The EcoInnovator

An excerpt from the latest report in the Corporate Eco Forum Research Series looks closer at the importance of key innovation innovation drivers and shares one case study for developing a company-wide eco-strategy.

The Corporate Eco Forum conducted an in-depth study of 30 Global 500 firms to better understand the state of eco-innovation and to learn the best practices that are driving successful execution of these initiatives. Representing a combined $1.5 trillion in annual revenue, the companies surveyed will play a significant role in the evolution of eco-strategy.

The findings of our research are published in a new report to be released next week at the CEF Annual Meeting, “Driving Eco-Innovation: Best Practices in Execution from Global 500 Leaders.” The full 80-page report is the second in the CEF Research Series and contains findings from the quantitative survey of eco-executives and insightful case studies on execution of eco-innovations. (Click here to read the report preview.)

The study found that innovation is critical to eco-strategy success. Execution remains the challenge. As some Global 500 companies work to close the execution gap on key sustainability innovations, other leading-edge companies have experienced success. In this excerpt from the full report, we discuss the drivers of eco-innovation execution.

Our in-depth interviews with eco-executives led us to focus on execution of four key execution drivers:

1. Achieving a company-wide strategy for eco-innovations
2. Generating company-wide momentum for implementing eco-innovations
3. Aligning the corporate eco-team with the business
4. Creating a company-wide culture for eco-innovations.

The results from the quantitative survey confirmed that the above four drivers of execution were indeed very important. While other drivers were also identified, these four were most frequently mentioned in the interviews preceding the survey and are considered in greater detail in this report. As seen in Figure 3.1, more than three-fourths of the firms in the sample felt that they were all either highly or very highly critical to the success of eco-efforts in the company. The differences in importance among these drivers are not very significant.

Figure 3.2 shows that the Global 500 leaders have relatively middling abilities as a whole to execute on these drivers, even by their own assessment. For example, only around half of them have high or very high abilities to execute on momentum, shared culture and corporate eco-team alignment. Only four percent of them have very high execution abilities with regard to momentum. The percent of firms who have similar abilities is highest (64 percent) for achieving a company-wide coordinated strategy for eco-innovations. All this suggests considerable room for improvement for all the drivers among the Global 500 firms.

Achieving a Company-Wide Coordinated Strategy
The importance of developing a concerted effort towards sustainability has often been discussed by early deployers of corporate eco-strategies. Our survey found three-fourths of company leaders who responded to the question consider a company-wide coordinated strategy for executing eco-innovations as either highly or very highly critical to their company’s overall eco-effort.

Interestingly, the remainder of respondents consider such a strategy to be low or medium in criticality, suggesting indirectly that decentralized, uncoordinated efforts within business groups or company divisions may be preferable to them.

Based on the interviews with Global 500 respondents, we identify at least 10 different strategies for focusing on eco-innovations. These 10 strategies run the gamut from internal managerial processes and efficiencies in production to external customer-facing product innovations to innovations involving collaborative partnerships with other players in the industry. As a result, eco-innovation strategies focus on a wide range of applications, including activities processes, technologies, products, work partnerships, and even attitudes toward business and the environment.

The full “Driving Eco-Innovation” report takes an in-depth look at case studies and best practices involving 25 different eco-innovation drivers. In this excerpt, we share the following example:

Case Study: Corporate-Wide Environment Management Systems to Drive Eco-Initiatives
An important class of eco-innovation strategies relate to internal management systems and coordination/governance mechanisms for managing work in organizations. A good example of such managerial eco-innovations is an environment management system (EMS), one version of which has been documented in the ISO 14001 standards. The EMS of a global technology services provider that we talked to is a good example of such an eco-innovation strategy.

The senior manager in charge of internal environmental initiatives at this company told us about its eco-innovation focus: “For us, it could be summed back to our global environmental management system. It is a management system that basically drives the company’s strategy and focuses on goals and objectives, and roles and responsibilities, across the company — regardless of what business we are in at any given time and what may be the external requirements or expectations. It requires us to do a regular strategic analysis of this field. It is very important, since we avoid debate on who is supposed to do what to whom at any given time.” The executive further said that this is a unique source of eco-advantage to the company, since it is one of few companies that is able to register against ISO 14001 globally.

The key expectation in the company is that eco-innovations and other eco-efforts should be executed along a consistent management system. The manager emphasized that the company has “one policy in the company, one set of strategies and one set of goals” when it comes to eco-innovations and initiatives. The prerequisite to having an effective EMS is that company strategists understand clearly what the focus points are, i.e., which government programs and regulations necessitate implementation, as opposed to what is simply trendy.

Importantly, these management systems are relatively independent of the ISO 14001 standards.
The senior manager emphasized, “Our management system will be here with or without ISO standards. Even if the ISO standard goes away tomorrow, our management system will still be here.” Moreover, this company’s management system predated the ISO standard by several years, which enabled company strategists to register within one year of the standard being released. A core challenge in using such corporate-wide management systems to drive eco-efforts is in keeping up with regulatory change. The company needs to be constantly aware of this external influence and be able to adjust the management system to these changes. The senior manager emphasized, “Even in a field you think you understand, where the regulations have been around, our understanding continues to change [along with] our ability to measure changes, which adds to the challenge.”

Along with a strong emphasis on corporate-wide management systems, this technology service provider also targets a wide variety of other approaches to eco-innovations, including product and process “stewardship” in environmental principles, pollution prevention, energy conservation, and innovations related to carbon emissions and water consumption. Nevertheless, the underlying focus of all these areas is to ensure consistency with the management system, which is the company’s most important area of concern.

Register now to become a member of the Corporate Eco Forum to receive a copy of the full report, “Driving Eco-Innovation: Best Practices in Execution from Global 500 Leaders” and all of the upcoming reports in the CEF Research Series. Corporate members - from BT to GM to P&G to SAP - will attend the CEF Annual Meeting next week in San Francisco and discuss the findings of the report and their implications for future strategy.

Renowned futurist Dr. James Canton discusses the importance of sustainability to the future of global business.
Many goals of today’s corporate eco-strategies are aimed at achievements for 2020 and beyond. The next decade will undoubtedly set the stage for the leaders of the next business era.

Dr. James Canton agrees. As Chairman and CEO of the Institute for Global Futures and a member of the Advisory Board of the Corporate Eco Forum, Dr. Canton’s extensive experience advising the world’s leading corporations and governments involves his belief that sustainability will be the key transformation strategy for business success in the future.

Dr. Canton spoke to The Eco Innovator about why eco-strategy will disrupt business in the same way that the Internet did, why it doesn’t matter if you believe in global warming, and why 2020 will be “game over” for companies still on the sustainability sidelines.

The Eco-Innovator: Many Global 500 companies are launching eco-strategies today that have goals for 2020 and beyond. What factors should they be considering?

