All posts by Adam Aston

NRDC OnEarth

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

NRDC OnEarth

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

GreenBiz

Why a Former GE CSO Is Taking the Plunge to a Water Startup | GreenBiz

After more than two decades working his way up the ranks at GE, Jeff Fulgham took a hard look at his past achievements in the water business, and looked out ahead its future prospects. Worsening water shortages and rising water prices in ever more regions, he concluded, all meant that the typically sleepy world of water was about to start roiling.

As Chief Sustainability Officer at GE Power & Water, there were plenty of ways to tap into the opportunity. But Fulgham, 52, saw another option. In mid September, he started as employee No. 3 at Banyan Water, a San Francisco-based startup that is barely a year old. He enters as the company’s chief sales officer.

A well-connected industry insider, Fulgham is tasked with scaling up a young business and guiding a team of decades-younger MBAs to build a new kind of water business. The move comes as a surprise to many in the business — it’s only the second time Fulgham has left a company. And with retirement on the horizon, staying at GE promised a future of steady compensation, healthy options and a comfortable pension.

“It’s a challenge to walk away: GE’s been fantastic. And I’m not much of a job jumper,” Fulgham reflected last week, when I caught up with him in New York City. In town for Climate Week NYC, Fulgham spoke on a panel titled “The Energy-Water Nexus” which I moderated.

In the end, the challenges of building a business from scratch won out. Compared with the pipes, pumps and chemicals approach that Fulgham knew at GE Power & Water, Banyan’s model is more 21st century, more Silicon Valley. Founded by CEO Tamin Pechet and backed by Catamount Ventures — where Pechet was until recently a principal — the company isn’t focused on developing its own technology. Instead, Banyan is buying up specialist companies already at work in the market.

Banyan then will scale up and customize those services into a comprehensive suite it can offer to big enterprises — such as universities and corporate real estate managers — looking to cut their water use, streamline billing, and lower costs.

“The idea is that we can pull in great little companies, and bring them together into one larger, more efficient, durable company, making them the part of a much stronger whole,” said Fulgham.

Typically, the experienced companies Banyan is evaluating have great technology but are hamstrung by a lack of capital, said Fulgham, and thus face a hurdle moving beyond their home markets. Banyan hopes to help, with capital, plus sophisticated sales and support systems.

“It’s a business model combining technologies and services in a field that, five years ago, probably wouldn’t have worked,” he said. “The market is ready now, though.”

“In drought-stricken areas like Atlanta, in Texas, and in California, water prices have risen by five or even ten times in the past decade. This makes new business models possible,” Fulgham said.

Not surprisingly, Banyan’s initial focus will be water-starved stretches of the southern half of the United States. Fulgham is understandably cautious to say too much about Banyan’s strategy just now, given that it is about to unveil its first acquisitions.

He offered the example of a hypothetical Texas university, facing diverse water challenges, including scores of bills for different sites, aggregate water fees in the million-dollar range, and scant knowledge of just how much water was flowing to which facilities.

To help this university get a handle on its water use, one of Banyan’s first offerings — there are more in the pipeline — will install a smart-grid style network of sensors and controllers that deliver real-time data on how much water is going where and when, notifying managers if flow rates spike at a given sensor, indicating a leak.

For the university grounds, Banyan could install state-of–the art irrigation management software that knows when to delay watering – by knowing not just when its raining, but able to use weather forecasts to delay today’s watering if rain is due tomorrow.

To finance these retrofits, Banyan aims to adapt a model used in the power sector by energy services companies, or ESCOs. The approach pays for efficiency upgrades by using the savings freed up by the retrofits to finance their purchase. This allows a client to pay for improvement from operating budgets, rather than as a capital expenditure.

But why “Banyan,” I wondered? Banyan trees, Fulgham reminded me, have adapted to thrive even in arid climates by sending out aerial roots penetrate the round, vastly extending the tree’s reach to soak up moisture. “We’re hoping to do the same thing: reach out to small companies, and connect them into a stronger, more successful whole,” he explained.

