Introduction

This book is for leaders of small and medium-sized organizations who want to take the steps necessary to achieve environmental sustainability in a practical and cost-effective manner. No business on the planet meets all the criteria of a fully sustainable enterprise. The fundamental challenge for any small to medium-sized organization is determining how much time and money to take away from day-to-day operations and invest in becoming sustainable. But, as you will see from the many examples offered, it makes business and environmental sense to implement as many of the recommendations found in this book as possible—even in challenging economic times.

It has taken forty years since the first Earth Day for sustainability to become an “overnight success.” Today, after years of scientific evidence, protest marches, consumer boycotts, growing public demand, successful lawsuits by public interest and environmental groups, increased shareholder value to companies that embrace sustainability, and environmental causes championed by celebrities and thought leaders, the idea of sustainability in business is almost universally accepted.

Recent polls show that 80 percent of the American people are motivated by environmental issues ¹ and 95 percent of shoppers are open to green products. ² The Era of Sustainability has arrived. Centuries of spending the earth’s capital as if it were in endless supply and exploiting the environment as if it were one’s private profit center have given way to enrolling all stakeholders in environmental decision making. Combining this with the evolution of environmental technology, we are approaching the point where sustainability is an economic driver and a competitive advantage.

Street Smart Sustainability: The Entrepreneur’s Guide to Profitably Greening Your Organization’s DNA provides the reader with practical best practices to create a sustainable enterprise in a cost-effective manner. We’re not merely making the case for sustainability. Our book is designed for those who have already accepted sustainability as an initiative worthy of their time and effort. It provides the leaders of small and medium-sized organizations with simple tools to make continuous, cost-effective improvements in their sustainability practices—practices that diffuse into the organizational DNA and become fixtures, shifting the prevailing corporate culture.

Many how-to books build your skill set from one chapter to the next. By the end of the book you can put the new skills into effect. Street Smart Sustainability takes a different approach. Individual chapters are designed to act as standalone sets of action steps on particular topics. They can be read and the recommendations implemented sequentially, or they can be read in random or impulse order. The book takes advantage of your intuitive understanding of the principal functions that any organization must engage in, such as facility selection and maintenance, energy and water use, purchasing, and waste disposal. It is supplemented by a Web site that acts as a repository of information on all the topics, searchable by key word, with interactive question-and-answer functionality in a usergenerated module. We hope to collaborate with other efforts on the topic to ensure the most comprehensive resource available.

Each chapter provides a series of action steps on a particular initiative and is designed to inspire new business opportunities. For example, your waste can become another enterprise’s raw materials and a cost savings could result in an income-generating collaboration. Each chapter also ends with a summary listing some recommended opportunities for cost-effective sustainability.

Most small and medium-sized businesses operate without the luxury of management depth and outside advisors and they need to make progressive changes over a period of time. Read the chapter on purchasing or carbon footprint, and you may implement those recommendations while managing your enterprise in a day-to-day manner. Do everything in all the chapters, and your organization will become much more sustainable. The book also includes tools to allow you to measure progress and savings.

Street Smart Sustainability is designed to be a road map to the sustainable “low-hanging fruit.” Following the 80/20 Rule, this short book cannot be a comprehensive guide to sustainability, but it should provide 80 percent of the guidance that a 1,000-page book on the subject would provide. How to make your organization sustainable may seem like too big of a topic to squeeze into a small book, but we, as the authors, have been extremely lucky to have had a medley of life experiences that have greatly helped us tackle such an audacious goal.

While attending Stuyvesant High School in New York in 1968, David got involved with Students for Environmental Action and ultimately ended up being a co-organizer of the first Earth Day in 1970. Since that time he has helped over 300 companies become greener profitably. A pioneer in performing comprehensive sustainability audits, David audited and did other environmental work with a large number of Social Venture Network (SVN) companies, including Stonyfield Farm, Aveda, Tommy Boy Entertainment, Motherwear, Blue Fish Clothing, Mal Warwick Associates, Rhino Records, and Eileen Fisher.

