how to use “green” business methods to create (more) profits (for all)

RENACERRENACER Presents:Presents: WorkshopWorkshop

How to use “Green” How to use “Green” Business methods to Business methods to create (More) Profits create (More) Profits (for All)(for All)

Presented byPresented byDouglas Lezameta &Douglas Lezameta &Hernan Vargas, RENACERHernan Vargas, RENACERSam Jensen Augustine, PG&ESam Jensen Augustine, PG&EAntioch, CAAntioch, CAOctober 2013October 2013

AGENDA

• Introduction• A brief perspective – the social role of business

in History• What’s a “Green” or Sustainable Business?• How to use “Green” business practices to

generate more profits• Special Presentation by PG&E• Cases – restaurant, construction contractor,

janitorial services• Q&A, Conclusions and Recommendations

A brief perspective – the social role of business in History

From Corporate Responsibiity by Toby Webb, www.tobywebb.blogspot.com


• From Corporate Responsibiity by Toby Webb, www.tobywebb.blogspot.com


The 1800’s Cadbury Family expansion planThe Bournville manufacturing plant – first workers’

village in Victorian EnglandDesigned explicitly and purposefully to create a high

quality of life environment for workersResults:

Significant accident reduction Very low absenteeism Dramatic reduction in employee turnover Much increased profits, successful market expansion, market domination From Corporate Responsibiity by Toby

Webb, www.tobywebb.blogspot.com


The 1911 Manhattan Sweatshop Fire The Nov 2012 Tazreen Bangladesh Sweatshop Fire

The April 2013 Rana Building Collapse in Bangladesh


• Bangladesh: Minimum average wage $ 37 monthly, in Cambodia is $ 61 a month, and in industrialized China is $ 150 per month

• The average cost of manufacturing a dress shirt is between $1 to $1.50 in Bangladesh, and in industrialized China is between $3 to $4.

• But after what happened…what is (was?) the true cost of production (including “bad publicity and bad reputation” risks)??

• This is when the concept of ”Externality” comes into place

From The Wall Street Journal Online article “Before Dhaka Collapse, Some (Western) Firms Fled Risk”, May 8th, 2013


From Corporate Responsibiity by Toby Webb, www.tobywebb.blogspot.com

Externalities usually show up in unexpected ways, mostly through significant (and destructive) legal costs associated with damages….


…a present debate: “Fracking” in the extraction of Natural GasObvious benefits of natural gas…….but the Fracking process, based on water usage, is fraught with big questions…....No doubt on the significant visible benefits of the

Marcellus Shale and its economic value……but we know the costs???? Fracking exemption of

the Clean Air y Water Acts


There is no available data to assess quantities of water used, nor the impact on the quality of water sources caused by fracking

We can’t know if the fracking process is dangerous to human health and the environment….exactly what happened with DDT some 40 years ago….

…and that’s the nature of Externalities


The banking and financial sector became Too Concentrated,Too Complicated and Interconnected,Too Distant from their clients, Too Big to Fail….

…until the point when those externalities became realities, and we all suffered the consequences, not just the entities that indeed failed.

What’s a “Green” or Sustainable Business?

• The “Doux Commerce” Principle: no transparency, no business deal - it’s in your best self-interest to act in a transparent way.

• Adam Smith explaining the Dutch superior trading skills.• Smith postulated that Reputation is extremely

important in Business.• Jane Jacobs, a top American anthropologist (1992)

stated on Humans: either we steal, or we trade to make a living (51-53).


• Human TRUST is thus paramount in business dealings….

• …Trust rests on two key assumptions: The Market must have complete

information on the transaction at hand (including the effect of externalities), and,

The Parties involved in the transaction deal believe and understand that both can be accountable and suffer / enjoy the consequences of the trade


“The Capitalism System is in danger…. We are not valuing things correctly…. We all are to blame for this predicament….” Dr. Michael Porter, the most prestigious Strategy Guru in the world, HBR 2011


These are the 10 global megaforces WE have created that make our world and the way we live not viable in the not so long run

From the research paper performed in2012 by KPMG, Expect the Unexpected


The famous 2007 paper by The Hartman Group:The famous 2007 paper by The Hartman Group: Sustainability is becoming more and more important as a key attribute in purchase Sustainability is becoming more and more important as a key attribute in purchase

decisions by prospective clients across many industries and business segmentsdecisions by prospective clients across many industries and business segments Sustainability = social aspects -Sustainability = social aspects - employees welfare and wellness employees welfare and wellness How has this dynamic continued evolving?How has this dynamic continued evolving?


