So far, The Panelist has hit home on a few of the underlying benefits of exhibiting sustainability within the private sector, as well as shown how select corporations have taken the lead in raising the bar.
Successfully integrating sustainability practices within a company's business practices can simultaneously increase revenue and reduce operating costs, hence increasing the bottom line. But can sustainability actually be used as a crutch to spur innovation? From the bottom up, can a company base its own business model on promoting sustainability?
Absolutely.
Photo:sillygwailo, Creative Commons, Flickr
Tuesday night, I attended a panel discussion headlined by four young companies who are doing exactly that, and these companies are just the latest examples of how we, as a society, can merge business and societal interests. "Do well by doing good" is the slogan of SRI money manager Parnassus Investments and is becoming a catch phrase in the industry.
From what was presented the other night, let's take a quick gander at how sustainability interests are addressing certain voids in the marketplace and, in turn, translating into business interests:
1) Consumer Powerline – Operates in a fast-growing segment of clean tech known as "demand response management." By properly managing energy consumption during peak electricity usage periods, customers can reduce their energy expenditures and thus create new sources of cash, all while reducing harmful emissions. Consumer Powerline operates in large energy markets in the US, and has a client base of mostly Fortune 1000 companies. The client pays no fees; Consumer Powerline generates revenue by sharing in the money saved. Another player in this market to watch out for is EnerNOC (ENOC), who issued their IPO just last month.
2) RecycleBank – Imagine getting rewarded to recycle. Yep, RecycleBank's business model is set up where people are incentivized to "do good". By diverting waste away from landfills, RecycleBank saves municipalities money by helping them avoid landfill fees. At the same time, natural resources are preserved. Like Consumer Powerline, there is no cost to the consumer in entering this program. In encouraging more people to recycle, nor should there be. It's a unique business model where revenue is directly related to promoting sustainability. RecycleBank is able to track the amount that each household recycles, which is then translated into RecycleBank Dollars, which can then be cashed in for store credit at a list of over 300 (and growing) participating retailers. As the company grows, an interesting challenge going forward would be pinpointing which retailers would best serve each income demographic.
RecycleBank currently services New Jersey, Pennsylvania, and Delaware, and is ready to roll out in Massachusetts, Vermont, and upstate New York.
3) NuRide – cleverly addresses the increasing problem of traffic congestion that large urban areas are experiencing. Rick Steele, the company's co-founder and CEO, pointed out that out of the hundreds of millions of car rides a day, 80% of the vehicles have one person in them, and is the main cause of congestion, as well as harmful emissions. So why not devise a way to incentivize people to share rides?
NuRide is simply a social network of people who can meet up to share rides and reduce these problems…and get rewarded at the same time. Much like RecycleBank, NuRide participants can redeem their "frequent driver miles" for gift certificates at participating retailers. So far, NuRide has 22,000 participants. While the goal is to get as many cars off the road as possible, it should also be noted that not every single person has to be registered in the program to reduce congestion. In fact, people might be surprised at how few cars off the road are needed to make a noticeable difference. Providing incentives to do so is a great way to do that.
So what does it take to get people to change their behavior? NuRide actually conducted a survey to its participants, and found out that less than 20% of the people enrolled in NuRide did it for environmental reasons; the bulk of them enrolled in the program because of the generous rewards program. While I believe this figure will increase in the future, the mission of the company is still nonetheless preserved now.
4) groSolar – Solar panel distribution and installation company. Not much different than the PowerLight subsidiary of Sunpower Corp (SPWR) or a typical roofing company looking to add to its portfolio of products, but its mission is clearly to fight global warming. Established in 2001, groSolar is one of the largest solar energy companies in North America. groSolar contracts its photovoltaic technology from well-established companies such as Evergreen Solar (ESLR) and SunTech Power (STP).
These companies have shrewdly found innovative ways to "do well by doing good". We hope that this trend will continue and we will see plenty of other ways to accomplish the same goal. But is this guaranteed to happen? Ron Gonen, the founder and CEO of RecycleBank, pointed out how critical it is that the current push toward sustainability is not just a fad this time around. The viability of these consumer-oriented businesses heavily depends on consumer behavior and how they view the global issues we face today. These kinds of innovations are appearing in the marketplace mostly because, given the circumstances we are currently facing, it "just makes sense."
Personally, I think the trend will continue. We seem to have reached the tipping point and more momentum is gained each day. I look forward to seeing more clever ways to calm our outraged planet.
Disclosure: I do not own any of the stocks mentioned above although I have been closely tracking ENOC since it went public.