James Canton: First, the idea of an “eco-strategy” implies a concise standard of excellence. It sounds like we have a consensus, which has not been established yet. We are still very early in the game – the definition of an “eco-strategy” is still a moving target. Also, what may count as an eco-strategy for one company or one industry may be different from what counts in another.

Developing an eco-strategy is more art than science today. The definition of eco-strategy is still an evolving paradigm that needs to be evaluated and tested in the marketplace. Let’s not assume that there are strategies out there that have buy-in and consensus.

What I’ve found as I consult with governments and institutions is that it is very difficult for people to picture the right strategies for the future. It is still an evolving conversation.

Let’s make an analogy to the Internet. In the 1990s, the early adopters were considered radical. Most companies did not believe that the Internet represented a fundamental shift that would transform business and organizations – that didn’t happen until after 2000.

A similar phenomenon is happening with eco-strategy adoption. Many companies still think it is about reputation. They’re using their eco-strategy to prove to the marketplace that they’re on top of the right trends.

By 2020, we’ll have global agreement. We’ll have organizational leaders that have demonstrated the courage to deploy real eco-strategies.

Because by 2020, if we’ve not achieved a measured, significant reduction in emissions, sequestered carbon, developed carbon-trading exchanges, cut back on climate change so that we’re able to manage the risks associated with health and mobility, it will be a tragedy.

But as of today, we still don’t have a critical mass of change. There’s not so much happening that I can say, as a futurist, we will achieve these goals. At this point, by 2020, we’ll need to have developed more ideals and goals to make a sustainable future come to life.

By 2020, the global business community will have put the stake in the ground and created the goals that will transform their organizations – and it will be the corporations, not the governments – which will make the planet more livable for our children and grandchildren.

The Eco-I: What will separate the successful eco-strategies from the others?

JC: In every part of the organization, innovation around eco-strategy will need to be baked in. That’s where the real change will occur. Currently we’ve got companies with a green strategy for this service, or with investment in green initiatives, but overall, they’re still risk-averse.

That won’t be the case in 2020. Consumers will be brutally evaluating which companies are really green. Eco-strategy will be a systematic approach to the business.

Going back to the Internet example, the eco-movement is similarly a very disruptive business change. Green will be a natural evolution by 2020. The companies that get it right will be rewarded – by the marketplace, investors, consumers – and those that don’t will suffer. I forecast that 25 percent of today’s companies will not change fast enough and will be disrupted by the eco-strategy movement in the same way that the Internet disrupted the corporate establishment.

In many companies, the boardroom has not yet woken up to this reality. When it does, that is when things will really shift. Interestingly, you now have cases where companies like GE, which are out in front of this green movement, have had to deal with investors who are not on board.

The good news is that this won’t be the case in five – or even three – years. In a short time, you will see entire company boards replaced. The new members will be listening to the marketplace, which says green matters. Where the environment is primarily an identity issue today, eco-strategy will become a fundamental change in the DNA of business – and by 2020 we’ll see that.

The Eco-I: For today’s companies that are just launching their sustainability initiatives, is there still time to make real change by 2020?

JC: Companies should be baking in sustainability to their strategies today. Yet many don’t have any kind of real eco-strategy. They are de-linking green initiatives from their overall corporate missions. These companies still need to make the strategic link to where the marketplace is going and execute on that strategy.

I worked with GE on their “Ecomagination” strategy. The program began a decade-plus ago when the company was dealing with a lot of pollution problems. After a lot of hard work, they ended up turning a corner. GE had to make sure that product strategies included eco-considerations that were authentic to the market and sustainable for the planet.

To use the Internet example, if the Internet didn’t transform your communications, supply chain, ecosystem, customer interactions, then your company is not around anymore. Any sizeable company has embraced the Internet. What was a disruptive force in the 1990s is now the standard of business.

The company that is not working on its eco-strategy is planning its own death and demise. It is really a matter of smelling the coffee and getting moving.

Every business is facing the same transition. Rather than fighting the change, it will pay to embrace a good eco-strategy – to see where the market is going and get there before the competition.

By 2020, it is “game over.” It is critical for companies to cast their eco-strategy bets now and make changes as they go along. By 2012, they’ll otherwise have missed the opportunity to achieve a competitive advantage by having a business strategy that has the right sustainability components to establish them as leaders. Companies that can execute on eco-innovations today will be way out in front.

The Eco-I: What will drive eco-strategy success in 2020?

JC: Eighty percent of corporations have yet to realize that eco-strategies will create a new competitive edge in business. There are products and services that have yet to be created, which will drive bottom-line value.

This is a tremendous opportunity. Here are customers saying they want to buy these types of products. From a mercantile point of view, it pays to serve them. I’m in business to make money. Buying into the idea of climate change – it doesn’t make any difference. But if you like to make money and want your company to survive, guess what? Eco-strategies make financial sense.

It is the pure economic argument that is getting traction today. Those companies that are out in front don’t care about the metrics of eco-strategies because they understand that fundamentally, customers want this. Our surveys show that 90 percent of Europeans and North Americans view themselves as environmentally aware. The question is, can companies create eco-strategies to transform their organizations, so that they can benefit from these sentiments and improve their bottom line? That’s the real challenge.

When I work with companies, we don’t discuss the health of the planet. I don’t play the social-morality card to get clients to pay attention. Basically, I say, “Your customer will buy more goods and pay more money for green offerings. If you want to leave money and market share on the table, so be it. But if you want to understand these trends and use them to develop an eco-strategy that will lead to a competitive advantage in the future, then let’s talk.”

Dane Parker, Dell’s Global Director of Environment, Health and Safety, describes the computer maker’s success in meeting its carbon neutrality goal five months ahead of schedule.

When you say you want to be the “’greenest’ technology company” on the planet, you’ve got your work cut out for you. But Michael Dell did just that.

Last year, Dell put a stake in the ground, pledging that his company would launch a “Zero Carbon Initiative” aimed at improving efficiencies globally over the long term. As part of the computer maker’s mission, Dell pledged to achieve carbon neutrality by the end of 2008.

Earlier this month, Dell announced that it had reached its goal ahead of schedule. The company’s global power-management initiative now saves the company $3 million annually and enables the company to avoid nearly 20,000 tons of CO2. Its corporate headquarters in Texas is powered by 100 percent green energy and its purchase of renewable energy through utilities is now 116 million kWh annually – an increase of 870 percent in four years.

The EcoInnovator spoke with Dane Parker, the Global Director of Environment, Health and Safety at Dell about the inner workings of Dell’s eco-strategy and what other companies can do to improve the success of their carbon initiatives.

The EcoInnovator: What began Dell’s drive to become the ‘greenest’ technology company on the planet?

Dane Parker: We were actually doing things along green technology lines for several years before we created the “greenest technology company” goal. We were working on material efficiencies, PC “take back” and recycling programs, energy conservation efforts, and so on. It was clear that these were the right things to do.

