It doesn’t seem too long ago that the business practices of Wal-Mart were widely criticized by groups ranging from workers’ rights activists to environmentalists, from trade unions to anti-globalization demonstrators and to those increasingly concerned with the state of American urban sprawl.  Yes, many of us took well advantage of Wal-Mart’s very low prices, but, still, it is obvious their image had to change.  Enter former CEO H. Lee Scott’s increasing personal and professional “revelations” about the positive impact Wal-Mart could have on the planet, and the growing efforts Mr. Scott pushed toward reducing the company’s operational footprint.

For CEO Scott, it started with a 2005 post-Hurricane Katrina speech highlighted by Wal-Mart’s new commitments to: doubling the fuel efficiency of its massive shipping fleet; to Wal-Mart, eventually, “creating zero waste;” for the company “to be supplied 100% by renewable energy” (currently, the company will source about 1% of its energy in the U.S. from renewables in 2009); and to invest $500 million annually in various energy saving programs.  Then, the world’s largest retailer cemented – at least in their eyes – their commitment to green business practices and environmental concerns with their recent dramatic release of Wal-Mart’s “Sustainability Product Index” on July 16 of this year.

As Greg previously remarked here on Source and Resource, the company’s new audacious and ambitious Sustainability Index involves 15 questions to approximately 60,000 to 100,000 suppliers around the world.  The Index “will serve as a tool for Wal-Mart’s suppliers to evaluate their own sustainability efforts… (focusing) on four areas: energy and climate; material efficiency; natural resources, and; people and community.”

Naturally, environmentalists and green business experts were healthily cautious before jumping to applaud the release of this index.  However, after further assessment of the sustainability criteria, experts have generally agreed that, although it has its faults – such as a lack of clear metrics, data, and interim milestones in some areas – the Sustainability Questionnaire is a bold move forward that could lead to an increased demand for transparency across all global businesses.  And, I say, that if this intense scrutiny successfully increases the environmental sustainability of the Wal-Mart supply chain, which reportedly touches 1/3 of the world’s productive capacity, then the efforts will truly yield a new, positive “Wal-Mart Effect.”  The ripples caused by the Sustainability Index may reverberate a newfound, widespread urgency for Life-Cycle Assessments and supply-chain environmental impact assessments for numerous products across retail sectors.

Therefore, your company may need assistance in readying itself for answering such questions and applying these new metrics to its products or services offered.  This is true whether you currently sell to Wal-Mart, are planning to sell Wal-Mart, or are rightfully intrigued by the fact that such “sustainability questions” might, soon, apply to other buyers of your products or services.  It is especially imperative to be familiar with the new rubrics and manners of reporting if your company is either a supplier to, or a partner with, consumer-goods companies Procter & Gamble, Tyson foods, Unilever, General Mills, and the other enterprises that have partnered with Wal-Mart to create their new Sustainability Consortium led by academics from the University of Arkansas and Arizona State University.

There is an upcoming workshop and conference in the Boston area that aims to provide answers, support, and guidance in these areas.  The workshop is entitled “Wal-Mart Supplier Readiness Workshop” and the accompanying conference the following day is called “Greening the Supply Chain.”  The two events are being created by the highly reputable “all things green” media outlet, Greentech Media, and their partner sponsor, Groom Energy, on September 16 and 17.  The two-day affair will be located at the Embassy Suites by the Boston-Logan Airport and will discuss opportunities such as The Carbon Disclosure Project, green certification systems, and managing “social compliance.”  The sponsors describe the workshop as a “time- and cost-effective way to gain confidence with your submittal (to Wal-Mart) and to gauge investment levels in sustainability programs.”  They recommend the two-day event to not only Wal-Mart suppliers, but also to suppliers who want to network with experts and other suppliers.  In addition, Sean Stephan, the Senior Director of Packaging and Sustainability at Wal-Mart International will be on hand to speak and answer a direct Q & A session.

Thus, it may be worthwhile for yourself or a representative from your business to go to the conference if not to network then to learn something about sustainability and supply chain issues, especially if your company can handle the $495 registration fee.

