VideoCompanies that have not done much work on "green" initiatives will likely get going now because of their declining business fortunes. So said John Mahoney, finance chief of Staples, at the CFO Green Conference yesterday in New York.
Do sustainability efforts save money? The question of whether that's the case or whether such practices cost more than they're worth has long been answered, conference speakers asserted. "We've seen over and over again that companies can find ways to benefit both the environment and their bottom lines," said Gwen Ruta, vice president of corporate partnerships for the Environmental Defense Fund.
A vast assortment of green practices have had a clear impact on the financial performance at Staples, according to Mahoney.
"While the economy is reeling today, we can afford to maintain our sustainability programs because of their measurable impact on our financial performance," he said. "I think the economic environment is going to really represent a turning point for many companies in thinking about how sustainability works."
Staples, though, does not know exactly how much money it saves by being green, Mahoney said in response to a CFO.com question following his session. The company has an environmental department led by a senior executive, and it must deliver measurable benefits that are a multiple of the department's cost. But the company does not track all the activities at its 2,000-plus stores. "That is difficult to measure, and it's just part of [the store managers'] jobs," he said.
He did, during the session, provide several examples of measured cost savings. In 2008, the company switched from using three-amp lightbulbs to two-amp bulbs. That single change was the key factor in a $6.2 million reduction in energy costs, $4.2 million of which fell to the bottom line after subtracting the costs of running the program.
(Not everyone was in tune with the program. One store manager, after receiving the new energy-efficient bulbs, "put them on an endcap and sold them," Mahoney said, referring to the display hub at the end of a store aisle.)
Staples also is saving 540,000 gallons of diesel fuel per year after modifying its trucks so that they can't go more than 60 miles per hour. That saves $1.5 million. "When diesel prices spiked we were able to offset about 80% of the increase just through this program," Mahoney said.
And the company has 24 rooftop solar panels that collectively save "hundreds of thousands of dollars" with virtually no capital investment by Staples, thanks to tax credits for such installations.
Mahoney also mentioned some large-scale programs that would seem to have significant savings attached, though he did not quantify them.
An effort to get customers to recycle printer and toner ink cartridges began in 2005, when customers turned in 5 million such items to be refilled for sale. The carrot was $1 per item, paid in Staples Rewards points. In 2007, 22 million cartridges were recycled. This January Staples hiked the payout to $3 per cartridge, and is on a pace to recycle more than 50 million of them in 2009, according to Mahoney.
Interestingly, that program originated in an initiative by a store manager in Oklahoma, who was looking to make some money to donate to local schools systems with budget shortfalls, and not specifically to help the environment. The energy-reduction program also began, Mahoney said, as a cost-cutting initiative rather than a green one. "One by one people started to see that the two could go hand in hand," he said.
A cornerstone of Staples's environmental program is selling paper products containing a high amount of recycled material, which also are used in the company's 1,400 copy and print centers. This began with an intense lobbying effort by a group of non-governmental organizations back in 2000. In fact, they did more than lobby; for two years, while the company took its time figuring out how to respond, activists chained themselves to racks in Staples stores and the NGOs did things like issue baseball cards showing the company's CEO with the moniker "MVP of Forest Destruction."
Today Staples sells more than 2,200 paper products with recycled content, and the effort does not end with paper. For example, Staples-branded office furniture includes recycled steel, and binders and organizers use recycled plastic.
These products not only are cost-efficient and green, they also stimulate customer loyalty, Mahoney claimed. "We find that when these products are made with high quality and priced right, [their environmental friendliness] becomes the tipping point for customers in deciding what they're going to buy," he said.
Few customers, though, will buy products solely for their green impact. When Staples first opened stores in Seattle, it figured that the city's youngish, famously hip population would "go for green products like crazy," Mahoney said. "But we found that they didn't buy them more than anybody else in the country. The market for people who either are willing to pay more for or absolutely demand green products, just because of the sustainability issue, is very small."
Green Partnerships
Ruta, meanwhile, gave a rundown of cost-saving measures by some of the companies that the Environmental Defense Fund has worked with on green initiatives.
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