Companies that have not done much work on “green” initiatives will likely get going now because of their declining business fortunes. So said John Mahoney, finance chief of Staples, at the CFO Green Conference yesterday in New York.
Do sustainability efforts save money? The question of whether that’s the case or whether such practices cost more than they’re worth has long been answered, conference speakers asserted. “We’ve seen over and over again that companies can find ways to benefit both the environment and their bottom lines,” said Gwen Ruta, vice president of corporate partnerships for the Environmental Defense Fund.
A vast assortment of green practices have had a clear impact on the financial performance at Staples, according to Mahoney.
“While the economy is reeling today, we can afford to maintain our sustainability programs because of their measurable impact on our financial performance,” he said. “I think the economic environment is going to really represent a turning point for many companies in thinking about how sustainability works.”
Staples, though, does not know exactly how much money it saves by being green, Mahoney said in response to a CFO.com question following his session. The company has an environmental department led by a senior executive, and it must deliver measurable benefits that are a multiple of the department’s cost. But the company does not track all the activities at its 2,000-plus stores. “That is difficult to measure, and it’s just part of [the store managers'] jobs,” he said.
He did, during the session, provide several examples of measured cost savings. In 2008, the company switched from using three-amp lightbulbs to two-amp bulbs. That single change was the key factor in a $6.2 million reduction in energy costs, $4.2 million of which fell to the bottom line after subtracting the costs of running the program.
(Not everyone was in tune with the program. One store manager, after receiving the new energy-efficient bulbs, “put them on an endcap and sold them,” Mahoney said, referring to the display hub at the end of a store aisle.)
Staples also is saving 540,000 gallons of diesel fuel per year after modifying its trucks so that they can’t go more than 60 miles per hour. That saves $1.5 million. “When diesel prices spiked we were able to offset about 80% of the increase just through this program,” Mahoney said.
And the company has 24 rooftop solar panels that collectively save “hundreds of thousands of dollars” with virtually no capital investment by Staples, thanks to tax credits for such installations.
Mahoney also mentioned some large-scale programs that would seem to have significant savings attached, though he did not quantify them.
An effort to get customers to recycle printer and toner ink cartridges began in 2005, when customers turned in 5 million such items to be refilled for sale. The carrot was $1 per item, paid in Staples Rewards points. In 2007, 22 million cartridges were recycled. This January Staples hiked the payout to $3 per cartridge, and is on a pace to recycle more than 50 million of them in 2009, according to Mahoney.