CleanTech WebLog

The Environmental Defense Fund and buyout firm, Kohlberg, Kravis and Roberts made an interesting announcement today. Their “Green Portolio” collaboration taps into EDF’s expertise to create analytical tools to “assess and track improvements on a series of environmental metrics. These tools will enable managers to cost-effectively improve efficiency, reduce waste and address environmental impacts, such as greenhouse gas emissions, the use of toxic substances, waste generation or water consumption.”

I’m encouraged by such talk. But it’s interesting that this announcement comes about 10 weeks after a scathing report published by the Service Employees International Union (SEIU) entitled “Winners and Losers: The Fallout from KKR’s Race for Profit.” This report highlights negative environmental impacts from some of KKR portfolio companies (particularly Accellent and Borden Chemicals).

It would have been much better for KKR to have instituted the Green Portfolio collaboration before the report by the SEIU. It could have been a more impactful announcement and would have been met with less skepticism.

Still if KKR and EDF can develop some useful tools, begin publicly reporting environmental metrics for their portfolio companies and propagate these processes so that many other firms manage and report on their environmental impact, then the result will be very fine indeed. The proof of concept is targeted for some time in the next 3-6 months. I’m marking my calendar. I want to see what comes out of this.

The Clean Tech Open launched its California competition this week, in the fabulous Rotunda of the new San Jose City Hall.  San Jose is the hosting city, and  Mayor Chuck Reed was on hand to kick off the event. He threw a challenge to the assembled group of entrepreneurs, investors and business leaders.   “Bring us a way to make it possible for the people of San Jose to install solar on their residences at no cost!—and do it in 60 days!”, he said.   The time constraint elicited laughter, but it underscored the commitment that Mayor Reed and the city have made to clean technology, both for the city’s use and to foster the innovation needed to make the new technologies a viable part of San Jose’s community.   

Mayor Reed reiterated that the city has definitive goals to reduce its electricity consumption by 50%, move towards 100% renewable sources, and add 25,000 jobs in clean technologies.  This is great news for fledgling cleantech companies, and was validated further by the city’s meetings with seven of the CTO “alumni” finalist companies from the last two years, where they discussed opportunities within the city  for their products and services.

This competition is a great way for entrepreneurs with a good idea to get started.  The goal is to foster innovation in clean technology in six categories: renewable energy, smart power, green building, energy efficiency, and air, water and waste management.   And it’s easy to enter—all you need is an idea, $150, and a three page executive summary.   Then the fun starts. (And I mean that—it’s an amazing group of people and lots of fun.)  If you’re selected as a finalist, good things happen to you—you’ll basically get a business makeover through a series of mentoring events, business workshops (how to write a business plan, how to do a VC pitch), and hands-on advice on legal, financial and business issues.  The winners are announced in October, at the “Academy Awards of Cleantech”.  The winners of each category will receive a prize package worth $100,000.  The visibility and networking that ensue from participating in this event open doors and create opportunities that are worth at least as much as the prizes themselves.   To date, alumni from the past two years have raised more than $45 million in financing.  That’s worth thinking about if you have a great idea!

For more info, go to www.cleantech.com.

Energy-efficiency guru, Amory Lovins of the Rocky Mountain Institute, is famous for talking about the low-hanging fruit available to companies through energy efficiency. He contends that there’s so much low-hanging fruit that it “is mushing up around our ankles and spilling in over the tops of our waders while the tree pelts our heads with more fruit.”

For businesses in Silicon Valley, there are some particularly delicious fruits that companies can essentially get paid to eat! I’m referring to incentive programs that subsidize corporate expenditures on programs that result in saving money and resources.

Water Conservation Programs
The WET (Water Efficient Technologies) program is administered by the San Jose/Santa Clara Water Pollution Control Plant and the Santa Clara Valley Water District. Rebates of up to $50,000 per water conservation project are available for projects that reduce annual water usage by 100,000 cubic feet (100ccf) or more. The rebates can cover up to half the total project cost.

The Santa Clara Valley Water District offers two other rebate programs: the Irrigation System Hardware Rebate Program which offers up to a $4,000 rebate on irrigation system and the Weather Based Irrigation Controller Rebate Program with rebates up to $1,100. Beware that funds are limited for these programs and there are expiration dates.

The water district also offers free site evaluations which have shown potential savings of up to $1,000 per acre of landscape.

