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Sustainability Incentives

An Advocates for Ethics in Business interview with Ian Yolles, Chief Marketing Officer at RecycleBank

By Ian Yolles, Julia Taylor Kennedy | RecycleBank | October 4, 2010

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JULIA TAYLOR KENNEDY: I'm Julia Taylor Kennedy, and for the next half hour, I'll be speaking with Ian Yolles. We recorded our conversation on August 26.

As an executive at RecycleBank, Yolles is familiar with incentives and sustainability. The business' mission is to entice consumers to recycle, with a reward system similar to frequent-flyer programs. He'll tell us more about that in a minute.

Yolles has long worked at the intersection of business and environmental conservation. He has a long career in corporate social outreach and marketing at companies, including Nike and Outward Bound.

It's my pleasure to welcome Ian Yolles to Global Ethics Forum. Thanks for coming.

IAN YOLLES: Thanks, Julia. It's a pleasure to be here.

JULIA TAYLOR KENNEDY: First, let's start with RecycleBank. What is the concept?

IAN YOLLES: The concept is essentially to motivate people to choose to engage in a series of progressive green actions. You can think of it, in a sense, as a form of behavioral economics, a carrot-versus-stick approach. The genesis of the business really began with a focus explicitly and specifically on recycling. The idea was to increase the rate of activity associated with recycling at a household level.

The point of innovation revolved around two dimensions. One was the idea of putting an RFID [radio-frequency identification] chip in a recycling bin, which enables us to identify that it's your recycling bin when you put it out in front of your house on a weekly or biweekly basis. Then a scale goes on the truck that comes by and picks up the recycling bin. That combination means we have the ability to identify it as your recycling bin. We know that you have recycled, and we can weigh the amount that you have recycled.

On top of that we layered essentially a rewards program, similar to a frequent-flyer program for an airline. The idea was that the more you recycle, the more points you would earn. Those points are redeemable at any number of national business partners that we have, but also with local businesses in the community that you actually live in. The rewards and the points associated with the recycling that you are doing are the carrot.

Using that positive carrot-versus-stick approach, we have been able to have a very material impact on increasing recycling rates. We now are in over 300 communities and over 22 states in the United States; we're also now operating in the UK.

JULIA TAYLOR KENNEDY: Who are you working with? Are you working with governments? Are you working with private waste-collection companies?

IAN YOLLES: Both, but the principal client, if you will, is the municipality—ultimately, a mayor. If you think about it from a mayor's perspective or from a community perspective, there is an economic benefit to be derived by diverting waste from the landfill to the recycling stream. That was actually one of the insights that led to the generation of the business.

Most people, when they think about the economics of recycling, only think about the value of the recycling stream and what you can get for it on the commodity market, which ebbs and flows. That's typically how people historically have thought about the value of recycled materials.

If you stand back and think about it from more of a systems point of view and look at what happens to waste when it goes to the landfill, you find that it's costly to dump waste in landfills, and it's getting more costly. Landfill space is filling up. There are tipping fees.

For every ton of waste that goes into the landfill, the municipality gets charged. Because landfill space is filling up and is at more and more of a premium, you have to truck it further and further. There are costs associated with the trucking of garbage, not to mention all the detrimental environmental impacts from trucking garbage around and putting it in a landfill.

The concept was, from a business model standpoint, to the extent we could divert waste from the landfill to the recycling stream, there are actually economic savings there for the municipality. A core part of the business model is the idea that as we divert waste and increase recycling, we'll share those savings with the municipality. From a political point of view, from a mayor's point of view, there is economic benefit. There is an environmental dividend associated with the increase in recycling. Then the third dimension of this is the rewards program itself.

I mentioned that we have both national partners and local partners. When we go into a community, we partner with a number of local businesses in that community. What we are actually doing is driving foot traffic into local businesses in the community. There is this interesting local economic/business development part to the story as well. It's really a quite amazing win-win-win scenario for the community, certainly from a political point of view, the economic piece, and the environmental piece.

