It is no small feat to reduce energy use and carbon emissions across a multinational corporation, while still growing sales.
Johnson & Johnson, a leading provider of health-care products and related services with more than 200 subsidiary companies in 57 countries, provides a unique example of success: It instituted a corporate strategy for carbon emissions reduction, backed up by a ten-stage checklist for increased energy efficiency at all its facilities and a $40 million annual fund to support greenhouse gas emissions reduction projects.
The company reports dramatic results. From 2003 to 2006, total sales increased 27% while energy use increased by only 0.5%, which means the energy intensity of sales during the three-year period actually decreased 21%.
Subsidiaries get money for upgrades
A cornerstone of this effort is the ten-stage checklist, known as Enhanced Best Practices (EBP). Adapted from the U.S. EPA's Energy Star standards, it includes 245 potential energy-saving facilities upgrades. Each of Johnson & Johnson's subsidiary companies is expected to implement all feasible upgrades that have a return on investment of less than five years.
When subsidiaries identify projects with a longer payback period, they can apply for financing from the $40 million annual fund, effectively removing two of the most common impediments to greenhouse gas (GHG) reduction projects: limited capital availability and short payback period requirements for capital investments.
In 2006, 20 capital projects were financed by the fund, which are reducing a total of 34,500 metric tons of GHG emissions each year.
Over the past decade, Johnson & Johnson saw an estimated $30 million annualized savings because of projects financed through the fund, which have an average return rate of 16%. Newly acquired subsidiary companies have three years to begin optimizing energy efficiency and reducing emissions.
Johnson & Johnson will also provide its Enhanced Best Practices materials free of charge to other interested companies.