Green Initiative Justification Report for American Beverage Corp

Introduction and Purpose

"There is a growing sense of the world's interdependence and connectedness, and an understanding that progress is an illusion if it destroys the conditions for life to thrive on earth" (Buchholz, 1991). Business ethicist and university professor Rogene Buchholz made this point decades ago, arguing that preserving natural resources should be a priority for the business community. Since that time, corporate social responsibility has become an even more important goal. Consequently, this report provides the management team of American Beverage Corporation (ABC) with recommendations for launching a corporate environmental and sustainability program.

There are many reasons that ABC should commit to sustainable practices and principles, not least of which is protecting the earth's resources. As this report discusses, there are also compelling economic and business reasons to go green. By launching a green initiative, ABC will realize the following benefits: reduced operating expenses, increased sales, expansion into the green products market space, reduced tax liabilities through energy-saving tax credits, and decreased dependence on fossil fuels. At the same time, ABC can achieve environment-friendly goals through programs that reduce greenhouse gas (GHG) emissions, cut back on water and energy usage, minimize our carbon footprint, and promote responsible corporate citizenship.

Problem Statement

Together, we all share the planet, and we envision a future that keeps it livable even as we grow ABC to new levels of success. ABC is a dynamic beverage and snack food business committed to continued growth and expansion. Our shareholders expect continued profitability while we meet the challenges of today's hypercompetitive global economy. At the same time, we strive to embrace sustainable and eco-friendly practices. These goals are not mutually exclusive, as many have believed in the past; in fact, they complement and reinforce one another in ways that produce measurable and quantifiable positive results.

The global trend toward going green accelerates every day because it is both progressive and smart business. We all want ABC's continued success, even as we pledge to protect the earth's natural resources through more efficient use of energy, water, land, packaging, and transportation. ABC is committed to actively promoting green practices. In the past, we used more energy and fossil fuels than necessary, and we allowed customers to turn to competitors with greener products and technology. As we move forward with the adoption of the recommendations in this proposal for the upcoming fiscal year, we will grow ABC's profitability through company-wide plans to reduce, reuse, recycle, and innovate.

Method Used

To prepare this report, ABC's Green Team conducted research to understand the challenges the company will face in implementing green strategies. Research indicates that a routine problem companies encounter is gaining buy-in from managers for green programs. According to Jacquie L'Etang (1995), business ethicist and professor, managers encounter difficulties developing corporate social responsibility programs because of conflicting interests and priorities. They face pressures, both internal and external, which means that programs like ABC's Green Initiative typically develop from a combination of proactive and reactive policies. Understanding these constraints enabled us to shape a program that we believe almost everyone will be able to support.

Recommendations included in this report take into account those internal and external factors that affect the outcome of sustainability programs. By proactively uncovering reasons for resistance, we hope to give our green program maximum opportunities for success. We know that ABC associates and management teams are committed to the company's success, and we acknowledge the effort on the part of all employees and other stakeholders.

It was the Green Team's mission to evaluate each department's operations, as well as ABC's processes and procedures. Our sustainability assessment looked for opportunities to reduce expenses and to recycle and reuse materials. We propose the following eco-friendly strategies and programs, as detailed in the Findings section of this report.

In addition to conducting the sustainability assessment and surveying the literature on green programs, the Green Team also researched various options to determine whether they might contribute to the program being proposed. Whenever possible, we quantified recommendations so that we could identify the costs of trade-offs or investments, as well as the value of benefits that ABC will receive.

Findings: Reducing Operating Expenses and Carbon Emissions

Reducing Operating Expenses

A significant reason for the popularity of green programs is their impact on bottom-line savings. The recommendations in this proposal allow ABC to cut expenses while requiring minimal investment or upfront costs. As a result, ABC can realize significant financial benefits from going green starting immediately in some cases, and within the current fiscal period for others.

