Herman Miller Nets 32 Percent ROI from Energy Efficiency Investments

Office furniture manufacturer Herman Miller’s investments in areas such as energy efficiency have resulted in a 32 percent rate of return, according to a case study recently published by Forrester Research.

According to the study, Herman Miller has reduced landfill waste by 80 percent, hazardous waste by 91 percent, overall emissions by 87 percent and water usage by 67 percent. During the same period, sales doubled to more than $2 billion.

Herman Miller has maintained sustainable business practices for more than 50 years. It has been known for its audacious environmental goals and for transforming its organization, design, manufacturing processes, marketing materials and customer relationships.

The company uses techniques such as lean manufacturing and the Cradle to Cradle Design Protocol to reduce costs and improve overall manufacturing efficiency. It is aiming to be carbon-neutral by 2020.

Herman Miller’s CEO Brian Walker recommends that companies wanting to green their supply chains should design products with sustainability as a core principle, put the goals on paper and embrace transparency and meaningful metrics that can be efficiently measured and communicated to stakeholders and investors.

This is an example of how companies can leverage EHS management to improve performance and generate measurable benefits. In this case, Herman Miller identified process improvements that enabled the company to meet its sustainability goals, increase operational efficiency and earn a solid return on investment. It’s a reminder that EHS management is no longer just about compliance.

2 comments October 30th, 2008

Experts Say IT Trend May Drive CSR into Financial Reporting

This from Environmental Leader today: “The Global Reporting Initiative’s creation of an extensible business reporting language taxonomy for the many indicators itemized in its sustainability framework could automate sustainability reporting in much the same way that the SEC believes XBRL will aid the production of financial reports,” according to CFO.com.

This development could even drive a new trend that combines standard financial data with sustainability data in a single annual report. A handful of companies already do this, according to CFO. Eric Israel, a managing director at KPMG, believes more will follow.

“There is a serious need for IT support to make this happen,” Israel says. “It’s missing now, but as expectations change and sustainability reporting becomes less about PR and more about satisfying investors’ need for data, more automation will become essential.”

Half of the S&P 500 released Corporate Social Responsibility reports last year, according to SIRAN, the Sustainable Investment Research Analyst Network.

Corporate decision makers would be well advised to consider making investments in CSR information management software now. The pressure is on. Companies that delay will find they are unprepared when CFOs will be accountable for CSR reporting in the future.

1 comment October 28th, 2008

US EPA Competition Drives Reduced Emissions

Competition is good for everyone. So it’s not so surprising that many leading corporations, municipalities and small businesses are participating in a different kind of competition: a contest to see which organizations can go beyond regulatory requirements to improve the quality of the environment.

Companies like industry leaders Intel and John Deere are examples of organizations participating in the National Environmental Performance Track program. Sponsored by the U.S. Environmental Protection Agency (EPA), the Performance Track competition encourages organizations to develop programs that reduce emissions is excess of EPA-regulated limits for air, water and land pollution. For example, another noteworthy participant, the City of Dallas, has pledged to reduce water consumption at city-operated sites by 49 million gallons over 3 years, a 5 percent reduction.

Performance Track participants are encouraged to develop measurable emissions reduction goals that drive improvements to air, water and land quality. Since the program launch in 2000, more than 500 Performance Track member organizations have established in excess of 4,000 goals, resulting in a reduction of 310,000 metric tons of GHG emissions, 13,000 tons of nitrogen oxide and 52,000 tons of hazardous waste from being released into the environment.

Your organization still has a few more days to submit a 2008 Performance Track application. If your organization or government entity would like to join the competition, applications will be accepted through October 31. Members can obtain annual performance reports and renewal applications starting February 1, 2009. Submission deadline is April 1.

Needless to say, ESS can help Performance Track participants monitor progress against EPA and corporate benchmarks. ESS’ integrated EHS platform and powerful software tools, including our Environmental Compliance and GHG/Carbon Management solutions, help organizations streamline collection, processing and communicating emissions information to reduce complexities and risks and costs associated with generating both mandatory and voluntary reports.

Add comment October 28th, 2008

In a Downturn, Technology is Key to Process Improvements, Cutting Costs

Traditionally, IT investments take a back seat during a downturn. Based on my experience, that’s usually the last thing companies should do. It’s been proven that technology supports business process improvements (BPI) that drive sustainability initiatives, streamline data collection and monitoring for better governance and risk management and enables companies to cut costs, which is priority one when the markets head south.

Process improvements are even more valuable because they position companies to emerge as market leaders at the end of the downturn. This requires some contrarian courage, but the payoff can be extraordinary a few quarters down the road.

I know this because I’ve always used downturns as an impetus to innovate, with an eye toward leading the market and saving money. We have recently completed a business process update that is working well and positions the company to meet our short- and long-term goals.

