Cummins CEO says innovation, sustainability, and regulations are good for business

At Environmental Defense Fund, we believe that environmental progress and economic growth can and must go hand in hand. EDF+Business works with leading companies and investors to raise the bar for corporate sustainability leadership by setting aggressive, science-based goals; collaborating for scale across industries and global supply chains; publicly supporting smart environmental safeguards; and, accelerating environmental innovation.

This is the sixth in a series of interviews exploring trends in sustainability leadership as part of our effort to pave the way to a thriving economy and a healthy environment.

I’ve worked with many business leaders over the course of my career, and there are few more forward-thinking on sustainability and environmental innovation than Tom Linebarger, Chairman and CEO of Cummins, Inc.

As head of the largest independent maker of diesel engines and related products in the world, Tom has set lofty environmental goals for Cummins, including cutting energy intensity from company facilities by a third by 2020.

Under Tom’s leadership, sustainability and community engagement have become core parts of company culture – including efforts to establish technical education programs around the world to lift youth out of poverty and publicly favoring tough, science-based and enforceable environmental regulations.

I recently had a chance to catch up with Tom and learn more about the formation of Cummins’ sustainability goals and the importance of long-term protective standards in the trucking industry.

Here’s an edited transcript of our conversation.

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Walking the Walk: Companies Lead the Call for New Clean Truck Standards

A number of America’s most iconic brands helped pave the way for the new Clean Truck standards announced August 16th by the U.S. EPA and DOT. Nearly 400 companies, large and small, publicly urged strong, final fuel efficiency and greenhouse gas standards for heavy trucks.

Through their action, these companies have reaffirmed a basic truth of business today: to be a “leader”, companies must align their sustainability goals and strategies with their external engagement on policy.

Tom Murray, VP, Corporate Partnerships Program

Tom Murray, VP, Corporate Partnerships Program

While there are many differences as to how these 400 companies intersect with heavy trucks—manufacturers make the trucks, fleet owners drive the trucks, brands hire the trucks to move their goods to market—they are all unified by one resounding theme: cleaner trucks are better for their business, better for our health and better for the planet.

Indeed, common-sense efforts to cut climate pollution have gone mainstream in business. Earlier this year Microsoft, Google, Amazon, Apple and others raised the bar on corporate climate leadership by standing up for the clean power plan. Colgate-Palmolive, Hewlett Packard Enterprise, Nike, Starbucks and over 100 other companies built on this trend by urging “the swift implementation of the Clean Power Plan and other related low-carbon policies so that we may meet or exceed our promised national commitment and increase our future ambition.”

But this corporate support of the clean truck standards goes even further: it’s another step in the evolution of corporate climate leadership. This is beyond simply supporting good policy; a number of these companies are actively shaping it to deliver significant sustainability benefits. Among the companies that distinguished themselves in this effort are:

  • PepsiCo: the largest private fleet in the U.S. led the way in demonstrating the alignment between its sustainability objectives and its policy advocacy through an op-ed, and expert testimony.
  • Walmart, the 3rd largest private fleet in the U.S., was highly proactive and constructive in its engagement on the clean truck phase two program, supporting it with public statements, and expert commentary.
  • Cummins, FedEx, Eaton, Wabash National, Conway, and Waste Management joined PepsiCo in the Heavy Duty Leadership group that urged the EPA and DOT to: “Achieve Significant Environmental, Economic and Energy Security Benefits.”
  • Honeywell, Achates Power and a number of other innovators made clear that they were ready to meet the challenge of building more fuel efficient trucks.

There were hundreds more examples like these—each one of them a proactive leadership action that demonstrates the new frontier for corporate leadership.

Securing these protections was a real team effort.  The Pew Charitable Trusts organized a letter of support for strong standards signed by IKEA, Campbell’s Soup, and many others. Ceres brought forward a strong statement from General Mills, Patagonia and more. The Union of Concerned Scientists articulated how strong rules would benefit leading fleets, including UPS, Coca-Cola and Walmart. Together, these efforts marshalled an unprecedented level of corporate support for a critical piece of climate policy.

So, if your company is among the now hundreds of companies actively advocating for strong climate protection measures, thank you. We look forward to your continued leadership and engagement on other critical advances, including implementation of the Clean Power Plan and moving forward with reductions in methane emissions. We want to work with you to shape protective policies that also make business sense.

If, however, your company is still stuck at talking the talk, it’s time to start walking the walk when it comes to supporting common sense measures like the Clean Trucks program.

You’re falling behind the leadership pack in the one of the world’s most important races.

Accelerating the Shift to More Efficient Trucks

Freight transportation is the work horse of the global economy, ensuring that the products consumers want get on the shelves where and when they want them. With 70 percent of U.S. goods being moved by truck, freight is a key source of U.S. fuel consumption and corporate greenhouse gas (GHG) emissions. Today, freight also offers companies a key opportunity to drive us toward a lower carbon future.

pepsico-logoIn a Wall Street Journal op-ed with EDF President Fred Krupp, Pepsico Chairman and CEO Indra Nooyi voiced the company’s strong support of the new fuel efficiency and GHG standards for medium and heavy duty trucks released June 19th by the U.S. Environment Protection Agency and Department of Transportation. Over the life of the program, these robust standards will cut fuel consumption in new trucks by 1.8 billion barrels of oil and reduce carbon emissions by one billion metric tons.