The ABC Green Team began this project with a sustainability assessment—a tool intended to inform decision-making in order to promote sustainable outcomes and, in our case, to guide the development of this proposal. The metrics used for appraisal will serve as a foundation for corporate sustainability reporting going forward, and initially involved ABC's accounting and auditing systems.

Beginning with our IT department, we identified a significant opportunity to save both energy and money by implementing PC power management software. "Edison" software, developed by Verdiem, helps companies like ours reduce energy waste from IT devices. With minimal investment requirements and a straightforward implementation by our IT staff, ABC can start saving energy and fighting climate change within weeks (Kluster, 2011).

In addition to benefiting the environment, using Edison can cut ABC's energy costs by $20–$60 per PC per month. These reduced energy costs can amount to six- and seven-figure annual savings for large companies like ours. For many companies, Edison alone is responsible for a 5–15% reduction in overall, organization-wide energy consumption. Unlike replacing equipment—which can be time- and cost-intensive—making existing equipment more energy-efficient is a fast and straightforward process that pays off within months (Kluster, 2011).

Consider this striking fact: fifteen PCs can generate the same amount of carbon emissions as a mid-size car each year. By implementing effective PC power management strategies throughout the company, ABC will be doing its part to help the environment (Kluster, 2011).

One of ABC's goals is continued growth alongside sustainable operations. The average PC consumes 588 kilowatt-hours of electricity per year, and of that amount, almost 400 kWh are wasted by running PCs at full power when not in use. By putting a computer in sleep mode during periods of inactivity, the Edison power management software can cut energy use by an average of 60–70%, up to as much as 90% in some scenarios. As demands on our IT and PC networks grow larger, gaining control over energy use will prove to be an important competitive advantage (Kluster, 2011).

Reducing Carbon Emissions

According to reports from Verdiem's current customers, large companies can cut PC carbon emissions by up to 440 pounds per year per PC. This reduction can mean savings of thousands of tons of carbon emissions each year by doing nothing more than managing PC power consumption (Kluster, 2011). As a concrete example, DuPont estimates savings to date of $3 billion from its efforts to reduce carbon emissions, having successfully reduced GHG by 63% during the 1990s—far ahead of their announced schedule (Ryan, 2008).

Along with saving money and reducing carbon emissions, there are also intangible benefits to implementing a PC power management program and any eco-friendly sustainability program. ABC employees can enjoy a deep sense of pride in working for a company that is doing its part for the environment. Not only will ABC computers be using less than half the power they previously required—without any impact on productivity—but employees will know that they are personally helping to reduce the company's carbon footprint and thereby fighting climate change (Kluster, 2011).

A BBMG Conscious Consumer Reports study showed that the vast majority of Americans expect business leaders and marketers to provide environmentally friendly products. Moreover, Americans are adamant that any "green-friendly" claims must be backed up with legitimate practices. With ABC committed to a strong sustainability program—as evidenced by our Green IT strategy—communicating the value of our green program to customers and stakeholders has the potential to strengthen our reputation and our brand significantly (Kluster, 2011).

The ABC management team has a chance to become cost-savings and sustainability heroes for our organization. Every year, companies waste nearly $4 billion powering devices that are not in use, but ABC will no longer be counted among those statistics. By introducing power management strategies, we can produce impressive results on both fronts: sustainability and cost-savings (Kluster, 2011).

ABC's Finance Department will be pleased to know how much we can lower our exposure to energy price volatility. Energy sales are expected to grow 50% worldwide by the year 2030, but ABC need not experience such an escalation. By reducing the amount of power required to run our business, we can mitigate risk from factors well beyond our control (Kluster, 2011).

One final point regarding our Green IT initiative: energy-efficient IT is also high-performance IT. IT equipment can account for nine percent of all energy consumed by businesses—the third largest source of power consumption for the commercial sector. Putting power management policies in place is likely the easiest way for ABC to control power consumption across our network (Kluster, 2011).