Green Spot: United Technologies: Think Global, Act Global

Nov. 8, 2007
The $48 billion corporation of 2006 is using 19% less energy than the $24 billion company of 1997. Here's how.

A lot of people don't know United Technologies Corp. (UTC) -- but they should. After all, with quite a few household name brands (Carrier heating and air conditioning, Sikorsky helicopters, Otis elevators and Pratt & Whitney jet engines, among others) and around $50 billion in yearly revenues, this diversified global enterprise provides some of the most innovative and respected research-driven manufacturing on the planet. As director of environmental programs Paul Vitello points out, UTC has been in the fuel cells business "since 1958," and with 110 million sq. ft. of real estate for production and sales, the company's manufacturing footprint is a large one.

However, UTC is looking to change that dynamic in a big way. Vitello credits UTC CEO George David, who has held the position since 1992, for pushing his passions for developing efficiency and reducing waste through the company, and for aggressive sponsorship of a program to minimize environmental impact despite an equally aggressive company growth strategy.

"It's paid off," Vitello observes. "The $48 billion corporation of 2006 is using 19% less energy than the $24 billion company of 1997."

Switching Drivers

UTC had been measuring greenhouse gas emissions for some time, but not acting directly on the information it was collecting. Instead, energy reduction was the focus of the company's environmental programs. However, in 2006 the executive leadership made the decision to "switch drivers," and move from measuring and reporting energy use reduction to a greenhouse gas reduction-based model.

"Our goals apply to any UTC facility around the globe -- any place, anywhere, of any size," says Vitello. This standardized framework of emissions reporting means the same percentage reduction goals, whether the targeted facility is a huge Pratt & Whitney engine plant with thousands of employees, or a Carrier HVAC storefront service shop "with five guys and a van."

To achieve this, UTC has developed standard practices that each company and facility is required to use. "We put together an energy management guidebook to teach our facilities people and managers what to do with their electric bills, with their purchasing," Vitello said. And since the program is backed at the highest organizational level, a "no excuses" policy prevails throughout the global organization. "No matter if you're a plant, or a small sales office, you're still responsible for meeting that 12% target," he said.

Think Global, Act Global

With 60% of its revenues coming from overseas, UTC has made its goals global in scope. "It doesn't matter to us if the facility is in the U.S., the EU, or Asia," he says. "Every single one of our facilities has the same targets. Any of the projects we've done, we go country to country, run best practices workshops and audit facilities."

"After our facilities go through their SP17 audits, they take the projects, enter them into the database and we track them over time as they're implemented. We ask for kilowatt hour reduction, greenhouse gas reduction and cost reduction."

Vitello encourages manufacturers to join the EPA Climate Leaders program, saying: "I would really encourage you to look into the program -- they have great resources and it doesn't cost you a thing. And they don't just put the resources out there -- they pay to come out and help you establish your programs."

As far as the thorny question of standards, Vitello and UTC use the greenhouse gas protocol developed by World Resources Institute and the World Business Council for Sustainable Development, and break their emissions data into several "scopes" for development of a credible carbon footprint. According to Vitello:

  • Scope one is direct emissions under your operational control;
  • Scope two is emissions from the generation of the electricity purchased by the company; and
  • Scope three is product impacts, supplier impacts and employee impacts.

"While we don't have to include scope three emissions into our reporting, we felt it was important to include business travel in our emissions footprint calculations and reduction goal," he says.

Scope one and two have a lot to do with basic conservation and manufacturing efficiency issues, and according to Vitello it boils down to everyday decisions in purchasing, facilities and the like.

"Maintenance is also key -- you have to maintain the efficiency of your older systems," says Vitello. "That's just low-hanging fruit. Also, if you're buying a chiller, it's going to be there for 20 years, and you'll be stuck with it long term, so you've got to look at maximizing efficiencies in your equipment decisions."

Along similar lines, all new construction from UTC will be LEED-certified to take advantage of the latest efficiency upgrades and waste reduction strategies. Vitello says that the "green building" phenomenon is misunderstood as far as the real value is concerned. "Most people understand that a sustainable building is something they would like, but they grossly overestimate the costs, and underestimate the benefits."

As far as scope three emissions reporting, UTC is just one of a growing number of large global manufacturers who have begun to take a closer look at their supply chains.

"It's about business risk management," he says. "What we're looking at now is a set of expectations for key suppliers. We want to make sure that suppliers we do business with are abiding by the laws of the land, and have a good idea of what their environmental footprint is."

To use a rapidly vanishing metaphor, this focus on their direct suppliers is just the tip of the iceberg, says Vitello. "We go into our suppliers' facilities and assess them," he says. "We want them to be looking at their suppliers too, and over time, we will continue to develop more and better data collection from our supply chain."

The Bottom Line Is The Bottom Line

The best thing about the viewpoint, often cited by UTC CEO George David, is that it's a practical, common-sense business value. "I don't care if you make the argument that all this is good for the environment, even though it is," Vitello says. "The bottom line is, energy and greenhouse gas reduction is also going to save you money and that is good for the business."

For more features like this, see Green Spot: Best Practices in Sustainable Manufacturing. To participate in IW's Green Spot leadership in manufacturing program, email IW Making Green Editor Brad Kenney to start the application process.
About the Author

Brad Kenney | Chief Marketing Officer

Brad Kenney is the former Technology Editor of IndustryWeek and now serves as director of the mobile/social platforms practice at R/GA, a global marketing/advertising firm in New York City.

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