Sustainability = Market Transformation (Even If You Didn’t Ask For It)

WalMart_AWeidmanNo time for build-up. Let’s cut to the chase. Here is a collection of sustainability trends that may will affect the way you do business in tomorrow’s marketplace.

TrendSustainability comes to the App Store.  Nike has launched an app to help designers and product creators understand the environmental impact of the materials they specify and use. “Making” is an app that ranks materials based on four environmental impact areas:  water, chemistry, energy and waste. The app scores materials based on data from the Nike Materials Sustainability Index. Designers can quickly see how material choices impact the sustainability of their design. However, the app is available to everyone in the iTunes Store.

Why this is important: Nike has joined the ranks of Walmart, P&G and others to not only differentiate their products, but to transform the marketplace to further embrace sustainability as the “new normal.” Sustainability will be driven from the consumer-side of the market, whether it’s with Walmart’s Sustainability Index product labels or Nike’s iPhone app that lets consumers compare a product’s materials in the store.

TrendEnergy exporter to energy importer and vice versa?  It is calculated that by 2030, Saudi Arabia will consume as much energy within its borders as it produces. According to the Energy Information Administration (EIA), the U.S. relied on net imports for about 40 percent of the petroleum we consumed in 2012. Of that, 14 percent came from Saudi Arabia. Shale gas to the rescue?  Not necessarily, as the EIA estimates the U.S. will become a net exporter of natural gas by 2020 as domestic natural gas consumption will only grow by 10 percent by 2030.

Why this is important:  The energy market transformation, sources and consumption patterns, will occur slowly but significantly over the next several decades. However, new energy sources, such as shale gas and renewable energy, do not necessarily equate to additional electric power generation, as capital costs will trump fuel costs. EIA projects that “…despite rapid growth in generation from natural gas and non-hydropower renewable energy sources, coal continues to account for the largest share of electricity generation…” through 2030. However, given the Saudi Arabia projection above, a market transformation to hybrid vehicles will most likely be in our future — roughly 79 percent of transportation energy comes from petroleum.

TrendSmart grid, smart meters, smart buildings and dumb ICT systems?  Two new acronyms for today: ISO and DR.  ISO stands for Independent System Operator. According to the Federal Energy Regulatory Commission (FERC), it is “an independent, federally regulated entity established to coordinate regional transmission in a non-discriminatory manner and ensure the safety and reliability of the electric system.”  Think of an ISO as a regional air-traffic controller for electric generation, transmission and distribution. There are eight of them in North America.

DR is short for “Demand Response” and defined as “changes in electric usage by end-use customers from their normal consumption patterns in response to changes in the price of electricity over time, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized,” according to FERC.  In other words, users of electricity are “incentivized” to reduce their electric demand/usage when “requested” by the ISO. That is, facility managers will shift and shed peak energy demand through building controls to reduce energy costs and generate revenue. This market transformation includes smart grids, meters and buildings designed to automatically respond to a demand reduction request as we quickly move away from “manual DR” (the phone call) to “AutoDR” (the silent signal).

Why this is important: Electricity has been viewed as a collection of “dumb loads” at the end of a generation/distribution system, i.e., electric utility, with little or no interaction between the “load” and the utility. The market transformation envisioned will require the facility housing the “dumb loads” to become a full partner with the utility in managing the electric grid. The building will need to communicate, negotiate and support the electric generation and distribution through data exchange. That is why the ISO will be connected to the Smart Grid, which increasingly will be connected to the Smart Meter, which may be connected to the Smart Building but not necessarily to the dumb ICT “loads.”  What happens when the ISO sends the signal through the Smart Grid to reduce the electric demand when the Smart Meter is unaware of the ICT systems? Possibly silence, darkness and no communication — unless the ICT industry becomes aware of the changing landscape, thinks beyond the electrical outlet and becomes part of the market transformation.

TrendSustainable meetings no longer an oxymoron. I continue to receive anecdotal reports that the ASTM Green Meeting Standards are finding their way into the marketplace and causing confusion, if not necessarily disruption. In particular I’ve heard meeting planners/clients are asking for live event suppliers to comply with “ASTM E2745 – 11 Standard Specification for Evaluation and Selection of Audio Visual (AV) and Production for Environmentally Sustainable Meetings, Events, Trade Shows, and Conferences.” As I suspected, the problematic section is 4.2.7, Procurement. In particular, states the following:  “The supplier shall select equipment manufacturers that have at least one of the following: (1) Restriction of Hazardous Substances Directive (RoHS) compliance; (2) ISO 14001 certification; (3) Manufacturing facilities powered in part or in whole by one or more alternative energy sources; (4) Electronic Product Environmental Assessment Tool (EPEAT), or similar recognized, formal system for evaluating and reporting the environmental performance of electronic equipment; (5) Formal enviro-packaging policy; or (6) Sponsorship or participation in formal product take-back/recycling program.”

Why this is important: Good news! Most live event suppliers already qualify by way of section (5) Formal enviro-packaging policy. Road cases, those custom-made, reusable, recyclable, re-buildable cases made from mostly enviro-friendly materials, should qualify as “enviro-packaging” when accompanied with a written policy. Although no formal guidelines exist for what constitutes a “policy,” it is my opinion that a formal company statement that describes your shipping practices should qualify you. For example, try the following:  “As standard sustainability policy, Live Events Company XYZ removes all equipment from their original packaging, recycles or disposes of that packaging in an environmentally acceptable manner, and ships the equipment to the job site in road cases that are reusable, recyclable, re-buildable and made from enviro-friendly materials.”

This is one of those happy circumstances where the market has been transformed to recognize our industry’s good and sustainable business practices.

What is your company doing to transform into a sustainable business?

3 Responses to “Sustainability = Market Transformation (Even If You Didn’t Ask For It)”

  1. Why is this important? For you that ride this train of sustainability this is a good post to encourage those in the industries to move to make things as sustainable as possible. However, to legislate such BS is damaging and supercilious. If you do it to save the world or save the ignorant from themselves, thank you but stay out of my life. If you do it so there will be resources left for the rest of the world, then you can ride that narcissistic idea with the rest of the Chicken Little’s to the house of power to demand our total compliance. Have your ideas, promote your ideas, advocate your ideas, but do not demand me to believe or follow your ideas. Besides not one person out of a hundred understand what the word “Sustainability” means. Every person like you believe it means something else and somehow wants to impose their ideas on others through the power of government.

  2. Great post Allen — We REALLY need to keep sustainability at the forefront these daysin as many creative and actionable ways as possible. At two recent conferences, one at which I spoke and another at which I was a participant, sustainablity was voted the lowest on a list of 10-20 items that are key areas of attention by facility managers. What will it take to make people realize we have to act sooner rather than later on sustainability issues?

  3. Great examples, and well written presentation! Thank you Allen Weidman. The transformation needed in a market-driven world economy is a market driven response to advocate for the profitability found in sustainable practices. The transforming focus on more sustainable processes that produce positive market responses at the same time will build momentum with a vision for the future. Regulatory incentives can give way to client-user awareness created by some of the standardized metrics in the market place.