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February 01, 2008

Joel Makower on the State of Green Business 2008 Report
    by Bill Baue and Francesca Rheannon

GreenBiz founder talks about the inaugural report, which surveys the top 10 green business stories of 2007 and introduces the GreenBiz Index. -- A new report on �The State of Green Business 2008� is just out from, which covers the intersection between environmental responsibility and business success. The report, the first to be issued annually, covers the top ten green business stories of 2007 and also unveils the Green Business Index, which assesses progress in environmentally sustainable business practices in twenty categories.

Please support
our sponsorsJust before the report�s release, writers Bill Baue and Francesca Rheannon spoke with executive editor Joel Makower about the report and prepared this excerpt from their interview.

Bill Baue: The report seems to reach two seemingly contradictory conclusions: pessimistic optimism or, more precisely, optimistic realism. On the one hand, you say that green business has passed the tipping point on many indicators you consider, shifting from a movement to a market. On the other hand, the positive changes seem woefully inadequate to the crises that we face, like climate change and water scarcity. Say more about this tension between the positive growth of green business and the daunting task at hand.

Joel Makower: It's not going to be simple, fast or easy, so it's not surprising that, while we're starting to turn a corner, we're also just beginning to recognize what the journey is going to be like. Some things are markedly improved and some, while improved, are being overshadowed by the growth of the economy. And some are just barely out of the gate. So we're starting to move in the right direction, but the question is always, is it enough � or is it too little, too late?

A lot of the gains can come from improved efficiencies. For years, companies have been wringing out waste and inefficiency, carbon intensity, or toxicity and replacing them with more efficiency, lighter weight materials, renewable energy. That's really starting to accelerate. But we need to do much more of that � we've just begun to scratch the surface of what's possible in terms of the efficiencies of operations, of manufacturing processes, the design of products themselves, the systems of commerce, how far things travel, what happens to them at the end of their useful life.

Francesca Rheannon: The stock markets have been incredibly roiled lately. There are fears of a recession, perhaps even of a depression. Could this throw a monkey wrench into the kind of positive developments you're talking about?

JM: It could, but it could also accelerate them. It could make the payoffs for efficiency that much greater. Companies realize that they have waste-reducing opportunities but the costs and benefits of tapping those aren't there. A slowing economy could make those more appealing.

On the other hand, if everybody stops buying everything, there's going to be some major economic turmoil. Frankly, we don't know the impact of that: will it reduce consumption in ways that benefit the environment? Perhaps. But the social impacts could be devastating.

BB: You say that "while carbon intensity represents improvement of sorts, it also obscures the fact that overall carbon emissions need to decrease significantly, not grow more slowly, in order to avoid what a consensus of scientists predict will be the worst impacts of climate change. According to many scientists, greenhouse gas emissions need to decrease 80% by 2050. At current rates, the US will never get there." That is a really dire prediction. Can you talk about the problem that carbon intensity creates for creating environmental solutions?

JM: In the State of Green Business Report we inaugurated the Green Index, which includes twenty indicators of progress or lack of progress in the business sector, primarily focusing on the United States. Carbon intensity is one of those. It�s how much C02 we emit as a country for every million dollars of GDP. How efficient are we? The good news is that we've become more efficient. It�s dropped some seventy million tons of C02 per dollar of GDP since 2001.

The bad news is that the overall amount of carbon hasn't dropped much. It just started dropping a little bit in 2006 for the first time. We don't yet know about 2007. Going down 1.5 percent in one year is a good thing, but we need to be making much bigger changes. If we continue to do business as usual � gradual efficiency � it's not going to get us anywhere close to the goals that we need to be achieving.

BB: Describe the impetus behind creating the Green Index and what impact you intend on green business practices.

JM: Businesses are making big commitments [to being green]: we've got GE, Wal-Mart, Dupont, BP and hundreds of other companies from Coca Cola to Clorox, who are now in the game and many of them are doing really impressive things. But we don't really know if this is moving the needle. What kind of change is this making? So we created the Green Business Index to look at that.

We take twenty indicators: everything from carbon intensity and toxic intensity � how many tons of toxic releases are emitted into the air, water and soil for every dollar of GDP or how much is the average energy used per square foot of office space � to the number of sustainability reports coming from large companies; how are employees getting to work � is it carpooling or mass transit? � the number of teleworkers; the number of LEED-certified commercial office buildings how much paper we're using per dollar of GDP and how much of it is being recycled. Much of this will be a baseline to really track how effective all of this really is.

BB: Explain the rating system that you created: �swimming�, �treading water� and �sinking�. How did you come up with that rating system and what are the implications in terms of where we are right now and where we're heading?

