You Can Do Well by Doing Good

It used to be that caring for the environment was considered something of a luxury. You know -- a "nice to have" thing that everyone wished for, but which few people were willing (or even able) to foot the bill for in order to attain.

Recently, however, there has been a dramatic shift in that attitude. Thanks in part to last year's spike in energy prices, minding the environment has become an important part of minding a company's bottom line.

Cash and the planet can work together
That transformation has been made possible through some tremendous work in research and development into greener technologies. In addition, industrial titans have given environmentally friendly technologies a taste of the economies of scale. One of the most well-known ecological initiatives to leverage a giant company's scale is General Electric's (NYSE: GE  ) "ecomagination" campaign. GE's not alone, though -- even Wal-Mart (NYSE: WMT  ) is ramping up its environmental initiatives and seeing business benefits by taking care of the planet.

These days, even profit-hungry companies like GE and Wal-Mart realize that there's both money to be saved in being energy efficient and money to be made in helping others get there. And the economies of scale that those giants bring have been a huge factor in enabling economic and environmental stewardship to work together gracefully.

There's a reason why the list of the Global 100 Most Sustainable Corporations in the World includes well-known firms like these:

Companies

Sample Environmental Initiatives

Intel (Nasdaq: INTC  ) and AMD (NYSE: AMD  )

"Performance per Watt" standard for energy-efficient computing.

United Technologies (NYSE: UTX  )

Energy-efficient elevators that use regenerative braking.

Coca-Cola (NYSE: KO  )

World's largest bottle-to-bottle recycling plant.

Toyota (NYSE: TM  )

Famous for the Prius. Also involved in the use of ecological, carbon-neutral plastics in automobiles.

It's not just about a public relations coup or a feel-good strategy. These companies are making significant investments in infrastructure and product design to be more environmentally conscious. The business benefits for them and their customers are real -- or else they likely wouldn't be pursuing them as aggressively as they are.

After all, these companies ultimately answer to their shareholders and have to compete in order to thrive. No matter how noble its intentions, no company can survive for long by throwing its money away and wasting its people's time on initiatives that don't add value.

Even charities are contributing
Caring for the environment has become such a smart business decision, in fact, that even charities that aren't directly chartered toward environmental causes are stepping up to the plate.

In Cincinnati, for instance, the local American Red Cross chapter is attempting to achieve LEED (Leadership in Energy and Environmental Design) certification for its new disaster operations center, which will also serve as its headquarters. The structure has a legitimate shot at earning Gold status from the nonprofit U.S. Green Building Council, which runs the LEED program. (I'm a member of the Green Committee for the Red Cross building project.)

More than anything else, that showcases just how far cost-effective green technology has come. After all, as a not-for-profit entity that relies heavily on donations, the local Red Cross has to be an extremely careful steward of its limited resources. Otherwise, it risks both alienating its donors and being caught unprepared when called upon to provide its critical services.

An investment that pays back
While environmentally responsible activities still often require upfront investments, many of them have become cost-effective enough to be worth that cash. For instance, maintaining indoor air quality during construction is one of the LEED criterium that the Red Cross is trying to meet. While that requires some additional work (and thus expense) during construction, it does protect both the health of the construction workers and the building's climate control systems.

Through longer equipment life and lower maintenance costs, the chapter expects to recoup the upfront investment it will take to earn that extra LEED point. When the environment, people's health, and a charity's limited resources can all be protected at the same time, it truly is a win-win-win situation.

Luxury becomes commonplace
Whether for profit, charity, or personal satisfaction, environmental stewardship is no longer an expensive luxury, but rather a smart strategy toward delivering cost-effective results. That bodes extremely well for the future of business and the planet.

At the time of publication, Fool contributor Chuck Saletta owned shares of General Electric and Intel. Chuck also currently serves as volunteer chairman of Health and Safety for the Cincinnati Area Chapter of the American Red Cross, where he sits on the Green Committee for the new building project.

Coca-Cola is a Motley Fool Income Investor recommendation. Intel, Coca-Cola, and Wal-Mart are Motley Fool Inside Value selections. The Fool owns shares and covered calls of Intel. Try any of our Foolish newsletters today, free for 30 days. The Fool has a disclosure policy.


Read/Post Comments (15) | Recommend This Article (25)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 22, 2009, at 5:21 PM, tramagli wrote:

    But why did it take 30+ years for anyone to realize that?

  • Report this Comment On April 22, 2009, at 9:02 PM, burrowsx wrote:

    FSLR STP ENER AMAT

    Walmart indeed: destroy the rural economy, and put up solar cells? Give me a break!

