Cultivating a Greener Bottom Line
Businesses are starting to deal proactively with environmental issues
- By Katie McCarthy
- Sep 01, 2007
Radical change is coming to the
business world. In the 21st century,
many corporations are not
just thinking about their bottom line,
they also are thinking about their influences
on the Earth. Public relations
and marketing campaigns often focus
on how companies are at the forefront
of social responsibility.
Some individual corporations
account for some of the largest
economies in the world. With
operations spanning across continents,
corporate responsibility is a
significant factor in environmental
management.
It may be that many corporations
are becoming better environmental citizens
and that change will affect not
only how business is done in the future,
but also the world’s future ecosystems.
Many corporations increasingly
claim that they are more environmentally
responsible. Companies are entering
a time of environmental marketbased
solutions, energy-efficient solutions,
and superior products that move
the industry forward. Corporations are
releasing products such as hybrid vehicles,
energy-efficient appliances, and
less hazardous electronics. Companies
also are proactively managing their
effects on climate change by reducing
their greenhouse gas emissions. The
company of the 21st century is changing
and business leaders are ready to
rethink their environmental impacts.
With new developments, new campaigns,
and different business practices,
could corporations be changing the
way business is conducted?
Is it all just greenwash? Or could corporate
America be genuinely greening?
Climate Impact
Green practices often involve a company
reducing its greenhouse gas
emissions. In an era when emissions
have continued to rise, taking a step
toward reduction is not only good to
pre-empt regulation but good for the
environment as well.
U.S. emissions of carbon dioxide and
other greenhouse gases continue to
grow. Emissions increased 16.3 percent
since 1990 and in 2005 alone they
increased 0.8 percent, according to the
Feb. 20 report, “Inventory of U.S.
Greenhouse Gas Emissions and Sinks:
1990-2005,” by the U.S. Environmental
Protection Agency (EPA). EPA links
the increase in greenhouse gas emissions
to economic growth measured at
a 55-percent increase in the gross
domestic product during the same 16-
year period.
EPA also reports that globally, the
United States accounts for 22 percent
of carbon dioxide emissions. Carbon
dioxide is one of the greenhouse gases
that experts say contributes to global
warming.
Internationally, the U.N. Climate
Change Conference, held in November,
opened with a warning that climate
change will be one of the greatest challenges
facing the human population.
The United Nations also led a call for
action to limit global warming and to
assist developing countries that will
have to adapt to a new climate.
Shortly before the conference, Achim
Steiner, U.N. under-secretary general
and executive director of the U.N. Environment
Programme, said, “Climate
change is under way and the international
community must respond by
offering well-targeted assistance to
those countries in the front-line which
are facing increasing impacts such as
extreme droughts and floods and
threats to infrastructure from phenomena
like rising sea levels.”
Climate change isn’t a new challenge
for businesses. Smart corporations like
DuPont and Alcoa have aggressively
reduced their own greenhouse gas
emissions. DuPont, as the largest supplier
of fluorocarbons, played a critical
role in resolving global environmental
concerns posed by chlorofluorocarbons,
or CFCs. In 1988, Dupont learned that
CFCs like Freon refrigerants were
depleting the earth’s stratospheric
ozone layer. In order to stop the damage,
Dupont decided to end its production
of Freon as well as other CFCbased
products. By 1990, Dupont had
filed 20 patents for non-CFC refrigerants.
DuPont rose as an industry leader by
developing alternative products to
those with CFCs. Dupont also went
beyond compliance by lowering its carbon
dioxide emissions 60 percent from
1990 levels voluntarily. DuPont recently
announced that it is working to create
cleaner manufacturing products
from renewable resources.
Along with Dupont, Alcoa also is a
leader in minimizing climate change
impact. Alcoa has reduced its greenhouse
gas emissions by 25 percent
since 1990. The goal was reached
seven years ahead of Alcoa’s 2010 target
date by aggressive reductions of
perfluorocarbon (PFC) emissions.