Businesses with old-fashioned water-hog toilets can get high-efficiency toilets installed free-of charge, while supplies last! And there is a rebate of up to $400 for replacing commercial washing machines with high-efficiency models.

Even if you’re not in Silicon Valley, your business may qualify for rebates from your local water or pollution control districts or municipality. Check it out!

In Part 2, I’ll cover some sweet energy conservation incentives.

In a free market system, the profit motive is considered to be the main reason why businesses exist. The concept is that everything a company does, now and into the future, is aimed at the ultimate goal of earning a profit. Even apparently altruistic corporate social responsibility initiatives have the ultimate goal of ensuring the company’s financial success by burnishing its image, creating loyal customers and employees, or otherwise paying off in future profits.

If that’s true, then why would companies bother tracking – or beyond that –
reporting their greenhouse gas (GHG) emissions?

There are many rational reasons not to track GHG emissions, such as:

• too many other business priorities
• no government requirement to report
• takes staff time to gather and analyze the data
• emissions estimation process is confusing
• publicly reporting emissions may make the company a target for activists
• too many different reporting agencies and protocols
• cost of membership in a GHG registry and cost of data verification, where required.

Yet, the number of companies voluntarily participating in the California Climate Action Registry (CCAR) doubled during the last year. As of 2/15/08, there are 327 members.

Clearly one of the driving forces behind this membership growth is impending regulation. In September 2006, Governor Schwarzenegger signed into law California Assembly Bill 32 (AB32), the California Global Warming Solutions Act. This act calls for a reduction by 2020 of GHG emissions to 1990 levels. Among other things, AB32 mandates reporting, with the details of “who, when and how” to be specified by the California Air Resources Board (CARB) of the state’s Environmental Protection Agency. In December 2007, CARB issued its proposed mandatory reporting regulation specifying which business segments must begin reporting in 2009.

So, the vast majority of new CCAR members were likely motivated by the belief that, sooner or later, they would have to start reporting their emissions.

Still, a handful of other companies signed up, too. We asked Gary Gero, the interim president of CCAR, why. Gary acknowledges that the main reason companies join CCAR is a “risk management strategy.” Even companies not initially required to report see regulatory compliance on the horizon. They are searching for answers and ways to move forward. They know they must understand their inventory of emissions and devise plans to deal with it. CCAR offers help, tools, education and a community of other companies facing the same challenges.

Interestingly, once CCAR members begin tracking their emissions, they start to look at the financial implications, begin to monetize their emissions and start to identify operational inefficiencies and monetize them. According to Gary, “A lot of businesses may be tentative at first, but as soon as they start tracking their emissions it’s like putting their toe in the water and finding out it’s not so bad in there.”

Going green doesn’t happen all at once.  It’s a continuum.  Every business, like every person,   can do something that conserves, recycles, saves, and re-uses. 

How does a company create sustainability in their organization?   First, assess what’s going on, to identify areas for improvement.    Start small, with  a recycling program, or by  creating employee incentives and rewards for using public transportation, or carpooling, or hybrid vehicles. Reduce power consumption where it can be done with relative ease.  Start a program with IT to turn off or down computers and lights at night. Change the lightbulbs!  Buy carbon offsets to mitigate things that are more difficult to control, like travel for salespeople. 

When you’re ready to dig deeper, look into how emissions can be reduced, then measured and reported.   Join the CCAR (California Climate Action Registry).  Check out your county’s Green Certification program; most California counties have them or are developing them.  If you have company vehicles, start specifying those that use hybrid technology or biofuels. 

Not everything can be done at once, but as you move along the continuum, changes can be made further inside the company.   Look at your supply chain and the partners in it; there are almost always ways that transportation and packaging can be improved.   In manufacturing, opportunities abound: to get rid of materials that have toxins, to recycle more, to use technologies already in place to streamline processes.   Product lifecycle management, ERP, and asset management software all can play a part in this without making sweeping changes to existing practices.   Small changes, consistently practiced and added to, will cumulatively change an organization’s impact. 

And, whatever you do–measure it!   Set goals and targets and report on the progress to all the stakeholders.

At the greenest end of the continuum, sustainability is integrated into all the company’s work, from product design to buildings.   That’s where we are headed.   And as we walk the path that takes us there, each action is a valuable step along the way.