Getting Easier to be Green

Bruce Parker

Last year, General Electric announced its “Ecomagination” initiative that is intended to reduce the company's greenhouse gas (GHG) emissions by 1 percent by 2012. Previously, the firm was on pace to increase emissions 40 percent by that year. The company also announced that it is doubling its annual spending on research into cleaner technologies and more efficient energy uses.

Meanwhile, Wal-Mart has pledged to spend $500 million annually to reduce GHG emissions by 20 percent over the next seven years at its worldwide stores and facilities. In addition, the company committed to reducing energy use by 30 percent, cutting waste generation by 25 percent, increasing the fuel efficiency of its trucking fleet by 20 percent over the next three years and doubling its fleet's miles per gallon over 10 years.

This new phase of corporate environmental concern is being driven by several factors: climate change (global warming), perhaps the most consequential environmental issue today; globalization; anticipation of mandatory GHG emissions controls; social responsibility; corporate reputation; and profits.

All 25 members of the European Union have signed the Kyoto Protocol requiring significant reductions in carbon dioxide (CO2) and other GHGs. The United States has not. But because U.S. firms do billions of dollars of business in Europe, it makes perfect sense that they apply the same rules to their U.S. operations.

President Bush's approach to climate change and renewable energy has consisted mostly of voluntary efforts with federal and state incentives (e.g., tax credits, R&D credits, grants). In contrast, most forward-thinking CEOs see mandatory GHG emissions controls not as a matter of if, but of how and when.

Also driving this Green Revolution is a genuine sense of social responsibility and a desire to build corporate reputations as environmental stewards. “Socially Responsible Investing” (SRI) has entered the environmental lexicon. Many investors want their equity holdings to reflect their values.

In response, Goldman Sachs, one of the largest investment banking firms, in 2004 established the Environment, Social and Governance Index (ESG), which assesses 42 social and environmental criteria in the global energy sector. According to the Smith Barney Consulting Group, by the end of 2003 about $2.16 trillion was invested based on socially responsible criteria.

Solid waste management activities are an important but relatively minor source of total annual U.S. GHG emissions. In 2003, GHG emissions from MSW activities were less than one percent of total GHG emissions from all sources. Equally important, GHG emissions from landfill methane in 2003 were substantially less than two-hundredths of a percent.

Methane is the primary GHG emission of concern in the industry, as more of it is emitted than carbon dioxide, and methane has about 23 times greater global warming potential than carbon dioxide. In spite of the small amount of GHGs that the solid waste industry emits, it has made remarkable progress in reducing these emissions since the 1970s, even though the amount of MSW managed has nearly doubled since that time.

According to U.S. EPA, in 2005 landfill gas-to-energy projects removed an amount of methane equivalent to the carbon emissions from more than 13 million vehicles or the benefit from planting 19 million acres of forest. The projects also help reduce our dependence on foreign oil by offsetting the use of 162 million gallons of oil or 341,000 railcars of coal.

Bruce Parker is president and CEO of the Environmental Industry Associations. E-mail the author at [email protected].