Sustainability, or “Green Business”, it’s a growingly very significant business opportunity: It’s creating new opportunities for high-growth

markets, sales and revenues, It’s facilitating the implementation of processes and

tools that help reduce operating costs, thanks to enhanced cost efficiencies in resource utilization,

It’s increasing the productivity and yields of resources due to lower usage of them in creating the same products, or by increasing the volume produced while using the same level of resources

What’s a “Green” or Sustainable Business?A not-so-fairy tale from Disney:

The risk (and opportunity): the discovery of Nike’s children sweatshops - 1994

Disney’s solution: the implementation of Disney’s International Labor Standards

It required significant effort and enforcement together with the support of Governments and Licensees

It cost Disney $$$$$$$$Sustainable Shared Value created: Preservation, if not

enhancement, of the Disney brand, organic less risky sales growth Financial Sustainability Fact: the shared value created was much

higher than the direct cost of the initiative and than the potential liabilities

Social Sustainability Fact: workers’ rights and welfare indicators improved in many regions around the world where Disney operated with their standards


• But “green business” or sustainable practices are neither only for big corporations….nor just focused on environmental issues….

What’s a “Green” or Sustainable Business?• The U.S. Federal Government Plan to confront Climate Change, June 2013• The Federal Government will issue new regulations through EPA and other agencies• The Plan is focused on three key areas of the American economy:

– To significantly reduce pollution in energy generation and reduce the consumption of energy

– To significantly increase the utilization of renewable energy– And to Build sustainable infrastructure

• Which Small Business sectors will be affected the most?– Construction – standards for “green building” – Commerce and Retail – standards for the use of energy in refrigeration, heating– Restaurants – standards for water consumption and others applicable to retail– Transportation, distribution and logistics – standards for efficiency in energy

consumption– And all suppliers of goods and services to large, big corporations

“We have to act”, President Obama at Georgetown University, June 2013


…to become “green” or sustainable, it can be an advantage for small and mid-sized (SMBs) businesses… SMBs are local, and locality is becoming a major selling

point, It’s usually easier to differentiate their value proposition,

and They are more agile to respond and adapt to changing

environments…and the biggest impediments to become a “green”,

sustainable business?: ..surprisingly, it’s not financing, but… Technical capabilities and managerial acumen, and Access to entrepreneurs’ support networks

Plus, of course, an open mind and motivation

How to use “Green” business practices to generate more profits

Building a sustainable business is a Journey.There are diverse paths for all.We propose the following method:

1. Pick two or three quick positive hits you could get by using green practices

2. Build on those quick successes by taking on one or two structural fundamental operating challenges that could benefit from a “green” solution

3. Seek and utilize continuously available support networks (many of them free!)

4. Make a habit of controlling and measuring results and adjust your plan as you go


1. What could you change quickly in your business that your clients would appreciate or would reduce your operating costs without doing a major investment, using “green” practices? Something related to quality of life? An upcoming change in regulations? Are new materials available? Could a new technology be implemented? Are there networks of sustainable support

services available we haven’t used?


2. For structural changes:– How do you really create sustainable value:

• Can you enhance your productivity?• Can you improve the welfare and wellness (of your

workers and/or community)?• Can you regenerate or restore resources, can you

eliminate waste, can you use non-toxic materials and processes?

– Could you or should you differentiate, or target a specific market niche better than others?

– This is a more complex process, but you can do it.


