I think this is a continuous spiral with no particular end point, but constantly looking for the new frontier that the sustainability lens brings. This is not about creeping incrementalism; it’s about radical change. It’s about turning a moment into a movement, and fostering multiple movements to effect real change”

“Five years ago, no one was talking about zero waste. The economy has changed, allowing zero waste to be a financially viable undertaking. We now have five certified zero waste sites, and the movement goes on. And what would come next?” she continued. “After zero waste, we would envision a zero emissions site—one that has no emissions to air, water, or landfill.”

Now in her fifth year of sustainability reporting, Amorim has spent the better part of the last decade in an environment, health and safety role and understands the complex dynamics of Life Technologies’ Cristina Amorimmainstream products. Acknowledging that her journey has been more about challenging the status quo, she explains:

“We constantly ask questions to challenge what we have been doing. For example, can we source raw materials that are less toxic? That would create a less permitted and safer operational environment with less waste to dispose of. This in turn leads to products that are simpler and cheaper to ship, as they require less packaging, less regulated storage and fewer transportation fees. As a result, our customers will have less packaging and hazardous waste to deal with, reducing their total cost of ownership.”

When Complex Challenges of the 21st Century Meet Genetic Sequencing

So how did Amorim, who was recognized by Ethical Corporation in 2012 as Sustainability Executive of the Year and is Life Technologies’ first CSO, initiate a sustainability strategy that leverages the company’s technology in the markets it serves?

“As I see it, the entire company is the epitome of sustainability. Our genetic sequencing technology has the potential to address some of the world’s most pressing challenges. Just like in the 20th century, computing science turned a mainframe computer into an iPhone, in this century, life sciences is increasingly putting more DNA sequencing power into smaller devices at a lower cost – making it accessible to every scientist in the world. As sequencing is becoming democratized, scientists increasingly have the tools to transform life as we know it.”

In a world where 70 percent of available freshwater is used for agricultural irrigation, Life Technologies products have the potential to transform food economics. By re-engineering seeds, scientists can create higher-yield and drought-resistant crops.

Amorim continues, “As scientists leverage DNA sequencing technology to harvest oil from algae, biofuels will free us from extracting petroleum from the earth and tackle climate change
simultaneously. The significantly decreasing cost of sequencing the genome hastens theLifeTech_2012 development of more effective medicines, vaccines and clinical solutions that alleviate the health and economic burdens on society.”

Embedding a Cultural Shift: A Decade in the Making

As a biotechnology company, Life Technologies manufactures temperature-sensitive products requiring storage and shipment conditions ranging from -80° Celsius to ambient. Cold shipping requires expanded polystyrene (EPS) coolers and refrigerants like dry ice and gel packs, to maintain specific conditions during transport.

As the U.S.’ largest shipper of dry ice with FedEx, each year we ship 800,000 EPS coolers (equivalent to 105 truckloads) and consume 4500 metric tons of dry ice, costing $15 million in packing, refrigerant and freight. Given the poor recyclability of EPS, energy intensity of refrigerants and package weight, this represents our largest environmental impact and opportunity.

How is Life Technologies turning this challenge into an opportunity? Amorim explains, “Our strategy includes eliminating the need for coolers by converting products from cold to ambient shipping, piloting cooler reuse options, and investigating alternative materials to expanded polystyrene.”

Through a robust stability testing program, we have proven that some of our products can safely withstand ambient transport conditions. Just like transporting ice cream from the supermarket to your home freezer– we don’t carry a cooler or dry ice in our trunk.

“So far we’ve converted genetic analysis, sequencing, cell culture and molecular biology reagents, top-selling capillary electrophoresis and transfection reagents. The impact has been significant—each year, we now ship 250,000 fewer EPS coolers (33 fewer truckloads), use 2400 fewer metric tons of refrigerant, and save $4 million in operational costs globally. Most importantly, we know our packaging becomes our customers’ waste. These product conversions help us leave less branded garbage in their hallways.