Then a year ago, Michael Dell came out and articulated the goal for the entire company. We have a group internally of eight key stakeholders deciding what “green” is for Dell. Our carbon neutral goal was a big part of the operational footprint area. In fact, it was the overarching goal for the piece of the strategy for which I am responsible. Dell has other specific goals for other areas of the business.

The Eco-I: How were the specific goals associated with this mission established?

DP: We first set up priorities that were fundamentally based on the reduce-reuse-recycle hierarchy. We applied these priorities to the operations of the company with the goal of improving energy efficiency and reducing consumption. The second priority was to maximize the direct utility purchase of renewable and green energy.

We’ve been doing this for four years now and have made significant progress. We’ve added other ways to invest and offset the remainder of our energy usage that we couldn’t buy renewable resources for. Now we’re continuing on our multi-year goal of reducing the offsets and energy credits we need to achieve carbon neutrality.

To set the goals, we talked to a lot of people about strategies and goals that we hadn’t worked on before. We were also fortunate to find great partners. These sources helped us learn new ways to invest in green energy opportunities around the world.

The Eco-I: What were the most significant drivers of Dell’s ability to achieve carbon neutrality a year ahead of schedule?

DP: I think neutrality was achieved through a combination of internal and external partnerships. We worked with large consumers of energy internally, like our data centers. We helped them gain an understanding of the trends going on in energy usage and create plans to reduce that consumption. We were also working with our large customers on the same front.

It is important to achieve good internal relations with the business groups. Michael’s commitment from the top makes this a lot easier. When we approach a business unit about our initiatives, they are excited to work with us and willing to engage.

Externally, we have been educating ourselves by working with various NGOs and stakeholders as we sort through the various green options we have. We are looking to identify an approach that is credible and defensible for Dell.

The Eco-I: Dell’s green initiatives are saving the company $3 million annually. How are those savings tracked?

DP: We haven’t rolled up all of the savings from eco-initiatives in total. For example, we haven’t included the energy savings we’ve delivered by building more efficient products.

In terms of direct operations and our carbon neutrality commitment, $3 million per year is actually a very conservative number. We have a separate bucket of funds to use for green initiative and new programs compete for funding. We carefully track each program individually with a Web-based tool.

We also track the cost of purchasing renewable energy versus that of traditional energy. After being in the market for a while, we find we are saving energy cost when we’re able to buy green energy.

The Eco-I: Organizationally, how is Dell’s sustainability team set up?

DP: There is a sustainability group within Dell. It is a small team of five people globally. A lot what they do is the stakeholder relations - working to connect with external groups make sure we stay well connected.

Internally, we have an Environmental 2.0 Steering Team. The members each have operational accountability and ownership. They come from a variety of areas of the company, for example product development, operations, recycling, and so on. Because Dell is a very lean and flat organization, everyone knows each other. The team comes together on a regular basis to develop the strategies that will work for their areas and the team holds members accountable.

The Eco-I: Dell requires its suppliers to report on their sustainability efforts. How have your vendors reacted to this requirement?

DP: There is a VP of procurement on our environmental team. The process of delivering the message and getting these suppliers on board has happened faster than I anticipated. We were the first company in our industry to engage in the Carbon Disclosure Project’s Supply Chain Leadership Collaboration. We had a 95 percent response rate from the supply base to provide carbon emissions data. They are engaged. We are now moving resources in our procurement organization to greening up the supply chain.

The Eco-I: Do you have any advice for other corporations that seek to achieve carbon neutrality and realize their sustainability goals?

DP: The key thing is that you need to make sustainability a program not a project. Our work fits into a greater picture that matches the overall company strategy. If green projects are managed off on their own, it is very tough to keep momentum over the long term.

We continue to examine what “green” means to Dell and what we think leadership in “green” is. This focus has enabled us to put forth a variety of strategies that are part of an overall program. Other companies must decide for themselves what “green” means to them – and carbon neutrality can’t be the only element in the strategy.

Ultimately, Dell will not be done until all the energy we purchase is direct utility contracts for renewable or green energy. We won’t be happy until that’s done. It is a big effort, a worldwide effort – some areas require more work than others – but as green energy improves and costs come down, we plan to accelerate our efforts.

In advance of the publication of his new book, Strategies for the Green Economy, longtime green business expert Joel Makower shares his thoughts about what distinguishes today’s corporate eco-initiatives from those of the past.

With all the buzz around corporate eco-action today, it is nice to talk to someone who can put the entire movement in perspective.

Joel Makower has been an active participant in the two decade-long movement of companies toward today’s heightened levels of awareness and action on sustainability. The good news? He thinks the green strategies at companies today are truly different.

Executive Editor of GreenBiz.com and expert advisor to numerous companies and organizations (including the Corporate Eco Forum), Makower will publish his latest insight on sustainability in a new book to be released in October, Strategies for the Green Economy. The book outlines the evolution of corporate eco-action and looks closely at what companies can do – and are doing – to incorporate “green thinking” into innovative strategies and offerings.

The Eco Innovator talked with Makower about the drivers of corporate eco-action of today, whether we’ve reached a green “tipping point,” and why the” Makower Paradox” means companies are actually taking part in more eco-actions than they’re telling us about.

The Eco-Innovator: Given your experience during the last “build up” of corporate enthusiasm for environmentally-focused strategies during the early 1990s, is this green revolution different?

Joel Makower: Yes and no. It is an overnight success story but the night began 20 years ago. What is happening now is an acceleration of what’s been going on for two decades. We’ve now reached a point where almost any company of any size is asking, “What’s our green strategy?”

The problem is that most companies don’t know what that means. For some companies, it is kind of a PR/marketing play. For the majority of companies, it consists of what I call “random acts of greenness,” a green initiative involving facilities, employees, marketing, philanthropy and so on, but nothing holistic or strategic

But for a growing number of companies, it is strategic. These companies are trying to understand how to operate in a world in which energy, water, materials, climate and toxicity become constraints - and what opportunities fall out of that. That’s what’s different this time - the strategic perspective.

The Eco-I: Have we reached a corporate eco-action “tipping point”?

JM: I don’t think we’ve experienced a tipping point yet. The green efforts of companies have not grown to the point where they are happening without intervention. Most companies are doing something - and some companies are doing something deeply - but we are nowhere near the point where lots of companies are doing lots of things deeply.

The two questions I am often asked is whether we’ve reached a tipping point and whether this eco-initiative is just another fad/bubble/trend? The answer to both questions is no. Consider the “hockey stick” metaphor that is often used by the venture community to describe the uptake of trends. The foot of the stick is a slow gradual rise followed by the heel and then a dramatic upturn in adoption. I think we are just starting to turn the corner with corporate eco strategy - we’re in the heel and we’ve got a long handle yet to traverse.

