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INTRODUCTION

Greener by Design LLC has been tasked with assessing the role of sustainability in the exercise equipment industry. The purpose of this white-paper is to out-line the cost-benefits to SportsArt ECO- POWR™ (SAEP) for further alignment with the sustainability industry. SportsArt ECO-POWR™ is a pioneer in green systems that attached to an inverter that harnesses human-generated power from exercisers and feeds it back into the power grid as useable energy, which can offset the costs of a facility. Through this focused study on the SportsArt’s fitness line, key stakeholders in the industry and the consumer market will have a better understanding of the cost-benefits of environmental responsibility and sustainable best practices in comparison to exercise equipment lines that are not considering these measures.

Greener by Design sees the advantage of the further alignment with sustainability and the certification of green products as a demonstration of a company’s dedication to public safety and effort to provide a high level of product quality to customers.

“Sustainability can be a driver for increased engagement with current and new stakeholder relationships. Organizations are looking at implementing programs for improving the health of their employees, which can create a culture of health and also reduction f their carbon footprint.”

BACKGROUND/PROBLEMS

The total dollar amount of manufacturer’s, as reported by The Fitness Industry Suppliers Association was $708,178,501 in 2014, which increased by 11% from 2013 (Fitness Industry Suppliers Association, N.A., January 2014 through December 2014). There are several indicators that show that the fitness industry has significant staying power. Health club memberships increased from 47.7 million to an estimated 52.6 million during the five year period from 2008 to 2013. Those numbers will continue to rise as consumers pursue healthier lifestyles (Bixler, 2014).

The scope of competition in the exercise equipment industry is global; and global competiveness, especially in the manufacturing process, is something that the US exercise equipment industry has focused upon. Manufacturers in the exercise equipment industry look for opportunities to become more efficient and increase their bottom-line by reaching larger target audiences through commercial partnerships with distributors. This mixed marketing integration utilizes the internet to sell and advertise products, and create retail stores by forming partnerships with professional retailers. Backward integration also occurs when companies have acquired key suppliers and service providers. More so, companies are investing more in innovative ideas to differentiate their products in an effort to gain a competitive advantage over other companies in a market where products might tend to be similar. In the exercise equipment market, these differences are most evident in new technologies used to manufacture cutting edge products. One of the most difficult obstacles to overcome when entering the exercise equipment market is the consumers’ loyalty for existing brands. Demand is driven by consumer income and demographic trends. The profitability of individual companies depends on unique product designs and effective marketing. Large companies have some advantages in brand recognition, but small companies can compete effectively by building unique products. Companies have to spend more on research and development and marketing than legacy companies in order to survive and be successful.

than legacy companies in order to survive and be successful. “One of the most difficult obstacles

“One of the most difficult obstacles to overcome when entering the exercise equipment market is the consumers’ loyalty for existing brands.”

Major products are motorized treadmills, stationary bikes, stair climbers, rowing machines, and elliptical "cross-trainers," collectively called cardio equipment; and weightlifting machines ("strength training"), and traditional weightlifting equipment ("free weights" and benches). In addition, there are a large number of ancillary products. This equipment allows individuals to exercise by them-selves in a limited space. The two major market segments for fitness equipment are the home and the institutional exercise equipment market (including health clubs, corporations, apartments, and hotels).

SUSTAINABILITY

No matter how large or how profitable, businesses today do not stand alone. Businesses are inextricably linked with the societies in which they operate. Whether it’s to close a plant, move operations to a different country or set a price for a new product, every decision that is made affects the surrounding community and the natural environment, for better or worse. What was the origin of sustainability you might ask? Many consider Rachel Carson’s Silent Spring (Carson, 1962) to be the turning point in our understanding of the interconnections among the environment, the economy, and social well-being. Since then, many milestones have marked the journey toward sustainable development. Regulations, resulting from corporate scandals, the rising influence of non-governmental organizations, environmental concerns and the fact that nearly one-third of the world’s top 100 economic entities are corporations, not countries, have prompted the emergence of sustainability. Sustainability has been broadly equated with philanthropy, while others expand the definition to focus on regulatory compliance, business ethics, and the environment. The terminology may also refer to Corporate Social Responsibility, Corporate Citizenship, Triple P (People, Planet, Profit), Triple Bottom Line and “Being Green” often interchangeably. In this paper, “sustainability” will be referred to as the umbrella term.

