Wednesday, April 22, 2009

Green news for Earth Day: the book industry is announcing carbon reduction goals

Happy Earth Day everyone!

We wanted to write a special post for Earth Day and fortunately we have great news to report: The Book Industry Environmental Council announced last week it has set goals for cutting the U.S. book industry's greenhouse gas emissions in 20% by 2020 (from a 2006 baseline) with the intent of achieving an 80% reduction by 2050.

This is very exciting news and as the Council pointed out in its press release, this industry-wide commitment is a global first in publishing and hence has tremendous importance.

Because of the importance of this move and its implications for the book industry, we thought it's important to take closer look at it and analyze it from strategic and operational points of view. Hopefully later on we'll also bring you an interview with one of the Council's leaders.

So let's start with our analysis, which will be presented as a series of Q&A:

What is the Book Industry Environmental Council (BIEC)?

The council, coordinated by the nonprofits Green Press Initiative and the Book Industry Study Group, includes representatives from more than 40 publishers, printers, mills and other stakeholder companies that together account for about 60 percent of the market share. The council is currently focusing on three priority areas: Tracking environmental progress of the book industry, setting an industry wide goal for greenhouse gas emissions reduction and establishing a label to identify publishers that are leading the way in reducing environmental impacts.

What is the baseline of the new goals?

The baseline is the 2006 figures of 12.4 million metric tons CO2 equivalent. This baseline was established in the report 'Environmental Trends and Climate Impacts: Findings from the U.S. Book Industry' that was published on March 2008 by The Green Press Initiative (GPI) and The Book Industry Study Group (BISG).

Why now?

Why not? actually the timing is great with first steps taken in Washington to formulate climate regulation, growing awareness of both companies and customers of the environmental impacts of the industry, growing sense of urgency, and an understanding that if approached now, climate change can become an opportunity for the industry instead of a risk.

And what about the economic recession? Well, with the right strategy companies can build solutions that not only will reduce their carbon emissions, but also lower their costs and create more business opportunities (finding the way to reduce the number of returned books is just one example), so it can become a win-win model that will also benefit the bottom line.

Is it doable?

The targets and their time frames are certainly reasonable. Nevertheless, there are two elements that are crucial to the success of the Council's initiative:

1. Strategic approach - publishers and other companies involved in the industry should approach their carbon reductions strategically and systematically - that's the only way to make sure they will gain the most out of it by creating a shared value - meaningful benefit for the environment that is also valuable to the business. This win-win model is crucial to ensure the success of this initiative. We'll review the process in the next answer.

2. Federal carbon regulation - without putting a price on carbon emissions, whether it is through a carbon tax or a cap and trade system, I don't think there are sufficient economic incentives for publishers to implement climate change policies in accordance with the Council's goals. Fortunately, we see it coming with the first step taken by the EPA last week.

According to the EPA's estimations, carbon prices will range from $13 to $17 per ton in 2015, and rise by about 5 percent a year, reaching $17 to $22 per ton by 2020. It means that we're talking about potential saving of 50-60 million for the industry. This figure may not sound too impressive, but in a growing competitive business environment, these savings can certainly make a difference for many publishers and increase their incentive to act faster and better to reduce more carbon emissions and hence reduce costs.

So what companies in the industry should do?

The Council recommends three major goals: 1. Increasing average PCW recycled content in books from 5% to 30% for all paper types 2. Reducing the portion of books returned from 25% to 20% and 3. Reducing the portion of books in landfills by 30%. These are definitely good goals but it's not enough.

The Council is defining here a market shift and such a shift is involved with both risks and opportunities, especially when each company needs to decide on the action plan required to implement these goals. In order to know how to best utilize the opportunities and avoid the risks, companies need not only goals but also a road map that will enable them to make the most out of this shift.

One example for such systematic approach that can take companies safely throughout this shift is the methodology that was developed by Prof. Andrew Hoffman of the University of Michigan and include 8 steps to build a climate change strategy. Here's a short description of the required steps:

Step 1: Asses emissions profile - what kinds of direct and indirect GHG emissions are being created, from what sources and in what quantities?

Step 2: Gauge risks and opportunities - what risks are posed by emissions from operations and GHG-intensity of products and services? What opportunities can be found to take the company forward?

Step 3: Evaluate action options - what options are available for reducing emissions? Are there any "low-hanging" emission-reduction opportunities? how can climate-related strategies enhance top-line and bottom-line objectives?

Step 4: Set goals and targets - by how much can the company reduce its impact? how can targets be connected to business strategy?

Step 5: Develop Financial Mechanisms - what financial instruments are available to suport GHG reductions? What are the pros and cons of emissions trading for the company?

Step 6: Engage the organization - How can buy-in from the workforce be achieved? how can resistance overcome?

Step 7: Formulate Policy strategy - what are the best ways to influence climate change policy at the state, national or international level?

Step 8: Manage external relationship - what external constituents are important to the success of the climate-related strategies? how should they be engaged?

These steps can of be adjusted to fit each company's operations, and as you can see from the example of IBM it may work even if you don't go through all the steps, but one lesson companies hopefully will learn here is about the need to approach climate change systematically to achieve the best results.

Can it work on the industry level or only on a company level?

I believe the logic of the Council is that an industrial effort, in which some of the big players are involved, is the best and most feasible way to shake the industry and move it forward in the right direction. It definitely makes sense, but one thing that should be taken into consideration is that the Council's move is quite unique - most voluntary climate change initiatives are presented by companies, because they see carbon strategy in terms of competitive positioning - an element that will add value to their unique value proposition. When this initiative is shared by all the competitors, then the competitive element is weakened, unless companies look at these goals as the minimum and not as a cap and will try to excel and move further to meet bolder goals.

What's missing?

1. I didn't see any reference to electronic content or in other words e-books. I know that this is a relatively small part of the whole industry and we still need to gather more information on the carbon footprint of e-books, but this is fast-growing niche that should be taken into consideration this way or another. Publishers should have more information about the implications of using more content electronically in terms of carbon emissions and evaluate whether this is a desirable path or not.

2. It will be interesting to learn more about the commitment of the big players in the book industry to these goals - are they all see it eye to eye and are fully committed to these goals?

All in all this is very good news and we'll continue to follow the developments in the industry closely and bring you updates and analysis to get a better understanding of the big picture.

Happy Earth Day!

Raz @ Eco-Libris