The Right Growth at the Right Time

Growth at any cost – these times are over. Companies that apply principles of sustainability have other important objectives. Hence, natural limits of growth emerge – or there are simply no limits, because there is still a lot of room left for the green and blue growth of a sustainable economy; considerable room exists for companies striving to grow, to stimulate growth, to subdivide or to not growth.  

By Ralf Bindel, translated from the German by Larissa Burkart, Christine Kühn and Theresa Lupek

The GLS Bank: growing in order to achieve more sustainability

© Frank Rogner
Headquarters of the GLS Bank in Bochum

There's a full house again – even though it is Saturday: more than 600 members have come to Bochum, where the headquarters of the GLS Bank is situated. The members want the bank to enable greater social change. For this purpose, the bank needs to increase its equity capital in order to finance the ecologically and socially equitable real economy.

It is already the second general meeting that takes place in 2011, this time, however, it is an 'extraordinary' shareholders' meeting. It provides a further demonstration of the bank's sustained growth: in 2010, the balance sheet total increased by more than 37 per cent and the total value of granted loans increased by 22 per cent. On average, the bank gains 2,000 new customers per month. These customers want to choose the area where their money will be invested in, or they need loans for projects such as organic farming, social facilities, or ecological construction.

According to press officer Christof Lützel, the bank feels the effects of the financial market crisis in a positive way. More and more people do care about how their money is spent. The bank only finances sustainable businesses, ranging from organic food stores to solar energy projects. By publishing regular reports on granted loans, the bank brings about transparency, which is appealing to members and customers. Since the number of employees rose by 34 per cent to reach almost 400 employees, additional office space is needed which will be provided by a building located next to the headquarters. The headquarters is being remodelled pursuant to the Gold Standards set up by the German Society for Sustainable Construction.

Thomas Jorberg, spokesman of the management board, says that the bank's growth is sustainable in order to enable more sustainability. He does not object to growth – as long as it is true, ecologically and socially equitable growth. This is the reason why the general meeting was held, where the introduction of a dividend on shares was accepted with a large majority of 94 per cent. Thomas Jorberg is convinced that, by taking this step, they are creating the prerequisites for increasing the number of members and the amount of the equity capital. Sustainable development grows together with the bank's growth – and vice versa.

The municipal utilities of the city of Bochum: more 'eco' from electricity

© Municipal Utilities Bochum
The new administrative building of the Municipal Utilities Bochum

We are still in the same city, but a few hundred meters away, close to the central station: the new administrative building of the Municipal Utilities Bochum (Stadtwerke Bochum) is built on concrete piles for the use of geothermal heat. For two years, they have been providing electricity all over Germany; soon they are going to provide gas throughout the country as well. Their influence has grown and so did their responsibility.

On the one hand, the liberalisation of the energy markets has strengthened the position of four large energy companies that own a large complex of nuclear and fossil power plants and network operators; on the other hand, however, it enabled small municipal utilities to gain more strength in the market. The most famous example can be found in the case of the ‘electricity rebels’ who founded the company EWS Schönau, situated in the Black Forest, which is one of the four major providers of green electricity nationwide.

The Municipal Utilities Bochum also offer green electricity: affordable electricity from Austrian hydroelectric power plants (one euro more per month), or higher-priced tariffs for the development of locally based renewable energy sources. At the same time, they are building their first offshore wind farm in cooperation with a number of other municipal utilities; Trianel, a European-wide operating company, directs the project. Nevertheless, Trianel is still building coal-fired and gas-fired power plants.

The municipal utilities are operating locally and under democratic control and the fact that they are growing puts pressure on the former monopolists. Their traditional locations are changing because urban population is declining or saving electricity, gas, and water; when working together, the municipal utilities gain a stronger position in the market in order to provide large capacities as well as a large network. The primary objective of the Municipal Utilities Bochum is to strengthen local energy sources as well as co-generation plants for combined heat and power electricity generation.

The decentralised supply through regionally situated small hydroelectric power plants, composting plants, coal mine methane plants, co-generation plants, and photovoltaic roof systems is growing faster than it is the case with large energy groups such as RWE and EnBW. According to Thomas Schönberg, the company's press officer, growth is not their corporate objective. Instead, they wish to satisfy as many customers as possible.

When the balance sheet total increases, there is also enough economic strength left to co-finance the local public transport system, or to accomplish the re-municipalisation of other electricity and water suppliers. Here as well, growth is in the interest of the municipality. According to Schönberg, the municipal utilities in Bochum is just one of many municipal utilities which follow the same principles.