Top Five Drivers for Sustainability 1

1. Cost and efficiency opportunities

2. Brand and competitive differentiation, customer requirements

3. Pressure from employees, shareholders, public

4. Government, regulatory pressures

5. Innovation and growth opportunities

Sustainability Defined The most widely recognized definition of sustainability is: "Meeting the needs of the
Sustainability
Defined
The most widely recognized
definition of sustainability is:
"Meeting the needs of the present
generation without compromising
the ability of future generations to
meet their needs."
—Brundtland (1987)
This definition describes the
balance that is needed between
the short term and the long term.
At the same time, a sustainable
business model also focuses on
the balance between your own
needs and those of your
environment:
“Sustainability entails a balanced
approach for organizations to
integrate stakeholder concerns
into business operations, in a way
that aims to benefit the
organization as well as its internal
and external stakeholders.”
—Based on definitions of ISO and
the European Union

1 Source: Forrester Research, The Evolution of Carbon and Energy Management Software, December 2010

METHODS FOR ORGANIZING SUSTAINABILITY

Set Goals

Include all stakeholder requirements and sustainability in your goal setting process

Organize to achieve them

Drive sustainability initiatives into financial and operating plans

Measure performance overtime

Monitor and analyze sustainability metrics and adjust goals and initiatives to ensure achievement of short-term and long-term goals

Report progress on sustainability initiatives to internal and external stakeholders 2

One example of an organization that measures performance is the Global Reporting Initiative (GRI), an independent non-governmental organization that was previously part of the United Nations, provides an effective way track environmental and social reporting. The GRI reporting framework is intended to serve as a generally accepted framework for reporting an organization’s economic, environmental, and social performance. GRI is a pioneer in sustainability reporting and is widely used around the world. Employees as well as customers look forward to GRI reports each year to become more familiar with their organization’s impact: employee engagement, sustainable practices, and customer health and safety. It helps to create more transparency between the organization and its stakeholders.

GRI is an international not-for-profit organization, with a network-based structure. Its activity involves thousands of professionals and organizations from many sectors, constituencies and regions. The Framework is developed collaboratively with their expert input: international working groups, stakeholder engagement, and due process – including Public Comment Periods – help make the Framework suitable and credible for all organizations.

- See more at: https://www.globalreporting.org/information/about-gri/what-is-

GRI/Pages/default.aspx#sthash.NeMz68fI.dpuf

2 O’Rourke, 2011

Table 1.1 GRI G4 Sustainability Reporting Framework

Category

Aspects

Economic

Economic Performance Market Presence Indirect Economic Impacts

Environmental

Materials Energy Water Biodiversity Emissions, effluents, and waste Products and services Compliance Transport Overall

Labor Practices

Employment Labor/management Relations Occupational Health and Safety Training and Education Diversity and Equal Opportunity

Human Rights

Investment and Procurement Non-Discrimination Freedom of Association and Collective Bargaining Child Labor Forced and Compulsory Labor Security Practices Indigenous Rights

Society

Community Corruption Public Policy Anti-Competitive Behavior Compliance

Product Responsibility

Customer Health and Safety Product and Service Labeling Marketing Communications Customer Privacy Compliance

Integration into Business Models

Companies can select an integrated approach to sustainability within their business models, which can create shareholder value, while also protecting the company from high-risk exposure. Risk management includes establishing clear codes of conduct and transparent operations. Common risks include:

§ Financial: avoid fines or higher interest rates imposed by banks that view your business as a high- risk association.

§ Operational: prevent safety, health, or environmental issues from shutting down operations.

§ Customer: limit the risk of negative corporate image alienating current or potential customers.

§ Strategic: don’t miss the opportunity to align with what your stakeholders require; and evaluate relationships with suppliers and channel partners for effective branding.

Increasingly, companies are devoting more resources to integrating sustainability into their business planning efforts, which provide numerous benefits for risk avoidance, stakeholder engagement, shareholder revenue, operational efficiency, customer attraction and retention, competitiveness, brand value and innovation.

Companies, such as Adidas and Nike may also look to the emergence of several sustainability-driven financial indexes, including the Dow Jones Sustainability Index, Ethibel, SERM, and FTSE4GOOD, which have helped investors make informed decisions by evaluating companies across a broad range of economic and environmental criteria. These indexes may consider policies the company has in place, how it reports on environmental impact and whether it monitors its suppliers. They typically also track external and internal social aspects, such as how the organization:

Consults various stakeholders in decision-making processes

Ensures equal opportunities for staff

Fosters human capital development

Complies with health and safety regulations

Embraces corporate philanthropy policies

Focuses on product safety

Companies, such as Adidas and Nike may also look to the emergence of several sustainability-driven financial indexes, which have helped investors make informed decisions by evaluating companies across a broad range of economic and environmental criteria.”

Sustainability indexes also track corporate governance issues, such as board composition, policies around ethical behavior and processes for risk and crisis management.

