Greenthink Case Study– Sustainability, Profits, and Bamboo

By Ryan Duffy, Communications Fellow

The following is an excerpt taken from Chapter 5, “Corporate Climate Change,” of Green Think: How Profit Can Save the World, written by USGBC's co-founder and CEO, Rick Fedrizzi:

If you've ordered a Dell laptop since 2009, there's a good chance there was something different about it. I'm not talking about the processor or the amount of RAM or the quality of the screen. I'm not even talking about the computer. I mean the packaging it came from.

In a 2012
 story for Green Manufacturer, Oliver Campbell, Dell's director of packaging procurement, described an initiative that took him and his team halfway around the world to China, on a quest for packaging materials that were better for their customers, better for the environment, and better for business.  And they found just what they were looking for: bamboo. 

Bamboo might be best known as a food for pandas, but it's also considered a rapid renewable resource because, well, it grows so rapidly–as much as two feet a day, which means it can be harvested earlier than other hardwoods. And while bamboo is relatively light, it is also unbelievably strong. 

Of course, Dell wanted to make sure it didn't just use any bamboo–particularly not if it would affect the pandas.  As Campbell told Green Manufacturer, “We've walked the supply chain in Jianxi Provice in China several times, inspecting their harvesting practices.  The harvesting of the bamboo trees is done via selective cutting, not clear cutting, and bamboo naturally generates.”

Switching to bamboo helped Dell lower its packaging and shipping costs and in the process, according to Campbell, contributed to savings of “more than $20 million just due to the use of greener packaging.” It's a great story about a big company doing right by the environment.  But here's the best part: In the past few years, as the cost of bamboo has risen with demand, Dell has transitioned ot other forms of sustainable packaging, including wheat straw- and even mushroom-based packaging. Their experiment with bamboo opened their eyes to the benefits– ecological and monetary– of sustainable packaging.  According to the company's 2015 Corporate Responsibility report, “As a result of our efforts, at the end of FY15, 100 percent of the packaging for laptop shipments was recyclable or compostable–up from 86 percent and 85 percent, respectively, in FY14.” Dell's continued focus on environmentally friendly packaging has resulted in “saving a cumulative $53.3 million in costs and avoiding 31.3 million pounds of packaging.” 

Dell has made its business better, greener, and more profitable by making a specific, strategic change in an existing production system. But in order to make internal changes such as these, companies need to understand where their excess environmental costs are coming from. 

In 2011, German sportswear company Puma issued its first Environmental Profit and Loss (EP&L) report, which showed that the environmental impact of the company's operations and those of its suppliers in the prior year was equal to nearly 210 million dollars.  That's slightly more than 10 percent of Puma's 2010 profits! Of this massive cost, Puma learned that 94 percent came from its supply chain, including 57 percent from raw materials. Not long after, the company started making products–shoes, T-shirts, jackets, and backpacks– that are totally biodegradable or recyclable. Puma calls the line “InCycle” and has used the same EP&L concept to compare the impact of these products. In a 2013 report, PwC cited Puma as a sustainability case study, stating that “the environmental impact of its InCycle shoe is nearly a third less than its conventional suede shoe and equivalent to 3 percent of the retail price.” According to Puma, in the process of making these InCycle shoes, the company also uses 21 percent less water and 20 percent less land, and produces 35 percent fewer greenhouse gas emissions and 60 percent less waste.

In an effort to further reduce costs and waste, the company has also begun to eliminate that trusty old friend of footwear: the shoebox.  Working with renowned designer Yves Behar, Puma has created what it calls the “Clever Little Bag,” an alternative packaging for its shoes that has already saved the company 5,400 tons of cardboard. As Alan McGill of PwC put it, “Fundamentally, Puma's analysis is about risk management for the environment, and for business, because you cannot seperate the two.” 

The Innovation Bottom Line, a joint report from the MIT Sloan Management Review and the Boston Consulting Group, confirms that this kind of internal examination and reflection is necessary for sustainable strategies to drive profits.  According to Jason Jay, director of the MIT Sloan Initiative for Sustainable Business and Society, “Companes can find ways to solve [their sustainability] problems and profit in the process. But to do so takes innovation in management practices, business models, and market infrastructures.” 

In other words, sustainability isn't about selling green gadgets like a solar-powered device that chases away garden moles. Corporations like Dell and Puma are realizing that the truly sustainable innovations are not necessarily the ones that roll off the asembly line. Rather, the sustainable innovation is the assembly line itself— how products are made, how materials are sourced, and how energy is conserved. 

If you're interested in reading more, you can find the book here on Amazon for $12.99— as you will find out if you read the book, each book is made only after it is ordered to reduce waste and inefficiency!

Clever Little Bag photo taken from Puma's website.