Overcoming the financial challenges
Johnson & Johnson faced a challenge that countless other corporations experience every day. Aligning financial practices with plans to reduce environmental impacts remains difficult, as these decisions are often made separately rather than in tandem.
As noted in our new WRI report, "Aligning Profit and Environmental Sustainability: Stories from Industry," several other companies are already emerging as leaders in solving this dilemma.
Some examples include:
• Diversey (now called Sealed Air) bundles projects with a high return on investment and moderate GHG-reduction potential with those that have a lower ROI but high GHG-reduction potential. This portfolio generates an overall ROI that the chief financial officer can approve while achieving important emissions reductions that the sustainability team is happy with. The company balances capital expenses and operating expenses by reinvesting operational cost savings from GHG-reduction projects, such as lighting retrofits and heating, ventilation and air conditioning efficiency upgrades, into capital-intensive projects, including wind turbines and a combined heat and power fuel cell.
• UPS relaxes the company's minimum rate of return on vehicles that have the potential to reduce fuel use and costs. By doing so, the company helps ensure that its long-term environmental performance is a consideration during its capital allocation process.
• Citi tests promising energy efficiency finance solutions at its own facilities, such as using an energy services agreement to finance a highly efficient "tri-gen" plant that will generate electricity, heating and cooling for a Citi facility in Europe. The company is reducing its own energy consumption while improving its understanding of how energy service agreements can be taken to market.
• DuPont set a goal to double investment in research and development programs that provide environmental benefits to customers, such as energy and water efficiency or reduced waste. R&D programs included must provide improved performance in one or more of 10 benefit areas, ensuring that the company is continually developing products that improve environmental performance for customers. The company also has a goal to increase revenue from products that reduce emissions by $2 billion by 2015.
A handful of forward-looking companies have already demonstrated success in ways to find the money to fund environmental sustainability projects. Now, to really make a big impact, other companies must get on board and scale these approaches so that financial practices and environmental goals are better aligned.
Budget image by R_Szatkowski via Shutterstock