What it takes for companies to show their environmental credentials

Ken Silverstein writes on the Forbes website about the motivations in the corporate sector for taking environmental issues seriously. What do you think?

 

Being ‘Good Neighbors’ And Staying Out Of Print Motivates Companies To Be Environmental Stewards

Next time you pull through your local Taco Bell, stop and ask the management there what it is doing to mitigate both its waste and its carbon emissions. As it turns out, it is doing a lot, beginning with building modern restaurants while measuring its emissions.

And it’s not just the smaller retailers that want to be custodians of the environment. It’s also the multinationals, which are out front and which have said that such attention builds trust with their customers and the communities where they operate — initiatives that will continue no matter the outcomes of the U.S. elections. The steps they are taking?

While the initial moves may have been prompted by regulations or consumer demands, many companies now want to ensure that everyone up-and-down the corporate chain of command is committed to the cause — from the chief executives to the folks on the shop floor. They have determined that they are not just getting environmental benefits but also financial returns, while creating goals for which team members can strive and attain. The cost of complacency can be quite high.

“More and more investors are starting to ask questions about non-financial issues,” says David Harpring, director of global sustainability and engineering for Yum Brands YUM -2.12% in Louisville, KY, who spoke at Environmental Leader’s conference in Denver last week. Yum owns about 43,000 Taco Bells, Kentucky Fried Chickens and Pizza Huts based in 140 countries, although many are franchised.

In fact, about 43 percent of Fortune 500 companies have already set targets to reduce carbon pollution, improve energy efficiency and procure more renewable energy, according to CERES, a business group dedicated to sustainability issues.

More than half of the Fortune 100 are publicly disclosing their climate and energy-saving targets – and they’ve collectively reduced carbon emissions by 58 million tons, while saving $1.1 billion annually by doing so, it adds. These carbon reductions by corporations are the equivalent of retiring 15 coal-fired power plants.

Harpring says that Yum’s biggest challenge is in trying to measure the total greenhouse gas emissions. It has determined that 97 percent of those releases are coming from the restaurants, although it also examines such things as travel by car and airplane. It then provides a template to report that data.

Because Yum is a growth company, it aims to reduce greenhouse gas emissions on a per restaurant basis: Improving energy efficiency and realizing a return on investment are consistent and include making adjustments to air condition units, lighting and equipment and refrigeration. Yum’s buildings also use 15 percent less energy while the company is striving to divert half of its internally-generated waste to other uses by 2020.

The Stakeholders

It’s about building a brand and one that can be trusted by all stakeholders.

“It starts with regulations,” says Andree Blesgen, senior process engineer for Evonik Industries in Mobile, Ala., at Environmental Leader’s conference. “Then it moves to minimizing our environmental footprint. All investments will have a payback: some quickly and some long term.”

For example, the speciality chemical maker’s site in Darmstadt, Germany found a source of waste heat to run its production processes. In co-operation with a local energy supplier, a mile-long steam pipeline was built to connect a waste incineration plant with Evonik’s site.

About 200 million pounds of steam are delivered to Evonik each year displacing natural gas and thus cutting approximately 26 million to 31 million pounds of greenhouse gas emissions each year. While the company says that such investments do reap a return, it often takes longer than the typically anticipated pay back periods it sees on its investments in its chemical plants.

“We want to be a good neighbor,” says Blesgen. “We don’t want to be in the newspapers.” Being an environmental steward is critical to the mission, he adds.

One company that has made the news big time is Canada-based Imperial Metals Corp., which in August 2014 saw one of its retention walls break and release millions of cubic feet of polluted water, destroying a lake there. The government determined that the mine had employed “weak practices.” As a result, Imperial Metals saw its share price fall overnight from $16 to $10, and now it is $6.

Sustainable Spirit

Most businesses want to do their part. But many may not have in-house experts and may not know where to start. To that end, third parties are there to help. Siemens is one such company offering assistance, working with major chain retailers and large industrials, while also setting its own corporate goals to achieve carbon neutrality by 2030.

Its focus is on helping customers reduce their energy demand and their ultimate consumption. For most retailers, the electricity purchased to run their stores represent 60-80 percent of their carbon footprint, says Dan Kubala, director of retail management for Siemens Retail & Commercial Systems in Austin, who spoke at the Environmental Leader conference. Success means reducing both their bills and their emissions.

To get there, Siemens relies heavily on new technologies and specifically automation, he adds. As such, it provides the tools so that retailers can remotely manage their heating, ventilation and air conditioning (HVAC) units to improve their operations and better understand how efficient they are.

By optimizing them, a standard retailer can cut its electricity bills between 15-30 percent, Kubala says, which will reduce its overall carbon footprint by 9-24 percent. Its energy management system, for example, has helped ALDI — a grocery chain with more than 10,000 stores worldwide — cut its carbon emissions by 29,000 metric tons per year, he adds.

Beyond that, Siemens can automate lighting equipment to ensure that it is turned off in the evenings and during holiday schedules. At the same time, the technologies can ensure that the air quality is always acceptable while HVAC fans are only turned on during occupied hours to avoid wasting energy.

“We help others by focusing on automation and bringing analytics to the platform to provide visibility and control,” says Kubala.

“But we walk the walk too,” he adds, referring to Siemens’ corporate initiatives. “A lot of people come to work for us because of our sustainability strategies.”

Corporate cultures are, indeed, at the core of prosperity — defined as working for the good of all stakeholders: customers, communities and shareholders. No doubt, making money is at the root of capitalism. But continued success means burnishing the brand, or thinking beyond the four walls of a company and recognizing that economic health and environmental well-being are closely linked.

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