Thursday, April 22, 2010

Happy Earth Day!

Happy 40th Anniversary! It was 40 years ago today that United States Senator Gaylord Nelson held an environmental "teach-in", an event which evolved into an international idea of planetary sustainability.

So join in, and take a step back, look at what can be done for the planet and each other. Don't worry, there's no need to buy a card (but feel free to put your creativity to the test and make an Earth Gift using only things you'd otherwise throw away)!

Sure, the mantra is repeated around the world this time of the year: "Earth Day Every Day" But what does that mean? Don't drive for the day? Recycle extra well on April 22nd?

Here at GreenProfit Solutions, we try to make that oft-repeated statement ring true. How? We consider the potential environmental impacts from nearly every activity we engage in.

As an example: From minimizing driving distances through combining stops to being as fuel-efficient as possible by avoiding rapid starts and stops as well as maintaining all vehicles, we seek to reduce our transportation footprint.

  • We seek to educate others about new progress made in sustainable projects around the world, and how to apply them here.
  • In fact, our Facebook fan page has over 50 links already speaking about exactly that.
  • The efforts don't end there, but, if interested, simply Contact Us for more details.

Interested in doing something exciting for Earth Day/Week? The Federal Government is hosting a number of discussions, roundtables, and various activities around the country. If you're in DC, take a moment to visit the NASA Earth Day area at the National Mall. Unable to make it to the nation's capital? Check out the Earth Day Network and search out events in your area.

Of course, more importantly than attending events is remembering the meaning of Earth Day. The first year was to point out glaring environmental ills: illegal dumping, polluted waterways, and toxic power plants. While these types of things continue to occur, there is more awareness and monitoring (from companies, the public, and EPA); it's in a company's best interest to be as environmentally-responsible as possible. Today, Earth Day should be looked at as a way to bring people together, independent of the dividing forces, in a joint effort to make the world we live a better place. Sustainability is a continually-evolving goal; why not approach it together?

So what are you doing for Earth Day?

Joseph Winn is the President of GreenProfit Solutions, Inc. a sustainability consulting, certifying and contracting firm. For more information, please contact Joseph at 1-800-358-2901 or email [email protected].

Monday, April 19, 2010

Clothing - The Forgotten Piece of a Business' Sustainability Program


You have it, I have it, but do we know that much about it? Sure, we deal with it every day, and it’s with you nearly all the time. I’m talking about clothing of course. So common, it often becomes the overlooked item in sustainability initiatives. Recycled content, chlorine free, certified paper? Check. Energy efficient lighting (with recycling program for spent fluorescents)? Implemented years ago. Company uniforms? Well, yes. What about them?

Clothing has a variety of impacts, depending on the type, content, and cleaning style. The material may be produced using large amounts of pesticides, chemicals, and even unsustainable forestry activities. Shoes using leather, suede, or rubber, as a start, can also be sites of concern. Even the traditional “dry cleaning” operation emits enormous concentrations of pollutants, while some of the chemicals may remain within the garment. So are there alternatives?

In fact, there are many ways to reduce the environmental and social impacts of a wardrobe.

Cotton

Let’s start with cotton. A wonderful, soft material that has been the staple of many regions for over a century. Today, the vast majority of cotton in clothing comes from conventionally grown crops; these can be sprayed with any number of pesticides and fertilizers. This promotes a monoculture, or single-crop, situation. The natural properties of the land are rarely attended to, so more fertilizer and soil will constantly be required, thus entering a continuous cycle. According to the Organic Trade Association, organic cotton is “grown using methods and materials that have a low impact on the environment. Organic production systems replenish and maintain soil fertility, reduce the use of toxic and persistent pesticides and fertilizers, and build biologically diverse agriculture.” Currently, nearly 1% of global cotton production is organic, but it is growing fast. Sales in some product categories are increasing nearly 50% annually. Consider organic cotton for the next set of company clothing runs and make a difference!

Small addition: In personal experience, organic cotton is often softer than the conventional equivalent, but seems to shrink more on the first wash. Plan size orders accordingly.

Bamboo

It’s not just for floors! The latest trend in sustainable fashions, bamboo clothing has a lot going for it. The plant is one of the fastest growing on the planet, doesn’t require large amounts of pesticide or fertilizer, and can be grown organically. However, is it really as “green” as retailers would have customers believe?

