World is Green

This is the new blue ocean strategy. Find a business/service/product which uses environmental resources (electricity being the biggest one), figure out a way to create new solutions to decrease their resource use and then add the green tag for branding. As an addition, if you can provide measuring systems, you have another revenue source.

The greening of data centers seems to go the same way.

ZdNet Australia has a new article on this space.

Being green, in terms of IT and datacentres, only very superficially has anything to do with saving the environment. In reality it is about cold, hard cash — and how to spend less of it.

CIOs are facing a challenge. There is a relentless demand for more powerful datacentres and the cost of power is increasing. Combine this with increasingly strict environmental laws and the issue becomes clear — IT needs to do more with less electricity.
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In order to meet these energy efficiency challenges, a series of innovations has sprung up, centred on hardware, software and datacentre design. The champion of these innovations is virtualisation.
[...]

Kumar describes a scenario in which a virtualised server moved from performing at 10 to 20 percent of its capacity to more than 80 percent capacity.

“In real power terms, a 300 Watt server which was running at 20 Watts is actually now running at 280 Watts. You are reducing the footprint but putting in more processing power, so the power per footprint has gone up,” Kumar said.

[...]

The sudden rise in green IT has created opportunities for vendors and business to profit from this blossoming market. Recent research from analyst firm Forrester has predicted that the global market for green IT will peak at US$4.8 billion in 2013, and then decline thereafter — as businesses reach peak efficiency.

Analyst group S2 intelligence predicts a potential market in “green accounting“, where firms pay to accurately measure their environmental impact. Such measurement would likely be software based, and would help to satisfy government regulation, customers and trading partners.

New opportunities beckon.

More TATA news. Yesterday, it was about TATA Motors plan to create viable eco-friendly cars. Now, it is about the small car. The TATA’s have plans to launch a small car in the Indian market valued at Rs. 100,000 (USD 2,600).

Economic times has more:

Mr Mashelkar also revealed how the small car concept first struck Ratan Tata, who’s now in the race to acquire two iconic British brands — Jaguar and Land Rover. “You know how ‘Ratan’ (Ratan Tata) thought about this small car. He talked to me on several things. One day, he was going on the road and saw a family of four getting soaked in the rain. That was when he decided to create a small car for all,” he said. “Just a month ago, I was at the Tata Motors’ factory in Pune, talking to their engineers and their fantastic team there. It was there that I had the privilege of sitting in that small car — the Rs 1-lakh car that they plan to roll out at Singur. It is incredible,” said Mr Mashelkar. “I sat in that car by the way, and it was amazing,” he said.

“I am a six footer and it’s spacious both in the front and in the rear. In terms of acceleration, it is equivalent to a Maruti 800 and has an incredible design finished by indigenous Tata Motors’ engineers,” Mr Mashelkar added.

Talking on the potential of economics of this car, the top-notch scientist said: “It will create a paradigm shift in low-cost transport and the whole world is looking forward to a car that efficiently runs 25 km on a litre of petrol and offers international specifications. These kind of fuel-efficient cars will be in demand as pollution is on the rise, climates are changing and fossil fuels are running out. People are looking at a new global eco-car and I have a feeling that this can be the new eco-car not only in the country but elsewhere — in other countries. I feel a sense of pride that it will be manufactured in India.”

At 25 km a litre it will be a great car for city driving if it matches the international standards. I have deep respect for the TATA group and especially Ratan Tata. If anybody can do it, it is his team. 2008 will be a year to look for.

Update:

NyTimes has more on the Tata’s bid to acquire Jaguar and Land Rover from Ford.

The combination of luxurious, specialized products and cheap, commodified ones may seem like an unlikely business model, but the Tata Group, the sprawling family-run conglomerate that owns a third of Tata Motors, is full of similar contradictions.

The group’s Taj Hotels command some of the highest rates in the world — one night in a luxury suite in the Taj Mahal Palace in Mumbai costs 110,000 rupees ($2,795) in high season. But the group is building no-frills hotels around India, with rates as low as 1,499 rupees ($37.95) a night for a double room in some cities.

