Foundations for Sustainable Local 

Economic Development   Greening Existing Businesses  

   

Erin GrizzleAlecia Mills 

Tashieka Tucker       

Georgia Institute of Technology City and Regional Planning Program 

Planning Local Economic Development December, 2008 

     

Nancey Green Leigh, PhD, Professor Joy Wilkins, Dana King, EII, Co‐Advisors 

 

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Table of Contents: Introduction……………………………………………………………………………………..3 Chapter 1 - Understanding Green Concepts as Related to Existing Business………………………………………………………………………………………….3 1.1 Cradle to Cradle………………….…………………………………………3 1.2 Natural Capitalism………………………………………………………….5 1.3 Life Cycle Assessment……………………………………………………....5 Chapter 2: Greening Concepts in Practice……………………………………………………8 2.1 Green Tourism……………………………………………………………...9 2.1.1 Green Tourism Case Study….………………………………..…..9 2.2 Green Chemistry…………………………………………………………...14 2.2.1 Green Chemistry Case Study………………………………..…..15 2.3 Greening Landfills…………………………………………………………19 2.3.1 Greening Landfills Case Study…………………………………..20 Chapter 3 - Benefits of Greening: The Business Rationale…………………………………26 Chapter 4 - Benefits of Greening: The Economic Development Rational………………………………………………………………………………………...27 Chapter 5 - Conclusion………………………………………………………………………...28 References………………………………………………………………………...29

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Introduction Greening of an existing business can happen anywhere from the invention, definition,

construction, production and ultimate disposal of a product (Durrani, 2008). In addition, it can involve the facility where the product or service is produced or housed, and the way in which it is sold. The greening of existing businesses can involve re-working every aspect of the business model. Business practices such as online ordering, requiring suppliers to provide more sustainable products, tele-working, and using local suppliers are all examples of ways that existing companies have chosen to go green.

In broad terms, the greening of an existing business can be seen as steps taken to act in a way that is seen as sustainable or eco-friendly and that produces a meaningful benefit for society and is also valuable to the business and to local economic development (Durrani, 2008).

Chapter 1: Understanding Green Concepts as Related to Existing Business The construction of a green business model is reliant upon understanding some key concepts and practices as it relates to green business. Products, processes and even suppliers are all important components to consider.

Downcycling has been a buzz word in the green vocabulary, which means taking products that are made of high quality raw materials and recycling them into something of less quality and so on until they can no longer be recycled and are ready for disposal. In this process, the materials lose value and, as a result, we all lose valuable materials. The very process of recycling a product often involves harmful chemicals that pour more dioxins into the environment.

In 1789 a very insightful Thomas Jefferson wrote “The earth belongs….to the living….No man can by natural right oblige the lands he occupied, or the persons who succeeded him in that occupation, to the payment of debts contracted by him. For if he could, he might, during his own life, eat up the usufruct of the lands for several generations to come, and then the lands would belong to the dead, and not to the living (McDonough, 2002).” In a closed loop system such as our earth, where there is a finite supply of natural resources, it is in the best interest of future generations if we close the loop on natural resources so that they are reused.

Though mentioned so many years ago by Jefferson, this idea of closing the loop has only really taken shape in recent times and has been brought to the forefront by a book by Braungart and McDonough entitled Cradle to Cradle.

1.1 Cradle to Cradle Concept

In order to green existing businesses it is important to look at products and services. In a capitalist economy where growth and success are defined in terms of consumption, the authors of the book Cradle to Cradle turn their attention to products, and to the idea that systems should not only be efficient, but essentially waste free.

Traditionally, sustainable has been defined as exploiting the natural resources without destroying the ecological balance of a particular area (Encarta, 2008). Since the advent of the

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industrial revolution, natural resources have been in plentiful supply and easily exploited, often to boost the economy. However, this exploitation has had some disastrous consequences.

The world’s population expends billions of pounds of toxic materials into the air, water, and soil every year and in the process we are harming our health, our ecosystems and destroying species.

The goal of the cradle to cradle school of thought is to design products that replenish, restore, and nourish the world. This will lead to “good growth – more niches, health, nourishment, diversity, intelligence, and abundance – for this generation of inhabitants on the planet and for generations to come (McDonough: pg 78).” It challenges us to work towards creating a sustainable earth with a diverse abundance of resources for millions of years. To reach this goal, the authors argue that we must design as if waste does not exist. They suggest that there are two types of resources that allow for the elimination of waste: biological nutrients and technical nutrients. “Biological nutrients and materials are fundamentally organic materials that can decompose into the natural environment, soil, water, for use by other animals. An example of this is wastewater treatment using microorganisms and plants that can help clean sewage and industrial wastewater in an ecologically sensitive way (McDonough: pg 105).” Apart from raw sewage, consideration of what goes into the drain from homes to industries should be designed in a way that they do no harm and provide nutrients to other living organisms without having to be treated.

Products such as packaging, shoes, clothes, upholstery, and textiles can be designed in a way that they become biological resources, serving as nutrients for other organisms instead of waste to be placed in a landfill or incinerated. The California Integrated Waste Management Board offers resources to buy biodegradable and compostable packaging (CA Waste to Management Board, 2008). Nike has also jumped on the bandwagon and created a biodegradable shoe.

Technical nutrients are inorganic or synthetic materials manufactured by humans such as plastics or metals, that can be used many times over without any loss in quality, staying in a continuous cycle (McDonough: pg 109). These are materials that are designed to go back into the industrial cycle. If technical resources can be kept separate from biological resources they can retain their high quality status and be upcycled back into a closed loop system and used over and over indefinitely. An example would be smelting like metals with like metals to retain their purity and like plastics with like plastics. The concept can be applied to industrial solvents all the way across the spectrum to carpeting. The initial goal is for the technical resources to be composed of safe materials. Thus no dangerous waste would be produced, and because products are constantly recirculated, demand for natural resources would be reduced. Additionally, manufactures would save billions of dollars on new material purchases (McDonough, 2002).

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An example of a community encouraging technical resources can be found in Chicago under Mayor Daley’s GreenWorks Awards program. In 2007 the GreenWorks program recognized the Waste to Profit Network, which works with city, state, and local companies to convert the waste of one company into resources for another (Illinois Waste Management, 2008). This process is referred to as by-product synergy, and reduces the environmental impact of production while providing businesses with opportunities for new product development, all the while working with technical resources. By-product synergy is the principle that underpins the concept of “industrial ecology,” a holistic view of industry in which organizations exchange energy and material between one another (USBCD, 2008). This is a shift towards a closed loop and inter-dependent relationship similar to that found in nature. In addition to Mayor Daley’s GreenWorks Awards, the U.S. Business Council for Sustainable Development has implemented by-product synergy programs in various stages in Connecticut, Massachusetts, Michigan, Ohio, Denver, Colorado, Mobile, Alabama and the San Francisco Bay area in California.

So how do businesses develop a cradle-to-cradle program? Braungart and McDonough suggest several steps:

1. Start by eliminating harmful substances in product design and construction including PVC, cadmium, lead, and mercury.

2. Make the best decisions you can based on the information available to you. This means choosing materials that are not harmful, and respecting the people and communities that are manufacturing, transporting or consuming your products.

