The writing on the wall: Your 10-year road map for environmental innovation and trends

Earlier this year, two companies launched MP3 players that run on solar power—no battery or cord needed. And another company recently replaced an older-technology power supply with one that is 90-percent efficient. None of these small steps solves the varied environmental sustainability challenges the electronics industry faces, but they do illustrate an important point about the quest for “Green.”

These companies are already farther down the road to power efficiency than most. Ten years from now, TFI Environment expects all electronics companies to design products that are 99-percent energy-efficient.

The three aforementioned companies have a clear head start.

Other electronics companies also have launched initiatives to design environmentally sustainable products, packaging, and services; to run more efficient offices, plants, and internal IT operations; to use renewable energy sources; to devise strategies for reuse and recycling; and to find environmentally minded supply chain partners.

Then there's everyone else: They groan about hazardous waste regulations, freeze in fear about upcoming chemical restrictions, ignore the ROI from going green, and fret over their inability to continue to do business as usual.

There are too few of the former companies and too many of the latter. TFI Environment can predict with reasonable confidence what the 10-year environmental road map looks like, and can say with near certainty that the companies acting now are the ones most likely to still be in business in a decade.

TFI Environment estimates that 3 percent of electronics companies are environmental “innovators,” and 5 percent are “leaders.” Another 10 percent are “getting started,” just beginning to go beyond what regulations require. The rest—82 percent—remain focused on meeting minimum regulations.

Innovators typically move with publicly stated purpose and publicly announced measurement of progress. Hewlett-Packard (HP) and Sun Microsystems are two examples, and offer an interesting comparison.

Because of its very early efforts, HP was a pioneer in sustainability. Sun embraced green in recent years, illustrating that once the decision is made, quick progress is possible.

HP, Sun, and others like them follow their own road maps. For everyone else, TFI offers its forecast and road map for which the industry is most likely to follow in adopting sustainability measures (see table).

According to this road map, most companies are still adjusting to restriction of hazardous substance directives from the European Union and others. Some might be inclined to start designing environmentally sustainable products, packaging, and manufacturing operations. And most are just beginning to report carbon footprints and other issues.

For example, in May, the Carbon Disclosure Project announced 58 percent of participating suppliers—which include electronics and nonelectronics companies—reported the emissions from fossil fuels they burned and electricity they purchase, but only 26 percent had created greenhouse gas reduction targets.

Although it does not appear on the road map, most companies still ignore the best resource they have: their own employees. In consulting engagements, TFI Environment always finds that employees care passionately about the planet's health, want to help mend it, and want to work for environmentally responsible companies. Some of the best ideas come from this natural resource, available to any CEO willing to tap into it. The innovators and leaders do tap into it, and most companies don't.

No matter how passionate workers are about going green, the CEO must commit to making the environment and social responsibility strategy integral to the core business strategy to guarantee the necessary level of commitment with direct reports.

Companies serious about this quest announce goals publicly and devote the necessary resources to achieving them. They then measure and report results on Web sites and elsewhere. They assign a VP or higher-level executive to own the road map, tying compensation and incentives to its success. This person has the power to allocate financial resources to make changes, including funding for projects with sound ROI.

Sun Microsystems is one example. Jonathan Schwartz has used his position as CEO to set standards for Sun, and to exhort other companies to do the same. In an interview in November 2006 with the San Francisco Chronicle, he explained, “The impact on the environment is equivalent to the impact on the bottom line. The more aggressive we got in pursuing our business objectives, the more we realized we need to focus on the environment as a source of competitive advantage. …Companies that don't focus on the environment do so at their own peril.”

Sun has quickly transformed itself into an eco-conscious company that sees sustainability and the bottom line as compatible. This shift in thinking is crucial: Everything else flows from it.

Schwartz appointed a VP for eco-responsibility. The company set measurable goals on many fronts. For example:

• Reduce its corporate carbon footprint by 20 percent by 2012;
• Achieve LEED certification for at least one building by 2008, and for another 10 to 20 buildings by 2009; and
• Cut energy usage in Sun data centers and help customers do the same by enhancing power while reducing energy usage and heat production in Sun products.

Sun has achieved telecommuting goals ahead of most—note that the road map sees wide popularity in 2010. While the road map also forecasts reducing hardware as widespread by 2016, Sun has adopted its own thin-client technology on internal desktops—which reduces the amount of materials to be recycled—and is marketing this strategy to its customers.

These examples just scratch the surface of Sun's initiatives. For a more complete breakdown—and to borrow ideas—visit Sun's Web site: http://www.sun.com/aboutsun/ehs/

Two areas in which TFI Environment projects substantial progress by 2012 are design-for-environment of products, packaging, and processes; and intensified efforts to recycle products and materials. Here are two examples of what innovators are doing now.

Two years ago, Nokia reduced by half the size of the box for its cell phone. According to David Conrad, head of environment for Nokia North America, about 250 million phones—half the total sold from February 2006 to the end of 2007—have been shipped in the new box, for a savings of $150 million in materials and transportation.

Nokia can put 1,100 new boxes on a pallet, compared with 480 old boxes, resulting in 5,000 fewer tractor trailers on the road. The new packaging, made of recycled paperboard stock containing 55 percent post-consumer recycled content, has saved more than 855 trees, eliminated more than 5,000 pounds of waterborne waste, and diverted more than 77,000 pounds of landfill waste.

“You have to challenge convention [and revisit things] that have been answered again and again, to make people rethink the way products can be designed, manufactured, and packaged,” says Conrad. “Corporate sustainability and environmental sustainability are not mutually exclusive or mutually agreeable—they are mutually dependent.”

Earlier this year, HP announced it now uses post-consumer recycled plastics to make new HP ink-jet print cartridges. More than 200 million cartridges have been manufactured with the process. HP says it used more than five million pounds of recycled plastic in its ink-jet cartridges last year, and is committed to using twice as much in 2008.

According to Jay Celorie, a manager of HP's social and environmental responsibility efforts, when HP begins to design a product, it systematically considers the energy efficiency of the design, the materials that will have a lower impact, and how the device and its components can be recycled. It establishes goals, just as it does for sales. It monitors and audits progress toward the goals, including the efforts its suppliers make toward choosing and producing environmentally sustainable parts and materials.

HP, which launched product recycling in 1987 and product design for environment in 1992, also is an innovator worth studying. Its practices and goals are found at http://www.hp.com/hpinfo/globalcitizenship/environment

The innovator examples cited here certainly aren't the only ones. For example, the road map sees wide adoption of alternative power sources by 2012, but Intel already is the largest purchaser of green power in the U.S., according to the Environmental Protection Agency.

By 2012, the road map forecasts wide adoption of technologies to reduce power and water consumption in buildings through use of occupancy sensors, motion-detector power strips, and lighting moderation according to gradations of daylight.

By adopting technologies like these as part of a broader green design effort, the future is here at Texas Instrument's newest wafer fabrication plant in Richardson, Texas. As a result of the green design of RFAB—a high-efficiency, million-square-foot chip fab—the company anticipates savings of $4 million a year in operating costs over previous plants.

From the virtualization of data centers to achieve efficiency and reduce heat to usage of satellite offices to reduce auto emissions by commuting employees, other examples of innovators and leaders could be noted—but not enough.

For the electronics industry to continue to be competitive, many more companies must move from where they are today to the “getting started,” “leadership,” and “innovator” levels with a strategic, CEO-sanctioned road map.