Tag Archives: CSR

Meet the Change Makers: Tiffany’s Diamonds and Gold Get Greenish Sparkle With Stance Against Pebble Mine | OnEarth

Most businesses hungrily pursue new sources of vital raw materials. Tiffany & Co., by contrast, has begun to forge a different path. In the last several years, the company has taken an increasingly public and vocal stand against an enormous gold mine that has been proposed at the headwaters of Bristol Bay, Alaska. Pebble Mine, as the project is known, is estimated to hold more than $300 billion worth of gold ore and other precious metals.

Publicly listed Tiffany & Co. traces its roots back to 1837, when Charles Lewis Tiffany and John Young set up a “stationery and fancy goods emporium” in New York City. Today, with $3.1 billion in sales last year, the storied jeweler has a very big appetite for gold, diamonds, and similar earth-borne treasures. Yet Tiffany CEO and chairman Michael J. Kowalski sees the near-term costs of squelching a new gold supply as far outweighed by Pebble Mine’s potential risk to the environmental, and in turn, to Tiffany’s brand.

The proposed mine lies within a 40,000-square-mile watershed, filigreed by dozens of pristine rivers and tributaries, that is home to beavers, moose, and caribou, which feed off summertime plant growth. A huge population of bears, as well as the native Yupik people, relies on the annual return of spawning sockeye salmon, a flood of wild fish that ranks among of the world’s largest such runs. Opponents argue the fishery — worth hundreds of millions of dollars a year — and the broader ecosystem could be imperiled by mine construction and runoff of acids and dissolved metals. “I can’t think of a mine that threatens more ecological value in North America than Pebble,” Kowalski said.

Tiffany’s take on mining issues has evolved over a two-decade span that roughly coincides with Kowalski’s tenure, during which time the company has faced the overlapping crises of blood diamonds and conflict gold. Mining practices in strife- and famine-torn regions have led to grievous human rights abuses, as warring factions fight for access to mineral wealth, as well as environmental damage, such as mercury pollution from small-scale gold-mining operations. Today, the company states flatly that, with respect to mining: “We recognize that some public lands are simply not suitable for mining, and that their value for recreation and conservation is far greater than their value as a source of minerals.”

Michael J. Kowalski

Tiffany’s increasingly visible commitment to sustainability is documented in its first corporate sustainability report, released last month. In addition to advocating for responsible mining, the company has also focused on its retail operations — manufacturing its iconic blue boxes and bags, for instance, exclusively from materials certified by the Forest Stewardship Council. Efficiency upgrades and solar panels in its stores have lowered greenhouse gas emissions by more than nine percent per square foot since 2006.

OnEarth contributor Adam Aston recently discussed Tiffany’s evolving approach to sustainability with Kowalski at his office — decorated with photographs of family travels to national parks in the United States and overseas — at the company’s Fifth Avenue headquarters in midtown Manhattan.

Tiffany & Co. depends on mining, yet mining is destructive by nature. How do you decide one proposed project is promising, but another, like Pebble, is not?

It’s difficult for us to make definitive statements about what constitutes responsible mining today. But in a simplistic sense, we’re clear that it’s better to extract minerals from a legacy mine than to threaten a pristine ecosystem. That led us to Rio Tinto’s Bingham Canyon Mineoutside of Salt Lake City. The precious metals used in our U.S. manufacturing come from there as well as from recycled sources.

The mine has been there for 100 years. There are legacy issues, certainly, but today the mine is being managed responsibly. I know Mr. Redford would disagree [Ed. note: Writing for OnEarth’s Community Blog, NRDC Trustee Robert Redford has compared the threat of the proposed Pebble Mine to the environmental damage done by Bingham Canyon Mine]. But it is a worthwhile debate.

Look, we all may not be pleased with the standard of U.S. environmental regulations for mining, but they are pretty good in a global context. The greater concern is mines in less-regulated areas. Isn’t the more positive thing to source from a nearby mine that is monitored than from one that is far away, where we have no influence, and regulations are practically nonexistent, such as in, say, Papua New Guinea?

For those reasons, some have suggested that Pebble Mine would operate using the world’s best practices, including regulation and monitoring.

The argument has been made: “Well, if you really care about responsible mining, you should be a supporter of Pebble because it will be the most responsibly built and managed mine in the history of mining, and it is unfair to tar Pebble with the abuses of past mining practices.” In fairness to the Pebble Partnership (a joint venture between a subsidiary of Anglo Americanand Northern Dynasty Minerals), I want to make this clear: We have no doubt that they would do everything possible to develop that mine as responsibly as they possibly can. And I’m going to presume that the state of Alaska will do everything possible to make certain that happens if the mine goes forward.

That said, we have reached the conclusion — as have many non-governmental organizations (NGOs) and local Alaska residents — that the risk is simply too great. Despite the best of intentions, the location of this mine is so inherently problematic that it is simply not worth the risk of a catastrophic event. Other jewelers have come to the same conclusion and, like us, signed The Bristol Bay Protection pledge.

Is this is first such position you’ve taken on gold mining?

No. Starting back around 1994, we began receiving a fair amount of unsolicited mail asking us to oppose the New World gold mine that was planned right outside of Yellowstone National Park. At that point, we didn’t have the ability to see into our gold or silver supply chain, nor had our company policy on these issues been developed.

We began making inquiries, and as we learned more we thought, “If the New World mine is built, and there’s a catastrophic failure of the tailings dam, the flood would destroy a good part of Yellowstone National Park. That’s not a good thing for the jewelry industry.” It was that simple. We drew the conclusion that, as leaders of the jewelry industry — not necessarily by size but certainly by reputation — it was appropriate for us to speak out in opposition.

When did you begin to formalize your mining policies?

About 10 years ago, we began to see concerns about gold mining enter the mainstream media. So around 2001, we started making inquiries to the NGO community, saying, “We’re very interested in responsibly mined metals, but what should we do?” The response shocked us because, back then, a lot of NGOs said, “There are no standards of responsible mining yet. We really can’t tell you where to go.”

In 2002, we began working with NGOs like Earthworks to move forward on this issue. Today we abide by a set of core principles around responsible development and operation of large-scale mines.

Tiffany is synonymous with diamonds. How did the crisis of blood diamonds influence your position on mining?

Our experience with blood diamonds certainly raised our awareness about the environmental and human rights risks connected to metal mining. They weren’t remotely on our radar screen when the stories first surfaced. That’s because, back in in the early ’80s, we did not manufacture the majority of our jewelry. We bought it from manufacturers around the world, primarily from Europe, and some from the U.S. We would also buy polished diamonds — not rough unfinished diamonds — from diamantaires* in historic diamond centers such as New York, Tel Aviv, or Antwerp. Because of this arrangement, we had little insight into the supply chain beyond those levels, and quite frankly, little incentive to make needed improvements to our supply practices. [*Ed. note: Diamantaire is an industry term, describing buyers, traders, and artisans who work in the middle layer of the supply chain. Diamantaires buy, cut and polish raw diamonds before they’re set into jewelry to sell to larger wholesalers or retail jewelers.]

So dependency on diamantaires left you with little control over the origin of the gems?

Yes. Then, in essence, we became our own diamantaires. We had also undertaken a separate effort to vertically integrate our supply chain, beginning some years before the blood diamond problem first surfaced. The company was growing rapidly, and we needed to assure the flow of supply of manufactured goods, and later raw materials. We committed to cutting and polishing our own diamonds so that we could buy rough diamonds at the mine head. That gave us better knowledge of where a particular diamond came from.

The horrors of Sierra Leone crystallized this part of the strategy. We knew we absolutely had to be able to identify the country of origin and, ultimately, the mine of origin of as much of our raw materials as we could.

It’s an ongoing process. We’re not all the way there, even today. But we’re confident that over time, for diamonds, we can identify the mine of origin, and attest to the social and environmental conditions at those mine sites.

Many industries have abandoned such vertical integration, arguing that high-volume specialists can be more efficient. How has taking control over your manufacturing process affected your bottom line?

By streamlining the supply chain, we have been able to capture a greater share of the profits typically taken at each step, from mine to trader, from trader to polisher, and so on. The vertical integration has been a strong profit-driver, and it’s also allowed us to try to exercise some leadership on corporate social responsibility issues around the supply chain. For example, we have invested heavily in places like Botswana and Namibia to train diamond setters and polishers. By investing in those communities, we’ve helped create industries that deliver more income than the simple extraction of gems could alone.

We’re probably rather unique, I think, for a retailer. We are without a doubt the most vertically integrated retail jeweler in the world. We make about 65 percent of all our jewelry at facilities here in the U.S., at a site in Westchester County, New York, and another in Providence, Rhode Island. This includes the jewelry we sell around the world — in fact, we’re a net exporter, even to China.

Other industries have established standards — I’m thinking of industry-created definitions of “organic” in the food business. Tiffany has been outspoken about the need for third-party standards for responsible mining. What progress are you making?

We very much believe that if there are to be standards for human rights and environmental practices in the jewelry industry, there must be genuine third-party certification, where NGOs and other stakeholders participate in the establishment of those standards. You saw this with blood diamonds. I think the industry rallied dramatically to correct the problem by creating theKimberley Process [to certify rough diamonds as conflict-free], which I think has largely been a success.

We have every control in place to be certain that diamonds from Tiffany only have Kimberley certificates. Can I make a 100 percent affirmative claim that nothing here has every come through? No one can. And that is, I think, where some of the biggest challenges are, in trying to assure supply chain integrity.

Does this position create tension with the mining industry?

We take great umbrage at criticisms we’ve faced. Some of the pro-mining folks have said of our efforts, “This is all about public relations.” In response, I say, “Hold on. We’ve been concerned about this for almost 20 years. This is not about greenwashing. This is something we’ve been committed to. It’s what our customers want. It’s about the business imperative.”

