Get Engaged Archives

November 10, 2010

Reality is Overrated as a Motivator

Right before the big election last week, I found myself thinking about beliefs and what people are absolutely sure they know, regardless of the facts. Two stories that appeared on the front page of the New York Times on the same day, demonstrated Americans' remarkable ability to kid ourselves.

- First, a story about how virtually everyone in America — and especially the anti-tax advocates — thinks their taxes have gone up or stayed flat under President Obama. They don't realize that taxes actually went down for, as the article says, "95% of working families." That cut to nearly everyone's withholding tax was a pivotal part of the stimulus bill.

- Second, a story titled, "In Kansas, Climate Skeptics Embrace Cleaner Energy," about a Midwestern non-profit, the Climate and Energy Project, that has gotten people to reduce energy use and emissions...by not mentioning climate at all.

The first story is a microcosm of every accomplishment the Democrats managed to keep hidden from the American public, but I'll leave real comment on that phenomenon to the politicians and economists.

But the second story is right up my alley — it's about how to motivate people to pursue the societal and economic benefits of going green. The Climate and Energy Project is cleverly avoiding the climate debate and thus any discussion at all that triggers arguments about the really bad misinformation out there (the article, for example, points out the shocking statistic that only 48% of people in the Midwest agree that there is actually warming going on — whether you think it's human-caused or not, temperature measurements are clear on this point).

Instead, Nancy Jackson, Chairman of the Climate and Energy Project, has hit on three alternative arguments to going green: personal thrift, the benefit to the community of promoting green jobs, and a religious appeal to "creation care." The program has targeted everything from home weatherization to getting the community to lobby Siemens to build a wind plant in the region. They've also gotten towns to compete with each other to save energy.

Their success has been remarkable; according to the Times, "energy use in the towns declined as much as 5 percent relative to other areas — a giant step in the world of energy conservation, where a program that yields a 1.5 percent decline is considered successful."

This group's work goes to the heart of a critical debate moving through the climate policy world. I recently took part in a meeting of green thought leaders to discuss why the climate bill in the U.S. failed this summer and what we can learn. We all asked ourselves, what's the right messaging to reach Americans? The only real divide in the room was over the question of whether to talk directly about climate change.

On the one hand were respected thinkers who said, "You can't solve climate without talking climate." On the other side came the argument that talking about saving money, jobs, the economy, and other drivers of action would do the job. Although I think that we probably have to talk climate change to policy makers, when it comes to reaching everyday Americans, I tend to fall into the latter group (see "8 Reasons You Should Cut Carbon (Aside from Climate Change)").

The lesson in Kansas is clear to me: it does not really matter if you believe in climate change. The logic of decoupling our country, our businesses, our communities, and even our homes from carbon, and from oil in particular, remains incredibly strong. At the macro level it's about national competitiveness, national security, and not relying on declining, ever-more-expensive resources.

But this applies on the personal level as well. Who doesn't want to save money and use less energy? Who wouldn't want their town to depend on locally-created, free energy?

For businesses wondering how to promote their green initiatives and products, I see lessons in how to talk to both consumers and employees. For employees, the best motivators are proven cost savings, good data, and competition. The Kansas program used all of these to great effect.

When talking to consumers, the lesson seems to be to use whatever combination of these works, plus throw in some values and religious mores, if that fits the audience. A call to save mother earth for purely environmental reasons might work well in Berkeley, but in Kansas make the subtle shift to talk about creation care, or don't go down that road at all.

So even though I titled this piece a bit sarcastically, the Kansas program works so well because it IS based in reality -- the savings you can yield, the jobs you can attract to your town, and the connection to religious values you can feel are all real. It's just not the reality of climate change.

The end result is the same — people are saving money and energy and starting to build a new economy. And if we move down the path to a cleaner world, who really cares how?

(This post first appeared at Harvard Business Online.)

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March 16, 2011

Will Employees Choose the Greener Options for Office Printing?

Just a quick link and note about part 3 of my "series" of blogs on my trip to the Waste Management/Xerox Executive Sustainability Summit a few weeks ago. Xerox asked me to attend and cover the event. My final piece discusses an interesting presentation there from an IDC analyst and paper/print industry expert.

