Sustainability Emerges as Central to Global Corporate and Social Innovation


Proactive global companies are moving the concept of sustainability beyond an intangible vision and aspirational goals in support of concrete actions, visible metrics and public reporting and disclosure. These companies value innovation, conscious capitalism, and a new model for business that is more accountable to a global citizenry than to crony capitalism or PAC activism. They also realize they must offer a responsibility-based “service” to others for their products and services to differentiate themselves and compete successfully in a dysfunctional society with consumer options too numerous to count. Economic performance still must be achieved, but more C-suite executives are balancing their bottom line with a more sophisticated complexity grounded in scientific, systems-based thinking.

Companies and global enterprises cannot succeed nor profit in a society that is failing with little regard for the integrity of workers, consumers, natural resource use or environmental resilience. Ignoring the trend towards sustainability principles will leave the laggards at a perilous high risk of failure because of exposure to the creative destruction of capitalism in normal business cycles.  Here are the top ten reasons not to ignore this trend:

  1. Companies with sustainable business models have lower costs of capital, better capital expenditure levels in their industry peer groups, and enjoy quality training for their workforce, better management, succession strategies and industry respect.
  2. Commitments to sustainability and their implementation appeal to millennial human capital with relevant skill sets encouraging this market transformation and values-based capitalism. Companies in heavy metals, minerals extraction, utilities and energy-intensive manufacturing are realizing that with senior staff retirements they face a “brain drain” and human capital shortfall.
  3. Sustainability-minded companies enjoy wider networks of stakeholder support and respect—especially from millennials—which are reinforced and validated through social media efforts, thereby providing communications, marketing, sales and public affairs benefits on proactive and defensive corporate issues. A company must always manage with trust as we saw recently with Volkswagen’s emissions scandal.
  4. A company’s leadership on sustainability thrives through its supply chain by fostering quality communications, productivity, modernization and execution support for sustainable results through thoughtful partnering and not rote supplier mandates.
  5. Sustainability becomes the centerpiece of innovation, encouraging improvements in the R&D process and methods, and quality and productivity metrics, throughout the company’s supply chain. Improvements to existing products, methods or processes already in the mix are more likely to appear than just sole reliance on new products.
  6. Resource, materials, energy and water impacts are accounted for, with decreases in waste materials and negative community and ecosystem impacts. Stakeholders’ concerns are better managed and enhanced corporate-community partnering can be sustained with improved risk management and more economical results.
  7. Financial and non-financial compliance and goal-oriented outcomes are fostered with increased levels of cross-team respect, allowing teaming and innovative solutions to be undertaken with less confrontation or adversarial hurdles within companies, and across stakeholders and their external markets.
  8. Product development, design and process improvements occur that are focused on durability, efficiency, minimal waste creation and maximum resource recovery and reuse. Life-cycle cost analyses for products improve, contributing to positive company and socioeconomic outcomes beginning at product inception instead of at product disposal.
  9. Product branding, loyalty and cost benefits accrue to support better teaming with customers and the media for future market share retention and growth. Sales and marketing initiatives can become more effective and productive—the gains of which can be reinvested into customer service, O&M support, social media, revenue sourcing and feedback for new product development.
  10. Improved performance within peer industry groups of sustainable companies promotes better economic outcomes for products and motivation for senior management to achieve performance incentives that benefit the customers served. As noted above, companies who differentiate themselves on sustainability principles are also able to attract relevant millennial talent that is drawn to a comprehensive value stream that is not merely financial, but reflective of wider values, integrity and character.

Historical growth with its cyclical patterns and consequences has fostered a false sense of consumer capitalism security, marked with concentrations of capital and power. Yet status quo capitalism without sustainability-focused improvements does not support the global capacity to bear a doubling of the Western-lifestyle expectant population in 15 years as related propaganda might purport. At this current resource consumption trajectory, what level of growth can really be achieved? Capital availability, mergers and acquisitions and technological innovation create complexity in this growth thesis. These growth tensions were already appearing in global markets as of 2014 and are spreading.

New Metrics

Leaders as diverse as product designers GE, Eaton Industries, Apple and Ford Motor Co. to leaders in cities, counties and local governments are demonstrating how to create a new structural framework for growth that is sustainable. In places across the U.S. from Seattle to New York and Austin, Texas to Arlington County, Virginia, locally-led initiatives center on buildings, “Smart Cities” growth, efficiencies in energy, water, solid wastes, transport, and more.

