The drumbeat of green business is getting louder. Consider: Green building — suddenly a $7 billion per year national business — has gone mainstream.
The green advantage is Oregon’s to lose.
By Christina Williams
The drumbeat of green business is getting louder. Consider: Green building — suddenly a $7 billion per year national business — has gone mainstream. Clean energy alternatives have become sexy money magnets for private investors looking for the next big thing. Al Gore, the once wooden presidential candidate, has ridden a PowerPoint presentation and some scary facts about global warming to celebrity status.
The clincher? Even Wal-Mart, the retail giant that lefties love to hate, is going green.
Sustainable business practices have moved in from the fringes and up the corporate agenda, creating an opportunity for Oregon — a place known globewide for its green trees and green cred — to claim leadership, export its expertise and carve out a lucrative niche.
But Oregon can no longer just skate along on its reputation while the rest of the business world greens itself up.
John Emrick, chairman of catalog retailer Norm Thompson and green apostle to his industry, puts it this way: “We have the opportunity to own something that would put Oregon and Portland on the map. People just assume that we’re the experts. Do we want to own it?”
Sustainability is maturing into a real market opportunity. The demand for clean energy alternatives is projected to build a $100 billion worldwide industry within the next decade. Organic products continue to find favor with customers, hitting $30 billion in annual global sales and growing at a rate of nearly 10% per year. And companies that are cluing into green-friendly practices are realizing their own savings in costs such as energy and transportation, not to mention the goodwill they curry with ever more savvy consumers.
Oregon is home to some of the brightest minds in green business, but does anybody know it? Unless there is a concerted effort to market the state’s expertise, its green edge will quickly dull.
THE URGENCY IS NOT LOST on some of the state’s leaders. This month’s Oregon Business Plan summit is assembling its faithful under the slogan “Gaining Sustainable Advantage” and will examine ways to leverage sustainability as a competitive wedge.
The governor-appointed Oregon Innovation Council’s $38 million economic development plan for the 2007 Legislature includes a proposal for a signature research center focused on developing innovations for the green marketplace and a bid to build a commercial-grade wave energy park.
And there is a smattering of other initiatives in the works. On Gov. Ted Kulongoski’s agenda are a number of green initiatives, most significantly a plan to provide public support for renewable energy. The Department of Agriculture is working with growers cooperative NORPAC and a group of other partners to create the Oregon Sustainable Agriculture Research Center. At the University of Oregon’s Lundquist College of Business, there’s a push to build a first of its kind research center and MBA concentration on sustainable supply chain management. The Oregon Forest Resources Institute is spearheading an initiative to exploit the state’s ample woody biomass as a source for alternative energy.
The people behind these efforts refer back to last year’s Oregon Business Plan summit and the frank lecture by economist Michael Porter, who called Oregon out on having fallen short in developing an innovation-based economy. Porter urged business leaders to focus on the state’s strengths and singled out sustainability and an innate advantage around natural resources as a good place to start.
Efforts such as the Bio-Economy and Sustainable Technologies (or, snappily, BEST) Center proposed by the innovation council play to the research strengths at the state’s universities — including the Oregon Institute of Technology, with its established Oregon Renewable Energy Center, along with the big dogs of PSU, OSU and U of O — and would position the state to get more national funding to explore the potential of renewable energy.
“We’ve never, ever, ever made this kind of focused investment in economic development in this state,” says Gail Achterman, director of the Institute for Natural Resources at Oregon State University. “This is the sea change and it’s happening around sustainability.”
Whether or not there’s enough in the works to bolster the state’s reputation beyond vaguely green to the authority on how to develop a thriving economy laced with green businesses remains to be seen.
IN A WILSONVILLE INDUSTRIAL PARK a low-profile janitorial chemical and supply company has planted a big, green stake in the ground. Coastwide Laboratories’ biodiesel-powered delivery vans are parked outside the warehouse. In the lab, a suite of environmentally friendly chemicals is put through its paces.
Strategists take note: Coastwide is a business that has taken the green advantage and made it pay.
Four years ago, Coastwide introduced a line of cleaners under the Sustainable Earth brand that is selling like gangbusters — president Grant Watkinson reports an average of 50% per year sales growth for the last three years. Watkinson says the 150-employee company has a strong commitment to doing what’s right — but Sustainable Earth also allows the company to differentiate itself in a tough business climate.
“We have a commodity product. How do we create real value in our supply chain?” poses Rick Woodward, corporate director of sustainability for Coastwide. “Indoor air quality is a value, it’s something that the customer — hospitals, offices, schools — can relate to. It’s something that makes them feel good.”
And it’s something that raised Coastwide’s stature in the industry, leading to a deal in May for the 70-year-old company to be acquired by Corporate Express, a Colorado-based office supply company with a keen interest in taking the Sustainable Earth line national.
Coastwide is just one of a passel of companies grabbing attention for their sustainable practices — from architects Gerding Edlen, internationally known for green building prowess, to catalog retailer Norm Thompson, which is in the process of disseminating its sustainable practices throughout its new parent company, Catalog Holdings. Even technology giants Intel and Hewlett Packard continue to develop environmental stewardship programs as a way to polish their corporate citizenship, keep ahead of federal and international regulations and, oh yes, reduce costs by cutting down on waste, designing more efficient packaging and making the company’s stock more appealing to socially conscious investors.
And the green vibe is starting to pull in other businesses. When Jason Graham-Nye started looking for a place to start their environmentally correct flushable diaper company, gDiapers, he first thought of California. “They’re probably more green,” he says. “But it’s the most expensive place to start a business.” He started looking closer at Portland and discovered a talented creative community and lots of green-friendly businesses. “Now investors are all saying that Portland is a hub for interesting small companies.”