  • In the effort to climb aboard a growing fad, bamboo plantations are showing up around southeast Asia. Some of these plots were previously productive forest, home to countless species of plants and animals.

Sustainable and deforestation don’t go well together.

  • The process of converting the fibers of bamboo into soft clothing requires using strong chemical solvents. These may end up in emissions, wastewater, and even in the final product (Yes, what you’re wearing). Unfortunately, don’t expect a unique approach to the process, as all bamboo clothing is produced at only one facility in China.

Sustainable and water/air pollution also are unwelcome bedfellows.

In fact, according to the Federal Trade Commission (FTC), bamboo fabrics are nothing of the sort. In August 2009, they issued a Consumer Alert regarding the sale of bamboo. Here’s a small segment: “The Federal Trade Commission, the nation’s consumer protection agency, wants you to know that the soft ‘bamboo’ fabrics on the market today are rayon. They are made using toxic chemicals in a process that releases pollutants into the air. Extracting bamboo fibers is expensive and time-consuming, and textiles made just from bamboo fiber don’t feel silky smooth. There’s also no evidence that rayon made from bamboo retains the antimicrobial properties of the bamboo plant, as some sellers and manufacturers claim. Even when bamboo is the ‘plant source’ used to create rayon, no traits of the original plant are left in the finished product.

The Verdict

So, while the use of bamboo in furnishings can be a sustainable endeavor (with the use of low-VOC adhesives and varnishes), it would appear that, for now at least, bamboo just isn’t the bright green clothing item we would all love it to be. However, it is also not the worst, as the benefits on the plant growth side cannot be ignored. Examine the material options available for your needs and budget, then see, if, despite the negatives, bamboo really is your best environmental option.

Look for the second part of sustainability in clothing for information on dry cleaning, shoes, and other common clothing concerns.

References
Organic Trade Association - Organic Cotton Facts
FTC - Have You Been Bamboozled by Bamboo Fabrics?

Joseph Winn is the President of GreenProfit Solutions, Inc. a sustainability consulting, certifying and contracting firm. For more information, please contact Joseph at 1-800-358-2901 or email [email protected].

Friday, April 16, 2010

Cutting Costs with "Green" Tax Incentives - Part 1


The Energy Policy Act of 2005 (EPACT) is one of the most comprehensive and sweeping energy legislation packages ever passed. Signed into law by President George W. Bush on August 8th, 2005, the bill authorized massive tax benefits, reductions and deductions, plus loan guarantees in an effort to spur action on a new energy policy.

Buried among these voluminous new initiatives now part of the IRS Tax Code, was the new Deduction of Energy Efficient Buildings granted under Title 26, now known simply as Section 179D. Specifically, Section 179D offers substantial tax benefits to commercial property owners to upgrade their buildings and make them more energy efficient. The legislation was targeted to expire in 2008, however, the American Reinvestment and Recovery Act of 2009 extended the benefits of this bill through 2013. Perhaps due to the enormity of the legislative package, or a lack of understanding, the IRS reports that less than 2% of all commercial property owners have taken advantage of this tax saving opportunity.

There are special rules for government owned buildings, wherein the tax benefits may be transferred to a project manager or architect, but for purposes of this article, we will focus on how banks, as building owners and leaseholders, can leverage these benefits.

About the Actual Deduction

Under Section 179D, deductions are based on areas of energy savings and total square footage of a building. The regulation provides commercial building owners and leaseholders with a deduction for implementing energy-efficient commercial building property in their buildings between December 31, 2005, and January 1, 2013. The deduction is available whether the respective space is new construction or already existing and applies to the year in which the energy-saving property was made ready for its intended use. It is divided into three categories:

  • Lighting
  • HVAC & hot water
  • Building Envelope

The maximum deduction of $1.80 per square foot requires a 50% reduction in total annual energy and power costs (compared to a reference building that meets the minimum requirements of American Standard of Heating, Refrigeration and Air Conditioning Engineers (ASHRAE) 90.1-2001), not to exceed the amount equal to the cost of energy efficient commercial property placed in service during the taxable year. A partial deduction of $.60 per square foot requires a 16 2/3% reduction in energy consumption, and can be achieved through improvements in one of the previous 3 categories (Lighting, HVAC, Building Envelope). With recent technological advances in lighting, as well as the generally lower costs compared to the other categories, this deduction is considered the “lowest hanging fruit”. A partial deduction for Interim Lighting affords the bank a deduction between $.30 - .60 per square foot and requires a 25 – 40% reduction in lighting power density (50% in the case of warehouses). As many banks have multiple branches, and this is a per building incentive, the deductions can be quite substantial.

