The Profitability of Certified Sustainability with David Goodman
Contact David Goodman
Lisa Ryan: Hey, it's Lisa Ryan. Welcome to the Manufacturers' Network Podcast. Our guest today is David Goodman. David is the CEO of Edenark, the world's top environmental sustainability certification program for SME businesses, small and medium businesses, which are classified under a billion dollars. David, welcome to the show.
David Goodman: Thank you very much for having me.
Lisa Ryan: So, as we get started, please share with us a bit about your background. Why did you choose to focus on sustainability for your company?
David Goodman: My career started in advertising and marketing. I spent many years in Real Estate, and I worked with a partner in the largest real estate company in the world. I ran 40 million square feet, and during that time, I spent a lot of time building energy reduction certifications like LEED or brain. A LEED-certified building is not a sustainability program, but they're building an energy reduction program, so I had that background.
For the last 25 years, I've been a corporate enhancement CEO. Private equity groups will parachute me in to fix trouble companies. Having seen many companies that needed help and having this background in energy efficiency caused me to think about a way to help businesses use green or sustainability or energy efficiency in a positive way on the marketing side, not just on a positive way on the expense reduction side. That is what brought me to what we have today.
Lisa Ryan: When you're thinking about the manufacturing, which is the bulk of this audience, what is it about green initiatives that can help them in their processes products and attracting people?
David Goodman: First, we'll look at it from the standpoint of in effect market demand. I'm quoting organizations like Forbes Nielsen, Harvard Business Review, MIT Boston consulting group; these are not my studies; these are studies from large international organizations that are in the business of doing research and studies.
We know that seven out of 10 consumers that's both B2B and B2C are looking for. We'll move their business to a certified sustainable business because they're looking for a way to do good, to find suitable corporate citizens. We know that 70% of the market out there is up for grabs. They are open to the potential of moving their business from where they are to where you are as a company.
It might be something that you want to think about. We also know that the number one thing that all businesses have since the beginning of time, the number one issue that all companies have is finding a way to stand out, differentiate, and convince the consumer to buy from you versus the organization down the street. If that's the number one issue that all businesses face, we know that sustainability is the number one thing consumers are looking for and that seven out of 10 will switch business. That makes a pretty compelling point, and organizations should consider this.
Lisa Ryan: What percentage would you say of sustainable businesses right now? You're looking at something that you want to stand out from the crowd, but is this being one of 100? Is it one of 1000? What are the numbers?
David Goodman: That's an excellent question. We know that the big organizations, those big publicly traded organizations, the over billion-dollar organizations, have already figured this out. They already have sustainability programs; they have sustainability departments that are deeply ingrained in both sustainability and SG environmental and social governance. But SMEs, which are, as you touched on before, organizations from basically one employee to 500 employees- $1 to a billion dollars that group is today not pursuing sustainability with any significant percentage. An SME can be significantly different from its peer group by becoming certified. That leads us to the real numbers. The numbers show us that an SME that becomes certified sustainable waves that flag and says, look at me, I'm a good corporate citizen. Depending on the study, they are growing between 75% and 20 times faster than their peer group.
If you at New York University, the Stern School of business does an annual study, and pre covid certified sustainable business grew about 5.6 times faster than their non-certified peers. During covid, it got up to 7.1. We're waiting for the newest data, which will probably continue that upward trend. That upward separation between the non-certified sustainable companies and the certified sustainable company they're lapping the field.
Larry Fink, the CEO of BlackRock, is the largest asset manager in the world - $9 trillion in holdings - Larry doesn't want to work with CEOs of companies that are not certified sustainable. It's not because Larry is a tree hugger but because he knows they're leaving money on the table.
So you've got these companies that if they become certified sustainable and wave a flag and say look at us, we're a good corporate citizen, good things happen on the revenue side. Good things also occur on the costs; either cost will go down, the cost of money is going to go down, being able to hire quality and hire and retain quality employees goes up. So the ability to stand out is significant.
Lisa Ryan: So what are some of the things included in sustainability? I think about all right, we put up recycle bins, and we're recycling paper and cans, but starting from there to genuinely take on the certification and say we are sustainable. What are some of the most impacted by going that route?
David Goodman: Let's stop for a second and talk about the word I've used a few times - certified sustainable. And let's define Certified sustainable versus just sustainable. This gets to your question. Tomorrow, an organization could bring you to know senior management or all the employees together, and it could say we're going to become a sustainable organization. Somebody could go Google a bunch of books, and they could read up on it, and they could do everything right. They would be doing good for the environment, and costs would go down. But on the revenue side of their P&L, they will not see the needle move much because over 80% of consumers, both B2B and B2C, will not believe their claims. There's been too much puffery and advertising - any toothpaste will give you the widest white. And we, as consumers, especially in the green\sustainability environment where there's so much greenwashing, which is lying or exaggerating when a company goes out and says I'm a sustainable business. If it doesn't have a third party that's a globally accepted entity that certifies or are verifies their claim, it's just not going to be recognized by the marketplace.
Back to your question - your question was what about a whole bunch of things that a company can do, but the first part of the question is if a company is going to commit the time and do it for the environmental benefits\cost saving benefit. Or is the company going to do it for the market benefit, brand benefit, and, frankly, from the standpoint of government compliance and selling to other organizations. Back to what the manufacturers were talking about, they often sell their stuff to other organizations that put their product in a bigger finished well. And that end client if it is a larger company if it's a publicly-traded company and already has a sustainability program its procurement department is going to require its vendors to become sustainable food, so holding on to that business is going to be more complex and more complicated if you're not certified sustainable, i.e., proving that you're sustainable now. So back to your question, what can you do so there's all kinds of easy IE - non costly things that a company can do like a meatless Monday. A meatless Monday is where all the staff decides they're not going to go to McDonald's and have a big MAC at lunch. They're not going to eat meat.
The trickledown effect on that company's carbon footprint is 10% by having a meatless Monday, so here's something that a company could do that costs the company absolutely nothing. It's also a team-building event that lowers its carbon by 10%, and it didn't cost them a shiny nickel. Then there's all the other end of the spectrum. You've got things like solar or led capital improvements. Still, we don't recommend that a company does any of that until we cover many very inexpensive, very easy, very fun things that get the team smiling. It receives the QA team saying, hey, this is fun, this is good to do.
Lisa Ryan: Okay, I thought about it in 2019. I became a certified speaking professional, which differentiates me because only 17% of professional speakers have it. I also know that it was a five-year process to get it, with money and shows, and everything, but it differentiates my business from everybody else. I also know the amount of paperwork and time it took. People who are listening might be thinking that this sounds like it's going to take a lot of time, cost a lot of money, and be a lot of paperwork.
So, where does that look like? When is a company committed that we will go that route and become certified? I do like the fact that you started with it being fun.
David Goodman: It has to be fun anytime you ask people to make a small change significant change. We're in January, so we're at that time when everybody goes into their gym and health club because it was just the holidays and they put on a little weight. Are they going to stay at the health Club in February? Um, maybe, maybe not. Using that analogy, if we want an organization to keep up the course, we've got to make it fun. We've got to make it affordable. We've got to make it where everybody smiles and says, hey, let's keep doing this.
So back to your question, what we did was we took the world's top sustainability standard. The ISO 14,001 is bigger than all the other global programs added up and multiplied by five, it is the world's preeminent international sustainability standard, but it's a monster. It's big; it's cumbersome; it's expensive. We turned it into an SME program. It is priced and designed so that a small business can afford it. I have an automotive garage in Malaysia that is a client. If that automotive garage in Malaysia can afford it, the odds are that just about any organization can afford it. The entire program is set up to be very affordable, both in money and time.
The biggest concern we get from prospects is not the cost upfront before they even know the cost. Their concern is more about oh my gosh, we're pretty busy around. Is this going to take us away from the day job? And it won't.
The program's design is fast. The cost is rough - I know this will sound too good to be accurate, but roughly 5% of the historical cost is a very affordable program. We're very fast, the companies like it.
Lisa Ryan: What are some of the things that you look at when they're going through the certification process.
David Goodman: The listeners aren't going to see this, but I'm going to show it to you what I do. I send every new client a sheet with roughly 50 no-cost/low-cost ideas. I asked them to take two markers like the yellow and green color, and with one of the markers, I asked him to mark the things they had already done. Oh, my gosh yeah, we've already got recycle bins. Yeah, we already started putting LEDs in when our regular lights burned out. Then, with the other marker, markdown some things they like to do. So that becomes, In effect, the starting point for our discussion.
I give them these ideas of meatless Monday - things that aren't going to cost them anything. Often things that when they look at the list, it'll prompt them to remember, oh my gosh, yes, we've already started a bunch of this stuff.
We call it our foundation. We can start laying out what we're going to do this year and what we will do next year. We work on two or three projects this year that are easy again fun getting everybody smiling and saying, oh, you know what, that wasn't so bad after all, and so they come back next year, and we do more.
Lisa Ryan: And one of the things when it comes to workplace culture is that we want to find, to keep the good people that we have in many cases, they want to be part of something bigger than them, and this sounds like a sustainability issue. This project sounds like a great way to do that. What do your customers do to get their employees involved in this process and get their ideas?
