Sustainability Law Blog

The University of Oregon's Lundquist School of Business has announced that Tom Osdoba, formerly with Portland's Office of Sustainable Development, is the new director of the school's Center for Sustainable Business Practices . On April 3, the school will sponsor a symposium at its Portland campus (the one with the "Made in Oregon" sign on top) called "Growing a Green Economy: Perspectives from Law and Business." The timing of the symposium dovetails nicely with the Portland Development Commission's work on the Portland Economic Plan referenced in an earlier post "Sustaining Portland's Economy." One focus of that plan is the role of Higher Ed in securing a sustainable economy. Further, an insider tells me that at the symposium the University of Oregon will announce a joint JD/MBA program focused on sustainability. Such a joint program, perhaps the first in the nation, will add to the resources Portland and Oregon can claim toward forming a legitimate national leadership role in sustainability.

President Obama's and Governor Kulongoski's are not the only executive branches looking to stimulate the general economy by emphasizing greener technology. Mayor Adams and the Portland Development Commission are formulating the City of Portland Economic Development Strategy, a five-year plan for promoting economic growth and job creation. According to PDC's Peter Cunningham, the strategy is 50% complete with a target completion of early summer, 2009. The goal of the strategy is to build here in Portland the most sustainable economy in the U.S. The rationale is that Portland possesses unique advantages that make it a front runner to be the capital of the U.S. green economy. All this seems audacious for a city of Portland's size, but according to PDC, the Portland Metropolitan region possesses talent clusters 84% greater than similarly-sized regions for renewable energy and 43% greater for environmental services and recycling.

The concept of a sustainable economy as a three-legged stool is familiar to many: economy, environment, society. PDC has its own spin: sustainable job growth; sustainable way of life; and inclusive prosperity.

The Silicon Forest never really had a chance to rival the Silicon Valley or the Research Triangle in the race for Web-based commerce supremacy, because it was starting out from too far back in terms of both its industry base and its research base. There is no question, though, that Portland is a leader in policies promoting transit, land use planning, bicycling, density, a thriving central city, green buildings, and recycling. Portland may really be, rather than merely aspire to be, a front runner in the race to the most sustainable economy.

At the Portland Business Journal's Sustainable Oregon luncheon at The Nines Hotel last Friday, I was leafing through the University of Oregon School of Law Green Business Initiative literature. The law school explains that the Green Business Initiative will advance Oregon's economic and environmental goals, will build on Oregon's talent, resources, and culture, and will take advantage of Oregon's natural advantages in the area of green business. I was thinking about the Oregon brand and its importance to all of us doing business here as I read in The Oregonian about the U of O's interest in changing the acclaimed and esteemed "Made in Oregon" white stag/reindeer sign. The school would like to alter this icon that sits atop its new University of Oregon in Portland campus to read: "University of Oregon." Maybe that Made in Oregon wording is more sustainable than the U of O perceives, and should be maintained. It certainly seems to fit with the concept of the Green Business Institute.

Governor Ted Kulongoski wants to reduce Oregon's greenhouse gas emissions by the year 2020 to 10% less than 1990 levels. He's proposed to do this by making key investments in greenhouse gas reduction, energy efficiency and conservation, renewable energy and sustainable transportation. These investments will help stimulate the sustainable economy by creating incentives for companies to manufacture and invest in projects in Oregon. (Read the press release here.)

I applaud the Governor for leading this initiative. As Mark Edlen, Managing Principal at Gerding Edlen, has suggested, it's not just the right thing to do, it's good for business.

But the Governor's proposals ultimately rely on innovation for their success. If you've had a chance to touch the thin film solar panels that Solar Integrated Technologies is installing for PGE (NYSE: POR) on warehouse roofs owned by ProLogis, you know what I mean. Likewise, SolarWorld AG has committed an entire wing of its 480,000 square foot factory in Hillsboro to advanced photo-voltaic research.

Beyond simply leading in sustainable behavior, Oregon must strive to lead in sustainable innovation. It's one thing for Oregonians to choose to install or buy renewable energy or drive a plug-in car, but it's another for Oregon businesses to develop the technology that produces the renewable energy or the battery for the plug-in car.

