Corporate America Has Found a Way to Turn a Profit Off Being Green
It’s time to stop crediting corporate sustainability efforts as acts of altruism. For big business, protecting the environment often means padding the bottom line.
Nike Inc. has come up with a way to weave more efficiently, reducing the raw material and labor time needed to make each shoe. That has kept more than 3.5 million pounds of waste from reaching landfills since 2012. But the good news doesn’t stop with the environmental impact. The company is spending less on transportation, materials and waste disposal.
The shoemaker’s “more environmentally conscious product has been a source of cost savings,” said James Duffy, an analyst at Stifel.
Those flimsy plastic water bottles sold by Nestle SA? The ultra-thin design has a smaller impact on the environment while pushing down costs associated with packaging and shipping. Amazon.com Inc. and Walmart Inc. have poured tens of millions of dollars into a fund that builds out recycling infrastructure, reducing landfill tipping fees and recovering material that could be sold as new products.
Tech giants have spent billions of dollars on solar and wind power, cutting greenhouse-gas emissions and energy expenditures at the same time. Alphabet Inc.’s Google, Amazon and Facebook Inc. are now some of the largest buyers of green power in America.
Turns out it’s not just easy being green—it’s also profitable.
“We’ve moved past this concept that business versus the environment is a tradeoff,” said Tom Murray, who advises companies on reducing emissions at Environmental Defense Fund, including Walmart, McDonald’s Corp. and Procter & Gamble Co. “The business benefits were always there, but more and more companies are going after them.”
The business case for going green has never been stronger as companies find ways to make more from less. Here’s a look at the ways corporate sustainability is making environmentalism pay.
Lightweight Flights Cost Less
United Airlines Holdings Inc. has been making its planes lighter, driving down fuel use and costs. Airlines account for almost 2% global carbon emissions. Not even the in-flight magazine has been spared in the search for unnecessary heft: changing to a lighter paper stock saved almost $300,000 per year on fuel. United redesigned airplane bathrooms, switched out beverage carts and ended duty-free sales. The company was also working on reducing its cabin waste to zero.
What it pays: United has saved more than $2 billion on fuel so far.
Hanging Hotel Towels Saves More Than Water
It turns out that simply asking guests to hang up towels to dry and forego daily sheet changes can save hotel operators 25% off annual energy costs. “To some surprise within the hotel industry, this option was quickly embraced by hotel guests as a small way to engage in energy conservation,” according to a report by the Urban Land Institute. Clarion Partners LLC does that at all of its hotels and went a step further by reducing flows through toilets, faucets and showerheads.
What it pays: Cutting water use saves Clarion hotels about $17,250 per year.
Idle Trucks, Real Money
Walmart runs one of the biggest trucking fleets in the U.S. That means scores of semis standing in traffic at any given time. At that scale, the introduction of technology that reduces energy use when trucks or idling and software that creates more efficient routes can improve fuel efficiency by 90%, reducing carbon dioxide emissions.
What it pays: Diesel averages almost $3 a gallon in the U.S.
Tech’s Green Power Payoff
Google, Facebook and Amazon are among the largest energy consumers in the U.S., and a lot of that power is now emission-free. Each company committed to getting 100% of their power for their data centers from renewable resources such as wind and solar. Exxon Mobil signed up to energize its operations in Texas with solar and wind energy starting next year, which would place the oil producer among the top 10 buyers.
What it pays: With renewables now cheaper than fossil fuels, these green energy commitments shave an estimated 10% off tech giants’ gargantuan utility bills.
Paperless Bathrooms Are Cheaper
Restaurants, movie theaters and others have been making the switch from paper towels to hand dryers in their restrooms for years. Dryers have become the norm because of the savings on the cost of paper towels and the expense of sending garbage to the landfill. Soldier Field, home of the Chicago Bears, made the switch and cut carbon emissions by 76% per use.
What it pays: A football stadium can save more than $12,000 a year over the cost of paper towels.
Re-Sold Clothes Are a Moneymaker
Patagonia Inc. has been repairing and recycling clothes since its inception in the 1970s, making the practice a core part of the brand’s environmental image. Two years ago, however, the company added incentives for customers who return used items. This wasn’t just an act of urgency to keep clothing out of landfills. A 3-in-1 Snowshot Jacket that retails new for about $400 was recently listed on Patagonia’s Wornwear website for $187 to $207, more than twice the amount paid to customers in a voucher. What it pays: Each re-sale of a high-quality used jacket can net $100. “It’s a profitable business unit,” said Phil Graves, director of corporate development at Patagonia.
Slender Plastic Savings
Nestle has been saving money with ever-thinner plastic bottles, cutting the content in its half-liters by more than 60% since 1990. That also reduces the harmful chemicals and emissions produced from making plastic and saves on transportation costs. There’s also been a push to use more recycled material. Nestle recently started offering a 100% recycled bottle for its Pure Life water brand. Coca-Cola Inc. has decided to ditch plastic altogether for its Dasani line by pumping water into aluminum cans. That switch will make it easier to recycle and boost profitability. The cans weigh less, which cuts transportation costs.
What it pays: 72 cents per pound of plastic resin.
Beer With Less Spent on Water
Lagunitas Brewing Co. was growing so quickly that its local water utility couldn’t process all the highly concentrated wastewater produced by its manufacturing process. Managing it all might have required costly upgrades to the municipal system. The brewer instead bought a new type of treatment system onsite that cleans the 7 gallons of high-strength wastewater made with every gallon of beer. The methane byproduct is used to produce electricity. Its one of the many breweries and vineyards out there that have now installed these systems.
What it pays: Estimated savings more than $1 million a year on utility bills.