Adopting environmentally friendly practices seems to be all the rage in corporate America these days. Some companies, like Starbucks (NASDAQ:SBUX) and Whole Foods (NASDAQ:WFMI), embrace environmental practices as part of their branding strategy. But even big firms with less of a stake in the retail business, like General Electric (NYSE:GE), seem eager to establish environmentalist credentials.
In any case, this growing concern with environmental stewardship has less to do with altruism and more to do with good business sense. A case in point is Stock Advisor recommendation BorgWarner (NYSE:BWA). The auto-parts producer recently agreed to pursue the commercialization of next-generation diesel and gasoline engine technologies developed by the Environmental Protection Agency. BorgWarner will collaborate with the EPA on the new engines and provide financing for the projects.
The Clean Diesel Combustion initiative appears to be particularly promising. It focuses on an engine design that reduces emissions of nitrogen oxides in the engine combustion process rather than in the exhaust system, which is currently the primary method of nitrogen oxide control. What's more, the new system may actually boost the efficiency of diesel engines, which already are more efficient than their gasoline counterparts. BorgWarner expects to have the diesel technology on the market within five years, according to the Associated Press.
But again, the push to commercialization has little to do with a new environmental consciousness at the engine manufacturer and more to do with new federal regulations and recent business developments that make pursuit of clean diesel a prudent business move.
EPA regulations on diesel emissions are going to get increasingly more stringent in the coming years, and that will heighten the need for new pollution-control technologies. Meanwhile, automakers such as DaimlerChrysler (NYSE:DCX) and Volkswagen are introducing more diesel vehicles in the U.S., and companies such as ADM (NYSE:ADM) are bumping up their production of biodiesel, which works in conventional diesel engines. Finally, a new federal tax break provides a credit of as much as $3,400 through 2010 for every diesel compound that meets low-emission requirements.
Given these trends, the development of new diesel technology seems less like an option and more like a business imperative. For BorgWarner, going green is also likely to mean more of the type of green that pleases investors.
Starbucks and Whole Foods are Motley Fool Stock Advisor recommendations. For more of Tom and David Gardner's picks, try out Stock Advisor free for 30 days.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
