Utilize zero waste in support of the bottom line
Business today is faced with pressure from environmentalists, regulators and even investors to be more environmentally conscious.
Many CEOs think of this as a “responsibility” that forces them to invest in new products, processes and equipment to placate external entities. Alternately, there are an increasing number of managers who have embraced the green movement. They have redefined their stakeholders using a more global perspective and have instilled this attitude into the culture of their organizations. Their companies see sustainability as not only necessary, but profitable. They have changed the way they do business and the way they report their activities to the public.
As corporate cultures change, corporate mission statements increasingly list zero waste as a primary objective. The concept goes beyond the obvious lack of disposing of refuse in a landfill. Zero waste includes a spectrum of activities from the redesign of products and processes to reduce manufacturing inputs and packaging, to reductions in water and energy consumption, to the disposal of unusable material, even to the disposal of manufactured products at the end of their useful lives.
Different firms define zero waste differently. The most basic is sending no waste to the landfill. This is achieved through reducing, reusing, recycling and incineration. Reducing means bringing fewer resources into the workplace. Suppliers are encouraged to eliminate packaging or to use returnable packaging. Reducing also challenges manufacturers to design products that use less material, to re-engineer the cutting and assembly process to produce less scrap, and to use less energy, water, and supplies in the manufacturing process.
Reusing scrap (waste) reduces the need to purchase new materials. Scrap wood can be turned into pressed wood panels, plastics can be remolded, and metals can be melted down and reformed. However, many firms don’t have the facilities to do this.
Recycling is another way to keep unwanted materials from the landfill. Most municipalities have infrastructure in place to collect paper, glass, cardboard, metal, and plastics. New businesses have cropped up to collect these items, sort, bundle, and sell them in bulk to other businesses that can use them. These recycling entrepreneurs have extended the list to include fabrics, wood, waste oil and so on. Recyclers might buy the materials, but usually they are removed for free or for a small disposal fee. Storing, sorting and transporting these materials to recycling facilities may generate additional costs. Other items such as carpeting, computers and office furniture that are usable in their original form may be donated to schools or charities.
Incineration is the final option to keep waste out of the landfill. Waste can be burned to create usable energy; however, this method of disposal creates externalities in the form of emissions and, potentially, chemical waste residual.
Zero waste and emissions goals are intended to reduce landfill waste to zero while also eliminating greenhouse gas generation. This may be achieved through the reduction of harmful chemicals in the plant, reclamation of chemicals used, and shifting to hybrid or electrical vehicles for deliveries or other company use.
Beyond zero waste and emissions is the goal to remove waste already in the waste stream so as to have a positive environmental impact. Interface Americas, a carpeting manufacturer, is one such firm. It produces no landfill waste and reclaims additional waste carpeting to use in production of new products.
In conjunction with zero landfill and emissions, many firms target reductions in water and energy waste. Processes must be designed to reduce water used or to recapture and reuse water previously lost in production. Solar and wind energy sources are also being introduced by some companies in their efforts to reduce their reliance on non-renewable energy sources.
Achieving zero waste may come with environmental and economic tradeoffs. Innovations and equipment needed to reduce waste are often expensive endeavors as at Subaru, which installed a solvent recovery system. PepsiCo Inc. developed the first beverage bottle made entirely of recycled material. It costs more to make than other bottles so the only way to make it pay off is by convincing customers to pay more for this feature because of its green properties.
Once firms have reduced, reused and recycled, there still remains some waste for nearly all firms, often in the form of food waste. Ideally, food wastes could be composted but building the infrastructure is an expensive endeavor and is usually surrounded by controversy as no one wants the structure in their backyard. Often firms that claim to have achieved zero landfill send waste such as food scraps and other unusable material to waste-to-energy facilities to be burned. This produces cheap energy, but burning of waste produces greenhouse gasses.
Staples Inc. and other firms have replaced their fleets with hybrid/electric vehicles. Though there may be no tailpipe emissions from electric vehicles, they must be plugged into the electrical grid. The true measure of a vehicle’s emissions is a function of the way the municipality generates its electricity. This might be nuclear or, more frequently in the U.S., coal-fired plants. “According to the EPA’s calculations, for a midsize car, electricity’s upstream emissions are about three times higher than gasoline’s upstream emissions.”
When firms can’t achieve zero emissions on their own, they will often purchase renewable energy credits or carbon credits. Professor Anant Sundaram at Dartmouth, stated that the S&P 500 companies emit 3 to 4 billion metric tons of greenhouse gas emissions. If, under a cap and trade system, the market price per ton was levied at $20, the companies would be paying $60 billion to $80 billion each year.
Despite the costs, zero waste sustainability efforts can pay off in several ways. Cost reductions can be achieved through use of less material in production and reuse of previously discarded material. Firms have also found ways to enhance their revenue streams by appealing to new, environmentally conscious customers as well as old customers with new green products. Finally, eliminating waste can also reduce the risk of being charged for environmental cleanup or lawsuits from employees, customers, and others over health issues caused by polluted land, air, or water. Embracing zero waste can simultaneously benefit both the environmental and economic bottom lines.
Paulette A. Ratliff-Miller is assistant professor of accounting at Seidman College of Business, Grand Valley State University.