Conscious Company Magazine | Issue 1 Winter 2015 by Conscious Company

IMPACT INVESTING 101 | LEADING MILLENNIALS

THE FUTURE OF BUSINESS AS USUAL

INSPIRING INNOVATORS NEW BELGIUM BACK TO THE ROOTS ECOVATIVE

JOHN MACKEY WHOLE FOODS MARKETâ&#x20AC;&#x2122;S CEO ON THE VALUE OF SUSTAINABILITY AND TAKING RISKS

JAY COEN GILBERT AN EXCLUSIVE CONVERSATION WITH THE CO-CREATOR OF B CORPS

CONSCIOUS FOOD PRODUCERS:

NEW YORK

SOUTHWEST AIRLINES SEMPRA ENERGY TOP FORTUNE 500 COMPANIES DISCUSS THE SUSTAINABILITY ADVANTAGE

TOP

EE FIAV INABL

SUST

WINE BRANDS

FOOD | ENERGY | FINANCE | INNOVATION & DESIGN | LEADERSHIP

SPECIAL THANKS TO OUR HEROES,

WITHOUT WHOM THIS PUBLICATION WOULD NOT HAVE BEEN POSSIBLE

Scott Dunbar Larry Keeley Larry and Cindy French Jeff and Katie French

Amber Lee Eckert Cia Lindgren Nathan Havey Thrive Consulting Group Ashley Coale

Devon Bertram Emily Olson Katie Dunn Wendi Burkhardt

AND TO YOU, OUR READER, FOR PICKING UP OUR INAUGURAL ISSUE

WHAT IS OUR DEFINITION OF A CONSCIOUS COMPANY? We operate from a working definition of a “conscious company” as a venture that intentionally takes all stakeholders, present and future, into account and operates in a way that, at the least, doesn’t harm those stakeholders and, at best, benefits them. There are a myriad of businesses that fall under this umbrella and we hope to showcase everything from small mission-driven organizations that operate for the purpose of benefiting society or the environment (or both) all the way to large, multinational companies that are incorporating sustainability into their operations. All of these companies are trying to do better and we want to celebrate their efforts and tell their stories. This movement, this work, requires collective effort. This is why Conscious Company Magazine has signed B Lab’s Declaration of Interdependence. As we hold these truths to be self evident: That we must be the change we seek in the world. That all business ought to be conducted as if people and place mattered. That, through their products, practices, and profits, businesses should aspire to do no harm and benefit all. To do so, requires that we act with the understanding that we are each dependent upon another and thus responsible for each other and future generations.

WHAT IS THE PURPOSE OF CONSCIOUS COMPANY MAGAZINE? For hundreds of years, businesses have figured out the very best ways of making money. The one and only measurement of a “successful company” has been monetary. This measurement of success is changing. No longer are people content to judge a company simply by how much money it makes. A new definition of success in business is emerging and it centers on a company’s ability to have a positive effect on society and the environment, in addition to making money. The most successful businesses on Earth, and the ones that will enjoy longevity in the marketplace, are the ones that have created new operating models that take all stakeholders into account. We want to celebrate these businesses. Our mission is to help redefine what it means to be a successful business by featuring the stories of companies that operate consciously, by providing their leaders with a megaphone to inspire other businesses to do the same, and by showing the world just how powerful business can be when used as a force for good.

WHY PRINT? Throughout the process of conceptualizing this publication and bringing it to life, we have been asked multiple times about our decision to print this magazine from a sustainability perspective. We not only understand these concerns, but we have wrestled with them ourselves. Our decision came down to our deep desire to spread the word as far as possible about the amazing businesses that will be featured in our pages. Printing Conscious Company Magazine allows us to increase the exposure of our brand through our retailers, expand the conversation about sustainability, and, hopefully, reach and inspire people who might not normally pay attention to this movement. Additionally, we have taken a number of steps to ensure that our printing has been done in a sustainable way: we are using Forestry Stewardship Council (FSC) certified paper for all print material; we are partnering with local Boulder-based PrintReleaf to help reduce our environmental impact by planting trees across a global network of reforestation projects; and we have pending B Corp certification to assure that we stay on track to meet our sustainability goals. We plan to practice what we preach in all facets of our operations, and we hope you will hold us accountable if you believe that we can do something better.

FSC logo

FROM THE EDITORS

HIS MAGAZINE BEGAN, as many endeavors do, as a conversation over a meal between two great friends. We were trying to answer the very simple question, “Why doesn’t a print magazine about sustainable business exist in the US?” Weeks of researching and discussing this question led us to another very simple question, “Why not us?” and Conscious Company Magazine was born. One of the first interviews that we completed was with John Mackey, in which he told us, “Follow your heart. Take time to ask the ‘big’ questions like, ‘Why am I here? What do I care about? What excites me?’ and answer your true calling. Life is short, so don’t cheat yourself by doing something you don’t love and believe in.” When we asked ourselves these “big” questions, we quickly knew that creating this magazine was the answer to all of them. Later, in our conversation with Jay Coen Gilbert, he mentioned that the sustainable business movement has suffered because it is often synonymous with what it stands against, rather than what it stands for. As we put together this inaugural issue, we consistently thought about what we stand for, what our mission is. We stand for the ventures that are making the world a better place by giving them a voice and telling their stories. We stand for hope through the power of good business. We stand for large scale, positive change through innovation, collaboration, courage, and the belief that we can, collectively, do better. As we look forward at the beginning of a new year, we believe it’s time that we all stand for something and start to ask ourselves the big questions. What will you stand for? What do you care about? What excites you? What changes will you make to help make the world a better place? We thank you for picking up a copy of Conscious Company Magazine. We hope that you enjoy what we have put together for you and that it inspires you to take action on those bigger questions. It is our hope that the conversation about sustainable business only continues to grow and that you lend your voice to this movement so that we all may redefine the future of business as usual together. With immense gratitude, Maren & Meghan

WINTER 2015 • ISSUE 1 The Conscious Company Magazine Team CO-FOUNDER AND EDITOR-IN-CHIEFTESS Meghan French Dunbar CO-FOUNDER AND CHIEF STRATEGY OFFICER Maren Keeley ART DIRECTOR Cia Lindgren ADVERTISING MANAGER Amber Lee Eckert COPY EDITORS Ryan Thompson Jack Mott TRANSCRIPTIONIST Natasa Milosevic INNOVATION AND DESIGN ADVISOR Morley McBride SUSTAINABLE WINE ADVISOR Mayacamas Olds STRATEGIST Megan McDonald ADVISORY BOARD Ashley Coale Devon Bertram Emily Olson Katie Dunn Nathan Havey Scott Dunbar Wendi Burkhardt

TABLE OF CONTENTS

FOOD

INNOVATION & DESIGN

12 GREYSTON BAKERY

15 SPOTLIGHT ON NY

18 NEW BELGIUM

31 JACK RABBIT HILL

TOP FOUR SUSTAINABLE WINERIES

SOLIDWOOL

FINANCE

THE STATE OF CROWDFUNDING | AMY CORTESE

A CONVERSATION WITH MICHAEL SHUMAN

49 BARNRAISER

COMMUNITY SOURCED CAPITAL

IMPACT INVESTING 101

61 ENTO

ATLANTIC LEATHER

ECOVATIVE

GROW COMMUNITY

SUSTAINABILITY AT THE ALPINE WORLD SKI CHAMPIONSHIPS

LEADERSHIP

117 MARKETPLACE ENERGY

5 ENERGY TRENDS

SEMPRA ENERGY

SIMPLE ENERGY

B CORPS | AN INTERVIEW WITH JAY COEN GILBERT

BACK TO THE ROOTS

INTERVIEW WITH JOHN MACKEY

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SOUTHWEST AIRLINES

112

DISCUSSING POLICY WITH THE AMERICAN SUSTAINABLE BUSINESS COUNCIL

LEADERSHIP INSIGHTS FROM THRIVE CONSULTINGâ&#x20AC;&#x2122;S FOUNDER NATHAN HAVEY

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LEADING THE MILLENNIAL GENERATION

Inspiring stories, insights, and advice from top conscious companies working in food and agriculture.

FOOD & AGRICULTURE

Greyston Bakery Interview with Mike Brady, President and CEO, Greyston Bakery

“We don’t hire people to bake brownies, we bake brownies to hire people.”

ernie Glassman, Zen master and social entrepreneur, founded Greyston Bakery in 1982 because he saw employment as the key to eliminating poverty. Bernie initiated the company’s Open Hiring policy, beginning a long tradition of providing jobs to the difficult-toemploy: people with social and economic challenges such as homelessness, former incarceration, drug use, language barriers, or lack of education. His mission has expanded over the last 30 years to include holistically serving low-income communities in Yonkers by providing affordable housing, child care services, community gardens, and workforce development. Today, Greyston, a certified B Corp, continues to flourish and is celebrated as a top business model for creating social change.

Meghan French Dunbar: What do you love about your business? Mike Brady: Greyston Bakery has a pulse that I have encountered at few other places. Our mission has always been to bake brownies to employ people, and we do just that. Individualized attention to each employee also sets us apart from other corporations and creates a strong community and a supportive environment that I love. MFD: Which of your business practices are you most proud of? MB: For 32 years, Greyston has served as a model for balancing business success with social justice innovation. We are proud of our incredible partnerships, our devoted customer base, and our committed employees working together to support our peoplecentric mission. Maren Keeley: What are the top 3 benefits of operating your business in a sustainable way? MB: We constantly strive to be sustainable in three veins: environmentally, socially, and economically. It is difficult to stand out in a global supply chain, but because

of our social justice commitment, we get recognized and valued alongside multinational suppliers much larger in size. Moreover, the benefits that Open Hiring provides within our organization and the local economy are numerous: 1. We focus the majority of our onboarding resources on employee training, rather than on interviews and background checks, which is a cost effective means of growing the workforce. 2. We train our community’s most economically disadvantaged residents and provide them with skills that can break the cycle of poverty in their families. 3. We generate two million dollars in savings to Westchester County through reduced recidivism. MFD: What advice do you have on building a highly effective team? MB: At Greyston, our culture is based on achieving our mission to serve others. The effectiveness of our management team is dependent on working with people who resonate with this mission. Our team members are dedicated to moving our business forward with their traditional job skills while finding new and creative ways to achieve our social justice goals.

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FOOD & AGRICULTURE MK: What advice do you have regarding quality leadership? MB: There is no substitute for articulating a clear vision and being transparent when reporting on your successes and failures in pursuit of that vision.

MFD: What tips do you have for building a strong community at your business? MB: Give everyone an equal chance to be successful, hold people accountable for their behavior, and encourage open dialogue from anyone that has a suggestion for improving the business. Photos: Greyston Bakery

“It is difficult to stand out in a global supply chain, but because of our social justice commitment, we get recognized and valued alongside multinational suppliers much larger in size.” Editor’s Note: Greyston Bakery was generous enough to send us a few sample brownies and we were blown away! Seriously, they were absolutely delicious.

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Open Hiring A New Model for Social Change At Greyston, we want to challenge the notion that a certain background is a relevant predictor of a poor employee (e.g., a criminal record, issues with homelessness, etc.) and we do this through our practice of Open Hiring. Open Hiring is a simple concept based on the Buddhist fundamentals of nonjudgment and loving action brought to Greyston by our founder Bernie Glassman and the Zen community of New York. Contrary to traditional hiring processes, during Open Hiring potential employees are not asked about their job experience, their education, their skills, or any other topics that are generally covered in a job interview or application process. Instead, they are introduced to what will be expected of them as employees when they start working as bakers. As a result, we have a community of people working together to not only change their lives for the better, but also to prove that there are better models for hiring people into a workplace.

FOOD & AGRICULTURE

NEW YORK

LOCAL, SUSTAINABLE FOOD PRODUCERS

In each issue of Conscious Company Magazine, we will highlight local, sustainable food producers in different geographical locations.

For our first issue, weâ&#x20AC;&#x2122;re shining the spotlight on New York.

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FOOD & AGRICULTURE

Rescue Chocolate - Brooklyn, NY Products: Vegan chocolate bars and truffles.

WHAT DO YOU LOVE ABOUT YOUR ORGANIZATION? We are able to provide high-quality artisanal food for humans to enjoy, and we also benefit animals because we donate profits to various animal rescue organizations. Our products allow our consumers to not only experience a decadently fabulous treat, but to know that each bite is also doing a little bit to combat the problem of killing unwanted dogs and cats at municipal facilities. HOW DOES OPERATING YOUR BUSINESS IN A SUSTAINABLE OR CONSCIOUS WAY ADD VALUE TO YOUR COMPANY? Our founder, Sarah Gross, has been a vegan for a very long time, primarily because of the animals, but also because of the benefits to her health and the environment. She knew that she definitely did not want to harm animals or the environment in her business undertakings. So, every Rescue Chocolate product is not only vegan but is also certified as kosher, fair trade, and organic. These certifications cost a little bit more, but we’ve found that our customers are more than willing to pay for a fully ethical product. In fact, this is what sets us apart from many other chocolate companies.

WHAT DO YOU LOVE ABOUT YOUR ORGANIZATION? CREPiNi is a pioneer in the specialty food trade – the first crêpe company in America to use automated production. We treasure our European roots and value food as the centerpiece of a happy, healthy lifestyle. The company’s signature product – the Naked Crepini™ – is the fusion of a classic French crêpe and a Russian blini, based on an age-old family recipe. Introducing Crepini to North American homes to the delight of families across America keeps us all energized to keep innovating and improving consistently! HOW DOES OPERATING YOUR BUSINESS IN A SUSTAINABLE OR CONSCIOUS WAY ADD VALUE TO YOUR COMPANY? More than 12 million crêpes were made and sold in 2013 as a result of automating our production and significantly expanding our client base. Crepini is able to offer more and better products at a lower price to existing customers, while increasing margins by 35%. Crepini is a certified B Corp (Benefit Corporation), producing in a facility that utilizes optimum energy levels and relies on a sustainable supply chain. In the past four years, Crepini picked up four SOFI awards and won the 2013 Progressive Grocer Editors’ Picks contest, the highest honor in the food world. 16 |

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CREPiNi - Brooklyn, NY Products: Varieties of sweet and savory naked and filled crêpes.

FOOD & AGRICULTURE

sweetriot - New York, New York Products: All natural, organic, ethically sourced Cacao Nibs, Bars, and 100 Calorie Packs. WHAT DO YOU LOVE ABOUT YOUR ORGANIZATION? Our company is one of the few that works to maintain responsible practices in every area of our business. Plenty of companies are certified as Organic or Fair Trade or as B Corps – sweetriot is so amazing because the company is all of these things! In addition to all of this, we strive to create products that positively impact our customers with packaging that makes you smile (and supports an emerging artist!), ingredients that are actually good for you, and a work environment for employees that is democratic and empowering. HOW DOES OPERATING YOUR BUSINESS IN A SUSTAINABLE OR CONSCIOUS WAY ADD VALUE TO YOUR COMPANY? We believe that if people have the option to do good through their purchases of everyday items, they will. No one wants to buy a product that contributes to child slavery or the poverty cycle - it’s all about educating people about the reality and then giving them alternative products. We believe in leveraging our for-profit business model to do good. Our customers connect with this mission and continue to choose our products because of it. WHAT DO YOU LOVE ABOUT YOUR ORGANIZATION? So many things! I love that I’ve seen it grow from the very beginning and how different it is each day. I love the people that work for me and I love going out in the world and getting people excited about what we do. Most of all, I love the products we produce and what they stand for. I fully believe in people simplifying the food they eat to clean and healthy foods and I believe our products are an expression of that.

Emmy’s Organics, Inc. - Ithaca, NY Products: Vegan and gluten-free superfood snacks and cereals, including Macaroons, Super Cereals, and Chocolate Sauce.

HOW DOES OPERATING YOUR BUSINESS IN A SUSTAINABLE OR CONSCIOUS WAY ADD VALUE TO YOUR COMPANY? Operating our business in a sustainable and conscious way, first and foremost, is the ONLY way we would have it. As far as the value added to our company, I think that consumers are becoming more and more aware of their health and their impact, so they are becoming more in line with socially and environmentally conscious companies. On a more global scale, running a sustainable business will keep you going longer. Providing high quality jobs, sourcing organic and non-GMO ingredients, and offering packaging that can be recycled are all examples of things that are helping keep our planet and communities in a better state. This is the greatest value of sustainability, in my opinion. WINTER 2015

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NEW BELGIUM BREWERY IN FORT COLLINS, CO, IS QUICKLY MAKING A NAME FOR ITSELF AS ONE OF THE MOST INNOVATIVE AND SUCCESSFUL COMPANIES IN THE CRAFT BEER MARKET. The companyâ&#x20AC;&#x2122;s passionate, loyal fans resonate with the New Belgium brand, which has become synonymous with its core values of environmental stewardship, creating authentic relationships, and having fun. The brewery is consistently recognized as one of the best places to work and as one of the most democratic workplaces in the US and, as a result, it enjoys an employee retention rate of 95%.

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FOOD & AGRICULTURE

INTERVIEW WITH KATIE WALLACE, ASSISTANT DIRECTOR OF SUSTAINABILITY

Meghan French Dunbar: How did the sustainability program at New Belgium get started? Katie Wallace: New Belgium is twenty-three years old and when our co-founders started the company in the basement of their house, they took a hike out to Rocky Mountain National Park and they defined their core values and beliefs. They said, “Here is the list of things that we think are important to live by and we don’t think that businesses should operate by a different set of moral guidelines than human beings do.” That was the beginning of our core values and beliefs. They included environmental stewardship, honoring nature at every turn as a business, being a business role model both socially and environmentally, creating jobs, having relationships with one another, and having fun. I would say we are lucky to have founders that, since day one, have really cared about the impact that we have on people and the planet through our business efforts. Sustainability and human well-being have always been a part of the decision making at New Belgium. In our early years, they were just what our founders brought to the table, but there was no formalized process around those values. However, in 2007, we gathered a group of seventeen co-workers from different areas of the brewery so that we had all the areas of the business represented and we had a couple of consultants come in and we

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formalized what we now call our Sustainability Management System. We asked ourselves the questions, “What are the big issues facing the world today? How does the brewing industry negatively contribute to those issues? How can we, as New Belgium, start to turn that around and influence change?” We came up with categories like reducing water usage (because it’s the primary ingredient in our beer), reducing our greenhouse gas emissions, and reducing our waste generation. Also, advocacy is another thing that we added in there because we want our little splash to ripple. We are still a tiny company, but if we can influence beyond our own operations, then it would really make a big difference in

The Power of Co-ops: An Amazing Story About Employee Ownership In the late 90s, we did an environmental assessment of the brewery and found out that the largest environmental impact from our operations was from coal-powered electricity. So, we called the utility that supplied the electricity to us and asked them if there was a renewable energy option available that we could buy into to help reduce our environmental impact. They said that there was a wind farm in Wyoming that we could purchase electricity from, but it would be at a premium and we would have to pay the money upfront and sign a ten-year contract. We asked them how much it would be to enable them to bring that wind power to Fort Collins and they gave us a price. We actually had that money in the bank, but we had already promised it to our co-workers as profit sharing. New Belgium is employee-owned and we have it incorporated into our mission that we will share profits with employees. Our founders didn’t want to take that money back after people had planned on getting it - it didn’t feel true to the spirit of New Belgium. So, they brought the decision to the co-workers and said, “Hey, we have the opportunity to bring wind power to Fort Collins and offset our environmental impact, but we would need this money. We have a short window to decide whether to use that money, but you should decide if we should bring the wind in.” At that point, they left the room and they let the co-workers decide whether or not they wanted to give up their profit-sharing checks. Forty-five minutes later, the co-workers’ team came out of the room and they had unanimously voted to give up their profit-sharing checks to support bringing the wind-power to our city. It was a defining moment for us, where each person acted as an owner and everyone put their money where their mouth was and made the decision, “This is who we want to be in the world!” It was a special moment for employee ownership and for our commitment to be environmental stewards. I think at that moment, we realized that this is important to all of us and that this will always be a part of our company.

FOOD & AGRICULTURE

the world. At that point, we formalized our work in sustainability and we actually started tracking our utilities. We set goals around our natural resource consumption and we put sustainability into our strategic planning framework. Before, we always kind of assumed that sustainability was a part of everything that everyone did, but now we actually had metrics and we started strategically calling out what we wanted to accomplish in these areas for the company. We really preserved the legacy so that no matter who comes on or who leaves, we have formalized our practices within the company so that they will exist after we are gone. I would say that the root of why our founders chose to include environmental strategies from day one is because of the people that they are. Kim Jordan, our CEO and co-founder, was a social worker prior to coming to New Belgium. She has always had a strong affection for well-being and humanitarian efforts. Helping people is a really big part of her

background, and she has a deep understanding of social wealth issues. Jeff Lebesch [the other co-founder] was an electrical engineer. He recently retired from the company, but he really brought us a nerdy, wonderful passion for efficiency. For him, we were not being extremely successful unless we were extremely efficient. He had a deep passion for innovation and made sure that we were really smart with our resource use. I don’t want to sound too flowery about this though, because the reason we do all of this is because it makes business sense. There are certain motivations for getting into it and that comes from a deep place of compassion and understanding, but we wouldn’t be able to do it if we were not able to make a strong business case for it. It is just extremely smart, especially for the long-term health of our business, to make investments in sustainability, reduce our environmental impact, and enhance other’s lives.

“I DON’T WANT TO SOUND TOO FLOWERY ABOUT THIS THOUGH, BECAUSE THE REASON WE DO ALL OF THIS IS BECAUSE IT MAKES BUSINESS SENSE.”

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TOP REASONS TO IMPLEMENT SUSTAINABILITY MFD: Besides the feel-good stuff that sustainability often gets tied to, what are the primary reasons that New Belgium does this from a business perspective?

INCREASED PRODUCTIVITY AND CREATIVITY

If we are talking about benefiting our co-workers and creating a great place to work, those benefits to the bottom line are hard to measure, but there is no doubt in my mind that they are profound. It’s like using Maslow’s hierarchy of needs – we provide full benefits for our co-workers so that if someone’s kid is sick, they are not sitting at their desk being stressed out about it, but they are able to just take their kid to the doctor. It’s about providing for people’s basic needs. It ends up taking off exponentially because when people are in that safe space, they are accessing the higher-functioning areas of their brain. They are not functioning from the amygdala or fear state of their brain, but they feel protected and it increases their ability to be more creative, more compassionate, and more efficient and productive. We absolutely save costs with our efforts to develop this mentality. Employee creativity and productivity also leads to better and less expensive ideas for reducing our environmental impact.

BRANDING

Creativity-wise, I think we have one of the coolest brands in the world – I love it! It really has the goals of our co-workers coming through it. There is an authenticity that people really connect with. I think it helps us to

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generate more revenue and it would not be as authentic if we didn’t have our whole team behind it and helping to shape it.

EMPLOYEE RETENTION

COST SAVING THROUGH EFFICIENCY

We also reduce costs and generate increased revenue because our co-workers are really engaged and a part of our goals. The big bonus from this is that they are happier to work. We have a 95% retention rate and save so much money on recruitment because people just know that we are a great company to work for.

I would also say that addressing efficiency makes really good business and environmental sense. For example, we have beer loss throughout the brewing process. We went back and took a more intentional look at how we do some of the brewing processes and we made some pretty significant savings that decreased our beer loss. When we decrease our beer loss, we also decrease water use because there is so much water used in beer making and we reduce the use of hops and ingredients that go into the beer and all the energy that went into growing them. Every time that we can reduce beer loss and increase efficiency, we’ll try. Those are huge business savings, to the tune of hundreds of thousands of dollars and, over time, millions of dollars in savings, and they are also better for the environment.