Tata owns a chain of high-end jewelry stores, Tanishq, and makes fertilizer though its Tata Chemicals unit. The company has an exclusive charter airplane business, serving clientele like chief executives and Bollywood stars, and owns Tata Sky, which beams business news and hit movies into a million Indian households.
[...]
As in many family-run conglomerates, there is a “strong emphasis on the long-term perspective,” said Subir Gokarn, Standard & Poor’s chief economist in Asia. Tata focuses on building institutions, on social responsibility and ethics, and on fair dealing with government, he said.

But it is also highly profitable. After-tax profits at Tata Motors, which is publicly traded, increased 21 percent in the first half of this fiscal year, to 9.94 billion rupees ($253 million).

The Mint writes about new market opportunities for Coir. From the Wikipedia: Coir (Etymological origin: from Tamil and Malayalam - kayar - cord) is a coarse fibre extracted from the fibrous outer shell of a coconut.

Environmental degradation has had a surprising side effect. It has given a new lease of life to Kerala’s age-old coir industry and fuelled the rise in demand for two of its products—coir geotextiles and coir pith. Meshes or nets woven from coir are known as geotextiles.

A.C. Jose, chairman of the government trade promotion body Coir Board, says with efforts to check soil erosion and prevent landslides gaining ground globally, coir geotextiles have found new takers from the mining industry. These are laid on slopes to check soil erosion.
[...]
Coir pith, made from retted or cured coconut husk after the fibres are separated, is being widely used as manure. The husk pulp is decomposed after immersion in water for 6-10 months. The fibre in them is then separated and the residue, pith, is dried and used as manure. Coir pith is the largest product being exported from India, says Jose.

Every day we see a new market opportunity being presented from the greening and environmental issues facing us.

Artisans around the world create products of high quality however, like any product unless there is a marketplace for their products there is no way to realise that value in money, fame and prosperity.

Ebay and World of Good has initiated a project called Project Good, where the products are from craftsman around the world and the money spent on these products will be making a family better off.

The important thing in this kind of a project is the quality of the products. Due to the people behind this project, the social story can be believed upon. This combination can be very good in driving sales.

However, for me it is important that consumers buy products based on “their needs” and these could be design, quality, fun, price, and other economic aspects. The social story should be a “free prize inside” and it will drive sales. But in the longer run, sustainable consumer buying should come from the quality and design of the craftsmanship.

The Australian Financial Review (AFR) carried yesterday an article by Scott Gallacher about Food Miles. It is a very balanced look at an idea which is gaining high recognition by consumers around the world; but especially in the UK and Europe.

(Unfortunately, I cannot link to the AFR article as the paper has decided to restrict its online content, even to its paper subscribers. For a paper subscirber like me; I need to pay additional monthly fees to access a online software version which cannot be linked. Think about the decision. Which publication in the world creates a online non-linkable, non Googlable edition in the year 2007. Considering the monopoly of the business paper in Australia it may last for a while but slowly its ability to influence matters will come down especially with similar coverage by its sister publications and increased online coverage by The Australian and other News limited papers.)

Coming back to Scott’s article.

Food Miles is the idea of calculating the distance travelled by a particular food item (fruit, veggies, meat, dairy products, wine) from farm/production to table. The contention is that; the greater the distance the higher the transport emissions and hence, less sustainable.

This perception of carbon content of food is very important for companies engaged in the export of food
products.

The Guardian article in 2003 suggets this:

our food is transported further than ever before, often by air. That makes it a major contributor to greenhouse emissions and climate change. It also means a heavy dependence on a resource that is not only finite but also highly politically-charged: oil. So our food supply is more vulnerable than before. By blockading a few depots during the fuel strike in the autum of 2000, protesters were able to bring the system perilously close to collapse.

Similar ideas in The Independent in May 2007.

When I pick up a carton of organic Chilean blueberries, Argentinian blackberries, or Zambian sugarsnap peas, all air-freighted from their countries of origin, my carefully constructed rationale for buying organic is shot full of holes. Only the most stubborn climate-change deniers still challenge the notion that air-freight, with all its CO2 emissions, is contributing to global warming and helping to heat up the planet towards the point of no return. Air freight emits more greenhouse gases per food mile than any other mode of transport. This is what I am aiding and abetting when I pick up any air-freighted product - whether or not it carries an organic stamp.

