Atlanta Companies Go Green

Michael J. Pallerino

October 1, 2007

"Sustainability is a state where
the demands placed on the
environment by people and
commerce can be met without reducing
the environment's capacity to support the
demands of future generations."

– Paul Hawken, "The Ecology of Commerce"

Ray Anderson remembers the day when Interface's journey to sustainability – a journey he admits was not part of his company's playbook – became very real. In 1994, at age 60 and in his company's 22nd year of making carpet tiles, Anderson began hearing a new question from his customers, especially architects and interior designers, which Interface's founder and chairman had never heard: "What is your company doing for the environment?"

The more he thought about the question, the more disturbing it became. So he formed an environmental task force to frame answers on what Interface was doing for the environment and to what type of environmental policies it was adhering.

The task force's organizers asked Anderson to christen their effort with a speech on his environmental vision. But the truth of the matter was, Anderson didn't have one. And he didn't want to make a speech. "In all my working life, I had never given one thought to what we were taking from the Earth or doing to the biosphere in the making of our products, except to obey the law," he recalls.

So Anderson did what any business visionary would do – he drug his feet. But the posturing didn't work. The task force organizers stayed on him. Finally, he relented. The date for his speech – a speech that not only would answer his customers' questions, but also change the course of his business philosophy – was set, Aug. 31, 1994. "I had not a clue as to what to say," Anderson recalls. "Somehow, though, I knew ‘comply' was not a vision."

It was by pure serendipity that "The Ecology of Commerce," written by long-time environmentalist Paul Hawken, landed on his desk. Anderson had never heard of him. But he was intrigued. So he began thumbing through the book. By page 17, he was reading. By page 25, it became a spear in his chest
– an "epiphanal experience," he recalls.

Anderson not only found the inspiration for his speech, but the motivation for his movement. The speech stunned the task force. What he proposed was a challenge to transform Interface into the world's first industrial firm devoted to sustainability. The passion in his words and subsequent actions showed Anderson – who many believe to be the godfather of America's sustainability movement – demanded sustainability in the strictest sense: taking nothing from the earth that is not rapidly and naturally renewable, and doing no harm to the biosphere.

While Interface has been a pioneer in the sustainability movement, more companies are going " greener" than ever before. According to Kevin Doyle, president of Green Economy, a Boston-based firm that promotes an environmentally healthy workforce, the green industry in the United States in 2005 was about $265 billion, employing 1.6 million people in an estimated 118,000 jobs.

Doyle says green businesses have been growing at a rate of about 5 percent annually during the past three years. Two particularly hot areas are global carbon credit trading, which doubled to $28 billion from 2005 to 2006, and construction and services associated with "green buildings" that meet industry standards set by the U.S. Green Building Council (USGBC). Today, the green building industry is worth $12 billion; 10 years ago, it was unquantifiable.

Numerous Atlanta companies are on the cutting edge of the green movement, understanding that becoming "green" will become a key competitive strategy for whole industries. When Susan Spivey-Tilson began working on green buildings 10 years ago, she not only struggled to get the word out, but to garner public understanding as well.

How times have changed.

Spivey-Tilson, a sustainable design specialist for Thompson, Ventulett, Stainback & Associates Inc. (TVS), an Atlanta-based architectural design firm, says increasing public awareness of climate change and the finite nature of our resources abounds. Today, terms such as "green building,"  "LEED certified" and "sustainability" are household words in a world committed to saving itself from environmental ruin.

So where does Atlanta fit in?

In the most recent listing by the USGBC, Atlanta was named No. 1 in LEED-certified cities. As of July 2006, the state of Georgia had 102 LEED registered or certified buildings. LEED, a USGBC program, is a voluntary national accepted benchmark standard for the design, construction and operation of high performance green buildings. The five key areas for obtaining this certification include sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality.

"The movement has now infected every aspect of the design, construction and real estate industries," Spivey-Tilson says. "Not only are there an increasing number of commercial projects in almost every segment going green, but there are initiatives addressing sustainable sites and existing buildings, too. Everyone is keyed in, not only architects, designers and engineers, but also policy makers, product manufacturers, consumers and financial institutions are making statements through their actions in support of green."

Green buildings use 30 percent less energy than traditional buildings with methods such as incorporating insulation and windows that help with heating and cooling.

Over the past five to seven years, architecture firms are seeing a dramatic shift from green design being a niche market to it achieving an almost mainstream recognition, particularly in the institutional market. "This has resulted in tremendous pressure for architects, planners and interior designers to demonstrate green capabilities, and in a distinct competitive advantage to firms showing leadership in this area," says Jim Nicolow, AIA, LEED Accredited Professional, a senior associate with Atlanta architecture firm Lord, Aeck & Sargent.

Nicolow says projects pursuing LEED certification have a higher level of design integration. " By setting specific environmental and performance goals early in the process, as encouraged by LEED, these goals become part of the building program from the start, encouraging full team collaboration to meet the goals," he says. "Most studies show green design can be incorporated with minimal to no added cost in new construction and renovations, so that would yield an instant payback. In terms of real business benefits, profit (reduced costs), risk management (hedge against raising utility costs) and PR are the big motivators.

"Five years ago we needed to extol the benefits of green," Nicolow says. "Now our clients are asking for green design, and we need to demonstrate we can provide it. One area that still requires some education and explanation is some of the soft costs associated with green design. It takes time to create an energy model to optimize a project's performance. There are some added costs associated with the analysis and documentation associated with green design. These fees are a fraction of total project costs, and that is the area in which we still need to educate the consumer."

