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Does Going Green Always Mean Making Green ($)?

Posted by: John Carey on May 25

Lots of companies talk big about ‘sustainability,’ bragging about how much they are cutting energy use, greenhouse gas emissions, and their impact on the planet. Many — from Ford to Sun Microsystems — now have vice-presidents for ‘sustainability’ or ‘eco-responsibility’ to oversee these efforts.

Some of this is public relations, of course. But proven reductions in energy or emissions are important, no matter what the original motives. And companies usually get a bottom line benefit. DuPont, for instance, pegs its ‘green’ savings at more than $2 billion.

But I have a question. How many companies are taking actions that go beyond providing an immediate or short-term payback? I look forward to hearing from readers on this question. But over and over, I hear from the ‘sustainability’ or energy efficiency gurus in companies that their efforts can be a hard sell. Both top execs and the guys in the factories or stores have to be convinced that the bottom line will be helped — or at least not hurt.

Take one good example: Wal-Mart.

CEO Lee Scott readily admits that his ‘green’ strategy was born from a desire to improve the beleaguered retail giant’s image. But as it was implemented, the effort quickly became colored by Wal-Mart’s relentless penny-pinching culture. Most steps have to be rigorously justified in terms of cost-savings or revenue-boosting.

It was a no brainer, for instance, to switch stores over to more energy efficient lighting (more --or better--fluorescents and natural light through skylights). But the individual store managers resisted. What if the new light made the meat look funny, or the shirts a different color, and people bought less of them? The managers are under such constant pressure to keep sales up that they never want to take any risks.

So Wal-Mart’s energy efficiency team outfitted some test stores with skylights and more efficient lights. Lo and behold, the goods looked better not worse, even boosting sales. That got people’s attention: They suddenly wanted the new lighting rolled out in all 3700 stores in a few weeks!

It took a lot longer than that. Now that it’s complete, Wal-Mart has gotten a double benefit. Its electricity bill dropped 17%. And the stores look brighter and more appealing to customers.

Another obvious energy-cutting move was putting doors on the refrigerated meat counters. No way, the store managers said. They firmly believed that people would buy less meat if they had to open a door to get at it.

So again, the company had to test the impact in a few stores. The initial results: sales didn’t drop. And managers discovered an unexpected benefit. Kids often toss gum or other trash into the old style open meat cases, requiring periodic cleaning. The doors stopped that. So things look good for rolling out the new energy-saving cases in more stores.

Such are the internal hurdles that companies’ ‘green’ teams must leap to cut energy use or reduce greenhouse gas emissions. I hear similar tales from other companies. My suspicion is that demands for a short-term bottom line benefit are common. But let me know if there are examples out there of companies with a longer-range outlook!

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Reader Comments

Dave Douglas

June 4, 2007 04:11 PM

Excellent article. Since I'm mentioned, let me provide my perspective.

In response to your question in the tile, I would say that I don't know if going green always means making money, but I do that know that being a publicly traded company always means making money.

The good news is that, from our experience, there are plenty of projects that are win-win. From a corporate point of view, if you have lots of win-win projects, why bother to do the ones that are win-loss right now? Whenever we work through a project and it doesn't pay off financially, we either rework it until it does, or put it on the back burner. Solar power is a great case of this. Eventually I believe that it will make financial sense in a large number of general situations, but our analysis says that today it only makes financial sense in a small set of specific situations. So we're continuing to evaluate lots of variations, but have so far not made the commitment. Meanwhile, we have gone ahead with some major work on our internal datacenters, because the financial case was there.

Dave Douglas
VP of Eco Responsibility
Sun Microsystems

Chris Bennett, vice president, Core Systems, NetApp

June 5, 2007 06:07 PM

The world is awash in digital data. It’s everywhere, and we demand it to be so, with an insatiable appetite for information. The downside to this thirst is that corporate budgets are now straining to pay for the space, power, heating, and cooling required to keep up pace. While much attention–and rightfully so–has been paid to more visible efforts (Wal-Mart’s reduced energy footprint it its retail stores), global enterprises are taking these initiatives into a less glamorous but equally important building–IT data centers.

Not surprisingly, powering the data center has quickly become one of the top issues that companies are facing today. In fact, it has become such a big issue that many NetApp customers have indicated a serious focus on addressing power consumption in the data center as a long term strategy.

For several years, enterprises have been paying more to operate IT infrastructure than they do to purchase it from suppliers (see IDC’s report, “Workloads 2006” that says that the fastest growing part of a server’s TCO is now power and cooling vs. other management functions). Servers have made rapid advancements in power efficiency. However, the growth in digital media and disk drives, for instance, needed to store all our data is so steep that an enterprise’s storage infrastructure represents the next frontier of data center efficiency improvements. Today, storage can represent 1/3 of the total IT load in a typical data center. But given the projected growth in data, storage power consumption is growing faster than other infrastructure areas.

Too many existing power-saving technologies, however, fail to adequately address the main drivers behind power growth, focusing mainly on decreasing overall energy costs. So as a long-term business strategy, the NetApp approach has been to help customers buy and use less storage by focusing on intelligent data management to reduce their storage power consumption in 3 ways:

(1) Eliminate redundant copies of data
(2) Increase storage utilization rates (and thereby decrease the amount of unused space)
(3) Provide highly efficient physical storage infrastructure

As a global company with thousands of employees worldwide, we also practice what we preach to our customers. While we can’t do much about the unending thirst for data, at NetApp we are helping our customers drive down their data center’s carbon footprint one byte at a time.

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In Green Business, BusinessWeek Energy & Environment Editor Adam Aston and Associate Editor Heather Green cover the green scene from New York, with Senior Correspondent John Carey in Washington D.C. and correspondent Mark Scott filing from London. Keeping on top of the business aspects of energy, the environment and climate change, their focus is the technologies, policies, markets and people that are shaping how the earth's resources will be used in the century ahead.

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