Office Depot: No tree-hugging, please

Yalmaz Siddiqui is a dark-green environmentalist, who once started a business called, of all things, “eco-eco.” But in his job as the senior director for environmental strategy at Office Depot, the $11.6-billion a year office-products giant based in Boca Raton, FL, he doesn’t talk about saving the planet. Instead, he focuses on the  business benefits of sustainability, particularly those that accrue to Office Depot’s customers.

“It really is rare for me to invoke climate change or landfills or toxicity in my internal arguments,” Yalmaz says.  “We’re in Florida. We’re not in San Francisco or the Pacific Northwest. Impassioned arguments about environmental issues don’t resonate.”

Whatever his approach, it seems to be working: Office Depot has green cred. In Newsweek’s ranking of U.S. companies, they were the top retailer and No. 8 overall,  ahead of rival Staples (17), Best Buy (19),  J.C. Penny (64), Starbucks (82) and Whole Foods Market (106). While the rankings are debatable, Newsweek wrote:

Office Depot, at No. 8, is the single retailer to make it into the U.S. top 10. It’s had its share of operational successes—saving 3,000 tons of wood and up to $1.5 million a year simply by delivering goods in paper bags rather than cardboard boxes, for instance. But, as with IBM, perhaps more significant are the tools Office Depot provides to its largest customers, including cities, states, and large corporations. It shows customers the environmental and financial tradeoffs of their purchasing decisions on everything from copy paper to cleaning supplies.

This customer-centric approach helps explain what Office Depot can do, and what it can’t, when it comes to “green.” You won’t see solar on the roofs of  Office Depot stores, at least for now, because the return on the investment is insufficient.  You will see attention paid to energy efficiency because the ROI makes sense, and you will see even more attention paid to selling greener products because profits from those sales drop right to the bottom line.

I spoke to Yalmaz by phone the other day because I’m  interested in how people inside companies — intrapreneurs, they’re sometimes called — promote change. There’s a small army of these folks in corporate America, and the work they do matters. With Washington gridlocked (or worse) on environmental issues, it’s up to corporate America (as well as state and local government) to deliver the change we need.

Yalmaz, who is 41, started “eco-eco” after college to sell organic clothing, reusable organic cotton bags and other dark-green stuff. “It didn’t resonate with the marketplace,” he said. Subsequently, he got a masters in environment and development, did consulting work with PwC and IBM focusing on the forest, paper and packaging industries and then joined Office Depot in 2006.

The company divides its environmental strategy in three: Be Greener, Buy Greener and Sell Greener. Be Greener focuses on internal operations, and this is mostly about saving money. Mostly but not entirely: Office Depot, as you’d expect, buys recycled paper, for which there’s essentially no business case. (If classical economists were right about how the world works, there’s be no recycled paper. It costs more and performs no better than paper made from virgin forest.)

But, as Yalmaz notes: “It’s an iconic product, when it comes to organizational greening. It’s the everyday symbol of environmental commitment. It’s very tangible.” Through its purchasing requirements, he explained, the federal government helped create the market for recycled paper.

Office Depot also got a lot of attention for replacing cardboard boxes with lighter weight bags when delivering supplies to institutional customers. That was a double win, saving the company money and pleasing customers. “It was sold as way to satisfy customer desire to have less packaging,” Yalmaz says.

Office Depot also took a pragmatic, customer-driven approach when it set out to define greener products. The firm looked at the purchasing policies of key, leading-edge buyers like the EPA and the U.S. Green Building Council, rather than setting out on its own to measure the environmental impact of what it sells. “We’ve tried to make the definition of green products as simple and accessible as possible,” Yalmaz says. That’s a different approach from the one taken by Walmart and its partners in The Sustainability Consortium, who are setting out to do complex, science-based life cycle analyses of thousands of products.

Unlike Walmart, Office Depot hasn’t set big attention-getting goals like zero waste or being powered entirely by renewable energy. It’s ranked No. 16,  behind Staples (No. 4) and Walmart (No. 5) in EPA’s list of the top 20 retail green power partners. But, to its credit, Office Depot is unusually transparent about its environmental performance, posting a dashboard that tracks its progress or lack thereof. For example, you can see that the percentage of copy paper sold with post-consumer recycled content actually fell between 2008 and 2010.

This week, to spur sales of green products, Office Depot recognized 25 of its own customers for their “leadership in greener purchasing.” Winners from the FORTUNE 500 include Chevron, JP Morgan Chase, Google, Bechtel and Comerica. Says Yalmaz: “If I was to be asked, what is the ultimate metric of success of our environmental program, I’d say it was ‘green spend’ by customer.”

To borrow a phrase from economist and author Gernot Wagner, but will the planet notice? That’s hard to say. Clearly, if Office Depot sells a lot more greener products in place of conventional products, we’ll be better off. And if greener corporate behavior paves the way for the political action needed to have a big impact on climate change and other issues, great. “Normalization of green behavior works better than a message of environmental guilt,” Yalmaz says. On the other hand, let’s not fool ourselves into thinking that buying recycled paper or Pilot pens made out of recycled bottles (try them, they’re cool) get us where we need to go. It won’t.

Radical transparency at Office Depot

Here’s a simple but powerful idea:

People have the right to know where things come from and what they are made of.

That’s the idea behind a free open-source, volunteer-driven platform called Sourcemap. Sourcemap will soon make its mass market debut, thanks to a partnership between Office Depot and New Leaf Paper.

The goal of the partnership is, not surprisingly, to sell more recycled paper. While you’ll get some argument about this, experts say that recycled paper saves trees, energy and water, produces less pollution, uses more benign chemicals, and requires less bleaching than virgin paper production.

The trouble is, recycled paper–for now–costs more.  That’s largely a problem of scale. If there were more demand for recycled paper, there would be more incentive to collect used paper, more infrastructure devoted to recycling and costs would come down.

So, to drive up sales and eventually drive down costs, Office Depot and New Leaf want to show customers — institutions, small companies and individuals — the environmental benefits of recycled paper, in part by telling them exactly where their paper come from.

“We’re trying to make environmental paper mainstream,” says Jeff Mendelsohn, the president and co-founder of New Leaf, which develops, markets and distributes environmentally-preferable paper.

Beginning later this year,  shoppers who buy Office Depot’s 100% Forest Stewardship Council-certified recycled paper will be able to use their mobile phones to read a QR code (a kind of barcode) on the package. They’ll then see a movie, like this one, that traces their paper back to its source. This paper was tracked from the GreenBiz’s State of Green Business Forum 2011 in Washington, D.C., back to the streets of Milwaukee. Please take a look:

I spoke with New Leaf’s Jeff Mendelsohn and Yalmaz Siddiqui, director of environmental strategy at Office Depot, last week in Washington, where they gave a lively talk on their project. [click to continue…]