Archive for November, 2009
Thursday, November 12th, 2009
The U.S. Green Building Council (USGBC) has done an outstanding job in greening the industry. But as the LEED standard continues to evolve, the question is: What’s next?
To get a feel for where the green building marketplace might head one day, go to GoodGuide.com and look up any of the 75,000 consumer products they rate, from air fresheners to yogurt. GoodGuide aggregates more than 200 technical databases into a ten-point scale to rank products—and the companies that make them—on their environmental, health, and social impacts. Some of the databases evaluate items over their entire life cycle, from the extraction or harvesting of their contents through manufacture all the way to disposal. In an instant you can compare the ecological virtue or negatives of any product to all of its competitors.
Imagine if some day a parallel rating system existed for buildings, one that rolled up all the ecological impacts of the materials over their entire life cycle and combined those with the impacts of building opera-tions. Such an evaluation would add breadth to LEED ratings by including more dimensions of ecological impacts. Like GoodGuide, the system would have to be independent, verifiable, and transparent.
There are signs of a growing demand for such transparency in green building. When Kaiser Permanente, the nation’s largest health maintenance organization, undertook to build millions of square feet of hospitals, they asked the Healthy Building Network, with its expertise in avoiding toxins in building materials, to help them go beyond simply minimizing volatile organic compounds from carpets and flooring.
“Kaiser looked to us, for example, to assess the materials in a carpet to avoid phthalates in the backing. Phthalates are endocrine disruptors, bronchial irritants, and asthma triggers,” says Tom Lent, a director of the network. “You need to look at all the industrial chemicals used in building materials and match them to medical hazards.”
Such fine-grained evaluation of the impacts of material typifies life-cycle assessment (or LCA), the method used by industrial ecologists to evaluate the gamut of an item’s ecological plusses and minuses. To be sure, LCAs themselves need some improvement. For one, they are very crude in how they address health issues from materials, like the phthalates in carpets.
An example can be seen in Energy-Star ratings, where a wall-mounted digital display screen might look highly energy efficient, but such thin-slice data misrepresents the overall picture. More than 90 percent of its environmental impact occurs during manufacture and disposal, according to Dara O’Rourke, an industrial ecologist at the University of California at Berkeley. An LCA would reveal impacts beyond the use stage. In theory, LCAs can generate a level of information that allows an architect to make more informed choices. LEED standards have brought ecological transparency where there was little or none before. But in some ways LEED ratings represent a black box that’s not easily penetrated.
The LEED governing group has begun using LCA evaluations to inform their green-building standards. Taking LEED certification to this next phase would present a better picture of a building’s cumulative ecological impacts. “We are proponents of radical transparency for architects, so they can drill down to find the data behind the claims,” says Lent. “The green-building world is peppered with labels but sparse on transparency.” “LEED is a first step,” commented Pedro Vieira, a member of the Consortium on Green Design at the University of California at Berkeley. “But it only touches the surface. [In theory] you can do an LCA of a building, assessing all the individual materials, water and energy used, as well as the logistics of producing them.”
Article originally posted at greensource.construction.com
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Tuesday, November 3rd, 2009
Here’s yet another concern for investors: sustainability risk management, or SRM. While the basic concept has been around for years, emerging market forces are creating a new strain of investor sustainability risk: point-of-purchase reputation risk. Disruptive systems are on the verge of revealing ecological impacts of products that could sink some brands — and boost others.
Regulatory and litigation risks have become familiar, and most companies have learned to avoid or manage them. The new kid on the block — reputation risk — may grow to be the most important for many businesses. One big reason? With Wal-Mart’s announcement in July that it is working with an academic consortium to develop a sustainability index for rating products, a never-seen-before level of transparency seems headed for their stores. Other retailers like Safeway and Best Buy are showing interest in adopting a similar rating.
Here’s the way the ecological transparency index seems likely to work. Wal-Mart’s house brand division is already piloting seven existing products, asking suppliers to assess those products on four dimensions of sustainability: resource use, including nonrenewables; impact on climate change; impact on ecosystems throughout the product’s supply chain; and impact on human health. Data like this, apparently, will become the basis for sustainability ratings that will be posted so shoppers can compare brands in the store aisles.
