U.S. Ranked 8 in Innovation

"Nothing is more important than innovation. The minute we stop innovating, we die," said an executive interviewed for a recently released report by the Boston Consulting Group and National Association of Manufacturers, titled The Innovative Imperative in Manufacturing: How the United States Can Restore Its Image. The report ranked the U.S. eight among innovative-friendly countries. Singapore made the top spot.

The report cited ways the U.S. is disadvantaged when it comes to innovation, including work force quality, and economic, immigration and infrastructure policies. The U.S. government can help foster innovation by "boosting" the payback on innovation, supporting innovation activities, and improving the innovation environment.

Research and development (R&D) tax credits are important. The American Recovery and Reinvestment Act (ARRA), signed into law by President Obama in February, provides tax credits for R&D. Government grants are just as important, and the ARRA provides them for "green" projects such as renewable energy and energy efficiency.

Four ways companies can succeed in innovation

American companies know they are behind in innovation. Less than half of the executives interviewed for the report said they were satisfied with their companies innovation performance. The report suggests four ways companies can succeed in innovation: idea generation, structured processes, leadership, and skilled workers.

Idea generation. The report states simply, "Ideas matter." They do indeed matter and companies are smart to invest in innovation. Understanding customers is key, as is establishing a "company culture that supports innovation." Another key to succeeding in innovation is working with suppliers. Suppliers can be a valuable source in developing innovative products.

Structured processes. According to the report, the most innovative companies in their index are ones that excel at "generating and benefiting from new ideas." Companies need to create processes for generating ideas.

Leadership. The differentiating factor for companies that succeed at innovation is "strong, focused leadership."

Skilled workers. The most critical element to succeeding in innovation is acquiring a skilled workforce.

Partnership between government and companies needed

Action in all the areas mentioned in the report, and highlighted in this article, are in the "mutual interest of companies and government." In a depressed economy, fostering innovation becomes very important. In the words of the report, all government levels need to make innovation a "top priority and prove their commitment with concrete action."

California Legislation Would Create Product Stewardship

California creates 40 million tons of waste a year. The California Product Stewardship Act or AB 283, introduced by CA Assembly member Wesley Chesbro (D-Arcata), addresses the state's waste problem. The Act would aim to reduce waste and greenhouse gas emissions. It would create the Extended Producer Responsibility Framework Program (EPRFP) which would provide incentives to producers to create products and packages that are more environmentally friendly.

According to the proposed bill, the EPRFP would encourage producers to "research alternatives during the product design and packaging phases to foster cradle-to-cradle producer responsibility and reduce the end-of-life environmental impacts."

"AB 283 moves California toward a more sustainable environment and economy," said Chesbro. "Product stewardship will reduce government spending and greenhouse gases, while creating jobs that are desperately needed in our state. This bill will help move California out of its budget crisis and into a ‘cradle to cradle' state that takes
care of its own."

"CPSC and NWPSC have developed Framework Principles that address many products at once, rather than the product-by-product legislation that is slow and costly," said Kevin Hendrick, director of the Del Norte Solid Waste Management Authority. "Framework legislation will streamline the process to include other products over time."

"EPR policies are working in Canada, Europe, Japan, and other countries," said Heidi Sanborn, executive director of CPSC. "The primary responsibility should rest with producers because only they make design and packaging decisions. It is far less expensive to design a product and packaging to reduce waste than it is to create expensive end-of-life disposal and recycling systems."

How to Bridge Corporate Sustainability Gap

A new study by Deloitte polled 220 board directors at U.S. companies with revenues of $1 billion or more. Most considered themselves to be well-informed about corporate sustainability. However, only half think their companies practice sustainability, and less than half think their board is committed of addressing sustainability issues.

Deloitte also published a whitepaper titled, The Responsible and Sustainable Board with recommendations for getting the board involved in sustainability, which include:

• Get consensus: Schedule a forum for the board to talk about sustainability issues.
  