Photo CC-licensed by Jeff Howard.

NRDC OnEarth

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 energy, packaging 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

GreenBiz

Carbon War Room Aims to Cut the Barriers to Building Energy Retrofits | GreenBiz

The Carbon War Room today launched a new consortium that aims to cut through the Gordian knot of barriers that has made it tough to finance commercial building retrofits. In the process, the groups involved hope to pick off billions of dollars worth of the lowest-hanging fruit of building energy efficiency.

The Carbon War Room’s approach opens the door to zero-upfront-cost deals for mid- and small-scale retrofits, where in the past only a limited group of larger projects could land financing for such deals.

To turn this trick, the new plan upgrades an existing financing model known as PACE. It also relies on private capital, rather than public subsidies.

“This is game changing. It has the potential to solve the problem of the commercial retrofit market that has lingered for 35 years,” said Jigar Shah, CEO of The Carbon War Room at the BusinessClimate 2011 event today in New York City.

Across the country, older buildings are ripe with some of our economy’s largest concentrations of energy waste, and thus offer some of the least-costly fixes. Improving the world’s building stock offers the opportunity to save 5 gigatonnes of greenhouse gas emissions per year, and amounts to a $2.5 trillion investment opportunity, said Shah.

Dubbed PACE Commercial Consortium, or PCC, the approach brings into alignment the interests of a series of players that in the past have failed to find the right profit motives, risk levels, or technologies to get beyond one-off, complex deals to finance major green commercial retrofits.

For commercial building owners, the PCC offers a turnkey model that delivers financing, the building upgrade and deal insurance, all paid through a increased tax assessment that is more than offset by reduced energy costs.

The players debuting today with the PCC’s first round of deals are:

• Lockheed Martin (Bethesda, Md.) will provide building technology and services to audit, install and authenticate efficiency gains.
• Energi (Peabody, Mass.) insures the deals, using proprietary
 energy engineering underwriting standards, to help guarantee the savings promised by Lockheed. As a reinsurer, Hannover Re will back Energi’s policies.
• Barclays Capital will raise the capital to finance these deals and Ygrene Energy Fund (Santa Rosa, Calif.) will administer the financing.

The new program builds on an older model of retrofit financing known as the property-assessed clean energy program, or PACE. As pioneered in California in 2008, PACE legislation enables property owners to accept a voluntary tax assessment as a means of repaying upfront financing of energy efficiency and renewable energy improvements. Twenty-six states in the United States have enacted legislation enabling the secure and scalable financing PACE structure.

Because they are repaid alongside tax assessments, PACE assessments are already considered a very low risk financing option. The PCC goes further in a number of ways, according to Murat Armbruster, a senior advisor who led the Carbon War Room’s involvement.

First, PCC lowers the risk of retrofit deals by having Energi insure the energy savings contracts that Lockheed signs with building owners. With reduced risk on the payment stream derived from these energy savings deals, Barclays Capital and Ygrene Energy Fund can offer lower-cost funding by bundling a number of these deals into an investable asset sought out by pension funds and institutional investors.

How do the players make money in this complex relationship? Here, I’ll crib from the New York Times, which has the best explanation of this process I could track down. (There’s also a graphic from Ygrene at the bottom of this post showing the process graphically.)

Ygrene and its partners will gain exclusive rights for five years to offer this type of energy upgrade to businesses in a particular community. They will market the plan aggressively, helping property owners figure out what kinds of upgrades make sense for them. Lockheed Martin is expected to do the engineering work on many larger projects.

The retrofits might include new windows and doors, insulation, and more efficient lights and mechanical systems. In some cases, solar panels or other renewable power might be included. For factories, the retrofits might include new motors or other gear.