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Another example of efficiency is the cardboard divider between our bottles that we used to use in our packaging. It had been there forever and we didn’t even question it. One night, a couple of our co-workers were having non-New Belgium beer with their friends, which we often do and encourage. They noticed that there was not a cardboard divider in their twelvepack and they thought, “We are on the packaging line every day and we use so much cardboard for those dividers. It’s a lot of waste and it is not really necessary.” They brought the project to us through our internal system for sharing ideas. We ended up testing it out and there was no additional breakage without the divider so we removed all cardboard dividers from our packaging. We saved over $780,000 last year from not purchasing cardboard dividers. It is actually well over a million dollars that we saved though, because we saved money on the factory line from the factory workers who no longer have to put the dividers in. There are so many projects like that that are win-wins and make a lot of business sense, and we really think that engaging co-workers in that creative process is a good first step of finding good projects. MFD: What are the most innovative things that you are doing through your sustainability program? KW: We are engaging and accessing the creative potential of our co-workers. It is a highly collaborative process. We have different avenues where co-workers can share their ideas for improving the experience of the company. Anyone who has something to share can provide feedback. Another thing we do is outside of our company. We are part of the project called FortZED. It is a public-private partnership with the City of Fort Collins, Colorado State University, New Belgium, and several other businesses. We got together and said, “We want to create a net zero energy district in our community and we feel like we will be more successful with that issue if we combine forces rather than trying to act alone as individual silos in this process.” We also partnered with several smart grid developers and, collectively, we were awarded a grant from the Department of Energy to demonstrate that there are solutions to managing distributed energy systems on this scale. We successfully worked together to demonstrate that

“I THINK IF YOU REALLY WANT A COMPANY TO BENEFIT PEOPLE AND THE PLANET, YOU’RE GOING TO HAVE A REALLY HARD TIME IF IT’S NOT INCORPORATED INTO THE BASIC STRATEGIC PLANNING PROCESS.” it is possible to cooperate in a public and private fashion to benefit our community and reduce our environmental impact. As a part of that project, we built solar panels at the New Belgium brewery, we added more methane capture at our processed water treatment plant, and we added an additional generator to store energy from the water treatment plant. Of all the grant recipients across the country, we were the only public-private partnership and we performed the best out of all of them. I think it shows that we can do more together than we can do alone, and instead of fighting for our own pieces of the pie, a lot of cool things can happen when we come together as a community. Third, on the innovation side, the way that we have integrated sustainability into our strategic planning is really cool. I think many companies have a set of values and they state them on a plaque at the entrance and that’s all the attention they get. When we do strategic planning, we start with our company purpose and our core values and beliefs. From that, we create our mission. From our mission, we create our annual strategic priorities. From our priorities, we create our departmental initiatives and our personal initiatives. It is a really integrative process. We also kick off our annual strategic planning with all of our co-workers coming together. We close down the brewery and we fly in everyone who works remotely and we all engage in the process. I think if you really want a company to benefit people and the planet, you’re going to have a

really hard time if it’s not incorporated into the basic strategic planning process. So, right next to our financial goals, our quality goals, and our customer satisfaction goals, we have goals for creating a happy work place and reducing natural resource consumption. We are also doing cool things with energy consumption. We have an internal electricity tax, so for every kilowatt-hour that we consume at New Belgium, we charge ourselves 2.4 cents. All of that money goes into a savings account and that is how we reserve some funds for renewable energy and energy efficiency projects. We started doing that in January 2013 and we saved enough money that we are doing two projects this year. We are improving insulation within the brewery for our ambient cooling and refrigeration for our summer beer, which will decrease a lot of energy. With the tax, we are basically accounting for the externalities that we don’t see on our electricity bills because the true cost, environmentally, of us using that electricity is not accounted for. So, we tax ourselves a little extra and then we invest that money in initiatives that help save electricity. Photos: New Belgium

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THE COMPLEX WEB OF THE ORGANIC INDUSTRY Have you ever been curious about the structure of the organic industry? Which companies own what and who has remained as an independent producer? Yeah, us too. Michigan State University Associate Professor Phil Howard breaks it down for us here.

Phil Howard, Associate Professor Michigan State University www.msu.edu/~howardp

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ORGANIC MARKETPLACE TRENDS

$35.1

BILLION The size of the organic products sector in the US in 2013

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11.5%

The growth rate of the organic industry from 2012 to 2013

10%

The average growth rate of the organic food industry since 2010 in the US, compared to a 3% average growth rate for total food sales in the US during the same time period

Photo: Leslie Lindell

FOOD & AGRICULTURE

IF YOUâ&#x20AC;&#x2122;RE LOOKING TO PURCHASE A MORE SUSTAINABLE BOTTLE OF WINE,

there are four certifications that will help you find more conscious brands: Biodynamic, SIP Certification, Lodi Rules for Sustainable Winemaking, and Organic. These certifications indicate that the product has been produced in a more environmentally and socially beneficial way as compared to conventional wine, but do you actually know the difference between them? Here is a quick overview that will help you sort it all out.

BIODYNAMIC

SIP CERTIFICATION

Biodynamic wine takes sustainability to a whole new level. Biodynamic wines not only have to meet all guidelines for organic certification, but biodynamic practitioners use a holistic approach, seeing their farm as an interconnected, diversified, and balanced living organism. The founder of biodynamic agriculture, scientist and respected philosopher Rudolph Steiner, designed the system in the 1920s to enhance the health and quality of the farm and of the food produced on it. Today, biodynamic certification, carried out by Demeter International and Demeter USA, is often viewed as the pinnacle of sustainability for agriculture and indicates that a product has been created in the most conscious way possible.

SIP (Sustainability in Practice) Certification, launched in 2008, is a third-party certification process for California winegrape growers that indicates that the wine producer farms in a manner that protects natural and human resources. The certification addresses multiple factors including energy usage, water conservation, air quality, habitat conservation, and social responsibility. By taking these factors into account, SIP certification is arguably a more holistic approach to sustainability as compared to organic certification. With over 34,000 acres of farmland in California SIP certified, the program seems to be gaining serious momentum. One thing is for sure: if you see a wine bottle displaying the SIP certification logo, you can feel good about your purchase.

PRINCIPLES OF BIODYNAMIC FARMING:

1. All National Organic Program organic certification guidelines must be met as a baseline. 2. As opposed to organic certification, which only applies to a certain area of the farm, biodynamic certification applies to the entire farm. 3. Use of natural pest control methods such as ladybugs for insect control and whey for fungal control. 4. At least 10% of the farmland must meet certain biodiversity requirements. 5. There is a strong focus on reducing all imported materials to the farm and creating fertility through livestock integration, cover crops, crop rotation, and use of compost. 6. The farm is organized so that the waste from one area of the farm becomes energy for another. 7. Animals are a critical component of the farm and, in addition to contributing to the fertility of the soil, there is a strong focus on the welfare of the animals themselves. 8. There are two variations: wines that are certified biodynamic and wines that have been made with certified biodynamic grapes. Photo: Leslie Lindell

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FOOD & AGRICULTURE

LODI RULES FOR SUSTAINABLE WINEGROWING The Lodi Rules for Sustainable Winegrowing, launched in 2005, was Californiaâ&#x20AC;&#x2122;s first third-party audited certification for sustainable winemaking. With 101 farming practices taken into account, this comprehensive certification promotes practices that enhance biodiversity, soil and water health, community, and employee well-being by focusing on topics such as land stewardship, business management, human resources, and air quality control. This certification indicates that the wine in question has been produced in a holistically sustainable manner.

Photos: Leslie Lindell

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ORGANIC While organic wines may not be as comprehensive as biodynamic, SIP, or Lodi certified products, they still provide a high-quality option for conscious consumers and are both better for the environment and human health than conventional wine. Under the organic umbrella, there are two variations: wines that are certified organic and wines that have been made with certified organic grapes. In order for a wine to be certified organic, all of the grapes and agricultural ingredients must be certified organic and all use of synthetic pesticides, fungicides, insecticides, or fertilizers is not permitted. There are approximately 70 chemicals permitted for use in organic wine production, including naturally occurring salts and enzymes. No chemical used in a certified organic wine can have an adverse effect on human health or the environment as defined by the Food and Drug Administration (FDA), and sulfites cannot be added to certified organic wine. For a wine to state that it uses certified organic grapes, 100% of the grapes used in the production of the wine are required to be certified organic. Any other agricultural ingredients, such as yeast, used in the production of the wine do not have to be certified organic, however, they are still held to high standards and cannot use â&#x20AC;&#x153;excluded methods,â&#x20AC;? such as genetic engineering. Sulfites are allowed to be added to wine that uses certified organic grapes.

FOOD & AGRICULTURE

CONVENTIONALLY PRODUCED WINE by the numbers

26 14 The number of different chemicals found in one bottle of conventionally produced Bordeaux during a study in 2010.

MILLION

The number of pounds of pesticides used in California in 2012 on conventionally grown wine grapes.

The number of commonly used fungicides that may persist in finished conventionally produced wine in amounts that exceed what the EPA considers to be a safe dose.

MILLION

The number of pounds of pesticides used in 2012 in California that are considered “bad actors” chemicals that cause cancer, are neurotoxins, or directly contaminate groundwater.

400,000

The number of pounds of glyphosate (an herbicide commonly known as Roundup), which has been linked to Parkinson’s Disease, infertility, and cancer, used in 2010 on wine grapes in California.

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PHOTO: STEPHEN SMITH

CONSCIOUS WINE

AT JACK RABBIT HILL FARM IN THE PICTURESQUE NORTH FORK VALLEY OF WESTERN COLORADO sits the state’s first certified organic vineyard, Jack Rabbit Hill Farm. This 70 acre farm, which is both certified organic and biodynamic, includes 18 acres of vineyards, 11 acres of hops, wildlife margins, and a host of assorted animals. While traditionally Colorado might not be too well-known for its wine, Jack Rabbit Hill Farm is quickly making a name for itself by sustainably producing high-quality wines, ciders, and spirits. We had the chance to speak with Lance Hanson, co-founder of Jack Rabbit Hill Farm, to discuss how producing wine in a conscious way adds value to the farm’s brand.

PHOTO: KATELYN VONFELDT

FOOD & AGRICULTURE

Meghan French Dunbar: What is the story behind how Jack Rabbit Hill Farm came to life? Lance Hanson: Anna and I and our two children moved to Jack Rabbit Hill Farm in 2001 to partner with my sister in transforming a small cattle ranch into vineyards and a winery. We wanted to make wines that naturally expressed the breathtaking beauty and climate of our valley. Inspired by some world-class orchard growers in the area, we embraced low-input organic farming practices from the beginning as the way to produce distinctive, expressive wine. At Jack Rabbit Hill Farm, clean farming is always the most important factor in producing quality wines, ciders, and spirits.

MFD: What do you love about your company? LH: It’s really satisfying to make products that the market really believes in and supports, but that can’t happen unless every single individual on the team excels. We’re a bootstrapped operation and our staffing is lean, so every individual is really key to the operation. We all wear lots of hats - animal husbandry, composting, pruning, fermenting, bottling, delivering, selling, and hosting visits. Everybody on the farm participates at some level in everything happening on the farm. So, what Anna and I love most is our expanding team of very talented and passionate individuals. It really is the most fulfilling part of what we do.

MFD: Can you tell me a bit about the sustainability efforts at Jack Rabbit Hill? LH: First, we use holistic farming practices (organic, biodynamic, no-till rational grazing). We started out as an organic farm in 2001, and we were the first vineyard in Colorado to obtain organic certification. When we started biodynamic farming in 2006, [Rudolph] Steiner’s (the founder of the biodynamic movement) ideas really got us thinking about and focusing on the importance of holistic practices for growing expressive wines with fewer inputs than other approaches and the importance of livestock on the farm for building fertile soils. We’re now extending these practices by implementing the covercropping and grazing ideas of Andre Voisin and Allan Savory. Second, we have gain-share pricing for growers. We know firsthand how hard it is to grow clean, expressive fruit, and quality

5 Photos: Stephen Smith (1 & 4) Gary Hubbell (2) Katelyn Vonfeldt (3 & 5)

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FOOD & AGRICULTURE fruit means quality wine, cider, and spirits. So, our other growers are all certified organic, and we’ve been happily paying them above-market prices since we started sourcing nonestate fruit in 2005. In some cases, the prices we pay are double the going market rate, and this makes a real difference for these growers. MFD: What are the top three benefits that come from operating your vineyard in a sustainable way? LH: Product quality, product quality, and product quality. MFD: Can you taste the difference that being certified organic or biodynamic makes? LH: We think so. We think products grown without synthetic inputs (i.e., organic and biodynamic) and with zero-additive processing (i.e., biodynamic, which means no commercial yeasts, fining agents, or other additives) have more intense,

Photo: Katelyn Vonfeldt 34 | WINTER 2015

expressive, vibrant flavors. MFD: Does anything concern you about how conventional wine is made? LH: We’re not really concerned about conventional wine. There’s lots of it and there are certainly plenty of buyers for it. But for us - for how we want to work and live - holistic farming practices are a better fit, and we think we’re making a much better product because of it. MFD: What should people look for to assure that the wine that they are purchasing has been created in a conscious way? LH: Like in all other consumer products segments, there’s tons of green washing in the wine industry. If you ask 100 wineries if they’re sustainable or low-input or organic, all 100 will say yes, yes, yes. The conscious consumer always needs to peel back a few layers - read the

fine print, look at the ingredients, determine whether the product is certified organic or biodynamic - and it never hurts to reach out directly to the winery to get more information on their practices. We love getting inquiries like this! In fact, anyone is welcome to email me at lance@ jackrabbithill.com! MFD: What gives you hope for the future? LH: I think as long as countries like the US protect the pursuit of life, liberty, and happiness, then I think there’s a lot to hope for. Our children are much smarter and more reasonable than I was at their age. We just need to make sure we don’t screw up so badly that we diminish opportunities for successive generations. We need to make sure they always have access to good and full information so they can make their own personal decisions. In the food industry, GMO labeling would be a good start.

“

For us -

for how we want to work and live -

holistic farming practices are a better fit, and we think we’re making a much

better product because of it.

Lance Hanson with horn manure compost from Jack Rabbit Hill Farm

”

FOOD & AGRICULTURE

FREY VINEYARDS

RE FOSTU AINABL

TOP SU WINERIES IN THE U.S.

Redwood Valley, Mendocino County, California Products: Organic wine and Biodynamic wine WHAT DO YOU LOVE ABOUT FREY VINEYARDS? We are proud to be Americaâ&#x20AC;&#x2122;s first organic winery, making wine without added sulfites or other synthetic preservatives since 1980, and we have always been family-owned and operated. No-sulfites-added wines are preferred by a growing number of wine lovers today. Our wines are also vegan (made with no animal byproducts commonly used for fining), and gluten free (no gluten byproducts commonly used for fining or as barrel sealant). We are also a leader in organic grape growing in Mendocino County, California, which has more organic grapes produced today than any other county by percentage.

Photos: Frey Vineyards

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AS A WINERY, WHY IS IT IMPORTANT TO OPERATE IN A SUSTAINABLE WAY? For the quality of life and health of future generations, it is important to grow food and wine sustainably and organically. Many pesticides and synthetic fertilizers are suspected of increasing cancer rates in people and of harming bee populations that are vital for the pollination of many fruits and nuts. Organic farming eliminates the introduction of these chemicals into the environment and increases soil fertility by using alternative and traditional methods such as cover cropping. We are all temporary stewards of the Earth, and living sustainably is a natural duty.

FOOD & AGRICULTURE

“You can actually make a more interesting bottle of wine by letting nature have its way.”

BENZIGER FAMILY WINERY Glen Ellen, Sonoma, California Products: Sustainable, Organic, or Biodynamic wines

WHAT DO YOU LOVE ABOUT BENZIGER FAMILY WINERY? All Benziger Family Wines communicate a sense of place and respect for the land, whether it’s a sustainable, organic, or biodynamic wine. We’re dedicated to producing wines that care for the environment and sharing that passion with everyone who opens a bottle of our wine or comes to visit us at the winery.

AS A WINERY, WHY IS IT IMPORTANT TO OPERATE IN A SUSTAINABLE WAY?

Photos: Benziger Family Winery

We believe that not only the land, but also our wines have benefited from our sustainable and biodynamic practices. You can actually make a more interesting bottle of wine by letting nature have its way. Our sustainability programs emphasize environmentally sound growing methods, such as biodiversity, soil revitalization, and Integrated Pest Management (IPM), which help cultivate grapes with more character, flavors, and aromas with the goal of making better wines. We don’t just farm this way because we think caring for the land is the right thing to do, but it also happens to be the best way to make distinctive, authentic wines. By treating our vineyards the best way we know how, we’re making wines we’re really proud of. WINTER 2015 | 37

FOOD & AGRICULTURE

RE FOSTU AINABL

TOP SU WINERIES IN THE U.S.

LANGETWINS FAMILY WINERY AND VINEYARDS Lodi, California Products: Sustainable Wines

Photos: LangeTwins Family Winery and Vineyards

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WHAT DO YOU LOVE ABOUT LANGETWINS FAMILY VINEYARDS?

AS A WINERY, WHY IS IT IMPORTANT TO OPERATE IN A SUSTAINABLE WAY?

I love that we are committed to our belief that to be generational, we must be sustainable. To us, this means sustainable practices are used in every aspect of our business, from the winery to the vineyards and everything in-between. We use sustainable farming practices that are environmentally friendly, economically viable, and socially equitable and we have extended that commitment into our winery and tasting room. Our efforts to be generational provide a purpose and direction to everything we do.

For the twins, Randall and Bradford Lange, one simply cannot be a generational farm family without being sustainable. It’s how they were taught to farm and it’s how we farm the LangeTwins estate vineyards today. Unlike other farming practices, sustainable winegrowing is all-encompassing in its approach. We are not only concerned with the health of the vineyard, but its surrounding natural environment as well. As stewards of the land, the LangeTwins family has been a sustainable grower in the Lodi Appellation of California for five generations and we’re continually working to preserve the land for more generations to come.

FOOD & AGRICULTURE

COOPER MOUNTAIN VINEYARDS Willamette Valley, Oregon Products: Sustainable wine using biodynamic grapes WHAT DO YOU LOVE ABOUT COOPER MOUNTAIN VINEYARDS?

AS A WINERY, WHY IS IT IMPORTANT TO OPERATE IN A SUSTAINABLE WAY?

We love that we get to authentically express the soils, climate, and beauty of Oregon through the lens of pinot noir, bottle it up, and send it out for the world to enjoy.

Growing wine grapes is a long-term adventure. The responsible land stewardship that we practice today will make for higher quality wines for the next generation that oversees the winery.

Photos: Cooper Mountain Vineyards

Editorâ&#x20AC;&#x2122;s Note: Cooper Mountain Vineyards was kind enough to send us their amazing wine to sample and it was extraordinary.

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Top leaders working in sustainable finance share their insights and advice on how to change the financial sector for the better.

FINANCE

THE STATE OF

CROWDFUNDING BY AMY CORTESE

n a cold day in late November, Kyle DeWitt and Tim Schmidt were overseeing the final phase of their longtime dream to open a microbrewery. The brewing equipment was hauled in, the taps were installed, and the electricians were rewiring the renovated historic building in downtown Tecumseh that will be home to Tecumseh Brewing, a brewpub and beer garden that will feature a rotating roster of microbrews, from a Black IPA to a Peanut Butter Stout. When the taps finally start flowing in January, it will be thanks to a recently passed Michigan law that allows any business based in the state to raise money from any resident of the state through crowdfunding - a form of online fundraising where small sums from a large number of investors take the place of one or two big financiers. After months of drawn out talks with banks and state funding agencies that seemed to be going nowhere, DeWitt and Schmidt decided last March to give the new law, the Michigan Invests Local Exemption (MILE), a try. They put together a campaign on LocalStake, a crowdfunding platform, and raised $175,000 from 21 local investors. The pair hit their funding goal in half the time allotted and had to turn away investors. The crowdfunding campaign also helped the brewery secure a $200,000 bank loan to complete its funding needs. Without MILE, says DeWitt, “We’d still be banging our heads against the wall.” Michigan’s MILE is one of more than a dozen such state laws that have cropped up over the past two years to help get capital into the hands of cash-strapped entrepreneurs. They seek to fill a funding gap for promising local ventures that are

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not being served by conventional funders like banks and venture capital, which tend to focus on larger, less risky deals. That was also the aim of the Jumpstart Our Business Startups (JOBS) Act, landmark legislation signed into law by President Obama in April 2012. The centerpiece of the JOBS Act was a crowdfunding provision that would make it easier for small, private companies to raise money by offering equity or debt to investors, including their customers, friends, and the general public. (Securities laws have made it prohibitive for small private companies to raise money from all but the wealthiest investors.) Crowdfunding represented a democratizing force that could unlock new sources of capital for job-creating entrepreneurs, boost the economy, and give Wall Street-wary investors a profitable alternative. The president called it “a game-changer.” But more than two-and-a-half years later, the crowdfunding law, often referred to as Title III of the JOBS Act, is bogged down in rule-making at the Securities and Exchange Commission. What’s more, the rules as proposed would impose costly requirements on small businesses wishing to raise capital and on crowdfunding platforms alike, causing even the bill’s most ardent supporters to declare it unworkable. “At the end of the day, Title III is deeply flawed,” said Patrick McHenry, a North Carolina House representative and the original champion of the law. Against that disheartening backdrop, a growing number of states like Michigan are crafting their own mini-JOBS Acts. Texas became the thirteenth state to pass a state crowdfunding law in November, and Oregon was expected to enact one by the start of the new year.

The states in the crowdfunding club are red as well as blue, but they share a pragmatism and desire to spur entrepreneurship and job creation within their borders. The laws vary by state and often reflect the unique character of their regions. Vermont’s Small Business Offering Exemption, for example, excludes companies involved in petroleum production, mining, or other extractive industries. Kansas officials, meanwhile, named their law the Invest Kansas Exemption, or IKE, to honor the state’s most famous native, Dwight Eisenhower. Like the JOBS Act, the state crowdfunding laws include restrictions on how much companies can raise (typically $1 million to $2 million in a year) and how much non-wealthy investors can invest in crowdfunding deals. But generally, they allow any business based in the state to raise money from any resident of the state, without all of the red tape and restrictions that come with the JOBS Act. In Kansas and Georgia, the first two states to enact such laws, companies raising money submit a simple one-page form to state regulators, and there are no audited financials required. There’s not even a requirement for a web portal - companies can raise money completely offline if they wish. State crowdfunding has its limits. Only companies incorporated in a particular state and doing the majority of their business there are eligible (that means no Delaware corporations). And companies are restricted to raising money from state residents (or face harsh penalties). As such, this approach may not appeal to high-flying firms that can attract a national or global

FINANCE

“

The states in the crowdfunding club are red as well as blue, but they share a pragmatism and desire to spur entrepreneurship and job creation within their borders.

