Fallout: The Financial Crisis

Will companies stay green in recession?

Sarah Gardner Feb 11, 2009
Fallout: The Financial Crisis

Will companies stay green in recession?

Sarah Gardner Feb 11, 2009


KAI RYSSDAL: Goodness knows you’ve heard the word a lot on this program. You’ve probably used it yourself at some point in the past couple of years: Sustainability.

Companies have caught on too. A lot of them have launched what they call sustainability initiatives — doing well by being good. That usually means cutting energy and water use and waste. They’ve hired sustainability directors, carefully calculated their carbon footprints, and banished styrofoam from the lunchroom.

We wondered, though, whether it’s still easy to be green in a recession. From the Marketplace sustainability desk, Sarah Gardner reports.

SARAH GARDNER: Five hundred well-dressed professionals armed with Blackberries and strong coffee pack an auditorium in San Francisco for a conference on “green business.”

JOEL MACKOWER: Wow. Look at y’all. Either this is a hot topic or there’s a whole lot more people without jobs than I thought.

No, these sustainability execs are fully employed, thank you very much. And they want to keep it that way. Maybe that’s why they all stressed the cost-saving nature of their work.

Man 1:We are driving upwards of $60 million off the bottom line.

WOMAN:So there is a lot of hidden value in doing the right thing.

MAN 2So our work is actually becoming more important in the company.

These execs told us their companies had no plans to cut back in-house sustainability programs, whether that means installing more efficient heating systems, conserving water, or using less packaging. Of course, these guys all work for companies still willing to pony up the travel money for green conferences, so you figure their employers are pretty committed to this stuff already.

So we tracked down John Davies from the research outfit Green Biz Intelligence. He gave us the bigger picture.

JOHN DAVIES: We didn’t see a lot of new hiring. We saw a lot of hiring freezes.

Davies spent two months surveying over a hundred companies, most in the Fortune 500. About a quarter of them told Davies they were actually expanding their environmental budgets this year. Another quarter admitted they plan to cut those budgets. And the other half? Well, they were simply going to tread water.

Conference organizer Joel Makower insisted that marked a notable shift in corporate behavior.

MAKOWER: Companies, in the past, whenever there’s been a downturn, companies have sort of said, “OK, let’s take a step back and, oh by the way, the economy’s bad, let’s get rid of our whole environmental department because no one’s suing us today. That’s not happening right now.

So corporate green hasn’t withered on the vine, but it’s not blooming either. That’s especially true for companies just starting down a greener path.

GIL FRIEND: We’re seeing a great deal of uncertainty.

Gil Friend runs Natural Logic, a firm that advises corporations on greening their operations. Friend says many are delaying decisions on new programs — like a large food company that recently hired him.

FRIEND: They’re uncertain where the capital flows are coming from, so they’re going a little bit slower.

Companies, Friend says, believe sustainability will save them money in the end but worry about spending that money right now when the economy and their businesses are so vulnerable. That’s why environmentalists are curious to see whether champion cost-cutter Wal-Mart will stick with green as the recession deepens. We tracked down Wal-Mart Sustainability Director Matt Kistler at the retailer’s offices in D.C.

MATT KISTLER: Now is not the time to slow down. Now is the time to actually accelerate, I believe.

Kistler insisted Wal-Mart won’t back off its 2005 goals — to power its stores by renewable energy, create zero waste, and sell products that help the environment. They’re hardly close. But Wal-Mart’s gone much further than many environmentalists expected. Kistler told us Wal-Mart’s saved well over $100 million with its recycling efforts alone. But he says they’ve started investing in clean energy too.

KISTLER: There are many technologies that we’re evaluating and some we are testing at this time that are very new and, I think, could be the future of what energy looks like for our company.

Advocates at Environmental Defense say that WalMart plans trying out thin-film solar panels on some stores. That cutting edge technology could make solar electricity much cheaper.

But Wal-Mart’s bottom line isn’t that different from other companies trying to weather the recession. Our CFO, says Kistler, isn’t interested in us not making money.

I’m Sarah Gardner for Marketplace.

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