Businesses that set ambitious goals to reduce their carbon footprint also increase their profitability. How is that possible?
It’s simple. Reduced carbon emissions result from using less energy, the production of which in the U.S. puts tons of CO2 and other so-called greenhouse gases into the atmosphere each year. Greenhouse gases have been shown to accumulate in the atmosphere, causing climate change, also called global warming. By paying attention to more efficient use of energy, a business squeezes out waste while reducing its contribution to the release of CO2 gas. Whenever a company reduces waste, it saves money and enhances profits.
Here are two compelling examples provided by Hunter Lovins, of Natural Capitalism Solutions.
Dupont set a goal to reduce its carbon emissions 65% below its 1990 levels by 2010. They made this announcement in the name of increasing shareholder value. The company met their goal early, and are now over 80% below their 1990 levels of greenhouse gas emissions. Between 2000 and 2005, the waste-cutting saved them $3 billion. Andrew Winston, the author of “Green to Gold,” points out that between 2005 and 2007, Dupont’s annual savings from squeezing out waste was $2.2 billion a year. That was the same, those years, as their profitability. Here’s a company that’s profitable because it’s cutting emissions.
In another example, Swiss microchip maker ST Micro-electronics, set a goal of zero net greenhouse gas emissions by 2010 while increasing production 40-fold. At the time they made this announcement, they had no idea how to meet this goal. During the 1990s, its energy efficiency projects averaged a two-year payback (a nearly 71% after-tax rate of return). Making and delivering on this promise drove innovation and increased their market share. In 2004, the company moved from the number 12 micro-chip maker to number six. By the time ST meets its commitment of net-zero emissions, it estimates that it will have saved almost a billion dollars.
Sure, these examples from large corporations are impressive, but what about small business? A June 2006 article in Business Week by Byron Kennard, “Global Warming on Main Street,” is rather dire, noting that small businesses are especially vulnerable to climate disasters, including flooding and droughts. And yet, “There’s been virtually no research on what global warming means to small business, even though 23 million U.S. small businesses constitute one-half of the economy.”
It’s in the best interest of a small business owner, then, to lower its carbon emissions. Simple energy efficiency measures, such as installing programmable thermostats, upgrading lighting, turning off computers when not in use, and using water-saving faucets, can easily allow small businesses to save at least 30% on their energy bills.
Taking it up a notch, setting a really audacious goal of being carbon neutral by, say, 2015 is a great challenge that could inspire great innovation and engagement. A goal like that invites everyone in the company to contribute creative ideas. People who know they are helping a greater cause are naturally more involved and committed to success. Who knows? Maybe some businesses would even tie profit-sharing to reduced carbon emissions, to acknowledge the profitability of eliminating waste.
Even if you are skeptical about the causes or consequences of climate change, what’s not to like? Saving money from reduced waste and an engaged workforce innovating to solve problems goes directly to the bottom line.
If you need help mapping out a plan to save energy in your business, call on us! We have tips and training on how to reduce energy use around the office. Two articles to get you started:
Shift Your Mindset from Hell to Heaven Three steps to lowering carbon emissions.
Blueprint for a Green Business Start by benchmarking your carbon footprint and/or ecological footprint.
[Note: Information in paragraphs 5 and 6 of this article are from the paper, “The Business Case for Climate Protection,” by Hunter Lovins, available on the Natural Capitalism Solutions website. Paragraph 4 is from an interview of Hunter Lovins by David Riordan on Integral Life.]