Tag: capital

More companies are investing in renewable energy to power their operations and offset their carbon emissions...Getty Images

EBay at its very core pioneered the circular economy — of finding new homes for treasures that might otherwise have ended up at the dump. “Avoiding items going into a landfill is very important to our customers,” says Steve Priest, CFO of eBay. “Driving the circular economy is part of everything we do.” But finding new shelves for Beanie Babies is just a small component in eBay’s sustainability efforts, which prioritize slashing greenhouse gas emissions.

In eBay’s case, these are mostly tied to electricity used to power vast data centers. Since 2017 eBay has cut its carbon emissions by 29% to 88,000 tons per year. The e-commerce giant became carbon neutral this year, and is aiming to achieve a 100% renewable electricity supply for all its offices and data centers by 2025.

This goal might actually be attainable in the next few years as eBay’s biggest clean energy projects yet come online. The White Mesa Wind Project in Texas (a joint venture with Apple, Sprint and Samsung) began operating this year, producing 75 peak megawatts for the four companies, enough to power 20,000 homes.

Meanwhile the Ventress Solar Project in Louisiana, a virtual purchase power agreement between eBay, McDonalds and BP’s Lightsource division, will generate 345 MW. “We collaborate with our tech peers when some sustainability issues come up, where banding together makes more sense,” says eBay’s chief sustainability officer Renee Morin.

Such efforts have earned eBay the no. 11 spot on our inaugural Forbes Green Growth 50 list. Using emissions data from Sustainalytics and financial data from FactSet Research Systems, we honed in on U.S. companies with market caps greater than $5 billion, that started with more than 100,000 tons of carbon dioxide equivalent emissions in 2017, and have since successfully reduced their emissions while simultaneously growing profitability (as measured by an absolute increase in net income or operating income from 2017-2020).

Going in, we figured these criteria would produce a list of more than 100 companies. But green growth is harder than it looks — both Weyerhaeuser and Edison International, ranking no. 21 and no. 10 on our list, grew earnings less than 2% since 2017.

Is there a connection between cutting carbon emissions and boosting earnings? eBay’s Priest thinks we’ve reached the point where companies that don’t care about green will find it nearly impossible to deliver growth. “Customers want to be associated with corporations that take their environmental responsibilities very seriously. Those that do will continue to drive loyalty from their customer base.”

This is a strategic emphasis echoed by Stephan Tanda, CEO of Aptar, which took the no. 1 spot on the Green Growth 50. Aptar makes myriad drug delivery systems and dispensing products for consumer goods, especially foods and cosmetics. “We look at everything we do through a sustainability lens.” Most of Aptar’s facilities in Europe are already certified landfill free. By the end of the year Aptar is looking to achieve “80% disposal avoidance.”

It’s a business that involves reconciling contradictions — most of their products are plastic, which he says actually has a pretty low carbon footprint relative to alternative containers. A new Aptar product is a “monomaterial” lotion pump with no metal parts, entirely recyclable.

Consumer demand for such new products is arguably more impactful than the kind of government policy circus on display at the recent COP26 meetings in Glasgow, Scotland.

“Governments don’t impact what we do that much. Consumers and patients and customers demand what we do,” says Tanda. They will pay for the carbon transition because it is what they want. Listening to the consumers is how Tanda aims to “future proof our business.”

That approach has worked for electricity giant AES, which landed no. 15 on the Green Growth 50 list after reducing emissions by 22%, replacing coal-fired power plants with wind, solar and batteries — “a winning combination that can decarbonize 90% of the grid,” says Chris Shelton, president of AES Next. Because the costs of renewables kept going down, they were able to shift customers over under a “green, blend and extend” program.

AES also operates a kind of inhouse venture capital operation. Its Fluence utility-scale battery joint venture with Siemens recently went public and now sports a $6 billion market cap — the company behind some of the biggest battery installations in the world.

There used to be a large group of companies “in denial” about mitigating greenhouse gas emissions. “That group is vanishing fast,” with companies moving over to the “bargaining” group, where they want to know the minimum they have to do to get by and keep activists off their back — that’s the insight of Chris Romer, cofounder of Project Canary, which installs laser-based sensors at industrial sites to monitor methane leakages.

The landmark ESG moment, he says, was last year’s ExxonMobil annual meeting, where shareholders voted in more green-friendly board members.  There’s no going back. Romer says manufacturers can already earn multiples of their monitoring and certification costs by selling “green” products at a premium.

Even on the Green Growth 50, some companies are less enthusiastic than others. Nicotine giant Altria for example, positioned at no. 35 on our list, seems to be doing just enough, having cut emissions by 10% in the studied time period. But according to its most recent sustainability report, Altria’s renewable energy use is just 2.3% of its total, a surprisingly meager ratio.

Altria also demonstrates how hard it can be to stick to a well intentioned program. The company was making great strides toward reducing the amount of waste it was sending to the landfill. In 2018 it nearly hit its 21 million pounds goal. But 2019 wrecked the trend, when Altria delivered 87 million tons to landfill — mostly rubble from a headquarters renovation. Their next challenge: reducing litter from cigarette butts.

Stronger performers included Eli Lilly, which ranked eighth on our list after the pharmaceutical company swapped out old light bulbs for LEDs at three plants, saving 330 mwh per year. And Bristol Myers Squibb, which heats its Munich, Germany office building with 100% geothermal energy, found itself at no. 13. Church & Dwight, parent company of Arm & Hammer, has meanwhile placed third on the list, having achieved its goals of no more PVC in packaging, and offsets carbon emissions by planting millions of trees in the Mississippi River Valley.