Habitat for Humanity is known for building low-income houses, but soon they may become a national leader in low-income residential “green” housing. Habitat for Humanity International and The Home Depot Foundation announced Tuesday the national expansion of “Partners In Sustainable Building,” a successful pilot program initiated at 30 affiliates that resulted in the construction of 260 sustainable homes. Most of the houses participating in the pilot received 15-30 percent energy reduction, while some achieved LEED Platinum certification, which resulted in nearly 50 percent energy savings. Jonathan Recker, CEO of Habitat for Humanity International, called the pilot program “extremely successful.”

The national program will expand to 120 affiliates in 45 states across the nation and will provide $30 million in assistance to participating affiliates over a five-year period. According to Habitat’s press release, affiliates will be granted $3,000 for each home built to Energy Star standards and up to $5,000 for each home built to a higher green standard.  These amounts are the typical additional costs to sustainably build an average $75,000 Habitat for Humanity house. The higher costs are attributed to additional needed materials, certification, and new training.

The program is hoping to build 1,500 sustainable homes by the end of 2010 with the eventual goal of building 5,000 in the next five years. Homes can be certified by a number of green building organizations, including the National Association of Home Builders standard, LEED, EarthCraft, and Enterprise Green Communities.

Although the environmental and monetary benefits of green building are catching on in the United States, it is still difficult to convince some people to make the investment. In addition, LEED certification is not as popular with residential housing as it is with business buildings.
Habitat’s pilot program proved that upfront costs of green residential building are minor and that the initial extra costs can be easily recouped throughout the lifetime of the house. If the national program is equally successful, it will be one of the largest, if not the largest, low-income green building initiatives in the United States.

Low-income individuals and families are hardest hit during energy price fluctuations, such as spikes in natural gas prices that have occurred during the last couple of years. High energy costs often mean no heat during cold winter months for low-income families. Energy efficiency housing provides these families with a buffer between volatile energy prices and their pocketbooks.

At the core of both organizations is the belief that environmentally-sound building should be accessible to all:

“The Home Depot Foundation believes green building techniques are not a luxury—they aren’t exotic or expensive,” said Kelly Caffarelli, president of The Home Depot Foundation. “By embracing the practical principles of green building, our partnership with Habitat for Humanity International is demonstrating that these techniques can actually make homes more affordable to own, maintain and live in from day one and for the long-term. With health and economic concerns at an all-time high, this issue is more important than ever for the families who will purchase these homes.”

Money is also allotted to train employees about green building: “To inspire and educate additional affiliate participation, eight Habitat State Support Organizations, which provide services to 440 affiliates, will also receive grant money to add staff and host training sessions for Habitat affiliates to learn how to build to nationally-recognized green standards.”

The Home Depot Foundation was created in 2002 and has since granted $120 million to nonprofit organizations and supported the development of more than 65,000 affordable, healthy homes. The foundation focuses on supporting sustainable building projects for working and low-income families across the United States.

Despite a large increase in the United States’ overall greenhouse gas emissions during the last several decades, the United States has slowly but surely been able to produce more with less energy. Our energy efficiency has improved by leaps and bounds, but a new report authored by McKinsey Global Energy and Materials says that the full potential of energy efficiency initiatives has yet to be realized. If the United States were to implement a comprehensive strategy aimed at increasing energy efficiency, the resulting monetary and emissions’ savings would be enormous.

According to the report, a “holistic approach executed at scale” would yield gross energy savings worth more than $1.2 trillion, more than double the amount needed upfront for investment in these energy efficiency measures. This program is estimated to “reduce energy consumption by 2020 by 9.1 quadrillion BTUs, roughly 23 percent of projected demand, potentially abating up to 1.1 gigatons of greenhouse gases annually.”

The report seeks to simultaneously pinpoint the barriers of unlocking the potential for energy efficiency while also reviewing solution strategies. If a directed and comprehensive strategy in the United States was implemented, companies involved in all areas of energy efficiency could reap huge benefits. Manufacturers of energy-efficiency related products, energy auditors, builders, and contractors, among others, could see business skyrocket. But even if a comprehensive plan is not initiated, the report can be used by companies heavily invested in the energy efficiency field to focus their efforts towards areas with the most potential.