Continue reading "What About Sustainable Entrepreneurship?" »

I recently attended an Oregon Natural Step Network meeting featuring the founder of a local winery speaking about her company's sustainability journey. I was inspired to hear about the sacrifices, successes and lessons learned along the way.

The Oregon Wine Board estimates that about 26% of Oregon's 17,400 acres of planted vineyards are certified biodynamic by the Demeter Association , organic by Oregon Tilth, or sustainable by Low Input Viticulture & Enology, Inc. (LIVE) . That's an impressive number and it continues to grow as more consumers seek out wines that are made using sustainable practices.

I learned about what sounds like a great tool. The Oregon Wine Board, recognizing that sustainability is part of the Oregon wine identity, is developing an "Oregon Certified Sustainable" or "OSC" label to be rolled out late this year or early 2009. According to the Wine Board's website, it has been working in partnership with Oregon Tilth, LIVE, the Demeter Association and Salmon Safe to create "a unifying platform and certification logo to help consumers easily identify sustainable wines." The idea is that if a vineyard has already met the rigorous requirements of one or more of these agencies, they would be allowed to use the OSC logo on their wine bottles. Given that earning any of these certifications is no easy task, consumers would be assured that wine with this new logo is not guilty of greenwashing.

Post authored by Kimberlee A. Stafford, attorney practicing in the Real Estate and Land Use and Sustainability Groups at Tonkon Torp.

Oregon Governor Ted Kulongoski recently outlined his policy proposals for boosting energy efficiency (Click here for a summary of the Governor's remarks). His proposals include net-zero greenhouse gas emissions by 2030 for all new residential and commercial buildings, energy performance certificates on all homes sold in Oregon, a new public awareness campaign, and expansion of the Oregon Business Energy Tax credit (BETC) and the State Energy Efficient Design program (SEED) .

The net-zero energy emissions goal is likely the most important of the Governor’s proposals because buildings are big energy consumers and have a big impact on the environment. The National Renewable Energy Laboratory (NREL) reports that commercial and residential buildings use almost 40% of the primary energy and roughly 70% of the electricity in the U.S. Energy demand is also on the rise, with commercial sector demand doubling in size between 1980 and 2000 and expected to grow another 50% by 2025.

In contrast, net-zero energy buildings produce the majority of their own energy needs over the course of a year. Designed to be exceptionally energy efficient, these buildings are powered by renewable energy sources such as solar panels or wind turbines located on site. Ultimately, net-zero energy buildings could result in less energy consumption despite an expected boom in demand.

Nevertheless, the Governor’s plan will encounter challenges beyond his worries of how to finance the policies. To begin with, there is no single definition of net-zero energy efficient building.

Another concern is that a net-zero energy buildings are not necessarily green or sustainable structures. Builders are not required to use green building methods, such as reducing waste or using recycled building materials, to earn a net-zero structure certification.

All this goes to show that gaining energy efficiency isn't easy. Oregon will have many choices to make, on energy efficiency and other green options, as it marches into a sustainable future.

Posted by Marc Sanchez, Summer Associate at Tonkon Torp LLP.

Erin Flynn, Economic Development Director of the Portland Development Commission, made that comment at the recent Portland Leadership Summit’s breakout session on Economic Development and Prosperity.

Ms. Flynn said that Portland economic development faces two challenges: the need for new development tools, and institutional fragmentation. She noted that while the city has good tools for development, they are place-based and real estate-dependent. She argued for creating complementary economic development tools that will encourage entrepreneurship and micro business development. She also suggested making manufacturing more visible and cautioned that as we develop the city, we not displace profitable businesses from their current locations.

Ms. Flynn also believes that accountability for economic development is spread too thin over many city agencies. Good ideas can languish or get lost in translation when one agency is responsible for developing an idea but another agency is responsible for implementing it. Ms. Flynn suggested that the city must systematically coordinate economic development resources and activities across bureaus in order to improve delivery and impact as well as identify remaining gaps.

For someone who's been arguing that the city spends too much time boasting about sustainable development and not concentrating enough on developing a sustainable economy - of which sustainable development is a vital component (see blog post November 27, 2007) - I welcome Ms. Flynn’s point of view.

