Archive for October, 2009

FedEx and UPS competing to be “Green”

FedEx and UPS are both becoming green. Are they doing it to help the environment or as a better business practice? An article by Marc Gunther explores both UPS and FedEx’s sustainability practices. Regardless of who is “greener,” the fact that major companies are competing to be more environmentally efficient and sensitive makes everyone win.

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Highlights citing “greenness of FedEx and UPS” by Marc Gunther

FedEx

  • FedEx has promised to reduce its greenhouse gas emissions from aircraft by 20% by 2020, on a pound per available ton mile basis. It was the first U.S. shipping company to do so. “UPS would not have set a reduction goal if we hadn’t not it first,” Jackson says.
  • It has created a corporate citizenship blog, signaling a willingness to be open and to engage with critics.
  • It has engaged constructively in Washington. FedEx CEO Fred Smith lobbied a few years ago for fuel-efficiency standards for commercial vehicles.
  • Their Boeing 777 freighter, uses less fuel and produces fewer emissions than the rest of its fleet. Even better, it can fly from FedEx’s Memphis hub to China without having to stop for refueling in Anchorage, as its older planes do.

UPS

  • UPS recently took the shipping rivalry to a new level by deciding to offer customers a “green” option of paying a small fee, between 5 and 20 cents, to offset the carbon emissions of their shipping
  • UPS willalso reduce emissions from their airlines by 20 percent between 2005 and 2020.
  • UPS has already reduced emissions by 28 percent, to a level well below those of FedEx. Its CO2 pounds per available ton miles was 1.54 in 2005, while FedEx’s was 2.26. The result is that, even in 2020, FedEx won’t be as efficient or as low-carbon as UPS was in 2005.
  • In 1990 UPS began buying more efficient aircraft engines and planes. “We did it to reduce our fuel burn,” Wicker said, and to cut costs. They werebn’t thinking of “green.”But the company has been consistently retiring older, smaller, noisier, fuel-guzzling planes and buying newer, larger, quieter and more efficient ones. UPS’s fleet “is the most efficient cargo airline in the industry,” Wicker says.
  • UPSers — that’s what they call themselves — note that their company measures its carbon footprint more accurately than does FedEx. UPS includes its buildings, trucks, trains and planes, as well as its use of electricity and the carbon burned by outside contractors. (That’s Scope 1, Scope 2 and Scope 3, for carbon geeks who are reading along.) FedEx does not include the emissions of many of its drivers because they are independent contractors. “If you are going to make a decision on who to ship with based on who’s most carbon efficient, you have to compare an apple to an apple,” Wicker says.
  • The company is counting on the development of biofuels for jets to achieve its 20 percent by 2020 carbon target.

When Green Becomes Routine

Jim Witkin of the New York Times and Green Inc. recently interviewed Eric G. Olson a management consultant and author of the coming book “Better Green Business.”

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In his book, Olson says carbon footprints will become just another measure – like profitability and growth – for businesses, and that the word green will gradually disappear from the business lexicon over the next 5 to 10 years, as environmental stewardship becomes fully integrated into everyday business practices. Several external forces will drive this transformation, Mr. Olson said – particularly as large consumer products companies and retailers like Wal-Mart require suppliers to manage their own environmental footprints. Companies without a clear strategy and committed leadership, Mr. Olson argues, will come up short.

Green Inc. recently chatted with Mr. Olson about the green business transformation. Excerpts from that conversation follow.

Q.When will green become an outdated term in the business vocabulary?

A.When we have an accepted, widely adopted and mature set of standards and practices for things like carbon footprint and other measures of resource use, like the accepted financial measures businesses use today. Carbon footprint, for example, will just become another measure along with profitability and growth. Also, branding of environmental initiatives will become commonplace and less of a differentiator in the long term. Consumers will be able to make informed choices based on environmental labeling, like today’s nutritional labels. But there’s a lot of ground to cover between now and then.

For example, Wal-Mart’s Sustainability Index could be one major driver for this kind of standardized labeling, but by some estimates, only 10 percent of its global supplier base is currently prepared to measure and manage environmental impacts with the necessary rigor.

Q.How would you recommend these other 90 percent accelerate this transformation?

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