SORTING THROUGH THE GREEN PRODUCT MAZE FOR THE MULTI-FAMILY AND HOSPITALITY ORGANIZATION

The market for green products is exploding, from energy-efficient lighting to recyclable flooring. Thus, trademarks and symbols for green product certifications and labels are pervasive from: product packaging, manufacturers’ websites, print advertising, and trade show booths. Familiar names include: Greenguard, Green Seal, Energy Star, Environmentally Preferable Products and Services, and Building for Environmental and Economic Sustainability (BEES). Without these programs, specifiers would be left to sift through piles of product information filled

with invalidated claims from manufacturers to determine which products are right for the job. Green certifications, otherwise known as eco-labels, verify that a product meets specific standard via a third-party validation. Green certifications or labels are voluntary; therefore they are showcases for manufacturers genuinely interested in being taken seriously by facility executives who want to purchase products with verified green claims. Green product certifications and labels complement the U.S. Green Building Council’s LEED rating system as tools for facilitating a market shift to more environmentally responsible buildings. The difference lies in that LEED looks at the whole-building envelope while the green product certifications and labels look at the specific characteristics of the individual products LEED is the most recognizable rating system for whole-building green design, whereas green certifications each have their own criteria.

However, LEED and eco-labeling share the same goals to validate specific environmental criteria. It’s important for facility executives to separate green wash from verified environmental claims by assessing key criteria such as: low VOC emissions, energy efficiency, or high percentage recycled content, for example. Green certification and labeling bodies use vastly different standards, which range from: life cycle analysis, single-attribute certifications, multiple attribute certifications, processes and performance standards. Facility executives, especially in areas of multi-family housing and hospitality, should differentiate the spectrum of certifications by evaluating the transparency of the standard (easy to understand), its foundation in environmental science, and the standard’s ability to select only the upper echelon of products in a certain product category to achieve certification. The hospitality industry has increasingly recognized the importance of being green for their bottom line. The Green Hotel Association Invalid source specified. are environmentally friendly properties whose managers are eager to institute programs that save water, save energy, and reduce solid waste while saving money. Green Hotels provides a Catalog of Environmental Products for the Lodging Industry and a 157-page Membership Conservation Guidelines & Ideas.

“675.9 million square feet of real estate space became LEED certified in 2014, the largest area ever to become LEED certified in a single calendar year, and a 13.2% increase in total certified square-footage from 2013. (U.S. Green Building Council)”

THE GREEN GYM

A logical step for commercial real estate markets seems to be trending towards the greening of facilities,

notably in the hospitality industry. Hotel Fitness centers, for instance, have become models for sustainable design and operations. The two sectors share a common thread of achieving optimal health, both personal and environmental. Strategic planning, design and operations, can help fitness centers be at the forefront of the eminent shift to the incorporation of green practices within the fitness industry. Currently, there are only a handful of green fitness centers and there unfortunately is no standard for green gyms and equipment outside of LEED certification. Green gym design includes not only the incorporation of environmentally friendly products but also creating an environment that fosters the promotion of healthy living.

Fitness centers have unique challenges in respect to sustainable design and operations. Fitness centers use energy, deplete resources and generated heat via exercise only to be lost in the surrounding

environment as wasted energy. Fitness gyms in select case studies have adopted power-producing exercise machines by harnessing human energy. Equipment selection is a key criterion for the design phase. The main impedance to the wide-spread implementation of energy harvesting devices is regarding economy of scale – can an energy harvesting system harvest enough energy to offset the initial cost, and

is the cost per kilowatt hour (kWh) comparable to current energy generation methods? It is vital to

consider the predicted energy savings of the gym as well as the economic effect of a potential influx of customers at commercial fitness centers. In order to evaluate the effectives of a human-driven energy harvesting system, the workings of a gym lacking this technology must first be understood. To determine whether or not energy harvesting technology is beneficial, it is necessary to know the difference between a gym that harvests human energy and one that does not. The following questions can be used to model the benefits:

What are the facility’s annual energy costs, and how do these costs vary throughout the year?

How much energy is likely to be harvested with the proposed technology?

How much money could energy harvesting save the facility over a given time period?

What would the initial cost be to implement energy harvesting technology?

Does a correlation exist between energy usage and gym attendance?

Do enough people currently visit the facility to make the implementation of energy harvesting worthwhile?

Information from this methodology can be used as a case study for demonstrating the pros and cons of implementing energy harvesting into design.

“Infrastructural improvements to a green gym can enhance the customer’s experience in working out while giving back to the environment.”

SPOTLIGHT ON

SPOTLIGHT ON OUR MISSION SportsArt leverages eco-innovation, unique design and green manufacturing excellence to provide

OUR MISSION

SportsArt leverages eco-innovation, unique design and green manufacturing excellence to provide the fitness, medical, performance and wellness markets superior products, innovative programming, research- based education and unmatched support.

