Sustainability in the recession

A lot of hype about companies decreasing focus on sustainability given the current economy. I disagree. As companies are being challenged by the economy, they are very actively looking at any cost reduction they can get. This includes: employee travel restrictions (and more use of video conferences), reduced packaging, reduced product transportation, more focus on cost reduction projects. While these initiatives have the primary goal of reducing costs and maintaining cash flow, they also reduce the overall carbon footprint. Frustrated sustainability advocates, should see this as an opportunity.

Just 12 months ago, many environmentalists were pushing technologies that did not have a rate of return that met most companies hurdle rates for capital. The investments you will see over the next few years, will have payback. That is good. Unfortunately, we will not have the R&D $$ to get the next technologies down to a price point that justifies investment. But expect to continue to see a strong focus on energy conservation, wind, and solar hot water. The wildcard is the USA government investments as part of the stimulus package that may have a way of distorting market forces in the selection of technologies.

The other thing that is happening is that many companies are now working beyond the "low hanging fruit" based on pure cost reductions. We are seeing the much longer/more significant changes. This includes:
1) Product reformulation - Manying companies are working on new formulations that use less toxic chemicals. You are already seeing "green" alternatives of major brands. You will start seeing the "green" alternative become the brand itself. I believe "clorox" green cleaner will replace the older clorox window cleaner.
2) Supply Chain reconfiguration - Companies are looking at their carbon footprint as part of their distribution network design. IBM announced they have sofware and services to help in this area. It takes years to change distribution networks, but I keep seeing, smaller DCs, closer to the customer. Part (no all) is based on reducing transportation miles.
3) Packaging Changes - With all the push back on plastic bags, etc, you will see companies get more green in their packaging. No company will compromise on the "look" of their product on the shelf, but packaging companies (see packaging digest) are all pushing green packaging. Green package will become the "attractive" shelf display. This includes recycled content, non-plastic based packaging, and reducing layers. I believe this will start in areas that are more environmental aware areas and over the next 3-5 years become the standard. Get used to bagged cereal and boxed milk.

This economic downturn is exactly what companies need to enable the very large supply chain changes. Many older companies will fail, allowing new companies with more efficient ways of doing business to thrive. This is a great thing for sustainability. Agree?

Industrial Buildings

Physical buildings are a large part of the supply chain. Whether it is manufacturing sites or distribution centers, they are substantial part of the operating costs (and carbon footprint) of a supply chain. On an annual carbon footprint, they typically an order of magnitude or more less significant than manufacturing or shipping a product. However, if you include the initial construction rather than just annual operating costs, the equation changes dramatically. There has been significantly more focus on looking at the building industry as a way to reduce growth in carbon emmissions.

There was a good article on three recent Sustainable Industrial properties in a magazine called Building Design+Construction. They profiled three industrial properties – a refrigerated DC, a dry goods DC, and a manufacturing site. Here were some things from the article that were worth sharing:

1) An overview of technologies divided between <5>5 year payback

2) There is now a commercially available roof unit that integrates T5 lighting, skylight, and PV panels (supplied by Daylight Technology of San Diego, USA). This could reduce install costs significantly.
3) LED lighting is available for external application (i.e. drop lots), but not commercialized for internal. One site took an external LED fixtures to use in a refrigerated environment.
4) Automated monitoring and control of a natural ventilation system. The two sites that had this system would typically be conditioned in those parts of the USA.
5) Hunter Industries is using white corrugated boxes to reduce lighting needed in the warehouse. I am not sure I agree with this approach. White packaging is typically more expensive and requires bleaching agents that are pretty bad for the environment. But a very interesting concept.

There is also a very large White Paper on Climate Change and buildings (http://www.loginandlearn.com/course/overview.php?courseid=1362). It provides some good detail on climate change issues and building impact. The one item that was interesting was payback trends for a project for an office building.

Sustainability Strategy

Sustainability the big picture

Read a good article on Sustainability from Monitor Consulting. One of the key items was not to try to meet all aspects of sustainability. There is no consensus among the various NGOs and governments on what is sustainability. So, don’t try to be everything as a company. It would be very difficult to be the leader in CO2 reduction, water management, energy savings, endangered species, air pollution, shortest supply chain, waste reduction, and so on. You won’t be able to focus nor get a return (either in investment or “credit” from the consumer) if you do not have a focus and strategy. For example, Coke focuses on clean water as it is critical to be able to get water for their business. Or look beyond the boundaries of your business to find a Sustainability focus. Staples provides reverse logistics for NiCad batteries and ink cartridges. Other retailers are finding other options to promote a sustainability agenda (and also drive traffic to their stores). Another example from the article (which is more of happenstance) is Toyota’s sustainability success with the Prius. The environment impact is in the use of the product (reducing petroleum and CO2 emissions) rather than anything internal to the company.

