Green Business

Over the last month, three major news magazines have had cover stories on the increasing importance of environmental issues in America.* In a striking turnabout, these articles are largely progress reports on efforts by business to meet environmental challenges, rather than how business has tried to downplay or deny the threat of climate change. Repeatedly, too, in recent weeks, the Wall Street Journal has contained news on ecological developments in individual companies or sectors of the US economy.

The change in attitude is summed up in Business Week for January 29. "Sustainability" had been viewed as merely adding to costs and perhaps prompting companies to set up Environmental Affairs Departments with a mainly public relations orientation. Then the companies could say they were abreast of these issues, have representation at major UN conferences on them, and the like.

Gradually, as companies did more research, they came to the realization that the kinds of projects they would undertake to meet sustainability goals or adhere to regulations actually presented business opportunities. Rather than adding to costs, these initiatives might reduce costs or yield new revenues from enhanced product offerings.

Here are three such activities that can give you a flavor for what's going on.

Wal-Mart, not presently known as the most thoughtful corporate citizen, is in fact working on environmental issues on a number of fronts. Some of them are very simple: it learned for instance that it could make a meaningful cut in its fuel usage and heating expenses by installing skylights in its buildings. The firm opened a new "energy efficient" store in an abandoned shopping mall in the Kansas City area in January. It cut down on the packaging for some of the toys it sells, reducing waste and in the process saving itself $1.2 million a year in shipping costs, according to the Business Week article. Perhaps most intriguing, the stores began to sell fish from "sustainable fisheries". Business Week quotes a major fish supplier about the effect of this policy, "They can have more impact than a bunch of smaller, more noble players . . . . It has brought an about-face in the mindset of the entire supply chain."

The Wall Street Journal in last Wednesday's (February 21) weekly "Property Report" notes that despite sharp declines in home sales and home construction, sales of environmentally friendly building materials are holding up well. Demand is up for dual-pane windows, heavy duty Styrofoam insulation and similar items to keep down heating and air-conditioning costs. Home Depot and Lowe's benefit, among other building suppliers. And after all the bad-mouthing Styrofoam has taken over the years as a clutterer of landfills, here is a good use for the material.

Finally, for today, the stories are true: you can get energy out of garbage. I've always thought this notion was pie-in-the-sky, but it isn't. The new, March 2007, issue of Popular Science** magazine describes in detail the development of a $250 million Plasma Converter, the Startech. It breaks down garbage – toxic stuff, even – into its molecular form. The fuel generated by the transformer is more than enough to cover the energy it uses itself. Sales back to the local electric power system, as well as lower garbage disposal costs, mean the machines pay for themselves very quickly. One of the first major commercial applications will be on Long Island, by a company that disposes of construction debris.

Some of these innovative projects are spurred by government regulation. But some are not; they come from private and genuine efforts to make the environment better. At the same time, as we noted here before, some naysayers may argue that the companies are just doing these things for profit. But the important point is that there is profit to be made in these products and services, whereas few saw such profit opportunities in the past. In a future Ways of the World, we'll examine what investors think about this emphasis; investment firms and stock researchers are already adding ratings of environmental policies to the financial indicators they study routinely in evaluating companies' debts and stocks.

In the past few weeks, we've brought you discussions of the massive amount of US petroleum consumption, car and truck designs and fuels, and new business environmental initiatives. We've learned a lot ourselves and, honestly, had a good time exploring these things. Acknowledging ecology is perhaps the most dynamic development in business practices and products since computers and will have far more fundamental and longer-lasting ramifications. We'll revisit it again soon.

Meantime, it's nearly spring, and for you and me, that can mean only one thing about our own personal economies: taxes. We'll shift our attention to some considerations about taxation in general and about our own tax returns.

*"Imagine a World . . . ." Business Week, January 29, 2007, pp. 50 – 64.
"Overselling Ethanol" U.S.News & World Report, February 12, 2007, pp. 30 – 39.
"The Greening of America", The Economist, January 25, 2007, pp. 9, 22-24.
**"The Prophet of Garbage", Popular Science, March 2007, pp. 56 – 61; 86 – 90.