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How Businesses Are Going Green

More companies than ever are paying closer attention to how their actions affect the planet. But it's a divisive issue.

Illustration of a green cityscape with a variety of buildings, including homes and skyscrapers, integrated with green spaces, trees, and wind turbines, under a light blue sky with fluffy clouds, representing an eco-friendly urban environment.

​Executives at real estate services firm Stok expected their employees to be happy about the 401(k) plan it introduced in 2014. Stok was a small startup at the time, and such firms typically don’t offer the savings plan. 

One employee refused to participate and explained her decision to the chief financial officer: All the investment options included companies in the fossil fuel industry—choices the employee believed were at odds with Stok’s mission to create sustainable, environmentally friendly projects.

“The investments weren’t tied to our values,” says Jolene Goldsmith, a partner at the San Francisco-based company. “We hadn’t really considered that before.”

Stok spent roughly 18 months working with a firm to create two funds that shun fossil fuel companies or any ancillary firms. (Investments in gun manufacturers are also forbidden.) Now all 38 staff members at the 11-year-old company are at least partially invested in one of those funds. 

“With the 401(k), we aren't just saying we care about the environment," Goldsmith says. "We show it." 

Green Policies and Political Debate

It’s not just firms whose businesses have an environmental focus that are paying closer attention to how their actions affect the planet. More companies than ever are adopting earth-friendly policies. Some efforts, such as cleaner manufacturing processes and more-efficient waste management, are impressive but they aren’t apparent to employees. So organizations are illustrating their commitment in more obvious ways to their workforce, such as by offering socially conscious 401(k) investments, providing stipends to buy or lease electric cars and creating gardens where staff can grow food.

Such actions put them in the middle of one of the country’s most divisive issues. President Donald Trump has openly questioned the existence of climate change. Supporters lauded his decisions to pull out of the Paris Agreement, an international accord to fight climate change, and slash regulations at the Environmental Protection Agency. But others look at the recent rash of floods, wildfires and dramatic temperature swings as signs that the earth is in danger. Rep. Alexandria Ocasio-Cortez, D-N.Y., and Sen. Ed Markey, D-Mass., proposed a Green New Deal, which aims to fight climate change and create new jobs through sustainable public works projects. And Washington state Gov. Jay Inslee is centering his campaign to become the Democratic nominee for president in 2020 on protecting the environment. 

Politicians aren’t alone in taking a stand. Larry Fink, chairman and chief executive of investment management firm BlackRock Inc., has been telling other corporate leaders that their missions should reach beyond making profits to also improving society, including adopting policies to address the environment. Hearing that from the head of a company with $5.98 trillion under management as of last December is likely to spark interest from C-suite executives. In the 2019 edition of his annual letter to fellow CEOs, Fink reiterated that BlackRock would assess companies’ strategies for dealing with climate change as part of its investment strategy. 

“We have heard from some companies that if the federal government isn’t going to step up [on climate change], then we will have to take a stand,” says Taryn Holowka, senior vice president of marketing, communications and advocacy at the U.S. Green Building Council (USGBC), a nonprofit that promotes the design, construction and operation of environmentally sustainable buildings.

The Corporate Shift to Green Practices

In 2000, the USGBC started LEED, or Leadership in Energy and Environmental Design, a system that rates buildings based on seven factors, including location and transportation, water efficiency, materials and resources, and indoor environmental quality. There are four levels: certified, silver, gold and platinum. A point system measures actions such as reducing carbon emissions, reusing rainwater and providing green spaces to determine the ranking.

Last year, 33,644 buildings/spaces in the U.S. had achieved LEED certification—roughly 15 times as many as a decade ago. Companies aren’t constructing LEED spaces as a public relations ploy. Studies show it’s a wise business decision.

Seventy percent of people said that when choosing a job, they would be more likely to select one at an environmentally conscious company, according to a study by Swytch, an Austin, Texas-based tech firm that distributes information on green-energy production. Nearly half of the 1,000 people interviewed said they would even be willing to take a pay cut to work at a company with green values and policies.

