Environmental projects are yielding unexpected gains

Spot the common thread in these tales:

Starbucks Corp, responding to concerns that growing coffee caused rain-forest damage, spends some $200,000 to help Mexican farmers improve the quality of beans grown under a forest canopy. The premium-priced coffee produced by the Mexicans turns out to be so tasty, and is selling so well in the United States, that Starbucks is introducing it overseas and for institutional customers. It has increased its order for Mexican shade-grown beans tenfold since the program began in late 1998 and is negotiating with shade-growers in four other countries.

At the request of local environmentalists, the Chesapeake, Virginia, plant of Nova Chemicals Corp. sets aside about a fifth of its 60 acres (24.3 hectares) for a habitat that Van White, the plant's environmental affairs manager, calls a "bed and breakfast" for migratory birds and other wildlife. The one-time cost is about $8,000 to plant 24 species of trees and fruit-bearing shrubs. The unanticipated yearly savings is $16,000.

"Turns out, that's what we'd been paying to mow those 11.5 acres," Mr. White said.

The projects were under taken with only environmental goals in mind, yet they also yielded unexpected savings or revenue streams. "The notion that environment is just an expensive cost is way out of date," said Glenn Prickett, executive director of the Centre for Environmental Leadership in Business, a unit of Conservation International created with money from Ford Motor Co. Mr. Prickett's group worked with Starbucks on the shade-grown coffee project, has helped Exxon Mobil Corp. protect a rain forest while it explored for oil in Peru, and aided Asarco Inc., a mining company, in safeguarding wetlands when it searched for gold in French Guiana.

By now, some 30 years after the environmental movement took hold, many companies are giving second lives to raw materials, fuels and other products that previously went to landfills. Water from

their process cooling systems is being used to heat and cool their plants. Fly ash and other pollutants scrubbed from the air of ten show up in concrete and highway asphalt. Once-disposable cameras are being refurbished for reuse. And makers of deodorants, toothpastes and cold medicines have all but dispensed with cardboard shells for tubes and bottles, reducing paper waste –and package costs.

But those kinds of projects represent the easy pickings of environmentalism. Today, companies have to do much more. They are often required by law to pull gases from air and materials from water and trash that they never had dreamed would be on any list of environmental problems.

Most companies assume that they are already using the least expensive materials and most cost effective processes. They also assume that solving the latest crop of environmental headaches will cost them plenty .So discovering that the answers to environmental demands can shift to the profit side of the ledger is a big financial surprise.

"When they substitute chemicals or processes, they often have to put in expensive equipment, retrain workers, do lots of costly things," said Gaytha Langlois, professor of ecology at Bryant College in Smithfield, Rhode Island. "But then they find that the new equipment or process really is more efficient and that there are all kinds of savings to be had."

There is also enlightened self-interest at work. "When you reduce waste and emissions, a community is a lot more willing to issue permits or other operations down the road, said Samuel Smolik, vice president for global environment, health and safety at Dow Chemical Co. in Midland, Michigan.

With a variety of forces putting ever more pressure on them to clean up, companies might well hope that their environmental projects yield many more such hidden bounties.

Many companies - Procter & Gamble Co. is a notable example - use environmental performance as a criterion in choosing suppliers. Banks are taking potential environmental liabilities into closer account when they decide whether to make loans. Insurers insist that companies prove that they are running clean shops before they issue policies covering environmental accidents. And some customers are pushing their own environmental problems into their suppliers' court. A couple of years ago, customers of Xerox Corp. started asking the company to help them dispose of excess toner from their Xerox machines. Customers for the most expensive copiers had the influence to make that request more of an order-a pretty tall order.

'It was costing us half a million a year just to collect and transport the stuff," said Jack Azar, vice president for environment, health and safety.. So chemists at Xerox spent a hefty chunk of their research budget to learn to incorporate the toner waste into new toner. The company still has to pay for collection and transportation; but it is saving about $800,000 a year on new toners for expensive machines. This year, Xerox will expand the recycling program to toner waste for less expensive copiers.

The Internet is also making corporations more sensitive 10 environmental issues. "Environmental groups have become truly sophisticated in using the Web to move information to millions of people literally overnight, and to attack companies on a global scale," said Carol Browner, who headed the Environmental Protection Agency under President Bill Clinton. The switch to a Republican administration in Washington may spur many more such attacks. Many environmentalists worry that their issues now have low priority in the Bush government.

"The environmental movement was deflated in the '90s because people thought Bill Clinton was an environmental president," said Andrew Hoffman, assistant professor of management at the Boston University School of Management. "It's being ignited again in opposition to George W. Bush."

But even as the pressure on companies heats up, the beneficial surprises from environmental programs may fall as more companies install formal programs to seek savings at the outset.

Dow Chemical now routinely applies statistical analysis to environmental projects to ensure, its businesses are wresting the maximum economic benefits from meeting anti-pollution goals.

"Historically, projects were discussed in either the language of economic value or of environmental performance, but we've figured out how to translate from one language to the other," said Mr. Smolik of Dow.

International Herald Tribune 10 September 2001: