Crafting Environmental Business Strategy with ‘The Green to Gold Business Playbook’ Co-Author P.J. Simmons

July 13, 2011

P.J. Simmons has dedicated his career to enlightening others with environmental issues — taking them out of the “green box,” as he puts it, and into the mainstream. He has taken to co-founding the Corporate Eco Forum, a way for business leaders to collectively share their best green practices in a no-pressure environment. Collectively, the 80-some member businesses have a combined value of $3 trillion. Simmons recently published The Green to Gold Business Playbook with co-author Dan Esty, a follow-up to the original Green to Gold book by Esty and Andrew Winston. The book makes a compelling case as to why companies should consider the environment at the forefront of their business strategies. “Going green is not really a business panacea,” Simmons says. “It requires the same kind of strategic business approach that you would take with any kind of business decision.”

Transcription

JOHN SHEGERIAN: Welcome back to Green is Good, and we’re so honored today, truly honored today, to have P.J. Simmons on with us from New York City, New York. Welcome to Green is Good, P.J. P.J. SIMMONS: Thanks so much, John. It’s a pleasure to be here. JOHN SHEGERIAN: P.J., before we get into any questions or anything, what we love to share with our listeners, both here in the United States and around the world, is your journey. We want it to come from you because your journey is absolutely fascinating. Not only are you a Fulbright Scholar, not only were you a leader at the Clinton Global Initiative, not only are you the co-founder of the Corporate Eco Forum and also the co-author of The Green to Gold Business Playbook, which just came out and we’re going to talk about, but your journey is one of the most fascinating sustainability and green journeys we’ve ever heard of. We want you to share how did you get to where you are today, and how has that journey been? P.J. SIMMONS: John, that’s a very nice introduction. Thank you so much. It’s really a pleasure to be talking to you guys, and I’m such a big fan of all of the work you’ve done, John, too, so I’m really honored to be here. I guess the quickest way to answer your question is many years ago, when I was focused on international affairs as an undergraduate at Tufts University and just embarking on a career in that sphere, I read Al Gore’s Earth in the Balance. This is back in 1992, so I was heading off to graduate school, and it really was kind of like somebody took a two-by-four and smacked me over the head. I just couldn’t quite believe that I had made it through an education at one of the best institutions of higher education in this country without anybody really impressing upon me how connected environmental issues were, natural resource scarcities, all those kinds of issues, were connected to all the things that I had studied at college, economics, politics, security, human health, on and on. In retrospect, I think what happened was I had this epiphany that there were all these connections to all these things that were so important to the quality of life for people and for our economy and our security and so forth. In retrospect, I think a lot of my career has been about trying to help get environmental issues out of this green box that we tend to put them in, and into the mainstream and see all these connections so that one day we’re at a point where it’s just natural that we consider environment in virtually everything we do. That’s really been at the heart of my journey and why it’s taken many twists and turns. I’ve worked in the non-profit sector. I’ve worked in foundations. I’ve worked in the think tank community and have been really excited to be working with business for the last 5-6 years. JOHN SHEGERIAN: That’s so great. You co-founded the wonderful Corporate Eco Forum, and now you’re the Chair of it. Tell us a little bit how you started it, why you started it, and who’s really involved with it. P.J. SIMMONS: A gentleman by the name of M.R. Rangaswami has become my closest collaborator for five years. We had a mutual friend through the Clinton Global Initiative that put us in touch. M.R. was at a point in his career where he was contemplating retirement or doing something that would connect to his values and make an impact in the world. He had been running around in Silicon Valley with the likes of Vinod Khosla and Ray Lane and a lot of folks who were interested in clean tech and clean technology, clean energy, and so forth. He was really intrigued at the possibility of doing something to try to promote and accelerate innovation in clean energy, clean technology. A mutual friend brought us in touch. He said, “I’d love to do something,” and my first reaction was, “Well, I’d love to help you, but there’s an awful lot of stuff going on out there that’s really kind of amazing in this space, so I’m not sure how much value add there would be. I certainly don’t want to reinvent any wheels, so let’s just take some time and figure out what it is we should do to be helpful.” We spent about six or eight months interviewing a lot of senior executives at predominantly Fortune 500 companies, and one of the things that we heard repeatedly was that there was a need for a kind of safe space, a trusted space, for very