David was also the director of standards of the first U.S. environmental certification and labeling organization, Green Seal, where he oversaw the development of standards for energy-efficient lighting, waterefficient fixtures, recycled paper, rerefined engine oil, household cleaners, paints, appliances, and other consumer products. He also worked with the environmental-standard-setting bodies of other countries to globally harmonize environmental product standards.

He represented the United States and the American National Standards Institute (ANSI) in the creation of the global ISO 14000 standards for environmental management systems. He also worked with the U.S. Environmental Protection Agency (EPA) and other environmental scientists from around the country in the creation of the life cycle analysis (LCA) methodology. David is also a partner in Meadowbrook Lane Capital.

Joe did not wake up one day and say, “I’m going to pursue sustainable business principles and practices.” His has been a gradual evolution from street kid to social entrepreneur. Joe started a company with an innovative and environmentally superior way of dispensing fruit juices as fountain drinks. The creation of this technology, as well as new formulas, resulted in the elimination of bottles, cans, packaging, and refrigeration and in 1994 alone saved 50,880 trees, 20,966,400 gallons of water, 9,974 cubic yards of landfill space, 12,579,840 kilowatt-hours (kWh) of energy, and 179,712 pounds of potentially air-polluting effluents. Since then, the technology has positively impacted the environment beyond expectations, and the Pepsi Cola Company has purchased the formulas, technology, and brand for distribution and integration worldwide.

Joe created Meadowbrook Lane Capital, a socially responsible investment bank, which was, as the Wall Street Journal described, the “White Knight” in the Ben & Jerry’s Unilever transaction, preserving ten of the social and environmental initiatives of Ben & Jerry’s. ³ Through Meadowbrook Lane Capital, Joe has bought and sold nineteen businesses. For each successive business he improved his sustainable practices, culminating in the purchase of CSRwire.com as a vehicle to distribute and archive sustainability news and reports, organize the world’s sustainability information, and act as an opensource platform for innovative financial instruments and structures to demonstrate that business can be a tool for creating a just and sustainable planet. Joe is also the founder of the Gasoline Alley Foundation, designed to “teach inner city and underprivileged persons to become successful entrepreneurs using socially responsible/sustainable business practices while revitalizing inner city neighborhoods.” ⁴ The foundation has incubated over forty sustainable enterprises.

Both of us have the perspective of seeing firsthand hundreds of sustainability practices done right and done wrong. We have been friends for fifteen years and have collaborated on many ventures for over a decade.

The book uses examples from a large variety of small and medium-sized organizations, most of which we have worked with. Most chapters include a story about Stonyfield Farm or Aveda. Both of these companies now have multihundred million dollars in annual sales, but they both started out as struggling little companies. Their goals were not to become multihundred-million-dollar companies but to heal the planet. Both have become hugely successful not despite their sustainability practices but because of them.

Every organization begins moving toward sustainability by having a visionary leader who decides that sustainability is an important objective of the company. Chapter 1 discusses how the leader gets employee “buy-in” to the vision and guides and motivates the company into becoming sustainable.

Once the leader and employees adopt a vision for sustainability, the next step is to measure where the company currently is, how far it has to go, and what it has to do to realize the vision. A baseline sustainability audit is the first step in measuring your organization’s impact on the environment and becomes the basis from which you can monitor and make continuous improvement toward sustainability. Chapter 2 provides a how-to on performing your sustainability audit.

With the sustainability vision articulated and invested in company-wide, and with the audit results tabulated and comprehended, a sustainability plan needs to be developed and implemented. The mechanics of this are described in chapter 3 along with an overview of several very effective, field-proven sustainability management tools, frameworks, and standards—such as the CERES (Coalition of Environmentally Responsible Economies) Principles, the ISO (International Standards Organization) 14000 standards for Environmental Management Systems, and the Natural Step Framework—that are being successfully employed by small and medium-sized enterprises. Chapter 3 explains the differences between these tools and provides guidance on which ones to select.

