Sonoma County businesses go green to get into black

Local businesses are embracing the concept of sustainability amid the realization that going green - besides having a positive impact on the planet - can also bring their bottom line into the black.

Once limited to agriculture, sustainable practices have spread to sectors as unlikely as technology, food manufacturing and financial services.

Santa Rosa businesses as varied as Keysight Technologies, Redwood Credit Union and Amy's Kitchen all offer up evidence that even small changes in their operations can have a significant impact on the environment.

Executives at these companies note that sustainability practices are now integral to their mission, especially as scorecards on corporate behavior now provide investors insight on whether a firm is behaving appropriately in every aspect of business, from sourcing to labor rights.

Also, consumers are demanding it.

“The bottom line it's consumer preference, which ironically some of that came from (government) mandates that have evolved into market desires. That continues to grow from all directions,” said Ben Stone, executive director for the Sonoma County Economic Development Board.

While the term is increasingly ubiquitous in the business world, the definition of “sustainability” is more amorphous. A United Nations commission definition commonly cited called it “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

But over at Traditional Medicinals, the Rohnert Park-based herbal and medicinal tea manufacturer, it can be explained simply, with staples.

The company has been an environmental leader since its founding in 1974, from paying fair wages to its suppliers in developing countries to last year fully converting to local renewable electricity. It recently upgraded its machines at its Sebastopol plant that pack the organic tea harvested from such countries as Kazakhstan and Egypt. The new, faster Italian-made machines do not use staples that tie a bag to a tag along its string. The result? Traditional Medicinals is saving more than 200 million staples from production annually.

“It's cool because our customers can now compost all of the tea bag,” said Ben Couch, the company's sustainability manager. “Even though it's just an aluminum wire … it's a pretty big difference at the end of the day.”

CEO Blair Kellison said the impetus for many of the ecological advances are coming from the marketplace, especially from millennials who are concerned even about supply chain issues. “Part of it is being driven by consumer demand,” he said.

Those practices also are paying off in the company's budget. Traditional Medicinals last year sold almost 13 percent more products than in 2015, but purchased only 0.4 percent more herbs and 6 percent less packaging by weight. Those savings can be used for other parts of the business.

“The staples were part of a more holistic sustainability approach,” Couch said. “They are more of a function of our (overall) operational efficiency.”

Sustainable business practice

Stewardship of the land has long been a trait in Sonoma County, tracing to its agrarian roots. Not surprisingly, local farmers have been on the forefront of the sustainability movement to ensure that they will be able to pass their land onto their heirs.

Jackson Family Wines of Santa Rosa has been a leader in the wine industry with its practices, embracing solar panels that generate power then saved onto Tesla batteries as well as using ultraviolet light rather than water to sanitize their tanks. The Sonoma County Winegrowers association has implemented a program to ensure that all of the almost 60,000 vineyard acres in the county will be certified as sustainable by 2019.

The focus on sustainability practices has now spread to local companies across the county, from industries in areas such as technology to banking and food production. They also range in ownership structure from publicly traded companies to not-for-profit cooperatives.

Kellison said he believes the county's scenic natural setting, from the majestic coastal cliffs to the rolling golden hills, motivates local business officials to lead on the issue.

“People are locating here because they value the quality of life,” he said. “People who live here care about maintaining clean air and clean water.”

That sentiment is shared at other local businesses. The commitment to social responsibility at Keysight, an electronics measurement company, stems from its founding more than 40 years ago as a unit under Hewlett-Packard. It became an independent company in 2014 and is traded on the New York Stock Exchange. “It's been one of the threads that continues strongly in our operation and culture,” said spokesman Jeff Weber.

Keysight over the past year has installed energy-efficient LED lighting at its headquarters and three other sites, which has led to a 4 percent decrease in electricity use.

The ethos is reflected in the Keysight parking lot, which sports 30 electric vehicle charging stations, one of the largest collections in Sonoma County. They are powered by Keysight's three-acre solar panel site and provide free charges for employee vehicles. The perk also helps in recruiting and retaining in-demand tech employees around Northern California.

“We expanded it just based on demand,” Weber said.