According to the report, a comprehensive strategy addressing energy efficiency opportunities would need to:

1.    Recognize energy efficiency as an important energy resource that can help meet future energy needs while the nation concurrently develops new no- and low- carbon energy sources.
2.    Formulate and launch at both national and regional levels an integrated portfolio of prove, piloted, and emerging approaches to unlock the full potential of energy effiency.
3.    Identify methods to provide the significant upfront funding required by any plan to capture energy efficiency.
4.    Forge greater alignment between utilities, regulators, government agencies, manufacturers, and energy consumers.
5.    Foster innovation in the development and deployment of next-generation energy efficiency technologies to ensure ongoing productivity gains.

The report identifies and maps “in detail the complex and persistent set of barriers that have impeded capture of energy efficiency at the level of individual opportunities.” As noted earlier, significant gains have been made in energy efficiency in the United States, but decisive barriers still exist. For instance, most energy efficiency measures require significant upfront investment, which deters many. “Efficiency potential,” the report says, is highly fragmented as a result of more than 100 million locations and billions of devices used in residential, commercial, and industrial settings. “This dispersion,” the report says, “ensures that efficiency is the highest priority for virtually no one.” And lastly, quantifying amounts of energy not consumed (potential savings) can be extremely difficult.

These hurdles can be overcome, but the solutions must be implemented in a holistic, rather than piecemeal fashion. Most simply, the report lists four categories of “proven, piloted, and emerging” solutions: (following is quote)

1.    Information and education. Increasing awareness of energy use and knowledge about specific energy-saving opportunities would enable end-users to act more swiftly in their own financial investment. Options include providing more information on utility bills or use of –in-building displays, voluntary standards, additional device- and building-labeling schemes, audits and assessments, and awareness campaigns.

2.    Incentives and financing. Given the large upfront investments needed to capture efficiency potential, various approaches could reduce financial hurdles that end-users face. Options include traditional and creative financing vehicles (such as on-bill financing), monetary incentives and/or grants, including tax and cash incentives, and price signals, including tiered pricing and externality pricing.

3.    Codes and Standards. In some clusters of efficiency potential, some form of mandate may be warranted to expedite the process of capturing the potential, particularly where end-user or manufacturer awareness and attention are low. Options include mandatory audits and/or assessments, equipment standards, and building codes, including improving code enforcement.

4.    Third-party involvement. A private company, utility, government agency, or non-governmental organization could support a “do-it-for-me” approach by purchasing and installing energy efficiency improvements directly for the end-user, thereby essentially addressing most non-capital barriers. When coupled with monetary incentives, this solutions strategy could address the majority of barriers, though some number of end-users might decline the opportunity to receive the efficiency upgrade, preventing capture of the full potential.

For these initiatives to be completely successful, close collaboration needs to occur between governments, businesses, and non-profits. But regardless of whether a comprehensive nationwide approach is implemented, businesses of all sizes in the energy-efficiency field can pinpoint solutions outlined in the study and work on those in their local communities. They should work with their local utility companies and governments to start awareness campaigns that provide simple and user-friendly information for the public and business, while at the same time working with those same utility companies to provide tax credits or grants. Businesses should also work with local municipal governments and state governments to instate mandatory energy efficiency requirements such as audits and building codes. California has the highest standards for energy efficiency in the country and energy-efficiency related businesses prospered as a result.

These are just a few of the opportunities for energy-efficiency related businesses, but as you can see, the possibilities seem endless.

At some point, we have all been critical of corporate greenwashing. It is common to hear reports of companies adopting eco-friendly technologies for good PR or to benefit from government incentives. Some of these firms dubiously publicize their production process as being ‘green’ without actually endorsing the initiatives that they promise to undertake — there is a wide gap between supporting a green technology and adopting it. Further, with the economic meltdown hammering stock markets across the world, most of the global-scale private firms have toned down their investment in green technologies. For these reasons, it is heartening to see that IBM has taken the initiative to honestly and reasonably present its green efforts for the 2008 – 09 fiscal.

IBM has always been at the forefront of reducing energy use in its workplace and production environments, not to mention its efforts to use innovative technologies to curb greenhouse emissions and reduce hazardous wastes being dumped into landfills. The company started the trend of owning-up to its individual performance from a green & sustainable business practice perspective as a part of its annual Corporate Responsibility Report.