  • Report this Comment On April 22, 2009, at 9:13 PM, xetn wrote:

    Perhaps you should all read the story in the link for an alternative view of the so-called "green jobs":

    http://mises.org/story/3430

    It is a very different view than most and is worth a look.

  • Report this Comment On April 22, 2009, at 10:27 PM, gary55981 wrote:

    Why wasn't Ford mentioned. It has the most practical fuel efficient cars being sold in the US. With their efficiency with gasoline, no other known energy source is as efficient for personal transportation for the majority of our citizens.

  • Report this Comment On April 22, 2009, at 11:34 PM, TMFBigFrog wrote:

    Hi Fools --

    In terms of why environmental thinking has taken so long to catch on, I honestly believe a lot of it has to do with the economies of scale not being there until recently. You need companies with the size and scale of GE and/or Wal-Mart to drive cost effectiveness and efficiencies into the end-to-end supply chain to make environmentally-focused products cost competitive.

    I do believe that the GE / Wal-Mart model is more likely going to be mainstream successful at promoting environmentally friendly behavior in a bigger way than many of the ones that have come before. For instance, the GE branded CFLs sold at Wal-Mart make financial as well as environmental sense.

    I'll happily pay $3.00 to replace a $0.75 65 watt incandescent with a 15 watt CFL with equivalent lighting, because the CFL has a clear pay back in terms of lowered electric cost and longer life span, while providing essentially equivalent light. While it may not be the "greenest" technology out there, it is a great practical idea based on the principle of being cost-effective while promoting environmentally friendlier technologies than the alternative.

    Likewise, in my day job, I work in transportation logistics. There's a big move in the industry towards intermodal shipping on long haul routes. Such a move is usually both economically and environmentally friendlier than trucks. It's taking off as a win-win option (win in the pocketbook, win for the planet). The large trade-off is time. It typically takes longer to ship intermodally than via truck, so you need better advance planning and a somewhat stronger financial position to carry the larger rolling inventory. But from an investment / payback perspective for products that can move on a "drum beat", it's usually easily worth it.

    Personally, I'm not a "let's go back to the stone age" kind of environmentalist. Especially with the 90 degree days at 90% humidity summers we live through here in Cincinnati, along with the insane allergies I get here that make sleeping with open windows physically impossible even when medicated, you can pry my air conditioning from my cold, dead fingers.

    But at the same time, I am a huge fan of making the right choice for the environment when I can justify the decision financially. For instance, when our air conditioning gave up the ghost a few years ago, the model we bought was 30% more energy efficient than the standard model sold at that time. We paid an upcharge to get the more efficient model, but over the 10 year warrantied life of the air conditioner, it made economic sense.

    Could we have gone even greener -- yeah. Would it have made economic sense? At the time, it didn't realistically look that way, but the way our electric rates have skyrocketed since then, it might have. If I had perfect foresight into rate futures when making the decision, I might have made a different choice. Right now, it certainly isn't worth discarding our perfectly functional air conditioner, but when this one eventually gives up the ghost, I'll have a different set of parameters to work with.

    Likewise, when and if the price of solar panels drops enough to make their installed cost competitive with grid power over a reasonable time frame (in this neck of the woods, with our weather patterns, and my home orientation), I would very much be interested in investing the up front capital to put panels on my house. I'm happy to engage in environmental initiatives when the economics are there to support them.

    When the economics aren't there, I'd rather invest my limited resources where they make sense -- in insulation, caulking, and CFLs instead of solar panels, for instance. We're not made of money, and we have to make choices on where to put our cash.

    Best regards,

    -Chuck

  • Report this Comment On April 22, 2009, at 11:51 PM, TMFBigFrog wrote:

    Hi gary55981,

    Regarding your question: "Why wasn't Ford mentioned."

    I pulled the list of companies from the "Global 100 Most Sustainable Corporations in the World" list, which you can find here: http://www.global100.org/ . Toyota & Honda made the list, Ford did not. You'll have to ask the keepers of the list why they felt Ford didn't qualify...

    Best regards,

    -Chuck

  • Report this Comment On April 23, 2009, at 2:17 AM, bobs111 wrote:

    GE has a huge financial stake in windmills and solar electric panels! They are NOT trying to save the earth, they are trying to make a killing! They are using the gov. to MAKE us use cfl's (which they also make. The dirty little secret is that compact florecent lights contain MECURY! a hazardous metal that the "ENVIRONMENTALIST" have been warning us about forever and they are less energy efficent if left on for less than 15 minutes. Recycling uses more recources and returns less usable products than it saves! Only urbanites think that the earth is in any danger by man. All of the STUPID ENVYRONMENTAL LAWS that you pass only effect us farmers that are trying to put food on your undeserving plates, I'm thinking of quiting, what if we all did? As far as Walmart is concerned, its been a Godsend to the rural communities across America, good products at a fair price!

