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Running an environmentally friendly business

Profits, or an environmentally-friendly business? It doesn’t have to be a choice. How, you ask? Read on and find out all about profitably running an environmentally-friendly business.

Your business asset, should you choose to protect it, is the environment in which we live. And while you may never have thought of the ecosystem as a business asset, maintaining a viable ecosystem is essential to the livelihood of everyone on earth including your staff, your customers, and hence your business.

This thinking needs to lead any action on the environment, says Fiona Wain, CEO of Environment Business Australia. “What’s coming is atrophy of the most fundamental capital we have,” she warns. “The market as an entity doesn’t understand the urgency. It doesn’t understand the value of the natural capital that we take for granted. It doesn’t understand the cost of degradation to that asset.”

Environment Business Australia represents the environment industry and the clean-tech sector, encompassing technology, infrastructure, systems, and financing. “We’re looking at how to create the next great technological era. Australia has always benefited from past eras, such as the recent IT one. The ET—environmental technology—one will be a lot bigger because it impacts on everything,” she predicts.

The urgency involves avoiding an average temperature rise of 1.5 degrees Celsius, which, by scientific estimates, will reinforce a feedback loop that will cause irrevocable damage. On current levels, the world will hit this mark by 2030. Wain admits that it’s a monumental task for both developed and developing countries, but she can identify Australia’s major role. “The one area where Australia can lead is to demonstrate that an energy intensive economy like ours can retain prosperity—rather than growth—by putting in clean energy systems that reduce greenhouse gas emissions.”

She takes issue with artificial advantages given to damaging industries, which means new, more efficient technology without subsidies struggle in the marketplace. “This is something that has crept up over decades of artificially deflating prices for things like energy and water and then assuming that that’s what we can keep on doing,” says Wain. “As consumers we have to start paying the right price for everything.”

Established sectors see the removal of subsidies and other artificial advantages as a threat to their profitability, but Wain says it’s not about eradication and replacement in one fell swoop. She suggests a combination of government policy, private enterprise, and financial incentives for efficient technology may well do the trick. “Alongside private sector innovation we have to see government using their policy levers. Alongside regulations, we need fiscal incentives so we’re taxing the bad and rewarding the good,” she insists.

The government itself is a big consumer, which may be where they can shape the market. Wain proposes that if all three levels of government only bought or leased a benchmark clean vehicle, it would create a market of scale to help consumers access these vehicles at an affordable price. “The auto companies will yell, kick and scream, but if you give them 18 months to retool their plants and set the benchmark, that cleans up a whole slew of things,” she says.

Additionally, auctioning permits in a carbon emissions trading scheme could create about $10 billion per year, enough to help polluting industries fund research and development to increase energy efficiency. “This is the biggest opportunity for wealth generation the world has ever seen, but the window is rapidly closing,” states Wain. “We need to create a framework to overhaul the entire marketplace. It may take 20 years, but it has to start immediately. We can no longer delay saying ‘India, China, US—we’re not going to move if they’re not going to move’.”

SME Green Business Challenge

While Wain gives a big picture view of how businesses should embrace the ET revolution, small businesses often find it difficult to contribute to positive environmental actions because of their comparably limited resources. David Peart, founder of e3, saw the potential for small businesses to make a difference, especially considering they employ most of Australia’s workforce. “Government already targets large energy users, and large businesses such as News Limited are already taking leads in this area,” he observes. “I provide a framework for SMEs and give them an achievable target to provide meaningful outcomes.”

Peart’s program, the 60-Day Carbon Challenge, involves businesses reducing their carbon emissions by 20 percent in 60 days to achieve certification. At the beginning of the program, e3 measures the business’ usage across three key areas: energy, fuel resources, and recycling. This encourages different types of businesses to participate. If there are limited reductions in one area, they can still contribute to overall reductions in other areas.

“A lot of businesses use the offset model whereas we’ve chosen to attack the demand side. We don’t want to say to a business ‘here’s your carbon footprint, pay us money and we’ll plant trees and give you an accreditation’ and for them to think they’ve done something to decrease the problem, which is the voracious demand for energy,” explains Peart. “We don’t disagree with offsets, but we don’t think the market is sophisticated or clear enough to actually mean something.”

