Business executives are connecting environmental practices to profits, driven in part by consumer desires.
A 2014 study by Nielsen, a survey information firm, reports that a majority of consumers across 60 countries will pay more for products or services from companies committed to social and environmental good.
Companies say recent changes to manufacturing processes and products help the environment and boost their bottom lines.
There is a clear public relations benefit. Increasingly, publicly traded companies release reports on their carbon emissions, water savings or waste-recycling rates. Two decades ago, fewer than 30 companies worldwide reported on such environmental measures. But now more than 6,000 companies produce sustainability reports, according to a recent Harvard Business School study.
Here are four industries redefining “business as usual”:
Historically, the “green” with which U.S. financial institutions have been associated is money. (U.S. currency is green.) That won’t change, of course, but there is a new type of green today, as “sustainable banking” takes hold.
“For us, loans based on sustainable principles are better bets,” said Stephanie Meade, a director at New Resource Bank in San Francisco. New Resource sees almost no loan defaults. “In the long term [our clients] are likely to be around — they’re not making short-term decisions just to be profitable.”
Big banks are shifting priorities too. Citigroup Inc. recently pledged to invest $100 billion in environmentally sustainable projects. The company hopes to reduce greenhouse-gas emissions by funding clean transportation projects and energy-saving features in housing.
“Our job is to finance the good things, and that includes wind power, solar energy … and a whole spectrum of new technologies,” said Mike Eckhart, a Citigroup director. He believes it will only help profitability. “This is not a multibillion-dollar opportunity,” Eckhart said. “It is — already, today — a multi-100-billion-dollar opportunity.”
Retailers looking to reduce their carbon footprints start with their supply chains, which account for up to three-quarters of a company’s greenhouse-gas emissions, according to the Environmental Protection Agency.
Some retailers make and transport their own goods and thus can easily tweak processes. Those that don’t still influence their suppliers and shippers. (Retailers enforce environmental codes of conduct on suppliers and sometimes terminate business relationships if codes are ignored.)
To help its apparel suppliers go green, Nike Inc. partners with Bluesign, a company that maintains an index of eco-friendly chemicals and dyes. Nike also invests in DyeCoo Textile Systems, which pioneered a waterless way to dye fabric that Nike hopes to use in all its factories. The process will eliminate chemical discharge, lower energy use and improve color-saturation.
Wal-Mart Stores Inc. overhauled its trucks with more fuel-efficient tires and improved aerodynamics. It trains drivers in efficient driving techniques. In 2013, Wal-Mart trucks delivered 181 million more cases, while driving 269,000 fewer kilometers, compared to the year before. That reduced carbon emissions to a degree equivalent to taking 5,000 cars off the road and lowered expenses by $65 million.
They’re talking about it too. Two decades ago, few industrial companies produced sustainability reports. Today nearly 90 percent of the largest manufacturers in the U.S. release such annual reports, detailing their green efforts and goals.
Caterpillar Inc., the world’s largest maker of construction machinery, reported an increase in its reuse of scrap materials. In 2014, the company recycled 90 percent of its scrap back into its products. The amount recycled — 695 million kilograms — is equivalent to 5,072 bulldozers.
“There has been a push for large companies to try to do more with less,” said John Cangany, a manager at Ford Motor Company. Ford is cutting the amount of water it uses inside cooling towers and along assembly lines that wash parts. In 15 years, the company saved more than 41.6 billion liters, enough to fill 16,000 Olympic-sized pools.
Many nonmetal car parts today contain more post-consumer, recycled waste. The seat fabric in the Ford Focus model contains the equivalent of 22 recycled plastic water bottles. Ford estimates that such innovations save it $10 million annually in North America alone.
The automaker uses more natural elements too. It recently joined with Heinz to use tomato skins left over from ketchup production to develop bio-based plastics, Cangany said.
As temperatures fluctuate and oceans face uncertainty, people worldwide become more “eco-conscious” and high-tech innovators cash in, producing everything from electric cars to products made from recycled materials.
In the U.S., 71 percent of consumers consider the environmental impact of their purchases, according to marketing firm Cone Communications.
Nest Labs Inc. has ridden the trend. The Silicon Valley startup, which makes a “smart” thermostat, was recently purchased by Google for $3.2 billion.
Gadgets that reduce energy consumption will generate $22 billion dollars in global revenue by 2023, according to Navigant Research, a technology-consulting firm.
North Carolina’s PlotWatt developed software to analyze energy used by home appliances and recently has grown its market share among commercial businesses. The system’s data, which shows better ways and times to operate appliances, is valuable to chain-restaurant owners, who rely on walk-in freezers and other large appliances.
Restaurants can reduce their energy bills by 11–15 percent, the equivalent of selling “a lot of extra cheeseburgers,” said Luke Fishback, PlotWatt’s co-founder.
Some customers sign up simply to save money, he said. But “they’re helping the environment whether they mean to or not.”Illustrations by Doug Thompson