These trends may focus less on economic growth measured by GDP, and more on human health, well-being and quality of life outcomes. Broader views and definitions of capital will arise, with new sources and metrics of value. The current monetary system and model for capital delivery must improve and extend the reach of public funding with more public-private partnering and matching funding to decrease a reliance on grants. Sustainability measures advance collaboration which is in turn replacing mindless competition. The subsequent financial overhaul of businesses and industries will likely be less Darwinian and more strategically service-oriented. In the short term, bubble speculation must be terminated in deference to investments that create a lasting multiplier benefit to stakeholders. Accountability, responsibility, long-term durability, innovation and stewardship are the real values created by corporate sustainability.

A greater incorporation of system-focused management principles will create a closed loop system where traditional law of commons thinking erodes in favor of longitudinal externality accounting. Shared ownership models like those already seen in hotels, ride sharing and health care will further expand with a heightened focus on product resilience and durability in new ownership and delivery models. The entrepreneurial, startup companies entering the market with this new business model are likely to model sustainable practices as well because of their relatively high investment in capital equipment (compared with mature companies) and because of their unique managerial incentives.

The past decade has set the table and transformed companies, industries and global markets. The process has been marked with confusion, setbacks, and achievements by corporate shareholders, NGOs and stakeholder leadership. Consequently, the Congressional Budget Office now forecasts a reduction in U.S. economic growth by 1% to 2025, compared with the 1980-2007 period. The results of structural, corporate dysfunction are validated by senior executive, boards, market, and customer action and impact growth priorities, competitiveness, and income equality in U.S. society. The trends can no longer be ignored because of the governance, market and financial operating risks that are created.  Moreover, Pope Francis has encouraged renewed moral and ethical dimensions to business practices and societal growth decisions which would apply equally to sovereign governments, companies and NGOs together.

Thinking Long with Durability in Mind

Until recently, markets generally were built on voluntary outcomes for capital investment, loans, product selection, and consumer choice. Yet markets are human enterprises formed by business, political and cultural choices. A corporate failure to address more sustainable outcomes in the upcoming decade could place at risk whether 50-70% of current companies listed in the Dow Jones will survive or not in the listing index over the next decade. For these companies to survive, they must ensure they are participating and contributing to thriving societies and global markets, and not just to their boards and shareholders. The affected communities, skilled employees and stakeholders already realize that their public success and well-being are on the line.

This awareness on both sides will be the center of a new value proposition that offers genuine value that is affordable and sustainable for people, communities, businesses and societies. That new value cannot be measured solely by GDP. Government spending must generate better returns beyond entitlements spending focused on physical and social infrastructure, R&D, innovation, entrepreneurial startups and healthcare and defense efficiencies through informed information technology. Technology solutions focused on processes, without asking why and what for, are only half truths. Companies must focus on doing no harm as they pursue their strategic business objectives; their raison d’etre will be held accountable, feet to the fire, through social media and global communications in our on-demand world. Case in point again, Volkswagen. That leadership will come from the engineering, communications, scientific and IT systems and functions with less reliance on the corporate, legal and financial functionaries of the past.

The evolution has begun, but at what pace, which industries and for how long? Who will lead and how? How should progress and outcomes be measured? And is there a moral and ethical obligation to do no harm as we consider our collective future imperatives? You, the leaders of tomorrow, will be answering those difficult questions to advance the transformation towards a sustainable future marked by success and measured to foster new and wider outcomes than mere profit ahead.

CE3 Blog by Michael J. Zimmer, Executive in Residence & Senior Fellow, Ohio University; Edited by Elissa E. Welch, Project Manager, CE3; Originally published Feb. 2015, Revised Feb. 2016.



The Prospect for Alternative Energy in a Fossil-Fueled World


In the month of July 2014 (an “average” month with peak summer electricity demand), the U.S. Energy Information Administration (EIA) estimated that the U.S. used 6.65 quadrillion BTUs of fossil fuel-generated energy (i.e., coal, gas and petroleum), 0.75 quads of nuclear, and 0.81 quads of renewables (i.e., photovoltaics, wind, geothermal, biomass and hydropower). That’s a total of 8.2 quads. That means 9.1% of the total energy consumption that month was from renewables and 80.5% was from fossil fuels. Compare this to five years ago: in July 2009, 8.3% of total energy consumption was from renewables and 81.9% was from fossil fuels.

Continued phasing-in of renewables is required as part of an overall supply mix. In spite of the fact that over the past several years, the cost of renewables has been declining faster than other fuel sources, renewables will not likely surpass fossil fuel resources until post-2050. A more plausible supply strategy goal is to strive for increases of 10% more renewables each decade coupled with the increased use of demand-side management, transmission & distribution (T&D) investment, energy efficiency and waste heat recovery. The challenges are numerous, but the rewards will be long-lasting. Here’s why.

