January 28, 2008
With dozens of magazine covers and news features, television shows, books, products, feature films, and even a NobelPeace Prize, climate change was undoubtedly the topic of the moment in 2007.
As Jon Coifman of the Natural Resources Defense Council (NRDC) puts it, in the collective consciousness the environment seems at last to have shifted from something to go and visit to something that is part of everyday life—it’s our backyards, our kitchens, our houses, and our cars. What this translates to for business leaders is an increasingly aware consumer population and a lot of potential for new business if it’s conducted responsibly.
While the mainstream may have just recently tuned into the “green” channel, some businesses have been focusing on the environmental and social impacts of their operations and products for decades. Those businesses continue to push the sustainability agenda, and they are now increasingly being joined by start-ups looking to revolutionize things like the electrical grid that haven’t changed in decades or even centuries.
“The paradigm has shifted—we have a lot of companies calling us now, looking for help fi guring out what their footprint is, how to ‘green’ their operations, and how to develop new products within that,” says William Sarni, CEO of DOMANI, a full-service sustainability consulting firm that works with leading multinational companies like Alcoa, BASF, Cisco, Coca-Cola, and Pfizer. Now that “sustainability” has become simply a part of doing business, companies that wish to push the “green business” envelope are innovating faster than ever, often through partnerships with other companies that enable knowledge-sharing and help push technology along at a faster rate. In 2005, for example, nanotechnology company QuantumSphere partnered with a leading zinc air battery expert to develop the most advanced air electrode in the world—and increased battery power output by more than 320%. This increased performance unlocks new portable power and electronics applications for zinc air batteries, the most powerful commercial battery available by volume and weight. As a result of this breakthrough, the company was recently awarded the Best of Small Tech Nanomaterial of the Year Award for its QSI-Nano® Manganese Catalyst, a key ingredient inside next-generation electrodes for disposable zinc air batteries. Even companies in sectors not traditionally associated with environmental responsibility are “greening” their operations in every way possible and expanding their offerings to include more responsible options. Car companies are racing to release the first plug-in hybrids, and energy companies such as BP have been investing in alternatives to oil for years now. After all, if oil is running out no matter what, energy companies all want to be well-positioned to harness the power sources of the future, from wind to solar to hydropower.
“We hear from some customers at the fuel pump that they buy our gas because they like that we invest in things like solar and wind, which is great. Still, at the end of the day, we wouldn’t be investing so heavily in our alternative energy businesses if we didn’t think those businesses were going to be profitable in their own right,” explains Sarah Howell, BP’s Director of Environmental and Corporate Communications.
Outside of the “green business” realm, it’s not just profits that are driving companies to embrace environmental initiatives. Companies recognize the long-term global environmental challenges, and, just as individuals work to reduce, reuse, and recycle, mainstream companies are finding ways to do their part as well. Last year, Abbott [NYSE: ABT] announced a goal to reduce absolute greenhouse gas emissions. Abbott also became the first large company to commit to going “carbon neutral” with its U.S. sales fleet. By offering employees the option of driving a hybrid or other fuel-efficient vehicle, Abbott is reducing its emissions significantly—equivalent to removing 12,000 cars from the road. The healthcare company plans to neutralize the remaining emissions of its fleet by purchasing carbon offsets in 2008.
“Abbott’s business is focused on improving people’s health, and our work to protect the environment is an important part of this commitment,” says Mike Warmuth, Vice President of Abbott’s Global Engineering Services Division. “By going carbon neutral with our fleet and introducing other significant environmental initiatives, we’re increasing the efficiency of our operations and reducing greenhouse gas emissions. At the same time, we’re also directly engaging our employees, who are proud to work for a company with a strong commitment to the environment.”
Still other companies are teaming up with firms such as Salt Lake City-based Bluesource, which creates greenhouse gas reduction projects across the U.S. for a variety of industries. Bluesource co-founder and CEO Bill Townsend says his company developed these projects—from carbon capture and storage for enhanced oil recovery to methane capture and utilization—to meet the greenhouse gas reduction goals of various industrial clients that have large and broad carbon risks. “North American businesses are looking for opportunities to reduce their carbon environmental impact, but in many cases do not know how to approach the issue,” Townsend says. “The voluntary carbon market, as one example of an environmental marketplace, is playing an important role in providing an incentive to act on climate change without regulatory requirements. With Blue Source’s diverse portfolio of carbon offset projects, we hope to continue to demonstrate that it is indeed possible to reduce carbon emissions while creating economic benefits that support a sustainable future. Businesses today no longer face the decision of making a financial gain or being socially conscious; the carbon markets allow for both.”
What was once called the “triple bottom line” has morphed into what L. Hunter Lovins, co-author of the seminal green business primer Natural Capitalism, calls the “integrated bottom line,” as corporate interaction with labor and the environment affects profits now more than ever. In addition to customers that are more knowledgeable than ever about the impacts of business on society and the environment, companies also have to operate in a world filled with bloggers and citizen journalists who will inevitably document their every misstep.