The other day someone asked me how I felt about being a green lawyer. I thought about it for a few minutes and responded, "I'm not a green lawyer, I'm a business lawyer." Sustainability is so much more than just being “green.”

We hear about the triple bottom line (depending upon your vernacular): people, plant, profits; or community, environment, business; or equity, environment, economics. If you imagine the triple bottom line as a three-legged stool, as it is often characterized by Dick Roy, founder of Oregon Lawyers for a Sustainable Future, Northwest Earth Institute and the Oregon Natural Step Network, then you realize we must achieve balance among all three components. Remove one of the legs of the sustainable stool and it topples over. We can't achieve sustainability for the community or for the environment if we don’t achieve sustainable economic interests, too.

I recently returned from the Green Building Conference in Chicago. No doubt Portland is very good at building green buildings. But, if Portland wants to establish the standards of the sustainable economy and continue to demonstrate leadership in the sustainability movement, then Portland needs to incubate, develop and promote businesses that create the products and services that actually go into green buildings.

If Portland is happy with just being green, then Portland won't be sufficiently sustainable.

Sustainable clothing maker NAU's financing experience confirms that lofty values can pose challenges to achieving the firm's business goals. To NAU's credit, they believe the triple bottom line business model actually enhances value. But, in an interview in Grist, NAU's Sustainability Officer Eric Brody acknowledged that NAU faced significant pushback to its documented commitment to sustainability. Brodi said, "People advance the view that the language [NAU's rules of corporate responsibility] suggested a greater degree of responsibility and therefore could lead to the company being devalued."

NAU initially rolled its code of corporate responsibility into its organizational documents. But as a result of challenges to raising capital, NAU eventually removed the code from these documents and adopted it as a stand alone set of principles. NAU's articles of incorporation do require that any amendment to its rules of corporate responsibility require approval of at least 75% of NAU's outstanding voting securities. No one knows yet whether or not these rules are binding on NAU or guidelines by which NAU chooses to operate.

Considering NAU's experience, I advise clients to consider carefully how the actions and positions it takes may affect its ability to raise capital and, ultimately, its ability to achieve or realize its business plan. A successful business has a much greater opportunity to impact society than an unsuccessful one.

In a city blessed with natural abundance, and a population committed to enjoying that abundance, Portland, Oregon is a logical home to outdoor clothing and equipment stores. Relatively new on the Portland scene, NAU has differentiated itself by employing a business model that blends profitability and philanthropy. NAU exists, as its website suggests, "to demonstrate the highest levels of citizenship in everything we do: product creation, production, labor practices, the way we treat each other, environmental practices and philanthropy. We believe that companies have a broader responsibility than simply generating profit. That's one reason we're blending profitability and philanthropy, what we believe is the new measure of success."

In other words, NAU practices good corporate citizenship. What is corporate citizenship? I think attorney Robert Hinkley stated it best in his Model Uniform Code for Corporate Citizenship: "The duty of directors shall be to make money for shareholders but not at the expense of the environment, human rights, public health and safety, dignity of employees, and the welfare of the community in which a company operates." NAU included in its corporate documents a set of socially responsible principles, including among other things:
• Permitting directors and officers to consider social and environmental factors in exercising their powers and discharging their duties to the corporation;
• Requiring that 5% of the aggregate purchase price of any product or service sold by the company be contributed to charitable organizations (I always choose Ecotrust); and
• Providing that no officer shall receive cash compensation (exclusive of signing bonuses, stock option grants and other benefits) more than 12 times the compensation of the lowest paid full-time U.S. employee.

These goals are right in line with the newly adopted HB2826 in Oregon that permits a corporation to include a statement in its articles of incorporation about the pursuit of the triple bottom line.

Clients often ask me whether their organizational documents should include similar codes of corporate responsibility. My answer: It depends. While I believe these are noble goals that we and all businesses should aspire to, emerging growth companies only have so many investor opportunities. My experience suggests that investors, even like-minded investors, (and yes there are like-minded investors), struggle with binding statements in organizational documents that may impact a company's ability to achieve its business plan.