To summarize:

Improvements can be made in three categories

  • Lighting
  • HVAC
  • Building Envelope
  • Each can achieve a $0.60 deduction per sq. ft.
  • Lighting is considered the “low hanging fruit” due to rapid ROI and lower upfront costs

Three Year “LookBack”

What about banks which may have already made significant investments in energy upgrades? Fortunately, the IRS rules allow banks to take deductions on qualified upgrades completed during the 3 prior tax years. For qualifying institutions, this is simply found money.

Certification of Qualified Property

To insure receipt of expected credits, the taxpaying entity must certify the property meets all energy-conservation claims, and establish the total annual energy savings required for obtaining a partial deduction. The guidelines provide information about the software programs that must be used in calculating these power and energy expenditures.

Additionally, the property must be certified as an energy-efficient commercial building property by a qualified individual. These individuals may not be related to the taxpayer and must be an engineer or contractor properly licensed in the jurisdiction where the building(s) is/are located. The certification need not be attached to the tax return, but Section 1.6001-1(a) of the IRS regulations state that taxpayers are required to maintain books and records that would satisfy investigation into the applicability of the deduction.

Note: The preceding article is not legal nor accounting advice and should not be relied upon without the advice and guidance of a professional Tax Advisor familiar with all relevant facts. It is always highly recommended that you consult with your own attorney and accountant regarding any IRS Tax Code issues.

Joseph Winn is the President of GreenProfit Solutions, Inc. a sustainability consulting, certifying and contracting firm. For more information, please contact Joseph at 1-800-358-2901 or email [email protected].

Wednesday, April 14, 2010

New SEC Guidance on Climate Change Risk Disclosure - Part 1


What does the Securities and Exchange Commission (SEC) have to do with sustainability? On January 27th, 2010 the SEC published guidance for public companies on the reporting of impacts potentially contributing towards climate change. Additionally, they disclose the effects climate change may and can have on a company’s profitability. While some public and corporate officials are stating that the risks cannot as yet be properly assessed and the requirements are premature, most major investors, which have been supporting the new guidelines, are pleased. Why has the SEC taken this action and is this information really pertinent to an investor?

Let’s take a look at what has been occurring over the past decade. Many states and local governments have enacted their own legislation resulting in greater regulation of greenhouse gas emissions (GHG). GHG legislation on climate change is currently pending in Congress after the House of Representatives approved a bill, later amended in 2009 by the Senate, to limit a company’s emissions of greenhouse gases through a system of “Cap and Trade”. Even the EPA has begun to require large emitters to disclose and report their data.

Since the 1990’s, 186 countries have supported the efforts of the Kyoto Protocol, and the European Union Emissions Trading System (EU ETS) which is the mechanism that controls the Cap and Trade system of allowances and credits for carbon and other greenhouse gases. While the U.S. has never ratified this treaty, U.S. companies doing business in those countries are required to comply.

Climate change risk has not gone unnoticed by the insurance industry. In their 2008 report, major investment firm Ernst & Young stated that climate change was the top strategic risk. They explain it as being, “long-term, far-reaching, and with significant impact on the industry” (Climate Change Greatest Strategic Risk to Insurance Industry). It remained on the top 10 for 2009 (Top 10 Risks Most Likely to Affect the Insurance Sector During 2009). Partially as a result of these reports, the National Association of Insurance Commissioners (NAIC) created an industry standard of mandatory disclosure. Designed for state regulators, it highlights potential financial risks due to climate change as well as actions taken to mitigate them. New actuarial models are in development along with new products specifically designed to cover these new risks.

