environmental ratings

The 4 toughest environmental challenges in business

May 9, 2013: 2:49 PM ET

Industry experts offer fixes for some of the green world's thorniest issues: solar expansion, recycling, establishing standards, and feeding the world's growing population sustainably.

FORTUNE -- Sometimes the best way to make a real breakthrough is to set an impossible goal.

Think of President John F. Kennedy's 1961 speech in which he called for the United States to put a man on the moon by the end of the decade. Many dismissed the idea as preposterous. But, sure enough, by July 20, 1969, the Eagle had landed at Tranquility Base. The seemingly unachievable became reality.

The roughly 350 attendees at Fortune's Brainstorm Green conference last week participated in their own experiment in the power of audacious goal setting. They were challenged to come up with practical ways to make a quantum leap forward in four key areas of sustainability: solar power, recycling, measuring the environmental impact of products, and scaling up food production to match population growth.

The program was developed to give the conference-goers a chance to go deeper on important environmental topics -- to help create solutions rather than just talk about problems. Jib Ellison, founder and CEO of Blu Skye Consulting, helped design the "rapid prototyping" approach.

Here's how it worked. The attendees were split up into four groups, one for each challenge question. Each group had a facilitator and a team of discussion leaders with expertise in the challenge area. They had 85 minutes to brainstorm. (A bit less than Kennedy gave NASA to get to the moon, granted, but enough to exchange some stimulating ideas.) Each group then came up with a few concrete recommendations. And all of the participants were given a chance to sign up to work on advancing the sustainable solutions proposed in some way. Here's what they came up with:

8696311213_02909f4e37_nChallenge #1: How do we put solar on 50% of rooftops in the U.S. by 2018?

There is some positive momentum in the solar world. Net generation of power from solar more than doubled in the U.S. last year, according to the Energy Information Administration, but it remains a fraction of what is produced from coal or natural gas. About 83,000 homes installed photovoltaic systems in 2012 bringing the U.S total to roughly 300,000.

But given that there are more than 100 million households in the U.S., the idea of putting solar on 50% of rooftops is daunting. There are myriad challenges. One big one is consumer awareness. Many -- if not most -- potential customers are not even aware if solar is available to them, much less how to go about getting it.

In one of the customer issues brainstorming groups, NRG (NRG) Energy CEO David Crane, who was floating around the room as a discussion leader and whose company is aggressively working to install residential photovoltaic systems, wondered aloud, "Is most solar sold to the wife or the husband?"

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Another problem is that the U.S. power grid wasn't designed to handle a lot of power being generated at end points -- i.e. homes -- and the excess being fed back into the system. If the U.S. is going to achieve 50% penetration of homes with solar power, it will require changes to the grid system.

Ellison of Blu Skye coordinated the solar session, dividing the 50 or so conference attendees into four groups, each of which would spend 12 minutes brainstorming on each of four aspects of the challenge: technical, customer, finance, and policy, then rotate to the next topic.

Roughly an hour later, the discussions leaders summarized some of the best ideas for solving the solar challenge in the four categories.

Policy: The group recommended "green default permitting" -- meaning that it should be okay to put photovoltaic panels on your house without a permit. Laura Spanjian, sustainability director for the city of Houston, said they would like to create a program to incentivize cities to take action. "That's where the action is going to happen," said Spanjian. "We want something that is similar to Race to the Top where the federal government gave money to cities to improve schools." The policy group also emphasized the need for long-term financing that is government-backed. For instance, the federal government could offer discounted mortgages with a few basis points off for homeowners who install solar.

Finance: The consensus of the finance group was that solar financing needs both scale and standardization to drive the liquid capital in U.S. markets to solar and drive down the cost of capital for the industry. One key factor in making that happen, they agreed, is securitization. The industry must create assets that are at least 20 years long and government-backed. The big concept they came up with is a federal "green bank" to back these assets and prove them to the market.

Technical: "The challenge here is turning on PV at 50 million end points, on the average of 5 kilowatts each, and somehow we're going to keep the lights on at everyone's home with 250 kilowatts of distributed solar," said Naimesh Patel, CEO of Gridco systems and one of the discussion leaders. To accomplish 50% penetration without crashing the grid system, Patel's group proposed standardization at two levels. First, they want to create a communications infrastructure to manage all the end points and the utility infrastructure that's taking this power and has to manage it. Second, they want to create uniform processes for everything from installation to training to maintenance procedures themselves.

MORE: Does sustainability matter to investors? Depends who you ask

Customer: The big theme is that the industry needs to do a better job of reaching customers and making it easy for them to install solar -- and thereby encourage powerful word-of-mouth referrals. With that in mind, they propose that the industry should put a huge emphasis on customer service. One big idea for reaching more customers is to team up with companies or organizations that have existing relationships to large pools of customers, such as Home Depot (HD), Lowe's (LOW), security companies, and local governments.

8696368993_ca746cfbe9Challenge #2: How do we double America's recycling rate in five years?

Most Americans do a little recycling. The trick is to get them to do a whole lot more. The facilitator of this challenge group was Erin Billman, a principal at Blu Skye Consulting. She had five people make pitches, then they set up stations in the room and people "voted with their feet" and chose the area they wanted to work in. The best-attended group, No. 5, was about how to raise recycling rates by increasing consumer education.

The groups worked together for about 30 minutes, then came back to present their conclusions. Here's what they came up with:

Group 1: The focus was thinking about the economy holistically -- government, business, consumer. "Our vision: convene a national dialogue to create a shared imperative to drive an efficient circular economy through active collaboration," said Gary Sova, senior vice president, national accounts, Republic Services. Where to have this summit? SC Johnson has offered Wingspread, the Frank Lloyd Wright residence now used by the Johnson Foundation as a conference center, as a place to start.