Of course, the effort requires engagement across multiple functions. “From R&D to distribution and sales & marketing, everyone has a part to play. We tapped into natural leaders across these functions to become ambassadors for these initiatives. It provided them with visibility and career growth opportunities. They are delivering cost savings, protecting the environment and feeling good about it,” she added.

The Externalities: Collaborating with Suppliers

While these examples prove a significant point about how sustainability thinking can shift mindsets on profit, purpose and business value across organizations, what about Life Technologies’ external supply chain? With over 50,000 products and complex transportation cycles, how is the company addressing sustainability in its supply chain?

“I have a hard time understanding the traditional concept of ‘greening the supply chain.’ Asking hundreds of suppliers to fill out forms and check boxes provides no tangible value. We could never understand how to take action on that supplier data,” Amorim explained. “Instead, we find more value in partnering with key suppliers.”

One example is Kimberly-Clark. On the path to zero waste, Amorim and her team went dumpster diving one morning to understand their waste streams. What they found was a sea of blue and
purple  latex gloves.

We approached the glove supplier, Kimberly-Clark, who partnered with us to implement a glove take-back program. It started in one location and has today expanded to five. We segregate the gloves at the point of use and Kimberly-Clark sends them to TerraCycle, who turn them into purple park benches. This partnership provides true value—glove take-back helped us achieve our zero waste goal and helped Kimberly-Clark increase their revenue by becoming our sole glove supplier globally.

Take Back: Turning Obligation into Opportunity

The circular economy has arrived. That is what excites Amorim, one of very few female CSOs in the private sector. “The regulatory environment is also helping us close the loop. The WEEE [Waste Electric Electronic Equipment] legislation in Europe is one example,” says Amorim.

WEEE institutionalizes the cradle-to-cradle concept as a means of keeping electronic equipment containing heavy metals out of landfills. “Wouldn’t you like it if Maytag removed your dishwasher at the end of its life? I can’t move it and it doesn’t fit in my trashcan. In Europe, we now have to set up a take-back scheme for all of our instruments. How can this be done profitably?”

“We realized that by taking instruments back only to recycle the parts was a cost burden. Instead we bring them back to refurbish certain product lines for resale, harvest high-value parts to be used on service calls, and responsibly recycle what’s left.”

For Life Technologies and other companies, refurbished instruments open up an entire new market. At a lower price point, instruments such as DNA sequencers are more accessible to more scientists. And with increased revenue, the WEEE obligation becomes an opportunity.

While issues like cold chain shipment, waste, and regulatory compliance present thorns on the way to the gilded goal of a closed-loop model for Life Technologies, triangular connections in its supply chain and their appetite for cutting-edge innovation leads one to believe the opportunities are endless for Amorim and her team.

As the exuberant sustainability chief concludes, “We’re aiming for radical.”

Originally written for and published on CSRwire’s Commentary section Talkback on July 22, 2013.

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#SharedValue & Sustainability: In Conversation with Nestlé Waters North America

09 Wednesday Jul 2014

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A conversation with North America's largest seller of bottled water on how they define Shared Value, their take on what's often critiqued as an "unsustainable business model," their drive for modernizing recycling infrastructure and much more more!

[View the story “#SharedValue: A Chat with Nestle Waters North America” on Storify]

Decoding Nestlé Waters North America’s Sustainability Journey: Environmental Villain or Facts vs. Emotions?

09 Wednesday Jul 2014

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When a company labels its Annual CSR Report as Creating Shared Value, you have to stop and wonder if they’re responding to the latest buzzword in the market or leveraging its potential by truly embedding it into their reporting and cultural framework.

In its third cycle, Nestlé Waters North America’s [NWNA] latest Creating Shared Value Report attempts to accomplish the latter. Among its headlines:

  • What the company is doing to advance recycling in the U.S.
  • The company’s path to achieving a zero-waste future
  • Its continued efforts to be the most efficient user of water within the beverage industry

To gain some firsthand perspective and background on these goals and the accompanying challenges for North America’s largest seller of bottled water, I reached out to EVP for Corporate Affairs Heidi Paul [Join us for a Twitter Chat today, June 18th, at 1:00pm ET to connect with Paul directly at #SharedValue!].