What is remarkable is that the Report does not try to promote the fact that it is sincerely committed to the cause of making itself environmentally compatible. Instead, the Report merely tries to educate people about the progress and even the drawbacks that IBM came across when trying walk along the greener route of conducting its business. The Report is truly exhaustive in its nature, spilling over more than 43 pages. It is precise in accounting for the performance of every green initiative across a wide array of company functions, from the supply chain, to community-cause related endeavors, to corporate governance, right down to among the employees. The Report highlights IBM’s efforts to  develop a more responsible global brand, supporting water conservation and helping develop energy-efficient workplace communities, while presenting an honest reflection of IBM’s slow transformation from energy dependent to truly “green.”

The noteworthy performance indicators of the Report are:

Conservation of Energy
•    Savings made by continuing with conservation projects have gone past the annual goal of 3.5%
•    Energy savings equaled 6.1% of the total energy use for 2008.
This translates into savings of:
235 million kilowatt electric hours
6.3 million gallons of fuel savings
215,000 metric tons of CO2 emissions

Overall, the total savings made through various conservation methods yielded $32.3 million in energy cost savings. Most of the energy saving projects were executed in IBM’s data centers that have conventionally used high-energy server operations.

Controlling Greenhouse Gas Emissions

•    Purchase of renewable energy increased to 450 million kWh in 2008
•    This equals 8.6% of IBM’s global electricity use for the year
•    This means a total reduction in CO2 emissions, due to energy use, by nearly 1.6 %

IBM has already been sensitive to its CO2 emission levels and it reduced the same by nearly 40% from 1999 to 2005. Not satisfied with this, the greenhouse gas emission reduction percentage has now been projected at 12% by 2012.

Controlling PFC Emissions — toward the end of 2008, the PFC emissions in CO2 were down by 30.4% in comparison to the 1995 baseline. PFC (Perfluorocompounds) is released during the production of semiconductors and IBM seeks to reduce it by another 25 % by 2010.

Managing End-of-Life Products — IBM produced 42,302 metric tons of waste products in 2008 that were further processed for proper disposal. Only 0.6% of it found its way to the landfills or got smoked in the incineration facilities. In 2007, this figure was a bit high at 0.8%. This means that in 2008, IBM was able to recycle or re-use more than 99% of its products that had reached the end of their lifecycle.

Recycling Plastic — Annual goal of recycling used plastic products is 5%.
Figures for:
2007: 10.6%
2008: 10.3% (a shortfall of 0.3%)

Minimizing Hazardous Waste — in 2007, hazardous waste products were reduced by 8,400 metric tons.
2008: 10,900 metric tons

Recycling Non-hazardous Waste — Annual goal for recycling non-hazardous waste products is 75%. Figures for:
2007: 78%
2008: 79%

Water Conservation — The figures released for conserving water are based upon IBM’s performance in its microelectronics manufacturing process. The annual goal is to conserve about 2% of the total volume of water used for this process, over a period of five years.
Figures for:
2007: 6%
2008: 4.6%

If you choose to be critical, it can be observed that in terms of year-on-year progress, IBM has not taken any substantial steps for endorsing newer, more innovative technologies. Most of the conservational technologies used earlier have been continued with, albeit their effectiveness has increased in some cases. However, it should be understood that given the size of IBM’s worldwide operations, it is comparatively difficult for it to adopt new conservation or recycling methods across all its facilities. Nearly every new technology that it adopts needs to be radically modified for vastly-different regional requirements.

What should be complimented is that even during an economically-challenging environment, the company has sustained its efforts towards actually adopting environmentally-responsible, greener business practices. IBM’s ability to sustain its progress on a greener path while keeping its business practices equally profitable should be a role model to smaller businesses that argue about the impracticalness of adopting greener production/manufacturing technologies. Further, IBM’s method of publicizing its green performance on an annual basis should influence other companies to come forth with their own honest progress reports. Perhaps, then, all businesses can learn from the successes and failures of their neighbors, and the business sector can make legitimate movement towards a sustainable economy.