Solid waste sector promotes environmental initiatives
Waste Management Inc. plans to spend hundreds of millions of dollars over the next dozen years to make its solid-waste operations more environmentally friendly.
The country’s largest solid waste company is not alone, however. All the major players in the solid waste sector are looking for ways to make its vast fleet of vehicles more energy efficient and increase the amount of materials recycled, among other efforts.
“We have historically taken innovative steps to protect and enhance the environment. We are going greener,” said Lynn Brown, vice president of corporate communications at the Houston-headquartered solid waste company.
“That’s why we are monitoring for investment in technology that can be economical and commercializable – we want to bring new, innovative technologies to managing waste in the most environmentally efficient and effective manner.
Waste Management plans to direct its capital spending of up to $500 million a year over a 10 year period to environmental initiatives. Among the goals is to increase fleet fuel efficiency by 15 percent and reduce fleet emissions by 15 percent by 2020.
“We expect these investments to add to earnings, margins and to meet our internal rate of return threshold targets, which has generally been 15 percent,” Brown said.
“We expect these projects will generate positive cash flow, which
can be used for purposes such as share buybacks, dividend payments, debt reduction
and acquisitions or investments in our business.” Brown said the company
plans to implement the initiatives while maintaining yearly capital expenditures
at approximately 10 percent of revenue.
The $500 million is roughly what the company already spends
on new trucks, Leone Young, an analyst with Citigroup Inc. in New York, stated
in a research note.
“Although not expected to be material over the near term, the environmental
initiative will be incremental over time to revenues and returns, as well as
positive to the company’s image and an aid to building community relations,” Young
“We think it’s important to note that this is also expected to
be accomplished within the current capital expenditure parameters or capital
expenditures in the rage of 10 percent of revenues annually. This is not expected
to be incremental spending,” she said.
Young also noted that Waste Management intends to increase
the volume of recyclable materials it processes annually from 8 million tons
to 20 million tons in 2020, implying an increase of 7 percent annually. Young
said that a significant amount of the increase in recyclables is expected to
come from increased electronic waste recycling.
“There’s a global campaign among all industries to be more environmentally
conscious, and there are also tax incentives for companies that try to be more
energy efficient,” said Stewart Scharf, an analyst with Standard & Poor’s
Corp. in New York.
“These initiatives are looked upon very favorably from a political sense,
but will likely have a small impact on Waste Management’s overall operations
in the near term. However, on a longer-term basis, these efforts could provide
Corey Greendale, an analyst with First Analysis Corp. in Chicago, said Waste
Management has been among the most visible among the solid waste companies
with its efforts to promote environmental efforts. “They’re more
than anyone else, using it as kind of a nationwide marketing effort,” Greendale
said. “They have a television campaign nationwide that they have been
working on, making sure that they have a good image.”
Phoenix-headquartered Allied Waste Industries Inc., the second largest solid
waste company in the country, is investing approximately $200 million annually
in new, more fuel-efficient vehicles, as well as installing new technology
like oxidation catalysts, said Jesse Stallone, director of sustainability initiatives
at Allied Waste. It is also expanding its use of bio-diesel fuels to power
a growing percentage of its fleet.
Allied Waste is also focusing on recycling. “Allied’s state of
the art recycling facilities process nearly two million tons of recyclable
materials annually, including cardboard, newspaper, aluminum cans, plastic
and construction materials,” Stallone said.
Fort Lauderdale-based Republic Services Inc., the third largest
solid waste company in the country, is also focused on environmental efforts. “We
were green before it was cool to be green,” said Will Flower, vice president
“We have always been a steward of environmental responsibility. Protecting
the environment is our business. For years, we have been introducing creative
recycling programs for our customers and investing in facilities to process
In addition to Republic Service’s 33 recycling centers located in 21
states, Republic Services has introduced the use of duel-fueled vehicles which
can operate on traditional fossil fuels, or cleaner burning fuels such as compressed
“We wanted to make it easier for others to be green. After we invested
in and constructed a refueling station for compressed natural gas vehicles,
we decided to open up our fueling station to other commercial fleets to make
it convenient for smaller businesses that are interested in using compressed
natural gas in their fleets,” Flower said.
“These smaller businesses probably would not make the switch to compressed
natural gas if they did not have a reliable local fueling station that they
could depend on.”
Keeping focused on bottom line issues is also important,
“Being green is important. So is operating in the black. We evaluate
every project to ensure there is an adequate return. The fueling station is
an example where we earn a profit and encourage others to be more environmentally
friendly,” Flower said.
More could be done, however, Flower said. There needs to
be more education among consumers and product makers to boost environmental
efforts, he said.
“Far too many consumers do not participate in recycling programs. This
is only the first step in the recycling process,” Flower said. “Product
makers also need to step up and ensure that outlets exist for the materials
they would like to see collected. Product manufacturers must be willing to
buy back and reuse recyclable material.”
Flower said the government could also help by stimulating
markets for recycled products – especially for items that are difficult to recycle, such as
“If needed, government should work with product makers to determine the
best means to promote the use of recycled materials,” Flower said. “It’s
time for people to put their money where their mouth is when it comes to recycling.
Many product manufacturers and packagers can be better partners in the recycling