JULIA TAYLOR KENNEDY: Is this a profitable business model from RecycleBank's perspective? Is this a nonprofit or a for-profit?

IAN YOLLES: We are absolutely a for-profit business. We are an early-stage company, funded primarily by some very committed investors. We're in the early growth stage of the business. We launched the business about three years ago. As I mentioned today, we are now in over 22 states and 300 communities.

One of the other interesting inflection points for the business is, having demonstrated the success in the recycling arena, there is now a broader vision that has emerged for the business. Now what we're looking at is taking this same fundamental methodology, and understanding the dynamics about human motivation and behavioral change and behavioral economics, and we're starting to apply it to a broader arena of environmental action.

For example, we just launched a new program in the city of Chicago, where currently we are involved on the recycling side. With the Citizens Utility Board, we are incentivizing people to reduce energy usage in the home, using the same kind of rewards platform as the key carrot used to motivate recycling.

JULIA TAYLOR KENNEDY: I'm curious where your revenue comes from. Does it come from the partners? Does it come from the municipalities? What is that structure like?

IAN YOLLES: We have a couple of different revenue streams. One, as I alluded to before, is when we increase recycling and divert waste from the landfill to the recycling stream, the city or the municipality saves money. One part of the business is essentially that we share those savings with the city. Recycling goes up; money is saved; we share those savings with the city.

Another source of revenue is the sale on the points themselves. You can think about this rewards platform. Essentially, we are building, in a way, the world's first green rewards program. We can sell the points and use the points to motivate a green behavior.

Then the third source of revenue for us is, as we build this community of engaged members that are a part of this growing RecycleBank family, we are also entering into relationships with major marketing partners, major brands, who are doing some interesting and innovative things from a sustainability standpoint and enabling those brands to enter a dialogue and engage with our community. We are telling the story of the innovative, progressive things that some of our marketing partners are currently doing.

JULIA TAYLOR KENNEDY: Do you find that this is a growing sector, these social enterprises, these socially responsible and conscious businesses?

IAN YOLLES: We are well into what I would describe as a major cultural and structural shift regarding how both individuals and businesses are thinking about these issues. From a consumer point of view, decisions are not only about the traditional value proposition associated with a purchasing decision. It's increasingly the case that people are considering the brand that they are doing business with, the nature of the business, the nature of the product, where it's made, and the story behind the product.

Any significant business, in one way or another, is now grappling with these issues and beginning to think about sustainability through multiple lenses. In some cases it's very supply chain-driven, thinking about how to lessen the impact of the business in terms of their product sourcing and supply and manufacturing. There are some fantastic examples of businesses that are using sustainability as a lens and a way of thinking to catalyze product innovation and product design.

In many instances businesses are grappling with questions around how to engage, from the communications and marketing point of view, with their customer communities. We are well into a much deeper structural and cultural shift.

There are also lots of examples—Walmart is one of the most striking—where there is now recognition that doing the right thing from an environmental point of view can also generate significant economic savings. The traditional paradigm, of course, has been that those two things are somehow antithetical. People are beginning to realize that that is not necessarily the case.

That's a core part of the RecycleBank business model—using this sort of positive, economic incentive, to encourage an individual to take a positive green action, rather than a penalizing approach.

JULIA TAYLOR KENNEDY: I have had a lot of people on the program who are either outside the business sector or who are in bigger corporations, like Xerox and other companies, that have a sustainability department. To have a social enterprise that takes as part of its premise, "Okay, this is part of our business," from the beginning—"Recycle" Bank, in the title—there is a balancing that goes on in that kind of business model as well between how much we have to focus on profit versus how much we can be a completely socially driven business that a nonprofit might be.

I'm curious what kinds of issues come up and what do you have to grapple with as a social enterprise at that border.

IAN YOLLES: We are a social enterprise, in that the idea of making a tangible, measurable environmental difference is core to who we are; it's core to the business model. Having said that, we have a group of investors that have all of the traditional investment metrics associated with how they are viewing our business. I've worked in large-scale companies, like Nike, so I get the difference between these two worlds.