”

audience of investors. But then, those companies typically have no problem raising capital - unlike the thousands of smaller, community-based businesses that the state laws are intended to help. Indeed, the promise of intrastate crowdfunding may be greatest in rural areas far from urban money centers like New York or Denver, where communities are struggling to stay relevant and keep their young from leaving. In Kansas,“The theme has been more community development than get rich quick,” says Kansas Securities Commissioner Josh Ney. The eight or so ventures to take advantage of IKE so far have ranged from a dairy farm to a grocery store - and yes, a couple of microbreweries. Minneola, for example, is a rural farming community of 750 in southwestern Kansas, so small that it didn’t even have a local grocery store. Using the IKE law, local businessmen raised $180,000 to open the Hometown Market, a grocer with

Intrastate Crowdfunding Exemptions WA MT OR

ID WY NV

CA AZ

MN WI

SD NE

KS OK

IA IL MO

NH MA RI CT NJ DE MD

SC GA

AK HI

WV VA

AR MS AL

PA OH

EXEMPTION ENACTED

EXEMPTION PENDING

a deli, prepared foods counter, and a florist. More than 180 people invested - or one in seven residents. The market is not a huge moneymaker, but it offers a vital service to residents. “It’s more of an investment in the community and a way of life,” explains Luke Jaeger, who serves as chairman of the market. It’s much the same in Michigan, where several small companies, including a minor league baseball team, a maker space, and a spirits distiller, are preparing to take advantage of the MILE law. Chris Miller, an economic developer in Adrian, Michigan, who was a driving force behind MILE, views it as “a real and significant opportunity to have an impact on a local economy.” State crowdfunding has been slow to take off - a fact that critics have seized on. But that’s to be expected with a major change in law, and state officials are working to raise awareness and to educate investors and entrepreneurs. Federal regulators have thrown up some roadblocks, too, and there are kinks to be worked out. And yes, there

are risks: some people will lose money with crowdfunding, no doubt, just as they do in the stock market or any other investment category. But it’s a risk worth experimenting with. Just as Kickstarter has allowed independent artists to bypass the traditional gatekeepers like record studios and publishers to get their works produced, crowdfunding can help entrepreneurs with good ideas and promising growth potential get the funding that is denied to them by banks and VCs. Millions of Americans have moved their money out of big banks to credit unions and community banks; many may want to do the same with some of their investment dollars. As with gay marriage and marijuana, states will be the laboratories where the crowdfunding experiment plays out. “This is something states can take the lead on,” says Commissioner Ney of Kansas. “We want to show the more benevolent side of crowdfunding and that local, community offerings can be successful.” $

Amy Cortese is a journalist whose work has appeared in the New York Times, Business Week and other publications. Her book Locavesting: The Revolution in Local Investing And How To Profit From It, helped popularize the concept of community capital. Her latest venture, www.locavesting.com, is a hub for local investing news, education and resources.

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FINANCE

INTERVIEW WITH

MICHAEL SHUMAN The renowned expert on community economics and author of Local Dollars, Local Sense speaks about the benefits of investing locally, tips for new companies seeking financing, and how he really feels about venture capital.

Meghan French Dunbar: I was hoping you could give us your elevator pitch on the benefits of local investing. Michael Shuman: There are several rationales for local investing. From the perspective of a community, the more money that gets reinvested in local businesses, the more income, the more wealth, and the more jobs will be created. There is an overwhelming body of evidence that shows that the prosperity of a community is linked to the percentage of jobs in locally owned businesses. Putting one’s scarce investment dollars in businesses in one’s backyard is a way of ensuring that you get not just a rate of return, but your community also gets a healthy rate of return in terms of its tax base and overall quality of life. From the viewpoint of an investor, the virtues of local investing are that if you learn how to do it right, investors should be able to make more money. There is some good evidence - not perfect evidence, but good evidence - that locally owned businesses have higher profit rates than the Fortune 500, in which most of us invest. However, because we do not have sufficient marketplaces for putting money into local businesses, we are unable to take advantage of those higher profit rates. The third argument is really from the standpoint of local business. Local businesses themselves right now have an unfair lack of access to capital markets. They are under-lent to by banks and they are practically overlooked by equity markets. If we can get the capital markets to operate more efficiently for the local businesses that we care about and love, they will have a much easier time finding the financing that they need to expand and thrive. MFD: Building on that, if someone is looking to invest in their own local economy, where do you suggest that they start?

MS: Well, honestly, for probably 75-80% of the American public, the two most important local investments are: 1) to get out of credit card debt and stop losing money because that 25-30% per year in interest you pay on your debt leaves your community and, 2) to own where you live, because in almost any set of assumptions, the rate of return that you will get for your home or co-op unit or cohousing unit will be far superior to what you’ll get on Wall Street. As I said, I suspect for 75-80% of the American public, just doing those two things right will absorb almost all extra investment that they have, but once you get those things right, I think that once the JOBS [Jumpstart Our Business Startups] Act gets implemented, there will be a proliferation of websites and portals where you will be able to find local businesses looking for local capital. The mission of all these local investors will be to find those great businesses in their own backyards and ignore all of the rest. Maren Keeley: What advice do you have for small businesses that are seeking investment? MS: I think that is a really interesting question and, of course, it depends a lot on the sector, the community, and the stage the business is in. Generally speaking, I think it is still probably necessary for any entrepreneur to go out of their own pocket to get a good venture started. You can go out of your own pocket through credit cards or through your home equity or with the help of friends. Even though that is difficult, that is not a bad way of sorting out who has an idea that really is worth putting more money into and who doesn’t and it really focuses the entrepreneur on creating a reasonably small-scale sub-financing model.

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FINANCE

INTERVIEW WITH MICHAEL SHUMAN CONTINUED

“THERE IS NO SUCH THING AS A SOCIALLY RESPONSIBLE VENTURE CAPITAL FIRM. I BELIEVE THAT THE MISSION OF VENTURE CAPITAL IS TO DESTROY LOCAL BUSINESSES AND ALL OF ITS VESTIGES OF COMMUNITY CONNECTEDNESS.”

I think that during the tech boom a lot of what went wrong is that people with great ideas on paper never were able to implement or were never put to the test of asking, “Could this work in the marketplace on a smaller scale first?” I think it is a good first step for entrepreneurs to undergo that test. Once you have proven your concept, I think it’s worthwhile to make an assessment about where the best plausible sources of financing are. For some businesses that have very large and loyal customer bases, like a grocery store or a hardware store or a small manufacturing company that customers regard as really cool for what it produces, that kind of company could possibly raise its capital from its customers. I think that ought to be considered because it is a way of increasing visibility and getting your customers more deeply enmeshed in your business. For other companies, they may still want to look to the traditional sources of financing from a smaller number of deeper-pocketed individuals. What I would caution against is that, in my view, there is no such thing as a socially responsible venture capital firm. I believe that the mission of venture capital is to destroy local businesses and all of its vestiges of community connectedness, so I would never touch venture capital. I would also avoid getting into deep debt – modest debt is all right but not deep debt. I think most local businesses are pretty much up to their gills in debt right now and they are looking for alternatives. I would encourage businesses to think more creatively about royalty financing and about mixes of different kinds of investor classes – for example, maybe one thing you finance with crowdfunding and another thing you do with deep-pocketed individual investors.

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MFD: What do you see as the largest challenge facing this next generation of investors? MS: Well, if I can generalize, there are two challenges that I think are pretty common. The first is lawyers. I say this as a lawyer, because I think lawyers have been inculcated in a set of principles around securities law that are largely obsolete. In every state that is trying to do reform now, the lawyers are the one organized flaw that has to be overcome in order to enact the reform. And they implicate such silly things like, “There is no way that we can protect the investor unless the company pays hundreds of thousands of dollars for disclosure,” or they will say, “The unaccredited investor doesn’t have the common intelligence or sense to make investment decisions at their own risk.” Yet, they will let them freely lose their house at a casino. The whole system is so contradictory right now in terms of risk management. The second obstacle really comes down to our expectation that investments should be easy and that we can just automatically hand our money over to a stranger and then have them re-invest our money thousands of miles away from our community and deliver to us, by the time of our retirement, a consistent 8% per year rate of return. To me, that is a pure fantasy. Americans hopefully have woken up to the many biases and distortions that exist in the system that take advantage of that attitude. We need people to really start paying attention and learning about the great investment opportunities in their own backyard and to put a little bit more energy into using the tools that exist or the tools that will soon exist for them to put more money into those local businesses.

FINANCE

MK: What innovative local investment business models have you been inspired by, and are there any that you would like to see multiply or spread to other communities? MS: My favorite business model is Zingerman’s Deli, which is based in Michigan. They started as a small delicatessen. The first thing that happened with the deli is that they had to make a decision on whether they were going to franchise after ten years of business success and they decided against this for two reasons. The first was that they would probably lose all control if they went national. The second was that what they really loved about going to work every day was their local relationships. So, they looked systematically at the things coming into the deli and the things going out of the deli and they created businesses around them. They serve sandwiches on bread, so they created a bakehouse. They serve coffee, so they created a coffee roasting company. They serve ice cream and cheese, so they created a creamery. And then, on the other side, they said, “Well, we have great products,” so they created a sit-down restaurant called the Roadhouse. They said, “We’ve got great customer service,” so they created a training module for other local businesses. Zingerman’s now has nine independently owned businesses and they each have their own partnership. The partners collectively

Photo: Zingerman’s Deli

meet for decisionmaking once a week, for quality control purposes. The result of the model is that Zingerman’s now has sales of over 40 million dollars per year and it has created 550 jobs in the Ann Arbor economy. To me, that’s the way that economic development should work. In a given business, look at where it’s getting its inputs, find the value-adding opportunities, and try to make a map of different ways of building local self-reliance through that. To me, that kind of model, if it were practiced across the country, would put conventional economic development out of business. MK: I like the idea of seeing things as a system and building out the local economy that way. What advice do you have for communities for building their local economies? MS: Well, I think the starting place has to be to look at the leaks in your local economy. By leaks, I mean all of the areas where people living in the community are buying things from outside the community, because every unnecessary outside purchase means dollars are leaving your economy and having no economic benefit. Every investment outside of your community, rather than an investment in the businesses in your community, means that you are overlooking some way of building up the economy in your own backyard, to your detriment.$

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FINANCE

CROWDFUNDING AT A GLANCE

15 Million

$1.4 Billion

Number of people who visit Indiegogoâ&#x20AC;&#x2122;s website (a leading online crowdfunding platform) every month.

Amount pledged to projects through Kickstarter (a leading online crowdfunding platform) since the websiteâ&#x20AC;&#x2122;s inception.

$5.1 Billion Estimated amount of money pledged via crowdfunding in 2013.

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Crowdfunding - the process of raising money to fund a venture or project through multiple, small contributions from a large number of people.

89% Percentage of growth in the crowdfunding sector from 2012 to 2013.

17% Percentage of crowdfunding money raised in 2013 that went to businesses and entrepreneurial endeavors. 30% of all money raised went to social causes.

$90 Billion Projected size of the crowdfunding market in 2025.

FINANCE

FINANCING THE GOOD FOOD MOVEMENT EILEEN GORDON, CO-FOUNDER OF BARNRAISER, ON TACKLING THE CORPORATE FOOD PRODUCTION SYSTEM THROUGH CROWDFUNDING

BARNRAISER

is a crowdfunding community dedicated to powering the good food movement. Its goal is to collaborate with sustainable food artisans, farmers, educators, and community leaders to launch projects that reshape food systems by putting $1 billion in the hands of food innovators. Over 41 million Americans and their global counterparts make decisions based on health and sustainability. Barnraiser empowers those same people to connect with innovators, share their inspirational stories, and collectively fund their success. The campaigns on Barnraiser range from raising money to build a barn that would serve as both a community gathering space and facility to make and sell the farmâ&#x20AC;&#x2122;s homemade ice cream, to bringing a variety of nut-free, GMO-free, organic snacks to the marketplace, specifically targeting children with severe nut allergies. While the crowdfunding campaigns are all unique and varied, they are united in their commitment to a more sustainable food future. WINTER 2015

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“

I wanted to help get money into the hands of the farmers, food artisans, and community leaders who are helping to bring sustainable, humanely farmed, pesticide-free food to our markets and tables, which is why I developed Barnraiser.

”

Meghan French Dunbar: Barnraiser emphasizes telling the stories of the people who are changing the way we eat. What is the story behind Barnraiser? How did you develop this idea? Eileen Gordon: I was inspired to develop Barnraiser in large part because I was discouraged by the dominance of the large-scale corporate food production system in the United States, and wanted to help inspire people to create a different food future. My initial venture into this idea occurred when my husband, Michael Chiarello, and I partnered with Connolly Ranch to develop Dirt to Dine Adventure Camps. After the camp launched and gained success, I asked myself, “What is the bigger picture here?” In my mind, the big idea was to help provide a radical overhaul of the economic factors that affect modern agriculture. I wanted to help get money into the hands of the farmers, food artisans, and community leaders who are helping to bring sustainable, humanely farmed, pesticide-free food to our markets and tables, which is why I developed Barnraiser, an online crowdfunding source for food innovators across the country. Maren Keeley: What has been your biggest success so far? EG: Our biggest successes so far have involved seeking out, presenting, and funding the most innovative and viable projects for Barnraiser. We were excited to support longtime California organic agriculture expert Amigo Bob Cantisano in his campaign to raise money to create an heirloom “mother” orchard of fruit and nut trees that are drought and pest-resistant. This type of project is especially important given California’s current drought. Additionally, the Falling Fruit campaign, which helped to develop a mobile app for Falling Fruit’s collaborative urban food sources, draws attention to the possibilities of uniting tech innovations with food issues. MFD: What advice do you have for other entrepreneurs looking to launch their own businesses?

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FINANCE

EG: If you want to increase your odds of success, base your business on something you’re passionate about. It’ll be easier to put in the long hours and go the extra mile when you love what you do. Otherwise, what’s the point? MK: As one of the leaders of Barnraiser, what qualities do you think are most important for being a quality leader and what advice do you have regarding leading a team? EG: In order to provide quality leadership, you must also practice quality listening and communication skills. By actively collaborating with your team and listening to their ideas, you can build a stronger and more robust environment for growth within your business.

MFD: Barnraiser places a lot of emphasis on community. How do you build a strong community within your business and why is this important? EG: Strong community building within the business environment can be seen in small daily moments such as shared lunches or larger moments such as off-site field trips to collaborate with fundraising partners, like visiting Rob from the Napa Valley Bee Company (who is developing a local hub for information on sustainable beekeeping). By providing opportunities for community building, we not only create strong ties within our team, but reflect the very philosophy upon which we’ve built our business, which is to provide community support to lift up and launch important ideas and innovations. $ Photo: Barnraiser

“If you want to increase your odds of success, base your business on something you’re passionate about. It’ll be easier to put in the long hours and go the extra mile when you love what you do. Otherwise, what’s the point?”

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FINANCE

COMMUNITY SOURCED CAPITAL Transforming the finance sector, one local investment at a time $50

$50

$50 $50

$50

$50 $50 $50

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ommunity Sourced Capital’s innovative investment model helps small businesses borrow money directly from people in their own communities through an online lending platform that allows businesses to borrow between $5,000 and $50,000. By selling what they call “Squares” or $50 chunks of a larger loan intended for a business in a specific community, the company has been able to provide approximately $600,000 in capital through 38 loans since inception. More than 3,000 individuals have participated in this unique platform by helping to fund loans and, currently, almost one-third of that $600,000 total has already been paid back. It’s an inspiring approach to facilitating local investment and one that is gaining traction. We spoke with co-founder Casey Dilloway.

Meghan French Dunbar: Tell us the story of how Community Sourced Capital started. What was the inspiration behind this idea and at what point did you make the decision to really go for it? Casey Dilloway: The inspiration was a question: how do we help capital move toward real value? That’s a loaded statement because “real value” can have lots of different interpretations. It was less about how to put our agenda forward in funding businesses we think should exist, and more about opening up the opportunities for businesses to access a new source of funding and people in their community to have a say in whether their money should be part of funding it. It’s built into our motto: “Fund the world you want to live in.” MFD: What benefits (beyond monetary) do people get from investing in their own communities? CD: There are so many reasons to invest in our own communities, and there is a fair amount of research that shows the positive outcomes from doing so. Increased economic opportunity and increased civic engagement are two fairly obvious benefits of investing in one’s community. The other benefits might take a while to emerge, but that’s the thing with trying to influence a system as big as a financial or 52 |

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economic system: change may not happen overnight. I think anyone working on economic systems understands that. It’s part of our job to help our peers understand that. If we want to see communities thrive in the long run, we have to think of our investments that way, too. MFD: What is one of your favorite success stories to date? CD: My favorite success story is a loan made to a hotel in Long Beach, Washington. They borrowed about $19,000 from their community to put a solar hot water heater on their roof. They installed the project and repaid the loan within a year. Then they took on a second loan to do solar photovoltaic and 75% of the lenders involved in the first loan came back to help fund the second one. That’s a really cool case of a business accessing something that looks more like a community line of credit. They built a financial relationship with hundreds of people in their community, they took on the responsibility of paying them back, and their community said, “Yes!” to helping finance the business again. MFD: It doesn’t appear that you have to be an accredited investor to participate and become a “Squareholder.” Is this correct and, if so, how does this work with SEC [Securities and Exchange Commission] regulations?

FINANCE

CD: We set out to create something that everyone could participate in, which meant that, given the current SEC regulations, we could not offer formal investment opportunities to the public or generate a financial return for anyone lending money to small businesses. We get to do what we do because we use zero-interest lending, which we think is essentially the act of sharing money. The regulations that have been put in place by the SEC and other government agencies are designed to protect investors from getting involved in fraudulent investments. However, the cost for a business to prove that it is not fraudulent is really high; the regulations required make it hard to raise small sums of money and probably a lot of investments in small businesses are done offline, unbeknownst to the SEC. When things like Kickstarter came along and started doing fundraising quite literally “online,” it got people thinking about how to make investments “online,” as well. I don’t think anyone has it totally figured out yet, and the folks at the SEC aren’t making it easy to figure out either. It’s another one of those big system changes that will take a while to figure out. In the meantime, we’re really happy with the progress we’ve made with our zero-interest model. Maren Keeley: You work with startups and small companies all the time. What advice do you have for someone who is thinking of starting his or her own business? CD: Surround yourself with people who have done something similar and ask them lots of questions. Don’t take advice just because someone gave it to you, but listen and be open to challenging your understanding of your business. At the end of the day, follow your heart. And the more people you can find who see the vision you hold in your heart, the more helpful their advice will become. MFD: What aspect of Community Sourced Capital are you most proud of? CD: I’m really proud of the conversations we have started around realizing new possibilities for finance. We recently received a Crosscut Courage Award [a Seattle-based award honoring the most courageous citizens in the Northwest] for

business. We’re in a tough industry for innovation, because most of the innovation in the finance industry is focused on making as much money as fast as possible. To challenge that paradigm does take courage, but it’s worth it. I’m not just proud of my team for being part of this courageous company, I’m proud of the community we have grown that is taking a chance on this vision. We’ve been growing a community of banks, credit unions, CDFIs [Community Development Financial Institutions], and thousands of community members who all support us. How great is that?! MK: Have you seen any patterns regarding the types of companies that are most successful in raising funds through Community Sourced Capital? CD: Businesses that are engaged in their communities are most successful in accessing capital from their communities. That might mean that they have a brand people know about, or the owners of the business are accessible to the average customer, or the company itself is fun and friendly and people like to frequent it because they feel more alive when they do (hey, I feel more alive at certain coffee shops). These are a few community attributes that make some businesses more capable of asking people to lend them money. But then again, I tend to think that community-oriented businesses are more likely to be successful in general. MK: What advice do you have regarding leadership and building a cohesive team? CD: Build a shared vision early on. If you build a team that does not have that shared vision - and by team I mean everyone, including co-workers and investors and partners - then it’s only a matter of time before it becomes an issue that’s large enough to destroy a company (and friendships, too). Leaders can help bring that shared vision out of people, and they hold people accountable if things get off track or if the vision gets too blurry for anyone to see the road ahead. We try to do this with our small business borrowers, too. We ask, “What’s your vision for your business and does your community see it and share it?” That adds just a little more power behind our motto, “fund the world you want to live in.” $ Photos: Community Sourced Capital

“Fund the world you want to live in.”

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IMPACT INVESTING

IS YOUR INVESTMENT PORTFOLIO KILLING THE PLANET? BY DALE WANNEN

FINANCE

AS I WAS DRIVING INTO A WHOLE FOODS’ PARKING LOT LAST WEEK, I couldn’t help but notice how many Priuses were in the parking lot. Walking through the crowded aisles, the blaring signs of Organic and GMO-free labeling decorated everything from produce to potato chips to pickles. And then, when I got home, I noticed that my wife was using non-toxic cleaning products and our baby girl was dressed in a fair-trade organic cotton onesie. THIS GOT ME THINKING, “ARE PEOPLE DOING THE SAME WITH THEIR INVESTMENT PORTFOLIOS?” The idea of Sustainable and Responsible Investing (SRI) isn’t a new one. It has been around for decades and really came to life during campaigns to divest from companies that were involved in the apartheid movement of South Africa during the 70s and 80s. Today’s big movement is to divest from companies involved in the fossil-fuel industry. This ethical element of investing is gaining serious interest with about one out of every eight dollars now following some sort of social or environmental mission. So, what exactly does it mean to be an “impact” investor? Below, I have outlined the three pillars of SRI.

ENVIRONMENT, SOCIAL, AND GOVERNANCE (ESG) SCREENING The first item, ESG screening, basically screens out companies that don’t align with an investor’s values. Do you cringe when you open your brokerage statement to see polluting oil companies and large greedy banks at the top of your holdings? If so, then you may want to consider shifting into SRI. If corporate governance equality is a concern, then a company with an all-male board of directors may not fit your criteria. On the flip side, if a company is using all organic and grass fed beef in its supply chain, then it may be a consideration for your portfolio. ESG screening is really at the core of what sustainable investing is all about. It gives the investor the chance to really be proactive about what is in his or her portfolio and at the same time not relinquish any potential for long-term gains. In many cases, most of us own the mutual funds that hold the individual stocks. If that is the case, learn more about the funds. In the prospectus of the fund, there is a list of every single stock position along with an investment philosophy. Because you are a paying customer of these fund families, you have every right to contact them to ask if they are considering the integration of any environmental or social screen within the fund. There are a plethora of sustainable mutual funds being offered in the world of investing. If one has a retirement plan at the workplace, the HR manager may be able to answer questions on what options there are for sustainable investing. One major misconception is that you have to give up returns in this type of investing. This misconception was something that came up decades ago during the major movements to alternative energy stocks. Today, studies are now showing that companies that are integrating sustainability into their businesses may be better suited to manage risk and at the same time reap rewards on Wall Street.

SHAREHOLDER ACTIVISM The second item, shareholder activism, is simply a more direct and organized way of addressing a company and its executive team on issues that the company may not be handling well. When investors purchase stock in a company, they are now owners of this entity. A shareholder has the right to file a shareholder resolution. These proposals can bring forth major positive changes at an organization. Some examples include the implementation of an electronic recycling and takeback program at Best Buy, the use of cage-free eggs at Denny’s restaurants, and questioning of executive compensation packages at Oracle. About 400 shareholder proposals make it onto the proxy statement of major S&P 500 companies every year and support for these resolutions is at an all-time high.

“TODAY, STUDIES ARE NOW SHOWING THAT COMPANIES THAT ARE INTEGRATING SUSTAINABILITY INTO THEIR BUSINESSES MAY BE BETTER SUITED TO MANAGE RISK AND AT THE SAME TIME REAP REWARDS ON WALL STREET.”

IMPACT OR COMMUNITY INVESTING And thirdly, impact or community investing is a way to direct investment dollars toward what may be considered more impactful avenues. There are many vehicles that will take your investment dollars and support enterprises in education, agriculture, and ecological stewardship. They, in turn, may give a return to the investor. This capital may be in a range of forms, including equity, debt, working capital lines of credit, and loan guarantees to organizations throughout the world. Examples of projects in recent decades include investments in microfinance, community development finance, and clean technology. Some investors are driven by their personal values and goals, their institutional mission, or the demands of their clients. Some investors want strong financial performance, but also believe that their investments should be used to contribute to advancements in social, environmental, and governance practices. Evidence is starting to show a strong link between ESG and financial performance. And let’s face it, if you can screen the “evil-doers” of the world out of your investments, and at the same time not sacrifice your returns, then isn’t it a win-win?

Dale Wannen is President of Sustainvest Asset Management, an independent investment advisory firm based in Northern California that specializes in socially and environmentally responsible investing, helping clients meet their financial goals without having to sacrifice their morals. He can be reached at dale@sustainvestmanagement.com. www.sustainvestmanagement.com WINTER 2015

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SOCIALLY RESPONSIBLE INVESTING OVERVIEW SUSTAINABLE AND RESPONSIBLE INVESTING IN THE UNITED STATES 1995-2014 $ BILLIONS

$7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 1995

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ESG INCORPORATION ONLY SOURCE: US SIF FOUNDATION

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OVERLAPPING STRATEGIES

Spotlights on the most innovative ventures working in sustainable design.

