Now green costs less
By Claudia H. Deutsch The New York Times
TUESDAY, NOVEMBER 22, 2005
NEW YORK A few years ago, scientists at Cargill learned how to make rigid, transparent plastics from corn sugars. There was just one problem: They cost a lot more than the oil-based plastics they would replace.
But that was before the price of oil shot up and companies came under pressure from consumers and investors to find economically sound ways to adopt "green" packaging and other environmentally friendly products and processes. This year, Wal-Mart, Wild Oats Market and a host of other retailers, as well as food suppliers like Del Monte and Newman's Own Organics, all embraced corn-based packaging for fresh produce.
Sales at NatureWorks, the Cargill subsidiary that makes the plastic, grew 200 percent in the first half of this year over the same period last year. "The early adopters were more influenced by environmental concerns than costs," said Kathleen Bader, chairwoman of NatureWorks. "But now we're competitive with petrochemicals, too."
Cargill is one of several companies profiting from the concerns - of shareholders, communities and consumers alike - about global warming, leaking landfills and other potential environmental hazards.
Huge companies like General Electric and Chevron now have separate businesses to market what they are calling environment-friendly products.
And new companies and university projects appear each day. Cornell University's College of Engineering, for one, expects to have a commercial process for using bacteria to recoup energy from wastewater treatment within three years.
"There are a lot of creative types looking for the next big thing," said Robert Sheppard, deputy director for corporate programs at Clean Air-Cool Planet, a nonprofit environmental education organization. "Well, these days, environment is it."
It is impossible to quantify the environmental industry. Many of the newer companies are privately held. And many "green" products - more efficient power generators, say, or biodegradable plastics - are parts of other industries.
But investors are clearly funneling ever more money into green technologies. Last year, the California Public Employees Retirement System, or Calpers, said it would invest $200 million in what it called the "burgeoning environmental technology sector." This year, 27 members of the Investor Network on Climate Risk promised to invest $1 billion in companies with green products.
"The environmental industry is about to take off, as more investors realize that they can reap returns from cleaner technologies," said Dan Bakal, director of electric power programs at Ceres, a coalition of investors and environmental organizations that runs the investor network.
Entrepreneurs say the change is palpable. Northern Biodiesel, a small company in Ontario, New York, recently got financing for a plant to turn cooking oils and agricultural waste into diesel fuel. "Banks used to dismiss me as a tree-hugger when I tried to borrow for an environmentally advantaged product," said Bob Bechtold, the company's vice president.
In one sense, the current environmental boon is a replay of the 1970s, when regulations spawned a profitable industry to sell electrostatic precipitators, air scrubbers and other air-cleaning devices. Federal rules limiting diesel emissions are spurring sales now, too.
But this time, other powerful motivators are at play. The United States did not sign the Kyoto treaty regulating greenhouse gases, but companies feel pressure to reduce gas emissions in order to do business comfortably in countries that did sign. Moreover, "people know that regulations will come here, too," said Judi Greenwald, director of innovative solutions at the Pew Center on Global Climate Change, a nonprofit research group.
Even without rules to force their hands, companies are responding to societal pressures to act in an environmentally sensitive manner.
"Investors believe it is simply not acceptable to be environmentally irresponsible," said Abby Joseph Cohen, chief U.S. investment strategist at Goldman Sachs, which just announced its own comprehensive environmental policy.
Others note that companies can no longer avoid the issue. "Shareholders are pressuring everyone to disclose what they are doing in the environmental arena," said Michael Johnston, executive vice president of Capital Group, a money management firm.
The reasons are as much financial as moral, said Stanley Deutsch, an analyst at Babson Capital Management. "Pension accounting, legal problems and, these days, environmental problems, all can be claims on cash flow," he said.
In many cases, skyrocketing prices of oil and gas have given a boost to clean technologies. Procter & Gamble is substituting vegetable oils for petroleum derivatives in Tide detergent and Head & Shoulders shampoos, and rivals like Colgate and Kimberly-Clark are exploring alternative ingredients as well.
NEW YORK A few years ago, scientists at Cargill learned how to make rigid, transparent plastics from corn sugars. There was just one problem: They cost a lot more than the oil-based plastics they would replace.
But that was before the price of oil shot up and companies came under pressure from consumers and investors to find economically sound ways to adopt "green" packaging and other environmentally friendly products and processes. This year, Wal-Mart, Wild Oats Market and a host of other retailers, as well as food suppliers like Del Monte and Newman's Own Organics, all embraced corn-based packaging for fresh produce.
Sales at NatureWorks, the Cargill subsidiary that makes the plastic, grew 200 percent in the first half of this year over the same period last year. "The early adopters were more influenced by environmental concerns than costs," said Kathleen Bader, chairwoman of NatureWorks. "But now we're competitive with petrochemicals, too."
Cargill is one of several companies profiting from the concerns - of shareholders, communities and consumers alike - about global warming, leaking landfills and other potential environmental hazards.
Huge companies like General Electric and Chevron now have separate businesses to market what they are calling environment-friendly products.
And new companies and university projects appear each day. Cornell University's College of Engineering, for one, expects to have a commercial process for using bacteria to recoup energy from wastewater treatment within three years.
"There are a lot of creative types looking for the next big thing," said Robert Sheppard, deputy director for corporate programs at Clean Air-Cool Planet, a nonprofit environmental education organization. "Well, these days, environment is it."
It is impossible to quantify the environmental industry. Many of the newer companies are privately held. And many "green" products - more efficient power generators, say, or biodegradable plastics - are parts of other industries.
But investors are clearly funneling ever more money into green technologies. Last year, the California Public Employees Retirement System, or Calpers, said it would invest $200 million in what it called the "burgeoning environmental technology sector." This year, 27 members of the Investor Network on Climate Risk promised to invest $1 billion in companies with green products.
"The environmental industry is about to take off, as more investors realize that they can reap returns from cleaner technologies," said Dan Bakal, director of electric power programs at Ceres, a coalition of investors and environmental organizations that runs the investor network.
Entrepreneurs say the change is palpable. Northern Biodiesel, a small company in Ontario, New York, recently got financing for a plant to turn cooking oils and agricultural waste into diesel fuel. "Banks used to dismiss me as a tree-hugger when I tried to borrow for an environmentally advantaged product," said Bob Bechtold, the company's vice president.
In one sense, the current environmental boon is a replay of the 1970s, when regulations spawned a profitable industry to sell electrostatic precipitators, air scrubbers and other air-cleaning devices. Federal rules limiting diesel emissions are spurring sales now, too.
But this time, other powerful motivators are at play. The United States did not sign the Kyoto treaty regulating greenhouse gases, but companies feel pressure to reduce gas emissions in order to do business comfortably in countries that did sign. Moreover, "people know that regulations will come here, too," said Judi Greenwald, director of innovative solutions at the Pew Center on Global Climate Change, a nonprofit research group.
Even without rules to force their hands, companies are responding to societal pressures to act in an environmentally sensitive manner.
"Investors believe it is simply not acceptable to be environmentally irresponsible," said Abby Joseph Cohen, chief U.S. investment strategist at Goldman Sachs, which just announced its own comprehensive environmental policy.
Others note that companies can no longer avoid the issue. "Shareholders are pressuring everyone to disclose what they are doing in the environmental arena," said Michael Johnston, executive vice president of Capital Group, a money management firm.
The reasons are as much financial as moral, said Stanley Deutsch, an analyst at Babson Capital Management. "Pension accounting, legal problems and, these days, environmental problems, all can be claims on cash flow," he said.
In many cases, skyrocketing prices of oil and gas have given a boost to clean technologies. Procter & Gamble is substituting vegetable oils for petroleum derivatives in Tide detergent and Head & Shoulders shampoos, and rivals like Colgate and Kimberly-Clark are exploring alternative ingredients as well.
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