Going green one DC at a time

As the public policy debate over global warming continues, sustainability initiatives in business seem alive and well. That's so despite the economic travails of the past two years. There are good reasons for that.

In our March issue, we will feature a story on one of the newer sustainable building initiatives in our segment of the business world. Jackson Family Wines, the Santa Rosa, Calif.-based winemaker that produces Kendall-Jackson and other wines, has opened a sprawling new distribution center in American Canyon, Calif., that will likely receive a silver—if not a gold—LEED certification from the U.S. Green Building Council (USGBC). As explained on the USGBC's Web site, the LEED—Leadership in Energy and Environmental Design—certification system rates buildings in five key areas: sustainable site development, water efficiency, energy and atmosphere, materials and resources, and indoor environmental quality.

Earning LEED certification does require some extra costs up front. But what companies like Jackson Family Wines understand is that designing a building to conserve energy and water, minimize emissions, and protect the health of workers and neighbors pays off throughout the facility's life. One example: the building cuts energy consumption—and costs—by 61 percent compared to a baseline used by the USGBC.

LEED certification in DCs and warehouses has gained significant traction in recent years. It surprises no one who's familiar with the companies' philosophies that outdoor-gear retailers like Patagonia and REI have built LEED-certified warehouses: their customers—hikers, bikers, kayakers, climbers, hunters, etc.—are likely to be sensitive to issues like that. But developers that don't have to answer directly to consumers have taken up the mantle as well. Two years ago, ProLogis, the giant distribution center developer, announced that all its new warehouses in the United States would meet LEED standards. At the time, the company said the decision was driven in large part by what its customers— bottom line-driven industries—wanted in their DCs. Jones Lang LaSalle, another large developer of DCs and other commercial properties, says it has more than 550 LEED-certified professionals on its worldwide staff.

The role of government in encouraging sustainable development with both carrots and sticks cannot be ignored, of course. And certainly businesses must accept responsibility for the effect their operations have on the environment. Whether or not you acknowledge the science on global warming, it's hard to argue that cleaner air isn't a good thing. (As an aside, I've yet to see evidence from the skeptics that we can continue to pump endless amounts of carbon into the atmosphere without affecting the climate, but that's for another time.)

It is true that incentives, rules, and good corporate citizenship provide powerful incentives to develop green DCs. But as Jackson Family Wines' experience suggests, it is also just good business.