Innovation & Design

The Business Benefits of Going Green


The Clean Tech Revolution is a readable, straightforward guide to earth-friendly business strategies

Perhaps you've heard the trendy new catch phrases such as "eco-chic," or "green is the new black," which refer to the popularity of innovative, earth-friendly products such as Toyota's (TM) hybrid cars. In Toyota's case, "green" also refers to the color of cash; this month the carmaker announced that between December, 1997, and May, 2007, it sold more than 1 million hybrid cars worldwide (including its iconic Prius and newer hybrid Camry).

And a new, lucidly written book, The Clean Tech Revolution: The Next Big Investment Opportunity, unpacks how businesses can follow the lead of companies such as Toyota to go green—and make green dollars—by designing, selling, or funding inventive eco-friendly products and services.

The book was written by Ron Pernick, the Portland (Ore.) co-founder of the six-year-old green business consulting and research firm Clean Edge, with former business journalist and Bay Area contributing editor Clint Wilder. Clean Edge is the firm that developed the year-old NASDAQ (NSDQ) "Clean Edge U.S. Index" (QCLN.O), which tracks public companies specializing in developing green technologies, ranging from renewable electricity generation to energy storage and conversion. (Currently, none of the companies listed is a Clean Edge client.)

Predictions for the Future

Sure, it's safe to say the authors have a vested interest in the promotion of clean/green innovation and design—although Pernick and Wilder disclose clients mentioned in the book such as Sharp Electronics and investment bank Piper Jaffray in a "Note to the Reader" intended to ensure transparency—but their focused, informed analysis provides a helpful and straightforward guide that quickly and efficiently unpacks green business strategies.

The text focuses on eight key sectors that hold the most promise for revenues within the next decade, including the solar power market, which they predict will grow from $13.6 billion in 2006 to $69.3 billion by 2016. Or biofuels (petroleum alternatives made from plant matter), which Pernick and Wilder forecast will grow from $20.5 billion in 2006 to $80.9 billion in 2016 (see BusinessWeek.com, 11/13/06, "Planting the Seeds of a Biofuels Boom").

One of the book's key strengths, simple as it is, is Pernick and Wilder's clear definition of what "green," really means in the context of technology—both in terms of sustainability and potential profits (see BusinessWeek.com, 11/13/06, " Harvesting Green Power"). While many consumers and corporations alike toss around the term "eco-friendly" to apply to a variety of products that are in some way made from, or are powered by, renewable and sustainable materials, the idea of "green" can often seem vague.

"Ten to Watch"

The authors have favored the term "clean technology" since the early 2000s to refer to, as they explain, "any product, service, or process that delivers value using limited or zero non-renewable sources and/or creates significantly less waste than conventional offerings." Explained Pernick in a telephone interview: "The word 'clean' resonates more than 'alternative' when used to market products to mainstream audiences," That's important when profits are a main goal.

Toyota's Prius is just one well-known example of successful clean tech in action (see BusinessWeek.com, 3/20/07, "Hybrids Stuck in Neutral"). The real value of the book lies in the authors' snapshots of lesser-known companies. In the eight chapters devoted to specific technologies (solar energy, wind power, biofuels and biomaterials, green buildings, personal transportation, smart grid, mobile applications, and water filtration), Pernick and Wilder present alphabetical "10 to watch" lists (see BusinessWeek.com, 05/21/07, "Nuclear Power: A Bad Reaction").

These include international companies such as Suntech Power (STP), based in China's Jiangsu Province, which manufactures solar cells and is the first Chinese solar power company to go public on the New York Stock Exchange, alongside well-funded U.S. startups such as Menlo Park (Calif.)-based Cilion, which makes ethanol fuel. Cilion is backed by respected venture-capital Silicon Valley firm Khosla Ventures (see BusinessWeek.com, 2/19/07, "Ethanol: Too Much Hype—and Corn").

Although the book might have the word "investment" in its subtitle, its authors don't want readers to use The Clean Tech Revolution as a stock-picking guide. This might sound counterintuitive, but Wilder is firm on the point. "'Investment' as we define it isn't just about pure dollars," Wilder said in a phone interview. "We want it to be clear that it's important to talk about investment in terms of the future economic health of a region [when discussing investing in clean technologies]."

A Growing Library

To highlight this point, the authors present an insightful chapter called "Create Your Own Silicon Valley," toward the end of the book, featuring 10 "clean tech clusters" around the world that hold promise in terms of becoming centers of clean-tech business development. The list includes Hyderabad, India—which has a tradition of solar power research and development at local universities and established biotech companies—as well as Copenhagen, Denmark. That country, as the authors write, is the "world leader in wind production per capita, with wind turbines supplying some 30% of the nation's electricity." This highly original and intriguing chapter could have easily become a book in its own right.

The Clean Tech Revolution has some stiff competition, in terms of resources written for executives of all ranks, industrial designers, and laypeople eager to learning more about eco-friendly products and business practices. The editors of the Web site Worldchanging.com published a compendium of articles in the fall of 2006, as a hefty book, called Worldchanging: A User's Guide for the 21st Century (see BusinessWeek.com, 10/26/06, "Can Design Change the World?").

The Worldchanging site and book have business sections, featuring articles such as Is Clean Energy the New Tech Boom? Popular blogs such as treehugger.com also feature clean-technology companies and products on a daily basis. And on the print magazine front, mainstream, big-media outlets such as Vanity Fair and Elle magazines publish annual "green" issues devoted to eco-friendly companies and products.

Gathering Precious Water

But what sets Pernick and Wilder's book apart is its focus on the business benefits of going green, from money saved by building eco-friendly corporate headquarters and lowering heating and cooling bills, to money earned by startups committed to creating clean technologies. Other books, magazines, and Web sites tend to include clean-tech and green business within a spectrum of other lifestyle, political, environmental, or design topics.

The Clean Tech Revolution, with its colorful and varied narrative chapter introductions (ranging from the experience of driving a hybrid car in sunny, affluent Marin County, Calif., to a short vignette of families gathering precious water in the remote Indian village of Korukollu), promises to be a valuable snapshot, at least, of the tipping point of international green business in the late 2000s. And Pernick's and Wilder's predictions and analyses are sure to grow more valuable as references.

After all, companies specializing in clean tech are clearly poised to grow within the next decade. Business advisory firm LECG predicts, for example, that the ethanol industry will add more than 203,879 U.S. jobs and contribute an estimated $46 billion to the U.S. gross domestic product by 2015. In addition, LECG predicts that biodiesel makers will add more than 39,000 jobs and $24 billion to the U.S. GDP by 2015, while the wind-power industry will create more than 12,500 new jobs and add between $100 million and $200 million to the U.S. GDP, also within the next eight years.

The so-called clean-tech revolution promises to continue, and savvy designers, brand strategists, consumers, and investors with their eyes on "green" success, in both senses of the word, would be wise to pay attention.

Click here to view eight companies featured in The Clean Tech Revolution.


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