3. Reduce and reuse harmful substances in manufacturing where there is currently no substitute and make healthy substitutions when possible. 4) Reinvent your product or system to something that may be entirely different than the one you started with. Design outside of your paradigm (McDonough, 2002).

1.2 Natural Capitalism

Similar to the cradle to cradle line of thought, another concept associated with greening existing business is natural capitalism. As defined, natural capitalism refers to “conducting business profitably, while also protecting natural resources (Lovins, 2007).” Some common strategies for business include adopting technologies that extend natural resources’ usefulness, designing production systems that eliminate costly waste, reinvesting in nature’s capital, changing your business model and imitating biological production models (Lovins, 2007).

Conserving natural resources means using less material per unit by improving the product’s design. Industry can accomplish this by increasing the product life cycle, reducing energy consumption in the manufacturing process and building in recyclability. Conserving natural resources also means evaluating your supply chain. One example of this would be purchasing raw materials from sustainable forests rather than those of traditional suppliers.

1.3 Life-Cycle Assessment

Consumers are increasingly interested in the world behind the product they buy. Life cycle thinking implies that everyone in the whole chain of a product’s life cycle, from cradle to grave, has a responsibility and a role to play, taking into account all the relevant external effects. The impacts of all life cycle stages need to be considered

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comprehensively when taking informed decisions on production and consumption patterns, policies and management strategies. (Klaus Toepfer)

A third, yet still similar concept related to the greening of existing business is life cycle assessment. In the 1960’s, growing concerns for raw materials and energy resources came to the forefront, which led to inventive ways to account for energy usage and to project future supply and use of resources (SAIC, 2006). In 1969, a group of researchers did an internal study for Coca-Cola that laid the foundation for the current method of life cycle inventory analysis that is used in the United States (SAIC, 2006). The study was used to compare different types of beverage containers to determine which container had the lowest release into the environment and used the least amount of natural resources (SAIC, 2006). The study was able to determine the raw materials, fuels and environmental loadings from the manufacturing processes for each container (SAIC, 2006). By the 1970’s other companies adopted this method.

Consumers’ increasing interest in a more holistic approach to green has also led businesses to think more critically about adopting practices to foster green ideals. Businesses use life cycle assessment or LCA as a tool to make greener products and processes (SAIC, 2006). LCA evaluates every stage of a product’s life from the perspective that each stage is independent, yet each operation leads to the next (SAIC, 2006). “LCA enables the estimation of the cumulative environmental impacts resulting from all stages in the product life cycle, often including impacts not considered in more traditional analyses (e.g. raw material extraction, material transportation, ultimate product disposal, etc.)” (SAIC, 2006, pg. 1). LCA provides a comprehensive view of the environmental aspect of a product or process (SAIC, 2006). It also helps to provide a more accurate view of the environmental trade-offs in product and process selection (SAIC, 2006).

The term life cycle refers to the major activities in the course of a product’s life span; from its manufacture, use and maintenance, including raw material acquisition required to create the product, to its final disposal (SAIC, 2006). The table below illustrates the life cycle stages that are considered in a life cycle assessment and typical inputs and outputs that are measured (SAIC, 2006).

Source:  Wikipedia:  Life Cycle 

Assessment  

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LCA uses a specific technique to assess the environmental aspects and potential impacts associated with a product, process, or service by:

1. Compiling an inventory of relevant energy and material inputs and environmental releases.

2. Evaluating the potential environmental impacts associated with identified inputs and releases.

3. Interpreting the results to help decision-makers make a more informed decision (SAIC, 2006).

The LCA process is made up of four components: goal definition and scoping, inventory analysis, impact assessment and interpretation. Each of these is described in greater detail below:

Goal definition and scoping defines and describes the product, process and/or activity. It also establishes the context in which the assessment is to be made and identifies the boundaries and environmental effects to be reviewed for the assessment (SAIC, 2006).

Inventory analysis identifies and quantifies energy, water and materials usage and environmental releases (SAIC, 2006).

Impact assessment evaluates the potential human and ecological effects of energy, water, and material usage and the environmental releases identified in the inventory analysis (SAIC, 2006).

Interpretation analyzes the results of the inventory analysis and impact assessment to select the preferred product, process or service with a clear understanding of the uncertainty and the assumptions used to generate the results (SAIC, 2006).

Life Cycle Approach and Business

It is important for businesses to internalize how each choice that leads to a specific product or service, impacts the environment and community (SAIC, 2006). When a business

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thinks holistically about a product’s design, it benefits the business, as well as consumers through cost savings (SAIC, 2006). When businesses incorporate the life cycle approach into their strategy, it improves market share, brand image, the effective use of materials and innovation (SAIC, 2006). Through LCA businesses are able to optimize how they use their time, capital, labor and material input (SAIC, 2006).

Limitations to Life Cycle Approach

The life cycle approach does have its limitations. Performing a life cycle assessment can require time and resources. There is also the problem with the availabilty of data. There has been concern about the analytical and practical approach to LCA. The analytical approach has been said to be to scientifically driven, making it too complicated (UNEP, 2005). It becomes difficult for small firms to implement the LCA process (UNEP, 2005).

Chapter 2: Greening Concepts in Practice Businesses across the globe are beginning to consider the life cycle of their product portfolios and are making conscious decisions to green their practices. Three industries leading the way in creating greener products and processes are tourism, chemistry and utilities/waste management.

2.1. Green Tourism

Green tourism is on the rise as more individuals are becoming increasingly concerned about the environment. In the long term, green tourism will have a positive impact, decreasing tourist’s carbon footprints. Global Sustainable Tourism, a coalition of 27 organizations dedicated to sustainability, has developed criteria to help identify what constitutes green tourism. There are four criteria: effective sustainable planning; maximizing social and economic benefits for the local community; enhancing cultural heritage; and reducing negative impacts to the environment (Partnership for Global Sustainable Tourism Criteria, 2008).

Tourism is the United Kingdom’s major economic driver. The nation recognizes the importance of the green movement and its impact on tourism. In 1999, the U.K. established the Business Council for Sustainable Development (BCSD-UK, 2006) a non-profit organization focused on the implementation of sustainable values and the promotion of sustainable development as integral to business standards and new business opportunities (BCSD-UK, 2006). The United Kingdom also has the Green Tourism Business Scheme (GTBS), founded in 1997 (GTBS, 2008). It is the largest organization of its type, with 1,400 members across the U.K. (GTBS, 2008). The U.K. has seen a growing number of visitors doing business with companies and organizations that take a green approach to their products and services (GTBS, 2008). As a result, GTBS is working to equip its members with knowledge and expertise that will assist them in becoming more sustainable, and thus attractive to potential customers, by reducing energy usage, while providing a competitive advantage (GTBS, 2008). In the next section, a case study is used to take a closer look at the details of a green tourism program.

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Case Study: Green Tourism in Florida

Strategy

Florida is one of the most visited states in America, second only to California (Travel Industry Association of America, 2008). In 2004, Florida had over 76.8 million visitors (Florida Quick Facts, 2008). The tourism industry has a $57 billion dollar impact on the state’s economy. Since tourism is a large business, Florida’s Department of Environmental Protection Agency (EPA) established the Florida Green Lodging Program (FGLP) to recognize and reward environmentally conscientious lodging facilities in the state (Green Lodging, 2008).

