Article: Profitable Green

Profitable Green

Is it still possible for businesses to be profitable and green?

PDF FILE: SCAN OF THE ARTICLE AS PUBLISHED

(Click here if you need a PDF reader.)
Profitable Green

by Patricia Dines

February 2011
NorthBay biz magazine

Regular biz contributor Patricia Dines looks at how green is weathering our current economic storm.

(c) Copyright Patricia Dines, 2011. All rights reserved.
"When you're conserving something, you aren't paying for it. It's just smart business." -- Robert Boller, Kendall-Jackson
Only a few short years ago, the concept of "green" was the newest media darling. Having worked its way over decades from our culture's fringes into the mainstream, green suddenly graced the covers of our largest magazines, joined the product portfolios of major corporations, became a key shopping criteria for consumers, and shaped new definitions of business and personal success. Even pretenders hopped on board, adopting eco-friendly façades and creating confusion with authentically earth-aligned offerings.
But now, as everyone trims their sails to navigate today's turbulent financial waters, the media's topic du jour is the economy. So has green been discarded like last year's fashion trend, the new hire without seniority, an unneeded luxury during a time of survival?
I asked various local opinion leaders this question and found out that, at least in the North Bay, these ecological values are so well-rooted that they're not only being retained, but are being used as an economic survival tactic.
Certainly, there are a range of commitment levels, motivators, and activities being pursued, and projects that directly save money are an easier sell. But now it's not just activists, idealists, and government regulators who are bringing up the topic, but also industry groups, government educators, and a wide range of businesses offering eco-resources and inspiration.
Green ideas have become so normalized that, for many businesses, the question less often is if they'll pursue greening activities but which ones and how. People also increasingly recognize that eco-wisdom positions us for future success and is essential for our overall well-being.
So let's take a peek at how green is weathering our current economic storm.
Profiting from green
For 24 years, Ben Stone has been director of Sonoma County's Economic Development Board (EDB), an innovative and respected program that's tasked with "encouraging the startup, retention, and expansion of Sonoma County businesses and jobs." EDB does this by developing and disseminating local economic data and operating other programs that help local businesses start up and grow.
EDB's projects include the Business Environmental Alliance (BEA), which was recommended for formation by a business task force 15 years ago. "The BEA was founded on the concept that good environmental practices are simply sound business," says Stone, "that cutting energy, water and materials costs means substantial savings to the bottom line." One of the first initiatives of its kind, this education and outreach program informs businesses about the benefits of eco-activities, including financially.
The EDB also operates the Sonoma County Green Business Program (SCGBP), which offers businesses free greening checklists, assistance, and certification. SCGBP has certified 106 businesses, including restaurants, wineries, landscapers, cleaning services, auto shops, manufacturers, and more. It's part of the nine-county Bay Area Green Business Program, which has certified nearly 2,300 organizations since 1996.
Stone indicates that local businesses are still quite interested in green. In fiscal year 2009-2010, SCGBP's certified business membership grew by 50 percent (it's now the most active green business program in the Bay Area, says Stone). Plus, in BEA's 2010 Sonoma County business survey, more than three-quarters of those responding said they've done a voluntary environmental assessment of their operations. More than half are working toward measurable targets for resource efficiency and 63 percent have staff dedicated to sustainability initiatives. Many organizations also see a marketing and competitive advantage in being green, adds SCGBP coordinator Mara Hochman.
Perhaps the most surprising result in BEA's survey is that the companies' top reason for greening is to benefit their bottom line. According to BEA's 2010 Annual Report, which describes the survey results, companies' motivations for eco-action include: cutting costs, avoiding future price increases, taking advantage of financial incentive programs, aligning with community targets, adapting to regulations, and working within resource limits such as constrained local water supplies.
Key targets for business include reducing energy consumption, water use, and waste generation. Additionally, companies are installing solar, especially local wineries, Stone observes, because they have the roof space and sun exposure and can sell excess energy to the power grid during the more expensive daytime hours. Then they draw energy to process their wine at night when rates are cheaper, benefiting from the price difference while generating clean local energy that replaces the usual polluting sources. Sonoma County now has 33 megawatts of renewable energy installed, primarily solar.
Stone also finds it notable that a close second reason survey respondents gave for greening is to help preserve Sonoma County's quality of life. He muses, "I think it's amazing that, along with the bottom line, their sense of responsibility is right up there. It's one of the special things about Sonoma County."
BEA's report indicates that, while the current recession can make it sometimes more difficult to fund eco-improvements, many programs also exist to ease up-front costs, including utility company rebates and Sonoma County's innovative Sonoma County Energy Independence Program (see "Financing a Greener World," Aug. 2009).
