By Graham Russell
Often overlooked in all the sustainability literature on risk management, internal cost savings from reduced energy or water usage, improved employee loyalty and productivity due to better working conditions, wellness programs, etc. is the concept of sustainability-focused innovation in products or services as a source of market opportunity and new revenues.
This type of externally-focused approach to sustainability as a driver of improved financial performance is just as much a part of the overall business case for corporate sustainability as these internally-focused initiatives. Few companies illustrate this market-driven sustainability approach as clearly and successfully as Alpine Waste & Recycling.
Founded in 1999 in Denver, Alpine is the largest independent waste collection and recycling company in Colorado with current revenues of $34 million and a staff of over 200. Founder and CEO John Griffith explains that, unlike many other companies with a stellar sustainability track record, Alpine’s own sustainability strategy has been shaped almost entirely by market and revenue expansion opportunities rather than by risk mitigation or internal cost-saving drivers.
Though personally a believer in the importance of sustainability, Griffith always maintained that operational efficiency and service standards needed to be the primary focuses of Alpine to insure survival in an extremely competitive industry. However, in 2006 he realized that many of his customers were beginning to demand changes in the services provided by their waste handling vendors as part of their own evolving sustainable business programs. In particular, he saw that providing services that would divert increasing proportions of their waste from landfills would create added value in customers’ eyes and additional revenue opportunities for Alpine.
Accordingly, 2007 saw the formation of subsidiary Altogether Recycling, which began with the collection of single-stream recycling material and quickly followed by building what was then only the second single-stream recycling facility in the state. It is now Colorado’s second largest recycling plant, offering customers the widest range of acceptable materials and diverting an annual volume of 72,000 tons from landfills.
Recognizing that organic material now represented the largest component of its customers’ remaining waste streams still going to landfill, later in 2007 Alpine became the first company in the Denver metro area to collect this organic material and the first to create its own organic waste processing facility. The company now processes 7,100 tons of organic waste per year for 200 customers. The collected organic material is processed into a high-quality, nutrient-rich compost which it sells to the landscaping and agricultural industries.
Griffith is the first to admit that composting has been a difficult proposition from a money-making standpoint. However, Alpine’s compost volumes are increasing steadily as more and more (especially larger) companies are recognizing the need to divert food and other organic waste from landfills as part of their broader sustainability programs. He is also confident that farmers will increasingly recognize that the quality of the compost delivered by Alpine’s plant is superior to animal waste and other traditional forms of organic fertilizer material.
In planning and implementing these first major sustainability initiatives, Alpine did not rely to any great extent on outside help from consultants, but it did pay close attention to other companies in the waste industry in California that had already implemented some of the initiatives Alpine was just starting. Once again, unlike many companies that have approached sustainability initially from the standpoint of taking cost and waste out of internal operations, Alpine has never had a Green Team, relying instead on its executive team to plan and implement these major market-focused sustainability initiatives.
The success of these first endeavors showed Griffith that Alpine could create “an identity in our marketplace as the leader in sustainability initiatives." As a result, he and his executive team began to think more broadly about other measures that could further enhance the Alpine sustainability brand.
This led to a decision in 2010 to begin conversion of the company’s fleet of trucks from diesel to compressed natural gas (CNG), making Alpine the first company in its industry in Colorado to make this transition. CNG emits 21 percent fewer greenhouse emissions than diesel, and it's also a domestically-produced fuel. Unforeseen at the time, but ultimately an added benefit to Alpine, was the substantial drop in natural gas costs over the past several years -- its cost advantage over diesel currently amounting to $1.25 per gallon. It is especially well-suited to heavy vehicles that log large annual mileages and come back each night to a central location where a refueling plant can be installed.
The incremental cost of a CNG-powered vehicle versus a diesel truck is about $30,000, and ongoing maintenance costs are somewhat higher. However, federal tax credits offset a portion of the upfront capital cost penalty.
Alpine has also has secured an unexpected labor-related benefit based on the way the CNG vehicles are refueled. Each evening the returning diesel-powered trucks must be refueled at a conventional pumping station, an operation that can take as much as 15 minutes. The CNG-powered trucks, on the other hand, are simply plugged into the “slow-fill” CNG refueling system, and the driver is immediately available to use those 15 minutes for other productive tasks. Fifteen minutes a day doesn’t sound much, but multiplied by 40+ trucks and 250 operating days a year, it amounts to a significant labor productivity benefit. Taking all of these factors into account, company CFO Alek Orloff reckons that the annual ROI on the incremental upfront capital cost is in the range of 30 to 35 percent.
Griffith points out that the truck conversion project is a deviation from the firm’s normal approach to sustainability insofar as it represents an internal initiative as opposed to one that is driven essentially by a market opportunity. The financial return on the project has in fact been adequate, but the leadership team justified the move in large part on the grounds that “it fit with who we wanted to be in the industry”: namely, the sustainability leader. Perhaps it is after all a market-driven opportunity insofar as it leverages the company’s sustainable brand image in the eyes of customers. Fifty-one percent of the company’s trucks now run on CNG.
Part 2 of this article will show how Alpine has used sustainability-focused thinking to develop a service product that is unique in the waste industry.
Sustainability4SMEs: Graham Russell & Martha Young
Graham Russell brings 25 years of CEO experience in the environmental services industry to his current role as a sustainability professional. He currently teaches sustainable business in the University of Colorado, Denver MBA program and chair’s the School’s Managing for Sustainability Advisory Council. He provides sustainability and cleantech consulting services to SMEs through TrupointAdvisors and is on the board of the International Society of Sustainability Professionals.
Martha Young has been an industry analyst and writer for 20 years. Her expertise is in small and mid-sized businesses, information technology and energy. Young co-authored four books on virtual business processes (cloud computing), and project management for IT. She is on the board of two small Texas-based businesses, and acts in a technical advisory and business strategy capacity for an east coast venture capitalist.