senior executives to, peer-to-peer, talk about the journeys that they were taking to try to drive sustainability and environment into the hearts of their businesses, the challenges they were having, the war stories along with the success stories, and do that in a way that the cameras were off, they weren’t constantly trying to tout all the great things that were happening, but really talk about the challenges as well. That was really the heart of the idea of the Corporate Eco Forum, to provide a trusted community, a safe space, for those private conversations, just peer-to-peer. How’s it going? How can we share our best practices in a way that’s non-competitive? How can we together accelerate the spread of best practice and also explore what one of our founding advisors, C.K. Prahalad, urged us all to do, which is focus on next practice. What are the best practices that are emerging for the next several years? That’s really what’s been created. John, you got a flavor of that last week in Washington. We were so glad to have you there. JOHN SHEGERIAN: I was so honored and humbled to be there because, I’ll tell you what, it was probably the best conference in my seven years with our recycling company and being in just a little part of the sustainability revolution was truly the most relevant conference I’ve ever been to. I was just amazed at how you put it together, you and M.R. crafted it, and had the interactions among all of us. Again, my hats off to you because it truly is something that’s so special and so desperately needed. There’s such a void in the marketplace. I think you hit it out of the park. P.J. SIMMONS: Thanks so much. I think the reason that it’s worked so well is at the core of the strategy, it’s been just to simply listen to what our members, we now have 80 companies that are members of the Corporate Eco Forum, combined revenues of $3 trillion, so it’s an awesome network of executives and companies, but really the heart of the strategy has just been to listen to what they are having challenges with, what they really want to talk about, and build agendas and build the structure all around that and be very highly nimble and adaptive based on what they need at any given time. That’s really been the core of the strategy. JOHN SHEGERIAN: The one thing that I don’t understand about you, P.J., because you’re just an amazing superhuman individual, is how you and M.R. put that amazing conference and continue to keep it going, and you had the time to talk about what we’re going to talk about next to do, The Green to Gold Business Playbook, with Dan Esty, which is the sequel to Green to Gold. Tell us a little bit about why you and Dan got together and did this. Who is it really for? P.J. SIMMONS: John, I wake up every day really motivated to try to make a difference and move the needle on these issues. I sort of see what’s happening, the rate and scale of change globally on environment, and I see how that will impact our lives, our children, our grandchildren, the supply chain, and on and on, just really riled up to try to make a difference. That was really the motivating force. I had actually been a big fan of Green to Gold, the first book by Dan Esty and Andrew Winston, that came out in 2006, which, as you know, was the book of the meeting of the World Economic Summit. It really made a huge difference in changing the conversation internationally about environment and business, and really helping to recast these issues as kind of core business strategy issues and not philanthropic ones. It really kind of pointed out the four key benefits for companies that want to try to go green or greener, one being reducing costs, the second being reducing risks, the third being growing revenues and having new sources of revenues, and the fourth being building brand and other forms of intangible value. It made a really compelling case. I was a big fan, and I think Dan really wanted to do a sequel. Andrew had already been through this once. I think he was pretty exhausted after the first book, so Dan needed a partner for the second one, and because I had been focused at the Corporate Eco Forum in trying to keep cataloging all the best practices and what was working and what wasn’t working, trying to kind of be a packrat of all the tools and resources that are out there for companies that are trying to drive this into the hearts of their business. I kind of felt like it was a natural opportunity to pull a lot of this stuff together and get it out to even wider audiences, to have a bigger impact. The goal of the book is to take this compelling argument of why companies ought to put environment squarely in their business strategies for competitive advantage, and then move even further to providing practical guidance in terms of the how, and really structure that in a way that was relevant to achieve supply chain officer, to achieve information officer, to an office manager, to somebody that is working in logistics and transportation, to somebody working in finance, all different parts of what makes a company tick, all those different job functions, to try to lay it out in a framework that would be relevant. It wouldn’t have to be read cover to cover, but it would just be a really practical resource for companies that really wanted to figure out how do you go about getting strategic advantage from driving green. That was kind of the motivation. It was a really tough couple of years to try to balance it all, but I think, ultimately, very rewarding. JOHN SHEGERIAN: I’m holding the book in my hand, and for our listeners out there, this is a must-read. It’s not only an amazing resource, but also you could upload it on your iPad right now or you can buy the book. I suggest everyone go to the website, www.greentogoldplaybook.com. It’s a beautiful website, lots of information there on how you can buy both at Amazon, Barnes & Noble, Borders, or, like I said, just upload it on your iPad and you don’t even have to carry it around; it’s right in your hands. This is very important. Listen, P.J., you have such a visibility into so much that’s going on in the sustainability revolution, the green revolution. Can you share with our listeners some of the most interesting takeaways that you learned during the process of writing this book? P.J. SIMMONS: Sure. I think the heart of my own learnings in the last several years and working on these issues is that, ultimately, green in business is a mindset. It’s a mindset that’s more rooted in common sense than anything else, and it’s really about using a different lens to approach this as planning and problem-solving, that leads you to get rid of waste in all forms, energy waste, water waste, wasted inputs, raw materials, all those things that when you get rid of those wastes, it saves money. It’s about the common sense actions that you would take to anticipate and head off all sorts of risks that you might not be apparent to if you didn’t have a green lens, but when you use it, you can kind of look a little bit further into the future and safeguard your company against those risks that can be, as BT could tell you or a lot of other companies that have actually been stung by those risks, can really make a huge difference. At the same time, all of this is going green is not really a business panacea; it requires the same kind of hard business approach, strategic approach, that you would take with any kind of business decision, and that’s really fundamental to our approach in pulling this all together in the book to say, “Look, each one of these plays we talk about in various parts of your business may not make sense given where your business is today and given your culture, given what you specialize in and so forth, but it does lay out a range of things for you to test and try and figure out what is going to be the most relevant to you.” I think, really, kind of a big takeaway is that, ultimately, the pressures behind all of this are not going away. The idea that green might be a fad in businesses, I think, is being put to rest as people see that the fundamental drivers are really only intensifying, energy prices growing, scarcities of critical resources, increasing demands and expectations of stakeholders and watchdog groups and regulators, global competition, even, in clean tech. All of these things are combining for increased pressure for businesses to go in this direction. With that, lots of increased opportunities for businesses like yours to come in and actually solve a lot of these problems that we will continue to face in the years ahead. JOHN SHEGERIAN: P.J., can you also share a little bit on the fallacy that being green or going green costs money, that you actually save money and it’s good for your bottom line when you go green as a big corporation or even a small corporation. P.J. SIMMONS: Well, you know, John, you put your finger on one of the reasons why I think a lot of companies aren’t doing more in this area, is that perception of this is really costly. I think part of that is a mindset. Instead of thinking of this stuff as an investment that might produce greater returns on investment, they think of the upfront costs and they have this sense that it’s too much and we’re not going to invest in it. What our book tries to do is point to the hundreds of examples of companies, large and small, that have made even modest changes that have required very little to almost no upfront costs, and have produced lots and lots of returns that are really, really attractive. Lots of other examples, we sort of divide each of our plays into basic, intermediate, and advanced plays. The basic plays, many of those are very low-cost or no-cost measures that companies can take that are “green.” Companies may not call them green, but they may actually produce benefits to the environment and huge benefits to the company. In the advanced plays, there are companies that actually will really make capital expenditure choices or they’ll make larger investments upfront that might not be as attractive compared to some other lower-cost investments, but over the long haul, in terms of returns on reducing operation expenses and all sorts of other benefits, that they can have huge payoffs. If you look at examples in buildings and facilities, there have been tremendous success stories where companies have gotten really fast payback and big returns on investment from modest upgrades and investments in the areas of lighting, for example, and heating and ventilation and air conditioning, insulation of the buildings. The Empire State Building, which I know, John, you’re originally from New York and I’m based here in New York, they invested about $20 million in eco-efficiency renovations and retrofits recently, and those are projected to save about $4.5 million annually, and cut energy use by 38% with a payback in about three years. That’s the kind of thing that we’re seeing. There are hundreds of examples of this in the book, of those types of activities in supply chain and logistics, in information technology, in basic office activities. It’s really exciting and I think that when you see the examples of companies large and small that are getting those kinds of returns, that’s what get Chief Financial Officers to take a second look and reframe this from this is going to be really expensive upfront to this might be a really good investment for us to look into. JOHN SHEGERIAN: Besides the bottom line, as you and I know, there are also other benefits to the brand, intangible benefits. It’s not just dollars and cents; there’s branding advantages and other intangibles. Can you also pull some examples out of your amazing book? For our listeners who just joined us, we’re so honored to have P.J. Simmons from New York on with us. He’s the co-author of The Green to Gold Playbook. Please go to his website, www.greentogoldplaybook.com. Buy the book, upload it on your iPad. Talk about, P.J., some of the intangible benefits that come, besides just cash and money, to the bottom line. P.J. SIMMONS: Sure. The one thing I do want to add to that is in addition to cost savings, there are lots of companies that are really boosting their revenues and changing the way that they innovate by using a green lens. Companies like Proctor & Gamble and Clorox and GE that have developed huge revenue goals around eco solutions and products that are driven by green. Those are really exciting, and the book has a lot of those examples as well. When we talk about intangibles, it’s the idea that the green effort can actually create a lot of significant business benefits that are important drivers of future earnings and shareholder value, even if they aren’t easily measured or accounted for on traditional financial statements. If you were talking about brand equity, improved customer satisfaction and loyalty, improved license to operate, reduced operational burden and interference from regulators, stronger ability to attract and retain top talent, which is incredibly important, innovation capacity, and so forth. When you think about the amount of a company’s reputation that might be not just based on its ability to generate revenues, but it might also be based on all sorts of other factors, this is one of those areas where increasingly companies’ performance in environment and social issues is really making a difference. One of the examples that I often think of in this area is Walmart. If you think back to the time that Katrina hit, at the time, Walmart was really getting hammered on all sides, from environmental groups, social groups, labor issues, and so forth. When Katrina happened, the CEO at the time, Lee Scott, galvanized the culture to respond in a very compelling way to get its employees to come together and try to help address a lot of the relief efforts that happened around Katrina. At the time, he said something along the lines of, “This is our company at its best. What if we were always at our best like this?” That was just about the same time that Walmart started really investing in a different approach to thinking about how green affects virtually everything it does. Today, fast forward several years, you can’t go to a conference or read a book about business and the environment without seeing Walmart all over the place. The transition, in terms of its reputation, has been fairly stunning. There are companies that are much smaller, like the New Belgium Brewing Company, which is a craft brewery based in Colorado, that has really motivated its workforce by embracing sustainability as part of its corporate identity. Their company’s executive team points to green initiatives as a source of increased employee satisfaction and a key reason of why they have a retention rate of 95%. That’s really fueled the firm’s rapid growth. Between 2003 and 2007, I think their compound annual growth rate of 13.5% was almost double the craft brewery average. You have companies like that that really see how much employees can get excited about a company that stands for something and that really puts green at the heart of what it’s trying to do. Interface Carpet Company is another example that I’m sure many of your listeners know very, very well with CEO Ray Anderson, that has set really exciting goals about having net zero impact. For that company, it’s really galvanized its employees. Lots of intangible benefits as well. JOHN SHEGERIAN: You’re right. When you listen, P.J., to all that you’re saying, both tangible and intangible benefits, why aren’t all the companies out there, big and small, running for the door? What are the obstacles? Are they just the legacy fallacies that exist? If there is a great case to be made, and you’ve made it in the book, that you can do well and do good both at the same time, why isn’t the revolution even moving at a faster velocity? Why isn’t sustainability moving even much faster than it is right now? P.J. SIMMONS: I think, in many cases, if you just think how many of us have everything that we have on our