From: Conservation Corp.
A Corporate Commitment
By Katherine
Holden
When a global corporation makes a
commitment to environmental sustainability and puts money into its mantra of
change, it’s worth taking note. PepsiCo, which started out with Pepsi Cola in
1898, began turning green exactly 100 years after its first fizzy brown cola. In
1998, it saw a shift in hue, and, with the choice of Indra Nooyi as CEO in 2006;
the greening of Pepsi has leapt forward.
The Pepsi-Cola division is the
second largest soft drink business in the world. The Frito-Lay division is the
world leader in salty snacks, generating 60%-plus of PepsiCo’s net sales and
more than two-thirds of the parent company’s operating profits. Tropicana
Products Inc., the third division, is the world leader in juice drinks. Included
in that division is the Quaker Oats Co., which also houses Gatorade.
The companywide goals of 2015 are
set against the 2006 usage figures for water, electricity, and fuel consumption.
And by 2006, many plants were already down about 20%, so the 2015 goals make
things harder.
“We’re trying to bring all
technologies in place now up to the highest standard we can in all divisions,”
says Tom Schaefer, Principal Engineer in the Quaker, Tropicana, Gatorade Energy
Group. “Each facility, each year is given reduction goals, and do they have
projects set up to reach them? The tactics are whatever is needed to reach the
goals.”
Schaefer’s voice, always upbeat,
seems even more excited when speaking of some of the experiments now going on.
“Our oat hulls, from Quaker oatmeal, are now used at the University of Iowa for
biomass. We’re thinking of using them in our own operations.”
 |
Photo: Tolleson Solar
PepsiCo’s Sustainability Center |
Then, remember Tropicana orange
juice? “Tropicana has so many orange peels, and all go into cattle feed right
now,” he continues. “What if we burn them to make steam or electricity? Orange
peels have Btu content—there’s a lot of oil in orange peels. Is it
cost-effective? We’re looking into that.”
The enthusiasm Schaefer manifests
indicates the commitment companywide that Indra Nooyi speaks of when she says,
“...across the world, we have unleashed the power of our people to come up with
ideas to reduce, recycle, and replenish the environment, and we are making great
progress by reducing how much water we use in our manufacturing, and the carbon
footprint that we put on the environment.”
What about the 2015 goals with the
financial meltdown of 2008? Tim Carey, Director for Sustainability and
Technology PepsiCo—Chicago says, “Long-term sustainability denizens have seen it
before: The economy slows, revenue and profit growth fall, and business directs
investments away from projects with environmental or social sustainability
benefits. It’s a predictable cycle with unintended consequences—at best you
emerge from the economic downturns where you left off, and worse, further behind
than when it started. Leading companies have eschewed this formula to emerge
from downturns more cost-efficient and stronger than their peers.”
Carey points to the Dow Jones and
other sustainability indices for evidence for this conclusion. “While not
perfect, general trends show that the more sustainable companies perform
better,” he says. “For example, from 2006 through year end 2007, the Dow Jones
Sustainability World Index (DJSI) performed seven to 10 points higher than the
S&P 500.”
Carey points out that there are reasons
to expect better long-term performance from companies that “best integrate
sustainability into business decisions.” Those companies, first, must kill
“environmental sustainability initiatives with poor economic returns,” as well
as opting out of “social initiatives that ignore adverse environmental or
economic impacts,” he says. Carey looks for that “sweet spot—where the economics
of the project equal or exceed benchmark investment thresholds, environmental
impacts are reduced, and social networks relevant to your company, its
employees, and society are strengthened.”
“Deciding when to fund
conservation projects is easy,” insists Carey, because “projects that reduce
packaging without increasing losses drive unit costs down, and water and energy
used more efficiently lowers costs.” He claims that it isn’t unusual “to see
returns of 20–30-plus percent when implementing less-wasteful practices.” Carey
also adds that “Increasing resource efficiency by several percent per year,
while waiting for the economy to rebound, creates competitive advantage.”
In turbulent economic times, Carey
says that “companies that derive advantage by embedding environmental
efficiencies, not only into operations but into the culture of the company, will
find themselves outpacing the competitors who still view these changes as merely
a response to regulation or short-term fixes.”
Putting a dollar amount on
conservation measures, since 2004, the Quaker Oats, Tropicana, and Gatorade
divisions of PepsiCo have “reduced our energy and water intensity by over 20%
per pound of product,” states Carey. “That’s saved our combined business
approximately $30 million in utility costs. While capital was not required for
all these accomplishments—where it was, the returns on investment were typically
15–20%.”
Carey also makes a great point
when he says, “Don’t worry if you’re short on conservation ideas; they don’t all
have to come from inside your organization. There are equipment suppliers and
consulting professionals that can identify quick-return opportunities as can
industry trade associations, because, when it comes to reducing environmental
impacts and protecting employee safety, competing companies are more willing to
work together to reach a common, higher objective.”
Perhaps his final comment is the
most potent. “If you wait for the economy to recover before addressing
sustainability, you will have higher cost structures, less innovative products,
or worse, may already be out of the game.”
