Ernst and Young

6 Trends in corporate sustainability

The chatter over whether renewable energy is worth it and if climate change is real is so loud that other parts of the emerging sustainability movement are muted. But corporations throughout the world, recognizing doing good for the environment also is good for their bottom lines, continue to quietly enhance their green team efforts.

Consider Lockheed Martin. It is one of the world's largest defense contractors, but also is a leader in sustainability, reaching its stated five-year environmental goals a year early.

The company met or exceeded its goals of reducing water use, waste-to-landfill and carbon emissions by 25 percent annually since 2007, while revenue climbed 12 percent in the same period. Lockheed Martin is an example of increasing awareness among Corporate America that going green can be profitable, rather than costly.

"Taking action to preserve resources is fundamental to securing against operational risks, extending the value of our business model, and expanding and enabling sustainable, profitable growth," Bob Stevens, chairman and chief executive officer, said in a statement.

The company slashed water use 25 percent, saving more than 1.5 billion gallons, or equivalent to water consumed by 3.9 million average U.S. households every day. Lockheed Martin upgraded heating and cooling equipment, installed low-flow fixtures and designed projects with sustainability in mind, such as landscaping in Denver, Colo. that reduces or eliminates supplemental water from irrigation.

Lockheed Martin cut its waste-to-landfill amount 39 percent, or 35 million pounds, compared to 2007, its baseline year, through recycling programs at multiple U.S. facilities, efforts in Marietta, Ga., that cut the amount of packaging required for major parts, and reducing cafeteria food waste at several facilities.

Carbon emissions fell 30 percent through energy efficiency efforts with lighting and HVAC systems, the purchase of renewable solar and wind energy, and innovations such as using wood waste to power a 1.6 million square-foot plant in New York state. The total carbon reduction equals the annual greenhouse emissions from more than 85,000 passenger cars.

Learn more in this press release from Lockheed Martin.

Lockheed, which is developing a hybrid unmanned aerial vehicle for the military (more here) is hardly alone when it comes to sustainability gains. Brewmeister Heineken is starting down the same path, according to this post, announcing reductions in carbon emissions and water use.

Continuing the beverage trend is Bacaradi, which announced these results. Meanwhile, hospitals, which are huge consumers of energy, are getting into the act. And we can't forget one of the biggest dogs of all, the U.S. military. Oil consumption among Army troops is equal to 15 to 22 gallons per day per soldier, and the Department of Defense contends sustainability is a security and economic issue. Check out this national security report .

More is likely to come. In the video below, Case Western Associate Professor and author Chris Lazlo shares ways corporations can instill sustainability into their processes.

Sustainability will grow as awareness increases, even though the tools of the trade are still in their infancy, according to this report by Ernst & Young and GreenBiz:

"These trends suggest that sustainability efforts are now well-integrated into the corporate fabric of a growing number of large and midsized companies. But the effectiveness of such efforts may be limited by internal systems that don’t allow companies to effectively measure, track and optimize their sustainability impacts, or to understand and manage the risks of insufficient action."

The authors have identified six trends in corporate sustainability:

1. Sustainability reporting is growing, but the tools are still developing
2. The CFO’s role in sustainability is on the rise
3. Employees emerge as a key stakeholder group for sustainability
programs and reporting
4. Despite regulatory uncertainty, greenhouse gas reporting remains
strong, along with growing interest in water
5. Awareness is on the rise regarding the scarcity of business resources
6. Rankings and ratings matter to company executives.

More businesses say sustainability is as important to the operation as safety and employee satisfaction, which is evidenced by growth of green teams even during the worst economic downturn since the 1930s.

The biggest reasons given for the emphasis on sustainability: Cost cutting, particularly energy expense, and increased revenue from brand awareness, changing consumer demand and staying ahead of the competition. In addition, equity analysts calculate sustainability into their evaluations.

photo image by Sanja Gjenero
video of Case Western Associate Professor by SustainableBrands

Clean Energy Could Be The NEXT BIG THING!

First, Ernst & Young referred to clean technology as the next industrial revolution. Now, Seattle investment firm Cascadia Capital likens sustainable industries to the early years of the Internet, saying in a new report:

"The clean energy sector is going through the same re-birth process. . . We are seeing better companies, better technology, better business models and better executives in this industry every day. We strongly believe that a lot of the companies we see and work with will be well known companies in the 2013-2014 timeframe. Green companies are rising from the ashes."

