August 01, 1996

Article at Asian Business Review

Green practices starting to pay off


Australian business is waking up to the fact that environmental programs can save them money. Wilson da Silva reports.

TO THE SURPRISE of many boardrooms around the world, leaping on the environmental bandwagon – once seen as good publicity – is starting to pay large corporate dividends in cost savings and efficiency. 

And the movement, which has taken root in a large number of western countries, is catching on in corporate Australia, with proponents saying that a sea change in corporate attitudes to things environmental is taking place. 

“Until you start seeing things outside the square, you don’t see the savings,” said Bruce McDonald, environmental project manager at Fletcher Construction, the New Zealand based multinational with large operations in Canada and North America. 

“It’s not about wearing grass skirts and throwing away the mobile phone. It’s actually good business,” he said. 

Not that the company didn’t take some convincing. When Fletcher Construction won a US$12 million contract two years ago to build police and court complexes in the outer Melbourne suburbs of Dandenong and Frankston, it decided to pilot a waste minimisation program at one site, while operating the other in the traditional manner. 

At the end of the trial, the numbers spoke for themselves: at the ‘green’ Dandenong site, one-third of the waste was saved for re-use. Total refuse fell by 15 per cent, and just under half of the landfill space normally used for waste was needed. In the end, the company saved 55 per cent on waste removal costs. 

“That really sold it for us,” said McDonald. “Years ago, we used to send our waste concrete straight off to landfill – it costs us money to dispose of it. Now we can use it as road base, and even better, we can make it a value-added product by using the site waste as ‘green concrete’ into a new product. 

“There’s a general awareness now that waste costs money, and by controlling that, we can improve our business,” he said. 

The savings have been impressive enough for five of Fletcher’s Australian competitors – Lend Lease, Multiplex, John Holland Constructions and Barclay-Mowlem – to recently join a program run by the State and Federal governments of Australia, to emulate Fletcher’s techniques. 

“For most large companies now, it is recognised as being essential to have effective environmental management if they are going to stay in business,” said Dr Tony Beck, assistant director of the Business Council of Australia and head of its environment advisory unit. 

“There have been some very impressive cases of cost savings or profitable new products developing,” he said. “It is now seen as part of doing business.” 

In fact, this year sees the launch of an environmental version of the quality standard ISO9000. 

Products where waste and electricity have been minimised and parts have been recycled will be badged ISO 14000. 

The system, being implemented by engineering consultancy CMPS&F, has been launched in Singapore and Malaysia and will soon be seen in Indonesia. 

It is a growing trend. A recent study of the ‘green’ programs of 43 British companies found that environmental initiatives had netted them US$17.5 million a year in savings, and the average payback for measures which required initial extra expenditure was 18 months. 

In 1995 more than one third of Britain’s top 100 companies produced separate environmental reports on their activities. In the United States, chemical producers say they have seen a 49 per cent fall in pollution output since 1989 as a result of environmental practices, creating a corresponding saving in waste management and disposal costs. Some leading companies are confident enough to talk about a zero-waste production level as a serious long-term goal for the industry. 

Most companies engaging in environmental programs soon discover that even little things help: a small company in Sheffield, Britain, saved US$171,000 a year simply by mailing out statements to those clients who wanted them. Another spent US$516 putting its drivers through environmental training, and saved US$3000 a year in diesel fuel bills. 

In Australia, companies like Westpac Banking Corp have lead the charge: in 1993 the Sydney-based bank spent US$3.3 million introducing an environmental program that is now expected to reap a cumulative US$9.1 million in savings by next year. Initiatives ranged from water conservation audits (saving US$25,000 at one Sydney branch), to choosing energy-efficient designs at new premises, which alone have sliced some 25 per cent off a branch’s energy costs. 

At its plant in Portland Victoria, aluminium producer Alcan, found that a review of workplace practices reduced waste production to six cubic metres a month, compared with 1100 cubic metres previously. This saved Alcan A$400,000, the cost of carting the extra waste to a landfill and burying it. 

Some companies have even taken environmental measures to heights that only a few years ago were a conservationist’s misty-eyed dream: an office block under construction in Australia’s capital, Canberra, uses geothermal energy to boost its heating and cooling system. Not only is geothermal an alternative and benign energy source beloved of environmentalists, the measure will also use 40 per cent less energy. Its builders expect the system to pay for itself within two years. 

This trend to greening the corporate workplace is also leading to job growth, according to the Green Jobs Unit, a program run jointly by Australia’s leading conservation group, the Australian Conservation Foundation, and the peak organised labour body, the Australian Council of Trade Unions. Funded by the Australian government, it trains unemployed candidates in waste minimisation and environmental auditing skills. 

According to research by the unit, employment in waste management and clean production more than doubled in the five years to 1993. Based on recent research, the unit expects another 100,000 new jobs in Australia to be created in the renewable energy sectors and by a switch to energy efficiency programs over the next few years. 

In December 1995, the first 19 unemployed participants of the ‘green jobs’ training program graduated in Melbourne, and were quickly placed in companies ranging from construction and local government to plastics manufacture, and even a law firm. 

One of the graduates was Ross Turnbull, 57, unemployed since 1992 after three decades as an advertising account executive. He has already started environmental auditing at Melbourne solicitors, Price Brent. 

“It’s not only going to save money to cut electricity consumption, for example, but we can also have a story to tell about the reduction of greenhouse gases,” he said. 

The program provides a six-month subsidy to participating companies who employ the graduates. It is hoped that thereafter, their skills will be seen as essential enough to keep the graduates on. 

“There’s no guarantee that I’m going to stay here or not, and I suppose that’s up to me; I’ve got to prove myself within the six months,” said Victor Isanto, 24, one of the graduates hired by Fletcher Constructions. 

“All you can do is try and do your best.”