NWNA_2012_CSR_Report_coverAmong my questions: how does the company balance criticism for selling bottled water while promoting healthy choices, what it is doing to shift its supply chain and use of plastic, its  well-acknowledged work in the area of Extended Producer Responsibility, and how her team plans on including consumers in its drive for sustainability.

Defining “Shared Value”

Paul started the conversation by setting the record straight on the company’s definition of what’s quickly gained momentum as a replacement for CSR: Creating Shared Value.

“We define CSV as a strategic way to achieve triple bottom line sustainability. In other words, be financially, environmentally and socially sustainable.  At the end of the day, Nestlé seeks to create shared value in those areas where we can make the most impact and that are material to our business. Globally, that is in the areas of Nutrition, Water and Rural Development. For our bottled water business in North America, our focus is on healthy hydration, packaging responsibility and watershed management.”

Has the terminology helped NWNA’s citizenship team – 28 people strong across the company – integrate its sustainability goals more effectively within its business units?

“It has done wonders. When you’re looking at philanthropy unconnected to business, it is not really sustainable. CSV focuses our engagement on the three critical topics and asks the whole company to see what can be improved for society and ourselves. We get the benefit of input from our supply chain, employee groups, community partners, etc.,” she said.

Coding the Impact of Bottled Water

Let’s get to NWNA’s main product then: bottled water. Does it feel the twinge of irony every time that is said in the same sentence as “shared value”? Paul chose to answer that with some data:

“Seventy percent of what Americans drink – according to the Beverage Marketing Corporation – today comes from a package, not from a cup or the tap. In fact, our research indicates that if people don’t have access to bottled water, 63 percent say they will buy some other beverage from a package instead, often a sugared or caloric drink with a greater environmental impact.”

“We play a key role in increasing Americans’ consumption of water, which is the healthiest beverage choice. As the data indicates, there is a crucial role that bottled water plays in consumer choice. Everywhere there is a high-calorie sugary, packaged drink available; we want to make sure there is water as well,” she emphasized.

Does the company’s sales data support Paul’s emphasis? “The volume sales increase for 2012 for the bottled water industry was 6.2 percent. And per capita consumption reached nearly 31 gallons, up more than 5 percent from 2011. Further, 51 percent of people who stop drinking sugared soft drinks are switching to bottled water. In fact, bottled water is outselling sugared soft drinks in grocery stores in eight major markets across the country,” she supplied.

At the end of the day, Paul believes, the company’s job is to talk about why bottled water is a choice – nestle waters north america brandsan amply available one – and why it should be available anywhere packaged beverages are being sold.

Is Nestlé Waters North America’s Business Model Sustainable?

That brought us to the next obvious thread: the plastic being used to produce the bottles. Recalling a keynote given by former NWNA CEO Kim Jeffery at a Net Impact conference years ago, I asked Paul how the company handles its fiercest critics regarding its use of plastic.

In a jungle of facts, fiction and emotions around environmental issues, Jeffery confronted the audience back in 2009 with a firm and resolute stand: we sell bottled water and we are doing everything we can to make that process sustainable.

Where there was a finality of “take it or leave it” to Jeffery’s remarks four years ago, Paul took a more nuanced approach to respond.

“Limited resources need to be used again and again. We have taken the mantle of becoming part of that solution. The larger point is there are billions of servings of beverages being sold everyday in some sort of package. Some populations are getting most of their calories from bottled drinks. And every time they choose water over a different drink, they’re making a more healthy and environmentally friendly choice,” she said.

And is a goal of reaching 60 percent recycling ambitious enough considering the climate and environmental challenges we face?

“At the time we were setting the goals, the nation was at a 28 percent recycling rate for PET plastic and thought that a goal to double that rate was ambitious and would require big changes. We had a lot to learn. We began to study recycling programs and the patchwork of policies and systems that were in place but were not moving overall recycling rates very much. There are big opportunities for increasing recycling by improving collection in public places, business and industry and in urban residential buildings. Today, however, there is no money going to fund this expansion of infrastructure.”