Those companies that are seen as green business leaders and positive members of the global community will not only benefit their bottom lines through such things as energy savings and waste reduction, but through an increased customer base and strong brand loyalty. Perhaps even more valuable, companies that are seen as environmentally and socially responsible buy themselves what Lovins calls a “goodwill bank.” “When companies screw up, which inevitably they will do at some point or another, if they’ve taken the time to really integrate sustainability into their operations and communicated that integration to customers, their customers are more likely to stand by them,” Lovins says.
Integrating the bottom line with sustainability initiatives has been at the heart of the GLOBE Foundation’s efforts since 1993. GLOBE is a nonprofit organization focused on business as a solution to environmental challenges, and has been fostering the growth of corporate sustainability by bringing company leaders together to discuss industry-wide problems and the potential for reasonable, profitable solutions. “We believe that environmental problems present business opportunities, and companies really can do well by doing good,” says John Wiebe, President and CEO of the GLOBE Foundation.
GLOBE 2008, the 10th event in the prestigious GLOBE international conference series will bring together over 10,000 participants from 80 countries this March in Vancouver to discuss some of the most important issues shaping the global environmental business agenda and exhibit technologies designed to address the greatest challenges facing humanity. Energy issues, climate change, and building design that meets the ultimate in sustainability principles will be discussed by leading edge thinkers with business leaders committed to making a difference. Up-to-date program information is available at www.globe2008.ca.
Today’s green business leaders, from Siemens to Waste Management, Abbott, and BP, are integrating social, environmental, and economic concerns into innovative, successful business strategies.
BP: Driving Energy Innovation
In 1997, BP’s then-CEO Lord Browne stepped out on a limb with a speech at Stanford University about the need for the energy industry to accept the science surrounding climate change and begin to do something about it. Oil industry stalwarts said he had “left the church,” but more than ten years down the road it’s clear that he was on to something. In 1997 BP committed to reduce its greenhouse gas emissions to below 1990 levels by 2010. The company achieved its reductions nine years ahead of schedule, and was surprised to find that it was cost-effective in doing so, according to Sarah Howell of BP.
“We thought hmmm… here’s an example where people think you have to spend a lot of money and completely change your thinking, but we proved that we could do it without a huge investment; what it took was increasing efficiency in our own operations, and by being more cognizant and efficient we discovered we could reduce emissions and save money,” Howell says.
In 1998, British Petroleum merged with Amoco to form BP Amoco and then acquired ARCO and several other companies, and re-launched in 2000 as BP, an energy company. At the time of the merger, both British Petroleum and Amoco had large and well-respected solar manufacturing businesses, and the merger of the two created BP Solar, one of the world’s largest solar manufacturers. By 2005, BP launched its Alternative Energy group with a commitment of $8 billion of investment over ten years into four sectors: solar, wind, gas-fired power, and hydrogen power coupled with carbon sequestration and storage.
The company’s solar business was already quite strong, and it very quickly built up its other Alternative Energy businesses. BP acquired several small wind power companies throughout the U.S. and formed a strategic partnership with Clipper Wind, one of the largest wind turbine manufacturers in the country. In January 2007, the company announced its intention to build five large wind farms in the U.S. and by December 2007 the first of those farms—a 300 MW wind farm in Colorado—was commissioned. In the same time frame, BP also constructed a 1,000 MW gas-fired cogeneration power plant in Korea and announced plans for a hydrogen power project at its Carson, Calif. refinery that uses a byproduct of the refining process to produce hydrogen for power and CO2 that is sequestered and stored.
In addition to low-carbon power, BP invests heavily in the research and development of efficient, low-carbon fuels. The company has partnered with DuPont to import biobutanol from an existing first generation manufacturing facility in China to blend with gasoline to provide to the UK market. In the U.S., BP has invested $500 million in an Energy Biosciences Institute (EBI) co-located at UC Berkeley and the University of Illinois at Urbana-Champagne, where students and scientists will explore the application of bioscience and the production of new and cleaner energy, principally fuels for road transport, and creating new technologies to develop fuels from non-food crops. The EBI will also research the conversion of heavy hydrocarbons to clean fuels, improved recovery from existing oil and gas reservoirs, and carbon sequestration.
It’s all in the name of good business. “We look at this not as a trend but as a sustainable business strategy. I hope other sectors (such as retail, clothing, construction, etc.) keep with it too and reap both the environmental and economic benefits,” Howell says.
Siemens: Solving The Environmental Problems Of Tomorrow, Today
Since 1874, Siemens has been working in Canada as both an innovator and an environmental leader. The company is credited with introducing a number of clean technologies to both Canada and the world, from the first light rail transit (LRT) system in North America to the largest wind farm in Ontario. Siemens is also responsible for the design and installation of the first retractable stadium roof and the world’s first fully integrated airfield lighting control system.
