Downstream (End-of-Life, recycling) Archives

July 7, 2008

Home Depot Solves and Eco-Problem

This post first appeared at Harvard Business Online.

Home Depot announced last week that it will collect and recycle compact fluorescent light bulbs (CFLs) in nearly 2,000 of its stores. This is great news since it eases the transition to low-energy bulbs by solving a big customer problem: what do I do with this bulb when I'm done with it? Home Depot is the not the first - IKEA and local stores have CFL recycling programs - but it brings a bigger scale and reach to solving the problem.

First, bravo. Home Depot is, in part, taking responsibility for the "end-of-life" of one of its products (in wonky terms, this is "extended producer responsibility" and it's the law for some products in some parts of the world, such as electronics in Europe). But in the New York Times article on this program, one quote really struck me. Ron Jarvis, the company's SVP for environmental innovation (cool title) said, "We're trying to do the right thing...Some of the things that we do are for the community and not for the bottom line."

I'm always a bit frustrated at a slightly sheepish explanation for a green program that costs some money and might impact the financial performance of the company. Of course it will affect the bottom line. But I think it will help it. No doubt Mr. Jarvis meant what he said, but may be wrong, and here's why. When are people most likely recycling a bulb? I'm going to go out on a limb and guess that it's when they need a new one. Why wouldn't they buy it while they're at Home Depot recycling the old one? And what about that mop or plant or lumber they've been meaning to get? Solving a customer eco-problem can drive business.

From a strategy perspective, Home Depot is utilizing a critical eco-advantage mindset and approach: thinking about the value chain. Here's how I'd recommend finding these kinds of business and green opportunities. To oversimplify...

1) Think about - and measure if possible - the full value chain impact of your products. Where are the big impacts for energy use, water, toxic waste, and so on?

2) Look forward in the value chain (after thinking about upstream opportunities as well). What issues do your customers face? In this case, you might hear two complaints:
A) Boy are my energy bills going up;
B) I have no idea what to do with my old CFL bulb.

3) See if you can solve their environmental problem. Solving A is easy: sell them CFLs (and insulation and better windows and on and on). Solving problem B is harder but possible with scale: start a recycling program.

4) Reap the benefits of a closer relationship with your customer who now thinks of you as a solution provider (and if you're Home Depot, sort of apologize for it).

OK, Home Depot didn't mean to do the last part of #4 I'm sure. But I can't figure out why any company should have to dance around how a green program might help the bottom line after costing some money upfront - in most cases, that's just called investment. Only on environmental initiatives do people feel the need to apologize about short-term expense. Home Depot and its execs were right to crow about the environmental benefit and doing the right thing. But they are also fully justified to promote the likely payback and business benefits of investing and bringing customers into their stores.

Or perhaps Mr. Jarvis and the Home Depot team are craftier than I realize. Maybe they didn't want to let their competition know how much of a win-win this could be. Sorry if I let the cat out of the bag.


May 26, 2010

Greening Pepsi, from Fertilizer to Bottles

[This appeared first on my Harvard Business Review blog]

Pepsi recently demonstrated its commitment to reducing its environmental impacts up and down the value chain with two rapid-fire announcements about new initiatives. The old-school approach to greening is to focus on operations within the proverbial "four walls." But Pepsi, like other leaders, is approaching sustainability more holistically, with much greater impact.

I recently spoke with Tim Carey, Pepsi's Director of Sustainability for Beverages in the Americas, about two big initiatives in which he's playing a key role.

First, on the downstream side, Pepsi looked for ways to raise the recycling rate of beverage containers from a relatively paltry 34% to 50% or higher. Working with GreenOps, a division of Waste Management, Pepsi launched a new program called "Dream Machine." These "reverse" vending machines, now being placed in high-traffic areas such as gas stations and stadiums, take back those often-abandoned and often-unrecycled empty bottles and give users points toward rewards from sponsors or local merchants.

But Pepsi has gone beyond those relatively minor incentives to add on a social mission. The program will also help fund Pepsi's donation to a group called Entrepreneurship Bootcamp for Veterans with Disabilities (EBV), which trains vets at business schools around the country. Pepsi expects that the combined immediate points and larger mission will drive new, greener customer behaviors — and help solve one of the beverage industry's most intractable value chain problems.

Second, Pepsi has embarked on a very unusual supply chain effort to reduce the carbon emissions associated with its Tropicana orange juice. After conducting a full life-cycle analysis of the product line, the company was relatively surprised to find that the biggest portion of the carbon footprint was found not in manufacturing, or distribution, but actually back in the agriculture stage — primarily the result of the heavily natural-gas dependent process of making fertilizer (see chart).

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The analysis showed Pepsi execs where the largest impacts were, and thus where they'd get the biggest bang for their buck on carbon reductions. The company started working with suppliers and farmers to find new ways to make and apply fertilizer. For example, instead of using natural gas from as far away as Russia (which then requires shipping heavy fertilizer across the world), Pepsi is using biomass from closer to home. Wood waste and agricultural by-products are two sources, but execs are hopeful they can also use the large number of their own orange rinds left over in manufacturing, which would fully close the loop.

The company is also working with scientists on the root chemistry of orange trees, applying fungi and bacteria to increase the uptake of nutrients. All that techno-speak means that the trees will need less fertilizer in total, which means less manufacturing and shipping of that fertilizer and, voila, a smaller footprint.

A 100-acre test run of these new methods of working with new, low-carbon fertilizer is underway. A few years from now, Pepsi and its suppliers will know what's working and what isn't.

But here's the best part: the cost of these changes to consumers and growers will be about zero. And it had to be. Let's face it, this kind of carbon reduction isn't easy to convey to consumers, so the market benefit may be small for now. So the sustainability team needed to find ways to lower the fertilizer footprint without causing any additional cost to suppliers or farmers. How did they do it?

By focusing its efforts on the real footprint — identified through a solid lifecycle analysis and good data — Pepsi found the approach with the highest payback. As sustainability exec Tim Carey put it, "It's not unusual to spend tens of millions of dollars removing some carbon from a manufacturing process at returns that can be 10% or less...or we can take 15% of total carbon out in the fertilizer step without costing anything."

The impacts of these tests — and future rollout — will not be small; Pepsi buys a fairly shocking one-third of the Florida orange harvest. And the recycling work could shift millions of bottles out of landfills. Pepsi's full value chain view on sustainability is deep green stuff — this is how you implement green thinking.

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February 23, 2011

What is "Zero Waste" - And Why Should You Care?

My monthly (or so) e-letter is out. If you don't receive it, here's a quick summary and link to the latest...

What is "Zero Waste" - And Why Should You Care?

If we’re to believe the flurry of press releases over the last year, organizations of all stripes are trying to drastically reduce the waste they send to landfills. In the years since Subaru announced a “zero waste” facility in 2004, the pace of announcements has risen, and they’ve come from a broader range of organizations.

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For this e-letter I interviewed a number of sustainability execs and waste leaders from GM, Pepsi, Interface, Waste Management, and others. I ask (and I hope answer) a few key questions:
1. Why are companies doing this?
2. What does zero waste mean?
3. How else can we think about waste reduction?

See the full post here...