Center for Industrial Research and Service Iowa State University Extension and Outreach EDA UNIVERSITY CENTER FINAL REPORT

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1 Center for Industrial Research and Service Iowa State University Extension and Outreach EDA UNIVERSITY CENTER FINAL REPORT 1

2 EDA UNIVERSITY CENTER FINAL REPORT Center for Industrial Research and Service Iowa State University Extension and Outreach Abstract THIS ANNUAL REPORT OF THE ECONOMIC DEVELOPMENT ADMINISTRATION-UNIVERSITY CENTER (EDA-UC) PROGRAM PROVIDES A SUMMARY OF THE ACTIVITIES FOR THE FY EDA-UC PROGRAM AT THE IOWA STATE UNIVERSITY CENTER FOR INDUSTRIAL RESEARCH AND SERVICE (CIRAS). The FY2010 FY2012 EDA-UC Program is in the third and final year of an award to develop and implement the Sustainable Economies Program, which provides regional trade centers (RTCs) in rural Iowa with an in-depth economic assessment of the financial, social, and environmental triple bottom line well-being of the region coupled with technical assistance to the critical organizations and businesses of the region. The program provides sustainability assessments, technical assistance, and mentoring within the communities and businesses that drive the regional economy. This annual report highlights the results for the full threeyear program. This Report Was Prepared Under an Award from the U.S. Department of Commerce Economic Development Administration EDA Grant No This publication was prepared by the Center for Industrial Research and Service. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration. 2013, Iowa State University Extension and Outreach. All Rights Reserved. Report Available Online at: 2

3 Table of Contents Abstract... 2 Table of Contents... 3 Executive Summary... 4 Section 1: Economic Development Needs, Issues, and Opportunities in the Region Historical Activities of the CIRAS EDA-University Center Lessons Learned Economic Needs, Issues, and Opportunities in Iowa... 6 Section 2: Progress on the EDA-Approved Scope of Work FY2010 Results FY2011 Results FY2012 Results Section 3: In-Depth Discussion of the Sustainable Economies Program Key Concepts and Tools for Sustainable Economies Triple Bottom Line Concept Regional Trade Centers Economic Assessment Process Developing Indicators of Social, Economic, and Environmental Condition Community Economic Sustainability Economic Drivers Sustainability of Assistance within RTCs Community Economic Sustainability Overview Review of Current Activities in Iowa Review of Activities Outside of Iowa Community Assistance Process Business Sustainability Overview Review of Best Practices Obstacles for SMEs Sustainability Assessment and Implementing Sustainability Workplace Wellness Business Innovation Section 4: Program Sustainability Appendix 1. Preliminary Triple Bottom Line Assessment Appendix 2: Projects and Event List Appendix 3: Supply Chain Sustainability Assessment for SMEs

4 Executive Summary THE SUSTAINABLE ECONOMIES PROGRAM HAS BEEN DEVELOPED TO CAPITALIZE ON THE STRENGTHS OF RESOURCES AT THE CENTER FOR INDUSTRIAL RESEARCH AND SERVICE (CIRAS) ECONOMIC DEVELOPMENT ASSOCIATION-UNIVERSITY CENTER (EDA-UC) PROGRAM AND INTRODUCE EMERGING CONCEPTS IN SUSTAINABILITY AND INNOVATION AS A SOURCE OF LONG-TERM SUCCESS WITHIN IOWA COMMUNITIES AND BUSINESSES. The purpose of the Sustainable Economies Program is to provide regional trade centers (RTCs) with the education and technical assistance to make effective longterm decisions leading to economic sustainability. A sustainable economy is an economy that has the financial, social, and environmental capital to meet the needs of the present without sacrificing the ability to meet the needs of future generations. This program specifically taught regional economic leaders and stakeholders the tools and techniques to critically analyze, develop strategies, and execute plans so that they can succeed without the support of the EDA-UC program. This program focused specifically on the micropolitan and nanopolitan regions in Iowa, as they are major sources of risks and opportunities in the long-term well-being of the Iowa economy. The Sustainable Economies Program worked with four RTCs over the three-year EDA-UC Program. Each of the four RTCs underwent an assessment, technical assistance, and mentoring process to identify critical sustainability issues and begin to put plans in place for long-term success. The overall program relied on the concept of the triple bottom line, integrating environmental, financial, and societal needs. CIRAS used this triple bottom line concept throughout the EDA-UC Program to help identify and target opportunities for sustainable growth within RTCs and their economic drivers. The CIRAS EDA-UC Program has developed and implemented a process to assess and improve the economic sustainability of RTCs in the state of Iowa. This process includes four main phases: Region Selection, Regional Analysis, Plan Development, and Plan Implementation. This annual report details the development of the key steps in this process, along with results from all three years, including applied research and the RTCs of Carroll County, Lee County, Appanoose County, and Cerro Gordo County. Phase 1, Region Selection, focuses on appropriately identifying the RTCs across the state of Iowa and selecting an RTC to participate in the program. This process uses economic indicators to understand the importance of cities within Iowa to their regional economy and has identified 40 RTCs across the state (see Figure 5 and Appendix 2 for details). The next step in selecting a community includes a preliminary triple bottom line analysis of the RTCs as a whole to understand the current state of RTCs, along with a qualitative analysis to identify regions with strong community and business leadership. This process identifies RTCs that have long-term risks indicated by the triple bottom line indicators but possess the leadership to generate action for longterm success. The Regional Analysis phase evaluates the selected RTC, centering on an economic analysis of 99 indicators from secondary data for each of the three domains of the triple bottom line. A key factor driving the long-term viability of an RTC is the performance of the businesses and other organizations that drive the local economy. To account for this, the economic assessment also includes identifying and gaining an understanding of unique regional assets and diverse public and private leaders, key stakeholders, in the chosen RTC. 4

5 Above: Swan Lake Park in Carroll, Iowa. Left: Participants in a Dumpster Dive simulation learn to identify the sources of waste in a business. The third phase, Plan Development, works with businesses and communities in the RTC to assess the current state using the Regional Analysis and other tools, followed by identifying near- and long-term plans to improving sustainability. CIRAS has formulated strategies for community plan development from best practices in sustainability and community planning. The final phase of the Sustainable Economies Program process is Plan Implementation. This focuses on providing direct technical assistance and mentoring to the community and businesses as they begin implementing their plans. In the Plan Implementation phase, the EDA-UC Sustainable Economies Program team has led a variety of projects to build momentum in the RTCs of Carroll, Lee, Appanoose, and Cerro Gordo Counties. These range from innovative approaches to The overall program relies on the concept of the triple bottom line, integrating environmental, financial, and societal needs. attracting new employees to building leadership capacity within a region. The business technical assistance portion matured throughout the program in line with national trends and client demand. The initial focus of the business technical assistance was to provide broad-based sustainability assessments helping companies understand their current financial, social, and environmental state and to identify growth opportunities. Through this approach, 16 in-depth assessments were completed along with 9 complementary technical assistance projects. Through this process, it became evident that a key aspect of long-term sustainability for businesses that was not being directly addressed was innovation. While research shows that the most important component to long-term sustainability of a business is innovation, many companies were missing this component in their business. As a result of this recognized need, CIRAS changed Year 3 of the Sustainable Economies Program to integrated new assistance in innovation and technology commercialization. This effort included teaching the fundamentals of innovation and performing rapid prototyping for businesses in the region. These efforts formed the foundation of a new portfolio of CIRAS Innovation programs that will be offered statewide through the NIST MEP program. 5

6 SECTION 1: Economic Development Needs, Issues, and Opportunities in the Region 1.1. Historical Activities of the CIRAS EDA-University Center The Economic Development Administration-University Center has operated within CIRAS at Iowa State University (ISU) since 1980 to provide economic development assistance to Iowa manufacturers and entrepreneurs with a focus on economically disadvantaged regions in Iowa. In the 1980s and 1990s the program provided technical assistance to entrepreneurs and small manufacturers in rural Iowa communities for developing start-up companies or in implementing new technologies, product development, technology transfer, and access to technical knowledge. Since 2004, while continuing technical assistance for manufacturers, the EDA-UC has focused on assisting regional economically disadvantaged areas in Iowa by providing regional economic research analysis. These studies were based on assessing multicounty regional economies and industry clusters, analyzing key trends and transformations in industrial strengths and weaknesses, and developing an economic analysis report with recommendations on directions to concentrate regional efforts for industrial and economic growth. In addition, there have been several other opportunities to expand the breadth of the EDA-UC s scope of projects, including developing a Community Continuity Study, a Flood Response Program, a Business Continuity Planning Program, and a Biobased Product Supply Chain Study Lessons Learned In 2010, CIRAS conducted an internal and external review of the success, effectiveness, and suggestions for improving the EDA-UC programming. Resulting from this review was the identified need for a mentor for the regions during and after the study process to assist the regions in implementing changes and regional programs to affect the economic growth of the region as identified in the plans. Through our EDA-UC work with Councils of Governments (COGs) and local developers over the past five years, we have learned that every region does not have the capacity to implement change in a consistent fashion. In addition, we have found that it is essential that rural communities work together to pool resources under the guidance of effective leaders. It was also identified that a new approach to assisting manufacturers directly within the region studied needed to be developed to take advantage of the economic analysis and directly impact the studied region Economic Needs, Issues, and Opportunities in Iowa Iowa is a state undergoing a transition from a primarily rural to a primarily urban-based population. The state hosts ten metropolitan regions ranging in population from just under 90,000 in Story County to almost 431,000 in Polk County. These major regional economic drivers are distributed across the state and serve as major anchors for education, health and social services, entertainment and cultural opportunities, and overall business activity. Iowa s 20 metropolitan core or metropolitan-influenced counties claim a disproportionate share of investment, job, people, and income growth when compared to the rest of the state. Between 1990 and 2009, Iowa s metropolitan counties explained the net of all statewide population growth, accounted for 84 percent of nonfarm job gains, and accumulated 78 percent of all gains in proprietorships. The state also hosts 15 micropolitan regions, counties with an urbanized population of 10,000 to 49,999. Iowa s micropolitan areas are important employment, trade, and service delivery centers in the state in their own right. Though their combined population has decreased this past decade, these areas nonetheless serve as regional economic and service centers for much larger, mostly more rural, areas. Between 1998 and 2008, measuring job peaks prior to respective recessions, these important trade centers saw nonfarm job increases of 2.5 percent despite population losses. Iowa has 25 smaller urban counties within which the dominant city has a population of 5,000 to 10,000. These areas, too, serve as regional trade and service centers, especially for the more rural portions of the state. Like the micropolitan areas, these regions are also losing population, but prior to the most recent recession they were able to post job gains. 6

7 1.5% 1.8% 0.8% -0.4% -0.5% U.S. State of Iowa Metropolitan Large Urban Small Urban -1.2% Rural Figure 1. Iowa Population Changes, 2010 to 2012, by Levels of Urbanization 3% U.S. State of Iowa Metro Larger Urban Small Urban Rural 6% 14% 5% 9% 32% 29% 25% 22% 19% 19% 15% 4% 12% -1% -2% 0% -1% -1% -5% -3% -6% -8% -8% -7% -9% -11% -15% -17% -20% Under to to to and up Figure 2. Iowa Population Changes in Key Age Groups, 2000 to 2010 The accompanying graph (Figure 1) describes population changes in Iowa and its subregions looking at the 2000 and 2010 censuses. It displays the performance of Iowa s denser and less dense areas. The state s growth was less than half of the national rate of growth. Iowa s metropolitan areas, however, grew slightly faster than the nation as a whole, but both its larger urban counties (an urban population of 20,000 to 49,999) and its smaller urban counties (an urban population of 2,500 to 19,999) declined by 2.3 percent. Iowa s remaining counties, those with no urban population center, declined by 5.4 percent. Overall in Iowa, 66 of 99 counties posted population declines between 2000 and 2010, as did 600 of the state s 947 municipalities. Widespread population declines notwithstanding, it is important as well to look at the components of population change. Figure 2 describes the intergenerational changes occurring across the state. While the state overall has grown, it has lost a disproportionate share of its young adults, those ages 25 to 44, when compared to the nation. This key demographic group declines sharply as urbanization levels decrease. Where large and small urban counties posted just 2.3 percent overall declines, this group declined 15.2 percent and 17.0 percent, respectively. Given those losses, there is a discernible echo of losses in the number of young persons under the age of 20. This factor alone explains rural areas low job-growth performance 7