The way I view it in the context of a business like RecycleBank or a previous business that I was involved in, an apparel company called Nau, the intent was literally to design an entire business from the ground up with sustainability as an animating principle throughout the entire design process, not just of the product, but the business as a whole. From the standpoint of both RecycleBank and Nau, these two things are not only not antithetical; they are actually complementary.

We are building a brand. The community that engages with us has a deep sense of connection. They want to be a part of this community that we're building, because we are making a positive impact. That feeds our ability to generate significant revenue and ultimately generate significant profits.

Done well, these are actually not antithetical; they're synergistic.

Now, having said that, when you are working in a large corporate context, that is a very different environment. In some ways, you have to think about a lot of retrofitting. There is a long legacy and history, not just in the way things are done, but more importantly in the way people think.

When the subject of sustainability and progressive environmental action begins to be part of the discourse in a large corporate structure, you have to think about organizational change. You are intervening in a complex system to begin a process of profound change. That's an entirely different context to be operating in, versus the context of RecycleBank, where the very genesis of the company aligned these ideas of doing well and doing good—the idea that this was going to be a profitable business, but simultaneously we're going to have a positive impact on the world.

JULIA TAYLOR KENNEDY: Your background is primarily in marketing. This is another place where people see greenwashing marketing.

How important is marketing for a company like RecycleBank, that is a startup, that, as you mentioned, has sustainability as part of its mission? I can imagine that the challenges are very different from the challenges that a company like Nike might face in marketing sustainability.

IAN YOLLES: It's a great question.

Often people think about marketing as sort of the superficial window dressing. The way I like to think about it is that the most compelling marketing, the most compelling communications, the most compelling brands are brands that have deep congruency and alignment from the inside out. What I mean by that is, any great brand starts with the internal behaviors within the actual company and the decisions within the company itself, from an internal point of view. The external expression, from a marketing point of view, should be deeply aligned with that. Any great brand has tremendous congruency from the inside out.

That's the way I think about the discipline of marketing. At RecycleBank, we have a group of people who are focused on building this business and on the extent that we are actually having a positive environmental impact. In our case, it's actually a measurable, trackable impact and that's the beginning of a very powerful brand story and marketing platform. That's where our authenticity and credibility in this space comes from, as opposed to a superficial advertising campaign that's talking about whatever it might be talking about.

That's the way I think about not only the discipline of marketing, but the idea of a brand and building an authentic, credible brand that people can actually believe.

JULIA TAYLOR KENNEDY: You have multiple audiences that you're reaching. Tell me a little bit about how you reach the different audiences that you need to to sort of bring communities together.

IAN YOLLES: We do have multiple audiences. It starts in the physical world, in the sense that we will engage in a contractual relationship with a municipality—the political office of the mayor and the people in the city, the political structures that are responsible for implementing recycling programs and waste programs. That's obviously a core audience. Then, ultimately, we have the constituents, the citizens in that particular community.

Typically, the way it works is, there will be an announcement that the mayor has just decided that RecycleBank is going to be offered within the city environs. There is a press conference. We begin to sprinkle the idea of RecycleBank within the community via local media. There's a letter that typically goes out from the mayor's office to all of the citizens within that community reinforcing that the program is going to be birthed in that particular community. Then we initiate contact through a direct-mail piece that goes to every household in the community, inviting them to become a part of the program. Then we sort of transition the relationship more onto the online space.

That's one of the interesting things about the business. We are building this interesting community online, encouraging engagement online. But it's really designed to empower an action at a hyper-local level in the community where the individual resides.

JULIA TAYLOR KENNEDY: You mentioned you have 300-plus communities now, in three years.

How did that pacing go? Are you gaining more and more partners now or was it from the start that you had these partners in place?

IAN YOLLES: No. We had to prove the model. We started literally with a single program. I believe the first program was in Philadelphia. There was a lot to prove—the idea of putting a chip in a bin, being able to measure recycling, and selling that to a municipality. It's not easy to sell to a municipality. So there was a lot of proving-out in the early days to demonstrate that the model actually worked.