Importantly, this is not a fad that will go away. Once companies wring out the waste, inefficiency, material and carbon intensity of their products and processes, they’re not going to add them back if oil drops down to, say, $90 per barrel. This is a bell you can’t unring.

The Eco-I: What do you see at Fortune 500 companies today that makes you think that green strategies are really taking hold? Are the factors internal or external or both?

JM: This really depends on the company and the sector. Every company has a different set of drivers. Some are driven by customers, whether businesses or consumers. Some are driven by competitors. Some are driven by shareholders who are asking questions about carbon risks and disclosures. Some are driven by activists who bring attention to things that weren’t previously known.

And some are driven by the need to attract and retain talent. For example, in the Silicon Valley where companies are trying to attract the “best and brightest,” salary and benefits only go so far. People want to work for good companies and a strong commitment to sustainability helps. In other companies, the CEO wakes up one morning with green concerns or her kids ask some tough questions and she decides that a green strategy is important.

Sector-wise, in IT, for example, e-waste and energy-efficiency are driving green efforts. There are many large enterprises that won’t do business with you if you are not paying attention to green issues. WalMart has policies to that effect. In reality, the drivers are usually some combination of these factors.

The Eco-I: What role are today’s consumers playing, specifically according to the segmentation analysis provided in your book by noted sociologist, Cara Pike? How should companies incorporate this insight in their green strategies?

JM: The analysis will help inform companies about how to talk about their green efforts - whether they’re communicating with customers, employees, potential employees, shareholders, community members and so on.

In one chapter of the book, I describe one of my colleague’s experiences asking people on the street what it means to be concerned about the environment. Seventy-five to 80 percent of respondents agreed they were concerned — but that concern manifests differently in different people. Some were talking about climate change, others about things closer to their community such as water and air quality and loss of open space. Others were more concerned about their ability to hunt, fish, swim, hike and canoe. And in urban areas, environmental considerations often included things like crime, traffic and asthma.

So where you stand on the environment depends greatly on where you sit. Companies must understand these differences so that they can understand how to better relate to customers, employees, community members, and others.

The Eco-I: How can companies rise above the green “buzz” and gain recognition for their genuine achievements in sustainability?

JM: Ironically, “green” is an area where companies are “walking” more than they’re “talking.” It goes against conventional wisdom but it’s true.

The fact is that most companies are doing more green work than they’re talking about. Because when companies are doing something right environmentally, and they talk about it, they are often illuminating the public about previously unknown problems. I call this “Makower’s Paradox.”

For example, one company might announce that it is using 25 percent less pesticides than before. The public then cries out, “We didn’t know that product had pesticides. Why are you only cutting 25 percent? We are going to boycott your company until you quit using pesticides altogether.”

This paradox can create big problems for a company. In most other industries, products start with standards. We don’t have those in green business. We have a green building standard, and several green product standards, but nothing for what it means to be a green business.

The lack of standards is a problem. Consumers say they’re concerned about the environment. Companies are actually doing more than they say they’re doing. Activists are only good at playing bad cop. You never hear them playing good cop (”Yes, that works. Thank you. Now do this.”) The media is good at making green corporate heroes and then knocking them down. The government is clueless and really needs to lead, follow or get out of the way. What results is a very skeptical and cynical marketplace.

We don’t have an answer to a very basic question when it comes to greening business: how good is good enough? The analogy is Sophie, my Golden Retriever. When I hold out a cookie, she’ll keep doing tricks until one of them gets her the cookie. Companies are like that today with their green efforts. A company does A, B, C, and so on, hoping to get the cookie. But there is no green standard — no definition of “good enough.” And they get frustrated that they never get the “cookie.” There are lots of standards I the works and lots that have come and gone but nothing yet.

No company will ever be perfect in its green pursuits but the lack of norms and standards are retarding progress towards that goal. And that’s a big problem for everyone.

Recurrent Energy’s “Solar as a Service” helps major organizations receive the benefits of solar power without the upfront capital investment.

For many companies, adopting alternative energy is just too expensive. Recurrent Energy’s model aims to change all that.

The San Francisco-based solar power developer partners with major clients to deliver “Solar as a Service” ^SM – a distributed model for solar power. Last month, Recurrent received a $75 million investment from Hudson Clean Energy Partners to help expand the company’s commercial and industrial client base.

Recurrent has succeeded in attracting A-List clients to its innovative offering. Recent client announcements include a deal with the City and County of San Francisco for the nation’s largest municipal solar photovoltaic project, and today’s news that outdoor retailer, The North Face, will partner with Recurrent Energy and EI Solutions to build a 1MW solar electricity system in Visalia, Ca.

CEO Arno Harris spoke to The EcoInnovator about commercial adoption of solar, how his company’s Solar as a Service model can help and what other companies should look for in a solar provider.

The Eco-Innovator: How has the adoption of solar energy by the enterprise market changed in the past few years?

Arno Harris: We’ve definitely seen an increase in corporations instituting sustainability initiatives, helping to broaden awareness of renewable energy’s advantages. One great example of that is The North Face, who announced their partnership yesterday with Recurrent Energy to create a 1 MW solar project in Visalia, California – a major foundational piece to the retail company’s overall sustainability platform.

Secondly, we’ve witnessed a growing tide of consumer and employee demand - be it in real estate or retail – for sustainable alternatives, resulting in businesses’ heightened need to demonstrate commitment to the environment.

Lastly, the state and federal incentive programs play an important role in defraying some of the cost associated with installing solar power. As more states adopt their own incentive programs and they continue to grow, so will the widespread adoption of solar power and other forms of renewable energy.

The Eco-I: What is currently hindering adoption of solar energy by major companies today?

AH: Historically, one of the largest barriers to solar market growth has been the high upfront capital cost. An average large commercial solar installation costs millions of dollars and is not typically a good use of company capital. That barrier has been addressed by the advent of Recurrent Energy’s Solar as a Service. We own and operate onsite solar power systems and sell the electricity they generate via a power purchase agreement (PPA). Solar as a Service enables our clients to purchase solar electricity as it is used, rather than purchasing the solar equipment itself. That means that enterprises can achieve reduced carbon emissions, energy independence, predictable pricing, and enhanced sustainability — without the upfront cost, risk of ownership, or operating burden of doing it themselves. Customers, such as The North Face, can attest to how valuable the PPA approach has been to making solar a viable option for their sustainability and climate change strategies.

The Eco-I: How will the partnership with Hudson Clean Energy Partners impact the ability for Solar as a Service to become adopted?

AH: Recurrent Energy’s partnership with Hudson brings together two key ingredients that are necessary to bring solar power to scale: access to capital and the expertise to put it to use. We’re building a new category of power developer with global ambitions. It’s a capital intensive business and we work with big customers—REITs, large corporations and utilities—who need to have a high degree of confidence in our ability to deliver on power contract terms and operate our generating fleet well into the future. On the supply side of our business we’re dealing with global, publicly traded manufacturers who need to know that we’re sufficiently capitalized to make the purchases we’re committing to. Hudson’s investment—plus their appetite to continue funding the company’s needs—provides us with the operating capital to expand our business and the balance sheet strength necessary to engage productively with our customers and suppliers.