The EPA started a recycling program in the mid to late 1990s in an attempt to encourage hotels to recycle. However, its attempts failed because the hotel industry refused to participate, arguing that recycling was too expensive. The EPA then devised a program that incentivized recycling, making it an economically sound decision for the hotel industry. It also devised a certification program called the Green Lodging Program. This program preserves the state’s natural environment and makes good business sense. The lodging industry is one of the state’s largest commercial sectors; over 83.6 million people visit Florida, half of which stay in hotels, motels or bed & breakfasts (Green Lodging, 2008). Hotels that are certified by the Green Lodging Program must reduce water use, conserve energy and decrease their solid waste (FRLA.Org, 2004-2008).

Process and Implementation

In 2002, the EPA held a stakeholders meeting that included the Hotel Motel Association of Volusia County and the convention and visitor’s bureau. The chamber of commerce and other vendors offering green service became stakeholders later on in the process. Initially, the EPA received opposition from water and energy facilities. These groups believed that the program would have a negative impact on their sales revenue. There was also opposition from the hotel industry because other similar programs already existed. However, Florida faced a challenge that was unique to its state: an above average amount of rainfall and water present. In order to be responsive to Florida’s specific needs, the Florida EPA developed the Green Lodging Program, in addition to these other, similar programs.

The main purpose of the program is to understand and improve environmental performance, instead of simply implementing a few, so called, green practices Once an initial program was developed, and the EPA selected four pilot hotels. In March 2004, these hotels received certification, which meant they met the following criteria (More, 2008):

An environmental champion was identified. Approval was obtained from appropriate management and an admission

application was submitted. A “Green Team” was created. An Environmental Assessment was conducted. Goals were established and environmental improvement areas were identified. On-site designation reviews were schedule. A system to monitor and evaluate the project was established.

These criteria are explained in greater detail below:

Identifying an environmental champion:

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The Green Lodging Program believes that a successful program a leader will serve as a liaison between the FGLP office and the hotel during the process. The environmental champion need not have expertise in environmental issues, but must be able to communicate well and have organizational skills (Moore, 2008). Obtain top management commitment and submit the admission application: FGLP requires an official sanction from top management to give legitimacy to the commitment of the hotel/motel to conservation (Florida Green Lodging Program, 2008). Create a Green Team The Green Team can be set up as a formal or informal group that is responsible for ensuring that all environmental improvements are being performed correctly and in a timely manner (Florida Green Lodging Program, 2008). The Green Team usually represents an individual from each hotel/motel from housekeeping, engineering, kitchen, front office, maintenance and upper management (Florida Green Lodging Program, 2008). Conduct an Environmental Self-Assessment

The Green Team is charged with assessing how green the facility currently is. The team is to identify and evaluate opportunities to improve their environmental performance by conducting a walkthrough of the hotel property. The Green Lodging Program designed a checklist that the facility can use for guidance in obtaining baseline data (Florida Green Lodging Program, 2008). This includes a review of product purchases, utility bills and waste hauling records (Florida Green Lodging Program, 2008). The team will also record a list of baseline utility data for water, energy and waste for the property (Florida Green Lodging Program, 2008). There must also be one year of baseline data to cover seasonal fluctuations (Florida Green Lodging Program, 2008). FGLP has outlined core activities that every hotel/motel must adhere to, and are verified on-site, by a trained FGLP assessor (Florida Green Lodging Program, 2008). The core activities represent the minimum best practices in the area of communication, water conservation, energy efficiency, waste reduction and clean air, that all designated members will have to implement (Florida Green Lodging Program, 2008). These are described in more detail below:

Communication: All of the following communication efforts will be required.

The hotel/motel’s Environmental Self-Assessment and Planning Checklist must be made available to the public (upon request).

The hotel/motel must ensure that the staff is familiar with the hotel’s environmental policy and their role in it.

There must be a discussion about green practices at staff meetings. The environmental initiative must be communicated to guests and staff through

newsletters, television, placards in guest rooms, etc. The hotel/motel must provide a formal process for guests and staff to give

feedback on green practices (e.g. suggestion box or survey form).

Water Conservation: At a minimum, three of the following water conservation efforts must be implemented.

The hotel/motel must offer a towel reuse program in guest rooms.

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The hotel/motel must offer a linen reuse program in guest rooms. The hotel/motel must use low flow faucets that use 2.5 gallons or less per minute,

or 1.6 gallons or less per flush in guest rooms. The hotel/motel must use low flow showerheads that use 2.75 gallons or less per

minute in guest rooms. The hotel must use automatic faucets or toilets in public restrooms. The hotel/motel must use water efficient clothes washing machines that use less

than 25 gallons per load.

Energy Efficiency: At a minimum, two energy efficiency efforts must be implemented.

The hotel/motel must use Energy Star-rated equipment other than lighting. The hotel/motel must use programmable thermostats. The hotel/motel must use sensor lighting, both indoor/outdoor. The hotel/motel must use high energy efficient lighting. The hotel/motel must use a computerized Energy Management System. The hotel/motel must support green power, either by installing renewable energy

generating equipment (e.g. solar water heating system), purchasing at least five percent of green power through a local utility or purchasing green tags (renewable energy certificates) from a green power generation source in Florida.

Waste Reduction: All four waste reduction categories below must be implemented.

The hotel/motel must provide an opportunity to recycle all of the following materials, and at least one must be available to guests: office paper, newspaper, magazines, corrugated cardboard, aluminum cans, steel cans and plastic bottles.

The hotel/motel must purchase a minimum of 30 percent post-consumer recycled content for one of the following products: office paper, toilet tissues, paper towels or paper napkins.

The hotel/motel must institute one of the following source reduction activities: bulk purchasing, reduced packaging or manufacturer take-backs.

The hotel/motel must recycle ink cartridges and toner cartridges.

Clean Air Practices: All of the following clean air practices must be implemented.

The hotel/motel must use environmentally preferable cleaners. The hotel must use high efficiency air filters with a Minimum Efficiency Rating

Value (MERV) of 8 or better. The hotel/motel must clean all air handler units and coils at least annually, follow

a preventive maintenance schedule and keep a record of all activities.

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Schedule on-site assessment Once the Green Team has satisfied their requirements, a trained assessor will come out to assess the property (Florida Green Lodging Program, 2008). The assessor will determine if each of the criteria has been met (Florida Green Lodging Program, 2008).

What is unique about the program is that each facility must be committed to developing and implementing improvement goals (Moore, 2008). The Green Team must review and re-evaluate opportunities to improve environmental performance by conducting a walk through of the property and complete another Environmental self-assessment and checklist (Florida Green Lodging Program, 2008). The improvement goals that the Green Team sets must include short and long-term targets (Florida Green Lodging Program, 2008). There is some flexibility in the types of short and long-term goals that facilities can set (Moore, 2008). Each facility must track and evaluate the progress of the new targets, and is then reviewed by FLGP assessor.