8 over the past decade, plus it indicates difficulties they will have to overcome in future years: economies need a pool of young adults in order to expand; if the pool of young adults is shrinking, then the potential for economic growth diminishes. The erosions in overall population and in the adult workforce have serious consequences for the overall quality of life and leadership across much of nonmetropolitan Iowa. Among the most mobile are adults with skills and knowledge that are in high demand in areas where economies are expanding or are poised to expand. Basic human capital foundations are also at risk across Iowa s nonmetropolitan areas as existing professionals and leaders age and are not followed with a cohort of replacements who are similarly educated or established in the region. Persons with the greatest human capital assets command strong earnings that more rural areas cannot match. Not only is there a physical hollowing out of much of Iowa, there is also persistent erosion in the mean skill and knowledge levels of communities. Iowa s micropolitan and smaller urban counties generally serve as manufacturing and transportation centers, as well as the locations of regional retail trade, business services, and health and education services. These communities usually have acute care and regional hospitals as well as centers for the care of the disabled and elderly; most have community college campuses, and they are important economic and social anchors of their surrounding regions. Many of these centers have evolved over the past 25 years to become regional employment nodes at a time when trade activity and other nonfarm employment activity has stagnated or declined in the surrounding area. in health care, professional and business services, and services to individuals, communities that can aggregate those types of growth and offer urban-like amenities and quality-of-life prospects will have advantages over their peers and smaller places. Assisting regions to understand their roles in the area economy and their capacities to foster stability areawide will be an important component for economic development planning. The evolving nature of these RTCs will lead to changes in which communities market themselves and seek job growth. While a certain amount of traditional industrial recruitment will of course always remain, communities will likely shift to recruiting classes of professionals in the future. Most especially, the competitive development of professional services health care, accounting and financial services, legal activities, engineering and architecture, for example will accomplish two very important rural development objectives. It will enhance the service delivery capacity to the region, and it will improve the region s mean human capital levels, as the professionals that own and staff these services have college degrees. The Sustainable Economies Program within the EDA-UC used a broad application of economic sustainability to address these risks and opportunities. A full understanding of the long-term sustainability of the region in a balanced financial, social, and economic way will allow the region to plan for a balanced economy that is more resilient to change and disruption in the future. Also, embracing the new knowledge and concepts of sustainability and green initiatives can provide for a source of economic growth in the near term. Longer-term stability for these centers will likely hinge on their abilities to continue as manufacturing and transportation centers, but also on their abilities to consolidate higher value regional trade and services into their locations. As most future job growth will likely be 8

9 SECTION 2: Progress on the EDA-Approved Scope of Work The Sustainable Economies Program has been developed to capitalize on the strengths of resources at the CIRAS EDA-UC Program and introduce emerging concepts in sustainability as a source of long-term success within Iowa communities and businesses. The Sustainable Economies Program worked with four RTCs over the three-year EDA-UC Program. Each of the four RTCs underwent an assessment, technical assistance, and mentoring process to identify critical sustainability issues and begin to put plans in place for long-term success FY2010 Results Phase 1: Region Selection Correctly defining the region is critical to the success of the effort. In this work, an RTC is used as the defining region an area made up of a group of smaller communities and towns that socially and economically interact directly with a nearby larger functional trade center. TASKS Use data-driven analysis to identify the RTCs. Develop process to measure and evaluate economic, social, and environmental indicators for an RTC. Establish indicators to identify which RTCs exhibit potential for sustainable economic development success. Select RTC #1. DELIVERABLES Develop preliminary triple bottom line assessment for RTCs. Report written identifying process and analysis for selection of the RTC. ACCOMPLISHMENTS ACHIEVED The tasks and deliverables on the left were achieved during Year 1 of the EDA-UC Program. The University Center team used available economic data to develop a data-driven process to identify the RTCs. Next, the team developed a process to measure and evaluate the economic, social, and environmental indicators within the RTCs. QUANTIFIED DELIVERABLES Forty RTCs were identified in the state of Iowa and are described in Section A preliminary triple bottom line assessment was developed applying a subset of the 99 indicators as a start of the selection process. The results of this analysis are shown in Appendix 1. Note that at the time of this assessment, there were 31 RTCs, as eight were added based on analysis of new data in A summary of the triple bottom line assessment and indicators used is provided in Section Carroll, Iowa, was selected as the first RTC to participate in this program. A report of the process used to analyze and select the RTC is contained in Section DIFFICULTIES ENCOUNTERED The primary difficulty encountered in this process is that broad economic sustainability indicators are a new concept. As a result, the process of understanding and selecting available indicators required considerable research and analysis. 9

10 Phase 2: Regional Analysis With the RTC established, the Iowa EDA-UC economic scientists will perform a triple bottom line assessment of the region. TASKS Gather data regarding workforce, wages, and quality-of-life issues (people). Gather data regarding environmental issues and infrastructure (planet). Gather data regarding the economic drivers (profit). Assess economic development capacity and capabilities. Identify and gain an understanding of unique regional assets. Identify diverse public and private leaders key stakeholders in the RTC. DELIVERABLE Report on the economic sustainability of the RTC is published and disseminated to key stakeholders. ACCOMPLISHMENTS ACHIEVED The EDA-UC team gathered available economic data and the indicators developed in the previous task to perform an assessment of the economic data and capabilities of the Carroll, Iowa, RTC. As part of this process, the team held various sessions with regional economic leaders from key stakeholders in the region. These sessions included local public officials, the Region XII COG (an EDA-funded entity), nonprofit stakeholders, and business leaders. QUANTIFIED DELIVERABLES A report on the economic sustainability of Carroll, Iowa, was published in July While this was originally scheduled for release in March 2011, the report was delayed to allow for release of census-related data and additional research regarding the triple bottom line impacts on a regional economy. Seventeen one-on-one and two large-group meetings were held with stakeholders in the community and businesses to describe the program and understand the regional economy and items of local importance. DIFFICULTIES ENCOUNTERED While there were no major difficulties encountered in this phase, the process of identifying and gathering stakeholders in the community required considerable time. 10

11 Phase 3a: Plan Development Regional The regional plan is the all-encompassing roadmap that the RTC leaders will use to schedule specific action items, within the community and beyond, over the life of the plan. All members of the Iowa EDA-UC team will support the leadership network mentor as they work with the community leaders to develop an RTC plan. TASKS Engage with state economic development leaders and program managers of other key federal grants likely involved with providing services in the region. Establish a network of leaders to work on the development and subsequent implementation of the regional plan. Engage available economic development resources. Coach business and community leaders as they develop the RTC plan addressing the triple bottom line sustainability needs people, planet, profit. DELIVERABLE Regional plan developed. ACCOMPLISHMENTS ACHIEVED The team worked with the Carroll RTC to develop a regional plan upon release of the Regional Analysis (Phase 2). The process used for this is highlighted in Section and in detail in Section 3.2. As the EDA-UC Program completes Year 1, several opportunities for regional collaboration are expected to be identified. QUANTIFIED DELIVERABLES The EDA-UC team has completed one preliminary educational event to provide an overview of economic development and sustainability with key leaders in the community. The three regional planning events described in section 3.2 were completed. See Appendix 2 for details. DIFFICULTIES ENCOUNTERED Since the movement toward broad economic sustainability is still in development, a key difficulty in this phase was the process of evaluating and selecting appropriate models for sustainability that captured the full economic, social, and environmental needs of a region. 11

12 Phase 3b: Plan Development Economic Drivers The economic drivers plan refers to individual roadmaps developed for key institutions or private companies that are found to be drivers of the regional economy. The Iowa EDA-UC team project manager will work with the selected institution and business leaders to develop entity-specific plans to address their triple bottom line sustainability needs. TASKS Select and engage key economic drivers based on the Regional Analysis. Develop a triple bottom line assessment for institutions and/or private companies. Perform triple bottom line assessments for selected economic drivers. Develop long-term sustainability plans for selected economic drivers. DELIVERABLES Develop triple bottom line assessment for economic drivers. Report identifying the personnel facets (people), environmental aspects (planet), and long-term financial viability (profit) factors used in developing the triple bottom line assessment. Perform two triple bottom line assessments with economic drivers within an RTC. Develop plan to implement technical assistance to address the identified triple bottom line sustainability needs. ACCOMPLISHMENTS ACHIEVED The EDA-UC team performed research into business sustainability to better understand the key financial, social, and environmental factors impacting businesses. After analyzing available tools and considering the results of discussions with regional stakeholders, a tool was developed based on the Global Reporting Initiative framework. For a full discussion of the factors impacting business sustainability and the process used to develop the tool and long-term planning process, see Section 3.3. QUANTIFIED DELIVERABLES A triple bottom line assessment for businesses and nonprofit institutions was developed. Triple bottom line assessments were performed on six businesses in the Carroll region. See Appendix 2 for details. A report on the financial, social, and environmental indicators impacting business sustainability is contained in section 3.3. DIFFICULTIES ENCOUNTERED While business sustainability initiatives go back to early environmental movements of the 1970s and are more mature than community economic sustainability planning efforts, the primary focus has been on heavy industry. Only recently has sustainability in business gained broad acceptance. As a result, there are numerous approaches and tools that have been released over the past ten years. The process of evaluating and selecting an appropriate approach for small- to medium-sized enterprises (SMEs) was more complex than originally expected. The Supply Chain Sustainability assessment incorporates these best practices into a simple tool that is relevant to SMEs, which should make this process easier in the future. 12

13 Phase 4a: Plan Implementation Regional The Iowa EDA-UC staff will remain engaged with each RTC throughout the plan implementation process. The primary effort for this portion will take place in Year 2 of the EDA-UC Program; however, the process will begin during Year 1. The leadership network mentor will serve as the point of contact. TASKS Provide RTC team with mentoring throughout the plan implementation process. Provide technical assistance for selected projects within the RTC. Engage other resources necessary to provide technical assistance community specialists and other local, state, and federal programs. DELIVERABLE Begin mentoring and technical assistance projects for the selected RTC. ACCOMPLISHMENTS ACHIEVED The release of the economic assessment and completion of the planning process for the region will be the primary drivers of the activities in this phase, which will continue into Year 2 of the EDA-UC Program. However, the EDA-UC team has begun the process of identifying other resources for technical assistance through discussions with other organizations in the state of Iowa, such as those described in section This process will allow collaboration between sustainability initiatives throughout the region, minimizing duplication across various initiatives. QUANTIFIED DELIVERABLES Preliminary mentoring and planning sessions were performed in FY2010. Results from this effort have been recorded under Year 1 Balance of funds in FY2011. DIFFICULTIES ENCOUNTERED No difficulties were encountered through this phase. A detailed discussion of difficulties encountered is included under Year 1 Balance of Funds in FY

14 Phase 4b: Plan Implementation Economic Drivers The Iowa EDA-UC staff will remain engaged with each of the selected key economic driver institutions and businesses during the plan implementation phase. The focus will be on strategically assisting these entities with implementing the point solutions defined in the plan. This effort will begin in Year 1 and be continued in Year 2. The project manager will serve as the point of contact. TASKS Engage other resources necessary to provide technical assistance business and community specialists as well as other local, state, and federal programs. Begin implementation of assistance for institutions and businesses. Remain engaged with the entities to ensure continuous improvement in the identified triple bottom line sustainability needs. DELIVERABLES Begin to perform technical assistance projects with selected economic drivers. Report prepared identifying strengths and weaknesses of the RTC economic driver plan development and initial implementation process. Key findings for improving the processes for Year 2 to be identified. ACCOMPLISHMENTS ACHIEVED At the time of this writing, the six companies participating in the Sustainable Economies Program are in the planning process for technical assistance. However, early in the assessment process it was determined that there was a general need for more knowledge on the fundamental concepts of green manufacturing among businesses in the region. As a result, through our relationship with the NIST Manufacturing Extension Partnership (MEP), also managed in Iowa at CIRAS, the MEP program brought in national experts to provide two days of training to businesses in the Carroll region. QUANTIFIED DELIVERABLES Cooperated with the MEP program to host two events (Green 101 and Dumpster Dive ) in Carroll, Iowa. DIFFICULTIES ENCOUNTERED No difficulties were encountered through this phase. A detailed discussion of difficulties encountered is included under Year 1 Balance of Funds in FY2011. Case study developed for assistance provided to a select key economic driver and disseminated through CIRAS public website. 14

15 2.2. FY2011 Results Year 1 Balance of Funds TASKS Research and develop tools in supply chain sustainability for SMEs. Research and develop improved employee wellness programs for SMEs. Provide continued mentoring and technical assistance to businesses and community organizations in the Carroll, Iowa, RTC. DELIVERABLES Release research report on national/ worldwide best practices in supply chain sustainability. Work with SMEs in Iowa to understand their current practices in supply chain sustainability and provide technical assistance to improve sustainability. Release preliminary research report on employee wellness in SMEs in Iowa. Conduct five technical assistance projects in the Carroll, Iowa, region. ACCOMPLISHMENTS ACHIEVED The tasks and deliverables on the left were achieved during Year 2 of the EDA-UC Program. New research in supply chain sustainability created a tool to effectively help SMEs understand sustainability opportunities (see section for further details). Research in existing workplace wellness practices identified significant opportunities to improve business competitiveness, and follow-on work in Carroll identified innovative ways to grow the community and businesses. QUANTIFIED DELIVERABLES A report on national/worldwide best practices in supply chain sustainability was released in March 2012 and is available at edu/publications/ciras_supply_chain_sustainability pdf. A formal survey of SMEs in the state of Iowa combined with in-depth discussions with businesses identified significant gaps in sustainability practices for SMEs. A tool developed in response was used on nine business assessments. A research report on workplace wellness was completed in January This report determined that the return on investment (ROI) for workplace wellness programs is between -176% and +1,784%, indicating that an effective wellness program can provide a significant competitive advantage to businesses, freeing up capital for growth projects. Six technical assistance projects were completed in the Carroll, Iowa, region in addition to the six projects in FY2010 (see Appendix 2 for full list of activities). DIFFICULTIES ENCOUNTERED In working with the Carroll region, the key difficulty encountered was the momentum of past failures in regional growth. Despite continuous business growth, the population in the region has continued to decline. The current state of the population is constraining business growth and new business start-up. In response, the EDA-UC team led a Kaizen event with nonestablished leaders in the community through a process to identify new ways to grow. This team identified four new approaches to grow the area: business start-up support through a SCORE chapter, a regional diversity campaign, a new regional marketing approach, and new ways to market employment opportunities. While this took additional efforts beyond original expectations, CIRAS expects to see significant long-term investment, new business, and employment growth from this effort. 15