In fact, we’re pro-responsible mining because we think that’s what is essential for the growth and long-term economic health of the jewelry industry.


TRUTH SQUAD — Checking industry claims with NRDC’s sustainability experts

The prestige of Tiffany’s brand means there is real force behind the company’s efforts to reshape the way jewelry retailers and the broader mining industry are approaching sustainability, says Joel Reynolds of the Natural Resources Defense Council, who directs its urban west program and the marine mammal protection and Southern California ecosystem projects. He also leads the Save Bristol Bay campaign, bringing together a broad coalition of interests opposing the proposed Pebble Mine in Bristol Bay, Alaska. In particular, he says, “Tiffany has a unique ability to draw attention to [Pebble Mine].”

As Tiffany turned up the volume on the issue, other major retailers such as Walmart and Target — which sell high volumes of lower-cost gems, gold and other jewelry — have taken notice, says Reynolds. This is leading to a process that he believes will improve industry practices and lead other major jewelry retailers to sign on to the The Bristol Bay Protection pledge, as Tiffany has done. At the core of the issue, Reynolds said, is the question of whether the mine can be built and operated without significant risk. “Under comparable hydrological circumstances, 93 percent of similar mines in the U.S. have failed to meet the standards they commit to in their original environmental impact assessments,” he notes, pointing to a 2006 study of water-quality problems at hard-rock mines.

Key state and federal deadlines for Pebble’s developers to submit permit applications for the mine were originally set for this year, but have been pushed back to 2012 and 2013. This suggests opposition to the project is getting traction, Reynolds says. Outside Alaska, the mining reform organization EarthWorks has successfully lobbied more than 60 jewelers to take the “No Dirty Gold” pledge, which would apply to the Pebble Mine. Tiffany & Co. is a long-time signatory. Target is the most recent retailer to sign on, in March of this year.

By taking this voluntary pledge, jewelers agree to abide by The Golden Rules of responsible mining: to ensure that toxins, such as sulfuric acid, don’t contaminate the land, water, and air, and that workers rights and labor standards are respected. Still, critics charge that until a third-party certification system for gold mining exists, efforts to clean up the industry will remain piecemeal and difficult to verify. — Adam Aston


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Meet the Change Makers: PUMA’s Sustainable Track Record | OnEarth

The sportswear giant is first out of the starting block with an aggressive effort to track environmental performance

PUMA has a long history of winning in dramatic style. At Beijing’s 2008 Olympic Games, Jamaica’s Usain Bolt savored his world record-setting victories in two sprints by holding up his golden PUMA track shoes in a victorious archer’s pose. In 1970, Brazilian soccer legend Pele drew TV close-ups when he interrupted the opening whistle of the World Cup to bend down and tie his PUMA soccer shoes. For the exposure, PUMA reportedly paid $120,000. Decades earlier, some of the first-ever spiked track shoes helped Jesse Owens sprint to quadruple gold-medal success at the 1936 Berlin Olympics. The shoes came from PUMA’s forerunner, founded in Germany in 1924. All along, PUMA has remained a formidable contender in the devilishly competitive business of sporting gear. While continuing a tradition of high-profile athletic endorsements, a steady stream of alliances with leading designers — including Jill Sander, Philippe Starck and Alexander McQueen — has helped the German company resurrect its brand in the U.S.

The man credited for its resurgence, and for driving sales to $3.6 billion last year, is Jochen Zeitz. Appointed to run PUMA in 1993 at age 30 — at the time, this made him the youngest-ever chairman of a listed German company — Zeitz, a German nativehas also distinguished the company as a sustainability pioneer, especially in the self-assessment and publication of its environmental impact. In 2008, he established a foundation to support innovative, sustainable solutions that balance conservation, community, culture and commerce. Last year, 48-year-old Zeitz worked with Anselm Grün, a Benedectine monk, to co-author Prayer, Profit & Principles – Monk and Manager, a book about how to confront pressing social and environmental issues.

Earlier this year, PUMA published the results of the first ever “environmental profit and loss” statement (EP&L) released by a major corporation. Building on the convention of corporate sustainability reporting, triple-bottom-line assessments, and more recently initiativesto report greenhouse gas (GHG) emissions, PUMA’s EP&L attempts to put a dollar value on environmental damage not typically captured by standard financial measures. For the exercise, PUMA assessed the cascade of impacts caused by producing shoes and sportswear: from raw material production, such as cotton farming and oil drilling, to raw material processing, involving leather tanneries, the chemical industry and oil refineries.

Working with accounting giantPricewaterhouseCoopers and data firmTrucost, in May PUMA pegged the ecological costs of its operations for GHG emissions and water use at $124 million for 2010. Of the total, $9.5 million is due to PUMA’s direct actions, and the remaining $115 million are incurred in the chain of suppliers that deliver finished goods to the company. The approach is controversial. Critics have argued the system is too abstract to trigger meaningful change. But by putting a dollar value on the environmental impact of its production process, Zeitz contends PUMA is playing a “catalytic role” in helping to shift the way companies measure and record their costs, and ultimately reduce them. OnEarthcontributor Adam Aston recently spoke with Zeitz, who now serves as chief sustainability officer of PUMA’s parent company, PPR Group, as CEO of its Sport & Lifestyle Group, as well Chairman of the Board of PUMA about how the EP&L can help improve sustainability.

The corporate sustainability report is, for most companies, the most detailed assessment of their environmental impact. At PUMA, you took the process considerably further. What’s the benefit?

We’re moving away from the traditional sustainability report. Such reports are fine for senior management to chart broad efforts. But from the perspective of designers or buyers trying to understand the impact of their decisions on the environment, that approach isn’t specific enough.

That’s where the EP&L comes in. Used across the entire supply chain, it offers a better tool to look at product development and design decisions, to understand the impact of what raw materials we use, how the materials are processed, where our products are made, how they’re shipped, how we package, stock and sell them, and how we dispose of or recycle them.

What variables did you measure in your first EP&L?

The first two we focused on were carbon and water. In the next phase, to be announced shortly, we aim to add other environmental indicators, such as the precursors of smog and acid rain, waste reduction and land use impacts. Eventually, our goal is to track about 90 percent of our environmental impact. Beyond that, the final 10 percent, I think, will just get too complicated.

In phase two, we plan to assess the social impacts in sustainability, such as changes in standard of living, security and health of the communities where we and our contractors have impact.

Finally, in phase three, we want to broaden the scope to look, holistically, at the economic positives of business. If we’re truly comprehensive in this effort, we shouldn’t just look at negative things. The fact is that companies also do good things — creating jobs, paying taxes, fuelling economic growth, increasing wealth and improving quality of life. That’s also something that we want to start valuing.

What surprised you in your evaluation?

The real eye opener was how much of our impact happens so early in the supply chain. That’s when most of the carbon emissions are created and most of the water is consumed.

We estimate that over half of our carbon emissions happen in the production and processing of raw materials, in the raising of cattle for leather and treating that leather, for example.

That means that the second you decide what raw materials to use in your product, you’ve set in stone the bulk of that products’ environmental impact, no matter what happens later.

How are you using the EP&L findings to alter the way you do business?

These numbers show you where you can start to turn your product development in a better direction, by looking for alternative materials, investigating how they’re made, where and by whom. So the findings are influencing product design and development day-to-day, as well as manufacturing, sourcing, even marketing to a point. We’ve begun to share these findings with our suppliers, to help them understand why we’re strict about certain materials or processes.

Are consumers starting to see these changes?

In some cases, yes. For example, to cut the amount of cardboard in our shoe boxes, we worked with Yves Behar to create Clever Little Bag. It’s a design that cleverly combines a reusable bag with a cardboard frame. The approach does away with about two-thirds of the paper used in regular boxes — this saves trees, of course, but also huge volumes of electricity and water, given how paper is made. And since it has a built in handle, the design also eliminates the need for an extra bag at checkout. That makes it more convenient for the consumer. The process of designing this required that we coordinate with our suppliers in Asia to ensure the new approach didn’t cause troubles with how our shoes are packaged at the plant, then shipped and distributed.

Given that you don’t own most of the factories that supply PUMA sportswear, is it a challenge to push through these kinds of sustainable design decisions?

While we don’t own the factories or suppliers, we are deciding who our manufacturers will be, who our raw material suppliers are, where we buy our raw materials from, and so on. We have the ability to tell a factory: “Stop buying from that supplier.”

But, of course, there are cost implications. The full costs that we identified in our EP&L exercise are borne by all of the participants in our supply chain. Though we’re at the end of that chain, PUMA doesn’t pay the full cost of that EP&L.

That’s a reason we’re working to educate our suppliers. If we identify that the footprint of cushioning in our shoes, for example, is predominantly with the chemical industry, we can say to that industry and its suppliers: “Okay, guys, what can you do to shrink your footprint?” It’s got to be a joint initiative.

Do you worry that these efforts will drive up prices, and that higher price tags could turn off consumers?

Look, very little that we buy today is truly sustainable, but this effort has to start somewhere. I believe that brands have significant power to change consumer behavior. Consumers are starting to understand that, ultimately, we’re living on one planet and we have to look after it. There’s a natural survival mode that kicks in, where we are starting to realize that things are broken and we’ve got to change it.

For PUMA, the key is that we don’t over promise, and are very transparent and true to what we do, with honest communication about what we’ve accomplished and what we haven’t. Communicating these efforts is important: we don’t want to lose our customers’ trust by getting it wrong. Nor do we want to sell a greener product that is ignored.

We’re trying to sell a solution that is desirable in many ways­ besides its environmental impact — its design, materials, and its style. This effort has to include the consumer. Otherwise it’s not going to change things.

What have been the greatest challenges in deploying this method?