Short-term loans provided by Barclays Capital will be used to pay for the upgrades. Contractors will offer a warranty that the utility savings they have promised will actually materialize, and an insurance underwriter, Energi, of Peabody, Mass., will back up that warranty. Those insurance contracts, in turn, will be backed by Hannover Re, one of the world’s largest reinsurance companies.

As projects are completed, the upgrade loans, typically carrying interest rates of 7 percent, will be bundled into long-term bonds resembling those routinely issued by governmental taxing districts. Barclays will market the bonds. Retirement funds have expressed interest in buying these bonds, which will be repaid by tax surcharges on each property that undergoes a retrofit.

At a time when public funding for green retrofits is drying up, tapping private capital pools holds great allure. “These investments are 100 percent private capital. There is no government debt or cost involved. The markets can supply this financing because the economics are sound, engineering performance is insured, the security is strong, and clean energy capital assets are profitable,” said Brian McCarthy, CEO of Energi Insurance Services in a prepared statement.

In the deal announced today, the Carbon War Room unveiled details about the size and location of the first round of investments to be place: $650 million in PCC deals will be focused on two commercial markets.

First, Miami-Dade County, Fla., a market estimated to have $550 million in retrofit funding potential. This funding can, in turn, generate up to $1.8 billion in economic activity in the Miami-Dade region.

The second site the consortium is focusing on in this first round is the city of Sacramento, Calif. where there’s an estimated $100 million market and another $530 million in potential economic activity.

As a side note, least year, the Federal Housing Financing Agency (FHFA) — which oversees Fannie Mae and Freddie Mac — issued a letter that all but froze PACE financing for residential mortgages.

However, because they are not backed by the housing agency, commercial PACE deals were not impaired by the ruling. That said, the ruling has had a broad chilling effect on PACE backed business models. In the meanwhile, court challenges to FHFA’s ruling are proceeding in California and elsewhere.

figure 1

Top photo courtesy of Serious Materials; chart courtesy of Ygrene.

GreenBiz

Pink Hats Build a Gold Tower: Inside Avon’s New LEED Gold HQ | GreenBiz

In fitting out its new U.S. headquarters in midtown Manhattan, Avon Products Inc. required that contractors — from electricians to wall board hangers — hire as many women workers as possible.

In the process, the 125-year old cosmetics company set a record for New York City, with a 17 percent female-crew ratio for the duration of the project. “We were proud this project was built by so many women, from the cabinet makers to the electricians,” said Louise Matthews, Avon’s Vice President, Global Real Estate at a press introduction to the building.

On site, women’s construction hats were pink, the color Avon has transformed into a global symbol of its long-running effort to boost awareness of and research funding to beat breast cancer.

avon receptionThe results of those pink-hatted laborers were unveiled today at 777 3rd Avenue, Avon‘s new US headquarters.

At its 275,000 square-foot quarters, occupying the bulk of a 38-story, early ’60s modernist tower, Avon retrofitted its new home to hit the Gold standard for commercial interiors under the U.S. Green Building Council‘s Leadership in Energy and Environmental Design (LEED) rating system. The designation will be granted once LEED has reviewed the project’s scorecard.

Eighteen months in the making, the project’s design and construction was led by HOK, a St. Louis-based architecture firm that specializes in sustainable design. HOK collaborated with Avon’s internal design committee to help select a light color palate for a somewhat feminine, timeless feel to the interior, said Doug West, an HOK architect. The firm worked to keep the green features and technology systems behind the scenes, he added.

In making a move from its recently vacated former headquarters, just a few blocks to the west, Avon focused on saving energy and water, while improving the work environment for its staff:

avon officeLighting. To save power, the headquarters turned to high efficiency lighting, which cut energy use by 22 percent compared with a conventional system. Motion sensors in private offices and meeting rooms shut off lights. To maximize the use of natural daylight, work-station dividers are low, permitting light to penetrate deep into the floor plate. Some 96 percent of working positions have views to the outside.

Water. In bathrooms and pantry areas, high efficiency fixtures are the norm, saving about a third of water compared with regular designs.

Waste. During construction, 84 percent of waste was recycled, minimizing landfill demand.

Sustainable materials. Consistent with LEED goals, HOK sourced local building materials wherever possible. New York-area manufacturers produced the offices’ wood flooring, glass-paned office fronts, and ceiling panels, for example. Over 91 percent of the wood used throughout the project is certified as sustainably harvested by the Forest Stewardship Council.

Transport. Avon negotiated with the building owner to include bike racks and showers in the basement to spur bicycle commuters. The building is just a few blocks north of the Grand Central Station rail and subway nexus, as well.

Energy. Avon committed to buy electrify for its headquarters produced from 100 percent renewable sources.

The U.S. headquarters joins a growing portfolio of green buildings in Avon’s network. Earlier this year, the company launched its “Avon Green Building Promise,” a worldwide commitment to achieve at least a “certified green” level in every major new construction or significant renovation project, and to seek a higher level, such as Gold or Platinum (or local equivalent), where possible.

Towards this goal, Avon has also built or converted five other notable sites:

  • Medellin, Columbia: Avon’s Ecobranch Distribution Center is the first building to achieve LEED Gold certification in all of Colombia.
  • Cabreuva, Brazil and Zanesville, Ohio: Distribution centers both earned LEED Gold certification.
  • Shanghai, China: Avon’s R&D Center achieved LEED Platinum certification
  • Northampton, U.K.: Avon’s administrative headquarters achieved a “Very Good” rating under the UK’s version of LEED, known as BREEAM, short for Building Research Establishment Environmental Assessment Method.

Avon’s green building spree is likely to continue. “Our Green Building Promise ensures that we continually work to minimize the impact of our buildings worldwide,” Matthews said. “We hope this will serve as an inspiration to other companies in New York City and around the globe.”

Global CCS Institute

Is it fair for RAND to ask whether biomass co-firing can beat CCS on cost? | Global CCS Institute

I came across a tidbit in a recent RAND technical report, Near-Term Opportunities for Integrating Biomass into the U.S. Electricity Supply. While the focus of the bulk of the 187-page report, commissioned by the US Department of Energy, is biomass, RAND makes an intriguing, all-too-brief comparison with carbon capture and sequestration.

Its conclusion is that wood biomass, if sourced locally, is less costly than CCS – at least for the first 5 percent of  reduced fossil fuel input!. Here’s the nub of the report’s CCS assessment:

“Biomass cofiring is an alternative… [to CCS]. In CCS, the CO2 is captured from the flue gas and compressed for pipeline transport and permanent storage (NETL, 2010)…. [The] current estimated cost per ton abated for subcritical PC plants employing CCS, $94 per metric ton CO2e (NETL, 2010). We see that, for our three supply scenarios, our most likely cost of abating GHGs never rises above this estimate…. This result implies that, in a carbon-constrained world, cofiring would be an attractive option for reducing GHG emissions when compared with CCS at today’s costs. This result holds for the relatively expensive biomass–pellets transported over long distances, except at the high end of the cost estimates. Although the cost per ton of reducing GHG emissions is more attractive with cofiring than with CCS, the total number of tons of GHG emissions avoided is relatively small. Systems for CCS typically remove 80 to 90 percent of CO2 from flue-gas streams, reducing lifecycle GHG emissions by a similar percentage…. [C]ofiring subbituminous coal and wood chips at 10 percent results in GHG reductions of 8.7 percent because so much of the electricity is still generated by coal.”

For those interested in deeper details on cofiring, check out the 70-plus page report by clicking here. Regrettably, however, RAND makes no further mention of CCS, leading to more questions than answers.