16 Year 2 Funding Regional Trade Center #2 TASKS Region Selection: Use data-driven analysis to select RTC #2. Regional Analysis: Gather financial, social, and economic data and perform an analysis to measure and evaluate economic, social, and environmental indicators for RTC #2. Plan Development (Regional): Engage with state economic development leaders and program managers of other key federal grants likely involved with providing services in the region. Coach business and community leaders as they develop the RTC plan addressing sustainability needs. Plan Development (Economic Drivers): Engage local economic drivers and perform triple bottom line assessments and planning. Plan Implementation (Regional): Perform mentoring and technical assistance projects with community organizations. Plan Implementation (Economic Drivers): Perform mentoring and technical assistance projects with economic drivers. DELIVERABLES: Identify RTC #2. Publish and disseminate report on the economic sustainability of the RTC to key stakeholders. Develop regional plan. Complete three triple bottom line assessments and economic driver planning processes. ACCOMPLISHMENTS ACHIEVED The EDA-UC team completed the effort for RTC #2 Lee County, Iowa. This included an in-depth economic analysis, a sustainability summit, planning sessions with regional groups, and technical assistance to regional economic drivers. QUANTIFIED DELIVERABLES See Appendix 2 for a detailed list of activities. Identified RTC #2 as Lee County, Iowa, consisting of the cities of Fort Madison and Keokuk. Delivered a report on the regional economic sustainability in February Developed regional plans consisting of agreed regional priorities and facilitated development of additional local plans. Performed seven economic development technical assistance projects in the Lee County region. Performed triple bottom line assessments and technical assistance projects with three economic drivers (businesses) in the Lee County region. These technical assistance projects used the triple bottom line assessments to identify significant growth opportunities through expansion of new and innovative product lines supported by financial, social, and environmental improvements to the business. DIFFICULTIES ENCOUNTERED The primary difficulty encountered in the Lee County region was working with two distinct cities in creating regional strategies and plans. Lee County is the only county in Iowa with two county seats (one in Fort Madison and one in Keokuk), so the two cities have historically performed economic development activities independently of each other. This required significant planning and discussions with local leaders to begin to create regional activities as opposed to local activities. Conduct three community implementation projects. 16 Conduct three economic driver technical assistance projects.

17 Regional Trade Center #3 TASKS Region Selection: Use data-driven analysis to select RTC #3. Regional Analysis: Gather financial, social, and economic data and perform an analysis to measure and evaluate economic, social, and environmental indicators for RTC #3. Plan Development (Regional): Engage with state economic development leaders and program managers of other key federal grants likely involved with providing services in the region. Coach business and community leaders as they develop the RTC plan addressing sustainability needs. Plan Development (Economic Drivers): Engage local economic drivers and perform triple bottom line assessments and planning. Plan Implementation (Regional): Begin mentoring within the community. Plan Implementation (Economic Drivers): Begin technical assistance within the community. DELIVERABLES Identify RTC #3. ACCOMPLISHMENTS ACHIEVED The EDA-UC team is on schedule with the assessment of RTC #3, Appanoose County, Iowa. Regional assessment and research is near completion, and meetings with regional stakeholders and economic drivers are in progress. The team is on schedule to meet the deliverables associated with RTC #3. QUANTIFIED DELIVERABLES See Appendix 2 for a detailed list of activities. RTC #3 was identified as Appanoose County, Iowa, with a focus on the RTC of Centerville. A report on the regional economic sustainability was delivered in July A regional plan was developed in July Six triple bottom line assessments were completed. Community and economic driver technical assistance projects were defined in the regional planning and triple bottom line assessments and began in July DIFFICULTIES ENCOUNTERED At this time, the EDA-UC team has not encountered any difficulties. Lessons learned in Carroll and Lee Counties have resulted in improved efficiency in Appanoose County. Publish and disseminate report on the economic sustainability of the RTC to key stakeholders. Develop regional plan. Complete three triple bottom line assessments and economic driver planning processes. Begin community implementation projects. Begin economic driver technical assistance projects. 17

18 2.3. FY2012 Results Year 3 Funding Regional Trade Centers #2 and #3 TASKS Provide continued mentoring and technical assistance to RTC #2 (Lee County) Provide continued mentoring and technical assistance to RTC #3 (Appanoose County) DELIVERABLES Complete efforts in outstanding technical assistance projects in RTC #2 (Lee County) Conduct three community implementation projects in RTC #3 (Appanoose County) Conduct three technical assistance projects in RTC #3 (Appanoose County) ACCOMPLISHMENTS ACHIEVED The EDA-UC team continued mentoring efforts in RTC #2 (Lee County, Iowa) and RTC #3 (Appanoose County, Iowa). This included technical assistance to businesses in the regions and planning, mentoring, and technical assistance to economic developers and community leaders in the regions. QUANTIFIED DELIVERABLES See Appendix 2 for a detailed list of activities. Provided coaching and mentoring to continue to implement regional economic development plans. Executed six economic development technical assistance projects and completed three additional projects started in FY11. Provided planning technical assistance on a project that led to a $1.2B investment in a new fertilizer manufacturing facility, the largest capital investment in Iowa history, which will lead to 165 long-term jobs. Performed three technical assistance activities with businesses and completed seven additional outstanding technical assistance projects with businesses started in FY11. DIFFICULTIES ENCOUNTERED No major, new difficulties were encountered during the coaching and facilitation process for RTCs #2 and #3. 18

19 Regional Trade Center #4 TASKS Region Selection: Use data-driven analysis to select RTC #4. Regional Analysis: Gather financial, social, and economic data and perform an analysis to measure and evaluate economic, social, and environmental indicators, including opportunities of regional innovation capacities for RTC #4. Plan Development (Regional): Engage with state economic development leaders and program managers of other key federal grants likely involved with providing services in the region. Coach business and community leaders as they develop the RTC plan addressing sustainability needs. Provide education and support to businesses in innovation and technology commercialization in line with regional strategy. DELIVERABLES RTC #4 identified. Report on the economic sustainability of the RTC is published and disseminated to key stakeholders. Regional plan developed. Conduct three community implementation projects. Conduct five public events in innovation processes. Conduct technical assistance with five existing businesses in developing and vetting ideas for new products. ACCOMPLISHMENTS ACHIEVED Identified Cerro Gordo County as RTC #4, performed a triple bottom line analysis on the region, facilitated regional planning, and provided technical assistance. A major accomplishment in this RTC was the transition to an innovation focus in a short period. The RTC analysis was modified to include indicators of regional innovation capacity, and a set of new programs was rolled out in Cerro Gordo County focused on providing manufacturers with tools for innovation. See Section 3.4 for additional details on the business innovation activities. QUANTIFIED DELIVERABLES RTC #4 was identified as Cerro Gordo County, consisting of the cities of Mason City and Clear Lake. Developed and published a report on the economic sustainability of Cerro Gordo County. Facilitated development of a regional plan and conducted two community economic development assistance projects. Conducted six public events in innovation for 61 attendees. Conducting business technical assistance activities, projecting five projects to be complete by 7/31/13. Completed 13 product prototypes with a projection of 10 prototypes by 7/31/13. DIFFICULTIES ENCOUNTERED The primary difficulty encountered in this set of tasks was the rapid transition to a focus on innovation based on recommendations from the EDA-UC Showcase panel review. The EDA-UC team leveraged ongoing work under CIRAS NIST Manufacturing Extension Partnership (MEP) and the North Iowa Area Community College (NIACC) John Papajohn Center to provide content and capabilities, but it still required approximately a six-month acceleration in program development to meet the EDA-UC timeline. Because of this, marketing messages and material were not yet mature and required significant direct discussions with potential participants. Provide technical assistance to 10 businesses in prototyping new product concepts. 19

20 Applied Research TASKS Implement pilots of employee wellness programs with Iowa-based manufacturers. DELIVERABLES Conduct three employee wellness program implementations. Prepare a report on the benefits and process used to implement employee wellness programs. ACCOMPLISHMENTS ACHIEVED Conducted employee wellness programs with three manufacturing businesses in Iowa. Iowa State University s wellness experts worked with businesses to conduct in-depth assessments of employees at each company, and they then used the results to develop and deliver customized programs with the manufacturing companies. Through these three pilots, the team identified significant health and wellness risks among large numbers of employees and worked with the employees to deliver wellness programs to decrease these risks, improving the wellbeing of the employees and saving both the employees and company significant costs. QUANTIFIED DELIVERABLES Conducted three wellness program pilots including 176 wellness assessments 87 participants in wellness program activities 38 wellness sessions DIFFICULTIES ENCOUNTERED The largest initial difficulty in this program was helping companies understand the cost implications of employee wellness. Once companies and employees began to understand that their health impacted their personal and business finances, companies were extremely active in these programs. 20

21 SECTION 3: In-Depth Discussion of the Sustainable Economies Program 3.1. Key Concepts and Tools for Sustainable Economies Triple Bottom Line Concept The concept of the triple bottom line has been in use for over 15 years. Towards the sustainable corporation: Winwin-win business strategies for sustainable development by John Elkington 1 is widely regarded as the original use of this concept in business. The triple bottom line is a simple concept that states for something to be sustainable it must meet basic financial, social, and environmental requirements (see Figure 3). These requirements are not only internal (management, employees, etc.), but also external investors, consumers, communities, and other stakeholders who may be impacted by the product or service. Today, emerging standards in sustainability are quite likely to be based on this triple bottom line concept. In a conceptual manner, evaluating a triple bottom line is simple find solutions that are positive for each facet and implement those solutions. In practice, however, this becomes complicated in that there are typically trade-offs between the aspects that cannot be easily compared (e.g., comparing costs to hard-to-quantify issues such as human rights improvement). CIRAS is using this triple bottom line concept throughout the EDA-UC Program to help identify and target opportunities for sustainable growth within RTCs and their economic drivers (businesses and nonprofit entities) Regional Trade Centers There is a hierarchy of urban activity in Iowa and the nation. At the top are metropolitan areas, which by definition have an urbanized population of 50,000 or more. There are ten of these in Iowa, and they serve as major employment centers for the surrounding region. In addition, by virtue of their size, metropolitan areas have a much more diverse array of industries, so they are much more self-reliant than smaller communities. Counties with an urbanized population Social Environmental Bearable Sustainable Equitable of 10,000 to 49,999 constitute micropolitan areas. Iowa has 15 of these areas, and they serve as major regional employment, trade, and service centers. Figure 4 on the following page illustrates shares of population and employment in Iowa among Iowa s metropolitan counties, its micropolitan areas, and the remainder of the state. Metropolitan areas have a lower share of population than wage and salary jobs because they depend on a labor supply that extends beyond their borders. Micropolitan areas have a more matched relationship between population and job shares, while the remainder of the state has significantly more population than jobs. Combined, Iowa s 24 metropolitan or micropolitan urbanized areas account for 74 percent of its population and 78 percent of all jobs. Viable Financial Figure 3. Triple Bottom Line Financial, Social, and Environmental Feasibility As important as the metropolitan and micropolitan regions are to the state s economy, Iowa s smaller cities also serve as important centers of trade and service. When we look at Iowa s cities that have populations of from 5,000 to 9,999, which have relatively high resident employment levels in their community and in their host county and have 1 Elkington, J Towards the sustainable corporation: Win-win-win business strategies for sustainable development. California Management Review 36 (2):

22 56% 61% People Wages and salary jobs 18% 17% 26% 22% Metropolitan Micropolitan Remaining Iowa Counties Figure 4. Iowa Population and Wage and Salary Jobs as Percentages of State Totals, 2008, by Urbanization Level comparatively high retail trade performance for both the city and the county, it is reasonable to conclude those communities are also RTCs with diversified retail, service, and governmental capacities not evident among the remainder of Iowa s cities. Our convention is to call these important, but smaller, Iowa places nanopolitan urban areas. 2 These metropolitan, micropolitan and nanopolitan cities are the RTCs in Iowa, as shown in Figure 5. These three types of RTCs drive the state s economy. Sustainable economic performance in the state of Iowa is dependent on the success of these unique regional economies the sum of their individual performance will drive the state economy. Based on their diverse capabilities and relatively strong performance, metropolitan regions have less need for support at this time. However, as discussed in Section 1, there are significant long-term issues in the micropolitan and nanopolitan regions of the state. As a result, the EDA- UC program will focus on providing these regions with the tools and knowledge to sustainably grow during and after the EDA-UC Program. The nanopolitan cities provide important employment, trade, and service coverage to areas of the state that do not have more urbanized populations, especially in the southwest and the northeast. The nanopolitan counties, therefore, tap into Iowa s rural development dimension and are undeniably important components of Iowa s rural economic and service support structure. The criteria for a nanopolitan region are as follows: (1) minimum population of 5,000 in the core city; (2) at least 50 percent of the city s residents working within the city; (3) a retail pull factor of 90 percent or greater for the city (implying that the city meets 90 percent of the average retail needs of its residents); (4) at least 50 percent of residents employed within the county, for the county as a whole; and (5) a minimum retail pull factor of 50 percent for the county. Many Iowa counties have no RTC at all these are Iowa s most rural areas where economies are primarily farm dependent and that have only limited urban services and capacities. These definitions allow for a high amount of functional practicality with regard to economic development planning. They take the Iowa economy not only as it is, but as it has evolved over the past 60 years. Those dominant patterns of 2 The term nanopolitan is not an official definition, but one adopted for descriptive use in Iowa by the EDA-UC Program to describe small trade centers of from 5,000 to 9,999 in population that were nonetheless urban in nature but not especially designated by the U.S. Bureau of the Census. These communities do, however, fall within the Rural-Urban Continuum Codes (also known as Beale Codes) maintained by the U.S. Department of Agriculture Economic Research Service. In that system, counties with urban communities of from 2,500 to 19,999 are classified as other urban. 22