If you can measure it, you can manage it. In chapter 4, you’ll find other very powerful metrics you can use in becoming sustainable. These tools will help you quantify your waste, analyze the entire life cycle of your product or service from cradle to grave, and figure out the economics of your sustainability initiatives.

The most effective way to be green is not to remediate but to design products and services sustainably from the start. Chapter 5 provides simple green design rules.

Chapter 6 discusses the impact of facilities on the environment and outlines the steps necessary to make a greener facility.

The sustainable energy initiative consists of maximizing your energy conservation while maximizing the percent of renewable energy you use. Chapter 7 relays renewable energy options and energy conservation measures while providing instructions on how to conduct your energy audit.

Once you know your total energy use, you can calculate your carbon footprint. Chapter 8 provides the formula for converting your energy use numbers into carbon dioxide (CO₂) emissions and then offers recommendations to mitigate your carbon footprint.

One of the biggest impacts organizations have on the environment is through their purchases. Chapter 9 provides tools for assessing vendors’ sustainability practices and how to implement green purchasing.

“Reduce, reuse, recycle” is the mantra for entry-level responsible environmental stewardship. Chapter 10 provides the strategies and tactics to cost-effectively reduce emissions to air, releases to water, and disposal of solid waste.

In nature, there is no such thing as waste. Chapter 11 explains the methods successfully employed by many companies to use waste as a raw material. It also looks at the implications for the planet and on the bottom line, turning an environmental problem into a business opportunity.

Street Smart Sustainability: The Entrepreneur’s Guide to Profitably Greening Your Organization’s DNA is for entrepreneurs who already agree with the necessity of making their businesses sustainable. However, others—a relative, spouse, employee, lawyer, banker, vendor, customer—may not agree and will ask, “What! Are you nuts? Why are you doing this?” For them we’ve provided the “Top Ten Sustainability Talking Tips” and data to support what is already in your head, heart, and soul.

Top Ten Sustainability Talking Tips

It makes sense to green your organization’s DNA because sustainability

1. Reduces the cost of goods

2. Improves sales and market share

3. Attracts and retains talented employees

4. Improves community relations

5. Prevents arbitrary new regulations

6. Increases access to capital

7. Increases valuation

8. Builds customer loyalty

9. Facilitates partnerships

10. Creates peace of mind

REDUCE THE COST OF GOODS

Companies take their retained earnings and, instead of cashing out at the end of the day, reinvest them into making products or services. Companies make two types of products: intended products, which they sell, and unintended products, which they have to pay to dispose of. The latter is often what adversely impacts the environment. When companies learn to reduce or eliminate their unintended products, they invariably reduce their cost of goods and lower their risks.

For one company in the automotive industry, we worked on reducing the amount of toxic chemicals and harmful solvents purchased and their subsequent disposal. The employees who witnessed these reductions felt better about their relationship with the company. Pride and productivity increased. With fewer chemical purchases, costs were reduced, dumping fees were reduced, and less refuse traveled down the drain to attract the attention of the community.

The plant manager said, “Is this stuff environmental?” and when he was answered with “Yes!” he said, “Let’s do more of this stuff.”

IMPROVE SALES AND MARKET SHARE

In a 2009 study commissioned by Green Seal and EnviroMedia Social Marketing and conducted by Opinion Research, 82 percent of consumers bought green products despite the battered economy and the fact that in some cases the products cost more. Of the 1,000 people surveyed, 505 bought just as many green products today as they did before the economic downturn, while 19 percent said they bought more and 14 percent bought fewer. ⁵

Another survey tool shows that the LOHAS (Lifestyles of Health and Sustainability) population is large and growing. This market segment covers people interested in personal health, green building, ecotourism, natural lifestyles, alternative transportation, and alternative energy. This group currently represents 41 million American consumers and is worth about $209 billion in consumer (excluding business-to-business) sales. ⁶ The percent of green buyers is even higher in Europe than in the United States.