A large proportion of the program’s budget is used for staff, and to train assessors that go out into the field to assess properties (Moore, 2008). Funding for the program comes from the EPA’s General Revenue Fund (Moore, 2008). Examples of Certified Hotels

In June 2007, the Hilton at the Walt Disney World Resort was designated by the Green Lodging Program. The Hilton uses ENERGYSTAR appliances to conserve energy and has implemented a recycling program for paper, cardboard, aluminum and steel cans, magazines, plastic, ink cartridges, kitchen grease, fluorescent lamps and soap (FRLA.Org, 2004-2008). The facility also has low flow toilets, faucets, showerheads and charcoal air filters (FRLA.Org, 2004-2008). The Sheraton Suites Tampa Airport is the 169th hotel to become a designated member. The hotel has also committed itself to helping conserve and protect Florida’s natural resources. Outcomes

Florida’s Green Lodging Program resulted in many positive outcocmes. The program has helped to integrate pest management, the use of organic pesticides and encourage the hotel and motel industry to use local resources. The environmental impact has been a decrease in gas emissions, a decrease in the use of natural resources, and an increase in energy efficiency. With rising energy costs, the Green Lodging Program has assisted hotels and motels in lowering power, water and waste bills (FRLA.Org, 2004-2008). There have also been unintended benefits. Staff have incorporated practices learned from the program into their personal lives (Moore, 2008). Workers also appreciate the change to green practices because they are less exposed to harmful chemicals (Moore, 2008). People with asthma have also experienced a difference after facilities incorporate green programs (Moore, 2008).

Additionally, designated members have incorporated commuting programs for their workers, and designated properties have the opportunity to use the FGLP logo on their marketing material, showing their commitment to environmental protection and conservation (FRLA.Org, 2004-2008).

On July 13th, during the Serve to Preserve Florida Summit on Global Climate Change, Governor Charlie Crist, signed three executive orders initiating state energy-use policies, one of

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which requires all state agencies and departments to hold meetings and conferences at hotels that participate in the Green Lodging Program whenever possible (FRLA.Org, 2004-2008). The summit also explored how groundbreaking technologies and strategies could place Florida at the forefront of the movement to reduce the emissions of greenhouse gas (FRLA.Org, 2004-2008). The governor’s executive orders spurred interests, and now there are 352 designated properties in the state of Florida (Moore, 2008).

Currently, the organization is working with the University of Central Florida to quantify the success of the Green Lodging Program (Moore, 2008). Lessons Learned and Conclusions Florida’s Green Lodging Program took years to develop into its current state (Moore, 2008). When Florida began its quest to encourage the tourism industry to adapt green practices, not many other states were embarking on this endeavor (Moore, 2008). Through trial and error, Florida learned what works best for their state, and developed reasonably attainable goals for the hotel industry (Moore, 2008). The crucial lesson learned during this process is that it is important to hold the industry accountable by making site visits to ensure that hotels/motels are holding up to their end of the bargain (Moore, 2008). The Green Lodging Program is not a static program, it forces members to think of ways to continually improve themselves.

Green Chemistry Another popular practice in the greening of existing businesses, green chemistry, focuses around the creation of green products and services by utilizing green processes and components throughout product design and development. To better understand this concept, we turn to Paul Anastas and John C. Warner, who developed a set of guiding principles to help define green chemistry as:

1. “The design of processes to maximize the amount of raw material that ends up in the product.

2. The use of safe, environment-benign substances, including solvents, whenever possible.

3. The design of energy efficient processes.

4. The best form of waste disposal is to not create it in the first place.” (Anastas, Warner).

Under the Pollution Prevention Act of 1990, U.S. policy states that “pollution should be prevented or reduced at the source whenever possible. Chemicals that persist in the environment remain available to exert toxic effects and may bioaccumulate. Biodegradability should be viewed as integral to Product design.” (Boethling) As a result of national policy, the Environmental Protection Agency provides support for green chemistry initiatives through projects and programs, including educational activities and research and development.

The City of Chicago has long had abundant technological resources in the area of green chemistry, including the Waste Management and Research Center (WMRC). Founded in 1985, the WMRC is affiliated with the University of Illinois and the Illinois Department of Natural

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Resources. The WMRC provides technical assistance to engineers and existing businesses to help reduce solid waste and toxic release into the air and water. In addition to green chemistry, the WMRC also assists with pollution prevention, energy efficiency, water purification and conservation, environmental management systems, compliance assistance and testing of alternative technologies. In 2006, the forward thinking company, Consolidated Printing, won Chicago’s Green Works Award for substituting food-grade products for chemicals used in traditional printing practices (City of Chicago). Below, we take a closer look at this greening method in practice.

2.2. Case Study: Green Chemistry in California

Strategy

Paul Anastas and John Warner’s 1998 book “Green Chemistry: Theory and Practice” provides a comprehensive introduction to alternate feedstocks, and environmentally benign chemicals. Feedstocks are the raw materials needed in some industrial practices. “Theory and Practice” was targeted to professionals involved in the design (chemists and environmental scientists), manufacture and disposal of chemicals and their products. The book points out that chemists are not trained as toxicologists, and gave little consideration for end-of-pipe pollution prevention. Throughout the pages of the book, Anastas and Warner support replacing toxic chemical processes with ones that are not hazardous to the environment. This became known as Green Chemistry.

Green Chemistry promotes innovative ways to protect human health and the environment, while providing new economic opportunities. Greening of the chemicals used in industrial processes can reduce hazardous substances at the molecular level that can be implemented for commercial use. Thus, it incorporates cradle-to-cradle sustainability.

Motivation for California’s chemical policy came from several factors. Each day, California produces or imports 644 million pounds of chemical substances for industrial or commercial purposes. The U.S. imports or produces 42 billion pounds. We do not know all of the health or environmental effects of the 83,000 chemical substances listed in the Toxic Substances Control Act (TSCA) Inventory.

Americans dispose of two million plastic bottles and 60,000 plastic bags every five seconds. Some of this ends up in the ocean where plastic makes up 90 percent of floating debris, and is found in 48-86 percent of seabirds and marine mammals. Electronic waste ends up in landfills or is transported to Asia. California has 85 large hazardous waste sites and 61 of them are leaking into groundwater, posing a major threat to human health and the environment. Chemicals are ending up in human breast milk, and have been detected in umbilical cord blood.

California has found themselves in a crisis. Since the 1970’s, hazardous waste per capita in California has been going up. The legislature has passed 35 bills regulating environmental waste, but they have been ad hoc laws, usually trading one waste byproduct for another. As a result, California decided to take action. First, they looked at what steps other entities had taken to approach the problem.

Outside of the United States, the European Union (EU) enacted regulation entitled REACH, on chemicals and their safe use, in June of 2007. The new law’s aim is to protect

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human health and the environment through better and earlier identification of hazardous substances. Not only is the EU acting, but so are individual countries within the EU. Sweden has set a very ambitious goal to produce zero toxins by the year 2050. These new laws not only affect European Union countries but also affect multinational corporations based in other countries. California’s exports to the EU totaled $22.8 billion in 1999, providing impetus on the part of California in order for them to compete in the global market.

Armed with knowledge from such books as “Green Chemistry: Theory and Practice,” and “Cradle-to-Cradle,” the California legislature started asking questions about waste reduction on the front end in the upstream processes. Since 2007, the California EPA has been engaged in a fact-finding policy exploration process to identify what cradle to cradle regulations look like.

