Best Buy: Sustainability amidst turmoil

Best Buy has made headlines this year, and not the kind that any company wants:

Best Buy Cutting 50 Stores to Get Profitable. Good luck with that. (Forbes)

Best Buy CEO Resigns Under Cloud (Minneapolis StarTribune)

Best Buy Suffers For Lack of a Plan (New York Times)

Best Buy in Turmoil: Will It Survive? (Forbes, again)

Best Buy is losing market share to Amazon, its stock is down by 25 percent since the beginning of year (while the S&P 500 is up by 15 percent) and the company’s  founder Richard Schulze stepped down as chairman because he failed to tell the board about allegations that then-CEO Brian Dunn was having an inappropriate relationship with a female employee. Now Schulze wants to take the company private, maybe with money from Qatar. It’s more than enough to paralyze an organization or, at a minimum, distract everyone.

So how are the company’s sustainability efforts going? As it turns out…very well.

Maybe it helps that Leo Raudys, Best Buy’s senior director of environmental sustainability, previously worked in Minnesota state government, where his ultimate bosses included governors Jesse Ventura and Tim Pawlenty.

“You spend 18 years in government, and you see elections bring people in and out,” says Raudys (right), who is trained as an ecologist. “You just put your head down and keep going.”

I spoke last week by phone with Raudys, with his boss George Sherman, a senior v.p. who oversees all services at Best Buy (which includes recycling, among other things) and with Susan Bass Roberts, who oversees community relations.

What I took away from our conversations is that sustinability programs are thriving at Best Buy because they deliver real competitive advantages–and Best Buy needs any edge that it can get these days.

“Our environmental program is built around clear business objectives,” said Sherman (left),  who reports directly to Best Buy’s new CEO, turnaround artist Hubert Joly. ‘This is one of the crown jewels of the company. It is one of the things that we do absolutely best.”

It helps, too, that Best Buy’s environmental goals around recycling and carbon emissions reductions are clear and focused.

Let’s take them one at a time.

The company has said it wants to recycle 1 billion pounds of consumer goods by 2014, and it’s well ahead of schedule (as GreenBiz’s Adam Aston reported in April). No other retailer matches this program in size or scope; it requires setting up collection points in every store, and managing a complex “reverse logistics” network that trucks and sorts discarded goods. Because Best Buy already has a repair operation, as well as a trade-in program for used electronics, it knows how to move stuff out of the stories as well as into them.

This month, Best Buy said for the first time that all of its e-waste handlers would have to meet the e-Stewards standard, a program developed by environmentalists including the Basel Action Network, a watchdog group. Basel Action Network applauded the move, calling it a demonstration of “real leadership.”

Best Buy’s recycling program, to the surprise of company insiders, now makes a modest profit. It attracts people who want to get rid of their old junk  into the stores. And it signals to customers that Best Buy is acting responsibly.

“We’re essentially running a zero-cost traffic driver that does good things for our customers,” Raudys said. “It’s a sustainable business model.”

Neither of Best Buy’s biggest competitors — Walmart and Amazon — offer free electronics recycling.

As for carbon reductions, Best Buy has promised to reduce its carbon footprint in absolute terms by 20% by 2020, a bold goal. Last year, it reduced emissions by 4.4 percent. That puts it ahead of peers who are being tracked by the Carbon Disclosure Project, and it’s in line with the reductions that scientists say the world needs to avoid catastrophic climate change. [See my recent blogpost, Corporate sustainability by the numbers.]

The Carbon Disclosure Project [report, PDF, download) ranks Best Buy among its top leaders both when it comes to disclosure (BBY scored 97 out of 100)  and actual carbon reductions (BBY got an A.) Walmart did not qualify as a leader in either category, and Amazon didn’t even bother to report its carbon footprint. (Quick aside: I hope to take up the question of why Amazon is a laggard when it comes to sustainability and corporate responsibility in a future column. If you have thoughts, email me.)

Best Buy’s carbon reduction efforts, which are virtually driven by store design and energy efficiency, have saved the company about $60 million since they began in 2009. New store designs include skylights, dimmable lights and efficient heating and cooling systems that don’t require much additional upfront investment. “The economic case is so compelling,” Raudys says. “Why wouldn’t you do it?”

Meantime, Best Buy has focused its charitable giving on helping lower-income teenagers bridge the digital divide. This, too, is closely aligned with the company’s core business.

Will any of these initiatives help Best Buy rebound? Perhaps at the margins–a small number of consumers may choose to reward Best Buy for its efforts by shopping there, all else being equal. They also give Best Buy’s employees a reason to feel good about the company, even in these trying times.

Comments

  1. Ed Maibach says:

    Thanks for the ray of sunshine on a Monday morning. It’s great to see evidence of ROI from long-term thinking.