  • Topping that list, as my colleague Christopher Short pointed out in our discussions of this report: why is CCS the bad guy here, posited as a high cost alternative? Any number of low-carbon technologies can make electricity, most of which are more expensive than co-firing a small amount of biomass with coal, but none of which address the compelling need to find a fix for greenhouse gas emissions from the installed base of fossil-fuelled power plants.
  • The findings are surprising given that some have claimed that biomass would lead to little—if any—net reductions of emissions over its lifecycle. If so, RAND’s exercise may ultimately be a moot point. In this camp is Resources For the Future’s Roger Sedjo, who has written that this conflict is in part due to varying time lines being assessed. In the long run, he argues, “biomass carbon is a zero sum game.” But for short periods and individual sites, he writes, the question is more complex.
  • The study’s conclusions are predicated on the coal substitute being “locally sourced wood biomass.” The study gives detailed cost comparison metrics about biomass costs and transportation’s factor. All the same, the cost question opens a Pandora’s box of follow on questions one of which is what about the majority of markets where supplies of woody biomass are scant or distant? That’s especially a concern for populated, built-up areas where power demand is typically greatest and biomass transport would be most costly.

Finally, however carbon-neutral or cost-effective it may, decarbonizing coal based energy systems through co-firing with biomass ultimately still requires the development of CCS to abate all the emissions. A less well known expectation is that to meet the stabilisation target of 450ppm of CO2-eq, CCS with biomass co-firing is a technology requirement for many of the energy-climate models used to explore mitigation pathways.

GreenBiz

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.

NRDC OnEarth

Green Pinstripes: Wharton School of Business Dean Thomas Robertson Talks About Sustainability | OnEarth

Stroll through practically any business school in the country — or any of the fast-multiplying U.S.-style B-schools overseas — and there can be little doubt that an MBA remains a hot commodity. With the start of classes now upon us, business schools are prepping for another near-record year. During this recession, as in past downturns, applications have surged, with candidates looking to use the slowdown to upgrade their credentials.

Just a couple of years ago, this bumper crop might have seemed unlikely. In 2009 the financial meltdown exposed the outsize role played by financial MBAs and math-whiz PhDs in crafting the house-of-cards investment vehicles that all but crashed Wall Street.

Critics pointed to another, deeper cause: a culture of profit at all cost that had been incubated in business schools. “The really grim news for the MBA…is about more than short-term trends,” wrote Matthew Stewart in Slate back in March 2009. “The economic crisis has exposed long-standing flaws…in the very idea of business education.”

If the recession hasn’t dimmed the prospects of B-schools, the crisis of confidence has spurred a flurry of curriculum makeovers at top institutions. Ethics, of course, have come into greater focus. In parallel, there’s been a rising appetite on the part of students and faculty alike to study more sustainable approaches to business. The number of programs emphasizing social, environmental, and ethical issues has been rising steadily in recent years, according to Beyond Grey Pinstripes, an independent, biennial survey of business schools managed by the Aspen Institute.

For a look at how sustainability and post-crash ethics are evolving at an elite business school, there’s no better laboratory than the University of Pennsylvania’s Wharton School of Business, one of the nation’s oldest and largest B-schools and an important nursery for Wall Street talent.

Thomas Robertson took over as dean of the school in August 2007. As the dust from the financial crisis has settled, he has worked to boost the profile of sustainability in Wharton’s curriculum and among its staff. To be sure, Wharton remains strongly focused on finance, even as highly ranked competitors such as Michigan’s Ross School or Berkeley’s Haas School have made sustainability a core commitment. Notably, none of the nation’s top three B-schools — Chicago’s Booth, Harvard Business School, and Wharton, according to Bloomberg Businessweek’s latest rankings — appear in Beyond Grey Pinstripes.

Robertson says Wharton is hoping to change this. Adam Aston, a freelance writer and former energy and environment editor for BusinessWeek, spoke recently with him about sustainability and the greening of Wharton at his office on the school’s leafy campus near downtown Philadelphia.

Sustainability as a business strategy is still the exception, and there haven’t been many successful, mass-market “green” brands. Why do you think that is?

