Manufacturing & Distribution, Summer 2011

The Five Keys to Being Green

If you look at current trends in manufacturing companies, you’ll notice that they are no longer “green” about being green. Manufacturers are becoming more environmentally savvy and sensitive, both in their facilities and in their products.

Likewise, distributors are doing more to increase energy efficiency and reduce fuel consumption. Consumers are more attentive to the “green quotient” of products, and green innovation is a popular topic in the national and local news.

Smart manufacturers are attempting to reduce, reuse or recycle, not only for environmental reasons, but also to bolster their bottom lines. Many innovative companies have even created new roles, such as “director of sustainability,” to manage these efforts.

Is your company on the green bandwagon? Here are some ideas to make the most of your endeavors:

1. Look out. When it comes to being green, one person’s trash truly is another’s treasure. Is your company creating waste that could be used productively by another? If so, pass it along rather than send it to the landfill. For example, one global manufacturer of hygiene products gives its shrink wrap waste to another local manufacturer for use in plastic toys. And a large food manufacturer donates its fruit and vegetable scraps to a local zoo for animal feed.

2. Look in. Changing practices or processes can be challenging, but the payoff can be huge. For example, a national producer of potato chips built a new manufacturing facility using 22 percent recycled materials. The new plant uses 30 percent less energy than industry standards, and waste heat generated from the manufacturing process is used to heat the buildings. Skylights and windows improve lighting conditions and supplement conventional lighting during the day, which reduces overall electricity consumption.

All of these innovations will pay for themselves in reduced costs. What’s more, the publicity and goodwill has been tremendous.

3. Investigate tax incentives for going green. The Energy Policy Act of 2005 provides tax incentives for constructing or renovating buildings that reduce utility costs through the IRC §179D Energy Efficient Commercial Buildings Tax Deduction. Under this program, manufacturers can deduct the cost of upgrading a building’s indoor lighting, HVAC/hot water and building envelope, up to $1.80 per square foot. If just one of these systems is upgraded, the deduction is capped at 60 cents per square foot. Either way, it can pay to make renovations.

Similarly, the IRC §45L Business Energy Investment Tax Credit provides tax credits for renewable energy technologies, including solar water and space heat, solar thermal electric, photovoltaics, wind, biomass, geothermal electric, fuel cells, and other energy resources. These incentives greatly increase the return on investment.

4. Tap into local incentive programs. The Database for State Incentives for Renewable Energy (DSIRE) website provides an overview of state, local, utility and federal incentives and policies that promote both renewable energy and energy efficiency. Funded by the U.S. Department of Energy, DSIRE is a convenient way to search for incentives by state, incentive type and eligible sector.

5. Publicize your efforts. Green gets ink, and good publicity attracts positive attention, builds community relations and increases employee loyalty. Some public relations consultants specialize in green PR.

Many trade publications have sections dedicated to environmental updates. Industry conferences and local business groups often look for speakers who can share their sustainability success stories. And some green manufacturing blogs and websites welcome guest columnists.

Many manufacturing companies want to embrace environmental sensitivity, but aren’t confident that their efforts will make financial sense. Consulting with your CPA before investing significant dollars will ensure that your efforts to go green don’t put you in the red.

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