  2. This is playing around the margins. Some of the biggest impact a high-volume retail company such as this could have on sustainability would be in the form of
    – driving structural change in the electronics industry via more modularity in the products, vs today’s throwaway culture (this will do more than incomplete recycling after the fact)
    – driving change on packaging waste, particularly plastics
    – finding ways to offset the impact of chain-based mega stores sucking the life out of local retail scene
    – finding ways to turn dead-end retail jobs into something that drives lifetime momentum among the employee base

    Or we could just let them off the hook and instead get warm and fuzzy about them taking the easiest route and cutting energy costs (duh – they’re trying to stave off terminal bankrupcy) while acting like they did it for the rest of us and the planet.

  3. Marc Gunther says:

    Sam, I agree with some but not all of your critique.

    Yes, Best Buy could try to do more to change the way electronics are made–although that’s primarily the job of manufacturers, not retailers. Do you think they have the clout to tell Apple to redesign the iPhone so it is more easily repaired or recycled? Not likely.

    Yes, packaging is another are where they could have more impact.

    No, I don’t think it is the job of “chain-based mega stores” to support local retail. C’mon. And bigger stores tend to me more efficient, i.e., sustainable than small ones.

    No, re dead-end jobs. The former CEO of Best Buy, Brian Dunn, started on the floor of a store.

    • If Best Buy is not starting this conversation about the way electronics are made, either individually or as part of the many industry groups it funds and is part of, then pray tell us how is change going to happen? Mind you i’m sure you’ll admit that companies like best Buy are not wallflowers when they need a subsidy or the want to influence legislation affecting them. But you ask us to believe that Best Buy can do nothing to influence products? Sorry, but you’re bending over backwards to give a free pass here.

      I must say Marc, I’m shocked at you trotting out a Horatio Alger response to a serious issue: the vast majority of jobs in this kind of retail are part-time dead end at low pay. This is why I raise the issue of local retail: the money gets sucked out of the community along with entreprenuership opportunity – and no skills given back either. Are you, as sustainability expert really going to attempt to wash this away with allegory and one-in-a-million anectdotal anomaly?

      And by the way, you actually disagreed with and disputed, point-by-point, with each and every single critique I made of Best Buy (go back and read your post). In this light, I’m not sure why you started with the snow job intro (“I agree with some but not all of your critique”), because in the end you’re demanding for Best Buy to be given a round of applause for saving themselves a few bucks in energy costs and….gosh golly gee, actually cleaning up some of the massive heap of trash they generate by siting on their hands while suppliers their suppliers structurally generate it, in oder to fuel an at-all-costs hunt for quarterly growth.

      If the bar is gonna be set THAT low, then we might as well turn out the lights and go home, because not much will change with the way business is done.

      Retail is at the heart of much of what is wrong with our society in terms of consumerism and a really bad habit of planned obsolescence. And from what I can see, you’re quite happy for the sector to carry on making very little structural change.

      By the way, I’m not saying this randomly – I’v worked extensively in the retail sector before eventually leaving. The problems here sustainabilty-wise are deep and entrenched. And the group-think in the sector is quite strong on many dimensions, making sustainability major challenge for them. Glossing over these matters is really not doing anyone a favor.

  4. Marc Gunther says:

    Sam, as I said in my response to your earlier comment, I do agree with you (1) on the obligation of Best Buy trying to influence the way things are made (with the caveat that its influence is limited) and (2) about packaging.

    On dead-end jobs in retail, sorry, I’m not persuaded that the opportunities are any greater in local stores than they are in chains like Best Buy or McDonald’s, for that matter. I’d need to see evidence on this. I do know that entry-level people at the big chains have the opportunity to rise into middle-management on a regular basis and, occasionally, much higher. I’m going to do a future post about Starbucks that will make this point, albeit also with anecdotal evidence.

    • You’re continuing with the vague terms (“have the opportunity”) and then a promise of “anectdotal evidence”. And this is what we’re supposed to rely on for….judging the sustainablility of an organization? Wow.

      Sorry but that’s not good enough.

      Best Buy is basically glossing over A TON of major issues and IMO you’re jumping on their bait about what are very basic actions actually.

      Save the praise for when they do something actually difficult, let alone groundbreaking. There are “A” grades being handed out like candy here for “B-“, if not even “C” grade work.

  5. I appreciate both Marc’s overview article about Best Buy’s sustainability efforts, as well as the critique by Sam. And I do applaud the leadership of Leo Raudys.

    I feel it’s important to point out that the primary reason Best Buy began its electronic take-back program was because it was required by the State of Minnesota’s cutting-edge electronic take-back legislation. This legislation was fought by electronics manufacturers and retailers but it has turned into a wonderful model of how government can actually bring about environmental responsibility and support businesses in improving their bottom line.

    As the article points out, Best Buy is actually profiting from the electronics recycling program, attracting new customers and improving its image vis-a-vis laggards like Amazon and Walmart. We should be asking why Amazon isn’t reporting on its environmental footprint.

    In conclusion, please keep up your important reporting Marc and please asking those tough sustainability questions Sam.

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