Through strong reductions in their
greenhouse gas emissions, DuPont and
Alcoa demonstrated that corporations
can change their business practices and
affect the environment. These two market
leaders are going beyond their own
interest by pushing for nationwide regulation
of greenhouse gases with the
U.S. Climate Action Partnerships
(USCAP).
Partnership Power
USCAP is composed of multinational
corporations DuPont, Alcoa, BP America,
Caterpillar, Duke Energy, FPL Group,
General Electric, Lehman Brothers,
PG&E, and PMN Resources along with
four nongovernmental organizations
(NGOs) — Environmental Defense, Natural
Resources Defense Council (NRDC),
Pew Center on Global Climate Change,
and World Resources Institute. Together,
the groups are working to mitigate
climate change.
USCAP is calling for the federal government
to quickly enact strong national
legislation to achieve significant
reductions in greenhouse gas emissions.
Organizations like USCAP allow corporations
to advocate what regulation
demands they will have to deal with in
the future.
For example, USCAP urges federal
policy makers to mandate reductions in
greenhouse gas emissions from emitting
sources and to limit energy use in commercial
and residential buildings.
USCAP also is calling for Congressional
leadership to establish short- and midterm
emissions reduction targets. The
group wants a cap-and-trade program.
A market-based policy tool for protecting
human health and the environment,
cap and trade sets an aggressive
cap, or maximum limit, on emissions,
according to EPA. Companies with pollution
sources covered by the program
would receive emission allowances,
with the total amount of allowances
capped. Companies that pollute beyond
their allowances must buy credits from
other companies that pollute less than
their allowances. The system of transfer
is known as a trade.
Along with emission reductions,
USCAP is lobbying for accelerated technology
research and development related
to greener technology across the nation.
Reporting on the new partnership,
Chairman and CEO of General Electric
Jeff Immelt said, “The time has come for
constructive action that draws strength
equally from business, government, and
nongovernmental stakeholders.”
The cooperation between these business
and environmental leaders should
be a clear sign to lawmakers that legislative
action is needed. The companies
involved in USCAP represent a combined
market capitalization of more
than $750 billion and environmental
groups with more than 1 million members
worldwide with global policy influence,
according to the NRDC.
“The Climate Action Partnership recognizes
that the undertaking to address
climate change is an enormous one,
and should not be underestimated. But
enacting environmentally effective, economically
sustainable, and fair climate
change law must be a national priority,”
said Jonathan Lash, president of the
World Resources Institute.
USCAP demonstrates how NGOs link
lobbying strategies with corporate campaigns.
Smart NGOs affect whole industries
by finding industry leaders and
companies responsive to their
campaigns.
NGO Action
One such example relates to how NRDC
helped shape the pending $45 billion
buyout of the TXU Corp. Investors from
Kohlberg Kravis Roberts & Co. and
Texas Pacific Group relied on NRDC to
help broker a deal that withdrew permits
for eight of 11 pulverized coal
plants proposed in Texas. The planned
11 pulverized coal plants would have
emitted 78 million tons of carbon diox-ide into the atmosphere.
The proposed new TXU, under
Kohlberg Kravis Roberts & Co. and Texas
Pacific Group, supports a mandatory
nationwide limit on global warming
emissions paired with a market-based
emissions trading systems, and plans to
join USCAP, according to the NRDC.
“This is the new standard by which
new energy investments in this country
are going to be measured. The smart
money is now on clean energy and lower
emissions. This is a breakthrough that will
have lasting implications for future energy
investments in this country and for the
policymakers who set the rules of the
road,” said David Hawkins, a former top
EPA official and head of the NRDC’s climate
program.
Aims to limit total carbon dioxide emissions
from its generating operations and to
reduce them over time, as well as pledges
not to propose any additional traditional
pulverized coal plants outside of Texas,
show that this new company is serious
about its effect on the environment.
Waste Issues
Along with limiting greenhouse gas
emissions, more companies are reducing
the amount of hazardous chemicals
in their products, conserving
resources through better packaging,
and finding ways to recycle electronic
waste (e-waste).
The problem of e-waste disposal continues
to grow. In December, the U.N.
