What does Walmart, Aveda, Ben and Jerry’s and Sun Microsystems all have in common? Corporate Greenhouse Gas (GHG) reduction strategies.
A growing trend in corporations is to actively pursue plans and policies to address GHG emissions. This trend is not being driven by the widespread acceptance of the science behind climate change but rather by the business case for improving bottom-line results through aggressively increasing operating efficiencies while hedging against future liabilities. What was once dismissed in boardrooms as tree-hugging philosophies is now eagerly embraced and trumpeted by CEOs right on through to the ranks of entry-level employees.
New titles and divisions have emerged to manage and implement these strategies. Titles such as Vice-President of Sustainability and Director of Eco Responsibility are now commonplace in many of the world’s largest corporate organizational charts. Two recent conferences focused on this subject, providing insight into how this trend is taking shape and the resulting changes on business operations. In Ottawa, the World Wildlife Foundation and the Canadian Centre for Policy Ingenuity held a one-day event titled “The Business of Climate Change.” Notable speakers were Paul O’Neill, the 72nd Secretary of the US Treasury, Jeffery Simpson, a Columnist with the Globe and Mail, Elyse Allan, President and CEO of GE Canada, and Avrim Lazar, President and CEO, Forest Products Association of Canada. Days later in New York City, Reuters held a two-day conference called “Corporate Climate Response” at their Times Square headquarters. Representatives from numerous companies like Walmart, Sun Microsystems, AMD, Ben and Jerry’s, NFL, Staples, and Whole Foods gave presentations on their own corporations’ strategies.
A theme consistently reiterated at both events was that acting on climate change is good for business. It was also noted that certain political parties, companies and lobbyists have spent numerous resources over the years trying to propagate a myth stating the opposite. Those scare tactics resulted in many companies delaying action and thereby throwing away millions of dollars in inefficiencies and other wastes while continuing to grow their GHG emissions. Efforts to correct the damage done by this myth continues today and is further complicated by the mainstream media’s propensity to label corporate environmental policies as “green washing”—a tactic where a company adopts an environmental policy for the sole purpose of boosting their own public image. This fear of the “green washing” label has kept many companies quiet about their own internal efforts to act on climate change.
The main strategy being adopted by corporations is three fold: increase efficiency, reduce waste, and finance carbon off-set projects with the overall goal of reducing absolute GHG emissions while increasing bottom-line performance. To increase efficiency, the low-hanging fruit is targeted first. Step one is to change all lighting. Incandescent lights are replaced with high-efficiency compact-fluorescents, and the common straight-tube fluorescent (T12) lights are replaced with the new T8 standard tubes and ballasts which result in a 40% energy reduction and also results in brighter, longer-lasting lights. The savings that companies have found from completing this one simple step have been staggering. Many stated that it was unbelievable they had never done this before due to the on-going money savings that resulted. Motion sensors on lights and policies for shutting down appliances like computers provided further savings. Replacing appliances with newer efficient models, especially for space cooling, was also mentioned.
Reducing waste materials was something that many companies had never considered in the past. The savings in this area, especially for a manufacturer, were numerous. Interface, a carpet manufacturer, is now using recycled carpet as a feedstock. This step has significantly reduced the embodied energy contained in their raw materials and closes the loop on the resources they use.
Patagonia, the clothing manufacturer, is doing the same with some of their clothing lines. What was once sent to landfills as waste is now re-used as a core input to produce the product. Since many feedstocks are petroleum-based, the savings from using recycled materials have been large, and the added hedge against future petroleum prices has come as a welcomed bonus.
To make further reductions in GHG emissions, companies are investing in carbon off-sets such as paying a premium to get a certain percentage of their power from renewable resources like wind or solar. Some companies are also buying offsets for the commuting their employees do while on the job. These purchases allow a company to deduct a corresponding amount from their GHG emissions. The money spent on buying this type of offset is then invested into projects that are beneficial to addressing climate change, such as wind farms, biomass generation from landfills, solar projects, etc. One interesting company that provides offset opportunities is Sun Edison. They are in the business of providing solar power to companies with no up-front capital investment. Sun Edison has installed and maintained solar panel arrays on top of a number of Staple’s stores. This provides Staples with electricity directly from a renewable source, a fixed electricity price set for the next 20 years, and income from selling excess power during peak load times—not to mention the obvious reductions in GHG emissions.
It was noted by many of the companies presenting that, once strategies are put into play, a snowball effect from within the corporation takes hold. The C-level executives interest is raised when they start seeing the money saved, and even generated in some cases, by making their operations efficient. Employees come on-board and happily adopt the new policies. The environmental department then begins receiving ideas and questions from across the organization on how to make further improvements. These conferences provided a glimpse into the interest and momentum among many companies in increasing efficiency while reducing GHG emissions. The experiences of these early adopters of environmental policies have shown that addressing climate change is a business opportunity, not a business cost. The organizational make-up of companies are slowly changing to integrate these types of policies into part of their core operations.
What I witnessed in both Ottawa and New York City were the beginnings of a fundamental shift in how corporations conduct their operations. The good news is that the opportunity for making environmental improvements and emission reductions is enormous. Unfortunately, that’s also the bad news.