Group 2: Is it possible to activate youth by creating a Recycling Corps? That was the question at hand. The vision was to come up with a program that is scalable across the country. First thing to do is find a host location, probably a university, said discussion leader Kevin Anton, chief sustainability officer at Alcoa (AA). The program could be modeled after Teach for America.

Group 3: This discussion focused on how businesses can work together on off-take agreements. "We struggled for a shared vision," said Teri Shanahan, vice president, sustainability for International Paper (IP). "The shared vision is there isn't one clear obvious answer. It's pretty clear that this is easier to do when there's an economic benefit for someone in a supply chain." One (very, very big) action they proposed would be to redesign the entire waste system.

Group 4: The group had an energetic conversation about product design in relation to recyclability, or "designing for abundance." Before we reuse and recycle, the idea is to "redesign, renew, and regenerate."

One action item is to identify an industry-leading company in each of the major materials categories -- paper, plastic, metal, organics, glass -- and ask them to take the lead on new design standards that are more sustainable. David, Steiner, CEO of Waste Management (WM), suggested that his company might be willing to sponsor a design institute to coordinate these efforts.

Group 5: None of the above approaches will be effective without motivating consumers -- the focus of this group, facilitated by Suzanne Shelton of sustainability marketing agency The Shelton Group. Much of the conversation centered on making recycling more of a social norm through the use of games and social media. But one effective way to get consumers more involved, it was suggested, is just to double the size of curbside recycling bins and challenge consumers to fill them.

MORE: NRG previews new Solar Canopy

Challenge #3: How can standards and labels better measure and communicate the environmental impact of our products?

The crux of this challenge is simple: Ratings are a huge pain. Companies haven't figured out how to present them in a way that they themselves, investors, or consumers understand. "Assessments suck. That could have been the title of the session maybe, but we're trying to make them better and we're trying to make them more efficient," said Kara Hurst, CEO of The Sustainability Consortium.

There is tension between publishing sustainability ratings quickly in a relatable format and publishing correct information. GoodGuide has taken the philosophy of publishing as many ratings as it can as quickly as possible, then correcting on the back end. "Our model is, 'There is no perfect system,'" said Dara O'Rourke, GoodGuide's co-founder and Chief Sustainability Officer. "The science of sustainability is completely incomprehensible to customers. We've got to figure out how to boil down the complexity of the sustainability information into something that actually resonates."

The facilitator of the ratings sessions summarized the group's conclusions thusly. "What does not work? Wonky stuff and fear," said Michael Ellis, partner, CleanTech Group/GreenOrder. "What does? Delighting customers."

To that end, Nike (NKE), for one, doesn't market the sustainability of products to consumers, according to Hannah Jones, Nike's VP of sustainable business and innovation. The idea is to tell stories about positive stuff that the company is doing because consumers respond well to progress, positivity, and innovation.

Another theme is that companies should use standards to determine where they might work together, and where they can't. As Jones of Nike said: "Let's get surgical about where we compete, and I promise you I'll kick your ass there, but let's collaborate on everything else."

8696467319_0c5ec6bd26Challenge #4: How do we sustainably produce enough protein to feed the world?

When you talk about feeding the world, there are a couple of big-picture facts that drive the conversation: The world's population is growing, from roughly 7 billion now to an estimated 9 billion by 2050. And as prosperity spreads, more of those people are demanding to eat more protein in the form of meat.

In the discussion about how to meet this challenge, three themes emerged: the need for product innovation, the necessity of reducing the meat industry's environmental footprint, and the fact that consumer behavior needs to be altered.

The facilitator, Aron Cramer, CEO of Business for Social Responsibility, divided the group into four sections:

Meat: A lot of the discussion was about the tension between the benefits of responsible production vs. sustainable consumption. There's a growing body of thought that to feed the world a growing demand for protein, we're going to have to do more with less. We need to use genetically modified organisms (GMOs) and make use of and develop new farming techniques. That's opposed by the sustainable consumption camp, which believes we just need to eat less.

One thing the group did agree on, according to Dennis Treacey, chief sustainability officer at Smithfield Foods (SFD), was energy production and the importance of making sure manure products could be used to generate energy. They expressed concern about soybeans and corn being the primary food source for pigs and suggested sorgum and grasses as alternative feed stocks.

Seafood: A big topic for the seafood group was aquiculture, and the biggest issue with aquiculture is feed. There are groups using algae for the production of biofuel but they don't use all the algae; the waste product needs to be turned into food for fish. Other options were also discussed: insect protein (some places harvest fly larvae, which have "squiggly little legs but no wings yet" and make it into fish feed).

Another option: the possibility of multi-trophic aquiculture, which means a fish farm surrounded by a mollusk farm surrounded by a kelp farm. It was pointed out that fish are highly efficient in terms of their "feed conversion ratio" -- the amount of stuff that goes in vs. comes out. It takes 1.5 kilos of feed to generate a kilo of fish. For a chicken it would take over 2 kilos, for a pig 5 kilos, and for a cow 7 to 10 kilos.

Plant-based protein: This group proposed a data-driven solution. They agreed that it was important to bring transparency into the cost of meat production and to generate peer-reviewed data on those costs. However, they also agreed that they faced a big marketing challenge. Plant based proteins may be clean and natural, but they may not sell as well as a juicy steak.

Consumers: The consensus was that education is the most important factor in changing consumer behavior. Bottom line: Most people don't understand how much they're eating. The group suggested programs like meatless Mondays. They also pointed out that it's important to raise awareness at restaurants, since 50% of meals are not eaten at home.

Reporting by Shelley DuBois, Leigh Gallagher, and Jennifer Reingold

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