The municipal utilities in the city of Munich: more 'bio' throughout the country

© Stadtwerke München
Organic farm in the Mangfalltal valley

Let's stay with the municipal utilities, but let's go 600 kilometres southwest of Bochum and the Ruhr Area to Munich. Being one of only a few German cities with a positive residential development, Munich has been experiencing a baby boom since 2009. The Munich City Utilities (Stadtwerke München, known as the SWM for short), Germany's largest municipal supplier of electricity, gas, water, district heating, and public pools, is expanding.

In Munich, home to 1.3 million residents, about 170,000 customers already obtain green electricity from hydroelectric power; further eco tariffs promote regionally situated hydroelectric power plants. The inhabitants of Munich also have electricity for the popular e-bikes and for future e-cars, the electricity being only renewably generated in an environmentally responsible way. The contribution of renewable energies to the city's energy supply is supposed to increase: the SWM could be able to produce enough green electricity at their own plants to meet the requirements of the entire municipality of Munich by the year 2025.

The particular aspect, however, is that organic farming is growing around the city of Munich, promoted by the SWM. Other than many European cities where water supply has been privatised and for which negative impacts the residents have to count the cost now (literally), the SWM have been acquiring pieces of land during the past few decades in order to ensure the quality of drinking water. The SWM lease the pieces of land within the water supply catchment area of the water intake facilities to organic farmers only. The lease is on favourable terms in order to make sure that those who have not been organic farmers by then will start organic farming.

The concept is working out: already more than 110 farmers have been shifting to conservation of resources and appropriate livestock farming since 1992. According to what Christian Ude, Munich's mayor, says in the documentary Water Makes Money, the organic farmers are responsible for 2,700 hectares, which is the largest connected organic farmland area throughout Europe.

The SWM support the farmers financially and assist them in terms of the commercialisation of their organic products. Both parties benefit from the concept: the inhabitants of Munich ensure the quality of their water and keep the efforts and costs for water treatment at a low level, while increasing the supply of healthy products from the local area and safeguarding livelihoods at the same time.

In the documentary 'Water Makes Money', Munich's concept serves as a model for the water supply in Paris, where they have just begun to apply a similar concept – after the remunicipalisation of its water supply service. As for the German-French co-production, an english trailer is available on YouTube.

W. L. Gore & Associates: Staying small in order to grow

Gore & Associates Logo

Starting in Munich, we are crossing the big pond to learn about growth consulting for companies. We are visiting W. L. Gore and Associates, whose headquarters are in Newark, Delaware, which is located in the middle of the US East Coast and is the second smallest state in terms of surface area. Delaware owes its wealth to the DuPont family, founders of one of the biggest chemical groups in the world.

The chemist Wilbert Lee "Bill" Gore worked here for 16 years until he and his wife started their own business in 1958. He worked with Polytetrafluoroethylene, the famous PTFE, which is better known by the registered name Teflon by DuPont. He used this substance to develop Gore-Tex, the textile fibre membranes used for waterproof, air-permeable clothes.

As well-known as the insulating, weather-resistant fibre is, we know little about the anti-growth-culture of this multi-billion dollar company. This culture has led the company to achieve continuous growth in regard to its balance sheet total, number of employees, patents and products. However, this only occurs in units of about 150 employees.

This number, which is identical to the so-called Dunbar number, has proven itself to be key for a functional growth process at Gore. Bill Gore once said in an interview that in his experience, growth becomes difficult once they exceed this number. Therefore the company builds new factories and buildings, but all of them are autonomous units within the company.

One of the 'associates' explained that one aspect of the company’s growth principle is that every new factory comes with a parking lot that houses 150 cars. Once they see people parking on the lawn, they know that the time has come to build a new factory. At Gore, all employees are referred to as 'partners'. There are no official titles, regardless of salary, responsibilities or duration of employment.

There are no department managers, bosses or supervisors but rather sponsors and mentors, which the employees elect themselves based on who they think is best suited for those tasks. There are no organigrams, no budget or strategy plans and salaries are agreed upon in democratic fashion. The most appealing rooms in the buildings are either conference rooms or open-access areas, so that nobody can distinguish themselves based on the location of their office.

Gore & Associates is regularly among the top ten of the world‘s most popular employers. Gore & A., which started as a small company with few employees in the 1960s, has become a private association of enterprises with a turnover of USD 3 billion and 9500 employees ? pardon, associates, who work in autonomous units of 150 people in 30 countries and only have to adhere to the company‘s corporate culture.

This is a fascinating model for growth, which is based on the empirical Dunbar number. This number defines social groups of about 80 to 230 individual members as the most vital, innovative and resilient groups. There are two Gore factories in Germany: both are located near Munich and employ no more than 150 associates each.

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