plates every day in our jobs, and the fact that many of us feel as though we’re doing the jobs of three or four people increasingly, everybody is so busy. Everybody is overextended, and if you don’t already have access to information that’s readily available, if it’s not really easy for you, if you don’t really know much about this “green” stuff, if you’re responsible for a supply chain and you’ve got to worry about products getting put together in the right place at the right time and the right quantities and condition at the right price, you’ve got all these things on your plate. To add green on top of that, if you don’t know exactly what to do and what the benefits are going to be, you’re going to be resistant. I think it’s a very common experience in a lot of cultures where folks are skeptical, and they should be because, as we point out, not every green play is going to pay off equally for everybody. That said, I think the good news is that companies that do invest even a little bit of time in thinking about this stuff end up finding huge benefits. One of the keys that we point to in the book over and over again is just how when you empower people within the company to kind of look for opportunities and you just give them some examples and you give them some basic tools to start looking, they are the ones on the front lines to uncover the opportunities and to be creative and solve a lot of the problems. GE, for example, has done this brilliantly with what it calls energy treasure hunts, where they let loose thousands of employees in plants and in buildings and so forth and go and look for places where there are lots of energy savings that could be had. 3M has something called the Pollution Prevention Pays program, the 3Ps program, that saves $1.5 billion in the last several decades by engaging employees in looking for these kinds of things. Again, I think to answer your question, it’s just sort of natural for folks that are overextended to kind of be skeptical at the beginning. I think that’s a big challenge. Another one is lack of financing to cover upfront investments, typically for smaller companies, and that’s another area where in our book, what we try to do is point people to, instead of programs and in some cases new banks or new parts of government agencies that actually could help in those types of situations. Finally, a fairly unpredictable policy environment has also kind of prevented a lot of companies from dipping their toes in this area. Particularly around energy issues, there’s been a lot of back and forth. There’s a lot of differences in state approaches to regulation without a lot of common federal framework. A lot of companies are saying, “Let’s take a wait and see approach. We don’t have a clear price on carbon. We’re not sure where energy costs are going to end up.” That also helps, I think in some cases, companies resist doing any major changes, given that uncertainty. JOHN SHEGERIAN: We’re going to do something different today, P.J. Your book is so important. Mike and I are so thrilled with the work you’ve done and the hard work you’ve put into this. We want to now offer to our listeners, we’re going to give away five signed copies to our international listeners, the first five international listeners that write me an e-mail, tell me what they’re doing in the sustainability space, and why they want this book at jss@greenisgood.fm, and the first five listeners in the United States that also e-mail me under the same request, we’re going to also give away five signed copies to them. P.J., unfortunately, we’re down to the last minute or so. We’re going to always invite you back here whenever you want to talk more on all the great work you’re doing, both with your book and at the Corporate Eco Forum. Do you have any last thoughts for our listeners before we have to sign off? P.J. SIMMONS: Only, John, to say thank you for your leadership and your leadership by example. You’re one of those people who has actually really seized the business opportunity and has gone after it in a way that really represents how entrepreneurial spirit around these issues can lead to great business results and also really contribute to problem solving on a really large scale. It’s that kind of leadership that I see all the time when I talk to people in small businesses and large businesses that’s the constant source of inspiration for me. While the challenges that we face are really huge, I’m inspired by you, I’m inspired by your listeners, and I really look forward to hearing some of the e-mails that come back to you and what people are working on and what they’re inspired by and hope that I can stay in touch. JOHN SHEGERIAN: We’re going to also announce those winners some time early in the fall. We’re just so, again, humbled that you came on our show today. For our listeners out there, again, please go and buy P.J.’s great book, www.greentogoldplaybook.com at Amazon, Barnes & Noble, Borders, and all great bookstores in your local area. P.J. Simmons, the planet and our environment are blessed because of your amazing work. We are lucky to call you a friend and as one of the leading visionary leaders in sustainability, you are truly living proof that green is good. P.J. SIMMONS: Thank you so much, John. Such an honor to be here. Can’t tell you how much I appreciate it.