This shows once again that the clean-energy industry isn't dying as many claim. It is emerging, staggering forward unevenly like a toddler growing up. The implosion of government guarantee-recipient Solyndra wasn't a failure as much as it was a sign of maturation. It couldn't compete and, in business as in nature, the weak are early casualties.

As former California governor Arnold Schwarzenegger said at current Gov. Jerry Brown's climate conference last week: "All kinds of businesses failed at the same time as Solyndra, but no one hears about that. You make mistakes and you fail. That is the way business is."

Here is more on the conference.

Cascadia notes, as we have many times, that investors, entrepreneurs and researchers have been joined by the big bucks of Corporate America. Companies such as Boeing and Walmart see profit in sustainability. You can bet these large corporations wouldn't be investing in it if they didn't expect rosy returns at the end.

They are saving millions from efficiency measures, such as lighting retrofits that really do pay off (How about $300,000 per year for Canon!). They are boosting their sustainability departments and are joining governments, professional sports and schools in pledging to use more renewable energy. (more here, here and here.)

One of the world's richest men just announced plans to buy into his second gigantic solar farm - this one in Arizona - to complement one in California, a state with the most ambitious renewables mandate in the nation, an equally ambitious cap-and-trade plan and a robust green chemistry program.

Companies are even joining forces with state governments to build new cities dedicated to testing clean energy. Check out this fascinating proposal out of New Mexico, where a whole new kind of company town is in the offing.

Clearly, the green movement is gaining, even if the GOP slate of presidential candidates ignores it. Tom Engelhardt in a post entitled, "Restless Planet" calls it the "Fifth Occupation," and claims its already bubbling to the surface, much as the methane is bubbling up from formerly frozen terrain. See this New York Times piece.

"When they stand their ground and chant 'We exist!' in anger, strength, and wonder, maybe then we can really tackle climate change and hope it isn’t too late," he writes. "Maybe the fifth occupation is the one we’re waiting for -- and don't for a second doubt that it will come. It’s already on its way. "

Video: California Gov. Jerry Brown at CODA plant

Demise of Green Energy Greatly Exaggerated

For an industry that supposedly is on the brink of collapse, clean energy sure is holding up well. We've seen it at the local level, where our nonprofit, which is involved in energy efficiency, benchmarking and other energy-saving programs, is gaining a higher profile.

And we're seeing it nationally, too. Three items - the restart of a billion-dollar military solar program; President Obama's $4 billion commitment to cutting energy costs; and Kachan & Co's predictions for Clean energy technology in 2012 (more here) - are indicative of the growing interest.

The big news is that Bank of America Merrill Lynch and SolarCity are combining to revive a plan to install solar panels on up to 120,000 military housing units across the nation, creating 300 megawatts of solar power. This is further evidence the military, which contends the nation's dependence on foreign oil is a security risk, is taking a leading role in the green movement. Want more evidence? The military has turned up the heat on energy technology by selecting 27 test sites for various proposals.

In addition, a just-announced Obama public/private partnership could lead to $2 billion worth energy-saving improvements on federal buildings across the nation, and $2 billion more on 1.6 billion square feet of commercial and industrial property. Some heavy hitters have signed up.

Energy efficiency has long been called the "low-hanging fruit" of the clean-energy movement because a relatively modest investment can yield significant results.

Then there is Dallas Kachan's 2012 clean tech forecast. The forecast is mixed - expect declines in venture capital and for election-year rhetoric to muddy the waters - but is bolstered by his predictions that oil prices will rise, making renewables more economically viable; that innovation in solar energy will surge; and that Corporate America will "buy their way into clean technology markets in 2012, supplementing the role of traditional private equity and evidencing a maturation of the cleantech sector. "

Some states are moving faster in clean energy's various segments than others. Here in California, Gov. Jerry Brown is a big proponent, embracing a multi pronged effort that features a greater emphasis on efficiency. The state seeks to reduce CO2 emissions by 20 percent annually through 2020, and the Global Warming Solutions Act, or AB 32, passed in 2006, sets a goal of 33 percent renewable energy generation by 2020.

No wonder Ernst & Young likens the momentum of clean energy to the industrial revolution.

Reminds me of the Mark Twain quote, "The reports of my death are greatly exaggerated."

White House photo of Presidents Obama and Clinton.

The Green Movement: Defying The Naysayers

Things sure get weird in a campaign year. Statements and misstatements. Lies and half-truths. I-said-this-but-really-meant-that. It's easy to get swept up in the negativity and for positive messages to get lost in all the noise.