Beyond that, a Harvard study found that employees who worked in green-certified buildings scored 26 percent higher on cognitive function tests (controlling for annual earnings, job category and level of schooling) and had 30 percent fewer sick-building symptoms than those who worked in noncertified buildings. 

Still, not all companies are rushing to install solar panels, use LED lights, and set up compost and recycling stations. 

“There are still people who don’t believe,” says John Breman, a managing director at Willis Towers Watson. “The downside to [going green] is that there is a cost. We’re seeing more companies ease into being green than do it all at once.”

Some aspects of green construction can be more expensive than traditional methods, though savings on energy and water typically compensate for the increased expenses, experts say. Operating costs in new green buildings fell by a median of 8 percent after one year and 14 percent after five, according to a worldwide study of almost 2,100 engineers, architects, real estate owners and investors by Dodge Data & Analytics, a provider of information and services to the construction industry. In green-retrofitted buildings, median operating costs fell by 9 percent and 13 percent, respectively.

Maximizing ROI in Eco-Friendly Initiatives

The World Wildlife Fund (WWF), in preparation for LEED recertification of an eight-story building at its Washington, D.C., headquarters, is contemplating modifications to the numerous features that previously earned it a platinum rating.

The 251,707-square-foot building has a planted roof that helps stop rainwater runoff. That decreases the contaminants, downstream flooding and erosion that negatively affect waterways. It also reduces heat, because the surface is more reflective than a standard roof. The roof houses glycol panels that provide heating to the eighth floor and that use 10 percent to 15 percent less energy than traditional water heaters.
Image of a lush green rooftop garden on an urban building with various flowering plants and a winding pathway, showcasing an example of green building and sustainable design in a city setting.

The nonprofit considered installing a water treatment system, which uses ozone as the purification agent. It cost $80,000, and WWF wouldn’t see a return on the investment for five years. It decided against the purchase.

“We choose things through a cost-benefit analysis,” says Colin Hood, a senior property manager of Cushman & Wakefield, which oversees the building for WWF. “We consider the cost, whether it will make us more green and if it’s a worthwhile effort. In this case, the answer was no.” 

One aspect of WWF’s green program that will never change is “Panda Fridays.” WWF’s offices are closed every other Friday to conserve energy, and employees log longer workdays to make up the time.

Those days off are a significant recruitment and retention tool. “It’s the golden rope that keeps us all here,” says Jocelyn Quinitchette, WWF’s facilities senior specialist, noting that the benefit is good for the environment as well as employees’ work/life balance. 

The Competitive Advantage of Green Business Practices

Stok’s Goldsmith says that about 5 percent of job applicants ask about the fossil-fuel-free 401(k) and believes it helps differentiate the firm. The company is also based in a LEED-platinum building and has a zero-waste goal. Refuse at the office that can’t be composted or easily recycled is picked up by an outside firm that upcycles waste rather than sending it to a landfill. “We put our money where our mouth is,” she says.

As a health insurer, Blue Cross Blue Shield of Massachusetts (BCBSMA) believes promoting a healthy lifestyle for employees is part of its mission. All three of the Boston-based firm’s locations are LEED-certified. Two have gardens for employees to grow vegetables.

The company holds about 10 workshops a year for its gardeners and all employees to discuss topics such as seeds, storage and pest control.

“People are learning about healthy eating and nutritious food,” says Monica Nakielski, director of sustainability and environmental health at BCBSMA. “But we’re also supporting land use and regeneration agriculture.”

In addition to having the gardens, BCBSMA serves organic food and antibiotic-free meats in its cafeteria; 30 percent of the food is locally sourced to save energy. The insurer also provides employees the opportunity to buy produce in reusable boxes or bags delivered from two local farms. Employees can swap items they don’t like with colleagues, and nonprofits receive any excess food.

“At the end of the day, we have no waste and support economic development,” Nakielski says. 
Photo of a smiling woman in a green shirt and sunglasses, kneeling in a community garden filled with vibrant vegetables, holding ripe tomatoes in her hand, representing individual participation in sustainable and green activities.

Bank of America has had an extensive, comprehensive green program since 2007 that touches all aspects of its operations, from clients to employees. That year, it vowed to deploy $20 billion in capital to support sustainable businesses through services including lending, investing and capital raising. It met that goal four years ahead of schedule and has financed more than $126 billion to sustainable business activities to date. It has pledged to deploy another $300 billion in capital by 2030.

“We realized we have a role and responsibility in helping develop a sustainable economy,” says Rich Brown, senior vice president and environmental program director at Bank of America. “We do it through deploying capital to help accelerate that transition.”

The bank also leads by example. In 2011, it started the My Environment program, a voluntary initiative that gives employees ways to learn more about the environment and become better stewards of the planet by offering a range of activities, from webinars to volunteer opportunities. The group has 24,000 members in 30 countries.

It also helps employees reduce their energy use. For example, U.S. employees can receive up to a $1,000 rebate on a new, first-time purchase or lease of a SunPower solar system. Employees in the U.S., Canada and Europe also receive funds for buying or leasing electric, battery electric, plug-in hybrid and fuel cell electric vehicles. The reimbursement in the United States and Canada is $4,000 for a purchased car and $2,000 for a leased one. A 20 percent discount on home charging stations is also available.

“The environmental benefits are part of a comprehensive approach to make Bank of America an attractive workplace,” Brown says. “Employees and prospective employees rate employers on a whole host of ESG [environmental, social and governance] issues, so offering benefits connected to that goal of accelerating a low-carbon economy is consistent with our overall business approach.”

 Tips for Creating a Green Office

Provide reusable cutlery, plates and cups rather than disposable items.​

Stock healthy snacks from local producers.​

Distribute recycling and composting bins around the workplace.​

​Buy sustainable furniture and donate old chairs, desks and cabinets to nonprofits.

​Decorate the office with real plants and arrange desks so employees see as much natural light as possible.

Use LED lightbulbs and install sensors to automatically turn off lights when spaces are unoccupied.

​Install low-flow toilets and fixtures.

​Clean with nontoxic, biodegradable products.

​Set up bike racks and build showers to encourage cycling to work.

​Dedicate prime parking spaces for those who carpool or drive electric or battery-operated vehicles.

Case Studies in Corporate Sustainability Efforts

Other firms are looking at how they can make their workplaces even more eco-friendly. Last fall, San Jose, Calif.-based PayPal Holdings Inc. hired Jaxon Love to be its new global lead of environmental sustainability. He has been delving into the company’s operations to determine its energy use and considering ways to reduce it. One bulding in its headquarters complex is LEED-gold. 

“It signals we take this seriously,” says Love, adding that there is more the firm could and will do going forward. 

“We have stakeholders who want us to be transparent about energy use,” he says. A company survey of employees found that education and the environment are the two causes that most interest them.

In honor of Earth Day on April 22, PayPal is rolling out an online platform to get its employees more engaged and involved in preserving resources and eliminating waste. Through Benevity, a provider of workplace charitable programs, employees will be able to learn how to reduce their carbon footprints. The app will tell employees how much energy they can save by taking shorter showers or biking to work just once a month, for example. It also allows employees to challenge their colleagues to adopt environmentally friendly habits through various contests. 

That will build on efforts that employees have been organizing themselves. For example, the company’s employees in Ireland are working to reduce their use of plastics, while those in Milan are spearheading an initiative to eliminate disposable cups. 

“In Europe, they tend to be five to 10 years ahead of us in taking environmental initiatives,” Love says. “But we have employees here that are very passionate, too.” 

Theresa Agovino is the workplace editor for SHRM.


Explore Further

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Happy employees can be energized by more than casual Fridays and chocolate doughnut Mondays. Your company’s sustainability initiatives can be a source of pride for your employees—if they’re invested in those projects.
The December 2017 passage of the Tax Cuts and Jobs Act made profound changes in the federal tax code, and some of those changes include how employers provide commuting benefits to their workers.
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