It’s not totally black and white, for sure. Data collection is a challenge, given how many suppliers feed materials into our products. But it can be done if the rules are set, and everybody plays along.

Then, of course, is the question of valuation. For example, there is not just one method of measuring the value of water or the cost of carbon.

For us, this meant being on the cautious side when it came to valuing environmental costs, generally opting for the higher cost estimate. So, for carbon, we take its social cost, around $90 per metric ton, many times the cost of a ton of carbon offsets in EU markets. The higher social cost of carbon reflects estimates of the future costs of climate change. [For background on how this value is calculated, check PUMA’s Greenhouse Gas Emissions Valuation Model.]

Are you open to sharing these methods with your peers, to help them spread?

Yes, absolutely. For those that are serious and want to associate themselves with what we are doing in an open manner, we will also be open with them. We have already had a number of requests from the automotive, chemical and beverage industries, as well as from one of our competitors.

Sidebar – Truth Squad: A more environmental balance sheet

Why would a public company such as PUMA bother to report costs it isn’t required to? After all, tracking down water-use and carbon-emissions data for far-flung factories manufacturing countless products is a costly, complex effort, demanding time from top management at PUMA and its partners.

The goal is to turn transparency into a competitive advantage. In fact, while PUMA’s particular EP&L methodology is unique, it’s one of an emerging set of related standards for corporations to recognize, measure and report the non-financial impact of their activities. “Call it triple bottom line or sustainability accounting or CSR [for corporate sustainability reporting], dozens of standards are being developed that attempt to capture elements of companies’ environmental impact,” says Alisa Valderrama, a finance policy analyst at NRDC’s Center for Market Innovation. Some of the leading players in these efforts include Global Reporting Initiative (GRI), the Carbon Disclosure Project and CERES.

PUMA’s first effort, recording water and carbon costs on a profit and loss statement, may sound like a trivial bookkeeping shift, but the company is going a step further than most: Puma is not only disclosing impacts, but working to integrate what they learn into their bottom line. This means going beyond getting management to trim disproportionately high environmental costs. In the long term, such efforts can also help reduce the “material” risks to financial performance that companies are required to report. Energy shortages or toxic spills at a sub-contractor are examples of risks that could dent the annual returns of a company like PUMA. Lastly, share price could eventually benefit since some studies suggest that fuller disclosure of non-financial factors correlates with better investment returns.

“PUMA’s efforts sophisticated, a really holistic example,” Valderamma says. “This is costly, hard stuff: assessing your toll on the environment is not as easy as counting widgets coming of the assembly line.”

Yet she is frustrated with the broader state of reporting, because until such voluntary standards are incorporated into mainstream accounting and financial practices, their impact will be limited. “You want to get to the point where this is no longer rare and voluntary, but commonplace and expected, where Wall Street analysts are asking about EP&L in quarterly calls,” she says. “That will be the bellwether of real market change.” — Adam Aston

Meet the Change Makers: How Verizon is dialing in efficiency | OnEarth

Greening fleets, mining copper cables and tweaking data centers at Verizon

Verizon can trace its technological roots back to the 1880s, when Alexander Graham Bell’s invention first relayed voices between Manhattan and Boston. Now, as then, the New York-based company still connects old-fashioned phone calls. But these days, digital business services are emerging as big telco’s main focus, from tending corporations’ high-speed networks to building advanced mobile cell services that keep us connected everywhere.

As demand for these digital services grows, Verizon finds itself in a tight race for the top spot in the U.S. telecom market. With $107 billion in revenues last year, it trails only AT&T, which posted $113 billion in sales.

Verizon’s first chief sustainability officer, as well as vice president of supply chain, James “Jim” Gowen believes that focusing on green technology will offer Verizon a way to close the gap with its rival. The company’s efforts, Gowen points out, are already improving Verizon’s efficiency and reducing its environmental impact. In time, he says, they’ll open up new markets, too.

Verizon’s commitment to sustainability is still in its early stages. It was just two years ago that the company formally wove together a variety of ongoing eco efforts that were happening across its far-flung operations. Gowen, who is a long-time veteran of Verizon’s supply-chain operations, was promoted to his post in September 2009. Outside the office, he sits on the sustainability council at Penn State University’s school of business.

One of the biggest challenges to scaling up green efforts, Gowen admits, is Verizon’s enormous size. But that also means the impact of Verizon’s choices is proportionally large, he says.

OnEarth contributor Adam Aston recently spoke with Gowen to learn what lessons Verizon can offer other corporations greening their operations on a large scale.

What’s the scale of your global operations?

Verizon is bigger and broader than many folks realize. We have more than 190,000 employees globally, and have followed our customers overseas, so we’re doing business in more than 150 countries, with more than 90 million retail customers.

In terms of facilities, we have approximately 30,000, ranging from remote equipment sheds to very large data centers. To keep our cellular network humming, we operate approximately 40,000 cell towers.

Only a few dozen U.S. companies listed on the stock exchange, out of more than 7,000, have appointed chief sustainability officers. What led Verizon to take that step?

It was a long time in coming but was really formalized in 2009, when we surveyed green efforts across the company. Verizon was already doing a lot of work in sustainability, but our efforts were separate and often unaware of related work elsewhere in the company.

When we looked at our two big divisions — wireless and conventional wire-line services — it was amazing to me how much was going on. But it hadn’t been brought together yet. So the decision was made to create an office of sustainability, led by a new chief sustainability officer.

The next decision had to do with what the main focus of this role would be: more operational or more policy and marketing? And that affected where the new sustainability office would be based. Some companies opt for Washington, D.C., which implies more of a policy focus. We chose to emphasize operations, so the role was put into the supply chain area, under my watch, at our operations center in Basking Ridge, New Jersey.

Why now?

The pressure was coming from both outside and inside. From our corporate customers, the number of requests to document our sustainability practices as part of quotes for new business was growing steadily. Some of our partners are documenting their carbon footprints, for example, and need us to be able to estimate the impact of the services we provide to them.

Internal pressure was rising, too. There was a groundswell of employees eager to see change move faster. I was getting very frank calls, with folks telling me things like, “I work in Tampa and we don’t recycle.” That caught my attention right away. Green practices are becoming more and more important to attracting and keeping top people.

You mentioned that Verizon operates a huge fleet of vehicles. Is it a target for your green efforts?

The fleet is a major focus. On the road, we operate the third-largest private fleet in the United States, with more than 39,000 vans, trucks, and cars. Keeping them running requires 56 million gallons of fuel every year. Right now, about six percent of our fleet runs on alternative fuels. We’re aiming to boost that figure to 15 percent by 2015.

In 2010, for instance, Verizon added 1,600 alternative-energy vehicles, including specialized vehicles, such as our aerial trucks, which use a hydraulic arm to lift up a worker in a bucket and access overhead wires, as well as hybrid pickup trucks and sedans. As fuel supplies become more reliable, we’re boosting our use of biodiesel and ethanol as well.

It can be simple stuff, too. By discouraging idling by our fleet drivers, we estimate that we saved 1.7 million gallons of fuel in 2009 — roughly the same amount used by 2,800 average cars over a year.

We’re also working with other big fleet operators. In April 2011, Verizon was among five charter members of a new National Clean Fleet Program initiative by President Obama. Some of the other participants are our day-to-day competitors, but by working together, if we go to the auto industry to request greener features, its more likely those changes will happen.

How are you improving the environmental performance of your network and data centers?

Verizon is continuously upgrading our network of cables. The oldest parts of our network were built more than a century ago. There are many wires and switches that date back decades, all of which are being replaced with lighter, smaller, more energy-efficient digital systems. For example, in recent years, we’ve been replacing miles and miles of aging copper cables — some of the older ones are enormous, as thick as an arm — with fiber optics. Given the high value of copper lately, recycling this copper has been a significant source of revenue. It’s like mining our own cable network. These upgrades all deliver improvements in energy use.

Replacing conventional networks with fiber optics can deliver big savings. At a lab in Columbia, Md., Verizon is developing ways to use optical fiber in local area networks, to and from buildings on a campus or to homes in a neighborhood. To date, these have used conventional, older cable technology. Making a switch cuts the amount of power needed to send data between buildings by up to 75 percent and can deliver signals as far as 12 miles without the need to amplify them.

And within our data centers, we’re pursuing ways to lower energy use. We’ve set energy-efficiency standards for the gear we buy from suppliers of network equipment. These standards have saved some 90 million kWh of power consumption and avoided approximately 115 million pounds of CO2 emissions.

Speaking of greenhouse gas emissions, many companies have announced targets they’re working toward. Verizon hasn’t done that. How are you approaching this problem?

We are looking to lower emissions, but our focus has been on what we call an Environmentally Neutral Engineering Policy: for every kWh of demand we add to the network, we aim to remove one or more somewhere else. This has helped us cut emissions. We focus on the energy consumed by our network because electricity accounts for about 90 percent of Verizon’s overall carbon footprint. Of the remainder, about seven percent comes from fuelling our fleet, and most of the balance from operating our buildings.

Company-wide, the push to cut carbon really began in 2009. By the following year, we had lowered our CO2 emissions by a bit more than two percent. That reduction came despite double-digit growth in our network: the volume of data we moved grew by about 16 percent, to nearly 79 million terabytes. Measured this way, our “carbon intensity” efficiency improved substantially: we produced about 16 percent less CO2 for each unit of data we handled. In April, we announced our commitment to reduce our carbon intensity by another 15 percent and I’m happy to tell you that as of the third quarter we are on track.

Even as electronic gizmos become more efficient, they seem to be multiplying at our homes and offices. What is Verizon doing about its customers’ environmental impact?

In April of last year, Verizon launched two new energy efficient set-top boxes, which reduced energy usage by about a third for our customers. Then in January, we were certified as an Energy Star Service Provider for set-top boxes, and we’re now installing four different Energy Star models.

