Corporations find business case for going green

Allison Linn Senior writer • Profile • E-mail

In recent months, environmental advocate Gwen Ruta has started feeling like the proverbial Hollywood starlet who, after years of toiling in bit parts, is suddenly being hailed as an overnight success story.

“All of a sudden, everybody wants you to be in their movie,” Ruta, director of corporate partnerships with Environmental Defense, said recently with a laugh.

It’s possible to take that statement quite literally — after all, the environment was the star of the Oscar-winning “An Inconvenient Truth.” But what is really exciting Ruta these days isn’t the buzz out of Hollywood but the increasing interest across the country, on Wall Street. For corporate executives, going green is becoming, if not mainstream, at least more commonplace.

Companies ranging from retailing titan Wal-Mart to investment firm Goldman Sachs are jumping on the green bandwagon and pledging to make tangible changes that go beyond the public relations-oriented “greenwashing” of years past.

In another major shift, some big companies are even asking that they be regulated on greenhouse gas emissions, arguing that it is the only way for them to plan for how to deal with the rising threat of global warming. A coalition of businesses and environmental groups earlier this year formed a partnership called the U.S. Climate Action Partnership aimed at doing just that.

Are corporations experiencing a sudden rash of social consciousness? Not exactly. Instead, companies are increasingly realizing that going green could be a new way for companies to save — or even make — more green, as in money.

“The strategies that are being ... implemented by some of the leading-edge companies are done to maximize profits and to mitigate risk,” said Fred Wellington, senior financial analyst for the environmental group World Resources Institute.

Still, the big surprise isn’t so much that companies are getting involved in environmental issues, but what companies are doing it. People expect companies like Whole Foods, Patagonia and REI to have environmental initiatives; not only is it key to their public relations efforts, it also makes good business sense for them to preserve resources.

But DuPont? BP? Wal-Mart? These are companies that still raise the hackles of environmentalists for some of their practices, yet are also taking serious steps toward promoting things like solar power and reducing greenhouse gas emissions. What exactly do they have to gain?

The answer, as always, lies in the bottom line.

Cost savings in energy savings
When Wal-Mart Stores Inc. pledges to significantly reduce energy use at its stores, that translates into lower costs for running the same business. It’s not the only money-saving environmental effort under way at the famously stingy retailer.

DuPont, the giant chemical maker that once was considered among America’s worst polluters, estimates that it has saved $3 billion from a nearly two-decade effort to dramatically reduce carbon emissions. Not surprisingly, the company is pushing for even more cuts.

And what about BP? The oil and gas giant will remain just that for a long time, but it pays to be thinking about the future now. If oil prices surge even higher, or supplies dwindle, people will still want to heat their homes, drive their cars and turn on their lights. For a company like BP to make it in that type of market, it might help to be able to offer alternative products, such as solar or wind energy.

Pat Tiernan, Hewlett-Packard Co.’s vice president for social and environmental responsibility, says that for the computer maker, “sustainability is about making business sense.”

“We don’t do things just to be good. We don’t do things just to be, for example, tree huggers,” Tiernan said. “We do select things that have a brand value to them, but most of the things that we do, it has to make business sense.”

Environmental groups also are increasingly trying to show companies the business case for environmental improvements.

Ruta, of Environmental Defense, said her group notes three major potential benefits — cost savings from energy reductions, increased market share from more competitive products, and managing the risks associated with depending on fuels such as oil, which could spike in price or become more heavily regulated.

Companies are starting to pay more attention.

“What we’re witnessing is some of the bigger, major corporations in the United States understanding that these are fundamentally business issues, and they’re developing business responses and strategies,” said Wellington, of the World Resources Institute.

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