If my experience doesn’t sway your opinion, here are some numbers from CIO Insight for you to consider:

• 73% of IT executives roll out business process improvement during a downturn so they can do more with fewer resources. They see it as a way to increase productivity.
• 37% use process improvements to stay competitive. This advantage tends to be overlooked. BPI gives you an unbeatable competitive advantage in a downturn.
• 69% say BPI helps them cut costs, which is what all good businesses try to do –downturn or not.
• 39% even think BPI helps them maximize revenue when they need it the most.
• 22% see it as a way of accelerating processes for a go-to-market advantage.

If your company is the first in your industry sector to leverage technology, generate BPIs, cut costs and position your company to do more with less, how can you fail to be the winner?

We’re even finding emerging research that suggests that sustainability initiatives help companies cut costs during an economic downturn. More about that later.

Add comment October 27th, 2008

Global Carbon Market Will Exceed $100 Billion in 2008

The deepening global economic recession could delay implementation of a U.S. cap on carbon emissions and reduce demand for carbon credits in states that have enacted regional carbon limits. However, both U.S. presidential candidates support alternative energy programs and climate change initiatives. In our view, it’s not a matter of whether these regulations will be implemented. They will. It’s simply a matter of when they will take effect.

The recession is expected to slow industrial production and reduce demand for carbon offsets. Nonetheless, a recession is a good time to prepare for widely anticipated legislative mandates. The drought will eventually end and companies need to be ready for the post-recession regulatory era.

The EU is already tightening regulations on GHG emissions. Now we’re watching to see what the American election will bring in the way of commitment to climate change initiatives, which have to be balanced with the slowing US economy.

Even though U.S. legislative initiatives may be delayed, companies would still be wise to move forward with their investments in technology, including integrated carbon management solutions. Implementing a proactive strategy will lower your company’s risk exposure to carbon market fluctuations. Delaying your decision could be very costly going forward.

The global carbon market is on pace to grow more than 80 percent this year to $116 billion, according to New Energy Finance, a clean-technology research and analytics firm. That growth can be attributed to consistently high prices for carbon allowances and credits in European Union countries that are bound by the Kyoto Protocol cap on heat-trapping gases.

The volume of carbon emissions transacted will grow 31 percent this year to 3.9 gigatons. European Union allowances, which constitute about 68 percent of trading by volume, have averaged about $34 a ton. Meanwhile, collective trades in secondary certified emission reductions (CER) more than doubled to $10 billion.

Although the trading volume of secondary CERs increased by 100 percent, the volume of the new CDM market — the main currency of the European Union’s Clean Development Mechanism (CDM) market — fell 26 percent. New Energy Finance analysts underscored that there has been a drop in the size, but not the number of carbon mitigation projects, such as industrial heat recovery and afforestation investments.

Experts are projecting that when the U.S. — the world’s top per-capita CO₂ emitter — adopts an emissions cap-and-trade scheme, the global carbon trading market will reach $3 trillion annually by 2020.

Investing in carbon management technology tools can minimize companies’ exposure to the growing carbon market. As organizations prioritize their IT expenditures, carbon management systems should be at the top of the list. Addressing emissions now means your company won’t be at risk whenever government officials put new limits in place.

Add comment October 24th, 2008

Study: Consumers Want to Reduce Carbon Footprint Despite Economic Woes

Not surprisingly, the economic downturn has not diverted consumers from their environmental concerns. Check out Carbon, a new report by Forum for the Future, a UK sustainability organization, tells us that consumers would like to make good decisions that benefit the environment and have reliable and trustworthy information to support solid decision making.

Check out Carbon summarizes the findings of a research project exploring the role carbon labeling plays in increasing consumer awareness. A survey of 1,000 consumers reinforces that concern, with 85 percent of respondents saying they want more information about the environmental impacts of products.

The report, which was launched at the London headquarters of Lloyd’s Register during an event that attracted some of the UK’s top sustainability and climate change experts, also highlights the importance of educating consumers about opportunities to reduce carbon emissions that result from their purchases. Carbon labeling is a vitally important tool to help consumers reduce their carbon footprint when making shopping decisions.

Carbon labeling, of course, would require consumer product businesses and their suppliers to conduct extensive monitoring and management of water, waste and air emissions (including GHGs).

Jurisdictions need to carefully review these efforts, to make sure labeling regulations don’t become too demanding for business. The best way to deal with the source of major carbon impacts is at the manufacturing level. Rushing headlong into a major labeling effort could sideline a concept that has promise. Hopefully, government decision makers will find the best way to balance these concerns.

Add comment October 22nd, 2008

Google Leads Tech Companies Spearheading Sustainability

When you think of companies with sustainable operations, it’s hard to imagine that such a list would include technology companies that use massive amounts of electricity to run data centers.