I believe all companies should be working on starting to determine their carbon footprint using the Carbon Disclosure Project methodology (www.cdproject.net) and then focus on one area that can unit employees, the business and their customers. This needs to be a sustained commitment (5-10 years). A company should plan to have a pipeline of projects and initiatives that can lead to press releases and media exposure every 3-6 months (depending on size of the company). This should not be an expensive item (relative to the size of the business) but should return savings from cost reductions or government/utility incentives. I would not advocate spending money without a return for a company. I may personally spend more for to buy an organic product, I would not waste my employer’s money on an investment that only had a “sustainable” benefit and no reasonable ROI.


http://www.monitor.com/Expertise/BusinessIssues/OrganizationandLeadership/tabid/68/ctl/ArticleDetail/mid/699/CID/20082008133243971/CTID/1/Default.aspx

Sustainable Forktrucks

October 21, 2008

Have spent a lot of time researching sustainable fork trucks. There has been a lot of talk about Fuel Cells, but have not seen anything that is commercially available. I talked to all the OEMs at NA in Cleveland back in March 2008. The OEMs and Fuel Cell manufacturers were looking for pilot opportunities, but nothing was "off-the-shelf" ready. Basically, all the electronics and controls have to be changed to changed with a fuel cell rather than an electric battery. Also, since fuel cells weigh less than a big electric battery all the balances and moment arms need to be recalculated (or lead plates added to the fuel cell compartment).

Crown is working with Plug Power
Hyster is working with Hydrogenics
Raymond is working with Ballard
http://www.mmh.com/article/CA6514673.html


The economic issue preventing widespread use is providing hydrogen at the site. At less than 50 trucks, it is too expensive to generate on-site and it requires trucking hydrogen in ($$$). At more than 50 trucks (24x7), you can cost-effectively generate Hydrogen on-site. But that is a pretty large investment and may not meet many companies ROI or payback requirements. It is even more prohibitive to try a pilot. Walmart has done this at two DCs (Washington Court House, OH is one location). Fuel Cell today has an overview of the current market. Lift trucks are a subset of the Niche Transport group,
http://www.fuelcelltoday.com/online/survey?survey=2008-07%2F2008-Niche-Transport-Vol1
I do not share their optimism on the growth of the market. Still watching. If anyone has run a pilot, I would be interested in their findings.

Another option is Methane Fuel Cells. Oorja has a product they demo'd at NA. Not sure how far along they are to commercialization. Looks like they only have something for Class 3 lift trucks (walkie-rider trucks) http://www.oorjaprotonics.com/index.php. They have a small methane fuel cell and a battery. The footprint of the unit and using a battery interface should allow for substitution with an existing battery-based type lift truck. Using methane reduces the issues with hydrogen infrastructure, but not sure of the overall efficiency and how frequent is the fueling required.

LEEDS Certification

Burt Bee's New Distribution Center

DC Velocity, October 2008
Overview of Burt's Bees new DC in Morrisville, NC. A good approach for sustainability. There has been a lot of press about new distribution centers that have been build-to-suite that have received LEED certifications. This would include JohnsonDiversy/Liberty Property Trust DC near Racine, WI that received LEED Gold (http://www.johnsondiversey.com/NR/rdonlyres/11FE5469-A223-482E-8D18-7666D6C9AD87/0/distributioncenterawardweb.pdf) Also, Patagonia's Reno DC (www.youtube.com/watch?v=nr9WU4-NAc4)

I think the Burt's Bees Warehouse is a much better example of true sustainability since they are re-using an existing property. The building of new buildings and developing new land has the biggest environmental impact over the life of a building than any of the nifty technologies that can be put into a new building. I believe that brownfield redevelopment is under valued in sustainable evaluations.

Another interesting trend is companies not utilizing LEED certification. The cost of certification which can be $30-50K in consulting fees is not always worth the investment. Many users seem to be resigned to the fact that they need to use LEED for marketing (i.e. Prologis and other developers), but their maybe a need to look for a better approach. Their was a recent article that a Orange Julius owner used Green Globes as it was a web-based assessment.