Beyond energy we realize that there are many other “green” opportunities with consumer devices. We’re working to reduce packaging and suspected toxins in our electronics. Working with cell phone makers, we’ve rolled out handsets with greener features.

Motorola’s Citrus, for example, is free of polyvinyl chloride (PVC) and brominated flame retardants (BFRs), chemicals that are believed to pose health hazards. The handset is manufactured from 25 percent post-consumer recycled plastic. Likewise, the packaging is four-fifths recycled, and the user manual is made from 100 percent recycled paper. And as a whole, the cell phone is certified CarbonFree through a deal with Carbonfund.org.

Verizon has played a big role in the Internet revolution, a shift that has on one hand lowered paper use and travel, but on the other has spurred the spread of power-hungry electronics. What’s that next big transformation that will affect energy trends?

The smart grid and electric vehicles are just beginning to emerge. We expect that in the long term they will significantly cut the use of fuel for transportation. Verizon is positioned to play a big role in this shift, by developing information technology, security, and communications services to help the utility sector speed the rollout of the smart grid.

For example, our Internet Protocol and wireless networks are a good match for the sorts of billing, tracking, and management challenges that utilities and car owners will face in re-charging electric vehicles at home and while traveling. By the end of last year, we had contracted with more then 20 utilities to wirelessly connect more than one million meters back to the smart grid.


Sidebar: Truth squad

NRDC’s Samir Succar on the prospects for telcos to pave the way for a smarter grid 

In the realm of sustainability, it’s common for companies to point to future green goals, whether reduced emissions or planned product lines. This can make assessing their eco-progress more of an art than a science.

Consider Verizon’s big green bet on the smart grid, the next frontier in telcos’ efforts to shape the energy impact of their customers. The need to wirelessly link digital power meters and smart appliances to the grid promises huge energy savings. Verizon, like its peers, is tackling this opportunity, but it stands out with ambitious goals to operate smart grid applications on behalf of utilities, relying on its deep expertise with data centers and complex wireless transactions.

“Digitizing the grid holds enormous opportunity,” says NRDC’s smart grid expert Samir Succar, “but it remains to be seen if Verizon will be just a neutral party relaying information to the utility, or if it can really play a role shaping customers’ habits.”

To deliver savings, Verizon and other network operators will have to alter their emphasis on performance over efficiency. Consider a recent NRDC study that revealed that by not enabling energy-savings settings on set-top boxes, cable, satellite, and data providers were costing consumers $2 billion per year in wasted energy. Verizon and the others have responded to those criticisms by rolling out lower-energy devices. 

It’s tough to gauge who’s winning in the telcos’ race for sustainability. Both AT&T and Verizon appointed chief sustainability officers in 2009, but the third-place carrier, Sprint Nextel, beat its peers in a recent green ranking of U.S. companies. Sprint was first out of the gate with four environmentally responsible cell phones. It has also committed to a 90 percent rate of collecting discarded phones, taken steps to lower its junk mail output, and is targeting cuts of 15 percent to its overall emissions by 2017. 

–Adam Aston


URL for original story: http://www.onearth.org/article/meet-the-change-makers-verizon

Meet the Change Makers: Maersk Gets Shipshape | OnEarth

How the world’s largest shipping line orders up efficiency. Maersk Line executive Jacob Sterling tells us how.

If global commerce has a circulatory system, it’s the network of thousands of container vessels that ply the world’s oceans, moving goods from port to port. On a typical run, one of these floating juggernauts might pick up thousands of tons of the latest e-gizmos from Shanghai, then a load of toys from Hong Kong to deliver to U.S. consumers. On the return trip, it might haul grain and other commodities from the Midwest, along with recycled paper and metal scrap harvested from New York City’s trash. Over the past half-century, the worldwide adoption of neatly stackable, truck-sized container boxes has driven down freight costs by 99 percent while spurring growth in global trade nearly 100-fold. Without the humble container ship, your glossy iPad would still be a figment of some designer’s imagination.

The dark side of this oceanic trade boom is pollution. Because they burn “bunker fuel” — the dirtiest and therefore cheapest type of oil  — the world’s floating freighters emit staggering volumes of black, sooty pollution. Recent EU estimates suggest that in a single year, a single gargantuan container ship vents the same amount of smog-forming sulfur oxide (SOx) gases as 50 million cars annually. By that count, it takes less than two dozen of the largest container vessels to belch out the same amount of pollution as the world’s entire stock of roughly one billion vehicles. In fact, the world’s freighter fleet is responsible for about 3.5 percent of global warming emissions, about twice the share of the aviation sector.

In the face of these numbers, Maersk Line, the world’s largest operator of container vessels, is taking steps to green its operations. This isn’t an entirely altruistic effort on Maersk’s part — it knows new air-pollution rules are soon tightening in both the EU and the United States and wants to get the jump. Last February, the Copenhagen-based company announced that it plans to build the largest, most energy-efficient container ships on the seas. In a deal with Korea’s Daewoo Shipbuilding & Marine Engineering, Maersk inked plans to buy 10 new energy-efficient vessels, with options for 20 more, to be delivered by 2016. They ain’t cheap: At around $190 million apiece, and more than 1,300 feet long, the new ships will carry 18,000 containers apiece — 16 percent more than today’s largest vessels. Maersk says they will emit 20 percent less carbon dioxide per container, and featuring advanced new engines, consume 35 percent less fuel per container.

OnEarth’s Adam Aston talked with Jacob Sterling, Maersk Line’s head of climate and environment, about how the company’s very big boats can make a smaller impact on the environment.

Freight ships are among the largest mobile objects in the world. How do you decrease the environmental impact of their operations?

One way is what we call “slow steaming.” In a vessel as big as a freighter, if you cut speed by 20 percent, we found you cut fuel consumption and CO2 emissions by as much as 40 percent. We don’t run all lines 20 percent slower all the time, but we aim to do it as much as possible. For example, we may run slow on a delivery of low-value scrap metal and paper going from Europe to China, but boost speed on the return trip when we’re moving more valuable, time-sensitive fashion apparel. Also, if you slow a given vessel down by 20 percent you might need to add more ships to that route to ensure reliable service for the customer. Overall, though, we see 5 to 15 percent savings in fuel and CO2 emissions on routes that are slow steaming.

Are your big shipping customers asking for greener shipping options?

It’s growing in importance and is part of a mix of services they are seeking. But it can be challenging for them because the push to save energy and cut costs runs counter to many years of trying to make supply chains more efficient. That means that until now the paradigm has been: faster, faster, faster. So much so that in 2007, we took delivery of new, super-fast freight vessels — compared to regular freighters, they’re practically speed boats — that could go almost 30 knots [35 mph]. Conventional vessels cruise at around 25 knots [29 mph], and slow steaming is 20 knots [23 mph].

But now we’re selling off the speed boats because they’re so inefficient at slower speeds. Instead, the vessels we will take delivery of this year will have wide hull shapes and advanced engines that recapture waste heat, to be more efficient, not faster.

Is there any promise in efforts to replace the pollutant-heavy bunker fuel with biofuels?

We’re looking into it. But the volumes we need mean it’s a ways off still. The first generation of biofuels has been disappointing. Often these fuels don’t score well in terms of how much CO2 they actually save [over their entire life cycle] relative to fossil fuels. And the quantities, so far, are too low for our needs. But we’re optimistic. Unlike jets, which need very pure biofuels that remain stable at very low temperatures, our engines could work on biofuels that are less refined. It would certainly help with the challenge we face of getting sulfur out of our fuel supply, because biofuels have close to none.

In port cities such as Los Angeles, Seattle and Hong Kong, freighters are a major source of air pollution. How can you change this?

While in port and while approaching them, we’ve already begun to switch to cleaner marine diesel fuels. In Hong Kong, one of the world’s busiest ports, we led this effort, voluntarily, in a way that led about a dozen other shipping lines to do the same.

In port, the cleaner marine diesel we use is closer to automotive diesel. In Hong Kong, for instance, the fuel we’re using has just 0.1 to 0.5 percent sulfur, whereas regular bunker fuel has up to 20 times more. Bunker fuel isn’t like normal oil. It’s more like asphalt. It has to be heated first before it can be pumped into engines to be burnt.

What about using plug-in electric sources in port, as are offered in Los Angeles and other ports? Are those a factor in cutting pollution, and are they spreading in use?

Shoreside power is certainly a way to cut pollution — but it’s only an option in ports. We are looking into shoreside power, but it does have the downside that we then become dependent on the power sources available locally. Most often electricity production is based on fossil fuels, so it is not a silver bullet.

How well is the global shipping business prepared for the inevitability of rising oil prices?

Higher and more volatile fuel prices have become the new normal in the shipping industry. Increasing fuel prices increase the price on transportation, but they also has the effect that those shipping lines that are best at saving energy and fuel save a lot of money and are more profitable. So increasing fuel prices can actually drive development of cleaner shipping.

Step back and consider the full scope of Maersk Line’s efforts to green its operations. What has been the overall impact?

Since 2007, we have reduced our relative CO2 emissions by more than 14 percent per container moved. This is due to the introduction of slow steaming, as well as our continuous focus on running our vessels more efficiently. In terms of changing the culture of our company, it’s difficult to say. It has always been in the values of Maersk Line to protect the environment and try to be a good global citizen. But now environmental performance is a key element of our business strategy. I think that we as employees will become more aware of the role we play in driving Maersk Line and the shipping industry towards better environmental performance.

How do you feel the industry as a whole is responding to this challenge?

I think that the industry could step up its efforts to develop CO2 regulations for shipping. And Maersk Line strongly supports the goals of the International Maritime Organization to develop them. But without global CO2 regulations for shipping, the sector as a whole risks being seen as a laggard even though it has real potential to drive the transition toward an economy that uses fewer fossil fuels and produces less CO2.