The prevention model highlights how much unnecessary energy businesses consume. Peart gives the example of a client company who started using reusable mugs on coffee runs, saving 2,000 disposable cups a month. Other behavioural changes include turning off computers, lights, and appliances when not in use, printing double-sided, recycling where possible, and adjusting air conditioning to an appropriate level. Most of these changes save money because of the reduced demand on resources.

More efficient appliances are often the same price or only slightly more expensive than standard appliances, diluting the myth that being environmentally friendly costs more. The better option delivers continued benefits through cost saving and can add to productivity. Some businesses may select utility services that currently cost a little more but do much to reduce emissions, such as switching over to renewable energy resources like wind or solar power.

“An important flow-on is to increase the demand for renewable energy products. If we can get that demand increase, then investment will drive towards those areas and hopefully governments will make different decisions on future energy requirements instead of more coal-fire options,” says Peart.

At the moment, e3 is focusing on the 20 percent reduction businesses can achieve on an individual level via education and by changing behavioural patterns. Eventually, however, Peart wants progressive reductions on a macro level with businesses to continually reduce their energy needs to meet the 60 percent reduction target required to avoid catastrophe.

Environmentally Friendly Production

Different businesses can take environmental initiative in different ways. Manufacturers, for example, can ensure that both their product and the processes involved in production benefit the environment. This could include obtaining material from sustainable sources, using less energy in manufacture, being more efficient with materials to reduce waste, and having reusable or recyclable components.

Even humble packaging can make a big difference. The National Packaging Covenant (NPC) charter is “to minimise the effects rising from the disposal of used packaging, conserve resources through better design and production processes, and facilitate the reuse and recycling of used packaging materials”. Because there is scant regulation on these issues, the NPC is a good place to start taking stock of how packaging can be more environmentally friendly, from material supplier to customer disposal.

IT products are notoriously resource hungry and many IT companies are starting to take action by becoming more responsible with their products. Lenovo recently released the Think Centre A61e desktop computer, which uses so little power it can run off an optional solar panel. It is made of 50 percent recycled material and 90 percent of the components are recyclable, which is gold standard on EPEAT, a ratings system issued by the Green Electronics Council.

Otto Ruettinger, Lenovo’s desktop business development manager for Australia/New Zealand, says the technology industry now has a responsibility to provide more efficient products for businesses and consumers, given that PC usage will increase. “PCs will make up a larger proportion of energy usage—it’s about 4.5 percent but predicted to rise to 6 percent in the future,” he says. “Our social and environmental responsibility means that energy efficiency is becoming a lot more important to us and to our customers. That was the idea behind [developing] the A61e.”

Power management is another area to examine, says Ruettinger. “One of the most fundamental things you can do is activate power management on a fleet of PCs. When somebody goes home, they may not turn their PC off. What you can do is tell the PC after how many minutes you want to shut off the display,” he says. “If you’re using an LCD display you can reduce power use from about 40 watts to about four watts.”

Lifecycle management of computers has also emerged as an issue. Many computers and other e-waste (electronic waste) become obsolete and are often discarded to landfill, despite having mostly salvageable parts and toxic components that need special attention. Charles Bligh, vice president of IBM’s Small-Medium Business division in Australia/New Zealand, says that IBM recycled 98 percent of about 600 tons of e-waste in their asset recovery program. “The greening of IT is not only what you bring in to your organisation but how you use it and how it leaves your organisation in terms of scrapping and reusing your equipment, making sure it doesn’t end up in landfill,” he says.

IBM recently conducted a worldwide survey of small to medium businesses about their environmental policies and buying habits. The results showed 58 percent of Australian respondents expressed concern for the environment but environmental aspects affected only 38 percent of purchasing decisions. Bligh says the next step is encouraging people to take action the next time they need to upgrade equipment. “We encourage people to do a stock take of their energy usage and their behaviour and buy energy efficient equipment when they refresh,” he says. “Even when you lease, just ask whether the leasing company has a buyback scheme that will take care of e-waste.”

