Build Sustainable Business

This posting is about Sustainable Finance. Increasingly there are important initiatives around this issue, with a clear impact on how we invest in (or take away from) sustainable development of business, of environment, of society. I share insights from some of the initiatives I am  tracking right now.

Sustainble Finance Lab: Triodos Bank and University of Utrecht, the Netherlands

Sustainable Finance Lab started in the autumn of 2011. This think tank brings together multiple disciplines to discuss the sustainability of financial sectors and models for banking in the future. Dr Herman Wijffels, chairman of the SFL and Professor of Sustainability, as well Peter Blom, head of Triodos Bank, and 12 other top researchers, have put their heads together to struggle with what is literally a multi-million dollar question:

How do we create a financial sector that is truly in service of society and contributes concretely to a sustainable economy?

Currently, businesses and banks are fixated on maximizing their profit margins. But this focus on economic and financial value above all else in the world is a dangerous trend in our society. What is lost when the only thing that counts is market and financial development? What are alternatives if we wish to build a sustainable economy?

About Triodos bank: get their annual report here. Triodos is a proactive and well-established ‘sustainable’ bank with offices in Netherlands | Belgium | Germany | Spain | United Kingdom.  Triodos offers a very different picture to the sorry state of affairs of banking at the moment. In Europe their client base is  growing by 24% per year, and the number of employees hired to work at the bank is increasing by 13% per year. 2011 net profit was 51%  higher in 2011 than 2010 (17.3 million Euros). Total credit lent by the bank to sustainable businesses rose by 33% to 2.8 Billion Euros. Social impact: 66% of the clients that benefit from microfinancing by Triodos in all parts of the world are women, which is a much closer reflection of the real percentage of women in the population worldwide and also of the share of entrepreneurs (big or small) who are now coming up in the world market.  Environmental impact: The green energy and climate projects they finance supplied 1.5 million households with energy in Europe last year.

Global Alliance for Banking on Values (GABV)

The Global Alliance for Banking on Values (GABV) met in March this year in Vancouver, hosted by Vancity, one of the largest lending bodies in Canada. This worldwide network of 15 leading sustainable banks wants to increase the power of sustainable banking significantly in coming years. The alliance will allow banks to work together to develop instruments to make results more visible for the world economy and will build a powerful exchange program for the next generations of sustainable bankers.

Upsides

The online magazine Upsides attracts global readership from 95 countries, offering a platform for trendsetting interviews, articles and photo reportages about sustainable development and financing initiatives in Latin America, Asia, and Africa. It brings in ideas and insights from trailblazers who have the drive and dedication to make it work. It is refreshing to see so much energy for positive change with a banker’s sharp perspective on how it really works economically.

The Project Syndicate

This Economists’ Club is the consummate forum for the world’s most prominent economists, business leaders, and policy-makers to address today’s most hotly contested economic issues in a non-technical way. A recent contributor on the need for a Sustainability Mindset amongst economists (and all of us!) is Michael Spence, a Nobel laureate in economics, and currently Chairman of the Commission on Growth and Development, an international body charged with charting opportunities for global economic growth. He is also Professor of Economics at NYU’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, and Senior Fellow at the Hoover Institution at Stanford University. He was previously Dean of Stanford’s School of Business and Professor of Economics at Harvard University. He notes that right now, there is “no existing alternative to which we can all switch. Changing the growth model means inventing a new one over time, step-by-step, from complementary parts. The two key ingredients seem to be education and values. Everyone, not just policymakers, needs to understand the consequences of our individual and collective choices. We need to be aware for example, that population growth and rising consumption levels have intergenerational consequences, and that how we conduct ourselves will affect the lifestyles and opportunities of our children and grandchildren.” He asks an important question: who is responsible here?

What’s the point of think tanking and networking like this?

As these networks are gathering steam and clout in the world, you should not just be one to be watching and waiting. Although we may get discouraged by the hegemony of propaganda and negative news in the mainstream press, and although we may ASSUME nothing is changing, the reality is, there are stellar groups of movers and shakers in the world who are connecting on this challenging and complex mission to create sustainable economies.