Survey data shows that people have high intentions to act green around the office, but a much smaller percentage will actually print less. I discuss also the challenge of defining "green" in a digital vs. paper world (there's a footprint to both forms of media), and lay out some topline ideas on using less paper at the office.

See the full post...

Will Employees Choose the Greener Options for Office Printing?

(Sign up for Andrew Winston's blog, via RSS feed, or by email. Follow Andrew on Twitter @GreenAdvantage)

October 10, 2012

How Walmart's Green Performance Reviews Could Change Retail for Good

Walmart's efforts to green its supply chain are about to get much more effective. Sustainability will now play a role in its merchants' performance reviews, which help determine pay raises and potential for future promotion. This is a big deal: these merchants are high-level managers responsible for multibillion-dollar buying decisions. They're the people who determine which products appear on the shelves of the world's largest retailer.

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Some quick background: Walmart deserves praise for its industry-leading sustainability successes, such as improving its fleet fuel efficiency by 69% and becoming the nation's leading commercial buyer of solar energy. The company's most important sustainability initiative — the pressure it puts on its 100,000 suppliers to improve their environmental performance — has changed how thousands of products are made, packaged and sold.

For the past five years, Walmart has built sturdy scaffolding around what could be a world-beating green supply chain, including:

  • Developing Sustainable Value Networks, which bring together major suppliers with cross-functional internal teams to tackle issues from packaging to waste to energy use.
  • Asking 100,000 suppliers to answer and provide data on 15 environmental impact questions.
  • Building the Sustainability Consortium (TSC) with many of the world's largest consumer products companies and big retail competitors. TSC created metrics to evaluate suppliers and their products on environmental and social performance, and Walmart has integrated these metrics into its own supplier Sustainability Index and scorecards.

But greening its supply chain has been a tough task. Suppliers have repeatedly voiced one critical and legitimate complaint: Walmart's merchants don't really take sustainability into account when they make buying decisions. This flaw in Walmart's green supply chain program has threatened to undermine the foundations of a highly-touted and important initiative.

In essence, the suppliers and other stakeholders have told the company, according to Walmart's Sustainability director Jeff Rice, "It's great to ask your suppliers questions, but it only matters if you do something with the information." In their view, the company has continued to choose the products it sells primarily on price.

But now, in addition to Walmart's long-standing, laser-like focus on cost, its merchants will have to consider sustainability in their buying decisions — or risk a weak performance review. And all because of a simple shift in incentives.

Jeff Rice gave me a great example of how this change is already working, in the form of how Walmart selects the personal computers it sells. Laptops use a lot of energy over their lifetime, and a big driver of energy use is the default setting on power management. These settings determine how fast (if at all) the computer goes to sleep or when the screen dims. Using the index scorecards I mentioned above, Walmart's laptop buyer identified energy use as the biggest determinant of the computer's total lifecycle footprint and emissions.

The buyer then discovered that only 30% of the laptops sold at Walmart ship with the advanced energy-saving settings in place. To compound the problem, the company's research shows that most consumers leave such settings at factory default. So the laptop buyer set a new goal for herself: to increase the percentage of laptops sold with the advanced power settings from 30% to 100% by this Christmas. This single product shift will reduce CO2 emissions by hundreds of thousands of metric tons and save customers money on their electric bills.

Rice told me that performance evaluations for buyers only include a handful of targets, and all are discussed thoroughly at annual reviews. Sustainability performance won't determine the entire evaluation, of course, but it's high profile enough that it should affect behavior.

Incentives matter and cultures shift over time. Hard-won operational changes like modifying performance reviews may not be sexy, but the results can be profound. And when it's the world's largest retailer changing its buying criteria, the ripples will likely be felt around the world.

(This post first appeared at Harvard Business Online

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February 24, 2013

The Inside Story of Diageo's Stunning Carbon Achievement

This is the exclusive, short story of how Diageo North America, with creativity and guts, both in operations and in the senior ranks, achieved the holy grail of carbon emissions reductions. They did it without using carbon offsets — and about 38 years earlier than they had to.