Jeffrey Hollender, cofounder of Seventh Generation, insists that his company’s success is largely due to being recognized as an innovator of products made from sustainable materials. If you want to position your products or services where money and growth are, sustainability is the place.

ATTRACT AND RETAIN TALENTED EMPLOYEES

A study of 800 MBA students from eleven leading North American and European business schools found that 94 percent of the students would accept a lower salary, an average of 14 percent less, to work for a company with a reputation for being environmentally responsible and for caring about employees and other stakeholders. It also showed that companies that subscribe to socially responsible business practices consistently attract the cream of the crop from the best business schools. ⁷

For example, at Harvard Business School, one of the largest and fastest growing clubs is the Social Enterprise Club. Net Impact, an organization founded as Students for Social Responsibility, has grown into a network of 15,000 emerging business leaders in 250 chapters. ⁸

Employees love to be on the side of the “good guys.” Worker productivity is high in companies that are proactive environmentally.

Imagine the difference it will make to your bottom line to attract great people seeking jobs with your company who will stay with your company for as long as they can and work for you as productively as possible. That is what sustainability can do for you.

IMPROVE COMMUNITY RELATIONS

Poor corporate citizenship attracts the attention of activists ready to hold the company accountable and diminishes the prospect of community support for corporate initiatives that need community support.

With the advent of e-mail and social media tools such as Twitter, YouTube, Facebook, MySpace, and LinkedIn, word gets out quickly and effectively. A simple camera phone can record an environmental indiscretion. The knowledge that a company is seeking to make continuous progress in its sustainability practices addresses many concerns of the community and fosters more cooperative company-community relations.

PREVENT ARBITRARY REGULATIONS

The costs associated with public policy initiatives and regulations that may undermine a company’s activities have been well documented. Mitigating these initiatives requires legions of lobbyists, distracts management, and detracts from brand value. However, when a company strives toward sustainability and environmental excellence, and when industry acts in a proactive, environmentally and socially responsible manner, the need for government regulations is reduced as are the costs associated with influencing public policy.

As pointed out by Professor Ronald Coase of the University of Chicago Law School, winner of the 1991 Nobel Prize in Economics, when companies fulfill their “social contract” with consumers, regulations are not needed. Government regulations fill the vacuum created when industry fails to maintain this contract.

In addition, federal regulations established by Office of Management and Budget Circular A-119 state that when an existing voluntary standard works, regulations need not follow, and the voluntary standards can be the basis for government procurement decisions. ⁹

Many companies, instead of becoming “victims” of legislation, are being proactive. They are designing products and services that meet present and pending environmental and sustainability standards. In doing so, they reduce the likelihood that new regulations will require increases in product or service costs and management attention. For the small to medium-sized enterprise, government fines and procedural changes can be severely costly.

INCREASE ACCESS TO CAPITAL

The Social Investment Forum reports that in 2007, $2.7 trillion was placed in investments that had social or environmental screens applied to them. As a percent of all assets under management, socially responsible investing grew at a rate of 18 percent over the previous year, compared with a growth of 3 percent for all assets under management. ¹⁰

These investments have been also described as patient, indicating a way that allows management to invest with a long-term view in mind. One of the most active organizations for socially screened, private, patient capital is Investors’ Circle, whose members have invested $134 million in over 200 deals since 1992. ¹¹ One of the founders of Investors’ Circle, Woody Tasch, has been promulgating the notion of “slow money” supporting local living economies for small to medium-sized businesses.

By the way, the Internal Revenue Service is anticipating an enormous transfer of wealth over the next few years. This transfer will create several million new millionaires as parents who lived during the depression and World War II transfer their wealth, through inheritance, to their baby boomer children. Baby boomers have proven to be the most active participants in the sustainability movement.

Do you need capital to grow, to access new markets, or for capital equipment? Several trillion dollars says that investors will give it to you only if you are sustainable and socially or environmentally responsible. What are you waiting for?