The point is to take responsibility and join these great leaders, any way we possibly can, every day. Ready steady go.

Stepping up to the challenge: 9 days left!

The Harvard Business Review / McKinsey M Prize in Management Innovation is yours for the taking. Run for their The Long-Term Capitalism Challenge. The competition seeks to accelerate the shift toward a more principled, patient, and social accountable capitalism—one that’s truly fit for the long term. Specifically, we’re looking for Stories (real-world case studies) and Hacks (boldly original ideas) that offer up the most progressive practices and disruptive ideas that tackle the challenge of making our organizations more sustainable.

The motivation is that it’s time to radically revise the deeply etched beliefs about what business is for, whose interests it serves, and how it creates value. We need a new form of capitalism for the 21st century—one dedicated to the promotion of greater well-being rather than the single-minded pursuit of growth and profits; one that doesn’t sacrifice the future for the near term; one with an appropriate regard for every stakeholder; and one that holds leaders accountable for all of the consequences of their actions. In other words, we need a capitalism that is profoundly principled, fundamentally patient, and socially accountable. This isn’t a new challenge, but it’s more urgent than ever—not just as an effort to escape reform and regulation from the outside, but to restore the public trust, to repair the moral fabric of the system, and to unleash the innovation required to tackle the world’s most pressing and important challenges.

See you there!

This is an interview with Caroline Rennie, an international sustainability consultancy and associate professor on the DAS program in Sustainable Business at HSG-BSL in Switzerland. http://www.linkedin.com/in/carolinerennie

Tell me in 250 words what you do in the area of what we call sustainable
business development (SBD)?

Ren-new works with companies to find ways to make sustainability profitable. To do that we explore the core elements that make a company’s business successful today, and determine how they could be done more sustainably. These can be technical initiatives (e.g. replacing an inefficient heating system with a far more efficient system); process initiatives (e.g. redesigning how things are done) or cultural initiatives (working on broader change).

Part of what makes a business successful is its culture, and its values. When sustainability is part of the core values, and linked to business profitability, it has the greatest chance of success. Companies want employees aligned, and seek to do that around business objectives. But a lot of energy in a company is devoted to competing against colleagues, or competition between departments – competition that often doesn’t advance the company. Companies that have embraced sustainability have discovered that people do align around purpose – and that when the company has a purpose dedicated to something higher, that brings alignment and efficiency to the company making it more productive and efficient.

What are the 3 main reasons why companies won’t/don’t go for SBD and
prefer to downplay ecological/social considerations?

Ecological costs are underpriced, and the price rarely comes back to an individual company. That means that drivers are going to be either risk or opportunity. This makes investment feel like a gamble. The situation in Japan has demonstrated to that until something really bad happens, people tend to feel that the people who signal potential problems are worries and spoilsports. Once something bad has happened we are considerably more motivated to ensure it doesn’t happen again. With sustainability, the risks are somewhere in the future, and each company is likely to underestimate the risks to its business. This is only exacerbated by the trend to shorter-term employment: if a manager things he’ll be in a job for 2-3 years he is less likely to take risk seriously that someone who has a longer-term view.

Opportunity is also a gamble. Particularly if you do not know what the result will be. Companies that have extraordinary success with sustainability – like Walmart, P&G and Unilever, report that they were surprised by the outcomes: surprised by how many people participated in reducing waste, energy, and finding ways to save money and the environment at the same time. While they had considered sustainability a defensive strategy, they found it to be a powerful profitability strategy.

Thirdly, a powerful sustainability programme engages stakeholders outside the company: NGOs, investors, customers, consumers, regulators, etc. This is an extraordinary source of input and energy. But it can be uncomfortable too. Many businesses have been able to work in quiet anonymity without worrying about stakeholders. Engaging can feel like a waste of time until it sufficient trust is built up that information flow well. With information comes energy, and suddenly ideas spark and opportunity blossoms. Again, when and how that happens isn’t predictable, and can make the gamble feel excessive.

How would you advise a company select/ start up an appropriate SBD
innovation program?