Finally, going green has marketing implications for responsible businesses as more and more consumers choose environmentally friendly products. However, genuine green credentials must first fight unscrupulous operators in the marketplace who use ‘greenwash’, defined as misrepresentation or exaggeration of eco-credentials. An example of greenwash is the word ‘natural’, which has no legal definition and can relate to a single ingredient comprising less than 1 percent of the overall product. The lack of regulation in this area leaves consumers fending for themselves when it comes to finding genuinely eco-friendly products.

The Australian Competition & Consumer Commission (ACCC) is looking into green compliance, which should eventually result in legal definitions for hazy terms like ‘natural’ and ‘carbon neutral’, as well as regulation of practices such as carbon offsetting and different types of recycling. In the meantime, businesses can still publicise genuine environmental initiatives as long as they are clear on how those initiatives are measured. Non-government organisations such as Greenpeace, WWF, and the Australian Conservation Foundation all provide standards you can apply.

Eventually the marketing edge will fade as the majority of businesses become more environmentally responsible, so it’s best to get in early with your efforts to make the most of the push. Otherwise, you’ll be left trailing as other companies evolve. Take a tour of your workspace and question whether you can do anything for a greener future. Do you have what it takes to save the world today?

Resources for a Sustainable Business:

Clean Energy Council: www.cleanenergycouncil.org.au
Environment Business Australia: www.environmentbusiness.com.au
e3: www.e3global.net
Electronic Product Environmental Assessment Tool: www.epeat.net
Energetics: www.energetics.com.au
Greenprint: www.printgreener.com
National Packaging Covenant: www.packagingcovenant.org.au
Trade & Environment Solutions: www.tesol.com.au
Introducing Great Green Profit is a free e-book by Leigh Baker on how you can reduce waste in the production phase of your product. Download it at www.balance3.com.au
Don’t forget Business Clean Up Day, Tuesday, February 26, 2008 (www.cleanup.org.au)

Green Business Case Study

Sewerage systems are a necessary evil. They carry away our waste but they also consume a huge amount of energy and water. The Biolytix system changes all that, thanks to a breakthrough observation by founder, Dean Cameron.

“Dean realised that the waste breakdown occurred not in water or on dry land but the area between water and land. What he set up to do was replicate a riverbank in a 3-D matrix. It gives a vast surface area for efficient breakdown of waste products,” explains Joe Barnewall, CEO of Biolytix. “And by keeping it aerobic rather than anaerobic, they don’t produce CO2 or methane or any greenhouse gases.”

The system uses so little energy, Barnewall jokes they measure its ‘carbon toeprint’. Additionally, Biolytix uses less water than standard systems and most of that water can be recycled, the nitrogen-rich product being perfect for irrigation. Furthermore, it requires little maintenance as it contains organic components—worms and other helpful critters to break down and process waste—that reproduce.

Most of their customers are landowners with reasonable parcels of land, but Barnewell says business is moving towards other types of properties. “We’re finding that we’re selling to developers. Development cost is not just construction but the upgrade of your local sewerage plant, so it’s actually cheaper if you don’t centralise treatment,” he says. “Having this system means that you can avoid having to install mains sewerage.”

Barnewall suggests that regional towns could benefit from having Biolytix relieve demand on their sewerage systems. “For many places the barrier is government regulations. The reality is, most rural towns in Australia are running at or above 100 percent of their capacity,” he says. “One of the applications we’re trailing is if there’s a sewer line going near a park or a sporting field, we can run our line alongside the sewer, draw from it and irrigate the sporting ground. They’re getting irrigation on the sporting ground and they’re also reducing the load off the main sewer.”

Biolytix has won several technology, business, and environmental awards since its debut on ABC TV’s The New Inventors, even earning international nods such as the 2007 Asian Innovation Award, where competition included multinationals Microsoft, Shell, and HP. The coming year sees a possible trial with NASA and the launch of their second-generation system, which will include a water treatment process for household use. The recycled water should be clean enough to wash clothes and flush toilets, says Barnewall. “If we can use that water for everything except drinking, cooking and bathing, that will quench the demand for fresh potable water.”

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Adeline Teoh

Adeline Teoh

Adeline Teoh is a journalist with more than a decade of publishing experience in the fields of business, education, travel, health, and project management. She has specialised in business since 2003.

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