“There is also the issue of competing systems. Bottle bills for example do raise the recycling rates for bottles and cans, but actually reduce the efficiency of curbside because it is taking the most valuable commodities, which reduce the revenue, potential from curbside. Our goal was to work with others and find the most efficient system with the highest impact,” she emphasized. “

Environmental Villain or a Case of Facts vs. Emotions?

Of course the plastic of the bottled water we consume is bad for the environment. But so is almost every other product and consumer packaging we use in our day-to-day lives as study after study has shown.

Turning the argument on its head though, would we be wasting as much or filling up landfills as quickly as we are if we didn’t have the choice of bottled water to begin with? Where does consumer choice end and producer responsibility kick in?

Identifying that as another area for impact, Paul picked up:

“If bottled water isn’t available, people routinely purchase another packaged drink, one with calories and with a heavier environmental footprint. The availability of bottled water in times of natural disasters, where often tap water can be compromised, also creates a role for bottled water that goes beyond most product categories. Bottled water provides a reliable second source of water in these situations – that’s something everyone in our company is proud of.”

So when your business model is set around selling a product that is healthy and encourages nutrition while understanding and targeting its impacts through a well laid out sustainability strategy NWNA_priorities– as  Jeffery succinctly put it in his exit interview with Greenbiz Publisher Joel Makower earlier this year – is it fair to be labeled an environmental villain?

Perhaps, perhaps not.

The Challenges of Sustainability

As Paul reiterated, the journey of tackling facts vs. reality has been full of challenges and continues to be an uphill task. “Like anything else, our work in the area of recycling, water conservation and reducing our social and environmental footprint has been a constant education,” she said, citing the lack of modern and efficient recycling system as one of the company’s top challenges.

“Not too many people understand the current system in place. There are numerous questions like who is funding what, how does it work, who are the middle men, how do we get to the next stage, where can we build in efficiencies, etc. And if the goal is to accept our responsibility as a producer to recycle efficiently toward a goal of zero waste, then we need answers to these questions.”

“We’ve always said we’re open to options, and so far the option that we have seen with the highest potential to be low-cost and efficient is a well-constructed EPR system, run by industry. What makes this complicated is there are a dozen different ways EPR has been implemented globally. Many of those are not efficient. This uncertainty about the ability to do it “right” makes others in the dialogue want to take more of a “wait and see” approach. Even if you convince people who, done well, EPR in the form being proposed is the best solution, there are doubts about implementation across the board,” she said.

Other challenges?

Consumer vs. Producer Responsibility

Paul cited the potential of collaboration in building more sources for wind and solar energy, as well [“we’re not there yet but this is definitely on our radar”].

There is also a need for collaboration in the area of water stewardship. “Improving watersheds will require collaborations among the various stakeholders within a watershed, be that users, scientists, environmental groups or government. Nestlé Waters North America manages the watershed areas around the 40 springs we use that are overseen by our 10 Natural Resource Managers. We have also made a commitment to collaborate on two watershed projects per year,” Paul said.

And what about NWNA’s consumers? How does the company leverage its brand to shift consumer behavior?

“In the 1970s, recycling meant ‘putting it in the bin.’ Today, this is old news. What motivates people now is when they understand its benefits. If a consumer recycles a water bottle after use, the greenhouse gas impact of that bottle is estimated to be reduced by more than 15 percent.”

“Also, we need to close the loop on what happens to the bottles after they are recycled. They are not trash; they are a resource that can be used again and again. Right now our 50 percent r-pet bottles in our Arrowhead, Deer Park and Resource brands shows consumers what happens when they recycle. It becomes a new bottle. The visibility of this message on our bottles helps us tell the story that we need much better recycling to become a more sustainable world.”

The company’s top challenge moving forward?

“At the end of the day, you want zero impact, but is that possible? Our challenge is to keep finding those ways to improve when it feels like you’ve reduced the impact to the minimum,” she said, finishing with a flourish: “You need to find the next frontier every time – that’s the goal. And the challenge.”