I described part of the process in the first question. I would add to that that the value of sustainability comes from working across silos. Therefore, rather than make SBD a ‘bolt-on’ activity, peripheral to the company, cross-functional teams can provide the richest outcomes. This is in part because of their different competencies, and in part because of their independence from one-another. The natural tendency towards group-think in teams is broken down.

What are the 2 main challenges in running an SBD program / strategy in a
company?

Keeping a focus on business value.

Engaging the full workforce.

How do you convince companies to keep going with SBD? what are the real
pay-offs / benefits?

Once companies engage, they become passionate. But only if sustainability is linked to business value. There is a conception among some people that sustainability is simply philanthropy. While philanthropy can play a part, it is not the purpose. The purpose needs to be to enhance business value – by ensuring better stakeholder relations; more appropriate product development; more efficient processs… When those conditions are met, profitability increases and there is no difficulty in keeping sustainable development going.

What is the trade off (price to pay) for doing business as usual instead
of going for SBD?

Whether a company engages or not, the requirement for sustainable development is increasing: energy, clean water and many materials are in increasingly short supply. Carbon is being systematically constrained which puts pressure on businesses to shorten their supply chains, and make them more efficient. Investor and insurance groups are raising the costs of not operating sustainably, making business more expensive. And supply chains are being required to become more sustainable if they want to remain competitive. So a company that chooses not to engage in sustainability will systematically lose its edge to companies that do operate more sustainably.

This is an interview with sustainability afficionando Veronique Sikora, who explores how we can share and manage knowledge of sustainability in effective ways.

She invites us to the Swiss Knowledge Management  Forum (SKMF) roundtable on March 8,  2012  in Lausanne, Switzerland

Veronique, what is your own personal vision on knowledge management and sustainability? 

The core of an organization is the people within it. An organization learns and grows with and through their people. By sharing and learning they sustain the wellbeing of organizational members and the organization itself. In sharing knowledge on sustainability, and learning from it, organizations will become more sustainable. One key element is that people have time and a place where they can freely exchange practices and ideas.

Facilitating information flows between people allows people to share practices, including best practices. In facilitating processes we promote sustainable environments. The Arid Lands Information Network depicts the successes of knowledge sharing communities. It shows that information and knowledge, and therefore people, are vital to communities. It is about people sharing their individual or group knowledge; about disseminating information, in the right way, to those who need it. In this case, where barriers exist, they have been broken and knowledge has allowed the community to grow.

What is your experience with sustainability and knowledge management in business?

Currently I am working on a consulting project for Schweizer Metallbau as part of the Diploma in Sustainable Business (University of St. Gallen & Business School Lausanne). Schweizer Metallbau is firstly known for its mailboxes and then for facades and windows, and more recently for solar panels. They have been conscious about sustainability, especially the energy they use and the impact on the environment, from the start of their business. We, Peter Halasi, Martin Rengier and I, are collaborating with Schweizer to help them develop and integrate a systematic approach to include environmental, social, health and safety practices into their product development process. The challenges lie in developing a common language and engaging all the employees in the process.

We have visited other companies to learn about their best practices and how they integrated environmental health and safety issues as part of our work. Three of these companies, Hilti, Gallus-Group & Giroflex, are committed to improving production processes and, most importantly, working conditions for both their employees and their customers. They all strive on reducing energy consumption.

All of them have a Cradle-to-Cradle mindset, and Giroflex has obtained Cradle to Cradle certification for their 656 model chair. Cradle to Cradle is, as Giroflex states, a question of using raw materials usefully, meaningfully and eco-effectively.” It is about knowing what resources go into a product, how best to avoid waste along the development and production process, and finally, how to ensure that the product is recycled. What struck me in this benchmarking activity was that in each of these companies, all employees are part of the business, and sustainability concerns each one of them. They are involved and accountable for their actions; they have been asked to be part of the process.

My conclusion from this was: Sustainable practices are an integral part of learning organizations and organizations that are willing to share what they know with their partners; up and down the supply chain, as well as across borders. Once they have learned, there are fewer barriers to sharing best practices.

You also have a central role in the Swiss Knowledge Management  Forum  (SKMF). Tell us about  the nex event coming up.

Date: March 8th  from 6:00 to  8:00 PM. Free entrance. Refreshments will be served as of 5:30PM.