1. Seek and utilize continuously available support networks (many of them free!)

– National, regional and local resources• Trade groups, associations, conferences• Suppliers networks• Nonprofits (like the ones that certify green businesses)• Chambers of Commerce• Public / Private Partnerships• Educational institutions• Social media platforms• Traditional media• Government agencies• Financiers and financial institutions• Investors’ groups

Cases

• The issue: Construction industry’s challengesThe issue: Construction industry’s challenges

– Sector Construcción, muy lenta recuperación…Sector Construcción, muy lenta recuperación…– Las oportunidades: en el sub-sector construcción “verde”Las oportunidades: en el sub-sector construcción “verde”

Environmental Leader, “Green Building Market To Hit $173.5 Billion by 2015,” July 1, 2010

Cases

..la construcción en general crecería solamente un 7%.....la construcción en general crecería solamente un 7%... ……en dónde se está produciendo este cremiento de construcción “verde”en dónde se está produciendo este cremiento de construcción “verde”

California’s ZNE Plan for Buildings

Zero Net Energy (ZNE) Action Plan for Buildings Zero Net Energy (ZNE) Action Plan for Buildings (Aug. 2010). (Aug. 2010).

To shift California’s 5B ftTo shift California’s 5B ft2 2 of commercial property space of commercial property space from using 38% of the state’s energy to from using 38% of the state’s energy to

“net zero” energy users by 2030. “net zero” energy users by 2030. ZNE buildings have net energy consumption of zero, ZNE buildings have net energy consumption of zero,

using energy efficient construction using energy efficient construction and use on-site renewable energy sources.and use on-site renewable energy sources.

4 Big Bold Energy Efficiency Strategies (BBEES)4 Big Bold Energy Efficiency Strategies (BBEES)1.1. All new residential construction will be ZNE by 2020All new residential construction will be ZNE by 20202.2. All new commercial construction will be ZNE by 2030All new commercial construction will be ZNE by 20303.3. Optimize / upgrade existing HVAC systemsOptimize / upgrade existing HVAC systems4.4. Low-income energy efficiency program by 2020Low-income energy efficiency program by 2020

Environmental Leader, September 2, 2010“California Rolls Out Zero Net Energy Plan for Buildings”

Cases• And there’s more:And there’s more:

– Recommissioning of old abandoned commercial buildings Recommissioning of old abandoned commercial buildings into “green infrstructure”: urban gardens, schools, into “green infrstructure”: urban gardens, schools, hospitalshospitals

– ““Green” Hospitals – this is a large part of President Green” Hospitals – this is a large part of President Obama’s planObama’s plan

– Renovation and remodeling of schools – one of the three Renovation and remodeling of schools – one of the three fastest growing sectorsfastest growing sectors

– Infrastructure for mass transit – BRT in Oakland / BerkeleyInfrastructure for mass transit – BRT in Oakland / Berkeley– Energy distribution and generation – the largest and Energy distribution and generation – the largest and

fastest growth sectorfastest growth sector– Sewer, water treatment and wastewater treatment plantsSewer, water treatment and wastewater treatment plants– Brownfield restoration and detoxification (Oakland Army Brownfield restoration and detoxification (Oakland Army

base)base)– ““Green” remodeling and renovation of old multifamily Green” remodeling and renovation of old multifamily

and apartment complexesand apartment complexes

Cases• What’s going on, what to do?

– Change in market preference – sustainable buildings– Change in regulations – sustainable buildings– A challenge: availability of resources – qualified, skilled workers in

green sustainable building practices– If you are not “green”, you are risking losing sales and getting out of

the market– First step – to get certification - training– Engage in training opportunities- network– USGBC and a few non-profits, community colleges

• Owners and Partners must get LEED certification• Workers can get formal training and certification through USGBC associated

entities or through authorized nonprofit institutions• A great way to begin is to connect with your County’s ABAG Green Business

program representative http://www.greenbiz.ca.gov/BGRemodeler.html

– Join a trade group (like the NorCal USGBC) or at the minimum actively participate in USGBC’s regional expos, conferences and events

Cases

Not all restaurant “concepts” suffered during the Great RecessionNot all restaurant “concepts” suffered during the Great Recession The sub-sector called “fast casual” kept growing vigorouslyThe sub-sector called “fast casual” kept growing vigorously All projections indicate that this sector will be the most dynamic and most profitable in this decadeAll projections indicate that this sector will be the most dynamic and most profitable in this decade ““Fine Dining” and other options seen as “not healthy” will suffer during the following yearsFine Dining” and other options seen as “not healthy” will suffer during the following years

Cases

Case: Antojería Mexicana El Chilar, Oakland, CACase: Antojería Mexicana El Chilar, Oakland, CA Started as a very small place inDowntown OaklandStarted as a very small place inDowntown Oakland Fresh, delicious and practical menu inspired in popular Mexican and TexMex Fresh, delicious and practical menu inspired in popular Mexican and TexMex

cuisine, at accessible pricescuisine, at accessible prices Established strategic alliance with local supplier of red meats produced Established strategic alliance with local supplier of red meats produced

organically and sustainably in the region– Niman Ranchorganically and sustainably in the region– Niman Ranch Implemented some sustainable business practices for workforce Implemented some sustainable business practices for workforce

management to enhance productivitymanagement to enhance productivity Connected with local resourcesConnected with local resources Established a successful catering line of business Established a successful catering line of business It became one of the highest ranked Mexican restaurants in Yelp (learnt to It became one of the highest ranked Mexican restaurants in Yelp (learnt to

use social media) use social media) It eventually expanded and opened a full-service restaurant, MolcajeteIt eventually expanded and opened a full-service restaurant, Molcajete

CasesConnect and use your local resources - EBMUD

Cases Connect and use your local resources

ABAG Green Business Program http://www.greenbiz.ca.gov/BGrestaurants.html

The Food Service Technology Center PG&E in San Ramon http://www.fishnick.com/

And also regional and national resources The CONSERVE Program of the National Restaurant

Associationhttp://conserve.restaurant.org/

Cases• Other issues and opportunities in the Other issues and opportunities in the

restaurant industry:restaurant industry:– Two of the highest operating costs in a Two of the highest operating costs in a

restaurant are energy consumptions and restaurant are energy consumptions and water consumption. Another significant cost is water consumption. Another significant cost is the so called FOGs (Fats, Oils and Grease) the so called FOGs (Fats, Oils and Grease)

– For cities, FOGs are also a headache. In San For cities, FOGs are also a headache. In San Francisco, the city spends a $ 3.5 Million Francisco, the city spends a $ 3.5 Million annual budget to declog and clean up sewer annual budget to declog and clean up sewer systems congested by these FOGs. systems congested by these FOGs.

– These FOGs are highly toxic, pollute the ocean These FOGs are highly toxic, pollute the ocean and devastate the marine biodiversityand devastate the marine biodiversity

– Nowadays, San Francisco and other Bay Area Nowadays, San Francisco and other Bay Area cities have programs that pay you for the cities have programs that pay you for the FOGs you produce.FOGs you produce.

– You could establish and alliance with Northern You could establish and alliance with Northern California’s People’s Fuel Cooperative and / or California’s People’s Fuel Cooperative and / or register with the Office of SFGreaseCycle.register with the Office of SFGreaseCycle.

Conclusions and Recommendations• ““Green” sustainable business practices are not a fashion Green” sustainable business practices are not a fashion

or a fad, they are the present and the future of business or a fad, they are the present and the future of business management practicesmanagement practices

• ““Green”, sustainable business practices are not Green”, sustainable business practices are not applicable the same way in all industries nor in all applicable the same way in all industries nor in all enterprisesenterprises

• It’s an evolving business model, but it is already It’s an evolving business model, but it is already generating proven positive results, which go beyond the generating proven positive results, which go beyond the so called “green” economyso called “green” economy

• There are several good examples of successful small There are several good examples of successful small businesses that applied these principles even though businesses that applied these principles even though they were in a disadvantaged situationthey were in a disadvantaged situation

• It is not too late, in fact it is still in its early stages of its It is not too late, in fact it is still in its early stages of its widespread and mainstream acceptancewidespread and mainstream acceptance