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By Richard Seireeni |
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| How Is Green Business Doing Today?
by Richard Seireeni, Brand Architect March 3, 2009 |
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The Dow closed below 6800 today. The last time that happened I was in my forties and still able to ski black diamonds at Mammoth. Aside from an annoying time check, I'm sure this news motivated a lot of bloggers to get blogging, including me. I've just published a book titled The Gort Cloud about the brand building and marketing experiences of America's leading green brands. I was curious to know how they are doing. So I asked them, "How is your green business doing today?" First to respond was Carsten Henningsen, founding director and chairman of Portfolio 21 Investments, "Speaking from the green multinational perspective: Portfolio 21, a mutual fund investing in greener corporations worldwide, is experiencing negative performance like the rest of the world; however, this green basket of 105 companies is outperforming the markets. In other words, Portfolio 21 investors are not losing quite as much as the rest of the markets." Well, that is reassuring, but who agrees with him? A report just released by the business consulting firm A.T. Kearney reported, "during the current economic slowdown, companies that show a "true" commitment to sustainability appear to outperform their industry peers in the financial markets. Indeed, in 16 of the 18 industries examined, companies recognized as sustainability-focused outperformed their industry peers over both a three- and six-month period, and were well protected from value erosion." And there are other reports echoing the same conclusion, some of which were aggregated in a recent article by the prolific and prescient writer, Joel Makower, in GreenBiz.com. This follows one of my own posts on GreenBiz titled, "Wall Street vs. Green Street: Who is Doing Better?" So, like the rest of us, I'm wondering why I didn't follow the sage advice to invest in the things you believe in. Instead, my not-so-green retirement portfolio is in shambles. So if we leave the financial investment world and head over to the personal hedge fund called "your home", we have the perspective of Chris Bartle, founder of Green Key Real Estate, "In 2008, we definitely felt the downturn in the economy and especially in the real estate industry. We only grew revenues by 50%. However, we tripled the number of franchises we have, tripled the number of agents we have, all while most of our competitors were losing agents and offices. So, our revenue per agent declined, but we continued to attract agents and franchisees who see green as the future of real estate. We are building the business for the return of the market." Well, they are not making more land but we are certainly making more people. When the housing market comes back, as it surely will, greener buildings should command a premium, especially given that energy costs are not going to decline and concerns about indoor environmental quality are only growing. This should be good news for three other companies featured in my book, Interface, makers of FLOR carpet tiles, YOLO Colorhouse, manufacturers of low VOC paints, and Michelle Kaufmann Designs, designer and manufacturer of green prefab homes. (Update: Sadly, MKD has announced that it is shutting its doors as of May '09.) Shifting gears, let's take a look at one of the founding industries in the green movement: food. It's no wonder that food was the jumping off point for sustainable and healthful products given that food is ingested. LOHAS, the pioneering lifestyle advocates in this space, are known for the mantra, "No impurities in the temple." Chief advocate for this belief is Gary Hirshberg of Stonyfield Farm, "In general green businesses, like Stonyfield, have more loyalty from their consumers which cushions the blows in times like these. Other companies that do not have value-add propositions can only sell on price; but, when your brand offers added health, safety and environmental benefits, consumers stick with your product and look to save money elsewhere in their budget. In all of my 26 years at Stonyfield, never have I watched sales more closely - and its daily fluctuations. Our category (yogurt) is flat but we are growing slightly, so in fact we are doing better than the two leading brands in the category. Stonyfield is a sustainable brand; our competitors are not. The same is true for other leading companies - Honest Tea, Sambazon, Applegate Farms - all sustainable brands and all in double digits. Not growing as fast as they were but still growing, which in this market is excellent. So yes, the performance of sustainable brands is outpacing their counterparts, even when the market is down and the consumer is worried." I would not be surprised to hear that three of Gary's Vermont neighbors, Ben & Jerry's Homemade, Seventh Generation and Green Mountain Coffee, would agree. They too are subjects of my book. The