The next SKMF event called “Knowledge cannot be transferred through wires” is March 8^th, 2012 at the EPFL Lausanne.
We are delighted to invite anyone who wishes to join this 19th SKMF roundtable in Lausanne. The round table is co-organized by the SKMF, the LAMS  laboratory of the EPFL School of Computer and Communication Sciences, and Business School Lausanne.

What is SKMF in a nutshell?

The Swiss Knowledge Management Forum is a community of people who share their perspectives on knowledge management issues through Round Tables (Lausanne, Zurich, Basel) and conferences. The Round Tables are an opportunity for people to learn through simulations and to take what they have learnt, and apply it in their work.

How/why did you get started with SKMF?

A few years ago, I was looking for a knowledge management community. I found the SKMF Round Tables at the EPFL and met Gil Regev. Being an active member of the Round Tables, the SKMF asked me to join the board. Along with Gil, I have focused on developing the Round Tables in Lausanne, which take place at the EPFL or Business School Lausanne. I have been active in facilitating and bringing experiential learning and creativity to the community. Gil and I continuously look for topics that integrate knowledge management in and across organizations. We have facilitated simulations on knowledge flows and knowledge sharing in virtual teams for example. In the future, I would like to focus on issues that touch on sustainability and knowledge management

What does SKMF add to the current KM landscape, how is SKMF different from other initiatives?

The SKMF is an open community that brings people together to share best practices across organizations and communities. We use simulations so people can experience what knowledge management is. The topics discussed range from ethics to innovation, to social networks. Our next conference, on May 10^th is about knowledge management and compliance.

Who are key allies in the SKMF movement as related to sustainable business?

The knowledge management community is opening its doors to sustainable business opportunities. In the SKMF, Gil Regev (EPFL) and John Gaffuri, Innovation Coach in Tessin, have been involved in sustainable business practices. Our President, Pavel Kraus has suggested we explore knowledge management practices and sustainability in our 2012 Fall Event.

What is SKMF aiming to achieve with its event around sustainability?

The SKMF is aiming to bring people together to discuss how knowledge management contributes to sustainable business. Sustainable business is about reducing energy consumption, improving social aspects and respecting people and the environment. New compliance regulations are pushing management in organizations to be conscious about the resources they use and how they use them. Knowledge management contributes to ensuring that knowledge flows take place in and across organizations and thus, contributes to the wellbeing of people and the organizations they are part of. This, in turn, contributes to the wellbeing of the planet.

Attending the SKMF Roundtable? Directions and details about the event

Location: EPFL BC Building, Room BC 430

Description: We will see that only information can be transferred between people; and that information that creates an interest will have a very positive impact on people¹s knowledge creation. We will experiment with information transfer for knowledge creation in the context of an international perfume creation company.

Facilitator: Thierry Baud, Global Knowledge Manager at Firmenich www.firmenich.com/

SKMF  Roundtable concept:  This is a semi-structured discussion designed to informally gather people who share an interest in Knowledge Management, IT and  life in organizations.  The  languages of the roundtable are French and English.  For  more information about this series of roundtables and for summaries of previous events, please visit the SKMF website.

Registration: The roundtable is free. For logistical reasons, we would be thankful if you could let us know whether you will attend by sending an email to gil.regev@epfl.ch. If you can’t  confirm ahead of time, and you can join us, please do.

The topic of this month’s blog is “Transition”, that is, how to move towards a truly sustainable way of living characterised by a low carbon footprint.

The best example of living communities that are well on the way to achieving this are European ecovillages, who cooperate with local communities around them, spreading information and motivating people to act and find their own answers to the deep environmental, economical and social challenges we are facing. Five well established organisations and ecovillages from different European countries (Germany, Austria, Italy and Hungary) have joined forces to inspire a profound transformation in society, and will spread their knowledge in their surrounding regions through the European Learning Partnership. This can be a great source of inspiration for businesses that are seeking to live up to sustainability principles and for social entrepreneurs.