Sidebar: Truth Squad

NRDC’s Rich Kassel weighs in on the pollution challenge facing the world’s shipping lines

Last June in Belgium, Maersk CEO Eivind Kolding told leaders of the world’s great shipping lines that if they are to maintain their role as primary carriers of the world’s goods, the industry must change. As environmental concerns multiply and technology improves, he said, the industry must reduce emissions and clean up operations.

Prodding its peers toward greener practices is nothing new for Maersk. The company “has consistently been ahead of the pack on a wide range of environmental issues,” says Rich Kassel, senior attorney and director of NRDC’s clean fuels and vehicles project. “It has continually signaled where environmental performance will go next.”

Maersk voluntarily lowered sulfur levels in its fuel at U.S. ports years before rules required it. Other industry players resisted the move, arguing that the use of high-sulfur bunker fuel was the only way to stay profitable. But emissions from the dirtier bunker fuels take a huge toll, both on nearby communities — typically low-income communities of color, which bear the brunt of the harm — and nationally, causing tens of thousands of premature deaths every year, as well as increased asthma emergencies and other serious health problems.

Maersk proved that it was possible to use cleaner fuel and still make profits. And its move made it easier for the International Maritime Organization and government regulators to require its competitors to follow suit. “When Maersk shows that something works, it’s easier to advance policies that change the entire industry,” Kassel says.

In the wake of Maersk’s switch to cleaner fuel, the IMO adopted new rules that will soon require all ships to use cleaner fuels whenever they are operating within 200 miles of U.S. coasts. Starting in 2015, ships in this zone will use fuel that contains 97 percent less sulfur than today’s average. This switch will translate into 14,000 fewer premature deaths and $110 billion in health care savings per year by 2020, Kassel says.

Adam Aston


Original URL for story: http://www.onearth.org/article/meet-the-change-makers-maersk-gets-shipshape

Meet the Change Makers: Steering Ford Toward Sustainability | OnEarth

A focus on efficiency helps Ford pull away from the Detroit pack. Executive Sue Cischke explains how.

In the long history of U.S. automakers, green strategy and profitability have rarely gone hand in hand –until, that is, Henry Ford’s great-grandson made them a centerpiece of his tenure as the company’s president and CEO. But by 2006, in the face of larger woes in the U.S. auto sector, Bill Ford had to step down from day-to-day management of the company (he now holds the title of executive chairman). Just two years later, in 2006, Bill Ford’s green vision looked cannily prescient. With gas prices spiraling skyward that summer, U.S. drivers stampeded away from gas-guzzlers. Soon after, the financial crisis leveled the economy, and car sales collapsed. Unlike its Motown rivals, Ford was able to steer clear of bankruptcy, thanks in large part to savvy financial moves by Bill Ford’s successor, Alan Mulally.

Today, with auto sales looking up again, Sue Cischke (pronounced SIS-key) believes that extending Ford’s commitment to green corporate practices and energy-efficient vehicles will help it outpace global rivals. Cischke entered the auto biz as a mechanical engineer at Chrysler in 1976, in the aftermath of the Arab oil embargo and as high-mileage Japanese imports began to fundamentally reshape the business. These days, she is Ford’s senior-most executive focused on environmental strategy, reporting to CEO Mulally as group vice president, sustainability, environment and safety engineering. One of her top responsibilities is steering Ford’s long-term vehicle development, a vital part of helping the company meet its commitment, unique among its peers, to cut the greenhouse gas emissions of all new Ford vehicles by 30 percent by 2020 (based on a 2006 baseline).

OnEarth contributor Adam Aston recently caught up with Cischke in Detroit to hear how Ford’s green push is unfolding.

Discussions about automakers going green tend to focus on vehicles. But Ford’s been pushing sustainability in its internal operations, too. How do you measure that?

We recognize that our manufacturing operations, in terms of energy use and the materials we consume, have an environmental impact. So our strategy includes increased energy efficiency in both our products and our manufacturing.

Since 2003, we’ve seen energy consumption at Ford’s factories around the globe fall by 29 percent. We’ve won a series of Energy Star awards from the EPA recognizing these efforts. We’ve undertaken countless steps, from small to big, to make these savings. On our assembly lines, for example, thepneumatic tools used to assemble cars have been made smarter, so that they power down quickly when not in use. We’ve also upgraded factory heating and lighting systems. And at some of our paint shops, we’re also converting fumes into fuel to make electricity.

Water is another concern. From 2000 to 2008, we have reduced our water usage by 56 percent. At our Cleveland plant, for example, a program to lower the amount of water used in the casting process, together with efforts to filter and reuse water thoroughly, cut fresh water use by 35 percent in 2009, on top of a 27 percent reduction the prior year. Each year, that’s saving the plant more than $1.2 million in city water costs alone. Worldwide, those kinds of efforts have saved more than 9.5 billion gallons of water at our factories. And we work aggressively to recycle the water in our plants for reuse in manufacturing.

And what about your vehicles?

Ford’s largest environmental impact comes from our products, which is why we have made the commitment to increase fuel efficiency and cut CO2 emissions in every new vehicle we produce. Ford now offers 12 cars, trucks and utility vehicles that lead their segments in fuel economy, including four with certified ratings of 40 mpg or more.

At the 2010 Detroit Auto Show, Ford announced an ambitious range of electrified vehicles. What green technology do you see as having the greatest impact?

In a car, to eke out mileage improvements, it’s about much more than the engine. It’s looking at every component as well as overall design, looking for ways to improve efficiencies. We call it paying attention in exquisite detail. It’s like going on a diet: to lose weight, you can’t just cut down on desserts. You’ve got to exercise more. The change needs to be comprehensive to last.

In the near term, I think Ford’s EcoBoost technology will have the biggest impact because it is an affordable fuel-economy technology that we will offer across most of our lineup. The centerpiece is a four-cylinder engine that delivers the power of a six-cylinder design, boosting gas mileage by up to 20 percent and reducing CO2 by as much as 15 percent. We use turbochargers and direct injection of the gasoline at higher pressures to help achieve these gains.

The approach makes other improvements possible, too. A smaller engine is lighter, so we can downsize other parts on the car — smaller brakes, lighter power-steering motors, and less rugged transmissions, for example — without sacrificing performance.

You’ve said that improving the efficiency of Ford’s entire product line with steps like EcoBoost — rather than the development of a particular advanced hybrid or electric technology — will be the company’s biggest impact. Why?

Because we developed EcoBoost and related design enhancements at a time when the industry was throwing out attention-getting, high-tech prototypes like EVs and plug-in hybrids. Those are important technologies, but will sell in small numbers for some while. We wanted a solution that was more holistic and mainstream.

It doesn’t have the same pizzazz, but because this [EcoBoost] technology will make its way into nine out of 10 of our models within a few years, most of the cars we sell will have the option to be up to 20 percent more fuel-efficient. We are adding more EVs and hybrids too.

In the near term, selling larger numbers of more efficient, affordable gasoline engines will have a bigger impact in reducing CO2 than the much smaller volume of electric vehicles.

In July, President Obama announced a landmark agreement with the auto industry to boost average fuel efficiency to 54.5 miles per gallon, for the model year 2025. In talks with lawmakers, car manufacturers have long fought to stop, delay or reduce such an increase, as they did during recent negotiations. For all the talk about greening cars, why has it been so hard for industry to change its tactics?

We look at affordability and higher mileage goals and realize we can’t just force certain technology onto consumers. When we started the first serious push for fuel economy back in the ’70s, consumers were disappointed with cars that were so underpowered they could barely get out of their own way.

That said, much has changed. In the past, the government would throw out a new mileage number and the industry would say, “No,” and the relationship was much more adversarial.

Today, we recognize efficiency as a strong reason for consumers to buy a Ford. It’s a competitive advantage for us. We are committed to improving the fuel efficiency of every new product we bring to market, but in terms of regulations, we still believe the agencies setting standards need to understand there is not a single technology solution, and that the technology advances we employ must remain affordable for car buyers.

In your role, how do you make sure that the company isn’t just paying lip service to sustainability but is getting actual, measurable results?

The thing is, the company that figures this all out is going to be the most successful. That’s a powerful incentive to get the strategy right. It’s easy for a company to project a vision and talk about the future. We’ve found it more useful to do what we need to do, and then talk about it.

Frankly, with all the noise out there about the financial troubles in the auto sector in recent years, it’s been hard for our green offerings to get the attention I think they deserve.

Our momentum is building. We’ve had a highly successful launch of our EcoBoost technology. The Escape Hybrid SUV has been on the market since 2004. The Fusion Hybrid joined the line up in 2008. And we recently announced we are bringing a new hybrid, a plug-in hybrid, and two all-electric vehicles to market within the next two years.

What does the future hold for Ford’s lineup — will it be all-electric?

It’s important to recognize that there is room for an entire range of technologies, but in terms of electrified vehicles (EVs), we see a stronger future for hybrids and plug-in hybrids. A plug-in hybrid can be charged overnight and run on batteries until they’re depleted, before switching over to a gas engine.

If I look into a crystal ball, we’re looking for two breakthroughs: battery costs have to come down as more EVs are sold, and we’re looking for new, better battery technology that will help increase driving range. Without both of those, I’m not certain whether drivers’ concerns about running out of battery power can be overcome for EVs that don’t have a traditional engine as a backup.

That’s why we’ve also focused on charging infrastructure, improving both charging speed and encouraging the development of more sites where drivers can re-charge outside their homes. We expect most people will charge at home, but we also believe consumers will become more comfortable with the concept of electric vehicles when there are a lot more places to plug them in.

In a company with some 160,000 employees around the world, simply delivering the message that sustainability is a priority seems daunting. How has Ford done that?

