[Post #3 of 3 on Wal-Mart's activity in the last couple of months. This appeared at Harvard Business Online]

I wouldn't normally focus on the same company twice in a week, but Wal-Mart just keeps making news in the world of sustainability — and in the world of commerce for that matter. With a major PR push, the company announced its latest initiative targeting supplier sustainability performance. After a lot of huffing and puffing, the announcement itself was fairly simple (at least for now).

In short, Wal-Mart will be asking all suppliers 15 questions about their approaches on four key issues: energy and climate, material efficiency, natural resources, and people and community. A few sample questions:

--> Have you measured your corporate greenhouse gas emissions?
--> Please report total water use from the facilities that produce your product(s) for Wal-Mart.
--> Do you know the location of 100% of the facilities that produce your product(s)?

For now, these questions are mainly for data collection, but they represent the first step toward (a) truly comparing suppliers on their sustainability performance and (b) creating a real sustainability index that consumers can use to compare products. Most of the press coverage on this was making it sound like a product green label was around the corner. But Wal-Mart, according to one top exec, is "maybe five years" away from that level of data and consumer communication.

Rather than analyze the announcement details any further, I want to put yesterday's announcement in context within the range of Wal-Mart's sustainability actions and within some larger trends. But first, let's be clear: this kind of sustainability data collection is good for business, and it's definitely good for Wal-Mart. And while it may seem like a total pain to suppliers, it will be good for them as well.

The logic is simple: knowing your business better makes it easier to find hidden value.

Read the rest of this post...

Everything's getting faster these days—you've heard it before. Two mega-trends in particular are merging: rapidly accelerating technological change and rapidly evolving environmental issues and pressures. Lucky for us, the first change is going to save our butts from the second. Fast-evolving, smart IT will play a critical role in helping us navigate and profit from environmental challenges. The two trends together are combining to make for enduring change in how business is done, a movement to a permanently higher plane of green and tech-driven activity.

A recent Wall Street Journal op-ed, "Ten-Year Century," makes the well-known case that the pace of transformation in society is accelerating. More has changed, the authors say, in this decade than in the previous century. To be specific,

Changes that used to take generations—economic cycles, cultural shifts, mass migrations, changes in the structures of families and institutions—now unfurl in a span of years... Game-changing consumer products and services (iPod, smart phones, YouTube, Twitter, blogs) that historically might have appeared once every five or more years roll out within months.

The "Laws" of Technology that the authors highlight—Moore's and Metcalfe's—perfectly describe how quickly both computational power and networking capacity are growing (double the computing power on every chip every 18 months, for example). It's a "law" in the world of technology that things are steadily getting faster.

But this op-ed and other "tech is changing the world so fast" stories—and I'm a sucker for them—miss the another big shift that's moving just as fast: the degradation of the natural world and the resulting pressure to green society and business.

[The rest of this blog appears on Harvard Business Online here]

If you put an energy meter inside a home and show people total usage in real time, a miraculous thing happens: they use about 10 percent less energy. The simple act of placing data in front of people changes their behavior. Data makes people smarter and inspires them to make small changes to save money and energy. You can use this powerful tool in business not only to cut costs, but to drive innovation and revenues.

Some are calling this phenomenon the "Prius effect," referring to how people respond when they see real-time fuel-efficiency data while driving the popular Toyota hybrid. As the described it, the Prius effect "can change driving in startling ways, making drivers conscious of their driving habits, then adjusting them to compete for better mileage." Similarly, making footprint data more accessible to those managers that can do something about it can create real value. As they say, you can't manage what you don't measure. It's amazing how often I hear that phrase — and how often people need to hear it. Tech leaders will tell you that one of the best possible solutions to the rapid increase in energy use and cost in data centers is simple: Add the power bill to the CIO's budget!

You can put your green data to use in five ways that will help your bottom line:

1. Saving money — a lot of it. As we've seen, if you give your operational people information on resource use, they will be inspired to find ways to cut back.

2. Driving internal competition. Share footprint data broadly and transparently and you'll see how badly people like to win. When PepsiCo Chicago ran a floor-by-floor energy reduction competition, the results were staggering. In one three-month period, electricity use dropped 17% (and paper use 22%). Energy use on the winning floor plummeted 31%. Factory heads at a number of companies have told me that they'd rather miss their financial targets than their green or energy goals — it's just too embarrassing to be at the bottom of the list.

3. Answering your customers' pressing questions. Wal-Mart, along with many other companies, is asking suppliers and vendors very tough questions about their environmental and social impacts. Those that can gather their data and tell the best story will get the most shelf space and mind space (see my previous post on Wal-Mart's eco-ratings for more on this point).

4. Prioritizing initiatives. Resources remain very tight — you don't want to spend money on the wrong things. With all the pressure to go green, it's easy to get lost in the weeds and pursue avenues that may not yield the most benefit. When companies really look at their full value-chain impacts, they're very often surprised at the results. Green leader Stonyfield Farm discovered that 95% of the ecological damage from its packaging occurred during production and distribution. So the company has made light-weighting (which is what it sounds like) the top priority — use less stuff and the footprint goes down. Stonyfield has made the deliberate choice to not use a recyclable, yet heavier, plastic; this counterintuitive and seemingly non-green choice makes the most environmental and fiscal sense given the real data.

5. Finding new market openings and focusing innovation. Procter & Gamble went through a similar lifecycle exercise and made a similar discovery about its laundry products. The vast majority of energy use was not in sourcing, production, or distribution, but in the use of the detergent in homes. And the majority of that was not the washing machine turning, but heating the water. This insight led to Tide Coldwater, a reformulated product to help customers wash in cool water, using less energy and saving money. Coldwater is one of P&G's seven original "sustainable innovation products" that generated $2 billion in sales in the first year.