However, a consortium of high tech companies and nonprofits is turning that assumption on its head. The Climate Savers Computing Initiative, spearheaded Google and Intel and supported by organizations like Dell, Microsoft, Lenovo, HP and the World Wildlife Fund (WWF), has shown that technology companies can be leaders in sustainability and energy efficiency.

Climate Savers members demonstrate their commitment to green IT operations in two ways: manufacturers produce products that meet specified power-efficiency targets; and corporate participants purchase power-efficient computing products.

Google, in particular, has demonstrated exemplary leadership as a company that both generates healthy profits for its shareholders and maintains sustainable operations. The company powers a portion of its operations using electricity from renewable sources, operates efficient PCs and servers and invests in carbon generation offset projects when it can’t reduce emissions.

Google’s successful implementation of green-friendly practices has motivated its executives to boldly promote an ambitious goal of being carbon neutral by 2010.
That will be a steep challenge, because its data centers run all over the world and consume electricity in quantities almost unheard of ten years ago. However, the company started focusing on its sustainability initiatives very early in its growth. Green-friendly operations and energy efficiency are now an important part of its operational model.

Climate Savers members, including Google, are at the forefront of climate change activism because, as tech companies, they understand the power of software platforms to deliver the information they need to make changes. With our carbon management solution, ESS is showing industrial companies that energy efficiency isn’t just the domain of the tech sector.

Add comment October 20th, 2008

Experts Cite Growing Popularity of Integrated Platforms

For quite a while now, I’ve been advocating that companies move to a unified software platform to simplify EHS risk and compliance, centralize data into a unified repository and manage data enterprise wide.

Last week, I received a briefing about the capital markets from a firm in our space that specializes in M&As and got a clearer picture of how they view compliance software. The presentation traced the history of compliance initiatives back to pre-SOX days (when we started ESS). It showed the hockey stick growth of compliance as a tactical matter, characterized by information silos, duplicate entities and limited compliance visibility. It shows that compliance has now emerged as a strategic imperative in the enterprise. Industry analysts like AMR have long ago embraced the concept. Now it’s gaining acceptance among other compliance software companies.

The presentation goes on to say that the compliance space is growing 2-4 times faster than any other in software and “no other software application category is growing as quickly. The next generation of compliance software will transform ‘converging’ point solutions to fully integrated compliance platforms, which will sustain and accelerate the rate of growth and demand in the coming years.”

AMR Senior Research Analyst Simon Jacobson, the keynote speaker at ESS EXPO.08, recommended that EHS data should be consolidated in a common database that efficiently collects information, ties it together and communicates it throughout the enterprise. Dow Chemical successfully leveraged that strategy to save more than $2 million and enabled all of the company’s U.S. facilities to use a common reporting process.

Ultimately, this affirms that growth in our space will occur not only because compliance is a strategic objective of nearly every company. It will happen because executives worldwide have discovered that compliance helps companies lower costs and reduce operational risk.

Add comment October 14th, 2008

Fallout from Bailout Bill Will Bring GRC Process into Greater Focus

Our longtime friend Michael Rasmussen of Corporate Integrity has once again sent a thoughtful email to advise us that the execution of Governance, Risk and Compliance policies will be changing again after Congress passed the financial bailout legislation last week. More and more investors and stakeholders will demand greater oversight of business operations because of what has happened to Wall Street and the investment banking industry. The current financial “spill” is not unlike an oil spill; it may be inadvertent, but it leaves behind a toxic environment.

The speed with which events multiplied to destroy century-old firms tells us that companies cannot afford to have systems that are outdated or siloed anymore. Risk can come from anywhere, at any time. Managing risk well demands an investment in the latest information technologies for collecting, analyzing and reporting information. Organizations all over the world, especially large global enterprises, will not be able to raise capital without proof that they are adequately managing business risk and market risk. In addition, stakeholders are looking to management to enhance EHS sustainability for more favorable corporate responsibility reporting.

Businesses that must comply with environmental, health and safety regulations are not immune to this trend. We have seen increasing year-over-year regulations for the past thirty years. This trend is not going to stop; rather, regulators are now empowered to both adopt and enforce an increasing number of regulations on behalf of their constituencies.

Here’s a list of questions Rasmussen suggests business leaders ask themselves right away:

• Do you have the correct risk management oversight across business operations and relationships?
• Do you have appropriate compliance processes?
• Do your compliance processes get to the principle of the matter; or are they simply about checking a requirement?
• Are the values and code of conduct of the corporation adequately defined and communicated?
• Are people properly trained on the expectations set before them?
• Are risk and compliance managed across business relationships?
• How do Governance, Risk and Compliance practices intersect and support corporate responsibility?

We have been urging that businesses ask these questions. It is more important than ever in the current environment. Are your GRC processes set up to be a holistic ecosystem or are they just a set of applications that don’t prompt your company’s managers to talk to each other or the C-suite?

Add comment October 6th, 2008