The Eco-I: Can you describe the recent agreement with the City and County of San Francisco’s Solar as a Service deal and what impact it will have on the solar energy market?

AH: The City and County of San Francisco is working with Recurrent Energy to build a 5 Megawatt solar power project on the roof of the City’s covered reservoir. Recurrent Energy will own and operate the solar power system and the City will purchase the electricity it generates for use on city buildings, schools, hospitals, and public transportation. When completed it will be California’s largest solar photovoltaic power project, as well as the nation’s largest municipal project to date. To understand its magnitude, you have to imagine 30,000 solar modules covering 12 football fields.

The Eco-I: What advice do you have for major companies who are considering solar power or the solar as a service option?

AH: There are several things I think are important to highlight to prospective customers. First, make sure you’re dealing with a firm that has the staying power to be in business for the long haul. Second, make sure you’re working with a company whose business model it is to own and operate solar power systems, not just making another system sale. Finally, it’s critically important to understand how risk is distributed in power purchase agreement and what you’re trying to accomplish—e.g. energy savings, long-term price hedge, or improved sustainability—as these will impact the terms and pricing you’ll receive.

The noted energy VC explains why it is “panic time” for the many enterprises without a plan for alternatives.

When you think of the leading energy VCs, Ray Lane is undoubtedly one of the first names that pops into your head.

Lane served eight years as Oracle’s president and COO before becoming a managing partner at Kleiner Perkins Caufield Byers. Over the past few years, his investments have included a wide variety of energy plays, making him one of the industry’s most active and knowledgeable investors.

The EcoInnovator spoke with Ray about the state of enterprise adoption of alternatives, the obstacles many companies face and the no. 1 clean-energy priority for companies.

The EcoInnovator: Are enterprises getting serious about renewable energy?

Ray Lane: I think the right way to look this is to look at history. If you look at enterprise adoption of technology or anything that has become routine in business today, it always started with enterprises doing things that weren’t scaled, weren’t institutional, and attacked the established methods of the day. The best examples would be the mainframe-PC or the client/server-Internet transitions. It took businesses about five years to go from denial to adoption. New energy is going through that cycle now.

In just the span of time that we’ve been investing in clean energy, attitudes have changed dramatically. The enterprise energy czar used to say, “Solar, wind, carbon trading – this is all very interesting but I’m not seeing the relevance to us.” Today it has become “Agenda No 1.” These executives now say it is absolutely one of the most important things they’re doing. And most find they don’t have a program for how they’ll adopt or make the transition to new energy sources.

As companies consider a clean energy plan, the first thing to do is to try to understand what the impact would be from NOT having the right energy policies in the end. If a business-as-usual scenario is continued, what costs will be incurred – either as penalties for carbon usage or for paying a penalty for depending too much on oil and gas?

The EcoI: Why are enterprises slow to enact alternative energy plans?

RL: The problem is that companies think that if they adopt too fast, it will be more expensive than continuing to use the fuels of today. They see a crossover point where it will be more cost effective to use renewable energy, but every company is afraid of when that crossover point will happen.

In the U.S., if companies had a price signal as part of an energy policy that said we had to cap carbon emissions by a certain amount by a certain date then a company like Dow Chemical or Ford or Exxon or any other company would know what the price of using oil and gas would be 5 or 10 years from now. They would know how expensive it would be to produce steam from boilers, run their fleet, etc. and they would know the penalty for not adopting alternative energy.

So what we have today are some companies, like Wal-Mart, aggressively setting the agenda for all enterprises. They know consumers want change and they know policies will come and they want to get ahead of those changes.

Other companies know they need to do planning – figure out the costs of solar or wind energy, the cost of using more natural gas vs. oil, etc. They’re getting smart about renewables but don’t know how to execute because businesses are set up so much on a short-term quarterly basis. That’s why many companies think that using gas is a cost advantage. So we have a lot of companies paying lip service - saying they’re “green” – but not a lot more than that.

These enterprises are playing a risky game in the short term. They’re saying, “We’ll get as much leverage out of the low cost of coal and relatively low cost of oil and ride it out.”

The EcoI: What can be done to speed adoption of renewable energy by companies?

RL: Two things are driving adoption. First, the cost of oil has risen very fast caught. The increases have caught everyone off guard. Any company with a fleet – airlines, retailers, and so on – is hurting. In fact, the world’s supply chain is breaking down. The current model is grow tomatoes in Peru and sell them in a store in California. That model doesn’t work when the cost of the tomato is 50 cents and the cost to transport it is 75 cents.

The rapid rise in the cost of oil is the thing that has made businesses realize: this is panic time.

The other change that is impacting enterprise awareness is the U.S. presidential election. Both McCain and Obama support strong energy policies and cap-and-trade systems so there will be a price set on carbon emissions going forward. But businesses still don’t know what the price will be and they won’t know for while.

These changes are pushing many companies to “panic mode.” They’re trying to get programs developed to reduce their dependency on oil as a transportation fuel and replace their sources of electricity with more efficient methods. It has to happen.

Most companies depend on coal-generated electricity. Over the next 5 years, many are moving to natural gas. It is more expensive to buy but only generates 40 percent of the emissions of coal. If companies move to natural gas, they’ll meet the reduced emissions targets but will again face a tight supply situation. We have to buy natural gas from the Middle East, Indonesia, and other countries, and have it all shipped here. It isn’t a good situation at all. Enterprises are faced with a big, big challenge.

The EcoI: What should corporations do to launch their alternative energy programs?

RL: The no. 1 priority for enterprises is to have an energy policy in place: What energy will be used? How will we move away from oil-based transportation fuels and coal-based electricity for powering our plants?

Another priority for companies is to really get smart about all the alternatives. There won’t be one “silver bullet” energy source for each enterprise. Executives must understand the spectrum of renewables.

There are two big areas that account for 80 percent of most companies’ energy needs: how to get electricity and how get fuel. Companies have to figure out and get knowledge about how get non-coal-based electricity - geothermal, nuclear, solar, wind - and what the cost will be to get to these renewable sources vs. coal. To reduce reliance on traditional transportation fuels, enterprises have to evaluate biofuels, electric vehicles, changes to traditional vehicles to make them more fuel efficient and others.

The EcoI: In the technology industry, enterprises pay close attention to the startups that venture capitalists are funding. Do you see that happening in energy today?

RL: If you time adjust it, technology wasn’t always like that. I think that energy is in the same stage that technology was in the late 1980s: There’s no Internet. No client/server. Corporations aren’t looking at venture capitalists to see what is going on - they are looking to IBM, Sun, Oracle to find out what products are coming next.

