Companies Discover it Pays to be Green
12/19/98
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Title: Companies Discover it Pays to be Green
Source: InterPress
Status: Copyrighted, contact source to reprint
Date: 12/19/98
Byline: Danielle Knight
WASHINGTON, Dec. 19 (IPS) - Big business has discovered that, by
reducing their use of materials - such as wood, metal, stone and
plastic - and recycling old manufacturing parts, leads to
increased profits, says a new Worldwatch Institute report.
Minimizing such use decreases pollution, trash, forest loss, and
many other environmental problems, say the authors of the report,
Gary Gardner and Payal Sampat, two researchers at the Washington-
based think-tank.
''Getting more of what we want through smarter use of materials
is a winner for the bottom line and the environment,'' they say in
their report, 'Mind over Matter.'
''Economic well-being is not necessarily linked to using vast
quantities of materials,'' they argue.
Corporations, such as the office machines manufacturer Xerox,
for example, are now leasing their products out instead of selling
them. The company 'rents' its photocopiers out and then takes the
products back to 're-manufacture' and recycle parts.
Using such creative methods, ''their materials therefore
circulate much longer - requiring a minimum of new material and
generating a minimum amount of waste,'' says the report. It also
saves the New York-based company millions of dollars each year by
reducing the amount of new material Xerox must purchase.
From copy machines to plastic bags, skyscrapers and ballpoint
pens, Worldwatch calls the current amount of materials used in
Europe, Japan and the United States ''astonishing.''
''Consumption of metal, glass, wood, cement and chemicals in
industrialised countries, since 1990 is unprecedented, having
grown some 18-fold in the United States alone.''
Using such large quantities of new materials leads to ecosystem
destruction, such as widespread logging for wood, or water and air
pollution problems from plastic and paper production, says the
report. Because such material use threatens the environment and
public health, companies and governments need to look toward
recycling, reducing and re-using materials, it says.
According to Worldwatch and other organisations, companies are
finding that, if they use creative ideas to reduce new material
use, profits often are increased.
''Some mistaken financial ''experts'' assume that
environmentally responsible practices represent costs without
benefits,'' says Alisa Gravitz, vice president of Social
Investment Forum, a non-profit organisation that provides
information on socially responsible investment.
''Executives and stockholders take note: when you actually
crunch the numbers, it turns out that good environmental
citizenship is great for the bottom line.''
Like Xerox, a carpet corporation known as Interface is finding
that it can increase profits while decreasing the amount of new
materials it uses. The company leases what it calls 'carpet tiles'
to offices replacing only the worn tiles as needed.
This strategy, combined with the use of recyclable carpet
fibers, decreased the company's wastes headed for landfills by 60
percent, since 1995, and saved the company 67 million dollars.
''A 25 percent increase in sales between 1995 and 1996 was
achieved with virtually no increase in raw materials use,'' says
Worldwatch. Such a shift to 're-manufacturing' could revitalize
local industry and employment.
''However, in industrialised nations, labour costs make repair
and re-manufacturing expensive,'' it says. ''An economy-shift to
re-manufacturing would probably require changes at the political
level, such as the realignment of the relative costs of capital
and labour through tax-shifting.''
Other companies minimize their waste by selling it to other
corporations for use in production. ''Whole clusters of industries
are set up this way, each linked by the waste flows of member
firms,'' says Worldwatch.
In Kalundborg, Denmark, the report illustrates how a power
plant, a cement factory, a farm, and several other industries
share their wastes. ''This creative arrangement diverts more than
1.3 million tons of waste from landfills or oceans each year,''
says the report.
Mitsubishi Electric of America and Mitsubishi Motor Sales, two
subsidiaries of the Tokyo-based Mitsubishi Corporation, have been
working with the environmental group, Rainforest Action Network,
to reduce the amount of new materials they use. Earlier this year,
they announced a plan to phase out use of tree-based paper and
packaging products by the year 2002, in favour of recycled and
alternative fibres, like hemp and kenaf.
''Sure recycled paper and alternative fibres are more
expensive, but as we make greater technological advancements -
with the Internet for example - we use less paper,'' says John
Savage, executive vice president of the Mitsubishi Electric of
America. ''The economics of it eventually work out.''
The view that being green increases the corporate bottom line
was recently boosted by study published in the Academy of
Management Journal which surveyed the practices of 243 companies,
including Ford, the automobile manufacturer and the oil-giant
Amoco.
Michael Russo a professor at the University of Oregon and Paul
Gate University found that companies with environmental policies -
including conserving resources during the production process, had
higher returns on investment compared to their competitors.
''It pays to be green,'' said Russo. ''When companies go beyond
the minimum required by law, their shareholders reap the
rewards.''
Governments should play an active role in accelerating the
trend toward reducing material use by adopting policies that
create incentives for corporations, says Worldwatch.
''These efforts point in the direction we should be going, but
we need to accelerate these material-conserving initiatives and
get government policy behind them,'' says Sampat, co-author of the
report.
Elimination of economic incentives, such as government
subsidies for logging and mining on public land, which encourage
companies to use new materials, would also spur corporations to do
more with less, says the report.
Taxing new materials and waste that ends up in landfills, would
also signal businesses to find ways to minimize their material
use, it says.
''High landfill taxes in Denmark have boosted construction
debris reuse from 12 to 82 percent in eight years,'' says
Worldwatch.
Producers of materials could also be made to be responsible or
accountable for the material they use, says the report. More than
25 countries, for example, have ''take-back'' laws for
corporations to be responsible for the packaging materials which
they produce.
''Extending the concept of producer responsibility throughout
the economy could have a profound effect on materials use,'' it
says. ''When producers are liable for managing material they
introduce into the economy, they quickly find ways to minimize the
amount they use, and to recycle the rest.''