The Carlyle Group, the massive investment firm, and the Environmental Defense Fund have created EcoValueScreen, a business process tool that will help Carlyle determine the eco-worthiness of potential acquisitions and opportunities for fine-tuning the operations of these businesses after they get gobbled up by Carlyle.
The overall idea is that costs or liabilities can be wrung out of most existing companies because energy and fossil fuel-based products aren't used in optimally efficient ways today. The tool will examine, for instance, whether a potential acquisition target could become more profitable if new transportation strategies were implemented or whether more eco-friendly packaging materials could reduce shipping and manufacturing costs. ("Upping the wood chip content of chewing tobacco by 17 percent could reduce operating costs by 6 percent," some MBA tinkering with EcoValueScreen one day may conclude.) If the company gets bought, Carlyle would ideally implement the plan, showcase the new profitability and then fob it off on someone else in time to accept the accolades of the investment world.
Carlyle has already examined 320 of the companies it owns or has owned in the past. The tool screens primarily for five factors: greenhouse gas emissions, water consumption, waste generated, forestry content and chemicals.
The move marks a further step in the evolution of the EDF. Years ago, it was seen as an left-leaning advocacy group. Fortune 500 companies didn't exactly look forward to the group's phone calls. Now, the organization tries to show large corporations the financial benefits of going green and how to implement eco-friendly strategies. Wal-Mart and the EDF recently unfurled a joint plan that will help the retail giant encourage its suppliers to "green" their supply chains.
In general, corporations are becoming more amenable to these ideas, said Elizabeth Sturcken, managing director of corporate partnerships for the EDF, in an interview that took place a few days ago. (We talked before this announcement.) During the planning phase of the Wal-Mart strategy, one particular food processor started off discussions by stating how the company did not want to hear about new types of feed or fertilizer. Later, the company became an advocate.
Some changes are also easy. Wal-Mart, for instance, will begin to affix labels to its house-brand clothing telling consumers that, yes, the clothes will get clean if consumers wash them in cold water. That behavioral change, if implemented, will curb the lifetime carbon generated by the shirt.