Corporations get savvy with cleantech

Climate change, once a contentious phrase, has moved soundly to the forefront of government and corporate thought, bringing with it enormous business opportunities in cleantech. As with other industries, having an in-depth knowledge of the market and knowing the strategies of the biggest players are both critical strategies for keeping up with the industry’s future trends.

By looking at the key initiatives of three disparate corporations, you’ll recognize a shift in their business strategies that reflects their desire to maximize efficiencies, cut costs and reduce their environmental footprint. Such initiatives demonstrate that sustainable business practices can lead to significant revenue streams and improved distribution infrastructure.

Wal-Mart:Transportation and waste management

In 2006, Wal-Mart (NYSE: WMT) set a number of ambitious goals with respect to improving its company-wide environmental impact. The company says it is aiming to increase the efficiency of its vehicle fleet by 25 percent by 2009 and by 50 percent by 2016. It is also aiming to reduce the natural resources it uses in packaging by 5 percent before 2011.

Wal-Mart’s current fleet of 7,200 tractor-trailer trucks is about 15 percent more fuel efficient than it was in 2005, a result of a fuel additive mix, more fuel-efficient tires and alternate power units that power different systems when the truck is parked. With the second-largest trucking fleet in North America, Wal-Mart cut its trucks’ average mileage per gallon by one gallon, reportedly saving $35 million to $50 million a year.

The new Wal-Mart trucks coming to market are expected to be about 8 percent more fuel efficient due to advances in aerodynamic design and lighter components. Tire innovations could lead to additional fuel efficiency, while the most significant savings will likely come from hybrid diesel-electric engines. When other innovations are taken into account, the total savings by 2010 could tally at 28 to 30 percent of its 2005 transportation costs.

To reduce waste in packaging and shipping, Wal-Mart in 2006 launched a five-year packaging reduction plan [see “Wal-Mart gets tough on wrap,” SI, October 2006]. Concurrently, Wal-Mart consolidated all the information it has about packaging alternatives and sustainable packaging materials into one database to help buyers make informed purchasing decisions. In February 2007, Wal-Mart offered the tool to its global suppliers, who now have a year to learn and contribute to the database.

Beginning in 2008, Wal-Mart plans to measure the environmental impact of its worldwide supply base and find ways to reduce packaging, utilize more effective materials in packaging and source the materials more efficiently through a packaging scorecard. The company estimates the initiative could save 667,000 metric tons of carbon dioxide, the equivalent of removing 213,000 trucks annually from the road.

Intel: Manufacturing toxicity and water conservation

Intel (Nasdaq: INTC) is one of many IT manufacturers taking a progressive stance toward environmental sustainability. Among other initiatives, Intel is working to eliminate lead in its products, produce more energy-efficient products and meet a zero water usage goal by 2015.

In May 2007, Intel announced plans to completely eliminate lead in its future production of processors. The new processors are also expected to utilize the company’s 45-nanometer high-k silicon technology, enabling more energy-efficient processors that demonstrate increased performance. The company plans to shift its 65- nanometer chipset products to 100 percent lead-free technology by 2008.

Intel also recently installed state-of-the-art water management systems in some of its chip fabrication plants. By installing a water management system at a Massachusetts facility, Intel boosted production by more than 50 percent — without increasing discharge levels to the publicly owned wastewater treatment works. The facility also collects and recycles 90 percent of the phosphorus from its manufacturing wastewater.

Similarly, Intel reduced water use at a New Mexico plant by 47 percent by deploying a high-recovery reverse osmosis water purification system, improved processing techniques and water-efficient landscaping. The facility also reuses water from semiconductor rinsing in other industrial processes, returning 75 to 85 percent of all water used in the facility to the Rio Grande River.

John Deere: Wind energy generation

Rather than focusing its environmental efforts outside its supply chain and manufacturing process, farm machinery manufacturer Deere & Co. (NYSE: DE) is working with its core customers to reduce its impact on climate change. Deere is helping rural farmers in the United States develop and finance wind projects.

The company has created a new business unit, John Deere Wind Energy, to oversee its investment in wind harvesting, and is funding both debt and equity investments in the community segment. Deere claims the approach offers shareholders a reasonable rate of return, while strengthening the rural economy upon which its core business is based.

Aside from financing wind turbines, Deere finances other products and services such as global positioning systems, mapping tools and satellites that assist farmers with wind forecasting and turbine placement.

Because of projects’ fixed costs and Deere’s ability to secure power purchase agreements from regional utility companies, rural electric cooperatives and private companies, Deere can focus its efforts on utility-scale wind projects of 1.25 megawatts or greater and leave wind turbine manufacturing to other companies.

Deere’s most recent wind project is a strategic alliance with Portland-based Momentum Renewable Energy. The company is poised to break ground on its first set of projects: a 5- and a 10- megawatt wind farm in the Columbia River Gorge at Threemile Canyon Farms [see “Harvesting the wind,” SI, June 2007].

Wal-Mart, Intel and John Deere are just three examples of a rapidly expanding universe of mainstream demand for energy- and waterefficient technology as well as cleantech. New corporate initiatives are announced weekly, with broad implications for innovative technologies that can help global corporations achieve their environmental goals while adding to their bottom line. Keeping up with the trendsetters in sustainable business practices is critical to keeping up in today’s carbon-constrained world.

Lauren Bigelow is the managing director of the Cleantech Network, which founded cleantech as a viable investment category in 2002 and continues to provide business opportunities in cleantech markets.