paper and publishing industries have also taken a hit, but George Milner, chief sustainability officer for Mohawk Fine Papers has some opinions, "Some years ago, I wrote a paper in which I referenced a research project that was conducted by the Roper Organization for a corporate client. The Roper study, updated in 1992, was entitled "The U.S Turns a Darker Shade of Green." It equated five levels of environmental commitment, each of which is a predictor of purchase behavior. True-Blue Greens - "true environmental activists and leaders ...convinced that individual actions can make a difference." Greenback Greens - willing to "pay significantly higher prices for green products." Sprouts - "show middling levels of concern about environmental problems, but their involvement in certain kinds of environmentally responsible activities, can be rather high." Grousers - "relatively uninvolved in pro-environmental activities...justify their indifference by citing factors beyond their control." Basic Browns - "least environmentally active ...they do not feel the need to rationalize their lack of effort." All elements of the paper business, manufacturing, distribution, and printing have seen a significant decline in sales as the economy continues to contract. Everyone is getting a real-life lesson in macro-economic theory. Institutional customers that can be categorized as "Grousers" or "Basic Browns" are the first to fall off the sustainability wagon when confronted with a weak market. They look for the cheapest product that will do the job. Even during the best of times, they purchase sustainable products only if there is some compelling business reason to do so. Their purchasing decisions are not guided by altruistic concerns; they are motivated entirely by self interest. "Sprouts" can go either way depending upon the issue of concern. Their magnanimity is limited and their commitment to environmental stewardship is not carved in stone. The "True-Blue Greens" and "Greenback Greens" will not waver. Sustainability is their mantra. What they will do though in times of economic stress, is seek ways to consume less. If we did not have suitable products we would be locked out of these markets, which would make it much more difficult to cope with the current business environment. Although we have seen a loss of demand in these markets, there has been no loss of commitment to sustainable products as evidenced by procurement specifications. So, having said all of that, we just completed an acquisition. Announced this morning." For those in the green marketing and advertising world, there is the experience of Marty McDonald of the Seattle agency, egg, "We have not been getting as many calls for new opportunities, but still, a few very significant ones have come through in the past month -- a very large brewer and a large consumer products company -- which bespeaks a concerted and committed approach to continuing down the path to sustainability in spite of the hard times. This is encouraging. We are fortunate to be working with a large utility on a significant energy project around efficiency and renewables, so unless you have been under a rock for the last 4 months, you'll understand the upside in this opportunity. We also work with food brands like Nature's Path Organic Foods, and while there has been some softening in sales across the board in the organic category, in Nature's Path's case, they have a strong brand with a committed core user who will continue to buy our products." Rounding out this perspective are the opinions of one of the original thinkers and inventors in the green space, Spencer Brown of Rent-A-Green Box, the green moving solution. Spencer has a long history of creating solutions, more recently solutions that will bring us closer to the Age of Sustainability. Spencer shoots from the emotional hip, "People are so tired of doing things the same old way that if there's a new choice, one that is cheaper and greener and makes sense, they (will support it because) they are doing something good for themselves and the planet... and (if) it's new, they want new... out with the old and in with the new... its like a weird thing... green business is good, bright, feels good, the right thing in a world of wrongs and mistrust... and lies and all of the BS that we are seeing... green guys are the new eco-heroes of the economy... That's a huge plus, and I think green companies are getting these fence sitters who are like.. wow... I really want something that makes me feel good... so out with the old and in with the new... and green is serving that feeling." Well, that's how I feel. Out with the old. In with the new and the green. Damn the torpedoes. Full green ahead. This article first appeared in The Huffington Post. © Rick Seireeni, Brand Architect and President The Brand Architect Group is a strategic brand consultancy with offices in Los Angeles, Tokyo and Shanghai. Project specialties include retail, food service, banking and real estate development.
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