Our CEO Alan Mulally saw my background and appointed me to head up sustainability. Given that I started out as an engineer, his decision reinforced that the sustainability factors are woven into the earliest stages of our design process all the way through manufacturing.

Day to day, one of the ways we keep the organization’s many moving parts in sync is via a sustainability mobility governance group, which includes senior executives in charge of developing new products, R&D, marketers and others. The issues we evaluate and prioritize there help guide Ford’s highest, board-level discussions of automotive strategy.


Sidebar: Truth Squad

Checking industry claims with NRDC’s sustainability experts

Alone among its Motown rivals, Ford outran bankruptcy during the fiscal crisis. For this and for developing a genuinely greener lineup of hybrids, electric vehicles and higher mileage cars, Ford deserves praise, said Roland Hwang, NRDC’s transportation program director in San Francisco. For example, under CEO Alan Mulally, Ford has re-geared its product offering to emphasize fuel-saving options across more of its offerings. In mid-September, it ended production of the Crown Victoria sedan, a fuel-economy laggard that averaged just 16 mpg in the city.

The broad shift has proven Ford can make money selling more efficient, in some cases smaller, vehicles, said Hwang. “Ford’s return to profitably this year has been impressive,” he said, and unlike past years, “earnings weren’t driven by pickups or SUVs.” Yet this fiscal resilience cast the company in a peculiar role: as de facto leader of the automotive industry’s opposition to the White House’s push for higher mileage standards. With the federal government holding about one-third of GM stock, and nearly a tenth of Chrysler’s, Ford emerged as the industry’s flag carrier.

In May, Mulally personally lobbied Washington lawmakers to bar California from setting higher standards independent from federal rules. And behind the scenes, Ford’s top lobbyists led a push to soften the new standard, known as Corporate Average Fuel Economy (CAFE). “These lobbying efforts run counter to its progress with greener vehicles,” said Hwang. In early July, the auto industry and the Obama Administration settled on a figure of 54.5 mpg by 2025, up from around 30 mpg today. A month later, Ford responded to the tougher rules with a plan to join forces with Toyota, its top international rival, to co-develop gas-electric hybrid systems for SUVs, pickups and other light trucks. Under past mileage rules, this so-called light truck category has been granted loopholes that tighten under the new standard.

There are competitive reasons for the tie-up too. The world’s other two top auto markets — China and Europe — are pushing towards mileage standards more stringent than proposed U.S. rules.  Adds Hwang: “Ford knows there’s a solid business reason to be ready sooner than later with high mileage solutions.” — Adam Aston


URL for the original story: http://www.onearth.org/article/change-makers-ford-sustainability

Meet the Change Makers: The New Pepsi Challenge | OnEarth


Can a company making sugary drinks and salty snacks for more than a century modernize for an era when health and sustainability matter? Image by Tom Kelley

Bringing sustainability to the soda and snack food aisles

Editor’s note: This is the first in a series of OnEarth Q&As with business leaders who are transforming their industries.

Since the days when Pepsi challenged Coke to a long-running public taste-off, the cola wars have receded to a quaint memory. PepsiCo has since grown to nearly twice the size of Coke, selling a more diverse line of products. The company based in Purchase, New York, posted sales of $57.8 billion in 2010, but just half of its revenue comes from beverages: Pepsi Cola, Mountain Dew, and Gatorade are its top-sellers. The rest? Those salty snack foods common at picnics and lunch tables, including Lay’s potato chips, Doritos tortilla chips, and Fritos corn chips.

In recent years, PepsiCo has also worked to distinguish itself from its archrival with a more prominent focus on corporate sustainability. Under CEO Indra K. Nooyi, the company has defined its five-year mission, dubbed Performance with Purpose, as “delivering sustainable growth by investing in a healthier future for people and our planet.” On the ground, this has translated into investments in renewable energypackaging reductions, and company-wide efforts to cut the use of energy, food commodities, and water. Those initiatives have already saved nearly 20 billion liters of water since 2006, according to PepsiCo’s most recent assessment. Pumping and treating less water has helped trim energy use substantially, too, because moving less water means using less electricity and fuel to power factories. While PepsiCo won’t reveal a dollar value on these savings, they run into the hundreds of millions.

The successes haven’t insulated PepsiCo from environmental controversy, however. The trash flow from billions of plastic bottles and the private sale of public water resources ignited public ire a few years ago and continues today. In March, PepsiCo unveiled the first fully recyclable disposable beverage bottle made from plant-based materials that don’t compete with food crops. The news won praise from green groups, including NRDC. It came just a few months after the company’s Aquafina brand was given a “D” for transparency by the Environmental Working Group in its Bottled Water Scorecard.

OnEarth contributor Adam Aston recently spoke to Dan Bena, senior director of sustainable development at PepsiCo. A 27-year veteran of the company, he is active in international water issues, having worked with the United Nations CEO Water Mandate and the World Economic Forum, among others, to chart a course toward worldwide water sustainability and security. He opened up about the environmental challenges the snack food giant faces.

Daniel Bena

You’re trying to curb water use across the company. How is PepsiCo changing the way it operates to meet that goal?

In 2009 PepsiCo became one of the first large companies to publish public guidelines recognizing water as a human right. This was just before the United Nations General Assembly did likewise. We’ve gotten a lot of positive feedback, even from non-governmental organizations that wouldn’t have had much time for PepsiCo before then, praising that step as an important line in the sand to draw.

 

The challenge we face now is to embed those values in our day-to-day operations, and to push them out to our suppliers and customers. To do so, we set out a few specific goals focused on water. Within our own beverage and food factories, we aim to improve our water-use efficiency by 20 percent by 2015, from a 2006 baseline. In fact, we’re already at 19 percent, so we hope to hit that goal very soon, four years early.

Second, we’re aiming to have positive water balance in water-distressed areas. Last month during World Water Week, an annual global summit of water experts in Stockholm, we published a joint report with The Nature Conservancy assessing the benefits of watershed preservation and restoration in five global communities, to help us and others learn better practices for protecting watersheds.

Lastly, we set a goal to provide three million people in water-distressed areas with access to safe water, also by 2015.

How do you define and improve “water-use efficiency?”

It’s a measure of the total water used to make a single unit of our product. For example, as a rough global average, it takes PepsiCo about 2.5 liters of water to produce a liter of beverage. It’s really variable though. At our best plants, it’s probably half that, and a few facilities use twice that amount. That’s the opportunity we face: to lower water use at our least efficient plants.

We track our internal water use for drinks by liters per liter of beverage, or for snacks as liters per kilogram of food. Using an analytical method we developed in house, called Resource Conservation, or ReCon for short, our plants around the world have gone through and meticulously mapped streams of water use.

When you do this, you see how water costs add up. Incoming fresh water is expensive to bring into a factory. On top of that, every liter that enters a factory must be treated, processed, and discharged. Each of these steps carries costs. So by reducing the amount of water entering a plant, you reduce those extra steps, too, and the savings compound. Factory managers used to the idea that “water is cheap” suddenly start paying attention. There’s no better way to get their attention than saying: “This can save you money.”

Since its launch in 2009, ReCon water has prevented the use of 2.2 billion liters of water, with a corresponding cost savings of nearly $2.7 million. We’ve also begun extending ReCon water-saving practices to our key suppliers. So far, those partners have scored a collective 22 percent improvement in water-use efficiency, compared with a 2007 baseline.

What else is water used for in the factories other than the actual beverages and food?

Believe it or not, in a beverage plant, one of the largest users of water is the room where the water is filtered. There, frequent backwashing of filters and advanced membranes consume really high volumes of water. Another of the biggest users is what we call “clean in place” or “sanitize in place,” where water is used to douse conveyers, equipment, floors, and rooms, ensuring they’re sanitary before producing beverage. Sometimes, it’s even used as a lubricant to keep conveyor belts flowing.

Are similar water-saving steps underway at PepsiCo’s food plants?

Yes. Few people realize this but producing food is also highly water-intensive. Making potato chips uses as much water as making beverages. There’s a lot of rinsing as potatoes are processed: to remove dirt when they’re peeled; to take off an outer layer of starch so they fry better. Companies talk about taking factories or buildings off the electric grid, but no one talks about taking plants off the water grid. That’s something we’re exploring at our Walkers potato chip plants in the United Kingdom.

As they arrive from the farm, potatoes are 80 percent water. Frying drives out most of that moisture as steam. The Walkers team is developing a process to capture that steam before it goes out a stack and bring it back into the process. It’s enough water, we think, that the plant could operate without taking fresh water from public supplies.

These efficiencies improve PepsiCo’s internal water usage. But what steps are you taking to help the communities you operate in where water is scarce?

I mentioned before that we’re aiming to achieve a “positive water balance” in water-stressed regions. An example can help explain our approach. One of the easiest areas in which to achieve big water savings is agriculture. Globally, farming accounts for about three-quarters of water use. In India, it’s more — about 85 percent. We make a variety of beverages there, and water supplies are widely at risk. To help lower farms’ water use, PepsiCo developed and patented a relatively simple piece of equipment that automates the direct seeding of rice.

Conventionally, rice is planted in a flooded field, where young shoots sit in three or four inches of water for up to six months. Direct seeding shortens this period and cuts water use by about one-third. We estimate that developing and promoting direct seeding lets us give back 5.5 billion liters of fresh water each year that would have otherwise been drawn from wells or surface streams and lakes.

Critics have cried foul over the idea of selling bottled water in low-income countries. You’ve argued that they’re missing the point — that water is sold anyhow, often at unfair rates in those markets.

There’s a misconception that poor people cannot and should not pay for water. The reality is that in many cases they do pay for water: the trouble is they often pay high prices for poor-quality water. Delivering safe, clean water at a fair price is something that can help close the health and poverty gap between consumers at the “base of the pyramid” — the poorest half of the world’s population — and the developed world.