INNOVATION & DESIGN

L O O W SOLID R I A H C O T P E E FROM SH

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INNOVATION & DESIGN

INTERVIEW WITH CO-FOUNDER, HANNAH FLOYD UK-based Solidwool has created a sustainable alternative to injection-molded polymers and fiberglass out of sheep wool. The companyâ&#x20AC;&#x2122;s wool composite, using wool as the reinforcement and bio-resins as the binder, is both beautiful and durable. By combining modern manufacturing techniques with natural materials, the company has successfully designed a replacement for fiberglass that also eliminates waste and helps to support the local farming industry. Through innovative design, Solidwool has found a way to address multiple problems, while simultaneously creating a high-value product that can serve many purposes. Meghan French Dunbar: What is the story behind Solidwool? Hannah Floyd: My husband Justin and I created Solidwool. In 2012, we were both looking at ways of creating our own business. We wanted to use our design skills to do good and felt our current work didnâ&#x20AC;&#x2122;t offer enough value. Both of us have creative backgrounds - Justin is a product designer and I worked in marketing. We knew that design is a force for good and we wanted to see if we could use design to create jobs and bring some manufacturing back to our hometown of Buckfastleigh, on the southern edge of Dartmoor National Park in southwest England. Our small market town had once been a thriving part of the woolen industry, but this industry left the town over time as the mills moved up north and the carpet industry moved abroad. We found that the sheep farmers in the area no longer had the same demand for the coarse fleeces of their moorland sheep. So we started with wool. With much experimentation and play, we finally came up with the idea for Solidwool. Justin had worked with designing

composite products in the past and so he was able to apply his knowledge to developing the material we created. MFD: Why is Solidwool considered sustainable or more environmentally friendly? HF: Our aim is to create a fully natural composite material that is tough, long-lasting, and beautiful. The coarse fleeces from the breeds of sheep that live in the upland areas of the UK that we use have diminishing market potential. These fleeces once found use in carpets, rugs, and blankets, but with the modern day obsession with finer grades of wool and the decline of these industries in the UK, they are becoming surplus. We are finding a high-value use for a material that is a by-product of farming the uplands areas of the UK. You could say we are finding a high-value use for a waste material. A vision of ours is that, as our buying capacity grows, we will be able to buy from and work with farmers that we feel farm in a sustainable way, thereby promoting methods of farming that are more friendly to the environment. Also, we use a bio-resin as the binder. Traditionally, the Solidwool co-founders Hannah and Justin Floyd with the Solidwool Hembury Chair

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INNOVATION & DESIGN

resins used in manufacturing composite materials are 100% petrochemical and have varying levels of toxicity. They have a significant carbon footprint in their manufacture and emit potentially harmful toxins during use. The toxicity is locked up when they are fully cured (but, what do you think that “new car interior” smell is?). Of course, these resins are also not pleasant to work with. The resins we currently use can be classed as bio-resins. The resin used in the first generation of Solidwool products has roughly 30% bio-based renewable content. Sourced from the waste streams of other industries, such as wood pulp and bio-fuels production, this environmentally conscientious resin manufacturer claims a minimum 50% reduction in the carbon footprint of the manufacturing process as compared to traditional resins. Plus, the company’s green chemistry eliminates those harmful toxins. Our resins are some of the most expensive available (a 30-50% increase in price over conventional resins systems), however, the company we work with is at the forefront of creating environmentally friendly resins. Although our resins are not yet 100% natural, the only way for this to become 60 |

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a reality is to support those who are innovating in this field. MFD: What products do you make and what are you developing next? HF: We believe in creating beautiful, soulful products that are designed to last. The Solidwool line currently includes the Hembury Chair. We designed this product as a showcase for the material. It is inspired by the Eames Plastic Side Chair, which was originally manufactured using fiberglass in the 1950s. For this chair, we are using fleece from the hardy Herdwick sheep of the Lake District. It produces a beautiful aesthetic when used as Solidwool, giving a dark grey composite with the lighter hairs standing out. The chair was showcased at Milan Design Week in April 2014 to much interest. Following this chair, we are looking to further develop our range of Solidwool housewares in 2015. We will also be developing our Solidwool collaborations, making the material available to like-minded companies should they wish to include Solidwool products in their own lines. We want to work with companies with stories that matter - stories of passion, craft, and purpose.

We are currently working on three collaborations. First, we are manufacturing photo calendars made out of Solidwool for a Colorado-based company, Artifact Uprising, as part of its “materials matter” holiday shop. Second, Blok Knives is using Solidwool for the handles of its hand-crafted kitchen knives. Finally, Fan Optics, a contemporary eyewear company, is including a set of Solidwool frames in its spring/summer 2015 collection. MFD: How do you envision this concept scaling and growing? HF: We feel that Solidwool has a huge amount of potential applications. We will continue to develop our own lines of furniture and housewares, as well as different versions of Solidwool materials and manufacturing methods. We have our own facility set up for design, manufacturing, and development and are seeking collaborations with likeminded businesses who can see a place for Solidwool in their product lines. These collaborations will allow us to have greater buying power for the raw wool material and help us to achieve our goal of supporting sustainable farming methods. Photos: Solidwool

WILL YOU BE EATING INSECTS BY 2020?

INNOVATION & DESIGN

WHAT ROLE CAN DESIGN PLAY

IN ENSURING FUTURE GLOBAL FOOD SECURITY? INTERVIEW WITH JONATHAN FRASER ENTO CO-FOUNDER London-based food start-up Ento is experimenting in this dynamic space by designing sustainable food made with edible insects.

Edible insects? Yes, you read that correctly and if you reacted skeptically, that is exactly why we need innovators like Ento to help design this protein-packed food source in a way that makes it a little easier for us to swallow (pun intendedâ&#x20AC;¦sorry).

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Meghan French Dunbar: What is the story behind Ento’s creation? How did this innovative company get started? Jonathan Fraser: Ento began as an academic project that our founding team completed whilst studying for our masters degrees at the Royal College of Art and Imperial College. We were looking into the problem of global food security - by 2050 food demand is set to double and agricultural productivity cannot keep up - and we came across eating insects as an exciting potential solution. Insects are much more efficient to farm than other sources of meat and are very healthy and tasty, but the challenge of social acceptance was what really interested us. So we created the Ento brand originally as part of a concept strategy for how we could introduce insects to the western diet, but it received such a great response that we realized we were onto something! After graduating, our team started working on building Ento from an academic project into a commercial reality. MFD: What products does Ento make? JF: The Ento brand and our foods are designed to overcome the negative preconceptions surrounding insects as food by presenting insects as an exciting, healthy food of the future. We make a range of dishes that present insects in familiar and acceptable

formats. We know the idea of eating insects is intimidating for some people, so our foods are designed to be visually appealing as well as delicious. Some of our current recipes include: grasshopper and potato croquettes, honey caterpillar pancakes with cream cheese, and cricket pâté. MFD: In what way are these products considered more sustainable? JF: Feed efficiency is the primary reason that insects are more sustainable than other sources of meat - they produce more protein for the same amount of feed that you would use for traditional livestock. Ten kilograms of feed can produce nine kilograms of grasshopper meat, but only one kilogram of beef. Insects can also be farmed at a higher density, so they require less land, and they also need less water. MFD: Where can people find Ento products? JF: Unfortunately, our products are not yet available to purchase online or in stores. However, we are currently in the build-up to a crowdfunding campaign, which will allow us to launch our first product and reach a lot more customers, and we Photos: Ento plan to announce the campaign in early 2015.

“We were looking into the problem of global food security by 2050 food demand is set to double and agricultural productivity cannot keep up - and we came across eating insects as an exciting potential solution.”

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Could waste from the fishing industry be the future of fashion?

INNOVATION & DESIGN

CONSCIOUS LEATHER Depending on who you ask, leather can have a negative connotation. Not only are some animals bred and killed specifically for their hides, but the tanning process often uses toxic chemicals and a lot of energy. At its worst, it is an incredibly wasteful, inefficient, and toxic process all in the name of fashion.

THE GOOD NEWS? Innovative companies are stepping up to the plate to design conscious leather alternatives. One such company is Atlantic Leather. Based on a centuries-old tradition of making shoes out of fish skin, this Iceland-based company is creating leather out of fish. Yes, fish leather. It sounds hard to believe, but this cutting edge company has developed a process to make a beautiful, sustainable alternative to traditional leather that utilizes the by-product, or waste, from the fishing industry. Using just four species of fish - salmon, wolfish, cod, and perch - the company produces durable leather in multiple different colors and finishes (shiny, matte, waxy, and metallic) to create over 1,400 different variations of the leather. Atlantic Leather has even developed a machine-washable salmon leather (the first of its kind in the world).

SUSTAINABILITY All of the fish skin used in the production of the leather would have otherwise been discarded and the company prides itself on never using any hides from animals that were bred for their skin. If using only waste-products to create the leather isnâ&#x20AC;&#x2122;t enough, the company takes its sustainability efforts to the next level by using geothermal heat and hydroelectric electricity to power its operations. Furthermore, it has developed a tanning method that uses far fewer chemicals than traditional leather manufacturing to reduce the toxicity of the process, and it offers vegetable and mineral tanning options that use natural substances to tan the leather. Brands such as Nike are beginning to take notice of this inventive Icelandic operation to provide a more sustainable alternative to the leather used in its own products and we hope itâ&#x20AC;&#x2122;s just the beginning.

Based on a centuries-old tradition of making shoes out of fish skin, Icelandbased Atlantic Leather is creating fish skin leather.

Photos: Atlantic Leather

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INNOVATION & DESIGN

CAN MUSHROOMS REPLACE PLASTIC? Yes, and so much more.

esign company Ecovative, based in New York, is testing the limits of exactly what its high performance biomaterials, grown from mycelium (the “roots” of mushrooms) and agricultural waste, can do. To date, the company has developed materials that can replace plastic foam like Styrofoam and engineered wood (also known as composite wood). Ecovative’s Mushroom Packaging has already displaced petroleum-derived materials in tens of thousands of packages with homecompostable alternatives and the company is just getting started.

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ECOVATIVE CO-FOUNDERS EBEN BAYER (LEFT) AND GAVIN MCINTYRE IN THE COMPANY’S PRODUCTION FACILITY Photos: Ecovative

INNOVATION & DESIGN

HOW ARE ECOVATIVE PRODUCTS BETTER FOR THE WORLD? Companies like Dow and Dupont have been leading the way in material design for the past 100 years by turning petroleum and natural gas into plastics and other materials. These materials can take millions of years to break down and are filling up our landfills and waterways. Unlike plastics and foams, Ecovative’s materials are bio-based, sustainable, and are actually good for the environment. When customers receive a package that utilizes Mushroom® Packaging, they can compost the packaging at home or have it sent to an industrial composting facility. While plastic foams will last forever in a landfill, Mushroom® Packaging will return nutrients to the soil. Aside from being rapidly renewable, these materials achieve a Class A fire rating without any chemical fire retardants, and have low to no VOC emissions.

ECOVATIVE’S MUSHROOM® PACKAGING CRADLE WINE SHIPPER. MUSHROOM® PACKAGING WAS THE COMPANY’S FIRST COMMERCIAL OFFERING, AND WAS LICENSED TO SEALED AIR NORTH AMERICA IN 2012.

WHAT CAN ECOVATIVE PRODUCTS REPLACE? To date, Ecovative has commercialized three products: Mushroom® Packaging, a plastic foam replacement for protective packaging; Myco Board, which is an alternative to engineered woods like particleboard and fiberboard; and Grow It Yourself kits, which are intended to promote sustainable design and products by getting its material into the hands of the public. The company’s Research and Development team is continually researching new applications for this revolutionary biomaterial. For instance, they’re exploring applications for the surfing and automotive industries. Looking further into the future, they have bold ideas for “smart” materials for circuitry and even medical implants that leverage the self-assembling nature of mycelium, along with its biocompatibility characteristics. The first application of this research will likely be something along the lines of a mycelium-based “bone” custom molded into the exact shape your body needs, such as a hip or knee. It’s inspiring to imagine the possibilities if humans replaced plastic and other synthetic materials with biocompatible materials like Ecovative’s.

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INNOVATION & DESIGN

CONSCIOUS COMMUNITY by design

row Community on Bainbridge Island, Washington, was developed with the goal

of being the first residential community in North America endorsed by the One Planet Living initiative. Grow, which is the largest solar community in Washington State, focuses on promoting health, happiness, and community through a mix of highly energy efficient singlefamily homes and multi-family rentals in a community setting complete with community gardens, car and bike sharing, edible landscaping, and proximity to a major metropolitan area. Itâ&#x20AC;&#x2122;s an inspiring model of community development and one that we hope will begin to scale throughout the rest of the country.

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We sat down with Grow Community’s Project Manager and Sustainability Expert to learn more. Maren Keeley: How did the idea for Grow Community emerge? Greg Lotakis: The former President of Asani Developments, Marja Preston, knew that a property held by a group of investors was a wonderful location for a walkable community close to Winslow [the main town on Bainbridge Island] and the Bainbridge-to-Seattle ferry terminal. She sat down with friends and asked the question, “If you could design the perfect neighborhood for your family, what would it look like and what would you do?” With that question in mind, we discovered and used the One Planet Living principles to guide the development toward deep sustainability. As our community discussions evolved, we began working to create a new neighborhood that was also

intergenerational, with homes that we hoped would work for residents at different times in their lives. It helped us imagine a place that could be enjoyed as a grandchild, as a grandparent, and at every age in between. MK: What are some of the innovative aspects of the community? GL: We have a lot happening in one development. At the same time, we like to say that we took many existing ideas and mashed them up in one place. To be more specific, we wanted people to check the sustainability box without too much

effort and focus on other important things in their lives. The most innovative aspects of the community include: HEALTH AND EFFICIENCY When residents purchase a home at Grow Community, they know it has been designed and built to be as healthy and energy efficient as we can make it. We have seen a 50% or more reduction in energy use in our homes as compared to the average Bainbridge Island home. RENEWABLE ENERGY In our first phase, we were able to create a team that included a local solar financier, a local solar products manufacturer, and a local

“IF YOU&COULD INNOVATION DESIGN

DESIGN THE PERFECT NEIGHBORHOOD FOR YOUR FAMILY, WHAT WOULD IT LOOK LIKE AND WHAT WOULD YOU DO?”

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INNOVATION & DESIGN

solar installer to provide a simple solar package for each homeowner. With local incentives, each homeowner has been able to take advantage of this opportunity and pursue their own energy generation. Now the solar program is being spread into Washington State through our partner, Simple Solar, and Grow Community, which is the largest solar community in Washington State, is the example of how well it has worked. Grow residents are near or at net-zero energy consumption compared to production in a calendar year! TRANSPORTATION Knowing that personal transportation has a large carbon impact, we work to support the community to reduce this impact through bike storage, bike sharing, and creative thinking around community car sharing so our residents can reduce their vehicle ownership to one vehicle per home. FOOD Community garden spaces are located in several areas to draw people outside and create a connection between homes. Edible landscaping is found everywhere - it’s not just about food in the garden, but having it all around us so we’re reminded that abundance can be provided in many ways. MK: I see that you are the first One Planet

Living Community to build residential homes in North America. Can you tell us more about this? GL: Each home at Grow meets the Built Green 5 standard, which is a local green building certification. While we appreciate how various green building certification programs have furthered efforts to make green building more common, most remain focused on buildings and sites. Our decision to use One Planet as a framework was made because of its focus on ways to build community. It felt more holistic. One important aspect of using these principles was the community process that we followed to allow for an integrated voice in our early design phases, as well as having members of the community co-author our Sustainability Action Plan. One of the principles we really try to embrace is Health and Happiness. We see this at the center of every principle of an interconnected system. MK: What aspect of this community are you most proud of? GL: Ultimately, all the “cool” around sustainability means nothing without community. Really, Grow Community Bainbridge is about creating opportunities for residents to support each other in the pursuit of One Planet Living. Being able to

walk across your path and connect with your neighbor over a glass of wine, share time in the garden with your grandchild, or watch kids and dogs play in the open space at the end of a day makes Grow special. It all comes back to health and happiness. MK: Do you feel this idea can scale and be brought to other communities in the US? GL: We truly hope so. There are so many great builders and innovators in green building that now it’s time to be thinking large-scale. Too many neighborhoods have been developed for one particular moment in our lives, lack energy efficiency, or allow vehicles to disconnect us from one another. Why do we make places for our elders that are “away” from where we live? Why do we make family homes in communities without including homes for singles or downsizers that wish to continue to live within a community? Why do we create developments that are strictly “for sale homes” and not include rental opportunities for those that may not be able to afford or qualify for home loans? Given our recent recovery from the mortgage crisis, an aging population, and rising energy costs, we need to begin changing the conversation about the places we create and their impact on our planet and our lives. Photos: Grow Community

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INNOVATION & DESIGN

AST FEBRUARY,

as Olympic athletes and spectators from around the world packed their suitcases for Sochi, the Russian Olympic Committee was backpedaling, defending allegations of illegally dumping construction waste and polluting the nearby water supply. Months later, Brazil, host of the 2014 FIFA World Cup, was criticized for demolishing entire favelas [also known as slums], destroying communities, and displacing thousands of local residents in order to build parking lots. Meanwhile, Major League Baseballâ&#x20AC;&#x2122;s San Francisco Giants have been playing under high efficiency lights powered by solar panels for the past seven years. The Portland Trail Blazersâ&#x20AC;&#x2122; impressive waste diversion system harvests latent utility by recycling and composting 80% of discarded items at its stadium. Numerous soccer, baseball, and football teams are addressing local water issues by using reclaimed water to irrigate their playing fields. From soccer to snowboarding to baseball, the sporting community is letting it be known that the biggest fans want to cheer for those who not only excel at their sport, but also demonstrate social and environmental prowess off the field. So why are the four largest leagues in American sports celebrating their sustainability achievements while international events like the World Cup and the Olympics are demonized for intrusive and destructive practices? One might look to the built environment for answers. All of the teams that play in the MLB, NBA, NFL, and NHL have one thing in common: they own the permanent facilities in which they perform. If the San Francisco Giants invest millions of dollars in a new solar array, they can count on benefitting from reduced electricity costs for the next few decades. Unfortunately, the same is not true for temporary events with changing venues.

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SPOTLIGHT ON THE 2015 FIS ALPINE WORLD SKI CHAMPIONSHIPS: Building Long-Term Sustainability Into Short-Term Sporting Events BY MEGAN MCDONALD

Photo: Jack Affleck

INNOVATION & DESIGN

“From soccer to snowboarding to baseball, the sporting community is letting it be known that the biggest fans want to cheer for those who not only excel at their sport, but also demonstrate social and environmental prowess off the field.” When temporary events require new construction, there is much to be learned from the myriad of sports teams who provide valuable case studies on using customizable resources for optimizing water and energy efficiency within their stadiums and facilities. More importantly, it behooves event hosts to look past the major league teams and learn from other, slightly smaller temporary events. These smaller temporary events demonstrate how new construction can be minimized and how the existing built environment can be used to host world-class events that deliberately bolster the local community. This February, a learning opportunity presents itself when the FIS World Alpine Ski Championships descend upon Vail and Beaver Creek, Colorado. For two weeks, the small mountain towns will be flooded with 700 athletes representing 70 countries, nearly 2,000 journalists, and tens of thousands of spectators, all requiring warm buildings in which to eat, sleep, and watch the events.

Without constructing a single new hotel or restaurant, the Vail Valley will utilize the existing built environment to provide almost all the services needed for the event. It would be misleading to suggest that the World Championships didn’t require some construction. The summer of 2014 was humming with activity on the Birds of Prey racecourse in Beaver Creek where bleachers were erected; a two-story VIP finish stadium was constructed; and the adjacent Red Tail Camp restaurant was renovated (and renamed “Talons”). With careful planning and a long-range vision, these facilities were designed to be as versatile and resource-efficient as possible.

BUILDING MULTI-PURPOSE STRUCTURES Vail Resorts hosts a wide variety of events at its 11 mountains around the country, including the Burton US Open, the GoPro Mountain Games, and Tough Mudder obstacle races. Considering the needs of these diverse events, Vail Resorts has strategically designed multi-purpose structures that will be useful in the future. During large events, portions of the new Talons restaurant can be easily converted into a VIP area, athlete changing rooms, and full media headquarters hardwired with new phone, cable, and Wi-Fi capabilities.

DESIGNING FOR REUSE Temporary structures for the World Championships, like the bleachers and finish stadium, are engineered to be carefully deconstructed at the end of the winter. Portions of the modular building will be stored and reused to construct right-sized facilities for next year’s annual FIS Birds of Prey race. Other resources, such as timber and plywood, will be reclaimed by mountain operations and repurposed into furniture, signs, and structures used around the mountain.

ENGAGING LOCAL BUSINESSES IN THE PROCESS While Vail Resorts’ crews were busy on the hill, just up the valley businesses from across the county gathered at the Walking Mountains Science Center to

participate in the new Actively Green 2015 certification program. With an ambitious goal to certify 100 businesses before the first racer hits the course, the program, which was designed specifically for the World Championships, has spent the past year engaging local businesses in a sustainability self-study that centers on their built environments. As Kim Langmaid, Vice President of the Walking Mountains Science Center describes it, “the focus of the Actively Green 2015 program begins with buildings. Organizations collect baseline data on facility operations and, from there, the Actively Green 2015 framework supports the business’ employees in creating a culture of sustainability within the organization.” As a result, “the built environment of the entire community becomes more efficient.” If successfully executed, the Vail Valley hopes that the 2015 World Championships will build the area’s reputation as a sustainable destination. Every hotel, restaurant, and retailer proudly displaying their Actively Green 2015 certificate during the event creates a lasting impression on visitors. Visionary leaders like Langmaid hope that, over time, “our community will become a globally recognized sustainable destination and that event and conference producers and travelers who hold the same sustainability values will choose to come to the Vail Valley because it supports them in their own corporate social responsibility and sustainability initiatives.” By maximizing the use of existing infrastructure and collaborating with local businesses and nonprofits, the Vail Valley is demonstrating how an entire community can join forces to host a world-class event for tourists and leave a lasting legacy for the local community.

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Educational stories, tips, and advice from the top sustainable companies working in the energy sector.

ENERGY

THE AMOUNT OF ELECTRICITY GENERATED BY SOLAR AND WIND RESOURCES

IS GROWING FASTER YEAR-OVER-YEAR THAN ANY OTHER RESOURCE

41%

In 2013, new solar generation capacity grew by 41%.

31%

From 2009 to 2013, new wind generation capacity grew by an average of 31% annually.

But, in 2013, only 4.13% of electricity was generated by wind energy resources and a mere 0.23% of electricity was generated by solar resources.