It was only during the 1990s that enterprise customers became more concerned with venture capital investments. The same thing is happening in energy now.

We’re now getting meeting requests from all of the Fortune 100 companies. They want to visit us because they see us as a surrogate for what’s coming down the road. They know we’re seeing the entrepreneurs that are producing renewable energy opportunities. These companies all want to get smart about what’s going to happen.

The EcoI: Compared to technology venture investments, what’s different about energy?

RL: Policy will play a huge role in the energy market. The Department of Transportation, the Department of Energy, and many other agencies are involved. In energy policy, politics have to play a role. Certain VCs such as ourselves are getting involved in policy.

A cap-and-trade system is going to be a huge change. RPS (Renewable Energy Portfolio Standard) mandates are happening state by state. Energy companies in California are scrambling because they have to comply with new standards by 2010. But nationwide, the fact is that we have 60 U.S. Senators from coal states. Imagine the politics in the back room: “We need a policy that taxes coal…”

Even though there are a lot of politics involved, I am amazed at how little the government knows about alternatives. I just got off a call with someone from the Department of Transportation. He was asking me how soon I think new batteries will be available for cars…

So we are seeing both enterprises and government officials coming to the venture capital industry for energy knowledge because we’ve spent the last five years getting smart about alternatives.

Environmental manager Stephen Martin discusses Caterpillar’s decision to supply the electricity for one of its plants entirely with wind power and explains how the move fits into the company’s overall sustainability strategy.

As a founding member of the U.S. Climate Action Partnership, Caterpillar could be thought of as an unlikely champion of sustainability strategy. Yet in 2007, the heavy equipment manufacturer publicly committed to specific sustainability goals for its products and operations which aim to combat climate change.

Operationally, Caterpillar aims to realize the following goals by 2020: use renewable energy to meet 20 percent of its energy needs, increase energy efficiency by 25 percent, reduce absolute greenhouse gas emissions from existing facilities by 25 percent, hold water consumption flat, send zero waste to landfills, and design all new construction to meet LEED criteria. The company’s annual performance on several key performance indicators can be reviewed in its SHAPE 2007 Sustainability Report.

Caterpillar made news earlier this month when it announced that its Northern Ireland manufacturing plants will be run entirely by wind power. Environmental manager Stephen Martin explained the move to The EcoInnovator and underscored the importance of top-management commitment to eco-strategy success.

The EcoInnovator: How did you decide to include wind power in Caterpillar’s renewable energy portfolio?

Stephen Martin: The decision was based on availability. We have been investigating feasibility of various renewable energy options and are still investigating opportunities around biomass. Our indirect purchasing department during electric supply contract negotiations offered the opportunity to tender to Airtricity, who supply “green energy”. This aligned with our strategy of developing opportunities around renewable energy, hence the decision to go with Airtricity.

The goal is to reduce our carbon footprint. We will measure this in line with Caterpillar’s Sustainable Development metrics, in particular CO2 emissions.

The EcoI: Green electricity is a major part of Caterpillar’s overall sustainability strategy. Can you describe other renewable energy-driven initiatives at Caterpillar?

SM: The main focus in the last 12-18 months has been on improving operational efficiencies and related energy efficiency. We are now beginning to investigate opportunities surrounding renewable energy, including wind. Other renewable energy initiatives include wood boiler and biomass CHP.

The EcoI: How is the ROI of Caterpillar’s renewable energy initiatives being measured?

SM: ROI will be established during the feasibility study to determine the most cost effective projects. Moving forward as projects are implemented, benefits will be monitored.

The EcoI: Can you describe the genesis behind Caterpillar’s overall sustainability goals?

SM: This goal was set in 2007 and published in Caterpillar’s SHAPE Sustainability Report in 2008 and was driven by Caterpillar’s Executive Office in the face of climate change emerging as the most critical environmental issue. In response to this metric a sustainability group has been developed within Caterpillar to drive improvements in Sustainable Development.

The EcoI: Can you share any best practices with other major corporations that are looking to integrate renewable energy into their portfolios?

SM: For any initiative to be successful it is critical that it is high on the agenda of senior management and that they have visibility of the benefits associated with its implementation. At executive office level within Caterpillar the need to address climate change and investigate opportunities around renewable energy are clearly understood and communicated, with metrics around these areas having been established. It is this drive which will ensure that integration of renewable energy into the business portfolio will be achieved. With renewable energy metrics in place, Caterpillar, at both a divisional and enterprise level will be able to measure performance moving forward.

ArcelorMittal makes two multi-million-dollar commitments to finding solutions for environmental challenges. Director of strategy and integration, Jason Schmitt, describes the the success of another recent eco-initiative in Brazil.

Steel giant ArcelorMittal is upping its already-significant commitment to reducing greenhouse gas emissions. Last week, the world’s largest steel company announced two new initiatives: a carbon fund and a clean technology venture capital fund.

The carbon fund stakes ArcelorMittal as a player in the carbon market. The €100 million (US$ 157 million) fund will invest in greenhouse gas-reducing technologies which can generate carbon credits for compliance in the EU Emissions Trading Scheme.

The clean technology venture capital fund was launched with a $20 million investment in Miasole, a maker of thin-film solar partners. By working with other noted green VCs including Bessemer Venture Partners, Khosla Ventures and Kleiner Perkins Caufield & Byers, the ArcelorMittal fund aims to support the commercialization of clean technology, with an emphasis on ventures that have relevance for the steel industry.

The EcoInnovator spoke with the venture fund’s manager, Jason Schmitt, director of Strategy & Integration for the Flat Carbon Americas division, about the execution of other recent eco-initiatives at ArcelorMittal.

The EcoInnovator: Can you describe the significance of your Brazilian eco strategy?

Jason Schmitt: Our Brazilian facilities continue to raise the bar in support of sustainability – one of our three brand values. They are doing so through the development of several Clean Development Mechanism projects (CDM) that are aligned with the Kyoto Protocol recommendations to reduce green house gas emissions

One specific CDM project is generating great public interest – the use of vegetable carbon (charcoal) at the ArcleorMittal Belgo blast furnaces. Among the advantages in using charcoal is the use of renewable biomass. Biomass is organic material made from plants and is a renewable energy source, meaning we can always access it through various vegetation crops.

We have invested in cultivating our own forests of Eucalyptus, and through this vegetation can supply the company with charcoal. There are 46,000 acres of land managed for the ArcelorMittal Forests in Brazil, with the forest operations certified by the Forest Stewardship Council (FSC), for best forest management practices. These Eucalyptus forests serve to capture and retain CO2 gases through photosynthesis simply by their presence – and at the same time, the Eucalyptus can be transformed into charcoal.

