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November 20, 2006
Book Review: Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage
    by Bill Baue

The plethora of real-life examples of corporate environmental initiatives is where readers will find value in this book from two authors associated with Yale.

In their new book Green to Gold, Yale Center for Environmental Policy and Law Director Daniel Esty and Director of the Center's Corporate Environmental Strategy project Andrew Winston advance their message of "eco-advantage," or the benefits of strategic corporate environmental sustainability, by plying a couple of key metaphors. First, they lean heavily on the "Green Wave," envisioning the trend toward eco-advantage as an oceanic image. Second, they tweak the standard alchemical equation, transforming "green" (corporate environmentalism) into "gold" (money). These metaphors predominantly reveal the significant strengths of the book, though they also expose some weaknesses that may be more or less significant depending on the eye of the beholder.

The authors introduce the Green Wave concept through examples that illustrate it most vividly: the Ecomagination initiative at General Electric (ticker: GE) and the recent conversion of Wal-Mart (WMT) to embracing environmental sustainability. The dynamics of climate change, the earth’s finite resources and stakeholder pressure create the swell of the Green Wave, according to the authors. Unfortunately, they fail to acknowledge California State Treasurer Phil Angelides' role in popularizing the term by launching the Green Wave initiative in 2004 by steering portions of the state's public pension funds toward environmental investing.

The wave metaphor extends throughout the book through the image of WaveRiders, or companies surfing the Green Wave. In contrast, companies that "dive beneath the wave, submerging themselves in the hopes that it will pass, will be disappointed by its enduring presence and pounding tenacity." The authors create an elaborate methodology for identifying and ranking WaveRiders.

Here, they recognize the importance of the socially responsible investing (SRI) field. They base a quarter of their score on SRI indexes--mostly AAA or AA ratings from Innovest Strategic Value Advisors or inclusion in the Domini 400 Social Index from KLD Research & Analytics, the FTSE4Good Global Index, or the Dow Jones Sustainability Indexes (DJSI). Lesser weight is given to inclusion in the top 10 holdings of Calvert funds, the Sustainable Business All-Star 20, or the Sierra Club Mutual Funds. The methodology also considers company connections to Ceres, the Global Reporting Initiative (GRI), the UN Global Compact, Business for Social Responsibility (BSR), and the Environmental Protection Agency (EPA) Energy Star and Performance Track programs. As well, the authors conducted their own survey.

The top 50 WaveRiders internationally include BP (BP), Shell (RD), and Toyota (TM). In the US, top WaveRiders include Johnson & Johnson (JNJ), Baxter (BAX), DuPont (DD), 3M (MMM), HP (HPQ), Interface (IFSIA), Nike (NKE), and Dow (DOW). A graph illustrates that the top 50 WaveRiders (minus the seven private companies) significantly outperformed both the S&P 500 and the FTSE 100 from 1996 to 2006. Unfortunately, the graph is not accompanied by detailed numbers in the body of the book nor in the endnotes, preventing readers from scrutinizing the data more thoroughly.

Perhaps the best part of the book is the trove of real-life examples of corporate environmental initiatives the book catalogues based on in-depth interviews and site visits to WaveRider companies. While many books discuss Shell's mid-'90s proposal to decommission the Brent Spar oil platform by sinking it into the North Sea, this book reveals that Greenpeace, whose protests prevented it, later admitted it got its facts wrong, exaggerating pollution levels a thousandfold.

And it was Unilever that partnered with the World Wildlife Fund (WWF) to create the Marine Stewardship Council (MSC) and committed to 100 percent sustainable fishing by 2005. And Wal-Mart's Acres for America program seeks to preserve land equal to the company's entire operational footprint of 130,000 acres.

"This action isn't a full environmental strategy by any means, but it is one attempt to answer the concern some communities have about how Wal-Mart gobbles up land," the authors state.

One example illustrates the second metaphor. Rio Tinto (RTP) geologists found a gold mine in Flambeau, Wisconsin in 1968, but community opposition delayed the commencement of mining operations until 1993. This exemplifies the importance of stakeholder engagement.

"Recognize that feelings are facts," the authors state. "Top performers know that what NGOs [nongovernmental organizations], employees, customers, communities, and other stakeholders feel about a company's environmental performance and reputation can be much more important than the reality."

"It's not what the data is, it's what the perception is," says Rick Paulson, a plant manager for Intel (INTC), as quoted in the book.

Early in the book, the authors discuss "mining the gold in environmental strategy," but when they present this actual example of gold mining late in the book, they neglect to underscore how it exemplifies their "gold" metaphor. In fact, the gold metaphor may weigh down the book, as it prioritizes the profitability of environmental initiatives, sometimes at the expense of maximizing environmental and social well-being.

"If an electronics producer finds a way to make its products without heavy metals, why share that with the competition?" the authors ask. "Why not use the Eco-Advantage to stick it to competitors?"

Elsewhere in the book, the authors quote the CEOs they spoke with as adopting corporate sustainability because it is "the right thing to do," yet here they prioritize competitive advantage over minimizing heavy metals in products. Most of the book focuses on fusing green with gold. Here, however, gold trumps green.


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