  • We have the technology to increase renewables, but it won’t be easy, quick or cheap. An inordinate focus on supply ignores the necessary infrastructure investment required to support renewables within the current investment framework for fossil fuel development.
  • Renewables cannot replace fossil fuels in the near term because the cost of capital, rate shocks and costs to end users. Energy investment will continue to compete with similar investments in new technology, water infrastructure, urban growth in our cities, housing stock upgrades, railroads, highways and tunnels and bridges. But renewables cannot be ignored or postponed because of their lower operating costs, efficiencies, reduced emissions and sustainability benefits.
  • Increasing renewables capacity will require huge amounts of capital outlay and technical expertise which could consequently boost business development, workforce training and infrastructure upgrades. These investments will create a 21st-century power grid that is distributed, diverse and more resistant to the effects of a changing climate and/or security attacks.
  • The status quo, consisting of resource extraction, fuels, transportation infrastructure, generation, T&D, manufacturing, etc., has taken countless investment dollars and more than a century to build. It will not be radically altered but will be modernized for the future with competitive manufacturing, global trade and tax reform pressures incentivizing more accelerated decisions than regulatory fiats or mandates.
  • The sheer magnitude of energy required to be generated on a 24/7/365 basis is impossible to recreate using existing technology, land transfers, materials (i.e., rare-earth minerals) and infrastructure. New technologies such as those being developed by our colleagues at Ohio University related to algae- based fuels, waste-to-energy and electrochemical technologies are the way of the future. Bringing them to market on a commercial scale is the next order of business.
  • The intermittency, lack of storage, and relatively high up-front costs of renewables make them less attractive for energy-intensive and trade-exposed (i.e., “EITE” and internationally competitive) industries such as steel, aluminum, paper and cement. These challenges will need to be addressed with reliable solutions so that these industries—the building blocks for infrastructure, manufacturing and product development necessary for competition in future global markets—can continue to grow.
  • The resurgence of oil and gas has led to a quiet revival of manufacturing, supply and logistics, and associated industries in and around the Ohio River Valley that has become a major driver in the post-recession economic recovery. North Dakota led the nation in job retention and growth over the last five years due solely to the growth in the unconventional oil and gas from the Bakken shale play.
  • The shale resources appear driven for global export value rather than indigenous national use. Similar development and trade incentives for clean technology and renewables for export value are equally important for advancing U.S. manufacturing and export product goals.
  • Experience in coal emissions controls has shown that the costs of mitigation are so high using existing technology, that it is not currently economically feasible. If mitigation follows a scheduled phase-in over a reasonable time frame and is coupled with significant legislative action (e.g., cap and trade, carbon tax, etc.), the adoption of low-carbon strategies such as renewables, nuclear, and carbon sequestration can be incentivized.
  • Electric generation technology, policy and market factors have reduced the cost to install renewables to the point that they are at parity with the cost of installing electricity from fossil fuel sources in many applications such as rural/remote areas, military installations and microgrids. Over the next five years, grid parity will escalate and could be accelerated by a market clearing price for carbon, a fuller inclusion of the negative externalities of fossil fuels, and the game-changing issue of electricity storage.

Fossil fuels enjoy 400-500% more national benefits and incentives than renewables—better balance in this mix is required moving forward. This necessary balance is already recognized by our military, intelligence and international energy agencies. Cities and countries where 70% plus of future global populations will reside also endorse a more balanced approach. Recognition is similarly advancing in global financial communities as investments in non-fossil projects are advancing rapidly. Aside from supply, the focus on network modernization, efficiency, materials science, and energy storage will impact the timing and depth of a global market acceptance of non-fossil alternatives.

CE3 Blog by Michael J. Zimmer, Executive in Residence & Senior Fellow, Ohio University with Scott Miller, Director, CE3; Edited by Elissa E. Welch, Project Manager, CE3

Carbon Pricing and Better Market Signals Will Help U.S.


Rather than perpetuate the current uncertainties from the European Union and stalled domestic legislative/regulatory efforts to revitalize the failing Kyoto Protocol platform, we might need a clean slate in the U.S. to make progress towards the upcoming international greenhouse gas (GHG) negotiations in Paris in 2015. Prudent future planning for large energy users must incorporate a price assumption for CO2 emissions to evaluate resource investment decisions for electric generation assets with longer useful lives.

A fresh start
A better domestic regulatory approach might let markets discover prices for carbon and sustainability efforts which could elicit bipartisan support. For example, even a seemingly straightforward cap-and-trade system requires extensive government involvement and impacts price discovery by the setting of mandates, price collars, allocations of allowances and other similar provisions. This impedes the market’s organic pricing process—arguably the best way to address carbon and solve regional energy challenges worldwide. Countries could establish their own targets consistent with international norms and seek to achieve regional or hemispheric goals. Or, an even better approach might be built around a strategy devised by independent power producers for the management of a subset of options, such as mercury emissions and combined power and heat (CHP) projects. This approach would incentivize the right economic conduct in a free marketplace promoting accurate price discovery. To be most impactful, regulatory efforts should be structured on a hemispheric basis for the next decade (2020-30) and rolled up globally thereafter, encouraging regional partnerships for progress in the interim.