Green business is still quite young. Yet even in that fairly short time, there are some serious questions about whether you can brand green any longer, because the public is so suspicious. To some extent it has reason to be. It’s easier to recall fallen green champions who have failed terribly than it is to come up with green success stories. BP is a poster child for this. The company emphasized for years how green it was, even as the environmental concerns about its operations were mounting, and then the problem spiraled out of control with the Gulf oil spill. Companies have to be careful. They should first ask, do green claims really differentiate our product, and should we be emphasizing that? If so, are those claims credible? Will consumers believe us? There’s a lot that can go wrong, so it’s no surprise that companies remain shy.

Are you hesitant to brand Wharton as a greener business school? You don’t appear in the Beyond Grey Pinstripes rankings, for example.

Wharton has had a funny love/hate relationship with rankings in general. A predecessor of mine, along with the deans at Harvard and a few other institutions, decided some years ago to stop participating. But the ranking services rate us regardless, using information from outside sources. Beyond Grey Pinstripes is among the most demanding, because it requires that we survey the content of individual courses to identify which ones have green content. However now we’re cooperating again for the first time in a long while, and we have full-time people substantially dedicated to answering these requests. The Aspen Institute is probably the most reputable place out there ranking green initiatives in schools. It’s a good place for us to be, whether someday we come in first or thirtieth.

Did you pick up any shift toward greener goals since the financial crisis?

The aftermath of the crisis has reinforced one of the longest-standing strategic pillars of the curriculum at Wharton: social impact. From environment to labor and other social dimensions of business, there’s very much a belief here that business schools must be a force for good in the world. Even so, this is the biggest school in the country. We have 4,900 graduate students plus a few hundred undergrads. And some of our alumni do still go astray.

Do you have any star faculty members working on green issues?

One is our vice dean of social impact, Len Lodish, who also leads Wharton’s Global Consulting Practicum. Among other things, this sends groups of MBAs overseas to apply business skills to solving social and environmental problems. One team recently went to Botswana, for example, to help develop a sustainable funding model for a health partnership. I’d also mention Eric Orts, the director of Wharton’s Initiative for Global Environmental Leadership. Eric is a lawyer and tends to come at these issues from that perspective. He argues that business as usual is quite likely to lead to major environmental catastrophes, and he’s pushing for Wharton to get ahead of the curve on these issues. It’s clear that sustainability is here to stay. I think it has come into its own as a business priority. We all realize that we’re going to destroy the planet if we don’t get on board.

In many business schools, the interest in sustainability is coming from the bottom up, from the students.

It’s true. A lot of student efforts are bubbling up here. Emily Schiller graduated with an MBA from Wharton in 2009 and chose to stay here to become the school’s first associate director of sustainability and environmental leadership.That role grew out of her involvement, when she was a student, as co-chair of Net Impact’s North America Conference, one of the nation’s largest nonprofit events focused on sustainability. She also works with our Student Sustainability Advisory Board, which takes student suggestions and so far has turned them into real savings of more than $100,000. One of their ideas now is to switch to natural cooling of our data center in winter, rather than using air-conditioning. If it’s cold outside, why not take advantage of that?

Sidebar: NRDC FOCUS — Peter Malik, Director of NRDC’s Center for Market Innovation

If business schools could choose one thing to enhance their focus on sustainability, what would it be?
Mortgages. The housing market has to be one of the drivers of economic recovery, but it’s still under severe pressure. Unsound lending practices were partly responsible for the mess, and we need to scale down the role of government-sponsored enterprises like Fannie Mae and Freddie Mac in underwriting private-borrower risk. Banks should also incorporate sustainability criteria into mortgage scoring and pricing. Live in a mansion and drive a Hummer, and you’ll pay more. Live in an energy-efficient apartment and walk to work, and you’ll pay less.

Learn more about Location Efficient Mortgages.