2013 ELECTRICITY GENERATION IN THE U.S. BY ENERGY SOURCE

Coal 39% Natural Gas 27% Nuclear 19% Hydropower 7% Other Renewable 6% Biomass 1.48% Geothermal 0.41% Solar 0.23% Wind 4.13% Petroleum 1% Other Gases < 1%

80%

The National Renewable Energy Laboratory recently concluded that renewable energy technologies that are currently available today, in combination with a more flexible electric grid, could supply 80% of US electricity demand in the year 2050. WINTER 2015

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ENERGY

ENERGY TRENDS THAT WILL CHANGE THE BALANCE OF POWER BY DAN UPHAM, WRITER AND EDITOR, ENVIRONMENTAL DEFENSE FUND

Like the colonist uprising 241 years ago, it’s fueled by a need to stand up against an outdated system that threatens our way of life. It’s a battle over the future of American energy and our antiquated electric grid. And it centers around the way consumers, utilities, and investors interact with this vast network of power lines, substations, and plants. As Cheryl Roberto, who leads Environmental Defense Fund’s Clean Energy program, notes, “The U.S. is poised to spend around $2 trillion over the next two decades replacing our outdated electric infrastructure.” That’s a lot of coin and a tremendous opportunity. We’ve detected five emerging trends that may forever change how we produce and consume electricity. It will be an American approach to energy that wastes less, pollutes less, and, as Cheryl likes to say, “puts customers in the driver’s seat.” It’s made by, and for, you and me. 76 |

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UTILITIES THINK QUALITY, NOT QUANTITY Power companies, like people, respond to incentives. The current regulatory framework in the United States incentivizes utilities to invest more in power stations and infrastructure than in building value for consumers and the environment. If they are to survive the Revolution, utilities need to rethink the model, and the regulatory framework needs to change to support utility investments in renewable energy and energy savings. It sounds daunting, but it’s already happening in New York State.

American Revolution forming in our great nation today.

TREND

We no longer fret over taxes on tea, but there’s another

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ENERGY

“It’s a battle over the future of American energy and our antiquated electric grid. And it centers around the way consumers, utilities, and investors interact with this vast network of power lines, substations, and plants.”

EVERYONE GETS A STAKE IN THE GRID

While rooftop solar panels are becoming more common, securing financing for these and other energy investments and retrofits can be tough. Clean energy is more than a way for homes and businesses to lower bills and protect the environment; these upgrades also represent a serious investment opportunity. Today, states are beginning to connect investors with programs such as on-bill repayment for large and small residential projects. Commercial properties are getting in on energy efficiency, too, thanks to the Investor Confidence Project, which brings standardization and quantifiable metrics to energy efficiency projects in the commercial building sector. The result: lower operating costs, higher market value, and a significantly lower carbon footprint.

Going back to incentives, energy-savings programs like demand response help consumers adjust their power consumption during peak times by offering a financial reward for doing so. By empowering consumers (forgive the pun) we can use resources far more effectively and efficiently. Distributed energy is a related concept, calling on smaller-scale clean energy resources such as energy efficiency, energy storage, and local on-site generation to complement traditional sources. California is at the forefront in this area.

VASTLY IMPROVED BATTERIES OPEN NEW DOORS Rapid advancements in battery technology are making batteries a surprisingly disruptive - for the better - force in the modern American Revolution. EDF’s Midwest Clean Energy Director Dick Munson reports that improved batteries could put renewable energy sources in the lead. “When the wind stops blowing or the sun goes behind a cloud, batteries are able to provide back-up power until those resources are back online,” he writes. Until recently, battery cost was prohibitive, with systems costing as much as $1,500 per kilowatt-hour. Today the average is between $500 and $700, and dropping. Bonus: someone has to build these batteries, and that means jobs. Just ask North Carolina and Illinois.

COMING: FEDERAL POLICIES TO SUPPORT IT ALL All of these trends are independently worthwhile, but the EPA’s Clean Power Plan may be the glue that binds them all together. In addition to putting the firstever limits on power plant emissions, the plan offers states impressive freedom to choose how to meet their emissions goals, and the trends above will play out as states exercise that freedom. Freedom is the hallmark of any true American Revolution, after all. As is our quest for a stronger, better, and more innovative nation. To take a page from the classic 1980s cartoon He-Man: Americans can be masters of our energy universe. We…have…the power!

TREND

02 03 04 05

CLEAN ENERGY FINANCE TAKES HOLD

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ENERGY

A CONVERSATION WITH MOLLY CARTMILL, DIRECTOR OF CORPORATE SOCIAL RESPONSIBILITY, ON THE STRATEGIC ADVANTAGE THAT SUSTAINABILITY PROVIDES FOR A FORTUNE 500 COMPANY.

Sempra Energy, based in San Diego, CA, is the holding company for both San Diego Gas and Electric Co. and Southern California Gas Co. Sempra has made a name for itself in the sustainability field, being listed on both the Dow Jones Sustainability Index and the Carbon Disclosure Project’s Leadership Index, all while employing over 17,000 people, serving more than 31 million people, and generating over $10 billion in revenue.

Meghan French Dunbar: What are the key areas that you focus on with Sempra’s Corporate Social Responsibility (CSR) program? Molly Cartmill: At Sempra Energy, our business strategy itself is sustainable. We focus on developing lower-carbon energy resources because that’s where we think the future lies. It’s an approach that is responsible and profitable. So, we don’t really have what your readers might typically think of as a CSR “program.” Instead, corporate responsibility is baked into our approach to doing business, our behavior in the marketplace, and our commitment to reducing environmental impacts. My team focuses on issues, data, and reporting on our performance, as well as meeting the expectations of stakeholders. Maren Keeley: What strategic advantage does having CSR baked into your overall business approach provide for Sempra? 78 |

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MC: We track corporate performance in a wide range of areas – from safety and air emissions to customer satisfaction, water use, and philanthropy. I believe in the axiom that what gets measured gets managed. So, my department

policy, or a method of addressing the issue. It’s rewarding when a new approach or solution is adopted and put into practice. So, we provide a strategic advantage by working to stay ahead of issues and trends.

“WE AREN’T INTERESTED IN PASSING OUT GLOSSY BROCHURES. HERE, IT’S ABOUT EACH AND EVERY EMPLOYEE BEHAVING RESPONSIBLY.” provides a mechanism through which we can measure and report on several key performance indicators. We also do something that I’m particularly proud of: when we find a gap or an area where information is lacking, we pull together people from across our company and develop an approach, a position, a

MFD: What effect do you believe the CSR program at Sempra has on the company’s bottom line? MC: Investors and analysts are increasingly interested in environmental, social, and governance issues, as well as business performance

ENERGY

“EVEN THE MOST PROGRESSIVE COMPANIES THAT HAVE BEEN PRACTICING SUSTAINABILITY FOR 20 OR MORE YEARS HAVE FOUND THAT THERE IS NO END DESTINATION, NO FINISH LINE.”

in all of these areas. When investors want to know how we are managing risks associated with climate change, or how we are working with stakeholders while building new energy infrastructure, or if they want to compare us against others in our sector, a corporate responsibility report is quite useful. The effect is not always direct and measurable, but I think reporting differentiates Sempra Energy and effectively describes who we are and how we approach challenging issues. In today’s business world, that kind of transparency matters a lot. MK: What do you consider to be your most successful CSR initiative? MC: Sempra Energy’s corporate responsibility reporting is a big success. Our reporting has improved every year, from the focus and scope of reporting to the transparency and frankness in discussing challenges and risks. Company scores on investor-driven surveys also continue to improve year-over-year. A significant recent accomplishment was being named to the Dow Jones Sustainability World Index. That kind of steady incremental improvement says a lot about the team here at Sempra Energy. MK: What are the largest challenges that you face incorporating a CSR program at such a large organization?

Photo: Whole Foods

MC: The first challenge is staying on top of a growing, changing business. Each time one of our business units forms a new business partnership, makes an acquisition, or opens an office in a new community, we need to understand what that means to our goals, our data collection and aggregation process, and our footprint. We need to make sure new employees understand the corporate responsibility function and related annual processes. We’ve made strong progress – most of our employees know that we’re not about green washing or fluff. We aren’t interested in passing out glossy brochures. Here, it’s about each and every employee behaving responsibly. And for my team, it’s about authenticity – about telling it like it is here at Sempra. As an example, this past year, for the first time, we included interviews with several WINTER 2015

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ENERGY INTERVIEW WITH MOLLY CARTMILL OF SEMPRA ENERGY CONTINUED

Who or what is giving you hope for the future

s the parent of a few millennials, I’d have to say I am inspired by the deep conviction of young people who want to make the world a better place. This generation is not only smart and technically astute, they are also genuinely optimistic and believe they can solve problems and change the world for the better. This generation wants to work for organizations that focus on sustainability, diversity, and giving back to the community and the world at large. This is a perfect match for companies who are working to make progress in the corporate responsibility space as long as these companies understand that they may need to make changes to accommodate new kinds of workers. It will be a big gamechanger, but it gives me tremendous confidence in the future. It’s exciting to think about where we will be 10 years from now!

members of our senior leadership team in our report. I think this can dramatically improve our employees’ understanding of corporate responsibility. How can we become a better, more responsive, cleaner, more strategic, and more service-oriented company? We need engaged employees to help us do that.

improve with each passing year. I see it as a process that never ends. Even the most progressive companies that have been practicing sustainability for 20 or more years have found that there is no end destination, no finish line. You simply start where you are and keep trying to improve, year-over-year, knowing you’ll never quite be done.

MFD: What advice do you have for someone who is just entering the world of CSR?

MK: What metrics do you find to be the most important?

MC: While you may want to change the world (or at least your own company), recognize that there are many steps that you absolutely must take before you get to that point. Those who demand change for change’s sake will lose out every time. You can have a great idea, but in the business world you’ve got to have evidence and explain why something should be implemented – and that necessitates gathering data, comparing performance, and making a rational business case for why that idea should be implemented. It’s also important to note that when you begin, you have to start with where you are right now, the data you have right now, and the goals you have right now. When you begin where you are, it will be authentic, transparent, and you will

MC: A major – and critical – challenge is determining what to measure. The answer to this question depends upon the organization, its sustainability context, and the issues of greatest relevance to its stakeholders. As you might imagine, greenhouse gas emissions are important for Sempra Energy because we’re an energy company – we own utilities and other businesses that generate power. So, we focus on reducing our impact on the environment. At Sempra, our carbondioxide emissions rate is about 40 percent below the national average. That means that for each megawatt of energy we produce, we’re emitting 40 percent fewer greenhouse gas emissions than a typical U.S. energy producer. That’s a pretty strong indicator of our priorities and our performance.

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MFD: As someone who leads such an impressive program, what insights do you have about quality leadership? MC: Well, there are many companies that are much further along on the path than us and it’s great to look at those early leaders and get very inspired by their amazing accomplishments. I think that good leaders recognize that change doesn’t happen overnight; patience and perseverance are pretty important. You have to have a plan, set reasonable objectives around improvement, and be patient with yourself, your organization, and your people. When you do, the payoff can be incredible. MK: What other CSR programs inspire you? MC: I’m intrigued by the organizations that were the early adopters; many are now the recognized leaders in corporate sustainability. Some have moved toward integrated reporting, which involves a combined corporate responsibility and annual report. Some have led the way when new reporting protocols are introduced, like the GRI’s [Global Reporting Initiative] G4 [Sustainability Reporting Guidelines]. And some, like Novo Nordisk, just fascinate me anytime I hear them make a presentation at an industry conference because they have real expertise in what it means to be a sustainable enterprise.

ENERGY

AMAZING SOLAR POWERED GADGETS SKYLOCK Instead of fumbling with your keys or dealing with a cryptic combination, Skylock makes securing and untethering your bike as easy as walking up to it. Developed by engineers from Boeing and Jawbone, this smart lock uses built-in solar panels to stay charged, with Bluetooth LE to enable automatic unlocking through your smartphone, Wi-Fi for extended range, and an accelerometer that can alert you should your bike get moved or call an ambulance if it detects a crash. It’s basically everything a simple chain lock isn’t.

Window Solar Charger by XD Design This Window Solar Charger can charge your mobile phone or MP3 player in your car, office, or at home with its integrated 1400mAh rechargeable lithium battery. Because the charger can stick to a window, it always faces the sun, making the solar charging process even more efficient. The charger includes a USB output and mini-USB input. You’ll never have to worry about finding an outlet again! WINTER 2015

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ENERGY

MAKING SAVING ENERGY FUN AT

Simple Energy motivates people to save energy by changing how utilities engage with their customers. The company uses behavioral science, big data analytics, and digital marketing techniques to build software that makes saving energy social, fun, and simple. Imagine not only having easy access to your energy usage information, but then having that energy usage data be the basis for an engaging rewards program that makes trying to reduce your energy use fun and competitive. As a result of this innovative program, Simple Energy has helped people save over 100 million kWh [kilowatt-hours] to date. That is enough energy to power almost 10,000 homes for YOAV LURIE a year and equates to a reduction in over 60,000 tons of CO2, which has the same environmental impact as planting over 1,500,000 trees or removing 12,600 cars from the road. The company is helping people make sense of their energy usage, save more energy, and enjoy doing it.

INTERVIEW WITH YOAV LURIE, CEO AND CO-FOUNDER Meghan French Dunbar: What is the story behind Simple Energy? Where did this idea come from? Yoav Lurie: I met Justin Segall, my co-founder, our freshman year at Duke University. Early on in our friendship, two things became apparent: we wanted to make a positive social impact and we were entrepreneurs. Years later, Simple Energy started as a hardware product - a simple thermostat. We had the great idea that if we could provide an inexpensive (almost free) easy-to-use thermostat, we could help people save energy in their homes. We shopped this idea around to friends, family, and energy industry executives. What we found was that people don’t need another gadget, even a free one. In fact, many of the utilities we spoke with were already offering ther-

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mostats and having trouble giving them away. The problem was getting people to change their behaviors. It was when we realized this that we got out of the thermostat business and into the give-ashit business. Since that day, everything we create is designed with what people want in mind. We started this company because we want to change the world and we quickly discovered that the best way to do it was to get everyday people to act like they care. MFD: One of the scariest times for many entrepreneurs seems to be making the choice to really go for it. What did this decision look like for you? What advice do you have for other budding entrepreneurs regarding making the decision to jump in?

YL: Oddly enough, the decision to start a company wasn’t hard for me. Since I was a child, I have always known that building companies was what I was going to do and I was already at a turning point in my life where I was deciding on my next move. What was difficult, however, was convincing my co-founder, Justin Segall, that starting Simple Energy was a jump he needed to make. Justin was comfortable. He had a great job and wasn’t looking to make a move. I asked him to look at this opportunity from the perspective of his 75-year-old self; what would that Justin think about choosing comfort over passion? That is the same advice I would give to anyone who is scared to go after something they want. When you look at things from that perspective, not taking the jump seems a lot scarier than going for it.

ENERGY

MFD: What do you attribute the success of Simple Energy to? YL: We’ve found a sweet spot between being able to get people to act and a need in the utility industry. People already cared about helping the environment, but it wasn’t enough to get most people to change their daily behaviors. Simple Energy has been successful in actually motivating people to take action. The utility industry is facing a changing market with new technology entrants and increasing regulatory requirements. Now more than ever they need to engage with their customers. Utilities need their customers to take specific actions to meet behavioral efficiency targets and reduce peak load demand. Utilities also need to strengthen their customer relationships to future-proof their business. Simple Energy helps utilities build better relationships with their customers by making energy saving fun, social, and simple for customers. MFD: One of the components behind the success of Simple Energy is competition through games. How important is this component for changing people’s behavior? YL: Rewards, points, and competitions are important because people enjoy them. The success of Simple Energy lies in the fact that we have been able to transform energy data into things people actually care about and experiences that inspire people to take action. Delivering energy data in charts and graphs just isn’t enough to motivate most people to make a lasting, meaningful change in their daily behavior. We’ve found that different motivations work for different people and that those motivations change over time. Simply put, we offer a range of experiences that target individual desires rather than taking a one-size-fits-all approach. While stay-at-home parents may want to share home energy savings tips with their friends on Facebook to support local schools, young professionals may be more interested in timely information delivered on their smartphone and the opportunity to compete with their friends to win a new tablet.

MFD: Are there any other industries where you think a similar model that utilizes games and competition could be applied to the benefit of society? YL: There is no limit to the power of play. A few of the industries that immediately come to mind where best practices of consumer engagement based on gamification can and are having a positive impact are health-care and education.

“We started this company because we want to change the world and we quickly discovered that the best way to do it was to get everyday people to act like they care.”

MFD: What business practice are you most proud of? YL: It is important to me that our business practices uphold the Simple Energy mission of creating a more sustainable future. Justin and I didn’t just want to build a business, we wanted to make a positive change in the world. One of the things I am most proud of is becoming a certified B Corporation. As a certified B Corporation, Simple Energy is part of a community of over 1,000 companies across 60 industries with one unifying goal: redefining success in business. Simple Energy has met rigorous standards of performance, accountability, and transparency; is using the power of business to address climate change; and is building a strong local community and a great place to work. MFD: What other companies are inspiring you right now? YL: I am inspired by companies that make the critical and seemingly boring aspects of life more beautiful and seamless, in a purpose driven way. That is why I try to always support other B Corps. Some of my favorite companies right now are Nest (connected home), Ello (the new social), 7th Generation (everyday products done right), and Revolution Foods (healthy kid-friendly school lunches). Photos: Simple Energy

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ENERGY

INTERVIEW WITH

JOE MADDEN, CO-FOUNDER OF

REVOLUTIONIZING REFRIGERANTS Refrigerants - the chemicals used in cooling technologies such as air conditioners, supermarket cases, and home refrigerators - are extremely potent greenhouse gases. In the US, they have become one of the fastest growing categories of climate pollutants. Under current business-as-usual practices, these refrigerants are simply produced, used, and emitted in a linear cycle that is both expensive for businesses and harmful to the atmosphere. Revolutionary company EOS Climate has developed a system that helps companies see refrigerants as an asset that should be tracked, reused, and resold, rather than as a consumable that is simply wasted at the end of its life. This system helps businesses save money, comply with regulations, and be more efficient with their resources, while simultaneously avoiding emissions of more than 4 million metric tons of CO2 equivalent so far. Meghan French Dunbar: Why are refrigerants a climate concern and why is EOS Climate’s work important? Joe Madden: Fluorinated refrigerants, which include chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs) and hydrofluorocarbons (HFCs), are incredibly potent greenhouse gases (GHGs) - thousands of times more impactful to our climate system and, under business as usual practices, every pound of refrigerant that is produced eventually reaches the atmosphere. This is due to the fact that, since their invention in the 1930s, refrigerants, like many other materials and products, have been part of a linear model: produce, distribute, use, waste (emit). For CFCs and HCFCs, which deplete the ozone layer, the world came together through the Montreal Protocol and successfully agreed to phase out their production in order to prevent irreversible damage to the Earth’s protective ozone layer. Subsequently, we developed HFCs as replacements, which did not harm the ozone layer. However, like their predecessors, HFCs are powerful GHGs produced in the same linear model on a massive and growing scale. We are now faced with very serious ecological limits from a climate perspective. The Intergovernmental Panel on Climate Change (IPCC) has 84 |

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provided us with a definitive number: 565 billion metric tonnes of carbon dioxide equivalent (GtCO2e). This is the number of GHGs that can be emitted by 2050 if we are to have a 67% chance of avoiding catastrophic disruption to our climate system. Current projections are that more than 50 GtCO2e will come from HFCs alone by 2050. At EOS Climate, we assembled a team of experts in finance, policy, operations, sustainability, logistics, and information technology aligned around a simple principle: if individuals and companies have a choice, they will act in an economically rational manner. Based on this concept, we set out to develop an economically rational choice for refrigerants that would deliver positive environmental outcomes on a global scale. Maren Keeley: How does a company benefit by using EOS Climate’s services - both in California and outside of California? JM: Regardless of location, EOS Climate helps companies benefit through better utilization of their existing assets, saving them money and time while reducing regulatory and reputational risk. EOS Climate’s Refrigerant Asset System (RAS) is a cutting edge platform that combines mobile technology and

business model innovation to effectively transform refrigerants from consumables to assets. This sounds like a small change in definition, but moving from “consumable” to “asset” is not just a change in definition, but a significant step toward bringing the circular economy to the refrigerant value chain. No matter where one looks, resource utilization is a major trend that is winning across industries, from transportation (Uber, Lyft, Zipcar) to hospitality (AirBnB) to personal goods (Yerdle) to heavy equipment (Getable). With EOS Climate, companies with large inventories of refrigerants can now begin to manage those inventories in such a way that allows them to get the most value out of them by recycling their refrigerants in closed loops until they no longer need them. When that time comes, they can sell their refrigerants to other companies that do need them at market rates. MFD: What insights do you have about carbon markets? What would you do to improve them? JM: As mentioned, we have entered into uncharted territory with regard to our global climate constraints and we are now faced with very difficult choices. One way or another, we will need to factor in the cost of GHG emissions into the global economy. This will mean a price on

ENERGY

MK: EOS is relatively young. What insights do you have for other young companies that are trying to get off the ground? JM: I think it is important to understand: 1. Market: Is there a market for whatever product or service you sell? 2. Competition: If there is a market, why is your product or service a winner? 3. Why: Getting a business off the ground is not for the light of heart. What is the reason you are going to get out of bed in the morning and do what you do in the face of uncertain odds? 4. Team: Make sure your team is talented, committed, and trustworthy. 5. Action: Act. Don’t be afraid to fail. If you are clear on your reason for doing something, do it. My biggest failures are usually instances where I failed to act. 6. Intuition: Listen to your intuition - it is powerful.

carbon, which will most likely come in the form of a tax or a price generated through a regulated market mechanism (i.e. a carbon market). When political issues are considered, including the influence of industry on policy, market mechanisms have an advantage over direct taxation. I have great faith in the efficiency of markets in general, and carbon markets or other environmental commodity markets are no different. Markets deliver swift and efficient outcomes based on all of the factors and information that players consider within a given market structure. Ironically, the primary reason we are faced with the colossal challenges associated with climate change is that energy markets and the commodity markets that supply those energy markets have, thus far, failed to account for the impact of carbon on our climate system - it simply hasn’t been a consideration. By creating an explicit price on carbon, carbon markets force energy markets to consider carbon. Since carbon markets are regulatory constructs, market design is critical. Thus far, it seems the policy makers in California have “done their homework” with regard to market design and have avoided some of the issues (price volatility and/or oversupply) that carbon markets in Europe and the Eastern United States have seen. However, most senior folks in policy have years of experience in policy making with little experience in market design, and, likewise, most senior folks in capital and commodity markets have little in the

way of policy expertise. Thus, in order for carbon markets to deliver desired outcomes, a delicate balance must be struck and flexibility must be part of the market design. I think it starts with the intention of the players involved, but there needs to be a system of checks and balances built in. MFD: What advice do you have regarding hiring and building a quality team? JM: Seek the best. Find people that are more talented than you, understand their needs, and empower them. Remember at all times that your team is bigger than any individual on it (including you) and work to preserve the team above all. MFD: What’s next for EOS? JM: Thomas Friedman had a column in the New York Times recently entitled “The World is Fast,” where he noted that the three biggest forces on the planet - the market, Mother Nature, and Moore’s Law - are all in a period of radical acceleration and change. EOS sits at the nexus of these converging factors. Our challenge will be to effectively leverage technology to enable the quantification and verification of environmental metrics so that the actions and materials that will result in positive environmental outcomes can be effectively valued in both the refrigerant marketplace and in the capital markets more broadly. If we’re successful, it could change the way commodities are valued and traded on the planet for the better. Photos: EOS Climate

7. Naivety: Embrace it. 8. Learn (fast). 9. Laugh.

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Inspiring stories, tips, and advice from the top sustainable companies working in the marketplace.

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WHAT ARE B CORPS? A Certified Benefit Corporation, or B Corp, is a business that has been officially certified by the nonprofit B Lab as having met rigorous standards of environmental and social performance, accountability, and transparency. The certification is akin to what organic certification is to produce or what LEED certification is to buildings. However, B Lab takes a holistic perspective and assesses all aspects of a company, from its environmental and social impact, to its corporate governance and community involvement. When you see the Certified B Corp logo, you know that you are purchasing from a truly sustainable company that does good, rather than one that is simply good at green marketing.

Jay Coen Gilbert, co-creator of B Lab, the non-profit behind B Corps, on transformational ideas, the power of teamwork, and the next evolution in capitalism.