Under a fresh start where domestic regulations promote a free market approach, we could provide every stationary source and mobile source of GHG emissions an allowance of carbon per megawatt hour (MWh) or mileage per tank of fuel, or delivered power, heat or cooling content, no matter what the technology, fuel, age of plant, location or past carbon emissions levels. Exceptions could be provided for small commercial and industrial users to protect small business. Using various modeling techniques based on U.S. Energy Information Administration (EIA) data to verify total carbon emissions per unit, the U.S. could implement a strategy that sets a declining schedule for allowances over the next 10-20 years. The U.S. Department of Energy with EIA assistance could annually update the table of carbon values to correct for actual consumption levels of heat, fuel and electricity in the U.S. Rising heat or electricity usage would not increase the cap on carbon emissions. The market would decide thereafter how to limit and implement effective carbon management in the economy to meet national goals.

How it would work
Parity is key. A new biomass plant would get the same carbon allowance as a new or existing coal plant. The same for a wind installation or a new gas-fired plant. The market would determine the price valuation for the carbon allowances. Any improvements in efficiency boosting the miles per gallon or the MWh from a specific volume of fuel would increase available allowances for trading purposes. Additional efficiency improvements would be funded by selling extra carbon allowances on the open market. In this scenario, owners of the older, less-efficient plants using coal or oil face the true market-based costs of their carbon management strategy as determined by the market each year. Historical least-cost dispatch becomes “least-emissions dispatch” because the external costs of the environmental and emissions dumped into our ecosystems are now assessed. For these outdated plants, their choice becomes clearer—use clean coal technologies, use a different fuel, upgrade and increase efficiency, retrofit, alter the mode of operations from base-load operations, purchase carbon allowances, or close the facility. This decision would not be able to be postponed for old, stale plants until 2030; action would start in the marketplace a year after enactment of the new regulations. This will then launch a march to competitiveness, jobs recovery, efficiencies and energy infrastructure modernization. Expect changes to occur even in states using 19th-century fuels in facilities built in the 20th century, without the infrastructure necessary to compete and solve 21st-century challenges and problems. A united, national energy policy could emerge based on this fundamental policy reform grounded in sound economics and proper reflection of fossil fuel costs to our socioeconomic system.

The learning curve
All prior carbon pricing systems since the Kyoto Protocol have failed in their ostensible goal of environmental protection and carbon reductions. Our policymakers are ardently striving to find proper price discovery for the cost of removing carbon and other forms of degradation. But in all instances, the wealth transfer is generated to the older and worst carbon-polluting facilities, and older fossil allowances for convenience generate false cost savings. The best choices for the future are not made when allowances are provided by regulatory or government fiat based on continued levels of emissions. Right now allowances under trading schemes are provided for the favored; nothing of real economic or environment value is created, and minimal environmental benefits are achieved. The EU trading system has borne that lesson out, while newer U.S. trading models in California and New England seek to correct the issue.

Only 16% of allowances are directly transferred to end-use customers, others are only filtered through intermediaries or shareholders. This tends to transfer the economic rents to the utilities, as 40% of all world carbon suppliers consider those allowances as pass-through costs in their rates from customers, while retaining the rent values for their shareholders. In the U.S., many of these same utility power plants have already qualified for stranded cost recovery or the separate beneficial outcome of tax normalization. Market-based outcomes are foregone; and rent transfers have occurred with no improvement in the assets or infrastructure or competitive energy policies since 1978. The customer is not served: markets do not work properly and the customer effectively pays twice for the underlying generation assets and choices in carbon management made by the utility. Can the U.S. EPA achieve better objectives in rulemaking under its endangerment finding? We will soon find out in 2015.

A new path
Let’s not repeat the same errors from the EU carbon trading over the past decade. U.S. experiences with SOX, NOX, and mercury offer better guidance to build upon. We cannot afford to make this mistake in a global economy where developing country markets do not carry the burdens of such legacy decisions and ratemaking schemes. The accurate inclusion of costs for carbon are essential to strategic company planning, competitive products and market positions under a sound U.S. energy policy. U.S. products, strategies and solutions for carbon management will offer the innovation sought by companies and countries in the global marketplace for growth, innovation, and ideas to foster a better outcome for the capitalist business model.