So what are the risks to a public company? Legislation and new regulations can certainly have a significant effect on capital expenditures. Cap and trade allowances could also force a high emitter to buy credits, creating a negative effect on cash flow. Even companies not subject to new regulations could be affected if their own supplies and services are suddenly only available at a higher cost. As with any challenge, there will be companies well-positioned to benefit from current and proposed legislation. For example, those with “credits” (businesses emitting below their quota) may be able to sell them as investment instruments to improve their own capital position.

Let’s not forget the potential physical effects of climate change. Sea level rise, melting of permafrost, availability of clean water, greater temperature extremes, and increase in storm intensity can all have deleterious effects on a company’s operation and even demand for their products. For example, warmer winters may reduce seasonal demand for heating supplies, while a burst of extreme cold can overwhelm distribution infrastructures; banks holding significant debt in coastal properties could be at higher risk; drought or flooding could negatively impact agricultural firms.

According to the SEC, the new disclosure guidance is simply an extension of regulations pertaining to environmental issues implemented in the early 1970’s. Focused primarily on disclosure guidelines, the original rules sought to monitor compliance regarding material discharge and environmental protection, for use in potential litigation. The current standards have evolved to “provide that information is material if there is a substantial likelihood that a reasonable investor would consider it important in deciding how to vote or make an investment decision, or, put another way, if the information would alter the total mix of available information.” (SEC Release #33-9106 (PDF))

To the CFO, properly assessing risk can be a complex issue, especially when considering the effect climate change may have on future company operations. Granted, there is a delicate balance in disclosure between compliance and stock valuation and demand. Currently, companies who are making some efforts on disclosing climate change risks are simply “burying” them in their 10-K form. It appears this practice is no longer acceptable with the new guidance requirements.
Are there any actions a company facing climate change risks may employ to comply with the full disclosure requirements and still show the company in a positive light? One method suggested is certification, primarily through an internationally recognized program and certification body. The International Standards Organization (ISO) has developed their ISO 14001:2004 Environmental Management System to assist companies in developing or transitioning to more sustainable systems and practices. Their newly developed standards ISO 14064 and 14065 provide an internationally accepted framework for measuring GHG emissions and verifying claims.

In our next article, we will examine the details and requirements of the new SEC guidance, discuss the potential benefits of a certification program, and also measure the relevance this action has on non-public companies.

Keith Winn is the VP Marketing/COO of GreenProfit Solutions, Inc. a sustainability consulting, certification, and contracting firm. You may contact Keith at 1-800-358-2901 or email [email protected].

Thursday, April 1, 2010

*April Fools 2010** - Important Announcement

The past year has been full of promise, achievement, and wonder for my company, GreenProfit Solutions. We have assisted numerous businesses in becoming more effective stewards of the global environment and their community. Additionally, the entire structure changed when a new partner was brought aboard. I stubbornly relinquished the title of CEO, and am now relegated to simply, President. However, (massively important) titles aside, our efforts have been impressive. Once a simple “green business” program, the offerings now range from comprehensive sustainability assessment services, product retrofits, ISO consulting/certification, and employee teambuilding exercises.

Not too shabby for a new business.

Of course, nothing can remain the same for long, and as the times change, so will we. No longer is it worth “sticking to our morals” for a single cause, even if it may be one which will guide the future of our planet. Hot off the heels of the President’s recent announcement of offshore drilling expansion and Google’s name change to Topeka, we, too, will be making some changes. Dismayed with the progress of “sustainability” and “green” in society, GreenProfit Solutions has decided to “follow the dollar” and make a shift in industry: Coal and petroleum extraction systems.

“Pump, baby, pump” will be the new slogan for the company. Or “dig, you, dig”, really, whatever gets the uninsured and underpaid employees to pull that energy-rich fuel out of the earth.

Solar, wind, geothermal, you ask? Solar is just some light, and why harness light when you can create it with wonderful incandescent bulbs! Psh, can you hold a pound of wind? What about geothermal? No, because you’d burn your hand on the molten lava (which we do not cover our employees against, so don’t do it). The future is in the oldest stuff we can find, because, to be honest, it’s cheap for us, and we can charge whatever we want for you, our forever customer!

So to better reflect our commitment towards this end, we will be changing our name to Fool’s Gold Power, at least for today. Because, since we’ve completely abandoned our morals and beliefs, we may do something entirely different in the future.

Don’t be surprised if we’re GreenProfit Solutions again tomorrow.