SportsArt is an established industry leader leveraging over 38 years of innovative design and manufacturing excellence. The company consistently seeks to advance industry standards, positioning itself as one of the most creative manufacturers of premium quality fitness, medical, performance and residential equipment. SportsArt is one of the largest single brand manufacturers in the world and is sold in over 70 countries worldwide. With over 500,000 square feet of state-of-the art manufacturing space; SportsArt designs, manufactures and tests all equipment to rigorous TÜV quality standards. with hundreds of patents worldwide for innovative technologies; such as the award winning ICARE™ system or the newly re-launched ECO-Powr series, SportsArt is the leading green fitness partner, developing products that are instrumental to rebuilding and sustaining lives.

Using innovation and technology to make the best fitness equipment, SportsArt technology is advanced, from factory to final product. Conducting business worldwide requires a commitment to product quality and safety. In addition to TÜV ISO 9001 quality certification, TÜV ISO 14001 certification for environmentally sound practices, and ISO 13485 Certification for Quality Management Systems, SportsArt products are also CE and ETL-C approved.

ECO-Powr

ECO-Powr consists of a group of cardio products that harness the energy of the user and feed it directly back into the grid by simply plugging it into a standard 120v wall outlet. Once users begin exercising, power is generated and fed back into the power grid to offset power consumption elsewhere in the facility Club owners who replace all of their ellipticals and cycles with the ECO-Powr products will see significant power offsets savings. See diagram 1 and 2 below to illustrate the ECO-Powr process.

In one hour, ten ECO-POWR products can generate up to 2000 watts of power. See Diagram 3 below to illustrate the carbon footprint impact of ECO-Powr.

DIAGRAM 1.0- Demonstration Of The Eco-Powr Process

DIAGRAM 1.0- Demonstration Of The Eco-Powr Process DIAGRAM 2.0- Simplified Schematic Of The Inverter Process Gail

DIAGRAM 2.0- Simplified Schematic Of The Inverter Process

DIAGRAM 2.0- Simplified Schematic Of The Inverter Process Gail Lalla | Role of Sustainability in the

DIAGRAM 3- Carbon footprint of Eco-Powr

DIAGRAM 3- Carbon footprint of Eco-Powr CONCLUSION SportsArt has the ability to directly address obstacles in

CONCLUSION

SportsArt has the ability to directly address obstacles in the industry by further differentiating its existing brand from its competitors. The nexus between sustainability and exercise equipment has not been thoroughly marketed in the fitness industry as a whole. Corporate environmental responsibility is also an emerging trend that consumers are increasingly vested in following. There is a clear need for expanding on this niche market angle of sustainability. Green issues are highly technical, complex, and fast moving, but with a streamlined approach, Sports Art can further accomplish its alignment with the sustainability industry while overcoming the current challenges the industry faces.

ABOUT SPORTSART

SportsArt Fitness is an industry leader in the design and manufacturing of high quality cardiovascular and strength equipment for home and commercial use. SportsArt retains control over every aspect of component design and the overall manufacturing process, ensuring proper integration, maximum performance and longer product life. SportsArt Fitness holds T ϋ V and ISO 9001/9002 quality certifications and hundreds of worldwide patents for their innovations.

SportsArt’s Taiwan factory also holds an ISO-14001 certification, which certifies that the company is committed to identifying and controlling the environmental impact of business activities, products and services, and continually improving environmental performance by implementing a systematic approach to setting environmental objectives and targets. For more information on the SportsArt Fitness brand and their latest products visit us on the web at www.gosportsart.com.

ABOUT GREENER BY DESIGN

Strategies And Solutions With Innovative Vision

Greener by Design LLC (GbD) provides comprehensive energy, environmental and regulatory compliance services. GbD is a uniquely qualified boutique firm of experienced, results oriented problem solvers and a dynamic mix of experienced research analysts, financial management experts, energy engineers and environmental planning professionals. Our team offers the knowledge, ability, willingness, and relationships needed to assist in a wide variety of situations and projects. We are constantly updating our offerings to keep in line with changing regulations and savings for our clients. Our primary aim is to:

“Increase your bottom line revenue while reducing your environmental impact.”

Greener by Design provides expertise on how technology, innovation, and policy will influence project development and delivers a full range of consulting and project management services while increasing bottom line profitability.

Greener by Design offers the personal focused attention and staff resources to hand-tailor projects to fit each client’s specific needs in the following areas:

GbD supports operations in resort destination markets with a focus on mixed-use commercial properties including
GbD supports operations in resort
destination markets with a focus
on mixed-use commercial
properties including hotels,
resorts, golf courses, restaurants,
casinos, retail operations, and
other select assets across the
United States and the Caribbean.
GbD’s range of consulting,
engineering and project
management services provides
public and private clients with the
ability to meet or exceed
regulatory requirements and
create a healthier environment.
To learn more about Greener by
Design’s solutions please visit:
www.gbdtoday.com
or contact us at 732-253-7717.
visit: www.gbdtoday.com or contact us at 732-253-7717. Gail Lalla | Role of Sustainability in the Exercise