• Ask the right questions of management.
  
• Examine your environmental and social impact

The whitepaper listed the following traits which companies with strong sustainability programs share:

• Set the tone at the top
  
• Establish sustainability commitments and goals
  
• Create a sustainability committee that will coordinate efforts
  
• Include sutainability metrics in CEO compensation
  
• Monitor sustainability performance with progress reports
  
• Include sustainability in new director orientation.

What are Obama's Plans to Help Businesses?

During February 651,000 jobs were lost. The unemployment rate is over eight percent. As Obama put it in his weekly address, it is the highest unemployment rate in a "quarter century." During the address, he mentioned the Consumer and Business Lending Initiative, a $1 trillion program to revitalize lending. 

The initiative expands the $200 billion program started in November that lends money to investors so they can purchase securities that are backed by debt. It was called the Team Asset-Backed Securities Loan Facility. The initiative will also include securities backed by commercial real estate mortgages. 

Stimulus package and businesses

The American Recovery and Reinvestment Act contains help for small businesses, including $730 million to the Small Business Administration, which is an independent government agency that helps small businesses. The $730 breaks down as follows:

• $375 million for temporary fee reductions or eliminations on SBA loans and increased SBA guaranteed shares, up to 90 percent for certain loans
  
• $255 million for a new loan program to help small businesses meet existing debt payments
  
• $30 million for expanding SBA’s Microloan program, enough to finance up to $50 million in new lending and $24 million in technical assistance grants to microlenders
  
• $20 million for technology systems to streamline SBA’s lending and oversight processes
  
• $15 million for expanding SBA’s Surety Bond Guarantee program
  
• $25 million for staffing up to meet demands for new programs
  
• $10 million for the Office of Inspector General

“The tax incentives and credit stimulus elements of the Recovery Act will truly help small business owners affected by the credit crunch, and will provide financing opportunities to help them create new jobs in their communities,” said Acting SBA Administrator Darryl K. Hairston. 

Fixing the Healthcare system will save businesses money

Last Thursday, Obama held a healthcare summit. He linked addressing the problems with the healthcare system to "putting America on a sustainable fiscal course." The U.S. healthcare system is in sorry shape. The Commonwealth Fund Commission gave the U.S. healthcare system a score of 65 (out of 100) when compared to other industrialized countries. The overall performance of the healthcare system did not improve from 2006 to 2008, and access to healthcare decreased. The efficiency of the healthcare system continued to be low.

The U.S. spends twice the amount per capita on healthcare that other industrialized countries do, but ranks last among 19 industrialized countries. It ranked 15^th last year. The rate of uninsured adults increased from 35 percent in 2003 to 42 percent in 2007. According to the Commonwealth Fund Commission, “We are headed toward $1 of every $5 of national income going toward health care.”

Health insurance premiums for employers increased almost five times faster than inflation over the last five years, according to a 2008 study by the National Coalition on Healthcare (NCHC). Health insurance premiums also increased four times faster than wage growth. Premiums are rising at double digit rates. "It is becoming clear to many companies that at current rates, their health insurance expenses will outpace their profits,” the NCHC study stated.

The rising costs of premiums affects businesses by reducing their capacity to grow, which in turn affects the economy because the job growth rate slows and wages do not increase.

Productivity decreases for businesses unable to provide their employees with coverage. The HR Policy Association puts the annual cost of decreased productivity between $87 billion and $126 billion.

A survey last year by the Kaiser Family Foundation asked employers what changes they will make to health plans for the next year. Forty percent said they are or are very likely to increase workers contributions. Forty-one percent said they will increase deductible amounts, 45 percent will increase office visit cost sharing, and 41 percent will increase

the amount employees will pay for prescription drugs.

Last September a study by the Urban Institute titled Making Healthcare Reform Work for Small Businesses showed that small businesses are more affected by rising health insurance premiums than large businesses. In 2006, only 35 percent of businesses with less than 10 workers offered health insurance to employees, but 98 percent with 1,000 or more workers did. 