23 changes have influenced overall regional prospects as well as longer-term investments like highways, social services institutions, and the distribution of the state s higher education assets. This type of economic development planning begins with a dominant central place that exerts discernible economic influence over a clear territory. It takes a regional economy as it is, quite mindful of intercommunity relationships and dependencies in the region with that core economy. It assumes that improvements in the core economy have strong and positive implications for regional well-being and overall regional competitiveness. Accordingly, it begins by looking at a range of business, government, cultural, and education leaders and institutions as the foundation for broad-based community development, an important objective of which is economic development. The Sustainable Economies Program team has selected the RTC of Carroll, Iowa, as the first location for this new program. Carroll was selected as a pilot community for this program due to several factors. First, all the RTCs were evaluated using a subset of the 99 indicators based on readily available data (see Appendix 1). In this evaluation, Carroll performed relatively well; however, it still had areas with opportunity for improvement. Second, the leadership in the Carroll RTC has proven to be progressive with strong regional leaders who are capable of leading the outcomes of the program beyond the scope of our assistance. Metropolitan: Urbanized population of 50,000 or more Micropolitan: Counties with an urbanized population of 10,000 to 49,999 Nanopolitan: Population >5,000 in core city plus significant regional economic impact Sheldon Sioux Center Sioux City Le Mars Orange City Council Bluffs Cherokee Storm Lake Denison Harlan Red Oak Spirit Lake Estherville Spencer Atlantic Carroll Iowa s Trade Centers Creston Algona Fort Dodge Boone Ames Des Moines West Des Moines Mason City Clear Lake Iowa Falls Charles City Marshalltown Newton Grinnell Knoxville Centerville Waverly Pella Oskaloosa Cedar Falls Waterloo Ottumwa Decorah Oelwein Independence Fairfield Washington Manchester Cedar Rapids Iowa City Mount Pleasant Burlington Fort Madison Muscatine Dubuque Maquoketa De Witt Davenport Clinton Figure 5. Iowa s Trade Centers Keokuk 23

24 Economic Assessment Process A general economic assessment of an RTC begins with helping the RTC understand its role in the region. It also includes assisting the RTC to understand the limits of its regional influences. There are many tools available to conduct that kind of evaluation, but one of the better tools can be found at the Local Employment Dynamics database, which can be accessed from the U.S. Bureau of the Census website. That data set allows researchers to discern the flow of workers into and out of a trade center. The map in Figure 6 demonstrates the regional labor force dynamics for the city of Carroll, Iowa, for According to the Bureau of Labor Statistics, there were 8,325 payroll jobs in the city. A minority of those jobs, 39 percent, were held by persons living in Carroll. Persons from either the remainder of Carroll County or from other counties accounted for 61 percent of the jobs. Accordingly, the regional worth of the Carroll city economy is very evident. We also see that 2,168 persons who lived in the city of Carroll worked outside of the community, either elsewhere in the county or in some other county. In terms of a net exchange, the city attracts 2.3 workers from outside of the community for every resident worker who works elsewhere. This very favorable net exchange of jobs is indicative of most RTCs, and the pattern is very pronounced in Carroll. a study of county shares of jobs, labor incomes, and value added (GDP) production relative to all RTCs; a look at three-digit industrial detail to discern which industries account for job, labor income, and value added generation in the region; an employment composition assessment compared to all peer regions to discern comparative strengths or deficiencies; a display of the region s top 30 industries, given high industrial detail, as measured by labor income production; a summarization of broad industries that are primarily producing for export (exogenous demand); the RTC s top 30 industries to be evaluated across a set of objective criteria to provide depth as to their respective roles in the area s economic well-being; flowing from the industrial analysis, summarizing the regional economy as to its expected occupational composition given its industries; the occupational data to be translated into summaries of regional knowledge and skill levels; and the region s dominant industries and dominant occupations to be both quantitatively and qualitatively evaluated. As important as the city of Carroll is for employment and trade, the same overall regional potency does not hold for the county at large. For the same period as in Figure 6, Carroll County had 11,610 payroll employees, of which 7,107 came from Carroll County and 4,503, 39 percent, came from outside of the county. While the county s dependence on external labor is pronounced, 3,972 Carroll County residents worked outside of the county. On a net-exchange basis, it received about 13 percent more workers than it sent to other places outside of the county. Following the analysis of a region s employment dynamics is an evaluation of the area s broad industrial strengths and weaknesses. In this project, RTCs are compared with all 40 micropolitan and nanopolitan RTCs so that they can gauge their overall competitive positions. These evaluations allow for Figure 6. Payroll Employment Flows Into and Out of Carroll County,

25 Table 1. Industrial evaluation criteria for RTCs Evaluation Criteria Low Medium High Earnings Per Job (Compared to RTC Median) < 90% 90% to 110% > 110% Value Added Per Job (Compared to RTC Median) < 90% 90% to 110% > 110% Export-Producing Jobs < 33% 33% to 66% > 66% Local Linkages (Type 1 Multiplier) < to 1.25 > 1.25 U.S. Job Growth Annual Rate Past 10 Years < 0% 0% to 1% > 1% Projected U.S. Annual Job Growth Next 10 Years < 1% 1% to 2% > 2% Projected U.S. Annual Output Growth Next 10 Years < 2% 2% to 3% > 3% The industrial evaluation criteria for the RTCs and their critical values are displayed in Table 1. Earnings and value added per job tell the relative worth of working in the region. Export-producing employment indicates the dependence of local industries on external demand. Local linkages is a measure of the degree to which area industries rely on regionally supplied production inputs. This measure is derived from a current input-output model of the RTC economy. The last three indicators tell us whether or not the region s top 30 industries grew during the last decade or are projected to grow in the next. As a companion analysis to this assessment, a bridge is developed that allows the translating of the RTC s dominant industries into occupational categories. This evaluation demonstrates the region s occupational strengths and weaknesses to include the education content of occupations and allows for a comparison, on an occupational basis, of the growth prospects of those occupations. Lastly, the economic analysis translates the region s occupational structure into measures of knowledge and skills. This allows for a scoring of the human capital value of an RTC labor force, as it would compare to its peers, as well as describing the RTC s relative strengths, deficiencies, and aptness to certain types of economic development and change. Notably, the translation and scoring process will allow for a determination of the RTC s standing relative to both occupational projections as well as anticipated skill and knowledge demands Developing Indicators of Social, Economic, and Environmental Condition Integrated regional development involves an understanding of area economic, social, and environmental assets, limitations, and issues. Many local planners, economic developers, and political leaders have only an abbreviated list of measures of local well-being. This project has developed a very wide range of indicators from secondary data for each of the three major organizing domains of the triple bottom line. Those groups and categories are displayed in Table 2. In all, the evaluation produces 99 separate measures by which the region can gauge its performance relative to all of its peers. These indicators are displayed in a dashboard type format that allows for a quick visual summary of a region s performance in a key category. The most indicators are in the People/Society domain, as there are many more indicators from which to draw given the amounts of regularly collected social, demographic, and vital statistics data generated annually. Next in terms of total indicators are Planet/Environment measures. Last are indicators of the economy. As mentioned in the table, an RTC s industrial and labor force analysis is evaluated using different criteria as part of the initial RTC economic overview, as described in the preceding section. 25

26 Table 2. Summary of secondary data indicators Domain Category Candidate Indicators Planet/Environment Profit/Economy People/Society Natural Environment 18 Built Environment 4 Energy 7 Waste/Recycling 4 Subtotal, Planet 33 Economic Performance 21 Industrial Analysis* Labor Force Analysis* N/A N/A Subtotal, Profit 21 Educational Systems 9 Health and Safety 14 Affordability and Equity 12 Culture and Community 10 Subtotal, People 45 Total Indicators 99 * Given the importance and complexity of these two categories to the rural Iowa economy, in-depth assessments employing a different comparative framework are provided as described in Section Figure 7 gives an example of one of the 99 indicators. Here RTC retail trade performance for Carroll County is compared across all of the peer cities using a calculation called a retail sales pull factor. The gauge uses color guides to demonstrate where the RTC quartile ranges are on this indicator, and it progresses from orange to green as an indication of the desirable area that an RTC would want to be in. The relative width of the quartiles tells us about the interquartile performance as well, and the indicator shows the minimum value and the maximum values relative to the score. These graphs easily demonstrate where an RTC is regarding the median value (the line between yellow and light green). By combining statistics with visual cues, the progression from orange to green, RTCs can quickly isolate their environmental, economic, and social assets, strengths, and issues across the major domains. The combination of an economic overview plus the production of the 99 indicators across the three triple bottom line domains provides regional planners and participants with a focused description of the role their current economy plays in the region, as well as the value of different elements Peer Minimum 54.1% 54.1% 69.2% 69.2% 81.3% 81.3% 96.7% 96.7% 142.0% Figure 7. Retail Sales Pull Factor of industrial or occupational specializations. It also provides an up-to-date comparative benchmark from which to evaluate the region s current condition as well as evaluate itself over time. Carroll 116.0% Peer Maximum 142.0% 26

27 While the assessment provides a very detailed and wide array of indicators by which a community may evaluate itself, 99 indicators are too many for a typical community to monitor on a regular basis, let alone incorporate those indicators into policy choices. The RTC is encouraged to choose, among the many indicators, those they believe most pertinent to community development or are otherwise pressing concerns, and to then develop mechanisms to monitor those indicators and gauge performance over time. Through the facilitated planning process component of the Sustainable Economies Program, the community selects projects or initiatives they think they can make progress on in the next few years. They then match their goals to several indicators that they will track to establish a benchmark, measure improvements, and evaluate long-term change Community Economic Sustainability This program primarily focuses on the economic sustainability of the participating RTCs. We use the term community economic sustainability as the broad goal of identifying the financial, social, and environmental activities that may affect the ability of the RTC to maintain and/or grow its standard of living over time. As previously noted, Iowa s demographics are changing and rural communities have lost population. It was also noted that these RTCs remain vital centers of trade, employment, amenities, and education. Community economic sustainability poses questions communities must ask, and answer, to retain that vitality. Some of the questions ask how to maintain the quality of public services when there are fewer households generating revenue to pay for those services or how the increasing cost of all energy sources will affect the ability to heat homes and businesses and provide the needed transportation services Economic Drivers A key factor driving the long-term viability of an RTC is the performance of the businesses and other organizations that drive the local economy. In addition to working with RTCs, this program supports the symbiotic relationship between businesses and the local community by working with these economic drivers to improve their ability to sustain success into the future. This program defines economic drivers as the businesses and organizations (such as hospitals) that are a critical component of the local economy and contribute to the local economy through various means. Table 3 provides a simplified breakdown, developed for the purposes of this program, of company types and their characteristics in a regional economy. Companies that are considered Regional Stakeholders, typically larger corporations, and Economic Core: Active, typically mid-sized businesses with a strong local presence, are considered economic drivers for the purposes of this program. This program provides different levels of opportunities and technical support for the various businesses in an RTC based on the type of business, as indicated in Table 1. The services are tiered in this approach to ensure that assistance is provided in a way to deliver the most effective services in this program. Further details on the technical assistance and mentoring process are provided in the Business Sustainability Overview. One key component to this program is participation in the community sustainability activities by all types of businesses. Representation of local business leaders from all types of businesses in the community sustainability initiatives will help in developing and growing relationships in the local communities. A detailed description of types of efforts to improve community economic sustainability in Iowa and other regions, along with how the Sustainable Economies Program builds on these efforts, is addressed later in this report. 27

28 Table 3. Company types in a regional economy Company Type Typical Size/ Ownership Characteristics Potential Participation Large corporation or part of a large Participation in community corporation economic sustainability activities Existing long-term planning and Select technical assistance as Regional >250 Employees; sustainability efforts needed Stakeholder Nonlocal Ownership Relatively high wages and exports Participation in local business Established part of community sustainability events Connections to Iowa State University research opportunities Independent business or Participation in community subsidiary of corporation with local economic sustainability activities control In-depth technical assistance and Economic Core: >25 Employees; Minimal existing long-term sustainability mentoring Active Local Ownership planning and sustainability efforts Participation in local business Relatively high wages and exports sustainability events Progressive management Connections to Iowa State Established part of community University research opportunities Independent business or Participation in community subsidiary of corporation with local economic sustainability activities control Select technical assistance as Economic Core: >25 Employees; Minimal existing long-term requested Passive Local Ownership planning and sustainability efforts Moderate wages and exports Traditional management Established part of community Retail and Community Support <50 Employees Local retail, food, distribution, banking, and insurance industries Low to moderate wages Established community leaders Participation in community economic sustainability activities 28

