Green is Good for Business

March 12, 2008
In the past, corporate environmental plansvwere mostly cost burdens relating to regulatory compliance, with perhaps a touch of the public relations image of being socially responsible. In the past few years, this has changed dramatically—“green” is becoming a business profit opportunity.

Most plants, factories and industrial systems were designed decades ago when the consequences of pollution and waste were not really considered. Now, companies are working to reduce their “environmental footprint,” and not just for long-term humanitarian reasons. Irrespective of whether or not man-made pollution is only a contributing factor to natural global warming, “green” is gaining more attention because of the real profit opportunities. Further, many businesses are starting to recognize the competitive dangers of lagging behind.

PayoffsThe increasing attention to the causes of global climate change is happening concurrently with rising energy prices. Oil at $100-a-barrel brings new opportunities. Products that use less fuel and decrease emissions generate growth and profits. General Electric is generating new growth and profits with super-efficient gas turbines that provide more electricity and less carbon dioxide emissions than older models. Boeing’s 787 jets use 20 percent less fuel than comparable models, and orders quadrupled as oil prices soared.

Hybrid cars are perhaps the best-known recent success story. Instead of innovating, U.S. automakers were lobbying against tougher emission standards, and kept introducing gas-guzzling trucks and sport utility vehicles (SUVs). Meanwhile, Toyota and Honda started investing a decade ago to compete with less fuel usage and fewer emissions. Now they are benefiting by environmental regulations as well as the jump in oil prices.

Here are some examples of how “green is good,” not just for the environment, but for the resulting direct savings and profits:

  • General Mills used to pay to have oat hulls, a Cheerios by-product, hauled away. But the company recognized that this could be burned as fuel, and customers now compete to buy the stuff. In 2006, General Mills recycled 86 percent of its solid waste, replacing disposal costs with profits.

  • Procter & Gamble and others are converting detergents to double and triple concentration, saving millions of gallons of transportation fuel, millions of pounds of plastic resin and tons of cardboard.

  • Intel and other silicon-chip producers used to dump unusable silicon wafers as waste. But they found that some of those chips have real value; they work fine in solar cells. Today, chip makers are scrambling into a new market valued at $750 million. In addition to just reuse of silicon, tons of carbon-monoxide emissions are eliminated, with savings of millions of watts of electric power.

  • Many offices, factories, hospitals and stores have begun to install natural lighting through solar tubes and skylights, supplemented by energy-efficient lighting. The energy and money savings are enormous.

Companies will use “green-tech” software and systems for programming and monitoring as they drive to become environmentally neutral and energy efficient. The idea is to use energy-related software to reduce material costs, simplify logistics, drive down electricity charges and shorten supply chains. India’s software giants like Infosys and Wipro consider this to be a huge opportunity and are investing heavily in this direction. Instead of focusing on old, tired software commodities, in my opinion, U.S. software companies should jump into “green-tech.”

The idea of “green” goes beyond the good feeling that we’re saving the environment; it brings enormous opportunities for savings and profits. Take a minute to do a green review of your own office, factory or plant.

Jim Pinto is an industry analyst and commentator, writer, technology futurist and angel investor. You can e-mail him at: [email protected]. Or review his prognostications and predictions on his Web site:

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