A study titled The Future of Employment-Based Health Benefits by the Employee Benefit Research Institute concluded that employers “have clearly passed the tipping point on retiree health benefits, which are in a sharp decline.” The percentage of businesses with less than 200 employees that offered retiree health benefits decreased from 68 percent in 200 to 59 percent in 2007.

The National Federation of Independent Business (NFIB) believes that the “current system of health insurance and health care is financially unsustainable and threatens the health and financial security of the American people.” Small business owners and their employees are “especially vulnerable to the weaknesses of our current system.”

Obama's healthcare plan

Obama does not support a government-run healthcare plan or letting health insurance companies operate without regulation. Instead he favors a plan that requires health insurance companies to cover pre-existing conditions, creates a Small Business Health Tax Credit to help small businesses afford offering their employees coverage, and prevents insurers from overcharging doctors for their malpractice insurance.

Obama's plan would also create a National Health Insurance Exchange which would include private insurance options and a public plan based on benefits available to congressional members. 

What is eBay's Greenteam?

To put it simply, eBay's Green Team is an internal group that works to make the company more environmentally friendly. The team became public on March 4. The business model of eBay, according to the Green Team, is to encourage people to resell items instead of throwing them out, and buy used merchandise instead of purchasing new products.

The Green Team began in 2007 with 40 eBay employees and now has over 1,000 employees involved. The Green Team's website contains a forum called Green Team Talks where people can exchange tips about "sustainable shopping."

eBay worked with the environmental consultant ICF International to green their facilities. Their newest building in San Jose, California is LEED Gold certified. It features an utomatic dimming system which adjusts electric lights to make use of natural light, results in estimated 39 percent energy savings. It is made of 95 percent recycled structural steel, contains 38 percent recycled carpet tiles and 100 percent recycled fabric. The campus contains a smart irrigation system which is a more efficient way to irrigate.

eBay's San Jose North facility has a 650 kilowatt solar energy system (3,248 panels on the roof) provide 18 percent of its energy needs).

A bit of greenwashing?

Michael Brune, executive director of Rainforest Action Group questions eBay's environmental creds. He pointed out that many of the items eBay sells are new. 

“It’s fair to say that buying used goods on eBay is better for the environment, but let’s not get carried away and say this is the greenest thing since recycled paper," Brune  said.

What is Sustainable Consumption?

Just glancing at the title of the recently released report, Sustainable Consumption Facts and Trends, by the World Business Council for Sustainable Development (WBCSD) it might seem that sustainable and consuming are two topics that just do not go together. However, the report points out that the present level of consumption by Western nations is putting stress on the Earth's ecosystems. 

What can businesses do to "mainstream" sustainable consumption? The report lists three different business approaches to sustainable consumption:

Innovation--Creating business processes for developing sustainable product and services.

Choice influencing--Using marketing and awareness-raising campaigns to encourage consumers to purchase sustainable products.

Choice editing--Removing unsustainable products and services from the marketplace.

There are several ways to create markets for sustainable products, according to the report:

1.  Certification

2.  Direct payments which create incentives for resource managers

3.  Tradable permits 

Policies that encourage sustainable consumption are needed. In 2007 the WBCSD developed policy recommendations that include: encouraging energy efficiency, a greater range of transportation fuels, and making consumers more aware of sustainable products and lifestyles.

Consumers are concerned about the environment, yet their concern does not always translate to their purchases. The report cites the following barriers: availability, affordability, convenience, product performance, conflicting priorities, skepticism and force of habit. If a product is cost-efficient and convenient, consumers are more likely to purchase it.

The report also lists ways to encourage sustainable consumption:

1.  Make it easy and affordable for consumers to purchase sustainable products.

2.  Make sustainable products available and comparable.

3.  Increase the availability of more sustainable products and services.

4.  Create a market for sustainable products by working with consumers.

5.  Use marketing communications to influence consumer choice and behavior.