Photos: Dan King Design: Sean Martorana

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MARKETPLACE Meghan French Dunbar: I feel like we need more organizations like B Lab. I think it is one of the most revolutionary ideas that I’ve heard of. How did you come up with such a revolutionary idea? Jay Coen Gilbert: Well, the thing is, I would like to have a revolutionary idea too, but I’ve never had one (laughter). This is less the story of an individual epiphany than it is of a slow, crowdsourced awakening. What has become the B Corp movement is really the product of the wisdom of hundreds of different companies and investors and academics and thought-leaders who all collectively identified the need for a set of standards that would differentiate companies that really walk the talk from those that are just talking a big game. MFD: I think one of the scariest things for people who are starting a new venture is making the decision to go for it. How did you make that decision to just start going for it? JCG: I am blessed with no fear of failure. Both of my parents were entrepreneurs, and so I have that in my DNA. I recognized that the worst thing that can happen is that I’d fail miserably and then I would learn from that and go on to a better idea. Myself and the other two co-founders of B Lab were all fortunate enough to have had some success in the private sector in our first careers. So, I had the luxury of being able to take a big swing on a big idea. With all of our time and all of our talent and some of our treasure, we decided to put it all behind an idea that came from the community and see how we could be put to the highest and best use. The idea was how to create a nonprofit organization to help lift up this whole movement of business as a force for good. It was the community that identified the need for performance standards and the community that identified the need for a legal structure that supported the maintenance of a company’s mission over the long-term. It was the community itself that said that the only way to do that is through radical transparency, because we all can’t do everything perfectly. It’s a combination of those three things – performance standards, legal structure, 88 |

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and transparency – that make and distinguish what it is to be a B Corp. We just sort of pulled those threads together into something relatively coherent that could hopefully cut through a lot of the clutter. When everybody claims to be a conscious company, it is hard to know who is for real. B Corp certification helps you identify those companies that are not just conscious in their words, but conscious in their deeds.

“I am blessed with no fear of failure.” MFD: In 2006 this was an idea that, at its inception, was not widely popular. I’m curious if there were any strategies that you used for bringing something that was not in the mainstream to something that now, eight years later, has over a thousand companies participating and is becoming more popular? JCG: I think that the biggest key for us was, as business leaders ourselves, investors ourselves, and entrepreneurs ourselves, who wouldn’t as individuals necessarily identify with a green movement or CSR [Corporate Social Responsibility] movement or sustainability movement in our prior lives, we didn’t show up to this with a lot of baggage. We had only our very pragmatic sense of, “Let’s figure out what works,” and then support that and be very experimental about what we are doing. Hence the name B Lab, where we are making a bunch of experiments; a bunch of them won’t work and we will discard those things that don’t work and go forward with those that do. One of the things that has been an

Achilles’ heel of this movement in its first twenty or thirty years has been that it is often more defined by what it stands against than what it stands for. So the first principle at B Lab and of the B Corp Community is that we stand for something, not against anything. So, showing up in the world and celebrating those folks that are leading, while creating paths for those who are interested in following and plotting their own journeys, has been very effective because we are not running around wagging our finger at a bunch of people who are not doing what we would like them to do. We are just celebrating those people that are doing amazing things that we’d love other people to know about. I think that the biggest thing was making sure that this was a community that is standing for something, not against something. The second thing is that we stand for business. We think that business is the most powerful man-made force on the planet and we are only just awakening to what its latent potential is to solve some of our most challenging problems. As this next generation of entrepreneurs and investors awaken to that potential, we want to create easy paths for them to follow, either with a corporate structure that supports their mission, or with tools, best practices, and resources to measure their progress on the path to being a truly conscious business. Through the certification, we provide a way for those businesses that are truly leading to be recognized as the leaders that they are and thereby attract the talent and the capital and the evangelical consumers that they need to build thriving businesses. I think that by making sure that everybody recognizes that they have a role to play in this transformation and this evolution of capitalism, we can help accelerate a positive evolution, which is our mission. MFD: You’ve had a successful forprofit venture with AND1 [maker of basketball shoes and apparel] and now you are one of the leaders at a successful non-profit. What do you consider to be the characteristics of a quality leader? JCG: For me, the most important thing about leadership is recognizing that the team beats the individual every time. The most important thing that

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B Lab co-founders Jay Coen Gilbert (left), Bart Houlahan (center), and Andrew Kassoy.

I’ve experienced as someone in a leadership position is the recognition and the humility that you can’t do all of this yourself – you are not smart enough and there are not enough hours in the day, and you don’t have enough clarity of vision. To me, it is crucial to recognize that what you need is a leadership team, not a leader. Our culture is a celebrity culture, and the photos always look better on the cover of the magazine if there is a single point of focus, which is an individual human being. I recognize why we want to tell stories of individuals, but I think it is sometimes pretty disruptive because it feeds the false pride of the leaders themselves, and it feeds the false dreams of potential leaders who think that they have to be supermen and superwomen to do everything on their own, which is almost never the truth. MFD: What is your elevator pitch on why sustainability is good for business? JCG: I think the main reason that I hear played back to us at B Lab from CEOs, from Fortune 500 companies, from start-ups is, at the end of the day, it

“We think that business is the most powerful man-made force on the planet and we are only just awakening to what its latent potential is to solve some of our most challenging problems.” is about attracting and retaining the best talent. Increasingly, people want more than just a paycheck from their work; they want a sense of purpose. One of the ways that B Corps connect to the bottom line most directly is that being a B Corp will help you attract and retain the best talent. Fifty percent of the world’s workforce is Millennials and the single biggest differentiating characteristic of Millennials is that they want to integrate work and life. They are not looking to balance two things, as if they were separate – they are looking to integrate them. Being a B Corp is the way to say that we don’t just talk about it, we actually live it. We want you to bring your whole self to work every day. And if you can give people the opportunity to bring their

whole selves to work every day, you are going to get some really talented folks that want to bust their butts to make you a better company. Being a better company is not only better for your short-term financial returns, but it is about contributing to the long-term health of the workers that are working with you and the communities that you are a part of. MFD: What’s next for B Lab? JCG: I think B Lab’s vision is pretty big, which is that we exist to serve a global community of leaders who are using business to create more shared and durable prosperity that can be enjoyed by all. We recognize that the leaders of that movement are those one thousand WINTER 2015

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“

When everybody claims to be a conscious company, it is hard to know who is for real. B Corp certification helps you identify those companies that are not just conscious in their words, but conscious in their deeds.

”

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certified B Corps from over 30 countries around the world, but we know that they are the drummers for a much bigger parade. They are not the parade itself. They are not the movement itself. The bigger movement behind them is this group of businesses that are inspired by the idea of conscious capitalism or having a conscious company but are looking for tools to begin the journey – or, if they have begun the journey, figuring out how to go a little bit further or deeper in their practices. We will soon have over twenty thousand businesses that will be using the B Impact Assessment as a free management tool to help them better understand how conscious they are and the ways that they can be more conscious in their businesses, to have a more positive impact, to create higher quality jobs, and to improve the quality of life in their communities through the use of their business. There is a huge demand for something free and easy to help them on this path. I think one of the next big things is not just growing the B Corp Community from one thousand to two thousand, but growing the community of conscious businesses in general. We are growing the community of businesses that are measuring their impact from twenty thousand businesses to two hundred thousand. And some of those will want to be aligned with the leadership group and get certified because it adds value to their business, but many, many more are just going to say, “Thanks a lot for the tool and I am going to go on my own merry way, but I am going

to do it in a more effective way.” So, I think one of the next big things for B Lab is to help create the tech platform and the tools to help all companies measure what matters, which is their impact on their workers and on their communities. I think that would be one of the big things that will happen over the next five years - the growth from twenty thousand to two hundred thousand users of the B Impact Assessment. Another big thing would be to continue the globalization of the movement. You know, five years ago 100 percent of B Corps were located in North America. Today, 30% of B Corps are located outside of the US and that is super inspiring. We get to meet B Corps from Brazil and China and Laos. That makes us feel really hopeful that this movement to use business for a higher purpose than just personal wealth creation is actually connecting with people on a very deep human level that isn’t about what culture you are from, isn’t about what political party you subscribe to, and isn’t about whether you think of yourself as green or not green, it is just about a better way to do business. It is going to be better for the people that work there, it is going to be better for the communities that you are part of, and it is ultimately going to be better for your bottom line. We are returning back to the way that business used to be done. Businesses used to be local and businesses used to be about relationships. You treated people well because you lived with them. What has happened as we have globalized economies is that those threads of connection have gotten much thinner and have often frayed and broken. One way to look at it is that the B Corp Community is helping to re-weave that connectivity between all of us by recognizing that, whether you are a worker, a consumer, an investor, or an entrepreneur, we are all basically part of the same ecosystem and we should treat each other like we would like to be treated. You know, they call it the golden rule for a reason. It’s critical to be humble enough to know that we can’t just talk about it, but we have to actually measure the extent to which we are living up to the Golden Rule and hold ourselves legally accountable to do so, so that even in bad business cycles or even when you change leadership or plan succession, that core integrity of the business can be maintained over time. I think that is what the B Corp Community really represents. It is the next evolution in capitalism towards one that is more stakeholder-focused and willing to be accountable for its actions. Photos: B Lab.

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MAKING

FOOD

PERSONAL AGAIN

Nikhil Arora, Co-founder, Back to the Roots ACK TO THE ROOTS GOT ITS START IN 2009 WHEN CO-FOUNDERS NIKHIL ARORA AND ALEJANDRO VELEZ PRODUCED THEIR FIRST TABLETOP MUSHROOM FARM. These mushroom farms mix agricultural waste, such

as recycled coffee grounds, sawdust, wheat bran, and corn cobs, with mushroom seeds to create a grow-yourown Mushroom Farm that produces gourmet Pearl Oyster mushrooms in just ten days. The mushroom kits took the market by storm, selling over 800,000 to date. Following the huge success of their initial product, Arora and Velez set out to find a way to bring aquaponics into the home and soon developed the AquaFarm. This closed loop, sustainable mini farming system uses fish waste to grow plants indoors. Similar to their Mushroom Farms, customers have fallen in love with the AquaFarm and the new product has taken off in the marketplace. By successfully combining education with sustainability, the two have created a thriving food business that continues to grow. Oh yeah, and did we mention that both founders are under 30?

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MARKETPLACE Meghan French Dunbar: You guys have an amazing story. Can you tell us how Back to the Roots came to life? Nikhil Arora: Alex, my co-founder, and I were both at Berkeley in our last semester in school and we both had job offers to go into the corporate world in consulting and investment banking. We both thought we knew what we were doing. We were in a class together and the professor brought up the fact that you can grow mushrooms on recycled coffee grounds. The idea inspired both of us. So, we reached out to get more information and ended up meeting up. We both thought, “forget investment banking, forget consulting,” and we’ve been mushroom farming ever since. MFD: Back to the Roots has a new product on the market, the AquaFarm. How did that come about? NA: We brought mushroom growing into the classroom and into the home and that has become a big inspiration and passion for us. With that mindset, we started getting deep into farming and came across this new trend called aquaponics. We ended up visiting one of the largest aquaponics farms in the country outside of Milwaukee. This place was incredible. Will Allan, who founded it, literally had thousands of tilapia and all of the fish waste was fertilizing tons of food for the local community there. We were so inspired by that concept. We started asking ourselves if we could do what we did with the mushroom kit and take a big mushroom farm and shrink it down into a tabletop experience, but see if we could do the same thing with aquaponics. All of this eventually turned into the AquaFarm.

NA: Most cities have start-up and entrepreneur hubs. Being a part of some of those has led us to some awesome mentors. Also, honestly, you can just cold email people and tell them what you’re working on. Especially in this space of natural foods and values-based and passion-driven businesses, people are willing to support entrepreneurs. Annie’s [Homegrown, Inc.] is an example. They’re a huge company and they have been a mentor of ours since day one. We either met them at a conference or cold emailed them and then we got the chance to know them really well and they have opened up so many doors for us. So, there are formal ways and informal ways, but never be afraid to share

“There’s that saying that it takes a village to raise a child and I think that’s true for a company, too.”

MFD: You have now launched two very successful products. What’s behind that success? NA: At the end of the day it’s passion and purpose. The team lives and breathes this and really gives this their all. We’ve also been surrounded by incredible mentors and partners. There’s that saying that it takes a village to raise a child and I think that’s true for a company, too. We’ve just tried to take all of that support and energy and inspiration around us and be the ones who can channel that and work our butts off to make it a reality. There are a lot of people who have been involved in helping us get here. MFD: What insights do you have regarding building a quality, effective team? NA: We hire with passion as one of our number ones. Having people who are willing to give it everything they have is really important. The rest of it can be learned. Also, looking for people who can do things better than you is critical. We’ve been really fortunate to build such a great team. We’ve tried to stay lean and find the right folks who can specialize in certain areas and then leverage that as much as possible. MFD: Where are the best places to find mentors for budding entrepreneurs? 92 |

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Back to the Roots Co-founder, Nikhil Arora

The best part about being an entrepreneur?

You get to curate your own future.

what you’re working on. You never know who will resonate with it and support you. MFD: So, we’ve got building an amazing team, driving your company with passion and purpose, and finding great mentors. What other wisdom would you impart to people trying to launch their own business? NA: One of the best pieces of advice that I got was, “true focus is saying ‘no’ to the things that you really want to do.” Especially when we were a bit younger, there were so many products and so many different ways that we could take the company. For a while, we were doing a lot of different things and half-assing all of them. At some point, we got to the point where we realized we needed to pick one thing and put all of our energy and focus on just that one thing. We decided to put that energy into making our little mushroom kit the very best mushroom kit and it was cool to see the effect of that decision. Early on, you’ve got to hone in on one thing and say, “I want to do that better than anyone else out there,” and see where it takes you. MFD: What is your favorite part about being an entrepreneur?

{

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NA: I think it’s about being able to chart your own path. There is something really cool about that. Every day you get to wake up and do what you want to do. It’s probably the most challenging thing, but also the most rewarding thing. You have no one telling you what to do so you have to look to yourself. You get to curate your own future though. It’s exciting, but also very challenging as well. Alex and I are incredibly close and work so well together – that’s another thing that I appreciate. MFD: Who or what is inspiring you right now? NA: It’s great to see all of our hard work paying off and there are so many people who respond to our product. We recently sponsored a music festival in DC and half of the people that came up to us had pictures of their AquaFarms on their phones. It’s been unbelievable to see the emotional response that this product has had on people. The whole team has been putting in so much work and so many hours and to see something like that, it’s one of the best feelings. Having someone come up and be so excited about your product that they want to show it to you on their phone is exciting. It’s a really cool feeling. Photos: Back to the Roots

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JOHN MACKEY THE CEO OF WHOLE FOODS MARKET

on learning from failure, making difficult decisions, and that one time an animal rights activist changed his life.

Controversial? Perhaps. Opinionated? At Times. Game Changer? Yes. Opinions about Whole Foods Marketâ&#x20AC;&#x2122;s CEO John Mackey run the gamut, but one fact remains: he founded and leads one of the only Fortune 500 companies that places an emphasis on doing business consciously. Whole Foods Market has proven to the world that a business doesnâ&#x20AC;&#x2122;t have to sacrifice its bottom line in the name of ethics, but can, in fact, prosper as a direct result of its sustainable practices. WINTER 2015

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Maren Keeley: The Core Values at Whole Foods Market (WFM) speak volumes about the company’s culture. What is the most difficult part of bringing these to fruition? Are some more challenging than others and, if so, why? John Mackey: We began with five core values and added more as we’ve evolved and as the company has grown in terms of geography, impact, and consciousness. We now have eight. They are our constants and they keep us grounded. So, I don’t think of it as bringing core values to fruition, but rather using them as our guiding principles and a compass as we grow the business. The challenge is to keep them all balanced to create win-win situations that ensure all stakeholders are equally happy. This creates a sustainable, conscious business system. Meghan French Dunbar: We’d love to know about times that Whole Foods has gone through a strategy pivot. How did you conclude these pivots were necessary? Which of these decisions have come from a mission- or purpose-driven place as opposed to a profit-driven place? JM: There’s a chapter in the book about our store in Madison, WI, that talks

about how we fell short on caring for our Team Members and supporting their happiness and excellence in the workplace. Several Team Members there opted to call in a labor union for third party representation. Although a contact was never activated in that store and the Team Members who continued to work there ultimately voted against union representation, it was a wake up call for us and for me personally. I traveled the country and visited every single one of our stores over the next 12 months, having one-on-one discussions and group meetings with Team Members to see how we could do a better job supporting them. We made changes to ensure leadership in Madison and across the company were actively serving the purpose and mission of the organization and that we were “walking the talk” on this front. It had nothing to do with profits, but preserving, spreading, and reviving the amazing culture that our Team Members have created over the years. MK: What have been some of the most difficult choices you have had to make regarding WFM? JM: There have been many difficult choices along the way. I’ve found that if I truly follow my heart, the business decisions turn out to be sound ones. One

very difficult decision was when I had to ask my father to move on from being the Chairman of the Board. He had been my coach and mentor from the time I was 25 until I was about 40. Without his guidance, I’m pretty sure I would have wrecked Whole Foods Market in my youth. But, there came a point when he wanted me to lead the company differently than I thought we should – conservatively and without taking risks – and something had to change. Our disagreements were interfering with our personal relationship. It was a very difficult decision, but it was the best thing for me and for the company. It was a huge leap forward in my own personal growth. MK: Can you speak to the challenges that WFM has experienced in the company’s impressive expansion and growth? Did any of these challenges come as a surprise? JM: One of the most pivotal moments of the company happened early on during the Memorial Day flood of 1981, when Austin experienced the biggest flood in more than 70 years and which devastated the city. It left our store with nearly eight feet of standing water and almost wiped us out. That experience drew our young company together though. It demonstrated to us

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MFD: In the last five years, WFM has developed its Animal Welfare Rating System. Did WFM decide that this was a necessary step because there was nothing comparable in existence? What business challenges have come along with this significant shift? JM: In 2003, animal rights activists showed up at the Whole Foods Market annual meeting and picketed us, trying to coerce us to stop selling duck meat from one of our suppliers. I began a dialogue with one of the activists, Lauren Ornelas, after the meeting ended. At the time, I believed Whole Foods Market already had the best animal welfare standards of any food retailer in the US. Lauren told me that, while I was well-intentioned and idealistic, I was also grossly uninformed when it came to animal welfare. I was taken aback by some of her harsh criticism, but I accepted her challenge to become better informed about animal welfare. That summer, I read a dozen books about the livestock industry and animal welfare to better educate myself. By the end of the summer, I realized she was absolutely right – I was horrified by what I had learned. I personally changed my diet as a result of this experience and became a vegan, but I also wanted Whole Foods Market to begin to collectively engage with these animal welfare activists so they could help us improve our animal welfare standards. I felt the company had an ethical responsibility to do a better job finding suppliers who took better care of their animals. This conversation ultimately led us to the multistakeholder approach that resulted in our Global Animal Partnership 5-Step Animal Welfare Program, which is something we are extremely proud of as a company.

“IF YOU WANT TO LEARN AND GROW, YOU HAVE TO BE WILLING TO MAKE MISTAKES.”

ANIMAL WELFARE RATING SYSTEM

5 5 4 3 2 1

STEP STEP STEP STEP STEP STEP

that all our stakeholders have the potential to form close relationships with us, to care and to commit intensely. Our Team Members grew closer together, our commitment to our customers was greatly deepened, and we came to understand that we were actually making an important difference in people’s lives. If all of our stakeholders hadn’t cared so much about our company then and come together in support, Whole Foods Market would have ceased to exist. It’s pretty humbling to think about that.

+ ANIMAL

CENTERED, ENTIRE LIFE ON SAME FARM

ANIMAL CENTERED, NO PHYSICAL ALTERATIONS

PASTURE CENTERED

ENHANCED OUTDOOR ACCESS

ENRICHED ENVIRONMENT

NO CAGES, NO CRATES, NO CROWDING WINTER 2015

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MK: One of the company’s Core Values is selling the highest quality natural and organic products available. What challenges come along with this? JM: Without a doubt, our quality standards are what set us apart in the industry and we’ve set the bar high in all departments. We don’t always get credit for the behindthe-scenes work we do on these standards, but our core shoppers know the lengths we go to and really appreciate the effort. They help us get better every day by demanding more transparency and deeper standards, which helps us constantly evolve and push the industry to prompt positive change. The challenge is maintaining our standards but continuing to experiment and innovate so that we don’t become complacent. We’re a multi-regional company that empowers our stores and regions to experiment with new ideas and concepts and to take risks – great ideas are celebrated and oftentimes replicated, but we also have plenty of misses. If you aren’t willing to take risks though, you will never be able to grow as a company. MK: Many of the large grocery store chains now offer natural and organic products in a portion of their stores. Has this had an effect on WFM either positively or negatively? Has WFM shifted its strategy or operations in any capacity as a result?

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JM: There was a time when Whole Foods Market was one of a handful of options when it came to the niche sector of natural and organic foods. The explosion of growth within the industry, which is in part a testament to the work Whole Foods Market has done over the past 36 years, has caused a spike in competition from small natural chains and conventional chains who imitate us. We need to continue to innovate, experiment, and differentiate ourselves at a faster rate than ever before to continue to give our shoppers an unmatched experience and the best quality products that taste great and differentiate us from our competition. Increased competition has forced us to look more closely at our pricing strategy and do a better job of conveying our value offerings – we look at it as a good thing because it forces us to do better. Nobody in the industry can match the level of quality standards we maintain across all departments, so it’s about balancing the quality with value to ensure there’s something for everyone in our stores. MFD: Do you feel that you have ever had to compromise on any of your Core Values as a result of your fiduciary responsibility to your shareholders? JM: All of the decisions we make as a company support the company’s mission and higher purpose – we don’t make decisions solely based on profit. Conscious businesses recognize the interdependencies that exist among all

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MK: What advice would you give to someone who is starting his or her own company? JM: My biggest piece of advice is to follow your heart. Take time to ask the “big” questions like, “Why am I here? What do I care about? What excites me?” and answer your true calling. Life is short, so don’t cheat yourself by doing something you don’t love and believe in.

stakeholders and value those relationships equally (we call this Win6 in the book). When the relationships aren’t equally valued, you run the risk of one of the stakeholders becoming overly dominant and potentially cancerous, threatening the well-being and balance of the entire system. Every company needs to make money, but if that’s your sole purpose and you fall into the trap of tradeoffs at the expense of your other stakeholders, your business will eventually fail. When all stakeholders – customers, suppliers, team members, shareholders, the environment, and community – are seen as interdependent and everyone wins, the level of performance is elevated exponentially and so is the potential for future success. MK: Since the publication of your book, Conscious Capitalism, have you come across other companies that are operating consciously that you did not mention in the book and, if so, which ones? JM: Conscious Capitalism is a revolution that has already begun. Since the book launched, Raj [Sisodia] and I have heard from hundreds of smaller, lesser known companies that are embracing the tenets of Conscious Capitalism.

