Does it pay to be green?

As part of Corporate America’s eternal quest to improve the bottom line, companies have long sought and implemented strategies and technologies that are now labeled “green.” Efforts to reduce energy consumption, minimize waste and improve performance tend to have environmental benefits. Now that “sustainability” as a strategy is coming into fashion, the push is on to expand and intensify the opportunities to save our planet and to publicize these efforts as a demonstration of good corporate citizenship. But is this just a public relations ploy, or can the tactic actually improve profitability?

Sustainability is about carefully managing Earth’s finite natural resources to sustain a quality of life for ourselves and future generations. Rapid population growth is one of the most compelling arguments for it. The global population, presently about 6.6 billion, is expected to increase by 50% within 43 years.

In manufacturing terms, exponential population growth means more factories taking up more land, using more raw materials, and allowing more emissions and waste into the environment. Demand for products and services will grow, but the availability of supplies isn’t guaranteed. Competition for Earth’s finite resources will heat up and it’s easy, yet unsettling, to imagine the socio-economic and political consequences.

A variable-speed drive saves energy that the La Union sugar mill in Guatemala is able to sell for additional revenue of $158,480 per harvest season. Source: Rockwell

“To achieve and maintain world-class sustainable manufacturing, you need continuous improvement – not just of your capital assets but the utilization and return on your raw materials, utilities and human resource assets as well,” says John Blanchard, principal analyst for CPG industries at ARC Advisory Group. “Manufacturing companies should recognize that it will become increasingly difficult for manufacturing operations to drive new growth and margin without considering manufacturing ‘sustainability’ in their business decisions.”

The benefits are practical as well as financial. Blanchard explains, “Maximizing the utilization of assets always brings a return on investment. If you can bring a packaging line from 50% efficiency to 80% efficiency without buying new equipment or using more energy, then you have reduced the cost per unit of product and demonstrated one of many approaches toward achieving world-class sustainable manufacturing.”

Here’s how some popular green strategies are paying for themselves.

Improve air quality

We’ve seen a 21% reduction in ozone levels nationwide since 1980, and federal, state and local governments are working together to continue this trend. EPA is proposing to revise and strengthen U.S. air quality standards for ground-level ozone based on the most recent scientific evidence about its health effects. What’s not improving is the concentration of greenhouse gases in the atmosphere – mostly CO2 from combustion of coal, oil and gas.

Moving from a liquid painting process to powder coating annually saves Tennant Company $33,000 per year, reducing water pollutants by nearly 36,000 pounds and cutting water use by 3.7 million gallons. Source: Tennant

Regardless of where one stands on its relationship to global warming, resistance may be futile. Nearly a third of ExxonMobil shareholders voted in May for a resolution calling on the company to reduce CO2 emissions. Although the resolution didn’t pass, the effort, along with the fact that that ExxonMobil’s primary competitors — BP, Conoco and Shell — belong to USCAP, may inspire the company to target its products and operations for reductions.

DuPont cut its greenhouse gas emissions by 72% from 1990 levels. Part of this success comes from using landfill gas as fuel in industrial boilers. DuPont's total savings from these projects exceed $8 million per year.

Frito-Lay’s corporate-wide dedication to energy management has helped the company prevent 1.6 billion pounds of CO2 emissions since 1999 and avoid an estimated $35 million in energy costs. This Climate Leaders Partner set a goal of reducing its greenhouse gas emissions per pound of product by 14% between 2002 and 2010, and is using strategies such as variable-speed compressors, improved leak management, heat recovery projects, and oven draft control to achieve the targeted reductions. It’s also testing hybrid electric delivery trucks to reduce air pollution and fuel consumption, and an on-board GPS tracking system to provide more efficient routing and reduce total system mileage, emissions and fuel consumption.