Eco-friendly food, packaging

Environmental practices are an especially acute concern in food manufacturing, where companies vie to be seen as industry leaders. For example, Whole Foods Market helped change practices in the seafood industry by establishing its sustainable seafood program for consumers. Amy's has had sustainability at the core of its mission since the vegetarian food manufacturer was founded in 1987 by Andy and Rachel Berliner. The privately held company, which uses only organic ingredients, has generated a loyal following through the years. Two years ago it opened its first drive-thru restaurant in Rohnert Park.

Amy's incorporates many sustainable practices in its design. It has an eco-friendly green roof with more than 15 types of drought-tolerant plants as well as solar panels. There also is a nearby water tower that collects rain water used to irrigate the living roof and landscaping, according to spokeswoman Lauren Clancy.

The packaging materials at the Amy's drive-thru are compostable. Even after getting rid of its paper straws because they would clog up when diners sipped their thick Amy's milkshakes, the replacement they found was compostable plastic.

In fact, packaging is increasingly coming under scrutiny in the fast food industry. U.S. Senate minority leader Charles Schumer, D-New York, last month called on the Food and Drug Administration to investigate such packaging for possible phthalates - chemicals used to make plastics more flexible - that has been shown to be toxic, especially for pregnant women and children.

‘Green' banking, investing

There has been significant movement even among sectors, such as financial services, not typically known for their environmental leadership. Redwood Credit Union, for instance, has helped 60 percent of its nearly 300,000 members switch to electronic statements rather than paper, which saves several tons of paper a month, said Robin McKenzie, senior vice president for marketing and communications.

Redwood has 19 branches and offices throughout the region, so water and electricity usage at those locations also is a top priority. Its water-efficient restrooms and landscaping practices have saved about 2 million gallons of water annually, while upgrades to its heating and cooling systems have saved 113,00 kilowatts per hour - which equals about 19 passenger cars driven for one year - as well as 300,000 gallons of water, McKenzie said.

One area where Redwood has made a particular difference is with its consumer loans. It has generated 213 solar panel loans worth more than $5 million and provides a 0.25 discount on auto loans for hybrids and other fuel-efficient vehicles. It also has benefited from new members who have switched their accounts over to Redwood from the Wall Street banks that played a major role in the 2008 financial crisis.

“Especially here in the North Bay, people want to feel good about where they bank and feel good about companies they do business with,” she said.

Sustainable jobs, training

As more businesses look for workers who have training and skills in environmental and sustainable practices, academic institutions have responded. Sonoma State University offers such courses as part of its executive master of business administration degree program, said Bob Girling, a business professor. He also is director of SSU's Sustainable Enterprise Conference held every year, which attracts many local businesses and practitioners.

“If you have expertise in this field, you are super employable,” said Tom Jacobson, director of SSU's Center for Sustainable Communities, where students work on sustainability projects that benefit local and regional government agencies.

One project the center worked on was with the California Department of Water Resources, which included a return-on- investment calculator to guide project development decisions toward sustainable finances. While most of the students in sustainability courses are majoring in environmental studies and planning, Jacobson has pushed to include those from other disciplines, such as economics, in the projects. He said those from other liberal arts fields can help provide an outside perspective to such work.

As the focus on sustainability develops over time, the scrutiny of certain business practices will grow beyond environmental issues. For example, Kellison said he believes there will be more of a spotlight on fair treatment of workers. The fast food industry recently was targeted by labor activists in the “Fight for $15” campaign to pressure employers to pay workers more generously.

At Traditional Medicinals, every one of its more than 150 employees makes at least a living wage, which in Sonoma County is defined as $13 an hour for a single adult - $2.50 more an hour than California's minimum wage. It also provides transportation subsidies and attempts to limit the number of temporary workers. Those efforts have paid off; its employee turnover rate was only 11 percent in 2016. That's well below the national average of 18 percent, according to CompData Surveys, a data and consulting firm based in Olathe, Kansas.

“The two biggest stories out there are global warming and income inequality,” Kellison said. “If you have a business, you have to be addressing both of those … We can't be exploiting people and we can't be exploiting the planet.”

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.