Like it or not, climate-change initiatives and regulatory mandates are increasingly becoming part of the manufacturing operating environment.

Retail giant Wal-Mart Stores Inc. recently announced plans to eliminate 20 million metric tons of greenhouse gas (GHG) emissions from its global supply chain by 2015, for example, a move that appears certain to shake up the way that many of its suppliers do business. The company also announced last year an environmental labeling program by which suppliers will be required to track and report on carbon emissions, water usage and other environmental factors for the products they supply.

“Some people are saying that Bentonville (Wal-Mart’s Arkansas headquarters) is actually having more impact on the retail and consumer goods sectors than Washington, D.C.,” observes Stephane N’Diaye, a San Francisco-based senior manager for the sustainability practice of Accenture, the global consulting firm.

But Washington is doing its part as well. Recently enacted Environmental Protection Agency (EPA) rules now require companies that emit more than 25,000 metric tons of carbon dioxide equivalents (CO2e) per year to report those emissions annually to the EPA. Under the rules, known as 40 CFR Part 98, GHG emission data collection was mandated to begin on Jan. 1 this year, with first reports due March 31, 2011.

The new EPA rule is believed to cover about 85 percent of the nation’s GHG emissions, and applies to roughly 10,000 facilities. There is currently no requirement to curtail carbon GHG emissions. But the new reporting mandate is seen by some as a move to establish a “baseline” for later U.S. cap-and-trade or carbon tax laws, should such legislation be passed.

Right for business

Given growing environmental consciousness and the heightening regulatory environment, how should manufacturers respond, not only from a tactical or reactionary stance aimed at compliance, but also from a longer-term strategic perspective?

“Strategically, irregardless of regulatory issues, companies need to start taking a look at how they’re approaching their energy usage and generation,” declares Chip Rennie, director, global industrial energy, for Emerson Process Management, the Austin, Texas-based automation supplier. It simply makes good business sense, he says, for large energy users to take a detailed look at ways to either reduce their energy consumption or to make their production more efficient.

Energy has become one of the largest components of the cost of manufacturing, after labor and raw materials, Rennie points out. “Any time you can increase your efficiency and reduce your energy consumption, you reduce your carbon footprint,” Rennie says. Yes, it may be the right thing to do for the planet, he allows. “But it’s also the right business thing to do.”

Indeed, manufacturers, in particular, are being driven by business interests to reduce their carbon footprints as much as they are by regulatory pressures, contends Marianne Hedin, an industry analyst for Pike Research, Boulder, Colo., a clean-technology research firm. Industry sectors such as utilities, government, retail and transportation are feeling pressure to comply with the new EPA ruling, which is also “a huge driving force for the manufacturing sector,” she adds.

But even before the EPA ruling and the recent actions by Wal-Mart, manufacturers were also feeling pressure to “go green” from their customers and shareholders, she points out. “They were worried about what consumers were thinking about their products, and what their brand image was. So that’s been driving a lot of their behavior around carbon management,” says Hedin, the author of a recent Pike Research report on carbon management software and services (See “Galloping Growth for Carbon Management”).

To be sure, as manufacturers consider the new EPA rules and other environmental mandates, they must understand how their businesses can be impacted by regulations, says Accenture’s N’Diaye. But they must also look beyond just compliance, he advises. “There is a huge opportunity for companies to strategically think about sustainability and what benefits they can get out of it.” Sustainability has definitely moved to a place among the top 10 concerns of many manufacturing chief executive officers (CEOs), N’Diaye observes.

Pragmatic

Consider Celanese Corp., the $5 billion Dallas-based manufacturer of specialty and intermediate chemicals. In the company’s recently released 2009 Sustainability Report, CEO David Weidman describes the Celanese approach to environmental stewardship as “pragmatic and business-focused.”

One recent example came at the company’s Bishop, Texas, plant, where two projects reduced the site’s energy consumption by more than 34,000 MMBTU (million British thermal units), while also cutting GHG output by almost 2,000 tons of CO2. Over time, the full annual savings is expected to total more than ...