The California EPA has a budget of $1 billion. The Department of Toxic Substances Control (DTSC) is one of the entities that comprise the California Environmental Protection Agency. DTSC’s focus is on the clean up of end-of-pipe waste products (emissions, wastes and discharges).

As a part of the information gathering process, the DTSC has instituted an interactive online discussion allowing the public to provide input on policy formulation in real time. The questions DTSC pose online are provocative, in order to get the public to tell them what they really think. A team reviewed the 57,000 hits DTSC received, and created matrixes and categorized responses. DTSC also held stakeholder workshops, where people were placed in groups, asked to create related policy, and then present their ideas to the entire workshop.

Director of DTSC, Maureen Gorsen also talked with chemists who designed plastics made from polymers. Polymers will last thousands of years, whereas the planning horizons for landfills are at most 300 years. She determined that it was crucial to begin with a product design that had biodegradability built in.

Next, the data gap was addressed. Consumers and manufactures simply do not know what is in the products and compounds they are using every day. Most would like to know, but the information is just not available. Therefore, research is paramount in providing transparency in the system.

Innovation is also necessary to identify new chemicals and processes to replace most of the hazardous chemicals now in use. The question is, how to build this green chemistry capacity right now. The answer is to provide incentives.

Process & Implementation

In 2008, the DTSC commissioned a report called the Green Chemistry Initiative, outlining green chemistry options for the state of California. This 190 page report was completed in May by a science advisory panel composed of a diverse group of organizations (Office of the Gov. 2008). They include:

Warner Babcock Institute for Green Chem. UC Berkeley UC San Francisco Yale MIT University of Pittsburgh Occidental Chemical Corp. HealthRisk Strategies Environmental Defense Fund Center for International Law Toxicology Excellence for Risk Assessment University of Mass-Lowell Johns Hopkins Bloomberg School of Public Health Dean, Pardee RAND Grad School Dow Chemical Clean Production Action UC San Diego Environmental Health Sciences Grand Canyon Trust Chemistry Dept Stanford, Institute for Research and Technical Assistance. Department of Toxic Substances Control California Environmental Protection The advisory panel created a mission and vision statement reflecting a cradle to cradle system for chemicals and toxins so that ultimately these substances stay out of the environment and human beings. The panel established subcommittees with designated chairs and co-chairs. They set up independent advisory panels corresponding to different specialties within the group, and opened their meetings for public comment. The subcommittees consisted of: (Office of the Gov. 2008)

Advancing green chemistry through evaluation of data needs and availability. Advancing Green chemistry and engineering through alternatives assessment. Advancing green chemistry through evaluation of

incentives and barriers. Advancing green chemistry through education and

information dissemination. Science and technology / research challenges and

opportunities. The panel recognized that to accurately address innovation and investment in green

chemistry, one must realize that the supply and demand for green chemistry are intricately connected. Thus in order to build the supply and demand side, the following recommendations were made: (Office of the Gov. 2008)

Supply:

Education of green chemistry in K-12 and college curriculums, provide fellowships and internships, train through vocational and workforce development.

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Research, Invention, and Innovation of Green Chemistry through partnerships and industry associations.

Implement management system approaches.

Help companies evaluate and inform their upstream and downstream processes.

Provide awards and competitions.

Develop Green Chemistry Web Portal.

Develop non-profits to identify, develop and test safer alternatives.

Demand:

Identify and prioritize chemicals and their toxicology because many are poorly understood.

Map the flow of chemicals.

Create government regulations to mandate disclosure. Identify and consider safer alternatives and phase out hazardous chemicals.

Provide guides to greener alternatives.

Provide a “green scorecard.”

Marketing (web-based marketplace).

Outcomes

Green chemistry practices can provide good economic growth by improving the profitability of businesses that use safer materials. Several California companies have been leading in removing chemicals from their products. Shaklee Corporation turned to a German chemist at Cogins to help them create a green product that dissolves dirt and grease made from coconut oil and sugar. A chemical engineering graduate from Stanford University started Methods Products, Inc., a green company based in San Francisco. Method’s sales have reached $77 million a year. Another company, the Johns Manville Co. was bankrupted by the toxic material asbestos in its fiberglass insulation product, but under new ownership they turned to Rohm and Haas to create insulation using formaldehyde free glue. This new product is competitive in price with building insulations that are still manufactured using formaldehyde. Because their manufacturing process uses no formaldehyde, they are exempt from federal hazardous air pollutant standards. Rohn and Haas were also instrumental in formulating a low emission paint now used on the 86 million square feet of California’s bridges. The paint doesn’t have smog producing petroleum-based solvents, and is as durable and rust-resistant as the old paints.

As the above examples show, going green can provide new jobs and give forward thinking businesses a competitive advantage especially in a global market in which countries are mandating new regulations requiring non-toxic substances. Going green can also relieve state

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and local government economic pressures. Most of the EPA’s budget is spent on end-of-pipe regulations and clean-up. Green chemistry can reduce or eliminate downstream mediation. Workplace chemical exposure cost California insurers, employees and workers $1.4 billion in 2004 in both direct and indirect health costs.

The outcomes of the Green Chemistry Movement can also be seen in the halls of California’s governing bodies as well. In 2005, California enacted SB 484, the first law in the nation that requires the disclosure of chemicals in cosmetics. In 2006, they enacted SB 1379, which measures and catalogues human exposure to chemicals. (Office of the Gov. 2008)

On September 29, 2008 Governor Arnold Schwarzenegger signed two groundbreaking environmental legislative bills, AB1879 and SB 509, into law. Governor Schwarzenegger said, “we will stop looking at toxins as inevitable bi-products of industrial production, but as something that can be removed from every product in the design stage; protecting people’s health and our environment (Office of the Gov. 2008).” The governor also said this effort would spur new research and innovation in green chemistry and drive economic growth.

AB1879 will further these previous bills by giving authority to the Department of Toxic Substances Control (DTSC) to create and regulate a process to identify and categorize hazardous chemicals. It also creates a Green Ribbon Science Panel who will give advice on policy and implementation strategies based on strong science. The Green Ribbon Science Panel’s members are composed of experts in the following fields of knowledge: (Green Ribbon Science Panel, 2008)

Chemistry Chemical Engineering Environmental Law Toxicology Public Policy Pollution Prevention Cleaner Production Methods Environmental Health Public Health Risk Analysis Materials Science Nanotechnology

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Chemical Synthesis Research

SB509 creates a web-based database that consumers can access to learn about toxicity and the hazards of chemicals used in California. This database is called the Toxics Information Clearinghouse.

This legislation is a direct result of the recommendations made by the Green Chemistry Initiative Science Advisory Panel. They implement two of the recommendations from this panel, one from the supply side recommending a green chemistry web portal, and one from the demand side identifying and prioritizing toxic chemicals and their toxicology.

California has also started a biomonitoring program to test what is in people’s bodies. They expect that in four years the information will begin flowing in. This information will be matched with EU’s REACH data on chemical toxicology, to further progress the state’s policies regarding chemical use.

Lessons Learned

One of the challenges facing California is defining what is harmful and what is not. There are some obvious concerns where enough data has been compiled to classify some chemicals as toxic, but in most of the 83,000 chemicals, very little data exists on their impact to human health. DTSC and their science panel are looking at different tools, which will allow them to recognize safer alternatives faster. Some of these tools are matrices, which compare and analyze chemicals based on particular hazards, life cycle analysis and decision trees. These tools are intended to move toward greener alternatives as opposed to defining green. At some point, regulation may require toxicological testing.