Originally written for and published on CSRwire’s Commentary section Talkback on June 18, 2013.

Shared Success at Verizon: No Silver Bullet for Sustainability, Say CSR & Sustainability Chiefs

09 Wednesday Jul 2014

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Verizon recently released its second Integrated Report, combining the company’s financial and non-financial data and metrics into one clean look at its overall performance.

While the technology giant has been publishing its environmental, social and governance results for almost a decade, integration with the firm’s financial performance is relatively new. And Verizon saw several significant changes in 2012 to its approach to sustainability and shared value – which Verizon calls “shared success” – including a reformat of its Foundation’s model.

In a recent webinar, I had the opportunity to discuss the report, Verizon’s goals, challenges and a whole host of issues with Verizon’s CSR and sustainability chiefs Kathy Brown and Jim Gowen, along with an engaged audience.

Here are excerpts – and a link to the webinar recording.

Whether you’re eager to learn more about Verizon’s approach to sustainability or what the future holds for integrated reporting and sustainability standards, the webinar will provide you with exemplary context, insights into one company’s efforts to reduce its impact, and how a multinational must pick a strategy that is holistic, focused and measurable.

Shared Success:

Kathy Brown: “When Lowell McAdam became our CEO a year and a half ago, he brought with him a set of principles by which he inspired us to live. It is a value-based approach to our work in the market. We deliver outstanding communication and technology for our communities and country. And we are to share our success with the community. While Michael Porter gets a deep bow for creating Shared Value, these pillars – solutions, service and sustainability – state our mission and our version of shared success.”

Verizon's Shared Success Innovation Process

“We want to achieve measurable social impact. We can do a number of things at one time because our technology is powerful enough for us to find a way to do well for our shareowners and stakeholders, communities and countries in tackling the world’s problems…Specifically, we are focusing on how technology can bring transformational change in education, healthcare and energy management. The platform is our fiber network [and] our wireless network. Through these [networks] we are able to reach millions of users and applications that can literally change the world.”

Setting Aggressive Targets:

Jim Gowen: “Our sustainability program includes aggressive targets, follow-up and our people [who] really do make the difference. In September 2009, when we created the Office of Sustainability, one of the challenges was how were we going to make an impact on a business that [in many areas] is growing exponentially. So we set the Carbon Intensity Metric as the way to grow most efficiently. We set an objective by 2020 to improve our carbon efficiency by 50 percent. Since 2009, we have driven our carbon efficiency 37 percent.”Verizon_networks

“But as I often tell my employees, that was the easy part. Now comes the tougher part. We’ve taken care of all the low hanging fruit. How do you keep that momentum going? For example, e-waste is one of our biggest impacts. We’ve set a goal of collecting more than 2 million pounds of e-waste by 2015. That’s no small feat.
We’re doing that internally as well as externally with our Recycling Rallies.In the last two years, we’ve held 36 of these [across the country]. That objective is very important to Verizon and our customers.”

Environmental Footprint: Setting the Stage

Jim: “Our environmental footprint is quite large. Supporting hundreds of millions of customers takes a lot of work. We operate 42,000 cell towers, 31,000 facilities globally, and [a] 38,000 private fleet of trucks and vans, etc. We had to concentrate on our own resources and see how to become sustainable.”

“We focus on four key areas: making our networks more efficient; expand[ing] our renewable sources of energy; run[ning] our fleets more efficiently; and reduc[ing] the lifecycle cost of ownership of how we operate.  From purchasing to logistics and sustainability – they all match up nicely.”

Highlights from 2012: From Packaging to the “Magic Bus”

Jim: “How do we make our packaging more environmentally-friendly? How do we handle the end of life for that? We asked our OEMs to make their equipment more energy efficient – 30 percent more than legacy equipment. Then we looked at our consumer stores: 131 stores have been LEED certified so far with the U.S. Green Building council, and a pilot is underway to increase that number across our markets.”

“We recently launched our Magic Bus program. The idea was generated by one of our line managers in New York who suggested that, instead of driving our own vans around very congested areas of New York, why couldn’t we drop off our employees with their equipment to provide service to our customers?”

