Thursday, February 23, 2006

Sustainability as a 'Competitive Necessity'

That's what Canadian telecom Nortel Networks believes. From Nortel's customers, who are making long-term, billion-dollar purchasing decisions and don't need any added risk from loss of networks due to wear and tear, the topic is increasingly important (as it is to the European regulators issuing directives to electronics manufacturers). And that makes environmental sustainability more than a nicety — it's a competitive necessity. Just look at the company it keeps on the Dow Jones Sustainability World Index: Alcatel, Cisco, Ericsson (the sector leader), Motorola and Nokia — Nortel's biggest rivals.

Much of the focus at Nortel and its peers is product stewardship — a big part, as it turns out, of how Sustainable Asset Management Group, which compiles the index, assesses the companies' sustainability. "We want to make sure that companies are aware of the impact of the products that they manufacture," says Edoardo Gai, senior analyst with the Zurich-based firm.

Nortel closely manages its products' life cycles, from the design stage through to what happens to the equipment when customers replace it, and everything in between, including such aspects as use of hazardous materials and energy efficiency. The company adheres to "design for environment" principles, which seek to eliminate negative environmental impacts before a costly product is created, and it is now investigating better analytical tools to automate the process of examining all the variables that go into determining an optimal design.

At the other end of products' life cycles, Nortel offers to take its customers' old telecom gear — whether it was originally from Nortel or not — and strip it down for re-use, if possible, or sold for scrap. It's a cost-neutral program (at minimum) that offers a nice customer benefit and also helps the landfills.

Is it just me, or does this look like truly healthy capitalism? Consumers demand greener products, and companies compete to supply them. Furthermore, this has got to be saving these companies money -- a win-win all around. The article leads off by noting that Nortel has had its share of ethical problems (sounds even a bit Enronish), so one might be tempted immediately to label this a PR move. But, its clearly good business! Very cool...

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