29 Sustainability of Assistance within RTCs The primary focus of the Sustainable Economies Program is providing technical assistance and education to selected RTCs to allow them to sustainably grow over time. The preceding sections have provided detailed discussion on the process used to develop and deploy a set of tools to facilitate the beginning of this process. However, in order for the regional economic growth to be sustainable, the RTCs must be able to sustain the tools and lessons after the EDA-UC Program has completed work in the region. This section will discuss how each of the preceding concepts is supported after the Sustainable Economies Program has completed work in a region. Early in the implementation of the Sustainable Economies Program in each region, there is a significant focus on education. Team members from ISU hold meetings with regional stakeholders (public agencies, non-profit groups, businesses, and others) to educate them on the concepts of sustainability and RTCs (Sections and 3.1.2). It is the expectation that by the time the key activities in the region start, local leaders are well-versed in these subjects. This is a base knowledge that all participants can rely on during the balance of the program and well into the future. The economic assessment process (3.1.3) and regional indicators (3.1.4) are intended not only to provide the community with a research-based set of information to make decisions on, but also to teach participants in the program how to use and critically evaluate data on their regional economy. The information contained in the assessment and indicators is used immediately by stakeholders for several purposes. In addition to using this information as inputs to the community planning steps, this information is regularly used as input to comprehensive economic development strategy documents, public and private organization key performance indicators, and as a key reference in making decisions as new issues arise. After completion of the EDA- UC Program, the RTCs that participate have the tools and understanding to recreate many of the assessments and indicators within the program. When they do not have the tools to do so, they have sufficient understanding of them to bring in external resources that can help them recreate the right assessments at the right time. The community engagement (Section 3.1.5) and business engagement (Section 3.1.6) processes are the start or rekindling of a long term relationship between the community and ISU. While there are several projects and organizing events contained within this program for each RTC, many of the potential projects are long term. Through ISU Extension and Outreach, community development specialists and business experts in a number of areas are available to assist RTCs as new opportunities arise. In each case, the goal will be to educate the local participants on the fundamentals of the topic, provide technical support throughout implementation, and leave the community or business with the tools and knowledge to sustain and replicate successes for future projects. 29

30 3.2. Community Economic Sustainability Overview Review of Current Activities in Iowa The opportunities presented by the adoption of sustainable practices are being explored in a variety of ways throughout Iowa. Most of the existing programs have emerged from particular viewpoints. Some are based on urban planning concepts, whereas others focus on environmentalism, ecology, etc. These initiatives vary from localized efforts due to a specific need to portions of national initiatives. The loci of current activities are large metropolitan areas such as Des Moines and Dubuque and some smaller communities in proximity to the University of Iowa. This section provides a high-level summary of key programs related to sustainability in the state. Sustainability has been a priority for the Iowa Department of Economic Development, which has created the Sustainable Community Demonstration Project and Downtown Revitalization programs as part of their menu of Community Development Block Grant-funded activities. The Sustainable Community Demonstration Project and Downtown Revitalization programs assist communities in demonstrating innovative, cutting-edge solutions to making Iowa s communities more environmentally, economically, and culturally viable. The Center on Sustainable Communities (COSC) is a nonprofit membership organization founded in 2005 that serves as Iowa s educational resource for sustainable construction and design. The center empowers individuals and communities to make everyday decisions that promote sustainability, resulting in a better quality of life for all Iowans. The COSC schedules residential, commercial, and energy-specific workshops. The University of Iowa s School of Urban and Regional Planning has launched the Iowa Initiative for Sustainable Communities (IISC). The purpose of the IISC is to enhance the capacity of towns, cities, and counties to become more sustainable communities. Communities currently participating in this program include Anamosa, Burlington, Charles City, Columbus Junction, Decorah, Oskaloosa, and Wellman. In 2012, Dubuque will also participate. The Des Moines Area Metropolitan Planning Organization is leading a consortium of local stakeholders to develop a regional plan for sustainable development (RPSD). The program supports metropolitan planning efforts that integrate housing, land use, economic and workforce development, transportation, and infrastructure investments in a manner that empowers jurisdictions to consider the interdependent challenges of economic competitiveness and revitalization; social equity, inclusion, and access to opportunity; energy use and climate change; and public health and environmental impact. The formulation of the RPSD will provide the chance to link a long-range regional transit plan and a strategic plan for economic and workforce development. Additionally, the RPSD will suggest updates to existing plans in order to align all regional planning efforts. The RPSD will cover a time horizon that stretches to 2050 and will relate the findings of other studies and plans to the overall multidisciplinary vision, goals, and initiatives under way in the greater Des Moines metropolitan area. Iowa State University is a research and educational partner in this project. In the city of Fairfield, Iowa, sustainability efforts are directed by an ISU Extension program specialist to oversee community sustainability efforts. This project is a sustainable-city demonstration project, including an education component in the form of a Sustainable Learning and Visitors Center. The commission identified three goals for the plan: to foster and maintain a culture of sustainability; to create jobs, wealth, and opportunities for investment with sustainable development; and to achieve sustainable community design and public policy and infrastructure. Sustainable Dubuque was developed in 2006 by the city of Dubuque based on 11 sustainable principles that guide government, business, nonprofit, and individual actions in Dubuque. Community planning documents including the Comprehensive Plan, Long-Range Transportation Plan, Comprehensive Economic Development Study, and many others are guided by this sustainable framework. Dubuque 30

31 has collaborated with Smarter Sustainable Dubuque, Dubuque 2.0, Climate Communities, the International Council for Local Environmental Initiatives, the National Trust for Historic Preservation Office of Sustainability, the Carbon Disclosure Project, and the American Institute of Architects Communities by Design to enhance Dubuque s sustainability efforts. This work includes significant involvement of businesses of all types and sizes in the region and has resulted in meaningful economic impact to the area. In an effort to facilitate regional collaboration, the Plan Implementation phase of the Sustainable Economies Program will provide connections to these groups as appropriate. These efforts can include sharing of best practices and lessons learned along with direct technical assistance. The EDA-UC team is in contact with several of these organizations to ensure coordination of efforts Review of Activities Outside of Iowa The research team evaluated several different types of sustainability approaches from a variety of different perspectives. The team specifically looked for approaches that had been implemented on a demographic scale similar to that of an RTC. Another criterion of the review was that the approach would be based on community engagement, meaning the involvement of multiple stakeholders representing key aspects of a community s economic, social, and financial infrastructure to match the main domains of the triple bottom line. Another criterion was the extent to which an approach used data for decision making, and this led to an investigation of a variety of indicator-based approaches that could be tailored to the types of secondary data available about communities the size of RTCs and accessible to community leaders without a large financial investment or specialized staff. Community-based processes are primarily variations and iterations of Torbjorn Lahti and Sarah James The Natural Step, based on the work of Swedish scientist Dr. Karl- Henrik Robert. 3 The Natural Step Framework has been the basis for long-term experiments in community-based processes such as Transition Town Totnes in England, Sustainable Toronto, Sustainable Seattle, and the Eco-City movement. Community-based approaches to sustainability come in varying shades of green from the deep ecology of Transition Town Totnes or the Swedish version of The Natural Step to the Happiness Initiative of Sustainable Seattle 4 and the more urban design, infrastructure, and policy reform focus of Eco-Cities. All share a common usage of community engagement processes that build on John Kretzmann and John McKnight s theories of asset-based community development, 5 which uses the concept of community champions to gain buy-in for broad-based change initiatives by identifying and engaging key stakeholders and thought leaders in a community. Community champions then use their social and professional networks to tap into assets in the community that can be used to further their project goals. The success of these efforts through community champions agrees with the lessons learned in previous economic development studies through the CIRAS EDA-UC Program. Sustainability indicator approaches were evaluated as a tool to help communities learn more about sustainability, as a means of constructing baseline information for planning, and as a yardstick for measuring the long-term outcomes and change achieved by the projects the community chooses to undertake. While there are innumerable approaches available, several well-established approaches were evaluated to understand the common themes that drove their use. 3 James, S. and T. Lahti The Natural Step for Communities: How Cities and Towns Can Change to Sustainable Practices. New Society Publishers, Gabriola Island, British Columbia, Canada. 4 Gross National Happiness Objective Indicators, (6 June 2011) 5 Kretzmann, J. P. and J. L. McKnight Building Communities from the Inside Out: A Path Toward Finding and Mobilizing a Community s Assets. ACTA Publications, Skokie, Illinois. 31

32 The Community Capitals Framework developed by Cornelia and Jan Flora of the North Central Regional Center for Rural Development is used fairly broadly in the upper Midwest for a variety of community planning and sustainability projects and categorizes indicators under the headings of social, financial, natural, cultural, built environment, human, and political capital resources. 6 The International Council for Local Environmental Initiative s Star Community Index is a compilation of 80 sustainability goals and 10 guiding principles that form a national rating system geared toward local governments. The Star Community Index categorizes indicators under the headings of natural systems, planning and design, energy and climate, economic prosperity, employment and workforce training, arts and community, health and safety, affordability and social equity, and innovation and process. 7 The University of Wisconsin Indicators of Community Sustainability was developed by David S. Liebl, Dana R. Fisher, et al. This tool is widely used in Wisconsin s 20 Eco- Municipalities. The tool categorizes sustainability indicators under the headings of economy and individuals, business, agriculture and natural resources, education, environment, and government. 8 The U.S. Interagency Working Group on Sustainable Development Indicators is a collection of various indicator projects that have been used in the United States and internationally. The group s resources include data sources for indicator development and checklists for judging the effectiveness of indicators. 9 Environmental Protection Agency (EPA) Green Communities provides a five-step approach to developing community sustainability plans. The steps include a community assessment, trends analysis, vision statement, sustainable action plans, and implementation. The EPA Green Communities program uses the triple bottom line approach of categorizing indicators under the headings of social, environmental, and economic. 10 The Sustainable Communities Initiative is a joint effort of the U.S. Department of Housing and Urban Development, the EPA, and the U.S. Department of Transportation and is more commonly known as Smart Growth. The Smart Growth indicators are categorized under six livability principles that include providing more transportation choices, promoting equitable and affordable housing, enhancing economic competitiveness, supporting existing communities, coordinating and leveraging federal policy and investment, and valuing communities and neighborhoods. 11 Components of the resources mentioned above are used as a basis for the triple bottom line indicators included in the economic assessment. Many had to be modified, however, to match available data or to construct data sets using more valid local data sources that are relevant and available to RTC communities. 6 Flora, C. B., J. L. Flora, and S. Fey Rural Communities: Legacy + Change. 2nd Edition. Westview Press, Cambridge, Massachusetts. 7 International Council for Local Environmental Initiative Star Community Index (6 June 2011) 8 Liebl, D. S., D. R. Fisher, E. Andrews, G. Campbell, K. Haas, R. Klemme, M. Miller, M. Peterson, B. Pinkovitz, and G. Wengert Indicators of Community Sustainability. University of Wisconsin, cs.html (6 June 2011) 9 U.S. Interagency Working Group on Sustainable Development Indicators Sustainable Development Indicators, (6 June 2011) 10 U.S. Environmental Protection Agency Green Communities Program Green Communities, index.htm (6 June 2011) 11 U.S. Department of Housing & Urban Development, U.S. Environmental Protection Agency, U.S. Department of Transportation HUD-DOT-EPA Partnership for Sustainable Communities, (6 June 2011) 32

