The Inspired Economist

Sometimes we think we have to change governments and corporations in order to see environmental change, but change is just as powerful when it happens one person at a time. And sometimes it’s easier to do. 

About a month ago, I made two posts about the environmental efforts of SunChips, a snack food company. I had become excited when I discovered, quite by accident, that one of my favorite chips was packaged by a company with a deep environmental commitment. It’s always nice when you discover something that you love anyway has a secondary environmental benefit. Makes me feel better about eating junk food. 

Yesterday, I ran into a guy who was eating a bag of them. I joked, “Hey, did you know that SunChips’ packaging is one-third compostable?”

He immediately perked up. “Really? I didn’t know that. Cool!” 

Then he added thoughtfully. “I enjoy using the environment. But I don’t know much about saving it. I drive a diesel truck.” 

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Last week, San Francisco’s Mayor Gavin Newsom passed into law an ordinance that requires all residential and commercial building owners sign up for recycling and composting services. Composting services?

Yes, joining other similar programs in Seattle, Boston, San Diego and Pittsburgh, residents will be required under threat of fine to contribute their yard waste and food scraps. The fines aren’t meant to aggravate, rather Mayor Newsom is interested in incentivizing compliance.

On the face of it, the composting effort seems a bit complex in its implementation and infrastructure. Or is it? In actuality it’s fairly straightforward, it simply requires a mindset shift with an extra few pieces of equipment at the homestead and office. Of course we all groan when we think we might have to throw our banana peels into a separate bin. But once we’re used to it, and our city is at 90% waste efficiency with community gardens, urban parks and micro-farms benefiting, what’s to deter us from making a little extra effort and re-train ourselves now?

Herein lies the challenge. The opportunity for San Francisco will be to imaginatively engage us in a herculean effort to educate AND motivate compliance.

The “Reduce Reuse Recycle” campaign has gained some strong ground, thanks not the least in part to its proficient use in elementary school these days (what parents have not heard their kid come home chanting this?). It’s a catchy phrase with an easy icon that we all recognize. And the three descriptive words help us understand at a base level both our actions and the big picture. No small feat.

And there have been other more entertaining efforts. The “Got Milk” campaign introduced by the California Milk Processor Board in 1993 has been credited with increasing milk sales nationwide. The San Francisco based ad agency Goodby Silverstein & Partners created that one. And remember the California Raisins? Introduced in 1986 by the California Raisin Advisory Board, another top agency Foote, Cone and Belding created that one.

This is not to say that all campaigns need professional-grade characters with narratives to entertain us. The digital world has actually provided us with a rich array of channels that may be employed. And companies like Virgance have shown us that there is no limit to creative methods of employing social activism.

San Francisco, like many cities, is not exactly rife with cash to employ a hot ad shop to devise its strategy, but hopefully this trend-setting city will get resourceful and seek creative solutions and partners for engaging and motivating positive behavior change.

At the time of this post, The American Clean Air and Security Act has passed Congress as Waxman-Markey. It will now go to the Senate. Supporter and opponents are divided over its efficacy. It is full of compromises needed to pass, but will these compromises make it ineffective?

These is something in this bill for almost everyone. There is also something for almost everyone to hate. Alan During gives 14 things he love and 6 he hates about Waxman-Markey.

It’s no surprise that the United States Chamber of Commerce and the National Association of Manufactures oppose this bill, but so does Greenpeace and Friends of the Earth. Dow Chemical and Ford Motors support it.

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Most odd stories relating to the environment tend to revolve around researchers and scientists and their slightly off the wall discoveries. But not so today. Today, in news of the weird — or at least slightly surreal — I bring you Daimler, the German automaker, who announced last week their very first hybrid car, the Mercedes Benz S Class. It’s a limousine.

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Yesterday, I blogged about the reasons marketers are choosing “green” as a marketing strategy. But for companies that pursue this strategy, it becomes clear pretty quickly that just marketing a green product isn’t enough. The company has to be sincere in its own commitment to environmental sustainability and show genuine sensitivity to the needs and concerns of its customer base. This has to be more than lip service. It’s got to be the real deal. 

So who are these green consumers (or LOHAS or lifestyles of health and sustainability consumers) and what are some of their demographics and psychographics that will help marketers to relate to them effectively? Collette Chandler of Keyboard Culture (Green Marketing), describes them this way:

• Leading-edge thinkers
• Higher-than-average education
• Average incomes (this may be a surprise to many who thought their incomes would be higher, but it’s no surprise to people with PhDs!)
• Among the least price sensitive consumers
• Expect good value (they expect green products to perform equal to or even better than equivalent non-green products)
• Extremely brand loyal
• Tend to write blogs
• Influence others, particularly their family and friends
• Early adopters
• Influenced by brand image

What drives LOHAS consumers to make the purchases they do? 

