The Wall Street Journal reported today that Xerox has developed a new copy paper which, they say, uses half as many trees, fewer chemicals and energy to manufacture, and weighs 10% less (reduced shipping energy and cost). See Xerox press release. Apparently it uses a process closer to the one that creates newsprint, using more of the tree. On the down side, the paper isn't quite as white and apparently yellows "badly" (says the Journal) over time.

Is this another example of a green product that doesn't live up to its regular counterparts? The yellowing sounds iffy. But a savvy analyst quoted in the article says the paper will likely be used "for transactions such as invoices and phone bills where people don't care about long-term archiving.

Just think about how much paper is not needed for very long — most, I would wager, ends up in the trash the same day. Much like the rising awareness of the craziness of using potable water to flush toilets, businesses and consumers are starting to ask questions about when virgin, high-end materials are really needed. Xerox's innovation should help companies match the product to the need.

I've long thought the mantra of reduce, reuse, recycle was missing a couple of levels — redesign and re-imagine (see drawing below from Green to Gold that lays this out).

Xerox, it seems to me, has done its part by redesigning paper. The customers need to reduce (how about not printing that presentation to flip through in the meeting, or printing 2-sided?), reuse, and recycle. And Xerox, other document handling companies, and creative start-ups can work on re-imaging how we use information so we don't need the paper at all. But for throw-away uses, which are a big part of the market, this innovation seems like a great incremental step. Bravo.

If you put an energy meter inside a home and show people total usage in real time, a miraculous thing happens: they use about 10 percent less energy. The simple act of placing data in front of people changes their behavior. Data makes people smarter and inspires them to make small changes to save money and energy. You can use this powerful tool in business not only to cut costs, but to drive innovation and revenues.

Some are calling this phenomenon the "Prius effect," referring to how people respond when they see real-time fuel-efficiency data while driving the popular Toyota hybrid. As the described it, the Prius effect "can change driving in startling ways, making drivers conscious of their driving habits, then adjusting them to compete for better mileage." Similarly, making footprint data more accessible to those managers that can do something about it can create real value. As they say, you can't manage what you don't measure. It's amazing how often I hear that phrase — and how often people need to hear it. Tech leaders will tell you that one of the best possible solutions to the rapid increase in energy use and cost in data centers is simple: Add the power bill to the CIO's budget!

You can put your green data to use in five ways that will help your bottom line:

1. Saving money — a lot of it. As we've seen, if you give your operational people information on resource use, they will be inspired to find ways to cut back.

2. Driving internal competition. Share footprint data broadly and transparently and you'll see how badly people like to win. When PepsiCo Chicago ran a floor-by-floor energy reduction competition, the results were staggering. In one three-month period, electricity use dropped 17% (and paper use 22%). Energy use on the winning floor plummeted 31%. Factory heads at a number of companies have told me that they'd rather miss their financial targets than their green or energy goals — it's just too embarrassing to be at the bottom of the list.

3. Answering your customers' pressing questions. Wal-Mart, along with many other companies, is asking suppliers and vendors very tough questions about their environmental and social impacts. Those that can gather their data and tell the best story will get the most shelf space and mind space (see my previous post on Wal-Mart's eco-ratings for more on this point).

4. Prioritizing initiatives. Resources remain very tight — you don't want to spend money on the wrong things. With all the pressure to go green, it's easy to get lost in the weeds and pursue avenues that may not yield the most benefit. When companies really look at their full value-chain impacts, they're very often surprised at the results. Green leader Stonyfield Farm discovered that 95% of the ecological damage from its packaging occurred during production and distribution. So the company has made light-weighting (which is what it sounds like) the top priority — use less stuff and the footprint goes down. Stonyfield has made the deliberate choice to not use a recyclable, yet heavier, plastic; this counterintuitive and seemingly non-green choice makes the most environmental and fiscal sense given the real data.

5. Finding new market openings and focusing innovation. Procter & Gamble went through a similar lifecycle exercise and made a similar discovery about its laundry products. The vast majority of energy use was not in sourcing, production, or distribution, but in the use of the detergent in homes. And the majority of that was not the washing machine turning, but heating the water. This insight led to Tide Coldwater, a reformulated product to help customers wash in cool water, using less energy and saving money. Coldwater is one of P&G's seven original "sustainable innovation products" that generated $2 billion in sales in the first year.