CE3 Blog by Michael J. Zimmer, Executive in Residence & Senior Fellow, Ohio University; Edited by Elissa E. Welch, Project Manager, CE3

How Now, CHP and DG?


A resurgence of interest is appearing in combined heat and power (CHP) and distributed generation (DG) options in many states, including specific interest from industry and the so-called “MUSH” markets (that is, municipalities, universities, schools and hospitals). Supportive state policies and incentives, technology support by vendors, ESCOs with low capital costs, and environmental incentives are combining to create a more conducive environment for CHP and DG projects. For example, the highly anticipated U.S. EPA rules regulating GHG emissions from existing facilities and supportive state policies will accelerate interest from and implementation by industrials, IT and MUSH market organizations.

CHP and DG projects, when coupled with intelligent energy efficiency from network and system optimization, offer substantial costs savings in industry and commercial uses. Commercial uses could dwarf potential in residential and industrial uses in some states. Smart dollars invested in O&M can finance the replacement of fans, motors, drivers, mechanical and heat needs to maximize CHP and DG efforts. Additionally, as the internet of things evolves, the electricity grid becomes more connected and more powerful with the addition of sensors and IT communications to supply sources. For example, cloud computing vs. server investment can reduce energy costs. Similarly, machine-to-machine (“M2M”) technologies that allow wired and wireless devices to communicate will drive smart manufacturing and innovative supply technologies. If done correctly, this shift will spur capital projects and investments, so long as projects produce quantifiable energy and cost savings over time, on a scale that allows financial pro formas to work and satisfy investors’ return expectations. The net result of these efforts is improved operations and analytical capability to monitor and sustain better system performance.

Common barriers to the implementation of CHP and DG projects have been:

  • Social & knowledge: equipment vs. software and IT involving a lack of technical assistance and better managing the equipment and IT interface;
  • Financial structuring, sources of capital & access: will come with better management, verification, data and protocols;
  • Structural: utilities, public service commissions with policies and regulations that are not modernized to reflect market and technology realities;
  • Traditional & outdated policies represent stale, non-consumer and non-market based thinking that stifle service and economic development;
  • Capital & banking sources with risk management profiles reflect a lack of energy lending experience; and
  • Cash flows that hamper internal hurdle rates of owners or fail to consider available incentives.

The best natural markets with incentives and market inducements based upon collective research and literature review include California, Massachusetts, Oregon, Utah, New York and Connecticut. States to watch as they design/improve incentives include Texas, Washington, Ohio, Michigan, Maryland, New Mexico, Minnesota: Pennsylvania, West Virginia, New Jersey and Illinois.

Current market forces, supportive regulatory and environmental policies, reliability and resilience concerns, and a wider array of fuel supply and technology improvements could represent the best market opportunity for CHP and DG in all sectors in more than 50 years. Here’s why:

  1. Capacity. A coalescence of available fuels, technology and the need for capacity has never been better for MUSH markets, industrials, IT and server loads, and municipal landfill and wastewater treatment facilities. The best regions include New England, the Mid Atlantic, California and Texas.
  2. Utility Business Model. The traditional business model of rate design for utilities is no longer serving its intended purpose, as customers demand better solutions, technology and services than the utility is willing or able to provide. When subject to rate design increases and regulatory attacks, continuing cost pass-throughs, riders and surcharges for declining service get expensive with diminished technology access and limited or no digitalization. The budget to support the old regulatory compact is dead as median income customers in the U.S. experience declining annual disposable income, and industrial and commercial margins are challenged.
  3. New Values for Performance. Power quality, reliability, volatility in price, and service responsibility for customer care and sustainable outcomes now exceed historical electricity market priorities. Industrials seek sustainability and a reduction in or removal of price volatility while seeking reliable and economical energy. Pricing values outweigh tax incentives and net metering reliance as customers realize the best rate to be paying is avoiding the costs of their own retail rate and the volatility, insecurity, and unreliability it poses.
  4. Variable Utility Market Response. The utility market response will vary based on fuel mix, individual utility priorities and recognition that the U.S. marketplace is more appropriately regarded as individual sub-markets with differences in the DOE regions. For example, because the natural gas market is volatile, seasonal in pricing, and considered a backup fuel strategy, it should be weighed as such to preserve the benefits of CHP and DG. For these and other reasons, in some regions utilities will be a friend of CHP and DG and others a foe, so that one blanket policy will not fit all and could be inappropriate.
  5. Financing. Financing models need to be revisited as U.S. banks are no longer lenders in the CHP and DG energy markets. Capital structuring, sourcing and third-party financing will need to evaluate and replace leasing and project finance models because of evolving accounting standards outcomes. The real game changer might be utilities with their cost of capital advantages fostering more joint ventures to develop these projects, and increased mandates on utility billing. New sources of loans are appearing from specialty funds, pension investment funds and high net worth family funding to replace the banks.
  6. Microgrids and T&D Costs. Microgrids, in conjunction with energy storage, energy efficiency and demand management co-strategies, will help accelerate CHP and DG implementation. More and more customers are seeking to avoid T&D costs—which will be rising faster than new generation costs this decade—and also avoid cost surcharges and line losses. To succeed, CHP and DG projects need to be fully integrated with load management efforts, conservation strategies and avoided water costs.
  7. EPA Regulations. Regulations for new SIP implementation for GHGs for existing facilities will accelerate the shift to CHP and DG, along with other requirements for mercury, boiler MACT, ozone, water and rules. (Interested in learning more? Check out CE3’s Energy Webinars Series archives.)
  8. Market Share. Based on our research and literature review, it is likely that 10 states will comprise over 60% of the U.S. market with an energy storage capacity whose share will grow to 25 states and reach to 80%. This would track the collective experience in the past with total energy, cogeneration, power marketing and renewables in the U.S. The whole country would likely not participate in the final market outcome.
  9. Need for Data. Case studies, data, and validation of project performance and operational efficacy will lower CHP and DG project costs—so will insurance and more robust markets for renewable energy credits (RECs) and emissions credits to offset project costs. Third-party financing sources and owners must share their case histories and provide operating data for insurance, financing, resilience, cyber security and weather performance values to be measured, verified and scored.
  10. Big Data Benefits. Big data and energy analytics will accelerate the desirability of CHP and DG alternatives to the customer, vendor, insurer, and technology solutions developer. Data also establishes the benefits of avoiding energy shifts to time-of-day pricing for each hourly or daily energy transaction, i.e. transactive energy with attendant volatility and lack of stability for planning.

