U.S. fails to make the grade on green building policy

The countries with the best green building markets earned that distinction largely due to strong government policies supporting sustainable construction, according to a new report by Lux Research. Nations in the report’s top tier include Singapore, South Korea, Germany, Australia, and the U.K.

The Boston-based firm that compiled the report identified six national policies — including building codes and energy efficiency targets — that play key roles in inspiring higher rates of activity in green building. The report, entitled ““Policy’s Dramatic Impact on Green Buildings: The Global Hotspots,” ranked 21 countries how successful they are at fostering an environment that supports green building.

Government motives behind these policies include an interest in energy security, and environmental and livability concerns, said Aditya Ranade, a Lux Research analyst and lead author of the report.

Wealthier countries with an ability and willingness to pay for these buildings were more likely to place higher in the rankings, he said. The 21 nations on the list represent more than 80 percent of the world’s total gross domestic product.

“For any emerging technology — and especially for green buildings — technology, financing and policy are the three legs of the stool that drive the adoption of these trends,” said Ranade.

The research firm is hosting a webinar on August 28 that will combine both the policy and financing landscape and explain how its analysts use those factors to determine global hot spots for emerging technologies in green building.

The U.S. didn’t make the cut into the top quadrant of countries in the report, despite significant pockets of cutting-edge green building activity across the nation. That’s because the catalysts for much of that construction aren’t attributed to federal policies, explained Ranade.

Green building trends in the U.S. have been driven by state and city-level government policies, corporations, and voluntary certifying organizations, such as LEED certification, he observed.

Lux researchers looked at policy measures over the last five years that support green building and highlighted six categories they believe have an impact on whether emerging technologies in green buildings are pursued. They include:

  • Building codes and standards. Countries with particularly strong energy efficiency components in their national codes include Singapore, Malaysia, India and Germany.
  • Information and awareness. Nations that mandate public disclosure of buildings’ energy performance to tenants and property buyers encourage more builders to incorporate energy-saving measures into their projects, Ranade said. Singapore, Germany and Japan scored high on this measure.
  • Tax benefits and direct financial assistance. For example, cash rebates incentivize property owners to adopt emerging technologies in their construction projects that would otherwise be too expensive or have a longer payback period. “Singapore has a scheme that if you meet their green platinum standard, you can get up to 70 percent of your capital expense reimbursed by the federal government,” said Ranade. “That’s an extreme example of cash rebates that’s not found in many larger countries.”
  • Energy efficiency improvement targets at a national level. South Korea and Australia have a price on carbon, which forces commercial building owners and energy-intensive industries to pay a tax if they exceed limits set by the government. The European Union has a tax as well, but Lux analysts consider it too low to have real impact. “We weigh these targets depending on the seriousness of each announcement,” he explained. “If there’s a price like a carbon tax or cap-and-trade economic incentive tied to it, the announcement is more meaningful in our analysis.”

Most countries analyzed in the report don’t incorporate all the policies identified, said Ranade. However, national building codes stood out as a basic requirement among most leaders on the list

“If you don’t have building codes and standards, none of the other measures would be effective,” Ranade asserted. “If a country wants to move into building energy efficiency, they have to write it into the building code. It’s not enough to say that you should have insulated windows; there needs to be an R rating associated with it.”

Some of the nations pooled near the bottom of the list in the report are oil-producing countries including Russia, Saudi Arabia, Brazil and Argentina. Cheap energy resources are impeding their governments from adopting federal policies on energy efficiency. These countries have minimal tax benefits for energy efficiency measures and their building codes regarding energy standards are still under development or aren’t even on the drawing board, added Ranade.

Surprisingly, the report’s researchers found a high number of developing and under-developed countries exploring green building technologies. For example, Peru has a government initiative to construct 200,000 eco-homes. Ranade predicts countries including Peru, Thailand, Colombia and Poland could adopt more policy measures in the future for green buildings if they see countries such as India, China and Malaysia succeed in their current efforts.

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This week’s Green Scene column in Crain’s Chicago Business: Fluorescent bulb recycler gets a jolt from Goldman

EverLights has been a successful fluorescent fixture recycling company, but owner Kelly Gallagher hopes to take it to the next level with the skills she picked up this year in an intensive business training program sponsored by Goldman Sachs.

Kelly Gallagher

With no formal business experience, Ms. Gallagher, her brother Ken and mom Patt in 1995 launched a company that collects and recycles fluorescent lightbulbs for businesses that didn’t want them to end up in landfills. Ms. Gallagher, then 21, aimed to create a company that would safely recycling fluorescent lamps and other lightbulbs because the toxic mercury content in those bulbs never decomposes in landfills. The trio’s corporate customers were in other states, since lightbulb recycling laws weren’t on the books in Illinois at the time. They joined others to work on changing legislation and new recycling laws were enacted in Illinois in 1997.