Environment Programme reported that
20 million to 50 million metric tons of
e-waste, including lead, cadmium, mercury,
and other hazardous substances,
are generated worldwide every year. But
while the e-waste is growing, the e-recycling
movement also continues to grow.
The National Safety Council estimates
more than 40 million units of electronic
equipment will be recycled in 2007,
with notebook personal computers and
desktop central processing units experiencing
significant growth in recovery.
E-waste is being addressed in the government
and private sectors. Legislators
are calling for new recycling standards.
In absence of a federal ban on landfill
disposal of e-waste, the states of
Arkansas, California, Maine, Massachusetts,
Minnesota, New Hampshire, and
Rhode Island have developed their own
bans to keep e-waste out of landfills.
As states address the e-waste issue,
corporations are doing their part too. A
number of original equipment manufacturers
— including Compaq, Dell,
Gateway, Hewlett-Packard, IBM, and
Micron — offer leasing and take-back
services, according to EPA.
E-waste is a big deal to Apple Inc.
Apple recently released “A Greener
Apple,” a statement from CEO and cofounder
Steve Jobs addressing Apple’s
reduction of toxic chemicals in its products
as well as increased recycling of its
old products. Apple completely eliminated
the use of cathode-ray tubes (CRT) in
its products in 2006. Apple products
also comply with European standards
for toxic substance restriction. European
standards are stronger than those
in the United States for electronic products.
The European Restriction of Hazardous
Substance Directive (RoHS)
standard, in effect since July 2006,
places reductions on toxins such as cadmium,
hexavalent chromium, and
brominated flame retardants. Apple was
in accordance with the standards a year
before RoHS took effect.
On the e-cycling side, Apple recycled
13 million pounds of e-waste in 2006,
according to Jobs. This was achieved by
Apple re-evaluating its practices and
developing new products.
Another company that has seen great
success with rethinking its logistics and
environmental impact is Wal-Mart
Stores Inc.
With its sustainability efforts, Wal-
Mart wants to create zero waste. Wal-
Mart also aims to reduce solid waste by
25 percent in three years and improve
its private brand packaging in two
years. Wal-Mart has already reduced
packaging in order to ship more efficiently,
allowing less energy to be used
and less waste for the customer who
receives the product. One of Wal-Mart’s
most innovative projects is a baling system
called the “sandwich bale.” The
bale allows for plastic to be recycled
more easily. The plastic is pressed
between two stacks of cardboard, like a
sandwich, then bundled for transportation.
Wal-Mart used the technology at
326 stores this year, diverting 1,100
tons of plastic from landfills.
Both Apple and Wal-Mart are thinking
of new solutions to take care of
waste. Reducing waste is just one way
that companies can think about sustainability.
As corporations grow,
becoming green may mean rethinking
the very products they’re building.
The Future
“We’re living in an important and
exciting time where going global and
going green is colliding,” said Bruce
Piasecki, president and founder of the
America Hazard Control Group, a
management consulting firm.
In his book, “World Inc.,” Piasecki
surveyed the 300 largest corporations
in the world, concluding that firms in
the 21st century need a new form of
capitalism in order to survive —
socially responsible capitalism. In
order to succeed, companies must
compete on price, technical quality,
and social needs. Corporations will be
responsible for the world’s future
needs facing challenges such as poverty,
water scarcity, and a changing economic
climate mostly due to their size.
Fifty-one of the 100 biggest economies
in the world are now corporations;
only 49 are countries, according
to Piasecki. And as much as 40
percent of world trade now occurs
within multinational corporations,
Piasecki said.
Facing the reality of climate change
and an escalation of fossil fuel prices,
companies that prepare for the future
will survive.
The environmental community is
playing an increasingly important role
in not only defining corporate failure,
but celebrating corporate success.
Going green not only boosts a corporation’s
reputation, but it may also dictate
its place in the market.
Forward-thinking corporations may
bring in increased profits.
The Toyota Prius, a hybrid sedan, is
one such green success story. By developing
a cleaner car ahead of its competition,
Toyota saw a record $10.5
billion profit in 2005, in part due to
the Prius. Other companies that are
now jumping on the hybrid craze are
buying many of their parts from firms
partially owned by Toyota, according
to Piasecki.