Herein lies the best market opportunity in the U.S. in the past 50 years: Through the implementation of the above strategies, market volatility and uncertainty can be reduced or removed. The role of the traditional utility service can evolve to add value via the next-gen, market-ready solutions of CHP and DG, initiatives that differentiate price from value in a complex and changing market. Only then and through CHP and DG can we harmonize the dilemma of using 19th century fuels in a 20th century electric power infrastructure to support the sophisticated demands of a more modern utility service in the 21st century.

For more information about the state of CHP, check out our Energy Webinar from November 5, 2013, archived here:

CE3 Blog by Michael J. Zimmer, Executive in Residence & Senior Fellow, Ohio University; Edited by Elissa E. Welch, Project Manager, CE3


Creating A Waste Economy


The Voinovich School of Leadership and Public Affairs at Ohio University is continuing their invaluable service to the region, this time in partnership with Rural Action. Funded by the Sugar Bush Foundation, the Athens Hocking Zero Waste Initiative (AOZWI) planning process reached a milestone in December with the release of an action plan. The plan “aims to provide a unified vision and path for a robust waste management system that will enable Athens and Hocking counties to work towards becoming a zero waste economy.”

This unified action plan demonstrates the need and economic incentive to reduce landfill waste and better manage resources across waste, recycling and reuse supply chains. To address the original plan set forth by community members in a series of meetings in 2012, AOZWI working groups will soon be established in an effort to make recommendations to modify to current practices, identify priorities and set goals. The working groups include:

  • • Education and Outreach
  • • Access to Recycling
  • • Collection of Hard-to-Recycle Materials
  • • Illegal Dumping and Burning Prevention and Enforcement

Though AOZWI is the poster-child of local waste reduction efforts, there seems to be an increased effort around the Ohio University campus and around our region that deserves notable attention. For example, in January, the Athens City Council decided the city’s efforts to recycle were falling short, and thus signed the city on to the action plan. Reducing waste is all about awareness. Ohio University has been part of this greater awareness for almost two years with the adoption of a sustainability plan in 2011 and a climate action plan set forth in 2012.

Recently, Ohio University entered into an energy performance contract with Constellation New Energy in an effort to improve campus conservation. The Athens News reports that through these efforts, Ohio University will save an estimated 50,145 tons of CO2 emissions and $3.2 million in energy costs annually for 15 years. Reducing wasted energy is a huge part of reaching certain sustainability and climate action benchmarks. By 2016, the University hopes to reduce individual consumption by 5% and to increase recycling rates to 80% by weight.

Robin Stewart, senior project manager for the AOZWI at the Voinovich School, says the biggest challenge to achieving similar goals throughout the Appalachian region is creating a viable model and acquiring greater capacity to handle a new waste-based economy. “We need to localize the supply chain,” said Stewart in an interview. “Creating initiative within communities is the best route to accomplish this in the business community, but education efforts such as the zero waste event guide and planning a zero waste graduation for Ohio University students are just as important.”