However, what is the truth? or should I say the ’whole truth’. Clearly transportation is not the only aspect of food production and distribution. Water, fertilizers, energy, production efficiencies and much more go into any food production.

Scott suggets two studies which have a different opinion.

The first study is by Defra, the UK Department for Environment, Food and Rural Affairs, titled “The Validity of Food Miles as an Indicator of Sustainable Development” conducted in 2005.

The study suggets that “a single indicator based on total food kilometers is an inadequate indicator of sustainability“. It provides data on the economic, social and environmental impact of food transport including pollution, congestion and noise. The interesting thing it finds is that most of the impact of transport is for food within UK (cars to supermarkets, trucks to distribute around the country etc) compared to international transport. In the international area, if transported by sea or rail it is much better than Air.

Coming to the life cycle of food Defra’s study suggets that “a case study showed that it can be more sustainable (at least in energy efficiency terms) to import tomatoes from Spain than to produce them in heated greenhouses in the UK outside the summer months. Another case study showed that it can be more sustainable to import organic food into the UK than to grow non-organic food in the UK.” Again this can change from case to case depending on the type of international transport used.

A second study by the New Zealand based Lincoln University (PDF) in 2006 shows that the carbon footprint of lamb, dairy products and apples are far less than that of their european equivalents even after the long journey from New Zealand to Europe. A simple reason is that NZ products are produced more efficiently than European ones.

They have undertaken a detailed anaylsis of a various inputs and outputs in farm in NZ and compared this to the ones in Europe and then arrived at this conclusion.

This entire exercise is important because from a business point of view if customers start buying their products based on “food miles” then; a large number of exports from countries like NZ and Australia and other places could be effected.

Considering that between the 2003 Guardian aricle and the 2007 Independent article, the above two studies have been published the explanation of Food Miles has not changed.  This is dangerous territory. Like the push against nuclear power; this suggets that there could be a strong idealogical notion around food miles.

A simpler explanation to all this is to look at the price of a product. If a product is cheaper; in general;
it means that it would consume lesser resources. The price of a product would encapsulate the energy, transportation, inputs, labour costs and other resources used in creating and distributing the product.

A much better explanation of this comes from the economic concept of Comparitive Advantage; which was first suggested by David Ricardo.

Lauren Lansberg explains:

Someone who is the best at doing something is said to have an absolute advantage. Lance Armstrong has an absolute advantage at cycling. For all I know, Lance Armstrong may also be the fastest typist in the world, giving him an absolute advantage at typing, too. Since he’s better at typing than you, can’t he type more cheaply than you? That is, if someone has an absolute advantage in something, doesn’t he automatically have a comparative advantage in it?

The answer is no! If Lance takes time out from cycling to do all his own typing, he sacrifices the large income he earns from entertaining fans of the Tour de France. If, instead, his secretary does the typing, the secretary gives up an alternative secretarial job—or perhaps a much lower salary as a cyclist. That is, the secretary is the lower-cost typist. The secretary, not Lance Armstrong, has the comparative advantage at typing! The trick to understanding comparative advantage is in the phrase “lower cost.” What it costs someone to produce something is the opportunity cost—the value of what is given up. Someone may have an absolute advantage at producing every single thing, but he has a comparative advantage at many fewer things, and probably only one or two things. (In Lance’s case, both cycling and also as the entrepreneur behind the yellow LiveStrong wristband.)

[...]

The moral is this: To find people’s comparative advantages, do not compare their absolute advantages. Compare their opportunity costs.

The point is simple. If NZ has a comparitive advantage in producing lamb meat; then it provides UK the opportunity to spealize and create another product at a lower cost. The result from a carbon point of view is that it will decrease the carbon footprint of both the products.

This case underscores the point that it is important to question the agreed upon wisdom of the experts and be open minded in our thinking.