Brazil’s charcoal blast furnaces reached full capacity in April 2007 and represent the manufacturing of 360,000 tons of liquid pig iron per year – driving a saving of 30 percent in the charging of metals used in steel production. Equally important, this effort is slated to reduce emissions by approximately 10 million tonnes of CO2 between 2008 and 2015.

The project is a prime example of ArcelorMittal’s market based approach, securing local solutions to meet local needs.

EcoI: What groups were involved and how did they work together to plan and execute the Brazilian initiative?

JS: ArcelorMittal has a Corporate Responsibility (CR) oversight structure responsible for CR activities and performance within the organization and its business units. The local Brazil CR team, as other CR teams across the organization, manages energy efficiency, sustainability and other similar CR projects. Assisting in this effort is ArcelorMittal Jequitinhonha, a subsidiary foresting company of ArcelorMittal Inox Brazil, dedicated to the production of wood and charcoal from cultivated eucalyptus forests for steelmaking application.

EcoI: What are the specific goals of the project?

JS: The objectives of the project are as follows:
1) Minimize the environmental impacts caused by the use of agrochemicals
2) Reduce the consumption of natural resources
3) Reduce the impacts on forestry activities in the biodiversity
4) Reduce the environmental impacts caused by air emissions.

EcoI: In a large organization, communications about specific eco initiatives can be challenging. How does ArcelorMittal keep employees abreast of the latest initiatives and gain their support for such programs?

JS: At ArcelorMittal, there is an integrated suite of corporate communication tools that are cascaded to employees globally. These tools include boldspirit, a quarterly publication that regularly spotlights eco initiatives, a quarterly ArcelorMittal corporate responsibility review, top line company news and organizational articles of interest. Other global tools include the ArcelorMittal intranet, ArcelorMittal Web TV, an annual sustainability report and intranet updates. Locally, eco initiatives are communicated via business unit newsletters and in countries like the USA, via employee forums designed specifically to capture employee dialogue and feedback regarding sustainability issues and initiatives.

EcoI: Would you say that senior executives are driving eco-initiatives or pushing back?

JS: ArcelorMittal top management, in fact all of its management, strongly support the eco-initiatives being driven within the organization. To show this support, an organizational Environmental Policy was formally adopted by top senior executives. The policy underscores ArcelorMittal’s commitment to meeting regulatory requirements, promoting environmentally friendly products and processes and extending this commitment to ArcelorMittal employees, suppliers and stakeholders.

After its first Sustainability Summit, the $200-billion dairy industry has a new commitment to reducing greenhouse gas emissions. Dairy Management Inc.’s Richard Naczi details how the execution-focused conference worked to unite the supply chain behind a set of sustainability initiatives.

More than 60,000 dairy farms produce approximately 21 billion gallons of milk every year in the U.S. The millions of cows involved are notorious producers of greenhouse gases – and that’s not to mention the feed crop, processing, packaging and transportation that is also required to bring dairy products to America’s table.

The size and diversity of dairy companies - from family farms to global conglomerates – equates to a significant challenge when it comes time to unite behind a call for sustainability. Wal-Mart’s decision to rate suppliers based on their sustainability record helped rally the supply chain to participate in the industry’s first Sustainability Summit in June.

The EcoInnovator spoke with Richard Naczi, executive VP of strategic industry analysis and evaluation for trade group, Dairy Management, Inc. about changing perceptions of “sustainability,” uniting the entire supply chain behind a cause, and the importance of cross-functional and cross-industry collaboration.

The EcoInnovator: How did the idea for the Sustainability Summit originate and what drove it to become a reality?

Richard Naczi: The dairy industry is at a crossroads in how to respond to a carbon-constrained world. We recognize that there is tremendous opportunity for the dairy industry to be part of the solution to climate change through leadership and innovation.  We had already been having conversations about sustainability and carbon reduction strategies internally when we learned of Wal-Mart’s sustainability scorecard. The retailer was asking all of its milk processors to look at their environmental footprint and gas emissions. Rather than making a series of lifecycle assessments, we realized Dairy Management could orchestrate an initiative to unite the industry around sustainability.

The result was the Sustainability Summit which included dairy producers and processors and non-governmental organizations, university researchers and government agencies. These parties represented the entire value chain, from feed crop production to dairy farmers to the retail sector. The initial reaction to “sustainability” for many parties was to think “regulation.” But we were able to migrate the perception of “regulation” to one of “opportunity” by demonstrating the business case for sustainability and having the right mix of people in the room to come up with viable solutions.

When you look at the three elements of sustainability strategy - economics, environment and society – it is important to have a clear understanding of the economic side. We need a vibrant industry to continue our dairy businesses which employ 900,000 people and generate $200 billion annually. As we showed the industry that there was an economic opportunity associated with sustainability, they became more excited about it.

The EcoI: The summit concluded with many plans for sustainability initiatives, including plans for improved packaging and refrigeration techniques and an industry-specific carbon trading system. The summit also arrived at several innovative solutions, including the expanded use of methane digesters. How will this technology work?

RN: We actually walked away with recommendations for 22 initiatives, with a commitment by attendees to work together toward sustainable solutions. One recommendation is to expand use of methane digesters, which have been around for about 25 years. Farmers realize they have an opportunity to produce energy from the methane produced on the farm, but there are many challenges, including how to resell that power on the grid, how to get the devices to be scalable and to work correctly, and so on.

One objective of the summit was to work through a broader coalition. Today’s dairy farm needs approximately 1,000 cows to make a methane digester program viable. By bringing other farms and other products into the programs, such as poultry and cheese producers, a methane digester program becomes scalable. We need cross-thinking from other industries to move our own industry forward.

The EcoI: What was the process for coming up with each initiative?

RN: The focus was to identify breakthrough approaches to reducing greenhouse gas emissions by designing business strategies that build economic, social and environmental value across the entire value chain.  We had a highly participatory system that engaged a cross-section of as many internal and external stakeholder groups as possible. This allowed participants to build a shared vision, explore opportunities and create practical action plans on carbon reduction strategies in eight different areas. As participation increased, that number grew to 22 initiatives. Summit attendees decided which initiatives they wanted to work on. Some initiatives got more traction than others based on participation from a wide variety of people, including experts in processing, packaging, NGOs, farm production, and so on.

At the summit, we used a program called Appreciative Inquiry moderated by its creator, David Cooperrider. The process helps disparate groups unite behind specific issues and work together towards a specific goal. The process helped our industry make as much ground as possible in the short time we had together.

A group formed around each initiative and a team “captain” was appointed. We ensured that the members included cross-functional expertise and also reached out to other industry experts who couldn’t attend the meeting to be sure all of the right people on the value chain were included.

The EcoI: What are the next steps Dairy Management is taking to ensure execution of these intitatives?

RN: Since the conference, more people have become aware of our efforts and though they couldn’t attend the summit, they want to be plugged into the right team. The next steps will include conference calls with each team in July and August to assess progress. We also have a group that is looking at funding for some of the projects, whether it is business funding, private grants, government grants or other sources of capital to keep our efforts moving forward.