In short, concludes Stone, "Everybody has their own approach to it, but I think there's a very strong sustainability and green emphasis here. Many companies could be other places. They've chosen to be in Sonoma County and care about Sonoma County. And one of the best ways to care is to make sure we maintain our environmental integrity and help reduce our air pollution, solid waste, energy use, and greenhouse gas emissions."
Inspiring examples
So what are some of the specific ways businesses are being financially aided by their eco-activities? BEA highlights local environmental success stories in its annual Best Practices Awards and indicates that it honors these companies "not only for the money they saved, but also for the value [they] added to their product, workspace and daily operations."
The diverse honorees in 2010 include:
• Kaiser Permanente, which saved more than $61,000 during its recent Santa Rosa hospital expansion by diverting 92 percent of construction waste from the landfill.
• Petaluma's Labcon, which makes laboratory disposables and has reduced power consumption by 25 percent over the past 10 years, even as it doubled production volume, thus generating $700,000 in annual savings.
• Occidental's Osmosis Day Spa Sanctuary, which uses thermal solar collectors to heat 80 percent of its hot water and has constructed wetlands to recycle all its graywater for landscaping use.
• Nature's Best Cleaners in Petaluma, which changed from a dry cleaning to a wet cleaning process and became, according to BEA, "a demonstration site for the Bay Area." The company no longer uses the toxic solvent PERC and saves more than 60 percent on its annual water bill. It's also insulated steam lines, replaced lights, and streamlined production times, cutting its energy bill by 25 percent.
• Santa Rosa's Vintners Inn, which installed an ozone laundry system that uses 90 percent less hot water, put in high-efficiency water fixtures and a towel and linen reuse program that dramatically trims water bills, and eliminated toxic chemicals and cleaning agents to protect groundwater. It provides recycling bins in every room, runs an onsite treatment plant that processes its wastewater for irrigation reuse, and keeps 10 goats to eat its restaurant's vegetable scraps, a decidedly low-tech approach that has helped reduce waste by 40 percent.
Another project Stone appreciates is the energy-efficiency initiative of vintner Kendall-Jackson (KJ), which cut nearly 30 percent from the company's energy bill and saves it $2 million per year. In BEA's Summer 2010 newsletter, KJ's vice president of sustainability, Robert Boller, explains, "At the end of the day, it's about conservation, and when you're conserving something, you aren't paying for it. It's just smart business."
New market opportunities
In addition to greening existing businesses, local companies are creating products that are ecological from the start. For example, Dick Herman, founder of Northern California's 101MFG, an association of local manufacturers, sees "truly remarkable business opportunities" in new green technology.
As an example, he points to Petaluma's Enphase Energy. On its website, Enphase describes its distributed microinverter technology as "a completely new class of advanced solar energy solutions," that offer quick and simple installation, reduced fire risk, and 24/7 customer management over the Internet.
Companies like this confirm one of Stone's original reasons for cultivating local green business, which was "to help Sonoma County companies be more competitive" because he realized that, "from an economic perspective, the whole world was going green."
Marin's Green Business Program
Marin County also offers its own Green Business Program, which has certified more than 400 businesses in categories that include food and drink, building and construction, business and financial services, landscaping, and community organizations.
Program coordinator Dana Armanino says applications to the program have stayed stable over the past few years, noting that businesses see certification as a way to differentiate themselves from competitors and demonstrate their commitment to the community. She finds businesses are "very excited" to learn about the resources available to help with costs, including energy and water efficiency rebates, adding that this program definitely seeks to "ensure that being green makes both environmental and fiscal sense."
"I've had several businesses tell me that they obtained clients because of their green certification." -- Danielle Sinclair, Napa County Green Business Program
Green business in Napa
Napa County's website indicates that it launched its Green Business Program (NCGBP) "in an effort to preserve the unique place that is the Napa Valley." NCGBP certifies local wineries, restaurants, hotels, travel and tour companies, office and retail operations, landscapers, auto repair shops, and several other industry types.
NCGBP program manager Danielle Sinclair says there's been a slight drop in program applications overall, probably because people are "more focused on keeping their businesses afloat." However, she adds, "I've had several businesses tell me that they obtained clients because of their green certification."
Steve Lederer, NCGBP's director, notes that winery certification applications have been steady. "The smarter wineries have always realized there's a benefit to increasing efficiency," he comments, "but these days, the economy has probably pushed more people to recognize the good business sense of saving energy and water. The smarter ones also look closely at return on investment [ROI] and the many incentive and rebate programs to get over the initial capital costs." He says some folks are delaying plans if they can't find up-front capital, "particularly for projects with a longer ROI, such as solar."
The California Sustainable Winegrowing Alliance
Another of the many groups available to help businesses reduce their eco-footprint is the nonprofit California Sustainable Winegrowing Alliance (CSWA). The fact that CSWA was created by two large mainstream organizations shows just how far green has traveled into the mainstream. One founding organization is California's Wine Institute, whose membership of 1,000 California wineries and affiliated businesses accounts for 95 percent of California's wine production. The other is the California Association of Winegrape Growers, whose member growers represent approximately 60 percent of the state's total annual grape crush.
