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Business sees green in going green

By Kevin Voigt
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Big business and heavy industries are often to blame for world environmental woes. But as governments debate the economic risks of tougher curbs on greenhouse gas emissions -- and even question the very existence of global warming -- an unlikely hero is coming to Mother Nature's aid: Big business and heavy industries.

More companies are leading the charge to develop and invest in environmentally friendly technology -- not just because its good for nature, but it's also good for the bottom line.

"It's both great business and a good business -- great in that it is generating real orders and revenue ... and good in the burnishing effect our initiatives have had on both our brand and our business," says Peter O'Toole, a spokesperson for General Electric.

GE has doubled its research and development budget to $1.5 billion into technology to reduce energy consumption and waste products. The return on the company's investment appears to be high: Last year, GE's "Ecomagination" line of products generated $10 billion in revenues in 2005, and is on track to eclipse $20 billion by 2010.

Companies are increasingly considering their environmental costs as a way to bolster their brand name and consumer confidence in their product.

"Outside of obvious costs, their returns are also measured in corporate reputation gains and the ability to continue operation into the future," says Roger Burritt, a professor at the University of South Australia in Adelaide who studies corporate accountability toward the environment.

Voluntary reduction of pollution by businesses "is by far the fastest way to curb greenhouse gases," says Janet Ranganathan, the author of "Green Ledgers." Ranganathan is a director at the World Resources Institute, an environmental think tank in Washington, D.C.

"Regulation will always be there, but it's slow and you can argue ad infinitum how much a company (should be fined) for releasing a ton of hexane in the air ... it's much better and cheaper for a company to monitor its waste production and environmental impact internally."

Companies such as HSBC have stepped up environmental programs -- its Hong Kong offices recycle 65 percent of its paper waste and the company recently spent $900,000 to install energy-efficient lighting. Wal-Mart has begun an extensive program to monitor and clean up its environmental practices, including its supply-chain policies.

Why? A leaked McKinsey and Co. study reported in a recent edition of Newsweek showed nearly 10 percent of Wal-Mart shoppers stopped patronizing the store because of its worsening reputation, including its commitment to the environment.

"NGOs are like wasps all over retailers like Home Depot, Lowes and Wal-Mart ... there's all these wood products being made in China, but how has it been harvested? China has a logging ban, so is it coming from illegal logging in Malaysia and Indonesia?" Ranganathan says. "These are the questions these companies are now being asked.

"If companies understand the true cost of environmental factors to their bottom line, they are more likely to do something about it on their own," adds Ranganathan. "Paying attention to the environment saves money."

" If companies understand the true cost of environmental factors to their bottom line, they are more likely to do something about it on their own." - Janet Ranganathan, World Resources Institute

More businesses are buying environmentally friendly technology as company's worldwide begin adopting what is known as the "triple bottom line," measuring not only how the company is doing financially, but also regularly reporting the company's impact to environment and society, says Burritt, the Adelaide professor.

Many companies such as CLP Group, a Hong Kong-based company which operates power plants in six Asia-Pacific markets including India and China, already include data such as total waste produced and effectiveness of environmental programs in annual reports.

"We set annual goals for a constant reduction of greenhouse emissions," says Jeanne Ng, chief environmental officer at CLP. "If we don't meet those goals, we have to answer for it." The company announced that any future coal-fired power plants will be equipped with the latest "scrubber" technology to reduce sulfur dioxide emission, even if local regulations don't require it -- which is often the case in developing economies.

More companies, Ranganathan says, are refining their thinking on the financial impact of environmental issues.

"Trash disposal is often lumped into 'overhead costs,' penalties from regulators are often just put into 'legal expenses'," she says. "Unless you put those together as 'environmental costs', you'll never see the full picture ... and you'll never know what you can do to save money."

At the World Resources Institute, Ranganathan is working with a company, which she only identifies as "a Japanese multinational car manufacturer," to examine areas around the world where water scarcity is on the rise. The company is using the data to plan and prioritize where to invest in water-saving technology at its global factories.

Companies such as GE are banking that more companies and consumers will be investing in environmentally friendly products. The company is developing products that "cut across nearly every GE business," says O'Toole, such as more efficient gas turbine engines and alternative energy products using wind and solar energy; desalination technology to improve clean water capacity; and light bulbs that burn less energy.

"The positive impact we see with our employees is eye-opening -- they are engaged, excited and generating real ideas on new technologies in areas we can improve (greenhouse gas emissions) and energy consumption," he says.


Excessive logging has accelerated desertification and soil erosion in China.


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