David Goodman: Let's touch on what you were saying. At the beginning of this, at this point, in terms of hiring and retaining employees. Again, a study that we didn't do. Hewlett Packard did this study, and other organizations have done similar studies. Roughly 50% of employees do not want to work for a company that is not certified sustainable or does not have sustainability as part of its core DNA.
Now, does that mean that they won't take the job? No, they may take the job, but there'll be looking to move on. Also, they will accept less money to work for a sustainable company. If I'm an organization looking to find employees and I am not certified sustainable, I'm fishing in a pond with about 50% of the fish. If I am certified sustainable, I'm fishing it with all the fish. So I'm going to be able to catch more. Keep more. And work less hard to get them and keep them.
Now back to your other point about what organizations have done. First, there is the point of getting them involved. So we form a green team. A green team usually has a representative from different departments - somebody that raises their hand says, yeah, I'd like to be part of this. That green team leads the effort and goes through that report that I was talking about, and comes up with recommendations to take the management and get buy-in.
But then, in terms of action items, we have many companies doing the meatless Monday that I talked about. We have many companies expanding their led retrofit that they had already started. We have many companies doing Community programs because sustainability is not just about building-related things like energy reduction; sustainability is about people. It's also about all the stakeholders, which would include the Community.
There are Community-related things. There are outreach things. There are procurement things reaching out to vendors. So you can have a company that would take all its plastic cups in and plates and transition that into regular plates or things like Bamboo, which grow fast.
There are so many different ideas and programs that are not costly. For example, some companies put in electric chargers for electric cars. That's great, but you don't have to go that far. You can do little things and have everybody pitch in.
Lisa Ryan: And what are, as far as getting the word out because this also sounds like an excellent opportunity for PR and just letting the Community know what you're doing? How important and how proud you are to have certification? Is that something that you also help people with, or are they hiring a firm on their own? What are they doing as they're going through the process? Then, once they get the certification.
David Goodman: So we have published a guide, and the guide lists eight things that we recommend. Companies, think about consider and, in effect, ask for when they are pursuing a sustainability Program. One of those eight things is that your sustainability vendor provider consultant has its program. The marketing of your pursuit and attainment of your certification is critical to your question to get the word out.
Let's talk about scheduling. Let's say that you and I signed an agreement today. Today, we signed a contract for you to be my client to start the sustainability Program. Tomorrow, before we start on that list, I will show you all those ideas before talking about the green team or anything to do with the actual work. Tomorrow, the first thing we will work on is a press release. That press release will talk about your company ABC corporation has decided to pursue becoming a certified sustainable business. That will go out on all of your media. That will go out on all my media. My media touches about 2.5 million. Then it is repeated every month, so we start getting the market excitement the buzz.
People would get in the company. Get phone calls from their vendors, from their clients, from their friends - hey, what's going on over there? It looks like you guys are doing something sounds neat. So we start that promotion of the pursuit of the certification before we even start working on the certification. Then every time there is an action event, we apply. They got certified. They started, formed the green team, and started working on the projects - that becomes a talking point in the furtherance of that messaging. So that goes out again to wave the flag and say, look at us, we're a good corporate citizen, we're doing good.
Lisa Ryan: And if somebody is thinking about this, what would be your best tip for them to get started?
David Goodman: Well, my best tip would be to look at that published document that talks about those eight points because let's say to your point, somebody says, you know yeah I've heard about this, maybe we should check into it. But where do we start? What should we look for in a program? There are all kinds of different organizations out there saying they got good programs like in everything in life.
What should we seek, in terms of those critical things that will make this work for us and be and end up with you know the best we can, we can achieve.
If you read that article and people could send it, I'll give you my email and all that people could send. So I could provide them with that information, and they just read that article. So that article is a good guide in terms of what they should look for and how they can make their own decisions if they agree with those eight points or not, awesome.
Lisa Ryan: Well, as we get to the end of our time together, if somebody did want to connect with you and learn more, tell us first, how's the best way for them to do that? Also, please share how your process works when you work with a client.
David Goodman: So the company website is Edenark.com. If they go to that and they'll see, just like in all websites, there's a contact us section, where you can just put in your name and send us a note. If they wanted to contact me directly, DGoodman@eadenark.com, I would then send them that article. It's a PowerPoint presentation that they can review, and they can then come out of that and decide if this is something they want more information on.
So, to your question about okay, well watch the process, we would talk. We would discuss what their goals are. We would then put together an agreement, and then, once that agreement was signed, we would start that promotion and get that going. So, we get the effect and market excitement, i.e., revenue potential, before...