CSWA's goal is to encourage and assist the widespread adoption of sustainable winegrowing practices and, through that "ensure that the California wine community is recognized as a change leader in the global marketplace" and create "a healthier environment, stronger communities and vibrant businesses."
Allison Jordan, CSWA's executive director, says, "I haven't seen anybody cutting back on sustainability efforts. In fact, it seems that people are recognizing more and more the business case for sustainable practices." The group's 2009 Sustainability Report notes participation in the organization is increasing, with 9,239 people attending 184 CSWA educational events since 2004. Additionally, since 2002, 1,566 vineyards and wineries have self-assessed their operations with CSWA's sustainable practices workbook; these organizations essentially represent 68 percent of California's winegrape acreage and 63 percent of its wine case production.
Jordan adds that, while "leaner times" are encouraging wineries to become more efficient, they're also being pushed toward sustainability by market forces that started "even before the economy tanked," including Walmart's sustainability initiative and retailer inquiries about sustainable practices.
Organic's continuing strength
OK, so it's great to see so many mainstream folks moving in an eco-direction. But what about the pioneers who helped develop and champion environmental approaches long before they were popular, such as the farmers who commit to organic's strong farming standards?
According to Whitlow, the organic market remains strong, referring to an Organic Trade Association study which found that "U.S. families are buying more organic products than ever before -- and from a wider variety of categories. In fact, 41 percent of parents report they're buying more organic food now than a year ago, up from 31 percent in 2009."
Whitlow estimates that the North Coast Chapter's client roster increased by 8 to 10 percent over the past year. She notes that grape growers are continuing to convert to organic and expand organic acreage, and more wineries are going through the organic certification process as well. Additionally, organic dairy farmers are "doing far better than their conventional colleagues," she reports, "although they've also been hit by the bad economy," and there's been an increased number of forage farmers supplying them. Mixed fruit and vegetable operations have stayed stable, probably because of the increased popularity of local farmers' markets, and there's also been an increase in small-scale animal operations such as grass-fed cattle, laying hens, ducks, and sheep.
Julie Johnson is owner/winemaker of Rutherford's family-owned Tres Sabores Winery, which was founded in 1999 (on a vineyard she had moved to in 1987) and was the third Napa Valley property to get organic certification. The winery's website says, "As stewards of the land, we're devoted to exploring the character of the grapes we grow and producing wines that truly reflect the 'voice' of the vineyard." Johnson is encouraged by the increase in wineries being certified green as well as those making the commitment to organic farming. She adds, "the cost of [organic] certification isn't the issue it's often portrayed as, because growers can get reimbursement for a substantial portion -- if not all -- of their certification fees." She's optimistic that farmers will increasingly adopt organic farming philosophies and systems, because vineyard health does improve.
The big picture
Of course, in addition to the financial benefits of taking ecological action is the broader survival value for everyone, including businesses. BEA's website describes its view of "The Big Picture" by saying, "There is little denying that the earth is changing in significant and potentially catastrophic ways." It quotes expert James Gustave Speth's conclusion that, "if we continue to do exactly what we are doing today, [even] with no growth in the world economy or population, the world in the latter part of this century will be unfit to live in."
Thankfully, BEA says, everyone, including business, "has a vital role to play in the transition from environmental crisis to sustainability.... There are real and practical steps that [each] business can take today to mitigate its ecological impact," while also ensuring profitability. The organization encourages businesses to do their part "to ensure that the needs of the present are met without compromising the ability of future generations to meet their own needs."
Ed Barr, president of two SCGBP certified business (P&L Specialties and Tom Beard, Co.), described his greening experience in the July 2010 NorthBay biz Green Scene. He wrote, "I've always felt very strongly about conservation and minimization of waste generation, but it wasn't until we embarked on this green certification journey that I saw the concept's true application to an operating business -- and the value of its returns. Receiving the green business certification was much more powerful for me than I'd originally expected. I [started from]…my desire to do the right thing and be a good steward, but through the process, I realized something much more important: As a small business owner, I could really make a difference."
Patricia Dines is the author of a wide variety of helpful books, newsletters, and articles that inspire and empower constructive action on community issues. For more information, see <www.patriciadines.info>.

READER FEEDBACK

Thanks from the BEA
Hey Patricia, Thanks for your excellent article in North Bay Biz about the BEA and Green Business Program. We really appreciate it, and please keep in contact!
Best -- Sarah McKibben, Project Coordinator, Business Environmental Alliance
This article (without graphics) is also on the publication's website at http://www.northbaybiz.com/General_Articles/General_Articles/Profitable_Green.php