As more products like the Prius
come to market, the business community
and the environmental community
will continue to envision future
greener economies.
Dave McCurdy believes that the
environmental community will have a
large impact on the corporation of the
future. McCurdy, an executive vice
president of Enviance, has helped
some of the nation’s largest corporations,
including Chevron, DuPont, 7-
Eleven, and Johnson & Johnson, manage
their environmental compliance.
He said companies know that environmental
compliance makes good
business sense.
“These environmental professionals,
these environmental leaders, they are
focused on doing the right things. The
idea that protecting the environment
and protecting your people is good
business is not a new idea. And it’s
a belief that has been closely held
by the biggest companies in the
world for a long time,” McCurdy said.
Green Leaders
Forward Management LLC, an investment adviser, recently announced its second
annual “Forward Green Leaders,” a short-list of U.S. large-cap public companies
whose environmental practices are innovative and progressive. A large-cap company
has a market capitalization of $5 billion or more. Leaders were selected from the
top 100 large-cap companies that meet the environmental criteria for the Sierra
Club Stock Fund and the Sierra Club Equity Income Fund. The top five are Bank of
America, Hewlett-Packard Co., Dell Inc., Whole Foods Market Inc., and Google.
• Bank of America is building a Leadership in Energy and Environmental Designcertified
52-story office building in New York. The Leadership in Energy and Environmental
Design (LEED) program is administered by the U.S. Green Building
Council.
• Hewlett-Packard’s Design for Environment guidelines introduce environmentally
sound practices into its full product development and manufacturing process. HP
is focusing heavily on building energy-efficient products, reducing raw materials
used in the manufacturing process, and product recycling.
• As the first major personal computer maker to commit to specific recycling goals
for computers, Dell continues to be a leader in environmental practices. Dell
established strict criteria for its recycling vendors, set up recycling programs with
a global reuse or recycle rate of 80 percent in each of Dell’s office and manufacturing
facilities, and participated in a number of EPA voluntary programs, including
Energy Star Green Buildings, Climate Wise, and Waste Wise.
• Whole Foods is going beyond organic by including an emphasis on local, ethical,
sustainable, and humane farming. Whole Foods Market has founded a $30 million
venture capital fund to invest in small artisans producing regional foods, allowing
for food to be shipped shorter distances from farm to market, reducing fuel consumption
and air emissions from vehicles.
• Google has begun building the nation’s largest solar electricity system at its
Mountain View, Calif. headquarters. Panels are being built for the entire campus,
and the roofs of its four main buildings and three adjacent buildings will
be decked |
Green Losers
At the 2002 Johannesburg Earth Summit,
the Greenwash Academy Awards
were held awarding BP for its Beyond
Petroleum campaign and its “Oil is old
news, Solar is the future” ad campaign.
One of the largest complaints from the
academy was that BP bragged about
investing $200 million in solar energy.
The figure may sound large to some,
but that’s the price of a single refinery,
chemical plant, or golf resort, according
to the academy. Also, that $200 million
is spread across six years.
Runners-up included mining corporations
and the OECD Guidelines for
Multinational Enterprises. In 2002, the
Newmont Mining Corp., the world’s
largest gold mining company, promoted
the Toxics Release Inventory in the corporate
social responsibility section of its
Web site, but for Latin America’s largest
gold mine, Minera Yanacocha in Peru,
Newmont provides no such information.
Yanococha faced ongoing allegations of
pollution of dikes, ditches, rivers, and
other environmental contamination dating
back to 1993. The OECD Guidelines
for Multinational Enterprises have disclosure
provisions, but they are voluntary.
Newmont didn’t receive the Oscar
because the OECD Guidelines for Multinational
Enterprises are ignored by
almost all mining corporations, according
to the academy. |
This article originally appeared in the 09/01/2007 issue of Environmental Protection.
About the Author
Katie McCarthy is the managing editor of Environmental Protection News and Waste Management News. She holds a bachelor's degree in journalism from the University of Arizona. She can be contacted at (972) 687-6715.