“From that originated a three-month pilot where we used vans that could host eight to 10 technicians with their equipment and inventory on board, and we started driving them around areas of Manhattan. We would pick [up] and drop them [off] and provide service to them throughout the day when they needed it. The benefit was significant – for our customers and our employees. We’ve now started 25 of those Magic Buses in New York and removed 250 of our vans off the roads of New York City.”

No Silver Bullet for Sustainability

Jim: “There is no silver bullet and no magic button. It’s going to take a lot of trial and error and a lot of commitment. While we think and look at our lifecycle approach, we’re still in our immaturity stage,  and the Verizon_reportopportunities ahead of us are so powerful that we can have a significant impact”

From Sustainability to Integrated:

Kathy: “Our Shared Success Council is made up of senior executives across the company – including marketing officers, product managers, general counsel, etc. – who are clearing the strategy for growth and in the process, sharing the idea of Shared Success. The report recognizes these efforts.”

“The process involves a lot of collaboration between executives and the folks on the ground. We focus a lot on our data, and we don’t see this journey as involving any one data point. It’s a journey of doing business, and the report reflects that. We’ve shown enormous efforts and growth, and the information is easy to read and use for our stakeholders across the board.”

Jim: “The report also helps us tell our story concisely. Our customers are asking, as are our investors. They are asking how we’re measuring ourselves? What are our goals – people want to invest in sustainable companies – and how are we incrementally achieving those?”

Technology and Health Care: Powerful Answers

Kathy: “We need to work on reducing costs on factory delivery systems and improv[ing] patient outcomes. Think about what you have on your iPad or phone today. We believe we can, in a more systematic way, think of security and identity issues for patients, fast connections, and [the] ability for patients and doctors to talk to each other in a secure environment through our technology, etc. We call this Powerful Answers.”

Who’s Reading the Report?

Kathy: “Internally, the audience is our employees who can have sense of our values as a company. Externally, people want to do business with companies with a heart but also have the technology and wherewithal to solve their problems. Beyond individuals, this includes communities [and]  governments who take on big ideas about congestion, smarter cars, health care, etc. This report does a good job [of] painting the bigger picture for this audience.”Verizon_Powerful_Answers

Jim: “[The] hip market that will change the world [is] using our technology, and this report helps them see first-hand the choices they have. Sustainability at Verizon is driven by our employees and our communities, not just one executive.”

Supplier Responsibility:

Jim: “Over the last couple of years, we have queried our top 200 suppliers, which represent 80 percent of our total spend, to ask them how they manage their CO2 and greenhouse gas impact. What goes into the products they supply to Verizon? And we were very surprised at the answers we got back and tallied them up and graded them.”

“Whether they’re early adopters or much more mature with their sustainability strategies, we’ve set ourselves a 2015 goal: to operate with over 40 percent of our suppliers that have targets and greenhouse gas emission goals. That impact is significant, and we’ve already seen that through the innovation they’re bringing to us about how they can become more sustainable and continue working with us.”

Evaluating Success:

Kathy: “We get all sorts of consumer indicators of how we’re doing in our community. We know how they use our network, what they think of it, etc. Once we start asking consumers how we’re doing in terms of impact, the responses have been very good. But it has been a challenge to do that in a broad way across many segments.”

For more insights from Verizon, listen to the webcast.

Originally written for and published on CSRwire’s Commentary section Talkback on April 18, 2013.

Bagels With the Tall Guy: In Conversation with Green Mountain Energy

07 Monday Jul 2014

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Green Mountain Energy, founded in 1997, is the longest selling retailer of carbon offsets in the country with a lofty mission: To change our dependence on power generation from coal and nuclear energy to renewable sources.

With a clear environmental mission and a dedicated consumer base, why would a company like Green Mountain Energy [GME] bother publishing an annual sustainability report?

“The [sustainability] report gives us an opportunity to write about everything we are doing. When you build a company of people who are passionate about the environment, the report becomes a forum to talk about everything we are doing,” says former President Paul Thomas.