Greening Landfills

A third main concept found in literature regarding the greening of existing business centers around the greening of landfills. Utility companies and waste management organizations in local communities are partnering with local businesses to harness the power of methane gas, the cheapest form of renewable energy. Solid waste firms are capturing methane gas from existing landfills, which is transferred as a green product to local utility companies, who then sell the gas to local businesses. These businesses then use it to power and heat their facilities, which in turn greens their production processes.

“From a greenhouse perspective, it’s very important that you capture methane,” said Michael Stoddard, deputy director of Environment Northeast. “But it’s a win-win when you not only avoid emitting it, but convert it to something useful (Gavin, 2007).”

More than 400 gas-to-energy plants can be found at landfills across the US (Gavin, 2007). This number is expected to double in the years ahead. Landfills account for one-fourth of the methane gas released by human

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sources, and produce power at about the same cost as wind turbines, with the added benefit of being a steady source instead of intermittent (Gavin, 2007).

Jenkins Brick Company of Montgomery, Alabama was the first major industry to build a factory near a landfill, specifically to produce electricity from methane. (Donnelly, 2007) Interface Flooring Systems, Inc. of LaGrange, Georgia spent over four years working to pipe landfill gas from LaGrange’s municipally owned landfill to company operations over nine miles away. As a result, Interface saves an estimated 30% on its gas bill and purchases an estimated $300,000-$400,000 per year of landfill gas from the city. LaGrange expects to recover its capital costs in seven to eight years on the $3 million project. The landfill is expected to supply gas for 30-50 years. (Johnson 2006).

Price increases in fossil fuels combined with policies created at both the state and federal level requiring utilities to purchase electricity from renewable sources make methane mining profitable. An example of these policies can be found in Massachusetts, where new legislation will require 15% of the state’s electricity to come from renewable sources by 2020 (Gavin 2007)

Local economic development implications

According to Stephen Johnson with the U.S. Environmental Protection Agency, “More and more businesses and communities are seeing the opportunity of turning landfill gas into win-win projects. It’s turning waste into wealth (Donnelly, 2007).” In terms of local economic development benefits, landfill gas projects generate revenue from the sale of the gas. Landfill gas use can also create jobs associated with the design, construction, and operation of energy recovery systems. Landfill gas projects involve engineers, construction firms, equipment vendors, and utilities or end-users of the power produced. Much of this cost is spent locally for drilling, piping, construction, and operational personnel, helping communities to realize economic benefits from increased employment and local sales (LMOP, 2008).

Businesses are also realizing the cost savings associated with using landfill gas as a replacement for more expensive fossil fuels, such as natural gas. Some companies will save millions of dollars over the life of their projects. Communities also enjoy increased environmental protection, better waste management, and responsible community planning (LMOP, 2008).

In order to better illustrate this concept, below is a practical example of how a landfill in LaGrange, Georgia was greened to benefit the environment, the economy and society as a whole, a true triple bottom line success.

2.3 A Case Study: Interface and the City of LaGrange: Using a Landfill Gas Recovery Project to Green Business and Government

In 2001, Interface Flooring and the City of LaGrange, Georgia embarked on a partnership that would utilize methane gas from a municipal landfill to power two large manufacturing facilities, greening not only products produced in these facilities, but the City’s utility service and landfill operations as well. The project was completed in 2005, and was “touted as the first of its kind in the flooring industry

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The City of LaGrange, with 27,000 citizens, provides a full range of services for its residents, with annual revenues of $71 million from its utility operations and $7 million from sanitation. With a goal of leading the way as a progressive and proactive city, the project allowed LaGrange to gain the distinction of being one of the first municipalities of its size to undertake a multi-customer utility whose profitability is derived from the sale of methane gas. Most ventures of this nature are led by privately operated landfills. In addition, the City expanded its coffers from the sale of the gas to a pre-established customer base.

Meanwhile, Interface Flooring, a global manufacture of carpet and fabrics, with $900 million in annual sales, also stood to benefit from the partnership. The company’s dedication to sustainable activities is even more impressive than its revenues. Interface’s vision is “Not just to change the company and eliminate the environmental footprint, but through the power of influence on others, to become restorative.” “Interface has a strong interest in sustainability and is laser-focused on trying to do community projects, which makes participating in the landfill recovery project an attractive and strategic option and in Georgia, a true triple bottom line success (Interface 2006).”

Strategy

In 2001, Interface became a founding partner in the USEPA Green Power Partnership. As such, they desired to have at least two percent of the energy used to power their production facility in LaGrange come from green sources. As a result, they approached the City of LaGrange with the idea of capturing gas from the city’s landfill (Interface, 2008).

At that time, the size of the landfill was 85.5 acres, with 3.48 million tons of waste-in-place, and little room for more. In fact, the city was already reviewing options to expand its landfill capacity, and therefore was receptive to Interface’s suggestion. Capturing the gas would create more space in the existing landfill, and eliminate the need for expansion, or the creation of a second landfill.

After this initial conversation, the city council elected to fund an initial study that lasted for almost two years in partnership with Interface to determine how much methane was coming out of the LaGrange municipal dump. They discovered that there

was enough gas present to power the Interface plant for 40 years. Realizing the potential that existed, Interface agreed to adapt its boilers and purchase the gas, if the city would consent to pipe it nine miles to their facility. (Dean, 2007).

The results of the study and Interface’s proposition were discussed at the council’s annual retreat in 2002, and were then presented to the city’s elected officials along with a financial model. Both received strong support. Therefore, it was agreed that the project, and partnership, should move forward.

Process and Implementation

Shortly following this decision, five key steps took place to determine an appropriate implementation strategy and approach (ARCADIS, 2001):

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Step 1: Options for gas extraction were determined and evaluated.

Option 1-Electric Generation: $3.95 million investment required with net revenue of $134,300 and a 29 year payback period.

Option 2: Inject Into Natural Gas Pipeline: Not viable due to carbon dioxide removal costs and concern about other contaminants, as well as liability issues.

Option 3: Direct Use: $3.53 million investment, net revenue of $707,960 with a five year payback period. This was the method selected.

Step 2: A visit was made to another landfill gas facility to collect information and understand the components and processes involved in extraction.

Step 3: The consideration of a bioreactor, which would yield more gas and increase landfill space by 30 percent.

Step 4: The possibility of building a wall to allow for vertical expansion of certain landfill cells was explored, and determined to be necessary.

Step 5: Information was acquired from World Resources Institute regarding industry benefits, which included an improved corporate environmental profile, emissions credits, lower energy costs and lower price volatility.

Once a strategy was in place, leaders emerged from the two entities to help guide the project. Once again, Interface Flooring not only initiated the project, but also worked with the City of LaGrange to lead and shape its implementation. The two men at the helm of the partnership were Patrick Bowie, director of utilities for LaGrange, and David Gutshaw with Interface.