INCREASE VALUATION

So, how did all this socially screened investment capital perform? Great. Socially responsible investors are investors, not philanthropists giving away their money, and like other investors they seek as high a return on their investment capital as is prudent to expect—at least competitive with other investments. The United Nations (UN) did an analysis of ten key broker studies and twenty influential academic works to explore the link between socially responsible investments (SRIs) and investment performance. The study found that SRIs are competitive with non-SRIs. ¹² In addition, 322 other studies showed that SRI mutual fund performance is comparable to non-SRI mutual fund performance. ¹³ The Domini Index, the oldest SRI index, showed an average annualized return of 8.43 percent though December 2008, compared to 7.78 percent for the S&P 500. ¹⁴ (The index was renamed the FTSE KLD 400 Social Index in 2009.)

Many companies illustrate that sustainability creates greater value. Ben & Jerry’s grew into a multinational company. Its growth, development, and leadership coincided with the company’s experiments in the sustainability movement. During the hostile takeover by Unilever in 2000, Ben & Jerry’s retained Meadowbrook Lane Capital to save the social and environmental mission of the company. During that rescue, the stock increased from $17.00 a share to $43.60. By dramatizing the brand value associated with sustainability, we uncovered significant value that Unilever voluntarily agreed to accept.

In other instances familiar to many readers, Stonyfield Farm began as a modest enterprise and was sold to Groupe Danone at a super premium; Tom’s of Maine began as a real mom-and-pop enterprise with Tom and Kate Chappell and was sold to Colgate at a super premium; the Body Shop started in a kitchen, went public, and demonstrated super premium value; Odwalla squeezed juice from real fruit and went public, and Coca-Cola ultimately purchased the company at a premium; Joe sold one of his companies to the Pepsi Cola Company at a significant premium; and the modest single restaurant White Dog Cafe was able to require a social contract from its buyer (in which the buyer agreed to many brand value requirements—even the soap used in the kitchen!). Sustainability creates greater value.

BUILD CUSTOMER LOYALTY

Being sustainable—environmentally and socially responsible— turns you into a hero in the eyes of your customers, financiers, partners, peers, friends, and family.

Conversely, decision makers at companies with bad environmental performance are shunned and ostracized in social and familial circles. For example, the tuna boycott was successful not just because of the economic damage to the companies that were boycotted. It was successful because, in one case, a young girl wouldn’t sit on the lap of the chairman of one of the largest canned tuna companies “until you stop killing dolphins, Grandpa!” This company stopped killing dolphins. ¹⁵

A revealing article in the New York Times disclosed that chromium platers were cleaning up their operations not because regulatory compliance made business unprofitable but because their neighbors wouldn’t talk to them anymore. They were socially ostracized at church, on the golf course, and at the bridge table because of their unsustainable practices. ¹⁶

FACILITATE PARTNERSHIPS

Conscious sustainability naturally attracts like-minded people. Collaborating with waste stream partners or supply chain partners, or forming an alliance with a larger company that aspires to connect with sustainability, facilitates partnerships.

For example, an entire business was created on the idea of supplying Ben & Jerry’s with brownies made by a bakery operated by people who were living in poverty. Better World Books takes used and outdated books from large universities and libraries (which would otherwise go to a landfill), repackages them, and sells them online globally, sharing the proceeds with the universities and libraries. The ReStore on Gasoline Alley in Springfield, Massachusetts (one of Joe’s incubations), accepts surplus and outdated building materials from large manufacturers and materials from home remodeling projects, deconstructs homes and repackages the materials, sells the products to economically challenged neighborhoods, and builds homes for the homeless with Habitat for Humanity and with Hampden County House of Corrections inmates. These are all partnerships that were generated through the ideals of sustainability.

CREATE PEACE OF MIND

When you are doing the right thing for the environment and humanity, your mind is not plagued by guilt or fear of being caught operating in a way that is in conflict with the common good. You sleep better.

Now that we’ve reviewed the many advantages of sustainability, let’s get started making your business more sustainable.