How Will You Prove You're Green?

March 30, 2011
According to a recent MH&L Reader Quick Poll, to many of you, LEED certification isn't worth the paper it's printed on. Some think it's a scam to make the lefties in the “Green Conspiracy” a little greener—financially, that is. Another sizable number of ...

According to a recent MH&L Reader Quick Poll, to many of you, LEED certification isn't worth the paper it's printed on. Some think it's a scam to make the lefties in the “Green Conspiracy” a little greener—financially, that is. Another sizable number of you don't even know what LEED is. Then there are those of you who've spent a considerable sum to get this piece of paper, to either please or win green-conscious customers or to live up to your own company's commitment to environmental sustainability.

LEED stands for Leadership in Energy and Environmental Design, and it's a program developed by the U.S. Green Building Council (USGBC) to “provide building owners and operators a concise framework for identifying and implementing practical and measurable green building design, construction, operations and maintenance solutions.”

In other words, it's meant to prove your operations aren't damaging or wasting our natural resources. Earning this piece of paper costs quite a bit of money

I've seen estimates that getting LEED certified can cost anywhere between 1.5 and 2.5 percent of a construction project. Only a few years ago it was thought that this was only suitable for office buildings, but now big companies like Kraft in the food and beverage world and McKesson in pharmaceuticals are certifying their distribution centers too.

However, some big companies with a pedigree in environmental sustainability, while certifying their office buildings and retail outlets, choose not to LEED-certify their DCs. For example, IKEA, the home furnishings retailer, has LEED certified stores in key markets—not only to make an environmental difference, but to make a difference with customers as well.

I talked with IKEA's community relations manager when I learned about their use of “BigAss fans” to help make better use of their heating and cooling spend in their warehouses. They also use these fans to make customers in their self-serve warehouses more comfortable. Ms. Minister says IKEA customers expect these stores to be run sustainably.

“The customers in Portland want to know they're shopping somewhere these things are thought of,” she told me. “That's why one of the things IKEA has been doing for a long time is flat packing our furniture. We can get more in shipments and that cuts down on the shipments themselves. We have fewer shipments because of that and that saves on CO2 emissions. Since we opened (in Portland) we've been able to increase our use of green energy in the store by 42%. We're constantly working to get that number higher. We buy at the platinum level green energy through our local power provider and with conservation we get that number higher. The fans help.”

One thing to note, however, is while IKEA is pursuing LEED certification for its stores, it's not doing so for its DCs. Why not? Here's what IKEA's public affairs officer, Joseph Roth, told me when I asked him:

“While we strive to implement as many sustainable building practices (physically and operationally) into our distribution centers, there are more and varied opportunities to receive LEED points (and thus certification) with stores/offices than warehouses where there is a more straightforward construction process. IKEA has its own standards and has chosen to pursue and receive LEED certification only for a store in a each region of the country, and its North American service office.”

An argument for LEED certification could be made by saying that big supply chain partners may want to see documentation of what you're doing to support their sustainability initiatives. They may not say you need to get LEED certified, but they may still want some kind of proof of your sustainability initiatives.

Thomas Taylor, general manager and founder of Vertegy, a sustainability consulting firm that has helped 28 buildings earn LEED certification since it was founded six years ago, described this certification as a kind of shorthand way to answer all those questions. In fact he had to convince Anheuser Bush that LEED certification was right for them.

“We said one of the reasons could be you have share holders and they want to know that when you spend their money you're doing it prudently and you can do all these things that are defined in the LEED rating system,” Taylor said. “But do you really want to take the time in a corporate report to explain all that or do you just want to say ‘We do a good job from a sustainability aspect and our building was vetted by the U.S. Green Building Council and we received a rating of X.'? For some people that's a legitimate reason to say let's do this.”

Others, like IKEA, choose the document-it-yourself approach. Either way, Taylor cites a McGraw Hill whitepaper that reports the results of a five-year study looking at the growth of Fortune 500 companies that have created an officer rank in their corporate structure that was either Chief Sustainability officer or compliance officer. Their conclusion was it will be more and more important for these companies to know the sustainability efforts of upstream and downstream supply chain partners.

The reason there haven't been many LEED certified DCs in the past is that material handling hasn't been addressed. That's changing, according to Taylor, because the current version of the program considers energy efficiency measures as well as air quality issues—as addressed by the afore-mentioned ceiling fans. Now certification takes into account the energy consumed by conveyors, stacker cranes, fans—anything that draws juice while supporting your handling operations.

Whether you've been blissfully ignorant of LEED or just ignoring it, it's going to be harder to do either of those as more and more of your supply chain partners and competitors look at LEED—and possibly take it.

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