“Siemens has focused on environmental responsibility for a long time as part of our commitment both to the environment and to making the best products possible,” explains D.L. Leslie, Manager, Corporate Communications, Siemens Canada.
The company’s LRT solution in Calgary is a prime example. The electrically driven zero-emission rail vehicles protect the environment, while at the same time providing safe and reliable transportation. “We need energy for infrastructure solutions and often the environment is compromised in the process, but with wind turbines, clean air technologies, flexible power grids, and reliable, low-loss transmission systems, we’re helping conserve resources, save energy, and cut costs,” Leslie says.
Siemens’ Building Technologies Group (SBT) is also focused on improving efficiency and reducing greenhouse gas emissions for its customers. The company’s advanced digital control technology and dedicated team of energy professionals provide customers with turnkey programs that maximize building efficiencies, as evidenced by a recent project with the Royal Canadian Mint. Siemens helped the designated heritage site in Ottawa, Ontario, to gain $1 million in savings annually and realize a dramatic improvement in indoor air quality.
Subsidiary Osram Sylvania further helps customers to improve the efficiency of their buildings. As one of the first companies to produce compact fluorescent lights (CFLs), Siemens is one of a handful of companies that is helping to reduce the use of incandescent lights around the world, Leslie says, adding that again it comes down to the company’s ability to produce innovative products that are also environmentally responsible.
As part of a study presented at the 2007 World Economic Forum in Davos, Siemens identified two significant challenges facing our planet in addition to climate change: urbanization and demographic change. According to the study, produced in partnership with Globescan, Incorporated and MRC McLean Hazel, 2007 marked the first year in history that more people lived in cities than outside of them. In addition to an increased migration of people to cities, the study found that humans are simply living longer.
This increase in both urbanization and lifespan is putting serious stress on the planet and specifi cally on the infrastructure of cities and on the environment as a whole. With technologies geared toward improving healthcare, infrastructure, energy efficiency, water, and transportation, Leslie explains, Siemens is well positioned to extend and enhance the quality of life and to provide comprehensive solutions to the multifaceted environmental challenges of the future.
Waste Management: Turning Waste Into Energy
Waste Management, a company best known for dealing with the waste of its 22 million customers, produces more renewable energy each year than the entire North American solar industry. It’s an achievement the company will build on over the next ten years. In late 2007, WM CEO David P. Steiner announced four key goals for 2020: increase wastebased energy production; increase the volume of recyclable materials; invest in clean technologies; and preserve and restore more wildlife habitat. “Where most see waste, we see opportunity,” he said, describing a platform for sustainable growth for WM, in which the company removes trash, recycles it, and delivers waste-based energy to its customers.
The company is already making progress toward its goals, according to VP of Corporate Communications Lynn C. Brown. WM currently has 33 working landfills certified as wildlife habitat preserves through the Wildlife Habitat Council (WHC), and hopes to certify 100 by 2020.
To increase the volume of recyclable materials, she says the company uses single stream recycling technology, which shatters the myth that recycling isn’t as profitable as disposal and also encourages people to recycle. New areas of business, such as electronics recycling and construction & demolition recycling are also increasing WM’s recycling volume. In partnership with Sony, WM has developed an eCycling program aimed at providing an e-drop off within 20 miles of 90 percent of the U.S. population. The company is currently in talks with other partners to develop similar programs, Brown says. Meanwhile, WM is increasing its capacity to capture recyclable construction waste, which will also help customers striving toward LEED (Leadership in Energy and Environmental Design) certifi cation through the U.S. Green Building Council.
In its quest both to decrease emissions and increase fuel efficiency by 15% over the next ten years WM will invest $5 billion of capital spending in its fleet of trucks. The company also is investing in next-generation landfill technologies that could produce electricity, create more space in landfills, and actually make diesel from landfill gas, which could then be used to help power WM’s truck fleet. Meanwhile, WM subsidiary Wheelabrator Technologies provides a new twist on an older technology. Wheelabrator combusts waste to create electricity, a process popular in Europe that the EPA says has less environmental impact than almost any other source of electricity, and is in increasing demand in the U.S. and Canada.
Another WM subsidiary, Upstream, consults with customer companies to reduce the amount of waste they create in the first place. While some might see this as WM cannibalizing its own business, Brown says it’s an important part of the company’s service for corporate customers.
A recent project with Alcoa illustrates upstream’s value. In Alcoa’s manufacturing process, alumina was being lost and entering the waste stream. Upstream helped Alcoa capture that alumina and transfer it back into the manufacturing process, which reduced its overall waste and saved the company money by keeping a valuable resource in the manufacturing process and reducing disposal fees. It’s a perfect example of WM’s overall approach to business. As Brown points out, “The very nature of what we do makes us an important part of our customers’ sustainability chains.