In order to better understand Interface’s commitment to the project, it is important to more closely examine the culture of their firm. Interface adopted a culture of conservation long before the landfill gas project was introduced. This can be seen in slogans painted on factory floors reading “One Planet/Zero Harm,” reserved parking for car poolers and the use of recycled packing boxes (Dean, 2007). Interface adopted the cradle to cradle mentality by carefully examining all of its processes, and producing products that can be completely recycled upon their demise. For example, “By asking questions such as how would nature make a floor, Interface utilized biomimicry to construct Entropy, a leading design which is partly constructed in Troop County. Entropy is a pattern that can be applied in any-which-way, thus reducing the amount of finished carpet tiles that must be rejected as off-quality. (Dean, 2007). Also, by recycling worn tiles into backing for new carpet, the company diverted 16.8 million pounds of carpet from landfills last year alone. The company is also working to develop products that will eliminate the need for glue and volatile organic compounds (Dean, 2007).

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Eagerly responding to Interface’s suggestion of using landfill gas to create an alternative energy source, the City of LaGrange took an active leadership role in all phases of the project as well, from strategy development to implementation. Once the project was complete, the City’s utility was tasked with collecting the gas, cleaning it up, conditioning it, compressing it and piping it through the city’s power grid (CNN, 2007).

However, Interface was not the only established customer for the methane based fuel. In fact a competitor, Milliken Carpet, who had a facility located nearby, also agreed to use the gas, ultimately replacing 30 percent of its natural gas consumption with methane from the landfill. With the cost of natural gas increasing by 400 percent since 2002, this was a win-win situation for the city and for Milliken (PR Newswire, 2005).

Also a leader in sustainability, Milliken’s LaGrange operations adhere to principles of total quality management and environmental and safety initiatives that have allowed them to win awards for sustainable leadership and innovations (PR Newswire, 2005).

Several other entities also became involved in the project:

Selected to lead the actual methane extraction portion of the project, ARCADIS worked closely with the LaGrange utilities to collect leachate from the landfill and re-inject it into the waste mass, increasing the moisture content of the landfill waste, and accelerating the biodegradation of the material. This process led to the additional compaction of waste and the creation of more air space. Plus, a higher quality of gas was produced, which provided a more viable renewable energy source (ARCADIS, 2008).

EPA’s Landfill Methane Outreach Program (LMOP) also became involved early on in the project. LMOP is a “voluntary assistance and partnership program that promotes the use of landfill gas as a renewable, green energy source. By preventing emissions of methane through the development of landfill gas energy projects, LMOP helps businesses, states, energy providers, and communities protect the environment and build a sustainable future (EPA, 2008).”

Finally, as mentioned earlier, The World Resources Institute (WRI) served as a key source of information and support during the project’s early stages. WRI is, “an environmental think tank that goes beyond research to find practical ways to protect the earth and improve people’s lives. Their mission is to move human society to live in ways that protect Earth’s environment and its capacity to provide for the needs and aspirations of current and future generations. WRI provides objective information and practical proposals for policy and institutional change that will foster environmentally sound, socially equitable development (WRI, 2008).”

Weekly meetings were held between all parties involved.

After meeting with a team from ARCADIS and the City, the EPA and the Georgia EPD were eager to get on board, and as a result, fast tracked approval for the project, which would take four years to complete. A nonbinding Statement of Interest was mailed to potential industries in

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September of 2002. Interface and Milliken respond positively. Next, a gas collection and leachate recirculation contract was awarded in October of 2002 for $1.72 million.

Ten year contracts were signed with Milliken and Interface for 77,640 dths per year of landfill gas under current rates, with a monthly index discounted by 30 percent. The firm, Jordon, Jones and Goulding was hired to design the landfill gas distribution system. Contracts totaling $1.5 million were awarded for 600 cfm of conditioning equipment and eight miles of 6” PE pipeline. The net present value of the project was determined to be $27 million, with $1.3 million originating from the sale of the gas.

ARCADIS was tasked with the design, engineering and monitoring of the project, with quality being the number one concern. All contractors were pre-qualified to control for quality in construction. Over 50 wells for extraction were constructed, which is twice the number of wells expected for the size of the landfill. As a result, efficiency was increased (City of LaGrange, 2005).

In January of 2004, the gas collection system and bioreactor began operation, with service to customers beginning in October of 2005. After the collection system became operational, methane sampling was tested, and will continue to be tested once every five years to monitor the state of the landfill and its emissions.

The conversion of the city’s landfill and the construction of the framework necessary to supply Interface and Milliken with the new fuel source was a $3 million project. A total of $1.7 million was spent on initial construction. The city spent $1 million on the compression, filtration and delivery of the gas. LaGrange will recover its capital costs in seven to eight years, with the landfill lasting between 30 and 50 years (Johnson, 2006). The project had no impact on other city funding sources. It remained self-sufficient, while providing revenue for the city and savings for its customers.

To help fund the project, the City of LaGrange applied for and received a $1 million low-interest loan from the Georgia Environmental Facilities Authority (GEFA) to upgrade landfill management equipment, including the installation of the landfill gas collection system and construction of a landfill gas generating facility (EPA, 2008). GEFA offers low-interest loans of up to $3 million to local governments for solid waste management projects, particularly those that help minimize waste streams or mitigate environmental hazards (EPA, 2008).

Outcomes

The landfill gas project in LaGrange is a triple win for the environment, society and economically for those involved. As a result of the project, Interface saved an estimated 30 percent on its gas bills and provides $300,000-$400,000 per year to the city in utility revenues from the sale of the gas (Johnson, 2006). In fact, the city is expected to accrue $30 million in revenues over the next 50 years. These net revenues will offset property taxes for residents.

Meanwhile, in environmental terms, the direct use of landfill gas helps fight global climate change by eliminating emissions of methane into the atmosphere while providing an abundant green power source, that is cheaper than natural gas, to customers (Interface, 2008).

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In economic terms, the use of landfill gas moved Interface one step closer towards their goal of becoming a restorative company (Interface, 2008). In 2004, as a result of the landfill gas project, Interface was able to offset all of the green house gas emissions associated with its carpet manufacturing operations in North America, more than 21,667 metric tons of carbon dioxide equivalent (Lilienthal, 2005).

Additionally, society benefited because not only did the project add 20 years of life to the existing landfill, eliminating the need for a new site, but the air quality and odor surrounding the area was greatly improved, much to the delight of the landfill’s neighboring communities (Interface, 2008).

Finally, as a result of their dedication to the success of the landfill gas project, Interface received the Landfill Methane Outreach Program’s Energy Partner of the Year Award for 2005.

Lessons Learned

A project such as this is unfortunately not necessarily feasible for every city. Finding city leadership with similar goals and attitudes as those of City of LaGrange officials is definitely key for the successful replication of this project. Commitment to quality, and the creation of a transparent process, also helped to create success. The entrepreneurial culture of the city, its aggressive, proactive and progressive nature, sense of community pride and the can do attitudes of the mayor and city council helped to make the project a good fit.

Additionally, the partnership and coalition of interests with local companies helped to reduce both the risk and the cost to the city ,while supporting each firm’s sustainability initiatives, thus providing something for both sides (Milliken, 2008). The presence of a customer for the gas, and a revenue stream that would support the project, ultimately resulted in its success.