Operating your business without environmental and social metrics leaves part of your management "dashboard" blank. How well can you run your company without complete information? But don't worry — you're not that far behind if you don't have a perfect handle on your value-chain footprint, or even your direct impacts. It's getting easier and easier to gather this data, and you can accomplish a great deal with even "back of the envelope" calculations (more on this in my next post).

For a slightly longer take on this topic, see also my recent e-letter, or the full discussion in my new book Green Recovery

[This blog was originally posted on Harvard Business Online]

It's always easier to picture how a manufacturing company can go green — just cut back on energy, waste, and material to reduce air and water pollution, for example. But what does it mean for a service-focused business, such as a software company, to travel down the sustainability path?

Last week I got an interesting view on how enterprise software giant SAP is pursuing a green agenda. Sustainability was a core theme at SAP's annual meeting SAPPHIRE NOW, a large gathering of over 16,000 CIOs and tech professionals. (Full disclosure: SAP hired me to speak at the event.)

So how does a company with a seemingly small physical footprint create real value from pursuing sustainability? SAP seems to be pursuing three paths that are a good framework to keep in mind.

First, walk the talk. SAP is first reducing its own impacts. Last year, the company saved $90 million Euros through eco-efficiency, including a 7% reduction in energy consumption. A good portion of the savings came from reducing air travel, which makes up 35% of the company's total carbon impact. SAP also got lean in its IT operations; for the first time ever last year, it had fewer servers when the year ended than when it began.

SAP also worked to engage employees and tackled some smaller, symbolic issues like paper use. Sustainability managers placed large stacks of empty paper boxes in the cafeteria to demonstrate how much employees used in a single day. The company has also asked its 50,000 employees to take "100,000 steps" (that is, two each, or one for each foot) to be more sustainable in their lives.

Second, and far more importantly, help your customers reduce their impacts, a core greening strategy for any company. As co-CEO Jim Hagemann Snabe put it during his keynote, SAP wants to be "an Enabler." Snabe continued, "We believe transactional systems we have installed in many customers have information that...can help customers manage resources — not just human capital, materials or money but scarce resources like water, energy and CO2...This is the mission we have taken on with sustainability."

SAP took a hard look at its product line to see if it could deliver on this vision. In the last year, the company acquired Clear Standards, a well-respected carbon footprint software company (rebranding it Carbon Impact), and announced it will purchase Technidata, a leading provider of environmental, health, and safety management software. Last week, SAP execs were running around the show floor, gleefully demonstrating how cool Carbon Impact looked on an iPad, and demonstrating how it helps SAP analyze its own footprint data.

As an example of how SAP envisions working with companies to enable sustainability goals, execs describe how the company helped oil refiner Valero harmonize its operational systems. By obtaining much better information on energy use and processes across the organization, Valero was able to save $120 million in energy costs last year (and an expected $200 million-plus in 2010) and slash environmental incidents 63% since 2006. The savings realized from having better data available is a perfect example of the "Prius effect" that I've written about before.

By working in this way with their customers, SAP is able to reduce impacts and create value far beyond what it could just do internally.

Third, communicate clearly with customers and stakeholders about how your products and services help the cause. SAP has developed a view on the key operational focal areas that companies need to manage well to head down the road to sustainability. The company created a "Sustainability Map" that includes 33 topics — such as sourcing, logistics, design, and green IT - across 8 functional areas of the business. These topics map to some broad goals that SAP argues drive sustainable value creation (such as reducing operation risk and improving resource productivity).

The map is a critical part of the company's new CSR report, an innovative, social-media-driven approach to both discussing the company's impacts and pitching its solutions. This dual-purpose report makes sense for a service business.

Dr. Peter Graf, the company's Chief Sustainability Officer, put SAP's shift in large, strategic terms and made it clear that providing customers with solutions was critical to the company's future: "When we look at sustainability we compare it to other fundamental megatrends [such as] globalization and the Internet. Sustainability is going to be similar in the way it fundamentally changes all business processes...so as the leader in business process technology, we have to play, and we have no choice but to lead." (See a streaming video of an interview with Peter Graf and me here — you'll have to register, and then look under "keynotes and broadcasts").

For many years, IT companies felt that they didn't have a lot of skin in the sustainability game — they didn't have big smokestacks, after all. But now even service companies like SAP are seeing the deep connection between green and business growth survival.

[This post first appeared at Harvard Business Review Online]

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