Alice Kenny on the increasing carbon offset deals in the market:

The voluntary carbon market surged 1000 percent over the past two years, according to recent reports. It racked in sales of over $100 million last year and is set to double again by next year. Yet no single standard exists to appraise the quality of marketed carbon offsets, forcing consumers to rely on advertisements for much of their education. In the short term, this could prove a bonanza for businesses marketing carbon offsets. But in the long term, it could compromise this consumer-driven market’s credibility, threatening inroads made in the battle against global warming.

The voluntary carbon market is not only just a first step; it is also a baby step. Voluntary offsets can lead the market but cannot solve the problem of global warming. Most scientists agree that seven billion tons of carbon emissions must be prevented from entering the atmosphere over the next 50 years to make a dent in global warming. The voluntary market can only deliver about 1/10,000 of these emissions cuts, Trexler estimates. Its strength, then, lies in its potential to spur massive government efforts to limit carbon emissions from large-scale emitters. If consumers lose confidence in their ability to fight global warming, they may be less likely to agitate for these reductions.

Jennifer Kho writes about the growing regulation in electronic waste and the opportunities present for companies all over the world in the supply chain.

Imagine a mountain of trash weighing as much an oil tanker. That’s how much electronic waste the world discards every hour, according to Greenpeace.

New environmental regulations that go into effect in China on March 1 aim to shrink that mountain of waste into a molehill. The Chinese effort is the latest attempt by governments aroudn the world to tackle the problem of growing electronic waste. But while makers of computers, cell phones, and other electronic gadgets might applaud that aim, many worry that they won’t be able to comply with the new laws in time.

The new laws are hitting the electronics industry hard. Companies like Dell, Hewlett-Packard, and NEC have all redesigned their products to comply with E.U. regulations, basically making Brussels the de facto arbiter on world standards.

But whatever their source, the new rules have forced changes in materials, designs, and processes, opening a mountain-sized opportunity for new players throughout their supply chains.

But no matter how much it costs companies to comply with the new regulations, it almost certainly will cost them more in fines, or worse outcomes, for ignoring them. Apple last year pulled its iSight web camera from Europe after it decided that it would be too expensive to meet RoHS specs; by December, Apple stopped selling the product in the U.S.

To be fair, the electronics industry is being asked to implement extremely complex changes in a short amount of time, says Elizabeth Grossman, author of the book High-Tech Trash. “I couldn’t think of another industry that operates on such a large scale internationally that is being asked to make these kinds of changes,” she says.

Corie Brown in the Los Angeles Times about the changing wine map due to climate change.

A growing number of climatologists are warning that by the turn of the next century, such a radically altered wine map could be the new reality. They say man-made greenhouse gases warming the planet are expected to shift viticultural regions toward the poles, cooler coastal zones and higher elevations.

“I don’t think you can make a vineyard decision today based on historical information,” says David Graves, one of the owners of Napa Valley’s Saintsbury wines. “You have to factor in climate change.”

No question, says London-based wine critic Jancis Robinson, global warming is changing wines. “Dry German wines now are seriously delicious. English wines and Canadian wines have benefited.” On the other hand, she says, wines from warmer regions including Spain and Australia are suffering the rise in temperature.

The acute environmental sensitivity of wine grapes separates vineyards from other agricultural systems, says Dan Cayan, a climate researcher at Scripps Institution of Oceanography. “If you believe the viticulturists and their classifications of where premium wine can, and cannot, be produced, and you impose the global warming projections,” he says, “you find some areas would possibly be thrust into a climate no longer suited to the grapes now grown there.”

Says Koch: “Grabbed in an aggressive manner, global warming is a challenge that can be solved.” Whether they like it or not, he adds, California vintners “recognize that we (the Wine Institute) are on the cutting edge of this global environmental issue.“

Scanning the environment and innovating for future changes is the crux of business strategy. The Wine Makers have their work cut out for them.

In marketing especially, high-tech marketing it is important to understand the ‘learning curve’ needed by customers to buy or use a product or service. The steeper the learning curve the tougher the sell.

In sustainability it is the same. Lets take the example of the food sector. If customers need to understand the vast amount of information and knowledge required to understand the life-cycle of the food they eat and then compare the various food products on their own it will be a nightmare.