JM: In each of the twenty indicators we have a chart or two with some metrics and several hundred words of context about what's going on and why this is happening, but at some point we wanted to put a stake in the ground and say, "is this good enough, or not?" So we came up with this swimming, treading water and sinking metaphor: are we making progress? Are we just holding our own? Or are we drowning?

In the case of the two that we said were sinking, one of them was carbon intensity. The fact is, we're making a little progress, but it's nowhere near the progress we need to be making. So I consider we're sinking there. With e-waste, we're recovering more and more used computers and printers and other electronic equipment, including consumer electronics, but the mountain of waste is growing so much faster that we're really losing ground. And then there were some where we are making genuine progress: in paper use and recycling, general energy efficiency of the economy, LEED office space, clean tech investments and some other things.

BB: The report also includes what you consider the ten biggest stories from 2007. What are a few of the big stories to take away from 2007?

One of the trends is "zero becomes the new black": we're starting to see companies talking about carbon neutral � that's one form of zero. But we're also seeing "zero waste". Companies are saying, "we're going to be one hundred percent renewably powered, we're going to have zero waste, we're going to be carbon neutral." We never saw those kind of absolute statements before. We saw companies like Interface Carpet and some of the real early leaders [saying that], but now we're hearing it from companies like IKEA and AMD and Wal-Mart and Sam�s Club and GM.

FR: There's the issue of green washing and green marketing. On your blog and podcast you covered the report, The Six Sins of Greenwashing, by TerraChoice Environmental Marketing. Could you discuss the tension between greenwashing and bona fide green marketing?

JM: [One] point that�s really important about what�s going on in the realm of business and consumers and the environment is that we don�t know how good is good enough. So we�re in this interesting era right now, where this has gone from a movement to a market and that�s the good news. The bad news is that it�s a kind of wild west market, where you�ve got consumers saying, �we want green products� and you�ve got companies saying �we�re being greener� and the consumers don�t always believe the companies and the companies, it�s not that they�re out and out lying, but sometimes it�s not as good as it could be in terms of the way they market it. And so there�s a lot of suspicion right now and we have a significant disconnect, a dysfunctional conversation, between companies and consumers. And I think that�s going to be a problem moving forward.

BB: Recently, Bob Langert of MacDonald�s posited a list of the �Six Sins of Greenmuting� � when companies choose not to communicate their green initiatives for fear of being accused of greenwashing. What are your thoughts about that?

JM: A lot of companies are doing things that don�t necessarily show up in the products. MacDonald�s has been a leader in efficiency in its sector for twenty years. About eighty percent of the things they�ve done are behind the counter, things the customer never sees, like how things are shipped and packaged.

One of the more than hundred things they did was to reduce the embossed golden arches on their napkins. It made their napkins twenty four percent thinner by removing the embossing, so they could put twenty four percent more in a package and reduce shipping by the equivalent of about a hundred tractor trailers a year from that one move.

We�ve seen companies like Wal-Mart and GE, companies we never thought would be talking the green talk, let alone actually doing significant things � and reasonable people will disagree how good those companies really are � but both of those companies and many others have made some significant commitments that I certainly couldn�t have imagined a few years ago.

I think we�ve gotten to the point where consumers want to know what companies are doing and they need to know, so there�s an opportunity for companies to be a little bit more outspoken.

BB: You mentioned Clorox earlier, and they just bought out Burt�s Bees. Can you talk about what Clorox is doing in greening their business?

JM: In January 2008, Clorox launched their first new product line in twenty years � and it�s a green product line. It�s a line of cleaners called Greenworks, made from ninety nine percent plant matter. This is really one of the first major consumer package goods companies to create a whole new line of green products. They are both green in terms of their chemistry and effective enough to carry the Clorox label. This is a big company creating something pretty interesting. And if the goal of all this is to get big companies to join the new green economy and come out with green offerings, this is a significant thing.

You�re [also] going to be seeing green lines from Proctor and Gamble, Johnson�s Wax. So this is one product category that�s really starting to move. And one of the reasons for that is Wal-Mart. Wal-Mart�s pushing these guys to create greener products. It wants to feature them in their stores and bring them to the masses. And so you have a perfect storm, where these companies have been thinking about these things, seeing the green market develop and wanting to create products for people who are looking for greener products. And now Wal-Mart is encouraging it. I think it�s the right moment.

Every year this area of business and the environment gets more robust. I get out of bed with a lot of excitement these days to see who�s doing what. And now that we�ve established some baselines, we�ll be tracking and updating all of this on a regular basis and seeing how far we can get.

You can listen to the complete interview between Corporate Watchdog Radio hosts Bill Baue and Francesca Rheannon and GreenBiz founder Joel Makower at the Corporate Watchdog Radio website.

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