The day of our interview, Thomas was still President of the company he has led since 2000. Two days later, news of his stepping down was delivered to my inbox along with a quote:

“I am extraordinarily proud of what we have collectively accomplished at Green Mountain and know that the potential for driving meaningful change is nearly limitless if businesses, like ours, can put market forces to work to solve societal problems.”

Thomas is referring to the recent acquisition of GME by New Jersey-based NRG Energy.

Merging Two Cultures & Winning Over the Skeptics

Paul_Thoms_GMEHow did the company overcome hesitance from employees, customers and investors alike about the acquisition?

“Our society is transforming as a whole from being oil-driven to something very different driven by renewable sources and technology. The question is how do we get from here to there as a society? NRG is a good example [of a company addressing] this dilemma. They are the largest investors in solar production in the country. Now, Green Mountain is a part of their initiative to make NRG a cleaner company – their activities are genuine and we fit well,” he explains.

What about shifting work cultures?

Thomas says the company has undergone several shifts since the 1990s. “We started with a lot of environmental enthusiasts with a low level of business skills. It would have been a lot of hot air if we didn’t drive value to customers. Today we are also a good sales organization, a customer-service driven company,” he says, transitioning from being an environmental company to a good business.

Sustainability Performance

But back to the 2011 sustainability report, which follows several other companies’ lead in shutting off downloadable PDFs in favor of an interactive all-you-can-consume website. The company has come a long way from its formation in the 1990s. According to the report, GME contributed to avoiding 4.5 billion pounds of CO2 emissions, which is “equivalent to not driving a car for six billion miles or planting 6.5 million trees.”

“Remember that in 1997, this was just an idea,” reminds Thomas. “We’ve also increased recycling and all our material now is made from 100% post-consumer recycled content,” he added.

Green_Mountain_Energy_CO2

GME also expanded its innovative Sun Club, which asks customers to pay an additional $5 a month to help the company invest in solar projects. The money donated is then distributed to fund solar projects nationwide in coordination with nonprofits. 2011 marked the biggest year yet in contributions.

But what is sustainability without employee engagement?

Transparency in Action: “Bagels with the Tall Guy”

GME encourages its employees to bike, bus or take the subway in its New York office and participants in 2011 doubled past years’ numbers, according to the report. The report also makes public GME’s paper and publishing standards as well as its contributions and partnerships with organizations like EarthShare.

Green Mountain Energy’s answer to town halls is what the staff quirkily call “Bagels with the Tall Guy.” Thomas explains:

“I’m 6’6” tall. My predecessor was bald so it used to be called “Bagels with the Bald Guy.” It is just an informal communication forum for employees to ask me anything that is on their mind. Nothing is off the table and the conversation is purposely unstructured.”

While all is fair game, Thomas admitted that not everyone attends every month. But what it does is allow “us to be transparent. I believe that employees are effective when they have more context of their job and how they are contributing. Their role makes more sense and there is less doubt about how they fit in and how they can make a difference,” he added.

Public Policy & Sustainability

GME_ProductsWith the Rio+20 Summit coming up, I asked Thomas what the government and public policy makers can do to help support the growth of businesses like GME.

Pointing to a fundamental disconnect, he said, “The public is ahead of policy makers because there is a fundamental misunderstanding between individuals who are concerned about the environmental and their willingness to make purchasing decisions.”

“In the last 10 years, we have seen a sea change in the public’s attitude. But policy makers have not caught up with that,” he continues, adding:

“Green Mountain can focus on market changes by aligning ourselves with the social and environmental benefits of our product. That’s a powerful combination. We’ve proven that green business works, that there is a market for us, and that we can drive a lot of societal benefit while providing good jobs and careers for individuals, and meaningful returns for investors.”

Thomas also cautioned activists and skeptics to keep in mind the regulatory barriers in the market for green energy. “Every state has its own approach ranging from Texas that is competitive and has an open market for electricity to states where the old monopolistic system is still there. We are not allowed to compete in those states!” he emphasized before adding, “We cannot sell green electricity without having permission to enter the states and compete first and foremost.”

A significant barrier but one that hasn’t stopped Green Mountain Energy from scaling the heights and pursuing its mission. His advice for aspiring social and environmental entrepreneurs? “Keep at it, we’ve done it and shown that green businesses can thrive. It’s possible.”

Originally written for and published on CSRwire’s Commentary section Talkback on June 1, 2011.

Aside

Sustainability is a Team Sport…And a Business Enabler

02 Wednesday Jul 2014

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  • 118 stores.
  • $1.7 billion in sales in 2010.
  • Over 10,000 employees.
  • One of Fortune’s “100 Best Places to Work For” since 1998.

That’s the clout enjoyed by Recreation Equipment Inc. (REI) today, a national cooperative and one of the country’s largest outdoor apparel and gear manufacturers founded by a group of conscious mountaineers in 1938.

At last week’s Net Impact conference, REI CEO and President Sally Jewell took the stage to discuss how her company was faring amid Amazon’s recent expansion, whether a cooperative should be a viable option every entrepreneur should consider, and how sustainability is a team sport – and not a niche market anymore.

The Amazon Disadvantage…

Calling Amazon a “tough competitor” for brick and mortar stores, Jewell, who is a former commercial banker, took umbrage with Amazon’s policy of no taxation alleging that this discouraged new jobs. “Our business is doing well. Fair competition is always good, but unfair competition isn’t. By not charging taxes, Amazon is taking away much-needed state revenue” and sales from REI stores.

“Not being able to employ people is frustrating,” she added, emphasizing that while REI was doing well with stores having grown every year since 2008, hiring was definitely slower than the CEO would prefer.

…And The Sustainability Advantage

With sustainability making inroads into American consciousness at a very slow rate, does the environmental tag hurt REI?

“Sustainability is no longer as niche as some might think. The new generations really care about the environment and their communities,” Jewell emphasized. “The average age of our store employee is 32 years. They really care about the products and take pride in our commitment to the planet. This is what got us to No. 9 on Fortune’s Best Places to Work for last year,” she added.

In fact, while REI stores have steadily grown in number since 2008, she added, their footprint has remained lower than 2008 levels. The company has also doubled the number of stores that are using on site energy generation, Jewell informed a packed room.

Cooperative: The Right “C” for Entrepreneurs?

REI is one of few cooperatives in the country that has successfully provided its members with an economic model that is lucrative and works over the long-term. “There is no mission without margin. You have to run a healthy business to be sustainable. While we don’t have investors to worry about, we have a member community,” Jewell informed, warning that, “The founders [of REI] sacrificed a lot to protect the cooperative structure. Their family home was a distribution facility for 22 years. Their daughter was packaging stuff since the age of 5 years.”

The result?

“85 percent of our sales are from our members who get a yearly dividend. So the structure is successful but hard,” she said.

Responsible Capitalism: More Investment Options

Jewell also offered a new face of investment options, saying the market desperately needed to step away from thinking in the short term. “We need to suggest more robust federal regulations that put in a longer-term requirement from companies instead of a quarter or even a year. This change alone can transform the way we think, hire and help ensure many more businesses are successful,” she appealed.

While REI is certainly known for its innovative product line, environmentally- and socially-conscious supply chain, it has in no way perfected the dilemma of margins vs. fewer resources. How do we get away from random acts of kindness to systemic change? “It’s hard to get incentives [internally and externally] exactly right. Our employees are pulling the company forward,” she admitted, adding that, “Sustainability is a team sport that has the potential to create demand for recycling and working itself up the supply chain.”

The Power of Education

Since the conference attracts a majority of MBA students and recent graduates from the exemplary Net Impact chapters, interviewer Marc Gunther asked in closing: How can these students best help companies like REI?

“We need people who can make business sense out of sustainability. Help other companies see the benefit. Whatever we do for sustainability has to be good for business,” she pointed out. “This is what students with your experience, passion and understanding can help other businesses comprehend and implement,” the 54-year-old chief added.