The goals for each initiative will come out of the teams themselves. The overall industry goal is reduction of greenhouse gases so each initiative will express their goals in that context. Some goals will be long term and might involve legislation and policy changes, while others can be enacted very quickly. Anecdotally, I’ve spoken with manufacturers who went back to their facilities after the summit and were able to immediately identify opportunities for savings from, for example, lighting or steam systems. These people have made changes and are already realizing benefits.

Part of the motivation to create the Sustainability Summit was to actually make a reduction in greenhouse gases and not to simply discuss strategies. We will stay on this path by tracking the progress of each working group through 30-day, 60-day and 90-day milestones. We intend to field-test several prototype projects to determine their real-world viability in reducing greenhouse gas emissions. We also want to avoid duplication of effort by learning from other industries. We are looking at quarterly updates and investigating the possibility of a follow-up summit sometime next year.

The EcoI: How will the dairy industry ensure participation across the supply chain?

RN: For the entire dairy value chain to participate there must be a business case for sustainability at every step in the supply chain. The industry sees sustainability as good thing, both business-wise and from an environmental standpoint. I’ve been really impressed by the people in the field. There is a lot of motivation to participate in the sustainability effort coming from a broad number of areas. This Summit is part of a broader industry-wide sustainability initiative that will inspire the innovations in products and processes that can increase profits and market share while also being better for the planet. I really see the whole thing as a “carrot” not a “stick”.

Maryann Jones Thompson is editor of the Corporate Eco Forum.

The VP of IBM Global Technology Services talks to The EcoInnovator about how the company is leveraging data center efficiency to drive its position as a green corporate leader.

One year ago, IBM committed $1 billion per year to Project Big Green, an initiative aimed at improving the energy efficiency of IBM’s products. Last week, IBM opened its biggest data center in the world. The Boulder, Colorado-facility will be the company’s “greenest” in North America.

Steve Sams is a key leader of IBM’s Project Big Green initiative. The EcoInnovator spoke to the VP of Global Site and Facilities Services, IBM Global Technology Services, about the significance of the new Boulder facility, the progress of Project Big Green and how customer demand drove IBM’s desire to be a sustainability leader.

The EcoInnovator: Can you describe the significance of last week’s announcement in Boulder, Co.?

Steve Sams: Last year, as part of IBM’s Project Big Green, we made a commitment that IBM would double the compute capacity of our Green Data Centers by 2010 — without increasing power consumption. The opening of our Boulder data center makes it IBM’s most energy efficient and most technologically advanced North American data center. It provides another 72,000 square feet of raised floor for our Strategic Outsourcing clients and brings the data center site up to 300,000 square feet - our largest in the world. At the Boulder site, an entire building on the Boulder campus was retrofitted. 98 percent of original building’s shell was reused, 65 percent of materials from original building were recycled, and 25 percent of newly purchased material was from recycled products. This demonstrates that other companies can grow their business and be energy efficient at the same time.

EcoI: Can you point to specific areas of success with which IBM is particularly satisfied?

SS: With the Boulder green data center, we had good collaboration with the local state, city and local utility companies to help us with our energy efficient efforts. IBM was able to quality for state and city investment initiatives and local energy provider rebates. In addition, Boulder is partially powered by alternative energy sources, with more than one million kilowatt hours per year of wind-powered electricity being purchased, resulting in a reduction of approximately two million pounds of carbon dioxide produced per year.

EcoI: Were there challenges in bringing the Boulder facility online that IBM didn’t anticipate?

SS: Our biggest challenge was to get the center ready as quickly as we could to be able to support the demand for increased data center space due to the increasing computing demands of our clients.

EcoI: Data centers and IT are the area where many companies launched their green initiatives. Today, many leading-edge companies are looking to take their green IT strategies to the next level. Do you have tips for such companies and/or examples of client organizations that have succeeded in advancing their green IT efforts?

SS: The biggest item that companies can do on data centers is to work to get visibility on the real costs on energy use in data centers and to get accountability for the use and the savings to the CIO. Data centers use 10 to 30 times more energy per square foot than office space, yet CFO’s typically allocate the costs equally to all users in a company. Surveys indicate that 77% of CIO’s are not responsible for the data center energy bill. When CIO’s are accountable for the energy use - and savings - we’ll see a much larger shift in becoming more energy efficient. We’ve helped many clients around the world meet their technology needs while being green, having already built green data centers for organizations including Telecom Egypt, Bryant University in Rhode Island, for kika/Leiner, the leading furniture manufacturer and retailer in Austria, and at GigaCenters, building the largest green data center in Canada for RackForce.

EcoI: With what metrics is IBM measuring the success of Project Big Green?

SS: The best measure of success with Project Big Green is the response of our clients and our ability to deliver immediate financial impact to them from the products and services that we provide. Our CEO, Sam Palmisano, cited it in our annual report when he indicated “our green data center solutions dramatically impact energy efficiency and physical space constraints while also helping the planet. Demand is climbing for these solutions and we hit more than $400 million in signings after introducing them in the third quarter. ” We’ve been able to deliver 15 to 40 percent annual energy savings for many clients around the world, with less than a two year payback, as well as design and build energy efficient data centers showing clients that green IT drives real cost savings today.

EcoI: IBM has been able to leverage its initiatives in the data center and other IT areas to drive its image as a green corporate leader. Can you share any tips for success with other companies that are aiming to use technology to drive overall eco-strategy?

SS: There are two keys we’ve had with Project Big Green. The first was to focus on our clients and how to help them with their energy challenges in the data center. We realized that energy efficiency is a global issue with significant impact today — and will have an even greater impact in the future. The second key was to make this a holistic approach and to bring all the areas of IBM to bear on the problem to provide the most comprehensive value to the client from a hardware, software and services perspective. Our recent announcements over the past few months continue our innovation as we add both depth - such as our new data center family of services — and breadth, with enhanced energy efficient software, server and storage systems across the enterprise — to the solutions we provide to clients. This end to end approach has been recognized by many industry analysts as well as by many of the Green IT awards which we’ve won - such as being ranked the #1 Green IT vendor company by IDG / ComputerWorld.

EcoI: How did IBM gain the attention of top management to support Project Big Green? How do you work with client organizations to convince top management that a sustainability initiative is in the company’s best interest?

SS: The original focus on Project Big Green was on energy efficiency. Increasingly a number of our General Managers were making calls on CEO’s and board rooms to help clients address tactical issues of power and cooling and how it was becoming an inhibitor to their ability to grow their business. When they were approached, the need became clear to develop a cross-IBM program focused on energy efficiency and the benefits to our clients. As we rolled out Project Big Green, the linkage between green data centers and corporate sustainability became a natural focus to link IT to the corporate goals.

Maryann Jones Thompson is editor of the Corporate Eco Forum.