But a funny thing is happening amidst the chatter: The green movement is gaining traction despite the naysayers. It's happening at the corporate level, where Ernst & Young is expanding its sustainability business and even devised "renewable energy attractive indices" (China, to no great surprise, is at the top) to track the world's appetite for clean energy.

And it's happening at the local level. My hometown newspaper, The Fresno Bee, today has this story about a proposal for a huge solar project. It's on land that cannot be farmed, and is indicative of what this region could become. Reporter Kurtis Alexander notes, "While the proposal joins nearly three dozen other solar plants pitched in Fresno County, the venture by Recurrent Energy is by far the biggest and underscores the county's standing as a hotbed for solar development."

The politicians may not acknowledge it, but the green movement is a bullet train on the fast track - despite an expected drop in stimulus funds. Ernst & Young puts it best: "A revolution is underway, and the renewable energy industry is adapting to a changed world. "

It's just not renewables. Energy efficiency and sustainability are helping power the train, and corporations are at the wheel. Pike Research projects spending on energy efficiency to increase 50 percent by 2017 as it becomes more important. has more, and makes particular note of Johnson Controls' clogged pipeline of work. Efficiency remains the biggest bang for the buck since buildings such as those in the photo above consume 40 percent of the world's energy. Often, minimum effort can yield maximum results.

Says Ernst & Young: "Global corporations across numerous industries are moving quickly to pursue cleantech revenue opportunities. The revenue opportunities are transformational because 1) they arise from a shift to a resource-efficient and low-carbon economy, and 2) they are changing corporate business strategies." There is more here and here.

The companies realize that efficiency cuts cost - AT&T slashed $44 million - and contributes to a stronger bottom line; that clean tech is a new revenue source; and that it helps corporations meet internal sustainability goals. Fifty-eight percent of the corporations that responded to an Ernst & Young survey said they plan to increase clean tech spending between 2012 and 2014, and 25 percent said their expenditures will remain the same.

As corporations go, so goes the military, which says the nation's dependence on foreign oil is a security risk. And the military isn't alone in that assessment. Check out this video from the Rocky Mountain Institute, which says threats - and not just those related to security - are leading to a national discussion on energy issues.

Of course, change won't happen overnight. Or will it? Technological advancements are coming at a dizzying rate. Costs are dropping rapidly and it won't be long until solar power, for one, achieves grid parity. I'll keep my beret handy, just in case this revolution is around the corner.

Photo of Seattle skyline by Lars Sundstrom

The Next Industrial Revolution

  • The evolution of clean energy could, in the eyes of Ernst & Young, become a revolution.

    An industrial revolution.

    That's right. The global auditing and analysis firm says the emerging green energy movement could be as revolutionary as the era that produced the cotton gin and steam engine.

    "The cleantech-enabled transformation to a low-carbon, resource-efficient economy may be the next industrial revolution. As this transformation accelerates, global corporations are increasingly realizing that they must understand the impact of cleantech on their industries and develop strategic plans to adapt to this change," Ernst & Young says in this story on its Web site.

    Almost 90 percent of the companies that responded to its annual global survey of corporations with more than $1 billion revenue said cleantech is an "organization-wide or business-unit-level initiative."

    About a third of them said they plan to earmark at least 3 percent of their revenue over the next five years to clean technology, and 75% said their clean-energy spending will increase.

    More demand for energy, higher prices, security concerns and diminishing natural resources will be catalysts for the growing movement. In addition, Ernst & Young says, progress toward a low carbon energy-efficient economy presents an economic opportunity for investors and others.

    Ernst & Young cites these trends:

  • The price of solar and wind energy will fall as they grow in magnitude (Check out this blog from my colleague);

  • Going green is a strategic business decision;

  • More businesses are developing sustainability measures, and reporting them to stakeholders and customers.

    Of course, this won't happen overnight. The first industrial revolution spanned decades, and this one is stumbling along in its early stages. Ernst & Young says raising capital to fuel the transformation will be an issue, especially in these austere times.

    Interestingly, the Ernst & Young report was the second one this week to sound a similar theme. Pike Research cited a different revolution - the proliferation of the Internet - when it said the military's embrace of green energy could drive renewable energy into the mainstream of society. More on that here.

    None of this surprises us. We have witnessed over the past few years the bumpy beginnings of change. More homes, businesses, cities and farms are using the wind and sun to partially run their operations. Investment into potential biofuels is robust, and energy efficiency - the most cost-effective and fastest way to lower power bills and shrink a carbon footprint - is gaining a faithful following.

    Let the revolution begin.

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