Plenty of entrepreneurial minds are plotting their next moves around a green advantage — one of the more ambitious is Nau, a Portland outerwear startup (see story on p. 21) — and may be looking for a place to set up shop. But unless they happen to catch wind of Oregon’s nascent strengths they’re likely to head elsewhere.
THAT’S WHERE MARKETING COMES IN. Aggressive marketing.
In a gallery space in downtown Denver, on the eve of the 2006 Greenbuild International Conference in November, 500 people crowded into something called the PDX Lounge to sip vodka cocktails, nosh local, organic food and ogle the reclaimed and sustainably produced furnishings. It was purposefully more hipster scene than tradeshow bland and the exclusive invitations promised to put visitors in a Portland state of mind.
In partnership with some 30 green building-related firms, the lounge was the work of Portland’s Office of Sustainable Development, which was looking to distinguish the Portland contingent at a trade show of 10,000 people.
“This is a first,” says Stephanie Swanson, spokeswoman for OSD. “We’re making sustainability a priority economic development strategy.”
Portland is also looking to distinguish itself from other cities — Chicago, San Francisco, Austin — that are starting to get press for their own green building cred. “There’s a lot of friendly competition between the cities. But people have a long way to go to catch up to what Portland established 30 years ago. We’ve got three decades of land use and transportation planning behind us and all that is part of sustainable development,” Swanson says.
Green ambitionThe time is right for Oregon to establish and exploit its expertise in sustainable business in a big way. Here’s a sampling of ways the experts are going about it: Oregon Business Plan Oregon Innovation Council’s 2006 Innovation Plan Oregon Sustainable Agriculture Resource Center Gov. Ted Kulongoski’s Energy Independence Agenda Sustainable Supply Chain Management Center, University of Oregon’s Lundquist College of Business |
In the green building world where Oregon’s leadership shouldn’t be in question, this kind of marketing — only more of it — is exactly what Oregon should be doing, leaders say.
Mike Russo, sustainable management wiz at the U of O’s Lundquist College of Business, recommends emphasizing the hard-nosed, bottom-line need for doing business in a sustainable way. “People are starting to say, ‘We’ve known about sustainability but there’s this whole other side to this that can be used to grow my business,’” he says. “This is ground zero for this kind of work.”
The key to marketing that expertise, he says, is honing the message — summing up Oregon’s strengths in green business and sustainable practices — and repeating it. “Part of the message is differentiation,” he says. “It’s about positioning.”
Kirby Dyess, a former Intel executive and member of the Oregon State Board of Higher Education, compares Oregon’s opportunity to lead in green business to Japan’s focus on quality to seize the electronics industry in the ‘70s.
“Japan took the electronics industry to the cleaners,” Dyess says. “I see sustainable business in the same vein as the whole quality initiative.”
Certification of Oregon’s exports — Forest Stewardship Council-certified wood products and certified organic foods — is part of the picture, and the ag and forestry sectors are imminently savvy, leading the country in applying sustainability to everything from raising cattle to managing forests.
Oregon has been proactive in keeping up with the sustainability standards of the rest of the world, certifying its produce to meet Europe’s EurepGAP and copying the public transportation strategies of foreign capitals. But to truly capitalize on the global opportunity, the region will have to market its green reputation in a new way. The point is not to sell the image of a state with clean water, wide-open spaces and a predilection for clean energy, green buildings and sustainable practices, but to promote — and ultimately export — the minds that engineered it.
“If we (Oregon) want this to be a strategy, we better put the pedal to the metal, and make this a priority.” says Darcy Hitchcock, president of Portland-based Axis Performance Advisors and co-author of a new book, The Business Guide to Sustainability. “The rest of the world is catching up and parts of the world are already ahead.”
Green ambition
The time is right for Oregon to establish and exploit its expertise in sustainable business in a big way. Here’s a sampling of ways the experts are going about it:
Oregon Business Plan
Business leaders gather in January to check in on the plan and will consider specific action items and policy recommendations to back that will bolster the state’s competitive positioning in sustainability.
Oregon Innovation Council’s 2006 Innovation Plan
The Oregon Innovation Plan will be presented to the Legislature as a package of funding recommendations including $5.2 million to build a commercial-scale wave energy park in the country and $3 million to launch the Bio-economy and Sustainable Technologies (BEST) signature research center. Both efforts draw heft from their intent to pull university research into green industry.
Oregon Sustainable Agriculture Resource Center
A much-needed clearinghouse for education, information and technical support for farmers and others in the ag world who want to operate with a focus on sustainability and certify their products for sale under an earth-friendly label. Should give Oregon ag products a leg up in the marketplace.
Gov. Ted Kulongoski’s Energy Independence Agenda
Emboldened by a Democratic majority in the Legislature, Gov. Kulongoski is marching forward with plans to introduce a bundle of bills to encourage the state’s foray into alternative energy sources with such initiatives as requiring 25% of the state’s energy to come from renewable sources by 2025 and establishing tax incentives for expanding the biofuels business and using renewable energy. It’s important from the perspective that every green-friendly policy adopted by the state sends a message to the world that Oregon is open for green business.
Sustainable Supply Chain Management Center, University of Oregon’s Lundquist College of Business
The state’s top-ranked business school is embracing sustainability with the stated goal of becoming a world leader in research and practices for a supply chain managed for environmental improvement. This first-of-its kind center will be marketed aggressively by Dean James Bean, who plans to forge links to export Oregon’s green know-how to China and beyond.
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