May-June 2009
From: Conservation Corp.
A Corporate Commitment
By Katherine
Holden
When a global corporation makes a
commitment to environmental sustainability and puts money into its mantra of
change, it’s worth taking note. PepsiCo, which started out with Pepsi Cola in
1898, began turning green exactly 100 years after its first fizzy brown cola. In
1998, it saw a shift in hue, and, with the choice of Indra Nooyi as CEO in 2006;
the greening of Pepsi has leapt forward.
The Pepsi-Cola division is the
second largest soft drink business in the world. The Frito-Lay division is the
world leader in salty snacks, generating 60%-plus of PepsiCo’s net sales and
more than two-thirds of the parent company’s operating profits. Tropicana
Products Inc., the third division, is the world leader in juice drinks. Included
in that division is the Quaker Oats Co., which also houses Gatorade.
The companywide goals of 2015 are
set against the 2006 usage figures for water, electricity, and fuel consumption.
And by 2006, many plants were already down about 20%, so the 2015 goals make
things harder.
“We’re trying to bring all
technologies in place now up to the highest standard we can in all divisions,”
says Tom Schaefer, Principal Engineer in the Quaker, Tropicana, Gatorade Energy
Group. “Each facility, each year is given reduction goals, and do they have
projects set up to reach them? The tactics are whatever is needed to reach the
goals.”
Schaefer’s voice, always upbeat,
seems even more excited when speaking of some of the experiments now going on.
“Our oat hulls, from Quaker oatmeal, are now used at the University of Iowa for
biomass. We’re thinking of using them in our own operations.”
|
Photo: Tolleson Solar
PepsiCo’s Sustainability Center |
Then, remember Tropicana orange
juice? “Tropicana has so many orange peels, and all go into cattle feed right
now,” he continues. “What if we burn them to make steam or electricity? Orange
peels have Btu content—there’s a lot of oil in orange peels. Is it
cost-effective? We’re looking into that.”
The enthusiasm Schaefer manifests
indicates the commitment companywide that Indra Nooyi speaks of when she says,
“...across the world, we have unleashed the power of our people to come up with
ideas to reduce, recycle, and replenish the environment, and we are making great
progress by reducing how much water we use in our manufacturing, and the carbon
footprint that we put on the environment.”
What about the 2015 goals with the
financial meltdown of 2008? Tim Carey, Director for Sustainability and
Technology PepsiCo—Chicago says, “Long-term sustainability denizens have seen it
before: The economy slows, revenue and profit growth fall, and business directs
investments away from projects with environmental or social sustainability
benefits. It’s a predictable cycle with unintended consequences—at best you
emerge from the economic downturns where you left off, and worse, further behind
than when it started. Leading companies have eschewed this formula to emerge
from downturns more cost-efficient and stronger than their peers.”
Carey points to the Dow Jones and
other sustainability indices for evidence for this conclusion. “While not
perfect, general trends show that the more sustainable companies perform
better,” he says. “For example, from 2006 through year end 2007, the Dow Jones
Sustainability World Index (DJSI) performed seven to 10 points higher than the
S&P 500.”
Carey points out that there are reasons
to expect better long-term performance from companies that “best integrate
sustainability into business decisions.” Those companies, first, must kill
“environmental sustainability initiatives with poor economic returns,” as well
as opting out of “social initiatives that ignore adverse environmental or
economic impacts,” he says. Carey looks for that “sweet spot—where the economics
of the project equal or exceed benchmark investment thresholds, environmental
impacts are reduced, and social networks relevant to your company, its
employees, and society are strengthened.”
“Deciding when to fund
conservation projects is easy,” insists Carey, because “projects that reduce
packaging without increasing losses drive unit costs down, and water and energy
used more efficiently lowers costs.” He claims that it isn’t unusual “to see
returns of 20–30-plus percent when implementing less-wasteful practices.” Carey
also adds that “Increasing resource efficiency by several percent per year,
while waiting for the economy to rebound, creates competitive advantage.”
In turbulent economic times, Carey
says that “companies that derive advantage by embedding environmental
efficiencies, not only into operations but into the culture of the company, will
find themselves outpacing the competitors who still view these changes as merely
a response to regulation or short-term fixes.”
Putting a dollar amount on
conservation measures, since 2004, the Quaker Oats, Tropicana, and Gatorade
divisions of PepsiCo have “reduced our energy and water intensity by over 20%
per pound of product,” states Carey. “That’s saved our combined business
approximately $30 million in utility costs. While capital was not required for
all these accomplishments—where it was, the returns on investment were typically
15–20%.”
Carey also makes a great point
when he says, “Don’t worry if you’re short on conservation ideas; they don’t all
have to come from inside your organization. There are equipment suppliers and
consulting professionals that can identify quick-return opportunities as can
industry trade associations, because, when it comes to reducing environmental
impacts and protecting employee safety, competing companies are more willing to
work together to reach a common, higher objective.”
Perhaps his final comment is the
most potent. “If you wait for the economy to recover before addressing
sustainability, you will have higher cost structures, less innovative products,
or worse, may already be out of the game.”