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What’s all the fuss about green marketing? It’s more than just another hook to get people to buy products. It’s about the types of people who purchase green products. They have higher than average incomes, they are willing to pay up to 20% more for products and services (according to Collette Chandler, an author and consultant specializing in green marketing), and they are extremely brand loyal. It’s a marketer’s dream.

It’s no wonder that companies are targeting this marketplace.

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This column highlights the top economic stories of the week.

General Electric CEO Jeff Immelt is on a mission to improve U.S. exports. That’s because General Electric doesn’t just sell light bulbs and refrigerators to the American public. The company is a global giant in energy, transportation and financial services. More on this story here.

With a full House vote expected this week on the American Clean Energy and Security Act (or Waxman-Markey), all eyes turn to the nation’s energy policy. President Obama is committed to an energy plan that will generate millions of new jobs, break our dependence on foreign oil, reduce the threat of dangerous carbon pollution and restore America’s role as a global leader in the clean energy industry. More on this story here.

Online business and social networks, in contrast to the old kind, are open to all and easy to join. A year ago it took LinkedIn over a month to win 1m new members; it now takes about 15 days and the site has 42m members around the world. More on this story here.

It appears that companies are realizing that zero emission electric vehicles should not just be for the “rich”. In May, Nissan announced that it would begin electric cars in the U.S. to be available in 2010. This week, they announced they would mass produce a zero-emissions electric car by 2012 that would be affordable. However, during a Nissan shareholder’s call Chief Executive Carlos Ghosn refused to speculate on the sticker price. More on this story here.

At one point, it seems as though virtually everyone has sat in front of washing machine and watched the soaked clothes tumble through the suds. That tradition may be a thing of the past if a new “virtually waterless” laundry machine finds its way to the mainstream. More on this story here.

The Economist tells us that the number of people with net assets of at least $1m (excluding their homes) fell by 14.9% in 2008, according to an annual report from Capgemini and Merrill Lynch. The total wealth of these 8.6m “high net-worth individuals” stood at $32.8 trillion. Over half of the super-rich live in America, Japan and Germany, but China passed Britain to take fourth place for the first time.

More and more frequently, I’m seeing companies choose sustainability, not just as operational preference, but also as a marketing approach. They are marketing “green” or sustainability (because “green” and “sustainability” are different) as a way to connect with consumers and sell products.

Thus, when I was contacted by Don Carli, senior research fellow with the Institute for Sustainable Communications, about a three-minute video on the topic of sustainability as a marketing issue, I was intrigued. It sounded like a headline I’d write. That always gets me interested.

The video was posted on YouTube by “Three-Minute AdAge,” a daily news “show.”  What I thought was interesting about this particular video was that, while it claimed to be about marketing, it really focused on the need for sustainability, not just as a way to connect with consumers, but as a way to protect marketers’ supply chains from disruption and price spikes based on their dependence upon carbon. It was interesting how Carli tied the two together—indeed, he appeared to make the two issues inseparable.

Here are some of Carli’s comments (edited for brevity):

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Oil peaked several years ago. Now coal has peaked. The Costs of their production will soar when the global economy recovers and demand returns. Some say that this is a bad time to launch an ambitious energy policy as that envisioned by the American Clean Energy and Security Act. They claim that this Act will raise taxes, and cost jobs. At the time of this post, a draft of this proposed Act is a bill before Congress.

According to Brenda Pierce, head of the of a US Geological Survey team that recently conducted a study of US coal reserves, “We really can’t say we’re the Saudi Arabia of coal anymore.” (wsj 6-8-09) It’s not that her survey found less coal, but analysis shows that the cost of recovering it is escalating.

The DOE (Department of Energy) published a similar analysis on US oil reserves several years ago. Several studies of world oil and coal reserves have shown that these energy sources have peaked. That is, once the world economy returns to its pre-recession level, the price of fossil fuels will surge.

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At one point, it seems as though virtually everyone has sat in front of washing machine and watched the soaked clothes tumble through the suds. That tradition may be a thing of the past if a new “virtually waterless” laundry machine finds its way to the mainstream.

Although only in prototype stage, this new machine may be able to save up to 90% of water compared to a conventional machine and will also cut carbon emissions. Created by Xeros, this machine replaces the old school idea of cleaning clothes. The technology goes with full on chemistry advances by replacing the majority of the water with reusable nylon polymer beads, the machine can clean clothes in less time than traditional machines, and we see these waterless wonders then you can thank Professor Stephen Burkinshaw, from the University of Leeds who made the discovery that certain types of polymer beads could be used for cleaning. Read the rest of this entry »