Using environmental practices to cultivate business growth
Content sponsored by Bank of America, written by me, and originally posted on Minneapolis/St. Paul Business Journal
There is no shortage of research proving companies that pay attention to their environmental, social and governance (ESG) practices are likely to benefit their bottom line.
Simply put, ESG is good business.
But while most companies recognize these practices as critical to the success and longevity of their core industries, some find difficulty with practical implementation — especially when related to the “E,” or environmental factors.
Here, we learn from three companies that are putting a focus on that “E” factor to boost employee and consumer satisfaction, create opportunities and change the world for the better.
What are your core businesses?
Cindy Brown, president, Chippewa Valley Bean Co. Inc.: Chippewa Valley Bean is one arm of the family’s agri-business, which my parents started in 1973. We work with about 100 farmers and handle a large percentage of the world’s kidney beans, exporting about 70 percent of them. While we also have pulse, a dry bean similar to a lentil or chickpea, our main crop is kidney beans, as it is much more sustainable as a plant-based protein that can help feed the world. We know we will have to rely on plant-based protein in the future.
Emilio Tenuta, vice president of global sustainability, Ecolab Inc.:Ecolab is a global leader in water, hygiene and energy services and technologies with nearly 50,000 associates working in 170 countries alongside customers in 40 different industries. Our purpose is to make the world cleaner, safer and healthier – helping businesses succeed while protecting people and vital resources. We touch a wide range of industries, from universities to tech to manufacturing to hotels.
Clay Norrbom, managing director, Juhl Clean Energy Assets Inc.:Juhl goes back about 30 years as a clean-energy company. We developed the first wind farm in Minnesota. Over the years, we diversified to work with all clean energy technologies — wind; solar; natural gas combined heat and power; and hydroelectric, combined heat and power — in an efficient way. Our customer base is selling direct to large companies, like industrial businesses, universities and small utilities (municipal and small co-op utilities) that have not generated electricity but would buy renewable energy directly.
What are some of the critical changes, disruptions or risks that you’re seeing in your industries?
Norrbom: When the grid was coal and nuclear, you needed a small number of very large plants owned by a small number of players. Companies bought (their energy) from those large utilities. Technology has advanced and the costs of renewable energy are coming down. For wind, solar and even engine-based projects, equipment is becoming much more efficient and cheaper.
Now, for the first time in decades, they can buy their own generation of electricity. Our competition now is the grid. We find our customers are interested in cleaner, cheaper, and more reliable energy. Companies that had a backup generator now want something reliable and clean.
Brown: The biggest risk right now is from climate change and longer periods of dry weather. Then, when it does start to rain, the storms are so much more intense. I’ve watched areas in southern Minnesota that just can’t get rid of all the water that comes down. Also, higher evening temperatures affect the growing of some crops.
Tenuta: Water scarcity or water stress is an increasing concern for industries. And our global water quality and quantity is changing: The United Nations expects a 40% fresh water gap by 2030. Industries are starting to see the real effects of not having enough fresh water to do business. This has the potential to dramatically disrupt business operations.
How do you manage those risks and disruptions?
Tom Kwak, CFO, Chippewa Valley: We’re looking at every way we can practice better efficiencies, which can also come with reduced costs. We are converting irrigation systems on the farm and putting in controls to use …a computer-driven system so water is only applied when absolutely needed. We’re looking at installing lighting that’s LED and solar-powered in our warehouses and distribution centers and looking at climate control. We are installing plug-in access for electric cars to encourage employees and converting a lot of our carbon-based activities to be more electric driven as opposed to propane.
If the (electrical) grid goes down, it could take weeks to come back up. We had to look at how we can operate with back-up generation of electricity. Each year, we’re checking off another box to ensure that we’ve got the correct financial means in place to survive a climate situation.
Norrbom: There are a lot of companies interested in building renewable energy or having it be part of their electrical supply, but when push comes to shove they look at whether they are going to invest in renewable energy or in their businesses. We can break down the barriers.
We tell the customers we work with, if they want to own renewable energy or clean energy, we’ll do the engineering. But if you don’t want to own it and want to use your capital in other ways, we’re willing to build and own it ourselves and sell you the energy.
Tenuta: For many of our customers, productivity and quality are crucial. Water is a dependency for many businesses, whether that’s using water to paint automobiles or clean and wash dishes in a hotel.
Connected devices and technologies allow us to use data to understand the variability of water supply in our customer operations and gain insights into any risk factors they face with the way they manage water and energy. Smart water management solutions exist today to help reduce the risk of operational disruption.
Why are effective environmental strategies important?
Norrbom: Businesses see it as an opportunity to engage their customers and employees and there’s interest from shareholders looking at companies that are doing something to address their long-term electricity and energy consumption.
A company like a large manufacturer can achieve its environmental goals, whether that’s a major reduction in carbon or a major increase in renewable energy, while at the same time saving some money.
Tenuta: When you implement a smart water management strategy in your operations, there’s a positive impact to your bottom line. Environmental changes don’t have to be at odds with your business objectives. Companies want to do business with companies that are delivering the benefits of product design but with a smaller environmental footprint.
Not only do environmental strategies help your business address potential risk, they are also incredibly valuable for engaging employees. Sustainability is integral in everything we do. That is part of the discussion millennials want in a place of work. They want to be able to work for a company that is growing and doing good in the world.
Brown: There aren’t a lot of financial benefits at the start because you’re investing in change, but there are an awful lot of community benefits. When we come back to the ability to feed people, and tackle hunger, we want to take care that we can still produce enough food and still take care of our environment.
We worked with the United Nations on sustainable development goals and looked at how they can affect our business and how we can help them. We use food and our donation dollars to World Food Programme, NGOs and food banks to help children get food and an education and got our U.S. growers involved as well.
It’s very beneficial to everyone to see that what we are using we are using appropriately.
Likeminded people see opportunities and appreciate how we are doing business. When we are doing the correct things from how we grow our crops, manage, minimizing footprint. customers believe in that and like that.
A message from Katie Simpson, Minnesota market leader, Bank of America Merrill Lynch
Today there are a wide array of challenges simultaneously competing for our attention across the globe, but one of the greatest challenges we face is climate change and its impact on the global economy.
At Bank of America, we are focused on responsible growth. We know that in helping to accelerate the transition to a sustainable, low-carbon economy, we are also helping to drive economic prosperity for our communities.
Through our third environmental business commitment, we are deploying an additional $300 billion in sustainable finance by 2030 through lending, investing, capital raising, and developing financial solutions for clients in Minnesota and around the world. This goal brings Bank of America’s total commitment to more than $445 billion (2007-2030). We are mobilizing capital to scale the solutions needed to address climate change and demands on natural resources while creating business opportunities for our company. In Minnesota alone, we’ve deployed $424 million in capital towards environmental business since 2013.
But Bank of America’s capital deployment is doing something else: it is also helping to create broader economic opportunities. That includes supporting new, well-paying jobs, increasing economic output, and growing GDP as we scale investments to develop the critical solutions needed to build the sustainable economy of the future.
Our firmly held belief is that tackling climate change is not just an environmental imperative, but it is also an economic opportunity and that all of us must band together to build a more sustainable local and global economy.