The Chicago-based company grew modestly but steadily over the years, increasing sales by about 10% each year, says Ms. Gallagher, who now runs the company solo. This year, EverLights expects to hit $2 million in revenues, with about half from Chicago-area customers. Some of the firm’s biggest clients include Walgreens stores nationally and, closer to home, they provide services to six Chicago city colleges, the John Hancock Building, and the University of Chicago.

Last year, Ms. Gallagher applied to attend a program created by Goldman Sachs and funded by The Goldman Sachs Foundation, which promised to boost her skills as a business owner. The investment firm designed a 5-month crash course — called 10,000 Small Businesses — that’s free to small business owners who want to learn strategic skills. It was a competitive application process and Ms. Gallagher was among 37 students out of 150 applicants accepted in the Chicago area’s first class this year. She graduated in May and says she is already enjoying results from participating.

Crain’s met with Ms. Gallagher to learn how the Goldman Sachs program refined her business know-how.

Crain’s: How has your perspective about running your company changed over the years that led you to apply to the Goldman Sachs program?

Ms. Gallagher: I’ve evolved from a tree hugger and “let’s get mercury out of the landfills” to looking at this as a business. I would have had that (phrase) tattooed on my butt back then. Now I’ve changed my focus to spreadsheets, accounting and growing the business.

I have an English Lit background with no formal business training. I was overwhelmed with the commitment of getting an MBA. When the Goldman Sachs program came along, I thought: I can do this. It’s only five months.

Crain’s: How demanding was the program?

Ms. Gallagher: When you’re accepted, you have to commit to every class and the homework assignments. Goldman Sachs is partnered with Chicago city colleges and they flew in Babson College professors to teach the program (and mentor the local instructors too since Babson has one of the best entrepreneurial business programs in the country). We had class every other Friday from 8 to 5:30 and every other Thursday night. There was lots of homework in between and we had to write a growth plan for our final assignment. Each student also had a consultant come in to our companies to work with us directly to pull apart our business.

Crain’s: What were the most valuable things you learned?

Ms. Gallagher: It gave me a business edge and a different way of looking at how successful we are, ways we can grow, and how to measure that growth. I called it a boutique MBA because it’s geared to small business owners. Every class presented a scenario and challenge that I’ve experienced at my own company. I got a training opportunity that cut out the stuff that I’ll never have to deal with as a multi-million dollar company.

Now I have more tangible goals. My company will hit $2 million in revenues this year and the goal is to hit $8 million in 3 years. This program gave me a roadmap of how to get there. It also taught me how to apply metrics toward growth opportunities to see if it makes sense for us to pursue them.

Revenues for 2012 so far have grown 25% from the year before. I attribute some of that to the program because I started applying what I was learning to the business right away. For example, we recently added an auditing service for our clients.

Crain’s: Did the program teach you anything that is particularly helpful for a small company trying to succeed in the green sector?

Ms. Gallagher: Not really. They customize the program for each business since we all get one-on-one time, but the program isn’t designed for any one specific sector. But if a company is trying to change its buying process to be more green or one of the goals is to be more eco-minded, the program teaches them how to figure out what makes most sense for your business to pursue, and how to measure the results.

Crain’s: Were there other green-focused company owners in your classroom?

Ms. Gallagher: There was great diversity in the class and a couple of landscaping companies had some green aspects to their business. Other classmates included owners of a yoga studio, a motorcycle company, a doggy daycare center, and home health centers. There was an acupuncturist, owners of a few tech companies, and a baker. We had different businesses but we were all coming from the same financial footprint.

Crain’s: How were you able to fit in this 5-month, 100-hour program into your life that was already crammed full running a company with only a handful of employees and taking care of 3 children under 10 years old?

Ms. Gallagher: I needed to get everyone’s blessing because I knew it was going to be a crunch. Everyone around me supported me and that was all it took. At graduation my staff told me they were inspired by me. At home, my kids kept saying mommy was going back to college. Maybe it will inspire them later on in life too.

Crain’s: Do you have advice for other entrepreneurs applying for the next round of this program?

Ms. Gallagher: Send in your application, speak from the heart and go for it.

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This week’s Green Scene column in Crain’s Chicago Business: New book showcases local farm entrepreneurs

A new book hitting stores this month spotlights entrepreneurial sustainable farmers in the Midwest and the Chicago chefs who use their ingredients.

Chicago-based writer Anna Blessing offers close-ups of 20 farms within a couple hundred miles of the city that are following sustainable farming practices. The farmers are entrepreneurs of different stripes: Some are running family-owned operations that date back several generations. Others are recent city dropouts who turned to organic farming as an alternative adventure. And some are creating urban farming opportunities right here in vacant city lots and high up on building rooftops.

