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Market News

 June 18, 2007
Harnessing the Power of Partnerships and Coalitions

 (by Anna Clark) - If corporate sustainability is the balance of the financial, social and environmental aspects of an organization, achieving this balance at a society level can lead to exponential change, hence exponential sustainability. This begins to happen when companies reach outside themselves to pursue green initiatives that go beyond their own perceived interests.

Numerous case studies illustrate the ripple effect of positive partnerships and coalitions. A recent example is the Clinton Climate Initiative. The William J. Clinton Foundation has created an arrangement among four energy service companies and five global banking institutions that will result in major environmental upgrades in 16 cities of the world's largest, most polluted cities.

Collectively, the banks, which include Citigroup, Inc., Deutsche Bank AG, JP Morgan Chase & Co., UBS AG, and ABN Amro, will commit $1 billion to finance energy efficient building upgrades in municipal buildings in participating cities. "They're going to save money, make money, create jobs and have a tremendous collective impact on climate change all at once," Mr. Clinton said of the partners in the initiative in a prepared statement. That is exponential sustainability in a nutshell.

Another coalition leading to sweeping change is the U.S. Climate Action Partnership (USCAP). The group's mission is to urge the federal government to cut greenhouse gas emissions 60-80 percent and to create business incentives. The 22 USCAP member companies, including GM, Shell and Dow Chemical, represent industries critical to slowing climate change. The corporate partners join six non-profit advocacy groups in this mission.

Fred Krupp of Environmental Defense says of the USCAP, "We chose a cap-and-trade approach because it guarantees the emissions cuts we need, while it unleashes cash and creativity from the private sector. This plan is a jobs winner as well as an environmental winner." By teaming up with non-profits, big businesses are able to proactively shape and promote creative solutions before they must face potentially less-favorable regulations.

Even just one company together with one non-profit can change the course of an industry. One example is the partnership between Allianz Group, one of the world's largest insurance providers, and WWF, a global leader in environmental conservation. The partnership seeks to address the growing impact of climate change-induced damages, such as flooding, forest fires and storm damages, on the insurance industry.

Allianz started the project to protect the interests of its customers, as climate changes could make insurance unaffordable for customers in high-risk areas. In fact, in states vulnerable to hurricanes, insurance rates are already increasing and in some cases, insurers are exiting these markets altogether. In the process of addressing the possible consequences of climate change, this partnership has been engaging governments and regulators to work with the insurance industry to find solutions.

The business sector used to focus purely on financials, leaving the job of curing societal ills to non-profits. However, one recent survey revealed that 81% of MBA students polled said that business should work toward "the betterment of society." As more large companies embrace sustainability as a strategic goal, they recognize that non-profits may have superior experience in the business of "betterment."

Partnering with non-profits was once a philanthropic endeavor. Today, companies are discovering that by partnering with non-profits on green initiatives, they can gain expertise, resources and recognition without the costs of going green alone. Such partnerships represent more of a symbiotic, rather than subordinate, relationship between the business and non-profit sectors.

As the threat of global warming becomes reality, sole focus on competitive advantage is giving way to cooperation among industry contenders, many of which are now building coalitions for the greater good. Can this paradigm shift be the silver lining to climate change?

The concept of exponential sustainability may still lie at the far end of the sustainability spectrum. Most companies would do well just to start evaluating their emissions and improve energy efficiency within their own walls. But if you decide that exponential sustainability belongs on your company's strategic horizon, the right partnership can rapidly propel you there.

Where does a company source partnerships opportunities? How does a company begin to build a coalition? Large companies are more likely to be approached by groups than small and mid-sized companies, although exponential sustainability can work for any-size enterprise. Smaller companies can hire a sustainability consultant to help them craft a sustainability strategy that includes finding partnerships within their industry or community.

If you are the owner of a smaller company, there is no reason to reinvent the wheel if you can join an initiative in your town or neighborhood that is already gaining steam. Seek out opportunities to support local programs spearheaded by your community or city council. By adding your resources and contacts to the effort, you gain visibility and standing among the very people you would like for customers and clients.

Small businesses may find that by tying green initiatives to their communities, they can inspire employees and existing clients to participate. Even small-scale partnerships and collations can create momentum around sustainability.

I can't help but think of the recycling container at my daughter's school, filled to capacity every week by moms eager to see the school reap financial rewards from their refuse. Yet, moms all over Dallas, when left to their own devices, often fail to put out their recyclables every week if the relatively low recycling rate in our city is any indicator. My point: people will work harder when coming together to reach a collective goal than they will when acting alone.

Economist Milton Friedman said, "The most important single central fact about a free market is that no exchange takes place unless both parties benefit." In the scheme of impeding climate change, partnerships and coalitions based on this principle do more than benefit the partners; they give hope to us all. Now that is what I call exponential sustainability.

Anna Clark is president of EarthPeople, a consulting firm that helps companies of all sizes save money and bolster their brand through the leading-edge principle of sustainability.