A Tale of Two States: Implementing a Sustainability Program Using the Carrot or the Stick

This past week at the Sustainability Leadership Program (SLP) at the University of Oregon, we focused on a number of topics including best practices on the implementation of sustainability programs.  One of the key points regarding sustainability programs is the need to lead through the change cycle of adoption so that, when the end arrives, sustainability is embedded in the everyday tasks of what organizations do, whether they are a small not for profit organization or a large corporation.  So says Marsha Willard of Axis Performance Advisors and executive director of the International Society of Sustainability Professionals (ISSP).

“It really is about winning the hearts and minds of the people,” claims Willard a veteran of scores of sustainability efforts based largely in associations, public agencies and universities in the Pacific Northwest.  “There are always two ways to go about things, the hard way and the soft way.  But at the end of the day you need to end up in the same place.”

At some point programs need to just choose which way to engage.

According to Willard, two approaches exist to move organizations to change in the area of sustainability adoption akin to the proverbial “stick versus carrot” methods.  The first approach is to change the processes by which the organization operates and the mechanics by which people execute their day-to-day tasks.  While this has merit this is basically the “stick” approach which is behaviorally driven by compliance to a new set of expectations inside the organization, whereby if you don’t comply there is a penalty for improperly executing business tasks and practices.  This can be effective in moving some people, or large groups of people who might be more comfortably taking baby steps if there are compelling business benefits to quick implementation.  A good example of this is the expansion of “lean to green” programs where waste reduction can reduce costs, or even create new revenue streams by selling waste produced by an organization.  Paint supply company Purdy created a new revenue stream by sweeping up the filaments left on the manufacturing floor and selling these bailed filaments to a North Carolina company who produces floor cleaning discs for industrial and hospitality use.  In this case, by changing the corporate practice a benefit was achieved by following a new set of business processes.

The second approach is the kinder and gentler “carrot” approach to implementing sustainability initiatives.  This involves changing the belief system of the organization through education and awareness, sometimes moving at a much slower pace.  However according to Willard this can be a very effective approach for organizations ingrained in institutions without a compelling timetable to follow. “Sometimes organizations move too fast, running the risk of not reaching the expected end result at all due to organization resistance,” observes Willard.  Institutions, public sector, and union-affiliated organizations have a longer journey to change how they go about their business on a day-to-day basis, so moving more predictably even at a slower pace reduces the immediate resistance that can stifle a sustainability program before it ever really gets out of the starting gate.

A good example of how these two approaches can be used differently and in tandem is the state implementation models of the American Recovery and Reinvestment Act (ARRA) Better Buildings initiative.  This program allocated a population-indexed grant across major metropolitan areas as part of the ARRA stimulus focused on creating energy efficiency of both residential and commercial buildings.  States were then allowed to apply for additional grant funds as part of Better Buildings to then engage and accelerate their programs.  Some 20 states received grants, Oregon and my home state of Michigan being two recipients.  The approaches both states used to implement the grant programs is another example of the dual-approach “carrot versus stick” method illustrated by Willard in the SLP presentation.

Michigan established its Michigan Saves program in conjunction with the Better Buildings of Michigan programs.  Since funding was directed primarily through several of the utilities including Detroit Edison and underwritten by banks working with the utilities, an extensive application process was developed.  Education is a key part of not only awareness surrounding the program but also the approach to apply for loans, grants and other subsidies under the Michigan Saves program.  In addition, due in large part to several concentrations of population across the state, the Michigan program simultaneously serves 27 different communities throughout the upper and lower peninsulas, with a focused program for the City of Detroit.  Each municipality has its own focus for the program, in many cases with slightly different implementation processes and requirements for both residential and commercial improvements throughout the state.  Different commercial programs exist depending on whether a company is a restaurant, grocer, retailer, or small manufacturer.  While over 1,100 homes and 130 businesses are targeted for the Michigan Saves program, to date no results have been published on a statewide basis.

In stark contrast, the Clean Energy Works Oregon program started in Portland and has remained largely focused in that particular geography, even as rural areas are beginning to come on-board in the statewide program.  “Focus and defragmentation is key to our success,” Clean Energy Works Oregon CFO Aaron Berg noted this past week at the University of Oregon program.  “We wanted to keep a focus on Portland and the surrounding metro area where the large concentration of our state population is located so we could make a targeted impact.”  While the program has expanded through a number of funding sources and partners, it is very customer focused and nimble, modeled after many public-private partnerships found in the state and supported by state policies and regulations.  Rather than direct consumers to process steps, participants are coached on what programs and funding sources will work best for them and then they are enabled to access program funds.  To date the Clean Energy Works Oregon program has serviced over 700 residential homes and commercial businesses are beginning to participate.

Regardless of the eventual relative success of the two programs in Michigan and Oregon, both serve as vital not-for-profit organizations bonded with a common purpose to reduce the overall environmental impact and energy use of both residential and commercial buildings.  However it can be noted that at least at the mid-way point of the program funding that implementing a sustainability program based on cultural adaptation using the “carrot” is showing better results than a sustainability program based on more rigid mechanics using the “stick.”  Time will tell which approach yields the greater outcome for each group of citizens.

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Filed under Community and Municipal Outreach, Compliance, Financial Management, Operations, Risk Management, Supply Chain Management, Sustainability

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