    On "Earth Day" we should all thank Rudolf Diesel!

  • Report this Comment On April 23, 2009, at 3:52 AM, Rabbit15501 wrote:

    I have some doubts about Coca-cola. Their industry requires massive amounts of water and is having impacts on available drinking and irrigation water- ex. in India- by lowering the water table. There is always more to learn behind the words, and also more to research behind this information too.

    Even if some are falsely claiming green for gain, the fact that there now exists a global heightened awareness in such a short time is extraordinary. Usually it takes a generation(s) to notice a significant change in habits - such as in littering or smoking- and this is breaking every expectation. So a major plus side to help balance the negatives. Investors can choose what companies they wish to support.

  • Report this Comment On April 23, 2009, at 3:57 AM, paultaut wrote:

    When costs of LED lighting come down and are force fed to the nation, not only will the energy saved be a boon to the nation, but you won't need a Hazmat suit to clean the area if one were to break.

    Having saved all this energy, we should be able to go straight to EVs instead of futsing around with everything in between.

  • Report this Comment On April 23, 2009, at 4:40 AM, inverbrass wrote:

    Gentlemen:

    General Electric is a joke along with NBC. Management matters. Shareholders should be upset.

  • Report this Comment On April 23, 2009, at 8:18 AM, jscott27 wrote:

    "Having saved all this energy, we should be able to go straight to EVs instead of futsing around with everything in between."

    First, we aren't going to save anywhere near that much energy. Moving all of these vehicles takes massive amounts of energy.

    Second the range on pure electric vehicles is miserable. Filling a tank w/ gas takes 10-20 min, charging an EV battery takes hours. I don't think I have ever seen an EV with reasonable performance that had a range of > 100mi / charge.

  • Report this Comment On April 23, 2009, at 10:19 AM, TMFBigFrog wrote:

    Fools -- two things to consider:

    1) For the vast regions of the country on coal power, from what I've been told, the mercury contained in a CFL is apparently less than the mercury saved from being emitted atmosphericly by the power plant for burning an incandescent light. Add to it the fact that Home Depot and other companies will take CFLs for proper recycling, thus preventing the mercury from entering the ecosystem. From that sort of lifecycle perspective, it seems like CFLs are still a net benefit for the environment.

    2) There's a saying that "The perfection is the enemy of the good." Especially when it comes to environmental concerns, perfection may well be unattainable. It's generally a bad idea to fight those who are trying to do better simply because they're not being perfect... You risk losing their support, keeping people on the fence from converting to the cause, and making yourself look like a less than rational advocate.

    Regards,

    -Chuck

  • Report this Comment On April 23, 2009, at 2:34 PM, windy107 wrote:

    Imagine, it's 5:00- everyone drives their electric cars home, plugs them in to recharge, turns up the A/C- due to "Global warming",cooks supper and turns on the TV. What happens on a cloudy day w/ no wind? We need power plants to supply a steady stream of electrical power. Let's fix the economy fisrt, then worry about "Global Warming". Check the weather daily for record high temps, you'll find that many were set in the 1800's. JM

  • Report this Comment On April 24, 2009, at 3:57 AM, cordwood wrote:

    Chuck,

    Your description of CFL murcury content may be correct,but it does bring up the fact of bureacratic doodling ;in this case, DEP guide lines for their disposal.

    Congress,[and their bureuacratic spawns],have had over 35 years to "debate" nuclear energy.In this case it ain't "perfection that's the enemy of good" it's just plain political posturing that is the enemy of good.Todays typical "cover my ass" retort to nuclear,is that "it won't help for over the next 12 years"...well,that was the same retort 30+years ago too! I believe there are some 20+ applications wandering their way thru the 'halls of government",which ,we are told ,will take 4-5 years to be cleared -AND add 25% to the cost of the plants by the continued bureaucratic doodling .All the while wasting time on such things as CFL disposal..nonsense is perfected,common sense is a waste product...with guidelines of course[ :-[

  • Report this Comment On April 25, 2009, at 12:20 PM, bronzeguy wrote:

    Doing 'good' investing. What about the GG recommendation of Philip Morris in this month's newsletter? What about protecting the 'inner environment'? I'm so disgusted with this action. I thought Fool was basically different. All about the bucks, isn't it?

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 881074, ~/Articles/ArticleHandler.aspx, 12/20/2014 6:10:13 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement