Why are US firms going 'green': CEOs or customers?

The number of large US corporations with a climate, energy strategy has soared in the past five years, a new survey says. Customers, employees are the two major forces pushing change.

Charles Sykes/Invision for L'Oreal Professionnel/AP Images/File
L'Oreal Professionnel lead stylist Joseph DiMaggio preps hair backstage at the Spring 2013 Timo Weiland runway show at Mercedes-Benz Fashion Week in September in New York. L'Oreal scored in the top five in Climate Counts's scorecard of major corporations because of its efforts to save energy and reduce its impact on the planet.

Minimizing waste. Reducing emissions. Conserving water. Increasingly, these are part of corporate culture as companies move to adopt sustainable business practices.

Five years ago, a quarter of corporations surveyed by Climate Counts had a publicly available climate and energy strategy. Now, two-thirds do, says the nonprofit, which ranks major companies. And in that time, their average score has improved from 30.6 to 52.1 out of 100.

"It's really become a science, almost," says Mike Bellamente, director of Climate Counts. "As recently as 10 years ago it was more compliance-based and philanthropic, and now it's, 'How do we develop our products and services in a way that aligns with sustainability?' "

The findings reflect the emergence of the "triple bottom line" – an expanded interpretation of business success that adds environmental and social factors to what is traditionally measured only in dollars and cents.

Customers are the top group driving corporate sustainability, according to 37 percent of sustainability executives who responded to a 2011 Ernst & Young survey. Employees were second (22 percent), followed by shareholders (15 percent), and policymakers and nongovernmental organizations (7 percent apiece).

"In a lot of ways the market said, 'The heck with Washington; we're going to move ourselves,' " says Kevin Wilhelm, chief executive officer of Sustainable Business Consulting, a Seattle-based consulting firm.

The shift is also qualitative, experts say, as discussions of environmental responsibility move from the compliance office to the boardroom.

"Before, you had your business and then you had a bolt-on environmental project on the side. Triple bottom line is about incorporating it into how you do business," Mr. Wilhelm says.

Take L'Oréal's biomethanation plant in Libramont, Belgium. It uses local agricultural waste to power the factory as well as an additional 4,000 households in the area, says the cosmetics giant, which ranked in the top five on Climate Counts's scorecard.

A new line of jeans from Levi Strauss & Co., Waste<Less, will incorporate an average of eight 12- to 20-ounce recycled plastic bottles per pair of jeans, according to the apparel company, which also ranked highly on the scorecard.

Still, there is always room for improvement.

"There's evidence that firms are taking this seriously, but at the same time, does that go far enough to ameliorate our environmental problems?" asks Mike Lenox, president of the Alliance for Research on Corporate Sustainability, a consortium of academic institutions.

As consumers vote with their dollars, investments, and workplace decisions, corporations seem to be listening.

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