Chapter 3: Benefits of Greening: The Business Rationale Now that the concepts associated with the greening of existing businesses have been discussed, and we have reviewed practical examples, it is important to take a look at why it is advantageous for business to go green in terms of cost, competitive advantage, brand image and the like. While making decisions that are environmentally conscious may appeal to a business’ stakeholders, we must not forget that companies are even more concerned with satisfying stockholders. This section seeks to explain why greening a business not only helps the environment, but can boost profits as well.

As with any business decision, corporations and other entities considering going green compare the costs of the transformation against the benefits, both long and short term. Unfortunately many business owners assume that the upfront costs of greening are far beyond what their budgets allow. In reality however, not only do companies easily recoup the initial costs associated with going green, but the savings also trickle down to benefit company employees and communities in which the businesses are located.

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The greening of businesses is often viewed in terms of the triple bottom line, a concept that captures success on three different levels: economic, environmental and social. “In other words, the triple bottom line measures performance based on people, or human capital, planet, or natural capital and profit, or the traditional bottom line (WBCSD, 2008).” Companies who are cognizant of the triple bottom line are constantly striving to create cradle to cradle products and are routinely conducting life cycle assessments. By considering the triple bottom line, these firms typically see, “increased business value, more cost

savings, increased competitiveness and market shares, better public image and reputation, improved brand value and greater market access as a result (WBCSD, 2008).”

A 2006 study conducted by the Green Building Council found that, “the retrofitting of existing buildings can save 90 cents per square foot annually, thus recouping the initial investment in only two years (Cortese, 2008). Meanwhile, “Sustainability, or green strategies, can yield a 38% increase in profits over five years,” according to author Bob Willard, an expert in the field (Teague, 2008). Green businesses also shield themselves from risks such as inflation in energy prices, unlike companies who are not conscious of their environmental impact (Durrani, 2008).

Additionally, from a human relations standpoint, going green is a philosophy that can assist with staff attraction and retention (Divecha, 2008). In fact, greening can create a healthier and cleaner work environment, improved efficiency and lower operation costs, which can help attract employees (Cortese, 2008).

Looking at it from the accounting side, corporations can easily decrease expenditures on fixed costs by greening their business practices. For example, the hotel group Accor saved millions simply by changing to energy-efficient light bulbs and other sustainable practices (Neilson, 2007).

On the marketing front, greening practices help companies convey a positive image to consumers, helping to build their brand, while increasing employee satisfaction and performance. For example, the organic wine growers in New Zealand and around the globe have seen a reduction in costs as a result of going green, saving $1100 per hectare each year in chemical costs alone. But beyond cost savings, individual vineyards are using their biodiversity to present themselves as being environmentally sound to consumers, who are growing more and more attuned to what is green and what is not when making purchasing decisions. Additionally, growers have stated that not only do employees feel safer as a result of not interacting with potentially harmful chemicals, but they have a positive-mind set that comes from caring for the

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land, which results in greater worker satisfaction and productivity. This enthusiasm results in greater profits for the growers (Stewart, 2007).

However, what is now seen as a competitive advantage is slowly transforming into a commodity in the business community. In other words, customers and clients are beginning to expect the businesses that they interact with to focus on green initiatives. Those that do not will find their customer base looking elsewhere.

Government in Support of the Greening of Business

Government and development agencies can help support the greening of business through their purchases and services, and by providing incentives such as a state procurement system for safer chemicals and products. There are several other ways to induce green businesses through certification, low-interest investment loans, and tax credits for improvements in meeting environmental and health criteria that exceed current industry operating standards. Also, government and development agencies can develop tools to assist business in identifying suitable alternatives, and removing regulatory obstacles to innovation. Finally, recognition and awards should be implemented to give companies going green a government seal of improvement that the public and purchasers can have confidence in.

Chapter 4: Benefits of Greening: The Economic Development Rationale Private sector businesses are certainly not the only ones reaping the benefits from going green. Local communities are also reaping the rewards in terms of new business creation and employment. Meanwhile, these same communities are also greening their internal strategies in order to cut costs and create opportunities.

For example, the City of Chicago is greening its tourism industry by encouraging eco-friendly hospitality businesses such as the Fairmont Hotel. Chicago is improving the city’s aesthetic benefits with green roofs, creating additional park space and tourist destinations such as Shedd Aquarium and focusing on becoming a leader in urban organic farming, with businesses cropping up such as City Farm, where visitors can find local organic produce (Garrett, 2008).

New business creation

The greening of existing businesses is expected to create a need for individuals with specific skill sets and knowledge as related to the transformation of existing business processes. As a result, consulting firms that specialize in these activities are popping up on the business landscape.

Existing firms are also adding new divisions to accommodate the interest in the green movement. For example, a new business unit is developing at McGraw-Hill to produce reference materials for businesses interested in going green. “McGraw-Hill launched ‘HQ: Good Design is Good Business’ to inspire workplace effectiveness, sustainability and economic rewards. The

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company expects that 82% of companies will be greening at least 16% of their portfolios by 2009 (Science Letter, 2008).”

General Electric also launched a new eco-imagination division in 2005, with the purpose of producing new products and services to provide clean air and water. This division is expected to increase its revenue to $20 billion per year within three years. Product lines include wind turbines, solar panels, water desalination plants and energy-efficient appliances (Neilson, 2007).

New revenue streams are also expected to come from the intellectual property, licensing and manufacturing revenues as a result of the greening transformation.

Employment

The greening of existing businesses is also helping to create a new class of green collar jobs. In other words, “jobs that help businesses fund, plan and manage everything to do with helping the company meet corporate or social responsibility around climate change, including engineers, compliance specialists, innovations managers, emissions audit experts and the like (Hartmann, 2008).” In fact, the green collar economy is expected to see the creation of over 340,000 new jobs in the next 10 years, beyond normal turnover (Hartmann, 2008).

Training programs are also being implemented to insure that workers develop these needed skills. The Construction and Property Services Industry Skills Council has funded green apprenticeships and training programs that allow businesses to educate workers for future green business needs, especially in the manufacturing industry (Hartmann, 2008). Additionally, the United States Congress recently passed a bill to create a $125 million green-collar training program (Fuentes, 2007).

Wages/Income

Cost savings from greening activities filter down to employee wages as well. Take for example the greening of Boston’s taxi fleet. The City of Boston operates 1,800 cabs, with 400 turning over each year. Two years ago, the Boston Clean Air Cab program was launched. Since then, the program has used hybrid taxis to save almost 70 percent on fuel costs alone. While the hybrids are expensive, they save drivers about $40 per shift on fuel, which translates into a yearly savings of about $25,000 solely in fuel costs, resulting in drivers making more take home money (Bachrach, 2008).

Chapter 5: Conclusion Several communities and businesses both in the United States and abroad have aggressively moved towards creating sustainable practices and products. Communities are realizing that greener is better, and as a society we are beginning to hold businesses accountable, thus making them more socially and environmentally responsible. Though shifting existing business practices and products to green may have high upfront costs, the benefits to the environment and the financial gains that businesses will realize in the long-run are immeasurable. Greening existing businesses provides cost savings, energy efficiencies and makes companies more productive and healthier.

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As the U.S. competes with other countries in this growing green sector it is important to secure the ‘first mover’ advantage in order to obtain future success and a competitive advantage (Ong & Patraporn, 2006).

References

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