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Here's what scientists are telling us: the world must cut carbon emissions by at least 80 percent from 1990 levels by 2050 to (we hope) avoid the worst of climate change. This level of change seemed like a pipe dream to many, including me... until I spoke last fall to Roberta Barbieri, the global manager for environmental sustainability for Diageo, the $17 billion spirits company. Imagine my shock, as we talked about setting aggressive goals on carbon emissions, when she casually mentioned that Diageo's North American division — a group with $5.58 billion in sales and 14 production and manufacturing facilities — had already cut emissions 80 percent.

The first thing I said was, "Excuse me?!," followed quickly by, "when can I come and talk to you?"

It all started in 2008, she told me later, when top Diageo execs had their minds set on doing something big. First, for perspective, they ran the numbers on what it might cost to go entirely carbon free. The back-of-the-envelope calculation was daunting (hundreds of millions of dollars) and included ideas like building bioenergy plants to power some of their largest distilleries — an option that would achieve large reductions, but was in no way cheap. They settled on a still-aggressive goal of 50%, made it public, and, remarkably, crossed their fingers.

At about this time, Richard Dunne, an environmental exec, entered the picture and took responsibility for meeting the target in North America. He had a strong suspicion that building an expensive bioenergy plant was not the only way to get there. His team implemented a rigorous process of collecting ideas for emissions cuts and estimating the costs. Then they sorted the results on a massive spreadsheet, ranking ideas by net gain on environmental improvement and then by financial investment. By looking at the largest carbon reduction options first, they could group ideas into three big buckets: 1) low/no cost (the no-brainers); 2) some operating expense increase; and 3) more significant capital expenditures (like the bioenergy plant).

Executives initially thought that only major capital projects would reduce emissions significantly. But Dunne's process revealed a surprising number of no-brainers. As a result, Diageo North America achieved a 50% carbon reduction by 2012, mainly with a mix of no- and low-cost initiatives. These project range from easy efficiency efforts like lighting retrofits, boiler upgrades, and installing variable speed drives; to larger, but still economical, changes, such as switching fuels (from oil to natural gas) and cutting back from two boilers to one in a small distillery.

Reaching the 50% reduction in North America years ahead of schedule was a pleasant surprise. But Diageo still needed to go further: the economics on reductions in other regions were not nearly as good, so North America needed to close the gap to help the global organization reach its 50% goal by 2015. But even with the expensive bioenergy plant beckoning as a solution, something even more unusual happened at a Canadian distillery, one of the company's largest.

Gene Ruminski, Diageo's North American sustainability manager, proposed that the Canadian distillery contract with its utility to supply natural gas harvested from a landfill - a net zero carbon solution that would reduce the carbon footprint for North America by another whopping 30%. But there was a big catch: energy costs would go up more than $1 million per year. This expense was more than the single plant could justify.

But then a senior exec, the president of Global Supply and Procurement, got wind of the idea (important point here: this exec sits on the company's internal sustainability council). With his global perspective, he realized that even though the landfill gas solution would increase operating costs for this one plant, it was actually a relatively cheap way to deliver a large reduction in emissions. So he gave the go-ahead and some financial leeway to the plant manager who had to take the annual million-plus hit to his bottom line. As it turns out, the plant's ongoing cost-cutting initiatives had already identified many millions of savings, so Diageo reduced the plant's target for total cost savings to allow for this massive carbon-reducing project.

This is an amazing story, with a few important lessons:

1) Companies still have much more room to cut energy, water, and waste than they realize. Even a well-run company can find enormous savings from easy, low-cost stuff.

2) Big goals force you to look for big ideas, meaning you can, as Diageo's Roberta Barbieri says, "do more than just turning off the lights."

3) Leadership matters. With a more strategic attitude, you can invest in longer-term value, both tangible and intangible. Flexibility is crucial, as the top exec had to give the plant manager leeway on his savings targets to meet the environmental goal.

This last point is really critical. Shifting subtly away from an attitude of "maximize profits this quarter at all costs" does not mean you leap right from capitalism to communism; it just means you take into account a broader definition of value to the organization and community. Flexible thinking about value frees you up to find unique solutions. As a clean tech and impact investor Charles Ewald said to me recently, "the gap between 'capitalism' and so-called 'philanthropy' leaves a lot of room for creativity."

I congratulate Diageo for getting creative, finding that chasm, and driving a spirits truck right through it.

(This post first appeared at Harvard Business Online.)

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