U.S. companies dig into coffers to go green
NEW YORK (Reuters) - U.S. industrial companies are spending heavily on environmentally friendly efforts even as the economic slowdown dents their profits.
Fueling the "green" trend are hopes that products that are made of recyclable materials or use less energy will win praise, forestall onerous regulation and cut rising costs.
In particular, oil prices have jumped more than 20 percent this year.
"Oil for $116 a barrel is staggering," said Donald Young, a spokesman for the International Facility Management Association professional group. "Companies are forging ahead."
For example, building maintenance supply company W.W. Grainger Inc says its manufacturing and industrial customers are clamoring for the energy-efficient lights, high-efficiency water faucets and even waterless toilets it sells through its catalog and Web site.
"I'm not seeing any evidence of customers cutting back (on the purchase of green products)," said Patrick Davidson, senior vice president for sales and marketing.
Indeed, Grainger's sales of such products rose 20 percent in the first quarter from a year earlier, compared with a 7 percent revenue gain overall, a company spokesman said.
At Home Office Solutions Group, which sells furniture to small businesses, sales of green products are "going strong" even as its customers' average purchase has declined, Chief Executive Mark Levin said.
One of his most popular items is Steelcase Inc's Think chair, which is made of as much as 37 percent recycled materials. And Home Office can sell it for $569 -- $250 less than the same manufacturer's Leap chair.
"Green doesn't always mean more expensive," Levin said.
An economic downturn will prompt companies to keep a closer eye on the economics of green investment, said Michael Klein, chairman of Citigroup's institutional clients group.
"The current market conditions will sharpen the focus. They will weed out initiatives that probably were not sustainable," Klein said. But he added that businesses will not entirely scuttle their environmental investment plans.
"The momentum that has been building in the U.S. private sector will not be lost," he said.
Citigroup has said it will direct $50 billion over a decade to address global climate change through investments, financing and other activities.
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