One model for such point-of-purchase comparisons already exists: www.GoodGuide.com, which aggregates more than 200 such databases to rate companies and products on environmental, health, and social impacts. These include not just the greenhouse gas outputs of the company but also dozens of registries of “chemicals of concern” like BPA and phthalates (both of which are on the recent list announced by the EPA of industrial chemicals that will no longer be allowed in consumer products). More than 60,000 personal care, food, and toy products are now rated on a ten-point scale, standing as proof-of-concept for Wal-Mart’s sustainability index.
Unveiling the ecological impacts of products to consumers will likely create instant winners and losers. Signs in store aisles would be much more effective than online systems, and this point-of-purchase comparison sets the stage for what psychologists call the “contrast effect.” The discovery that your child’s toy contains a toxic substance like lead activates disgust — and the toxin-free toy you are comparing it with looks all the better.
Investors can predict how shifts in brand preference could quickly scale, hurting some brands and improving others.
“Just as consumers have had myopia on the ecological impacts of products, investors do regarding these risks,” says Mark Tulay, director of People4Earth, a nonprofit organization. Tulay’s group has begun to establish a global standard for investors to assess sustainability-related risks and opportunities. The ratings include product health and safety, labor practices, the impacts of operations on the environment and biodiversity, and output of greenhouse gases.
Businesses vary widely in their preparedness for reputation risk. As one Wal-Mart executive told me, “I wonder about the future of companies who, when we tell them we want data on their carbon footprint, answer, ‘Carb-what?’”
The dilemma for most companies is that the standard industrial platforms, processes, and chemicals in daily use were developed in the era before companies and consumers were aware of the ecological dangers they could cause.
Adapting to reputation risk will require a new mindset. Take a paper company that has excellent practices in its mills — lower chlorine use, good wastewater systems, alternative energy use, and the like. But the company still sources its wood from virgin forests — a practice that will make it a laggard if its competitors no longer use virgin wood.
To become less susceptible to this new risk, investors might favor companies that use life cycle assessment to identify the impact profile of their products, benchmark those scores against industry averages, and find innovative solutions that raise their ecological scores in the marketplace. One useful tool in development is Earthster, a supply chain management tool designed to help companies do just that — including identify new suppliers with the needed ecological solutions.
Wal-Mart is already working with Greg Norris, developer of Earthster, on pilot analyses of the seven house brands I mentioned earlier. Earthster aims to create an open source information commons that sets sector-by-sector standards for sustainability scores. Companies will be able to use Earthster to compare their own goods to industry averages, diagnose their worst impacts — and then focus R&D or suppliers to improve where it will help their overall sustainability ratings the most.
Lowering sustainability risks that in turn can affect long-term profitability and growth potential has become a mandate at an increasing number of companies. The Sustainable Investment Research Analyst Network (SIRAN) reported in July that annual reports from 86 of the 100 largest publicly traded U.S. companies include sustainability initiatives, and 34 report measurable goals.
Investors are taking note. The Investor Network on Climate Risk has 80-plus members representing over $60 trillion (including BlackRock and CalPERS). While climate concerns have been at the forefront for investors like these, social sustainability — such as how workers are treated — has been an additional focus of late. And as new ecological transparency systems come online, that focus will most certainly broaden.
Investors can minimize their exposure to the risk of supporting companies more likely to lose in this reputation battle. “What’s been missing is what we are all working towards: meaningful metrics on the climate impacts at the product level,” says People4Earth’s Tulay, adding that this is what life cycle assessment systems like Earthster and GoodGuide seek to capture and quantify. Tulay adds, “Investors should demand ecological transparency from companies.”
Full article originally posted at harvardbusiness.org
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Tuesday, November 3rd, 2009
Po Bronson is a first-rate journalist, and I’m sure NurtureShock is a wonderful book (I haven’t had a chance to see it yet). But in his Newsweek blog Po has mis-stated several of my positions. So for the record, let me begin to set the record straight by quoting from my Forward to the 10th anniversary paperback edition of Emotional Intelligence, where I write about one myth “widely repeated: the fallacy that ‘EQ accounts for 80 percent of success.’ This claim is preposterous.”
In the Forward I go on to explain that the misinterpretation stems from estimates that IQ accounts for around 20 percent of success in careers. This leaves 80 percent unaccounted for. But this does not mean emotional intelligence explains the rest of career success. As I wrote in Emotional Intelligence, a wide range of elements, from family wealth and education, to simple luck – including emotional intelligence to some degree –and many more factors are at play. Malcolm Gladwell’s recent book Outliers argues for chance opportunity as one such.