But things have evolved. For example, I mentioned that we have recently launched the business in the UK. That's actually an interesting story. If you think about waste and landfill space in the UK—it's an island. It's a small, little place with lots of people, relative to the good old United States of America. They are going to run out of landfill space, I believe, in 2015.

When Boris Johnson, who is the current mayor in London, was running for office, he had somehow heard about RecycleBank. Unbeknownst to us—although we quickly found out—in one of his campaign speeches he talked about this American program called RecycleBank, because waste and waste management is a huge public and political issue in the UK. He spoke about us as part of his election campaign.

He got elected, and we were essentially invited to a meeting. They were very interested in having RecycleBank come to the UK. So we have recently launched the business there. We're operating in a couple of boroughs. It has become very high-profile in the UK, which is a reflection of the public and political discourse around the subject of waste in the UK and how to manage waste.

That's a long way from where the business started, where everything literally had to be proven from scratch.

JULIA TAYLOR KENNEDY: How did you come to be at RecycleBank?

IAN YOLLES: I've had a long interest in the notion of progressive business. Years ago I went to work at The Body Shop and worked closely with Anita Roddick. If you know the story about The Body Shop, Anita was an incredibly passionate, courageous woman, and in many ways was well ahead of her time. She was absolutely at the vanguard of thinking about aligning these multiple bottom lines within a business context.

The Body Shop is a multinational company, traded publicly on the London Stock Exchange. But her interest was not only to run a profitable business; it was to really think creatively about how to use the apparatus of the business to educate and engage in environmental and social issues—to think about the business as a tool for activism.

That was interesting to me. I went to work there, and it was terrific. From there I found my way to Patagonia, which allowed me to blend my passion for the outdoors and the wilderness with my interest in progressive approaches to business. Patagonia is another remarkable example of a company that has this deep authenticity, where there is congruency between how the company behaves and what it says, and it has built this terrific brand. It has differentiated itself based on its very innovative commitment to the environment.

Then I went to work in Nike and then was a part of founding this company I mentioned, Nau, where we tried to take all of these things that I had learned along the way and design a company from the ground up.

I was in Portland, Oregon. I'd been living on the West Coast for the last 16 years. I heard about RecycleBank, because I spoke at the Sustainable Brands Conference a couple of years ago, and after I spoke an employee at RecycleBank came up to me. They introduced themselves. They told me the story about RecycleBank, which intrigued me, and I kind of filed it away. Then last year, RecycleBank was looking for a chief marketing officer, and I got a call.

What interested me was the fact that there's this interesting story of innovation at the core of the business, number one.

Number two, associated with that was the idea of continuing to be involved in the sustainability field through my work and through a business lens, which intrigued me. I'm interested in early-stage-growth companies, having worked at all levels of scale. Of course, the people at RecycleBank, as I got to meet them, were terrific.

That's what caused my migration from 16 years on the West Coast to New York City.

JULIA TAYLOR KENNEDY: Well, welcome.

IAN YOLLES: Thank you.

JULIA TAYLOR KENNEDY: In that long career looking at branding and a social mission as going hand in hand, how has the atmosphere changed over the time since you were at The Body Shop and Patagonia, which are now case studies for early social enterprises and early use of these ideas with branding and doing good for society? Do consumers look at it differently? How do businesses look at it differently?

IAN YOLLES: Here's an interesting anecdote. Two years ago I was invited to speak the Net Impact Conference. Net Impact is a community of MBA students from across the entire country who have an explicit interest in the subject of corporate responsibility, and are interested in thinking about business and the environment, business and social issues, and the social agenda of business. I was so inspired and heartened when I went to speak to this conference. There were over 1,000 young, incredibly bright, incredibly passionate MBA students who had chosen to come to this three-day conference.

I went to work with Anita [at The Body Shop] in 1990. As I participated in the conference proceedings, I thought about the idea of this entity, Net Impact, and to see how things had evolved on such a scale in that sort of setting was remarkable to me. It is inspiring and incredibly positive. It's a cause for great optimism.

So that's one sort of reflection on the question.

The other reflection is that I think that there is not a major business that, in some way, shape, or form, is not thinking and acting on these questions and these issues. Think of some of the largest corporations in the world. Think of Walmart and the work that they are doing to completely reengineer their entire supply chain. They obviously have enormous clout, and they have been able to use their convening power amongst their entire supply chain and all the major consumer packaged-goods companies that sell at Walmart. Using their clout and convening power, they are causing a tremendous amount of change.

GE is another really interesting example of an iconic, very large, multinational U.S. company that has clearly made a decision. They have realized that the environment and sustainability are not only a part of their communications and brand positioning, but, more importantly and much more deeply, it seems to me, they have realized that it's a window to drive innovation.

Nike is another great example. Nike has gone through dramatic change. Nike, obviously, on the social side, some number of years ago, was the poster child, targeted by the activist community, around all of the labor-related issues associated with the production of their product. Although there is still a way to go, there has been a 360-degree about-face in terms of how Nike sees its responsibility.

I would argue now that Nike is a leader in terms of thinking about those issues. Nike is thinking about how to drive product innovation from an environmental point of view and from a sustainability point of view. You see a sea change—that's a very interesting case study—at Nike.

JULIA TAYLOR KENNEDY: When were you there? What was the atmosphere like when you were working there?

IAN YOLLES: I was there at the height of the early consternation on the labor issues.

First of all, from an internal point of view, it causes a certain amount of angst for employees at the company. To shift from there to demonstrating leadership, which Nike is doing, using it as a tool for innovation—now you have shifted from internal angst and a little bit of unease and discomfort to a sense of pride around the establishment of a leadership position and innovation.

JULIA TAYLOR KENNEDY: What has it meant for you in your career to be seeking out these opportunities that allow you to work at places with a "deeper purpose"? Is that something where you feel like your professional life is informing your personal ethic, or your personal ethic is informing your professional one?

IAN YOLLES: It's interesting. As I look back on my career, I began in the nonprofit sector and worked for a number of years, as you mentioned at the outset, with Outward Bound. I was tfhe executive director of Outward Bound in Canada. I did a liberal arts degree. I never had any conscious, deliberate intention to step into the business world.

But I had involved The Body Shop in the work we were doing at Outward Bound.

In fact, they became great supporters of a program we designed, where we were working with women who were survivors of domestic violence. it was through that that I got to know the people at The Body Shop.

When the conversation started with The Body Shop after I left Outward Bound, I wasn't really interested in selling soap and shampoo. It just didn't really stir me that passionately. But I was extremely interested in this question: How do you take the apparatus of this business and the core animating idea behind the business, which is to make money, and align that with this intention to use the business as a tool for social and environmental activism? That was, to me, a very interesting idea and question.

That's what started me on this path. As I look back on my career, it seems to look very logical. But I really feel as though what I've done is just tried to follow my passions, and I've tried to make choices that, for me, align as much as possible with my values and my own ethical sensibility.

It was interesting. Back to the commentary about Net Impact, as I spent time at the conference, a number of students sought me out. They wanted to talk to me about their careers and whether I could offer any counsel and guidance.

What was very interesting was that, in a multitude of ways, they were all asking me what I interpreted to be fundamentally the same question. The question was, "Okay, I'm about to graduate with my MBA. Do I need to go and do this sort of traditional thing in the traditional work world to prove my worth or can I take the risk to follow my passion?"

JULIA TAYLOR KENNEDY: Right. "Can I do this now? Will I get stuck in the traditional world?"

IAN YOLLES: Exactly. I couldn't presume to answer the question for anybody. It's up to the individual to make their own choices. I could only reflect on my choices. As much as possible, I've tried to follow my interests and passions, and so my career has taken the road it has taken, but certainly not by any deliberate design on my part.

JULIA TAYLOR KENNEDY: Great. It has been such a pleasure having you here on Global Ethics Forum. Thanks so much for joining us.

IAN YOLLES: Thank you, Julia. I've enjoyed the conversation.


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