Going for the green: Companies seek sustainability for the environment and the bottom line

As power costs increase and consumers and government put more pressure on business to reduce environmental harm, sustainability is becoming important to all kinds of companies. Sustainable service was the subject of a panel discussion at the Center for Services Leadership's 19th Annual "Compete Through Service" symposium. Managers are starting to understand the advantages of being cleaner and greener, panelists said, but in order to bring about real change, the commitment to sustainability must be organization-wide. The changes have to make sense for the business and achieve impact beyond public relations.

Jesse Stallone said he knew his profession had achieved legitimacy the day his 87-year-old grandmother called to ask him a question about light bulbs. His grandmother, the matriarch of a Southern family, was disappointed when Stallone derailed his plans to become a doctor.

When he first started his new profession as an environmental engineer, she asked pointedly asked him in front the whole family if his main function was to load or unload the trucks. Now, 20 years later, she wanted his advice. "'I need you to explain to me if I should buy these curly bulbs, because I think I can save some money,"' he recalled. "It took that long, but finally, somebody recognized this is a profession."

Stallone was on a panel that discussed sustainable service at the Center for Services Leadership's 19th Annual "Compete Through Service" symposium. His grandma is not the only one interested in sustainability these days. Rising energy costs and demands from government and the public that business reduce environmental impact are making sustainability a hot field.

Managers are starting to understand the advantages of being cleaner and greener, but in order to bring about real change, the commitment to sustainability must be organization-wide, panelists said. The changes have to make sense for the business and achieve impact beyond public relations. The good news is real impact is easier to accomplish than people may think, Stallone said.

The key questions

"Everyone wants to be a green company," said Adrian Nelson, IBM's site and facilities leader for information technology services in the Americas, but companies need a strategy and a place to start. Usually the best place to start is by asking questions, Nelson said. Nelson said IT is a huge consumer of energy resources, but often is treated as sacrosanct.

In 2007, the United States Environmental Protection Agency reported that by 2011, the energy demands of data centers would almost double compared to 2006, reaching about 12 gigawatts during peak periods. That would increase demand by the equivalent of 10 power plants, according to the report.

"You can go back to your company and change every light bulb in the building [to the curly type]," she said. "You can get all the recycled toilet paper you can find. That all helps, but if you ask a question about IT, about how much energy your IT is using, I'd be curious as to what the answers would be."

The way many data centers are cooled is wasteful, she indicated — akin to blasting the air conditioning in your house in order to cool a gallon of milk. There are more efficient designs, she said. Companies can 'virtualize' data and combine servers to create efficiencies. These changes sometimes meet with resistance within companies, however.

The top priority for information technology has been availability, she pointed out — not energy efficiency. "Breaking those old habits that we've lived with around data centers for many, many years is tough," Nelson said. The desire to be green has to permeate the entire company, become part of the corporate culture. "It can't just be some staff function that someone has on a given day," Nelson said.

Big Green

IBM, nicknamed Big Blue in the business press for many years, has come up with an initiative it calls "Big Green" to help the computing giant and its customers become more environmentally sound in their business practices. Big Green was the culmination of dozens of meetings and conferences with chief information officers around the world as well as IBM research. Big Green recommends that energy costs figure into every business case.

IBM is promoting the concept in a series of TV commercials in which cartoon animals appear and begin singing when someone at a company who is originally resistant becomes persuaded that going green is good business. "At the end of the day, you have to have a financial model that supports what you're doing," Nelson said. "If you're thinking of going green, you have to determine how green you can go."

At IBM, there are different measures for different projects, but, Nelson said, everything has to make sense for the business. The chairman gets a report on every initiative and each contains a financial component. "If the researchers are coming up with some really whiz-bang thing and it's costing the company a ton of money, and we're not going to be able to sell it, that might be something we pull back on," Nelson said.

Managing success

The lack of established measures for success has hampered sustainability programs. "If I ask you about your IRR (internal rate of return) or your ROI (return on investment), you all know we are going to a monetary standard that everyone can agree on," Stallone said. In Europe and Asia, the carbon standard has become accepted and it is becoming a standard measurement here as well. But, he asked, "is that the most important unit? Or is it a liter of water? Is it a gallon of oil?"

Companies need to flexible with their sustainability programs, said Seth Kiner, Director of Customer Experience Management and Marketing at Southern California Edison. Southern California Edison has been trying to bring more alternative energy to its customers for three decades, he said. Today about 16 percent of Southern California Edison's energy portfolio is from renewable sources, such as solar and wind.

Add in hydro-electric and nuclear power, and 46 percent comes from cleaner sources, Kiner said. "We've been engaged in a long-term strategy," he said. "This year we're looking to make certain that strategy is refreshed." That means doubling back to make sure that customers and partners needs are still being met with Southern California Edison's strategies, and in California, "needs" include complying with regulations.

A law passed in 2006, for example, puts a hard cap on companies' carbon emissions — opening up an opportunity for the power company to work with the firms on compliance. Whatever of company's sustainability efforts, it's important that they "ring true" with customers and the public, Kiner said.

"We don't want to be perceived as being involved in greenwashing," he said. Greenwashing is a perjorative term environmental activists apply to phony green environmental efforts. "We're really focusing on areas where we can make a difference and we can have an impact," Kiner said.

Bottom Line:

• As power costs increase and consumers and government put more pressure on business to reduce environmental harm, sustainability is becoming important to all kinds of companies.
• Initiatives must be sustainable for the business — that is, they must make sense for a business from a profit-and loss standpoint.
• Sustainability makes real impact; it is not just fodder the for public relations team. Efforts should fit in with the core business of the firm.
• In order to go green, a company has to make sustainability a priority and an important part of the company's culture.