The Profitable Side of Going Green


Mother Earth is getting a little bit of relief as more companies yield to pressure from environmentalists and activist shareholders to reduce their carbon footprints. But Gaia isn't the only one who's benefiting: Just ask the world's top 10 green companies, which have managed to save some serious greenbacks in the process of going green.

IBM (IBM), which tops the chart of Newsweek's2010 global green rankings, saved more than $370 million from its energy conservation efforts during the 19-year span leading up to 2009, the company says. And IBM isn't alone. GlaxoSmithKline (GSK), which ranked No. 5 on Newsweek's green rankings chart, managed to save £3.8 million (nearly $6.3 million) in energy costs during a three-year period by reducing its carbon footprint by 4%, according to an Energy Efficiency News report.

And even during these dour economic times, companies are apparently willing to increase their investments in green efforts, according to an MIT Sloan and Boston Consulting Group study on global sustainability and innovation. The report found 25% of survey respondents had expressed a willingness to increase their sustainability commitment in 2009, but that figure rose to 59% in 2010. And over the next year, 70% of survey respondents said they expected to increase their investments and sustainability management efforts.

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"The reason for this continued investment is there is an expanded view that moves from a purely [regulatory] compliance stance to a realization of operation efficiency that can effect profitability," says James Salo, senior vice president of strategy and research for Trucost, a firm designed to quantify environmental risks and their costs.

A decade ago, that wasn't the case with U.S. companies, which were woefully behind industry titans in Europe. But domestic businesses have been making green gains, especially in the past three years, Salo says. He points to two key drivers of the change: regulatory threats, such as a move made by the federal Environmental Protection Agency late last year to establish guidelines to reduce greenhouse gas emissions, and efforts by Fortune 500 companies like Walmart (WMT) to push their suppliers to also improve their carbon footprints.

Despite Walmart's effort to bring its suppliers into the fold, the world's biggest retailer didn't land among the top 10 in Newsweek's rankings -- it came in 39th. Here's how the top 10 scored, based on their carbon footprints, policies and strategies for addressing their footprints, and reputations among environmentalists:

  1. International Business Machines - 100

  2. Hewlett- Packard (HPQ) - 99.3

  3. Johnson & Johnson (JNJ) - 98.5

  4. Sony (SNE) - 96.4

  5. GlaxoSmithKline (GSK) - 94.2

  6. Novartis (NVS) - 91.5

  7. Deutsche Telekom (DTEGY) - 91.4

  8. Panasonic (PC) - 90.7

  9. HSBC Holdings (HBC) - 90.2

  10. Toshiba (TOSBF) - 87.7

While companies have made headway in going green, the next frontier that looms is standardizing the type of green information that's collected and the way that it's presented, Salo says. "We are still a long ways off," he notes.

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