33 Community Assistance Process During the Carroll RTC pilot project, the EDA-UC team found that separation of community education and planning sessions resulted in a lack of continuity among participants, causing reduced interest in action. Based on this, the original model of two community education sessions followed by a plan development session has been replaced with a new model to better facilitate teams developing and acting for regional economic development. The new process, applied in RTCs Lee and Appanoose, consists of multiple educational sessions early in the process, followed by a sustainability summit to kick off the major planning activities, then supported by focused team events. Using a participatory planning process to select goals, linking those goals to the sustainability indicators, and incorporating both into existing community plans is a way to reinforce the knowledge participants gain and help them learn ways of making use of data in a decisionmaking context. An ancillary by-product of the facilitated strategic planning session is the transfer of knowledge regarding incorporating evaluative thinking into goalsetting processes. Increasingly, government-funded programs are asking their grantees and partners to quantitatively demonstrate that the investment of public funds accomplishes a desired change in a social, financial, or environmental condition. Because traditional strategic planning is more task oriented than outcome based, deciding what to measure and how to determine whether or not progress is being accomplished is not normally addressed when projects and investments are being selected. The backward mapping described later in this document provides a way to address outcomes at the outset and is a useful skill that participants can adopt with all forms of planning they may be engaged in outside of this project. Early in the process, the EDA-UC program team holds several educational sessions with existing regional stakeholder groups. The primary focus of these education sessions is to explain the concepts of sustainability, regional economic development, and appropriate use of indicators in guiding change. These stakeholder groups include nonprofit organizations; educational organizations such as the local school district and community college; economic development leaders; local branches of federal and state government agencies such as the U.S. Department of Agriculture, Natural Resources Conservation Districts, or Departments of Natural Resources and Public Health; citizens with an interest in community betterment; health care organizations; retail and service sector businesses; and youth. Education sessions with these stakeholders are held during regular meeting times of these groups in an effort to demonstrate how to incorporate regional economic development as part of their mission rather than as a separate activity. Once the stakeholder base is educated, a sustainability summit is held. This sustainability summit is a full-day event open to the public to begin developing a plan. The summit accomplishes several key goals, including bringing the community together to discuss regional economic development, educating participants in the results of the triple bottom line assessment, providing external expertise in solving the core regional gaps, and starting to identify regional priorities in a team-based environment. The Lee County sustainability summit hosted 85 community participants from dozens of regional groups, and for many of those groups this was their first time participating in a regional economic development initiative. After education on the regional economic triple bottom line assessment and presentations by experts in regional environmental initiatives, social issues impacting economic performance, and workforce development, participants began to identify issues and goals for regional economic development. After the sustainability summit, the EDA-UC team organizes a series of focused sessions to develop plans for a package of community sustainability initiatives. These include activities to be incorporated in several community plans such as the updated Comprehensive Plan, the 10-year Economic Development Strategy, and the Smart Growth Plan. The planning process that will be used is a backward mapping exercise adapted from the Aspen Institute Roundtable on Community Change. Participants construct the backward map on a wall using symbols that represent the outcomes, indicators, preconditions, interventions, and 33

34 timelines of the sustainability initiatives they have selected. This will allow the participants to match the indicators provided in the second session to specific projects or interventions they would like to undertake. Preconditions are specific tasks that move the project closer to the eventual outcome. This tool applies the learning from the first two sessions and also teaches another way of developing strategic plans that incorporates outcomebased benchmarking within a multiple-stakeholder and multiple-agency context. The value of this type of planning exercise is that it takes a large problem and breaks it down to manageable pieces that different stakeholders can make work individually and collectively. Additionally, it provides the framework to incorporate the initiatives into existing formal planning documents because it is very easily adapted as visuals, as statements of priorities, as charts, and as a format for quantifying improvements. Completing the backward mapping process is a key step in encouraging RTC leaders to change. In many cases, the problems they are facing are large and have nebulous solutions, which can cause inaction. The backward mapping process gives communities a tool with which to approach these complex problems in a systematic way that encourages incremental change. Once participating in the backward mapping process, the community participants have a plan to address current high-priority problems and a tool to develop solutions to new complex problems as they arise. After the backward mapping process is complete, the EDA- UC team facilitates technical assistance in implementing key first-stage projects. This includes a range of services such as direct technical assistance, facilitating other university assistance, and mentoring in the community. As the projects begin to take a life of their own, the EDA-UC Program team slowly transitions out of the process. Participants in the Carroll employee attraction Kaizen event discuss opportunities to grow local population and businesses. 34

35 3.3. Business Sustainability Overview Sustainability concepts applied to business have become widely embraced by many corporations worldwide. This section will address the general concepts of sustainability and how it has become a global business practice. Next, this section will review the obstacles for SMEs to obtain results similar to those of large corporations. As described in previous sections, business sustainability is defined throughout this project as a business that [m]eets the needs of the present without compromising the ability of future generations to meet their own needs (Brundtland Commission 1987). This program utilizes the concept of the triple bottom line (Elkington 1994), which is focused on balancing the financial, social, and environmental needs now and in the future Review of Best Practices Sustainability in business has taken many forms, and there is no established single best practice to implementing sustainability. As the triple bottom line concept suggests, the ultimate goal is to be able to account for business activities in a way that allows companies to understand the individual financial, social, and environmental impacts while also providing a method to understand the trade-offs among the categories. As of this time, there is no generally accepted approach to evaluating the trade-offs among the triple bottom line categories, but extensive research is under way worldwide. Since the complexities of sustainability do not currently lend themselves to a broad singular approach to becoming more sustainable, many sustainability approaches have emerged over the last several years. These approaches can be separated into two groups: green/social responsibility labels and sustainability standards. Product-Oriented Green/Social Responsibility Labels Green/Social responsibility labels are perhaps the most recognizable best practices in sustainability. These labels cover every potential aspect of the environmental and social responsibility movement, and they vary greatly in their intent and usefulness. These labels tend to be single attribute standards in which the label specifies the impact of a product on a single factor. An example of this is Energy Star, which provides a rating for energy use for a given product. Labels are now beginning to expand to be multi-attribute labels such as the Cradle to Cradle label, which measures the impact of a product on several attributes including material health, material reutilization, renewable energy use, water stewardship, and social responsibility. 12 In addition to the label type, there is a second level of consideration for all green and social responsibility labels concerning the certification types. When a company puts a label on a product advertising positive green or social responsibility aspects, that label can be certified one of three ways: First Party, Second Party, or Third Party certification. First Party certification is when the company selling the product is the one making the claim of compliance. In First Party certifications, the credibility of the company is a critical factor regarding whether or not the label will be generally accepted by consumers. In Second Party certification, a second entity, typically a business that creates a label, certifies that a product meets the label requirements. In Third Party certification, an independent authority, typically a certifying agency, certifies that the product meets the requirements. Generally, Third Party certification is considered to be the most stringent and well-accepted type. In all certifications, the key to their quality and level of use will be that they use detailed, robust requirements that are relative to the user. Business-Oriented Sustainability Standards Emerging standards in sustainability are beginning to address the need for businesses to make decisions in a way that effectively balances the financial, social, and environmental pressures companies face. While there is no accepted approach to monetizing the externalities of social and environmental issues, companies and nongovernment 12 Certification Overview, (31 May 2011) 35

36 Sustainability in a Changing World THE PUSH FOR SUSTAINABILITY IS BEYOND GOING GREEN IN RESPONSE TO CLIMATE CHANGE AND RESOURCE DEPLETION. SUSTAINABILITY IS THE REACTION TO THE CONVERGENCE OF SEVERAL FACTORS THAT HAVE CHANGED DURING THE LAST FEW YEARS. THESE FACTORS INCLUDE GLOBALIZATION, INCREASED INFORMATION AVAILABILITY, NATURAL RESOURCE AVAILABILITY, AND CLIMATE CHANGE, AMONG OTHERS. THE FOLLOWING SECTIONS PROVIDE A BRIEF OVERVIEW OF HOW THESE FACTORS ARE INFLUENCING THE BUSINESS CLIMATE. GLOBALIZATION While the trend toward a more global economy has been a constant for decades, if not centuries, the pace of globalization affecting many classes of business has intensified over the last decade. Globalization has become a major driver of the sustainability movement. There is a constantly growing middle class across the world, especially in the BRIC (Brazil, Russia, India, and China) countries. This growing middle class is changing the competitive landscape on all fronts increased consumers (more potential sales, but increased resource needs), increased competition, and increased awareness of individuals as part of a global economy. INFORMATION AVAILABILITY Compounding the globalization impacts is the rapidly expanding availability of real-time information worldwide. This availability of information is changing the way consumers view companies and the way companies interact with each other. With the continuing growth of social media and other advanced web-based technologies, information is being spread faster than ever and people are finding ways to communicate within niche groups more effectively than ever before. This poses risks to businesses in that businesses can quickly lose control over publicity and communications, but it also poses significant opportunities for businesses. Social networking and increased Internet access worldwide have allowed increased opportunities for businesses to connect with consumers in more meaningful ways. NATURAL RESOURCE AVAILABILITY A coupling of the rapidly expanding middle classes in developing economies, better understanding of resource reserves, and historically uncontrolled use of natural resources has resulted in a clear understanding that many natural resources will not last forever. While resources such as water and fossil fuels are at the front of most people s minds, availability of other materials (such as indium, which is used in liquid crystal displays) is also threatening to limit our current demands for products. At the same time, this resource depletion can stimulate the development of new products, enable more efficient uses of existing products, or promote alternative methods for achieving production objectives, providing opportunities to businesses at the forefront of this movement. CLIMATE CHANGE In 2007, the Intergovernmental Panel on Climate Change released their Climate Change 2007: Synthesis Report, which included the following statement: Most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic (Greenhouse Gas [GHG]) concentrations. In responseto this complex study, the concept of understanding, measuring, and decreasing the carbon footprint of businesses and products has emerged as a key topic. While this report does not address the social and political aspects of climate change, GHG emissions are regulated in Europe and are a key factor in consumer and corporate purchasing decisions in several industries. 36

37 organizations (NGOs) have taken several steps toward increased awareness of the impacts of business activities on the triple bottom line. The result is a major increase in the availability of standards to help companies identify and manage green and sustainability issues in a balanced manner. The vast majority of them have been developed in cooperation with businesses, industry groups, and NGOs to propose accepted standards that set achievable expectations but give businesses the flexibility to manage how these standards are implemented with the business. These standards are applied at various levels of the business (factory/corporation, etc.) and cross a wide range of functions from full business sustainability to water use to human rights indicators Obstacles for SMEs While there is considerable social support for green and sustainable practices, new industries of environmentally and socially responsible products, and countless success stories, SMEs regularly struggle with the business case for sustainability and, more specifically, identifying how to approach sustainability within their business. Two major items inhibit implementation of comprehensive sustainability programs. First, management at SMEs typically has extremely deep knowledge in a specific business area but lack general knowledge in areas related to sustainability. A sample of sustainability-related standards and initiatives: ULE 880: Manufacturing Sustainability Standard (in development) Global Reporting Initiative CERES Roadmap to Sustainability Social Accountability 8000 Standard CERES Facility Reporting Project Human Rights Impact Assessment and Management EPA Design for Environment Program Second, SMEs are resource constrained and do not have the financial resources to undertake long, in-depth assessments required for sustainability. These obstacles are common when implementing new initiatives and technologies within SMEs. Through our experiences working with SMEs across several programs, CIRAS has gained expertise in assisting businesses through tailored implementations of best practices. The Sustainable Economies Program takes a similar approach used in previous successful efforts by identifying the key issues with the most potential impact to SMEs and structuring them in a manner that SMEs can apply within their business Sustainability Assessment and Implementing Sustainability The EDA-UC team conducted six triple bottom line assessments using the Global Reporting Initiative ( during the Carroll RTC process. While the tool effectively identified long-term gaps and risks associated with the current mode of operation, the assessment did not provide motivation for change. As a result, the EDA-UC team applied a different approach for the Lee and Appanoose RTC assessments. An in-depth research and benchmarking report ( Sustainability pdf) identified a best practice approach to implementing sustainability for SMEs: Step 1 Understand the Facts Step 2 Develop a Vision Step 3 Create a Roadmap Step 4 Execute, Review, and Change The key gap among SMEs is the ability to both understand the facts about their current state and develop a roadmap to achieve their goals. As part of the above report, a new triple bottom line assessment tool was developed (see Appendix 2). This tool, combined with a standard business assessment tool, provides SMEs with a clear path to improving their social, financial, and environmental betterment. 37

38 Initial results from Lee County assessments indicate that this tool meets the intended purpose: all three companies participating in the full assessment and follow-on technical assistance used the guidance provided to undertake new growth initiatives supported by fundamental improvements to their business across the triple bottom line. As with all CIRAS programs, the goal of this effort is to generate an ROI for the companies involved and the funds invested. Surveys are currently underway to collect the impact of these assessments on jobs created/retained, sales (new/retained), costs, and investments Workplace Wellness A key outcome of the initial sustainability assessments in Carroll County, coupled with discussions across the state, was the realization that employee wellness was a key issue hindering growth of Iowa manufacturers. A significant fixed cost, which could be better used to fund growth and innovation, is currently used to fund health-related costs. In addition, it is estimated that 4 10 percent of employees are not at work on a given day (U.S. Dept. of Labor ). Given the shortage of a skilled workforce in manufacturing and engineering, this creates yet another resource strain holding companies back from growth. In response, the EDA-UC team is in the process of developing a research-based workplace wellness program focused on providing businesses with an ROI. Preliminary research indicates that workplace wellness programs have historically resulted in an ROI of from -176% to 1,784%. Preliminary research also indicates that the key difference in the failed versus successful programs is not necessarily the quality of the program but the fit of the program to the needs and culture of the company. As a result, CIRAS is currently piloting a new workplace wellness program that incorporates assessments and focus groups at the beginning of the process to quickly and effectively design a workplace wellness program that will benefit the company and also provide benefits to employees. The pilots of the workplace wellness program with three manufacturers in Iowa have had significant early results. In each company, health risk assessments (HRAs) have identified health risks among individual employees and identified trends among the workforce at each company. These results showed that 60 percent of participants had moderate to high disease risk and identified significant physical fitness gaps among employees. Both of these findings can have a significant impact on the well-being of the employees and their ability to effectively contribute to the workforce. Wellness training programs consisting of 12 to 14 individual training sessions were held at each company participating in the program. Iowa State will revisit these manufacturers in January of 2014 to measure improvements in health and productivity along with reductions in health care costs Business Innovation Based on changing national priorities and additional focus by the Economic Development Administration on innovation and technology commercialization, the Sustainable Economies Program made a change to the business assistance portion of the program for the third and final year of this grant. Activities focused on performing triple bottom line assessments and technical assistance were replaced with assistance in improving the abilities of businesses in the Cerro Gordo RTC to innovate. The CIRAS EDA-UC team was able to leverage early work under the center s Department of Commerce (DoC) NIST Manufacturing Extension Partnership (MEP) program and assistance from the North Iowa Area Community College (NIACC) John Pappajohn Entrepreneurial Center (JPEC) to rapidly respond to this changing need and provide valuable technical assistance to businesses in the region. This section describes CIRAS approach to innovation and the activities that took place under this program. Innovation is complex there is no easy set of instructions every company can follow to become innovative. Research shows, however, that successful innovation systems do have a variety of common activities that can improve the 13 U.S. Department of Labor, Bureau of Labor Statistics Current Population Survey; Circadian Information, Shift Work Practices. 38

39 reliability of innovation. CIRAS describes this process as the Innovation Cycle and divides these activities into four key phases: Definition, Discovery, Development, and Delivery. In the Definition phase, companies create, refine, and document many ideas. This can include using proven, repeatable ideation techniques to generate unique ideas for any business. Ideas are then reviewed by a cross-functional team and the best concepts are selected. In this stage, strong problem statements and goal definition are critical, since this information will be used to develop a concept with an initial value proposition. While there are a variety of tools available to support the Discovery phase, CIRAS uses tools called CREATE and SELECT to help businesses with this phase. These tools use research-based methods to inject creativity into a group to meet their business goals. Discovery is a frequently overlooked step in the Innovation Cycle. Many companies do not have a robust way to decide whether to invest, shelve, or kill a concept. Executed well, companies not only further define and quantify the opportunity, but also understand how their capabilities can create a sustainable competitive advantage that justifies investment. Typically, cost-effective pilot studies are executed to validate major assumptions, which results in a valued concept that drives commitment of resources. Through the Sustainable Economies Program, CIRAS used two primary tools to support the Discovery phase. The first, called Real Win Worth, is a research-based tool to help companies make more effective decisions on which opportunities to invest in. This tool asks the critical questions that help companies validate potentially significant ideas and prevent investment in ideas with potentially little business value. A second tool used in this step is Rapid Prototyping, or 3D Printing. This tool, provided through our partnership with NIACC JPEC, allows companies to rapidly make a tangible model of a potential product, which can then be shown to designers and customers to validate value quickly and at a low cost. In Development, the goal is to evolve the valued concept into a ready solution. This phase focuses on up-front planning, solution design, and verification/validation. A key step in this process is to establish the infrastructure to deliver the ready solution prepare the business and supply chain to integrate the innovation into daily efforts. When the innovation is a product, traditional product development efforts are included in this phase. In the Sustainable Economies Program, CIRAS team members educated companies on key tools and concepts in product development, from Finite Element Analysis to project planning strategies. The final phase, Delivery, is where the company executes the ready solution and produces business value. When the previous three phases are executed well, this phase requires minimal effort. Many businesses, however, have gaps in the previous three phases that lead to significant problems in this phase. Poor transition to manufacturing, incorrect sales forecasts, and supplier delays are often experienced at this time. The remedies to these issues are usually found by improving the processes and decisions in the previous phases. In the Sustainable Economies Program, companies needing assistance with the Delivery phase were referred to CIRAS NIST MEP program for assistance. Companies that want to improve their ability to innovate on a systematic basis should evaluate their internal processes, searching for gaps in the Innovation Cycle. Sometimes adding simple tools and checks to critical points in the cycle can be the key to nurturing an innovation culture and achieving profitable growth. Through the Sustainable Economies Program, CIRAS provided a wide range of businesses with the tools to improve their performance in innovation. A critical step to rolling out a new program, especially one as complex as innovation, is educating people on the concepts The Innovation Cycle Definition Delivery Ideas Discovery Development 39

40 and value. As a result, a large part of the effort in this program was education. The Sustainable Economies Program team held eight separate business-oriented events to introduce the Innovation Cycle and its key tools to businesses in the Cerro Gordo RTC. These events ranged from basic introduction sessions to full-day workshops focused on creating innovative ideas. As of the writing of the report, the team is transitioning from large audience education to oneon-one technical assistance, helping companies to implement the tools and education learned in the public events. SECTION 4: Program Sustainability A key requirement of the EDA-UC program is the focus on program sustainability after the funding ends. CIRAS has a long history of successful efforts in the EDA-UC program where new economic development and technical assistance ideas were developed under this program and then became self-sustaining. The Sustainable Economies Program follows this model. The triple bottom line analysis, indicator development, and community coaching model have seen significant success and demand outside of the Sustainable Economies Program. The key structures, data, and lessons learned in this program are being spun off into two new initiatives as this current EDA-UC funding period ends. First, the model of community assessment, planning, and mentoring through indicators of financial, social, and environmental wellbeing has experienced demand from other micropolitan and smaller communities throughout the state of Iowa. These communities are working with ISU Extension and Outreach s Community Economic Development group (part of the Sustainable Economies Program team) to implement a scaled-down version of this model to develop long-term local growth strategies. These efforts are being funded directly by communities across Iowa. In addition, the set of triple bottom line indicators as a source of understanding the well-being of Iowa s economy has resulted in a new effort at ISU Extension and Outreach. The indicators and assessment process developed under this program have been combined with other efforts at the university to form an ISU Extension and Outreach strategic initiative focused on using economic indicators to drive programming efforts across the ISU Extension and Outreach organization. application of new concepts in sustainability, indicators, and RTCs. To minimize this difficulty for others, the Sustainable Economies Program team has presented on this concept at multiple national conferences and extensively with ISU Extension and Outreach. Reports and publications on the topics have been shared considerably with economic developers and other EDA-UC programs. While developing local indicators of long-term well-being will always require significant time, our dissemination of approaches and lessons learned should reduce this for others. The activities to assist businesses within the Sustainable Economies Program are being sustained through CIRAS NIST MEP program. Specifically, the sustainable supply chains assessment, green manufacturing tools, and innovation tools will be maintained as services for Iowa manufacturers. Under the NIST MEP public-private partnership, these services will be funded through federal, state, and private sources. In addition, the partnership with NIACC JPEC identified through this program is continuing forward under the NIST MEP program. The key difficulty in these programs was building awareness for the business case of new initiatives. The work performed under the Sustainable Economies Program provided qualitative and quantitative impacts that can now be used in discussions with manufacturers, improving the ability to scale these programs quickly. The workplace wellness program is being continued through a partnership between CIRAS and ISU Extension to Families. This has been partially funded by the university and expects to become self-supporting within one year. Programs for businesses will be available in late Many of the difficulties encountered throughout the regional economic development portion of the program centered on 40

41 Appendix 1. Preliminary Triple Bottom Line Assessment Profit People Planet City County Type Population Property Tax Capacity Property Tax Effort Debt to Valuation Retail Pull Factor Number of Businesses with > 20 employees Mfg Diversity Index Total Score Incommuting % Nonfarm Employment % Change Creativity Index % of Individuals w/ Bachelor Degree+ Higher Education Institutions Number of Hospital Beds Total Score Water Use (Mgal/d) EPA Releases Per 1,000 People Retail Energy Sales (MWh) Per Capita 2008 Number of Federally Declared Disasters Number of Brownfields Parks and Greenspace % Total Score Cumulative Score Centerville Appanoose Nano 12, Boone Boone Micro 26, Independence Buchanan Nano 20, Storm Lake Buena Vista Micro 19, Carroll Carroll Nano 20, Atlantic Cass Nano 13, Mason City Cerro Gordo Micro 43, Cherokee Cherokee Nano 11, Spencer Clay Micro 16, Clinton Clinton Micro 48, Burlington Des Moines Micro 41, Spirit Lake Dickinson Micro 16, Estherville Emmet Nano 10, Charles City Floyd Nano 15, Iowa Falls Hardin Nano 17, Mount Pleasant Henry Nano 19, Maquoketa Jackson Nano 19, Newton Jasper Micro 36, Fairfield Jefferson Nano 15, Fort Madison-Keokuk Lee Micro 35, Oskaloosa Mahaska Micro 22, Pella Marion Micro 32, Marshalltown Marshall Micro 39, Red Oak Montgomery Nano 10, Muscatine Muscatine Micro 42, Le Mars Plymouth Nano 24, Harlan Shelby Nano 11, Orange City-Sioux Center Sioux Micro 32, Creston Union Nano 12, Ottumwa Wapello Micro 35, Fort Dodge Webster Micro 38, Note: Calculations for Property Tax Capacity and Debt to Valuation are not available for multicity RTCs due to the way they are developed. In future assessments, the full indicator set will be adjusted to account for these complexities. 41

42 Appendix 2: Projects and Event List Project Title ID # Program Phase Dates Organization(s) Attendees Description CARROLL COUNTY REGIONAL TRADE CENTER Regional Economic Development Events and Projects Regional Triple Bottom Line Economic Assessment Fundamentals of Regional Economic Development Introduction to Regional Economic Sustainability RTC Triple Bottom Line Assessment Results Regional Economic Development Backwards Mapping Event N/A FY10 Phase 2 2/11 5/11 RTC 7841 FY10 4/25/2011 Carroll City Council Employee Attraction Kaizen 8049 Business Technical Assistance Projects Triple Bottom Line Assessment 7851 Triple Bottom Line Assessment 7852 Triple Bottom Line Assessment 7868 Triple Bottom Line Assessment 7869 Triple Bottom Line Assessment 7871 Triple Bottom Line Assessment 7986 Energy Technical Assistance 7924 LEED Market Analysis 7928 Triple Bottom Line Assessment 8020 Economic Impact Study 8050 Solid Waste Reduction 8147 FY10 Phase 3a FY10 Phase 3a FY10 Phase 3a FY11 Year 1 Balance FY10 Phase 3b FY10 Phase 3b FY10 Phase 3b FY10 Phase 3b FY10 Phase 3b FY10 Phase 3b FY11 Year 1 Balance FY11 Year 1 Balance FY11 Year 1 Balance FY11 Year 1 Balance FY11 Year 1 Balance 6/21/2012 Public Event 18 7/28/2012 Public Event 27 8/30/2012 Public Event 21 1/12 5/12 5/11 7/11 5/11 7/11 5/11 7/11 Multiple Regional Organizations and Businesses Industrial equipment manufacturer Commercial goods manufacturer Large health care provider 5/11 7/11 Publisher 2 5/11 7/11 5/11 7/11 6/11 8/11 7/11 9/11 9/11 12/11 10/11 2/12 12/11 2/12 Industrial equipment manufacturer Commercial goods manufacturer Commercial goods manufacturer Industrial equipment manufacturer Large health care provider Large health care provider Commercial goods manufacturer In-depth financial, social, and environmental assessment of the region. Introduction to the use of advanced economic analysis and indicators in economic development strategies. Introduction to sustainability concepts in economic development and collection of regional priorities. Presentation of RTC Triple Bottom Line Assessment. Technical assistance in developing a regional plan using backwards mapping and using economic sustainability analysis results to guide decisions and plans. Kaizen event to identify innovative ways to increase regional employee pool. Financial, social, and environmental assessment of business. Financial, social, and environmental assessment of business. Financial, social, and environmental assessment of business. Financial, social, and environmental assessment of business. Financial, social, and environmental assessment of business. Financial, social, and environmental assessment of business. Technical assistance identifying technologybased energy reduction solutions. Technical assessment of product and market growth opportunities in LEED market. Financial, social, and environmental assessment of business. Technical assistance to identify regional economic impact. 3 Technical assistance to reduce waste. 42

43 Project Title ID # Program Phase Dates Organization(s) Attendees Description LEE COUNTY REGIONAL TRADE CENTER Regional Economic Development Events and Projects Regional Triple Bottom Line Economic Assessment N/A Sustainability Summit 8185 Backwards Mapping Assistance N/A Retail Pull and Leakages 8325 Regional Leadership Development 8326 Junior Achievement Program 8327 Strategic Plan Updates 8328 Backwards Mapping Assistance Backwards Mapping Assistance RTC Lee County and SEIRPC CED s Development Business Technical Assistance Projects Waste Stream Mapping 8133 Triple Bottom Line Assessment 8151 Triple Bottom Line Assessment 8184 Triple Bottom Line Assessment 8183 Product Testing 8304 FY11 RTC #2 FY11 RTC #2 FY11 RTC #2 FY11 RTC #2 FY11 FY12 RTC #2 FY11 FY12 RTC #2 FY11 FY12 RTC #2 2/11 5/11 RTC 2/8/2012 Public Event 88 5/27 5/28 4/12 6/12 4/12 4/13 4/12 11/12 4/12 11/ FY11 6/12 6/ FY11 6/12 6/ FY12 FY11 RTC #2 FY11 RTC #2 FY11 RTC #2 FY11 RTC #2 FY11 FY12 RTC #2 9/12 Present 12/11 5/12 1/12 4/12 1/12 6/12 1/12 6/12 4/12 11/12 Lee County economic development groups Keokuk economic development groups Lee County economic development groups Lee County economic development groups Keokuk economic development groups Fort Madison economic development groups Keokuk economic development groups Regional Council of Government and Economic Development Groups Food industry manufacturer Commercial goods manufacturer Construction industry manufacturer Construction service business Construction industry manufacturer In-depth financial, social, and environmental assessment of the region. Summit to present results of economic assessment and facilitate early-stage economic planning. Technical assistance to implement regional plan using backwards mapping tools. Analysis and planning of regional retail linkages as a result of identified needs from triple bottom line assessment. Development of local leadership capacity as a result of identified needs from triple bottom line assessment. Assistance in identifying Junior Achievement program stakeholders and start-up process to begin to implement technical capabilities in education system. Technical assistance in using economic analysis to generate strategic priorities. Technical assistance to implement city plan using backwards mapping tools. Technical assistance to implement city plan using backwards mapping tools. Technical assistance in developing economic development segment of CED s plan and in developing information related to major new manufacturing facility. 2 Technical analysis to reduce waste Financial, social, and environmental assessment of business, combined with technical assistance to increase plant capacity. Financial, social, and environmental assessment of business, combined with technical assistance to identify market growth opportunities. Financial, social, and environmental assessment of business, combined with technical assistance to identify market growth opportunities. Technical assistance in development of business growth opportunity. 43

