Firms dig deep to go green
2008-04-30 07:31
New York - US industrial companies are spending heavily on environmentally friendly efforts even as the economic slowdown dents their profits.
Fuelling the "green" trend are hopes that products that are made of recyclable materials or use less energy will win praise, forestall onerous regulation and cut rising costs.
In particular, oil prices have jumped more than 20% this year.
"Oil for $116 a barrel is staggering," said Donald Young, a spokesperson for the International Facility Management Association professional group. "Companies are forging ahead."
Building maintenance supply company WW Grainger Inc says its manufacturing and industrial customers are clamouring for the energy-efficient lights, high-efficiency water faucets and even waterless toilets it sells through its catalogue and website.
"I'm not seeing any evidence of customers cutting back (on the purchase of green products)," said Patrick Davidson, senior vice president for sales and marketing.
Save millions in the future
While some of Grainger's energy-efficient lighting systems cost more than older styles, the company said they could save enough power to justify their purchase price in as little as nine months.
Replacing current technology with something more sustainable can save millions of dollars in the future, even if there's a temporary hit on earnings, investors and analysts say.
"Companies can spend $20m to save $60m," said Matthew Zuck, a manager of the AHA Socially Responsible Equity Fund.
And what companies may lose in cash, they expect to gain in goodwill or customer loyalty.
Steelcase has cut jobs and closed plants recently due to higher material costs and lower North American sales. But the Grand Rapids, Michigan-based company went ahead with a pledge to buy all the renewable energy credits generated by a Texas wind farm as part of its plan to cut its carbon impact.
Policies could become stricter
Although the energy from the wind farm will flow into a local power grid rather than a Steelcase facility, the company will use its credits to help its buildings meet environmental goals.
Companies have other reasons to operate in a sustainable manner. Some are rushing to make changes this year so they can take advantage of tax breaks offered by the Energy Policy Act of 2005, said Grainger's Davidson.
And regulation is coming, said Andrew Hoffman, a professor of sustainable enterprise at the University of Michigan. Companies are implementing changes to head off government policies that could be even stricter, he said.
Although the economic slowdown will probably crimp some large-scale building projects, such as revamping heating and air conditioning systems, companies will still spend to make smaller changes.