Operating your business without environmental and social metrics leaves part of your management "dashboard" blank. How well can you run your company without complete information? But don't worry — you're not that far behind if you don't have a perfect handle on your value-chain footprint, or even your direct impacts. It's getting easier and easier to gather this data, and you can accomplish a great deal with even "back of the envelope" calculations (more on this in my next post).

For a slightly longer take on this topic, see also my recent e-letter, or the full discussion in my new book Green Recovery

[This blog was originally posted on Harvard Business Online]

A couple posts ago, I talked about the ways you can use green data — footprinting information on your products and services up and down the value chain — to create enormous value for your company. As they say, you can't manage what you don't measure. And those with the best information can cut costs, reduce risk, answer customer questions on environmental and social impacts, and help customers reduce their footprints.

But it's a fair question to ask how you might gather this data, especially when budgets remain very tight as the economy gradually recovers. Conducting a full, detailed lifecycle analysis (LCA) is likely to be a time-consuming, resource-draining affair. But luckily there are some shortcuts. Here are a few principles and guidelines for getting smarter about your footprint with the least resources possible:

1. Qualitative analysis is good. In fact, it's better to start with a more strategic view on your products or services than to dive right into detailed numeric analysis. Map out your value chain for a quick view on resource use. Then ask really top level questions that aren't part of the normal day-to-day thinking for most functions in a company, like what comes in the door, and what did it take for suppliers to produce it (are there processes energy or water intensive, for example)? What do we do with our inputs, and how much energy and resources do we use? How much energy and resources do our customers use? What happens to our products after customers are done with them?

You're looking for directionally-correct answers on where the biggest risks and opportunities are...or at the very least, where your data gaps are and how best to fill them.

2. "Back of the envelope" analysis is also okay. Top-line numbers on your own impacts and energy use, from departments like IT, facilities, and distribution, can give you sense of where cuts are most needed or valuable. The data may not be readily available at first, but it certainly isn't capital intensive to find it.

3. Use data that's already out there. A truly detailed LCA is, frankly, a pain. Following a product through every stage of its creation and use is difficult. Luckily, the resources available to help you are multiplying. Industry groups and academics have conducted LCAs on many products. You can extrapolate numbers from similar categories to save time and at least understand where the biggest issues lie. For example, let's say you produce food products, some of which have a big dairy component. The dairy industry has conducted an extensive LCA on a gallon of milk. That study can tell you that the methane produced by livestock may dominate your life-cycle carbon footprint as well.

Another option: public (or quasi-public) databases. See the wonky-sounding Economic Input-Output Life Cycle Assessment (EIO-LCA) data at Carnegie Mellon, or the data collected by AMEE in the UK. Without going into too much detail, the EIO-LCA captures data on flows of goods in and out of all sectors of the U.S. economy, along with data on energy use in each sector, and allows for big picture estimates on impacts. It's a back-of-the-envelope calculation — on a very big envelope. But if you don't want to dig into databases yourself (and who does), then you'll be glad to know that some smart developers have embedded these data sources into handy software products, so...

4. Seek out tools to help you. There is also a wealth of options for software that can help you get a handle on your impacts, including those throughout your supply chain. There are a few now classic providers of product LCA software, such as Ecobilan's TEAM and GaBi Sofware. But new niche players and products that focus on a company's carbon footprint include offerings from both the usual suspects and new entrants: Carbon Impact (formerly Clear Standards, now part of SAP), Planet Metrics, SAS for Sustainability Management, Computer Associates eco-Software, and two open source solutions Carbon Counted and Earthster (in beta).

I've worked with, or been taken through demos of most of these players — all are offering good tools and expertise. But I'm sure I've missed many others so please send me tools you've found useful (andrew@eco-strategies.com).

On top of these carbon modeling tools, companies are offering a range of other green data-tracking services: a sustainability dashboard from Microsoft, Google PowerMeter to measure energy consumption (for homes, but how far off are business-targeted versions), and a cool new product from AngelPoints (working with Saatchi S) that puts the Wal-Mart Personal Sustainability Project program into tracking software so companies can show employees what all their pledges of behavior change add up to.

Beyond these more self-help methods, there is an ever-growing number of consultants that can guide you (including partners of mine such as Domani). You may need to start small with my guidelines above and estimate if resources are too tight, but if you can, working with experts can provide you with a much deeper picture of your company's data-gathering capabilities.

Finally, a larger investment in getting smarter — building that internal capacity to understand footprints on an ongoing basis, and even real-time — will pay back in ways you can barely imagine. Those with the best data win.

This first appeared on Harvard Business online.

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Happy New Year all (ok, I'm a bit delayed, but I entered the new year and promptly got really sick -- lost over a week in there). So let's start fresh now!

Anyway, I took a bit of time at the end of 2009 and early 2010, with a couple weeks' perspective, to think about the stories that really grabbed me in 2009. The top 10 is below, but see my brief write-ups and logic on each at my e-letter site here.

1) Copenhagen fails…or does it?
2) The debate over climate science rages on (in the U.S. at least)
3) The EPA steps in
4) Wal-Mart keeps the pressure up (and saves the rainforest?)
5) Domino's employees deliver a new kind of openness.
6) IBM starts building a "smarter planet"
7) GM goes bankrupt
8) Some of our biggest capitalists get serious about carbon
9) China emerges as a green tech leader…and the world's biggest emitter
10) The bottom of the pyramid becomes a source of innovation

And the bonus, theater of the absurd, wacky story...
10 1/2) Forbes names Exxon green company of the year