|The Business Benefits of Going Green|
By Reena Jana
June 22, 2007
Perhaps you've heard the trendy new catch phrases such as "eco-chic," or "green
is the new black," which refer to the popularity of innovative, earth-friendly
products such as Toyota's (TM) hybrid cars. In Toyota's case, "green" also
refers to the color of cash; this month the carmaker announced that between
December, 1997, and May, 2007, it sold more than 1 million hybrid cars worldwide
(including its iconic Prius and newer hybrid Camry).
And a new, lucidly written book, The Clean Tech Revolution: The Next Big
Investment Opportunity, unpacks how businesses can follow the lead of companies
such as Toyota to go green—and make green dollars—by designing, selling, or
funding inventive eco-friendly products and services.
The book was written by Ron Pernick, the Portland (Ore.) co-founder of the
six-year-old green business consulting and research firm Clean Edge, with former
business journalist and Bay Area contributing editor Clint Wilder. Clean Edge is
the firm that developed the year-old NASDAQ (NSDQ) "Clean Edge U.S. Index"
(QCLN.O), which tracks public companies specializing in developing green
technologies, ranging from renewable electricity generation to energy storage
and conversion. (Currently, none of the companies listed is a Clean Edge client.)
Predictions for the Future
Sure, it's safe to say the authors have a vested interest in the promotion of
clean/green innovation and design—although Pernick and Wilder disclose clients
mentioned in the book such as Sharp Electronics and investment bank Piper
Jaffray in a "Note to the Reader" intended to ensure transparency—but their
focused, informed analysis provides a helpful and straightforward guide that
quickly and efficiently unpacks green business strategies.
The text focuses on eight key sectors that hold the most promise for revenues
within the next decade, including the solar power market, which they predict
will grow from $13.6 billion in 2006 to $69.3 billion by 2016. Or biofuels
(petroleum alternatives made from plant matter), which Pernick and Wilder
forecast will grow from $20.5 billion in 2006 to $80.9 billion in 2016 (see
BusinessWeek.com, 11/13/06, "Planting the Seeds of a Biofuels Boom").
One of the book's key strengths, simple as it is, is Pernick and Wilder's clear
definition of what "green," really means in the context of technology—both in
terms of sustainability and potential profits (see BusinessWeek.com, 11/13/06, "
Harvesting Green Power"). While many consumers and corporations alike toss
around the term "eco-friendly" to apply to a variety of products that are in
some way made from, or are powered by, renewable and sustainable materials, the
idea of "green" can often seem vague.
"Ten to Watch"
The authors have favored the term "clean technology" since the early 2000s to
refer to, as they explain, "any product, service, or process that delivers value
using limited or zero non-renewable sources and/or creates significantly less
waste than conventional offerings." Explained Pernick in a telephone interview:
"The word 'clean' resonates more than 'alternative' when used to market products
to mainstream audiences," That's important when profits are a main goal.
Toyota's Prius is just one well-known example of successful clean tech in action
(see BusinessWeek.com, 3/20/07, "Hybrids Stuck in Neutral"). The real value of
the book lies in the authors' snapshots of lesser-known companies.
In the eight chapters devoted to specific technologies
(solar energy, wind power, biofuels and biomaterials, green buildings, personal
transportation, smart grid, mobile applications, and water filtration), Pernick
and Wilder present alphabetical "10 to watch" lists (see BusinessWeek.com,
05/21/07, "Nuclear Power: A Bad Reaction").
These include international companies such as Suntech Power (STP), based in
China's Jiangsu Province, which manufactures solar cells and is the first
Chinese solar power company to go public on the New York Stock Exchange,
alongside well-funded U.S. startups such as Menlo Park (Calif.)-based Cilion,
which makes ethanol fuel. Cilion is backed by respected venture-capital Silicon
Valley firm Khosla Ventures (see BusinessWeek.com, 2/19/07, "Ethanol: Too Much
Although the book might have the word "investment" in its subtitle, its authors
don't want readers to use The Clean Tech Revolution as a stock-picking guide.
This might sound counterintuitive, but Wilder is firm on the point.
"'Investment' as we define it isn't just about pure dollars," Wilder said in a
phone interview. "We want it to be clear that it's important to talk about
investment in terms of the future economic health of a region [when discussing
investing in clean technologies]."
A Growing Library
To highlight this point, the authors present an insightful chapter called
"Create Your Own Silicon Valley," toward the end of the book, featuring 10
"clean tech clusters" around the world that hold promise in terms of becoming
centers of clean-tech business development. The list includes Hyderabad,
India—which has a tradition of solar power research and development at local
universities and established biotech companies—as well as Copenhagen, Denmark.
That country, as the authors write, is the "world leader in wind production per
capita, with wind turbines supplying some 30% of the nation's electricity." This
highly original and intriguing chapter could have easily become a book in its own right.
The Clean Tech Revolution has some stiff competition, in terms of resources
written for executives of all ranks, industrial designers, and laypeople eager
to learning more about eco-friendly products and business practices. The editors
of the Web site Worldchanging.com published a compendium of articles in the fall
of 2006, as a hefty book, called Worldchanging: A User's Guide for the 21st
Century (see BusinessWeek.com, 10/26/06, "Can Design Change the World?").
The Worldchanging site and book have business sections, featuring articles such
as Is Clean Energy the New Tech Boom? Popular blogs such as treehugger.com also
feature clean-technology companies and products on a daily basis. And on the
print magazine front, mainstream, big-media outlets such as Vanity Fair and Elle
magazines publish annual "green" issues devoted to eco-friendly companies and
Gathering Precious Water
But what sets Pernick and Wilder's book apart is its focus on the business
benefits of going green, from money saved by building eco-friendly corporate
headquarters and lowering heating and cooling bills, to money earned by startups
committed to creating clean technologies. Other books, magazines, and Web sites
tend to include clean-tech and green business within a spectrum of other
lifestyle, political, environmental, or design topics.
The Clean Tech Revolution, with its colorful and varied narrative chapter
introductions (ranging from the experience of driving a hybrid car in sunny,
affluent Marin County, Calif., to a short vignette of families gathering
precious water in the remote Indian village of Korukollu), promises to be a
valuable snapshot, at least, of the tipping point of international green
business in the late 2000s. And Pernick's and Wilder's predictions and analyses
are sure to grow more valuable as references.
After all, companies specializing in clean tech are clearly poised to grow
within the next decade. Business advisory firm LECG predicts, for example, that
the ethanol industry will add more than 203,879 U.S. jobs and contribute an
estimated $46 billion to the U.S. gross domestic product by 2015. In addition,
LECG predicts that biodiesel makers will add more than 39,000 jobs and $24
billion to the U.S. GDP by 2015, while the wind-power industry will create more
than 12,500 new jobs and add between $100 million and $200 million to the U.S.
GDP, also within the next eight years.
The so-called clean-tech revolution promises to continue, and savvy designers,
brand strategists, consumers, and investors with their eyes on "green" success,
in both senses of the word, would be wise to pay attention.