Leading companies like General Mills, Walmart and Anheuser-Busch have made reducing fuel use and emissions from freight a priority in setting their internal supply chain performance goals. But Pepsico’s willingness to step forward with this op-ed is a prime example of how companies can extend their leadership by aligning their public policy stances on with their sustainability goals – what EDF has been referring to as the business-policy nexus.

Freight affects all of us, but business is in the driver’s seat

EDF - Building better trucksFreight transportation exists to serve companies that make or sell physical goods, from brands and manufacturers using trucks to bring in supplies and ship out final products, to technology companies needing trucks to deliver the hardware that powers their online services. While medium- and heavy-duty trucks only make up 7 percent of all vehicles on the road, they consume 25 percent of the fuel used by all U.S. vehicles.

Inefficient movement of goods wastes fuel, raises costs and increases environmental impacts. For firms like Pepsico, who maintain their own fleets, as well as those that contract out for freight moves, fuel is the single largest cost of owning and operating medium- and heavy-duty trucks. Truck fuel prices have increased 58 percent since 2009, a strong incentive for increasing the efficiency of trucks that move freight. Consumers are counting on businesses to solve this problem, as those costs are passed on to consumers. Through everyday purchases, the average U.S. household spends $1,100 a year to fuel big trucks. Strong standards can cut this expense by $150 on average a year by 2030. Read more

EDF Climate Corps Fellows Finding Gold in the Value Chain

Energy efficiency is a goldmine, but not everyone has the time or resources to dig. That’s why for the past seven years, over three hundred organizations have turned to EDF Climate Corps for hands-on help to cut costs and carbon pollution through better energy management. And every year, the program delivers results: this year’s class of fellows found $130 million in potential energy savings across 102 organizations.

But this year we also saw something new. In addition to mining efficiencies in companies’ internal operations, the fellows were sent farther afield – to suppliers’ factories, distribution systems and franchisee networks. What they discovered demonstrated that there is plenty of gold to be found across entire value chains, if companies take the time to mine it.

Here are three places where EDF Climate Corps fellows struck gold: Read more

Mission (Not So) Impossible: Turning challenges into opportunities

By Rachel Bourne,  2010 Climate Corps Fellow at Cummins, Inc., MBA candidate at Weatherhead School of Management, Case Western Reserve University, Member of Net Impact, LEED AP

What happens when existing green building certification and recognition systems, such as LEED or Energy Star, do not meet your building needs?

The only answer for many major corporations is: create your own building standards.

As a 2010 EDF Climate Corps fellow, my mission this summer was to create the business case for Cummins’ Global Building Policy, while reducing the company’s environmental impact. Cummins has made a voluntary commitment to reducing GHG emissions through the EPA’s Climate Leaders program.  With energy efficiency teams already in place at many Cummins facilities, my job was to incorporate these efforts by creating building standards for future building projects.

As a consultant, I’ve had the opportunity to work with building standards and prototypes for several Fortune 500 clients, many with some of the most sophisticated building programs in the world.  Working at Cummins, however, was my first venture into a company with more varied building types where I was given the opportunity to lead the strategic development of the Global Building Policy.  Initially, I ran into a few questions:

  • How do you create a standard for such a wide variety of building types and locations?
  • When does a standard become too specific? Or too general?
  • With so many stakeholders involved, who exactly is the audience?
  • How do I best present a business case for such a broad program?

While these questions may sound simple, for a company like Cummins that is  projecting growth and quickly sprouting new facilities, the answers are complex.  Despite the benefits associated with sustainable building standards, ranging from consistent corporate branding to increased energy efficiency, the process of creating standards is challenging for any corporation, regardless of size.  However, the majority of both the biggest challenges and opportunities tend to be consistent, regardless of the corporation or building type:

1. Consensus + Collaboration

How do we synthesize so many opinions and so much knowledge?

The process of creating a building requires careful collaboration of many minds, especially in a highly technical, manufacturing environment.  Getting input and reaching agreements between executive leadership, functional experts, design professionals and end-users takes time and finesse.  Additionally, between all those stakeholders there is a vast amount of knowledge that if leveraged correctly, will create high-quality standards.

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Climbing to the Peak of Organizational Efficiency at Cummins

By Margaret Rudolph, 2010 EDF Climate Corps fellow at Cummins, MBA candidate at Mason School of Business, College of William and Mary, Member of Net Impact

In rock climbing, both muscle power and endurance training make up a successful climb. An accomplished climber can climb for extended periods of time without forgoing efficiency. That same level of endurance is needed for a successful climb to a stable, organization-wide energy efficiency program.

Each company that hires an EDF Climate Corps fellow through Environmental Defense Fund is at a different point of its energy efficiency climb. I am currently completing my EDF Climate Corps fellowship at Cummins, an organization that is quite far along in implementing energy efficiency as part of its policies and forward-looking strategy.  The participating companies of EPA’s Climate Leaders program formalized these efforts with a commitment to reduce 25 percent of the greenhouse gas emissions below 2005 levels by 2010.

Over the past few years, Cummins has implemented a solid, self-developed employee training program called “Energy Champions” and created a number of initiatives to promote an energy efficient mindset among its employees. Frequent awareness campaigns target the entire employee population with top leadership presenting ideas on topics from water conservation to DIY building envelope evaluation. There is currently an ongoing process to transfer localized success into the broader scope of company culture. Read more