“Another common misconception,” I wrote in the Forward, takes the form of recklessly applying the importance of emotional intelligence to domains where it matters far less than IQ – academic achievement being the most obvious. When it comes to career success, the picture is more nuanced. IQ scores are the best predictor of what career rung we can manage. That’s what they were designed to do; IQ tests were first widely applied in sorting into the right specialty and rank millions of American soldiers during World War I.
But when it comes to predicting who among a talented pool of candidates within an intellectually demanding profession will emerge as an effective leader, IQ loses is predictive power. This is partly due to the “floor effect,” where in order to enter the top echelons of a given profession or large organization everyone has already been sifted for IQ. At those levels a relatively high IQ becomes a threshold ability – what you need to enter and stay in the game.
In my 1998 book Working with Emotional Intelligence I proposed that EI-based abilities more often than IQ-type abilities or technical skills are the discriminating competencies that predict who among a group of very smart people will lead most ably. This is a key point for anyone running an organization who must decide what abilities to look for in potential leaders. One methodology used in industrial/organizational psychology to make this judgment is called “competence modeling,” which contrasts highly effective leaders with mediocre ones, and determines what specific abilities the stars display that the others lack.
Organizations around the world use the competence modeling method to make personnel decisions, performing independent analyses of their own employees. As I wrote in the Forward, if you scan these competency models, “you discover that IQ and technical skills drop toward the bottom of the list the higher the position” (though they remain stronger predictors of excellence in lower-rung jobs). Competence models for leadership typically consist of anywhere from 80 to 100 percent EI-based abilities.”
I inadvertently may have added to the confusion about EI as a factor in success when I summarized this competence data in ways that were misconstrued as claiming that EI (I generally don’t use the term “EQ”) is more powerful in predicting career success than IQ. Once I realized that people did not understand the limited context and correct basis of this statement, I gave more qualifying information. Still, some press accounts and other secondary sources continue to misrepresent my views, as Po Bronson has done here.
Another point relates to the contrast between executive function and emotional intelligence. Po Bronson seems to say that executive function and emotional intelligence are in some kind of competition as concepts. Actually I would argue they are partly overlapping constructs. My model of emotional intelligence elaborates four domains of ability: self-awareness, self-regulation, empathy, and interpersonal skill. The first two – self-awareness and self-regulation — are themselves elements of executive function, all of which are based in the operations of zones of the prefrontal cortex. Indeed, in writing about self-regulation in my 1995 book Emotional Intelligence I cite the work of Walter Mischel and his now-famous marshmallow test with four-year-olds, which assessed their ability to manage impulsivity and delay gratification – two key indicators of executive function. I would expect executive function and emotional intelligence (at least as described in my model – perhaps not with Salovey and Mayer’s) to correlate strongly with EF. That’s a question for further research.
Po also misrepresents curricula in social/emotional learning as a waste of time. An article by University of Illinois psychologist Roger Weissberg and colleagues at the Collaborative for Social and Emotional Learning, now in press in the journal Child Development, reports on a meta-analysis of more than 200 studies comparing students who had the program with those who do not. The results, as presented in an earlier version of this paper: The programs reduce violence and other antisocial behavior by around 10% and enhance positive behaviors like paying attention in class by the same margin – and benefits are greatest in schools that need it the most. Most intriguing, academic achievement test scores go up around 11 percent. That sounds like a program anyone would want their children to benefit from.
Another odd notion put forward by Po is that Peter Salovey represents the academic side of emotional intelligence and I represent the commercial side. I do not sell any product or service related to EI. The sole exception: like Peter Salovey I have co-authored an assessment tool for EI (this is standard practice among psychologists; the various IQ tests embody differing theories of intelligence and how to measure it and are designed by the theorist). Our assessment tools are available only to professionals. Salovey’s is recognized as the flagship general measure of EI; mine is the ESCI, designed specifically for leadership development. Both Peter (I consider him a friend) and I are members of the Consortium for Research on Emotional Intelligence in Organizations, based at Rutgers. Our hope for the field is that rigorous research will more sharply define the EI construct, its correlates and its practical applications, all based on empirical data. That’s the way science grows and evolves. But good science takes time. Give it a decade, Po, and let’s revisit these issues.
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Welcome to the website and blog of psychologist Daniel Goleman, Ph.D., author of the New York Times bestseller Emotional Intelligence and Social Intelligence: The New Science of Human Relationships.