ReUse Industries, a local waste diversion non-profit organization, has been in operation for almost 20 years and has funneled 10 million pounds of materials back into the community for reuse. ReUse is bringing small communities together to develop a regional reuse economy. Working on a larger scale, the Ohio By-Product Synergy (BPS) Network works to bring buyers and suppliers of manufacturing and production industries together. “If one company produces a waste product, and it can be used by another company within the region, the BPS Network is there to create the economy, divert the waste product entering the environment and avoid further ground contamination,” said Stewart.

For ReUse and the BPS Network, buying, selling and promoting used goods is the clear option for making the familiar pattern of consumerism sustainable. Reused books, appliances, and furniture purchased from ReUse Industries saves money, supports the local economy, diverts waste, and lowers your cost of living or doing business. By saving so much during the purchase of used materials from ReUse or the BPS Network, we can reduce our reliance on primary material costs and logistics in our manufacturing businesses and increase our understanding for community collaboration.

The AOZWI project can serve as a guideline to how we need to begin organizing the way we manage waste in our businesses and communities. Currently, the state recycling goal is 25%, but we still have a ways to go. According to the U.S. EPA, packaging makes up approximately 30% of the United States waste stream and 34% of all waste can be composted. Imagine a world where individuals, communities and businesses strive to re-use packaging for the long haul, compost at a near 100% rate, and buy unpackaged or only previously used items. AOZWI is changing the way we think about waste and is raising that all-important awareness mentioned earlier.

To learn more about the specific goals of the AOZWI’s long-term action plan, click here.

Mathew Roberts

Handprints and the Green Supply Chain


Over the past month, I have been challenged to re-imagine the “finished product.” The concept of “the handprint” was originally brought to my attention last fall at “A Workshop for Efficiency, Emissions, and Energy in Ohio” hosted by Ohio University Voinovich School’s CE3. Frank O’Brien-Bernini, chief sustainability officer of Owens Corning, gave a presentation on how his company is reducing emissions by improving efficiency efforts on the production line. His emphasis of this perspective focused directly on improving how the production line is formed, what efficient production depends on, and tracking all steps from cradle-to-cradle when possible. Their flagship product for example, fiber-glass insulation, is made with up to 50-65% recycled material.

O’Brien-Bernini explained that handprint analysis is a framework slowly entering the arena of business and manufacturing and it is conceptually connected to creating a green energy supply chain. The Sustainability and Health Initiative for NetPositive Enterprise (SHINE), an initiative of Harvard’s School of Public Health, is helping companies like Owens Corning develop ways to proactively measure positive impacts instead of calculating emissions footprints. While handprint studies are more focused on improving energy usage in-house and measuring positive environmental changes, a green energy supply chain management system emphasizes sourcing. Both concepts are intertwined insofar as the company must take on the responsibility to look at where raw materials are coming from, how they are processed, and how best they can be used to accomplish sustainable handprints.

Stakeholders are increasingly demanding sustainable practices from companies at all levels of production and urging leaders to take steps to adopt long-term solutions to waste. Gale Tedhams, director of sustainability at Owens Corning, has recognized this demand. “We run on a lifestyle-cycle accounting process, looking at the lifetime from supply extraction to disposal, to save energy and create new lines of energy efficient products,” says Tedhams.

The concepts of the handprint and green energy supply chains tell us something very important. If we can re-imagine the finished product as yet unfinished in its life at the moment of purchase, we imagine the next phases of the product when its “useful” life for us is over. We can make products that are responsibly-sourced from extraction of the product to reusability, but it takes great effort.

However, companies incorporating sustainability into their supply chains will last longer, according to Art Dodge, CEO of ECORE International, “not only because of the cost-effective nature of the process and ability to achieve environmental goals, but also through the commercialization of new and innovative products.”

In a recent talk given by Dr. Jason Jolley, assistant professor of rural economic development at the Voinovich School, about environment management systems and the green energy supply chain, I learned that businesses burdened with high dependence on fossil fuels or heavy initial-production resources are developing models and management practices to meet the demands of a changing regulatory landscape.

The great part about the adoption of these management systems is that it encourages a materials “race to the top” and/or a clear passion to maximize the utility of raw materials. Companies are tapping into resources such as the U.S. EPA’s Green Suppliers Network, and others have been certified as actors in sustainability; the ISO 14000 series is an environmental management system (EMS) certification, yet its adoption is slow. By adding a green supply chain management (GSCM) system to this certification, businesses can access suppliers’ environmental performance and track the cost of waste, making for a resilient business model of the future. These two systems are highly complementary: research by Jolley showed that EMS adopters that also utilize GSCM will be more successful in reaching environmental protection requirements.