This relates to PepsiCo’s third goal I mentioned: improving access to fresh water for three million people by 2015. To hit this goal, we’re working with Columbia University’s Earth Institute and Water.org — which is the merger of Water Partners International and Matt Damon’s H2OAfrica.

The PepsiCo Foundation provides funding to assist a variety of Water.org projects. Under the WaterCredit Program, the money is distributed in microloans, on the order of $120 per loan, and used to build household sanitary facilities or to improve access to fresh water. The loans go almost entirely to women, and repayment has been close to 100 percent. Any global bank would be envious of those kinds of returns.

Earlier this year, we became the first private sector donor to the Inter-American Development Bank’s Aquafund. With our $5 million donation, the plan is to “lift and shift” the WaterCredit model from India to Latin America, and to deliver safe water to 500,000 people there by 2015.

Our third partner is the Safe Water Network, a not-for-profit that PepsiCo founded with Paul Newman’s charity and others who saw the need to bring people safe water. This work is focused on Ghana, India, and Kenya.

Some argue that the nature of the water crisis — its very scale and stubbornness — make it a poor match for corporate efforts. How do you reconcile PepsiCo’s reach with the scope of the challenge?

It’s true that water crises are enormous — so much so that no single entity can solve them alone. That’s why all the key players — governments, NGOs, academia, individuals and, yes, industry — must collaborate on the solutions. Recognition is the start of a long journey to help improve the situation. Commitments are the next step.

At PepsiCo our challenge now is to formalize those efforts, test their success and nurture the best of those practices across our business units around the world. It is a daunting process. But our efforts together with those of others — I think of it as a divide-and-conquer approach — can help achieve steady, small steps.

So, do companies have a role in protecting water? Not just a role, but an absolute obligation.


Sidebar: TRUTH SQUAD

Checking industry claims with NRDC’s sustainability experts

PepsiCo has been in the middle of more environmental and health controversies over the past decade than at any time in the century since it patented the recipe for Pepsi-Cola. In recent years, its Aquafina brand of bottled water came under fire. Today, the waste caused by the beverage industry, as well as questions about the commoditization of a public resource, persist as lighting-rod issues. Health is another knotty challenge. Concerns continue to mount over the role of sugary drinks as childhood obesity and diabetes rates skyrocket.

While some companies have shied away from acknowledging such problems, PepsiCo has responded with a range of industry-leading efforts. “Does one praise a company making an unsustainable product such as bottled water? I don’t know,” says Jonathan Kaplan, an NRDC senior policy specialist in San Francisco. “But there’s no question that they’re forward thinking on these issues relative to their competitors.”

For example, in 2009, the company conducted a life-cycle assessment  to gauge the environmental impact of its Tropicana orange juice line and published the results in the New York Times. “Many companies spend time doing LCAs, but they rarely make the findings public,” says Kaplan. Likewise, its public focus on developing plant-based plastic bottles, recycling, and greener operations boost the pressure on its competitors to follow suit, Kaplan adds.

Water use is another area where PepsiCo is leading its peers, Kaplan says. “Food manufacturers, in general, are closer to recognizing that we’re headed toward a future with finite resources, where water, grain, and other inputs are less available and more expensive.” By this measure, the company’s efforts to curb water use at its plants gives it an edge — and just might drive competitors to do likewise. “Companies that figure out how to become part of the solution will have an advantage.” — Adam Aston


URL for the original story: http://www.onearth.org/article/change-makers-new-pepsi-challenge

Patagonia Takes Fashion Week as a Time to Say: ‘Buy Less, Buy Used | GreenBiz

In a novel bid to lower the environmental impact of its products, outdoor-gear maker Patagonia is telling its customers to “Buy less, buy used.” To make it easier for them to do so, the Ventura, Calif.–based outfitter set up an online marketplace in collaboration with eBay.

The tie-up marks a first for eBay, as the auction site’s first-ever venture where its listings are available via another company’s web presence. Used goods can be listed on either site show up at both.

An auction function may not sound revolutionary in the retail world, but Patagonia’s broader agenda here is an unorthodox, perhaps even radical, act for the fashion industry.

Indeed, unveiled in New York last night, against the backdrop of fashion week — that annual blitzkrieg of “toss those togs from last season, here’s what to buy now” — Patagonia’s program points in the opposite direction.

“This program first asks customers to not buy something if they don’t need it,” said Yvon Chouinard, Patagonia’s founder and owner, in a prepared statement. “If they do need it, we ask that they buy what will last a long time — and to repair what breaks, reuse or resell whatever they don’t wear any more. And, finally, recycle whatever’s truly worn out.”

As anyone who has looked on in awe at the long lines of customers snaking through H&M to snap up $11 bikinis or $8 tops, the norm elsewhere in the fashion world has been towards clothes as low-cost, disposable commodities.

To take part in the auctions, customers are asked to take a formal pledge, “to be partners in the effort to reduce consumption and keep products out of the landfill or incinerator,” Chouninard said.

The move entails risks for Patagonia, to be sure. It makes no money on the used transactions, though eBay earns standard commissions. The program has the potential to cannibalize sales of new gear, as buyers postpone purchases of new goods, or look for used alternatives.

Yet with sales of $400 million in 2010, and likely to grow by 25% this year, according to the Wall Street Journal, Patagonia has leeway to try. It’s a move that few listed companies could have entertained. Talking to the Wall Street Journal‘s Stu Wu, Chouinard acknowledged that, as a private company, Patagonia is uniquely situated to experiment. “[Chouinard] doesn’t have any shareholders or other interests to please… ‘I’m in business for different reasons,’ he says. ‘I’ve made all the money I could possibly need.'”

Talk of reducing sales is a sure way to get your run-of-the-mill CEO fired. Yet Patagonia has been pursuing an agenda of the three Rs of waste reduction — reduce, reuse, and recycle — for many years. “Reuse” and “recycle” have proved to be doable. The company has been repairing gear since its beginning — it increased its repair staff to reduce turnaround times, in advance of this announcement — and annually recycles many tons of Patagonia gear from around the world.

The “reduce” goal has proved more elusive, though. At the New York event, Rick Ridgeway, Patagonia’s vice president of environmental programs and communication remarked for companies, “[Reduce] is thorniest one of all.”

He continued: “If we aim to reduce our impact, we have to reduce the amount of stuff Patagonia sells. We have to tell customers to buy stuff only when you really need it. This is an experiment. We’ll see how it goes.”

It’s no small issue. As a reminder of the stakes, Patagonia invited Annie Leonard to the New York event for her take on the conundrum facing companies and individuals trying to do less environmental harm.

Leonard is best known as the creator and narrator of The Story of Stuff, a riveting animated documentary about the lifecycle of material goods. If you haven’t seen it, take the time to do so.

Leonard’s work is unarguably critical of unsustainable mass production and high-volume consumption. Understandably, few companies would be comfortable giving her center stage to remind us why we should consume less. She offered this reminder of the paradox of consumption:

We have built our material economy on a one-way, really fast consumer frenzy, turning stuff into waste. We use too much stuff, and we use too toxic stuff. And people aren’t really talking about this. It’s easier to talk about using less toxic stuff. We shouldn’t have neurotoxins in our lipstick and carcinogens in our children’s toys — that’s a no brainer. We’re not there yet solving that, but at least its acceptable to discuss.It’s a lot harder to talk about the too much stuff problem. We’re getting to the core of some of the fundamental flaws of our growth driven, consumer-mania economy. We start to get to really sensitive places about our relationship to stuff, and how we look to stuff to find meaning, identify or status in life. So it gets tricky to talk about reducing our consumption of stuff.

So when Patagonia called I wondered, “Are you nuts? You’re actually going to tell people to don’t buy a coat unless they need it? You’re going to encourage used stuff to go back to the market?”… [The Common Threads Initiative] is an example of the kind of new paradigm business we need to have, that meets our needs without trashing the planet.

If Patagonia’s move seems controversial, keep in mind that both companies are likely to benefit from increased exposure and reputational gains, attracting new customers interested in the pledge, and cementing the loyalty of existing buyers.

What’s more, I wonder if sales may not be dented as much as it may seem. By formalizing of a secondary market for Patagonia gear, the company will capture the long-tail of demand from tentative, first-time buyers unfamiliar with of shy of the initially high prices for the company’s high quality gear.

For Patagonia, the Common Threads Initiative is an effort to reframe and broaden the scope of its cradle-to-grave focus approach to manufacturing, and integrates with Patagonia’s existing sustainability efforts such as Footprint Chronicles, where the company documents the life cycle of many of its products. Since 1985, Patagonia has donated 1 percent of gross sales to environmental conservation programs.

For eBay, the partnership is another step on ongoing efforts to extend and highlight the company’s Green Team sustainability efforts. In 2010, the company launched eBay Box to make it easier for customers to reuse packaging. The auction house also rolled out eBay Instant Sale to give customers an easier way to sell or recycle used electronics.


PepsiCo’s Water-Saving Mission Flows Beyond Its Factories | GreenBiz

When it comes to water issues, PepsiCo‘s fizzy drinks tend to get all the attention. But the company is also a huge manufacturer of snack foods. Its food operations, PepsiCo is finding, offer huge potential to save water — including going “off the water grid.”

At a UK factory that makes Walkers potato chips — or “crisps,” as the locals prefer — PepsiCo is exploring the possibility that the potatoes themselves could yield enough water to operate the factory.

Potatoes offer a unique opportunity to turn off the taps, PepsiCo’s plant managers have recognized. When raw spuds arrive at the loading dock, they’re about 80 percent water by volume.

Indeed, the biggest challenge in making chips crispy is extracting all that water. As the thinly sliced spuds pass through the deep fryer, a thick fog of steam rises from the oil’s surface, as the water steams off.