Expecting customers to do the research for ethical and environmental reasons is right in moral terms however, in the harsh reality of the practical world, it is not possible for customers to do this.

In the world of marketing for example Brands provide a easy to understand message. In a similar sense, the CD and MP3 player markets have followed the button design of the cassette player. Why? To make it easy for the customer.

One such product or idea in the Eco world is labelling. A standard label provides information to a customer in terms which is easy to understand and consistent on all products.

David Miliband, the environment secretary in the UK, is suggesting a eco-label scheme for the UK food products and clearly he understands the challenges.

This kind of “carbon labelling” would help both consumers who often felt “confused and powerless” and producers who felt their environmental efforts were going unrecognised and unrewarded, he said.

Tesco, which said in January that it planned to introduce new labels on the 70,000 products it sells to allow shoppers to compare carbon impacts.

It is currently investigating how to develop a “universally accepted and commonly understood” measuring system and has not said when labelled products will be in its stores.

“This is not an easy piece of work and will take time, particularly if this includes the whole life-cycle impact of food from production to distribution,” he said.

“In the shorter term, we want to develop environmental standards specifically for food production. This could cover a range of factors including energy inputs, fertiliser use, soil management, waste management and water pollution.”

The idea to provide a ‘eco label’ similar in design to a nutritional one is a good idea as it means a lesser learning curve for the customer.

The goal should be to create a label which is consistent, adheres to the highest standards and encompasses the entire life cycle and not just the ‘carbon’ cycle of a product.

Additional Resources:

• TreeHugger suggests Eco-labels.org as a fact-checker for all “green label” claims.
• A good introduction to Eco Labels (PDF) from Landcare Research NZ.

Textiles could be one of the most un-sustainable products in the world. In their entire lifecycle from growing the raw material or creating it from oil to manufacturing and selling and final disposal they can create a serious problem.

The Worsted Witch provides an excellent overview of “Textiles and Sustainability“.

She says:

Not all textiles are created equal. Some fabrics, such as polyester and nylon, which are petroleum-derived, are downright unsustainable. And although rayon is composed of wood pulp, its production is a polluting bad boy. Even ubiquitous cotton isn’t untouchable…

And continues by quoting from the an/Feb 2006 issue of Natural Home & Garden had this to say:

The textile industry creates a host of pollution problems. Factories discharge dyes and chemicals into waterways, and they release heat, fly ash, formaldehyde, and sulfurous and nitrous compounds into the air, thereby contributing to acid rain. Textile packaging, drums, and toxic chemicals are dumped into landfills. Even the used fabrics themselves are a problem. Many can’t be recycled because of their mixed-fiber content.

In this context, The Mint talks about the recent textile trade fair in Paris, Texworld, (Free Reg.) where organic cottons and fair-trade were the new trends helping companies to cash in.

As consumers wake up to global warming and globalization, ethical issues are gaining ground and spinning more and more hard cash in the competitive world of international textiles.

And textile ground-breaker Tencel, one of the world’s leading companies highlighting health and environmental concerns, said business was growing. “Demand for organic cotton is gaining momentum,” said Ram Srinivasan, general manager, marketing, KG Denim Ltd.

Socota uses clean cotton grown in Cameroon, which is then spun in Madagascar, woven in Madagascar and Mauritius, and turned into garments in Madagascar.

But as buyers worldwide look increasingly to eco-friendly fabrics, the ground-breakers in the field are having to look beyond purely environmental concerns to market their goods. Austrian firm Lenzing, which produces the new-age Tencel fibre made of wood pulp that revolutionized textiles in the 1990s, claimed that the fibre was perfect for people with sensitive skin.

As The Worsted Witch reminds us, “When a textile is labeled “organic,” it generally refers to the fiber itself, as opposed to the textile production process.”

There are benefits at different life-cycle stages of the organic and eco-friendly fabrics trade, both for consumers and producers however, in the larger scale of things it is important to see that organic cotton may travel half way around the world to reach the ethical customer.

Resources:

• A tutorial from the Charles Sturt University in Australia.