Dr. Jolley’s case study asked companies around the country about this doubled-up adoption. With a 13 % response rate and most of those responsive in companies holding less than 250 employees, an optimistic insight was revealed: smaller companies are often the first to adopt environmentally sustainable practices.

For many of these local companies, the move makes both environmental and economic sense. Owens Corning, a business built on improving energy efficiency, is the prime international example of stepping up to the standard. We are seeing supply chains today, especially with companies that are employee-owned, that put high value on creating production and supply chain alliances. Future-proof supply chains, as they may be called, are beginning to be adopted, inspired by “handprinting,” green energy supply chains and sustainability measures as necessary components of business.

I have gained a new perspective by changing the way I think about materials sourcing and production. I understand the importance of developing a product for more than profit, with an eye to social and environmental responsibility. When we become aware of our global impact, improvements in the efficiency on our production lines expand and extend to create an optimistic mindset of net-positive gain rather than impact.

Mathew Roberts

Little by Little


To some people, “environmentally-friendly” car manufacturing means electric cars or ethanol-fueled engines—“big ticket” items. Admittedly, I was one of those people, especially concerning cars. It’s easier to think about the “big” things when it comes to evolving technology—an entire car or an entirely different way to make gasoline. I’d always thought of driving a car as an “all or nothing” decision between convenience and environmental responsibility. I was very impressed, then, how Honda of North America has streamlined their manufacturing processes to take the little steps towards greater energy efficiency, those that are incorporated before they complete a finished product.

Honda changed its process of painting cars by thinking outside the box. Shubho Bhattacharya, senior staff engineer for Honda, featured in a video shown at CE3’s energy workshop in September 2013, created an algorithm for a system that completely changed Honda’s painting processes and has helped Honda to reduce its emissions targets. Bhattacharya’s work has created huge economic and environmental gains for the company.

In the same way that Bhattacharya was able to translate the abstract idea of changing the world into a tangible outcome, every day companies worldwide make small changes to their operations, creating positive impacts for the environment. Often their effect cannot be immediately seen, but their impact can be immediately felt. Oftentimes, impact is noticed in accolades and public recognition.

Honda has continued to gain industry, national and international recognition for their efforts to reduce some of the byproducts associated with their operations. In 2011, Honda achieved its goal of sending zero waste to landfills from its manufacturing operations in North America. In January 2014, the U.S. EPA recognized two of Honda’s Ohio plants with Energy Star Certifications for the eighth year in a row. Energy Star certified companies perform in the top 25 percent of all companies in their industries in energy efficiency.

Not only does Honda efficiently use its energy, it also generates industry-leading solutions to reduce CO2 emissions. The company began 2014 with a new wind turbine farm used in the company’s Russell’s Point Transmission Plant in Logan, Ohio. Honda is now the first major auto manufacturer with a plant that gains the majority of its electricity from on-site wind power. This is just another “small” step for Honda making an impact through its operations and on industry standards.

CE3 engages companies like Honda to build networks of peers to share the ways in which they have incorporated energy or environmental practices into their operations and remained profitable. During CE3’s “Workshop for Efficiency, Emissions and Energy Choices in Ohio” in September 2013, businesses from industries as diverse as paper production to home insulation showed how such small changes can have large impacts on the environment—little by little. Many organizations discussed the steps they believed would yield the best results for their company to while complying with U.S. EPA requirements and maintaining profitability. Here are a few takeaways from the workshop:

  • Include everyone’s input. Ask for and incorporate ideas from employees ranging from the CEO to those on the shop floor. Each and every position brings a different perspective and fresh insight to an issue. Communication, cooperation and coordination are key to cutting-edge innovation.
  • Think small steps with a big impact. Gradual changes can still lead to large benefits over time without excessive costs. Each small step represents movement toward the goal of improved energy efficiency for a better environment.
  • Use federal regulations to your advantage. Federal regulations can be an opportunity for the company to set new goals and engage in new projects. Instead of thinking of regulations as restrictions, use them as a chance to be innovative and grow the company’s sustainability message.
  • Share your successes. Forums like CE3’s energy workshops and webinars are a great opportunity to share your progress and exchange ideas with a diverse group of energy efficiency leaders—your peers. Watch for strategies from different industries that can be fine-tuned and applied to your own.


Following all those steps may not lead to emissions reductions as big as Honda’s right away, but each small step can make large impacts in bettering the environment. Corporations, groups of people, and individuals can make a collective effort to improve our natural environment. In the words of renowned anthropologist Margaret Meade: “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it’s the only thing that ever has.

By Seaira Christian-Daniels, CE3 Undergraduate Research Scholar