Each farmer’s story is accompanied by anecdotes from well-known Chicago chefs, including Paul Kahan and Stephanie Izard, who describe how relationships with these growers are central to the success of their own small businesses. Both growers and chefs share about 70 recipes in the book that call for ingredients from these mostly small-scale vegetable, fruit and animal farms.

Ms. Blessing, a Portland, Ore., transplant, hopes this book, titled “Locally Grown: Portraits of Artisanal Farms from America’s Heartland,” inspires more individuals in the business community to find their own niche to help expand the local, farm-to-table food network.

Crain’s: How did you select the Midwest farms to profile for this book?

Ms. Blessing: It started out with a handful of Chicago chefs who told me which farmers they work with who are doing neat things. The chefs are the spokesmen and superstars for this movement who are putting the farmers forward. I looked for a good cross-section of the different types of farms in the area and a mix of those who have been doing it for a long time, like Green Acres Farm (in North Judson, Ind.), as well as newer ones like Bare Knuckle Farm (in Northport, Mich.).

Crain’s: Restaurants have to make money if they want to be sustainable. Doesn’t a lot of this local produce, meat and cheese cost more than what they can buy from larger national distributors?

Ms. Blessing: Patrick Sheerin was among those responsible for bringing in local food to Chicago seven or eight years ago in a high-profile way to the Signature Room at the 95th (he’ll soon be cooking with his brother at the Trenchermen). A lot of Chicago restaurants are small and chef-owned, and they can do what they want. But Sheerin had to convince these corporate owners that serving local food in season was a good idea even though some thought it would be more expensive.

Sheerin said he would focus on individual vegetables, such as asparagus, and highlight it in his menu only when it’s in season. He used to buy it year-round from big distributors, but because he was buying it from local farmers only in season, he actually ended up saving money. If chefs change the way they cook and only use seasonal ingredients, it doesn’t have to be more expensive to get it from local farmers. Seasonability is now becoming a focus because it’s also a cost saver.

Crain’s: Did you get the impression that Chicago chefs seek out products from local farmers because it’s good for business or because the food actually tastes better?

Ms. Blessing: I think it’s because the food tastes better. Every chef without fail said they love the farmers, but they wouldn’t do it if the food didn’t taste better. Every chef’s priority is to find the best-tasting food because that’s linked to the success of their business.

Finding the farmers and some unusual foods for their menus takes more work. Some farmers won’t deliver and chefs have to piece together orders from many farms. Paul Virant (of Vie and Perennial Virant) told me over the course of a year he works with as many as 40 farms, and that’s not unusual for many chefs.

Anna Blessing

Crain’s: How has the relationship between chefs and local farmers changed over the last couple of decades?

Ms. Blessing: People like Rick Bayless (Frontera Grill) and Bruce Sherman (North Pond Restaurant) have been working with local farmers consistently for the last 20 years.

Places like Shooting Star Farm (in Mineral Point, Wis.) describe their relationship with chefs as an evolution. They used to work only with Charlie Trotter and a few other select restaurants. (Shooting Star owner) Rink DaVee used to surprise them week after week with the specialty produce he’d bring them. That transitioned to more of a collaboration between chefs and farmers working together, picking seeds. Then they found that not everything grows well on Midwest farms. So it then transitioned back to chefs asking farmers what grows well in this region.

More restaurants now are choosing a real focus on regional cuisine, and that’s more predictable for farmers, too, because they can supply restaurants with what’s in season. The chef has an interest in supporting these farmers because its important to the success of their own restaurants, too.

Crain’s: Are more chefs in Chicago willing to source pricier organic produce and meats close to home because diners are willing to pay for it?

Ms. Blessing: That’s part of it, but a lot of chefs have been doing this for a long time because they love the relationships they have with the farmers. Chefs also know that educated diners are coming in looking for these foods. Some chefs use this produce because of the marketing and trendiness of it. That’s OK because it’s such a contagious exciting thing that it’s impossible not to get into it.

Still, it’s only a small percentage (of Chicago restaurants) that offer locally sourced food. Some food artisans, like Pleasant Farms and their Pleasant House Bakery restaurant in Bridgeport, are trying to make their food more affordable and approachable for their community.

Crain’s: What lessons can entrepreneurs interested in the local sustainable food movement learn from this book?

Ms. Blessing: The focus really is on community, finding it or creating it. This is still a grass-roots movement. If you’re going to get in as an entrepreneur, you need to be connected to either the chef or the farmer side. Everyone tells me that this part of the restaurant world in Chicago is about sharing — they’re not secretive or competitive. It’s in their interest for this community to grow because it will get easier for them to get more local produce they can offer on their menus. Chefs need more farmers who are raising sustainable food on a scale that’s reliable for them.

The farmers in this book could be a good source for anyone starting out. They’re so willing to talk about what they’re doing, all you have to do is start a conversation and create connections within this community.

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