Glimpsing the future at Net Impact 2010

My favorite conference is Net Impact’s annual gathering, mostly because of the crowd—this weekend, about 2,500 people, most of them MBA students, undergrads and young professionals, gathered at University of Michigan’s Ross School of Business in Ann Arbor. These fare the smart, passionate and committed business leaders of tomorrow. I’m proud to be on the board of Net Impact, a nonprofit that helps its members harness the power of business for the greater good.

So much programming is crammed into the two-day event that it can’t be captured in a single blogpost or experienced by anyone, because dozens of sessions on different topics unfold simultaneously. But here are a few highlights:

What’s the future of recycling? It’s an unhappy fact that recycling rates haven’t moved up much since Earth Day. Yes, the original Earth Day, back in 1990. But innovative companies like TerraCycle, RecycleBank and Waste Management–yes, Waste Management, through a subsidiary called Greenopolis–are experimenting with clever and promising new ways to move the needle, by rewarding consumers for recycling.

I first wrote about RecycleBank in 2007. [See Turning trash into cash at Fortune.com] The company measures homeowners’ curbside recycling, and then rewards those who recycle with points that can be redeemed for stuff at more than 1,500 companies. “The idea of consumer behavior change is at the heart of our business,” said Ian Yolles, the chief marketing officer at RecycleBank, who previously worked at Nike and The Body Shop. The company is growing–it now operates in more than 300 communities in 26 states — and its investors include Coca-Cola,  venture capitalists Kleiner Perkins and Generation Investment Management (the fund led by Al Gore and ex-Goldman partner David Blood). RecycleBank generates most its revenues by saving municipalities money (lower tipping fees, higher revenue streams from recycling) and taking a share of the savings.

TerraCycle has a more unusual model. It collects all kinds of hard-to-recycle stuff by mail — drink pouches, candy wrappers, plastic bags, wine corks, toothpaste containers — and then turns them into other things. “In 2011, you’ll see a playground made out Capri Sun and Honest Kids drink pouches,” said Jo Opot, TerraCycle’s vice president of business development. Consumers who send trash get rewarded with donations to schools or charities, and they get the psychic satisfaction of knowing that something useful was made out of their garbage. You’d think that  few people would bother to send their trash in the mail to New Jersey–Terracyle’s home base–but the company says 12 million people have participated, returning 1.8 billion items. The company gets paid by brands whose products it recovers, by manufacturers who buy its materials and by marketers who use its logo on finished products. There’s lots more about this all works at the TerraCycle website, here.

For its part, Waste Management is rolling out Greenpolis, which offers interactive kiosks on streets, where people can recycle, as well as an online platform that offers rewards for recycling. In fact, all three of these companies want to get into the media business by engaging people on their websites. The Greenopolis website is packed with “green’ content and RecycleBank recently replaced its founding CEO, Ron Gonen, with Jonathan Hsu, who comes from the world of digital media.

Photo by Sanergy

Where’s the fortune at the base of the pyramid? It’s been 12 years since Stu Hart and the late C.K. Prahalad began writing about the money that big companies can make by developing products and services for the world’s poorest people. The idea has instant appeal–help eradicate global poverty and make money, too!

SC Johnson has been one of a number of companies (along with Unilever, P&G, The Water Initiative) to embrace the idea, so it was interesting to hear Chris Librie, director of global sustainability at SC Johnson, talk about the challenges operating at the BoP. He was joined by Mark Milstein, director of the Center for Sustainable Enterprise at the Johnson School of Business, an academic who works with Hart and has closely followed BoP enterprises.

Chris spoke frankly about about the frustrations that SCJ has run into as it tries to scale up a “community cleaning service” BoP business it is operating in Mathare, Kenya, a settlement that’s part of Nairobi. The business is aimed at cleaning public toilets, the only option for many people living in Nairobi’s poorest neighborhoods, as Sanergy, a sanitation/energy company, reports:

In Kibera, 65% of the toilets are not operational because the pits are full and there is no means to empty it or because the toilets are broken and nobody has the responsibility to fix them. But even more often, residents can’t use the toilets because of the seemingly simple problem of keeping them clean.

The SCJ community cleaning operations works at what Librie called the “cellular level”–that is, it provides a decent livelihood for local crews that clean the toilets, they buy and use SCJ’s cleaning products and the people living in Mathare get cleaner toilets–no small accomplishment. But SC Johnson isn’t making enough money to cover its overhead and marketing costs.

To its credit, the Wisconsin-based firm is continuing to experiment with BoP efforts. Its hope is to scale up the community cleaning business and make it profitable. “We’re a private company. We’re willing to think long term,” Librie said. “We’re willing to fail small in order to learn big.” [SCJ said much the same thing when I wrote about this back in 2006. See Chasing the base of the pyramid at fortune.com]

Chris was more optimistic about the scalability of SCJ’s efforts, working alongside US AID and Texas A&M, to help pyrethrum farmers in Rwanda. Pyrethrum is a natural insecticide used in Raid. But, as Milstein told me, this is a fairly traditional supply chain model. We’re still waiting for a big, scalable business to be created at the BoP.

What’s the future of food and ag? Food companies are digging deeper into their supply chains, to better understand the environmental impacts of the products they sell, and then try to reduce then, said speakers from PepsiCo, General Mils, Cargill and the Natural Resources Defense Council on a panel called “From the Farm to the Plate: Evaluating the Food & Beverage Lifecyle.”

Lawren Cooper, a sustainability manager with PepsiCo who is based in Chicago, said the company is trying to understand the carbon footprints of all of its biggest products–Pepsi, Diet Pepsi, Quaker Oats, Gatorade, Tropicana, etc.  Studying Tropicana, for example, the company found that one of its largest environmental impact came from growing the oranges, particularly in the manufacturing and application of nitrogen-based fertilizers. So PepsiCo has begun to work with farmers, mostly in Florida, to see if they can use less fertilizer or substitute low-carbon fertilizers.

By contrast, Naked Juice, a PepsiCo brand with a greenish hue,  gets its bananas and pineapples from Costa Rica, which has such an ideal climate for growing fruit that almost no fertilizer or water is needed. There, the environmental issue is shipping–bananas and pineapples travel by boat, which is efficient, while mangos from Mexico and apple juice from the Pacific northwest travel by truck, which generates higher emissions. “We’re trying to figure out ways to get them to ship by train or boat,” says Lawren.

This kind of work isn’t glamorous, but it’s one way change happens. I hope she succeeds–Naked’s Protein Zone is a favorite of mine.

Comments

  1. Thank you for sharing your thoughts on the Net Impact Conference, and especially for the very insightful moderation you did of the keynote session on recycling.
    I was at the session on the SCJ initiative in Kenya and what troubles me with business initiatives such as this is the opportunity-based approach vs. a needs-based approach. While it has fantastic merits in terms of efficiency, innovation and speed of prototyping, I feel being opportunity-driven creates the scenario where if you have a hammer everything looks like a nail. What is the core issue at Mathare? Is it a lack of cleaning products or a lack of cleaning? Can SCJ’s core competencies address the core issue(s)?

    How can we merge the benefits of both opportunity-driven and needs-based approaches?

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