How Adidas uses a portfolio model to reduce carbon emissions

When companies invest in anything, they're looking to make money back on that investment. The globally known sports apparel company Adidas Group is no different. By looking at green investments through a portfolio lens, Adidas has been able to push sustainable solutions to every part of the company.

At GreenBiz Forum 2014 in Phoenix, Arizona, Adidas' senior manager for energy and environment, Elizabeth Henry, sat down with GreenBiz's Shana Rappaport to talk about how Adidas provides funding for sustainable renovations.

At the center of Adidas' effort is the company's Green Energy Fund, a kind of internal venture capital fund. The fund's pool of money, Henry said, is anticipated to be $3 million in 2015.

"The things that are really neat, and that make this different than a regular sustainability budget, is that we target a 20 percent internal rate of return on this portfolio," Henry said.

But not every investment will make 20 percent, and that's where the portfolio model is leveraged to fund less profitable efforts.

"We're allowing higher-return projects to cross-finance lower-return projects," she said. Projects include installation of LED lighting and smart building controls for everything from sales floors to warehouses and corporate offices.

"There are some projects that fall below that line, but we choose them if they have a great carbon reduction potential," Henry said. "We're prioritizing those marginal projects on the basis of their carbon reduction."

Henry said that Adidas isn't yet bragging about its sustainability efforts to its customers, opting instead to impress the company's stakeholders.