"There are business opportunities in going ‘green.'
Let's face it, today we have to do this to save our skin."
– Jim Hartzfeld, managing director, InterfaceRAISE

Two important business mantras have resulted at Interface – sustainability can save money; and adopting this new business model could make its competition obsolete. "I can tell you emphatically these initiatives have been amazingly good for business," Anderson says. "Our costs are down, not up, dispelling a myth and exposing the false choice between economy and environment. We have saved more than $336 million in waste elimination alone."

Across America, a new business philosophy is taking shape under the banner of " sustainability." Jim Hartzfeld sees it every day. As managing director of InterfaceRAISE, Hartzfeld has been charged to raise awareness and reinforce the importance of integrating sustainability into a core business strategy. InterfaceRAISE was founded last year in response to the growing number of requests by other companies wanting to learn from Interface's experience implementing sustainability. It now works with companies and organizations such as Wal-Mart, General Mills, Sara
Lee and NASA to share best practices for application in other industries.

Hartzfeld has been here before. Freshly armed with a Goizueta MBA from Emory University, he joined Interface in 1994, around the same time the company leapt headlong into sustainability. In fact, it was Hartzfeld who Anderson charged with finding the answers to those environmental questions. "Honestly, I was not exactly thrilled with the prospects of chasing this recycling and litter project," he recalls. "But I was a team player."

Fast-forward to 2007 and Hartzfeld is seeing an extraordinary shift in business interest in sustainability. "The real business strategy that businesses can take is to open their eyes to what's happening around them," says Hartzfeld, who also was past chairman of the USGBC. "There are big shifts happening in energy costs, water issues and consumer behaviors, regarding sustainability. There are business opportunities in going ‘green.' Let's face it, today we have to do this to save our skin."

"You cannot beat this [sustainability]
for attracting and bringing people
together. We have found a better
way to more legitimate profits –
a better business model."

– Ray Anderson, founder & chairman,
Interface

Depending on whom you ask, a social or political movement of any magnitude doesn't hit its stride until there is some sort of legislation (or worldwide musical fest) affixed to it. Such is the case with the global warming issue, particularly the renewable electricity standard, which has experienced its share of debate on the state and national fronts as well as in the Oval Office.

To date, there are several pieces of legislation (including state and federal renewable electricity standards) making their way through the political landscape that could impact the way companies do business in Georgia.

On the state front, green proponents are pushing for the 2008 Georgia Energy Efficiency and Renewable Energy Tax Incentive Legislative Proposal. The proposed legislation is a state income tax investment credit to encourage businesses and individuals to invest in green projects and materials designed to improve the energy performance of their properties and/or create clean, renewable electrical energy to help support Georgia Power's Green Power program and other Georgia-based utilities' renewable energy initiatives.

"We believe there is a huge demand for green building in the state, yet many investments are not made because they lack sufficient return on investment, mainly because economies of scale
have not yet been achieved for many of these innovative products and services," says Walter Brown, VP of Green Street Properties and chairman of an ad hoc business group supporting the bill. " The primary reason the business community should support this type of legislation is to prevent Georgia from remaining one of the few states that has not introduced more progress legislation to seriously encourage more green building and renewable energy investment."

Brown says the proposed total cap is modest – around $10 million – and has an end date of 2015. Commercial projects can receive much larger tax credits – in some cases above $250,000 – but receive these benefits over a five-year period. He adds in no case can the credit cover more than 35 percent of the cost of a measure and likely will need to meet some basic economic needs test before becoming fully audit proof.

Nationally, in a move applauded by environmental and business interests, the House recently passed an energy bill that included a Renewable Electricity Standard, which would require most utilities to produce 15 percent of their electricity from renewable sources such as wind and solar power. The bill allots money for the development of alternative fuels and for increased efficiency
of appliances and buildings. It also could increase research on methods to capture the carbon dioxide emissions that scientists say are largely responsible for global warming.

The utilities provision – or the so-called renewable electricity standard amendment – was among the most contested measures in the energy bill. It would force utilities to make a significant share of their electricity from solar, wind, geothermal, water and other renewable fuel sources, although they can meet part of the requirement through conservation measures. The standard
applies only to investor-owned utilities and exempts rural electric cooperatives, municipal utilities, the Tennessee Valley Authority and the state of Hawaii from the mandate.

The House energy bill does not include an increase in fuel-efficiency standards for cars and light trucks even though similar legislation in the Senate included a fuel-efficiency measure. If incorporated into the final bill, efficiency measures could save consumers billions of dollars in gas costs and seriously reduce the amount of global warming pollution from cars and trucks.

"Similar standards have been implemented in over 20 other states around the country to great success," says Jennette Gayer, an advocate with Environment Georgia. "States are finding that expanding their reliance on renewables helps the environment and their economies because local companies are being encouraged, plus the state is diversifying its energy portfolio instead of relying on only one or two sources of power, which exposes customers to raw cost fluctuations.

For example, Georgia relies very heavily on only two types of fuel, coal and uranium." Gayer says if the bill is signed into law, Georgia will have to move quickly to capture the growth that will be generated in an already flourishing green economy.

"Compared to other states that have actively pursued renewables and efficiency, Georgia is missing out on manufacturing jobs, and more. Plus, we are sending our dollars elsewhere to buy fuel when we could be keeping it in state."

Just how many companies will make sustainability a priority depends on the marketplace. Today's consumers are more educated, which means they are making buying decisions based on more than price.

And as the cry for "green" becomes stronger, sustainability will become a larger part of the value proposition, especially when products are better and prices more competitive.

Says InterfaceRAISE's Hartzfeld, "Market leaders win by communicating well about new trends, values and technologies. Sustainability is no different."