44 Project Title ID # Program Phase Dates Organization(s) Attendees Description APPANOOSE COUNTY REGIONAL TRADE CENTER Regional Economic Development Events and Projects Regional Triple Bottom Line Economic Assessment N/A Sustainability Summit 8407 Steering Committee Facilitation and Backwards Mapping Events 8522 Marketing Appanoose County 8625 Financial Leadership for Appanoose County 8626 Natural Resources Project 8627 Leadership Class 8634 Business Technical Assistance Projects Triple Bottom Line Assessment 8356 Triple Bottom Line Assessment 8382 Triple Bottom Line Assessment 8383 Triple Bottom Line Assessment 8386 Triple Bottom Line Assessment 8384 Triple Bottom Line Assessment 8385 Training Within Industry Project 8630 Green 101 Event 8440 Dumpster Dive Event 8441 FY11 RTC #3 FY11 RTC #3 FY12 RTC #3 FY12 RTC #3 FY12 RTC #3 FY12 RTC #3 FY12 RTC #3 FY11 FY12 RTC #3 FY11 FY12 RTC #3 FY11 FY12 RTC #3 FY11 FY12 RTC #3 FY11 FY12 RTC #3 FY11 FY12 RTC #3 FY12 RTC #3 FY12 RTC #3 FY12 RTC #3 2/11 5/11 RTC 7/10/2012 Public event 68 8/28/ /9/2012 5/13 12/10/12 5/13 10/9/2012 5/13 10/18/12 5/13 6/12 9/12 6/12 9/12 6/12 12/12 Local officials and community leaders Local officials and community leaders Local officials and community leaders Local officials and community leaders Local officials and community leaders Consumer goods manufacturer Metals manufacturer Professional services business 6/12 12/12 Health care provider 1 6/12 1/13 Health care provider 1 6/12 12/12 11/12 4/13 8/6/2012 8/7/2012 Property management and retail company Hotel/resort industry organization Multiple local businesses Multiple local businesses In-depth financial, social, and environmental assessment of the region. Summit to present results of economic assessment and facilitate early-stage economic planning. Technical assistance to determine regional priorities and identify top four activities in program. Technical assistance in development of marketing plan and website. Technical assistance in development of financial literacy and leadership program. Technical assistance in development of an action plan for addressing natural resource opportunities. Conduct classes in leadership for current and potential local leaders to build regional leadership capacity. Financial, social, and environmental assessment of business, combined with technical assistance to identify alternate solutions for wastes. Financial, social, and environmental assessment of business. Financial, social, and environmental assessment of business. Financial, social, and environmental assessment of business. Financial, social, and environmental assessment of business. Financial, social, and environmental assessment of business. Technical assistance in job instruction to improve training performance of new employees. Training in the fundamentals of green manufacturing. 8 Training in techniques to reduce solid waste. 44

45 Project Title ID # Program Phase Dates Organization(s) Attendees Description CERRO GORDO COUNTY REGIONAL TRADE CENTER Regional Economic Development Events and Projects Regional Triple Bottom Line Economic Assessment N/A Sustainability Summit 8624 Regional Steering Committee Facilitation Mason City Sustainability Advisory Committee 8740 TBD Business Technical Assistance Projects How to Exploit the Innovation Cycle: Introduction How to Exploit the Innovation Cycle: Introduction How to Exploit the Innovation Cycle: Introduction How to Exploit the Innovation Cycle: Concept Definition How to Exploit the Innovation Cycle: Concept Discovery How to Exploit the Innovation Cycle: Product Development Forum Rapid Prototyping Assistance 8892 Rapid Prototyping Assistance 8894 Rapid Prototyping Assistance 8895 Applied Research Projects FY12 RTC #4 FY12 RTC #4 FY12 RTC #4 FY12 RTC #4 FY12 RTC #4 FY12 RTC #4 FY12 RTC #4 FY12 RTC #4 FY12 RTC #4 FY12 RTC #4 FY12 RTC #4 FY12 RTC #4 FY12 RTC #4 8/12 11/12 RTC 11/7/2012 Public event 57 2/13 7/13 Steering committee 42 3/13 7/13 1/15/2013 1/29/2013 2/5/2013 2/12/2013 3/19/2013 3/20/2013 2/13 4/13 2/13 4/13 3/13 5/13 Employee Wellness Program 8335 FY12 7/12 6/13 Employee Wellness Program 8590 FY12 11/12 7/13 Employee Wellness Program 8605 FY12 11/12 7/13 Sustainability committee appointed by Mason City mayor and City Council Multiple local businesses Multiple local businesses Multiple local businesses Multiple local businesses Multiple local businesses Multiple local businesses Farm equipment manufacturer Automotive equipment manufacturer Tooling manufacturer Consumer goods manufacturer Electronics equipment manufacturer Hydraulics equipment manufacturer In-depth financial, social, and environmental assessment of the region. Summit to present results of economic assessment and facilitate early-stage economic planning. Strategic planning event to identify projects to implement addressing triple bottom line indicators. Developing plans for implementing sustainability in all aspects of city government in Mason City. Held a workshop on the fundamentals of innovation for businesses. Held a workshop on the fundamentals of innovation for businesses. Held event on Innovation Cycle for regional leaders. Conducted open CREATE session for several companies to develop innovative product, process, service, marketing, and business model ideas. Held Concept Discovery workshop and educated on Real Win Worth tool to screen ideas. Held a forum on product development techniques to expose businesses to research and best practices in product development. Performed nine rapid prototyping projects in support of a new product development effort. Resulted in significant reduction in product development time. Performed three rapid prototyping projects in support of a new product concept. Printed concept was used as a test product for a trade show. Performed one rapid prototyping project in support of new product idea. Allowed fast market test and re-evaluation of design before a significant investment was made. Implementation of an employee wellness program. Implementation of an employee wellness program. Implementation of an employee wellness program. Note: Financial impacts of the activities described above are being collected and will be submitted on the GPRA report due August 31,

46 Appendix 3: Supply Chain Sustainability Assessment for SMEs The following pages provide an assessment of sustainability practices. This tool is intended to help SMEs understand their current practices in the triple bottom line across the supply chain. There are separate sections for financial, social, and environmental aspects of sustainability. Within each section, the assessment is separated into Supply, Internal Operations, and Customers and Distribution. To use the assessment, rate your current and planned activities in each of the items in the assessment. Once the assessment has been completed, review areas of low scores to determine potential elements for improvement. In considering these areas, review the potential impact to your business, relevance to your industry, and importance to your stakeholders. As described in the report, start with your internal operations and expand to other portions of the supply chain as appropriate. 46

47 Financial Supply Chain Sustainability Assessment Activities Explanation/Examples (if needed) Score (Current) Score (Planned) SUPPLY Tactical Understanding of Supplier Engagement in Sustainable Practices Local Supply Base Supplier Suggestion Program Strategic Early Supplier Involvement Surveyed your supply chain to understand what suppliers are engaging in sustainable practices and how it can benefit you Programs to maximize use of a local supply base Program in place to accept, analyze, and reward supplier suggestions in financial, social, and environmental initiatives Suppliers involved in new product design to provide input in financial, social, and environmental impacts of design decisions Supplier Coordination Total Cost of Ownership Analysis INTERNAL OPERATIONS Tactical Impacts of Defined Benefit Plan Obligations to Employees Employee Wage Analysis Understanding of Regional Economic Impact and Interconnections Environmental Cost Accounting Strategic Integrated Long-Term Business Strategy Strategic Alliances Corporate Policies and Procedures Risk Management Preparedness CUSTOMERS AND DISTRIBUTION Tactical Product Development and Innovation Strategic Surveillance of the Market for New Opportunities Coordinate with your suppliers by sharing information (demand, forecasts, etc.) to maximize efficiencies A defined process to consider costs beyond landed cost in evaluating supplier pricing (such as cost of quality, inventory, risks, etc.) If the business has defined benefit (pension) plans, is the financial impact understood and managed Analysis to determine wage competitiveness and long-term wage expectations Analysis of impacts of local operations on local environment (community), including financial, social, and environmental impacts; this includes aligning business philanthropic activities with your benefits Accounting for environmental costs, attempting to put a cost on environmental programs and projects Strategic plan covers financial, social, and environmental strategies Alliances with other businesses to jointly work on sustainability projects Detail and extent of consideration of sustainability throughout organization s policies/procedures Company has a risk management plan in place to identify and manage financial, social, and environmental risks Product development process includes sustainability considerations Formal process to identify growth opportunities, including opportunities from environmental or social initiatives 47

48 Social Supply Chain Sustainability Assessment Activities Explanation/Examples (if needed) Score (Current) Score (Planned) SUPPLY Tactical Human Rights Strategic Mission Statement Codes of Conduct INTERNAL OPERATIONS Tactical Workforce Analysis Safety Employee Training (Skills) Strategic Employee Performance Reviews Learning and Training (Mentoring) Commitment Rewards CUSTOMERS AND DISTRIBUTION Tactical Transportation Strategic Life Cycle Assessment (Consumer Health and Safety) Policy and processes in place to ensure suppliers meet human rights expectations (safety, right of association, child labor, etc.) Supply mission statement includes focus on supplier well-being in addition to business results Established codes of conduct for working with suppliers and other supply chain partners Understanding of current and projected workforce needs Existence of formal joint management/employee safety programs Formal employee qualification and training program Annual or greater conduct of employee performance reviews Employees are mentored and given opportunities to learn best practices within the company Written management goals include all aspects of the triple bottom line Employees are rewarded for developing ideas related to financial savings, social issues, and environmental impacts Logistics and transportation decisions consider the impact to our environment Efforts to understand the impacts of products on consumers throughout the entire life cycle 48

49 Environmental Supply Chain Sustainability Assessment Activities Explanation/Examples (if needed) Score (Current) Score (Planned) SUPPLY Tactical Suppliers Supplier selection criteria include environmental dimensions Environmental Standards for Suppliers Environmental Audits of Suppliers Packaging Strategic Best Practices INTERNAL OPERATIONS Tactical Substituting Environmentally Problematic Materials Remanufacturing Environmental Department/Teams Participation in Environmental Initiatives, Certification Programs Water Use Management Pollution/Chemical Management Solid Waste Management Energy Management Strategic Life Cycle Assessment (Environmental Impacts) Environmental Mission Statement Spreading Risk of Environmental Problems Employee Environmental Training Programs CUSTOMERS AND DISTRIBUTION Tactical Product Reclamation Strategic Design of Products Environmental Communications Specific Design Targets Environmental Risk Analysis Suppliers required to adhere to certain environmental performance standards Suppliers audited on environmental performance Returnable packaging, reduced packaging, recyclable packaging, environmentally responsible packaging, using packaging and pallets that can be returned after they are finished being used Benchmarking and best practices assessments are conducted with suppliers and other supply chain partners Replacing a material that can cause environmental problems with another material that is not problematic Rebuilding a product in which some of the parts or components are recovered Dedicated teams focused on integrating environmental initiatives For example, ISO 14000, Eco-Management and Audit Scheme, EPA, Green Lights, Green Seal, OSHA Programs in place to refuse/reduce/reuse/recycle Programs in place to refuse/reduce/reuse/recycle Programs in place to refuse/reduce/reuse/recycle Programs in place to refuse/reduce/reuse/recycle Efforts to understand the impacts of products throughout the entire life cycle from cradle to grave Leadership/Mission/Vision statement exists Use of a third party or expert to deal with environmental issues Environmental awareness and training programs exist for employees Process in place to reclaim end-of-life products from customers Eco-efficient products, eco-design, process improvement, design for environment Formal method to communicate with stakeholders on environmental issues Quantify and communicate environmental design goals and environmental impacts Assessment of risks of materials to the environment or to people 49

50 This Report Was Prepared Under an Award from the U.S. Department of Commerce Economic Development Administration EDA Grant No Iowa State University does not discriminate on the basis of race, color, age, ethnicity, religion, national origin, pregnancy, sexual orientation, gender identity, genetic information, sex, marital status, disability, or status as a U.S. veteran. Inquiries can be directed to the Office of Equal Opportunity, 3350 Beardshear Hall, HD13083