Green Strategies For an Uncertain Economy

Here are some ways to make lean, green initiatives part of your company's belt-tightening efforts:

1) Cut the waste. It almost goes without saying, but now is a better time than ever to go after the proverbial low-hanging fruit. Simple waste reduction strategies can free up badly needed cash while generating measurable environmental benefits. Wal-Mart has been leading an initiative with its suppliers to reduce packaging by 5% in the next five years and estimates this could save$3 billion in transportation costs through 2013. Notably, the savings won't accrue to Wal-Mart alone; its suppliers should themselves see $8 billion in reduced material and transportation costs. But you don't need to be a Wal-Mart to drive this type of initiative. Smaller companies including Allergan (biotech) andHerman Miller (furniture) have realized savings from reduced packaging.

Moving from paper to electronic communications is another tried and true source of savings for the earth and the bottom line. Verizon has not only saved more than $8 million in paper and administrative costs by getting more than 3 million customers to sign up for paperless billing, it also saved another $2.7 million by moving its payroll, training, and HR systems online. You can find more examples of such initiatives here.

2) Invest in efficiency. While the financial crisis has led us all to rethink the risk profile of our investments, it is important to remember that energy efficiency projects are still relatively safe ways to deploy capital. Oil prices may have fallen from their highs this summer, but the price is still far above what it was only few years ago (the price was under $30 per barrel in 2003), and the price of electricity is still rising. Even if energy prices remain where they are, many energy efficiency investments will be worthwhile. The McKinsey Global Institute just published a report stating that economic uncertainty can drive more investment in energy efficiency, particularly in the developed world, because efficiency costs less than meeting demand through new energy supplies.

What's more, investing in energy efficiency now puts your business in a better position to examine clean energy choices later. Lower energy needs will mean you will need smaller, less capital-intensive renewable energy systems to provide green power. 

3) 'Tunnel through the cost barrier.' Amory Lovins, Hunter Lovins, and Pawl Hawken introduced this concept in Natural Capitalism. In short, tunneling through the cost barrier means designing highly efficient products and processes so that they require less capital than traditional systems. Rather than waiting for five-, three-, or even one-year paybacks on equipment, you can be in the black on day one. How? By designing whole systems to be so efficient that they require smaller energy sources. For example: A well-insulated building requires a smaller HVAC system. Better-designed piping requires smaller pumps. 

4) Spend time rather than money. The approaches above shouldn't be capital-intensive, but they can be information-intensive and communication-intensive; they require plenty of thinking and cooperation to implement effectively. In a white-hot economy, it can be difficult to take the time for this level of planning. But during a slowdown, you may have the luxury to think things through more. One best practice is to convene design charrettes - meetings of designers, builders, and those impacted by design decisions - long before a project gets off the ground. By including participants all along the value chain in the process, you can avoid the hang-ups and do-overs that cause costs to escalate, while creating a greener, better outcome.

Posted by Andrew L. Shapiro and Noam Ross on October 29, 2008 

From:http://blogs.harvardbusiness.org/leadinggreen/2008/10/4-lean-green-strategies-for-an.html?cm_mmc=npv-_-MGMT_TIP-_-OCT_2008-_-MTOD1128