Getting Smart: The Benefits of Knowing your Footprint
It's hard to overstate the importance of gathering solid data about the environmental and social impacts of your products or business - as the old saw goes, you can't manage what you don't measure.
In my new book, "Green Recovery", I lay out a four-pronged plan for surviving and thriving in this downturn by getting lean, getting engaged, getting creative, and - backing it all up - getting smart. Without good data, it's very hard to find the best ways to get lean in your operations, find the biggest risks, or identify the best opportunities for innovation.
At first, it can seem daunting to try and capture footprint data about your whole value chain. Many companies find that answering a simple-seeming question like, "How much energy did we use in all our buildings last month?" is not so simple. Utilities don't always (or even often) make the data that easy to get to. And drawing boundaries around what's your 'facility' in a leased space, or where your "product" begins and ends within the context of its full value chain, is tough. But I'm a big believer in the 80/20 rule. You can do a lot on the proverbial back of the envelope.
Luckily, it's all getting easier. First there's data out there. The biggest store of LCA-related information is probably the Carnegie Mellon Economic Input-Output LCA site and database. They've collected government data on, for example, energy use in different sectors of the economy and flows of materials. Divide the energy used by steel manufacturers by tons sent to the auto industry (and then by number of vehicles), and you have a rough estimate of steel footprint per car. In addition, industry organizations and academics have calculated specific LCAs on a range of products. You can use proxies to get a sense of your product's footprint.
Then there's the software to analyze and assess footprints. The competition is fierce, from the big guns like Microsoft and Google putting out dashboards and metering software, to the targeted players like Planet Metrics, SAS, and Clear Standards (now part of SAP). Finally, suppliers and other partners are also going through the same process so it will be getting easier to construct a lifecycle impact.
In short, while it's not always simple, there are ways to get much more knowledgeable on your iimpacts. And the rewards are many. The companies that get their data together fastest will save money, improve performance, answer customer questions and demands, and find new market openings. Let's look at each benefit…
~Andrew Winston, Founder, Winston Eco-Strategies.
Saving money
When you give people a home energy meter so they can see their energy use real-time, an interesting thing happens…they cut back about 10%, sometimes more. The same things happens to driving habits when you have a screen showing real-time mpg. (so some are calling this the "Prius effect"). What a powerful thing data is. On the individual level, it's getting easier to track your energy use, with tools like the new iPhone app Carbon Tracker from Clear Standards. But this powerful data-driven behavior lever can work for businesses as well. Burt's Bees put inexpensive energy meters on one production line and the data drove them to create a new design for their lip balms to avoid heating the plastic wrap. In total, the change cut PVC use by 90% and energy use and cost by 42%. One tool in the ever growing arsenal of those trying to reduce energy use in IT: make sure everyone who impacts IT energy use knows how much they're using. In other words, put the energy bill on the CIO's budget!
Driving performance and competition
Share data openly, and people will compete to be the best. I was in a Prius when another Prius owner leaned in the window and good-naturedly jibed the owner about his 'low' 44 mpg average ("I'm getting 51.2 this tank," she said proudly). Within companies, sharing data about environmental performance fosters serious competition and learning. You can post data and change behavior for divisions, factories, even floors of an office building. PepsiCo Chicago ran a floor-by-floor energy reduction competition. In one three month period, electricity use dropped 17% (and paper use 22%). Energy use on the winning floor plummeted 31% last year. Or check out this little case study from a few years back about Heinecken breweries (as told in Green Recovery, but this is the original newsletter from New Zealand I got it from). Some companies, like UPS, are even starting to push for transparency across their industry to force competition, which works if you suspect you have the best footprint story to tell customers... which brings us to…
Answering customer questions
Of all the green wave forces that have continued during the recession, the greening of the supply chain may be the most powerful, as leading companies accelerated their efforts. Wal-Mart continued the full-court press throughout the summer, with a high-profile announcement about a new 15-question survey for all 100,000 suppliers (download the questions here). The first few questions focus on carbon and suggest strongly that you answer the Carbon Disclosure Project questions (which means a lot more than 15 in total), but others hit on waste and on your supply chain. How can companies answer all these new questions without good data? The end goal of Wal-Mart's new questions will be a product-level label. A few companies have begun the process already, such as Timberland (nutrition-like labels of data) and Gap (messaging on products about water). The rest will have to follow. And those who have the best data and the best story, will get more shelf space and mind space.
Finding market openings and innovating
When you know your business better, you know where your risks and opportunities are. A solid lifecycle footprint by company, division, or product can be an eye-opener. When P&G ran the numbers on energy use for their laundry products, they discovered that the "use phase" was the problem. And the majority of the energy use was not from spinning the washing machine, but from heating the water. Tide Coldwater was born. It's one of P&G's "Sustainable Innovation Products" or SIPs which the company has targeted for $50 billion in cumulative revenue by 2012. It's a 'green' product, but the pitch, given the economic climate, has been all about saving money…and there's nothing wrong with that. But the innovation wouldn't have happened without solid data to back it up.
Get the conversation going! Click here to post your comments on this issue of "Eco-Advantage Strategies."
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What Readers are Saying...
In response to Andrew's "Why This Is the Right Time to Go Green":
Your article is spot on that sustainability often overlaps with economic profit. However, there are many instances where it doesn't. Capitalism rests on continued growth. How can continued growth be anything but but bad for the planet unless 100% of a company's products are 100% closed-loop? A company reducing it's packaging by 30% is great, but they're still going to try to grow their unit sales 10% a year. When are we going to start requiring companies who tout these achievements to also show us their long-term plan for a POSITIVE impact on the planet vs. a LESS NEGATIVE one. After all, the bottom line is "Is the planet better or worse off that this company exists?"
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