Instead of letting it escape through a chimney, PepsiCo is exploring the possibility of capturing the vapor, condensing it to reuse and maybe recapturing the heat energy at the same time. It’s a move the company estimates could save the plant in Leicester, England, $1 million per year.

PepsiCo’s UK and Ireland arm has become a leader in setting ambitious environmental and operating goals. These also include being fossil fuel free by 2023 and achieving zero landfill across its supply chain by 2018 (click here to see more on the UK and Ireland goals).

Thinking like this is helping PepsiCo push ahead with ambitious goals globally, to cut water use across the beverage-and-snack conglomerate’s worldwide operations, says Dan Bena, PepsiCo’s director of sustainable development.

I caught up with Dan last week to hear how things were going since Pepsi published its inaugural water reportlast September (click here to download a PDF).

The report followed PepsiCo’s move in 2009 to publicly endorse water as a human right, just in advance of a similar declaration by the UN general assembly.

PepsiCo’s approach combines internal efforts at its plants with collaborative programs to conserve supplies of and improve access to clean water globally.

As part of a broader set of corporate sustainability goals, PepsiCo is specifically aiming to:

  • Improve water use efficiency by 20 percent per unit of production by 2015 compared with 2006;
  • Strive for positive water balance in operations in water-distressed areas; and
  • Provide access to safe water to 3 million people in developing countries by the end of 2015.

Efforts to cut water are ahead of schedule to beat the 20-by-2015 goal, says Bena. To drive this process within its factories, the company is turning to ReCon — short for “resource conservation” — a homemade analytic tool that maps out the use of energy and water in manufacturing plants. Deployed at hundreds of sites, and used in collaboration with supply-chain partners, the tool has saved many millions of dollars in water and energy costs.

“There’s a myth that water is cheap in many areas,” says Bena. “Even in places where it is inexpensive to buy, once you start measuring, you see the costs of treating water, using it, filtering it, and discharging it piling up.

“In some cases, we’re seeing a tenfold increase in the fully measured cost of water from when it enters a facility to when the process is complete. When business people see water costs real money, there’s no better way to get their attention.”

Bena explained that the second of PepsiCo’s three water goals, above, amounts to a kind of “one-for-one” rule. For every liter of water the company uses, PepsiCo hopes to restore, replenish or prevent the waste of as much or more water.

By this measure, Bena says that PepsiCo has already exceeded this goal in India thanks to its role developing a direct-seeding technology for rice. The method drastically reduces the period during which the rice stalks must be submerged in 6 to 12 inches of water.

“We patented a piece of equipment that saves about 30 percent of the water compared with traditional methods,” says Bena.

PepsiCo’s R&D team developed the specialized tractor over about four years, and has given Indian farmers free access to the equipment, along with technical guidance to learn new growing methods.

According to a World Business Council case study of the effort, PepsiCo’s initiative also cut farmers’ costs by 3,500 rupees (about $80) per hectare compared with traditional methods. Extended to 2,630 hectares (approx. 6,500 acres) in 2009, the system conserved an estimated 5.5 billion liters of water.

In addition, the Indian Government estimates that reduced water use lowers the paddy’s greenhouse gas (GHG) emissions by 70 percent, cutting down the volume of rotting vegetative mass, which gives off methane, in the standing water.

To push towards its third goal, providing safe water to 3 million people by 2015, PepsiCo has been focusing on developing public water kiosks in Ghana, India and Kenya. “There’s a misconception that people can’t or shouldn’t pay for water,” says Bena. “The reality is that in many poor countries, they already do, and they pay a high price for low quality water.”

Working with Water.org — which is the culmination of the July 2009 merger between Water Partners International and Matt Damon’s H20 Africa Foundation — PepsiCo is trying to supplant high-priced, private water distributors to build community taps.

There’s another benefit, too. “By brining water into a community, you eliminate the time children — often hours, and usually girls — typically spend fetching fresh water,” says Bena.

Back in the factories where it makes fizzy drinks, PepsiCo continues to drive down the volume of water use. “On average, it takes about 2.5 liters of water to produce one liter of beverage.”

“It’s really variable though,” Bena says. “Some newer, advanced plants are running at half that ratio. Some older ones are probably double that. That’s the opportunity that we face.”

Image courtesy of PepsiCo.

Check out the original story here: http://www.greenbiz.com/blog/2011/04/19/pepsicos-water-saving-mission-flows-beyond-its-factories?page=full

With its First-Ever CSO, UPS Kicks Sustainability Up to the C-Suite | GreenBiz

With its First-Ever CSO, UPS Kicks Sustainability Up to the C-Suite
Scott Wicker started at United Parcel Service, Inc. on his first day of college in 1977. The job was part of a deal with his dad: If Wicker could help support his own expenses, his dad would cover housing costs and tuition at Wayne State. Responding to a flyer posted in a school administration building, Wicker applied to UPS and was unloading big rigs in no time.

Thirty-four years and a couple of engineering degrees later, Wicker’s still at UPS. In that time, he’s gone from the loading dock to supervising the $50-billion company’s sustainability strategy and practices.

Scott WickerOn Wednesday, Wicker got kicked upstairs, becoming the shipping giant’s first chief sustainability officer. Wicker was promoted from his former role as vice president of sustainability and plant engineering.

The new title culminates a decades-long process at UPS to elevate sustainability to the company’s highest levels of management. “It was strategic decision, made between our CEO and COO,” says Wicker. “[Sustainability] is high on their list of priorities, so things get done. ”

As CSO, Wicker serves on a steering committee that routinely gathers the company’s top brass — its CFO, CIO, COO, plus heads of marketing and communications, human resources, and communications, among others — to oversee green strategy and help coordinate efforts of midlevel sustainability working groups across the enterprise.

The approach is part of an effort over the past few years “to really put teeth into our sustainability programs,” Wicker said in telephone interview earlier this week. “As sustainability has moved along and we wanted to accelerate that, we needed more structure, and the organization has recognized that fact.”

Top priorities for Wicker include devolving sustainability practices more deeply throughout UPS’ sprawling global operations. To spread the word, UPS will continue to rely on internal training and communications.

Wicker also sees the profit potential in green service offerings as a way to recruit serious commitment from UPS’ sales teams. “We’ve learned we have a competitive advantage in this area, and staff are always interested in ways to sell our business better from a sustainability perspective,” says Wicker. “One of the first places we went was to the sales and marketing team to see the benefits of these programs.”

One example of a green feature that is winning over customers, says Wicker, is UPS’ push to develop detailed carbon footprint reporting for practically any shipment a UPS customer makes. “Every year, the requirement from our customers gets tougher, so our data has to get better and better,” says Wicker.

For instance, the General Services Administration, the federal government’s buying arm, is requiring carbon information for its suppliers. For companies working to meet that requirement by measuring and improving their supply chain, “They discover UPS is big piece of their business model.” …  Continue reading here greenbiz.com

Coca-Cola Decides to Gulp Down the Rest of Honest Tea | GreenBiz

Coca-Cola Decides to Gulp Down the Rest of Honest Tea
Honest Tea, the fast-growing 13-year-old vendor of organic teas, first attracted the attention of Coca-Cola back in 2008, when the fizzy drinks giant took a 40 percent stake in the green-minded startup. Today, CEO Seth Goldman announced that Honest Tea had notified its shareholders of Coke’s decision to exercise its option to buy the balance of those shares, almost three years to the day after their original agreement. The deal is on track to close within the next few weeks.

The deal would cap a period of accelerating growth for the Bethesda, Md.-based tea brand. Sales peaked at some 100 million units of bottles and bags last year, bringing sales close to $100 million, Goldman explained, thanks in part to a boost in distribution that came from the original deal with Coke.

State of Green Business

“We’ve seen growth three-fold,” said Goldman, thanks in part to current or pending distribution deals with major national chains including CVS, Walgreens and Rite Aid. The high point of Honest Tea’s arrival to the mainstream, Goldman joked, may have been marked when the company appeared as a clue in a New York Times Friday crossword puzzle. The clue, “Honest ______ (drink brand).” The answer: Honest Ade, not Tea — one for the experts.

In a nod to Goldman’s central role as founder and CEO — or TeaEO — Coke has ensured that he maintains an equity stake in the operation and will continue to run the brand. The move is unprecedented, Goldman told attendees at the State of Green Business Forum today at the National Press Club in Washington, D.C.

Coke has a well-evolved business process for buying up small-brands, transitioning out the founder and folding the products into the parent’s larger manufacturing, distribution and marketing operations. “A veteran of the beverage business told me that after a takeover, for the first few weeks, they want to know your opinion, for the next few weeks, they want to know your telephone number, and after that they don’t want to know you,” said Goldman. “This was unusual for Coke, but came from the chairman.”

Speaking with GreenBiz.com’s senior writer, Marc Gunther, Goldman acknowledged the decision stirs charges that the organic tea brand is compromising its green integrity. Honest Tea has cultivated sustainable practices among its tea suppliers to achieve USDA certified organic status. It has also ruled out using high fructose corn syrup, and has certified its products as Fair Trade.

Goldman dismisses the charge, arguing that scaling up his business is the path to delivering the greatest benefits most broadly. “It’s easy to fall into a ‘big is bad, small is good’ trap,” said Goldman. “To those critics, I ask, ‘What’s your strategy to change corporate America?'”

Coke has proven loath to tinker with Honest Tea’s green appeal — even in the face of tension with the newcomer. The companies attracted national attention in 2010 when The New York Times detailed a conflict over Honest Tea’s decision to brand its kids’ beverage line as free of high fructose corn syrup (HFCS), despite pressure from Coke. The big drink brand was facing charges over the synthetic nature of the corn-derived sweetener along with the high calorie count of its fizzy drinks…