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 Capitalism has long dictated the prime corporate mission: Make more money. For a public company, this capitalistic approach is part of its mandate to act in the best interests of shareholders. It seems to work; major corporations have become corporate giants and have gone on to make vast fortunes for their owners.
But for companies that have traditionally pursued growth above all else, their size and success may also have another, less favorable effect: pollution and waste. Companies that were once considered unequivocally successful based on their performance are facing increasing criticism for how their pursuit of profit impacts the environment.
As it turns out, consumer scorn can be bad for profits, too, leaving shareholders to expect much more from the companies in which they invest. The result? An increasing number of companies are "going green". Find out what's motivating them to make the change.
Modest Investments Lead to Major Savings
For an increasing number of companies, reducing energy use is one environmental tenet that's a virtual no-brainer. After all, the lower the amount of resources a company uses, the more money it saves. According to 2006 estimates by the U.S. Department of Energy, industrial use accounts for about one-third of all the energy used in the United States - that's a lot of room for cost-cutting savings. (For related reading, see Clean Or Green Technology Investing.)
For example, United Parcel Service (NYSE: UPS), one of the world's largest package delivery companies, began adding hybrid vehicles to its fleet in 2006 to test whether the introduction of these vehicles might reduce their fuel costs (about 5% of their operating expenditures in 2006).
In fact, UPS believes that a shift in consumer sentiment toward environmental preservation will be good for the company's bottom line; in the 2007 Carbon Disclosure Project Report (in which companies voluntarily respond to a questionnaire and provide data regarding their emissions accounting, management and reduction), UPS reported that it had experienced upside exposure to the global green tech market. In the questionnaire, UPS stated that "managing fuel consumption and greenhouse gas emissions is a business opportunity - one that can improve the bottom line, reduce our impact and our customers' impact on the environment and increase the long-term viability of our company." Competitors such as FedEx (NYSE:FDX) are also using hybrid vehicles in an attempt to cut costs - and reduce their environmental impact.
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