Companies like Oklahoma’s First United Bank, Nick’s Pizza & Pub in Illinois, and Studio Movie Grill are a couple examples, but there are many more. The incentive to participate in Conscious Capitalism is not only to do good, but to achieve higher financial performance, a sustainable business, and deeper and more beneficial relationships with stakeholders. MFD: Besides costs and revenue, what are the most important metrics to measure for a purpose-driven business? JM: There are four key tenets of Conscious Capitalism – stakeholder integration, conscious leadership, higher purpose and core values, and conscious culture and management. They represent the essential elements of an integrated business philosophy that must be understood holistically in order to be effectively manifested. MFD: What have you learned from failure, both professionally and personally? JM: If you want to learn and grow, you have to be willing to make mistakes. For many people, failure is something that’s difficult to admit to and they will defend their decisions

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at all costs when questioned, but if you don’t take time to pause and reflect on lessons learned, you’re bound to repeat your mistakes in the future. Learn from them and quickly move on. It’s not easy, but being more conscious and living “in the moment” is something that has helped me tremendously both personally and professionally. One of the biggest lessons I learned was from the SEC [Securities and Exchange Commission] investigation that occurred when the FTC [Federal Trade Commission] was trying to block our acquisition of Wild Oats in 2007. I explain the situation in detail in the book, but basically after the Commission downloaded all of my emails, they learned that I was posting under a screen name on Yahoo! message boards focused on Whole Foods Market and Wild Oats. I did it for fun and everyone uses screen names on the site, so I certainly didn’t think I was doing anything illegal. My reputation was smeared by the media and, because I was under investigation, I wasn’t allowed to publicly defend myself, so I had to listen silently as distorted attacks came in from all sides through the media. The SEC ended its probe concluding I did nothing illegal and the WFM Board concluded the same thing. The experience was painful, but instead of contracting and getting defensive, I expanded my consciousness and was able to turn a crisis into an opportunity for growth – personally, spiritually, and

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professionally. One of the most important lessons I learned was that I am a public figure now and I need to be more conscious of everything that I do, say, and write. From that point on, I began asking myself the question, “How would I feel if what I was doing right now appeared on the front page of the newspaper or ended up on the news? Would I still do it?” MK: What advice would you give to someone who is starting his or her own company? JM: My biggest piece of advice is to follow your heart. Take time to ask the “big” questions like, “Why am I here? What do I care about? What excites me?,” and answer your true calling. Life is short, so don’t cheat yourself by doing something you don’t love and believe in. MFD: What advice do you have for building a board? JM: Look for people who are invested in the company over the long-term and believe in the higher purpose of the company. Those who are only looking for short-terms gains and an immediate return on investment aren’t going to help move the company forward in a way that’s mutually beneficial to all stakeholders.

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MK: What is your vision for the future for WFM? JM: Our higher purpose is constantly evolving by tapping into our heightened level of consciousness for the good of Whole Foods Market, our stakeholders, and for society as a whole. Right now, we are focusing on contributing to solutions to improving the health of Americans by providing education and healthy foods. We are working on improving agricultural systems to make them more sustainable and humane, yet more efficient. And we are helping end poverty globally through microloans to women in developing countries. MFD: Finally, what makes you smile most? JM: I am an avid long distance hiker, so I really enjoy being in nature – it has its own rhythm and pace that helps me resynchronize. I also feel most at home with my wife, Deborah, when we are spending time out at our place in the Texas Hill Country or traveling together. Currently, we are in India, which is a very special place to Deborah. Photos: Whole Foods Market

DAVID MATTHIS AND JOHN MACKEY FOR HOUSTON’S SHEPHERD OPENING (1984)

“I’VE FOUND THAT IF I TRULY FOLLOW MY HEART, THE BUSINESS DECISIONS TURN OUT TO BE SOUND ONES.”

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RESPONSIBLE BUSINESS PRACTICES

meet

GROUNDBREAKING DESIGN

AT PRESERVE

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Eric Hudson, Preserve CEO and Founder

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ERIC HUDSON

Founder and CEO of Preserve, on starting a company that he feels good about, sustainable design, and seizing opportunity. Innovative consumer products creator, Preserve, combines socially and environmentally responsible business practices with groundbreaking design to create stylish, eco-friendly products for the home, including a full line of kitchen, tableware, and personal care products. With over 75 products ranging from toothbrushes to cutting boards, the organization operates from the premise that choosing eco-friendly products doesn’t mean sacrificing quality, price, or performance.

Maren Keeley: Can you tell us the story of how you developed this idea? Eric Hudson: I started Preserve in 1996. I wanted to start my own business that developed creative ways to conserve and re-use the Earth’s resources. There was a lot of recycling going on back in the early 1990s, but there weren’t a lot of companies putting those materials back into new products. I saw an opportunity in the fact that 45% of people recycled because I thought those people would also be interested in purchasing products made from their efforts. The biggest opportunity was with #5 plastics. They weren’t being recycled well nor reused well, which provided a lot of room for innovation and improvement.

I also wanted to start a company that I would feel great about coming to every day. Not only did I have an idea for an opportunity in recycling, but I also had developed an idea for a toothbrush when I was a teenager. My dentist always told me to brush in a certain way, with a 45 degree angle, but the brushes out there just weren’t made to do that. I worked with my dad, who was an industrial designer of cars and boats, to design the first Preserve® toothbrush with input from dental professionals from around the Boston area.

EH: I have to be honest that I don’t. My inspiration for Preserve was not to bring an idea to market that was before its time. My idea was to do something that I had a conviction about, to be more resourceful, and to reuse Earth’s resources. I would feel very lucky if we have another idea soon that might be considered before its time and I would hope that it is something that also helps us reduce our human impact on the Earth.

MK: It seems like when you founded Preserve in 1996, you had a concept that was a bit before its time. Do you have any insights or thoughts regarding how to bring an idea that is before its time into the mainstream?

EH: Our products are considered environmentally sustainable for a number of reasons. They are made in the USA and made of 100% recycled polypropylene. The two exceptions are our toothpicks, which are made

MK: In what ways are your products environmentally sustainable?

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“Be passionate about your idea; don’t be in it just for the money. And if it is a social business, remember that it will need to be run well, just as any business is, in order to make it a long term endeavor.” of sustainably harvested birch wood, and the Preserve 2 Go container, which is made of 50% recycled polypropylene because of the more limited availability of clear recycled material. The Preserve 2 Go, our newest product offering, is a reusable takeout container that can be used by schools, hospitals, corporate offices, etc., to lower the financial and environmental costs of their food service programs that too often generate a lot of waste from single serve items. We also provide other reusable options where single-use is common, such as in food-service and partyware products. For partyware, we have an offering on Preserve’s online store called Shareware, which encourages sharing and reuse of our tableware sets, so not only are you reusing at home, but you are reusing within your community. Shareware sets come in various sizes to meet your party hosting needs, and come in tote bags from our friends at Blue Avocado, which are made of fabric derived from recycled plastic bottles. With Shareware, instead of buying disposable tableware for each party, you and your community can wash dishwasher-safe tableware after each party and reuse it over and over, saving money and the planet with each party you host (we have factored washing into the impact analysis). Our products are also Earth-friendly because they are recyclable through Gimme 5, our groundbreaking program in Extended Producer Responsibility. Preserve’s Gimme 5 is our #5 plastic recycling program supported by our friends at Stonyfield Farm, Brita, Burt’s Bees, Plum Organics, Berry Plastics, Green Mountain Coffee Roasters, and Whole Foods Market. Since many communities don’t recycle #5 plastics (and those that do generally mix them with other less-valued plastics), we created this program to create a recycling solution for Preserve products and for any other clean, rigid #5 plastics. Gimme 5 bins are located at Whole Foods Markets and food co-ops across the country (locations can be found on the Preserve website). The #5 plastic that we collect via Gimme 5 is used to make new products here in the USA. We also work with municipal recycling facilities to help us sort the #5 plastics. We are proud of Gimme 5 - it is a program that ensures there is a recycling

option available for our products and our partner products, and through the program we are helping consumers and municipal programs bust down the barriers to #5 recycling. MK: What business practice are you most proud of? EH: Most recently, it is the steps that we have taken in the last few years to establish ourselves as a B Corp. We have always been a business that takes more into account than the bottom line. The B Corp certification process gave us the form and structure to measure and review our progress and to improve as a business that delivers social value. It also brought the whole team to the same understanding of the value we are creating and the steps that we take to deliver this value. MK: What is your favorite Preserve innovation? EH: Gimme 5. I love that we created a program to solve a consumer need. We had been making products from recycled materials, but still hadn’t addressed the need that consumers had for recycling them at the end of their life. Gimme 5 met this need and created a more personal connection between our consumers and our mission. For the many people who didn’t otherwise have a suitable #5 recycling solution, we helped them to recycle and take this step for the Earth. With Gimme 5, we created a hands-on way for our “Preservers” - our term of endearment for our consumers - to more closely connect with our mission and be a part of reusing a spent package and turning it into a new product in the US. MK: What advice do you have for entrepreneurs who are endeavoring to launch their own business? What mantra should new entrepreneurs repeat to themselves? EH: Be passionate about your idea; don’t be in it just for the money. And if it is a social business, remember that it will need to be run well, just as any business is, in order to make it a long term endeavor. To be successful, a company must be well-run, regardless of its mission. Photos: Preserve

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SOUTHWEST AIRLINES has become a paragon not only in the airline industry, but in the business world at large. In fact, for 20 consecutive years, the company has been named to Fortune Magazine’s “Most Admired Companies” list and is consistently recognized for its customer satisfaction, quality of service, and corporate citizenship. All of this has led to a passionate, loyal customer base that few other companies enjoy.

s a Fortune 500 company with over 46,000 employees, the company attributes much of its success to its triple bottom line approach, placing equal value on people, the planet, and profit as it conducts business. This approach, which takes all stakeholders into account, may not yet be common in the upper echelons of the Fortune 500, but it is a key differentiating factor that has set Southwest Airlines apart from its competitors in a fiercely competitive industry and has also made it a model business that others emulate. We had a chance to discuss these keys to success with Bill Tiffany, Vice President of Supply Chain Management, and Casey Dunn, Southwest Airlines spokesperson.

“

Everything starts with our employees. We believe that creating an environment where they are happy, engaged, and thriving gives them the energy and freedom to do what they do best - deliver world-famous customer service. WINTER 2015

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MARKETPLACE Meghan French Dunbar: What strategies is Southwest Airlines implementing to be a more socially and environmentally responsible company? Casey Dunn: Southwest Airlines adheres to a triple bottom line approach, which takes into account our performance and productivity, the importance of our people and the communities we serve, and our commitment to efficiency and the planet. We recognize that each of these elements is interconnected and dependent upon the other. Our fuel efficiency initiatives reduce costs while also minimizing our environmental impact. Similarly, our investments in the communities where Southwest flies contribute to making them great places to live, work, and visit. Of course, none of this could happen without our 46,000 passionate employees. They are the reason our customers keep coming back. We are committed to creating a job-secure environment where our employees have opportunities to grow and make a positive difference. MFD: What is the business case for acting in a sustainable way? Do the sustainability efforts directly contribute to the company’s financial bottom line?

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Bill Tiffany: For Southwest Airlines, the business case to act in a sustainable way is simple - it’s the right thing to do for our company and our planet. We are in the business of connecting people to what’s most important in their lives through friendly, reliable, low-cost air travel. It’s no secret that operating an airline comes at a cost to the environment. Like any capitalintensive company, we consume a lot and produce waste. We are focusing on efforts that minimize our consumption and reduce or repurpose what we may have previously considered to be our waste. MFD: Southwest is renowned for its customer service and happy employees. What do you attribute this to? What employee engagement tactics does the company employ to be so successful in this arena? CD: For 43 years, Southwest has been a people-centered company that puts a priority on the welfare of our employees, service to our customers, and giving back to our communities. Our employees do more than deliver friendly, high-quality customer service that turns a passenger into a loyal customer; they create innovative programs to increase productivity, generate ideas to trim costs so we can keep fares low, and give

MARKETPLACE back to our communities and the planet. Everything starts with our employees. We believe that creating an environment where they are happy, engaged, and thriving gives them the energy and freedom to do what they do best - deliver worldfamous customer service. One of the many ways that we strengthen our culture is through the Companywide Culture Committee, which is made up of 157 active members who serve three-year terms, and more than 170 alumni members. The mission of the committee is to inspire employees to own, strengthen, and promote Southwest culture. The members are charged with responsibilities, including helping communicate important company information from our senior leaders, brainstorming new company initiatives, and volunteering for culture events designed to engage and celebrate our employees.

other interior materials with durable and environmentally responsible products, Southwest reduced the weight of each aircraft by more than 600 pounds. The Evolve retrofit resulted in nearly 43 acres of used leather - approximately 80,000 leather seat coverings - being removed from Southwest airplanes. As an active environmental corporate citizen, Southwest knew that it could not simply discard this volume of leather; the company needed to find a new purpose for it. The process of upcycling the leather, or converting waste materials to new materials or products of greater value, provided Southwest with a unique opportunity to make a large-scale impact with its leather. Through upcycling, Southwest wants the products to leave a positive impact on communities, benefit the individuals producing them, address issues facing the communities where they are produced, and create new social

“By replacing the leather seats and other interior materials with durable and environmentally responsible products, Southwest reduced the weight of each aircraft by more than 600 pounds.” MFD: What new innovations have resulted from Southwest Airlines’ efforts to be a more conscious company? BT: The LUV Seat: Repurpose with Purpose project is an example of Southwest’s innovation in terms of sustainability. As Casey mentioned, Southwest Airlines has a longstanding commitment to pursuing a triple bottom line through its business, particularly as it relates to sustainability and environmental efficiency. As part of this commitment, Southwest launched its Evolve campaign, a large-scale redesign of all 737-700 aircrafts, a portion of its 737-300 fleet, and which is now standard on all newly acquired aircrafts. By replacing the leather seats and

enterprises so that the effects of the project live longer than a single donation. Southwest is donating the leather to organizations across the globe like SOS Children’s Villages Kenya, where young adults apprenticed in leather work and produced 2,100 pairs of shoes with the local sustainable shoe company Maasai Treads. The shoes were donated to SOS Villages and Ahadi Trust as part of an anti-jigger campaign [Editor’s note: a jigger is a parasitic flea that burrows into people’s feet], and to Cura Orphanage, a residence for children who have lost their parents to AIDS. In addition to making shoes, the young adults learned how to handstitch 1,000 soccer balls with Alive & Kicking, which uses sports education campaigns to raise awareness WINTER 2015

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Check out www.consciouscompanymagazine.com for print & digital subscriptions, extended interviews, advertising information, or just to learn more about the team at Conscious Company Magazine.

MARKETPLACE about HIV/AIDS and malaria prevention. Life Beads Kenya, a charitable organization that provides skills, opportunities, and a livelihood for local women and disabled people, will produce thousands of wallets and toiletry bags with the donated leather. In the US, Southwest Airlines joined with LooptWorks, a domestic upcycling company, to create high-quality duffle bags and tote bags. Through the LUV Seat bags project, LooptWorks provided skills training and jobs for disabled adults. MFD: It seems like creating change at such a large company would be difficult at times. What strategies do you use to overcome this and effect change on such a large scale? CD: Southwest Airlines is always evolving to meet the needs of our customers, employees, and the communities in which they live. Our strategy has been to remain true to our core values as we aspire to become the most loved, most flown, and most profitable airline in the world. We approach our business decisions within that context and work diligently to evolve the operation while retaining our culture. Much of the transformation of our company is a direct result of our employees’ innovations and ideas. When grassroots initiatives are implemented on a larger scale, it builds trust and empowers Photos: Southwest Airlines employees to be owners.

THROUGH SOUTHWEST AIRLINES’ EVOLVE PROGRAM, A LARGE-SCALE REDESIGN OF ALL THE 737-700 AIRCRAFT, THE COMPANY REPLACED THE LEATHER SEAT COVERS AND OTHER INTERIOR ELEMENTS WITH ENVIRONMENTALLY FRIENDLY MATERIALS. THE USED LEATHER SEAT COVERS ARE BEING DONATED TO VARIOUS SOCIAL ENTERPRISES THAT SERVE THE LOCAL COMMUNITY, INCLUDING ALIVE & KICKING, WHO WILL USE THE LEATHER TO CREATE SOCCER BALLS TO SUPPORT EDUCATION PROGRAMS THAT USE SPORTS TO RAISE AWARENESS ABOUT HIV/AIDS AND MALARIA PREVENTION.

LUV SEAT LEATHER PRODUCTS DISTRIBUTED IN KENYA. SOCCER BALLS MADE BY ALIVE & KICKING AND SHOES MADE BY MASAAI TREADS ARE DISTRIBUTED TO CHILDREN AT SOS CHILDREN’S VILLAGES.

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SIX KEY POINTS FOR CONSCIOUS BUSINESS POLICY THIS YEAR

ecisions are being made every day at the national, state, and local levels that impact business and our economy. When businesses speak, the media and elected officials tend to listen. The problem is that the conversation and policy decisions have for too long been dominated by business groups with an old way of thinking – that short-term profit at all cost is the most important criteria. This view holds that any move toward a more sustainable economy (e.g., setting a price on carbon, increasing the minimum wage, regulating chemicals) will bring nothing but job losses and shuttered businesses. This is simply not true. There has been incredible growth in responsible and sustainable leadership by companies in all industries and that is to be applauded. However, we are still facing major obstacles to systemic change when the rules and policies are stacked in the favor of “old economy companies.” As we like to say, “If you’re not at the table, you’re on the menu.” The good news is that business leaders, like the ones American Sustainable Business Council (ASBC) represents, are in a unique position to change the conversation and shape policy. It’s critical that responsible businesses speak up and highlight the fact that financial profitability is entirely compatible with, and actually enhanced by, environmental stewardship and social justice. ASBC’s goal is to make sure people understand that, while the market is smart, it is not perfect. That’s why we need policies and regulations that ensure a level playing field and address externalities. It’s also why it is so important for conscious business leaders to get involved in setting policy for how the economy should work. While figuring out how the policy-making process works can seem a bit like learning a foreign language, it’s worth the time. Remember, if conscious companies are not involved in shaping the laws that govern the economy, others who may not share your values certainly will be. As ASBC looks ahead to the issues that should dominate the discussion in 2015 and beyond, we ask you to join us in these efforts:

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By David Levine (left), co-founder and CEO, and Richard Eidlin (right), co-founder and Vice President of Policy, American Sustainable Business Council

THE TAXMAN COMETH

There is still at least one thing everyone in Washington agrees on: our tax code is in desperate need of an overhaul. Unfortunately, that’s about where the bipartisanship ends. Where does the extra revenue come from, and where will it go? What loopholes will get closed? Will the changes make life easier for all American businesses or just the biggest multinationals? Our view is simple: any tax reform needs to put small- and medium-sized businesses on an equal footing with big business. That’s why we support ending tax inversions, which let companies buy a foreign competitor and reincorporate overseas to avoid taxes. To that end, we launched our “Proud to be an American Business” campaign. Whether it is your local coffee shop or hardware store or the largest of corporations, everyone should pay their fair share. All companies should pay for the needed infrastructure repairs, research and development, and education this country requires to stay competitive.

CLEAN WATER CREATES JOBS

ASBC conducts national small business polling every year. Last year, we found that 71 percent of the small business owners surveyed (a plurality of whom were self-identified Republicans) said clean water protections were crucial to economic growth, compared to six percent who said otherwise. That shouldn’t be surprising - many industries rely on clean water for one thing or another. This explains why 80 percent of those small business owners, including majorities of Democrats, Republicans, and Independents, said they supported the Environmental Protection Agency’s (EPA) “Waters of the US” rule, which would clarify protections for certain types of waterways under the Clean Water Act. It’s important that businesses make their support known publicly, since some business lobbies are pushing hard to have

“When businesses speak, the media and elected officials tend to listen.”

the rule dropped or changed to make it less meaningful. Even if it is approved as is, we can expect lawsuits after the rule is finalized. So, it’s crucial for business owners to continue to show that there actually is an economic case that clean water is good for business.

REDUCING CARBON EMISSIONS AND POWERING OUR WAY TO CLEAN AIR

One of the most contentious issues this year has been the EPA’s proposed rules for reducing emissions from existing power plants. Those rules would require existing coal plants to cut their emissions by as much as 30 percent from 2005 levels, by the year 2030. Our polling found that 64 percent of small business owners favored government regulation to cut carbon emissions, and one in five say climate change has already affected them, so it’s not a hard case to make. Businesses face significant risks to their supply chains and operations from climate change. The EPA plans to finalize the rules next summer, and that’s when the real work will begin. States will have one year to finalize their plans for meeting the new standards or three years if they decide to collaborate with other states. There are numerous creative opportunities for states and their business communities to work together to craft a range of solutions that benefit business while cutting carbon emissions.

THE PRICE OF CLIMATE ACTION

Putting a price on carbon is perhaps the most meaningful way to address climate change - and arguably the simplest from a technical perspective. British Columbia offers an example of how this could work. The province’s price on carbon, which was implemented in 2008, has led to significant declines in fuel consumption, while its revenue neutrality has resulted in the province having some of the lowest corporate and income tax rates in Canada. All the while, its GDP has grown faster than

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the rest of the country’s has since 2008. This success can be replicated in the US. Even the World Bank has issued a business statement that many companies, large and small, support putting a price on carbon. Our opportunity is global and, once again, businesses can help lead the way.

NET NEUTRALITY

ASBC is urging the FCC [Federal Communications Commission] to protect the neutrality of Internet access for businesses. It is crucial to oppose the effort supported by a few large Internet providers that would open the door to multiple tiers of access to consumers. This “fast lane, slow lane” approach would put start-ups and small businesses that rely on the Internet to reach consumers at a significant competitive disadvantage. Not only would their costs rise, but we can also expect to see reduced innovation and dynamism in the economy overall. Again, action by business will matter.

THE LABORATORIES OF DEMOCRACY

Anyone who’s been watching Congress work - or not work for the past several years knows that none of this will be easy to achieve, certainly on a federal level. Thankfully, there are other options for achieving policy change. In fact, there are 50 of them. Ten states, plus Washington, DC, enacted minimum wage increases in 2014, and five more passed ballot initiatives in the midterm elections. Despite its failure in Congress, capand-trade systems have been enacted in California and in the Northeast. Paid sick leave legislation was considered in states from Alaska to Vermont. While action from Congress would still have the biggest impact, it’s good to see states forging ahead. It’s easy to look at the political landscape now and wonder what it will take to address these problems. The answer is simple: it takes businesses demanding action.

Founded in 2009, ASBC and its organizational members now represent more than 200,000 businesses and more than 325,000 business leaders across the United States. These diverse business organizations include trade associations, local and state chambers of commerce, microenterprises, social enterprises, cooperatives, green and sustainable business groups, local main street businesses, women business leaders, economic development organizations, and investor and business incubators. ASBC has been joined by a wide range of companies including Patagonia, Eileen Fisher, Ben & Jerry’s, Seventh Generation, Clif Bar, Etsy, New Belgium Brewing, Green Depot, New Resource Bank, and Trillium Asset Management. ASBC informs and engages business leaders while educating policy makers and the media about the need and opportunities for a sustainable economy. www.asbcouncil.org WINTER 2015

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Conscious trailblazers share their best stories, tips, and advice about leadership and teamwork.

LEADERSHIP

INSIGHTS ON LEADERSHIP AND BUILDING AN EFFECTIVE TEAM

ACTIVE COLLABORATION “In order to provide quality leadership, you must also practice quality listening and communication skills. By actively collaborating with your team and listening to their ideas, you can build a stronger and more robust environment for growth within your business.” - EILEEN GORDON, CO-FOUNDER, BARNRAISER

BUILDING SHARED VISION “Build a shared vision early on. If you build a team that does not have that shared vision - and by team I mean everyone, including co-workers and investors and partners - then it’s only a matter of time before it becomes an issue that’s large enough to destroy a company (and friendships, too). Leaders can help bring that shared vision out of people, and they hold people accountable if things get off track or if the vision gets too blurry for anyone to see the road ahead.” - CASEY DILLOWAY, CO-FOUNDER, COMMUNITY SOURCED CAPITAL

THE IMPORTANCE OF THE TEAM “For me, the most important thing about leadership is recognizing that the team beats the individual every time. The most important thing that I’ve experienced as someone in a leadership position is the recognition and the humility that you can’t do all of this yourself – you are not smart enough and there are not enough hours in the day, and you don’t have enough clarity of vision. To me, it is crucial to recognize that what you need is a leadership team, not a leader.” - JAY COEN GILBERT, CO-CREATOR, B LAB

PATIENCE AND PERSEVERANCE “I think that good leaders recognize that change doesn’t happen overnight; patience and perseverance are pretty important. You have to have a plan, set reasonable objectives around improvement, and be patient with yourself, your organization, and your people. When you do, the payoff can be incredible.” - MOLLY CARTMILL, DIRECTOR OF CORPORATE SOCIAL RESPONSIBILITY, SEMPRA ENERGY

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THE OPPOSITE OF

BY NATHAN HAVEY

THE ORIGIN OF THE WORD “IDIOT” COMES FROM ANCIENT THE GREEK ἸΔΙΏΤΗΣ, OR IDIŌTĒS.

The term did not originally have the sharply negative connotation of contemporary usage. An idiot in Athenian democracy was someone characterized by self-centeredness, concerned almost exclusively with private gain as opposed to public prosperity. Idiocy was considered to be the natural state of ignorance into which all persons were born. Only by awakening to see the connectedness of things and by therefore engaging in the work of building and improving Greek society could a person become the opposite of an idiot: a citizen.

f you are holding a copy of Conscious Company Magazine, you probably recognize the responsibility business has for creating value for its many stakeholders (and not just its shareholders). You can see how doing business that way contributes to and strengthens our society. But how do you measure up against the Greek standard of citizenship? As the 114th Congress gavels into session in Washington, DC, it does so with an abysmally low approval rating. Gridlock and a feeling that the system is rigged have contributed to a crisis of faith in the US political process. In many state legislatures, the situation is little better. The voice of business is uniquely powerful in American politics, but most business people make little if any time to participate. It is an oft-cited observation that democracies elect the representatives they deserve. Decades of dwindling participation and domination of the conversation by self-serving, shortsighted business interests are largely responsible for creating the system as it is today. While it is very tempting to

disengage completely, doing so is exactly what ails us. In general, we allow our chambers of commerce and professional associations to advocate on our behalf, but these groups are still largely dominated by, well, idiots (in the Greek sense). They overwhelmingly advocate for their narrow and immediate self-interest, remaining blind to the collateral damage in their wake. If we are to create a paradigm shift toward conscious business in America, we must bring Washington along with us. But to do so, we must all raise the bar for ourselves to grow fully into our citizenship. Elsewhere in the pages of this magazine, there is an article by David Levine and Richard Eidlin of the American Sustainable Business Council. Already more than 200,000 members strong, the ASBC is the leading voice of conscious companies in Washington, and its influence in state governments is growing across the country. The ASBC is a great example of an organization doing the work that must be done, but it is only as effective as its members are active. It is not enough to be a member of

our associations. We must become active participants. We must wade through the long emails from our legislative and government affairs representatives within those associations, and raise our voices to affect organizational positions and eventually state and federal policy. We must tell our stories and share our values in the media, with our elected representatives, and with our trade associations. We must ask our colleagues to follow our lead. Ascendant is the idea that business exists to achieve the broadest possible prosperity for society as a whole. This publication is only the latest evidence that a transformation in global business is well underway. Yet, public policy in the United States lags far behind most of the developed world on this score. Unless we can continue our own awakening and catalyze a parallel transformation of our political system, our elected representatives will hinder our progress. All that is required to change this reality and accelerate our progress is for you to accept your responsibility and use your power as a citizen.

Nathan Havey founded Thrive Consulting Group in 2012 to help make conscious business the new business as usual. In the past two years, more than 30 organizations across 15 states have hired the Thrive team to help refine their purpose and create a program to achieve it. Nathan believes that conscious companies will create the world we all want to live in. Nathan is an active member of the American Sustainable Business Council and has participated in building several chapters of Conscious Capitalism. He is a regular speaker and trainer on organizing companies around a purpose beyond profit. More at www.ThriveConsultingGroup.com

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LEADERSHIP TRENDS BY THE NUMBERS

93% Percentage of CEOs and executives surveyed by Accenture and the UN Global Compact who see

sustainability as a key factor to success for their business in the future.

Percentage of businesses surveyed by McKinsey that are

incorporating sustainability into their overall mission and values.

70%

65%

Percentage of sustainability leaders surveyed by McKinsey who believe they achieve increased

Percentage of companies surveyed by the UN Global Compact that had

market share relative to direct competitors as a result of their sustainable products. 118 |

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committed to developing and/or assessing their

sustainability priorities at the executive level.

LEADERSHIP

LEADING INNOVATORS

THAT ARE INSPIRING CAROL SANFORD

CHERYL CONTEE

THE FUTURE OF FISH

I AM VERY EXCITED ABOUT CHERYL CONTEE, who is doing some different things with social media to change what people think social media is for. Cheryl, who founded Attentive.ly, is working on helping people see how they can serve change through social media. She helped the group MomsRising, which wants to change the way we think about motherhood and the role mothers play and how powerful they are in affecting policy. She has created a company that is helping nonprofits change public policy. She was involved in creating groups to help fight the battle between crack and cocaine. Basically, if you were black, you smoked crack and went to prison for four times or five times longer than the middle class professional white guy whose drug is simply called cocaine. She helped the group who was trying to change this policy using social media, using outrage, and using media in such an effective way that it actually caused Nancy Pelosi to introduce a bill. Congress has since signed the bill and many people are now being released from prison. That is what I call changing the system, really changing the system.

THE FUTURE OF FISH IS A NONPROFIT that helps to create a more transparent supply chain for seafood. They have people working together - not just knowing each other, but actually working together - from the boat and the captain, to the people who run the canning process, to the distributors. When you get Future of Fish products at the store, they will tell you the name of the boat captain,the water where it was caught, and who handled it. By tracing the entire supply chain and being transparent about it, the whole system is beginning to shift.

KULI KULI LISA CURTIS AND HER TEAM AT KULI KULI are using a plant substance called moringa that is very high-protein and filled with vitamins to make food products and bars, all while supporting women-owned farming cooperatives in West Africa where they source the plant. Their intention is to change the snack food bar industry. They are making a great product and make a really healthy bar. Most bar options right now are kind of semi-good; there are a few raw bars, but most of them really don’t have enough protein. I am very excited about what they are doing.

Carol Sanford has been leading major consulting change efforts in both Fortune 500 and new-economy businesses for more than 35 years. Her client list includes

“At its best, entrepreneurialism combines

initiative, innovation, and risk-taking

with a desire to bring real value to the world. To do this requires tenaciously challenging the limits (perceived or real) of what is possible.” From The Responsible Entrepreneur by Carol Sanford

Colgate, DuPont, Intel, Agilent and leaders of corporate responsibility such as Seventh Generation. Her work is also used in a Google Innovation Lab. Carol has published work in 10 different languages, including a series of articles in Executive Excellence and Stephen Covey’s newsletter and At Work. She holds undergraduate degrees from UC Berkeley in Economics and Public Law and a graduate degree from California State University, San Jose, in Urban Planning.

Photo: Kristen Img

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7 FASCINATING FACTS

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About the Millennial Generation

{

Millennials - the term for individuals born in the US between 1980 and 2000

2 1 3 7 4 Are the most diverse and

Are now the largest generation in the US, representing over

1/3rd

educated generation to date.

Nearly 65%

would rather make less money at a job that they love, as compared to making more money at a job that they find boring.

75%

of the workforce by 2025.

of the population.

would prefer to work for employers that take action on social or ethical causes that they care about .

Will make up as much as

Account for over

$1 trillion

in consumer spending.

Almost 90% indicate that they would be more likely to purchase products from a company that supports solutions to social issues.

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LEADERSHIP FOR THE MILLENNIAL GENERATION:

MAKE IT CONSTRUCTIVE, SUSTAINABLE, AND GENERATIVE BY JUSTICE CALO REIGN

initially started this article the same way many other articles that focus on the Millennials do - by listing the negative traits attributed to the largest generation in recorded human history. I, however, have taught, coached, and trained Millennials; I’ve been out to the clubs with them, call them my friends, counseled and consoled them, and done what many of their detractors fail to do; I’ve listened to them. I have come to a different conclusion about them than most and I believe that the style of leadership that worked on previous generations simply does not have the same impact on this generation. What seems clear is that Millennials don’t fit into the current political, economic, or social systems in the same way that generations before them have, and it can be frustrating for those in leadership positions trying to shepherd and direct them in the usual ways. The Millennials may never be “good little workers,” they may not always believe without question what people in authoritative positions say, and they might not think that seniority equates to good leadership. This doesn’t mean that they don’t desire and respond to leadership. The Millennials are smart, connected co-creators, and the leadership style that is successful in shaping them will not fight against these traits, but build upon them.

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CONSTRUCTIVE LEADERSHIP Millennials are not waiting on people in leadership positions to construct their reality of who they are for them; they generally have already got that covered. Millennials believe in themselves, they believe they will be able to accomplish their goals, and they believe they are capable of accomplishing the specific tasks before them. This may come across as entitlement to some who see things through a different lens, but taking time and energy to deconstruct their belief system can make Millennials apathetic and

angry, neither of which are traits that make for quality employees. Leadership that seeks to engage with Millennials will acknowledge them as individuals, acknowledge their desire to contribute (even when it seems misguided), and will acknowledge and even praise them when their contributions are effective. Instead of working to command subordinates, manage workers, or instruct followers, effective leaders of the Millennial generation will seek to create more leaders who will actively seek new ways to accomplish old tasks and who will have the confidence to handle the ever-changing environment of business.

“The same things that seem to have motivated previous generations do not motivate the Millennials...they want

purpose over a paycheck.”

LEADERSHIP

SUSTAINABLE LEADERSHIP

GENERATIVE LEADERSHIP

When I attended the United States Air Force Academy in 1998, there was a big push to change the way the cadre of trainers interacted with underclassmen. Gone were the days of hazing underclassmen and withholding food from them while trying to demand more out of them physically. The Air Force realized that to get the most out its future leaders, it needed to set them up for success - to do otherwise was unsustainable. The same is true for the Millennials; if you help them discover their talents, they will stick around and continue to learn from you. The best leaders of Millennials will help them learn to sustain their success and to perform consistently at a high level. Let little weaknesses fall by the wayside and, instead, focus on the strengths of your Millennials. Require your Millennials to complete multiple strength assessment tests and unpack their strengths with them. This will serve multiple purposes: 1) It will create opportunities to spend time telling them what their strengths are, creating greater engagement; 2) It will reveal multiple ways to leverage their strengths and talents for your organization; and 3) It will give them a sense of significance regarding how they can contribute to the mission. Strength assessments will also give you multiple tools to address what certainly is around the corner - if they have not already reared their ugly heads - and that is their flaws. A Millennial’s flaws, or severe deficiencies in mission-critical elements of the job, often reveal themselves during sustained periods of success when a Millennial has earned or been given new responsibilities. These flaws may be the result of a lack of training or could also be interpersonal and relational issues. Addressing flaws will create trust and build a sense of loyalty to you as you teach them to be unstoppable in their pursuit of excellence.

It is possible for strengths and flaws to exist within the same person, at the same time. While strengths can be used as a tool to offset and address flaws, it is unlikely that focusing on strengths will be a sufficient remedy. Some criticize the Millennials for lacking fortitude and say they crumble at hardships, but flaws are present in each of us, at every level of success, and in every generation. I will propose that Millennials are able to bounce back from hardships faster and with less damage because of their willingness to cooperate and collaborate with one another. Leaders of Millennials will create a sense of community inside of their organizations and the community will help carry the load as Millennials’ flaws are engaged and strengths are further developed. Effective leadership of Millennials moves away from an “us versus them” or “me and I” mentality and fosters a sense of “we” and of “oneness.” Effective leadership plays to Millennials’ feelings of interconnectedness and models the collaborative behaviors necessary to innovate new ideas. When everything is said and done, the same things that seem to have motivated previous generations do not motivate the Millennials. They want to gain experiences through their jobs, not to be chained to them, and they want purpose over a paycheck. They already see the world as interconnected, and they see themselves as major players in this world. We need them to be. We need them to innovate and collaborate, and we need them to feel like they are powerful in effecting change. We are moving into a conscious age of business and the Millennials and the generation coming after them will play a significant role in ushering us into this age. It’s time for those of us in other generations to either lead, follow, or get out of their way.

“

The Millennials are smart, connected co-creators, and the leadership style that is successful in shaping them will not fight against these traits, but build upon them.

Justice Calo Reign (BS, Behavioral Science - Leadership and Counseling, USAFA) has coached, trained, and instructed elite collegiate student-athletes at the Air Force Academy and University of Louisville. He is certified in NeuroPositive Coaching through the Applied Neuroscience Institute and continues to coach entrepreneurs, executives, world-class athletes, and entertainers to reach their highest potential. He is currently building a startup focusing on creating a generative entertainment industry. His blogs and podcasts can be found at www.sustyentertainment.com.

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SUSTAINABILITY LEADERS USE A NEW APPROACH TO

CREATING CHANGE BY CYNTHIA SCOTT

new set of leaders is emerging who are applying dynamic capabilities to create new models that are needed to develop innovative systems, products, cultures, and operations in their organizations. These sustainability leaders are pioneers - many working in roles that are newly formed or expanding their rolesâ&#x20AC;&#x2122; scope to provide strategic guidance and targeted implementation of a wide range of initiatives. These leaders are using sustainability as a â&#x20AC;&#x153;strange attractorâ&#x20AC;? to draw unlikely allies into a commitment to making change that matters. They need to apply engagement strategies and personal agility to overcome the doubt, resistance, and the complexity of getting things done. They must have an inner resilience that fosters collaborative relationships to build longlasting change. The systemic nature of many of these changes calls on sophisticated approaches to leading organizations and the people in them. Agile leaders are able to navigate individual, group, and organizational systems to translate ideas and technical expertise into the desired actions. Leadership for change requires a strategic vision, day-to-day conversations, and a level of personal resilience and agility that can challenge even the most seasoned leader. As a core faculty with Presidio Graduate School developing business and civic leaders, we have been challenged by over 750 MBA, MPA, and Executive Certificate students to develop their capacity to be leaders of sustainable enterprises. This requires a combination of academic training and personal development to embrace the complex, chaotic global environment to create the game-changing strategies, products and services, and behaviors that can support nine billion people in a thriving world. I am convinced that the challenges of making the changes necessary to foster a thriving world will require a bolder, more enduring form of stewardship, supported by a set of competencies that build on a combination of inner and outer capability. In short, I think sustainable leaders make choices based on seeing the world in the following ways:

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I am convinced that the challenges of making the changes necessary to foster a thriving world will require a bolder, more enduring form of stewardship, supported by a set of competencies that build on a combination of inner and outer capability.

Leadership for change requires a strategic vision, day-to-day conversations, and a level of personal resilience and agilty that can challenge even the most seasoned leader.

LEADERSHIP

SUSTAINABILITY LEADERS LEAD “INSIDE OUT” AND “OUTSIDE IN” Many leadership models focus on developing certain traits, skills, and competencies. Leading sustainability-focused change requires a different approach. Sustainability leaders must be more than just charismatic and inspirational to get their organizations to change. Sustainable leaders use an authentic mixture of “inside out” and “outside in” approaches, as well as personal resilience and courage, to challenge our culturally embedded ideas about what works. Sustainable leaders come to their work along two main paths: they either have the responsibility for initiating sustainability-focused work thrust upon them, or they initiate these roles as “intrapreneurs,” engaging their organizations from a values-based conviction that change in this direction is necessary.

FOCUS BEYOND SHAME AND BLAME In the past, most of our approaches to change have used threat in some form to motivate people. Leaders who use a positive view of what is working can build environments where people feel comfortable taking risks and practicing new behaviors. Asking people “what is working” generates an openness to change and fosters individual and group momentum. Leaders who are emotionally literate understand how to use their own experience to create the pathway for others to change and will inspire others to follow.

“

Sustainable leaders create and work in the tension between aspiration and the current state, which requires them to use imagination and engagement to move their systems forward. EVERYTHING IS CONNECTED

Sustainable leaders see systems of interaction, reaching out to create multiple partnerships across roles, functions, and industries. They are able to unite unlikely players, using the broad umbrella of “sustainability” to leverage change in many places. One of the most challenging requirements is to create shared accountability and adequate resources when no one group is responsible for “sustainability.” Leaders who see this web of connectivity in both business networks and personal relationships are able to build cultures of resilience and agility, seizing opportunities from unlikely connections, connecting innovation from one field to another.

CHANGE IS CONTINUOUS Leadership is a relative position. Sustainable leaders create and work in the tension between aspiration and the current state, which requires them to use imagination and engagement to move their systems forward. The organization moves as fast as the leader is able to change, requiring repeated personal and professional reinvention.

CONNECT TOP DOWN AND BOTTOM UP ACTIONS Leadership makes a big difference. Leaders can set the tone for change with their vision and strategy and those leaders who are able to engage on all levels of the organization to shape a shared vision will tap the energy and innovation that exists at all levels of their organization. Strong organizations are then able to connect their internal culture to their external brand, creating coherence for employees and customers.

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”

LEADERSHIP IS PERSONAL Leadership development is personal development. Reaching the higher levels of sustainable organizational adaptation requires the leader and the employees to go through their own journey of awareness and change. Sustainability leaders see their role as stewards of their industry and begin to make decisions to shape the future in a way that promotes sustainability for whole ecosystems. When people connect their personal sustainability to larger and larger circles of impact, they can begin to see their personal actions make a difference.

{

Leaders who use a positive view of what is working can build environments where people feel comfortable taking risks and practicing new behaviors.

Cynthia Scott, PhD, MPH, is the founder of ChangeworksLab, where she designs and facilitates workshops that promote sustainable leadership, high performance cultures, and innovative strategy. She is the co-author of 11 books, among them Leadership for Sustainability and Change, Getting Your Organization to Change, Rekindling Commitment, Take this Job and Love It, and Managing Change at Work. She is a Core Faculty member and teaches Sustainable Leadership at Presidio Graduate School, where she is dedicated to helping the next generation of sustainable leaders develop their capacity to grow high performance organizations. WINTER 2015

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COMMUNICATION SKILLS FOR COLLABORATIVE LEADERS

hy collaborate? While there are probably as many different responses to that question as there are people to answer it, one factor remains constant: we can’t separate collaboration from the “for what,” or the purpose of the endeavor. We collaborate for something bigger than what we can accomplish alone - a better world, a better environment, a better product, a more enjoyable workplace, a shorter timeline to reach our goal, or just because it’s more fun than working alone. If we could accomplish the goal (the “for what”) by ourselves, and do so quickly and easily, then we probably wouldn’t collaborate. BY RACHEL DAVIS

COLLABORATING FOR A SPECIFIC FUTURE OR GOAL

COMMUNICATION THAT CONNECTS

I have spent the better part of the past three decades facilitating people and groups as they work together toward some improved vision of the future, and I have learned that we, as human beings, tend to begin with an erroneous assumption. We often assume that everyone in the group is oriented around the same future. This is the first mistake to avoid, as it usually results in misunderstandings and, in some cases, wasted time, energy, and money by all parties. One of the questions I like to start meetings with is, “what do we want to accomplish (by x date)?” If it is the first meeting of a new collaboration, it is worth taking even more time for everyone to communicate their individual visions of our goal. Until a clear articulation of the “for what” future that we want to reach is clearly communicated and everyone is aligned, we can’t be sure that we are all on the same page. In a small collaboration of two to three people, we can take turns drawing “what I hear and see” on a piece of paper or small whiteboard and asking “what are you seeing” - are you seeing the same goal or approach or do you see something different? This helps get us literally on the same page and oriented toward the same (desired) future. With larger collaborations, this process of getting on the same page and aligned on a clearly articulated future or goal can take some time. In my experience, the time invested at the front end saves significant time and energy overall. The bigger, more complex, and more challenging the desired future or goal, the more we need collaboration and input from diverse perspectives and talents. With diversity often come differences - in perspectives, opinions, and worldviews. It is in these rich and subtle differences that we will likely come up with the best solutions in the end; however, those same differences can slip into division and even active conflict without the type of communication that consistently connects. 126 |

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I have had the good fortune of working with more than 100,000 people in many different countries and cultures. What I have learned is that, even when there are radical differences in our views, there are still many things we have in common that we can build upon. In fact, in my experience, we often have 90% in common in our human experience; it is the 10% in differences that can be problematic. Finding our common ground and using communication to highlight those things that we have in common allows us to build a solid foundation upon which to work out the differences. There are two places where we can generally find common ground: 1. Who we are as people - we all have family (parents, children, siblings, partners, grandparents, friends), life experiences, desires, ambitions, fears, etc. 2. What we each want - a common vision, future, purpose, or goal, even if it is as broad as “to be successful” or “to be understood, heard, or valued.” Chances are good that if we find ourselves in the same location, we actually have quite a bit in common. If/when the conversation gets heated or challenging, step back from the immediate disagreement and highlight the common ground. Building a bridge or connection across a potential divide can happen quickly if we are listening for the ways that we are connected in our purpose or connected as people.

LEADERSHIP

3 LISTENING DEEPLY FOR WHAT MATTERS When we talk about communication, the default is to think of only one part of communication (usually speaking). But communication has two parts - speaking and listening. By far the most powerful of the two is listening and, specifically, what we are listening to hear. It doesn’t really matter what you and I actually say. It matters what others hear and how they hear it. In the same way, it is how we listen that determines what we hear. If we listen to understand and appreciate the other person’s world (their perspective and experience), we will gain understanding and appreciation. Perhaps each of you will hear what you have in common, or how what one of you said was misunderstood, allowing you to re-state it in a way that is clear for both of you. Perhaps we will even hear and see the validity of how others perceive the challenge that is facing us in reaching our collaborative goal. In our willingness to hear another person’s point of view or perspective, perhaps our view will be clarified. Perhaps the inaccurate background assumptions that we both may have made will be brought to the light, allowing us to reach a better solution together. To work successfully in collaboration requires listening in a way that maintains or expands our relationships with those with whom we are working. This often requires holding two or more (seemingly) conflicting points of view in mind at the same time.

“

With diversity often come differences - in perspectives, opinions, and worldviews. It is in these rich and subtle differences that we will likely come up with the best solutions in the end.

Finding our common ground and using communication to highlight those things that we have in common allows us to build a solid foundation upon which to work out the differences.

” 4

SELF-AWARENESS AND ONGOING GROWTH We can have the idea that it’s good to be able to hold multiple viewpoints simultaneously; we may have heard someone we respect proclaim this is valuable, but unfortunately, no theories or tips from others can really help us develop the capacity to hold multiple different viewpoints. To collaborate and communicate effectively requires that something else be more important than our individual point of view. Collaborating with others is a now activity, which requires us to be present, open, aware, and conscious. While we can’t plan ahead for this, we can be well-prepared. We can expand our own individual consciousness through self-awareness and reflection practice. We can expand and deepen our embodied experience and wisdom through listening and practice. Like any other worthwhile skill, effective communication and collaboration are only mastered with continued practice, application, and internal growth.

Leadership Expert and Author, Rachel Davis, PhD.: Drawing from academic research and her extensive 30 years of practical experience, Rachel specializes in designing programs, curricula, and approaches that create high performance environments with accountability, balance, joy, and accomplishment. rachel@racheldavis.biz www.youatthecenter.com

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PARTING THOUGHT... Photo: Leslie Lindell

“NO ONE HAS THE ANSWER TO THE QUESTION OF HOW SIX (SOON TO BE EIGHT OR NINE) BILLION PEOPLE CAN LIVE TOGETHER SUSTAINABLY. BUT AN ULTIMATE SOLUTION IS EXACTLY WHAT IS NOT NEEDED. NO ONE HAD A PLAN FOR THE INDUSTRIAL REVOLUTION. NO MINISTRY WAS PUT IN CHARGE. NO SINGLE BUSINESS LED THE WAY. INSTEAD, COUNTLESS ACTS OF INITIATIVE AND DARING CREATED A CRITICAL MASS OF UNSTOPPABLE CHANGES. THE INDUSTRIAL AGE WAS NOT PLANNED, BUT INNOVATED. THE NEXT AGE WILL BE NO DIFFERENT.” - Peter Senge, The Necessary Revolution