The aim of the partnership is to raise awareness on the far reaching consequences of peak oil and climate change, because the two problems together are worse than either by itself: the use of more and more complex fossil energy resources due to the shrinking oil reserves in order to maintain our fuel excessive lifestyle would end in a runaway climate change combined with a collapsing economy due to the increasing fuel costs. Their  programme will promote realistic changes on a local scale (act locally, think globally). The strategic approach is inspired by the Transition Movement, initiated in the UK in 2007 with the goal to support local communities to sustain themselves and evolve from oil dependency to local resilience. It starts with a thorough information of the actual situation and the perspectives for the future, and encourages people to be part of the transition from the oil-dependent society to a resilient society, no longer depending on oil. In the current “Transition Journey” all participants will be encouraged to find ways and means to creatively contribute to a society in which all these crisis are not a thread, but a chance for a change to a more balanced and more attractive lifestyle.  By exchanging their experiences, the five partners will give impulses on an international scale for the revitalisation of rural areas combining an exemplary carbon footprint with a high quality of live.

The partnership is supported by the Grundtvig Lifelong Learning Programme of the European Union. The partners are:

“Keimblatt Ökodorf” is the coordinating leader organisation of the learning partnership. Working on building up the first ecovillage in Austria, their vision is to establish a regionally integrated, involved and hospitable community combining sustainability with a high quality of life. They want to assume responsibility and show respect for our planet and its biodiversity. Within social dialogue this ecovillage provides a lived model of economic, social and ecological sustainability. Homepage: www.oekodorf.or.at

Ecovillage Torri Superiore (I) is a medieval village, a little jewel of popular architecture, situated in the foothills of the Ligurian Alps, near the Mediterranean Sea and the French border, close to the town of Ventimiglia. Over the last 20 years, the village has been largely restored and is now the home of a community of 20 residents, as well as an ecological guest-house open to the public. The main activities are eco-tourism, education to sustainability, and farming (olive trees, gardens, animals). From 1999 to 2003 Torri was the European office of the Global Ecovillage Network – GEN.
website: www.torri-superiore.org

Galgafarm Ökofalu (HU) The eco-village in Galgahévíz started nearly twenty years before. Since then, many institution was found in Galgahévíz, like about 250 hectare certified ecological cultivation; bio-product shop; “folk college”; rural development foundation. With this substantiated the original idea to set up the eco-village, to give a livable life for approximately 50 families. Nowadays around 10 family live in the village but their numbers are growing. The Galgafarm-Ecovillage be found at the center of Hungary near, but enough far to Budapest, by a lakeside at the border of Galgahévíz…
website: www.gaiaalapitvany.hu

Sieben Linden (D) is an ecovillage in northern Germany that was founded in 1997. More than 120 people do live there and share a sustainable life-style with: organic gardening, composting toilets, straw-bale-houses, energy-production based on renewable energies (sun & wood), car-sharing, community supported agriculture, training for sustainability, etc. Sieben Linden is an official project of the UN-decade of education for sustainability. The concept for this Ecovillage came up around 1989. After 4 years, in 1993, a group of people bandied together to purchase a “project center” in order tomore effectivly search for land to settle on – and to promote the concept to politicians and others. In 1997 they found the land that we have (and continue to) built the Ecovillage of Sieben Linden on – located 25 km south of the project center.

Mirabell (D) is part of the eco-network of the “lassaner winkel”, a region in the north-east of germany. the network was started in 1996 and since has been growing. it´s main intention is to promote a supportive neighbourhood within our region. specific froms of activities are e.g. eco-tourism, the communal garden platform “DuT”, permaculture, environmental education, an eco- food coop, carsharing, the european academy of healing arts, the sound-house offering music therapy , concerts, etc, kindergarden “knospe”, different study- groups e.g. for NVC, communal celebration of the equinox and solstice. for the near future we are visioning a type of folk-school and open house for all people, an alternative energiy project, and to bring regional money to the lassaner winkel.

Upcoming opportunities to learn with the founders of these communities:

A holistic training for all those involved in Education for Sustainable Development (ESD) will take place in the living and learning place ‘Ecovillage of Sieben Linden’ from 10/06/2012 – 17/06/2012. http://www.siebenlinden.de/inspiringchange.html